Q3 2024 Inspire Medical Systems Inc Earnings Call
Good afternoon, my name is Philan and I'll be your conference operator today. At this time I'd like to welcome everyone to the Inspire Medical Systems 3rd Quarter 2024 Conference Call. All lines have been placed in use to prevent any background noise.
As the speaker's remarks, there'll be a question and answer session. I'll now hand the call over to your first speaker, Esgi Yagci, the vice president of the investor relations at Inspire. You may begin the conference.
Esgi Yagci: Thank you to all and thank you all for participating in today's call. Joining me are Tim Herbert, Chairman and Chief Executive Officer and Rick Buchholz, Chief Financial Officer.
Earlier today, we released financial results for the 3 in 9 months and its September 30th, 2024. A copy of the press release is available on our website.
On this call, management will make forward-looking statements within the meaning of the federal security's laws.
All forward-looking statements including without limitation, those relating to our operations, financial results and financial conditions, investments in our business, full year 2024, financial and operational outlook and changes in market access are based upon our current estimates in various assumptions.
The statements involve material risks and uncertainties that could cause actual results or events to materially differ. Accordingly, you should not place under-relying some of these statements.
Please see our filings with the Securities and Exchange Commission, including our Form Time Key which we filed with the SEC earlier this afternoon, for a description of these risks and uncertainties.
Inspired of Sclaims any intentional obligation except as required by law to update or revise any financial projections or forlooking statements, whether because of new information future events or otherwise.
Esgi Yagci: This conference call contains time-sensitive information and speaks only as of the live broadcast today, November 4, 2024.
Speaker Change: with that it is my pleasure to turn the call over to Tim Herbert. Tim?
Tim Herbert: and thanks everyone for joining our business update call for the third quarter of 2024.
Tim Herbert: Let's start with what is most important and that is the delivery of safe and effective therapy to our patients.
Tim Herbert: and Ezgi is called, we have surpassed 85,000 patients who have received inspired therapy.
Tim Herbert: To ensure outgoing improvements in our system level performance, we must continually monitor patient outcomes and invest in technology and programs to further advance and spark therapy, including the annual publication of our patient experience report, which is available on our website.
Tim Herbert: Today I would like to announce a recent peer review publication in the Journal of the Clinical Sleep Medicine.
Tim Herbert: that reviewed the real world experience with inspired sincere original FDA approval in 2014.
Tim Herbert: The investigators led by Dr. Colin Huntley at the Thomas Jefferson University. Review data from over 20,000 patients showing a continued improvement in patients' safety as documented by reviewing individual site experience.
Tim Herbert: as well as FDA and company databases.
Tim Herbert: In fact, within the first year after implant, F-plant rates have been shown to be less than 0.7% and revision rates reported as 1.5% which are both significant improvements.
Tim Herbert: from the originally reported Star Trail.
Tim Herbert: [inaudible]
Speaker Change: This strong data translates into our business performance and we are proud to report a successful third quarter.
Speaker Change: In the third quarter, we generated revenue of $203.2 million, representing a 33% increase compared to the third quarter of 2023.
Speaker Change: Third quarter U.S. revenue totaled $195.8 million, also a 33% increase over the same period last year.
Speaker Change: as well as expansion into 66 new implanting centers in the United States.
Tim Herbert: and 13 new U.S. sales territories.
Tim Herbert: We now have 1,371 active U.S. centers and 323 U.S. sales territories.
Tim Herbert: Utilization, by account, increased year-over-year and is consistent with the second quarter of 2024.
Tim Herbert: Outside of the U.S.
Tim Herbert: Revenue increased 27% over the same period last year to $7.4 million.
Tim Herbert: We saw strength in Germany, Switzerland, the Netherlands, and Belgium, and we began reimbursed procedures in France.
Tim Herbert: We are increasing our 2024 revenue guidance to $793-798 million, which represents 27-28% growth over 2023 revenue of $625 million.
Tim Herbert: This updated guidance reflects some revenue headwinds as a result of the hurricanes and related IV solution shortage impacts in the fourth quarter.
Tim Herbert: Net income for the third quarter was $18.5 million dollars.
Tim Herbert: compared to a net loss of 8.5 million dollars in the prior year period representing net income of 60 cents per share
Tim Herbert: compared to a net loss of 29 cents per share in the third quarter of 2023.
Tim Herbert: given the strong performance we have seen year-to-date.
Tim Herbert: We are raising the full year earnings per share guidance.
Tim Herbert: to $1.20 to $1.40.
Tim Herbert: Highlighting a few key team accomplishments, in September we attended the American Academy of Otolaryngology and the International Sleep Surgical Society Conferences in Miami.
Tim Herbert: The investigators highlighted that Inspire is a proven therapy with significant and consistent outcomes demonstrated in over 300 publications and over 85,000 patients treated.
Tim Herbert: resulting in coverage policies for Medicare in virtually all private plans.
Tim Herbert: The presentations highlighted Inspire's commitment with an established national team of trusted Inspire professionals focused on patient outcomes.
Tim Herbert: and our easy-to-use SleepSync system.
Tim Herbert: During these meetings, the investigators also presented data on the predictor study.
Tim Herbert: As a reminder, the initial focus of the PREDICTOR study is to identify patients who may qualify for inspirotherapy without requiring a drug-induced sleep endoscopy procedure.
Tim Herbert: The data presented focused on patients with a BMI lower than 32
Tim Herbert: which are those without significant lateral wall collapse that is a key component of complete concentric collapse.
Tim Herbert: We will continue to discuss this data with physicians and payers to streamline the patient's journey to receive inspired therapy.
Tim Herbert: on the market access front.
Tim Herbert: We are pleased with the final 2025 National Medicare Outpatient Payment Rates for CPT Code 64582.
Tim Herbert: which calls for a slight increase to both the hospital outpatient rate to $30,474 and the ambulatory surgical center rate to $25,832.
Tim Herbert: The final Physician Fee Schedule for 2025 is consistent with the 2024 Medicare Physician Fee at $816.
Tim Herbert: with respect to our market development activities. We continue to advance our medical education programs. In year to date, we have hosted over 250
Tim Herbert: advanced practice providers and inspired training programs with another 70 registered for training before year end.
Tim Herbert: The primary focus of this initiative is to improve capacity in both sleep and ENT clinics to meet the strong patient demand we continue to see for inspiratory therapy.
