Q4 2023 Silk Road Medical Inc Earnings Call

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Okay.

Operator: Good day and thank you for standing by. Welcome to the Silk Road Medical 2023 fourth quarter earnings conference. At this time, all participants are in listen-only mode.

Good day, and thank you for standing by and welcome to the Silk Road Medical's 2023 fourth quarter earnings Conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Marissa Bych with Gilmartin Group Investor Relations. Please go ahead.

We'll then hear an automated message advising your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today, whereas the bike.

Gilmartin Group Investor Relations. Please go ahead.

Marissa Elizabeth Bych: Great. Thank you all for joining today's call. Earlier today, Silk Road Medical released financial results for the three months and the year ended December 31, 2023. A copy of the press release is available on the company's website.

Great. Thank you all for joining today's call.

Earlier today Silk Road medical released financial results for the three months and year ended December 31, 2023, a copy of the press release is available on the company's website.

Marissa Elizabeth Bych: Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any 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, those relating to our operating trends and future financial performance, expense management, expectations for hiring and growth in our organization and our business, physician training and adoption, market opportunity and penetration, commercial and international expansion, regulatory approvals, reimbursement, competition, and product development are based upon our current estimates and various assumptions. These statements involve material risks and 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.

Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

Any 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 those relating to our operating trends and future financial performance expense management expectations for hiring and growth in our organization and our business.

Physician training and adoption market opportunity and penetration commercial and international expansion regulatory approval reimbursement competition and product development are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially.

Or from those anticipated or implied by these forward looking statements.

Accordingly, you should not place undue reliance on these statements.

Marissa Elizabeth Bych: For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of our latest annual report on Form 10-K filed with the Securities and Exchange Commission. Additionally, Silk Road Medical refers to Adjusted EBITDA, a non-GAAP financial measure. A reconciliation of Adjusted EBITDA's net loss, which is the most directly comparable GAAP measure, is included in our press release, which is available on our website.

For a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our latest annual report on Form 10-K filed with the Securities and Exchange Commission.

Additionally, silk road medical refers to adjusted EBITDA, a non-GAAP financial measure a reconciliation of adjusted EBITDA net loss, which is the most directly comparable GAAP measure is included in our press release, which is available on our website.

Marissa Elizabeth Bych: This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 28, 2024. Silk Road Medical 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. And with that, I will now turn the call over to Chas McCann, Chief Executive Officer. Thank you, Marissa.

This conference call contains time sensitive information and is accurate only as of the live broadcast today have you always 'twenty eight 'twenty 'twenty four.

Fred medical 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.

And with that I will now turn the call over to Chas Mccaughan, Chief Executive Officer.

Charles S. McKhann: And thank you all for joining today. I'm pleased to share that Silk Road Medical achieved full year 2023 revenue of just over $177 million, supported by more than 25,250 procedures, reflecting 28% and 29% year-over-year growth in revenue and procedures respective. In 2023, more than ever, growth in the business was driven by deepening adoption of QI-CAR within our trained physician base. As we begin the call today, I'd like to take a step back and offer a brief introduction to my background since there are some of you with whom I've not had a chance to connect since joining Silk Road Medical in November 2023. I've been focused on the advancement of minimally invasive medical technologies throughout my career and over the last decade I've been dedicated to the development and commercialization of several innovative products. Most recently as CEO of Apollo Endosurgery where we accelerated the company's growth through a transformational strategy rooted in product innovation, robust clinical evidence, and commercial discipline before successfully being acquired by Boston Scientific early last year.

Thank you Melissa and thank you all for joining today.

I'm pleased to share that silk road medical achieved full year 2020 for Euro 2023 revenue of just over $177 million supported by more than 25250 procedures, reflecting 28% and 29% year over year growth in revenue and procedures respectively.

Right.

In 2023 more than ever growth in the business was driven by deepening adoption of CCAR within our trained physician base.

As we begin the call today I'd like to take a step back and offer a brief introduction to my background. Since there are some of you with whom I have not had a chance to connect since joining silk road medical in November 2023.

<unk> focus on the advancement of minimally invasive medical technologies throughout my career and over the last decade I have been dedicated to the <unk>.

Element and commercialization of several innovative products. Most recently as CEO of Apollo Endo surgery, where we accelerated the company's growth through a transformational strategy rooted in product innovation robust clinical evidence and commercial discipline before successfully being acquired by Boston scientific early last year.

Charles S. McKhann: Following the sale of Apollo and after 25 years of developing and commercializing medical devices, I was afforded the luxury of taking a step back to look for the right next opportunity. In my diligence, I focused on three core tenets, which I see as the foundation for success as measured by positive patient impact and durable growth. First, the technology must target a critical deficiency in the current practice of medicine. Second, the solution for that deficiency must consistently yield best-in-class outcomes in a generalizable fashion. And third, the solution for the market must be supported by an experienced team that can adapt to an ever-evolving commercial landscape to drive success. And so I took this opportunity here at Silk Road because I saw all three of those factors.

Following the sale of Apollo and after 25 years of developing and commercializing medical devices I was afforded the luxury of taking a step back to look for the next the right next opportunity.

My diligence I focused on three core tenants, which I see as the foundation for success as measured by positive patient impact and durable growth.

The technology must target a critical deficiency in the current practice of medicine.

Second the solution for that deficiency must consistently yield best in class outcomes, and a generalizable fashion and third the solution for the market must be supported by an experienced team that can adapt to an ever evolving commercial landscape to drive success.

And so I took this opportunity here at Silk road, because I saw all three of those factors and three months and my experience is only serve to further validate the market for TR and our opportunity at Silk Road.

Charles S. McKhann: And three months in, my experiences only served to further validate the market for TCAR and our opportunity at Silk Road. So before turning to our 2024 strategy, I'd like to reiterate some of my remarks made at the recent J.P. Morgan Healthcare Conference, which underscore the winning tenets I just described. First, the deficiency in current carotid treatment is indisputable when we look at the devastating burden of stroke on patients and their families. The consequences of stroke by the numbers are staggering. Stroke is a leading cause of morbidity and mortality in the US, with millions living in a state of persistent disability and billions in stroke-related costs to the health care system. And in particular, prior treatment modalities for patients with carotid artery disease fall short of addressing the issue. Patients historically chose between carotid endarterectomy, an invasive surgical procedure with significant patient morbidity and procedure-related complications, or transfemoral carotid stenting, a minimally invasive approach in which procedural difficulty and lack of effective neuroprotection can lead to excess procedure-related stroke risk.

So before turning to our 2024 strategy I'd like to reiterate some of my remarks made at the recent Jpmorgan Health care conference, which underscore the winning tenants I just described.

First the deficiency incurred current carotid treatment is indisputable when we look at the devastating burden of stroke on patients and their families. The.

The consequences of stroke by the numbers are staggering stroke is a leading cause of morbidity and mortality in the U S with millions living in a state of persistent disability and billions in stroke related cost to the health care system.

And in particular prior treatment modality for patients with carotid artery disease fall short of addressing the issue.

Patients historically choose historically chose between carotid endarterectomy and invasive surgical procedure with significant patient morbidity and procedure related complications or trans femoral carotid stenting, a minimally invasive approach in which procedural difficulty and lack of effective neuro protection can lead.

To excess procedure related stroke risk.

Charles S. McKhann: When patients are presented with an informed choice, evidence shows that they prefer T. coli. Which leads me to my next point, TCAR works with incredible consistency, and the CCAR base of adoptions is growing and healthy. Silk Road is built on extensive evidence collection through the VQI registry, a vast base of real-world evidence that includes nearly all of our commercial experience since launch, and has contributed to more than 300 TCAR publications to date. Through the registry, we see marked consistency in outcomes across different settings of care. Operator Experience Levels, and Patient Profile. TCAR is just as effective in a rural community hospital as it is in some of the most accomplished medical centers in the country. And the consistency of TCAR was recently highlighted at a presentation in November at the 2023 VIFCAP meeting in a retrospective study conducted by Schemerhorn, which studied real-world results in nearly 45,000 patients. The study, which showed very low rates of perioperative stroke and death across both symptomatic and asymptomatic patients, well below acceptable thresholds, represents one of the largest applications of real-world data in the analysis of carotid treatment.

