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Operator
Good afternoon, ladies and gentlemen, and welcome to the Avenger fourth quarter and full year 2021 results call. At this time, all participants have been placed on a listen only mode and we'll open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Matt Kreps. Sir, the floor is yours.
Matt Kreps
Thank you, John. And thank you everyone for participating in today's call. I'd like to welcome you to Avenger's fourth quarter and full year 2021 conference call. Joining us today are Avenger CEO Jeff Zawinski and Chief Financial Officer Mark Wineswood. Earlier today, Avenger released financial results for the quarter and year ended December 31, 2021. A copy of the release is posted on the Avenger website under Investor Relations. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws. which are made pursuant to the safe harbor provisions of the Private Security Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements. All forward-looking statements, including without limitation, our future financial expectations, are based on our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please see our Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. Avenger disclaims any intention or obligation except as required by law to update or revise any projections or forward-looking statements whether because of new information, future events, or otherwise. And with that, I'd like to now turn the call over to Jeff.
John
Thank you, Matt. Good afternoon, and thank you all for joining us. Avenger made significant progress across the company in 2021. We grew revenue by 16%, fueled by the launch of our new TigerEye CTO crossing catheter early in the year and the growth of our CTO business overall, which increased 47% year over year. This increase in revenue allowed us to improve gross margin by four percentage points during the period, and we expanded penetration of our platform with the launch of 23 new accounts during the year, including eight new accounts in the fourth quarter. In addition to our commercial progress, we took important steps to provide future growth opportunities for the company. In 2021, we filed five 10K submissions for two strategic initiatives, and in recent months, announced FDA clearance for both applications. In November, we received pre-marketing clearance to add an instant restenosis clinical indication for Pantheris, based on the outstanding clinical data from our INSIGHT trial. Pantheris is the only directional atherectomy device to have received this highly differentiating indication. In January of this year, we announced FDA clearance for our Lightbox 3 Next Generation Imaging Console, which brings significant advancements to our platform in a compact and portable form factor. We believe that both initiatives will prove to be significant growth drivers for Avenger. I'm proud of how the team has performed in the face of the continued challenges presented by COVID-19 resurgence during the year. The emergence of the Delta variant in the third quarter, followed by the onset of the Omicron variant late in the fourth quarter, led to hospital restrictions and staffing shortages that limited procedural volume in the second half of 2021. While we've started to see signs of improving market conditions in recent weeks, Omicron has negatively impacted procedural volume and revenue in the first quarter of this year. We're optimistic that the recent improving trends will continue and that procedural volume will return to more normal levels and allow the company to return to growth in the second quarter. As we look ahead in 2022, we are continuing to invest in strategic initiatives to expand penetration of our platform for the treatment of PAD and provide new catheter usage opportunities, including the development of our first product for the treatment of coronary artery disease, or CAD. First, we plan to expand availability of our Lightbox 3 Next Generation Imaging Console to full commercial launch in the second quarter. which we believe will energize existing users and bring efficiency to our new account acquisition activities. Second, we expect to file five 10 K applications for two new catheter line extensions in our peripheral product portfolio designed to broaden the appeal of our product line, expand our user base and drive volume growth. And third, We've initiated a formal program to expand our platform to the treatment of coronary artery disease with the development of the first-ever image-guided CTO crossing catheter. We believe expansion of the coronary market provides a transformational opportunity for Avenger due to its large addressable market, existing reimbursement profile, and the compelling clinical advantages of our lumavascular approach. Let me share some details on these initiatives. We're excited about the potential for our new Lightbox 3 