Q1 2024 Inspire Medical Systems Inc Earnings Call
Okay.
DeLem: Good afternoon. My name is DeLem, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Inspire Medical Systems first quarter 2024 conference call. All lines have been placed on mute to prevent any background noise.
Good afternoon, My name is Dillon and I'll be your conference operator today.
DeLem: This time I'd like to welcome everyone to the inspire medical systems first quarter 2024 conference call.
DeLem: All lines have been placed on mute to prevent any background noise.
DeLem: After the speaker's remarks, there will be a question and answer session. I'll now hand the call over to your first speaker, Ezgi Yagci, the Vice President of Investor Relations at Inspire. You may begin the conference.
DeLem: After the Speakers' remarks, there'll be a question and answer session.
Ezgi Yagci: I'll now hand, the call over to your first Speaker Ischialgia Vice President of Investor Relations at inspire you may begin the conference.
Ezgi Yagci: Thank you, Dylan, and thank you all for participating in today's call. Joining me are Tim Herbert, Chairman and Chief Executive Officer, and Rick Buchholz, Chief Financial Officer. Earlier today, we released financial results for the three months ended March 31st, 2024. A copy of the press release is available on our website. On this call, management will make forward-looking statements within the meaning of the federal securities laws. All forward-looking statements, including, without limitation, those relating to our operations, financial results, and financial condition, investments in our business, full year 2024 financial and operational outlook, and changes in market access, are based upon our current estimates and various assumptions.
Ezgi Yagci: Thank you Joanna and thank you all for participating in today's call. Joining me are Tim Herbert Chairman and Chief Executive Officer and Ricky.
Ezgi Yagci: Chief Financial Officer.
Ezgi Yagci: Earlier today, we released.
Ezgi Yagci: Financial results for the three months ended March 31st 2020 for a copy of the press release is available on our website.
Ezgi Yagci: These statements involve material risks and uncertainties that could cause actual results or events to materially differ. Accordingly, you should not place undue reliance on these statements. Please see our filings with the Securities and Exchange Commission, including our Form 10-Q, which we filed with the SEC earlier this afternoon, for a description of these risks and uncertainties. Inspire 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.
Ezgi Yagci: On this call management will make forward looking statements within the meaning of the federal Securities laws, all forward looking statements, including without limitation those relating to our.
Ezgi Yagci: Financial results and financial condition investments in our business.
Ezgi Yagci: Full year, 2024 financial and operational outlook.
Ezgi Yagci: Changes in market access.
Ezgi Yagci: Based upon our current estimates and various assumption.
Ezgi Yagci: Sure.
Ezgi Yagci: These statements involve material risks and uncertainties that could cause actual results or events to materially differ.
Ezgi Yagci: Accordingly, you should not place undue reliance on these statements.
Ezgi Yagci: Please see our filings with the Securities and Exchange Commission, including our Form 10-Q, which we filed with the us easier earlier this afternoon.
Ezgi Yagci: Scripture end of these risks and uncertainties.
Ezgi Yagci: Inspire 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.
Ezgi Yagci: This conference call contains time-sensitive information and speaks only as of the live broadcast today, May 7, 2024. With that, it is my pleasure to turn the call over to Tim Herbert. Tim? Thank you.
Timothy P. Herbert: Conference call contains time sensitive information.
Timothy P. Herbert: As of the live broadcast today May seven 2024.
Ezgi Yagci: With that it is my pleasure to turn the call over to Tim Herbert Tim.
Timothy P. Herbert: Thank you, Ezgi, and thanks, everyone, for joining our Business Update Call for the first quarter of 2024. We always start our earnings call by reiterating our commitment to delivering strong and consistent patient outcomes.
Timothy P. Herbert: Thank you Keith and thanks, everyone for joining our business update call for the first quarter of 2024.
Timothy P. Herbert: We always start our earnings call by reiterating our commitment to delivering strong and consistent patient outcomes.
Timothy P. Herbert: Our mission is to put the patient first, and we are thrilled that over 65,000 patients have been treated with Inspire Therapy today. Last week, we celebrated a major milestone with the 10-year anniversary of the FDA approving Inspire Therapy. This is only the beginning. And in the years ahead, we look forward to advancing the technology and growing therapy adoption for the many patients with untreated obstructive sleep apnea. With that said, let's review our results.
Timothy P. Herbert: Our mission is to put the patient first.
Timothy P. Herbert: We are thrilled that over 65000 patients have been treated with inspire therapy today.
Timothy P. Herbert: Last week, we celebrated a major milestone with the 10 year anniversary of the FDA approving inspire therapy.
Timothy P. Herbert: This is only the beginning and in the years ahead, we look forward to advancing the technology and growing therapy adoption for the many patients with untreated obstructive sleep apnea.
Timothy P. Herbert: In the first quarter, we generated revenue of $164 million, representing a 28% increase compared to the first quarter of 2023. First quarter U.S. revenue totaled $155.8 million, a 25% increase over the same period last year. This revenue growth reflects increased physician and patient awareness, increased market penetration in existing centers, as well as expansion into 66 new implanting centers in the United States and 11 new U.S. sales territories. Outside the U.S., revenue increased 141% to $8.2 million.
Timothy P. Herbert: With that let's review ours our result.
Timothy P. Herbert: In the first quarter, we generated revenue of $164 million, representing a 28% increase compared to the first quarter of 2023.
Timothy P. Herbert: First quarter U S revenue totaled $155 $8 million or 25% increase over the same period last year.
Timothy P. Herbert: This revenue growth reflects increased physician and patient awareness increased market penetration in existing centers as well as expansion into 66, new implanting centers in the United States and 11, New U S sales territories.
Timothy P. Herbert: Outside the U S revenue increased 141% to $8 $2 million.
Timothy P. Herbert: We're very happy to report a strong rebound in Europe and, primarily, in Germany since receiving derogation late in the fourth quarter. The derogation process has allowed us to continue to grow the adoption of Inspire Therapy. Finally... We continue to work diligently to obtain EU MDR approval, which we expect to receive in mid-2024. On our last earnings call, we indicated more pronounced seasonality of mid to high teens in the first quarter, and the team worked diligently and delivered revenue growth within the expected range while holding seasonality to 15 percent.
Timothy P. Herbert: We're very happy to report a strong rebound in Europe, and primarily in Germany.
Timothy P. Herbert: It's even derogation late in the fourth quarter.
Timothy P. Herbert: But there is some process has allowed us to continue to grow the adoption of inspire therapy.
Timothy P. Herbert: We continue to work diligently to obtain EU MBR approval, which we expect to receive in mid 2024.
Timothy P. Herbert: On our last earnings call, we indicated more pronounced seasonality of mid to high teens in the first quarter and the team worked diligently and delivered revenue growth within the expected range, while holding seasonality to 15%.
Timothy P. Herbert: With this strong start and our outlook for the remainder of the year, we are increasing our 2024 revenue guidance to $783 to $793 million, which represents 25 to 27 percent growth over 2023 revenue of $624.8 million. Our net loss for the first quarter was $10 million compared to $15.4 million in the prior year period, representing a net loss per share of $0.34 compared to $0.53 in the first quarter of 2023.
Timothy P. Herbert: With the strong start and our outlook for the remainder of the year, we are increasing our 2020 for revenue guidance to $783 million to $793 million, which represents 25% to 27% growth over 2023 revenue of 600.
Timothy P. Herbert: $24 8 million.
Timothy P. Herbert: Our net loss for the first quarter was $10 million compared to the $15 $4 million in the prior year period.
Timothy P. Herbert: Representing a net loss per share up 34% compared to 53 cents in the first quarter of 2023.
Timothy P. Herbert: As our business continues to mature, we expect further operating leverage and now expect to be profitable for the full year 2024. Therefore, we are initiating first-time diluted net income per share guidance of $0.10 to $0.20 for the full year 2024. Switching our discussion to a few key market developments, first, the Surmount OSA trial results reinforced our view that GOP1s will be complementary to our market opportunity and may provide a mechanism for potential patients to reduce their weight and qualify for Inspire Therapy. As a baseline, Inspire Therapy is currently designed to treat tongue-based collapse with stimulation of the hypoglossal nerve.
Timothy P. Herbert: As our business continues to mature we expect further operating leverage and now expect to be profitable for the full year 2024.
Timothy P. Herbert: Therefore, we are initiating first time diluted net income per share guidance.
Timothy P. Herbert: 10 to 20 cents for the full year 2024.
Timothy P. Herbert: Patients with a higher BMI are more likely to experience lateral wall collapse of the airway, which is not effectively treated with hypoglossal nerve stimulation. If they experience lateral wall collapse, these higher BMI patients, such as the patients in the Surmount OSA trial who had a mean BMI of 39, generally would not qualify for Inspire Therapy. Therefore, with the headline results of the Surmount OSA trial, we believe many patients who experience significant weight loss, including those who benefit from the use of GOP1s, are likely to experience a reduction in their lateral wall clamps, which would allow them to qualify for Inspire.
Timothy P. Herbert: Torching, our discussion to a few key market developments first the surmount OSA trial result results reinforced our view that GOP ones will be complementary to our market opportunity and may provide a mechanism for protect for potential patients to reduce their weight and.
Timothy P. Herbert: Qualify for inspire therapy.
Timothy P. Herbert: As a baseline inspire therapy is currently designed to treat ton based collapse with stimulation of the hypoglossal nerve.
Timothy P. Herbert: Patients with a higher BMI are more likely to experience lateral wall collapse of the airway, which is not effectively treated with hypoglossal nerve stimulation.
Timothy P. Herbert: If they experience matter Warcraft these higher BMI patients such as the patient centered surmount OSA trial, who had a mean BMI of 39.
Timothy P. Herbert: Generally would not qualify for inspire therapy.
Timothy P. Herbert: Therefore, with the headline results of this amount OSA trial, we believe many of the patients who experienced significant weight loss, including those who benefit from the use of GOP ones are likely to experience a reduction there lateral wall collapse, which would allow them to qualify for inspire we look forward to reviewing the details.
Timothy P. Herbert: We look forward to reviewing the detailed study results when they become available. On a related note, with regard to the sleep endoscopy procedure, which is used to identify patients that are candidates for Inspire Therapy, we have completed the enrollment and quality assurance portion of the predictor study that is intended to identify a new approach to replace Sleep Endoscopy for a subset of patients. We are early in the data analysis phase, and we are identifying the populations that have predominantly tongue-based obstruction.
Timothy P. Herbert: Failed study results when they become available.
Speaker Change: Unrelated note.
Timothy P. Herbert: With regards to the sleep endoscopy procedure, which is used to identify patients that are candidates for inspire therapy.
Timothy P. Herbert: We have completed the enrollment in quality assurance portion of the predictor study that is intended to identify a new approach to replace sleep endoscopy for a subset of patients.
Timothy P. Herbert: We are early in the data and that data analysis phase and we are identifying the populations that have predominantly tongue base obstructions.
Timothy P. Herbert: Without surprise, and consistent with the Sumant OSA results previously discussed, our initial focus with the PREDICTOR study is on patients with a lower BMI, who may not have significant lateral wall collapse and therefore not require a sleep endoscopy.
