Q1 2026 Kestra Medical Technologies Inc Earnings Call
Speaker #1: Good Good afternoon and welcome to the KESTRA MEDICAL TECHNOLOGIES earnings conference call. This conference call is being recorded for replay purposes. We will be facilitating a question-and-answer session following prepared remarks from management.
Operator: Good afternoon and welcome to the Kestra Medical Technologies earnings conference call. This conference call is being recorded for replay purposes. We will be facilitating a question and answer session following prepared remarks from management. At this time, all participants are in listen-only mode. I would now like to turn the call over to Neil Bhalodkar, Vice President of Investor Relations, for introductory comments.
Speaker #1: At this time, all participants are in listen-only mode. I would now like to turn the call over to Neil Bhalodkar, Vice President of Investor Relations, for introductory comments.
Speaker #2: Thank you. Thank you for joining this afternoon's first quarter fiscal 2026 earnings call. With me today are Brian Webster, President and Chief Executive Officer, and Vaseem Mahboob, Chief Financial Officer.
Neil Bhalodkar: Thank you. Thank you for joining this afternoon's first quarter fiscal 2026 earnings call. With me today are Brian Webster, President and Chief Executive Officer, and Vaseem Mahboob, Chief Financial Officer. This call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements made on this call that do not relate to matters of historical facts should be considered forward-looking statements. These statements are based on Kestra Medical Technologies' current expectations, forecasts, and assumptions, which are subject to inherent uncertainties, risks, and assumptions that are difficult to predict. Actual outcomes and results could differ materially from any results, performance, or achievements expressed or implied by the forward-looking statements due to various factors. Please review Kestra Medical Technologies' most recent filings with the SEC, particularly the risk factors described in our Form 10-K for additional information.
Speaker #2: This call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements made on this call that do not relate to matters of historical facts should be considered forward-looking statements.
Speaker #2: These statements are based on Kestra's current expectations. Forecasts and assumptions are subject to inherent uncertainties, risks, and assumptions that are difficult to predict.
Speaker #2: Actual outcomes and results could differ materially from any results, performance, or achievements expressed or implied by the forward-looking statements due to various factors. Please review Kestra's most recent filings with the SEC, particularly the risk factors described in our Form 10-K for additional information.
Speaker #2: Any forward-looking statements provided during this call, including projections of future performance, are based on management's expectations as of today. KESTRA undertakes no obligation to update these statements except as required by applicable law.
Neil Bhalodkar: Any forward-looking statements provided during this call, including projections of future performance, are based on management's expectations as of today. Kestra Medical Technologies undertakes no obligation to update these statements except as required by applicable law. With that, I'll turn the call over to Brian.
Speaker #2: With that, I'll turn the call over to Brian.
Speaker #3: Thanks, Neil. Good afternoon, everyone, and thank you for joining us on today's conference call. We are excited to discuss the strong start we had to our fiscal 26 and the continued progress we have made in our key operational objectives.
Brian Webster: Thanks, Neil. Good afternoon, everyone, and thank you for joining us on today's conference call. We are excited to discuss the strong start we had to our fiscal 2026 and the continued progress we have made in our key operational objectives. Before we jump into that, I'd like to again highlight the purpose behind the mission that drives the Kestra team. At the center of everything we do are the lives we protect each day and the impact we have on patients, their families, and the providers who care for them. Recently, one of our territory managers, or sales reps, gave an overview of the ASSURE system to a provider where they discussed how the ASSURE system tracks heart rate trends and how this capability can provide critical insights for identifying patients with previously undiagnosed arrhythmias.
Speaker #3: But before we jump into that, I'd like to again highlight the purpose behind the mission that drives the KESTRA team. At the center of everything we do are the lives we protect each day and the impact we have on patients, their families, and the providers who care for them.
Speaker #3: Recently, one of our territory managers or sales reps gave an overview of the Assured system to a provider, where they discussed how the Assured system tracks heart rate trends and how this capability can provide critical insights for identifying patients with previously undiagnosed arrhythmias.
Speaker #3: The fact that patients could trigger their own ECG recordings with a simple push of a button on their wearable vest stood out to the provider.
Brian Webster: The fact that patients could trigger their own ECG recordings with a simple push of a button on their wearable vest stood out to the provider. Soon after, the impact of this capability came into sharper focus when the same provider prescribed the ASSURE system for a 53-year-old patient at elevated risk of sudden cardiac arrest. The patient had hypertension, nonischemic cardiomyopathy, frequent extra heartbeats, and a cardiac output ejection fraction of just 34%. During the fitting, the patient's fiancée candidly shared her anxiety about the unpredictability of her loved one's condition. To provide reassurance, the care team advised that the patient trigger heart rhythm recordings twice a day. Those recordings captured repeated irregularities in the patient's heart rhythm. The Kestra representative promptly pointed out the recordings to the physician, illustrating the clinical value of patient-triggered rhythm recordings and the broader role of the cardiac recovery system in guiding care.
Speaker #3: Soon after, the impact of this capability came into sharper focus when the same provider prescribed the Assured system for a 53-year-old patient at elevated risk of sudden cardiac arrest.
Speaker #3: The patient had hypertension and nonischemic cardiomyopathy, frequent extra heartbeats, and a cardiac output ejection fraction of just 34%. During the fitting, the patient's fiancé candidly shared her anxiety about the unpredictability of her loved one's condition.
Speaker #3: To provide reassurance, the care team advised that the patient trigger heart rhythm recordings twice a day. Those recordings captured repeated irregularities in the patient's heart rhythm.
Speaker #3: The KESTRA representative promptly pointed out the recordings to the physician, illustrating the clinical value of patient-triggered rhythm recordings and the broader role of the cardiac recovery system in guiding care.
Speaker #3: The insights were significant enough that the patient was scheduled for a cardiac ablation. However, before the patient was able to undergo the cardiac procedure, lifesaving therapy was necessary.
Brian Webster: The insights were significant enough that the patient was scheduled for a cardiac ablation. However, before the patient was able to undergo the cardiac procedure, lifesaving therapy was necessary. The patient laid down for a nap after feeling unwell. While asleep, they went into a dangerous rhythm that quickly progressed into cardiac arrest. The ASSURE system detected this and delivered a shock, saving the patient's life. In the critical moments that followed, our ASSURE Assist service quickly helped connect the patient to emergency care, and the patient was safely transported to the hospital. This story illustrates the full continuum of care that our cardiac recovery system provides, equipping providers with insights to guide treatment, protecting patients with lifesaving therapy when it matters most, and ensuring rapid emergency support in the vulnerable periods that follow.
Speaker #3: The patient laid down for a nap after feeling unwell, while asleep, they went into a dangerous rhythm that quickly progressed into cardiac arrest. The assured system detected this and delivered a shock, saving the patient's life.
Speaker #3: In the critical moments that followed, our assured assist service quickly helped connect the patient to emergency care, and the patient was safely transported to the hospital.
Speaker #3: This story illustrates the full continuum of care that our cardiac recovery system provides. Equipping providers with insights to guide treatment, protecting patients with lifesaving therapy when it matters most, and ensuring rapid emergency support in the vulnerable periods that follow.
Speaker #3: And while this is just one patient's experience, in the first quarter of fiscal 2026, our team and technology helped facilitate many similar lifesaving events.
Brian Webster: While this is just one patient's experience, in the first quarter of fiscal 2026, our team and technology helped facilitate many similar lifesaving events. We remain humbled by this responsibility and by the trust placed in us by providers, their patients, and their families. With that, I would now like to turn to our recent performance. In the first quarter, we continued to reach more patients at risk of cardiac arrest, accepting over 4,200 prescriptions written for the ASSURE system, an increase of 51% year over year. Revenue grew 52% year over year to $19.4 million. Continued improvements in revenue per fitting from higher in-network patient mix and reductions in cost per fitting from volume leverage drove the seventh quarter in a row of gross margin expansion. First quarter gross margin was 45.7% compared to 32.9% in the prior year period.