imaging console to positively impact our business. The Lightbox 3 is a compact and portable console incorporating an advanced solid-state laser for high-definition OCT imaging, a more powerful computing platform, and a redesigned software system with an intuitive user interface designed for procedural efficiency. In February, leading interventional cardiologists in premier hospitals in Chicago and Arkansas successfully completed the first cases with the Lightbox 3. In March, we expanded our first-case experience with six additional hospitals in the Northeast and Ohio using the portable configuration of the system. Since initiating the field evaluation program, nine physicians have performed 35 image-guided CTO crossing and atherectomy procedures with our tiger eye and pantheris catheters in a wide variety of lesion types and anatomy. Physician feedback has been extremely positive, with users commenting on the enhanced imaging, ease of use, and increased efficiency of the new console. Based on this positive feedback and the performance and reliability of the console in real-world clinical conditions, we plan to expand the Lightbox 3 to full commercial availability in the second quarter of this year. As part of this expansion, we will make portable configurations of the system available to our sales territories for use in on-site demonstrations and evaluations to support catheter utilization in new accounts. As we continue to build inventory, we will make the Lightbox 3 available for permanent installation and sale to new accounts as part of a defined evaluation process, as well as provide an upgrade option for existing accounts. With its dramatically reduced size and weight, lower cost, and enhanced capabilities, we are confident the Lightbox 3 will play a crucial role in fulfilling the potential of our LumaVascular technology for both peripheral and coronary applications. We're thrilled with our experience with the new console so far and look forward to reporting our progress with Lightbox 3 in the coming quarters. Regarding our new product initiatives, we've continued to make significant progress in the development of two new catheters for the treatment of PAD. We believe these new products will increase usage with current physicians and broaden the appeal of our product line to new users. Our first new product in development is a line extension of our TigerEye CTO crossing catheter for the treatment of fully blocked arteries. This new device builds upon our experience with our current TigerEye catheter. It has an integrated spinning outer tip for tough caps and calcium, an advanced shaft design for pushability and torque response in a challenging environment, and a three marker imaging system to facilitate consistent image interpretation across our platform. We expect to submit a 510K application for this innovative new device in mid-year 2022 with anticipated commercial availability in the second half of this year. Our second new catheter in development is a line extension of the Pantheris family of image-guided atherectomy devices. This new device is designed to provide a more streamlined approach for physicians and expand our capabilities for the treatment of larger vessels, such as the SFA and popliteal arteries, where the majority of procedures are performed. It utilizes a proprietary design for plaque apposition without the need for a balloon and is designed to operate at higher rotational speeds and challenging plaque. This new Pantheris line extension also adds rotational control for efficient guide wire management and a modified plaque management system for tissue packing. While we've experienced some recent challenges regarding delivery times from suppliers on parts, which has impacted our schedule, We anticipate filing a 510 submission for this new device in the second half of 2022, which we expect to lead to commercial availability in the first half of 2023. On a very exciting note, we've advanced our initial development efforts for our first entry into the coronary market, an image-guided CTO crossing catheter for the treatment of CAD. This revolutionary new device leverages the advances we've made across our platform to address a massive potential market with unmet clinical needs for a safe and reliable patient-oriented solution for what can be complex, expensive, and uncertain procedures. It's estimated that approximately 50,000 CTO PCI procedures are performed in the U.S. each year at a growing number of hospital centers. CTO PCI crossing is a highly complex procedure requiring specialized and demanding technique with a steep learning curve, and the use of multiple devices. These procedures also require extended time under fluoroscopy, which results in high X-ray radiation exposure and contrast burden, problematic for both the medical team and patient. In addition, an estimated 200,000-plus highly invasive