Q3 2023 TransMedics Group Inc Earnings Call
Good afternoon, and welcome to the Trans Medics third quarter 2023 earnings conference call. At this time all participants are in a listen only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded.
Or did for replay purposes.
Now like to turn the call over to Brian Johnson from the Gilmartin group for a few introductory comments.
Thank you earlier today trends in that extra released financial results for the quarter ended September 32023, a copy of the press release is available on the company's website.
Before we begin I would like to remind you that management will make statements. During this call, including during the question and answer portion of the call that include forward looking statements within the meaning of federal Securities laws.
Statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements. All forward looking statements, including without limitation, our examination of operating trends the potential commercial opportunity for our products and our future financial expectations, which include expectations for growth in our organization and guidance into our expectation.
For revenue gross margins and operating expenses in 2023 and beyond are based upon our current assumptions and estimates. These statements involve material risks uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements.
Additional information regarding these risks and uncertainties appears under the heading risk factors on our Form 10-K filed with Securities and Exchange Commission on February 27 2023.
Our subsequent Form 10-Q filings and the forward looking statements, including included in today's earnings press release, which is available at <unk>.
Which is available on our website and at Www Dot FCC Dot Gov.
<unk> disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise. This conference call contains time sensitive information and is accurate only as of the live broadcast today November six 2023.
With that I'll turn the call over to Waleed, Hassanein, President and Chief Executive Officer.
Thank you Brian Good afternoon, everyone and welcome to <unk> third quarter 2023 earnings call.
As always joining me today is Stephen Gordon, our Chief Financial Officer.
The third quarter was an important foundation building quarter for transplant X.
We closed two strategic acquisitions want to visit to position us for near term growth with the summit aviation.
And wanted to position us for long term growth with bridge to life technologies.
Following the acquisition of summit Aviation in August our team worked diligently to meet our goal to try to initiate a limited launch of.
Our transplant logistics service in late <unk>.
We met this goal and we started seeing early positive impact of logistics on revenue.
On Catalyzing N O P case volume and overall clinical adoption.
This early momentum combined with sustained growth demand for all three Oregon markets and solid U S performance enabled us to achieve significant growth in <unk>.
This was achieved despite operational and resource challenges, we outlined in our second quarter call.
Here are the summary results for <unk>.
Our total revenue was $66 $4 million, representing 159% growth over the same period in 2022 and.
And 27% sequential quarter over quarter growth from 'twenty from <unk> 2023.
64 million of the total of $66 4 million was from transplant related activities, including approximately $2 1 million in N O P aviation and logistics related revenue.
We are thrilled by the early performance of our transplant aviation and logistics service as it raises our confidence in our long term plans, which I will cover later in the presentation today.
Approximately $2 4 million of the total revenue was attributable to legacy summit charter and flight School operations.
As we've stated before we intend to exit the legacy charter business with diminishing contribution in Q4 before a full exit in early 'twenty 'twenty four.
Meanwhile, we will maintain our flight school revenue, which will continue to be a part of our P&L going forward.
Stephen will detail associated P&L impacts in his section of today's call.
Our team did a great job executing on all fronts.
Three Q performance speaks volumes to their hard work dedication and creativity.
I wanted to take a moment and acknowledge our entire team at <unk> for their efforts to help us achieve these great results.
Now, let me cover the specifics of Q3.
In line with our growth strategy, we grew revenue across all three Oregon markets in the U S compared to two Q.
Our U S revenues also grew sequentially.
Stephen will cover the details in his section of today's call.
Given the success of the MLP program and the flexibility it affords U S transplant programs to use it going forward, we will primarily focus on the Oregon specific revenue trends quarter over quarter instead of the number of centers.
Let me repeat again going forward.
We will primarily focus on Oregon specific revenue trends quarter over quarter instead of the number of centers.
This is because we no longer believe or see center numbers as an accurate predictor of growth in the MLP era.
Beyond strong revenue growth. We also demonstrated continued operational efficiencies in <unk> as we continued to benefit from increasing scale and making further progress towards positive cash flow and profitability.
In terms of N O P. We met our stated goal of having MLP contribute the lion's share of our U S revenue in <unk>.
As we reached an all time high of 97% NOP contribution of the total U S cases.
On a per Oregon basis, approximately 98% of liver, 93%, apart and 97% of lung cases, where from N O P. In <unk>.
