AngioDynamics, Inc.

Q2 2022 Earnings Conference Call

1/6/2022

spk_0: the morning and welcome to the and yet anaemic amex fiscal year two thousand and twenty two second quarter earnings health at this time of response or nelson only mode the question and answer session will follow the formal presentation if anyone should acquire operators is uncertain the conference please restart zero from your telephone keypad as a reminder this conference call is being recorded the news release details fiscal twenty twenty two second quarter results cross the wire earlier this morning as a valve on the company's website this conference calls us have been broadcast live over the internet at the investor section of the company's website at www dot angio dynamics dot com and the will ps replay of this call will be available of the same site proxy one hour after the end of today's call before the and i would like to caution listeners it to the course of this conference call the company will make projections are forward looking statements regarding future events for a statement the bags expected revenue adjusted earnings and gross margin through fiscal year twenty twenty two as well as trends that may continue measuring encourages you to review the company's past and future filings with the fcc including without limitation the company's forms ten q and ten k which identify specific factors that may cause the actual results or events to differ materially from those described in the forward looking statements the company will also discuss or non get financial measures during this call measure it uses these measures are salish operational goals and review operational performance of believe that these measures may assist investors and analyzing the underlying trends the company's business over time investors should consider these non gaap measures in addition to not as a substitute for or as superior to financial reporting measures prepared in accordance with gap five package offering insight into the company's financial results is also available on investor section the company's website and events of presentations this presentation should be read in conjunction with the press release disgustingly companies operating results and financial performance during this morning sovereigns call i know it's true that followed him climber and your dynamics president and chief executive officer mr palmer
spk_1: maggie rob good morning everyone in thank you for joining us for injured at a the sold twenty twenty two second quarter earnings call joining me on today's call is steve trowbridge and do dynamics executive vice president and chief financial officer will provide a detailed analysis of our second quarter financial performance and or revised f y twenty two guidance i am pleased with our second quarter performance as we have continued to progress along our city victory information and we have delivered strong revenue growth despite the ongoing challenges related to the covert nineteen global pandemic and other macro related headwinds these results are a direct reflection of our teams commitment to and or execution of our long term strategic plan to transform major dynamics into a high growth med tech company we ended the quarter with revenue of seventy eight point three million dollars representing growth of seven point six percent year over year net sales from our med tech business which as a reminder includes aryan on nano knife and are from back them a platform where eighteen point nine million dollars a thirty six percent increase over the previous year er med device business which includes the remainder of our portfolio grew approximately one percent year over year the spite of four million dollar backlog the ongoing disruptions from the kobe pandemic and resulting supply chain headwinds led to this backlog and naturally also had an impact on gross margin in earnings during the second quarter we ended the quarter with adjusted ie bs of negative two cents and gross margin of fifty one point eight percent before i going to the more specific results across our businesses i like to talk to the current macro environment the resulting disruptions and how we are addressing those in a little more detail as we have discussed during previous quarters we have been impacted by and we are working through supply chain disruptions stemming from colbert specifically we have discussed a tight labor market increasing labor costs raw material inflation and escalating freight costs like many other businesses we are feeling the supply chain impacts two of our main challenges are staffing from our internal manufacturing operations teams and increasing levels of production disruption caused by our employees being exposed to cope it we are also facing similar dynamics with some of our supply partners we're struggling to service our needs do to similar factors within their production environments these factors contributed to a more difficult environment in our second quarter which accelerated in november in order to address this disruption we are focused on increasing manufacturing capacity improving efficiencies a making adjustments to pricing and shipping terms all of us have a dealing with the ever changing impacts of coburn for nearly two years but we have managed route well and will continue to driver a business with the same disciplined approach while continuing to appropriately prioritize the investments intended to support the long term growth of our business earlier this year as we saw these macro pressure is building we began to identify and implement solutions to address them in the second quarter we initiated a plan to increase manufacturing capacity for a partner in costa rica we are pleased with the pace of this project and we will keep you updated on progress of this initiative and others during subsequent quarters to be clear we are not moving all of our manufacturing offshore and have no plans to close our existing facilities we are qualifying additional manufacturing capacity to not only address the short term supply chain disruption but also to enhance our ability to supply our customers as we grow up in this over the medium and long term in accordance with our strategic plan in addition to