Speaker #3: We remain humbled by this responsibility and by the trust placed in us by providers, their patients, and their families. With that, I would now like to turn to our recent performance.
Speaker #3: In the first quarter, we continued to reach more patients at risk of cardiac arrest, accepting over 42 hundred prescriptions written for the assured system.
Speaker #3: An increase of 51% year over year. Revenue grew 52% year over year, to 19.4 million dollars. Continued improvements in revenue per fitting from higher in-network mix and reductions in cost per fitting from volume leverage drove the seventh quarter in a row of gross margin expansion.
Speaker #3: First quarter gross margin was 45.7%, compared to 32.9% in the prior year period. We expect continued gross margin expansion in FY26 and remain confident that KESTRA is on the path to 70% plus gross margins.
Brian Webster: We expect continued gross margin expansion in FY26 and remain confident that Kestra Medical Technologies is on the path to 70% plus gross margins. With the strong revenue growth that Kestra Medical Technologies is generating, we are seeing nice operating leverage in the business. This leverage supports the investments we are making in the company's key growth drivers that we believe will yield significant long-term value for Kestra Medical Technologies and stakeholders. A quick overview of four of those growth drivers. First, we continue to expand our sales organization with the goal of further penetrating existing accounts as well as calling on new potential ASSURE prescribers. We are targeting geographies in which a high volume of wearable cardioverter defibrillator prescriptions are being written and where we also have strong in-network payer coverage. As we noted on our last earnings call, we ended fiscal year 2025 with approximately 80 sales territories.
Speaker #3: With the strong revenue growth that KESTRA is generating, we are seeing nice operating leverage in the business. This leverage supports the investments we are making in the company's key growth drivers, which we believe will yield significant long-term value for KESTRA and its stakeholders.
Speaker #3: A quick overview of the four growth drivers. First, we continue to expand our sales organization with the goal of further penetrating existing accounts as well as calling on new potential assured prescribers.
Speaker #3: We are targeting geographies in which a high volume of WCD prescriptions are being written and where we also have strong in-network payer coverage. As we noted on our last earnings call, we ended fiscal the year 25 with approximately 80 sales territories.
Speaker #3: While this will not be a data point that we will be updating on a quarterly basis, I can say that our territory additions in the first quarter were in line with our hiring plan, and we continue to aggressively expand our sales coverage.
Brian Webster: While this will not be a data point that we will be updating on a quarterly basis, I can say that our territory additions in the first quarter were in line with our hiring plan, and we continue to aggressively expand our sales coverage. Of note, we also have an updated commercial strategy that includes an expanded clinical specialist role that will complement our sales territory managers. We expect that this strategy will support further penetration of existing accounts. Second, we continue to make progress on improving our revenue cycle management capabilities while also bringing more payers in network. At the time of our IPO six months ago, approximately 70% of our fittings were for patients with in-network benefits. This figure is now approaching 80%. The higher in-network patient mix meaningfully increases our team's efficiency and positively impacts all key RCM metrics.
Speaker #3: Of note, we also have an updated commercial strategy that includes an expanded clinical specialist role that will complement our sales territory managers. We expect that this strategy will support further penetration of existing accounts.
Speaker #3: Second, we continue to make progress on improving our revenue cycle management capabilities while also bringing more payers in-network. At the time of our IPO six months ago, approximately 70% of our fittings were for patients with in-network benefits.
Speaker #3: This figure is now approaching 80%. The higher in-network mix meaningfully increases our team's efficiency and positively impacts all key RCM metrics. It is important to note that there are over 3,000 payers in the United States, so there will be a long tail of regional and local payers we are working to bring under contract.
Brian Webster: It is important to note that there are over 3,000 payers in the U.S., so there will be a long tail of regional and local payers we are working to bring under contract. The RCM activities that increase the speed and rate of our collections are process-driven. We expect to see further improvements over time. For example, in the early days of commercialization, we had a small RCM team that was not specialized. The same individual may have been tasked with following a claim from fitting all the way to cash. Our RCM function has grown significantly, particularly in the last 12 months, with team members specializing in specific areas such as prior authorization, medical review, home management, et cetera. Third, as you all know, we utilize a lease business model.
Speaker #3: The RCM activities that increase the speed and rate of our collections are process-driven, and we expect to see further improvements over time. For example, in the early days of commercialization, we had a small RCM team that was not specialized; the same individual may have been tasked with following a claim from fitting all the way to cash.
Speaker #3: Our RCM function has grown significantly, particularly in the last 12 months. With team members specializing in specific areas such as prior authorization, medical review, hold management, etc., third, as you all know, we utilize a lease business model; our substantial investment in our fleet of devices each with a capacity for approximately three patient wears per year enables the business to scale with our attractive unit economic profile.
Brian Webster: Our substantial investment in our device fleet, each with a capacity for approximately three patient wears per year, enables the business to scale with our attractive unit economic profile. While our current asset pool can support our near-term business objectives, we are continuing to add to our fleet at a measured pace as we grow our field team. Fourth, we are continuing to build the body of clinical evidence supporting the safety, efficacy, and benefits of the ASSURE system. We recently achieved a major clinical milestone with the conclusion of enrollment in our FDA post-approval study. This is a really significant achievement for the Kestra team and took a ton of really hard work by our entire team. We were also recently notified that our study was chosen for a late breaker presentation of our clinical data at the American Heart Association Scientific Sessions, which will be conducted in November.
Speaker #3: While our current asset pool can support our near-term business objectives, we are continuing to add to our fleet at a measured pace as we grow our field team.
Speaker #3: Fourth, we are continuing to build the body of clinical evidence supporting the safety, efficacy, and benefits of the Assured system. We recently achieved a major clinical milestone with the conclusion of enrollment in our FDA post-approval study.
Speaker #3: This is a really significant achievement for the KESTRA team and took a ton of hard work by our entire team. We were also recently notified that our study was chosen for a late-breaking presentation of our clinical data at the American Heart Association Scientific Sessions.
Speaker #3: Which will be conducted in November. At the time our post-approval study is presented, we expect this to be the single largest study ever published in the WCD category.
Brian Webster: At the time that our post-approval study is presented, we expect this to be the single largest study ever published in the wearable cardioverter defibrillator category. This is the biggest stage in cardiology for our exciting results. All of these growth drivers further our mission of protecting even more patients that are at risk of sudden cardiac arrest. We have previously noted that despite the overwhelming evidence that an extra fibrillation shock is effective at terminating dangerous cardiac rhythms, WCD therapy remains underutilized, reaching just 14% of the eligible U.S. patient population. That means six out of seven patients that are indicated for WCD are not being protected by one. Last quarter, I shared with you two examples of hospitals that transitioned from underutilization of WCDs to significantly expanding their use of WCDs by establishing therapy protocols with the ASSURE system as their preferred solution.
Speaker #3: This is the biggest stage in cardiology for our exciting results. All of these growth drivers further our mission of protecting even more patients at risk of sudden cardiac arrest.
Speaker #3: We have previously noted that despite the overwhelming evidence that an external defibrillation shock is effective at terminating dangerous cardiac rhythms, WCD therapy remains underutilized, reaching just 14% of the eligible US patient population.
Speaker #3: That means six out of seven patients who are indicated for a WCD are not being protected by one. Last quarter, I shared with you two examples of hospitals that transitioned from the underutilization of WCDs to significantly expanding their use of WCDs by establishing therapy protocols with the Assured System as their preferred solution.
