Q1 2025 Stereotaxis Inc Earnings Call
Good afternoon. Thank you for joining us first to get taxes first quarter, it's about a 25 earnings conference call.
And statements shrink because French school and question and answer appeared to follow may relate to future events expectations and as such constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 90 95, such statements involve known and unknown risks uncertainties and other factors, which may cause the actual.
So for four months, we're actually bunch up the company in the future to be materially different from the statements that the companys executives may make today.
These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K, or 10-Q, we assume no duty to update. These statements at this time all participants have been placed on a listen only mode. The floor will be opened for questions.
Speaker Change: And comments following the presentation and they're Gonna Binder today's call is being recorded it is now my pleasure to turn the floor over to your host David Fisher, Chairman and C. E O of Stuart's Axis. Please go ahead.
Thank you operator, and good afternoon, everyone.
Speaker Change: Our last call two months ago included a comprehensive overview of stereotactic his strategy will keep todays call more brick I'll focus our prepared remarks on a few key commercial and innovation uptake.
Speaker Change: Our commercial results for the first quarter was solid with 9% year over year growth.
Speaker Change: While the structural challenges of our old product ecosystem remain a significant headwind we are starting to show commercial progress.
Speaker Change: There are three areas, specifically, where we are orienting our focus and seeing results.
Speaker Change: Growing recurring revenue within our mapping portfolio differentiate ADP catheters, starting to commercialize our recently approved magic catheter in Europe and early launch of Gen X to expand robot adoption.
Speaker Change: Yeah.
Speaker Change: Our recurring revenue growth in the first quarter reflects predominantly the contribution of the <unk> family of differentiated diagnostic catheters.
Speaker Change: Global commercial team is increasingly driving adoption of these catheters as we approach the anniversary of acquiring a P T.
Speaker Change: <unk> sales in the first quarter were over $1 million.
Speaker Change: Sales in the United States, we're entering the acquisition we identified the most untapped opportunity in commercial synergy have particularly done well growing 30% sequentially in the first quarter from the fourth quarter.
Speaker Change: Mapping catheter is provide differentiated clinical value in the complex ablation procedures, where robotics is most valued in our team most experienced creating complexity Ts and PVC, along with pediatric and adult congenital patient.
Speaker Change: The process of getting catheter has adopted is gradually there is the need to generate awareness and interest that administrative effort to get on contract at hospitals and the clinical support to turn initial adoption into recurring juice.
Speaker Change: We're still in the very earliest innings of working through these processes.
Speaker Change: Our first focus was existing U S robotic customers a third of which has now begun first map it purchases.
Speaker Change: Our early marketing campaigns are also building awareness with measurable impact in the EP community, where there was essentially no awareness of the catheters.
Speaker Change: The response to these efforts has been very positive and reinforces our confidence in the clinical value and market opportunity.
Speaker Change: We're working through many hospital value analysis committee assessments at both robotic accounts and entirely new hospitals to translate that new awareness into first purchases we.
Speaker Change: We expect a long runway for continued growth and mapping catheter revenue as we continue to build awareness and work through hospital approvals.
Speaker Change: The most significant driver of recurring revenue growth in the coming quarters will be the Robotically spill magic ablation catheter.
Speaker Change: We were delighted in the first quarter to receive European approval for Magic.
Speaker Change: Scribed on the last call we began commercial efforts across many of our EU hospital customers.
Speaker Change: Initial adoption of magic requires administrative submissions at each hospital and for many hospitals also additional regional or national administrative efforts.
Speaker Change: We're continuing to work through these processes across the EU hospitals regions and countries.
Speaker Change: At approximately 20% of our hospital customers. We've got through these initial administrative effort and begun commercial sales.
Speaker Change: Just the initial use of magic at these initial accounts should conservatively generate a couple of hundred thousand dollars of revenue this quarter.
Speaker Change: We expect this revenue to ramp up significantly in the coming quarters and reiterate expectation shared on our last call that magic revenue in Europe will reach approximately $1 million per quarter by the end of this year.
Speaker Change: Building, an attractive razor razorblade business model, which portfolios are proprietary catheters is core to our overall strategy.
Speaker Change: That said a larger installed base of robotic accounts is the critical foundation for robust recurring revenue.
Speaker Change: We spoke in detail on previous calls about how Genesis ex serves as the innovation, making robotics broadly accessible across Cath labs.
Speaker Change: After receipt of European CE Mark for Genesis.
Speaker Change: And then European approval of Magic, we were pleased to announce our first Genesis ex purchase order in the first quarter and began an initial soft launch.