Timothy P. Herbert: Without surprising consistent with this amount OSA results previously discussed.
Timothy P. Herbert: Our initial focus with the predictive study is a patient with a lower BMI, who may not have significant lateral wall collapse, and therefore not require a sleep endoscopy.
Timothy P. Herbert: We will continue the analyses and move forward towards a peer-reviewed publication, enabling us to work with payers to update their policies. Staying with our R&D activities, we are happy to report that the Inspire 5 submission is in review with the FDA, and assuming approval, we are on track for a soft launch in 2024 and a full launch in 2025. The team is focused on our operational readiness, which includes ensuring proper inventory levels prior to full lock.
Timothy P. Herbert: We will continue the analysis and move forward with towards the peer reviewed publication.
Timothy P. Herbert: <unk> us to work with payers to update their policies.
Timothy P. Herbert: Staying with our R&D activity, we are happy to report that the inspire five submission is in review with the FDA.
Timothy P. Herbert: Assuming approval we are on track for a soft launch in 2024 and a full launch in 2025.
Timothy P. Herbert: The team is focused on our operational readiness, which includes ensuring proper inventory levels prior to fall launch.
Timothy P. Herbert: Furthermore, we continue to make enhancements to our technology, as evidenced by the commercial launches of our silicone-based leads and Bluetooth patient remote, the ongoing investments in our SleepSync digital platform, and most recently, the FDA approval of our new physician programmer, which connects directly with the SleepSync platform, highlighting our market development activities. Additionally, we continue to advance our medical education programs. And year to date, we had over 100 sleep fellows and close to 200 ENT residents attend our Inspire training program.
Timothy P. Herbert: Further we continue to make enhancements to our technology as evidenced by the commercial launches of our telecom basically the Bluetooth patient remote the ongoing investments in our sleep <unk> digital platform and most recently the FDA approval of our new physician programmer, which.
Timothy P. Herbert: Connect directly with the sleep sync platform.
Timothy P. Herbert: Highlighting our market development activities, we continue to advance our medical education program and year to date, we had over 100 slipped out at close to 280 residents at Tad are inspired training programs.
Timothy P. Herbert: In addition, we continue to increase our presence at primary care and cardiology conferences to drive increased awareness of Inspire Therapy. Our direct-to-consumer awareness programs continue to be excellent and provide a strong pathway for patients to connect with the proper health care provider. Key to our success is our continuous improvement of our tools to assist the patient journey. It is important to note that we have the first and only FDA-approved closed-loop neurostimulation system to treat obstructive sleep apnea and, over the past 17 years, have built very strong clinical evidence with nearly 6,000 patients worldwide and detailed compelling real-world evidence, including over 280 peer-reviewed publications and a strong reimbursement presence with over 260 million covered lives in the United States.
Timothy P. Herbert: Further we continue to increase our presence at primary care and cardiology conferences to drive increased awareness of inspire therapy.
Timothy P. Herbert: Our direct to consumer awareness programs continue to be excellent and provides a strong pathway for patients to connect with a proper health care providers.
Timothy P. Herbert: Key to our success is our continuous improvement of our tools to assist the patient journey.
Timothy P. Herbert: It is important to note.
Timothy P. Herbert: That we have the first and only FDA approved close loop neuro stimulation system to treat obstructive sleep apnea.
Timothy P. Herbert: And over the past 17 years have built very strong clinical evidence with nearly 6000 patients worldwide and detailed compelling real world evidence, including over 280 peer reviewed publications.
Timothy P. Herbert: And a strong reimbursement presence with over 260 million covered lives in the United States.
Timothy P. Herbert: We continue to advance therapy adoption and clinical evidence, including expansion of therapy indications, to increase the number of patients who can benefit from Inspire Therapy. And with Inspire, we have built a world-class team, including a direct commercial organization in the United States and numerous global markets. We have also invested heavily in research and development, commercial infrastructure, reimbursement, direct-to-consumer campaigns, medical education programs, and clinical trainers to drive continued awareness and adoption of Inspire Therapy while focusing on and improving upon our strong patient outcomes.
Timothy P. Herbert: We continue to advance therapy adoption of clinical evidence, including expansion of therapy indications to increase the number of patients who could benefit from inspire therapy.
Timothy P. Herbert: And its fire, we have built a world class team, including a direct commercial organization in the United States and numerous global markets.
Timothy P. Herbert: We have also invested heavily in research and development commercial infrastructure reimbursement direct to consumer campaigns medical education programs at clinical trainers to drive continued awareness and adoption of inspire therapy, while focusing on and improving upon.
Timothy P. Herbert: Our strong patient outcomes.
Timothy P. Herbert: In summary, we remain focused on the patient to continue the growth and adoption of Inspire Therapy. We will continue to execute our growth strategy of increasing utilization at existing centers while adding capacity by opening new centers. As we celebrate the 10-year anniversary of our FDA approval, we remain excited about our future prospects and are confident that we have the appropriate strategy in place to drive long-term stakeholder value. With that, I'd like to turn the call over to Rick for his review of our finances.
Timothy P. Herbert: In summary, we remain focused on the patient to continue that growth and adoption of inspire therapy, we will continue to execute our growth strategy of increasing utilization at existing centers.
Rick: While adding capacity by opening new centers.
Rick: As we celebrate the 10 year anniversary of our FDA approval, we remain excited about our future prospects and are confident that we have the appropriate strategy in place to drive long term stakeholder value.
Timothy P. Herbert: With that I'd like to turn the call over to Rick for his review.
Rick: Of our financials.
Rick Buchholz: Thank you, Tim. And good afternoon, everyone.
Rick: Thank you Tim and good afternoon, everyone.
Rick Buchholz: Revenue for the first quarter was $164 million or 28% increase from the $127 9 million generated in the first quarter of 2023.
Rick Buchholz: Total revenue for the first quarter was $164 million, a 28% increase from the $127.9 million generated in the first quarter of 2023. U.S. revenue in the first quarter was $155.8 million, an increase of 25% from the $124.5 million in the prior year period. Revenue outside the U.S. was $8.2 million, which is a 141% increase year over year. The global average selling price was consistent year over year and with the previous quarter, and we expect ASP to remain at this level for the remainder of 2024. Given the potential for new entrants in the future, we do not expect to continue to report this metric going forward.
Rick Buchholz: U S revenue in the first quarter was $155 8 million, an increase of 25% from the $124 5 million in the prior year period.
Rick Buchholz: Revenue outside the U S was $8 2 million, which is at 141% increase year over year.
Rick Buchholz: The global average selling price was consistent year over year and with the previous quarter and we expect asps to remain at this level for the remainder of 2024.
Rick Buchholz: Given the potential of new entrants in the future. We do not expect to continue to report this metric going forward.
Rick Buchholz: Gross margin in the first quarter was 84.9% compared to 84.4% in the prior year period. The increase was driven by improved manufacturing efficiencies and higher volume. Total operating expenses for the first quarter were $154.5 million, an increase of 21% as compared to $127.5 million in the first quarter of 2023. This planned increase was due to the expansion of our sales organization, increased direct-to-consumer marketing programs, continued product development efforts, and general corporate costs.
Rick Buchholz: Gross margin in the first quarter was 84, 9% compared to 84, 4% in the prior year period.
Rick Buchholz: The increase was driven by improved manufacturing efficiencies and higher volumes.
Rick Buchholz: Total operating expenses for the first quarter were $154 5 million, an increase of 21% as compared to $127 5 million in the first quarter of 2023.
Rick Buchholz: This planned increase was due to the expansion of our sales organization increased direct to consumer marketing programs continued product development efforts and general corporate costs.
Rick Buchholz: Interest and dividend income totaled $5.9 million in the first quarter compared to $4.3 million in the prior year period. This higher income was driven by higher interest rates on our increased cash and investment balances compared to a year ago. Net loss for the first quarter was $10 million compared to $15.4 million in the prior year period, representing a net loss per share of $0.34 compared to $0.53 in the first quarter of 2023. The weighted average number of shares outstanding for the first quarter was 29.6 million.
Rick Buchholz: Interest and dividend income totaled $5 9 million in the first quarter compared to $4 3 million in the prior year period.
Rick Buchholz: This higher income was driven by higher interest rates on our increased cash and investment balances compared to a year ago.
Rick Buchholz: Net loss for the first quarter was $10 million compared to $15 4 million in the prior year period, representing net loss per share of <unk> 34 <unk>.
Rick Buchholz: Compared to 53 in the first quarter of 2023.
Rick Buchholz: The weighted average number of shares outstanding for the first quarter was $29 6 million.
Rick Buchholz: We expect the full year diluted shares outstanding to be $30.4 million. Our total cash and investments were $469 million at March 31 and were consistent with our December 31 balance. A strong cash position allows us to remain focused on executing our growth strategy of increasing procedure volumes at existing centers while training and opening new implanting centers. We continue to expect to generate positive cash flow for the full year 2024. Moving on, to 2024 guidance.
Rick Buchholz: We expect our full year diluted shares outstanding to be $34 million.
Rick Buchholz: Our total cash and investments were $469 million at March 31, and was consistent with our December 31 balance the.
Rick Buchholz: The strong cash position allows us to remain focused on executing our growth strategy of increasing procedure volumes at existing centers, while training and opening new implanting centers.
Rick Buchholz: We continue to expect to generate positive cash flow for the full year 2024.
Rick Buchholz: With the strong trends we are seeing in our business, we now expect full-year revenue to be in the range of $783 to $793 million, representing an increase of 25 to 27 percent compared to full-year 2023 revenue. We expect full-year gross margin to be in the range of 83 to 85 percent.
Rick Buchholz: Moving on to 2024 guidance with the strong trends we are seeing in our business. We now expect full year revenue to be in the range of 783 to 793 million.
Rick Buchholz: Representing an increase of 25% to 27% compared to full year 2023 revenue.
Rick Buchholz: We expect full year gross margin to be in the range of 83% to 85%.
Rick Buchholz: We continue to expect to activate 52. [inaudible] While we are early in our adoption and will continue to expand our footprint by opening new centers and territories, we believe profitability is a more relevant metric in tracking our financial performance going forward. With that said, starting in 2025, we will guide to revenue growth and earnings per share. And as such, we will no longer provide center or territory guidance.
Rick Buchholz: We continue to expect to activate 52 to 56, New U S centers and established 12 to 14, New U S sales territories during each remaining quarter in 2024.
Rick Buchholz: While we are early in our adoption and we'll continue to expand our footprint by opening new centers and territories. We believe profitability is a more relevant metric and tracking our financial performance going forward.
Rick Buchholz: With that said starting in 2025, we will guide to revenue growth and earnings per share and as such we will no longer provide center or territory guidance metrics.
Rick Buchholz: Given the strong momentum in our business and our improving leverage, we expect the diluted net income per share for the full year 2024 to be between $0.10 and $0.20 per share. In conclusion, our strong performance and business momentum provide us with confidence in our outlook for the remainder of 2024. With that, our prepared remarks are concluded. Dulem, you may now open the line for questions. Thank you, sir. As a reminder, to ask a question, you would need to...
