Q2 2024 AtriCure Inc Earnings Call
Good afternoon, and welcome to <unk> second quarter 2024 earnings Conference call.
This call is being recorded for replay purposes.
At this time, all participants are in listen only mode.
We will be facilitating a question and answer session. Following prepared remarks from <unk> management.
I would now like to turn the call over to Marisa place from the Gilmartin group for a few introductory comments.
Great. Thank you operator.
Speaker Change: By now you should have received a copy of the earnings press release.
You have not received a copy please call 513644448 or to have one emailed to you.
Before we begin today, let me remind you that the company's remarks include forward looking statements.
Forward looking statements are subject to numerous risks and uncertainties many of which are beyond our control, including risks and uncertainties described from time to time and atrix or SEC filings.
Speaker Change: Regarding the potential market opportunity for each of threats franchises and growth initiatives.
<unk> results may differ materially from those projected.
I took your undertakes no obligation to publicly update any forward looking statements.
Additionally, we refer to non-GAAP financial measures.
Typically revenue reported on a constant currency basis.
Adjusted EBIDTA and adjusted loss per share.
A reconciliation of these non-GAAP financial measure most directly comparable GAAP measure is included in our press release, which is available on our website.
And with that I would like to turn the call over to Mike Carrel, President and Chief Executive officer of aged care.
Great. Good afternoon, everyone and thank you for joining us I'm pleased to highlight another strong quarter in <unk> driven by our unwavering commitment to treatment.
Patients with atrial fibrillation and postoperative pain.
We achieved total revenue of $116 million, reflecting over 15% growth driven by increasing demand across our portfolio of technologies.
Our results underscored by accelerated growth in several areas of business, including U S pain management.
U S open appendage management and across our international franchises.
Speaker Change: We also continue our path towards sustained profitability generating nearly $8 million in positive adjusted EBITDA for the quarter. Additionally.
Additionally, we reached an exciting milestone with positive cash flow generation of over $8 million this quarter and we plan to generate positive cash flow for the remainder of the year.
Now turning to updates on our business and highlights in the quarter.
Starting with pain management franchise, which grew 25% in the second quarter of 2024, we drove a remarkable acceleration in perhaps for yourself with strength in international markets bolstered by the U S, where we successfully launched the cryo sphere plus probe.
Physicians and patients are realizing the benefits of this enhanced technology with a 25% reduction in free time, which is generating more momentum in crown or block therapy.
We're also excited for the craft beer Max Pro launching later this year.
Speaker Change: The crowds are Max builds upon the features of the crown surplus with a larger bolt it bringing more efficiency to procedures.
Even greater reduction in ablation and procedure time.
In parallel we're exploring additional applications of crown or block therapy to expand our addressable markets and look forward to sharing those updates as we progress.
Now onto our franchise is centered on the treatment of atrial fibrillation.
Our open ablation franchise grew 15% worldwide, reflecting strength in our encompass clamp in the United States, along with rising treatment rates.
In international markets.
Our encompass clamp utilizes our synergy ablation system for a simpler and faster surgical treatment of atrial fibrillation, and we see steady interest in treatment with encompass as we introduce this innovative technology across our customer base.
The encompass clamp is currently only available in United States, We anticipate EU MBR approval and European launch in the back half of 2024.
Next our appendage management franchise achieved worldwide revenue growth of 15% with open chest devices outpacing our M I ask devices.
In the United States are open appendage management devices saw an acceleration in revenue growth to nearly 17% for the quarter despite competitive device activity.
We continue to believe competition validates this tremendous market opportunity in front of us.
More importantly, we are focused on leading the field with innovation and clinical evidence.
And did that in.
I am excited to share that we have.
Just received FDA clearance of our newest generation <unk> device the.
The <unk> flex many.
Our <unk> platform is widely recognized and physician community for its ease of use.
Unparalleled safety and outstanding closure results and this latest innovation introduces a much smaller implant profile, while maintaining the performance of our legacy platforms.