Speaker Change: The most impactful aspect of this launch was bringing Genesis tax to the two largest electrophysiology conferences in our field era in Vienna in March and HRS in San Diego in April.
Speaker Change: While stereo taxes has attended both conferences for 20 years is for the first time, we were able to install a functional robot in our booth.
Speaker Change: Doing so with a dramatic demonstration of how far we've advanced the technology.
Speaker Change: We were delighted by the reception with busy booth and positive commentary from many physician visitors.
Speaker Change: Several key opinion leaders in the field from hospitals that adopt it but gave up on robotics and its earliest iterations are never adopted robotics. It all came by and we're impressed and interested.
Speaker Change: These interactions are reflective of the power of innovation and increased relevance, we and many physician experts.
Speaker Change: <unk> robotics to play any P in Endovascular surgery.
Speaker Change: We have been busy preparing for the first commercial installation of Genesis attacks. This summer.
Speaker Change: It will be an important milestone to demonstrate the robot working reliably in a rigorous environment daily clinical use and will serve as the pivot from which to enter into a more robust commercial effort.
Speaker Change: In tandem with working towards that installation, we have been working to enhance compatibility of the robot with various X rays and preparing our supply chain manufacturing installation and commercial processes for a full launch.
Speaker Change: We expect a full launch in Europe, and the U S. Shortly after initial commercial use and pending U S regulatory approval.
Speaker Change: While we view <unk> as a significant driver of robotic system growth in the coming years, we continue to have a healthy pipeline of Genesis customers. We.
Speaker Change: We were pleased in the first quarter to receive an order for an additional genesis system from a U S customer.
We continue to expect a steady flow of Genesis disorders in the next few quarters with additional Gen X orders building on top of that base.
Speaker Change: We are pleased with the initial commercial impact of map it magic and Genesis effects.
Speaker Change: That said the majority of our focus remains on driving multiple innovations through key development and regulatory milestones.
Speaker Change: Realizing these milestones and our comprehensive innovation strategy set the stage for breakout revenue growth.
Speaker Change: This will be a milestone rich year, and we're making significant progress on multiple fronts.
Speaker Change: We discussed the full breadth of innovation efforts on our last call.
Speaker Change: And amazingly busy time.
Speaker Change: We have six active regulatory reviews ongoing key products being reviewed by either the U S. FDA, our EU notified body.
Speaker Change: There are an additional five regulatory efforts ongoing for products, we expect to submit for regulatory approval in the near term.
This is an amazing bolus of innovation and takes a significant amount of effort to shepherd forward.
Speaker Change: I'll share a few brief regulatory updates on the key technologies.
Speaker Change: First magic in the U S.
Speaker Change: We submitted magic to the FDA last year and continue to work collaboratively with FDA on the review of the catheter.
Speaker Change: We've also continued enrolling patients in our ongoing European study, which is supporting the submission and are nearing 100 patients enrolled.
Speaker Change: Given our interactions with FDA, we continue to expect U S regulatory approval for magic in the second half of this year.
Speaker Change: Second Chinese <unk> in the U S.
Speaker Change: In the first quarter, we responded to the Fda's original questions. We're drilling down a list of approximately 25 outstanding questions a few final topics.
Speaker Change: We received additional feedback and questions recently from FDA on these remaining topics. We're working to address these and continue to view regulatory approval of Gen effects in the summer as realistic.
Speaker Change: Third our Robotically steered high density mapping catheter magic suite.
Speaker Change: We submitted this catheter for regulatory approval in the first quarter and recently received our first round of questions from FDA.
Speaker Change: We see no significant concerns with these questions and we'll respond as soon.
Speaker Change: We continued to see both U S and EU regulatory pools for magic sweep in the third quarter.
Speaker Change: Finally, our vascular guide catheter imagine, which allows a robot to begin to expand its use beyond just electrophysiology.
Speaker Change: We also submitted this catheter for regulatory approval in the first quarter and similar to magic sweep continue to expect both U S and EU regulatory approval in the third quarter.
Speaker Change: Beyond these products in active regulatory review, we are finalizing regulatory paperwork for our synchrony Cath lab technology with regulatory submissions still this quarter and are making good progress on our robotically steered vascular guidewire, which we believe we will complete by the end of this year.
Speaker Change: Other R&D activities like our recently announced AI effort with Nvidia and the multiple PFA efforts are also very exciting and are being advanced in parallel, but not expected to lead to regulatory submissions. This year.
Speaker Change: It's an exciting period seeing so much of what we've invested in at the cusp of coming to market.
