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spk03: Our next question comes from William Polunovic at Concordia Genuity. William, your line is open.
spk06: Hey, it's Sean. I'm for Bill tonight. Thanks for taking our questions, and congrats on the quarter. If I could just start just on the update to the timing for AccuBlade. I know you called up second half, but any specific timing for the approval? How should we think about the launch and then the plans for a limited market release? How long could that be? Thanks.
spk02: Thanks for the question, John. So as we said in our last call, our guidance for the full year contemplated Accublate approval in the second half of the year. So that expectation is unchanged from what we had shared in March. As a reminder, obviously because Accublate is already approved and used outside the United States and has been on the market in Europe since March of 2021, the way we would approach a limited market release is probably a little bit different than if this were a completely new to market product. So we will start with obviously our highest utilization accounts as it relates to primary targets for AccuBlate and those accounts that have given us feedback where the integration of an ablation catheter is critical to growing their AccuMap procedures from where we sit today or toward adoption in additional additional categories. But we would, obviously, as you know, there will be a process by which we have to go through that committee approval, very consistent with when you launch any other new product. So, our current outlet contemplates a fairly modest contribution from AccuBlate in 2023. The one thing I would also just remind you of, as we had submitted AccuBlate in October of last year. The average PMA review time at the FDA is running right now between 330 and 350 calendar days, so if you use that as sort of a benchmark, that's also probably a good place to kind of land an expected approval. Obviously, we have worked diligently through the FDA deficiency responses that you receive at the 90 day mark and are working through remediation and remain very confident in an approval and launch in the second half of the year.
spk06: Great, thanks. And then just on Q2, you know, the street's currently at 4.8 million. Can you talk about the comfort level around that number?
spk02: Yeah, so we talked a little bit on the call about the extent to which supply chain challenges had negatively impacted our first quarter results in the range of $250,000. We are actively resolving some of those supply chain challenges. And just to reground everybody, those supply chain dynamics related to our AccuMap basket catheter, there was a period of time earlier this year when we were receiving no raw materials. Those raw materials have since resumed here probably right around the time of our call in late March, and we are continuing to rebuild inventory to support future demand. We will not fully resolve supply chain shortages here in the second quarter, but are very confident that they will be resolved through the balance of the year. So the only other thing I would point out as you think about Q2 is Q1 we did a little bit better than Q2. than expected, we are raising our outlook a little bit here for the year. Given some of those supply chain dynamics, you may see more of a weighting of revenue in the second half of the year. We had commented on our call on the fourth quarter that we thought we'd be at about a 45%, 55% weighting first half, second half. that number may look more like the first half being in a range of 40 to 45% in the first half and the balance in the back half. The last thing I just want to mention on supply chain dynamics is the back orders or inability to supply certain customers at the end of the first quarter has not impacted at all demand for the product. We have not seen lost procedure volumes. Where we do see that, it's transient. We are not losing the business because AccuMath is used in a very specific subset of cases where there really are no other options for many of the patients being treated. So we are seeing those orders get filled. We are not seeing purchase orders be canceled. So that's what gives us confidence in the build in revenue throughout the year.
spk04: Great. Thank you so much. Thank you very much. Please stand by for our next call or question.
spk03: Our next question comes from Margaret Taxer from William Blair. Margaret, your line is open.
spk05: Hi, everyone. This is Macaulay on for Margaret. Thanks for taking the questions. So in terms of the trajectory of the install base with it at sitting 433 after the quarter, I think you've talked about pushing the accelerator and kind of making the install base more of a focus now. So could you just walk us through your approach with some of those high volume centers or users and then your expectation with the ramp throughout the rest of the year with the first quarter number coming in a bit lower than expected?
spk02: Sure, so maybe just to clarify something, the install base in the first quarter was 77, and we did 451 procedures in the first quarter. We did in the first quarter continue to look to rationalize our install base and focus on accounts where we can drive procedure volume growth, growth in utilization per console, and higher revenue per procedure. One of the things that we did not talk about on the call that was a really big standout for us this quarter was was significant growth in our revenue per case in the first quarter. That is really the metric that we – one of the key metrics that we believe is ultimately an indicator of the health of the business. I recognize the attention to install base, and it's something we've been reporting since the company went public. In our minds, it is really not an indicator of the performance or the health of the business. We do envision to grow the installed base here in 2023. We expect that we will exit 2023 and each quarter through 2023 with progressive growth in the installed base. Our focus, however, has to be on driving procedure volume growth, driving greater penetration into the categories where AccuMap has clear differentiation, and driving increased revenue per procedure. And if you kind of look at how things are going here in the second quarter, We talked about on the call that we got off to kind of a slow start to the year. We had some very high volume accounts that had lower utilization early in the year. We have seen a significant pickup in procedure volumes over the course of Q2. And if you dig into that a little bit further, our primary levers to drive growth within high volume users is driving increased utilization of AccuMap across more procedure types. So second redo, first redo, de novo, persistent. The second is bringing on new users per account. So now we have a number of accounts where we have multiple users. And then the third is growing, the third actually is reengaging former AccuMap users. This is something that has been a really positive contributor here in the second quarter is people who had once used AccuMap and had slowed down utilization for a variety of reasons, we're now seeing pick their utilization back up. And the fourth is going into new accounts and expanding our install base.