But simply the H M. Flex is a great new and differentiated device, which we expect to achieve rapid adoption once fully launched later on this year.
In addition, we are enrolling in our groundbreaking market expanding leach stroke reduction trial at a robust pace with over 2900 patients enrolled as of today we.
We expect to complete enrollment of the 6500 patients in the middle of 2025.
This landmark and global clinical trial is expected to show a clear benefit to using a trickle devices can manage the appendage to manage the appendage in patients who undergo cardiac surgery without preoperative afib diagnosis.
Market of well over 1 million patients annually.
And finally, we are continuing to drive adoption of our hybrid <unk> therapy globally in the second quarter, we saw growth in procedure volumes in new accounts, although in certain hospitals, United States case volumes were impacted and EP shifted their time to new PSA catheter devices, we understand and appreciate the benefits of these technologies.
And our experience with the introduction of the PSA catheters in Europe. Several years ago tells us this diversion will eventually diminish.
To that point, we have seen rapidly expanding interest and growth of our hybrid <unk> therapies in Europe over the last two years, leading to increasing treatment with our episodes technology.
We expect this to hold true in the U S for our U S hybrid therapy franchise, particularly as physician experience shows the limitations of these devices and treating long standing persistent afib patients.
In the meantime, we are bringing awareness to the differentiated benefits of hybrid.
The wealth of data from our converge CCF and deep trials as well as numerous other studies repeatedly demonstrate better outcomes for advanced Afib patients using a hybrid approach and this influence guidelines to the positive worldwide.
We believe the focus on more efficient endocardial ablation can serve as a tailwind for everyone in the market and in the long run <unk> will benefit.
From a growing funnel of patients.
Considering the ongoing robust growth in our portfolio, but offset by relative softness in our M. I S ablation and <unk>.
Appendage management sales, we're revising our full year guidance to $456 million to $461 million, reflecting growth of approximately 15% over full year 2023.
We also continue to manage our spending with the discretion and are reaffirming our guidance and our plans to deliver an adjusted EBITDA of $26 million to $29 million.
In closing we are pleased with our first half performance.
Showing the breadth of our growth platforms. We also remain confident in our strategy to invest in growth and market expansion opportunities leading to durable growth.
Expanding profitability and cash flow generation and with that I will turn it over to our CFO Andrew Eric.
Thanks, Mike our second quarter 2024 worldwide revenue of $116 $3 million increased 15, 2% on a reported basis and 15, 4% on a constant currency basis, when compared to the second quarter of 2023.
On a sequential basis worldwide revenue grew six 8% from the first to the second quarter of 2024.
Second quarter 2024 U S revenue was $95 $5 million, a 12, 5% increase from the second quarter of 2023.
Open ablation product sales were $38 million up 13, 9% over 2023 with the continued strength of the encompass clamp adoption.
Device.
These positive results were partially offset by a slight decline in our minimally invasive appendage management products, reflecting slower growth in minimally invasive ablation sales, which ended the quarter at $11 $8 million up 4% over the second quarter of 2023.
As Mike mentioned in his remarks interest in PSA catheters within certain hospital systems led to pressure on our hybrid therapy results for the quarter.
Speaker Change: And finally rounding out our U S business as pain management, where sales reached $15 million in the second quarter 2024, reflecting 19, 2% growth over the second quarter of 2023.
We delivered exceptional performance across our international franchises driving total international revenue of $27 million up 29, 4% on a reported basis and 34% on a constant currency basis as compared to the second quarter of 2023 Euro.
European sales accounted for $12 $6 million up 33, 6% and Asia Pacific and other international markets accounted for $8 $1 million up 23, 5%.
Consistent with the first quarter, our international growth was seen across all franchises and in most major markets. We expect momentum throughout our international business to continue for the remainder of 2024.
Turning to another key metric for the second quarter of 2024 gross margin was 74, 7%, which represents an approximately 170 basis point decrease in comparison to the second quarter of 2023. This decrease was primarily driven by less favorable geographic and product mix.