Speaker Change: We are heads down focused on advancing all these technologies through the development and regulatory processes and ensuring we are able to manufacture them with high quality and at scale and on commercializing the technologies creativity.
Speaker Change: This year, we will demonstrate the tangible reality of our overall strategic transformation into a company with an easily adopted robot that can navigate a proprietary set of catheters in EP and broadly across endovascular procedures.
Speaker Change: Milestones will increasingly contribute to commercial results as we progress through the year and set us up for breakout growth as we look towards 2026.
Speaker Change: Jim will now provide additional commentary on our financial results and then ill make a few financial comments as well before opening the call up to Q&A.
Speaker Change: Thank you David and good afternoon, everyone.
Speaker Change: Revenue for the first quarter at 2025 totaled seven 5 million growth of 9% from $6 9 million in the prior year first quarter.
Speaker Change: System revenue for the first quarter was $2 million and recurring revenue was $5 5 million compared to $2 6 million and $4 3 million in the prior year first quarter.
Speaker Change: System revenue in the quarter reflects revenue recognition on the installation of one Genesis system and partial revenue recognition of other ancillary systems recurring revenue growth reflects primarily the contribution from last year's acquisition of Atg technology.
Speaker Change: Gross margin for the first quarter was 54% of revenue recurring revenue gross margin was 68% and system gross margin was 15% recurring.
Speaker Change: Revenue gross margins remain impacted by acquisition related accounting that temporarily reduces disposable margin.
Speaker Change: This is an accounting treatment and not reflective of cash margins our activity prior to the acquisition recurring revenue margins were approximately 75% following the acquisition they dip down below 60% and we expect recurring revenue margins to get back to our normal level by this year's third quarter.
Speaker Change: System gross margins have been fairly consistent in the 15% to 20% range and are impacted significantly by fixed overhead allocated over low production level.
Speaker Change: Operating expenses in the quarter of 10 million included $3 2 million in noncash charges for stock compensation expense Mark to market adjustment for acquisition related contingent earn out consideration and amortization of acquired intangible assets. Excluding these noncash charges adjusted operating.
Speaker Change: <unk> were $6 8 million compared to the prior year adjusted operating expenses of $6 1 million.
Speaker Change: The increase in operating expenses reflects the addition of ATT operating expenses following the acquisition.
Speaker Change: Operating loss and net loss in the first quarter of 2025, or $5 9 million and $5 8 million compared with $4 7 million and $4 5 million in the previous year.
Speaker Change: Adjusted operating loss and adjusted net loss for the quarter, excluding noncash charges for $2 7 million and $2 6 million compared with $2 2 million and $1 9 million in the previous year.
Speaker Change: Negative free cash flow for the first quarter was $1 8 million compared to $2 3 million in the previous year at March 31, stereo taxes had cash and cash equivalents of $10 7 million and no debt.
David Fisher: I will now hand, the call back to David.
David Fisher: Thank you Kim.
David Fisher: As mentioned in our press release, we are reiterating the revenue guidance, we provided on the last call.
David Fisher: We expect double digit revenue growth for the full year 2025.
David Fisher: In any given quarter, we expect system revenue to fluctuate between approximately 2 million to $3 million.
David Fisher: Recurring revenue will continue to scale throughout the year, reaching an expected $7 million in the fourth quarter.
David Fisher: Our revenue expectations assume only modest contributions from Genesis effects in Europe. This year and no Genesis is X revenue from the U S.
David Fisher: We believe it is conservative, but warranted pending regulatory clearances.
David Fisher: These revenue expectations also assume no system revenue from China, while we viewed the recent approval of Genesis in China as a potentially significant tailwind. This year the ongoing macro situation create substantial uncertainty on to the extent Chinese hospitals will be able to purchase Genesis systems.
David Fisher: We and our partner Mike report are continuing to work on a meaningful pipeline of Chinese customers, but believe it is prudent to view this as an upside given the uncertainty.
David Fisher: Growing recurring revenue and stable.
David Fisher: Operating expenses support our expectation for reduced cash used in 2025 compared to 2024.
David Fisher: I'm pleased with our relatively modest cash use in the first quarter and our cash level is approximately flat with our cash balance at the end of last year's third quarter.
David Fisher: Tariffs, assuming current rates persist are anticipated to cause less than a 1% increase to our expenses.
David Fisher: We view our existing balance sheet is allowing us to reach key milestones commercialize our innovation and profitability growth.
David Fisher: We will now take your questions. Operator can you. Please open the line for Q&A.
Speaker Change: This time I would like to remind everyone that in order to ask a question Press Star then the number one thing a telephone keypad. We also asks that you. Please limit your questions to one and one follow up so that everyone can have the opportunity to engage with Irish speakers for today.