Rick Buchholz: Given the strong momentum in our business and our improving leverage we expect the diluted net income per share for the full year 2024 will be between 10 to 20 <unk> per share.
Dulem: In conclusion, our strong performance and business momentum provide us with confidence in our outlook for the remainder of 2024 with that our prepared remarks are concluded dilemma you may now open the line for questions.
DeLem: As a reminder, to ask a question, you will need to press star 11 on your telephone. To withdraw your question, please press star-11 again.
Dulem: Thank you Sir.
Dulem: As a reminder to ask a question you will need to press star one on your telephone to reach our your question. Please press star one again.
DeLem: We ask that you please keep your questions to no more than one question and one follow-up, and if time permits, we'll be more than happy to take more questions. Please stand by while we compile the Q&A room. And I will introduce our first question comes from the line of Danielle Antalffy from UBS. Please go ahead.
Dulem: We ask that you. Please keep your questions to no more than one question and one follow up and if time permits we'll be more than happy to take more questions. Please standby, while we compile the Q&A roster.
Danielle Antalffy: And I show. Our first question comes from the line of Danielle <unk> from UBS. Please go ahead.
Danielle Antalffy: Hey, good afternoon, guys. Thanks so much for taking the time to answer the question.
Danielle Antalffy: Hey, good afternoon, guys. Thanks, so much for taking the question.
Danielle Antalffy: Hi, just a quick question on the U.S. performance in the quarter. Listen, 25% growth, very, very strong, but did, you know, did come in below expectations. I guess, I don't know if you could comment a little bit on the streetness modeling.
Danielle Antalffy: Yes.
Danielle Antalffy: Hi.
Danielle Antalffy: Quick question on the U S performance in the quarter less than 25% very very strong.
Danielle Antalffy: On slide six.
Danielle Antalffy: It came in below expectations, I guess I don't know if you could comment a little bit.
Danielle Antalffy: I mean, it looks like the sequential decline in utilization was actually less in Q1 versus Q4 than it has been historically, so that's great to see. But maybe some of this dynamic on Medicare versus private pay and, most importantly, anything you're seeing from the private pay side, for example, UnitedHealthcare, and this new dynamic with them of potentially requiring some sort of documentation around oral appliances.
Danielle Antalffy: The Street was modeling.
Danielle Antalffy: It looks like the sequential decline in utilization is actually less in Q1 versus Q4, then we have said before is that for HCC.
Danielle Antalffy: But maybe some of the Fernandez on Medicare versus private pay mix and most importantly, anything youre seeing from the private pay side for.
Danielle Antalffy: For example, United California dynamic with them.
Danielle Antalffy: Actually refineries into this afternoon. This evening around financial sorry that was a lot of sites.
Timothy P. Herbert: Sorry, that was a lot, but just any forecaller on U.S. performance. Thanks. Thanks, Danielle. I think I got it.
Timothy P. Herbert: Any more color on Pos so far.
Timothy P. Herbert: Thanks, Danielle. I think I got it. Yeah, we did talk a little bit about the seasonality expected in the quarter. We did have a strong Q1 last year offset by some of the silicone lead inventory that we were shipping, and we knew we had a strong Q4 coming in as well. So we expected the higher seasonality.
Timothy P. Herbert: Thanks.
Speaker Change: Thanks, Danielle I think I got it.
Timothy P. Herbert: Yes.
Timothy P. Herbert: We did talk a little bit about the seasonality of the express.
Timothy P. Herbert: Expected in the quarter, we did have a strong Q1 last year offset with some of the silicon lead inventory that we're shipping.
Timothy P. Herbert: We had a strong Q4 coming in as well so we expect that the higher seasonality. The team did well the team held tight to come in where we expected to be with a 15% seasonality and we do see the utilization continuing to be strong as we move forward going into the year and therefore, we have confidence.
Timothy P. Herbert: The team did well. The team held tight to come in where we expected to be with 15% seasonality, and we do see the utilization continuing to be strong as we move forward going into the year. Therefore, we have confidence in being able to increase our guide. We do understand the concerns over some of the private pay and the prior authorizations, and specifically UnitedHealthcare with oral appliance therapy. We are tracking that very closely, and with United as we work hard to document the prior authorizations going in, and we don't see any significant pushback at this point. I don't believe it has any impact on our business.
Timothy P. Herbert: And being able to increase our guidance, we do understand the concerns over some of the private pay in the prior authorizations and specifically.
Timothy P. Herbert: United Healthcare with.
Timothy P. Herbert: Oral appliance therapy, we're tracking that very closely and with United.
Timothy P. Herbert: We work hard to document the prior authorizations going in and we don't see any significant pushback.
Timothy P. Herbert: Again, I feel we're in a good position moving forward for the rest of the year. Thank you. And I show our next question comes from the line of Robbie Marcus from J.P. Morgan. Please go ahead. Hi, this is Alan. I'm for Robbie.
Timothy P. Herbert: At this point don't believe it has any impact on our business again, we feel we're in a good position moving forward for the rest of the year.
Alan: Thank you.
Robert Justin Marcus: And I show our next question comes from the line of Robbie Marcus from J.P. Morgan. Please go ahead.
Timothy P. Herbert: I think it's all of the above. I think we do see good demand for the therapy across the board. We do see an uptick in utilization as we move through the year. I think we did have confidence to increase the guide, focusing more on the latter half, but I have confidence going forward with the demand for the product within the United States with the increased number of centers that we opened up and continue to drive utilization.
Alan: And I show. Our next question comes from the line of Robbie Marcus from Jpmorgan. Please go ahead.
Timothy P. Herbert: Hi, This is Allen on for Robbie I had I guess a bit of a follow up to the first question on the U S. Despite the U S experience is heightened seasonality.
Robert Justin Marcus: Did that raises the guide by let's say a fair multiple of be largely driven by O U S.
Robert Justin Marcus: So what are you seeing that gives you confidence.
Robert Justin Marcus: Quarter to raise guidance by this much and should we think about that as coming from utilization Doc adds center ads.
Timothy P. Herbert: I think it's all of the above I think we do see good demand for the therapy across the board.
Timothy P. Herbert: Do see uptick in utilization as we move through the year I think we did have confidence to increase the guide focusing more on the latter half.
Timothy P. Herbert: But I have confidence going forward with the.
Timothy P. Herbert: Demand for the product within the United States with the increased number of centers that we opened up in and continue to drive utilization.
Timothy P. Herbert: Thank you. And I show our next question comes from the line of Travis Steed from Bank of America. Please go ahead. Hey, thanks for taking my question. I guess, you know, why do you think U.S. centered?
Robert Justin Marcus: Thank you.
Robert Justin Marcus: And I show. Our next question comes from the line of Travis Steed from Bank of America. Please go ahead.
Travis Lee Steed: And I show our next question comes from the line of Travis Steed from Bank of America. Please go ahead. Hey, thanks for taking my question.
Travis Lee Steed: Hey, Thanks for taking my question I guess, why do you think U S Center utilization.
Travis Lee Steed: It's slow and it's kind of about even if you exclude the new centers this quarter.
Travis Lee Steed: Kind of in line with the second half of last year, which is when you had some of the prior off issues I'm, just really haven't seen any improvement there. So.
Travis Lee Steed: So just curious is there something going on with the new centers, you're adding or older centers maturing.
Travis Lee Steed: Or any kind of rep changes going on in.
Travis Lee Steed: And also curious why youre no longer going to report the kind of the.
Travis Lee Steed: The metrics, we use to track utilization right.
Timothy P. Herbert: Right, I think that utilization continues to be our focus, and I think if you kind of look back at where we were in the first quarter, we're pretty consistent with where we were a year ago when you take into account the inventory shipments with silicone leads. And we know we always have seasonality as we come out of Q4 and move into Q1, and we tend to start wrapping back up, and that, again, gives us the confidence to be able to I think as we kind of look at, as we start maturing the company, and we focus on reporting on revenue, and now we're very happy to start reporting on and committing to profitability for the company as we mature.
Travis Lee Steed: Alright, I think.
Timothy P. Herbert: Utilization continues to be our focus and I think if you kind of look back to where we were back in the first quarter.
Timothy P. Herbert: We're pretty consistent where we were a year ago, when you take into effect the inventory shipments with <unk>.
Timothy P. Herbert: Silicon leads we know we always have seasonality as we come out of Q4 and moving into Q1, and we tend to start ramping back up and that again gives us the confidence to be able to.
Timothy P. Herbert: Kris.
Timothy P. Herbert: The guide as we move through the second half of the year I think as we kind of look at as we start maturing the company and we focus our reporting on revenue and now we're very happy to start reporting on and Canadian profitability for the company as we mature I think it's become less important for us to report on it.
Timothy P. Herbert: I think it's become less important for us to report on the number of centers and the number of new ads, and there are also some proprietary reasons for it to be able to do that as well. But I think that we're making sure that we provide the proper information for people to really be able to model the business and really feel that profitability is going to be a key to helping people out.
Timothy P. Herbert: Number of centers, then and the number of new adds and there's all sorts of proprietary reasons for it to be able to do that as well, but I think that we're making sure that we provide the proper information for people to really be able to model the business and really feel profitability is going to be a key to two.
Timothy P. Herbert: Some people out there.
Adam Maeder: And I show our next question comes from the line of Adam Maeder from Piper Sandler. Please go ahead.
Speaker Change: Thank you.
Timothy P. Herbert: And I show. Our next question comes from the line of Adam <unk> from Piper Sandler. Please go ahead.
Timothy P. Herbert: Hi, good afternoon. Thank you for taking the questions. I wanted to start with a guidance question. So the guidance that you raised, I wanted to just better understand, are we, are you guys, you know, attributing that primarily to the OUS business? Should we spread it across both US and OUS? Just help us kind of, I guess, think through that. And then, you know, any color, Tim, that you're willing to provide on Q2 trends thus far in the quarter. I have the street at $188 million for Q2 consensus revenue. I'm curious if you're willing to give a comment there as well. And I did have one follow-up. Thanks.
Adam Maeder: Hi, good afternoon, and thank you for taking the questions wanted to start with a guidance question. So the raised guidance I wanted to just better understand are we are you guys attributing that primarily to the O U S business is that should we spread it across both U S and O U S. Just help us kind of think through that.
Timothy P. Herbert: And then any color Tim that you are willing to provide on Q2 trends thus far in the quarter.
Timothy P. Herbert: The Street at 188 million for Q2 consensus revenue curious if youre willing to give up a comment there as well, but I did have one follow up thanks, Okay that sounds good I think that.
Timothy P. Herbert: Okay, that sounds good. I think that when we look at it, we're seeing good progress in Europe. We did have a little bit of a rebound effect with the derogation in Germany, which is strong, but we're seeing strong momentum going forward there, too. So the European team is performing very well, as is the team in the United States. So, well, I think there is a complementary element to some growth in international revenue, which is wonderful.