Given this success, we fully expect that we will transition out of the shrinking direct acquisition model in 2024.
To meet the growing demand for N O P and to overcome our clinical support staffing shortage. We discussed in two Q, we added 45, new clinical specialists and 10 surgeons in <unk>.
We will continue to invest in this area throughout the remainder of 'twenty three and in early 'twenty four to prepare for the expected growth in 'twenty four and beyond.
From a volume perspective, we are well on our way to reaching our stated goal of completing more than 2000 U S. N O P transplants in 'twenty two 'twenty three.
This would represent more than doubling of our case volume from 'twenty to 'twenty two.
Let me now turn to a more detailed discussion on our new logistics business.
As we described on our <unk> call.
<unk> set out to develop a more efficient national transplant logistics model in the U S.
Our goal is to control the entire end to end process of donor to recipient logistics for all N O P transplant volume in the U S by the second half of 2024.
By way of background and as a reminder.
Approximately 75% to 80% of MLP heart lung and liver transplants require private charter air transportation to move transplant teams and Oregon's from donor to recipient.
The rapid expansion of N O P. The increase in distance afforded by the protective effect of the Ocs technology.
And our experience operating the MLP model in the U S over the past 18 months.
Have clearly shown us that the current industry model is inefficient and scalable in the era of MLP and the new national allocation loss.
Our vision is that where that trends medics developed and operated world class efficient transplant dedicated logistics service, we can meaningfully drive additional growth of our N O P case volume and fueling overall revenue growth.
Late in Q3, we initiated a limited launch of our new transplant logistics business with aviation to solve these inefficiencies and support and expand our N O P case volume.
We are extremely pleased with the early results.
Despite expected early growing pains and inefficiencies as we integrate the summit operation.
<unk> truly represents the first inning.
Of this important new transmitter business offering.
So far we are thrilled by the early encouraging results.
We are in the process of building out the fleet and adding additional staff to operate the fleet efficiently efficiently.
As of today, we have acquired eight planes.
We plan to expand our fleet to around 15 to 20 operational planes by the second half of 'twenty 'twenty four.
Rest assured that we will continue to assess this need based on data driven approach.
We have also initiated the build out of our logistics digital command and dispatch center in Andover, Massachusetts.
And we expect it to be fully operational by Q1 of 'twenty four.
This is important as it will drive significant efficiency to the dispatch operation for MLP clinical and logistical resources.
I want to affirm that based on everything we know today.
We are extremely confident.
And bullish on the potential positive impact of transplant logistics service on the growth of our MLP case volume and more efficient utilization of our clinical resources.
Before I move on from logistics and aviation, let me share our expectations on our gross margin progression going forward.
In <unk>, the inefficiencies associated with integrating summit and streamlining the entire operation to focus in transplant was a bit of a headwind on our service margin.
We expect this to improve over the next few quarters.
Let me be crystal clear.
We fully expect both our product and service margins to improve over the next several quarters as we gain more operational leverage and efficiency.
Simply stated three EQ margins do not.
Pete do not represent our long term margins at all the.
The expected inefficiencies of integration.
So.
Simply stated the EQ margins do not represent our long term margins at all given the expected inefficiencies of integration and transitioning of the summit operations.
Now, let me turn to our mid and long term plans.
As we stated in our last call we have a multifaceted strategy to leverage some of the technologies, we acquired from bridge to life to accelerate our Ocs next Gen program and expand our product offering.
Our goal is to leverage these technologies and new clinical programs to drive our mid and long term growth in N O P case volume to reach our stated goal of performing.
10000 N O P cases in the U S by 2028.
We hope to have more to share about these new technologies and its associated clinical programs later in 'twenty 'twenty four.
We are continuing to drive our business forward and.
And for the seventh consecutive quarter, we have demonstrated that we can grow our revenue and adoption of our Ocs MLP cases.
We are on track to meet our stated goal of doubling our NLP transplants to more than 2000 in 2020 three.
We are not stopping here however.
As we are determined to reach our goal of 10000 transplants over the next five years.
Given our strong <unk> results balanced with potential scalability challenges, we are increasing our annual revenue guidance for the full year 'twenty three to be between 222 and $230 million up from our previously communicated guidance of 180 to 119.
<unk>.