David Fisher: For just a moment to compile the Q&A roster.
Speaker Change: Please say your first question comes from the line of.
Adam Maeder: Adam Maeder with Piper Sandler.
Speaker Change: Please go ahead.
Speaker Change: Hi, Good afternoon, David and Ken. Thank you for taking the questions and congrats on all the progress.
Speaker Change: Thanks, Good afternoon.
Speaker Change: Yes, good to hear from you David.
Speaker Change: Maybe just one from me to start on the capital side.
Speaker Change: Multipart question, but.
Speaker Change: Just wanted to dig into the backlog a little bit more and just kind of get a better sense for kind of how that shaping up I guess both on the <unk>.
Speaker Change: Genesis side as well as the Genesis ex mobile system.
Speaker Change: Both in the U S and in Europe, and one of the questions. I have is is the capital equipment environment still relatively healthy and our resilience.
Speaker Change: And in the U S particular, Lee just wondering if you.
Speaker Change: Folks are differing purchases waiting for the Genesis X to become available and if thats kind of.
Speaker Change: Impacting you guys a little bit and then I had a follow up sorry for the long winded question.
Speaker Change: Sure sure no. It's a great question.
Speaker Change: When you look at the capital environment. Overall, you do really have to look at the three key geographies each independently because there is very much its own dynamic in each of the three and just in terms of our product ecosystem and kind of what we're working within I would say that our experience is probably not necessarily reflective of that.
Speaker Change: Broader macroeconomics I don't know, we're still such a small fish that and it's very hard to say that what we experience is reflective of the broader capital equipment environment, because again, we're kind of a small fish in a huge ocean.
Speaker Change: I think that irrespective of how the macro does and we're going to be mainly driven by our own swimming capabilities.
Speaker Change: That said, if we look at kind of the three regions in the U S. So we have still have the least advanced of an ecosystem and that we don't yet have magic approved we don't have the catheter approves and so and so it's kind of it's a tougher capital environment for us.
Speaker Change: Do have various interested customers on the Genesis side as well.
Speaker Change: We announced we had won that James order from the U S customer in the first quarter. So obviously there continues to be a pipeline. There there continues to be activity, but I'd say thats, probably one of our most challenged end markets until we get Chinese effects on the market and test.
Speaker Change: And have kind of some of the catheters that are that are critical for <unk> and <unk>.
Speaker Change: Also approved.
Speaker Change: And we do have hospitals that are very much in kind of you probably saw some of that med at HRS as our hospitals that are very much interested in engaging with us in understanding how genetics ex could fit into their labs and they like the fact that they don't have to necessarily.
Speaker Change: Think about a major construction project for it and so there is kind of been.
Speaker Change: A group of them.
Speaker Change: Of interested hospitals, there, but obviously kind of we're waiting towards that later in the year. When we have approval of both <unk> and magic.
Speaker Change: To view that as being really actionable.
Speaker Change: And in Europe, we have.
Speaker Change: More kind of robust pipeline in that we have both.
Speaker Change: Both on the Genesis side and on the <unk> side.
Speaker Change: I would say that the Genesis side is still in some ways a larger pipeline than Genesis effects, just because there are physicians and hospitals that are interactive with us for the last couple of years in advance that interest in that over the years and if theyre already planning to do construction or are there.
Speaker Change: Building out new wings of hospitals.
Speaker Change: There the baseline assumption is to use Genesis just because thats whats been in their mind all along we are starting now to also build a separate pipeline of positions that would be most interested in genesis attacks.
Speaker Change: I recognize that the investment community already.
Speaker Change: Counted as a given that <unk> works in <unk>.
Speaker Change: Given that as a given and obviously we added at the conference we were able to show it at that.
Speaker Change: Very helpful. But there is something with physicians and hospitals. There is I think a natural conservatism, which wants to see things actually working in the real world treating patients before they are fully onboard and fully confident to jump in so there is more of that market confidence in genesis given that.
Speaker Change: People have seen it working now at many hospitals consistently treating thousands of patients then there is still on Genesis.
Speaker Change: It's up to us over this coming year as we install the first system, maybe a second system that we kind of demonstrate genesis ex working well and that will kind of increase the contents and allow us to grow there, but again I expect relatively consistency.
Speaker Change: Should have almost every quarter at least one or two genesis orders coming out of Europe, and then China has its own dynamic. We obviously just got regulatory approval. Mike report is a great partner with us in China, there and they are pushing aggressively despite the macro noise to.