Tim Herbert: Further, we continue to increase our presence at primary care and cardiology conferences to drive increased awareness of Inspire Therapy.
Tim Herbert: Our direct-to-consumer program remains strong and provides a pathway for patients to connect with the proper health care providers.
Tim Herbert: In the third quarter, we continued to see operating leverage in our DTC expenses as we found ways to be more targeted and efficient in our digital advertising, which we believe has contributed to a significant increase in digital patient engagement at a lower cost.
Tim Herbert: Going forward, we will continue to evaluate our DCC programs with the goal of enhancing patient awareness regarding inspired therapy.
Tim Herbert: We continue to advance initiatives to improve the patient experience. And one example is that we now have over 250 centers using digital scheduling to book patient appointments.
Tim Herbert: With digital scheduling, the patient's ability to schedule an appointment on their first attempt is increased, greatly improving the patient's journey to receive Inspired Therapy.
Tim Herbert: Switching to product development. We have begun the soft launch of our new SleepSync programming system designed to increase the efficiency of Inspire Patient Management with greater accessibility and a comprehensive view of therapy history.
Tim Herbert: Early feedback is promising, and we expect full U.S. availability this year, enhancing capacity for patient follow-ups and improving experiences for patients and providers.
Tim Herbert: As you know, in August, we received FDA approval for the Inspire5 Neurostimulation System.
Tim Herbert: We are focused on operational readiness and building sufficient inventory, and we remain on track for a soft launch in late 2024 and a full launch in 2025.
Tim Herbert: Inspire 5 incorporates respiratory sensing capabilities into the neural stimulator, eliminating the need to implant the pressure sensing lead.
Tim Herbert: We believe this will provide benefits to the patient with one fewer component, to the physician with reduced surgical time.
Tim Herbert: and to the company with reduced production complexity and cost.
Tim Herbert: We continue to validate the coding scenarios with payers and Medicare contractors to help ensure we are prepared for the full launch in 2025.
Tim Herbert: We expect to provide more color on a coding strategy in early 2025 once we finalize discussions with the payers.
Tim Herbert: With the final OPPS rules released last week, we have set the pricing for Inspire 5 system to be consistent with the current Inspire 4 system.
Tim Herbert: In summary, we remain focused on the patient to continue the growth and adoption of Inspire Therapy.
Tim Herbert: we will execute our growth strategy of driving higher quality patient flow and increasing the capacity of our provider partners to effectively treat and manage more patients.
Tim Herbert: Our key strategies include adding advanced practice providers, training and adding new implanters, increasing center independence, and driving the adoption of SleepSync and our digital tools.
Tim Herbert: all of which are embedded strategies in our commercial team's objective to increase provider capacity.
Tim Herbert: Looking ahead, we remain excited about our future and are confident that we have the appropriate strategy in place to drive long-term stakeholder value.
Speaker Change: With that, I'd like to turn the call over to Rick for his review of our financials.
Rick Buchholz: Thank you, Tim, and good afternoon, everyone. Total revenue for the quarter was $203.2 million.
Rick Buchholz: A 33% increase from the $153.3 million generated in the third quarter of 2023.
Speaker Change: U.S. revenue in the quarter was $195.8 million, an increase of 33% from the $147.5 million in the prior year period.
Speaker Change: Revenue outside the U.S. was $7.4 million which was a
Tim Herbert: 27% increase year-over-year.
Tim Herbert: Gross margin in the quarter was 84.1%, consistent with the prior year period.
Tim Herbert: Total operating expenses for the quarter were $156.5 million, an increase of 10 percent as compared to $142.4 million in the third quarter of 2023.
Tim Herbert: Interest and dividend income totaled $5.9 million in the quarter compared to $5.5 million in the prior year period.
Tim Herbert: This higher income was primarily driven by higher cash and investment balances compared to a year ago.
Tim Herbert: Operating income for the quarter totaled $14.3 million compared to an operating loss of $13.5 million in the prior year period.
Tim Herbert: Net income for the quarter was $18.5 million compared to a net loss of $8.5 million in the prior year period, representing net income per share of $0.60 compared to a net loss per share of $0.29 in the third quarter of 2023.
Tim Herbert: The weighted average number of diluted shares outstanding in the quarter was 30.6 million.
Tim Herbert: Excluding the impact of any share repurchases that we may complete over the remainder of 2024, we expect the full year diluted shares outstanding to be approximately 30.6 to 30.7 million.
Tim Herbert: We are excited to announce we generated $52 million in operating cash flow.
Tim Herbert: during the third quarter, bringing the year-to-date total to $61 million and increasing our total cash and investment balances to $524 million at September 30.
Tim Herbert: This strong cash position allows us to remain focused on executing our growth strategies.
Tim Herbert: Moving on to 2024 guidance.
Tim Herbert: We now expect full year revenue to be in the range of $793 to $798 million.
Tim Herbert: representing an increase of 27 to 28 percent compared to full-year 2023 revenue and we continue to expect full-year gross margin to be in the range of 83 to 85 percent.
Tim Herbert: 12 to 14 new U.S. sales territories during the remaining quarter of 2024.
Tim Herbert: Given the strong momentum in our business and our improving operating leverage, we now expect diluted net income for the full year 2024 will be between $1.20 and $1.40 per share.
Tim Herbert: In conclusion, our strong performance and business momentum provide us with confidence in our outlook for the remainder of 2024. With that, our prepared remarks are concluded. Dulem, you may now open the line for questions.
Dulem: Thank you, sir. As a reminder, to ask a question, you will need to press star one one on your telephone. To rejoin your question, please press star one one again.
Tim Herbert: We ask that you keep your questions to no more than one question and one follow-up.
Speaker Change: Please stand by while we compile the Q&A roster.
Tim Herbert: And I show the first question comes from the line of Robbie Marcus from JP Morgan. Please go ahead
Robbie Marcus: Oh great, congrats on a nice quarter and thank you for taking the questions.
Robbie Marcus: Two for me, top line and bottom line question. Maybe I'll start with the bottom line.
Robbie Marcus: You know, once again, fantastic upside on profitability, very nice EPS.
Robbie Marcus: Margin Upside versus Consensus and the Guide.
Robbie Marcus: Maybe just speak to the sustainability and trajectory of those margins. I see what's implied in the guide for fourth quarter, but really just thinking further out. It seems like you've been able to leverage your
Robbie Marcus: DTC spending better, you were down year over year. How do you think about the trajectory forward, the need for investment in 2025 behind the new launch and I guess really can we see this continue upwards as sales grow?