And representing 138% to 146% growth over the full year 2022 total revenue with that let me turn the call to Stephen to cover the detailed financial results of the quarter Steven.
Thank you Ali.
I will now detail, our Q3 results and provide supplemental financial information for the quarter.
Given the two acquisitions and evolving business model I will move through the dialogue carefully and try to touch on all relevant points.
Starting with revenue for the third quarter of 2023, our total revenue was $66 4 million. This is an increase of 159% from the third quarter of 2022, and a 27% sequential increase from last quarter.
Of note the $66 $4 million of revenue for the quarter included $1 6 million of revenue related to summit Aviation's legacy charter business.
The legacy charter business is in the process of transitioning and we intend to exit by early 2024.
We expect the charter revenues should be minimal in Q4 zero.
Zero as we enter 2024.
The $66 $4 million of revenue also includes about $800000 of revenue related to the flight school that was part of our acquisition of summit aviation.
So taking into account the charter in flight school revenue.
Transplant related revenue was $64 million.
Those will lead mentioned included in the $64 million was our first transplant related logistics revenue of $2 1 million.
This logistics revenue was derived from missions that utilized our own logistics network in.
In the past our hospitals or hospital customers would have paid this to other logistics brokers.
But this is now part of the service that we're providing so we feel the $2 1 million in less than a full quarter as a very good start.
In the U S U S transplant revenue for the quarter was $59 7 million, that's 156% growth from Q3 of 2022.
And this includes the $2 1 million of logistics rub.
The Oregon breakdown on U S revenue was $41 2 million of liver.
$15 1 million of heart.
$3 4 million of lung.
So let me just repeat that $41 2 million of liver.
$15 1 million of heart, the $3 4 million of loans.
X U S revenue was $4 $3 million it was $3 9 million apart.
$3 million of lung and $1 million of Liberum.
Yes.
Now regarding the breakout of product and service revenue. This quarter service revenue is growing given the introduction of logistics and aviation so.
Product revenue was $47 7 million in Q3 of 2023 and service revenue was $18 7 million.
And just reiterating the service revenue includes the $2 4 million of non transplant related revenue.
Part of the summit acquisition $1 6 million of the charter that's being transitioned out by <unk> by 2020 for early 2024 and.
And point $8 million of the flight school revenue. This we expect to recur, but it's not likely to grow so the flight school will be less material as well as our transport revenue growth.
Now turning to gross margin.
Gross margin for the third quarter of 2023 was 61%.
And as Waleed mentioned this was lower than the Q2 of 2023 due to transient inefficiencies related to the summit acquisition in limited launch of our transport logistics offering.
Beyond the integration margin was also unfavorably impacted by legacy charter operations as we transition to focus exclusively on transplant missions.
So our service margin was impacted by both of these we had the old charter business trailing off.
And we have the new transplant business, beginning, but neither one was at scale in the quarter.
In general the higher mix of service does reduce the overall business gross margin.
However, we fully expect the gross margin to improve in the coming quarters.
In simple mathematical terms, our product margin this quarter was 77%.
And we expect this to improve into the 80% range over the next few quarters.
And the service margin was 21% in Q3, we also expect this to improve over the next few quarters to the low to mid 30% range.
The mix in the quarter was 72% product the 28% service.
In the future we expect the mix to be about 70, 30 product to service, which would equate to about a mid to upper 60% range for gross margin than the overall business very much in line with our expectations.
So we do expect and are very confident that the gross margin will improve over the next several quarters, starting in Q4 and into 2024.
Given the higher mix of service in our business, we believe a mid to upper sixties gross margin is a reasonable steady state.
And of course, as our logistics allows us to open up more cases and more product sales. The overall gross profit dollar contribution will be significantly higher than if we were not using our own logistics network and this was true in this quarter Q3 that we just finished as well.
Moving onto expenses total operating expenses for the third quarter of 2023.
Were $69 million.
However, operating expenses include two acquisition transition excuse me two acquisition transactions specific impacts.
First we have $27 $2 million of acquired in process research and development expenses related to our acquisition of the bridge to life technologies.
And secondly included in SG&A is approximately $2.2 million of other acquisition related expenses.
So if we normalize for these two items our underlying operating expense was $39 8 million.
This is 68% above the third quarter of 2022, and 6% sequential growth.
From Q2 of 'twenty three.