When patients are presented with and informed choice evidence shows that they preferred CCAR.

Which leads me to my next point CCAR works with incredible consistency and the CCAR base of adoption is growing and healthy.

Silk Road has built an extensive evidence collection through the <unk> registry.

<unk> base of real World evidence that includes nearly all of our commercial experience. Its launch and has contributed to more than 300 CCAR publications to date.

Through the registry, we see market consistency and outcomes across different settings of care.

Operator experience levels and patient profiles.

CCAR is just as effective in a rural community hospital as it is in some of the most accomplished medical centers in the country.

And the consistency of CCAR was recently highlighted at a presentation in November after 2023 Veith meeting in a retrospective study conducted by Schirmer Horn, which studied real world results in nearly 45000 patients. The study, which showed very low rates of perioperative stroke and death across both <unk>.

<unk> and asymptomatic patients well below acceptable thresholds represents one of the largest applications of real world data and the analysis of carotid treatment.

Charles S. McKhann: And in my more than 25 years in med tech, I have very rarely seen data sets of this size supporting a medical therapist. The consistency in outcomes and generalizability across patient cohorts speaks to an exquisite technology with a short learning curve. And these are critically important factors when the brain is at stake.

And in my more than 25 years in Med Tech I have very rarely seen datasets of this size supporting medical therapy.

The consistent outcomes and generalizability cross patient cohorts speaks to an exquisite technology with a short learning curve and these are critically important factors when the brain is at stake.

Charles S. McKhann: Broad, real-world clinical evidence and a short learning curve already have driven robust adoption and we expect to see further tailwinds as QI-CAR becomes further entrenched in the marketplace. And third, Silk Road was founded by pioneers in carotid treatment, and today, Silk Road is the only scaled company focused on addressing one of the leading causes of ischemic stroke, carotid arteries. In my first 100 days, I've spent significant time with our leaders, most of whom have spent the majority of their careers focused on better treatments for carotid and other cardiovascular diseases. That includes Lucas Buchanan, our CFO and COO, who's with me here today, along with the rest of our management team, who have all worked extensively in large cardiovascular enterprises in MedTech.

Rod real world clinical evidence and a short learning curve already have driven robust adoption and we expect to see further <unk> as CCAR becomes further entrenched in the marketplace.

And third Silk road was founded by pure pioneers in carotid treatment and today Silk Road is the only scaled company focused on addressing one of the leading causes of ischemic stroke carotid artery disease and.

In my first hundred days I've spent significant time with our leaders most of whom have spent the majority of their careers focused on better treatments for carotid and other cardiovascular disease that includes Lucas Buchanan, our CFO and COO is with me here today, along with the rest of our management team who have all worked extensively in large cardiovascular enterprises in med Tech.

Charles S. McKhann: That also includes Andy Davis, our experienced chief commercial officer, who leads a strong commercial team, employing a high-touch model to wrap around our physicians and their staff to offer unmatched support to their carotid program. The outstanding clinical outcomes for DCAR are a testament to the excellent support that our team provides to our customers every single day. And with the guidance of Dr. Sumaira MacDonald, our executive medical director, who is one of the leading experts in the world on the treatment of carotid artery disease, and the leadership of Bill Whalen, our EVP of R&D, our R&D team leads the way in carotid innovation to ensure that we remain at the forefront of minimally invasive carotid treatment.

That also includes Andy Davis, our experienced chief commercial officer, who leads a strong commercial team employing a high touch model to wrap around our physicians and their staff to offer unmatched unmatched support to their carotid programs.

Outstanding clinical outcomes for <unk> are a testament to the excellent support that our team provides to our customers every single day.

And with the guidance of Dr. Some IRA Mcdonald, our executive Medical director, who is one of the leading experts in the world on the treatment of carotid artery disease, and the leadership of Bill Whalen, our EVP of R&D, our R&D team leads the way in Colorado and innovation to ensure that we remain at the forefront of minimally invasive carotid treatment.

Charles S. McKhann: And so with these strong fundamentals I've outlined, our focus in 2024 is optimizing the transition from broadening our reach to now deepening adoption among our trained physician base, while recognizing improving leverage that comes with scaled operations. I'll start by focusing on deepening physician adoption. Silk Road has built a formidable commercial presence.

And so with these strong fundamentals I've outlined our focus in 2024 is optimizing the transition from broadening our reach to now deepening adoption among our trained physician base, while recognizing improving leverage that comes with scaled operations.

I'll start by focusing on deepening physician adoption Silk road has built a formidable commercial presence today. Our team is as strong as ever following initiatives. We took last year to optimize our commercial model and to achieve greater scale and continue to evolve from going broad to going deep.

Charles S. McKhann: Today, our team is as strong as ever, following initiatives we took last year to optimize our commercial model and to achieve greater scale and continue to evolve from going broad to going deep. In the process, last year, we experienced some growing pains, but we are confident that we are entering 2024 with the right talent and leadership in place, for continued driving, strong T-car adoption. At the start of this year, approximately one-third of our sales reps have been with the company for less than a year.

And in the process last year, we experience some growing pains, but we are confident that we are entering 2024 with the right talent and leadership in place.

Driving strong CCAR adoption at.

At the start of this year approximately one third of our sales reps have been with the company for less than a year.

Charles S. McKhann: But we are already seeing that these additions to our team are strengthening their relationships and growing their case volumes across the physicians and staff they serve. And we look forward to seeing these reps continue to move up the adoption curve or the experience curve, as our entire organization executes against the Silk Road mission of treating more patients at risk of stroke. And over the long term, we know that we will be able to increase our leverage with this organization to maximize adoption while moving towards sustained profitability. As we drive deeper adoption, we will continue to emphasize effective clinical data collection to complement our sales and marketing efforts. We are actively building on a track record of more than 85,000 patients treated to date, and most of whom are captured in the DQI database, and we continue to analyze outcomes across all patient cohorts and profiles.

And we are but we're already seeing that these additions to our team are strengthening their relationships and growing their case volumes across the physicians and staff. They serve and we look forward to seeing these reps continue to move up the adoption curve.

<unk> curve.

As our entire organization executes against the Silk Road mission of treating more patients at risk of stroke and over the long term, we know that we will be able to increase our leverage with this organization to maximize adoption, while moving towards sustained profitability.

As we drive deeper adoption, we will continue to emphasize effective clinical data collection to complement our sales and marketing efforts.

We are actively building on a track record of more than 85000 patients treated to date.

And most of whom are captured in the <unk> database.

And we continue to analyze outcomes across all patient cohorts and profiles.

Charles S. McKhann: This includes our prospective Roadster 3 post-market study investigating outcomes in standard surgical risk patients, which is enrolling at a strong pace. We anticipate completing enrollment in rows through three in the second half of this year. Beyond the right commercial infrastructure, deepening adoption requires we continuously innovate on our key product lines to extend our leadership position in carotid treatment and enhance the offerings for T. Last year, we rolled out our purpose-built T-car balloon catheter, or inflate, which is seeing steadily increasing adoption, even with a premium price position relative to competitive balloons.

This includes our prospective roadster three post market study invest investigating outcomes in standard surgical risk risk patients.

Which is enrolling at a strong pace.

We anticipate completing enrollment in roadster three in the second half of this year.

Beyond the right commercial infrastructure deepening adoption requires we continuously innovate on our key product lines to extend our leadership position in Colorado treatment and enhance the offerings for T car.

Last year, we rolled out our purpose built CCAR balloon catheter or inflate, which youre seeing steadily increasing adoption, even with a premium price position relative to competitive balloons and.

Charles S. McKhann: And in 2024, we are introducing a tapered configuration of our on-route transcarotid stent, and our next generation neuroprotection system or NPS Plus. Today, I'm excited to announce that we've initiated a limited market release of our tapered spent, customer feedback has been outstanding, and we plan to ramp up to a full market release in Q2. We are also finalizing preparations for the launch of NPS Plus, which features important ease of use and technical advances, and we anticipate initiating the launch of NPS Plus in the second quarter. In addition to our core commercial and product advancement strategy, we are looking beyond the horizon at the next phase of growth for Silk Road. Cultivating international markets offers an extension of key car growth in the long term.

And in 2024, we are introducing a tapered configuration of our on route Trans carotid stent.

And our next generation neural protection system or NPS plus.