Speaker Change: We want to continue, as we said when we became profitable, that we want to see consistency and getting leverage throughout our organization, not just with DTC, but also with our R&D, as well as the performance of our sales team through.
Robbie Marcus: increased utilization. So we want to continue moving forward.
Robbie Marcus: A lot on peel in there, but we have...
Robbie Marcus: shown some efficiencies with our DTCs.
Tim Herbert: you highlight there to be able to continue to create awareness and bring patients into the system yet be able to do that in a more efficient and cost-appropriate manner. But yes, we continue to move forward in a profitable state.
Tim Herbert: Hey Robby, this is Rick. I'll add on to that. One item to call out is the R&D expense. It
Tim Herbert: It was reduced to about 13% of our Q3 revenue historically. That's been closer to the higher teens.
Tim Herbert: And so one of the phenomenons there is that we did have some pre-launch inventory.
Tim Herbert: $1.7 million that was expensed in the third quarter of 2023. We did not have that in this quarter. And so we do expect R&D to be in the mid to high teens on a going forward basis. We also had some development costs.
Tim Herbert: shift from development really into more of you know the regulatory process we did not have some of those R&D costs in the third quarter but you know we we still expect that we'll have continued
Tim Herbert: profitability, you know, on a year-over-year basis.
Speaker Change: Great, appreciate that.
Speaker Change: Maybe just for my follow-up on the top line, Tim, I think it was on the last quarter call, maybe it was at an investor conference earlier this quarter, you talked about improving
Speaker Change: sequential utilization, third quarter over second quarter, fourth quarter over third quarter. Now that we have the results...
Speaker Change: What are you seeing in terms of utilization? How do you feel about third quarter?
Speaker Change: What do you think or what's implied in the guide in fourth quarter? Thanks a lot. Yeah, I think we had a great Q3. I do the utilization from Q2 to Q3 is consistent between the two and we do have a
Speaker Change: step up from the prior year period. It is our aspiration to be able to continue to grow utilization, and that will remain our focus going forward. I think maybe we saw a little seasonality in Q3 and maybe a late impact
Speaker Change: regionally at the end of the quarter, but I think overall we're happy with the performance in Q3 and utilization is flat to Q2.
Speaker Change: Appreciate it. Thanks a lot. Thanks, Robbie.
Speaker Change: Thank you and I show next question comes from the line of Danielle Intalfi from UBS. Please go ahead.
Danielle Intalfi: Good afternoon, guys. Thanks so much for taking the question. Congrats on a strong quarter here. Just to follow up on Robbie's question around around the guidance and specifically the comment, I think, Tim, that you made around
Speaker Change: reflecting some potential impacts from the IV fluid shortage and the hurricanes. Any way to quantify that, or maybe the way to ask the question is, how would we be thinking about utilization? Were we not seeing some impact there? And then just a follow-up after that.
Tim Herbert: Sure, well, we think it's difficult to quantify at this time. We anticipate the combination of the
Speaker Change: hurricanes, as well as the saline shortages.
Speaker Change: will represent some revenue headwind in the fourth quarter.
Speaker Change: mostly due to the evacuations and center closures. The IV solution is more of a national phenomena and is required in all of our procedures including the dice.
Speaker Change: But we're tracking that closely, and we have staff affected in the area due to the hurricanes. We're making sure that we take care of them, and we know that the...
Speaker Change: centers, the hospital, and the regions are working really hard to overcome.
Speaker Change: The challenges of the hurricane and while it's regionally focused, we certainly are working hard to make sure we can do whatever we can to help in those areas, but we do expect some
Speaker Change: impact, at least regionally, but we're working as hard as we can to overcome that. But again, it's very difficult to quantify at this time.
Speaker Change: Got it. Okay, that's that's helpful. And then the follow-up I had is on what you guys are seeing at the sort of
Speaker Change: start of the funnel thinking about like from the sleep physician perspective sleep doc perspective
Speaker Change: with, you know, we got approval for the
Speaker Change: app measuring obstructive sleep apnea and our texts indicate like doctors expect what are already pretty long wait lists to continue to grow. Anything you can say about what you're you're seeing there and sort of how to think about that as a potential tailwind in 2025. Thanks so much guys.
Speaker Change: Thanks, Danielle. That's a great question. I think the key is we have to look at all the avenues that people are becoming aware of the quality of their sleep.
Speaker Change: Be it from sensors in their bed, be it to the Apple watches, be it to the various technologies that are available. We also have other diagnostic techniques that can help sleep physicians diagnose.
Speaker Change: more patients, and we know that GOP ones will increase awareness of the quality of sleep as well. So we believe all of these will add to an increased awareness.
Speaker Change: of sleep quality and identify many patients.
Speaker Change: obstructive sleep apnea. So we do think it's going to be a tailwind going forward and it's our job to continue our DTC and our awareness programs and to improve our ability to connect these patients with the health care providers.
Speaker Change: And as you mentioned, their demand is going to be continuing to grow. So we need to find efficiencies in helping our patients through the overall process.
Speaker Change: Thank you. Thanks, Danielle.
Speaker Change: Thank you and our next question comes from the line of Travis Steed from Bank of America Security. Please go ahead.
Travis Steed: Hey, that's another recorder. I wanted to ask about the the coding strategies for Inspire 5. If you could kind of elaborate on what some of the potential outcomes could be around that and and the decision to not take a price increase in Inspire 5.
Speaker Change: Well, we have really one option that we're working with the payers, and we want to make sure that the Medicare, the MACs.
Speaker Change: as well as the payer are full aware of this and we can communicate with them. And then we're also, we'll be working with our physicians. But we think the OPPS rules are consistent.
Speaker Change: and they showed just a slight increase and with that we thought it was appropriate.
Speaker Change: to maintain a system level pricing when we introduce 5 versus Inspire 4. And remember, we don't have the pressure testing lead anymore with the Inspire 5 system. So we will be adjusting the price of the neurostimulator.
Speaker Change: But the system-level pricing will be consistent, and we'll lay all this coding out once we get the direct feedback from the MACs, which we are already making good progress on and believe we'll be ready to go when we launch.