increasing capacity in costa rica we have continued to actively pursue programs to improve our supply chain these initiatives include fk ewe rationalization and other targeted projects to increase capacity in efficiency and our manufacturing process as we discussed last quarter we have recently implemented targeted revisions to our pricing and shipping terms and response to the increased costs of doing business while the increases an operating costs have affected our business in a we have taken access to address these an actress gives me access to address these challenges to minimize any potential long term effects the majority of the supply chain challenges and cost increases affect our met device portfolio and have a lesser impact on our med tech portfolio as the investment and design for offices for a med tech products integrated robust supply chain planning we are continuing to pursue our strategic plan including funding our core transformational investments as we know they are vital to driving our growth and the value of our company over the long term now turning back to our detail results for the second quarter are are a on business saw continued suppressor growth during the second quarter with revenue of six point three million dollars up from five point nine million in the first quarter of foia twenty two despite increase pressure on procedure volumes stemming from colbert and hospital staffing challenges the continued highly positive feedback from the market confirms our belief that are already on platform offers differentiated technology for a broad suite of treatment options that drive positive patient outcomes at the end of the second quarter ari on had been used over thirteen thousand procedures and we estimate that are ya now represents about five percent share of this market as we've mentioned on previous calls are you on procedures have been fairly divided between above and below the name we think this demonstrates both the versatility of our technology and a league breath of our addressable market and opportunities for continued growth we continue to expect our on to generate robust revenue growth for the balance of f y twenty two and we believe we were properly considered the current headwinds as part of our revenue guidance as a result we are reiterating or revenue range of twenty four to twenty six million dollars for aryan for fiscal twenty twenty two we continued to see strong year over year growth with an hour from back to me or folio which generated approximately twenty one percent revenue growth over the second quarter of f y twenty one despite the challenging environment if included twenty nine percent year over year growth from rock from our mechanical from back to meet portfolio comprising and your back and alpha back we are also pleased that we recently completed a limited market release of our alpha back mechanical from back to me system this highly effective l a maher process generated valuable insights including the highly positive responses from physicians regarding their clinical outcomes which led us to commence are full market launch of alpha back in early december while it has only been a few weeks we've received excellent feedback from physicians and are very pleased with the pace of the launch as a reminder alpha back expands or a from back to me opportunity by addressing a much larger segment of the db t venous thromboembolism market as we've discussed the db t segment of this market represents and approximately one point five billion dollar market opportunity well the initial off of that product a twenty two friends kenya a device increases are address of the market it's still only a loss a portion of this one point five billion dollar opportunity we plan to unlock full access to the db t v t market through the upcoming launches every team fresh device and subsequent smaller french alpha back devices as we've described in our investor and technology day presentation in addition we plan to use the eighteen french device for a pulmonary embolism id a study that upon clearance would provide us access to an additional one point five billion dollar market we have filed the application for this id a study and are in discussions with the ft eight to support approval nano knife probe sales for the second quarter increase nine percent year over year year to date lena my from sales have increased by twenty percent we're pleased with our sales of mandalay probes despite the increased covert related challenges we face during the second quarter one dynamic we've seen as a result of these challenges is an increase in case cancellations for pancreatic procedures due to disease progression in certain instances we've noticed that treatment delays to rob the pandemic have led to disease progression in many patients some physicians have reported that when they finally try to perform a nana like procedure following a staffing or covert related delay they often discover metastasis in the operating room and cancel the ablation which is a very difficult situation for patients their families and the positions despite the challenges of the current market environment we believe by and growth benefited from the tail end of a larger capital base and increase data driven awareness from our direct study the inner life capital sales were down year over year against the difficult comp in the second quarter of fri twenty one following the trend of general quarter of a quarter variability and capital placements we remain excited and committed to investing are nana like platform as we continue to make progress with our clinical studies which will support are planned expansion into new indications such as prostate and we also look forward to exploring new geographic opportunities as the o u s environment improves er med device business grew approximately one percent in the second quarter which was in line with the long term to jack three of the business that we laid out for you at our investor technology day or medical device performance was impacted by the challenging supply chain environment and que to that resulted in the backlog that i discussed earlier turning to internal are indeed during the quarter we continue to invest in our key strategic parties