Asensus Surgical, Inc.

Thank you for standing by. This is the conference operator. Welcome to the Ascensus Surgical, Inc. fourth quarter and fiscal year 2021 financial and operating results conference call. As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Mark Klausner from Westwick. Please go ahead.

Good afternoon, everyone, and thank you for joining us for the Ascensus Surgical Fourth Quarter and Full Year 2021 Business and Financial Update Conference Call. On the call with me today are Anthony Fernando, President and Chief Executive Officer, and Shamiz Rampertab, Chief Financial Officer. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call, including any guidance provided, are forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business, including any impact from the COVID-19 pandemic and other geopolitical factors beyond our control. The company undertakes no obligation to update the information provided on this call. For discussion of risks and uncertainties associated with the Ascensus business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the 2021 Form 10-K expected to be filed later today and other filings we make with the SEC. During this call, we will also present certain non-GAAP financial information related to adjusted net loss attributable to common stockholders and the adjusted net loss per common share attributable to common stockholders. Management believes that these non-GAAP financial measures taken in conjunction with U.S. GAAP financial measures provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of the company's core operating results. Management uses non-GAAP measures to compare our performance relative to forecast and strategic plans, to benchmark our performance externally against competitors, and for certain compensation decisions. Reconciliations from U.S. GAAP to non-GAAP results are presented in the tables accompanying our earnings release, which can be found in the Investor Relations section of our website. It is now my pleasure to turn the call over to Essensus Surgical's President and Chief Executive Officer, Anthony Fernando.

Thanks, Mark, and thank you all for joining us today. On today's call, I will provide an overview of our recent accomplishments and then ask Shamiz to review our financial performance, after which I will discuss our priorities for 2022 before turning to Q&A. While 2021 continued to be challenging with the macro headwinds associated with COVID, including hospital restrictions, staffing shortages, and supply chain issues, we accomplished a tremendous amount throughout the year, We expanded our installed base by approximately 33%, drove a 44% increase in procedure volumes, made great strides in the development of the Sennheis surgical system, and increased revenues by approximately 150% compared to 2020. We finished the year on a high note. During the fourth quarter, we had six new Sennheis programs initiated, and saw procedure volumes increase by approximately 30% versus the prior year fourth quarter. Along those lines, I would like to provide a more detailed update on recent performance and the progress we have made on our key focus areas over this past year. As a reminder, these are, first, the continued market development for the SENHANCE system, and second, expanding our portfolio and continuing the technological advancement of Senhans. Starting with our market development efforts, it is crucial to our strategy that we continue to raise awareness of Senhans and follow up with health economic relevance data to support its adoption. As we mentioned in the past, we expected to have a number of key clinical papers published throughout 2021. During the year, we had 21 peer-reviewed manuscripts published, the most significant of which was in April. This publication in the International Journal of Medical Robotics and Computer-Assisted Surgery was the first to compare health economic outcomes of Senhans versus another robotic system as well as traditional laparoscopy. The study indicated that for certain gynecologic procedures, the Sennheis system per procedure cost were less than half of the cost of comparable robotic procedures and in line with traditional laparoscopically assisted vaginal hysterectomy case costs. The study also showed case times between Senhans and the other robotic system were comparable. We continue to believe that the development of data related to the variety of benefits offered by Senhans allow for greater adoption by surgeons in the future. The next segment of our market development efforts is the growth of our global install base and the acceleration of procedure volumes. During the fourth quarter, six enhanced programs were initiated, bringing the total to 10 programs for 2021, which was in line with our guidance for the year. Now turning to procedure volumes. In 2021, over 2,100 procedures were performed, representing the highest annual procedure volume total since the inception of SENHAN. which points to the continued momentum we have generated. Importantly, we saw growth across each of our key geographies during the year, with the U.S. growing 95 percent, the EMEA region growing 42 percent, and Asia growing 18 percent compared to 2020. During the fourth quarter, over 500 procedures were performed using SENHANCE, representing an increase of approximately 30% over the previous year quarter. In addition to the continued growth in utilization, we are very encouraged by the continued broadening of the types of procedures being performed with Sennheis. During the year, general surgery made up 40% of case volumes, with gynecology, urology, bariatric, and colorectal procedures making up the remaining 60%. This is important as it points to the fact that SENHANCE continues to be utilized across the most common high-volume specialties within soft tissue abdominal surgery. Now turning to our second initiative for the year, the continued portfolio expansion and technological advancement of the SENHANCE system. We reached two key regulatory milestones as we received 510K clearance for the expanded capabilities of the Intelligent Surgical Unit, or ISU, which will allow us to grow its capabilities with the Sennheis system, as well as 510K clearance for 5mm articulating instruments, which will improve the dexterity of our instrument platform, offering better access to difficult-to-reach areas of the anatomy. We also received CE mark for the initial version of the ISU and expanded the U.S. indications for use of the Sennheis system to include general surgery. Another technological development milestone during 2021 was the launch of Sennheis Connect. This is a mobile in-OR surgeon communication system. With Sennheis Connect, up to six clinical and product specialists can remotely interact observe and communicate with the clinical team in the OR throughout a surgical procedure from anywhere on the globe. It has proven to be a valuable tool that we have quickly been able to roll out over the course of the year and utilization has continued to grow as more surgeons have interacted with the technology. We are very proud of what we were able to accomplish in 2021 but also equally as proud of what we have been able to accomplish since late in 2019 when I stepped into the role of CEO and we implemented our market development strategy. Since this time, we have routinely delivered on the milestones we have set out to achieve on a quarterly and yearly basis, and the cumulative results have been very encouraging. First, we have more than doubled the size of our installed base around the world. Second, we have more than doubled the number of procedures performed. And third, we have rapidly accelerated the volume of clinical data related to Senhans being published, with more than 30% of all publications on the platform happening in the last 12 months. Given the macro headwinds, that have impacted healthcare systems globally throughout the last two years, our ability to achieve these feats is an even more validating outcome. We have generated real momentum during 2020 and 2021, kept off by a very strong fourth quarter, and we look forward to accelerating that momentum as we move to 2022. Before turning the call over to Shamice to review our financial performance, I want to thank everybody within the Ascensus organization as well as our customers and partners for their extraordinary commitment during the year. Without their dedication and effort, we would not be where we are today. With that, I will turn the call over to Shamice for a financial update.