Robbie Marcus: Great, and I had a follow-up on 2025. I think before you said you were fine with the consensus at 2025. Is that still the case and just how you're thinking about some of the puts and takes around competition, baking an Inspire 5 launch, GLP-1s. Is there any other puts and takes to think about on 2025 at this point?
Robbie Marcus: Yeah, sure. Hey Travis, it's Rick. Still a little early to comment on 2025 because we're right in the middle of our planning.
Robbie Marcus: But as we've mentioned before, we continue to think that the current consensus, if you will, for 2025 is not unreasonable.
Robbie Marcus: We will provide some more colors soon as we get to our Q4 earnings call.
Speaker Change: Some of the moving parts that really give us confidence for 2025 include our ongoing footprint expansion of more centers and more sales territories.
Speaker Change: are targeted DTC investments.
Speaker Change: We've not talked about France much, but we expect some contribution outside the U.S. from France.
Speaker Change: and also the, you know, obviously the launch of Inspire 5.
Speaker Change: And we continue to finally, you know, we get updated indication with our payers on the expanded indications for BMI and AHI in more payer coverages. Those are some tailwinds, I guess, for 2025.
Speaker Change: Great, thanks a lot.
Speaker Change: Thank you.
Speaker Change: And our next question comes from the line of Adam Nader from Piper Sandler. Please go ahead.
Speaker Change: Thank you very much.
Adam Nader: Hi Tim and Rick, congrats on the quarter and the impressive leverage and thanks for taking the questions.
Speaker Change: maybe just picking up on that thread on 2025.
Speaker Change: Richard Buchholz, Richard Buchholz, Timothy Herbert, Ezgi Yagci
Speaker Change: you know, whether it's potential impact from device competition or GLP-1s and Trizapatide. We'd just love for you to kind of provide some early thoughts there in terms of how you see that potentially impacting the business. Thanks.
Speaker Change: Sure, I think that Dianne Spurr is well established in our market with our centers and physicians and
Speaker Change: We need to continue to watch to see if there's going to be any new technology products released in 2025.
Speaker Change: I'm sure there will be some experimenting with that technology, but I think with our growth and...
Speaker Change: utilization and tailwinds that Rick described a minute ago. We're not too worried about that. We'll continue to
Speaker Change: grow the adoption of InspiroTherapy. As far as GOP1s, again we'll wait and track the progress with
Speaker Change: Those pharmaceuticals and and when they will be available With an indication for obstructive sleep apnea. We'll wait for the FDA to weigh in on that. But again as we talked about those
Speaker Change: products treat a different mechanism of action.
Speaker Change: and we think that GLP-1s will be complementary to inspirotherapy. What we do believe is it's going to help people lose weight, and it's going to help them relax their lateral walls, which is going to be able to present them with tongue-based collapse and suitable for inspirotherapy. So again, I think a release of a GLP-1 will be a tailwind for us.
Speaker Change: But we do look forward to a positive 2025 coming forward
Speaker Change: That's helpful, Tim. Thank you for that. And for the follow-up, maybe if we could just double click on...
Speaker Change: Richard Buchholz, Richard Buchholz, Timothy Herbert, Ezgi Yagci
Speaker Change: should we expect kind of an early 2025 full launch? And then just on the margin side, pricing sounds like is that parity to Gen 4, but will this still be gross margin accretive? Thanks again.
Speaker Change: Thank you, Adam. I think the key is exactly that. It's having the manufacturing lines up and running, and with the success that we've had over the years, we need to make sure that we have the proper amount of inventory on the shelf prior to launch.
Speaker Change: and the production line is active and we're making sure that we're preparing for that.
Speaker Change: And when we have the proper inventory, we will go ahead and launch.
Speaker Change: Several elements that also happen as part of the readiness is we will need
Speaker Change: new contracts with all centers because it is a new model released. We will be training our internal team as well as
Speaker Change: Price is remaining consistent with the NSPIRE-4 in that we do not require to produce
Speaker Change: the sensing lead anymore, it will reduce our COGS, and we believe that we'll see a slight increase in gross margin over time.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you and our next question comes from the line of David Scott from Baird. Please go ahead.
David Scott: Thank you.
David Scott: Great. Thanks for taking the questions and congrats on the quarter here. First one from us, the margin in the quarter is obviously pretty outstanding. I did want to ask more so on the DTC, the advertising side.
David Scott: It looks like that's been pretty flat, if not down slightly, you know, year over year. When you think about the level of investment that you have in DTC so far this year, I mean, is that something that you think can probably, you know, remain pretty flat into the out years? Does it continue to maybe go down on a year-over-year basis? Or is there some point in the future where maybe you have to start to re-accelerate that just to support the level of growth that's out there?
Speaker Change: Yeah, hi David. We're going to continue to invest in our growth. There's no question about that. And that comes in many forms, certainly with R&D, because we're already talking about launching Inspire 5, certainly with the continued scaling of our field organization, but also making sure that we measure the effectiveness of our DTC.
David Scott: gaining efficiencies and bringing the attention and still bringing the patience, requesting appointments with health care providers. We'll continue to monitor that and we're not committing long-term that we'll continue to decrease that, we might increase it.
David Scott: to even grow adoption further. So again, really focused on investing in growth.
Speaker Change: Any other comment on that? Yeah, I've mentioned from the dollar perspective, we've mentioned in 2024 that it'll be the overall spend for the year will be relatively flat over 2023 where we spent a hundred million in DTC, but we are also making medical education investments.
David Scott: And those are higher in 2024. We're increasing our investments in training programs for the sleep fellows and ENTs.
David Scott: And so, that along with being more targeted and efficient in our digital advertising focus, it's allowed us to decrease the spend but still have, you know, kind of wider DTC initiatives.
Speaker Change: All right, thanks. Maybe on international, you called out France for next year. I know in Q4 you had a
David Scott: You have a little bit of a benefit, I guess, on a year-to-year basis.
David Scott: in the fourth quarter for this year. So maybe can you help us think about how you're thinking about the implications for international in the fourth quarter this year, and then any other color I think, you know, that you could provide just around some of these additional markets that are contributing maybe the size of what France could be, but just help us think about that broader growth into 2025 as well. Thank you.
Speaker Change: Sure, I think the two big markets that are going to have a positive impact going forward are going to be France and the UK.
Speaker Change: and I think that both of them are...
David Scott: just up-and-comers right now. Obviously we just spoke last quarter about the
David Scott: countrywide reimbursement in France and our ability now to really start
David Scott: to open up the centers and start to take advantage of that and help.