We are continuing to make critical investments in the company to ensure scalability for growth and to support future growth, while still growing expenses at a much lower rate than revenue.
Our operating loss was $28 3 million in the quarter of 2023 compared to $5 5 million in the third quarter of 2022.
Taking into consideration the two transaction specific expense items I mentioned earlier, our operating income would have been just above breakeven for the quarter about 900000.
Our net loss for the third quarter of 2023 was $25 4 million compared to $7 4 million in the third quarter of 'twenty two.
Total cash was $427 1 million as of September 32023.
In the quarter, we spent $42 1 million on the two business acquisitions as well as approximately $103 million on eight jets that were added to our transplant logistics logistics fleet.
We are depreciating these jets over 10 years with a 50% residual value.
Finally weighted average common shares outstanding for the quarter were $32 6 million.
Overall, we are extremely pleased with our Q3 financial results, we have demonstrated that adding our own aviation and logistics offering in Q3 allowed us to continue growing revenue at a strong pace.
While we saw some headwinds on gross margin in this transitional quarter I have full confidence in our ability to grow the gross margin to the mid <unk> as we've described.
After integrating our logistics offering.
And this change in our business also showed that even with a lower gross margin. The gross profit dollars are growing which clearly puts us on a path to profitability.
As a concluding statement I will repeat our updated revenue guidance of 220.
Our guidance for 2023, or 222 million to $230 million, which represents a 138% to 146% growth.
Now I would like to turn the call back to our lead for closing statements.
Thank you Steven.
Overall, the third quarter was a critical execution period for <unk> as we integrated a new business summit aviation.
Expanded our MLP clinical support capacity and launched a first of its kind.
Business to expand our MLP product and service offering.
Despite the great results achieved.
We firmly believe that we are setting up a great foundation to further accelerate our growth in 'twenty four and beyond.
We are extremely confident in our strategy and our ability to execute it to achieve our stated goal of 10000 NOP transplant emissions by 2028 with that I will now turn the call to the operator for Q&A operator.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Youre using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
The first question comes from Allen Gong with J P. Morgan. Please go ahead.
Hi can you hear me okay.
Yes, Hi, Alan.
I just want to make sure my line dropped for a second congratulations on a really good quarter.
Just kind of touch on it a bit just a guidance right.
Just kind of doing my math, it looks like you're guiding to basically flat growth in fourth quarter and you had highlighted that you are taking a little bit of a cautious stance on a few dynamics. So can you walk us through kind of what is leading to that caution is the trends youre seeing so far in October or is it just the logistics of ramping up your aviation.
<unk> service model.
It's certainly the latter.
Alan.
Things one we are not fully staffed yet we made significant progress in Q3.
Our team was extremely creative to make us achieve the results we achieved but we're not out of the woods yet. So that's number one number two is continuing to standing up the aviation business.
Actually what we've seen in October is actually extremely encouraging we just need to make sure that we are cautious in our guidance to make sure that we still have these operational challenges for the rest of this year.
Got it and then I'm guessing, it's probably a little early to be talking about 2024, but I think in the past you've talked about your ambition, obviously heavier ambition for 2028, but when we think about the near term we've talked about we really wanted to continue doubling.
Sale of the number of transplants. So when we think about 2024 with the fact that not only will you have continuing momentum in the Oregon business, but now also ramping contribution from aviation how should we think about your growth aspirations for ton 74. Thank you.
Thank you Alan.
Alan.
We are not shy of sharing our aspiration and our ability to execute upon it. However, you reference point needs to be updated a little bit we've tripled our revenue last year, we are on pace to double this year over last year.
We will issue guidance for <unk> 'twenty four enough.
End of year.
Call, but I want to be.
Caution that our numbers are growing significantly so.
You know that that that data point is a bit data. So, but we are not issuing any guidance for 'twenty four right now we will do it in that first call in a year.
Our next question comes from Bill <unk> with Canaccord. Please go ahead.
Great. Thanks for taking my questions good evening.
Congratulations on the strong quarter.
Yes.
Firstly I think the most questions were getting these days are related to the metrics are surrounding the aviation business.
You gave us a little color on the gross margin, but yeah of.
The whole services business can you give us an idea of what you think kind of average revenue per case is gross margin operating margin per case and the night.
Thank you projected or you said that maybe 75% to 80% of your current MLP.
Could be.
Your own aviation applicable to that.
