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spk10: 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.
spk01: 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.
spk02: 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,
spk07: licensing and distribution agreements i'll now turn the call over to david to review our financial results in more detail david thank you vance and good afternoon everyone during my remarks today i will provide details on fourth quarter and full year 2021 operating results as well as our outlook as i discussed our results i will reference our updated presentation of sales sales results, and key business metrics that is included in our earnings press release and on Form 8K filed today with the SEC. A reconciliation of our GAAP to non-GAAP financials is also included in this filing, and I will be discussing our financial results on a non-GAAP basis during this call. As Vince previously mentioned, our revenues for the fourth quarter of 2021 were $4.4 million, up from $2.6 million in Q4 2020. Sales in the U.S. of $2.1 million advanced 31% compared to the prior year's fourth quarter. Increased capital equipment and left-hand access product sales drove U.S. performance. Sales outside the United States, which include revenue through our distribution partner Biotronic, were $2.3 million and compared to just under $1 million in Q4 of 2020. The year-over-year growth in our OUS businesses was driven by higher mapping procedure volumes, the launch of our AccuBlade 4 Sensing ablation catheter and system, and capital sales. By product segment, capital sales of $761,000 grew up from $175,000 in the fourth quarter of 2020, driven by the conversion of AccuMap systems from evaluation to long-term capital placements through cash sales and catheter commitment contracts. Disposable product revenue of $3.2 million increased 38% on a year-over-year basis. The strong performance in disposals was led by international markets, where electrophysiologists have access to our full suite of therapy products and benefit from our integrated mapping and therapy offerings. Service and other revenue of $352,000 was up from $46,000 in Q4 2020, driven by higher revenue from service contracts and console rentals. As in prior quarters, we continue to face headwinds at the gross margin line. Our historical decision to seek maximum vertical integration and pursue a broad product line maximizes innovation and agility. At the same time, the impact of this strategy on gross margins is significant until revenues are at scale. For the fourth quarter of 2021, non-GAAP gross margin was negative 119% compared with negative 84% in the fourth quarter of 2020. The year-over-year change in our non-GAAP gross margin primarily relates to recognized manufacturing variances, higher field service and freight expenses, higher depreciation associated with placed equipment, and warranty and other expenses. For 2022, we expect to see continued pressure on our gross margin. While increased disposal mix should help on a year-over-year basis, we will recognize manufacturing variances related to lower-than-plan volumes higher component costs and labor costs, and lower yields on certain products. On a reported basis, the impact of capitalized variances will be more significant in the first half of the year. Over time, strengthening our gross margin is a top priority for us, and improving this metric depends on multiple factors, the most important of which is scale. As we grow the business, our fixed costs will get absorbed across higher volumes. Secondary to scale is product mix between disposables and capital as we execute our plan to drive higher system utilization. In addition to business-related drivers, we are intensifying our focus on controllable variables such as manufacturing yields, product line optimization, process improvement, and automation. Our operations team is actively evaluating specific opportunities, and we will update you accordingly. We recognize the criticality of improving our gross margin and have included certain goals in our 2022 Management Incentive Program. Non-GAAP operating expenses were approximately $21.4 million in the fourth quarter of 2021 compared with $21.3 million for the same period last year. Higher SG&A related to investments in our commercial organization and higher expenses related to clinical trials were offset by lower R&D expenses tied to the timing of certain development programs. Our non-GAAP operating expenses have been roughly flat on a sequential basis the past six quarters, and we expect our non-GAAP operating expense to decline starting in Q2 of this year as we realize the benefits of our restructuring program. Excluding specified items, our non-GAAP net loss for the fourth quarter of 2021 was $28 million, or $1 per share, compared to a non-GAAP net loss of $24.9 million, for the fourth quarter of 2020, or 89 cents per share. Briefly touching on full year results, we had total sales in 2021 of $17.3 million, compared with $8.5 million in 2020, driven by increased adoption of our mapping system and platform, higher capital equipment sales, the launch of our therapy product line outside the US, and left-hard access. Non-GAAP operating