CVRx, Inc.

Good afternoon, and thank you for joining us today for CVRX's fourth quarter and full year 2021 earnings conference call. Joining me on today's call are the company's president and chief executive officer, Nadeem Yared, and its chief financial officer, Jared O'Shine. The remarks today will contain forward-looking statements, including statements about financial guidance. The statements are based on plans and expectations as of today, which may change over time. In addition, actual results could differ materially due to number of risks and uncertainties including those identified in the earnings release issued prior to this call and in the company's SEC filings, including the upcoming Form 10-K that will be filed with the SEC. I would now like to turn the call over to CVRX's President and Chief Executive Officer, Nadeem Murad.

Thank you, Mike, and thank you, everyone, for joining us this afternoon. I'll begin by providing an overview of our fourth quarter and full-year performance, followed by an operational update and details Our CFO, Jared Washine, will then review our financial results, and I will conclude with our thoughts for 2022 before turning to Q&As. We are very proud of everything that our team accomplished in 2021, taking into consideration the material headwinds caused by COVID-19 in the U.S. and in Germany. In 2021, we more than doubled our worldwide revenue, delivering full-year growth of 115% driven primarily by our U.S. heart failure business that grew more than 750%. We also made progress towards our strategic initiatives, including the first patient implanted with the help of our new ultrasound-guided implant toolkit. In the fourth quarter, Total revenue was $3.7 million, which fell short of our expectations, primarily due to COVID-related headwinds in Europe. Despite this impact, we saw an increase of approximately 75% over the fourth quarter of 2020. This significant year-over-year growth in the quarter highlights the resilience seen in our U.S. heart failure business. Turning now to an operational update. First, I wanted to give you a quick update on hiring. We added over 50 new employees in 2021, bringing the total at your end to over 100 employees worldwide. Being able to more than double the size of the organization by bringing in top talent in a tough hiring environment is a testament to the excitement in the industry for better STEM, and the opportunity that lies ahead. Of the new hires, two were for senior management, including our chief marketing officer and our European VP of sales and marketing. As part of that hiring, we continued the expansion of our commercial infrastructure. As planned, we added three U.S. territories in the fourth quarter, bringing the total to 14 by the end of the year. Recall we began the year with six sales territories, and we are very pleased with our ability to train these reps and launch them into the field throughout the year, despite the disruption from COVID-19. We also made progress with two early commercial initiatives during the year. First, we launched a direct-to-consumer marketing pilot program, and second, we created an internal prior authorization team. Both initiatives have seen early success, and our initial experience has allowed us to optimize these programs. Given the traction we have seen thus far, we expect to expand both initiatives in 2022 to support the adoption of BetterSTEM, which I will discuss in greater detail later in the call. Another area of focus for us during the year was product portfolio innovation. As we mentioned last quarter, we recently submitted three PMA supplements to the FDA. The first was for barostem MRI conditional labeling. The second was for our new implantable polish generator. And the third was for our new programmer. We are pleased to announce that we received approval for our new implantable pulse generator in December 2021. This new IPG is smaller in size than prior generation and has 20% longer battery life on average. We are expecting approval of the new programmer in the first half of 2022 and then plan to launch the new platform commercially. We are encouraged by the accomplishments during 2021. As a result of the successful launch of Better STEM for Hard Failure in the United States and the expansion of our commercial organization, we more than doubled our revenue. Despite the COVID-19 overhang that has continued into 2022, we are confident in our ability to grow the business and continue the adoption of Parastim to bring relief to patients suffering with cardiovascular illness. And now, I would like to turn the call over to Jared for a financial review.

Thanks, Nadeem. Total revenue generated in the fourth quarter was $3.7 million, which is an increase of $1.6 million, or 75% when compared to the same period last year. Revenue generated in the U.S. was $2.9 million in the current quarter, which is an increase of 244% over the same period last year. Heart failure revenue in the U.S. totaled $2.7 million in the current quarter on a total of 95 revenue units as compared to $607,000 in the fourth quarter of last year on 21 revenue units. The increase was primarily driven by continued growth in the U.S. heart failure business as a result of the expansion into new sales territories, new accounts, and increased physician and patient awareness of barostim. At the end of the current quarter, we had a total of 46 active implanting centers, compared to 38 on September 30, 2021, and 11 on December 31, 2020. At the end of the current quarter, we had a total of 14 sales territories in the U.S., compared to 11 on September 30, 2021, and 6 on December 31, 2020. Revenue generated in Europe was $800,000 in the current quarter, which is a decrease of 36% when compared to the same period last year. Total revenue units in Europe decreased from 55 in Q4 2020 to 39 in the current quarter. The decrease is due to the COVID-related headwinds in Germany in December 2021. The number of sales territories in Europe remained consistent at six during the current quarter. Gross profit was $2.7 million for the current quarter, which is an increase of $1 million over the same period last year. Gross margin decreased to 73% for the current quarter compared to 78% for the same period last year. Gross margin in the current quarter was lower due to a larger percentage of our revenue units coming from full systems versus battery replacements for existing patients. New patients receive a full system that includes an IPG and a stimulation lead and have a lower gross margin than a standalone IPG used for a battery replacement. This was partially offset by an increase in our average selling price. Research and development expenses were $1.8 million for the current quarter, which is an increase of $1.3 million when compared to the same period last year. This change was primarily driven by an increase in clinical study expenses due to a $1 million non-recurring reduction in a clinical accrual in the fourth quarter of 2020. Additionally, this increase was driven by a $200,000 increase in compensation expenses as a result of increased headcount and a $100,000 increase in non-cash stock-based compensation expense. SG&A expenses were $9.7 million for the current quarter, which is an increase of $6.4 million when compared to the same period last year. This was driven by an increase of $3 million in compensation expenses as a result of increased headcount, a $1.2 million increase in marketing and advertising expenses, primarily related to the commercialization of Barostim in the U.S., a $600,000 increase in non-cash stock-based compensation expense, a $700,000 increase related to D&O insurance costs incurred as a result of becoming a public company, and a $500,000 increase in travel expenses. Other expense net was $1.4 million for the current quarter compared to $632,000 for Q4 2020. The expense in the fourth quarter of 2021 was primarily driven by a $1.3 million loss on debt extinguishment in connection with the repayment of our outstanding debt under the Horizon Loan Agreement. The expense in the fourth quarter of 2020 was primarily driven by the increase in the fair value of the convertible preferred stock warrant liability. Net loss was $10.6 million, or 52 cents per share, for the current quarter as compared to a net loss of $3.4 million, or $10.04 per share, for the same period last year. Net loss per share was based on approximately 20,367,000 weighted average shares outstanding for the current quarter and approximately 360,400 weighted average shares outstanding for the fourth quarter of 2020. Turning to a balance sheet update. At the end of the current quarter, cash and cash equivalents were $142.1 million. Net cash used in operating and investing activities was $7.6 million for the current quarter compared to $4.2 million for the same period last year. The primary driver for this change was an increase in compensation as a result of increased headcount across the organization. Now turning to guidance. For the full year of 2022, we continue to expect total revenue between $20 and $23 million, gross margin between 74 and 76%, and operating expenses between $55 and $61 million. For the first quarter of 2022, we continue to expect to report total revenue between $3.6 and $4 million. I would now like to turn the call back over to Nadeem.