Today I am excited to announce that we've initiated a limited market release of our tapered stent customer feedback has been outstanding and we plan to ramp up to a full market release in Q2.

We are also finalizing preparations for the launch of NPS, plus which features important ease of use and technical advances and we anticipate initiating the launch of MTS plus in the second quarter.

In addition to our core commercial and product advancement strategy. We are looking beyond the horizon of the next phase of growth for Silk Road.

<unk> International markets offers an extension of <unk> growth in the long term.

Charles S. McKhann: Our international focus has centered around China and Japan, two markets with compelling strategic and commercial dynamics for the treatment of carotid disease. In Japan, following clearance of our on-route stent and on-route neuroprotection system, I'm excited to announce that we've signed an agreement with a leading distribution partner, Medecos Hirata, and we're actively working towards establishing reimbursement before initiating a post-market study. In China, I'm excited to announce that we've received clearance in January for on-route stent following approval of our on-route NPS in 2023. And more recently, we signed an agreement with Genesis Medtech Group, a leading distributor in China. While market development activities in both countries will take some time, and we do not anticipate a meaningful revenue contribution in the near term, we are excited to move to this next phase of expanding TCAR internationally.

Our international focus has centered around China, and Japan to markets with compelling strategic and commercial dynamics for the treatment of carotid disease.

In Japan following clearance of our <unk> stent and on route Neuro protection system I'm excited to announce that we've signed an agreement with a leading distribution partner Medico Cerrado and we're actively working working towards establishing reimbursement before initiating a post market study.

In China I'm excited to announce that we've received clearance in January for on route stent following approval of our NPS in 2023.

And more recently, we signed an agreement with Genesis Med Tech group, a leading distributor in China.

While market development activities in both countries will take some time and we do not anticipate a meaningful revenue contribution in the near term. We are excited to move to this next phase of expanding <unk> internationally.

Charles S. McKhann: Finally, we'd like to touch upon our efforts to expand into new disease states from our core competencies in karate. Earlier this quarter, results of the NITE1 study, or Neuroprotection in Transcarotid Amyelectomies, was presented at the International Stroke Conference. We are pleased with the outcomes of this early feasibility study, which showed that transcarotid acute stroke thrombectomy with flow reversal is feasible and safe.

Finally wed like to touch upon our efforts to expand into new disease States from our core competencies in carotid earlier this quarter results of the night, one study or neuro protection and Trans crowded Embolectomy me.

It was presented at the International stroke Conference. We are pleased with the outcomes of this early feasibility study, which showed that trans carotid acute stroke thrombectomy with flow reversal is feasible and safe and importantly, there was a clear signal that flow reversal could potentially offer incremental clinical benefits to patients.

Charles S. McKhann: And importantly, there was a clear signal that flow reversal could potentially offer incremental clinical benefits to patients. While advancement into NITE2 is not a strategic priority at the near-term, results of the study directly inform other active R&D initiatives we are working on to extend our lead within Carotid. And with our portfolio, over 250 issued and pending patents globally, and our core competence in transcarotid access and neuroprotection, we are well positioned to serve our stroke prevention mission and drive durable, long-term growth. I'd like to close by discussing what all this means for our financial profile in 2024 and beyond. I hope it's abundantly clear that durable growth remains our number one priority. In 2024, we anticipate full-year revenue of $194 to $198 million, reflecting 10 to 12% year over year growth as we capitalize on the strength of our commercial infrastructure to drive deeper adoption among our active physician base.

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While advancement into night, two is not a strategic priority of the near term results of the study directly inform other active R&D initiatives. We are working on to extend our lead within carotid disease and with our portfolio over 250 issued and pending patents globally and our core competence in trans carotid access and neuro protection.

We are well positioned to serve our stroke prevention mission and drive durable long term growth.

I'd like to close by discussing what all this means for our financial profile in 2024 and beyond I hope, it's abundantly clear that durable growth remains our number one priority.

In 2024, we anticipate full year revenue of $194 million to $198 million.

Reflecting 10% to 12% year over year growth as we capitalize on the strength of our commercial infrastructure to drive deeper adoption among our active physician base.

At the same time, we are committed to driving sustainable progress towards profitability with a strong capital position and scale of infrastructure we have today.

Charles S. McKhann: At the same time, we are committed to driving sustainable progress towards profitability with a strong capital position and skilled infrastructure we have today. To that end, and to chart our path forward for investors, we are introducing Adjusted EBITDA to our reporting framework. And we are targeting annual improvement in Adjusted EBITDA in 2024 relative to 2023, building off our progress in recent years. Lucas will provide more detail shortly. And so in sum, I am very excited about the year ahead. Silk Road is a world-class company with a world-class opportunity, and we expect to capitalize on that opportunity for the betterment of patients and shareholders. And with that, I'd like to turn it over to Lucas, our Chief Financial and Chief Operating Officer, to review our results in more detail. Lucas.

To that end and to charter our path for investors path forward for investors, we are introducing adjusted EBITDA to a reporting framework and we are targeting annual improvement in adjusted EBITDA in 2024 relative to 2023 building off our progress in recent years Lucas will provide more detail shortly.

And so in sum I am very excited about the year ahead silk road as a world class company with a world class opportunity and we expect to capitalize on that opportunity for the betterment of patients and shareholders and with that I'd like to turn it over to Lucas, our chief financial and Chief operating Officer.

To review our results in more detail.

Yes.

Thank you Chaz.

Revenue for the three months ended December 31, 2023 was $47 $3 million, an 18% increase from $40 1 million in the same period of the prior year.

Lucas W. Buchanan: Thank you, Chaz. Revenue for the three months ended December 31, 2023 was $47.3 million, an 18% increase from $40.1 million in the same period of the prior year. Growth was driven primarily by increased TCAR adoption and continued healthy demand, following expanded Medicare reimbursement, which went into effect October 11th of last, The number of TCAR procedures in the quarter was approximately 6,625. 20% increase from the same period of the prior year. Gross margin for the fourth quarter of 2023 was 74% compared to 73% in the fourth quarter of the prior year. The increase was a result of larger production volumes, which allowed us to spread fixed and overhead costs over a larger volume of units, as well as a benefit in stent unit cogs that will continue through Q1 before normalizing in Q2 and beyond. The benefit is related to a temporary favorable purchase price variance.

Growth was driven primarily by increased <unk> adoption and continued healthy demand following expanded Medicare reimbursement, which went into effect October 11th of last year.

The number of CCAR procedures in the quarter was approximately 6625% to 20% increase from the same period of the prior year.

Gross margin for the fourth quarter of 2023 was 74% compared to 73% in the fourth quarter of the prior year.

The increase was a result of larger production volumes, which allowed us to spread fixed and overhead costs over a larger volume of units.

As well as a benefit and stent unit Cogs that will continue through Q1 before normalizing in Q2 and beyond.

The benefit is related to a temporary favorable purchase price variance.

For 2024, we anticipate modest gross margin improvement over full year 2023.

Total operating expenses for the fourth quarter of 2023 or $49 $2 million, an 18% increase from $41 7 million in the fourth quarter of 2022.

Lucas W. Buchanan: 2024, we anticipate modest gross margin improvement over full year 2020. Total operating expenses for the fourth quarter of 2023 were $49.2 million, an 18% increase from 41.7 million in the fourth quarter of 2022. R&D expenses for the fourth quarter of 2023 were $10.1 million, compared to $9.2 million in the fourth quarter of 2022. The increase in R&D spending was driven primarily by growth in personnel, along with continued investments in new and ongoing programs. Sales, general and administrative expenses for the fourth quarter of 2023 were $39.1 million, compared to $32.5 million in the fourth quarter of 2022.

R&D expenses for the fourth quarter of 2023 were $10 1 million compared to $9 2 million in the fourth quarter of 2022.

The increase in R&D spending was driven primarily by growth in personnel, along with continued investments in new and ongoing programs.

Sales general and administrative expenses for the fourth quarter of 2023 or $39 $1 million.

Compared to $32 5 million in the fourth quarter of 2022.

The increase was primarily driven by the commercial expansion efforts, we conducted throughout 2023.

Now more than ever we are leveraging the years of work and investment we've put behind commercial R&D and back office infrastructure.