David Scott: patients in France receive therapy. So we're gonna help them build their business over the next several years.
David Scott: and I think we're also seeing increased performance out of the United Kingdom.
David Scott: And that being said, we still have...
David Scott: another year to go in the DOC region with Germany, Austria, Switzerland, and again Belgium and Netherlands continue to perform quite well, and we will make some progress over in the Asian markets as well, so I think we will see a consistent growth in
David Scott: international markets as we've seen in the past.
Speaker Change: Thank you. Thank you. And I assure our next question comes from the line of Michael Sircone from Jeffrey. Please go ahead.
Michael Sircone: Great, thanks for taking the question. Just a follow-up actually on Adam's question about the Inspire 5 rollout. Tim, you mentioned a few things that have to be done including renegotiating some of those contracts. Do you think you can just talk about, you know, whether or not that's a heavy lift or does that vary by the type of account or customer?
Tim Herbert: I think with our decision to leave system-level pricing consistent with the existing pricing of the contract, it minimizes that burden. It really is logistics.
Tim Herbert: process to go through with centers just to make sure that we have the new product added on to the pricing this in the addendum so we don't believe it's going to be a too much of a heavy lift to complete those contracts.
Speaker Change: Great. Thank you. And then just, you know, we saw a predictor data a few weeks ago. I was just curious if you had any update on on how your conversations with payers are resonating now that we we have that data.
Speaker Change: a little bit of investment in that patient's diagnostic without reducing the quality of care. That's what's most important.
Speaker Change: And as you saw at the meeting...
Speaker Change: There is an introduction of an algorithm for patients who have a BMI less than 32.
Speaker Change: and for patients with a less than 28, a BMI less than 28, they really don't have a lot of lateral wall collapse. So the proposal or the algorithm is that they can proceed directly to implant. And those between a BMI of 20 and 32,
Speaker Change: They want to have one more method and that was measuring nexacupras was the idea presented and any nexacupras
Speaker Change: less than 18 inches
Speaker Change: could proceed to therapy. So we need to collect a little bit more information on that, but it's a pretty strong algorithm that we can look at it and have discussions with payers, as well as physicians.
Speaker Change: to be able to adopt that process. So, it's very good to be able to present that data. The physicians are working on a peer-reviewed publication, and there are two other abstracts.
Speaker Change: at the meeting talking about lateral wall collapse as well. So, we're going to combine a lot more of this information to get everything put together as we take the next step forward with this.
Speaker Change: Okay, thanks Tim.
Tim Herbert: Thank you.
Speaker Change: Thank you. And our next question comes from the line of Richard Newitor from Truist Securities. Please go ahead.
Richard Newitor: Hey guys, thanks for taking the questions. Congrats on on a good quarter here, especially the profit I I wanted to start first question just on the on the inspire 5 coding strategy if you can
Richard Newitor: get a little more specific. You know, our understanding was that
Richard Newitor: The most logical route or strategy is to go back to using the cranial neurostimulation code. Is that correct? And then if it were, can you just talk to what your confidence level is that, whether it's that pathway or some other pathway that you can keep the physician economics.
Richard Newitor: neutral to where they stand now given the faster procedure time on a per kind of unit of time basis.
Speaker Change: Yeah, and we're making sure that we have this work through with the MACs and the payers first.
Richard Newitor: before we really kind of lay this out. We want to make sure that they have a fair shake.
Richard Newitor: at all the information and be able to come back and weigh in.
Speaker Change: The advantage that we have going forward as you highlight, the INSPIRE-5 procedure is shorter in that we do not need to implant the pressure sensing lead anymore, but that also improves the ability to do interoperative testing. That saves a little bit of time as well.
Speaker Change: So, yes, when we get down to it, it's going to be a measure of physician reimbursement on a per-minute basis.
Speaker Change: But what we look at, Rich, is if we can reduce the O.R. time such that physicians can do more procedures in a single surgical day, that's a significant benefit because they can bring in significantly more
Speaker Change: revenue, whatever code they use, to be able to take care of more patients.
Speaker Change: to take care of more patients, and as we've talked about...
Speaker Change: We know the limiting factor that we have today is we simply do not have enough capacity with ENTs to take care of all the patients that we have.
Speaker Change: So, being able to reduce OR time allows for more procedures in a day.
Speaker Change: and the relative value of these codes is such that it's still going to be a net benefit for the physician.
Speaker Change: either way.
Speaker Change: Okay, thanks for that. And then.
Speaker Change: Just going back to, you know, the 2025, you don't view consensus as unreasonable or consensus looks reasonable, however you want to phrase that. I guess, you know, because there's an international component to consensus, I'm just trying to think on U.S. utilization, you've talked in the past about the goal.
Speaker Change: being to consistently grow utilization in the US year over year. I guess when you say, you know, consensus doesn't look unreasonable, the consensus does project modest but still growth.
Speaker Change: and U.S. utilization year-over-year, you know, low single digits. I guess, does that count as part of your comment, that consensus looks reasonable? Thank you.
Rick Buchholz: Thank you, Rich. Yes, we do want to continue to grow utilization. We do know the same store sales is an important aspect of the growth of Inspire and we also know that centers that have the highest utilization also have the highest patient outcomes.
Speaker Change: Well, that's natural because there are more experience in every healthcare provider associated with that center has more experience.
Speaker Change: So, as we look for utilization into the future, we want to continually grow same-store sales, and that will continue to be a focus going forward, and that is incorporated when we make our comments that the consensus next year is not unreasonable.
Speaker Change: and we do take into account the international business as well.
Speaker Change: Okay, thanks Tim. Thanks Rich. Thank you and our next question comes from the line of Larry Bigelson from Wells Fargo. Please go ahead.
Larry Bigelson: Good afternoon. Thanks for taking the question.
Larry Bigelson: Pretty quick, two quick ones.
Larry Bigelson: One is when you do the soft launch, what are you going to tell surgeons, how are you going to tell surgeons to bill for Inspire 5 if you're not going to disclose the coding until next year? And second, is there any concern at this point of patient warehousing for Inspire 5 ahead of the full launch? Thanks.
Speaker Change: Thanks Larry, how are you? The physicians will have specific instructions with their payers for their soft launch Inspire 5 procedures so they will be brought under the tent to make sure that they're able to work with the payers to get the proper sequencing all set up.