Speaker #3: I would like to share another data point that gives us confidence that the WCD market will continue to expand into a multi-billion dollar market over the coming years.
Brian Webster: I would like to share another data point that gives us confidence that the WCD market will continue to expand into a multi-billion dollar market over the coming years. The results of a large German WCD study sponsored by the incumbent competitor were recently published. The SCD Protect study evaluated the risk of sudden cardiac death in over 19,000 patients in the first few months after they were newly diagnosed with heart failure or post-myocardial infarction or heart attack. Despite wide overall use of guideline-directed medical therapy drugs, the study found higher than expected sudden cardiac arrest risk in this patient population, suggesting a need for greater WCD protection in the early high-risk period of the patient's journey. Investment in this study is further evidence that the incumbent is focused on market expansion to help make up for lost share to Kestra.
Speaker #3: The results of a large German WCD study, sponsored by the incumbent competitor, were recently published. The SCD Protect study evaluated the risk of sudden cardiac death in over 19,000 patients in the first few months after they were newly diagnosed with heart failure or post-myocardial infarction (heart attack).
Speaker #3: Despite wide overall use of guideline-directed medical therapy drugs, the study found higher than expected sudden cardiac arrest risk in this patient population. Suggesting a need for greater WCD protection in the early high-risk period of the patient's journey.
Speaker #3: Investment in this study is further evidence that the incumbent is focused on market expansion to help make up for lost share to KESTRA. In conclusion, the simplicity of the KESTRA story continues.
Brian Webster: In conclusion, the simplicity of the Kestra story continues. We are competing in a large existing market that is growing consistently, involving unit volume and price. We have an underserved medical condition where we offer a clearly superior solution. We have rapidly closed the gap on payer endorsement of our product, and we are implementing a commercial expansion plan to rapidly grow the business. We are seeing strong execution across all elements of our business, and the foundation we have built has positioned Kestra for strong growth this fiscal year and beyond. I would like to thank our incredible team in the field and here at the home office in Kirkland for their passion and commitment to the Kestra mission. I will now turn it over to my partner, Vaseem, who will discuss first quarter financial results in more detail and provide our updated fiscal year 2026 revenue claims. Vaseem?
Speaker #3: We are competing in a large existing market that is growing consistently and involves unit volume and price. We have an underserved medical condition where we offer a clearly superior solution. We have rapidly closed the gap on payer endorsement of our product, and we are implementing a commercial expansion plan to rapidly grow the business.
Speaker #3: We are seeing strong execution across all elements of our business, and the foundation we have built has positioned KESTRA for strong growth this fiscal year and beyond.
Speaker #3: I would like to thank our incredible team in the field and here at the home office in Kirkland for their passion and commitment to the KESTRA mission.
Speaker #3: I will now turn it over to my partner, Vaseem Mahboob, who will discuss first quarter financial results in more detail and provide our updated fiscal year 2026 revenue guidance.
Speaker #3: Vaseem?
Speaker #4: Thank you, Brian. And good afternoon, everyone. Total revenue was $19.4 million in the first quarter, an increase of 52% compared to the prior-year period.
Vaseem Mahboob: Thank you, Brian, and good afternoon, everyone. Total revenue was $19.4 million in the first quarter, an increase of 52% compared to the prior year period. Revenue growth was driven by a 51% year-over-year increase in prescriptions, reflecting market share gain with existing customers and activation of new accounts. Gross margin was 45.7% in the first quarter compared to 32.9% in the prior year period. As Brian mentioned, we have now expanded our gross margins sequentially for seven quarters in a row. The continued expansion in gross margin was driven by the attractive unit economics inherent in Kestra Medical Technologies' rental model, a higher revenue per fit for more in-network patients, and a lower cost per fit driven by volume leverage and our cost improvement project.
Speaker #4: Revenue growth was driven by a 51% year-over-year increase in prescriptions, reflecting market share gains with existing customers and the activation of new accounts. Gross margin was 45.7% in the first quarter compared to 32.9% in the prior year period.
Speaker #4: As Brian mentioned, we have now expanded our gross margins sequentially for seven quarters in a row. The continued expansion in gross margins was driven by the attractive unit economics inherent in KESTRA's rental model.
Speaker #4: A higher revenue per fit, from more in-network patients, and a lower cost per fit driven by volume leverage and our cost improvement projects. Cost per fit decreased approximately 20% compared to the prior year period.
Vaseem Mahboob: Cost per fit decreased approximately 20% compared to the prior year period, while adjusted revenue per fit increased approximately 20% compared to the prior year period. In the years ahead, you should expect to see steady and consistent increases in our gross margins as our rental model benefits significantly from the volume and depreciation leverage. We remain confident in our ability to achieve 70% plus margins over the next few years. As we have discussed previously, higher in-network patient mix unlocks the power of the Kestra Medical Technologies business model. You can see this in our steadily expanding year-over-year conversion rate. We ended the quarter with a conversion rate of approximately 47% compared to an adjusted conversion rate of approximately 40% in the prior year period.
Speaker #4: While adjusted revenue per fit increased approximately 20% compared to the prior year period, in the years ahead, you should expect to see steady and consistent increases in our gross margins as our rental model benefits significantly from the volume and depreciation leverage.
Speaker #4: We remain confident in our ability to achieve 70% plus margins over the next few years. As we have discussed previously, a higher in-network mix unlocks the power of the KESTRA business model.
Speaker #4: You can see this in our steadily expanding year-over-year conversion rate. We ended the quarter with a conversion rate of approximately 47% compared to an adjusted conversion rate of approximately 40% in the prior year period.
Speaker #4: The higher conversion rate reflected improvements in all three key drivers of our conversion rate: our prescription fill rate, our bill rate, and our collections performance.
Vaseem Mahboob: The higher conversion rate reflected improvements in all three key drivers of our conversion rate: our prescription fill rate, our bill rate, and our collections performance. As we continue to bring more payers in network and enhance our revenue cycle management processes, we will see benefits in our revenue growth, gross margins, and our profitability profile. Moving on, GAAP operating expenses were $37.7 million in the first quarter and included $2.9 million of non-recurring new public company costs. GAAP operating expenses were $22.6 million in the prior year period. Excluding those non-recurring costs and our stock-based compensation expense, operating expenses were $30.3 million in the first quarter of 2026. The increase was primarily attributable to growth investments in our commercial and revenue cycle resources. GAAP net loss was $25.8 million in the first quarter compared to a GAAP net loss of $20.3 million in the prior year period.
Speaker #4: As we continue to bring more payers in-network and enhance our revenue cycle management processes, we will see benefits in our revenue growth, gross margins, and our profitability profile.
Speaker #4: Moving on, Gap operating expenses were $37.7 million in the first quarter and included $2.9 million of non-recurring new public company costs. Gap operating expenses were $22.6 million in the prior year period.
Speaker #4: Excluding those non-recurring costs and our stock-based compensation expense, operating expenses were $30.3 million in the first quarter of 2026. The increase was primarily attributable to growth investments in our commercial and revenue cycle resources.
Speaker #4: Gap net loss was $25.8 million in the first quarter compared to a gap net loss of $20.3 million in the prior year period.
Speaker #4: Adjusted EBITDA loss was $19.4 million in the first quarter, compared to an adjusted EBITDA loss of $15.7 million in the prior year period.
