Acutus Medical, Inc.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the acutest fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. It is now my pleasure to introduce Caroline Corner, Investor Relations.

Thank you, Operator. Welcome to Acutis' fourth quarter and full year 2021 earnings call. Joining me on today's call are Vince Burgess, President and Chief Executive Officer, and David Roman, Chief Financial Officer. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. Factors that may cause results to differ from these forward-looking statements are discussed under the forward-looking statements section in the press release attached as an exhibit to ACUTUS's Form 8-K filed with the SEC today and are also discussed in more detail under the risk factor section in ACUTUS's most recent filings with SEC, including the risk factors described in ACUTUS's Form 10-K. Any forward-looking statements provided during this call, including projections for future performance, are based on management's expectations as of today. ACUDIS undertakes no obligation to update these statements except as required by applicable law. ACUDIS's press release of fourth quarter and full year 2021 results is also available on the ACUDIS website, www.acudismedical.com. Under the investor section, it includes additional details about ACUDIS's financial results. The ACUDIS website also has ACUDIS's SEC filings, which you are encouraged to review. A recording of today's call will be available on the ACUDIS website by 5 p.m. Pacific time. Now I'd like to turn the call over to Vint for his comments on fourth quarter and full year 2021 business highlights.

Thank you, Caroline, and good afternoon to everyone joining us today. During today's call, I will review clinical and commercial highlights, provide a brief overview of our fourth quarter and full year top-line results, and go into further details around our strategic priorities and the steps we are taking to improve the company's financial performance. David will follow up with details on our financial and operational results, as well as our outlook. Amidst fluid market and business conditions, we continue to make progress in each of our three core technology areas, left heart access, mapping and therapy guidance, and therapy. Our left heart access product line continues to be very well received by electrophysiologists and structural heart specialists. as we continue to expand and refine our product offerings. Our left heart access portfolio now includes crossing devices and sheets intended for use across multiple procedure categories and in conjunction with many of the most popular access and therapy offerings on the market today. Most recently, we received FDA clearance to market crossing devices that pair with the Boston Scientific TruSeal sheath, which is used to deliver the Watchman left atrial appendage closure device, as well as the Merit Medical HeartSpan sheath. Continued portfolio expansion and increased focus on our left heart access line drove the business to more than triple on a year-over-year basis during the fourth quarter, and we expect continued growth here in 2022. In mapping and therapy guidance, we continue to see positive reception of our unique in the industry AccuTrack region of interest finder software suite. Capabilities inherent in the software allow physicians to rapidly identify potential sources and sustainers of arrhythmias. The unique single beat whole chamber mapping capabilities were recently highlighted in a paper out of Erasmus University in the Netherlands, where patients generally viewed as untreatable at ablation were successfully treated quickly and with relative ease using Acumap. We've also recently initiated a program to develop and integrate sophisticated and improved navigation capabilities into our Acumap mapping console and ablation catheter. Enhanced catheter localization, navigation stability, and accuracy are important customer needs and critical features that will further improve the physician experience with AccuMap. Turning to therapy, our AccuBlade force-sensing ablation catheter and system continues to gain commercial traction in Europe, and our customers and clinical support personnel report a markedly improved user experience in cases where we integrate our mapping technologies and our own ablation catheter and system. We now have 18 therapy systems installed with direct customers in Europe, in addition to our systems in place in the U.S. to support our therapy clinical trial. Acublate catheter sales annualized at over a million dollars in Q4, and therapy catheter penetration of our mapping procedures exited the year at just over 60%. Year to date, we are seeing further increases with penetration hovering around 70%. Regarding AccuBlade in the U.S., we are nearing completion of our enrollment of our right atrial flutter ablation trial, and we expect to complete our PMA submission in the coming months. This should allow us for U.S. FDA approval in early 2023. We are also making good progress on our pulse field ablation program, and earlier this month enrolled the second cohort of patients in our CE-MARC trial. We have now treated over 20 patients in the AccuForce PFA CE-MARC study, and we are on track to complete enrollment and follow-up this year. We