Speaker Change: Number two, we believe people will become aware of Inspire 5. We don't believe there will be a significant delay in patients wanting therapy.
Speaker Change: Especially in 2024, we know that with the high deductible insurance plan, patients are really going to be pushing hard to get to therapy in the year, but we'll continue to monitor that as we get into 2025 and prepare for the fall launch.
Speaker Change: Thanks for taking the question. Thanks, Larry.
Speaker Change: Thank you. And I show our next question comes from the line of Shagun Singh from RBC. Please go ahead.
Shagun Singh: Great, thank you so much. I guess just two clarification topics on Q4 and 25.
Shagun Singh: If you look at sequential growth from Q3 to Q4, it implies about mid-teens. And looking at the past five years, you've pretty consistently delivered sequential growth in the high 20s. It comes to somewhere around 20 million in that differential. And I'm just wondering...
Shagun Singh: And then, is there any U.S. inventory dynamic, you know, at play ahead of the Inspire 5 launch, or is it, you know, conservatism, anything you can share there? And then on 2025, again, just to follow up, you know, why do you think consensus is reasonable at about 20% year-over-year growth?
Shagun Singh: versus 27% to 28% that you're looking to do this year. And there are a lot of drivers next year as we think about Inspire 5, predictor, replacement cycle, et cetera. So why is that reasonable at all and why can't you do better? Thank you for taking the questions.
Speaker Change: Very good. Let's start with Q4 and start with the hurricane. Again, we are still kind of assessing
Shagun Singh: The regional impact of the hurricanes, again, we have our own...
Shagun Singh: team members who are displaced and working to make sure that they're all taken care of and the centers are back up and running. And potential patients are able to get back to their homes and get back in.
Shagun Singh: trying to recover, including scheduling a lot of the cases. But also remember in the fourth quarter, that's when we run up against our capacity, because as you mentioned, with the step-up from Q3, we run at a higher utilization.
Shagun Singh: and there's a high demand in there. So we don't have a lot of capacity to make up, so that's why we're closely monitoring the regional performance there, but we're doing everything we can to certainly help those patients as we go forward.
Shagun Singh: When we look at 25, yes, we have a lot of tailwinds helping us along, but again, we think that it's very early and we're still just starting our annual operating plan process.
Speaker Change: and but when we kind of look at our progress to date that's what we kind of looked at those consensus
Speaker Change: numbers, and we determined, yeah, those are not unreasonable, but we really look forward to finishing our annual planning and coming forward with a strong plan for 2025.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: And our next question comes from the line of Kellan Titchmarsh from Morgan Stanley, please go ahead.
Kellan Titchmarsh: Yeah, thanks a lot for taking the questions, guys.
Kellan Titchmarsh: I'll ask two up front. Firstly, just wanted to understand your priorities with a strong cash pile.
Speaker Change: you know last quarter you obviously announced the buyback but any other intentions you want to flag there as we head into 2025 and beyond?
Speaker Change: And then secondly, just looking for any update on the metrics you're thinking of providing us to help assess performance from 25 and beyond in absence of those center numbers. Thanks a lot.
Speaker Change: Absolutely. Yeah, we're very proud of the strong
Speaker Change: cash balance that we have. The team's working very hard, and as we mentioned, we're getting leverage across the organization to be profitable and start to move forward. With that, we did reserve for stock buyback, and we said we were going to be opportunistic.
Speaker Change: With that, at this point, we have not triggered that buyback, as you know, as we've been tracking that very closely, but we remain opportunistic and the plan is still in place.
Speaker Change: As far as the other use of cash, I think we always look for opportunities where we can grow the adoption.
Speaker Change: of Inspire Therapy.
Speaker Change: In the past, we've made minority investments in technologies that can help us with patient flow, and we'll continue to keep our
Speaker Change: antennas up and on what technologies can really help us grow awareness and adoption of INSPIRE and I continue to report back on that.
Speaker Change: As far as metrics...
Speaker Change: Yeah, regarding 2025 metrics, we're still working through that, but we will guide to revenue and gross margin and earnings per share in 2025. Historically, as you know, we've always been transparent, and so we want to continue that. So we will continue to disclose.
Speaker Change: are U.S. sales territories. We won't guide to that number, but we will disclose it. And we're also discussing the fact that we will disclose possibly a number of field clinical representatives just to provide some additional insight into our business and how we...
Speaker Change: continue to commercialize. But again, as we've grown and we're a larger company, you know, we believe that profitability is more relevant guidance metric.
Speaker Change: Thanks a lot.
Speaker Change: Thank you.
Speaker Change: And I show our next question comes from the line of John Block from CFL. Please go ahead.
John Block: Great, thanks guys. Two quick ones. Tim...
John Block: I'm just curious if you're seeing any early outreach or inquiries, you know, from ENTs that are now looking to get trained due to the pending elimination of the of the sentencing lead, simplifying the procedure, having them be a little bit more comfortable. Obviously, that could help the number of ENTs per center and free up capacity. That's the first quick one. I'll pause.
John Block: Thank you. Thank you.
Speaker Change: We talk about that that we believe that that will have a positive impact when
Speaker Change: Physicians don't no longer need to place that sensing lead between the intercostal muscle. It's kind of the one unnatural part of the procedure. We do believe that that will have a positive impact, but John, at this point, we are not marketing Inspire 5. The only time we talk about Inspire 5 is here on these calls to give you...
John Block: awesome awareness of our plans going forward but we're being very careful about talking about five outside of this. So I think that would be a phenomenon that you'll see in 2025.
Speaker Change: when it'll be able to open the door. And I think the key to it is what you hinted at, is the best way for us to increase capacity is to train additional surgeons at existing sites. And I think that really helps. And that will be a focus going into next year and look forward to talking about that more in the future.
Speaker Change: That's helpful, you know, maybe just to follow up there. I've actually always been surprised when we reach out that docs are Very in tune with Inspire 5 and quite honestly, Tim, you know, most know about it So I get your point if you're not marketing it, but they do seem to be
Speaker Change: You know pretty knowledgeable about nsp5 and that's approved like what are you telling these docs in terms of?
Speaker Change: when they're going to get trained or when they can start doing the procedure. That's sort of the follow-up to that last one. And just quickly, Rick,
Speaker Change: You know, the EPS was huge, the OPEX, if I've got it right, was down about $4-5 million sequentially.