Vaseem Mahboob: Adjusted EBITDA loss was $19.4 million in the first quarter compared to an adjusted EBITDA loss of $15.7 million in the prior year period. Cash and cash equivalents totaled $201.2 million as of July 31, 2025. We continue to expect our existing cash balance to be sufficient for Kestra Medical Technologies to reach cash flow breakeven and profitability. I would also note that based on our trailing 12-month revenue, an additional $15 million tranche of our existing term loan has become available to us to draw on through July 31, 2026. At present, this tranche of $15 million remains undrawn. I will now provide an updated fiscal year 2026 guidance. We expect revenue of $88 million, an increase of 47% compared to fiscal year 2025. This compares to prior year guidance of $85 million.
Speaker #4: Cash and cash equivalents totaled $201.2 million as of July 31, 2025. We continue to expect our existing cash balance to be sufficient for KESTRA to reach cash flow break-even and profitability.
Speaker #4: I would also note that, based on our trailing 12-month revenue, an additional $15 million tranche of our existing term loan has become available to us to draw on through July 31, 2026.
Speaker #4: At present, this tranche of $15 million remains undrawn. I will now provide our updated fiscal year 2026 guidance. We expect revenue of $88 million, an increase of 47% compared to fiscal year 2025.
Speaker #4: This compares to prior year guidance of $85 million. Underpinning this guidance is our expectation that we will continue to see strong growth in prescriptions as our market share increases with existing customers and as we activate new accounts.
Vaseem Mahboob: Underpinning this guidance is our expectation that we will continue to see strong growth in prescriptions as our market share increases with existing customers and as we activate new accounts. We expect revenue per fit to continue to benefit from a higher mix of in-network patients and improvements in our revenue cycle management capabilities. With that, operator, we have concluded our prepared remarks and are ready to proceed to the Q&A portion of the call.
Speaker #4: We expect revenue per fit to continue to benefit from a higher mix of in-network patients and improvements in our revenue cycle management capabilities. With that, operator, we have concluded our prepared remarks and are ready to proceed to the Q&A portion of the call.
Speaker #1: Certainly. Our first question for today: What comes from the line of Travis Thied from BofA Securities? Your question, please.
Operator: Certainly. Our first question for today comes from the line of Travis Steed from Bank of America Securities. Your question, please.
Speaker #5: Hey, congratulations on your quarter. Maybe to start on guidance, it’s nice to see a raise by more than the beat. Just helping us understand kind of what's driving the confidence to raise this much in the beginning of the year.
Analyst: Hey, congrats on a good quarter. Maybe to start on guidance, nice to see raised by more than the beat, just helping us understand kind of what's driving the confidence to raise this much at the beginning of the year and how to think about any cadence over the course of the year as we update our models.
Brian Webster: Travis, thanks for the question. I would say we certainly have a really strong Q1, and we're certainly bullish about the rest of the year. It's early in the year, so we're going to see if things play out over the next quarter or two. Right now, we're comfortable with that guidance update and excited about marching into our second quarter.
Analyst: All right, great. I wanted to maybe double-click on some of the in-network patient mix things you mentioned, just kind of understanding what you guys are doing on the ground to improve the mix, where the mix can be over the course of this year and next few years, and maybe to think about the impact on gross margins as well as we go forward.
Brian Webster: Yeah, as we mentioned, at the point of IPO, we were about, we have over 90% covered lives in the U.S., which just means that the total number of insurance covered lives in the U.S., we have about 90% of those under contract. When you look at the actual patients that we're taking, that's the real, that's where we get the real revenue from. We've seen that number go from 70% at the IPO to, as we mentioned here, about 80%. We think that will continue, a slow incline as we add more payers. There is a long tail, as I mentioned in my comments, of some 3,000 payers, so it takes a while to engage with the local and regional payers. Quite frankly, there are some payers that we're just not going to get there on price.
Brian Webster: We're going to continue to work those, but you'll see those gradually go up as we engage more payers. I think it's important to reinforce our strategy around when we are adding sales territories, we're doing it when we have known WCD demand and we have good payer coverage. We're trying to be very efficient about territory expansion when it comes to that. I think what you can expect is continuing gradual contribution from the in-network payers, as we increase that. You'll see that impacting, overall our revenue per fitting or per patient will continue to grow with that.
About 80%. Uh, we think that will continue, uh, you know, a slow um, incline as we add more payers. Uh, there is a long tail, uh, as I mentioned in my comments of, you know, some 3,000 payers so it takes a while to engage with the local and Regional payers and quite frankly, there are some payers that, um, you know, we're just not going to get there on price. And so um, you know, we're going to, we're going to continue to work those. But you'll see this gradually go up as we engage more payers and I think it's important to reinforce our strategy around when we are adding sales. Uh, territories we're doing it where we have known wcd demand and we have good payer coverage. So we're trying trying to be very efficient about um uh territory expansion when it comes to that. But I think what you can expect is uh, continuing gradual
Contribution from the in-network payers, um, as we increase that and then, uh, you'll see that, uh, impacting, you know, overall our Revenue per fitting or per patient will continue to, uh, to grow with that.
Analyst: Great. Thanks a lot, Neil. I'll talk to you in Q1.
Great, thanks a lot, and I hope to thank you.
Operator: Thank you. Our next question comes from the line of Rick Wise from Stifel. Your question, please.
Thank you. And our next question comes from the line of Rick Wise from Stifel. Your question, please.
Analyst: Good afternoon, Brian. Hi, Vaseem. Two things I'd like to follow up on a little bit. One, actually, you just touched on in your response to Travis, Brian, that this notion, and you've said it from the beginning, this notion of expanding into areas where there's greater in-network opportunity, or however I should phrase the words, I know you know what I mean. Where are you in that process? I mean, is there any way to quantify or give us a more granular understanding of what happened in the last few months and what's going to happen now this year in terms of that kind of a movement? Just so we better understand where you are.
Um, good afternoon, Brian. Hi, Waseem. Um,
2 things. I'd like to follow up on a little bit uh uh 1 actually you just touched on and your response to to to Travis Brian uh the the this notion and you've said it from the beginning this notion of
Expanding into areas where there's greater in-network opportunity or however, I should phrase the words, I know, you know what I mean.
What are you in that in that process? And I mean, is there any way to quantify or give us more granular understanding of like what happened in the last few months and what's going to happen? Now, this year, in terms of that kind of, a, of a moon. So, so just so, so we better understand where you are.
Brian Webster: Yeah, thanks for the question, Rick. It's obviously important to our business model. I don't think you can think of the payer additions in a straight linear line over time. You have to think of it more as sort of a sawtooth curve because, you know, in one period, we may add a good-sized regional payer. In the next period, it may be some smaller regional payers that we're trying to add to support specific territories where we have a lot of demand. I think it will continue to go up and to the right as we get more coverage, and that will continue to benefit the business model, benefit our ability to, you know, to go after these territories. It's really impactful when you're in a territory and you're a Territory Manager trying to sell your product and the competitor has insurance coverage and you don't.
Yeah, I I thanks for the question. Uh, Rick. It's obviously important to our to our business model. Um, I I don't think you can think of the payer, um, additions in, in a, in a straight linear line over time. You have to think of it more as sort of the Sawtooth curve because, uh, you know, in 1 in 1,
Brian Webster: That puts you at a disadvantage. What we're trying to do with that strategy is we're trying to make sure that when we make the investment to add new reps, we're giving them all the tools that they need, including insurance coverage so that they can be successful.
Has insurance coverage and you don't that puts you at a at a disadvantage. And and so what we're trying to do with that strategy is, we're trying to make sure that when we make the investment to add new reps, we're uh, we're giving them all the tools that they need including, uh, insurance coverage so that they can be successful.
Vaseem Mahboob: Gotcha. Rick, can I just add one more comment to that? I think, you know, we've kind of talked about it in the past, and one of the big things that we want to remind everyone is when you think about the impact on the conversion rate as a result of the in-network patient mix, we have said that we don't have to go to 80, 90%. What's baked into our financial model is for us to go from the high 40% that we are today to getting to the high 50% here over the next couple of years. To Brian's point, as you drive coverage and conversions on that 3,000 towards the higher mix, it'll lend itself automatically to get to that higher conversion rate.