Timothy P. Herbert: Well when we look at it we're seeing good progress in Europe, we did have.
Timothy P. Herbert: Little bit of a rebound effect with the derogation in Germany, which is strong, but we're seeing strong momentum.
Timothy P. Herbert: Going forward there too so the European team is performing very well as is the team in the United States. So I think there is a complementary element too.
Timothy P. Herbert: Growth in international revenue, which is wonderful.
Rick Buchholz: Yeah, Adam, it's Rick. I'll add to that too. So historically, you know, we have experienced seasonality in the first quarter, and then as far as the compensation of our full-year revenue, that generally builds throughout the year. So I would say the increase in the guidance should be mainly seen in the second half of the year.
Timothy P. Herbert: Yeah, Hi, Adam it's Rick I'll I'll add to that too.
Rick Buchholz: So historically, we have experienced seasonality in the first quarter and then as far as the compensate the composition of our full year revenue that generally builds throughout the year. So I would say that the increase in the guidance.
Rick Buchholz: It should be mainly seen in the second half of the year.
Adam Maeder: I got it. And guys, I apologize. I guess I'm a little confused. So the guidance raised is attributable to both the US and US business going forward. We should kind of spread it across both those geographies, is that correct?
Speaker Change: I got it guys I apologize I guess I'm a little confused so the guidance raise this is attributable to both the U S and O U S business going forward, which you kind of spread it across.
Adam Maeder: Both of those.
Speaker Change: Geographies is that correct.
Rick Buchholz: Yes, there will be from my O.U.S. perspective. We don't give quarterly guidance from an OUS and U.S. perspective, but we did see some catch-up in the first quarter outside the U.S. We had a strong first quarter, but we expect to see some additional catch-up into 2024, but to a little bit lesser extent. We're not guiding towards any sequential growth outside the U.S., but we look forward to continued good numbers outside the U.S.
Adam Maeder: Yes.
Rick Buchholz: There will be.
Rick Buchholz: From a from a.
Rick Buchholz: All U S perspective.
Rick Buchholz: We're not we don't give quarterly guidance from O U S and U S.
Rick Buchholz: S perspective.
Rick Buchholz: We did see some catch up.
Rick Buchholz: In the first quarter.
Rick Buchholz: Outside the U S. We did have a strong first quarter, but we expect to see some of the additional catch up into 2024, but to a little bit lesser extent so.
Rick Buchholz: We're not we're not guiding towards any sequential growth outside of the U S. But we look forward to continued.
Rick Buchholz: Continued good numbers outside the U S.
Adam Maeder: Okay, thanks for that guys, and if I may just at the follow-up, wanted to ask about Surmount OSA. Data came in pretty much as expected down the fairway, so I wanted to ask how you're thinking about any potential impact to the patient funnel either in the back half of 24 or 25. Are you hearing anything in the field, you know, from docs or reps, will folks look to potentially try a GOP1 before going, you know, forward with an Inspire procedure, or do you think there's going to be no impact on the funnel? Thanks again for taking the questions. Thanks Anthony, you bet.
Speaker Change: Okay. Thanks, Thanks for that guys and if I may just with the follow up wanted to ask you about surmount OSA.
Adam Maeder: Data came in pretty much as expected down the fairway.
Adam Maeder: I did want to ask how youre thinking about any potential.
Adam Maeder: The impact to the patient funnel either in the back half of 'twenty four 'twenty five.
Adam Maeder: Are you hearing anything in the field.
Adam Maeder: From docs are reps.
Adam Maeder: Well folks look to potentially try a GOP one before going forward with and inspire procedure or do you think theres going to be no impact to the funnel. Thanks again for taking the questions. Thanks Anthony.
Timothy P. Herbert: Thanks, Adam. You bet. Yeah, so we talked to all our doctors, and we talked to our field. We do hear discussions around the GOP1s, and we know patients with a higher BMI tend to get screened out with a sleep endoscopy, and there are patients who have reported being able to use the GOP1 to be able to lose weight and therefore qualify for Inspire.
Anthony: Yes, so we talked to all of our dogs, when we talk to our field, we do hear discussions around the GOP wants and we know that patients with a higher BMI tend to get screened out with the sleep endoscopy here.
Timothy P. Herbert: And there are patients who have reported being able to use the GOP wanted to be able to lose weight and therefore qualify for inspire so very early early days.
Calum Tishmarsh: So, very early days, but we do get positive reports on that and look forward to continuing to focus on that as we move through the rest of the year. Thank you. And I have next question comes from the line of Calum Tishmarsh from Morgan Stanley. Please go ahead. Yeah, thanks for taking the question, guys.
Calum Tishmarsh: But we do get positive reports on that and look forward to continuing to focus on that.
Calum Tishmarsh: As we move through the rest of the year.
Calum Tishmarsh: And I show our next question comes from the line of Calum Tishmarsh from Morgan Stanley. Please go ahead. Yeah, thanks for taking the question, guys.
Calum Tishmarsh: Thank you.
Calum Tishmarsh: And I show. Our next question comes from the line of Cowen <unk> from Morgan Stanley. Please go ahead.
Timothy P. Herbert: Great, thanks. Thank you very much.
Calum Tishmarsh: Thanks for taking the question guys.
Calum Tishmarsh: Just on the recent commercial insurance updates I know some of the policies kicked in in March. So curious to hear about any early interest or momentum you've seen from those high BMI nahi patients as well as the pediatric down syndrome population as well now they are in scope for coverage just any color on initial progress that would be great. Thanks. Thank you very much.
Timothy P. Herbert: I think we're seeing more progress with the high AHI, the high apneic hypotonic index, because that's a natural step for those patients to be able to receive approval, and we're able to move some of the prior authorizations in process to bring them in and move them forward. With the high BMI approval, remember, that's just a change to the warning to allow patients with a BMI up to 40, but it's still very important that we treat tongue-based collapse versus lateral wall, and we do today still use sleep endoscopy to screen those out, so not that significant of an impact with the high BMI yet, but that's something, as we just talked about with the GOP1s, that perhaps we can leverage that to take advantage there.
Calum Tishmarsh: I think we see more progress with the high ehi the high Avnet kept part Nick Index.
Timothy P. Herbert: Because that's a natural step for those patients to be able to receive approval and we're able to move some of the prior authorizations and process to print to bring them in and then move that forward with the high BMI approval remember that's just a change to the warning to allow patients with a BMI up to 40, but it's still very important that we treat.
Timothy P. Herbert: Tongue based collab versus lateral wall and we do today is still used sleep endoscopy to screen those out so not that significant of an impact with the high BMI, yet, but thats something as we just talked about with the GOP ones that perhaps we can leverage that to take advantage there and the fund news is with the pediatric population.
Timothy P. Herbert: And the good news is with the pediatric population. It's a group that we really care about. We continue to grow the awareness there, and we are opening up additional children's hospitals to be able to participate with Inspire, so we're starting to see some movement with that population as well.
Timothy P. Herbert: That we really care about we continue to grow the awareness there and we are opening up additional.
Timothy P. Herbert: Two of those hospitals to be able to participate with inspire so we're starting to see some movement.
Timothy P. Herbert: With that population as well.
David Rescott: And I'm sure, our next question comes from the line of David Rescott, from Baird. Please go ahead.
Speaker Change: Thank you.
Timothy P. Herbert: Sure.
David Rescott: Next question comes from the line of David Ross Scott.
David Rescott: From Baird. Please go ahead.
David Rescott: Hey, can you guys hear me alright?
David Rescott: Hey.
David Rescott: Great. Thanks for taking the questions. I wanted to follow up on the kind of profit or the positive kind of profit guidance that you gave for the full year, maybe just wondering what some of the bigger drivers are behind that. I know you talked about some more targeted kind of DTC spend in 2024, and I was wondering how big of a piece that is. And when we think about the cadence of that through the year, should we expect that to be more back and loaded, where you have a pretty positive Q4 that kind of outweighs the losses in the rest of the year? Do you think in Q3 you have the potential to deliver a positive quarter as well?
David Rescott: Can you guys hear me alright, yes.
Speaker Change: Great. Thanks for taking the questions I wanted to follow up on the kind of profit or the positive kind of profit guidance that you gave for the full year, maybe just wondering what some of the bigger drivers are behind that I know you talked about.
David Rescott: More tar.
David Rescott: <unk> targeted kind of DTC spend in 2024 previously wondering how big of a piece.
David Rescott: That is and when we think about the cadence of that through the year should we expect that to be more backend loaded where you have a pretty positive Q4 that kind of outweighs the losses in the rest of the year or do you think in Q3 have the potential to deliver a positive quarter as well.
Rick Buchholz: Yeah, hey, David, it's Rick. I'll take that question. So yeah, in the first quarter, our DTC spend was 26 million, a little bit increased year over year. But as we've talked about in the past, and in 2023, we spent about 100 million dollars on DTC. And as we mentioned, you know, with the increased demand from patients, physicians, and adding new centers will continue those investments. But again, that rate will really be moderate or nearly flat for 2024.
David Rescott: Hey, David It's Rick I'll take I'll take that question so yes.
Rick Buchholz: Yes in the first quarter.
Rick Buchholz: DTC spend was $26 million.
Rick Buchholz: A little bit increase over year over year, but as we've talked about in the past and in 2023, we spent about 100 $100 million in DTC.
Rick Buchholz: And as we mentioned with the increased demand.
Rick Buchholz: From patients physicians, and adding new centers will continue those investments, but again that rate will really be moderate.
Rick Buchholz: Because we are focusing on more targeted digital advertising to go after qualified patients and hopefully improve that conversion. So from a profitability standpoint, as we continue to increase revenue, DTC spend will be flat versus 2023. R&D will continue to spend a high teens percentage of revenue. And so that leverage will be gained in increased utilization. And so we put forth the new.
Rick Buchholz: Nearly flat for 2024, because we are focusing on more targeted digital advertising to go after qualified patients.
Rick Buchholz: Hopefully improve that that conversion so from a from a profitability.
Rick Buchholz: Suitability standpoint, as we continue to increase revenue DTC spend will be flat versus 2023.
Rick Buchholz: R&D will continue to spend.
Rick Buchholz: High teens percentage of revenue.
Rick Buchholz: And so that that leverage will be gained in.
Rick Buchholz: Increased utilization.
Rick Buchholz: And so we put forth a new the new.
Rick Buchholz: The new guidance, which we're excited about, which is the bottom line of 10 to 20 cents earnings per share on the bottom line. We mentioned before that we'd be profitable for the second half of the year, and now we're guiding to profitability for the full year. But we haven't broken down yet in which quarter will we turn that corner? But we're excited about the ability to be profitable for the year.
Rick Buchholz: The new guidance and that we're excited about which is a bottom line of 10 to 20 earnings per share in the bottom line.
Rick Buchholz: We mentioned before that we would be profitable for the second half of the year and now we're guiding to profitability for the full year, but we haven't broken down and which quarter. You know that we turned that corner, but we're excited about the ability to be profitable for the year.
Speaker Change: Thank you.
