Q1 2024 Hyperfine Inc Earnings Call
Operator: Good afternoon, and welcome to Hyperfine's first quarter 2024 earnings conference call. Currently, all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Marissa Bych from the Gilmore End Group for introductory disclosures.
Good afternoon, and welcome to hyper Finance first quarter 2024 earnings conference call.
Currently all participants are in a listen only mode, we'll be facilitating a question answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes.
MRSA bites: I would now like to turn the call over to MRSA bites from Gilmartin group for a introductory disclosures.
Marissa Elizabeth Bych: Thank you for joining today's call. Earlier today, Hyperfine Inc. released financial results for the quarter ended March 31, 2024. A copy of the press release is available on the company's website as well as at sec.gov. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
MRSA bites: Thank you for joining today's call.
MRSA bites: Earlier today Hyperfine, Inc, released financial results for the quarter ended March 31, 'twenty 'twenty four copy.
MRSA bites: A copy of the press release is available on the company's website as well as SEC tacos.
Marissa Elizabeth Bych: Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance, expense management, expectations for hiring, training, and adoption, growth in our organization, market opportunities, commercial and international expansion, regulatory approvals, and product development, are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.
MRSA bites: Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
MRSA bites: Any statements contained in this call that relate to expectations or predictions of future events.
MRSA bites: Salt or performance are forward looking statements.
MRSA bites: All forward looking statements, including without limitation those relating to our operating trends and future financial performance expense management expectations for hiring training and adoption broken our organization market opportunity commercial and international expansion regulatory approvals and product development are based upon.
MRSA bites: Our current estimates and various assumptions.
MRSA bites: These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
Marissa Elizabeth Bych: Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risks factor section of our latest periodic filing with the Securities and Exchange Commission. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 13, 2024. Inc. disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I will turn the call over to Maria Sainz, President and Chief Executive Officer.
MRSA bites: Accordingly, you should not place undue reliance on these statements for.
MRSA bites: For a list and description of the risks and uncertainties associated with our business.
MRSA bites: Refer to the risk factors section of our latest periodic filing with the Securities and Exchange Commission.
MRSA bites: This conference call contains time sensitive information and is accurate only as of the live broadcast today May 13 2024.
MRSA bites: Hyperfine, Inc, 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.
MRSA bites: And with that I will turn the call over to Maria <unk>, President and Chief Executive Officer.
Maria Sainz: Good afternoon, and thank you all for joining us. On the call with me today is our Chief Administrative Officer and Chief Financial Officer, Brett Hale. We're off to a solid start in 2024 with healthy top-line growth and a 3.3 million revenue quarter. We continue to add flagship institutions in the U.S. and build strong programs, giving us a solid foundation to drive the development of this new market for portable brain MR. We also recognize significant international contributions in Q1, driven by the addition of SELECT outside of the U.S. market to our commercial focus.
Maria: Good afternoon, and thank you all for joining us on the call with me today is our chief administrative officer, and Chief Financial Officer, Brad Hale.
Maria: We are off to a solid start in 2024 with healthy top line growth and a $3 3 million revenue quarter.
Maria: We continue to our flagship institutions in the U S and build strong program, giving us a solid foundation to drive the development of these new markets affordable brain EMR.
Maria: We also recognized significant international contribution in Q1, driven by the addition of select outside of the U S market to our commercial focus and.
Maria Sainz: And I'm also very excited about the progress we've made in the quarter on our Alzheimer's program and our stroke study. As a team, we delivered strong success across all fronts while maintaining spending discipline and preserving capital. I am very proud of the lean execution of the Hyperfine team in Q1.
Maria: And I'm also very excited about the progress we've made in the quarter on our Alzheimers program on our stroke study.
Maria: The team we delivered strong success across all fronts, while maintaining spending discipline and preserving capital I am very proud of the execution of the Hypersound team in Q1.
Maria Sainz: Innovation, clinical evidence, and commercialization drive our success in the near and long term. In 2024, we will remain an early commercial stage company while investing healthily in development and clinical activities that will drive commercial growth through expansion into new clinical applications and new sites of care in 2025 and beyond. We continue to have a significant focus on innovation. We launched our latest AI-powered software in January and have received very positive feedback from users on the image quality of our DWI sequence, which is clinically important for stroke detection. The latest software includes proprietary AI and deep learning algorithms and expands denoising to all sequences available on the subsystem. I'm looking forward to using it.
Maria: Innovation clinical evidence and commercialization drive our success near and long term.
Maria: 124, we remain on early commercial stage company, while investing hopefully in development and clinical activity that we drive commercial growth through expansion into new clinical applications of new sites of care in 2025 and beyond.
Maria: We continue to have a significant focus on innovation.
Maria: We launched our latest power software in January and have received very positive feedback from users on the image quality of our Dwi's sequence, which is clinically important for stroke detection.
Maria: The latest software includes proprietary AI and deep learning to operate them and expense seasonally seem to all sequences available on the system.
Speaker Change: Looking forward.