Speaker Change: To start to build them or to start to convert the pipeline that we have into actual orders and the whole tariff situation and what that would mean in terms of the price of Genesis.
Speaker Change: For Chinese hospital customer is obviously, a little bit challenging and there's uncertainty there as the news today is probably.
Speaker Change: Somewhat more helpful than that but add but that uncertainty does kind of raise questions and that's why we're viewing that all as upside that's not part of our guidance.
Speaker Change: But definitely there should be upside there, particularly if the macro situation is that is improved versus what it was last week.
Speaker Change: I hope that helps in particular as a follow up can obviously talk a bit more about it.
Speaker Change: No that's great color David Thanks, so much for all of that and for the follow up just pivot.
Speaker Change: Pivoting over to the catheter side.
Speaker Change: Your magic RF ablation catheter.
Speaker Change: I guess just wanted to kind of.
Speaker Change: Get a better understanding of the feedback from your European customers that have adopted.
Speaker Change: That catheter.
Speaker Change: The catheter performing.
Speaker Change: Is it being used predominantly in SVT and VT or is it really across the garden variety of cases.
Speaker Change: And as you think about that 20% I think.
Speaker Change: Set of customers that are now using magic.
Speaker Change: Through the Vac process, just kind of how should we think about that scaling over the course of the next couple of quarters and thanks again for taking the questions.
Speaker Change: Sure. So overall the reception to it is very positive it isn't very surprising for us because we did have obviously the clinical study before and so we got and multiple physicians, who had experience with magic even before the launch and it's it's.
Speaker Change: In many ways right a very.
Speaker Change: It's just improvement in various ways that make the experience with the catheter nicer than the performance nicer and what we experienced in the clinical study is now playing out also in these initial adoptions at commercially and it has been used.
Speaker Change: Like in the clinical study across the full spectrum of procedures. So svt's AF procedures, bt's pvc's congenital patients really across the spectrum of patients.
Speaker Change: Yes.
Speaker Change: Our overall volume there is more of a propensity of using it in VTS and Pvc's complex cases, where we add the most value and that just matches our overall procedural volume and we are continuing to ramp.
Speaker Change: Hospital by hospital.
Speaker Change: <unk> by physician.
Speaker Change: <unk> sites that will start using and then kind of switch over fully to magic. We've given the guidance of magic in Europe scaling to about $1 billion run rate at the end of this year and so that kind of.
Speaker Change: That kind of equals about a $4 million annual revenue from magic that will be a fairly good penetration, but by now thats probably about half of the penetration are a little bit less than half the penetration that we've kind of expect overall from our European customers and so I think kind of in the past I've talked.
About that generally you should expect a two year process to fully convert the market over and so I think we're very much on track on that.
Speaker Change: Great color. Thanks again.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Frank Atkins with Lake Street Capital markets. Please go ahead.
Frank Atkins: Alright, Thanks for taking my questions Congrats on the progress.
Speaker Change: I was going to start with one on magic just to continue that conversation a little bit how is the.
Speaker Change: Ordering patterns look for the 20% that are now active and they.
Speaker Change: Essentially started to use it and maybe they are testing a few units before they fully implemented and used magic exclusively or are they getting confidence kind of right upfront to switch over all of their RF magnetically driven catheters to magic.
Frank Atkins: Sure Hi, Frank good afternoon.
Speaker Change: It's a great question generally when we see the first order, we see an order for five or 10 catheters.
Frank Atkins: The box of five or 10, and then they'll work through those.
Frank Atkins: We make sure our trainers on site, we make sure that kind of there is there is a real discussions it's not that they just pull it out and use it one day without any discussion we want to make sure. Their experience is good there are differences right year given.
Frank Atkins: And the analogy that it's kind of all of US can remember you have to have a car that you've driven for 15 20 years and suddenly you have a new car, even if it's a better handling car there are differences in the experience and so it's useful kind of to both.
Frank Atkins: Discuss those before they do the first drive and then to kind of deal with them on the first drive and make sure it's going well and they're enjoying it and we've gotten very positive feedback we have had some and now kind of second orders after that first order.
Frank Atkins: Yes, Ethan I think third order from a couple so we're starting now to get into some repeat orders from some of the hospitals and otherwise are working through those initial initial batches.
Frank Atkins: Yes, sometimes also in some hospitals there are multiple physicians and so youll see kind of one who will take the the flag and say I want to be the one to do the first few and then they'll talk about it with their colleagues and other colleagues want to do it. So it's every hospital has its own little dynamic, but but overall kind of that's the way, it's playing out well.