Anthony Petrone: And I show our next question comes from the line of Anthony Petrone from Mizzou Hall. Please go ahead.
Rick Buchholz: And I show. Our next question comes from the line of Anthony Petrone from Mizuho. Please go ahead.
Anthony Petrone: Thanks for getting us in here this afternoon. I hope everyone's doing well.
Anthony Petrone: No. Thanks for get US adherence afternoon hope everyone's doing well.
Anthony Petrone: One dynamic in the U.S. to explore a little bit is just the sort of push out of Inspire5. You think there's, you know, maybe a little bit of pause that you saw in 2Q that could maybe extend, or in 1Q that can extend into 2Q. How did that dynamic play out in the quarter? And I'll have a quick follow-up. Thank you.
Anthony Petrone: One dynamic on in the U S to explore a little bit just the sort of push out of inspire five.
Anthony Petrone: Do you think there is maybe a little bit of pause that you saw in <unk>.
Anthony Petrone: That could maybe extend.
Anthony Petrone: In <unk> that can extend into <unk>, how does that dynamic play out in the quarter and have a quick follow up thank you.
Timothy P. Herbert: Sure. No, we don't see any delay. We like the progress we're making with Inspire 5, and the package is fully put together, and it's in review with the FDA, and we're running our program and starting our soft launch later this year, and full launch in 2025. So we still remain very, very excited about the Inspire 5 portfolio that we'll be launching.
Speaker Change: Sure No we don't see any delay we like with the progress, we're making with inspire five.
Timothy P. Herbert: And the packages probably put together and it's in review with the FDA and we're running our program targeting our soft launch later this year and for.
Timothy P. Herbert: Full launch in 25, so we still remain very very.
Timothy P. Herbert: Excited about the inspire five portfolio that we'll be launching.
Anthony Petrone: And maybe just a level set going back a little bit to UnitedHealthcare and the expanded, you know, coverage there. They did have one, you know, sort of preemptive step with mandibular repositioning devices. It seems like a minor step to us, yet that label is greatly expanded. The coverage is greatly expanded to match FDA.
Timothy P. Herbert: And maybe just to level set going back a little bit to unitedhealthcare in the expanded.
Anthony Petrone: Coverage there they did have one.
Anthony Petrone: Sort of.
Anthony Petrone: Preemptive step with Mandibular repositioning devices. It seems like a minor step to us yet that label has greatly expanded the coverage has greatly expanded to match FDA. So maybe just a little bit on the push pull there you think theres any slight hiccup from mandibular.
Timothy P. Herbert: So maybe just a little bit on the push-pull there. Do you think there's any slight hiccup from Mandibular, but on the flip side, it seems like this is a great up, you know, an expansive opportunity just from an overall coverage standpoint? So how does that push and pull play out through the remainder of the year with United specifically? Thank you. Yeah, thank you.
Timothy P. Herbert: But on the flip side. It seems like this is a great app.
Timothy P. Herbert: An expansive opportunity just from overall coverage standpoint, so how does that push and pull play out through the remainder of the year with United specifically thanks.
Timothy P. Herbert: Yeah, thank you. I think that's a very good observation that you made there.
Speaker Change: Thank you I think that's a very good observation that you make there and I think that we agree that the upside with the high haf's, specifically as well as to the pediatric population far outweighs the documentation that we put into the prior authorization for Matt <unk> advancement devices or oral appliance there.
Timothy P. Herbert: And I think that we agree that the upside with the high AHI specifically, as well as for the pediatric population, far outweighs the documentation that we put into the prior authorization for mandibular advancement devices or oral appliance therapy. And we think that our team works to make sure that the healthcare providers have the proper documentation in the prior authorizations that go to UnitedHealthcare. So we don't see a significant challenge from documenting oral appliances, but we do see a good upside with especially the high AHI and then secondarily with the pediatric population. So yeah, great observation, thanks.
Timothy P. Herbert: Therapy, and we think that that our team works to make sure that the health care provider.
Timothy P. Herbert: Have the proper documentation and the prior authorizations that go to United Healthcare. So we don't see a significant challenge.
Timothy P. Herbert: Documenting that the oral appliances, but we do see good upside with especially the high Hei and then secondarily with the pediatric population. So yes, great observation. Thanks.
Christopher Thomas Pasquale: And I show our next question comes from the line of Chris Pasquale from Nifrin. Please go ahead.
Speaker Change: Thank you.
Timothy P. Herbert: And I show. Our next question comes from the line of Chris Pasquale from Nathan. Please go ahead ma'am.
Christopher Thomas Pasquale: Thanks. Hey, guys, one quick one on Predictor. Do you have any plans to present that data or disclose the headline results prior to publication?
Christopher Thomas Pasquale: Thanks, Hey, guys. One quick one on predictor, just any plans to present that data, we will disclose the headline results prior to the publication.
Timothy P. Herbert: I'm sure we'll probably have a presentation down the road. Where we stand today and with the timing of the AASM, which is the sleep meeting in June, I don't think we're going to be in a position to present there, but we will be looking for a public conference as we work on publication in parallel. So we'll still push for it later in the summer or early fall, possibly with the AAO-ISS meeting.
Timothy P. Herbert: Sure, we'll probably have a presentation down the road, where we stand today and with the timing of the ASM, which is the sleep meeting in June I don't think were going to be in a position to.
Timothy P. Herbert: Present, there, but we will be looking for a public conference.
Timothy P. Herbert: As we work public.
Timothy P. Herbert: Publication in parallel so we will still push for later in the summer or early fall, possibly with the Oss meeting, but we will look to get that information out as soon as we can.
Christopher Thomas Pasquale: Okay, and then just circling back to Surmount. When you think about your current patient population, I know if you look at the adhere registry, the average BMI was around 29. Do you think that's still an accurate reflection of the patients you're treating commercially, or has that shifted at all since the label expansion? Just want to draw a distinction between the patients that were in this study at baseline and who you guys are seeing on a day-to-day basis. You know, I think, I think, good observation again. I think the patient should...
Timothy P. Herbert: Okay.
Christopher Thomas Pasquale: And then just circling back to surmount.
Christopher Thomas Pasquale: When you think about your current patient population I know if you look at the adhere registry the average BMI was around 29.
Christopher Thomas Pasquale: Do you think that's still an accurate reflection of your patients you're treating commercially since our label expansion has that shifted at all just want to draw a distinction between the patients that were in this study at baseline and who you guys are seeing on a day to day basis, Yes, I think I think good observation again I think the patient.
Timothy P. Herbert: Yeah, I think I think good observation again I think the patient in the BMI in the STAR trial is Consistent with the BMI that we saw in our 5,000 patient adhere registry And it reflects patients that have a sleep endoscopy and do not have significant lateral wall collapse and that's very consistent with the reports of the Surmount OSA trial who's the patient started with the BMI at 39 So you would expect those patients to be predominantly lateral wall collapse and as they lose weight They can relax that and and expose the tongue base collapse that is so effectively treated with Inspire So I think very very good consistency From the data that we saw and really look forward to seeing additional data When it comes out hopefully this
Timothy P. Herbert: The PMI and the Star trial is consistent with the BMI that we saw in our 5000 patient adhere registry and it reflects patients that have a sleep endoscopy and do not have significant lateral wall collapse.
Timothy P. Herbert: And that's very consistent with the reports of the.
Timothy P. Herbert: Surmount OSA trial, who is the patient started with the PMI at 39. So you would expect those patients we predominantly lateral wall collapse and as they lose weight.
Timothy P. Herbert: They can relax that Ed and expose the tank based class that so effectively treated with inspire so I think very very good consistency.
Timothy P. Herbert: From the data that we saw and really look forward to seeing additional data.
Timothy P. Herbert: When it comes out hopefully this summer.
Speaker Change: Thanks, Tim.
Speaker Change: Thanks, Chris.
Speaker Change: Thank you.
Richard Newitter: And I show our next question comes from the line of Richard Newitter from Truist Securities. Please go ahead.
Timothy P. Herbert: And I show. Our next question comes from the line of Richard <unk> from <unk> Securities. Please go ahead.
Timothy P. Herbert: Alright, thanks for taking the questions. Maybe just first on Inspire 5, I guess. Is the anticipated launch timing the same as it was the last time you provided an update? And then just on Inspire 5, how are you thinking about or potentially, you know, anticipating people, whether it's physicians or consumers, waiting for the Inspire 5 launch? For Inspire 5 to come out relative to the existing solution, I guess, is there a risk that there's a delay in treatment and, you know, however transient that might be, is that something that A, is contemplated in guidance, or B, something you've thought about and are preparing for?
Richard Newitter: Alright, thanks for taking the questions maybe just first on inspire five.
Timothy P. Herbert: Yes.
Timothy P. Herbert: As the anticipated launch timing the same as it was the last time you provided an update and then just on inspire five how are you.
Timothy P. Herbert: Thinking about or potentially.
Timothy P. Herbert: Anticipating.
Timothy P. Herbert: People, whether it's physicians or consumers waiting.
Timothy P. Herbert: For the inspire five to come out relative to <unk>.
Timothy P. Herbert: The existing solution I guess is there risk that that there is a delay in treatment.
Timothy P. Herbert: However, transient that might be is that something that is contemplated in guidance or be something you've thought about and preparing for it.
Richard Newitter: Thanks, Rich. The first answer to your first question is yes. We are running our plan and in line with what we talked about on our last earnings call. Number two is, with the launch, yes, there's always a risk of patients being aware of it, but we will not be marketing this program until the full launch, and so we believe the risk of..., warehousing, if you will, or patients waiting for the new technology is going to be very, very low.
Richard Newitter: Thanks Rich the first answer to your first question is yes.
Richard Newitter: And running our plan and in line with what we talked about at our last last earnings call never too is with the large yes. There is always a risk of <unk>.
Richard Newitter: Patients being aware of it but we will not be marketing. This program Intel that therefore launch and so we believe the risk of <unk>.
Richard Newitter: Warehousing, if you will or patients waiting for the new technology is going to be very very low we have this experience with past products that we have that we haven't experienced.
Richard Newitter: We have this experience with past products that we've had that we haven't experienced any kind of delay from that perspective. But we're certainly aware of that, certainly will monitor that, but we do not believe that's going to have a significant impact as patients who have untreated moderate to severe sleep apnea are very motivated to receive therapy.
Richard Newitter: Any kind of delay from that perspective, but we're certainly aware of that certainly we'll monitor that but we do not believe thats going to have a significant impact as patients who have untreated moderate to very severe sleep apnea are are very motivated to receive therapy.
Timothy P. Herbert: Got it. And maybe just one follow-up on what you are and aren't going to provide going forward. So it sounds like you guys are going to continue providing new account openings and utilization for the remainder of 2024, but starting in 2025, you're no longer going to provide new account openings. And if that's right, how are you going to help analysts and the investment community understand what the utilization trend is in the business, and what will you provide towards that end? Right, that's correct.
Speaker Change: Got it and maybe just one follow up on the.
Timothy P. Herbert: What you are and aren't going to provide going forward. So it sounds like you guys are going to continue providing new account openings and utilization for the remainder of 'twenty four but starting in 'twenty five.