Now moving to details of our operating expenses for the quarter total operating expenses increased $12 8 million or 15, 7% from $81 $2 million in the second quarter of 2023% to $94 million in the second quarter of 2024.
We continue to grow investments in research and development activities, which saw a 17% increase from the second quarter of 2023, driven by strong enrollment in our lead clinical trial and resources focused on both clinical trials and new product development initiatives.
SG&A expenses increased 15% primarily from the measured expansion of our team globally as well as from physician training programs.
Adjusted EBITDA for the quarter was $7 $8 million compared to $8 million for the second quarter of 2023.
Our loss per share was <unk> 17 cents in the second quarter of 2024 compared to a loss per share of <unk> 11 in the second quarter 2023, while the adjusted loss per share each period was 17 and 12 cents respectively.
We ended the second quarter was $114 million in cash and investments having generated $8 $1 million in cash flow. During the second quarter. We continue to expect positive cash generation for the remainder of the year and are on solid footing to fund current and future operating needs of the business with our strong balance sheet.
Now turning to our outlook for 2024, we are determined to advance adoption of each of our therapies throughout our markets globally.
Speaker Change: We are experiencing healthy growth across most of our business with a lower contribution from our U S. Mis ablation and M. I S appendage management products.
We believe the impact to our U S hybrid therapy business will ultimately be temporary and with these dynamics in mind, we are refining our full year 2020 for revenue guidance to be between $456 million to $461 million, reflecting growth of approximately 15% at the midpoint over 2023.
Consistent with our normal quarterly cadence, we anticipate summer seasonality to result in a low single digit sequential decline in revenue from the second to the third quarter, followed by a rebound in the fourth quarter.
From a margin perspective, we are carefully managing investments in our business to prioritize opportunities for future growth and market expansion as we realized efficiency and leverage from our operations.
We believe this approach solidifies the staying power of our business well into the future.
We are maintaining our expectation that 2024 gross margin will be comparable to 2023 with potential for varying impacts from cost savings initiatives offset by product and geographic mix.
On the bottom line, we remain committed to improving profitability and are maintaining our outlook of positive adjusted EBITDA of approximately $26 million to $29 million for the full year 2024 corresponding.
Corresponding to adjusted loss per share of approximately <unk> 74 to 82.
Based on revenue cadence in key areas of spending in the coming quarters, we expect a modest improvement in adjusted EBITDA in the third quarter 2024 over the third quarter 2023, and a more robust increase in adjusted EBITDA in the fourth quarter of 2024.
In closing our second quarter results demonstrate solid performance throughout our markets.
I'd like to thank our team for their commitment to our mission what you do each day matters and together we remain confident that we are well positioned to improve the lives of millions of patients worldwide with our therapies driving growth well into the future at this point I'll turn the call back to Mike for closing comments. Thank you Angie and to everyone. We are excited about the first half of two.
124, with continued strong double digit growth across our platforms advancing key clinical and innovation initiatives geared towards market penetration and expansion, while improving our cash flow generation. Our team is dedicated to delivering the best in class results for patients affected by Afib and pain after surgery and I remain.
Confidence in our products the ability of our team and the strength of our R&D initiatives and look forward to an exceptional back half of 2024 and all that it has in store for <unk> and all of us with that I'll turn it over to the operator.
Two questions.
Speaker Change: Thank you.
To ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
In the interest of time, we ask that you. Please limit yourself to one question and one follow up please.
Please standby, while we compile the Q&A roster.
Okay.
Our first question comes from Robbie Marcus with Jpmorgan. Your line is open.
Hi, This is actually Lili on for Robbie. Thanks, So much for taking the question.
Can you just give us your refresh thoughts on sort of the long term impact of PFS on the business.
Really the launches having at least the near term impact so as you're thinking so that <unk> can be complementary to your technology is and what gives you the confidence in those case volumes coming back on the M&A side. Eventually one is having such great traction.