which are first to support our existing platforms to facilitate position adoption and approved patient outcomes and second to continue the development of new products in order to expand into larger faster growing addressable markets even investment initiatives include clinical research product development and selling in marketing as we prepare to introduce these products into the market we also continue to look for opportunities externally and strategic talking emanate remains a component of our long term growth strategy we regularly monitor the landscape for the right opportunities while also maintaining a disciplined approach the capital allocation and cost management as we do so turning to our clinical programs we currently have twenty two active sites and are direct study and are encouraged by the overall execution of the study we also note that the us direct study spawned interesting initiating similar research and other countries for example they multicenter direct inspire study in australia recently enrolled it's first patient like to take a moment to discuss the progress regarding our prostate initiative for banana like system the nana lives unique mechanism of action enables it to be used as a focal option for physicians and patients seeking alternatives to radical prostatectomy current focal treatment options have been limited and their ability to grow to know more than five percent of the addressable market we believe banana my system as the potential to grow the focal treatment market do do with ease of use and unique mechanism mechanism of action to serve as a more favorable treatment for patients and physicians alike in order to prove disbelief we have partnered with the society of your logic oncology to launch the preserve study the preserve study at designed to assess local cancer control in patients with intermediate risk disease with a secondary and point measuring quality of life outcomes this study will be led by our principal investigators doctor jonathan coleman from memorial sloan kettering and doctor arvind george from the university of michigan we will keep you up to date on this important study and we expect to begin patient enrollment and que three we believe that the preserve study can provide viable evidence proving that and life system as a focal treatment option and expand the potential target market the greater than five hundred million dollars with that i like to turn the call over the steve trowbridge are executive vice president and chief financial officer to review the quarter in more detail
spk_2: thanks jim
spk_3: good morning everyone
spk_1: for it again i'd like to direct everyone to the presentation and our investor relations website summarizing the key items from our quarterly results our revenue for the second quarter of fiscal year twenty two increased seven point six percent year over year to seventy eight point three million driven by continued strength in our med tech businesses including a on narrow knife and and your back
spk_3: med tech revenue was eighteen point nine million or thirty six point four percent year over year increase on my device revenue was fifty nine point four million growing approximately one percent over the second quarter of fiscal you're twenty one
spk_1: for the first six months of the year med tech group fifty percent lead device was flagged compared to the prior year period the grew roughly five percent year over year when excluding last year's nhs order year to date through the end of the second quarter are med tech platform comprised twenty four percent of our total revenue compared to seventeen percent at this time last year revenue and are endovascular therapies business increased seventeen percent year over year to thirty nine point seven million benefiting from the continued adoption of orion and are from back to me portfolio our young contributed six point three million in revenue during the second quarter continuing the momentum that we've been building since last year's launch we did see some impact from the ongoing covert pandemic on orient hospital procedure volume during the quarter despite the challenging market environment we continue to place to lasers during the quarter and as of today are installed base is two hundred and forty two lasers with thirty five lasers placed during the second quarter we've you are a on is a key growth driver going forward and we continue to invest in the platform building out our commercial infrastructure and generating clinical evidence to drive further adoption as just stated earlier we continue to expect young to generate revenue in the range of twenty four to twenty six million for the year mechanical from back to me revenue which includes and your back and alpha that l m our sales grew twenty nine percent over the second quarter of f y twenty one as related procedure volumes improve sequentially with robust demand for the platform when a good and youtube views throwback the revenue grew twenty one percent year over year i will occur environment we have seen some softening and procedure volumes in the month of december we're very excited about brownback me as a key growth platform best your access revenue increased four point eight percent versus the prior year period continuing the solid performance of this business even in the face of hospital staffing shortages and manufacturing delays which have resulted in a portion of the backlog the gym discussed previously revenue from our oncology business declined nine point three percent during the quarter as compared to prayer primarily driven by fewer capital fails in the quarter as well as general procedural pressures related to coven and hassles that hospital staffing disruptions addition cells microwave remain challenge declining three percent and i've disposable revenue increased nine percent driven by increased awareness from our direct study and a growing installed base your de niro night disposable sales are up twenty percent moving down the into saban are gross margin for the second quarter of fiscal year twenty two was sick one point eight percent a decrease of three hundred and forty basis points compared to a year ago accelerating increases in labor and manufacturing costs continue to negatively impact or gross margin resulting in an approximately one hundred and seventy basis point headwind versus the prior year deflation airy pressures on raw material prices resulted in an approximately sixty basis point negative impact a gross margin and higher for a cost had an approximately ten days as point impact versus the prior year