Maria Sainz: We continue to invest in all areas of innovation, including hardware, software, and AI. We remain committed to launching a steady cadence of AI-powered software and accelerating sequence development improvements, and we expect to release our next AI-powered software by late summer. We plan to continue to improve image quality and shorten acquisition time, which is important for the use of the soup system in acute settings. Technology improvements, image quality, and usability make the portable SupBrain MR scanner more relevant across more clinical applications and sites. I want to now focus on clinical evidence.
Speaker Change: We continue to invest in all areas of innovation, including hardware software and AI.
Speaker Change: We remain committed to launching a steady cadence of air power software and sequence development improvement and we expect to release, our next day Air power software by late summer.
We plan to continue to improve image quality and shorten acquisition time, which is important for the use of the soup system in acute settings.
Speaker Change: Technology improvements in image quality and usability makes it affordable to bring them our scanner more relevant across more clinical application.
Speaker Change: Sites of care.
Speaker Change: I want to now focus on clinical evidence I have mentioned before we are developing a new market affordable Bryn Mawr.
Maria Sainz: As I have mentioned before, we are developing a new market for portable brain MR. The value of our platform technology is that it enables timely and early clinical decisions at multiple sites of care. Our clinical work is intended to yield data to drive awareness and adoption of our differentiated technologies across different clinical applications, as we already benefit from a very broad, clear indication by FDA for brain imaging of patients of any age. The SOOP system scans are also covered by the same reimbursement codes used for conventional MRIs.
Speaker Change: The value of our platform technology is that it enables timely and early clinical decisions at multiple sites of care.
Speaker Change: Our clinical work at the intended to yield the data to drive awareness and adoption of our differentiated technology.
Speaker Change: Across different clinical applications as we already benefit from a very broad indication by FDA for brain imaging patients of any age.
Speaker Change: System gas are also covered by the same reimbursement codes used for conventional MRI.
Maria Sainz: First, our clinical development aims to position the tube system as a clinical tool in the hands of clinicians that perform neurointervention. In this area, our immediate focus is our study to assess the detection and workflow value of Zoom in acute stroke triage. Our second focus is on superstition as a tool for clinicians managing and caring for patients suffering from chronic neurodegenerative diseases.
Speaker Change:
Speaker Change: Our clinical development aims to position to chip system as a clinical tool in the hands of clinicians that perform neuro intervention.
Speaker Change: In this area our immediate focus is our study to assess the detection and workflow value of soup in acute stroke triage.
Speaker Change: Our second focus is to position.
Speaker Change: Position as a tool for clinicians managing that carrying for patients suffering from chronic neurodegenerative diseases.
Maria Sainz: Here, our greatest opportunity is our active Alzheimer's approach. These two near-term areas of clinical use extension, stroke and Alzheimer's, are massive, multi-billion dollar markets for the soup system in the U.S. alone. These are also markets with a net need that align with the strength of soup technology, namely soup's portability, small footprint, easy access, and high ease of use.
Speaker Change: Here, our greatest opportunity is our octave all Cypress program.
Speaker Change: These two near term areas of clinical use expansion stroke in Alzheimers are massive multibillion dollar market for the <unk> system in the U S alone.
Speaker Change: These are also markets with unmet needs that align with our strengths of soup technology, namely portability small footprint easy access and high ease of use.
Maria Sainz: As a reminder, our technology aims to broaden the reach of brain MRIs in new clinical uses and sites of care complementing conventional MRIs. Turning to a more detailed update on our Alzheimer's disease, MRI is becoming a key component of Alzheimer's care, and there is a strong potential for the subsystem to become a very valuable tool to enable more scalable patient-centric care models. Over 50 million people globally suffer from Alzheimer
Speaker Change: A reminder, our technology is to broaden the reach of brain MRI in the new clinical users and sites of care complementing conventional MRI.
Speaker Change: Turning to a more detail update on our Alzheimers effort.
Speaker Change: <unk> is becoming a key component of hulsizer scare and there is a strong potential for the <unk> system to become a very valuable tool to enable scalable patient centric care model.
Speaker Change: Over 50 million people globally suffer from Alzheimer's.
Maria Sainz: Given the vast and compelling opportunity this presents, we have mobilized to build a comprehensive Alzheimer's program, beginning with our Alzheimer's Utility Study CARE PMR, which is led by Dr. Ben Zinger at Washington University School of Medicine. In the study, clinicians have placed subsystems at local Lekembi Infusion Centers. The study compared high-field MRIs and portable ultra-low-field MRIs to assess the ability of soup to detect aria complications in patients who are taking this amyloid targeting therapy.
Given the box and compelling opportunity. This presents we have mobilized to be the comprehensive all Simers program, beginning with our Alzheimers utility study care TMR.
Speaker Change: <unk> is led by Dr. Benzinger at Washington University School of Medicine.
Speaker Change: In this study clinicians have placed <unk> systems at local Mackenzie infusion centers.
Speaker Change: Study comparing high yield MRI and portable ultra low MRI to assess.
Speaker Change: The ability of soup to detect the ARIA complications in patients who are taking this amyloid targeting therapy.