Frank Atkins: Kind of multiple hospitals, obviously, where we are in certain aspects of either the hospital review or the National review to get it in and so it's kind of it's a grind just working through these processes, but but overall, we're very happy with kind of the physician reception.
Speaker Change: Got it that's helpful. And then maybe just magic in U S herd the updated commentary Youre working collaboratively with the FDA, what's kind of left on the docket as you look at that.
Speaker Change: Submission process is there anything specific that they're waiting to see or is it more just in their court and risks related to timing of when they can get to the file.
Speaker Change: So overall I would say that actually.
Speaker Change: Despite all of the news articles and things like this that we're painting a dollar picture of things FDA is seems to be working very hard is very.
Speaker Change: Still doing very detailed reviews as responsive and they're here, so I kind of say that said thats overall.
Speaker Change: Pleasure.
Speaker Change: <unk>.
Speaker Change: <unk> seen that in practice it doesn't seem like the stuff on the news are having an impact at least from our vantage point and.
Speaker Change: When you look at kind of our FDA review of Magic, we have received very very detailed.
Speaker Change: Questions comments on various parts of the submission and so those kind of.
Speaker Change: Either addressed or sometimes you do some secondary.
Speaker Change: Biocompatibility of Sterility test to supplement the test that you had before.
Speaker Change: The vast majority of that I think has done I think there might be a couple of tests that we are now running at third party labs kind of to supplement to submission, but largely that is all done.
Speaker Change: As we are continuing to enroll patients in Europe, particularly we've kind of we're not trying to enroll a specific number of patients now we're really enrolling a complex congenital complex anatomy patient and that kind of seem to be the most suited.
Speaker Change: Suited for FDA to review at this point and so as we're doing that while compiling all the data sharing it with FDA, there getting that and being able to review it and so I would say kind of it's been mix of.
Speaker Change: Working through the questions and some of the remaining topics ensuring that the clinical data that has been generated out of the European study is reviewed thoroughly and kind of that FDA feels comfortable with that and those are probably the largest items. There is the potential for an on site audit of the manufacturing facility, but that.
Speaker Change: And that may not be required so that's still.
Speaker Change: Thats still thats.
Speaker Change: Still a question Mark.
Speaker Change: Got it that's helpful. I'll stop there. Thank you.
Speaker Change: Maybe one other comment just kind of a similar to your first question, but more fitting with the second one in the U S is obviously the U S doesn't have as many administrative complexities as as Europe, and so generally I would expect U S adoption of Magic post approval to be quicker you, obviously don't have any of the national or <unk>.
Speaker Change: No registration you still have to work through Vac committees in the U S. But we've had now quite a lot of experience with Vac committees with the map of catheters in the U S and sometimes that goes slowly, but what a physician as vocal about it that can move overall very quickly and so that's been I think kind of we have good experience now with that in and that will help.
Speaker Change: With the Magic program in the future.
Speaker Change: Your next question comes from the line of Jason <unk> with Roth Capital. Please go ahead.
Jason: Hi, Thanks for taking the question so first off.
Speaker Change: I assume.
Jason: The.
Jason: Magic, it's approved in the U S.
Jason: It could be some upside in the numbers.
Jason: If we got I'd say early in the second half or is that that's the right way to think about it.
Speaker Change: Hi, Jason Yes, we didn't we didn't include magic in the U S. In our guidance for $7 million of recurring revenue in the fourth quarter that doesn't include magic care revenue in the U S.
Speaker Change: And in terms of just penetration in Europe, and I think you sort of spoke to are in U S.
Speaker Change: What what's your kind of timeline that you think before it can be sort of fully converted or fully set maybe not saturated at fully converted to magic in the U S and Europe.
Speaker Change: Sure.
Speaker Change: General statement I've made is that I expect a full conversion to play out over a period of approximately two years. So that would say in Europe, you should expect at.
Speaker Change: At some point in the course of 2026th that really substantially all of the usage is converted to magic and then U S would probably the U S is that a quicker timeline than that but it's obviously starting later.
And then for Genesis tax it sounds like you're already having conversations in the field.
Speaker Change: Are these.
Speaker Change: I appreciate that.
Speaker Change: Don't have to do a major construction.
Speaker Change: Have they looked at alternative ways of financing I know, if you've talked about in the past that you could potentially release these systems or even place. These systems has that been part of the discussions or is that something that you are saving for later.
Speaker Change: Yes.
Speaker Change: Good question. So obviously in Europe, we're having those open discussions on the.
Speaker Change: Commercializing Genesis attacks and kind of building a pipeline in the U S. It is not yet approved so were kind of sharing it as part of our innovation strategy, but we're obviously not commercializing it or floating gate or doing anything of that sort in the U S and when you look at.