Just trying to get some metrics around this so we can kind of model this out thanks.
Thanks Bill.
It's way too early to.
To focus on that Nitty gritty details.
On the in the aviation.
And we don't intend to share that.
Anytime soon.
Are most indicative metric to track as growth in revenue and improvement in the service margin. That's what we are going to be focusing on and we believe it's the most indicative of how.
Healthy.
Our operation both on the service and the and the product revenue on.
On the second one.
Of course, our intention is to cover.
Almost 100% of our MLP cases, with our aviation but.
We have to be realistic.
We would need you know we need to make sure that we beef up the fleet first.
Get all of our support staff the pilots the dispatch operations stood up that's why we expect to do to be doing the lion's share of the MLP cases by the second half of next year not before that but our goal is to do as many of those cases ourselves given of course, what we are.
What we see as a huge.
Huge benefit.
On all fronts, when we do that.
I.
I mean, we don't have visibility into the metrics, but just a ballpark on average what's the typical case revenue that gets that you've seen kind of pushed through.
The hospitals to reimburse for average case.
Revenue for aviation, specifically, how should we think about that sure. So bill.
I want to be cautious. This is not this is not a question. This is a fact of organ transplant.
Aviation and logistics transport are fully reimbursed.
Through the same mechanism of.
Oregon acquisition.
There is no limit per se.
In fact, we were doing this because we believe we could be more efficient and past some of the efficiencies back to the transplant program. So I do not want anybody on this call.
To think that the.
The aviation business is not reimbursed through normal mechanisms of organ transplant. There is no limit there is no specifics if the center feels that they it's too expensive they would they would ask for another quote or get from another vendor.
It's fully reimbursed it's not a question of reimbursement. It's question of making sure that we have the fleet that efficiencies the support team to be able to cover the missions.
As far as the average.
It's too early.
It depends if you are flying.
Shorter distances the averages.
More between.
25 to $30000, if you're flying longer distances. It could go as high as $100000. So it's really it's a it depends on what type of missions, you're flying and again we.
Our goal is to gain efficiencies first gain volume.
The Q3 results is just that really the first inning not even early inning, it's the first inning. So.
We're looking forward to.
Achieving more building more confidence in sharing more detail as we as we build the fleet and build up the operational efficiency, we were foreseeing here.
And then last question I promise just on the fleet.
A couple of things one you ended the quarter with $427 million in cash I think theres been a case you've acquired eight planes.
Memory serves me correct you are looking to acquire eight more.
Which for 2000 $7 million to $12 million a plane that will leave you with over $300 million in cash and.
Not to take words out as Stephen smiles, but.
Your core business stripping everything out was actually profitable by almost 1 million Bucks and I am I missing something here does that math add up.
You're not missing anything Bill this is Steve when you got it exactly right.
Awesome. Thanks, Thanks for taking my questions.
Thank you Bill.
The next question comes from Suraj Kalia with Oppenheimer. Please go ahead.
Hi, Waleed, Stephen can you having alright.
Yes, Hi, Suraj.
Gentlemen, congrats on a great quarter, so while I know you're shying away for obvious reasons from giving some of these metrics.
But I have to ask.
While he would give us some idea in your prepared remarks, you mentioned that your team creative.
In meeting demand.
Help us understand.
In terms of dry runs and missed runs.
Should we think about that how did you all handled that in this quarter, particularly.
Sure. Thank you Suraj.
<unk> prepared remarks really.
Addressing the fact that.
Yes, we were able to achieve these great results. Despite the fact that we we were still building our clinical support team.
So really our team went out of their way to make sure that we cover as many of the cases as we can and minimize the impact of.
Limited clinical staffing on our performance that's one aspect of it the second aspect is of our logistics team, we were operating with very very small.
<unk> fleet.
And very small staffing and.
We went out of the way to make sure that we cover those cases efficiently as much as we can and that.
The results speak for themselves.
So that's really what the prepared remarks was intending to show as far as their rate of dry runs dry runs as I stated several times dry runs is that nature.
Of the DCD donation.
It's going to be with us as long as we have DCD donors theres always going to be a case, where the DCD.
Potential DCD donor doesn't progress to DCD.
And where see as long as we're using DCD donors. This is going to be that this is going to be the norm for us.
As we go forward.
As far as the trend we saw in the quarter.