Accordingly, we expect our forward revenue growth rate to outpace growth in operating expenses.

Lucas W. Buchanan: The increase was primarily driven by the commercial expansion efforts we conducted throughout 2023. Now more than ever, we are leveraging the years of work and investment we have put behind commercial R&D and back office infrastructure. Accordingly, we expect our forward revenue growth rate to outpace growth in operating, Net loss for the fourth quarter was $13 million for a loss of 33 cents per share, as compared to a net loss of $12.6 million or a loss of $0.34 per share for the same period of the prior year. As Chas noted, we are introducing adjusted EBITDA into our reporting framework, to further illuminate our operating profile and path to sustained operating profitability. Suggested EBITDA for the fourth quarter 2023 was a loss of $4.1 million, compared to an adjusted EBITDA loss of $4.4 million in the prior year. On a full year basis, 2023 adjusted EBITDA was a loss of $17.7 million, reflecting an improvement of 7.4 million over full year 2022 adjusted EBITDA loss. $25.1 million.

Net loss for the fourth quarter was $13 million or a loss of 33 per share as compared to a net loss of $12 6 million or a loss of <unk> 34 per share for the same period of the prior year.

As Chad noted we are introducing adjusted EBITDA into our reporting framework to further illuminate our operating profile and path to sustained operating profitability.

Adjusted EBITDA for the fourth quarter 2023 was a loss of $4 1 million compared to an adjusted EBITDA loss of $4 4 million in the prior year period.

On a full year basis 2023, adjusted EBITDA was a loss of $17 $7 million.

Reflecting an improvement of seven points.

$4 million over full year 2022, adjusted EBITDA loss of $25 1 million.

Our expectation is for adjusted EBITDA improvement in the full year 2024 relative to 2023.

However, note that we expect our first quarter 2024, adjusted EBITDA loss to be larger than the loss. We saw in the fourth quarter of 2023, given standard first quarter expenses against an expectation for a mid single digit sequential revenue decline related to seasonal.

Patterns.

Lucas W. Buchanan: Our expectation is for adjusted EBITDA improvement in the full year 2024 relative to 2020. However, note that we expect our first quarter 2024 adjusted EBITDA loss to be larger than the loss we saw in the fourth quarter of 2023, given standard first quarter expenses, against an expectation for a mid-single-digit sequential revenue decline related to seasonal patterns. Finally, we ended 2023 with $190.9 million in cash, cash equivalents and in, In combination with our modest burn profile, we remain confident in our ability to achieve profitability with existence. Turning to our 2024 Outlook and Commercial Strategy. As Chas mentioned, we expect full year 2024 revenue to be in the range of $194 to $198 million, reflecting revenue growth of 10 to 12% over 2023, driven primarily by growth in procedures and relatively stable revenue per procedure with normal quarter-to-quarter variation. As a reminder, we recognize revenue when we sell units to hospitals. And those hospital-owned inventory units are later used by physicians in procedures, leading to some quarter to quarter variation, and Revenue Growth Relative.

Finally, we ended 2023 with $199 million in cash cash equivalents and investments.

In combination with our modest burn profile, we remain confident in our ability to achieve profitability with existing capital.

Turning to our 2024 outlook in commercial strategy as Chad mentioned, we expect full year 2020 for revenue to be in the range of $194 million to $198 million, reflecting revenue growth of 10% to 12% over 2023.

Driven primarily by growth in procedures and relatively stable revenue per procedure with normal quarter to quarter variation.

As a reminder, we recognize revenue when we sell units to hospitals.

And those hospital owned inventory units are later used by physicians in procedures.

Adding to some quarter to quarter variation in revenue growth relative to procedure growth.

We are actively focused on driving adoption within our 2800 strong trained physician base supported by 85 active sales territories and we are excited to expand our patient impact as we execute on our 2024 commercial strategy with this established network.

At this point I would like to turn the call back to Chad for closing comments.

Lucas W. Buchanan: © The Bulletproof Executive 2013, We are actively focused on driving adoption within our 2,800 strong trained physician, Supported by 85 active sales characters. And we are excited to expand our patient impact as we execute on our 2024 commercial strategy with this established, At this point, I would like to turn the call back to Chas for closing comments. Thanks, Lucas.

Thanks Lucas.

At this point in my career, it's all about delivering excellent patient outcomes supporting an unmatched provider experience and contributing to a better healthcare system and I want to emphasize that we have a special opportunity to do just that at silk road and so in closing I'd simply like to say, thank you to our customers and our team at Silk Road, who impacted the law.

Operator: At this point in my career, it's all about delivering excellent patient outcomes, supporting an unmatched provider experience, and contributing to a better health care system. And I want to emphasize that we have a special opportunity to do just that at Silk Road. And so in closing, I'd simply like to say thank you to our customers and our team at Silk Road who impacted the lives of more than 25,000 patients undergoing the TCAR procedure last year. And with that, we'll turn to our operator for questions. Gerald, please open it up for questions. Thank you. At this time, we will now conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

<unk> a more than 25000 patients undergoing the CCAR procedure last year.

And with that we'll turn to our operator for questions. Gerald Please open it up for questions.

Yes.

Thank you at this time, we will now conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.

To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.

Our first question comes from the line of Rick Wise with Stifel. Your line is now open.

Good afternoon. Thanks.

Both.

We could start off just first if you could talk about the guidance and just help us think about two aspects of the guidance.

Operator: Please stand by while we compile the Q&A ROC. Our first question comes from the line of Rick Wise with Stifle, your line is now open. Good afternoon.

Just one.

Talk about.

Charles S. McKhann: Thanks to both. Maybe we could start off just first, if you could talk about the guidance and just help us think about two aspects of the guidance. Just one, talk about, you know, what's incorporated in your guidance, some of the key elements, particularly if you would some of the headwinds and tailwinds related to the CMS CAS decision. What are you baking in and are there any other sort of larger concerns that you want to be sensitive to?

What's incorporated in your guidance some of the key elements.

Particularly if you would some of the headwinds and tailwind related to the CMS <unk> decision. What are you baking in and are there any other.

Sort of larger concerns that you're going to be sensitive to.

Charles S. McKhann: And just the second aspect of that, if I heard you correctly in terms of the first quarter, Lucas, I mean, it sounds like something like a $44 million number if I'm doing my quick math correctly would be. Somewhere in that kind of territory, you'd hope we would center around as the first quarter guidance gets put into place. Sure, why don't I take the first part, Rick, and then I'll hand over to Lucas on some of the details.

And just the second aspect of that.

If I heard you correctly in terms of the first quarter Lukas I mean, it sounds like something like a.

A $44 million number if im doing my quick.

Math correctly would be.

Somewhere in that kind of territory, you would hope we would center around as the first quarter.

Guidance gets put into place.

Sure why don't I take the first part Ric and then ill hand over to Lucas on some of the details but.

Charles S. McKhann: But the, you know, as we think about overall, on the guidance and kind of key puts and takes that went into it, you know, first and foremost, I hope you heard me loud and clear of feeling very good about the overall fundamentals of the market and where we can take things. And I think areas that factor into our guidance, first is just, as I mentioned, our Salesforce experience and time and territory. You know, it's, we do have about a third of our team who are kind of working their way up the experience curve. And so we do see that progressing over the first couple quarters this year and really teeing us up on the back half of the year. I will say we just recently had our national sales meeting, and it was great. The energy levels there were fantastic.

<unk>.

As we think about overall.

On the guidance and kind of key puts and takes that went into it.

First and foremost I hope you heard me loud and clear are feeling very good about the overall fundamentals of the market and where we can take things.

I think areas that factor into our guidance.

First is just as I mentioned, our sales force experience and time in territory.

We do have about a third of our team who are kind of working their way up the experience curve and so we do see that progressing over the first couple of quarters. This year and really teeing us up on the back half of the year.

I will say, we just recently had our national sales meeting.

And it was great.

The energy levels. There were fantastic people are excited but a lot of new faces and so we're working through that.

Charles S. McKhann: People are excited, but a lot of new faces. And so we're working through that. The second piece to it is we are moving from going broad to going deep as an overall approach. Doesn't mean we don't have some new customers, we will, but a big part of it is going deep. And that's a bit of an evolution for us.