Speaker Change: Yes. It is.
And fair question as we look at PSA, We do still think that it has a really positive impact as more and more patients in terms of the funnel there are going to be more and more failures. So if you think about the areas that PSA is incredibly successful as it's made it a lot faster for people to do this procedure I think theres still a lot of questions about is it going to be more effective and is it going to.
Safer on that front, but.
But we are definitely seeing it being faster so theyre filling that funnel and youre seeing a lot of growth in the catheter based companies in particular were trading a lot of the patients what that means is that if you are failing at the same rate youre going to have more patients that need to be treated once they fail and we believe the hybrid therapy is a great complement to that too once you found that when you've tried that pretty.
<unk> tried that last kind of shot to go after that patient helping out with the catheter hybrid really helps up quite dramatically. There we started to see that over in Europe. So what tells US that we think there is going to happen is that when you look at the data that's come out of Europe from the various different registries and also with our own experience at sites as we're starting to see the sights that got a little distracted by it.
Hey, they got excited about it they are still using PFA quite a bit they're actually seeing some failures come six 912 months later and then they are saying wait we've really got to get back on track on our hybrid therapy and start to use that and so we think that we're starting to see that in Europe, we're starting to see really robust growth in this area in Europe, and we see that continuing right now we anticipate the same.
Happening in the U S. I can't give a definitive date when that's all going to turn because right now a lot of the sites are distracted by making that changeover from whatever device. They were using the forward to using this device that takes a lot of time and energy away from.
The staff on that side, but they are still doing procedures and once they have the failures theyre still coming back to hybrid and we think that long term. The funnel is going to be so large that it's actually going to increase the overall number of patients that contributed quite a bit.
On top of that I guess I would add one more thing which is that.
We're also still seeing new sites come on board. So we're seeing a lot of sites that they are implementing PFA, but they're also saying wait we also want to implement hybrid to come into our courses in June we had a record number of people come to our hybrid of course, we had almost 100 people from across the country come into the course.
We are a mix of 50% surgeons, 50% EPS coming as teams to talk about the future of hybrid therapy, and what was happening on that front. So we've got a lot of good data from that as well and a lot of survey data when we talk to them about kind of what's happening in the field and the changeovers that are going through.
Got it Okay, and then just as a follow up on the open side of the appendage management business.
It's been a few quarters now with competition on the market. So can you talk a bit about how those dynamics.
Speaker Change: Evolve this quarter.
How sticky has that Trialing that you called out then and then how should we be thinking about that business growing the rest of the year. Thanks. So much yeah, Matt I think you saw in the numbers that the market is growing we talked about the fact that when competition enters into a market its great flattering to us that we've actually got a really big and robust large market. That's in front of us and that over time, we thought the mark.
With overall grow on what you saw this quarter was an acceleration to 17% growth on the open side of our business.
Medtronic is obviously getting some business themselves as well they've got people that are actually using their product for sure but by having two of us in the market Youre really creating more demand more interest really sound pricing that is out there on that front so from our standpoint.
Having that <unk> I think is already starting to have a positive impact on the overall market dynamics and I think that's only going to increase over time here that being said on top of that we also just came out with and literally just got the FDA clearance just before this call for our new flex menu device that is the smallest profile best product in.
The market is it is an exceptional product I can't be more excited about our product.
<unk> had in a long long time.
When we rollout encompass we changed the way people thought about the market on that front I think the same thing is going to happen with this flex many device just because of the sheer size and profile of the devices. So much smaller.
A great platform for us to build on and we're really excited to launch that in the back half of this year.
Okay.
Thank you.
Our next question comes from Bill <unk> with Canaccord. Your line is now open.
Speaker Change: Hey, Mike It's John on for Bill Tonight. Thanks for taking my question and congrats on the quarter.
Maybe just circle back here to answer your questions.
Yes.
Steve Mooney.
Can you describe the pricing strategy that you guys will take upon launch here do you think you will raise price, reflecting the benefits of the device.