Maria Sainz: By bringing imaging closer to the patient than a conventional MRI, we expect to significantly optimize workflow and ultimately open up the opportunity for more patients to be treated safely and efficiently. We expect preliminary data from this study to be shared by the end of 2024 in Stroke. We continue to enroll patients in our Action PMR study, which has now surpassed 100 patients. Action PMR is a multi-center evaluation assessing the use of SUCC systems in detecting acute ischemic stroke.
Speaker Change: My breathing imaging closer to the patient than a conventional MRI, we expect to significantly optimize workflow and ultimately open up the opportunity for more patients to be treated safely and efficiently.
Speaker Change: We expect preliminary data from this study to be shared by the end of 'twenty three 'twenty four.
Speaker Change: In stroke.
Speaker Change: We continue to enroll patients in our auctions TMR study, which has now surpassed 100 patients.
Speaker Change: Auction PMI is a multicenter evaluations assessing the use of <unk> system in detecting acute ischemic stroke, we remain bullish about this opportunity, which will open up the placement of two units in emergency departments on the hub and spoke stroke networks and look forward to sharing updates.
Maria Sainz: We remain bullish about this opportunity, which will open up the placement of SUCC units in emergency departments and hub-and-spoke stroke networks, and look forward to sharing updates in the coming quarters. Additionally, our technology was highlighted in four abstracts at the International Probe Conference, which was held in February. These abstracts highlighted the clinical utility and applications of portable ultra-low-field-grade MR imaging.
Speaker Change: In the coming quarters.
Speaker Change: Additionally, our technology work highlighted in for abstract at the International stroke Conference, which was held in February.
Speaker Change: These abstracts highlighted the clinical utility and applications affordable ultra low field brain MRI imaging.
Maria Sainz: I also want to provide additional detail on our commercial progress in Q1. In the U.S., we continue to add flagship institutions to our user base. Most recently, through the addition of MedStar Washington Hospital Center in Washington, D.C., we remain very focused on building stroke programs. We have newly established a SOOP user community to share best practices for the clinical use of SOOP to propel further adoption of this transformative technology.
Speaker Change: I also want to provide additional detail on our commercial progress in Q1.
Speaker Change: In the U S. We continue to watch flagship institutions for user base.
Speaker Change: Most recently through the addition of Medstar, Washington Hospital Center in Washington D C.
Speaker Change: We remain very focused on building stroke program.
Speaker Change: <unk> newly established a suit user community to share best practices.
Speaker Change: The clinical use of <unk> to propel us further adoption of these transformative technology.
Maria Sainz: In international markets, we have established a distribution infrastructure to support additional commercial activities. As we announced late last week, we have now appointed distributors in three key European markets and have hired an experienced market development resource to coordinate our international efforts. The distributor model allows us to focus on driving international revenue growth without significant OPEC use.
Speaker Change: In international markets, we have established a distribution infrastructure to support the additional commercial effort.
Speaker Change: As we announced late last week, we have now appointed distributors in three key European markets and have hired an experienced market development resource to coordinate our international effort.
Speaker Change: The distributor model allows us to focus on driving international revenue growth without significant opex views.
Maria Sainz: I am very pleased with the progress we are making on the three areas of focus and investment for our company and doing so while maintaining spending discipline. Our efforts in innovation, clinical evidence, and commercialization support a comprehensive strategy that will yield an acceleration of our business and growth in 2025 and beyond. The opportunities ahead are incredibly large and compelling, and our execution is very strong. I will now turn the call over to Brett to review our performance in court.
Speaker Change: I am very pleased with the progress we're making on the three areas of focus and investment for our company and doing so while maintaining spending discipline our efforts in innovation clinical evidence and commercialization support our comprehensive strategy, which will yield an acceleration of our business and growth.
Speaker Change: In 2025 and beyond.
Speaker Change: The opportunities ahead are incredibly large and compelling our execution is very strong I will now turn the call over to Brad to review our performance in the quarter.
Brett Hale: Thank you, Maria. Turning to our financial results for the first quarter of 2024, revenue for the quarter ended March 31, 2024 was $3.3 million, up 25% compared to the first quarter of 2023, driven by the sale of 13 swoop systems. Although our global average selling price was lower in the quarter, primarily a function of a heavier international mix, our value proposition has held very strongly with U.S. institutions.
Brett Hale: Thank you Maria turning to our financial results for the first quarter 2024.
Brett Hale: Revenue for the quarter ended March 31, 2024 was $3 3 million up 25% compared to the first quarter of 2023, driven by the sale of <unk> systems.
Brett Hale: Although our global average selling price was lower in the quarter, primarily a function of heavier international mix our value proposition has held very strong with U S institutions.
Brett Hale: Gross profit for the first quarter of 2024 was $1.4 million, compared to $1.2 million in the first quarter of 2023, resulting in a gross margin of 41.1%. RMD expense for the first quarter of 2024 was $5.6 million, compared to $5.5 million in the first quarter of 2020. Sales, general, and administrative expenses for the first quarter of 2024 were $6.4 million compared to $8.7 million in the first quarter of 2023. Our year-over-year reduction in SG&A and flat R&D spend is representative of our focus to fund future growth catalysts while maintaining spending discipline.