I would say it was that eight of DCD donors progressing.
Or lack of progression of DCD doors with a little bit below Q2, but that's all I can comment on but there is always DCD lack of progression when when youre using DCD donors.
And for my second question I know when we were a tier.
During the site visit if am.
Memory serves me right you had indicated that you had a 70% or north of 70% of all DCD Hearts.
Fedex was capturing dose.
I would love to get some updated color from you, especially hearts.
D C D and DVD trajectories look like.
If you could also characterize how you think <unk> share progression within the subcategories of smoothing gentlemen, Thank you for taking my questions. Congrats again.
Thank you Suraj I appreciate the call I. Appreciate the question. So let me address that two part question. You asked the first is yes transmit mix continue to do the lion's share of DCD heart donation in the United States, we expect to release the <unk>.
Annualized number after you add.
By year end when the full number of DCD Hearts.
Our release, but from where we see it here.
We are continuing to be north of 70% for sure.
As I stated.
Many times publicly.
D. C. D is the low hanging fruit right now because it's the sort of the black and white option to growing U S. Transplant volumes. That's why we expect to see the overall heart lung and liver transplant to grow this year over last year because of the high use of DCD donors, especially in heart and liver.
That is afforded by Ocs.
Now that doesn't mean that DVD, we're not.
The <unk> is not being used that the opposite is true I would say so far it's between.
45% to 50% of our volumes our DVD, we expect to see that growing into in 'twenty four and beyond as we are now highlighting the.
The benefits are there will be some data readouts there is some publications coming up.
In early 'twenty, four that will clearly point out the importance of using DVD Oregon's to expand the donor pool. Even further so we are confident that as we move forward the DVD and DCD portion of our business will continue to grow and we will continue to.
To achieve that.
High success rates on both.
Appreciate it.
Our next question comes from Ryan Daniels with William Blair. Please go ahead.
Okay for you there I know there was a little bit of controversy.
Over the last few quarters and just demand in the market with DCD for that but we've actually heard recently in our channel checks that many systems, especially nonprofits are just banning MRP outright due to ethical issue. So I'm curious if you've seen that in the market.
That's actually starting to face some bands across the United States.
Hi, Ryan.
As I stated last call and you're absolutely right.
We are not concerned at all about the progression of MRP. We're seeing the opposite is true. We're seeing many centers that uses an RP are now you'll use to use an RP and now shifting towards yes.
We are doing more than 70% of the DCD hearts in the United States. So I'm not concerned at all and ERP is going to be.
It's going to be limited in nature.
We have.
Our results is pointing to that.
And we have.
A couple of abstracts at the upcoming ice H O T that will address this point directly and clearly show that the importance of ocs and the capabilities of ocs, including cost comparison between ocs in ERP, because they put out for a while there there was a misunderstanding a misnomer that ocs might be more.
An MLP the opposite is true.
So.
Transmit X.
The Bottomline is transmit X is doing the lion's share of DCD Hearts in this country, we expect that to continue to be the case and ultimately at some point will probably be doing the vast majority of it.
We are.
Proud to before we are we trust our technology with trust our methods.
Does it eliminates all these ethical and legal concerns that that exist.
Around an ERP.
Okay. That's super helpful color, and then I guess, the additional question and I'll hop back in the queue really good progress, adding clinical staff I think you said 45, new clinical staff and 10 surgeons can you speak a little bit too.
That progressed through the quarter. So did you see the benefit for the full quarter or was that kind of spread throughout the quarter and then how should we think about the investments there in the fourth quarter to get to the scale you need to continue to grow into 2024, Thank you and congrats again.
Thank you Ryan I think to be fair I think this came mainly through the second half of the quarter. So they contributed some but not significantly we expect those to contribute more in Q4, and we will continue to make investment in building out the clinical support staffing in Q4 to prepare for 'twenty.
Four and beyond. So this is this is this is going to be a fountain that doesn't stop given because as we see more and more growth, we would need more and more.
Political support staffing.
And Tamara and his team are doing a great job and Oh.
And getting them.
Trained and deployed to the field, but we will see the impact of these 45.
New hires in Q4 and as we did.
Ramp up from Q4, it's mainly to see the impact in early 'twenty four.
Okay perfect. Thank you so much.
Our next question comes from Josh Jennings with TD Cowen. Please go ahead.