Timothy P. Herbert: One we're going to provide new account openings and if.
Speaker Change: That's right.
Timothy P. Herbert: How are you going to.
Timothy P. Herbert: Help.
Timothy P. Herbert: Analysts and investment community understand what the utilization trend is in the business and what will you provide towards that end.
Timothy P. Herbert: That's correct, and what we're going to be focusing on is our top line revenue growth as well as, more importantly, profitability going forward. And we'll continue our discussions with you, but I think the focus is really going to be top line and bottom line reporting to be consistent across the industry.
Timothy P. Herbert: Right, that's correct and what we're going to be focusing on is our top line revenue growth as well as more importantly.
Timothy P. Herbert: Profitability going forward and we'll continue with discussions with you, but I think the focus is really be topline bottomline.
Timothy P. Herbert: <unk> to be consistent.
Timothy P. Herbert: Across industry.
Speaker Change: Thank you.
Timothy P. Herbert: And I'm sure our next question comes from the line of Shagun Singh from RBC. Please go ahead.
Speaker Change: And I show. Our next question comes from the line of.
Timothy P. Herbert: Sure.
Shagun Singh: Sink from RBC. Please go ahead.
Shagun Singh: Great, thank you so much. I was just wondering if you could talk about, you know, Inspire 5 and the predictor study readout. You know, we've gotten some pretty good feedback on it, and very specifically on Inspire 5. I was wondering if you had any take on potential impact and driving down operating times, you know, that could potentially increase utilization. And then on the predictor study, you know, just how meaningful could this be in speeding up that patient funnel?
Shagun Singh: Great. Thank you. So much I was just wondering if you can talk about on slide five and predictors study readout.
Shagun Singh: <unk> gotten some pretty good feedback on it and very specifically on inspire five I was wondering if you had any big one potential impact in driving down operating times.
Shagun Singh: That could potentially increase utilization and then on the predict the study.
Shagun Singh: Just how meaningful could this be in speeding up that patient funnel and then just lastly, I was wondering if there's any updates on trends in OSA diagnoses I think previously you've called out a bunch of drivers like DLP ones <unk> BDC I think there's general increasing awareness amongst the <unk>.
Shagun Singh: And then just lastly, I was wondering if there's any updates on trends in OSA diagnosis. I think previously you've called out a bunch of drivers like GLP-1s, AFib, DTC. I think there's a general increase in awareness amongst the, you know, PCPs, etc. So just anything new you're seeing on the diagnosis front. Thank you for taking the question. Fantastic. I got them all
Shagun Singh: <unk> et cetera, So just anything you're seeing on the diagnosis front. Thank you for taking the questions.
Timothy P. Herbert: Okay, so with Inspire 5, yes, we do expect to have a reduction in operating time, operating room time for the surgeon, specifically because that will remove the pressure sensing lead, which is now going to be incorporated inside the Inspire 5 neurostimulator, so it's one less product that the surgeon needs to implant. And so we believe that that's going to be a significant reduction. We have talked in the past about our average OR times today being between 60 and 90 minutes, and we believe with Inspire 5, it could go down to between 45 and 60 minutes, so a significant reduction in the time to perform the procedure.
Shagun Singh: Fantastic! I got them all.
Speaker Change: Fantastic I got them all okay. So with inspire five yes, we do expect to have a reduction in operating time.
Shagun Singh: Operating room time for the surgeon, specifically because that will remove the pressure sensing lead which is now going to be incorporated inside the us.
Shagun Singh: Inspire five neurostimulator, so it's one less product.
Shagun Singh: The surgeon needs to implants, and so we believe that that's going to have.
Shagun Singh: Significant reduction.
Shagun Singh: I have talked in the past of our average ore types are they being to between 60 and 90 minutes and we believe with inspire five it could go down to between 45 and 60 minutes. So a significant reduction in the time they've performed the procedure. So we think thats going to.
Timothy P. Herbert: So we think that's going to be very well accepted, both by the patient as well as by the surgeon. Secondly, as far as the patient funnel goes, we know the time for a patient to contact a health care provider, go through the diagnostic process, and get scheduled and receive Inspire therapy takes a significant amount of time, and a key part of it in the middle is to perform the drug-induced sleep endoscopy. It could add anywhere from one to three months to the time, depending upon the scheduling of that specific surgeon.
Shagun Singh: Be very well accepted both for the patient as well as the surgeon secondly, as far as the patient funnel goes we know the time for a patient to contact a health care provider of go through the diagnostic process and get scheduled and receive inspire therapy takes a significant amount of time and a key part of it.
Timothy P. Herbert: In the middle is to perform that drug induced sleep endoscopy, it could add anywhere from one to three months to the time, depending upon the scheduling of that specific surgeon.
Timothy P. Herbert: So we believe with Predictor, if we can identify a population of patients with low BMI that don't necessarily need to have a sleep endoscopy and can have an alternative review, we can reduce the OR time for those patients. We believe patients with higher BMIs likely will have to continue with sleep endoscopy, but we're gonna keep working on the data analysis to be able to show that. But hopefully, in a significant number of patients, we can show an improvement in the patient experience, meaning the time from contact to receiving therapy.
Timothy P. Herbert: So we believe with predictor of we can identify a population of patients with low BMI that don't necessarily need to have a sleep endoscopy and it can have an alternative review that we can reduce the time for those patients. We believe patients with the higher BMI likely we'll have to continue with sleep endoscopy.
Timothy P. Herbert: But we're going to keep working on the data analysis to be able to show that but hopefully in a significant number of patients we can show.
Timothy P. Herbert: In improvement in the <unk>.
Timothy P. Herbert: Patient experience, meaning the time from contact to receiving therapy.
Timothy P. Herbert: And then finally, talking about the trends in obstructive sleep apnea, not only with the awareness that the GLP-1 drugs can create, and those elements such as OPRA on a TV show really create awareness, but when those patients go to their general practitioner, they will be diagnosed with diabetes, heart failure, and obstructive sleep apnea, so we believe that will increase. The Diagnostic Rate of Obstruct Secondly, patients are aware of how well they sleep.
Timothy P. Herbert: And then finally talking about the trends in obstructive sleep apnea have not only with the awareness that the GOP one drugs can create and those.
Timothy P. Herbert: Elements, such as oil product television show really creates awareness of when those patients go to their general practitioner. They will be diagnosed for diabetes for heart failure and for obstructive sleep apnea. So we believe that will increase the diagnostic rate of obstructive sleep apnea secondly patients.
Timothy P. Herbert: We have smart beds. There are watches that are coming out that will track the quality of your sleep. So, generally, society has become more aware of its quality of sleep, and we believe that will just continue to increase the awareness and the diagnostic rates for sleep apnea and, therefore, the... Opportunity for Inspire.
Timothy P. Herbert: They are aware of how well they sleep, we have smart beds. There our watches that will coming out that will track the quality of your sleep. So generally to the society has become more aware of their quality of sleep and <unk> and we believe that will just continue to increase.
Timothy P. Herbert: <unk>.
Timothy P. Herbert: Awareness and the diagnostic rates for sleep apnea and therefore the.
Timothy P. Herbert: Opportunity for inspire.
Speaker Change: Thank you.
Jonathan David Block: And I show our next question comes from the line of John Block from Seafield. Please go ahead.
Timothy P. Herbert: And I show. Our next question comes from the line of Jon Block from Stifel. Please go ahead.
Jonathan David Block: Thanks, guys, and good afternoon.
Jonathan David Block: Thanks, guys and good afternoon.
Jonathan David Block: Maybe just the first one any update on other privates Cowen.
Jonathan David Block: Maybe just the first one; any update on other private You know, call it coverage policies changing for the higher BMI AHI. Any update there? Do you expect most of them on board by the end of 2024? And the follow up, Rick, just to shift gears, you know, I'm just curious about the guidance and profitability for the year. You guys continue to be, you know, a solid beat and raise story. So let's just say hypothetically that the year ended at, I don't know, 825 million top line and not the 790 midpoint. How are you gonna handle that?
Jonathan David Block: <unk> coverage policies changing for the higher BMI AHRI any update there and do you expect most onboard.
Jonathan David Block: By the end of 2024, and then the follow up Rick just to shift gears, just curious about the guidance and profitability for the year you guys continue to be.
Jonathan David Block: A solid beat and raise story so, let's just say hypothetically the year ended at I don't know 825 million top line and not the $7 90 midpoint. How are you going to handle that do you see that flow through to the bottom line on the incremental dollar.
Jonathan David Block: You know, do you see that flow through to the bottom line on the incremental dollar? Or is it one of those things where you sort of take that upside and plow it back into the business? I'm just curious if the 10 to 20 cents should move higher proportionally to the, you know, potential upside to the revenue targets. Thanks, guys.
Jonathan David Block: Or is it one of those things, where you sort of take that upside in <unk>.
Speaker Change: I went back into the business I'm, just curious if that 10 to 20 <unk> should move higher proportionately to the potential upside to the revenue targets. Thanks, guys, Hey, Jon Let me take the first one and then hand off to Rick.
Timothy P. Herbert: Yeah, hey John, let me take the first one and then hand it out to Rick. As far as the payers go, we have an active program sending communications out to each of the payers to make sure that they are aware of the FDA approvals for the new indications and encouraging them to, excuse me, update their policies. They're making very good progress. We would like to have most of them taken care of by the end of the year, although Medicare is always challenging because, with the MACs, you have to run through a fixed process to be able to meet with CMS, meet with the MACs, and go through the update process to be able to get the policies updated and reviewed and implemented.
Timothy P. Herbert: First the payers go we have an active program sending in communications out to each of the payers to make sure that.
Timothy P. Herbert: They are aware of the FDA approvals for the new indication and encouraging them to.
Timothy P. Herbert: Excuse me update.
Rick Buchholz: Their policies are making very good progress.
Timothy P. Herbert: We would like to have most of them.
Timothy P. Herbert: <unk>.
Timothy P. Herbert: Taken care of by the end of the year, Although Medicare is always challenging because with the Max you have to run through a fixed process to be able to meet with CMS meet with the Max go through the update process to be able to get the policies updated and reviewed and implemented so Medicare is always a little bit of a delay.
Timothy P. Herbert: So Medicare is always a little bit of a delay getting through there, but the commercial policies have responded quite well, and we expect to continue to keep pushing that, as you mentioned, for the rest of the year.
Timothy P. Herbert: Through there, but the commercial policies have responded quite well and we expect to continue to keep pushing that.
Timothy P. Herbert: As we as you mentioned for the rest of the year, let me hand off to Rick.
Rick Buchholz: Let me hand off to Rick on probability response. Sure. First of all,
Rick Buchholz: Sure. Hey, John.
Rick Buchholz: Our profitability respond sure Hey, John.