Speaker Change: The different financial models.
Speaker Change: We are still at the point, where we are ramping up manufacturing and supply chain and everything of that sort there is.
Speaker Change: The demand that is.
Speaker Change: Open to acquiring systems and so we're not in.
Speaker Change: We're not trying to push.
Speaker Change: I think that at some point in the coming few quarters, we will start to present hospitals three models, a purchase model a leasing model and placement with the disposable.
Speaker Change: Revenue disposable catheter commitment model and we'll place the three of them to some extent on the desk of the hospital and will be agnostic to the three NGO will just kind of.
Speaker Change: Our streamlined.
Speaker Change: Speed of adoption by sharing these remodels all at the same time upfront at this stage, we are still predominantly talking about the sales model, although there remain a few scenarios where.
Speaker Change: With particular, Kols, where we would really like to see.
Speaker Change: Switch them on to robotics, and leasing model would be kind of will be attractive to us to get them to try it at least in to start to.
Speaker Change: Sure.
Speaker Change: Kind of share their experience with it because it would be kind of impactful for overall awareness of the robot in the field and so I'd say were mainly still focusing on the sales model, but as we ramp up manufacturing and supply chain as we go into full commercial launch youll see us be much more agnostic between the three models with the goal again of I think I had a comment in our <unk>.
Speaker Change: Repaired remarks, where ulta.
Speaker Change: Ultimately.
Speaker Change: Ultimately the real driver of growth is going from having 100 robot installed base to having 1000 robot installed base and so how do you kind of accelerate that as much as possible.
Speaker Change: And Luckily with our with a good portfolio of catheters, you can do that in a in a leasing model or a placement with disposable commitment model and it still ends up being financially.
Speaker Change: Prudent and attractive to do so.
Speaker Change: Great I appreciate all the color I'll jump back in queue.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Once again, if you would like to ask a question press star one on your telephone keypad.
Speaker Change: Your next question how much from the line of Josh Jennings with TD call. Then please go ahead.
Speaker Change: Yeah.
Josh Jennings: Hi, good afternoon, Thanks, Stephen Kim.
To ask David just as you're building out your catheter portfolio.
Josh Jennings: If we think about the commercial area, where you have to match a Carmen ablation catheter magic sweep high density mapping catheter.
Josh Jennings: And the map it portfolio I mean, how do you envision the case mix for robotics navigation.
Josh Jennings: Cardiac ablation procedures evolving.
Josh Jennings: I think the kind of person.
Josh Jennings: <unk> in particular versus a true.
Josh Jennings: You guys you described in some of the cases magic Kevin just in terms of your case mix would you expect that to change do you expect.
Josh Jennings: The platform to be utilized in more atrial ablation as well.
Josh Jennings: Hey, Josh Thanks for thanks for the customer that's a good one.
Speaker Change: And maybe kind of just to start you saw it obviously at HRS.
Speaker Change: The portion of our booths, where we displayed all the catheters and we have and obviously also on our investor slide an image of that and so this transition from a year ago selling zero catheters to having I think it was 10 catheters displayed in an eight out of 10 of them are going to be commercial this year and already.
Speaker Change: I think the majority of them are commercial at least in one one of the key geographies that is really kind of a major strategic transformation for stereo taxes again, we've had.
Speaker Change: 20 years of commercial experience and never selling our own catheter. So that is a big big one for us and when you look at the case mix, specifically and we are working on all all sides that kind of each of those portfolios mapped that magic and imagine end up being much much kind of a big significant portfolios of.
Speaker Change: A catheter revenue.
Speaker Change: When you look at the case mix specifically in EP.
Speaker Change: Where the majority of our procedures currently rpt's pdc's congenital patient I think that that will probably persist also in as.
Speaker Change: As we get our own portfolio of catheters R.
Speaker Change: Our mechanism of action, whether you apply that mechanism of action robotic magnetic mechanism of action to an ablation catheter or to a mapping catheter and are really provides its most value in challenging cases.
Speaker Change: We're we're kind of manual catheters had difficulty being navigated well or being stable or being safe and so I think kind of that said, that's obviously, what we where we shine and so I kind of say, that's our best foot in the door with any individual physician. Once you have your foot in the door and they like to use you you see adoption of us.
Speaker Change: Also in Spt's also in some cases, and so I kind of I think that we're at least for now we can be in order of magnitude larger even more than I mean.
Speaker Change: 30 fold larger adjusting the VT PVC congenital space and so that is a good niche a good large niche for us to focus on at this time.