loss was $101.5 million for the full year 2021, compared with $73.1 million in the prior year. The year-over-year change in non-GAAP operating loss was primarily related to investments in our commercial organization, product development as well as clinical trial and regulatory expenses to support our expanded product portfolio, public company-related costs, and manufacturing variances. Excluding specified items, our non-GAAP net loss for the full year of 2021 was $107 million, or $3.74 per share, compared to a non-GAAP net loss of $83.7 million for the full year 2020, or $3.91 per share. Our total cash and cash equivalents balance, including restricted cash at the end of Q4 2021, was $108 million. Turning to the outlook, in our press release today, we provided first quarter guidance that calls for revenue of $3.2 to $3.5 million, compared to $3.6 million in the first quarter of 2021. As a reminder, during Q1 2021, we recognized capital sales of approximately $1.2 million. For Q1 2022, however, there is no capital revenue included in our guidance. We are in the very late stages of finalizing a few new installs, which, if executed in Q1, would put us toward the high end of our guidance range. Excluding capital equipment sales, the midpoint of our Q1 2022 guidance implies year-over-year revenue growth of greater than 40% all driven by disposables. With respect to the full year 2022, we are encouraged by mapping procedure volume trends year to date, the pace at which we have been able to reposition consoles to higher potential sites, growth in left heart access, and the continued adoption of AccuBlade outside the U.S. Assuming stable market conditions, we expect to see disposable growth of at least 30 to 35% in 2022 on a year-over-year basis. At the same time, we expect to see lower capital equipment sales in 2022 as compared to last year. Specifically, in 2021, we registered capital sales of approximately $4.1 million excluding rentals. This included a significant number of conversions from prior evaluations to long-term placements. As we reposition consoles to new sites, we are not forecasting a meaningful contribution when converting these units in 2022 especially given the time required for a physician to thoroughly complete an evaluation and for us to clear administrative processes. When putting these factors together, we expect full-year 2022 sales to be flat to slightly up when compared to the $17.3 million generated in 2021 as growth in disposables is expected to be offset by year-over-year declines in capital equipment sales. As we execute on our restructuring, strategic initiatives, and 2022 operating plan, We will provide further updates during investor conferences and future earnings calls. We appreciate your continued support and interest, and I will now turn the call back to the operator to facilitate our Q&A session. Operator?
spk10: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Our first question comes from the line of Robbie Marcus with J.P. Morgan.
spk05: Hey, thanks for taking the question. Maybe to start, I don't think people are going to be thrilled with the full year guidance for 2022 and recognizing it's with fewer people, but it does raise the question of future cash burn versus your existing cash of around $100 million and you know, how long that can last for and what your plans are for future capital needs.
spk08: Thanks, Robbie. So maybe I'll start. Go ahead, Vince.
spk02: Yeah, I mean, Robbie, thanks for the question. You know, I'll let David speak to the, you know, sort of the numbers from the cash persistent perspective. But, you know, I think what we have experienced and learned over the last year, year and a half is, you know, that this market and the positions we serve is extremely heterogeneous. We, you know, we have to be very, very thoughtful, very careful about where we place our systems, how well we segment those customers, how we launch into those centers. And while, you know, we have, Good launch opening success in Europe, I think, driven not only by our terrific team over there, but the fact that we have an integrated therapy offering. You know, I think that predictability and the ROI on those launches and install base expansion is more reliable, more predictable. Our team here in the U.S. is exceptional, our clinical and commercial team. But as we launch, through this year, until we have an integrated therapy option, we think early next year, we have to be even more selective with where we launch. Because when we launch into a center where we integrate with typically somebody else's therapy catheter and system, we've got to be very, very thoughtful about where we go. And that's what's really driving that. Our decision to slow the installed base growth for this year, and that's obviously without the installed base growth this year, you don't have some of that capital and conversion revenue that we had anticipated during our prior earnings call and the associated disposables. But we think it's the right thing to do for the business to allow us to get out there and have great launch success improve the program, gain proof points, and build traction where we are. I'll let David speak to the cash implications and go from there.