The second piece to it is we are moving from going abroad going deep as an overall approach doesn't mean, we don't have some new customers, we will but a big part of it is going deep and thats a bit of an evolution for us and so we're focusing on that.

Charles S. McKhann: And so we're focusing on that. And then you asked specifically about, you know, the NCD and TF-CAS, and I'll just hit at a high level. You know, the NCD was put in place in early October. So we've got, what, about four months here. And while we are aware of anecdotes of some people picking up CAS, it's not a big broad wave of new users for transfemoral stenting.

And then you asked specifically about.

The NCD in TF, Kaz and I'll just hit at a high level.

TD was put in place in early October So we've got what about four months here.

And while we are aware of anecdotes of some people picking up cash it's not a big broad wave of new users for transdermal stenting.

Our customers feel very good about the ongoing demand for <unk>.

Charles S. McKhann: You know, our customers feel very good about the ongoing demand for TCAR. You know, we're going to keep watching it incredibly carefully. But, you know, as the only company that really is dedicated to this space, we feel good about our ability to keep driving demand for TCAR in a world that over time will move to be more endovascular, but we think that we're well-positioned for that. So those are some of the high-level comments.

We're going to keep watching it a credibly carefully but as the only company that really is dedicated to this space.

We feel good about our ability to keep driving demand for T car in a world that over time, we'll move to be more endovascular, but we think that we're well positioned for that.

So there is some of the high level comments, but Lucas other specifics on the guidance you want to do though.

Sure I'll tackle the second half of your question Rick I think.

Lucas W. Buchanan: But Lucas, other specifics on the guidance you wanted to do? Sure, I'll tackle the second half of your question, Rick. I think the historical pattern we've seen Q4 into Q1, has been flattish. And as I mentioned, sometimes there's kind of flat to slightly up on procedures and flat to slightly down on revenue, just giving some of those timing effects. So I think carrying forward the Q4 result into Q1 is probably not the right approach, because we do see and expect kind of that normal dip in revenue per procedures, even if procedures are strong. So I think you're in the right ballpark, maybe a slight tick higher.

The historical pattern. We've seen Q4 into Q1 has been has been flattish and as I mentioned, sometimes there is kind of flat to slightly up on procedures and flat to slightly down on revenue just given some of those timing effects.

So.

I think <unk>.

Forward. The Q4 results into Q1 is probably not the right approach because we do see and expect kind of that normal dip in revenue per procedures. Even if procedures are strong. So I think you are in the right ballpark, maybe maybe a slight tick higher.

Lucas W. Buchanan: Okay, just so I could follow up on one comment you made, Chas, you clearly are emphasizing your focus on and you're making innovation a priority. Maybe just broadly talk about the innovation pipeline. What are you excited about?

Okay.

I can follow up on one comment you made chaz.

Clearly our.

Emphasizing your focus.

And Youre, making innovation and priority, maybe just broadly talk about the innovation pipeline what are you excited about.

Charles S. McKhann: What do you want us to be excited about and expect from you and that pipeline? Thank you. Sure, yeah, no, I appreciate the question. For the pipeline, well, we've got the immediate opportunities, which, you know, now really are coming to fruition. And so just happy to see, as I mentioned, very good uptake with the balloon, and nice progression there, having the tapered stent, and as I mentioned, in a pretty limited number of accounts initially, but very good feedback from customers. And then NPS Plus, which I know was discussed last year, but we're, you know, putting the final touches to be ready to launch that as well. And so, just, you know, showing the marketplace that we are innovating and staying on top of the existing TCAR procedure.

What do you want us to be.

Excited about and expect from you and that pipeline.

Thank you.

Sure, Yes, and I appreciate the question for the pipeline, we've got the immediate opportunities which.

Now really are coming to fruition and so just happy to see as I mentioned very good uptake with the balloon and nice progression there.

Having the tapered stent and as I mentioned.

And a pretty limited number of accounts initially, but very good feedback from customers and then NPS plus which I know was discussed last year, but were putting the final touches to be ready to launch that as well and so just show in the marketplace that we are innovating and staying on top of the existing T car procedure and then beyond that.

Charles S. McKhann: And then beyond that, you know, since I've come in, I have spent a lot of time with our R&D team, and we've got some really interesting things we're working on to extend our leadership in the carotid space. I want to get a little further along, frankly, in terms of those development efforts before we talk about it a lot publicly, just so we know where we have and what some of the timelines are, etc. But, you know, the team's been doing some very good work, and I look forward to sharing more on a future call here. Thanks again.

Since I've come in I have spent a lot of time with our R&D team and we've got some really interesting things we're working on.

To extend our leadership in.

In the carotid space.

I wanted to get a little further along frankly in terms of those development efforts before we talk about it a lot publicly.

Just so we know where we have and what sort of the timelines are et cetera, but.

The team has been doing some very good work and I look forward to sharing more on future calls.

Thanks again.

Operator: Thank you for that question. One moment. Our next question comes from the line of Frank Takinen from Lake Street Capital Markets. The line is now. Hey, Chaz and Lucas, thanks for taking the questions. Congrats on a strong first 90 days. Chaz, look forward to many quarters going forward.

Thank you for that question one moment please.

Our next question comes from the line of Frank tackling.

Lake Street capital markets. Your line is now yours.

Hey, Jonathan Lucas Thanks for taking the questions. Congrats on a strong first 90 days Chad look forward too many corners going forward I wanted to start with a follow up on your previous answer you talked about the go deep strategy, increasing that utilization rather than broadly I heard the comments go adding incremental here and there but clear.

Charles S. McKhann: I wanted to start with a follow up on your previous answer. You talked about the go deep strategy, increasing that utilization rather than broadly. I heard the comments still adding incremental here and there, but clearly focused on going deeper. Maybe walk through that strategy. What does that look like in the field?

We are focused on going deeper maybe walk through that strategy, what does that look like in the field any changes you think you need to make.

Charles S. McKhann: Any changes you think you need to make related to the selling organization to achieve that? Sure. Thanks for the question, Frank. Yeah, so I mean, going deep is it's something that happens naturally in the evolution of a lot of medical technologies. You know, your initial and it's not binary, right?

Related to the selling organization to achieve that strategy.

Sure. Thanks for the question Frank.

Yes, so I mean going deep, it's something that happens naturally in the evolution of a lot of medical technologies.

Your initial and it's not binary right. The company has been evolving towards this for a while.

Charles S. McKhann: The company has been evolving towards this for a while. But as we look at it, you know, partly it's having the scale of the organization sort of fully up and operating on all cylinders, which, you know, so 85 territories, we think is a good number. You know, we don't have plans that may have large growth over that, you know, but if we see opportunities incrementally, we will.

But as we look at it.

Partly it's having the scale of the organization sort of fully up and operating on all cylinders, which so 85 territories. We think is a good number.

We don't have plans to may have large growth over that but if we see opportunities incrementally. We will we will also probably add some additional of our therapy.

Element specialists just for case coverage will be a piece of that but a big part of it then is just refining our playbook as we go forward there so things like customer segmentation and be really smart about what are we and what our approaches with someone who is a key car first adopter, how do we help him or her BMO.

Charles S. McKhann: We'll also probably add some additional of our therapy development specialists, just for case coverage will be a piece of that. But, you know, a big part of it then is just refining our playbook as we go forward there. So things like customer segmentation and being really smart about what do we and what our approach is with someone who's a TCAR first adopter, how do we help him or her be most successful in growing and developing their practice versus someone who may be a more mid-level adopter and earlier in that adoption curve, what are all the tools in the toolbox that we can use to help them, you know, expedite that.

Successful in growing and developing their practice versus someone who maybe are more mid level adopter in earlier and that adoption curve. What are all the tools in the toolbox that we can use to help them expedite that that could be things like our therapy awareness team that really helps work with and educate referring physicians.

That could be patient marketing, which we do see playing an important active role here.

Charles S. McKhann: That could be things like our therapy awareness team that really helps work with and educate referring physicians. That could be patient marketing, which we do see playing an important active role here. And I mentioned also fellows and early career physicians.

And as I mentioned also fellows and early career physicians.

And we have made a change I have made a lot of big changes to the team, but I have made a change organizationally.

And promoted Jorge O'hara is now our VP of marketing Jorge has a lot of experience in his background starting at P&G in marketing and then at Medtronic and <unk> three.