Brett Hale: Gross profit for the first quarter of 2024 was $1 4 million compared to $1 2 million in the first quarter of 2023, resulting in a gross margin of 41, 1%.
Brett Hale: R&D expense for the first quarter of 2024 were $5 6 million compared to $5 5 million in the first quarter of 2023.
Brett Hale: Sales general and administrative expenses for the first quarter of 2024 were $6 4 million compared to $8 7 million in the first quarter of 2023.
Our year over year reduction in SG&A and flat R&D spend is representative of our focus to fund future growth catalyst, while maintaining spending discipline.
Brett Hale: The net loss for the first quarter was $9.8 million, equating to a net loss of $0.14 per share, as compared to a net loss of $12.2 million, or a net loss of $0.17 per share, for the same period of the prior year. The improvement in net loss was a result primarily of cost savings initiatives implemented across the business over the past. Our cash burn for the first quarter was $12.0 million, and as of March 31, 2024, we have $63.2 million in cash and cash equivalents on our balance.
Brett Hale: Net loss for the first quarter was $9 8 million equating to a net loss of <unk> 14 per share as compared to a net loss of $12 2 million or a net loss of <unk> 17 per share for the same period of the prior year.
Brett Hale: The improvement in net loss was a result, primarily of cost savings initiatives implemented across the business over the past year.
Brett Hale: Our cash burn for the first quarter was $12 1 million and as of March 31, 2024, we have $63 2 million in cash and cash equivalents on our balance sheet.
Brett Hale: Similar to prior years, our first quarter burn rate is seasonally higher than other quarters of the year. We remain on track to execute our cash burn outlook for 2024 and end the year with a healthy remaining balance of cash and cash equipment. Now, turning to guidance.
Brett Hale: Similar to prior years, our first quarter burn rate is seasonally higher than other quarters of the year.
Brett Hale: We remain on track to execute our cash burn outlook for 2024 and end the year with a healthy remaining balance of cash and cash equivalents.
Brett Hale: We are maintaining our revenue outlook for the full year 2024. We expect revenue in the range of $12 to $15 million. We continue to expect gross margins to be in the range of 45 to 50% for the year as we grow and scale commercially. Our current gross margin profile is attractive for an imaging company, and we are very pleased to be driving healthy gross margins, even at a small scale, putting us in a position for future margin expansion.
Brett Hale: Now turning to guidance, we are maintaining our revenue outlook for the full year 2024.
Brett Hale: We expect revenue in the range of $12 million to $15 million.
Brett Hale: We continue to expect gross margins to be in the range of 45% to 50% for the year as we grow and scale commercially.
Brett Hale: Our current gross margin profile is attractive for an imaging company and we are very pleased to be driving healthy gross margins, even at small scale, putting us in position for future margin expansion.
Brett Hale: We continue to anticipate a total cash burn of approximately $40 million for the full year 2024. We expect our cash burn to be lower than 2023 levels, and we will execute this plan while sustaining investments in our three focus areas, including our robust Alzheimer's program. We also continue to see a cash runway for the business into early 2026. At this point, I'd like to turn the call back to Maria for closing comments.
Brett Hale: We continue to anticipate total cash burn of approximately $40 million for the full year 2024.
Brett Hale: We expect our cash burn to be lower in 2023 levels and we will execute this plan, while sustaining investments and a refocus areas, including our robust Alzheimers program. We also continue to see a cash runway through the business into early 2026.
Brett Hale: At this point I'd like to turn the call back to Maria for closing comments.
Maria Sainz: Thank you, Brett. I'm proud of the progress the Hyperfine team made in the first quarter, and I remain very optimistic as to what this team can deliver. The next few months will be busy for the Hyperfine team with important clinical conferences, as we will be participating in the American Society of Neuroradiology in May and the Alzheimer's Association International Conference in July. We also plan to host an analyst and investor webinar spotlighting our clinical advancements and strategy to actively expand into outpatient and office types of care.
Thank you Brad I'm proud of the progress of Hyperfine team made in the first quarter and I remain very optimistic as to what <unk> can deliver the.
Maria: The next few months will be busy for the hyper pricing with important clinical conferences as we will be participating in the American society of neuro radiology in May and the Alzheimer's Association International Conference in July.
Maria: We also plan to host an analyst and Investor Webinar, spotlighting, our clinical advancements and strategy to actively expand into outpatient and alternate sites of care.
Maria Sainz: We are committed to continuing to drive execution at the highest level across technology development, clinical work, and commercialization and do so with strong spending discipline. With that, I want to thank you all for your time and open up the line for questions. Thank you.
Maria: We are committed to continuing to drive execution at the highest level across technology development clinical work in commercialization and do so with a strong spending discipline.
Speaker Change: With that I want to thank you all for your time and open up the line for questions.
Operator: Thank you, and at this time, we'll conduct a question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Once again, that's star 1 1 for questions. Please stand by; we'll compile the Q&A roster. One moment for the first question. And our first question will come from Larry Beagleson from Wells Fargo. Your line is open.