coronary artery bypass grafting, or CABG surgeries, are performed in the U.S. annually, with estimates of up to 30% of these procedures related to the treatment of coronary CTOs. We believe this market provides an attractive target for a proprietary new image-guided system that would make a percutaneous approach more accessible and reduce the need for extended time under fluoroscopy radiation. Percutaneous CTO crossing in the US already has high reimbursement of $10,000 to $16,000 per procedure. In addition, We anticipate that our high resolution OCT guided catheters with anticipated diagnostic and measurement capabilities would qualify for existing OCT diagnostic imaging reimbursement in the coronary arteries. We believe that an image guided catheter designed for crossing efficiency and the need for fewer support devices combined with an attractive reimbursement scenario provides the opportunity for a highly positive clinical and economic value proposition. Our development efforts are focused on catheter designs that combine real-time OCT guidance with precise control and steerability to facilitate an anti-grade approach and allow physicians to safely and efficiently cross coronary CTOs while avoiding damage to the vessel wall. We're designing our first coronary CTO catheter in a low-profile, four-french size to provide for accessibility and maneuverability in small coronary vessels. Similar to Avenger's peripheral catheters, our first coronary device will incorporate a precise measurement capability, ideally suited for physicians to properly size balloons or stents prior to placement, which is critical for optical outcomes. We anticipate the U.S. regulatory pathway for this new device to be a 510 submission, supported by data from an IDE clinical study. In addition to the progress in our development activities, we've also meaningfully advanced our clinical initiatives over the past year. We're continuing to build the clinical body of evidence in support of our lumavascular approach, which we believe is critical to driving adoption. Groundbreaking clinical data from our INSIGHT trial, evaluating Pantheris for the treatment of instant restenosis, or ISR, was presented at the VIVA clinical conference in October. The positive data from this IDE study provided the basis for our successful 510 submission to expand the Pantheris clinical indication to include the treatment of ISR. With 200,000 stents deployed in the lower extremity arteries annually and a high propensity for restenosis over a two to three year timeframe, ISR is a large, recurring, and underserved market that will continue to grow as more stents are placed each year. Our Pantheris system provides the ability to visualize and direct treatment while avoiding the stent struts, which contributes to positive patient outcomes and provides a compelling competitive advantage in a challenging market. We're very proud of the data generated in the INSIGHT trial. Pantheris provided an 82% luminal gain following the procedure. 93% of patients in the study were free from target lesion revascularization, or TLR, and a measure of restenosis, at six months post-procedure, and 89% were free from TLR at 12 months. Both results are significantly better than those achieved by other atherectomy devices in their clinical trials for ISR. We've also made progress on our IMAGE-BTK clinical study. IMAGE-BTK is a post-market study evaluating the safety and effectiveness of Pantheris SV for the treatment of below-the-knee lesions in a real-world clinical setting. We anticipate enrolling up to 60 patients in the study, with patients evaluated 30 days, six months, and one year post-procedure. We're currently enrolling patients at two key opinion leader sites in the U.S. and are in the process of expanding the study to include two leading clinical centers in Germany. Most patients enrolled to date suffer from critical limb ischemia, or CLI, the most severe form of PAD. We expect to complete enrollment in 2022 with interim data results available for presentation later this year. We're excited about the clinical outcomes we've seen to date and the insights the physician investigators are already gaining from the high-definition visualization of below-the-knee disease provided by our Pantheris SV catheter. We made important strides to advance our business in 2021, and we're excited about the potential to expand our platform. With the commercial launch of Lightbox 3 this year, the filing of 510K submissions for two new PAD catheters, and our continued progress on the development of our first coronary product, we remain committed to our mission of radically changing the way vascular disease is treated and supporting physicians in providing the best possible care for their patients. At this point, I'd like to ask Mark to cover our financials, and then I'll return for Q&A. Mark? Thank you, Jeff.