Speaker Change: And again as you get your foot in the door Theres always the opportunity to expand your usage into into other.
Speaker Change: Other procedure types.
Speaker Change: And so that's kind of how I would like to do things now I think kind of sidestepping. The slugfest that is taking on in the AF space right. Now is probably also help.
Speaker Change: If anything from a from just a commercial team focused perspective, we can have a much bigger impact with that much lower hanging fruit in the in the complex ablation.
Speaker Change: Makes sense, thanks, and I wanted to follow up on the imagine I know you've been interacting with neuro vascular physician experts over the years.
Speaker Change: Our understanding that there was some buzz that you've generated.
Was hoping you could walk us through I know this might be a review, but walk us through five 10-K approval imagine five 10-K approval Genesis sacks.
Speaker Change: How do you see.
Speaker Change: The neurovascular community engaging and potentially adopting.
Speaker Change: Robotic magnetic navigation using the imagine tied catheter guide Waterford Crystal on the Neurovascular cases over the next 12 months to 24 months. Thanks a lot.
Speaker Change: Sure. Thanks, that's a great question too so our imagine portfolio will initially have.
Speaker Change: Imagine five asks and a guide catheter, it's a five French guide catheter and then we hope to submit by the end of this year.
Speaker Change: So the old ones for Guidewire, which is much much smaller kind of almost like the diameter.
Speaker Change: A piece of hair and little wire.
Speaker Change: And so those are kind of the two key families and each one of them will have kind of a family.
Speaker Change: <unk> of devices that are relatively similar but slightly different and the guide catheter has already been submitted and so that kind of as we gain approval. There are certain procedures that are better suited for a catheter and others that are better suited for wire. So let's say in the neuro field one of the areas, where we expect the guy.
Speaker Change: Catheter to provide a lot of value is just navigating up the carotid I think I might have mentioned.
Speaker Change: Some previous call some of the feedback we were receiving from neuro interventional, we're navigating from day order into the carotid and up the carotid in a subset of patients whether it's 15% 20% of patients can be very very difficult and they will spend 2030, 40, 50 60 minutes trying to do so and sometimes don't fail completely in doing that.
Speaker Change: Full time, they are on X-ray and obviously, if it's a stroke case.
Speaker Change: That amount of time, it's critical for the for the outcome of the patient and so there is kind of been stimulative. Other cases that would be useful for the guidewire that or just kind of different or other parts of a case, where a guidewire could be helpful. As we get the guide catheter approved.
Speaker Change: <unk>.
Speaker Change: I would say that the guide catheter can work, obviously with Genesis effects, but can also work with niobium Genesis and so.
Speaker Change: Quickest easiest adoption of the guide catheter will be in existing labs, where they already have a robot and an interventional cardiologists radiologists wants to step into the lab and kind of try it in some complex cases, essentially every EEP department as part of the interventional.
Speaker Change: Allergy Department and so even if you have a room there is a dedicated EP room.
Speaker Change: Usually the cardiologists are literal.
Speaker Change: Literally right next door, and and and able to use those labs.
Speaker Change: Probably more difficult for neuro interventional is to use an EP lab, just because the other tools that they have in our neuro labs are different and so that would probably only take place in an existing net year over year Genesys labs. If it was really part of a series of cases that were particularly difficult that they wanted to.
Speaker Change: To move into the EP rooms for that process and so I would see.
Speaker Change: Slower, but but kind of could interest adoption in the neuro field and probably that's going to be predicated also on having Genesis <unk> available and also on some of our efforts.
Speaker Change: <unk> touched upon in some of the prepared remarks on and making <unk> compatible with various other X rays in the field and so kind of we're working on that in tandem there are.
Speaker Change: Physicians in the U S from various hospitals, who are very interested in the clinical value that imagine can provide and so as we as we get that on the market as <unk> on the market I expect where we're going to be able to establish kind of stacks.
Speaker Change: A couple of hospitals at least and that start to demonstrate the clinical value in the neuro appealed and then.
Speaker Change: Probably youre going to see more value being shown in interventional cardiology interventional radiology just from existing installed base.
David Fisher: Understood I appreciate that thanks, David.
Speaker Change: Thank you everyone that concludes our Q&A session for today I will now turn the call back over to David <unk> for the closing remarks.
Speaker Change: Okay. Thank you very much for all your questions and for the continued support we look forward to working hard on your behalf over the coming quarter and speaking again soon thank you.
Speaker Change: Ladies and gentlemen that concludes today's call you may now all disconnect. Thank you for joining.
Speaker Change: Go ahead.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.