Speaker Change: Thank you and at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again once again Thats star one for questions. Please standby with component the Q&A roster.
Speaker Change: One moment for our first question.
And our first question confine and Larry <unk> from Wells Fargo. Your line is open.
Simran Aung San: Hi, good afternoon. This is Simran Aung San, Larry.
Speaker Change: Hi, good afternoon, the system run on for Larry Thanks for taking the questions.
Maria Sainz: Thanks for taking the question. First, maybe starting off on guidance, you beat the Q1 guide or, you know, consensus estimates by about a quarter of a million, and you're on a run rate now of over $13 million for the year, you know, if we just take the Q1 performance. So, why not raise the low end of the guidance range? You know, was there any kind of a one-time or one-time benefit in Q1? I know on the prior call, you had mentioned some capital placements that might have slipped into Q1. So, you know, was that sort of beneficial to the quarter?
Larry: Just first maybe starting off on guidance you beat the Q1 guide or.
Larry: Consensus estimate by about a quarter of a million dollars and you're on a run rate now is over $13 million for the year.
Speaker Change: If we just take the Q1 performance so why not raise the low end of the guidance range.
Speaker Change: Was there anything kind of.
One time or a one time benefit in Q1.
Speaker Change: I know on the prior call you had mentioned some capital placements that might have slipped into Q1. So.
Speaker Change: Was that sort of beneficial to the quarter.
Maria Sainz: Hi, how are you? So there wasn't anything that was just one time. There is constantly a flow of orders and POs that we get. Sometimes we think they're gonna fall at the back end of a quarter and then they fall at the beginning of the following, but there was nothing abnormal in Q1. We issued guidance only seven weeks ago, and I feel really good, and I feel we're off to a strong start, but I also don't want to get ahead of ourselves, so it's self-prudent to stick with guidance until we get a little bit more time under our belts, especially as we have now activated international partnerships and other things. There could be a time to be a little bit more aggressive, but this time, it feels best not to get ahead of ourselves.
Speaker Change: Hi, how are you.
Speaker Change: So there wasn't anything that was onetime.
Speaker Change: There is constantly a rolling all orders and Npls that we get sometimes we think they're going to fall on the back end up a quarter and then they followed the beginning of the following but there was nothing abnormal in Q1.
Speaker Change: We issue guidance only seven weeks ago, and I feel really good in IC and we're off to a strong start but I also don't want to get ahead of ourselves. So you sell to them to stick with guidance.
Speaker Change: And we get a little bit more time under our belt.
Speaker Change: Especially as we have now activated international partnerships and other things.
Speaker Change: There could be a time to be a little bit more aggressive, but this time it feels best won't get ahead of ourselves.
Brett Hale: Great, very helpful. And then, you know, gross margin in the quarter was maybe a bit softer than the street was modeling. And, you know, I think part of that was the device ASD came in a bit lower than we've seen in past quarters. So I guess one thing that gives you the confidence to reaffirm the full year guide of 45 to 50%? And two, how should we think about pricing and pricing durability going forward?
Speaker Change: Great very helpful. And then gross margin in the quarter was maybe a bit softer than the street was modeling and.
Speaker Change: I think part of that was the device asps came in a bit lower than we've seen in past quarters. So I guess, one what gives you the confidence to reaffirm the full year guide of 45% to 50% and two how should we think about pricing and pricing durability going forward.
Brett Hale: Yeah, thanks for the question. I'll take that. So you're correct, our ASP, as we mentioned in our prepared remarks, was a bit lighter than our historical. If you recall, in the second half of the year, we had several US-dominated quarters. This quarter, we had a more international mix added to the portfolio. So that lower ASP was the direct impact or margin, which was up from Q4, but maybe a little bit lighter than the full year guidance.
Speaker Change: Yes. Thanks for the question. So I'll take that so you are correct. Our Asps I think we mentioned in our prepared remarks was a bit lighter than our historical if you recall in the second half of the year, we had several U S dominated quarters with this quarter, we had a more international mix added to the portfolio.
Speaker Change: So thats lower ASP that was the the direct impact to our margin, which was up from Q4, but maybe a little bit lighter than the full year guidance and given the how we see how the year playing out we feel very confident that the margin will fall in the 45% to 50% range.
Brett Hale: And given how we see the year playing out, we feel very confident that the margin will fall in the 45 to 50% range. The ASP that we had in Q1, you think about that maybe as a lower end, the gross margin or the ASP that we had in perhaps Q4 of last year, maybe at the higher end. But we'll bring that up from the lower end into the middle of those two ranges.
Speaker Change: That we had in Q1, you think about that may be at the lower end.
Speaker Change: The gross margin or the ASC that we added perhaps Q4 of last year, maybe at the higher end, but we'll bring that up from the lower end into the middle of those two ranges.
Maria Sainz: Got it. That's very helpful as well.
Got it that's very helpful as well.
Speaker Change: And maybe just one last one for me on the international.