spk_4: as we anticipated beginning of the year or a on an alpha that start up costs the cat for approximately one hundred basis points impact versus the prior year
spk_1: we expect these dynamics to continue to pressure on margins near term given his ongoing headwinds we now expect physically your twenty two gross margin to be in the range of fifty two to fifty four percent decrease from our prior guidance of approximately fifty five percent over the long term we expect our gross margin to expand as growth and are higher margin med tech platforms accelerates and the manufacturing initiate gym mentioned earlier have an increasing impact our operations team remains focused on driving labor and service efficiencies and seeking material pricing opportunities we've also implemented modifications to or pricing and shipping terms in an effort to offset some of these ongoing headwinds
spk_4: will continue to monitor the dynamic environment closely and provide updates
spk_1: our research and development expense during the second quarter of fiscal year twenty two was a point two million or ten percent of sales compared to nine point seven million or thirteen percent of sales a year ago we continue our discipline investment in rd focused on driving are key technology platforms including the clinical spend for alpha that p and then internet prostate
spk_4: for fiscal your twenty two we continued to anticipate aren't he spent to target tend to thirteen percent of sales
spk_1: as the in a expense for the second quarter of fiscal twenty two was thirty three point three million representing forty three percent of sales compared to twenty nine point four million representing forty percent of sales a year ago the increase in as dna your have a year reflects the strategic investments we discussed during our investor and technology day including heck investments in areas such as aria we continue to anticipate fiscal or twenty two as in a spending to approximate forty to forty five percent of revenue are adjusted net loss for the second quarter of fiscal twenty two was point nine million or a lot of two cents per share compared to adjusted net income of point six million or earnings per share of one cent in the second quarter of last year the covert related headwinds which specter gross margin that i previously discussed equated to approximately a three said impact on second quarter results
spk_3: adjusted even done the second quarter of fiscal year twenty two was four point four million to their the five point two million in the second quarter of fiscal twenty one the second quarter of fiscal twenty two regenerated one point nine million and operating cash had capital expenditures of one point one million and additions to our a on placement and evaluation units of two point seven million
spk_4: as of november thirtieth twenty twenty one we had thirty four point three million in cash and cash equivalents compared to thirty five point five million in cash and cash equivalents on august thirty first twenty twenty one er det upstanding remain consistent a twenty five million
spk_1: and we do expect to see a higher than normal cat utilization during the third quarter as a result them both the backlog and funding the initiatives the gemini discuss today dirty not a guidance we continue to anticipate that fiscal year twenty two net sales will be in the range of three hundred and ten to three hundred and fifteen million we now expect that full year adjusted earnings per share will be in the range of a loss of two cents to again of two cents compared to our prior kinds of zero to five cents as we continue to invest in driving sustainable growth in our key med tech platforms also managing to continued headwinds that we discuss today
spk_4: in the current and evolving environment we expect potential headwinds to persist during the third quarter with a subsequent recovery is our internal initiative take hold and the external environments improve we plan to manage thirties headwinds in a consistent fashion
spk_1: for two quarters or our fiscal twenty two were pleased with our progression a long letter to the transformation we continue to balance prioritizing topline growth with managing profitability delivering eight point six percent growth year to date and continuing to make investments that support our future growth initiatives
spk_4: with that i'll turn it back to gym
spk_1: thanks dave this is an incredibly exciting time in a and you dynamics despite all the challenges in today's operating environment we are dedicated drink to transforming into dynamics into an innovative medical technology company with solutions that address some of the most dynamic opportunities in healthcare we can improve patient outcomes and drive high position satisfaction our second quarter results are evidence of our progress towards that goal and we plan to continue to deliver on our strategic plan initiatives in the coming quarters i want to thank everyone here to a dynamic for their dedication and commitment to serving our customers during these challenging times are employees face the same challenges that a faces with colbert many of them have family members of contract and covered and they work through this with the coming to our customers and supporter their work to to help patients in need with that like the during the call back to rob for questions
spk_0: thank you will have a conducting question answer session if like ask a question today please press star one from your telephone he pad and a confirmation tell indicate your lines in the question que you mean fresh start to feel like you move your question from the que abhisit series and seeker equipment and may be necessary thing up the handset before pressing the star he's one monthly salary paul for questions thank you and first question take comes from the line of bill plant have an iq with can't afford this is he your question