are encouraged with the acute procedural results and have further refined our dosing strategy to optimize clinical outcomes. We expect this trial to help inform our US IDE strategy and we will provide more specifics on timeline throughout the year. Turning to our fourth quarter, 2021, and full year results, that revenue of $4.4 million for Q4 grew approximately 70% year over year, led by procedure volume growth in our business outside the United States, higher capital equipment sales, and new product launches. For the full year, Net revenues of $17.3 million in 2021 grew approximately 100% year over year. This growth was registered across all geographies and product categories, including increased adoption of our mapping system and platform, higher capital sales, the launch of our therapy product line outside the U.S., and left-hand access. We ended the fourth quarter of 2021 with an installed base of 77 AccuMap systems. Consistent with disclosure on previous calls, we are strategically removing and repositioning certain systems with below target utilization. Further, as we identify any potential new AccuMap sites, we are more carefully aligning those systems to our revamped commercial pod structure to improve company economics as well as to ensure consistent and reliable case coverage and improve overall customer experience. As a result, our global net installed base could decline modestly here in the first half of 2022. For the full year of 2022, we expect to show marginal growth in our net installed base while increasing procedure volume growth and utilization within serviced accounts. Moving to procedure volumes and disposable sales during Q4, global mapping procedure volumes advanced 22% on a year-over-year basis. In the US, procedure volumes were down slightly in Q4 versus the prior year. I would note, however, that we are seeing improvements in US procedure trends here in the first quarter of 2022. Our businesses outside the US drove record procedure volumes in Q4 as customers adopt our integrated mapping and therapy platform. In total, Q4 global disposable sales grew 38% on a year-over-year basis with all major product categories, left heart access, mapping, consumables, and ablation contributing to this performance. Over time, generating recurring consumable revenue will drive our business. and we are seeing receptivity to our innovations and uptake of our product portfolio. Overall global disposable revenue grew over 75% in 2021 to nearly 12 million as adoption of our mapping system and catheter was further augmented by new product introductions in left heart access and therapy. To close on my remarks, I would like to discuss our strategic priorities as well as the restructuring we announced earlier this year. Exiting 2021 and considering business and market conditions, we undertook an intensive strategic planning process where we identified three broad action items that will guide our business going forward. First is to narrow the scope of our product development programs to those that will carry our business the next three to five years and to prefer more exploratory work. We continue to see very high levels of productivity out of our R&D, clinical, and regulatory teams, and we need to continue to set them up for success. To that end, virtually all of our energies from a development perspective, are now focused on enhancing the user experience with our mapping system via workflow improvements and improved localization and on integrating therapy, including RF ablation in the U.S. and ultimately pulse field ablation globally. Second is driving our commercial teams to focus on market development and utilization of the AccuMap mapping system and associated disposables. Achieving this objective requires us to be even more focused on converting electrophysiologists to regular use of our system in their complex procedures. This will enhance familiarity, drive adoption, advocacy, and ultimately procedure volume growth and utilization. In the near term, this intense focus on driving utilization of existing consoles will likely come at the expense of install-based growth, but this is required to cement our place in this field. As we execute this strategy, we are pleased to see growth in procedure volumes on a year-over-year basis here in the first quarter of 2022. And third is to strengthen the financial position of the company and improve operational performance. This involves several components, including reduced operating expenses, tighter controls on working capital and capital expenditures, and an intensified focus on gross margins. The restructuring we announced earlier this year is expected to drive annualized pre-tax non-GAAP savings of $23 to $25 million, as well as a 30 to 40 percent reduction in quarterly cash burn exiting this year. As previously disclosed, we started to realize the benefits of our restructuring efforts late March as our actions fell under the Worker Adjustment and Retraining Notification Act and required a 60-day notice period for impacted team members. Lastly, to augment our organic initiatives, we have retained several specialized third-party consultants and advisors to review our strategy, as well as a range of options to fund our long-term growth, including non-diluted financing, partnerships,