Operator: And maybe just one last one for me on the international kind of distributors that you guys assign. So the initial focus is France, the UK, and Italy. So maybe talk about the market opportunity and level of demand for Sloop in these geographies. And it sounds like you have placed initial systems there. So how should we think about revenue contribution from these three geographies in 2024? And is this contemplated in the guidance?
Speaker Change: Kind of.
Speaker Change: Distributors that you guys have signed it.
Speaker Change: The initial focus of France, the U K and Italy, So maybe talk about the market opportunity in level of demand for soil in these geographies.
Speaker Change: And it sounds like you have placed initial systems. There. So how should we think about revenue contribution.
Speaker Change: From these three geographies in 2024 and is that contemplated into the guidance.
Maria Sainz: Sure, so let me take that. I think we mentioned that in our last call where some international revenue was already in the guidance that we're issuing as we were planning to do exactly what we just did, which is set up some relatively small but some infrastructure to start being more commercial in Europe and potentially others select outside of the U.S. market. Remember that we had received CE certification as well as UK CA certification already in 2023, and we had a little bit of a pipeline of interest that had actually been represented or activated for us from a number of different countries, many of which now have a distributor in place accountable for our business.
Speaker Change: Sure. So let me take that I think we mentioned that in our last call where some international revenue work already in the guidance that we're issuing as we were planning to do exactly what we just did which is set up.
Speaker Change: Some relatively small, but some infrastructure to start being more commercial in Europe, and potentially others that leg to outside of the U S market remember.
Speaker Change: Remember that we had received CE certification as well as UK Ta certification already in 2023, and we had a little bit of a pipeline of interest that said had actually.
Speaker Change: <unk> represented or activated for us from a number of different countries. Many of which now have a distributor in place accountable for our business. So we were able to accelerate some of the the placement that came out of interest over the last several weeks or short months.
Maria Sainz: So, we were able to accelerate some of the placements that came out of interest over the last several weeks or short months with the appointment of these distributors. They may not be the only distributors we appoint. Those markets tend to be the larger medical technology markets. We're also actively looking at signing a partner in Germany, but we just haven't done that just yet.
Speaker Change: The appointment of these distributors they may not be the only distributors, we appointed those markets tend to be the larger medical technology markets. We're also actively looking at finding a partner in Germany. We just havent done that just yet we want to make sure that we are signing the right partner the other thing that actually.
Maria Sainz: We want to make sure that we are signing the right partner. The other thing that was actually very helpful was the appointment of our own business development manager, who is a seasoned and very experienced person that was very quickly able to facilitate the number of distributors that we were able to sign up relatively quickly. All of these markets have the same level of opportunity that the U.S. has. There's nothing different there.
Speaker Change: It was very helpful was the appointment of our own business development manager, who is a seasoned and very experienced person that was very quickly able to facilitate.
Speaker Change: The number of distributors that we were able to sign up relatively quickly.
Speaker Change: All of these markets have the same level of opportunity that the U S. Theres nothing different there they have less penetration of conventional MRI. They have the Alzheimer's drugs coming to those markets.
Maria Sainz: They have less penetration of conventional MRI. They have the Alzheimer's drugs coming to those markets this year, so probably about a six to a 12-month delay from the U.S. They have a lot of neurointervention that needs follow-up with brain MR. So we feel that going to those markets is just a strategic extension of what we're doing in our direct market here in the U.S. And the only thing I'd add to that is I think the comment
Speaker Change: Sure so probably about.
Speaker Change: A six to 12 month delay from the U S. They have a lot of neuro intervention that need to follow up with Brian EMR. So we feel that go into those markets is just strategically an extension of what we're doing in our direct market here in the U S.
Maria Sainz: And the only thing I thought I'd add to that is, I think we commented on our last call as well as today's call is that, you know, the distributor targeting and going to distribute versus direct makes a lot of sense for us at this stage. It's very OpEx, you know, friendly and helps us drive the top line without a significant amount of spending. So it shows up mostly as an investment in the gross margin line.
Speaker Change: And the only thing I'd add to that is I think we commented in our last.
Speaker Change: This call as well as today today's call is that the distributor.
Speaker Change: Targeting and going through distributors versus direct makes a lot of sense for us at this stage.
Speaker Change: Sorry, opex friendly and it helps us drive the top line without a significant amount of spending so it shows up mostly that investment in the gross margin line item.
Speaker Change: Understood. Thank you.
Speaker Change: Sure. Thank you.
Operator: Thank you. One moment for the next question. And our next question comes from Yuan Zhi from B. Riley Securities. Your line is open.
Speaker Change: In Q1 moment for our next question.
Speaker Change: And our next question comes from the line of <unk> <unk> from B Riley Securities. Your line is open.
Anderson: Hi, this is Anderson speaking on behalf of Yuan. We have just a couple of questions on our end. First, congratulations on the first patients enrolled in the Alzheimer's study. Can you provide us with an update on the study's enrollment and remind us when we can expect to see imaging and data updates from this study?
Speaker Change: Hi. This is Anderson on for you on just a couple of questions on our end.
Anderson: First congratulations on the first patients enrolled in the Alzheimers study could you provide us with an update on the study's enrollment and remind us when we can expect to see imaging and data updates from the study.