spk_5: great thanks good morning and i can hear me okay
spk_6: i know the morning
spk_5: eg morning so that the first question is yeah the current wave a cold it is is feels like it's very different from anything else in your you have the dubious honor of being the first company to really present some numbers ah i'm the your maybe your glass quarter didn't really get his much my alma crime but as we sit here in the middle he knows we're getting into january in this is hidden into
spk_1: full swing might be helpful if you could maybe compare and contrast how this wave of kobe these different versus the prior an impact on your business and then
spk_5: that you seen thus far and then secondly yeah you talk about the four million dollar backlog was at any specific product line and what product lines what is it didn't did that relate to and then have you fulfilled in ship those products thank you
spk_1: thanks for the questions builds gym a couple things bell back to the the on a cranberry with a very rural facing now we've seen increased activity of issue with a variant of och extra early and then internally sex totally our customers are under increasing pressure similar to what it was like early on in the pandemic now the better that is of our customers of the healthcare networks have gotten better and learn how to deal with this but they are facing staffing challenges probably a higher level today than they were of them as many of their employees are faced with covert are restrictions so we've seen higher levels of break out with lot of our customers so consequently he in a lot of the large healthcare delivery networks are asking us again and probably other companies to the stand down a little bit slow down as some cases of ah them can fling elective procedures are occurring even this week we got word from a couple the large delivery network that they're going to put a hold on elective quarter growth procedures which will don as you know last year so we're watching is very closely as you know our people are very close to our customers are watching a globally as well your run the globe are finding similar spots now the good news is there some spots around the globe that are how know your bent the curve already are getting a little bit better but here in the us the acuity is so high as far as the customer disruption factor that being said that you saw we still have strong demand for our products through the cycle so we've had less of a kobe did impact on our demand now flipping through the internal side as you saw earlier on back to your question on the backlog in the back or that affected us here i mentioned earlier the pieces were dealing with our number one first of all recruit why you to come to work to fill up and jobs we have and our operations quality and majestic seems that been a challenge for us and as you know many other companies and during this environment and number two also dealing with the disruption when our employees are exposed to covet giving them the space they need to clear and recover many covert affects that it packer operations and our play our our plans to make products sybil you asked about one product over another we identified in the call earlier bill it's mostly affected our device products less on the med tech products we have we done different levels of supply chain planning as we watch those new tech products that have kept us little more immune to these saw go back to device products that's worth affect us more and bill the moved away now out this morning moving some operations to costa rica that take some pressure offer internal a capabilities and all free up new ah opportunities roster reassigned people than our operations teams when we have the coast rig operation up and running and that was plane for a long time ago or operations team we always have had a labour challenge or teams have had this plan and others kind of teed up in a pocket for while we decided to implement a plane and move into action recently as we saw the effects of coven a labor of i an increase but i don't think we're gonna kahlo any one category of the other the other bill there's there's a little bit of
spk_4: pressure on each of the categories and device and and villages to follow up on the last piece he had asked you know about that four million dollar backlog and has cleared it so it was four million at the end of our second quarter
spk_5: actually gotten a little higher increased a little bit through december as we're implementing and finalizing the move the gym talked about we expect it to you know a plateau this quarter and then and then start to get better through through the year he as we continue to also focus the that consistently of kind of run rate demand that were saying and then if if i could just as we think about the impact of the crime in the corner in yeah you you get reiterated revenue guidance or three tend to three fifteen but you should we think that this is can have a pretty significant impact on the february ended quarter and maybe we'll see i yell at
spk_1: historically your down you'll maybe one to two percentage points sequentially at least last fiscal year and he could we see in more pronounced effect this year given omagh crime is we think about just the february quarter
spk_4: yeah it's a good question village of the that were were obviously focus and were very keenly keeping an eye on
spk_1: i think the seasonality that you mentioned is is fair and and we expect to see continue to see that that same pattern the yelled really their the issue that we're seeing most is not as much as on the demands are the the gym announced the gym was discussing war on our ability to you know kind of clear the backlog get the the labour into our plant yeah so as we continue to execute finalized these plans we do expect that are there quarter made maybe a little bit choppy
spk_4: i don't think it's going to be tremendously different than some of the seasonality you had mentioned before when you think about sequential quarter over quarter that what we're seeing now that that's kind of our expectation as we move through this is no that it will be a little choppy we're seeing some as on the crowd effects but as we're working through this and finalizing and then getting into the running yeah