Speaker Change: back on the conference call you expected it to be up eight to nine mil I think sequentially so just what played out throughout 3Q on the OpEx side that led it to come in you know considerably below what what your view had been thanks
Speaker Change: Quickly on the Inspire 5, we do get questions when you when several individuals were on this call were down at the
Speaker Change: Thank you.
Speaker Change: American Academy of Oral Laryngology meeting in the International Sleep Surgical Society and Inspire 5 is not a large topic. We don't have it as part of our booth.
Speaker Change: Obviously, John, you talked to a lot of academic physicians and...
Speaker Change: They have knowledge into the research ongoing.
Speaker Change: and they've been part of the evaluation. So there is a lot of talk amongst the academic physicians, certainly about Inspire 5, but as far as our own discussion, we keep it relatively quiet. And so no, we haven't disclosed when they will be trained or when we will be launching it, just as we discuss here.
Rick Buchholz: Yeah, hey John, it's Rick. Regarding the OPEX, we did have a reduction as I mentioned on our R&D line item because of Inspire 5 shifting from
Speaker Change: from developmental to more operational readiness. We also, again, DTC was down. We also, some of our stock-based compensation, just based on timing of...
Speaker Change: in the past on hires and so on, that also had an impact on the sequential OPEX number. But again, we expect we're going to continue to invest in our business across all facets, R&D and our sales organization.
Speaker Change: Thanks, guys.
Speaker Change: Thank you.
Speaker Change: Thank you. And I see our next question comes from the line of Anthony Petroni from Mizzou, Americas. Please go ahead.
Anthony Petroni: Thanks, maybe one on the funnel, Tim, just when we think about GLP-1s.
Anthony Petroni: you know, that 32 plus BMI category, you know, potentially providing a halo effect to hypoglossal nerve stimulation. Are you seeing that already in numbers?
Anthony Petroni: And when we think ahead to 2025, potentially having a GLP-1 on-label for sleep apnea, how do you think that plays out from a funnel perspective? And then I'll have one quick follow-up for Rick. Thanks.
Speaker Change: Thanks, we watched the Maple Leafs in town last night, so sorry we had to send them home.
Speaker Change: with that last part.
Speaker Change: I think that's a great question, with the 32, if you kind of look back with the lateral wall collapse.
Speaker Change: as well as the early reimbursement policies for payers.
Speaker Change: The majority of our patients really have a BMI less than 32.
Speaker Change: So, if you look at the number of patients in there...
Speaker Change: It's really going to be advantageous if we can find a better avenue
Speaker Change: to be able to move them straight to therapy or be able to assess also with neck circumference. It's really going to be a unique opportunity for those patients who really don't see a benefit.
Speaker Change: of having a drug-induced sleep endoscopy because they don't really have a likelihood of having lateral wall collapse or complete concentric collapse. So really the BMI Lesson 32 is really just a natural break point.
Speaker Change: And now we're going to continue to keep investigating higher than 32 up to 35, but at that point you really start to get a greater propensity for that lateral wall collapse.
Speaker Change: As far as the GOP ones, I think it's a matter of timing on
Speaker Change: when they get approval and if they get approval with an indication for obstructive sleep apnea and then what will be their time.
Speaker Change: to be able to launch that product and have a positive impact. So, there's still so much we don't know.
Speaker Change: pursue reimbursement, but we are confident that the launch of the GOP-1s and the continued use of those drugs to be able to treat obesity is going to help.
Speaker Change: patients with obstructive sleep apnea lose weight and come into the final four in SPIRE. So we'll continue to track that but we do believe that will be a positive until well into the future.
Speaker Change: That's a tough one for Rick. Just on R&D, it stepped down quite a bit. Maybe just a recap of what studies are in there today. Is complete concentric collapse still in there? And will there be additional studies launched in 2025? Thanks.
Speaker Change: Yeah, we're continuing to make investments in the R&D line item. There was, you know, we had expensed
Speaker Change: About $5 million of pre-launch inventory in 2023. And so that did not occur in 2024 because we got approval and we're getting closer to launch.
Speaker Change: So R&D was run a little hotter.
Speaker Change: last year because of the pre-launch inventory. But we're still making investments as we have in the past, but we're also continuing to make investments in our SleepSync digital platform and our digital health area.
Speaker Change: and also with the PREDICTOR study, we had clinical study expenses there, and with our recently approved SleepSync programmer. So we're continuing to make R&D investments, and that's why we're indicating that it's going to be closer to mid-2020.
Speaker Change: mid-higher teens on a go-forward basis.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: And I show our next question comes from the line from Brett Fishman from Key Bank Capital Markets. Please go ahead.
Brett Fishman: Hey Tim and Rick, thank you so much for fitting me in. I just wanted to ask a follow up on the hurricane and IV shortage topic. It sounded like you're still working on quantifying the impact on revenue for 4Q. So just curious if you think that, you know,
Speaker Change: That item is generally de-risked in the implied guidance or if you're still seeing an impact and level of uncertainty even into the month of November.
Speaker Change: Yeah, we believe that the recovery effort is well underway and
Speaker Change: and we try to build that in, but we do think that is de-risked.
Speaker Change: See, you know, a little bit of the impact late in Q3, obviously, in September when we get the evacuations.
Speaker Change: It's really a regionally focused area and then...
Speaker Change: In the fourth quarter, of course, we get a second hurricane, and then the...
Speaker Change: IV shortage, but I think that we're able to kind of address it. Our challenge is going to be just making sure that we have the capacity in the fourth quarter to be able to take care of the patients once we get back into their homes and get back into that health care and get rescheduled for their inspired procedures. So really for the most part, we're just focused on a local effort.
Speaker Change: All right, thank you for that color. And then just for my follow up, was wondering if you could comment a bit on how the new centers that you added in the first half of this year have ramped around utilization compared to the typical progressing curve that you've seen in the past. Thank you.
Speaker Change: I think that we always train centers lately with an expectation to be productive when they start and we want
Speaker Change: them to make sure they have a number of patients identified.
Speaker Change: So when we do start them up, they already have patients in the pipeline. And we are straight up with Senator saying, there's no advantage to yourself, to the patients, to anybody.
Speaker Change: for you to come on with the intention of not being a productive accountant. There's too many accountants that really are pursuing Inspire as part of their offerings.
Speaker Change: and so we make sure that we screen the sites also.
Speaker Change: The intent is that they will move up the utilization ladder quickly.