spk05: Got it. Very helpful, and sorry for that procedures, not install base on the first one, but thank you for that clarification. And then just a quick follow-up, and I know it's only been a few weeks since the recover results, but I guess what did you hear following the release? Was there any excitement amongst users in the US specifically, or is that something you know, you're trying to spread more awareness during your conversations at HRS next weekend. And thanks again for taking the questions.
spk02: Yeah, Macaulay, thank you for that question because Recovery AF is one of those studies that we've been waiting to get published for a while. And the publication of that data was important for us for a couple reasons. First, it's the only significant clinical publication we've had in a couple years, which, as you know, in this space, having continuous flow of clinical data is critical to adoption and sustaining physician engagement. The second is it really aligned well with kind of our refocus strategy that we've been bringing to market over the past year or so, which has been to uniquely focus our target on complex patients, namely redo cases. So the data from Recover does dovetail very well with how we've been going to market and how we've been engaging the physician community over the past year. In the U.S. specifically, we will have quite a bit of attention on Recover at HRS at our booth, but even in the interim, since we did have the results get published in April, we have hosted a number of physician meetings. It is definitely driving a significant amount of engagement and a significant amount of from the physician community and where it's really helped is in accounts where I would say they're medium level users to newer users and actually even former users. It's been a great tool to reengage some of those types of accounts. And I would expect to see some physicians here in the US potentially look to replicate the recover results in a US setting. And that's something that we're exploring as a company So thus far, I've been very happy with the response. I think HRS will be a great opportunity for us to go into the data in a little bit more detail with some of our key users and prospective users. And then I think this is going to drive some additional interest in evaluating the AccuMap in this very specific use case in 23 and beyond.
spk05: That's great to hear.
spk03: Thanks again. Thank you very much. Please stand by. for her next question. Our next question comes from the line of Marie Theobald from BTIG. Marie, your line is open.
spk00: Hi, I'm back. I hope you can hear me.
spk02: We can, yes, Marie. Good afternoon.
spk00: Okay, I'm so sorry. I had tons of technical issues. I probably missed some of your commentary, but sorry about that. So I wanted to ask here about the early qualitative kind of feedback that you hear on the Medtronic sales of the Left Heart Access products. And is it fair to assume that some of this is showing up in any of the service revenue or anything at this point? How should we think about kind of the very early days of the Medtronic launch?
spk02: Sure. Thanks for that, Marie. Medtronic took over commercial distribution very, very late in Q4. And over the past several months, we have been very pleased with how our partnership with Medtronic is progressing. From a commercial perspective, we have been very impressed with the pace at which Medtronic has picked up this product. And unsurprisingly, given their breadth and depth of distribution, it's done a fantastic job getting this product into many more hands of prospective users than we ever would have been able to on a standalone basis. From our side, our top, top focus is making sure that we can continuously deliver them high-quality and dependable supply and meet their ever-growing demand. So we are investing additional resources here to ensure that we can continue to support Medtronic's growth. But overall, as I reflect on the growth and development of the agreement and partnership over the past year, we are very pleased with how things are going. Just from a reporting perspective, the impact shows up in a couple different places. One is in disposable revenue, and the other is a little bit in the other line. and then also on the other line in the income statement on the asset sale gain, and that's where we start to accrue the net sales earn-out that gets paid out on an annual basis in March.
spk00: Okay, very helpful and great to hear. Ask my follow-up here, maybe one for Takeo. You mentioned gross margins. They came in a bit better than we expected this quarter, and you still are holding to that goal of positive gross margin first quarter of next year. How should we think about the ebbs and flows of that metric throughout this year? Is it a linear? Is it something a bit more, especially as you're making some investments here? How should we think about that growth margin line?
spk01: Thanks for the question, Marie. We're very pleased with the progress that we're making with our growth margins, and there's two primary factors. We saw the positive growth margin here on a sequential basis for the last two quarters here. And it really comes from the higher production volumes that we have across all of our products in our portfolio. And then the second is we are seeing the efficiencies and optimizing our manufacturing support and our footprint. So definitely, you know, we're getting to the production volumes that more closely aligns with our manufacturing footprint. So we do expect to see progressive improvement here throughout the quarters, and as we've stated, on path to a positive gross margin in the first quarter. That hasn't changed.
spk00: All right. Thank you so much for taking the questions.
spk03: Thank you very much. Thank you for your participation in today's conference. At this time, we conclude the program. You may now disconnect.
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