spk_0: and at running up those plans to start to see that recovery come out as you head into the end of our que three and four
spk_7: thank you and his license milena matthew mission with keybank physicists a crushed
spk_8: hey good warning guides on and if i'm on oriented adding you mentioned that you are the yard five percent share this point of addition understand like watch
spk_9: your installed base club what percentage penetration of of the of the office space labs or the the hospital systems are actually performing which procedures your ad are you have you are you at more than five percent penetration of of the people of the majority people
spk_4: had our performance procedures or be so bought a room ago as far as placement go hey matt the know so we can always interesting we we we feel that we've got about five percent of the stated markers we talked about when we when we launch this product and what our goal was to get to that ten percent by the end the year three what's really driving that is the versatility of the technology and a gym mentioned and we've been very pleased to see the breakdown of procedures with roughly half being above and roughly half being below the knee
spk_1: which is something that that the other technologies really can't do so that's what's driving on our estimation of the share gain their we still have plenty of room we think in terms of getting to the share of the market that out there we are of course as we said much more heavily weighted in our product in all the elves and hospitals given the dynamics that were been in them macro environment from when we watch the product so where were you aware heavier in the ldl started seats some some nice momentum in the hospital i think you're going to see that be a little the challenge given the current byron and just as they're dealing with with the on the crime of take over the last last month or two and then yeah maybe the next couple months and are we so they could run way in terms of fight getting into new car
spk_7: summers and that's gonna go along with the plans that we have to continue place lasers she saw that replace thirty five this quarter and we placed at the to last quarter we said we probably work in the at that pace of that we saw some opportunities to get into some of those accounts earlier but wanna continue to support those accounts and drive utilization
spk_8: and will continue to take place new lasers as we as we go through our que three you for as we continue to add those new customers are in moving into market share that way so and we've like the the flexibility that this product is shown to really drive that marketshare through the first eight months or so launch
spk_1: excellent on our back to search your thoughts on how old the crime and on and this of surge he had could impact on the commercial those the for commercial about about the thought sure and that we didn't match or exceed mentioned that we saw a little softness in december in our aims you have that cases aren't some the procedures a little softer they're so way but i don't think it can affect out for vac much map because we're just launching against and if you look back on that on the information we put our in our public guidance and of as day member this first version the twenty two for a job that is still limited amount ddt potential market that it serves so right now i don't think your microns push now will affect our whole lot like anything i'm a fact a little there are guy analysis committees that may be postponed or cancel the main drag yourself from getting was a little bit and i made in a hold back of some of the a sure that we like to have of physicians but over time what i'll put up for off the larger markets or later in this calendar year when we lost the eighteen french arm and then worked towards our r p indication work and then launching another small advice so make sure it's gonna fact if i don't know if it's a whole lot right now because we have so much work on our plate independent a bomb of the the primary you have enjoyed it on the the that i think jim they'll hit on the value and alice committee get value analysis committees which i think is an important point so if we don't see on the ground as being so the as derailing to our plans for alpha back as you mentioned league
spk_7: that you know a lot of activity going and and it we're very pleased with the feedback we're getting from our physicians and the results that they're getting when they're using alpha back in the l a maher
spk_10: yeah you may see a little bit of an extended period you know of that ramp because there might be some slight delays in those value analysis committees given the hospital activity but it's not the railing at all to our current plans we've been really pleased with way the process has been moving
spk_11: excellent and the last question just than we can locate on the timeline around the direct study work where you're out with that far
spk_1: that's very much
spk_4: thanks church that
spk_1: so with direct you know is this is clearly challenging environment around it with hospitals and and how they're handling clinical trials and and getting patients in there with that said on the registry side that which is beside the we talked about the out with within very pleased with the current firemen with a pace that we seen and so we're continuing to treat and are all patients in that registry side there's no doubt that it's a
spk_4: little the challenge challenges given the current environment in the hospital staff and challenges that gym mention which is what really is different this time versus yeah maybe earlier on in the pandemic now it's hitting the the hospital workers and and the second challenges of hospitals have in their try to treat their patients
spk_0: but we're still pretty pretty please with the clip that we're seeing a patient being a role now that being said as we mentioned the rcp we expected be more challenge that absolutely been the case