Rick Buchholz: First of all, we have not changed our guidance philosophy, and that goes across all of our guidance metrics. But we also, you know, have stayed focused on improving center capacity and utilization. And so, as we continue to improve utilization, let it be known that we continue to make investments in our business for long-term growth. Our revenue growth has been outpacing our OPEX growth. And we're excited to announce that we'll be profitable for the full year on a gap basis. As we continue to make those investments with our 84% gross margins and our OPEX not growing quite as fast as revenue, could we see improved leverage? Yes, but we're not guiding to that at this point.
Rick Buchholz: First of all we have not changed our guidance philosophy.
Rick Buchholz: And that goes across all of our guidance metrics.
Rick Buchholz: But we also.
Rick Buchholz: We stayed focused on improving center.
Rick Buchholz: Capacity and utilization and so as we continue to improve utilization.
Rick Buchholz: Let it be knowing that we continue to make investments in our business for our long term growth.
Rick Buchholz: Our revenue has.
Rick Buchholz: Revenue growth has been outpacing our opex growth.
Rick Buchholz: And we're excited to announce that be profitable for the full year on a GAAP basis.
Rick Buchholz: As we continue to make those investments with our 84% gross margin and our opex not growing quite as fast as as revenue.
Rick Buchholz: Could we see improved leverage yes, but we're not guiding to that at this point.
Speaker Change: Thank you.
Michael Holden Kratky: And I show our next question comes from the line of Mike Kratky from Larynx Partners. Please go ahead.
Rick Buchholz: And I show. Our next question comes from the line of Mike Kratky from Leerink Partners. Please go ahead.
Michael Holden Kratky: Hi, everyone. Thanks for saving our questions. The first one, is there any scenario where some of the secondary endpoints from Surmount LSA that we could see at ADA could make you, or you've heard KOLs think GLP-1s maybe could have a more negative impact on the business?
Michael Holden Kratky: Hi, everyone. Thanks for taking my question. The first one is there any scenario, where the secondary endpoints to surmount I want to say that we could see at Adi.
Michael Holden Kratky: You are you've heard Kols think DLP ones, maybe could have a more negative impact on the business.
Timothy P. Herbert: From the top-line data that was put forward, I think that's going to be a little bit of a struggle, if I understand the question. I think we look forward to seeing the detailed data, and it's hard to hypothesize on what that data is going to show, but I think if you look at the 51% reduction in AHI in the specific arm, that was just therapy alone, I think that is pretty indicative of what we can expect as we come into the summer, and that shows that they're able to help those patients with a higher BMI lose weight, thereby addressing their lateral wall collapse.
Speaker Change: From the topline data that was put forward I think thats going to be.
Timothy P. Herbert: A little bit of a struggle if I understand the question I think we look forward to seeing the detailed data and it's hard.
Timothy P. Herbert: The size on what that data is going to show, but I think if you look at the 51% reduction in AI in the specific or that was just therapy.
Timothy P. Herbert: Loan I think that is pretty indicative of what we can expect as we come into the summer and that shows that they are able to help those patients at the higher BMI lose weight there.
Timothy P. Herbert: So I think you'll see more of the same as we move into the summer months and be able to look at more specific details, specifically with different groups of... BMI after they lose weight, and then be able to look at the specific AHI reductions for different ranges of BMI. So I really look forward to seeing that data, but believe that data is again going to be in line with what we've talked about to show that these GOP1s will be complementary to Inspire.
Timothy P. Herbert: By addressing their lateral wall collapse. So I think I think you'll see more of the same as we move into the summer months and be able to look at more specific detailed specifically with different groups of.
Timothy P. Herbert: BMI.
Timothy P. Herbert: After they lose weight and then be able to look at the specific.
Timothy P. Herbert: <unk> reductions of different ranges of BMI. So really look forward to seeing that data, but believe that data is again going to be in line with what we've talked about to show that these GOP was will be complementary to inspire.
Michael Holden Kratky: Got it. Understood.
Speaker Change: Got it understood and then maybe just separately you mentioned the impact of some of the wearable devices, Yes, no Samsung got FDA approval for their watch earlier. This year. It seems like you might get a commercial launch of that thank you is there any consideration of that in your guidance and then to what extent does that represented a source of potential upside either near term or longer.
Michael Holden Kratky: And then maybe just separately, you mentioned the impact of some of the wearable devices. Yeah, I know Samsung got FDA approval for their watch earlier this year. Seems like you might get a commercial launch of that. And BQ, is there any consideration of that in your guidance? And then to what extent does that represent a source of potential upside, either near term or longer term?
Timothy P. Herbert: I don't think we've specifically included new technologies in our guide. I know it's still early days for the watches to come out, but smart beds have been in existence for some time.
Michael Holden Kratky: John.
Speaker Change: I don't think specifically we've included the new technologies into our guide I know, it's still early days for the watches to come out, but smart beds have been in existence for some time and I think our outreach programs are really key to driving.
Timothy P. Herbert: And I think our outreach programs are really key to driving our awareness, and we continue to spend a lot of time with general practitioners and cardiologists working our referral networks, which is the classic MedTech marketing as well, to continue to drive referrals. So we aren't that specific in our guide. Pin down that we're specifically dealing with new technologies, but we do believe that they will have a positive impact in the future for sure.
Timothy P. Herbert: Our awareness and don't and we continue to spend a lot of time with general practitioner that cardiologists and working our referral networks, which is the classic med tech marketing as well to continue to drive referrals. So we at that specific into our guide to be able to.
Timothy P. Herbert: Pinned down that were specifically dealing with the new technologies, but we do believe that they will have a positive impact in the future for sure.
Michael Holden Kratky: Got it. Thanks very much. Thank you.
Speaker Change: Got it thanks very much thank you.
Speaker Change: Thank you.
Michael Sarcone: And I show our next question, which comes from the line of Michael Sarcone from Jeffries. Please go ahead.
Michael Holden Kratky: And I show. Our next question comes from the line of Michael Sarcone from Jefferies. Please go ahead.
Michael Sarcone: Hey, good afternoon, and thanks for taking my question. Just, just one for me. So, you know, on the competitive front, you've got a competitor overseas, they released some US data, you know, and it seems like they're going to stress positive data or good results across both non-supine and supine positioning as maybe a point of differentiation when they start detailing in the U.S. Just wanted to get your take on, you know, have you had conversations with physicians and, you know, your thoughts on how meaningful No problem.
Michael Sarcone: Hey, good afternoon, and thanks for taking my question.
Michael Sarcone: Sure.
Michael Sarcone: Just just one for me so on the competitive front.
Michael Sarcone: <unk> got a competitor overseas they released some U S data.
Michael Sarcone: And it seems like theyre going to stress.
Michael Sarcone: Positive data or good results across both non supine in supine positioning as maybe a point of differentiation.
Michael Sarcone: When they start detailing in the U S. Just wanted to get your take on.
Michael Sarcone: Have you had conversations with physicians.
Michael Sarcone: Physicians.
Michael Sarcone: Your thoughts on how meaningful that could be.
Michael Sarcone: Efforts or potential to counter detail.
Timothy P. Herbert: No problem. We don't think it has any impact. We've been talking about Supine AHI with our physicians since 2007, when we launched Inspire. In fact, when I worked on this project inside Medtronic back in the late 1990s and 2000, we were focused on supine AHI. So this is not a new phenomenon.
Michael Sarcone: Claims.
Timothy P. Herbert: We don't have to think it has any impact we've been talking about supine ehi with our physicians.
Timothy P. Herbert: 2007.
Timothy P. Herbert: When we launched inspire in fact when I.
Timothy P. Herbert: Worked on this project inside Medtronic back in the late Ninety's in 2000, and we're focused on supine ehi. So this is not a new phenomenon gravity effects sleep apnea and when you laid supine gravity.
Timothy P. Herbert: Gravity affects sleep apnea, and when you lay supine, gravity pulls the tongue back harder than if you lay on your side. When we program our devices, we program for the worst case, in other words, in a supine position. So we know with certain levels of energy required to treat supine AHI, that's what programs, or that's what patients are programmed for. And then when they roll onto their side, you might argue that they are being overstimulated, and that's true because what we care about is making sure that we have equal treatment in both supine and non-supine positions.
Timothy P. Herbert: Gravity pose the tug back harder than if you lay on your side when we program our devices. We program worst case in other words in a supine position. So we know with certain levels of energy required to treat supine Adi that's what programs or that's what patients are programmed at.
Timothy P. Herbert: And then when they rollout to their side you might argue that they are being over stimulated and thats true because what we care about is making sure that we have equal treatment at both <unk> and non supine, we had specific items and that in our star trial. So.
Timothy P. Herbert: We had specific items in that in our STAR trial, a laser sharp focus on supine AHI since the day we started. Thank you. And I show our next question comes from the line of Larry Biegelsen from Wells Fargo. Please go ahead.
Larry Biegelsen: This is not.
Larry Biegelsen: Not a concern we have been.
Timothy P. Herbert: Focused.
Larry Biegelsen: Laser sharp focused on subprime ehi since the day, we started the company.
Larry Biegelsen: Thank you.
Larry Biegelsen: And I show. Our next question comes from the line of Larry Big Olson from Wells Fargo. Please go ahead.
Larry Biegelsen: Hey guys, thanks for taking the question. Well, one question from
Larry Biegelsen: Hey, guys. Thanks for taking the question one question for me and maybe it'll be a very short answer Rick good to see the profitability.
Larry Biegelsen: <unk> progress.
Larry Biegelsen: Any broad strokes on profitability goals beyond this year and how should we be thinking about tax rate. Thank you.
Larry Biegelsen: Right, so for 2025, we're not providing overall guidance yet for 2025. But, you know, we're going to be profitable in 2024. And we're not expecting it to go backwards. So, we expect to be profitable in 2025 and thereafter. And as far as the effective tax rate goes, we'll get more color on that. We have a lot of NOLs that we will get to recognize on that, and so for purposes of modeling, we'll provide more clarity on effective tax rates in a future call.
Larry Biegelsen: Right so for 2025.
Larry Biegelsen: We're not providing overall guidance here for 2025.
Larry Biegelsen: We're going to be profitable for 2024, and we're not expecting it to go backwards.
Larry Biegelsen: So we expect to be profitable for 2025 and thereafter.
Larry Biegelsen: And as far as the effective tax rate.
Larry Biegelsen: We'll give more color on that we have a lot of Nols that we will get to recognize on that and so for purposes of model. We will provide more clarity on effective tax rates in the future call.
Rick Buchholz: All right. Thank you. Thank you.
Speaker Change: Alright, thank you.
Rick Buchholz: Thank you. And I show our next question comes from the line of Brett Fishbin from Key Bank Capital Markets. Hi, this is actually a list on for Brett.
Speaker Change: Thank you.
Speaker Change: And I show. Our next question comes from the line of Brett <unk> from Keybanc capital markets. Please go ahead.
Rick Buchholz: Hi, This is actually Liz on for Bret. Thanks, So much for taking my questions.
Brett Fishbin: One for me could you guys provide some updates on your broader DTC strategy and how that's been progressing.