Matt
Total revenue for the full year 2021 was $10.1 million, an increase of 16% from the prior year. Fourth quarter revenue was $2.4 million, reflecting the impact of hospital access limitations and staffing shortages due to a surge in COVID-19 cases across the U.S., which impacted medical device companies, supporting hospital-based physicians. Catheter sales increased approximately 20% year-over-year, a good indicator of user case growth as we continue to focus on increasing utilization with strong market interest in our Pantheris SV and CTO catheters. These catheters are more likely to be used for the treatment of COI patients whose procedures are less likely to be elective. Growing our recurring revenue stream continues to be a core element of our commercial strategy. Looking at the first quarter of this year, we have seen the continued impact of the Omicron variant on case volumes as elective procedures were restricted or deferred in the first couple of months. As Jeff mentioned, we have seen an improvement over the last few weeks in usage levels recovery. Gross margin for the full year 2021 was 34%, our highest annual gross margin in five years, and 30% in the fourth quarter. Avenger's contribution margin from incremental sales of disposable products is far higher than our reported gross margin, providing important leverage in our operating model as we scale the business to drive more revenue. Continued margin expansion is critical to our long-term success. Operating expenses for the fourth quarter were $5.3 million, consistent with the third quarter, reflecting our continued investment in our R&D and clinical activities and focus on our sales and marketing team, to drive case activity and adoption of our platform. We have seen significant strategic benefit from our R&D investments, including our next generation catheter solutions and, more recently, our new Lightbox 3 imaging console. We will continue to invest in development activities in 2022 as we look to expand our PAD product offering to drive revenue growth and make progress on our coronary CTO crossing device. and loss attributable to common shareholders was $6 million in the fourth quarter, consistent with the prior quarter. Adjusted EBITDA, which is a non-GAAP measure that excludes certain excess and obsolete inventory charges, depreciation and amortization expenses, stock compensation and other items, as noted in the tables in today's press release, was a loss of $4.3 million compared to a loss of $4.1 million in the preceding quarter. A copy of the reconciliation from net loss to adjusted EBITDA can be found in today's press release, which is also posted on our website at www.aventure.com under the investor section. Cash and cash equivalents ended the year at $19.5 million. Please note that subsequent to year end, we raised $7.6 million in gross proceeds to a preferred stock offering in January 2022. In March, we executed a reverse stock split which should allow us to regain compliance with NASDAQ stock market minimum bid rules. As discussed previously, we are in a strong cash position and have the resources we need to fund our operations into 2023. At this point, I'd like to turn the call back to Jeff for Q&A. Thanks, Mark.
John
Avenger has significantly advanced its strategy over the past year, and we're well positioned to continue our efforts in 2022. We remain focused on driving adoption and utilization of our lumavascular platform, as well as the continued advancement of our technology in both the peripheral and coronary markets. We're starting to experience an improvement in market conditions as the impact of the Omicron surge lessens, and we're focused on executing our strategy to grow our business and advance patient care through the deployment of our proprietary products and technologies. At this point, we'd be happy to take your questions.
Operator
Thank you, ladies and gentlemen. The floor is open for questions. If you have any questions or comments, please indicate so by pressing star 1. Pressing star 2 will remove you from the queue should your question be answered. And lastly, while closing your questions, please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. And the first question is coming from Mark Weisenberger from B. Riley. Mark, your line is live.
Mark Weisenberger
Thanks. Good afternoon. Appreciate you taking the questions. Can you frame the impact on clinician workflow with the Lightbox 3 relative to the maybe more cumbersome Lightbox 250 and as well from the perspective of your field staff?
John
Thanks, Mark. Thanks for the question. You know, I had the opportunity to be in the field for many of the first cases with the Lightbox 3. And there are really two ways we approached it. One, we installed the box in two very important accounts in Chicago and in Little Rock, Arkansas. And so we had an opportunity to experience the utilization in kind of an installed type situation. First of all, the ability and the pathway to get into a case is so much more efficient and so much faster due to the improved and simplified user interface. Second of all, although we expected a reaction and a positive feedback as we've seen in our early kind of physician feedback and sessions with the light box due to the small size and small footprint, What I really underestimated was just how impactful the improvement in the imaging was. You know, if I had to sum it up into one word that the physicians and their staff said when they saw the Lightbox images, and these are people who, Lightbox 3 images, who worked quite a bit with the current platform, the one word would be wow. There was just such a clarity of the characteristics of the artery wall. of the plaque and the different kinds of plaque morphology, making image interpretation easier, but also making the whole procedure seem to just flow a little better. So, the advance was notable. The ability to connect into the image bank where you can have the presentation not only on the Lightbox 3, but also on the image bank next to the fluoro image. were all very, very positive improvements and, I think, very, very well received by the physicians. You know, we did over, what, 35 cases, probably more now since we're adding new cases every day on the Lightbox 3 in eight hospitals, and the device performed virtually flawlessly through all of those cases. So that is always a test when you get out in the real-world setting. The other thing that is extremely different about the Lightbox 3 is the portability of the device. So six of the hospitals that performed cases so far with the Lightbox 3 utilized the Lightbox 3. It was brought in that same day, very easy to transport by the sales rep or the clinical specialist, set up in minutes, and, again, very efficiently able to get into a case. We think this adds an important dynamic because now, instead of having to go through a capital contracting, you know, even for a placement process to have a new account, evaluate or try catheters, we can get in there very quickly. We even had in our Philadelphia area, one of our sales professionals, our clinical leaders, was able to take the Lightbox 3 into three hospitals in a single day. That would be unheard of. The box has been on an airplane and going out to Ohio to give a couple of KOLs in that market experience with the device. So it totally changes the dynamic of how we can engage with new accounts while providing absolute first-rate, high-definition OCT imaging.