Maria Sainz: Sure. But we're not going to provide sort of a month-by-month enrollment update. We have two sites actively enrolling, and I would say we're very pleased with the cadence of enrollment. I think it isn't a big secret in the Alzheimer's scene that WashU is probably one of the most active Lekembi infusion sites in the country. So we're very pleased to have partnered with Dr. Tammy Bensinger to lead the study, given the fact that it does look like a lot of the activity on Lekembi is happening right there.
Speaker Change: Sure. So we're not going to provide sort of a.
Speaker Change: A month by month enrolment update we have two sites actively enrolling and I would say, we're very pleased with the cadence of enrollment I think it isn't a big secret out in the interim in the Alzheimers theme that <unk> one of the probably most active they can be.
Speaker Change: Infusion sites in the country. So we're very pleased to have partner with Doctor Emmy Benzinger to lead the study given the fact that.
Speaker Change: It does look like a lot of the activity on that can be is happening right right there.
Maria Sainz: There are a couple of Alzheimer's meetings we are participating in this year. AAIC is in Philadelphia at the end of July, and then there is TTAD, the clinical trials for Alzheimer's disease, which is at the end of October in Madrid. So for sure, by the fall meeting in Madrid, we should see something. It could well be as early as the July timeframe. And until you have confirmation that abstracts and papers have been accepted, it's just not prudent to give you any more granularity.
Speaker Change: There are a couple of Alzheimers meetings, we are participating in this year.
Speaker Change: IC, which is in Philadelphia at the end of July and then there is <unk>.
Speaker Change: The clinical trials in Alzheimer's disease, which is.
At the end of October in Madrid, So for sure by the fall meeting in Madrid, we should see something it could well be as early as the July timeframe and until you have confirmation that the abstracts and papers have been expect Debbie just not prudent to give you any more granularity.
Maria Sainz: Scott, thank you. And also, we have seen new AI laws introduced in Connecticut and Utah considering the role of AI in SWOOPs imaging. Could you just help us understand the potential impact of these laws on SWOOP and adoption in these states?
Speaker Change: Alright got it. Thank you and then also we have seen new AI laws, introducing Connecticut in the Utah, considering the role of AI and fluid imaging can you just help us understand the potential impact of these laws on sweeping adoption in these states.
Maria Sainz: Okay, I think I'm going to have to get back to you on that question because it's not anything that our technical team has bubbled up yet. As a matter of concern for us, I would say all of our deep learning algorithms are proprietary. We do not use anything that is external, and we are primarily using it without any kind of patient influence, but more around the denoising of the images, as well as the reconstruction of the images. But if it's okay, let me check with our technical team and get back to you and see if there's anything else that I am just not aware of. Okay.
Okay, I think I'm going to have to get back to you on that question because it's not anything that our technical team has bubbled up off of.
Speaker Change: As a concern for us I would say all of our deep learning algorithms to our proprietary we do not do say anything that is external and we're primarily using need not with any kind of patient influence, but more around the <unk> of the images as well as the reconstruction of image.
<unk>.
Speaker Change: Is it okay, let me check with our technical team and get back to you and see if there's anything else that I am just not aware of.
Operator: Okay, thank you. I'll hop back in the queue. Sure. Thank you.
Okay. Thank you I'll hop back in the queue.
Speaker Change: Sure. Thank you.
Operator: Thank you. One moment for our next question, and our next question will come from a young Lee from Jeffries. Your line is open.
Speaker Change: Thank you.
Speaker Change: For next question.
Speaker Change: And our next question will come from the line of young Li from Jefferies. Your line is open.
Young Lee: All right, great. Thanks very much for taking the time to answer the question.
Young Li: Alright, great. Thanks, very much for taking my questions.
Young Li: I guess.
Maria Sainz: I guess to follow up on the system ASPs question, so, I mean, the heavier-O-U.S. mix drove the lower ASPs. I guess I'm kind of curious, how was the U.S. ASP? Was it still, you know, similar to prior record quarters as well?
Young Li: Follow up on the system in.
Young Li: Question.
Young Li: So I mean heavier O U S mix drove the lower asp's.
Speaker Change: I guess im kind of curious.
Speaker Change: How is U S ESP.
Speaker Change: So similar to <unk>.
Speaker Change: Prior record quarters as well.
Brett Hale: That's all; I'll take that one. So we don't disclose the individual ASPs by different segments. We did comment, I think, in Q3 and Q4, that those were US-dominated ASPs. And in our prepared remarks, we talked about the ASP in the US remaining very strong and the strong value proposition. So the ASP for the US, you can think about it very similarly. I think what we're doing is we're entering into a period where we have a little bit of a, you know, mix that takes place between US and international. In this particular quarter, we had a little bit heavier of an international mix compared to prior quarters.
Speaker Change: Yes, I'll take that one so we don't disclose the individual asps by different segments. We did comment I think in Q3 and Q4 that those were U S dominated asps in our prepared remarks, we talked about the asps in the U S remaining very strong and the strong value proposition so the ASP.