Charles S. McKhann: And we have made a change. I haven't made a lot of big changes to the team, but I have made a change organizationally and promoted. Jorge O'Hara is now our VP of Marketing. Jorge has a lot of experience in his background, starting at P&G in marketing, and then at Medtronic and EV3, as well as a lot of really good other healthcare experience. And so Jorge already was at Silk Road, and he led our strategy and business development efforts. He's now going to lead our marketing efforts and take on this work, working with, again, an already strong team. I mentioned Andy Davis and the team that he has.

As well as a lot of really good other healthcare experiences. So Jorge already was that soak royalty, let our marketing and business sorry, our strategy and business development efforts. He is now going to lead our marketing efforts.

And take on this work working with again, an already strong team I mentioned, Andy Davis and the team that he has so it's an evolution, but I think areas of emphasis and focus a lot of which we just talked about at the sales meeting I mentioned.

Got it that's helpful. And then maybe just one follow up related to that.

The reimbursement changes around trans femoral stenting, I know you've only been there for a limited amount of time and so the feedback is only anecdotally, we havent seen it play out but if we were to speak theoretically how do you think the share shift ended up playing out obviously open is still the lion's share procedures CCAR second men transcend Royal Centre.

Charles S. McKhann: So it's an evolution, but I think areas of emphasis and focus, a lot of which we just talked about at the sales meeting I mentioned. Got it. That's helpful. And then maybe just one follow up related to the reimbursement changes around transfemoral stenting. I know you've only been there for a limited amount of time. And so the feedback is only anecdotal. We haven't seen any of this play out.

Third, but if transdermal stenting is more successful do you think thats more likely coming out of open or is there a possibility of some of that comes from T car for you to think theoretically.

Charles S. McKhann: But if we were to speak theoretically, how do you think the share shift end up playing out? Obviously, open is still the lion's share of procedures. TCAR second, and then transseminal stenting third.

Yes, no I think.

We do see a world that over time, it becomes more endovascular based right and we certainly expect that <unk> is very well positioned to capture the majority of that growth and that as I said silk road medical is well positioned to capture and be continue to be the leader in treatment of <unk> right. We know the space really well and we've got a level of commitment to it.

Charles S. McKhann: But if transseminal stenting is more successful, do you think that's more likely coming out of open? Or is there a possibility some of that comes from TCAR, if you were to think theoretically? Yeah, no, I think we do see a world that over time becomes more endovascular based, right? And we certainly expect that TCAR is very well positioned to capture the majority of that growth. And that, as I said, Silk Road Medical is well positioned to capture and continue to be the leader in treatment of CAD, right? We know the space really well.

That others just don't have.

The other thing I would emphasize though is just the time element to it I think as I was going through my interviews and process last year.

A little bit of a sort of this feeling that somehow there was this wave that was going to happen frankly, we're not saying that we just arent there may be pockets of where we see some changes in views, but a lot of it's already existing carotid stent users.

Charles S. McKhann: And we've got a level of commitment to it that others just don't have. The other thing I would emphasize, though, is just the time element to it. I think, you know, as I was going through my interviews and process last year, you had a little bit of sort of this feeling that somehow there was this wave that was going to happen. Frank, we're not seeing that. We just aren't.

And so the.

Steps to then get new people doing the procedures.

It's going to take time and so it doesn't mean it can't happen over time, and we're going to watch it all really carefully but our primary area of focus our primary driver continues to be evolving behavior. Among what is still the bulk of the market that being CA.

Okay. That's good color I'll stop there thanks for asking the questions that's correct.

Operator: There may be pockets of where we see some changes and views, but a lot of it's already existing carotid stent users. And so the, you know, steps to then get new people doing the procedures can take time. And so it doesn't mean it can't happen over time. And we're going to watch it all really carefully. But our primary area of, you know, focus, our primary driver continues to be evolving behavior among what is still the bulk of the market, that being CAD. Okay, that's a good call, I'll stop there. Thanks for answering the questions. Thanks Frank. Thank you for the question. One moment, please. Our next question comes from the line of Robbie Marcus with JP Morgan, the line is now open. Hi, this is actually Rohin on for Robbie.

Thank you for the question one moment please.

Our next question comes from the line of Robbie Marcus with Jpmorgan. Your line is now open.

Hi, this is actually <unk> on for Robbie.

I had a question on the outlook down the P&L.

<unk> proven the ability to obtain a pretty healthy 70% plus gross margin for some time.

Trying to gauge what's required on the Opex side.

To maintain revenue growth, while also achieving profitability ultimately I know you talked about how you expect kind of a forward opex growth to be.

Lower than sales growth. So I was wondering if you could just be give some more specifics on that in 2024.

And maybe a timeline where potential adjusted EBITDA profitability as well.

Sure Rohit and thank you for the question I'll tackle that one so the short answer and as we've mentioned in these prepared remarks talked about prior is.

Operator: I just had a question on the outlook down the P&L. Silk Road's proven the ability to obtain a pretty healthy 70% plus gross margin for some time. But just trying to gauge what's required on the OpEx side, to maintain revenue growth while also achieving profitability ultimately, I know you talked about how you expect forward OpEx growth to be lower than sales growth. So I was wondering if you could just be give some more specifics on that for 2024, and maybe a timeline for potential adjusted even Sure, Rohan, thank you for the question. I'll tackle that one.

We are really at critical mass across our key functions.

And.

We do have a hiring plan in 2024 of course, but it's much more modest than years prior.

And so the infrastructure, we have whether you're thinking about the manufacturing capacity or the commercial organization or the commercial support.

R&D G&A back office that can support a much higher unit volume much higher revenue line.

Lucas W. Buchanan: So the short answer, and as we've mentioned in these prepared marks and talked about prior, is, We are really at critical mass across our key functions. And we do have a hiring plan in 2024, of course, but it's much more modest than than years prior. And so the infrastructure we have, whether you're thinking about the manufacturing capacity or the commercial organization or the commercial support, R&D, G&A back office, that can support a much higher unit volume, much higher revenue. So we like where we sit today on kind of our base of op-ecs. And if you take kind of a Q4 run rate, 49 and change, take it up ever so slightly, that's where we think we'll end.

So we like where we sit today on kind of our base of Opex and.

You take kind of a Q4 run rate 49 and change it.

Tick it up ever so slightly.

That's where we think.

For the quarter.

And so we were at 100 Opex as a percentage of revenue was 105% in 2023 is 104% in Q4, we want to continue our march towards 100%.

This year, obviously, we want to.

Really the main our main focus on topline growth because because that can now start to flow through more and more against that relatively fixed opex space.

Lucas W. Buchanan: And so we were at 100, OPEX as a percentage of revenue was 105% in 2023, is 104% in Q4. We want to continue our march towards 100%. This year, obviously, we want to.., really put the main our main focus on on top line growth because because that can now start to flow through more and more into that relatively fixed topic. So as you mentioned, we are highlighting adjusted EBITDA as a new reporting metric. We were 17.7 loss in 23 versus 25 and change loss in 22. And so we do expect to have another year of improvement on that important metric as well, fitting here with $191 million. Cash on the Balance Sheet.

So as you mentioned, we are we are highlighting adjusted EBITDA as a new reporting metric we.

We were $17 seven loss in 'twenty, three versus 25 and change loss in 'twenty two.

And so we do expect to have another year of improvement on that important metric as well sitting here with $191 million of cash on the balance sheet.

Okay.

Got it thank you and I just have a quick follow up.

More on the top line guidance is this.

Assuming any kind of increases in revenue per procedure.

From the new product launches that make the NPS plus or the new <unk> stent.

Lucas W. Buchanan: Got it. Thank you. And I just had a quick follow up more on the top line guidance. Is this assuming any kind of increases in revenue per procedure from the new product launches or like the NPS plus or the new? Yeah, I'll give a quick kind of math answer and just feel free to weigh in.

Yes, I'll give a quick kind of math answer in chess feel free to weigh in.

There's a lot of puts and takes in there.

Lucas W. Buchanan: There's a lot of puts and takes in there. As I mentioned, we expect revenue per procedure to be slightly less variation, but but still quarter to quarter variation. So I think we ended just over 7,000 on average for the year, and I think around 7,000 maybe slightly less is a good, ballpark to be in for 2024. But as you point out, there are there are various kind of puts and takes that that leads to that average.