Mark Weisenberger
That's really helpful. I guess besides the clinician and field staff impacts, could you talk about kind of the manufacturing and logistical impacts for you guys and the process and the cost changes that you're going to experience?
John
Yeah, so I'm going to go ahead and ask Mark to answer that question since that process reports up through him.
Matt
Yeah, so obviously one of the key factors of the Lightbox 3 was the fact that we could bring down the actual capital cost in addition to a lot of the benefits that Jeff's already noted. For us, our goal was to basically have a more flexible arrangement in order to assemble the box and actually be ready to fulfill orders. We're actually utilizing both in-house and external methods to actually assemble and manufacture and actually do order fulfillment. We're really excited about the fact that we've added this level of flexibility to our internal operations. so that we can be much more fluid in terms of our ability to respond to potential orders or opportunities to respond to physician usage. So I think you'll be seeing some very positive things about the Lightbox 3, hopefully in the near future.
Mark Weisenberger
Understood. Very helpful. Thank you. You did talk about the impact of Omicron late in the fourth quarter and early in the first quarter. When I look back at the first quarter of 2020, there was a 12% sequential decline from the fourth quarter of 19. And then really when COVID really first hit in the second quarter, there was a 35% sequential decline from 2Q20 to 1Q20. How do we think about the kind of sequential move from the fourth quarter of 2021 into the first quarter of 2022?
John
You know, it has been an interesting experience for all of us as we deal with the continued challenges and unpredictability of COVID. You know, absolutely, as you said, we were significantly impacted by COVID in the first part of 2020, and we started to show strong recovery as some of the deferred procedures came back in the second half of 2020. In the first half of 2021, we printed two very strong growth quarters. And as we entered into the third quarter, of course, there was the impact of the Delta variant. And then coming into the fourth quarter, the early months of the fourth quarter were very strong from a procedural volume standpoint. But as you mentioned, late in the quarter, Omicron really reared its ugly head. We've seen that continue through most of the first quarter. It was really not until the latter weeks in this quarter that we've started to see improvement. We're very optimistic and hopeful that the improvement in volume will continue through the second quarter. I think in many ways we're positioned well for a recovery in Q2 as the elective procedures return. you know, maybe history repeating itself a little bit here, but the impact in the first quarter was more significant than it was, you know, at least in our experience, than it was in the fourth quarter.
Mark Weisenberger
Got it. That was helpful. Two more from me. I think there were some speech schedule changes to the office-based labs, and I'm wondering Have you seen that impact kind of where procedures are taking place? And how do you expect that to evolve throughout 2022?
John
Yes. So on the reimbursement side, you're right. There was about a 15% reduction in OBL reimbursement, which was, of course, better than the initial 22% proposed. And there also was some indication that the reimbursement will continue to decline over a four-year transition period. The hospital reimbursement, as you know, was not impacted and remains strong. In many ways, we are less impacted because approximately 80% of our business is in the hospital market. And we do see a lot of potential not only to grow in our existing hospital accounts, but the ability to add new hospital accounts. I think the OBL reimbursement, at least what we're seeing, is it's putting more price pressure on a part of the market that already had a lot of price pressure. And so, you know, our response to that is to continue to support our current OBL accounts. You know, obviously, we are, with our Pantheris SV device and our CTO crossing devices, we treat CLI patients, and that is very, very meaningful and impactful in the hospital market. and those two products overall accounted for over 50% of our revenue and grew strong growers year over year for our business. We don't see utilization of our CTO specialty devices in the OBL market, so the reimbursement cuts in the OBL will not impact our CTO business. So overall, I think what What we're seeing is more price pressure in the OBL, pushing us to focus more and more on our core hospital customers in our core regional areas. Does that answer your question, Mark?