Vaseem Mahboob: If we don't have to get to all 3,000 immediately, it's just going to be a gradual process, and that's already factored into the messaging that we've had in the past.
Analyst: Great. Vaseem, I just wanted to touch on the, as we reflect on the quarterly flow. Obviously, this is a good quarter. You had a solid raise. It's very encouraging setting the stage as I think about the rest of the year. Help us think about the quarterly flow. With these extra, wonderful few million we're adding to our model, is it, do we take our current models and, is it more back-end loaded? Does it change the quarterly cadence? Help us make sure our models are in the right place, if you would. Thank you.
Gotcha. Um, can I just add 1 more comment to that. I think, um, you know, and we've kind of talked about it in the past and, you know, 1 of the, the big things that we want to remind. Everyone is when you think about, you know, the impact on on the conversion rate. As a result of the in network makes we have decided that, you know, we don't have to go to 80 90%. You know what, what's baked into our financial model is for us to go from the high 40s that we are in today to, uh, get into the, the high 50s here, over the next couple of years. So, to Brian's Point, as you drive coverage, and conversions on that 3,000 towards the higher mix, it'll lend itself to automatically to get to that higher conversion rate. But again it's if we don't have to get to all 3,000 immediately it's just going to be a gradual process and that's already factored into uh the messaging that we have had in the past.
Great. And and and uh, it seemed uh, I just wanted to touch on the the as we reflect on the quarterly flow. I mean, obviously, this is a good quarter. You had a a solid raise is very encouraging setting the stages as I think about the rest of the year but help us think about the quarterly flow. And I mean it it you know, with this these extra you know, Wonderful few million, we're adding from model is, you know, do we take our current models and, you know, is it more back-end loaded? Does it change the quarterly Cadence just to help us, you know, make sure our models are in the right place, if you would thank you.
Vaseem Mahboob: Yeah, that's a great question, Rick. I think what's really great about this quarter is now we've taken our guidance from being 42% year-over-year growth to a 47% growth year-over-year. As you guys have heard us communicate in the past, we are in a ramp. We are adding new territory managers, as Brian talked about. That's where most of the OPEX investment is going. As we have said in the past, there is a start and that ramp that needs to happen. We should expect not to be back-end loaded, but to see a really nice steady increase in our top line as we go through the remaining quarters for the rest of the year. Really excited about having to raise the guidance by the levels that we have.
Yeah, that's a great question, Rick. I think um, you know again what what's really great about this quarter is now we've taken our guidance from, you know, being 42% year-over-year growth to a 407% growth year-over-year. And as you guys have heard us, you know, communicate in the past, we are in a ramp. Uh, we are adding new territory managers as Brian talked about, that's where most of the aspects investment is going. So, as we have said, in the past, there is a, um, a a, a a a start and, you know, that ramp that needs to happen. So we should expect not to be back and loaded, but to see a really nice steady increase in our Top Line as we go through the remaining of the quarters for the rest of the year. But really, really excited about about having
Vaseem Mahboob: It's just based on, as Brian said, the comfort that we take in the performance of the business in the first quarter.
Analyst: Thank you. Excellent.
Having to raise the guidance by the levels that we have, and just based on, as Brian said, the comfort that we take in the performance of the business in the first quarter.
Yeah, thank you. Excellent.
Operator: Thank you. Our next question comes from the line of Matthew O'Brien from Piper Sandler. Your question, please.
Thank you. And our next question comes from the line of Matthew O'Brien from Piper Sandler. Your question, please.
Analyst: Afternoon. Thanks so much for taking the questions. I would love to talk about the prescription number in the quarter because that was really strong. Up about 300 sequentially. This time last year, we were roughly flat. I would just love to hear about the improvements that we're seeing on the prescription side of the business. I think you're now roughly annualizing to about 14% of all cases that you're going after right now. Where can we think about the company kind of exiting the year in terms of percentage of all prescriptions being written for the ASSURE system?
Good afternoon. Thanks so much for taking the questions. Um, would love to talk about the prescription number in the quarter because that was really strong, um, up about 300 sequentially. This time last year, we were roughly flat. So we just love to hear about the, the improvements that we're seeing on this prescription side of the business, and I think, I think you're now roughly an annualizing to about, you know, 14% of all all cases, um, that that you're going after right now. So just just where can we think about? Um, you know, the company kind of exiting the year in terms of, you know, percentage of all prescriptions being written for. Um, even for sure.
Brian Webster: Yeah, thanks for the question, Matt. I think the good news from my perspective in the prescription number is we, because we are ramping the commercial team, we look at the metrics broken into a couple of different buckets. One bucket is what we call a base rep or a fully onboarded, fully productive rep. We look at the month over month, week over week, month over month, quarter over quarter metrics for those reps. The good news there is the folks that have been here, been in the seat for a while, the metrics continue to improve with those reps. Now, that's not the full story, of course, because we're hiring a bunch of new reps. The question is, can you get those reps onboarded? Can they get up to some productivity levels in a reasonable amount of time? We really aggressively track those numbers as well.
yeah, thank
You man. Um,
From my perspective, in the, in the prescription number is we we because we are ramping the commercial team. We we look at the metrics, uh, broken into a couple of different. Buckets, 1 bucket is, you know, what, we call a base rep or a, or a fully, um, onboarded, um, fully productive rep. And we look at the the month-over-month
Brian Webster: What we're seeing there is a similar story, which is they're coming up the curve. They're hitting the kind of productivity numbers, weekly, monthly kind of numbers that we're expecting. That bodes well and that gives us confidence, which is why we continue to expand the commercial footprint. The math you're seeing on the sequential growth is the impact of both of those effects on prescriptions.
Well, and that gives us confidence. Which is why we continue, you know, to expand the commercial footprint. So the, the, the math, you're seeing on the sequential growth is the impact of both of those effects, um, on on prescriptions
Analyst: Okay, that's helpful. Just kind of staying on that topic, Brian, just the reps as they're coming in, are they really focusing on the low-hanging fruit, which is really just converting existing accounts over to ASSURE from the competitor? You know, are some of the more legacy reps really being more successful and kind of doing both, which is converting market share, but also expanding the market? Your commentary about the competitor and the clinical trial, I thought, was interesting too, just given how underpenetrated the whole category is. Thanks so much.
Brian Webster: Yeah, we, you know, I think that study is important because it's all boats rise on the tide, right? That's going to really shine a light on the ongoing need, especially in these heart failure patients. You know, Matt, when it comes to getting these reps on board, we're really trying to be focused on getting them. If you're a new rep, you're coming in and, you know, literally the day you open up your Salesforce.com instance, you've got all the Pareto of all the high prescribers, and you know exactly what your initial targets are, and they are absolutely going to go there first. The only caveat to that is some of these reps that we're hiring, they come in with pre-existing relationships, and they'll go to those relationships first, and some of those may not be the high prescribers.
Okay, that's helpful. And then just kind of staying on that topic. Brian. Just the the Reps as they're coming in are they really focusing on the low hanging fruit? Which is really just converting existing um, accounts over to assure from the competitor. Or, you know, are some of the more Legacy uh reps, you know, really being more successful and kind of doing both, which is, you know, converting market share but also expanding the market, because your commentary about the competitor and the clinical clinical trial, I thought was interesting too, just given how underpenetrated the whole category is. Thanks so much.