Speaker Change: Now again, it takes time for them to do so and whether they start earlier in the year or later in the year makes a difference because the way we categorize our classes.
Speaker Change: is on fiscal year, so even if the center starts in December, they're part of the class of 2024. But again, we train them with the intent to be able to have a system, to be able to have strong patient flow.
Speaker Change: Thank you.
Speaker Change: Thank you
Speaker Change: And I assure our next question comes from the line of Chris Pasquale from Nifrin Research. Please go ahead.
Chris Pasquale: Yeah, thanks for fitting me in. I'll just ask one, Tim. I wanted to follow up on the Inspire 5 rollout. I imagine customer demand is going to be high once you make that broadly available. You need to retrain the reps and the positions.
Chris Pasquale: How do you execute that transition without taking people out of the field and disrupting procedure volumes? Is it going to be spread out enough across the account base? Is that not an issue? Or should we be actually expecting some disruption during the first quarter of the full launch?
Speaker Change: I think it's a little bit of a relative. I think that we can do a lot of the training on logistics management online.
Speaker Change: But when we get into the surgical training specific aspects of it As you know Richard Todd or Chris, I'm sorry It is it's really pretty straightforward in that we just simply don't implant the pressure sensing lead
Speaker Change: and the other avenues that we need to train is how do you do interoperative testing.
Speaker Change: and then the next training is with a lot of the field clinical reps when we get into the activation but again it's still a device replacement going from four to five so it's a relatively really straightforward
Speaker Change: training that I don't know if we're going to really need to take all of our people out of the field to be able to do that training. We should be able to do that on site.
Speaker Change: Okay, thanks.
Speaker Change: Thanks, Chris.
Speaker Change: Thank you.
Speaker Change: And I show our next question comes from the line of Michael Polak from Wolf Research. Please go ahead.
Michael Polak: Good afternoon, thank you. Just one for me, I want to confirm on the center additions in the quarter, 66 added, I see the center network got 55 sequentially, so can you confirm there were 11 deactivations?
Michael Polak: Okay, can you just remind us what the criteria are to deactivate some of these centers? Thank you.
Speaker Change: Sure, I think the number one reason is the surgeon moves.
Speaker Change: to a different facility, and they just don't have the ability to offer and inspire at the therapy. That's primary. Number two, if it's a site that's been inactive.
Speaker Change: We want to be careful of sending patients to sites where they don't have an opportunity to receive inspired therapy, so what we do is we
Speaker Change: I take them off the website, we discontinue them. A lot of sites we do reactivate.
Speaker Change: and what happens is they may identify new surgeons that can take care of the patients and we take them all the way through the training process all over again before we reactivate them. But we make sure that if a center is not able to take care of two patients that we certainly want to discontinue them.
Speaker Change: Thank you
Speaker Change: Thank you.
Speaker Change: And I show our next question comes from the line of Mike Krapke from Leo Ring Partners. Please go ahead.
Mike Krapke: Hi everyone, thanks for fitting us in. So, following the predictor data, can you just help us understand to what extent you expect to be able to navigate away from certain patients needing a DICE procedure in 2025? You know, is that a noticeable tailwind next year and what are some of the remaining gating factors to be able to see a meaningful impact on your procedure volumes from that?
Speaker Change: Yeah, I think it is. I think what we want to do is we already have payers that have not specifically, I'm sorry, we have payers who have already changed their policy to not specifically require a dice.
Speaker Change: And that's consistent with our FDA indication, that they identify patients that do not have lateral wall or complete concentric collapse.
Speaker Change: but they don't specify how that is determined.
Speaker Change: payers to show that this is an acceptable
Speaker Change: method to be able to identify which patients are good.
Speaker Change: candidates for INSPIRE therapy. So I do think it's going to have an impact. So we're already working with some physicians to work with their peers and submit patients using the algorithm to be able to determine if they qualify for INSPIRE and not requiring them to have a sleep endoscopy. And we'll continue to track that and continue to report back.
Speaker Change: Awesome, thanks very much. Thank you.
Speaker Change: Thank you.
Speaker Change: And I show our last question in the queue comes from Suraj Kalia from Oppenheimer & Co. Please go ahead.
Suraj Kalia: Tim, Rick, thank you for squeezing man. In the interest of time, I'll just ask one question.
Suraj Kalia: So, Tim, just trying to understand U.S. dynamics, right? If we normalize Q3'23, you know, the $10 million that would move to Q4'23, we normalize all that, utilization for the last four, five quarters has been relatively slavish.
Suraj Kalia: Can you help us reconcile your statement about capacity issues for this Q4? I guess what I'm trying to understand is if utilization is, let's say, 5.7 implants per site per quarter, so you have 65 working days.
Suraj Kalia: And somewhere I'm not understanding your comment about the capacity issue. Even if it's hurricanes, it moves around, but maybe if you can expand on your capacity comments, that would be greatly appreciated. Thank you for taking my questions.
Speaker Change: Absolutely, thanks Raj. Yeah, you asked one question, I thought you were going to ask it in four parts.
Suraj Kalia: but
Speaker Change: I think that utilization continues to be our focus, and as you highlight, you spent time
Suraj Kalia: with that as well. And I think that as we get into the fourth quarter, we know that there's always a high demand for patients with the high utilization to be able to increase capacity to be able to take care of those patients. And so it's up to our field team to work directly with
Suraj Kalia: the surgeons to really make sure that we maximize as much OR time as possible to take care of the high demand that we know we see in the fourth quarter and take care of patients as best as we can. But again, our goal continues to remain.
Suraj Kalia: that we want to grow adoption and grow same-store sales because we think that that's going to be an important factor with the specifics of the US market.
Suraj Kalia: So, thanks very much.
Suraj Kalia: For everybody, I want to thank you for joining the call today. As always, I'm grateful to the growing team of dedicated, inspiring employees for their enthusiasm, hard work.
Suraj Kalia: and continued motivation to achieve successful and consistent patient outcomes. The team's commitment to patients remains unmatched and is the most important element to our success.
Suraj Kalia: I wish to thank all of our employees as well as the healthcare provider teams for their continued efforts as we remain focused on further expanding our business in the US, Europe, and in Asia. And for all of you on the call, we appreciate your continued interest and support.
Suraj Kalia: of Inspire, and we look forward to providing you with further updates in the month ahead. Thank you very much.
Speaker Change: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.