spk_8: and i think that even been more the case in the car environment with with coven so where did you need to focus on what we're seeing we can get through which is in enrolling patients in that registry side will continue to post to keep you updated on conversations as we are addressed the fact that we always knew the rcp was gonna be a bit harder thank you thank you an expressionless nine of chastened bedford was raymond james tissue the quests
spk_1: ah good morning and and happy new year so i have a few questions here just on on the backlog that the four million what what is a normal backlog a quarter and i'm just curious if the four million mentioned his is is can be viewed as excess backlog beyond the amount that you typically carry into new core hi jason is jim fix it is jason he know we target cut us off target of about half day sales which the ago that would be a look at our average run race or color six to seven hundred thousand in that range across we we think that's where we going to a backward or with this money for use in a complex business for jason this is significantly higher as why we wanted to call it out
spk_4: that is that really hard what we try to target for a workable run rate with our for our customers so this built during the quarter that's why we have limited as plans and i mentioned really did some of the reasons why it's mostly labour related in some cases as imagine some of our material suppliers are having challenges getting us some the materials
spk_1: or operations quality logistic teams are working through i gave wanted to examples earlier but they have many other planes are working on come to bring us down by the end of our fiscal year and jason's and just exactly right yeah that know typically we target that that six to seven hundred backlog of getting into four million and we really saw that accelerate in november
spk_8: the are like as gym mention in a we saw this quarter a bigger impact for our employees being impacted by gilded great example of that as we had an entire line of products in our facility that we couldn't make for over a week in november because everybody that was on that line ended up coming down with gilded i'm tough tough scenario we were as gym as mentioned through the beginning of his pandemic we're doing everything we can to support the health and safety of our employees by you know that's a good example in a good kind of anecdote of of house of the things can accelerate kitten and that's what we saw november which led to the increase of the backlog
spk_1: pat and he mentioned the think increasing capacity improving efficiency and and an adjustment to to pricing and shipping as initiatives the to to help the supply chain dynamic i'm a little unclear on what's that specific fact that allows the supply constraints to ease and and that's four million to get such shit you have a good question i'll give you a few won his first the additional capacity or bring a lie with our new costa rica partner just gives us more capacity gives us really access to more labor arms we can reassigned some of the labour in our internal operations that are making those processes to other things as number one number two talking about deficiencies increased efficiencies covenant well that's a few that a bucket of count a few things and one of those a week we've decided to also dirt reduce fk years we have a lot of as caves here and we reduced a bunch of sk use when you do that that that makes our operations team or complexity a little easier to less change every every time we don't products are building last lesson for use we build more of the same products hopefully now there's always a little customers rupture when that occurs but a streamlined or operations and jason we've also seen that in some of our products in the device area some of the old a geographic catheters and areas we've seen some of our competitors have severe backward of roms and customers have turned us they used to by other companies
spk_8: products and almost led to this is why we've had really strong demand arm across our board not just from that at a small gates but the man to state high so things like those jason that we're doing internally to streamline our operations increase capacity of the deal this backorder ah are in different ways a again some of the labour component we hadn't seen it come to this level before and then hit again with the covert a fact and the steve mentioned we have many of our employees affected by it we have to follow the protocols internally which led to you know a decrease of our ability to produce
spk_1: cut in answering one of the earlier questions he talked about your your id and asking you that can hold down on elective procedures just how would you characterize your portfolio either gonna present your portfolio that exposed to quote unquote elective procedures yeah read the book for the good news bad news with actually some that it's smaller percent of you look at really you know as were growing are er med tech for follows you see become a larger portion or a business that's really strong that's our future but those the ones were saying that could be more affected an example that steve game earlier was we saw softness ah in our and your back business
spk_8: a little bit in december was awesome physicians three patients and different means we're seeing that a little bit now as well so as far as our portfolio goes it's only a percentage but what we do you look at our after access but as we're treating patients still on a routine basis who need access to getting medication their bodies so that haven't really slowed anything that may pick up in some cases and offset some the other slowness so off if it's a job
spk_1: having jason we have a great intel from our customers through our sales people that talk to them every day in our clinical teams there in the field globally arm and we balance app and that's why we've also i reread the revenue games we gave it a with a lot of thoughts on the pro and con that we're all facing the challenges of the demand remain strong overall for our products
spk_8: okay and then a couple of alpha that question the timing omni eighteen french launch a think he said later this calendar year
spk_1: is that skill as of the right interpretation it is i get is a little unfair being it's only january sixth to say later found here too so i think that up being be the first half of this county or the be fair okay okay and then it is there any way that kind of frame the scope of and the l a maher versus a full market relief