As I mentioned, we expect revenue per procedure to be.

Slightly less variation, but still quarter to quarter variation. So I think we ended just over 7000 on average for the year.

And I think around 7000, maybe slightly less is a good ballpark to be in for 2024.

But as you point out there are there are various kind of puts and takes that lead to that average so all of our.

Lucas W. Buchanan: So all of our price assumptions, our units sold and ordering patterns, product launches, things of those sort are all all baked into that. The only thing I would add is that our pricing really is stable, you know, in a good way. And so the variability we're talking about does have to do with things like order patterns. But we feel good about the overall health there and the primary driver will be perceived, Great, thank you for that question. One moment, please, as I prepare the next. Our next question comes from the line of Tharap. Kalia from Oppenheimer & Co. The floor is yours.

Price assumptions or units sold in ordering patterns product launches things of those sort are all baked into that number.

Great you only thing I would add the only thing I would add is that price or pricing really is stable.

And a good way.

And so the variability we're talking about does have to do with things like order patterns.

But we feel good about the overall health there and the primary driver will be procedure growth.

Great. Thank you for that question.

One moment please.

Yes.

Yeah.

Okay.

Our next question comes from the line of Sarah.

Talia from Oppenheimer Intel the floor is yours.

Operator: Good afternoon, Chas, Lucas, can you hear me all right? Yes, we can. Thanks, Suraj. So Chas, congrats on a nice quarter. Hope to see many more.

Good afternoon, Chad Lucas can you hear me alright.

Yeah, So Ken Hi, Suraj perfect.

So jess congrats on a nice quarter.

Charles S. McKhann: Chaz, I want to focus on two. First. Can you characterize, in your prepared remarks, you said a third of them were.., new or non-tenured, some word you use. Just split it out a little more, Chas, in terms of what has been the Salesforce churn. You know, especially given the NCD, how many feet on the ground currently? Where are you all expecting to? calendar 24.

I hope to see many more Jos I wanted to focus on two things first.

Sales force.

Can you characterize in your press.

Third remarks, you said, a third of them, but I think so you said new order.

Non tenure some word you used.

<unk>.

Split this out a little more cash in terms of what has been the sales force churn.

Especially given the NCD, how many feet on the ground currently whether youre expecting to end.

Calendar 'twenty four.

Charles S. McKhann: What I said, just to recap, was that as of the beginning of this year, about a third of our sales force, especially at the rep level, is new within the last year. So within the last 12 months, and it really is a variety of factors that impacted that. Primarily it was the expansion, right?

Sure, Yes, that's what I said just to recap was that as of the beginning of this year about a third of our sales force, especially at the Rep level is new within the last year. So within the last 12 months.

And it really is a variety of factors that impacted that primarily it was the expansion right. We went from about 70 territories to 85 territories, we promoted some people into either manager level roles or into things like sales training.

Charles S. McKhann: We went from about 70 territories to 85 territories. We promoted some people into either manager level roles or into things like sales training. We had some attrition, or this would go back to early 2023, but nothing out of the norm of what I've seen in my career. And certainly not in the back half of the year, as you would think would be related to the NCD.

We had some attrition or go back to early 2023.

But nothing out of the norm of what I've seen in my career and.

And certainly not in the back half of the year as you would think would be related to the NCD. So it was just a variety of factors that led to a lot of change last year.

Charles S. McKhann: So it's just a variety of factors that led to a lot of change last year. But I will tell you, you know, we feel good about the people we hired. We hire from the best places in med tech. You know, I met, you know, pretty much all of this group at the sales meeting I mentioned. The mood is good.

But I will tell you we feel good about the people we hired.

Higher from the best places in Med Tech.

You know our net pretty.

Pretty much all of this group at the sales meeting.

Charles S. McKhann: The attitude is good. The excitement for the year is good. We just got to help them get up a learning curve as fast as we can. And the good news is we've got a lot of really good, experienced reps who can help them do that, as well as our marketing team and our reimbursement team and all the other folks that help do that. Our sales training, obviously. So hopefully that gives you a little more color.

I mentioned.

The mood is good the attitude is good the excitement for the year is good we just got to help them get up the learning curve as fast as we can and the good news is we got a lot of really good experienced reps, who can help them do that and as well as our marketing team and our reimbursement team and all the other folks that helped do that our sales training obviously.

Charles S. McKhann: And then to answer the final part right now, we don't have big expansion plans at the rep level over the course of this year. Doesn't mean we may not add some in certain spots, but it's much more about kind of consolidating with the group we have. We will probably add some additional therapy development specialists who, as you know, support the reps for things like case coverage over the course of the year to make sure we've got everything we need to support the growth in volumes. Got it. So in terms of your accounts, right, one of the things you mentioned in your remarks was, You're focusing, going deep. So if I use, you know, that context, right?

So hopefully that gives you a little more color and then to answer the final part right now we don't have big expansion plans at the rep level over the course of this year. It doesn't mean, we may not add some in certain spots, but it's much more about kind of consolidating with the group. We have we will probably add some additional therapy development specialists, who as you know support.

The reps for things like case coverage.

Over the course of the year to make sure we've got everything we need to support the growth in volumes we expect.

Got it and just in terms of.

Your accounts right one of the things you mentioned in your remarks was.

Youre focusing going deep.

If I use.

Charles S. McKhann: Y'all are right now in 1,200, the rough math, you know, average utilization is about five and a half units per quarter per hospital. Just walk us through, if I were to divide your accounts into high-volume, medium-volume, and low-volume buckets, arbitrary, I define them in these three buckets. You know, what does the stress test show you right now with NCD, just given what's going on with the NCD? Are the high volume accounts pulling back a little bit versus medium?

That context, right yogurt right now in 200 or so.

Accounts.

Do the rough math.

Average utilization is about five and a half units per quarter per hospital.

Walk us through a fiber to divide your accounts into high volume medium volume and low volume buckets right arbitrary I define them in these three buckets.

What does the stress test show you right now with NCD, just given what's going on to the entities are the high volume accounts pulling back a little bit versus medium.

Charles S. McKhann: Compare and contrast for us. Thank you for taking... Yeah, and I'll provide some overall thoughts, and then Lucas, feel free to chime in as well. I mean, I think it's... You know, like a lot of medical device situations, we certainly have a version of our top customers are the ones who are the primary drivers of a lot of our volume. Those are the ones who truly have adopted what I said, a TCAR first mentality. And we certainly aim to grow that group. I mentioned in my remarks to JP Morgan, we've got a lot of data to show that does in fact happen over time. The learning curve with TCAR is slow, the adoption, I mean, it's fast, the learning curve is quick.

Just compare and contrast for us Thank you for taking my questions.

Now I'll provide some overall thoughts and then Lucas feel free to chime in as well I mean I think it's.

Unlike a lot of medical device situations, we certainly have a version of our top customers are the ones who are the primary drivers of a lot of our volume.

Those are the ones, who truly have adopted what I said a T car first mentality.

And we certainly aim to grow that that group.

I mentioned in my remarks at JP Morgan, we have got a lot of data to show that does in fact happen over time.

The learning curve with CCAR is slow the adoption I mean as fast learning curve as quick the adoption curve. It takes a while as people continue to move from I am going to do some T car on just the right patients to then eventually why wouldn't I do a T car, meaning CCAR first and that does happen over time, so we still have a law.

Charles S. McKhann: The adoption curve takes a while, you know, as people continue to move from, I'm going to do some TCAR on just the right patients, to then eventually, why wouldn't I do a TCAR, meaning TCAR first. And that does happen over time. So we still have a lot of, I mean, you asked about accounts, but let's talk about physicians, physicians who are in that sort of middle bucket, that we can continue to work on and develop and grow their adoption to keep moving forward. And all the comments I've made are really independent of the NCD. Because again, our surgeon customers are not reverting to transfemoral calves. And we do monitor very carefully. And we're not seeing a widespread change.

Lot of I mean, you asked about accounts, but let's talk about physicians physicians, who are in that sort of middle bucket that we can continue to work on and develop and grow their their adoption to keep moving forward.

And all of the comments I've made are really independent of the NCD.