spk07: Sure. Thank you, Ben. So, Robbie, on the guidance, I just want to make sure that it's clear the drivers of the revenue outlook here. So, we do expect to see significant growth in disposables this year, which we are seeing year-to-date, driven both by procedure volumes as well as continued uptake of some of our recently launched products like AccuBlade outside the U.S. and our Left Heart Access product line predominantly in the U.S. The primary factor influencing year-over-year growth is what Vince just referenced, is the capital equipment sales, which last year were about $4 million, including significant number of sales to Biotronic as they built out their install base. And last year, as you know, was the first full year during which that partnership was implemented. So those are the primary moving factors reflected in the revenue outlook. As it relates to cash, as you point out, we had $108 million at the end of last year. Our restructuring contemplates, if you look at last year, our cash burn was roughly $28 million on average across the four quarters, and that number coming down into the high-teens mid-tie teens as we exit this year, but we should start to see that benefit reflected in Q2. It is a very fluid environment. Our base case outlook with respect to our cash puts us into the second quarter of 2023, although we have identified some very specific levers that can further extend our position and we'll be ready to respond rapidly as needed.
spk05: Thanks. And maybe within the accounts that do use the mapping system, what procedures are you seeing them use it for and what percentage of their total cases do you think they're being used in as we think about maybe broadening it out in the future?
spk02: Yeah, so let's think about the market for a second. So the EP business, the top line of the EP business globally, it's We believe it's north of $6 billion top line. The procedures that are done today we believe are 35% to 40% complex procedures. So this is persistent, longstanding persistent AFib, atypical flutter, complex tachycardia. Again, 30%, 35%. So the segment that that implies, the size of the current segment that that implies is somewhere between $2 billion to $3 billion. This is our power out. This is where physicians, I'm in front of physicians all the time. I always hear when I ask physicians, what are your pain points? What are your problems? They always come back to those complex procedures where there is no standardization of procedural approach globally, period, none. Every physician has a somewhat to dramatically different approach When you ask about what is coming down the pipeline from competitors, large and small, to help with that, you generally get, you almost always get blank stares. Nobody, there's just nothing coming that we can see and that our physicians will look us in the eye and say, well, there's this coming from this multinational or this from this startup to help address these issues. We think we've got a very compelling offering in this space. So that's our segment. So redo ablations, and there are, believe me, plenty of those. Redos, three dos, complex tachycardias, atypical flutters typically, and atrial tachycardias following, for instance, a cryoablation are very, very common. All centers see them. regularly, and that's really our sweet spot where we have the greatest array of differentiation in our current product line.
spk05: And, Vince, any way to tell what percentage of the cases are being done today at the, I believe it's 18 centers that have your systems?
spk02: Yeah, I think these numbers are a little hard to get at because of the characterization and how they kind of segment and report out. But we think where we are, we're in that sort of maybe 7% zip code in terms of the share of the cases we get. There are some centers where we get I think we get, you know, well over 25% share. There are other centers where, you know, we're new and they're just getting going with us and we're obviously not there yet. We've got some bellwether centers where we're getting, I think, a very significant share of those complex procedures.
spk07: And, Robbie, just to clarify, the 18 centers that Vince referenced on the call, that's where we have our ablation system installed. The market share number of that 7% to 8%, That's across our entire install base, including the U.S., where we obviously don't have an ablation catheter. In Europe, where we do have an ablation catheter and we have an established user, we have market share of complex cases well into the double digits.
spk05: Great. Thanks a lot.
spk10: Thank you. And our next question comes from the line of Amit Hazan with Goldman Sachs.