Speaker Change: For the U S. You can think about it very similarly, I think what we're doing is we're entering into a period, where we have a little bit of a mix that takes place between U S and international in this particular quarter, we had a little bit heavier of international mix versus prior quarters.
Maria Sainz: Okay, I got it. Very helpful. I guess, you know, given the mix here, ASPs overall are kind of lower a little bit versus prior expectations, or maybe our models kind of suggest that, you know, you maintain revenue guidance so that, you know, there should be more system sales. I guess I'm kind of curious about, you know, the visibility for orders, you know, in the U.S. or globally, thoughts on, you know, as your reps get more experienced If you have any, you know, color or visibility on that, that'd be really helpful. Sure. So I will remain very strong.
Speaker Change: Okay got it very helpful.
Speaker Change: I guess it seems.
Speaker Change: Seems like given the.
Speaker Change: Mix here.
Speaker Change: ASP piece overall.
Speaker Change: On a lower a little bit versus prior expectations or maybe our models.
Speaker Change: Kind of suggest that.
Speaker Change: You've maintained revenue guidance for that.
Speaker Change: There should be more system.
Speaker Change: So.
Speaker Change: To sort of offset some of that I guess I'm kind of curious about.
Speaker Change: The visibility for orders.
Speaker Change: In the U S or globally.
Speaker Change: Thoughts on.
Speaker Change: Your reps get more experience.
Speaker Change: The visibility they have in the business.
Speaker Change: I guess for the rest of the year ordering trends.
Speaker Change: If you have any color or visibility on that that'd be really helpful.
Maria Sainz: Sure, so I remain very positive about the pipeline. You are correct that our team in the US, our direct team, continues to gain experience in driving a broader pipeline. I would still say that the variability we have pointed to in previous quarters around when exactly deals close remains real, but the pipeline is becoming richer and richer by the quarter. We also have a mixed component now, which is why you are rightfully pointing that there is some variability on our ASP because, as we said, by choosing to use gross margin and operating through distributors to build our initial sort of stream of revenue, we've paid a small price for our ASP since we transact at distributor margins.
Speaker Change: Sure.
So I remain very strong about the pipelines you are correct that our team in the U S. Our direct team continues to gain experience in driving a broader pipeline I would still say that the variability we have pointed to in previous quarter surround Wayne.
Speaker Change: Exactly deals close remains weak.
Speaker Change: It remains real but but the pipeline is richer and richer by quarter.
Speaker Change: Also have now a mix component, which is why you are rightfully pointing that there is some variability on our ESP.
Speaker Change: Because as we said by choosing to use gross margin and operating through distributors to build our international.
Speaker Change: Initial sort of stream of revenue with paid a small price voice with our ASB since we transact that distributor margins, but we now have also a number of additional sales channels in international markets that are driving their own individual pipelines. So.
Maria Sainz: But we now have a number of additional sales channels in international markets that are driving their own individual pipelines. So overall, it's a richer set of opportunities. It's more people playing on our behalf out in the marketplace, but again, there is this variability around mix, which is gonna cause some variability around ASP, and there is always a little bit of that variability about the closing of the deals because we're still in complicated hospital buying processes that involve multiple functions from the legal connecting as well as the clinical stakeholders.
Speaker Change: Overall, it's a richer set of opportunities it's more people playing on our behalf out in the marketplace, but again there is these variability around mix, which is going to play some variability around the ISP and.
Speaker Change: And there is always a little bit of that variability about the closing of the deals because we are still in complicated our hospital buying off processes that involve.
Maria Sainz: We now have a line of sight to continue to build our stable of flagship institutions, and that applies both adult and pediatric. So I know we mentioned some adult flagship institutions that we landed last quarter. The previous quarter, we had a mix of both pediatrics and adults. And I can tell you now we're working on something in the southeast of the country that involves one of each. And they are also going to be a pretty important reference center for us in the south.
Speaker Change: Multimodal functions.
Speaker Change: MA.
Speaker Change: From the from.
Speaker Change: From the legal connecting as well as the clinical stakeholders. We have now line of sight to continue to build our stable of flagship institutions and that applies both adult and pediatric so I know we mentioned some adult.
Speaker Change: Hum.
Speaker Change: Flagship institution that we landed last quarter the previous quarter, we had a big self also pediatrics and adults and I can tell you now we're working on something in the southeast of the country that evolves one of each and they are also going to be a pretty important reference center, perhaps in the southeast.
Speaker Change: Alright, Thank you very much.
Speaker Change: Sure. Thank you.
Speaker Change: Thank you.
Speaker Change: And I'm not showing any further questions in the queue I'd like to turn it back over to Maria for closing remarks.
Operator: And I'm not showing any further questions in the queue. I'd like to turn it back over to Maria for closing remarks.
Maria Sainz: Thank you all for attending today's call and for your questions. We look forward to subsequent updates over the coming weeks and in our next call.
Maria: Well. Thank you all for attending today's call and for your questions. We look forward to subsea.
Maria: Subsequent updates over the coming weeks and in our next call. Thank you.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect everyone have a great day.
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