Mark Weisenberger
It does. Yep. Appreciate it. And then just the final one kind of around similar dynamics. I think at the end of last year, we saw IVL payment increases associated with that atherectomy. Have you seen any impact from that dynamic, and then how do you think it plays out in 22? Thank you.
John
Yeah, that's an interesting one, and I'm sure it's something that others, including yourself, have been exploring in the context of ShockWave's presentations. But, you know, there had been a proposal made to the AMA CPT panel twice now for a complete recast of the lower extremity codes. which would include providing add-on reimbursement for Shockwave. That has been deferred twice now, and it's been deferred, you know, postponed indefinitely coming out of the last meeting. So I'm not sure when that would actually come back to play. There has been other reimbursement codes added for Shockwave through CMS. I'm not sure how much that reimbursement is flowing through to actual payment. I would expect that in many cases it is, but I think where they would really benefit in our markets is through the addition of a CPT code. In many ways, we are very, very complementary to Shockwave. We primarily treat soft plaque, mixed plaque, and mild to moderate calcium, and we work inside the lumen. primarily targets medial wall calcium and is exclusively focused on calcified vessels. So as we look at Shockwave, you know, we see that as a complementary technology. Of course, we're all competing for the same reimbursement dollars. But, you know, other companies who are more focused in that calcium space, I think, are potentially going to be more impacted than us. Understood.
Mark Weisenberger
Thank you very much.
Operator
Once again, if there are any remaining questions or comments, please indicate so by pressing star 1. The next question is coming from Nathan Weinstein from Aegis. Your line is live.
Nathan
Thank you, and thank you, Jeff and Mark, for taking my questions. Very nice, thoughtful questions from the previous analyst. And we've spoken about this before, but maybe we could just hone in on the coronary market, and you could help us think about both the size of the market and kind of what the relevant opportunity would be for Aventure there.
John
Yeah, so just from a – thanks, Nathan. It's good to talk to you. Just from a procedural size of the market, you know, currently, even with the challenges of treating CTOs on a percutaneous basis, there's about 50,000 CTO PCI procedures performed in the U.S. each year. Now, those are very challenging, multiple wires, multiple support catheters, balloons, devices are used. They can take, and this isn't an exaggeration, four to five hours under fluoro with a lot of contrast used in the patient. So a very challenging procedure, and that does provide limitations on who will do them. And even with the strong reimbursement, that's quite an investment to make in a percutaneous or crossing of a CTO. There's about 200,000 CABG procedures performed in the U.S. each year, and our best estimates that about 30% of those are related to coronary CTOs. And so our whole value proposition here is if we can empower more physicians to efficiently and safely, because of the advantages of real-time imaging and the precise control of our catheters, cross a CTO using kind of the first method that's almost always tried, an anti-grade approach, which is much more efficient, that we can expand the market for not only CTO PCI and take some of those CABG procedures, but also bring more interventional cardiologists into play here and being willing to take on these procedures. And so we're very excited about the progress we're making with the device. We had an advanced user summit in January where we had 13 of our top users in KOLs, and several of them actually are interventional cardiologists who do treat CTOs on a percutaneous basis. Based on the feedback that we received at that meeting, based on the feedback we received from our other interactions with our physician advisors who are focused on the coronary CTO space, we really believe we're on the right track with this product. It also leverages a lot of the learning and the advances we've made in our platform, not only, of course, with our new Lightbox 3 for the platform overall and this improvement in imaging, but also in our Tiger Eye CTO crossing catheters, our current iteration and the one that's in development. So for us, we think this is an opportunity very much to create a market. There are very few devices used currently as specialty devices for crossing CTOs, and certainly none that incorporate real-time imaging. The other advantage we have in the coronary market, in addition to the high reimbursement that already exists for CTO, is that the interventional cardiologists who are treating coronary disease are much more familiar with OCT imaging. That's where there currently is reimbursement for diagnostic. That's really the use occasion for Abbott's Dragonfly device. So, there'll be a, we believe, a shorter learning curve on an image interpretation and be able to integrate the device into their practice. We're, of course, early in the process, but we're excited about where it's going. We're very excited about the opportunity and we look forward to sharing progress as we move forward.