spk11: Hi, this is Phil on for a meet. Thanks for taking the question. I thought I wanted to start with a kind of clarifying question about the guidance and about the quarter. You've previously broken out Biotronic as a component of the revenue. I was hoping you could do that for 4Q and then talk about Biotronic as a component of the sales guidance that you just provided so we can better understand how the underlying business might be performing within that.
spk07: Sure. So, Phil, thanks for the question. The reason we are now disclosing our sales US and OUS is the strategy around Biotronic is to give us accelerated global reach and for us to build our portfolio and build out the value proposition that we offer into markets that have significant case volumes, but where it doesn't make sense for us to invest organically today. And very similar to other larger medical device companies who have distributors outside the U.S., We just happen to have one very large one who serves as our global partner, and the volumes that they do are reflected in the procedure volume disclosure that we provided today. So as we look forward, we're going to be including Biotronic in our global business. So the trends that Biotronic sees are very reflective of the underlying trends that we experience globally. I will say that, you know, as you might recall, in the third quarter of last year, Biotronic's purchased a significant number of new consoles to seed their existing accounts and to grow their installed base. We did not see the same level of capital equipment purchases from them in the fourth quarter as really a disposable driven quarter. And we would expect disposables for all parts, all operating segments of our business really to be the primary driver of growth, both here in Q1 and for the balance of 2022.
spk11: Okay, thanks, David. Maybe I could ask it slightly differently and try to characterize the outlook for U.S. versus O.U.S. sales next year, if you're willing to kind of provide a commentary on the impact of the Salesforce cuts and the commentary around capital sales in the U.S. until we have an ablative technique that we can couple with this system. Thanks.
spk07: Sure, Phil. So we expect growth both in – Let's talk about disposals. Let's break out disposals and capital separately because in the U.S., we expect growth in disposables. We expect growth in disposals outside the United States also. With respect to capital equipment, you will probably see a bigger decline outside the U.S. reflecting the Biotronic impact from last year. Of the $4 million in capital that we sold last year, I think almost half of that went to Biotronic over the course of of last year so we would obviously we would not expect that to recur so on a geographic basis uh globally expect procedure volumes to grow uh and as well as disposables and then uh capital equipment declines globally but mostly led by uh the markets outside the us including biotronic okay that's helpful david thanks so much uh also in in the press release if i could ask just one more please in the press release you mentioned continued strategic review i'm just
spk11: Wondering with, you know, a pretty substantial restructuring already having been announced, if you could potentially frame some of the, you know, the pathways that that strategic review could potentially result in moving forward and obviously what the implications are kind of for longer-term growth trajectory. Thanks so much for the questions.
spk02: Yeah, I mean, I'll take a shot at that. And, David, if you want to chime in as well. If you look historically at the company, we have invested in heavily in building out a highly differentiated portfolio, not just with one, you know, better mousetrap, one focus product, just in mapping, for instance, we've invested very heavily, you know, by way of, uh, organic development acquisition and licensing, et cetera, across the full spectrum of EP. So we've created a, a small, uh, but with a broad product line across EP, mapping, and ablation therapy. We've also invested heavily in development and training of a crack commercial and clinical support team, including a sizable, one of the larger direct sales and commercial organizations in the US and Western Europe. And of course, we've invested very heavily and supporting our partner, Biotronic. We think there are multiple opportunities to explore non-dilutive financing, possible distribution opportunities of other companies' products through this channel, our own channel, etc., that are levers that we can pull. We've been approached on a number of things. We've approached ourselves on a number of possible opportunities, and we are exploring those very actively. As you look at this space, this EP is one of the most dynamic spaces in all of MedTech, and there are a lot of folks that want to be in this business. There are a lot of folks that have products that are earlier stage in this business that don't have any sort of distribution. themselves and we're looking at the full array of possible opportunities here.
spk10: Thank you. And our next question comes from the line of Margaret Cazor with William Blair.