Yeah, Jonathan I think you know with each new innovation that we bring to market one of our goals is to improve overall ASP and I'd say, that's still our strategy with the flex many.
Okay great.
Hi, guys recently.
Thanks.
Clearance in China to your range.
Are you thinking about that market in terms of.
<unk> size and what commercial approach do you think you'll take Baird. Thanks for taking my questions.
I appreciate that and yes, we did get clearance for the <unk> device in China, we've been working on that for quite some time and feel really good about the fact that we're going to be able to access an enormous market that does over 200000 cardiac surgery.
A year. So we already have a great market share on the ablation side of our business. There today. So we're kind of building on that foundation, but the only products. We've had in China have been on the ablation side and so this acre flip obviously adds tremendously to bringing that great product into the market. We don't anticipate much impact on revenue this year, but we would anticipate that as we look at $25.
Six and going forward that having that product on the market, it's something that they've been asking for that one in the market and this is obviously a great product. So we anticipate that it will have some impact on this and the outcome going years.
Thank you.
And our next question comes from Rick Wise with Stifel. Your line is now open.
Hi, Mike Hi, Angie This is John on for Rick Today I just wanted to go back to guidance you brought it down by a few million dollars talking about pressures on the converge side of the business and on the flip side of the business I just wanted to better understand what youre seeing today in both those businesses have these pressures bottomed.
Out in your view or are they still getting worse, just where do we stand now.
John I would say at this point, we think that the pressure kind of started I'd say late in the first quarter or very late in the first quarter and really we just didn't exit the second quarter in a way, which we would have expected I think what we're hearing.
And increasingly our drumbeat from our field team that PSA the number of accounts that were getting access to BFA technology and the distraction that they were seeing relative to their programs.
That was something that in the second quarter became pretty pronounced in would persist through the rest of this year at a minimum so that's really the driver in our view I think for recovery from a guidance perspective, I think our philosophy has always been to be very prudent when we think about our guidance we want to put numbers out there we feel very comfortable that we can meet and as well.
As a pathway to see upside for investors as well and so as we're looking at this we anticipated beyond 2024, when this kind of recover so to speak and the impact is dual fault I just want to make sure. It's both our mis ablation business, but then the mis Asia clips that are used in those hybrid procedures, which is a component of.
Our overall appendage management revenue.
That's clear and then I think.
Also sort of sticking to guidance.
And the prior guidance I'm, just curious how much of a flex many impact was.
Positive launch impact was incorporated and how much if any flex many sort of impact and price increases incorporate it now.
Going into 2024, we felt pretty confident that we would have clearance from the FDA for this product middle of the year and I would say that timing looks so different from how it has evolved and ultimately our clearance. We still expect for this product to be launched in the second half of the year, which was baked into our guidance going into the year and if you look at the overall guy.
<unk>.
Our open appendage management.
Robust growth builds within its the Miss one that youre not and obviously flexibility is a part of that.
Thank you.
And our next question comes from Murray table with <unk>. Your line is now open.
Hey, Mike and Andrew the San Juan from her Marie Tonight, Thanks for taking the questions.
Maybe I can shift over to the open inflation side of things.
I guess I'm, just wondering how youre thinking about maybe the mid to long term outlook on the business can still be call. It a mid double digit grower.
And then on the quarter.
How much more room is there to run in terms of penetration for for the encompass clamp.
Good question, Sam I'd say, we felt good it was a solid quarter for our open ablation franchise, and we really continue to be bullish and believe that the encompass clamp will help sustain growth in this area of our business. We're.
We're seeing really good activity across accounts that are using encompass and our team is really focused at this point going deeper into accounts that have adopted the technology, so making sure that it's more than one surgeon who is using the encompass clamp as well as broadening adoption to it to a broader set of accounts relative to penetration continue to estimate that the.