Because again, our surgeon customers are not reverting to transparent kaz and we do monitor very carefully and we're not seeing a widespread change and for example in referring patterns, we're going to keep watching it is early but.

Charles S. McKhann: And for example, in referring patterns, we're going to keep watching it, it's early. But, you know, the dynamics are much more, again, on us and our customers and how we move that adoption more than the NCD, I think. Lucas, what else would you add there?

The dynamics are much more again on us and our customers and how we move that adoption more than the NCD I think Lucas what else would you either yes, suraj I think I'll just add at the hospital level.

Lucas W. Buchanan: Yeah, Suraj, I think I'll just add, you know, at the hospital level, you know, in the treatment of carotid disease, you've got... You've got value analysis committees, you've got credentialing committees, you've got data collection of CEA and TCAR if they do CAS, CAS itself as well. You've got kind of multidisciplinary folks kind of weighing in first and foremost on on what's best for the patient. Right. And then you get into, what's best for the hospital bottom line. And, you know, GCAR stacks up really favorable when you consider all those variables at the hospital level.

In the treatment of carotid disease, you've got.

Value analysis committees, you've got Credentialing committees, you've got data collection of Cta and T car, if they do Kaz kaz itself as well you've got kind of a multi disciplinary folks kind of weighing in first and foremost on on what's best for the patient.

Right and then you get into what's best for the hospital bottom line.

Sure.

<unk> stacks up really favorable when you consider all of those variables at the hospital level first of all of our party there were already entrenched.

Lucas W. Buchanan: First of all, we're already there, we're already in trend. We continue to collect data showing that this works. We continue to show hospital administrators and CFOs.

We continue to collect data showing that this works we continue to show hospital administrators and Cfos.

Lucas W. Buchanan: The money they're making, the money they're saving, the throughput they're getting, they're now surveying their patients and realizing this indeed from the patient perspective, is a great procedure. So the NCD, the physicians, our sales team, you know, right now it's really viewed as an opportunity. And folks are excited that, you know, a few additional administrative barriers have been removed from a TCAR perspective. And we can go out and compete against CEA primarily, but certainly CAS II where there is interest or ongoing activity. But ultimately, this is all in service to the patient, right? Having options is a good thing and will lead with the best option in most cases. Thank you for your questions. One moment, please. Our next question comes from the line of Kristen Stewart from CL King, the floor is yours.

The money they are making the money they are saving the throughput they're getting.

They're now serving their patients and realizing this indeed from the patient perspective.

As a great procedure so the the NCD the physicians our sales team right now, it's really viewed as an opportunity.

And folks are excited.

A few additional administrative barriers have been removed from a T car perspective.

We can go out and compete against CA, primarily but certainly has to wear where there is.

Interest or or or ongoing activity, but ultimately this is all in service to the patient right, having having options is a good thing and we'll lead with the best option in most cases.

Yeah.

Thank you.

Thank you for your question one moment please.

Okay.

Our next question comes from the line of Kristen Stewart from CL King the floor is yours.

Operator: Hi, thanks for taking my call. I just wanted to ask, Chas, if you think that the 12% guidance, for company long term about or do you think there's some things that you're factoring in 24 that are leading to a slightly lower, Thank you. I'm out.

Hi, Thanks for taking my question.

Okay.

Sir.

I just wanted to ask.

What do you think that the 12% guidance.

I think.

The company long term about or do you think there are some things that you are factoring in 24 that are leading to slightly lower.

Charles S. McKhann: Yeah, no, thanks, Kristen. You cut in and out just a little bit on your question, but I think you were asking about the 2024 guidance in relation to sort of views over time. Is that correct? Okay, I think it was.

Great. Thank you otherwise.

In the outer years.

Yeah.

Yes, no. Thanks, Chris you cut in and out I was just a little bit on your question, but I think you were asking about the 'twenty 'twenty four guidance in relation to sort of use over time is that correct.

Charles S. McKhann: Sorry, you cut out just a little bit. Yeah, no, I mean, I think as I think about the guidance at this point, I did mention a few factors that I think impact us here. This year, as we sort of head into the year, a big one, as I mentioned, is just the Salesforce piece of it and just getting kind of fully up to speed with a pretty significant portion of our group. I feel really good about our ability to do that.

Okay. I think it was sorry, you cut out just a little bit.

Yes, no I mean, I think as I think about the guidance at this point I did mentioned a few factors that I think impacts us here this year as we sort of head into the year.

Big one as I mentioned is just the sales force piece of that and just getting kind of fully up to speed with a pretty significant portion of our group I feel really good about our ability to do that I already touched on that and mentioned the just overall the positive elements of this meeting.

Charles S. McKhann: I already touched on that, and mentioned the just overall positive elements of this meeting. I think evolving our strategy on the going broad to going deep element is important. And we already have a lot of the ingredients, but I think there's more we can do there and we're working on it. And then, you know, honestly, I've been in my role for about 100 days.

I think evolving our strategy on the going abroad going deep element is important and we already have a lot of the ingredients, but I think there's more we can do there and we're working on it.

And then honestly I've been in my role for about 100 days and so partly I'm also feel very good about the fundamentals, but I am still working with the team to really deep dive deeply into sort of a specific plans are going to maximize success and so for the year, we want a heavy heavy emphasis on predictability and accountability going forward.

Charles S. McKhann: And so partly I'm also feel very good about the fundamentals, but I'm still working with the team to really deep dive deeply into sort of the specific plans that are going to maximize success. And so, you know, for the year, we want a heavy, heavy emphasis on predictability and accountability going forward. And then over time, we'll layer in, you know, additional growth in the U.S. to be able to move adoption further. International growth will eventually start kicking in and will be a factor there.

And then over time, we'll layer in.

Additional growth in the U S.

You'll be able to move adoption further.

International growth will eventually start kicking in and it will be a factor there other R&D programs that I know is a little cryptic, but I alluded to will help and so.

Charles S. McKhann: Other R&D programs that I know is a little cryptic, but I alluded to will help. And so, you know, our view is to be a sustainable grower over the long term. And we're going to keep working on a range of plans to do that. Okay, perfect. And then I just want to clarify, are not the NPS, the new one, and the tapered stent would have a premium. You said that there's a lot of moving parts to thinking about things, but are those coming out in a premium price? Hi, Kristen, it's Lucas.

Our view is to be a sustainable grower over the long term and we're going to keep working on a range of plans to do that.

Okay, Perfect and then I just wanted to clarify.

Okay.

Theyre not the NPS, the new one and the taper them would have a premium please.

So you said that there is a lot of moving parts to thinking about things, but are those coming out of the premium priced.

Lucas W. Buchanan: I'll take that one. You know, fundamentally, it is factored into that overall kind of 7,000 or slightly under revenue per procedure guidance. Ultimately, all of our kind of new product efforts are in service to the adoption curve, right? We want to make this procedure, better, faster, safer, easier. And so across what is now five products that make up the TCAR procedure and iterations thereof, you know, at the product level, you might have price opportunity in certain times and certain products and price pressure elsewhere.

Hi, Kristen, it's Lucas I'll take that one.

Fundamentally it is factored into that overall kind of 7000 or slightly under revenue per procedure guidance. Ultimately all of our kind of new product efforts are in service to the adoption curve right. We want to make this procedure.

Better faster safer easier.

And so across what is now.

Five products that makeup the T car procedure and iterations thereof.

At the product level, you might have price opportunity.

Certain times in certain products and price pressure elsewhere, all of that is factored into our guidance.

Lucas W. Buchanan: And all of that is factored into our Okay, thanks very much for taking the, Thank you. Thanks, Kristen. Thank you. This concludes the question and answer session. I would now like to turn it back to Chas Mahan for closing remarks. Listen, thank you all very much for joining us again today and look forward to keeping the dialogue going over the course of the year. Appreciate it. Thank you for your participation in today's conference. This does now conclude the program. You may disconnect. For more information visit www. FEMA.gov

Okay. Thank you very much taking the questions.

Thanks Kristen.

Thank you.

This concludes the question and answer session I would now like to turn it back to CASM Holmes for closing remarks.

Listen Thank you all very much for joining us again today.

And look forward to keeping the dialogue going over the course of the year I appreciate it.

Thank you for your participation in today's conference. This does now conclude the program you may disconnect.

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