spk04: Hi, everyone. This is Brandon on for Margaret. First, I'm just curious if we could focus a little bit on the first quarter since we got kind of a preliminary range there and we're basically through the quarter and I was curious maybe have a little more flexibility to talk about what are some of the highlights in the quarter, what's kind of going well for you guys as we move through Q1 specifically, and then maybe where are the areas of improvement that you guys are focused on through the rest of the year?
spk07: Sure. I can start on that, and Vince can add some additional perspective on how our strategy is unfolding here. So the – First quarter, as I said, really is going to be entirely driven by disposable sales. Given our focus to isolate our commercial organizations to really driving procedure volumes within the accounts that we are currently serving, we are likely not to execute any capital conversions in the first quarter. We did see a significant bolus of capital sales in the first quarter of last year. So we did about $2.3 million in disposable sales last year in the first quarter. And if you look at the midpoint of the guidance range that we've provided here, $3.2 to $3.5 million, that implies 40-ish, a little over 40% growth on a year-over-year basis. One of the things that we've been monitoring very carefully as we execute this strategy of repositioning consoles is the extent to which that may or may not be disruptive to procedure volume growth. And we are pretty encouraged with what we're seeing year-to-date that on a global basis, our procedure volumes are up significantly. year over year. We are not seeing many external related headwinds. Obviously, COVID-19 continues to be something that we monitor, but we are pretty pleased with what we're seeing, executing procedure volumes as well as an increase in utilization, particularly in the U.S. in Q1 when compared to Q4 of last year.
spk02: Yeah, I'd say coming into the quarter, announcing a restructuring and also repositioning a meaningful number of the consoles that dislocation requires. You pull it out and then you reinstall a console at a new center and retrain and train up a staff, the learning curve issues and all that. Those two factors combined obviously gave us a little bit of a pause and then you throw in Omnicron, which I think has hit procedure volumes across MedTech in a lot of instances. With all three of those things, we're actually quite happy with our procedure volumes in Q1 in spite of all of those three sort of challenges, if you will. So quite pleased with the team, quite pleased with what's going on there.
spk04: Got it. And then As you look at the field today, you know, we're talking about some of these maybe unproductive systems getting pulled and going into more productive accounts. Can you maybe just compare and contrast some of the accounts that are doing well today? What's different about those? Why are they performing compared to those not performing? And how confident are you that they just need a little more focus and you can replicate that successful strategy through 22? Thanks.
spk02: Yeah, I mean, there's a whole array of factors that can contribute to rapid or not so rapid uptake and utilization and certain consoles just not being productive. And it goes from our key champions literally moving from one account to another so they don't have that champion there or to a different state. We've had that happen a number of times. We also, you know, I think we've learned, and we talked about this in prior calls, we've learned about the process of segmentation. We've got to ask the right questions about how physicians feel about their workflow, their setup, the types of accessories they want to use and the types of procedures they want to use our mapping system on and what therapy catheter, particularly in the U.S., they are most comfortable with. Our system works quite well with some other folks' therapy catheters, and we do well there, it doesn't work or doesn't work as well with other therapy catheters. And if you go into a center where the key physician really wants to use catheter A, which doesn't integrate as well with our system, sometimes we just don't have an overall great customer experience. that provides a challenge. And as we do a better job, and we're learning to do this, do a better job at qualifying our customers where we're going now, we're seeing better outcomes. We're seeing better launch profiles.
spk10: Thank you. Our next question comes from the line of Mary Tibble with BTIG.
spk03: Hi, thank you for taking the questions. I want to ask this first one here on the restructuring and just sort of confirm the timeline. Is the restructuring complete at this point? How many sales reps do you have here now in the U.S. and what geographies are they focused on? And what are you hearing from sort of your customers in the field in terms of their awareness or thoughts on the restructuring and how it impacts them?