The us market is only between let's call it 30% to 40% penetrated at this point in time. So continue to focus on the fact that this is a vastly underpenetrated market. We've got superior technology. That's made this procedure incredibly easy for a surgeon to do and our focus will be to continue to grow adoption.
Speaker Change: Really helpful. Andrea and then maybe if I can come back to converge for just a second.
I guess the accounts that are still using it maybe arent as distracted from some of the PFA launches are they using PFA and their.
The endovascular side of the procedure.
Just wondering if the complementary nature, even at some accounts are starting to work its way through.
Yeah, we definitely are starting to see some accounts, we see that over in Europe, where you see it already that's kind of our experience has been so new in the U S. You're not seeing a ton of it we've got several sites that are beginning to use <unk>.
PSA and converge into their procedures, what we're really saying more than what I anticipate is that if they do PFA and then when that PSA sales will come back in and do kind of the second stage as the converge procedure at that point in time and Thats. What we anticipate is going to be what's going to lead us into 2025 and beyond relative to that complementary aspects.
Just because if you look at the data that's come out you are seeing that the failure rates are basically the same as they were with RF and cryo and so you still have those patients what do you do after that and then after that is.
The hybrid procedure, which includes converge and thats, where it becomes complementary at that point.
Thank you.
And our next question comes from Danielle <unk> with UBS. Your line is open.
Hey, good afternoon, guys. Thanks, so much for taking the question, Mike just a follow up on <unk> and what Youre seeing from a competitive perspective, there I mean can you talk a little bit about what youre seeing from.
Site perspective have you seen sites.
<unk> dropped the competitive products and.
Trial are we through the trailing period are you still.
Speaker Change: Still seeing trialing.
And then just one quick follow up after that.
Yeah, we're just seeing great strength of the <unk> product and the nature of the product works. All the time, we haven't lost any accounts as a result of it like we're not seeing anybody flip over and not continue to use a trickle upon a majority of their cases. So overall, we feel like we're having some great success. We do have some sites as you mentioned that may have done some trialing and have basically come back <unk> <unk>.
Speaker Change: Kind of a full time.
Lack of a better word relative to that so we've definitely seen some of that.
For sure, but I mean overall as you can just see with our overall growth rate, we're still seeing really robust growth on a very large number and it's in one of our biggest franchises. So we feel like we're in a really good spot from that standpoint.
Speaker Change: Okay got it and then just to clarify just one point on converge and what you think you guys are seeing there with the PSA is it more pfa's just distracting the EP side of things or do you think it's more PFA is going to impact that and patient market here.
Speaker Change: Yes, I think what youre going to so there is two that you had on two different dynamics and you are right. So the first thing is the distraction that's really what we're seeing mostly today, which is that you've got sites that are now having to go purchase the equipment install it train their teams get their whole workflow the new workflow with the PFA system in house, and they're making that switch quickly, but as a result of <unk>.
That switch they become incredibly distracted from which patients they are treating and they tend to treat earlier to treat patients and really focus on the efficiency of their sites. How many cases that can they be doing.
A day etcetera, and you see that a lot of sites throughout the country I'd say, that's the primary thing that we see what.
But we also anticipate seeing a little bit more is that youre going to people that are going to try and say you know what I'm going to try and this we expected which is that I'm going to do that PSA just one last time. Let me go you have tried to Europe. They felt the catheter ablation I'm going go do PFA and then that then that's going to lead towards <unk>.
Speaker Change: Basically treating hybrid longer term I anticipate that's going to continue to happen, but we do see some of that but what I'm also seeing is that if you just look at the sheer numbers. If you look at how many catheters are being sold today. So I think most people on this call know, it's like what 400000 or so catheter ablation in the U S. Just for Afib last year.
Anticipated this year the growth is 15%, so 480000 or so this year at 80000 more patients that are now getting treated and the failure rates or equivalent. So you don't have that many more patients that what do you do next and Thats, where youre going to start to see more patients that are going to be in need of something beyond just the catheter regardless of what that energy source.