spk_0: it is a couple way six and i'm a cop couple of simple ways to frame it is we only give access to unlimited portion of our sales team that specially trained to kind of be in advance team to get on the front of this because our initial goal isn't to sell as many as we can it's again as much info as we can to engage with our customers to get their feedback we want to confirm or
spk_12: assumptions on the product design development are launch and training procedures so that's what we get relegated to a limited piece of the salesforce and they can only take it to pre approved customers that we knew would give us the feedback doubt that we're seeking to their process went very well we've enabled this process now this is the fourth product we've lost at injured in hammocks last couple years with this process we put in place and it worked very well i gave us the confidence in early december to go to the full launch now ah so have ourselves up now can engage with customers of their choice
spk_1: thank you like you next question function linus these little with oppenheimer cities across i i didn't actually did it on the on and a few questions as one start off with the kobe impact on on and your back in the quarter seems to have been lots of headwinds attempts to conflate with pick up in growth on t to talk about we are seeing on the ground now i thoroughly the cold in impact on on on and your back yeah hi david warnings gym if we said earlier we we're very close to our customers and fortunately this is kind of a gray area or falls into an elective procedure quote unquote unfortunately it's not my everybody looks at it that way but it's definitely we when you know the root cause is the staffing challenges in the how up your centers i believe so when they have such stress on their systems they have you know large swath
spk_4: of nurses being out with kobe in their own hospitals putting pressure on the i see you back and the capacity to serve their patients in the i see use so when you do that a kind of backtracked backwards to procedures they they don't want to do procedure that may have a patient and go to a nice you that's under challenge so we're in that you know kind of care continuum peacefully
spk_13: watch that very closely so when if a doctor can say what i'd love to do an angel act paid on his patients but i could treat him analytic maybe a little longer and watch it that have my eyes you free up as kind of the effects was really really hard to measure that exactly i'm trying to get a real world situations as to what's happening so we're very engage with our customers
spk_12: i'm a we're also working as a partner with them were you know with during this process ah to be either side when the ready for us in david's and and the lil little a stickler on that one so you know as you mentioned it was sequentially from que one we definitely saw an uptick in in terms of the that the market demand for for and your back in real recall in our cue one he said that there were so soft as that we saw in the summer but that we saw in a procedure bombs pick up whatever we we definitely saw that your most of our due to are kind of highlighting again today we're seeing a little bit of that soft as in december and it's to mention a lot of would come what's driving this in in our estimation is that
spk_4: those hospital staffing pressures and so when you got the icy nurses you know as you know out as you back as a very complicated procedure you bringing and profusion as you have a number of different specialties that are working through that is a when there's these a cute it's of of staffing pressures because the the healthcare providers are sick we sucked to see some of those blips but then they tended to reverse ye as you look at our air cadence there was a little bit of soccer to the summer we expected that to pick up it did we saw that were nothing a little substance emmerich we expect that to pick up through the rest of our fiscal year edit it in a very similar fashion
spk_1: oh the great that that's helpful i'm and in to look on the ori on are you able to talk about how he reps you ended a quarter with and are what are your expectations and turns them are your urine and target
spk_12: yeah so you know we talked about before having about the a forty based feel based sales people including our our territory marriages regional managers had where we ended that the second quarter yeah to support that we also have
spk_3: that it specialists and per diem the another thirty feel days read that are supporting needy or feel these people are supporting our reps to so all in all the alley data seventy four feel days are gone and employees today
spk_14: when the probably a little bit more the him back up but but but i think we've we've done a good job of preparing that came from the for the growth that were expecting to this year he and david is gemma question was after letting to last as well about that are young
spk_0: the and how will grow up again will grow as we've shown you might increase demand i increased interest in our product of people one of the place lasers that's why we will growth early number two were watching we measure every every time we played a laser a measuring how many procedures they do in a monthly basis were watching that go up as if he people get confidence when he said outcomes are what are brought up
spk_1: so we see a lot of upside potential in the current base of lasers we have as our clients get more more complex a product develop great outcomes so we're going to see demand come and get a new later placements and also more use interlace or so and will have will make sure we had the feel people to support that growth on it on and blossoms for me are you expecting to release of the past on your going to data on near term thing
spk_0: we we started to see publications come out from pathfinder yeah you've already seen a handful of those over the last few trade shows and expect to see if you more coming so yeah that that the data coming out a pathfinder as we speak of expected to continue
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