Yeah, we we uh you know I think that study is important because it's um it's all those all boats rise on the tide. Right. And um that's going to that's going to really shine a light on the ongoing needs especially in these uh in these heart failure. Uh patience. But you know, Matt when it comes to, um, when it comes to getting these reps on board, um, we're we're really trying to be focused on getting them. Um, if if you're a new rep you're coming in and you know, literally the day you you open up your
Brian Webster: I think in general, the strategy with the new reps is let's go where the business is and then go sideways from there and start to expand the market. As I said previously with the pre-existing reps or the already ramped reps, they have already done that, and so they're focused on further penetrating those accounts. What they're also doing is they're going into new accounts, and they're opening up new accounts that have not been big WCD prescribers in the past. That's part of how we're growing the market.
Your your salesforce.com instance, you've got all the appraisal of all the high prescribers and, you know, exactly what your initial targets are. And they are absolutely, uh, going to go there first. Now, the only caveat to that is some of these reps that we're hiring. They come in with, uh, pre-existing relationships, uh, and they'll go to those relationships first. And some of those may not be the high prescribers, but I think, in general, the, the strategy with the new reps is, let's go where the business is and then go sideways from there and start to expand the market. As I said, previously with the, uh, with the, the pre-existing reps or the or the, uh, already ramped reps, um, they have already done that and so they're they're focused on further penetrating those accounts. But what they're also doing is they're going into new accounts and they're opening up uh, new accounts that have not been big wcd prescribers in the past and so that's part of how we're growing the market.
Analyst: Got it. Thanks so much.
Brian Webster: You bet.
Got it. Thanks so much.
Operator: Thank you. Our next question comes from the line of Lawrence Beedleson from Wells Fargo. Your question, please.
Analyst: Good afternoon. Thanks for taking the question. Two for me. One on the conversion rate, one back on market share. Vaseem, what is the guidance assumed for the year-over-year increase in the conversion rate? It looks relatively small. A relatively small increase is assumed for the fiscal year versus the first quarter, which looks like about 700 basis points. Secondly, if I heard correctly, in-network is now almost 80%, which is relatively high. What are the drivers to get you to that best-in-class conversion rate that I think you said on the Q4 call was 76% from 47% today?
Thank you. And our next question comes from the line of Lawrence Beatles from Wells Fargo. Your question, please?
Uh, good afternoon. Thanks for taking the question. Uh, 2 for me: 1 on the conversion rate, 1 back on market share.
Um so uh to see, um, what is the guidance you see for the year-over-year? Increase in the conversion rate, it looks relatively small, uh, a relatively small increase is a uh, is assumed for the fiscal year versus the first quarter which looks like about 700 basis points and secondly, if I heard correctly in network is now almost 80% which is relatively High, what are the drivers to get you to that best-in-class conversion rate that I think you said on the Q4 call was 76% from 47% today.
Vaseem Mahboob: That's a great question. Thanks, Larry. We've seen a consistent year-over-year increase in our conversion rate, and I'm happy to report that, as we've indicated here, we've continued to make progress on all three elements of our conversion rate, and they're all trending in the right direction. Obviously, the biggest contributor of that conversion rate is the improvement in this in-network patient mix, and that has gone up 10% since the IPO, which is really positive. As Brian said, we'll continue to move that in the right direction. Our strategy is working, and I think the main focus areas for us on the conversion rate continue to be, as Brian mentioned, deploying the territory managers into these high prescription and high payer regions. That will organically happen as the commercial team expands, and it will continue to drive that positive growth in the conversion rate.
No, that's a great question. Thanks Larry. So, so we've seen a consistent view over your increase in our conversion rate. And, and I'm happy to to report that. And as as we've indicated here, we've continued to make progress on all 3 elements of our conversion rate, um, and they're all running in the right direction. Uh, obviously the biggest contributor of that conversion rate is the Improvement in this in that work, patient makes and and that has, you know, gone up 10 points since the idea of which is really positive. And as Brian said, we'll continue to move that, uh, in in the right direction. Um, so you know, uh, our strategy is working and I think the main focus areas for us on the conversion rate, continued to be as Brian mentioned, deploying the territory, managers into these high prescriptions and higher uh, regions and and doesn't work.
Vaseem Mahboob: Secondly, we are focused heavily on, as Brian mentioned again, on these tier two. For example, we signed Oscar Health last week, which is a nice small program. It's regional. There'll be a lot of those that are in the queue, and the market access team is working on those. Finally, not the least, we continue to invest in the RCM team and the capabilities they have on people, on process, on systems. We do all of that. What's reflected in the guidance here is about a 2.5% to 3% increase in our conversion rate. We think it's very achievable. Obviously, we've got a lot of game to play here in the remainder of the year, so you'll continue to see that progress on the conversion rate.
Vaseem Mahboob: Again, what we have said in the past, the conversion rate is a year-over-year metric that we got to be assessed at, and we'll continue to drive improvements on it annually.
And we think it's very achievable and and obviously you know we we got a lot of game to play here and the remainder of the year so you'll continue to see that progress on the conversion rate. But again you know what being said in the past, you know we are the conversion rate is a year-over-year metric that we got to be you know, assess at and um and we'll continue to drive improvements on it annually.
Operator: That's helpful. Brian, on market share, the press release talked about category leadership. I guess my question is maybe back to Matt's 14%. Where do you think you are today, you know, and is it prescription share, fitting share? You know, how long is it going to take to achieve category leadership? Thanks for taking the question.
Brian Webster: Yeah, thanks, Larry. I think time will tell how long it takes us to get to that position, but I think there's a couple of different drivers that I would say. With regards to where we stand today, we're probably somewhere around 12% market share is my math. I would say that the key driver, now that we've got the insurance coverage in place and we've got a high percentage of our patients coming in with coverage, that's not as big a focus as just pure sales coverage is. Right now, we're a little over 50% of the U.S. that we have covered in terms of actually having a rep in a territory. That doesn't mean we're 50% of the competitor. It means that in a city, like pick a city, like let's call it Minneapolis, right now, we don't have a rep there. They might have three reps there.
That's helpful Brian. Um, on on uh market share uh, the press release talked about category leadership. So I guess my question is maybe back to Matt's 14% where where do you think you are today you know and and you know as a prescription share fitting share and you know what's the you know, how long is it going to take to achieve category leadership? Thanks for for taking the question.
Yeah, thanks Larry. Um, you know, I think time will tell uh how long it takes us to get to that position, but uh, I I think there's a, there's a couple of different drivers that I would say with regards to, where we stand today, we're probably somewhere around 12% market. Share is, uh, is the my math and, um, I I would say that, um, the, the key driver, you know, now that we've got the insurance coverage, um, in place and we've got, you know, a high percentage of our patients, are are coming in with coverage. Um, that's not
Brian Webster: When we put a rep in there, we would say at least we've got representation there. Right now, we're still just a little over 50% territory coverage in the U.S. We've got a lot of room to go in terms of being able to cover the market. We're going deep in certain territories that we know are high-producing territories now, but also you'll see us starting to broaden that out and cover some of these other territories in the future. That's going to be the biggest driver. The rate at which we do that will determine how quickly we can get to that category leadership position.
Is bigger Focus as just pure, uh, sales coverage is and right now, you know, we're, we're a little over 50% of the of the US. Uh, do we have covered in terms of actually having a rep and a territory? Now, that doesn't mean we're 50%, uh, of the of the competitor. It means that in a, in a city, like, pick a city, like, let's call it Minneapolis. Uh, we might right now, we don't have a rep there. They might have 3 reps there, so when we put a rep in there, we would say, at least we've got representation there. So right now we're still just a little over, uh, 50%, uh, territory coverage in the US. So we've got a lot of room to go in terms of being able to, uh, you know, cover the market. And uh, we're we're going deep and in certain territories that we know are high producing territories now, uh, but also, you'll see us starting to broaden that out and cover some of these other.