Like and that's why I look at $25 26, and I anticipate and we're starting to see it over in Europe. Those failures are going to turn into hybrid cases.
Speaker Change: Thank you and.
And our next question comes from Mike Matson with Needham <unk> Company. Your line is open.
Speaker Change: Hi, Mike Hi, Angie this is Joseph on for Mike.
Joseph: Maybe the first question just.
I guess, just kind of wondering on the sustainability of the international sales.
Obviously, that's been a stronger.
Sure growth driver for you guys.
Speaker Change: I think you said you expect continued momentum throughout the year, So maybe a little additional color there would be helpful, but a little bit more specifically.
China I guess.
If you could comment on maybe the environment there.
Speaker Change: China revenue going obviously.
You'd be launching the <unk> clip, but we've heard.
Some companies see some weakness in China.
So if you could comment on that that would be helpful.
Speaker Change: Yeah to start with the international business very broadly I think that there is many reasons to be optimistic about sustained kind of accelerated growth gross levels first off in each market that we operate significantly underpenetrated, so a big big opportunity in front of us.
Speaker Change: We're seeing particular access and each of our franchises in Europe as that team is really focused on driving good accelerated adoption across each of our therapies and Mike Mike mentioned in his comments the encompass plant we expect to be on market in Europe. Later this year, so continuing to invest to bring technology to our European markets along.
With kind of the technology. That's there that's one area of focus and I would say beyond just Europe. We continue to look at each market and say, we're where is new and innovative technology belong in markets that the clip in China is one example of that so relative to our China business. We work with a group of distributors in China, and I would say our business is very solid we're not.
Seeing the same level of disruption and think that the <unk> will be a nice complement to our ablation technology in that market.
Okay.
Okay, Great. That's very helpful. And then maybe just a quick one.
Curious, maybe how sternotomy is going.
The pain management franchise.
Speaker Change: Yes for sure anatomy I think the feedback.
We've given on this call before is really the biggest pushback. We got was time and I talked on this call about cross surplus reducing time, 25% and then cross for Max reducing 50%. So that you're basically taking a freeze time from two minutes to under $1 1 million for each one of those freezes and.
Speaker Change: And that's a big deal for us and so I do anticipate that once we do a full launch in cross for Max that it might have some impact on sternotomy, we're not baking it into our numbers, though we're assuming there is not going to be much of an uptick on that as we look to the guidance in the back half of this year as we look at next year, and we'll get that Max rolled out we might incorporate it obviously in our guidance if we start to see some upside our realm.
That's how I look at Sternotomy as being a huge upside for us.
And we've built really two different devices that we think are going to make a difference in that market.
Yes.
Thank you.
And our next question comes from Daniel <unk> with citizens JMP. Your line is open.
Yes, great. Thanks, So just for my first question.
Pain management strong quarter and it sounds like crowd surplus had.
Some really good strong early feedback, but can you give us any color on this dynamic in terms of growth.
New physician usage with the new features or is it higher utilization with the time benefits just any more commentary would be great.
Yes.
Hi, Danny it's a combination of both so we saw really strong account growth in the quarter, we've seen that the past two quarters to start the year, but we're also seeing that within existing accounts that they continue to expand their adoption across a broader set of patients. So it's a combination of both I think the introduction of the cryo sphere.
Plus probe new technology. The existing device was launched in 2019, I think it's been reinvigorating for this market and certainly for our field team as they go back to customers, who maybe had hesitation with time, we've got a reduction in time with the cryo sphere, plus and we're also excited later this year with the cryo sphere Max.
Great and then just one follow up on appendage management.
<unk> been asked a bit about it but U S sales tempered down by Asps.
Any of that from Larry I think we had seen in the prior quarter or is it just the impact that you had mentioned an <unk> chip <unk> with.
With the EPS time being taken taken up by that.
Hey.
It's the latter it was that this is not a dynamic that we saw in the first quarter was kind of a drop off in Larry It's really the softness in the mis HR clip side, given kind of a slower mis ablation quarter.