spk02: Sure. Structuring was It was announced in early January, the 60-day Warren Act period. The team members that are no longer with us were let go, I think, the second week of March, second or third week of March as part of that. Obviously, not a great thing to do because we've got – or not a fun thing to do because we've got an incredible team here. I would say, by and large, this is a team, commercially and otherwise, company-wide, that's on a mission. It's a very passionate group of people. I think every single one of the people that was part of the reduction regretted that and did not want to leave. They very much wanted to stay here because they believe in what we're doing, and they'd rather work here than elsewhere. that was tough. I would say, uh, by and large, uh, the, the people that remain, you know, you, you go through these things, Marie, and, um, I think it, it toughens people up and you get kind of a, a bunker foxhole kind of mentality and we lock arms and we fight and we fight forward. And I think, I think we're doing a good job with the, with the team building and, and, and, uh, building the esprit de corps going forward. I will tell you, there are certain situations where, uh, we've, you know, we've had a couple of situations where we had a, a clinical support specialist that was, um, you know, highly favored by one physician or another. And, uh, a couple of those folks, um, uh, were part of the restructuring and, uh, you know, we've had to take extra efforts and make extra efforts to transition someone new into the, into the organization or not into the, into service that particular customer. And, Sometimes those things take a little bit of time, but I think the team's doing a great job getting that done.
spk03: Understood, and I agree that that's a tough thing to go through. Did you say how many sales reps you have left and what geographies you're able to cover still in the U.S.?
spk02: I don't know that we're actually, for competitive reasons, going to talk about our exact numbers, but our Our key pods where we've really had good success and we've got a good concentration of customers, consoles, and clinical support people and sales folks are in the southwest of the U.S., the southeast, and kind of that northeast corridor in the U.S. And then the U.K. and central Europe continues to be a real strong area for us.
spk03: Okay. Okay. And perhaps as my follow-up, you could offer a bit more detail on the PFA CE-MARC trial timeline. I heard you say you expect enrollment and follow-up this year. You know, how quickly could we see some of that happen? And has there been any impact to the U.S. trial enrollment timelines given some of the restructuring efforts? Thanks for taking the question.
spk02: The U.S., start the U.S. trial enrollment timeline, the Flutter trial, our therapy trial in the U.S. It's an IDE trial. We will certainly be completed, and we should certainly be completed with enrollment by within the next quarter. I think it's fair to say early in the next quarter. So that's been going well. You hear about a lot of trials being slowed by by COVID and whatnot. I think our clinical team's done a great job continuing the momentum there. From a PFA perspective, we do expect to complete enrollment on the PFA CE project we're working on this year and follow up. We're not talking with a lot of granularity around our expected date of CE mark and FDA trial, we are still analyzing the timelines and the clinical trial design as relates PFA in the U.S. with our focal point ablation catheter.
spk03: Thank you.
spk10: Thank you. And our next question comes from the line of Bill Plovenick with Canaccord Genuity.
spk09: Great, thanks. Good evening, and thanks for taking my questions. First, I'd just like to start off with the restructuring. Considering it's completed at this point, would you consider it completed? Kind of what was your head count as you exited 2021, and where is your head count globally as you end the restructuring? And then, you know, how is that U.S. versus O.U.S.? If you could give us any granularity on that, that'd be great. Thanks. That's the first question.
spk02: David, do you want to take that?
spk07: Yeah, Bill, you'll see some of these numbers reflected in our 10-K filing. So at the end of December, We had 338 people globally in the company, and our structuring involved 59 people who were notified in January and who exited the company in mid-March. I would also point out, and perhaps not unexpectedly on top of that, we've had some additional voluntary resignations over that time period and backfilled some other critical roles. So I would use that sort of 60-ish number as the reduction headcount where we'll be entering the second quarter. The vast majority of the reduction was in the U.S.