Uh, territories in the future, but that's going to be the biggest driver. The rate at which we do that will determine how quickly we can get to that category leadership position.
Operator: All right. Thanks so much, guys.
All right, thanks so much, guys.
Brian Webster: You bet.
Operator: Thank you. Our next question comes from the line of Mike Pollock from Wolfe Research. Your question, please.
Analyst: Good afternoon. Brian, I want to follow up on one of your prepared remote comments about the expanded clinical specialist role to complement certain territory managers to penetrate existing accounts. I guess, can you just help us better understand, you know, I was under the assumption you had specialists already. What's the expanded role look like? What is this person doing that's different? You know, how are they incentivized? Is this something you expect to deploy for all territories, or is this going to be focused on the biggest accounts? Any color here would be helpful.
Thank you. And our next question comes from the line of Mike Park from Wolfe Research. Your question, please?
Good afternoon. Um, Brian, I want to follow up on one of your, um, prepared remarks about the expanded clinical specialist role to complement certain territory managers to penetrate existing accounts, I guess.
Can you just help us better understand? You know, I was under the assumption you had Specialists already. What what's the expanded role look like what does this person do? That's different and um, you know, how are they incentivized and is this something you expect to deploy for all territories or is this
Brian Webster: Yeah, Mike, thanks for the question. I will start by just going back to the service model that's inherent in this category. At the point in time that we receive a prescription from a prescriber, they are expecting that within 24 to 48 hours, we will have come in and fit and train that patient and allow them to then discharge the patient to go home. There's a heavy service model that has to be deployed here, which really informs the way the rate at which we bring in new territories and open up our commercial footprint. As part of that, what we recognize is as we get strong penetration into certain accounts, we can start to adopt a model where some of the account management responsibilities can be transitioned away from the sales representative over to a clinical specialist.
Going to be focused on the biggest accounts. Any color here would be helpful.
Yeah, Mike, thanks for the question. Um,
so,
I will start by just going back to the service model and its inherent in this. Um, in this category um at the point in time that we've received a prescription from a prescriber, they are expecting that within 24 to 48 hours, we will have come in and fit and trained that patient and allow them to then discharge the patient to go home. So there's a, there's a heavy service.
Brian Webster: That allows then that sales representative to go in and cultivate new prescribers and new accounts. That's the strategy. It's a partnership, excuse me. What we will initially be doing is putting those roles in some of our high-performing territories where we've already demonstrated the ability to go in and capture significant market share so that we can give those reps some leverage to be able to go and expand beyond those accounts. As we see the progress we make in that, that will really determine how far down the scale we go when it comes to adding those resources. I think it's a strategy that's not an unusual strategy in med tech. We've seen it in other categories. It's one that I think will be successful for us, but we will start with the high performers and kind of go from there.
Model that has to be deployed here, which really informs the way uh, the rate at which we bring in new territories and and open up uh commercial or commercial footprint. Uh and so as part of that uh what we recognize is as we get as we get strong, penetration into certain accounts, we can start to adopt uh a model where some of the the account management responsibilities can be transitioned away from the sales representative over to a clinical specialist, uh, and that allows then that sales representative to go and um, and cultivate new uh, prescribers and new accounts. And so that's the strategy is, is it's a partnership
Ing territories uh, where we've already demonstrated the ability to go in and capture significant market share, so that we can give those reps, some leverage to be able to go and expand, uh, Beyond those accounts. Uh, and then as we as we see, you know, the progress we make in that then we will, that will really determine
How far down the scale we go when it comes to adding those resources. But uh it's a I think it's a it's a strategy that's not, you know, an unusual strategy in Medtech we've seen in other categories. It's 1, um, that I think will be successful for us, but we will, we will start with the high performers and and kind of go from there.
Analyst: That's helpful. The follow-up is on the late breaker coming at the American Heart Association through the FDA post-approval study. Can you remind us just some of the high-level specs of that post-approval study size, kind of focus patient, the period in which it enrolled? If you want to preview the data, great. What would you hope this shows? Is this going to be narrative changing on patient compliance? Is that the major hook? Is it simply just scale of quality data solidifies the pitch? Is it differentiated insights on the MI versus the heart failure patient, the post-MI patient? The so what of this presentation will you hope be what? Thank you.
That's helpful. Um, the follow-up is on the late breaker coming at AHA. Um, if you're a post-approval study C, can you remind us just some of the high-level specs of that post-approval study size? Kind of focused? Patient, um, the period in which it enrolled. And then, you know what?
Without, if you want to preview the data, great. Um, but, uh, what would you hope this shows? Is this going to be narrative-changing on...
Patient compliance. Is that the major hook? Is it simply just...
Scale of quality data solidifies the pitch, is it?
Differentiated insights on the me versus the heart failure patient. Um, the person that my patient, uh,
I, you know.
What, uh, the so what of this, uh, presentation will you hope, um, be what? Thank you.
Brian Webster: I just read the whole presentation to you now, Mike, and then we'll just cut to the chase. I'm kidding, obviously.
I just read the whole presentation to you about Mike, and then we'll just come to the chase.
Analyst: You're free to do that. This is a public forum.
Brian Webster: Yeah, yeah. No. Hey, look, it's really a significant milestone for the company. We started the FDA post-approval study soon after we launched the product. We've been at it for about three years, and we expect that the study will have somewhere between 24,000 and 25,000 patients in it. That's a huge body of work to be deriving clinical results from. The endpoints of the study include shock success rate. All shock success rate, that's the primary endpoint. The safety endpoint will be inappropriate shocks. We have other endpoints that we will report on around false alarm rate and also patient compliance. Those are sort of the big four.
I'm kidding obviously. Um, you're free to do that. This is a public forum. Yeah, yeah. So hey, look it it's really uh, a significant milestone for the company, we started the post-approval study, um, soon after we launched the the product. So, you know, we've been at it for about 3 years and uh, we expect that the study will have uh, somewhere between 24 and 25,000 patients in it. And that's a, that's a huge body of of work to be, uh, during clinical results from, um, the end points of the study include, um, uh, shock success rate.
I'll, I'll, uh, shock success rate. That's the primary endpoint. Um, and, uh, the safety endpoint will be inappropriate shocks, and then we have other endpoints, uh, that we, uh, will report on around false alarm rate.
Brian Webster: Now, as you start to peel back the onion on this incredible set of data, you have the opportunity to report on some of the differences between the post-MI patients and the non-ischemic patients. There is lots of other data that we expect will be published out of this dataset over the coming quarters and the next couple of years. The report out at the American Heart Association will be big news in that one of the biggest competitive points that our incumbent competitor makes about Kestra Medical Technologies is we don't have as much published clinical data as they have. Now, when we bring a 25,000-patient study to the table, it takes that argument and it buries it really deep in the sand because we now have an incredible body of clinical data that we can point to.
And also patient compliance. So those are those are sort of the Big 4. Now as you start to peel back the onion on of this, incredible set of data. Um, then then you have the opportunity to uh, you know, report on uh some of the differences between the post, me patience, and the non-ischemic patients. Uh and uh and lots of other data that we expect will be published out of this data set over the coming, um, quarters in the next couple of years. So the report out at ha will be, uh, it will be big news in that uh, 1 of the 1 of the biggest competitive. Um,
Points that that are the incumbent competitor makes about kestra is we don't have as much published clinical data as they have. Now, when we bring, uh, a 25,000 patient study to the table, uh, it takes that argument and it buries it really deep in the sand because, uh, we now have, uh, incredible body of of
Brian Webster: We're really excited about putting that objection away once and for all. We're excited about it. We don't have all the analytics completed yet, but we did recently get the late breaker notification. It's a big milestone for the company and a big milestone for a lot of folks that have been working incredibly hard. I think what you're going to find is that the promise that we've made with the ASSURE system is going to come to light in the form of that clinical data coming up just in a couple of months.