Thank you.
And our next question comes from Suraj Kalia with Oppenheimer <unk> co. Your line is now open.
But John can you hear me all right.
Speaker Change: We can begin.
Apologies for the background noise so Mike.
Many questions have been asked and looking at the first one on PSA and the next one on acreage map and I'll throw both of them together.
Look it's not new right. It's been round, we've been talking about this for years now.
What is.
Yes, correct from your expectation in terms of managing that.
On <unk> what are you currently.
Currently right now that you are like you know what.
In fact that this since you are.
Calculation.
Yeah. So on the PFS front, it's a great question Suraj, it's really the distraction of the sites happening I'd say, what's different was we expect it like you said we are aware of it we knew it was coming and saw what we saw over in Europe, we anticipated the.
Speaker Change: The impact of kind of going towards that second ablation that was all kind of built into our numbers and our thought process relative to it I'd say the actual workflow at the site was maybe a little bit more pronounced in terms of how fast they moved into the sites and then took that time away from them to be able to think about the workflow they were doing on hybrid.
Because they're so focused on getting their systems up and running getting through their vast committees figuring out what their contracting was going to look like how are they going to go through the referral patterns and switch out if theyre going from whether they are are they going to do what where they can do for their patient flow with RF versus cryo versus PFA. All that thought process I think maybe took over more mind share that's why.
We say that it's temporary.
Took over a little bit more mindshare as they were kind of getting those programs up and running from that standpoint, not as much affecting the actual patients per se in terms of the patient the long standing persistent patients we think that.
Speaker Change: The data is still out there they still feel really good the data from over in Europe is not compelling to treat these patients.
And I'd say that so for right now, it's mostly that distraction that was a little bit more than we had expected in this quarter.
Okay.
And Mike maybe I'm paraphrasing here one of the comments you made in your prepared remarks.
In your opinion.
Comments too one of the questions was something to that effect that.
Over time, the long term growth increases because BFA failures more patients are going to come into the funnel again, I think some tariff pricing.
Mike.
Yes.
So Mike the reminder.
And maybe I'm mistaken here.
Converge only energy modality specific or I E.
E Ara or does it.
Irrespective of energy modality for some reason I thought it was only RF and also Angie if you could share give us some color on same store new store sales for <unk>.
Speaker Change: In the quarter. Thank you for taking my questions.
And I'm not sure that I completely understand the question around.
The modalities of the epicentre device is an RF device so that it today utilizes.
Speaker Change: <unk> technology on that front in terms of what can be used on the other side. The catheter based the episodes can be used with any of it I mean, it can be used with PFA RF or cryo. So whatever they decide to use on the catheter based side of the technology that doesn't have any impact on what youre going to use.
Whether or not you can or you would not use the epicentre device I'm not sure if that's exactly what you're asking but.
So raj.
Yes, maybe as we try to get Suraj back I'll answer the second question Suraj going into the year and for many years can you hear me.
Yes, we can.
Speaker Change: Sorry apologies.
I was just Mike that's exactly what I was asking if it's.
The catheter energy agnostic.
Speaker Change: For converge and I think that that's what you indicated so.
That's really helpful.
I didn't have to give us long answered answer thats pretty simply yes catheter agnostic okay.
Speaker Change: Okay, Okay, so an NGL.
Speaker Change: Store and new store.
Yes, so we entering the year and for a number of years now we've been pretty much 100% penetrated in kind of the number of cardiac surgery centers in the U S. With our open nature clip devices. So the growth that youre seeing is really within existing accounts.
Thank you.
This concludes the question and answer session I would now like to turn it back to Mike Carrel, President and CEO for closing remarks.
Again, everyone. Thank you for joining and your interest in <unk> and as I said, great first half of the year looking forward to the second half of the year and really excited about the flex many device that we just announced today youll see more on that in the coming future talk to you soon.
Speaker Change: This concludes today's conference call.
Thank you for participating you may now disconnect.
Okay.
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