Thanks, Susan Congrats on really strong results.
I wanted to just ask on two things really do soon on in your prepared remarks first with just center numbers.
That's an accurate predictor of growth anymore.
But I'm not asking you to repeat yourself on some of the other questions that you've answered already but can you just give us a little bit more detail on why it's unlimited is not an accurate predictor of growth.
And just to build on that.
At Donlin.
Sure. Thank you Josh.
Really what I meant by saying that Josh is.
<unk>.
As long as we're growing our revenue per Oregon segment quarter over quarter that is the for us that is the most.
Our strongest indicator of our growth.
With N O P. As you know I mean every quarter, we get a handful of centers that never use the ocs and their life in our life and they jump in into the MLP.
Most of those continue on growth, but some of them mace.
The slip a month.
And then come back again, some some continuous every month, it's all I'm trying to say, it's becoming noisy to be looking at the center to center quarter to quarter Center growth. The other thing is and that's the most important is for liver and heart. We're already at a critical massive centers were already nor.
For 40 centers.
Our heart and liver so it's.
Growing beyond that is mostly.
Growing within the center I E increasing the adoption and penetration within the center. That's that's important the lung and do we have a new clinical program in lung is going to be fewer few centers doing the lung, but this this quarter was the largest anyway and it's reflective of the lung revenue that's what we're saying we want to be.
Not confusing the market with too much data that really may not track.
That growth that growth is tracked by that quarter to quarter progression of per Oregon revenue that is the most accurate indicator of growth.
And can we read through that will make that call.
Commentary.
And I think you've been reporting.
<unk> users versus centers that sort of flows the metric of centers that have.
Lister transplant mix in with the MLP service.
Quarter, but does that with capacity expanding that that delta and those metrics are just that are just not important and as you said not an accurate predictor of growth.
Exactly that's exactly what we're saying Josh.
Great.
And then my follow up is with something that we talked about I think in our headquarter visits this quarter.
Hey, guys just in my notes I have you.
Saying that the payers are saving money with MLP cases.
As a desire from payers for centers to adopt MLP.
And his transplant acts as a service.
We're hoping you could just build on that and.
And just how much interaction does your company have had with payers and.
Anything you can add just to the payers are saving money with each NOP case, thanks a lot.
Sure. Thank you Josh let me clarify Justice question.
The comments we made during.
The team from Cowens visit here.
Absolutely true what we're referring to is with MLP that growth of MLP have demonstrated the significant economic benefit of.
Of using ocs MLP across that chain of org at four of our patient needing an organ transplant, starting with accessing more Oregon lowers the patient wait time on the waiting list. That's one of the biggest.
Cost driver two insurance companies keeping patients waiting on the waiting list in an ICU environment, sometimes even supported maximum supported in an ICU environment. So that's number one number two we are seeing the post transplant.
Surgical procedures that cost add additional cost to the to the case rate dropping significantly for example post transplant bleeding post transplant take down to the Oi Postbank re transplantation post transplant procedures like ECP is growing down significantly.
Significantly.
That's what's causing that.
The payers to say, we're seeing the benefits of it.
It's really driven by more oregon's with with more Oregon's youre really driving the cost efficiency or the health economics of an organ transplant at significantly to a transplant payor and that's what what we're seeing and what we're hearing.
We are in constant communication and dialogue with some of the major payers in the United States. However, we're seeing more and more centers now are picking up that mantle and having their own discussion with their own business cases to their payors with significant success, we just held.
And multiple forums here in Boston in mid October and many programs highlighted to the rest of the community their success and growing.
Their transplant volume from Ocs and their positive discussion with payers commercial payers.
Given the significant success, we've achieved in growing their volume.
So we continue to believe that this is this is going to continue with us and the key for US is to make sure that we continue to laser focus on outcomes and the quality of care, we're providing if we do that right. The rest is going to be a pretty straightforward execution challenge.
Thanks Luke.
The next question comes from Bill.
<unk> <unk> with Canaccord.
And Genuity. Please go ahead.
Great. Thanks, actually I tried to get back out of Cuba, you've answered my question. Thanks.
Thanks Bill.
This concludes our question and answer session I would like to turn the conference over to Walid.
Half half the night for any closing remarks.
Thank you so much for your time this evening and we're looking forward to following up and looking forward to our next call. Thank.
Have a great evening everyone.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.