But clinical data that we can point to, uh, and we're, we're really excited about putting that objection away, uh, once and for all. So, we're excited about it. Uh, we don't have all the analytics, uh, completed yet. Uh, but uh, we, we did recently get the, the late breaker notification and it's a big milestone for the company and a big milestone for a lot of folks that have been working incredibly hard. And I think what you're going to find is that um the promise that we've made with the issur system uh is going to come to light in the in the form of that clinical data coming up uh just in a couple months.
Analyst: That's a very helpful color, Brian. Thank you.
It's very helpful, caller Brian. Thank you.
Operator: Thank you. Our next question comes from the line of Daniel Downs from Goldman Sachs. Your question, please.
Thank you. And our next question comes from the line of Daniel Downs from Goldman Sachs. Your question, please.
Analyst: Good afternoon, guys. Thank you for taking the questions. A key topic at last week's HRX conference was on compliance rates and that it still remains a key barrier on wearable cardioverter defibrillator utilization. Can you just detail a little further what you were seeing and how compliance rates are evolving across your user base's experience growth?
Last week's HRX conference was on compliance rates, and that still remains a key barrier. On WCD utilization, can you just detail a little further what you were seeing and how compliance rates are evolving across your user base as experience grows?
Brian Webster: Yeah, sure. Thank you for the question. I would say that compliance in any at-home patient and any at-home category, whether it's blood pressure monitoring or drugs or wearables like ours, compliance is the single biggest challenge. The therapies don't work if the patients aren't willing to take them, use them, wear them. Compliance has been the single biggest priority for us as we designed our product. We think about compliance in two different ways. We think about what is the daily average, sort of the median daily rate of wear time, and then what does that wear time look like as you go from one month to second month to third month and beyond. In other words, do they continue to be compliant? I think our metrics are pretty clear. We've published before that our daily median rate is over 23 hours a day.
Yeah, sure. Thank you for the question. Um, you know, I I would say that compliance in in any, um, in any at home patient. Um, and any at-home category, whether it's blood pressure, monitoring or drugs, or wearables, like ours, compliance is the single biggest challenge. Um, and the therapies don't work, if the patients are willing to take them, use them, where them. And so, uh, compliance has been the single biggest, uh, priority for us as we designed our product, and we think about compliance in, in 2 different ways we think about, um, what is the daily average? Sort of the the median daily rate of where time and then, what is the, um, what is that where time, uh, look like, as as you go from 1 month to Second month, to third month and Beyond? Uh, in other words, do they continue to be compliant? Um, and so
Brian Webster: That answers that question very clearly that patients are willing to wear our product. The second half of that, which is what's the duration that they're willing to wear it, you see a downward slope in the curve over time. Do they get sick of wearing it? The answer to that is remarkably sound that once patients, once they get past that sort of first week of wearing our device, they will wear it through the duration of their prescription. That means that they can tolerate it not just for the short term, but for the long term, and that gives them the protection that they need. These are the two goals that we had, as I mentioned, and we feel really good about the way our data is tracking for those goals.
You know, I I think our metrics are pretty clear. Uh, We've we've um, we've published before that our our uh daily median rate is is uh, over 23 hours a day, that answers, that question, you know, very clearly that patients are willing to wear, uh, our product. Uh, and then the second half of that which is what's the duration that they're willing to wear it and do you see a downward slope on the curve, uh, over time? Do they get sick of wearing it? And the answer to that is, uh, is remarkably sound that, uh, once patients, uh, once they get past that sort of first week of wearing our device, they will wear it through the duration of their prescription. And, um, and that means that they can tolerate it not just for the short term, but for the long term and that gives them the protection that they need. So these are 2 goals that we had as I mentioned and we feel really good about, you know, the way our data is tracking for those goals.
Operator: That's very helpful. Thank you. Just the second question is on the cadence of OPEX investments through the course of the year. Last quarter, we had talked about some of the investments the new commercial offer was making. We've discussed the new territory manager expansion today, but any color on the pace of those investments through the rest of the year and what those might be focused on? Thank you.
That's very helpful. Thank you. And just the second question is on the cadence of Opex investments through the course of the year. In the last quarter, we had talked about some of the investments that the new commercial offer was making. We've discussed the new territory manager expansion today. But any color on the pace of those investments through the rest of the year and what those might be focused on?
Thank you.
Brian Webster: I think the name of the game is going to be steady and measured. We are adding to our commercial footprint as we've talked about. I think last quarter we talked about the prior quarter we got a little bit aggressive with some of our OPEX because we had an opportunity to really invest in the leadership team and the training capability of all these new reps, etc. Now, as we got into our new fiscal year, we have a business plan for the year. We're executing to it with pretty tight precision at this point. What you're going to see is steady additions to the team so that we can consume those new territories and those new territory managers and provide them with all the support that they need to be successful. I think that's really the strategy behind the pace.
Brian Webster: This is not one of those categories where you can just say, "Hey, I'm going to go out and hire as many reps as I can as quickly as I can." That's not the game. We want high-quality reps that are going to come in, do a great job of serving our customers and their patients, and really build a durable commercial team. That's our strategy.
I think the name of the game is going to be steady, uh, and measured we, you know, we are adding um, to our commercial footprint as we've talked about. I think the last quarter we talked about, uh, you know, the the prior quarter. We we got a little bit, uh, aggressive with some of our Opex because we had an opportunity to really invest in the leadership team, and, and the training capability of all these new reps, Etc. Now, as we got into our new fiscal year, we have a, we have a business plan for the year, we're executing to it, um, with with pretty tight Precision at this point. And what you're going to see is is steady additions to the team so that we can consume those new, those new, uh, territories and those new, uh, territory managers and provide them with all the support that they need to be successful. And um, and I think that's really that's really the strategy behind uh the pace. This is not a uh this is not 1 of those categories.
Where you can just say, hey, I'm going to go out and hire as many reps as I can as quickly as I can. That's not the game. We want high quality reps that are going to come in to a great job of serving uh our our customers and their patience and uh and really build a durable uh uh commercial team that that's our strategy.
Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Brian Webster, President and CEO, for any further remarks.
Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Brian Webster, President and CEO, for any further remarks.
Brian Webster: Okay. Thank you. Thank you for the great questions. I think, again, the story of Q1, we're off to a new start in a new fiscal year. It's an exciting start, but we've got a business plan. We're executing to that plan. I'm thrilled by the level of commitment that the Kestra team has and the culture that we're building around performance and commitment. We're looking forward to getting back with you all in 90 days or so and giving you an update on Q2. We continue to put a really bright, shiny light on the focus we have around patients and the lives that we save every day, every week. We report on those to our team. Every Monday, we report on the patients' lives that were saved by our product last week.
And, um, uh, we're looking forward to getting back with you all, you know, in 90 days or so and giving you an update on Q2. We continue to, uh, to put a really bright shiny light on the focus we have around patients and the lives that we save.
Brian Webster: That continues to be the guiding light for this company, and it will continue to be so. Thank you for attending today, and we'll look forward to updating you again in 90 days. Thank you.
Every day every week. Uh, we report on those to our team. Uh, every Monday we report on the, the patients lives that were saved by our product last week, and that continues to be The Guiding Light for this company and it will continue to be so. So thank you for attending today and we'll look forward to updating you again. Uh in 90 days. Thank you.
Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Thank you, ladies and gentlemen, for your participation. In today's conference, this does conclude the program. You may now disconnect. Good day.