Brett Fishbin: Absolutely. We talked about refinement of our program and how we're really focusing our DTC more targeted to our demographic, and that's been very successful. We continue to grow DTC, but as Rick mentioned, we stayed pretty consistent with where we were in 2023, and we're seeing revenue grow beyond that as we're capturing leverage from our DTC program. We continue with both national TV buys as well as with social media, but now we're also getting into targeted digital placement that's shown to be quite effective. So the DTC program has evolved since our commercial approval 10 years ago in 2014 and will continue to evolve as we learn more and find better ways.
Rick Buchholz: Absolutely.
Speaker Change: Go back.
Brett Fishbin: Couple of quarters, but we talked about refinement of our program and how were really focusing our DTC more targeted to our demographic and that's been very successful we continue to grow GTT, but as Rick mentioned.
Brett Fishbin: We stay pretty consistent with where we were in 2023, and we're seeing revenue grow beyond that has for capturing leverage from our DTC program. We continue with both national television buys as well as with social media, but now we're also getting into targeted digital plasma.
Brett Fishbin: That chart to be quite effective so the DTC program has evolved since our commercial approval 10 years ago, and 2014 and will continue to evolve as we learn more and find better ways to reach out to our specific patient population.
Speaker Change: Great. Thank you.
Brett Fishbin: Yes.
Timothy P. Herbert: And I show our next question comes from the line of Michael Polark from.
Speaker Change: Thank you.
Brett Fishbin: And I show. Our next question comes from the line of micro Polack from Wolfe Research. Please go ahead.
Michael K. Polark: If I missed this, but Salesforce for each quarter of the year was 12 to 14. I see you've reaffirmed the guide for the year, but I'm just curious about one Q11 versus. 12 to 14 kind of, is that just timing? Anything to flag there? And you know, I asked just because it seems like a slight deviation and trend from the metric you had been guiding for a long time, and you typically were adding above the quarterly guide, and this is a touch below, so any color on this one would be helpful. No, but a good observation, Michael.
Timothy P. Herbert: Yeah.
Michael K. Polark: Hey, good afternoon apologies, if I missed this but salesforce sales territory ads or accretion in the quarter was 11 I think the guide.
Michael K. Polark: For each quarter of the year was 12 to 14 I see I see you've reaffirmed the guidance for the year, but I'm just curious in <unk> 11 versus.
Michael K. Polark: 12 months 2014 kind of is that just timing anything to flag there and you know I asked just because it seems like a slight <unk>.
Michael K. Polark: And trend that was a metric you had been guiding for a long time and you typically we're adding above the quarterly guide and this is a touch below so any color on this one would be helpful. Thanks observation, Michael I think the.
Timothy P. Herbert: I think it's just timing. We focus our new territory ads based on where we are adding new centers and where the need is. And so we don't specifically target a number of new territories per quarter. And so there's always, as you know, a little bit of fluctuation in there from quarter to quarter, but not a lot of change here. We reinforced our guide going forward and maybe just a little bit of timing on who was ready in the first quarter to be able to add a new territory, and we'll continue that focus going forward. Did I jump early?
Timothy P. Herbert: It's just timing I think the we.
Timothy P. Herbert: We focus our new territory ads based on where we are adding new centers and where the need is and so we don't specifically target a number of.
Timothy P. Herbert: New territories per quarter, and so there's always as you know a little bit of fluctuation in there from quarter to quarter, but.
Speaker Change: Not a lot of change there we reinforced our guide going forward and maybe just a little bit of timing and who is ready in the first quarter to be able to add a new territory and we will continue that focus going forward.
Timothy P. Herbert: Did I jump too early? Did you have a follow-up, too, Michael?
Speaker Change: Did I jumped early did you have a follow up to Micah.
Michael Sarcone: That was good thank you Tim.
Timothy P. Herbert: Yes.
Michael K. Polark: And I share our last question in the queue comes from Suraj Kalia from Oppenheimer & Co. Please go ahead.
Speaker Change: Thank you.
Timothy P. Herbert: And I'm sure. Our last question in the queue comes from Suraj Kalia from Oppenheimer and co. Please go ahead.
Suraj Kalia: Rick, Tim, can you hear me all right?
Suraj Kalia: Yes, Suraj. How are you?
Suraj Kalia: Rick Tim can you hear me alright, yes, Suraj how are you.
Suraj Kalia: Good. I hope everyone is well.
Suraj Kalia: Hope everyone is well so Tim a couple of questions I'll pose them right away and hopefully you get the gist of it.
Suraj Kalia: So, Tim, a couple of questions. I'll pose them right away, and hopefully, you get the gist of it. First and foremost, Tim, in terms of supine versus non-supine, right? There was a recent paper highlighting quite low responder rates and AHI reduction that inspires supine versus non-supine. So I guess if you could help reconcile your comment about the current titration, based on a supine position. So. It helps us understand why the paper is off if it is.
Suraj Kalia: First and foremost Tim in terms of supine non supine great.
Suraj Kalia: There was a recent paper highlighting quite low responder rates and EHR reductions at inspire supine versus non supine.
Suraj Kalia: I guess, if you could help reconcile your comment about the <unk>.
Suraj Kalia: Current titration.
Suraj Kalia: Based on our supine position so.
Suraj Kalia: Help us understand why is the paper.
Timothy P. Herbert: That is one question. And the second question, quickly, Tim, if I could, I understand the consensus commentary about complementarity of GLIPS to OSA and to the hypoglossal nerve and CPAP. I get all that.
Suraj Kalia: It is but that is one question in the <unk>.
Timothy P. Herbert: Question quickly.
Timothy P. Herbert: Could.
Speaker Change: I understand.
Timothy P. Herbert: Sure.
Timothy P. Herbert: Since this commentary about complementarity of clips too.
Timothy P. Herbert: OFC and two hybrid.
Timothy P. Herbert: Hypoglossal nerve and CPAP I get all that.
Timothy P. Herbert: Tim, what I'd love to understand more is, aren't we looking at just one side of the coin, severely obese people coming into, let's say, the obese category? But by the same token, the volume effect of overweight and obese patients is ten times that of severely obese, right? Shouldn't we be looking at the other side of the coin also? I'd love to get your perspective on that. Gentlemen, thank you for taking my questions. Suraj, thank you very much. I got them both.
Timothy P. Herbert: Tim what I'd love to understand more is arent really looking at just one side of the coin severely obese coming into let's say the obese category.
Timothy P. Herbert: But by the same token the volume effect of overweight and obese patients.
Timothy P. Herbert: 10 times that of severe right should we be looking at the other side of the coin also I'd love to get your perspective on that gentlemen, Thank you for taking my question. So.
Timothy P. Herbert: I'm going to go back and look at that paper. I think some of it was subjective evidence that was talked about and not the core evidence. But yeah, our focus is always around supine AHI. In fact, in our clinical studies, we literally screened out patients who did not have supine AHI or were only supine. So we evaluated that in the STAR trial. We've been evaluating that all the way through.
Suraj Kalia: Thank you very much Bob.
Timothy P. Herbert: Can I go back and look at that paper I think some of it was subjective evidence that was talked about.
Timothy P. Herbert: The core evidence, but our focus is always around two pad AHRI in fact in our clinical studies, we literally screened out patients who did not.
Timothy P. Herbert: <unk> <unk> hei and.
Timothy P. Herbert: We're only two five so we evaluated that in the star trial, we've been evaluating that all the way through.
Timothy P. Herbert: It's very clear that supine width gravity is more challenging to treat, but we believe that that's been a key focus for Inspire Synthesis since the beginning of the company, and we'll continue to focus on that going forward. Secondly, on the GOP1s being complementary, it's about the mechanism of action. I know we've talked about this quite a bit.
Timothy P. Herbert: It's very clear that super with gravity is more challenging to treat.
Timothy P. Herbert: We believe that Thats been a key focus for inspire.
Timothy P. Herbert: Beginning of the company and we will continue to focus on that going forward. Secondly on the GOP was been complementary it's about the mechanism mechanism of action I know we've talked about this.
Timothy P. Herbert: Higher BMI patients have more of a lateral wall collapse. Therefore, hypoglossal nerve stimulation is designed to treat tongue bases. Instructions, not lateral wall collapse. So we know as the patients get a higher BMI, that we, the GOP-1s, can be complementary to bring them to a lower BMI and relax the lateral walls. And to your question, the belief is, and I think what you'll see from the Surmount OSA trial, is patients who have a lower BMI do not have the same level of AHI reduction simply because Tongue Base Collapse. That's what inspired it. That's how the two become complementary to each other. Thanks very much for that, Suraj.
Timothy P. Herbert: Quite a bit higher BMI patients have more of a lateral wall collapse hypoglossal nerve stimulation is designed to treat tongue based obstructions not lateral wall collapse. So we know as the patients get a higher BMI that.
Timothy P. Herbert: The GOP was can be complementary to bring them.
Timothy P. Herbert: Two a lower BMI and relaxed the lateral walls and to your question. The belief is and I think what youll see from the surmount OSA trial is patients who have a lower BMI do not have the same level of HIV reduction.
Timothy P. Herbert: Really by the fact that mechanism they don't have lateral wall collapse and GOP ones are not designed to treat.
Timothy P. Herbert: Tom based collapsed, that's what inspired dose that's how the two become copper.
Timothy P. Herbert: Complementary.
Speaker Change: To each other so.
Speaker Change: Thanks, very much for that Suraj.
DeLem: This concludes the Q&A session for the conference. I'd now like to turn it back to Tim for his closing remarks. Thank you all.
Suraj Kalia: Thank you.
DeLem: This concludes our Q&A session for the conference I'd now like to turn it back to Tim for closing remarks.
Timothy P. Herbert: Thank you all for joining the call today. As always, I'm grateful to the growing team of dedicated Inspire employees for their enthusiasm, hard work, and Continued Motivation to Achieve Successive and Consistent Patient Outcomes. The team's commitment to the patients remains unmatched and is the most important element to our success. I wish to thank all of our employees as well as the healthcare teams for their continued efforts as we remain focused on further expanding our business in the U.S., Europe, and Asia. For all of you on the call, we appreciate your continued interest in and support of Inspire. We look forward to providing you with further updates in the months ahead. Thank you all very much.
Timothy P. Herbert: Thank you all for joining the call today as always I'm grateful to the growing team of dedicated inspire employees for their enthusiasm hard work.
Timothy P. Herbert: And continued motivation to achieve successful and consistent patient outcomes.
Timothy P. Herbert: The team's commitment to the patients remain unmatched and is the most important element to our success I wish to thank all of our employees as well as the health care teams for their continued efforts as we remain focused on further expanding our business in the U S.
Timothy P. Herbert: Europe and Asia.
Timothy P. Herbert: For our U for all of you on the call. We appreciate your continued interest and support of inspire.
Timothy P. Herbert: We look forward to providing you with further updates in the months ahead. Thank.
Timothy P. Herbert: Thank you all very much.
Kris King: Kris King.
DeLem: This concludes today's conference call. You may now disconnect.
Speaker Change: This concludes today's conference call you may now disconnect.
DeLem: Okay.
DeLem: [music].
DeLem: Okay.
DeLem: Okay.
DeLem: Okay.