Nathan
Wow, great. Thanks, Jeff. I appreciate the call and that corner definitely seems like an interesting area to watch for Avenger going forward. Maybe just a market question to follow up on a few of Mark's questions here. Obviously, coming through some COVID, just wanted to get a sense for you whether you saw hospitals and OBLs kind of in good shape. Financially, are they in good shape? And what are they saying in terms of maybe some type of demand?
John
Yeah, so, you know, I think one of the issues that hospitals are dealing with, in addition to, you know, the deferment of elective, or have been, deferment of elective procedures, is there are, and I'm sure you've heard this from many other companies who have hospital-based procedures, there is a continuation of pretty significant hospital staffing shortages, and so that does also create an impact. The OVL market, I think, overall, has... is, again, depending on whether they're treating CLI patients or claudicants, potentially less impact. But for us, the focus on supporting the CLI cases and the elective procedures as they come back hasn't changed. Our sales force and our clinical specialists have remained present in the field. We're in, we're engaging, and again, as I said earlier, the fact that we have our Pantheris SV, which is treating primarily CLI patients as opposed to claudicants for the severe below the knee disease, and our CTO crossing catheters, which typically is a CLI situation, that really has advantaged us to continue to support our physicians during this time. But we are encouraged by the volume we see coming back. You know, there is the potential for deferred procedures to come back in the second quarter and potentially that provides some upside as we go forward. But obviously we'll be there and we'll react to the market conditions the best we can.
Nathan
Very good. And then just a final question from me. And this one, I just wanted to start by saying I noticed that Avenger and your senior leadership team has strong, very strong operating expense discipline in recent years, which is nice to see. So if we just step back and maybe you could opine on, you know, kind of what do you think it's going to take for the top line to scale to a point where you could achieve profitability? Are the pieces to do that there today or kind of what needs to happen?
John
I'll let Mark add some color to this, but obviously, and I appreciate you making the comment, we have been very focused on controlling operating expenses. We are in a position now, as I think Mark mentioned on the call, where we can get operating leverage based on our growth in revenue. That's one of the reasons that you saw the significant increase in gross margin in 2021 overall. And so revenue growth in itself certainly improves our gross margin, but I'll let Mark add some color.
Matt
Yeah, so just to give a little bit of detail, you know, Aventure has very, very high direct margins. So, you know, we've talked before about being significantly more than, you know, 60% kind of direct margins on our disposable sales. So as we're able to increase the amount of volume and usage that we have in the field in terms of usage of catheters for procedures, we will see a significant increase in our gross margins and an improvement in our operating results. We have a lot of opportunities for growth in the future. In addition to usage of our existing products, one important aspect is having more products in the bag for our sales team in the field. In 2022, we have two new catheter products that we're going to be working on from the development standpoint. hopefully going into 510ks and then being able to get clearance so that we can add those to our bag to even increase the amount of sales that we have on a per salesperson basis, which again should help us improve our operating results. We have made a lot of changes in terms of reducing our cost structure over the last few years, and we feel very good that at this point we have an opportunity to you know, with revenue growth to see the improvements both in terms of our gross margin line and also in the bottom line performance.
Nathan
Okay, great. Thanks so much again, guys, for taking my questions. Thank you, Nathan. Appreciate it.
Operator
I'd now like to turn the floor back to Jeff Zielinski for closing remarks.
John
Well, thank you. And I'd like to thank you all for joining our call today. We appreciate your continued interest in our business. We appreciate the questions today. And we look forward to updating you on our further progress on our first quarter 2022 call. Thank you very much.
Operator
Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
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