spk09: Okay. That's good. And then as we think about that, you know, you talk about the strategic shift to the pods. You know, it is you look at the U.S. and you start shifting around and going to that core pod strategy. How much do the current core pods generate in the U.S.? Is it an 80 or 20, 90, 10? Where in terms of 20% of accounts are generating 80 or 90% of the revenue, and then you're kind of moving a lot of the other systems around. And, you know, the other half of that question is, this is something you started, I believe, last year when you hired the new commercial person. And, like, are we at the end of that transition, beginning of that? Kind of where are we in moving those systems around?
spk02: Yeah, I would say as we exit this quarter, I think we have moved the systems we created Based on our analysis, we feel like we wanted to move. I think we've moved the lion's share of those by now. I think for the most part, we placed them into new accounts. In terms of the percentage of revenues that come from, we'll call them the regions where we've decided to concentrate our concentrate our efforts and our people, I would say the lion's share of the revenues historically came from those regions and pots. We had people and a few installs in other areas, but there was not a lot of – we didn't we had difficulty ramping in those regions where we didn't have consistent clinical support there at the ready.
spk09: Right. Okay. So it's probably fair to say or at least to believe that the Q4 is kind of a good base upon which to work off in terms of, you know, your core U.S. business and then the international business on a procedural disposable standpoint. Is that pretty fair?
spk07: Yeah, I think that's a good representation of it. The only thing I would add to Vince's commentary is as we reposition consoles, we are obviously looking to do that within these established commercial regions. So as we re-expand our install base, we're looking to align those consoles with areas where we have an established sales force, well-trained therapy managers, and the right level of support so we can drive increased procedure volumes on an increased install base without significant investment, incremental investment in headcount.
spk09: Gotcha. And then, so that's the commercial. On the R&D strategy, I think there wasn't any discussion of the atrial fibrillation trial that was expected to enroll in the third quarter. Is it fair to say that that's probably TBD going forward and that's not on the table, one of the kind of projects that hit the chopping block, or how should we think about that?
spk02: Well, as you look at the therapy landscape, it is generally accepted that pulse field ablation is coming hard and coming fast, and you know, quite likely to replace standard RF ablation over time. And as you know, Bill, the AFib trials typically take two and a half to three years to complete, you know, enroll, 12-month follow, and then nine, 12 months in front of the FDA. So we have held that trial. and not yet started enrollment while we assess and watch kind of what's happening with PFA. You can imagine with a three-year trial with heavy expense, it's very tempting and I think probably advisable for us to be thinking about transitioning a trial like that to a PFA therapy platform.
spk09: Understood. Yeah, that makes sense. So I think, as you mentioned, the right atrial flutter seems to be, if that's approval early 23, it's a little faster than we expected. And then, as you mentioned, you'll follow up with the PFA strategically and push that through given the timeline. Okay. That is all the questions I had. Thank you very much.
spk10: Thank you. And our next question comes from the line of Javier Sonseca with Spartan Capital.
spk06: Hello, everyone, and thanks for taking my call. Considering the significant cost claim announced earlier in the year, can management shed some light on the commercial buildup for the expected U.S. market entry for AcuGate? And by then, do you think the focus would be to shift it back to increasing system installments? Thanks.
spk02: Yeah, I think that's a good assumption, that as we gain approval in the U.S., All signs in Europe point to a better customer experience, more efficient sales and launch process on an account-by-account basis when you have fully integrated mapping and therapy in the software that goes with it. So I think that's a pretty logical way to think about it.
spk07: And I think, Javier, on the commercial infrastructure, to your question to support the AccuBlade launch in the U.S., we launched AccuBlade in Europe with our established commercial team. It was a very important and seamless add into their bag. And I think the bigger question for us will be if AccuBlade drives the acceleration and procedure volumes that we had seen in Europe, will we have to invest in additional clinical and therapy manager support? But in terms of the existing sales infrastructure, we think given the quality of the organization we have in the U.S., the extent of experience in EP and depth of relationships that our current team holds, that they are very well equipped to launch AccuBlade successfully, as was the case in Europe.
spk06: Awesome. Thanks. Thanks for having my question.
spk10: Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect.
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