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spk06: Good day and thank you for standing by. Welcome to the CIENTRA first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Oliver Bennett. Please go ahead.
spk09: Thanks operator. Good afternoon and welcome to the FIENTRA first quarter 2021 earnings call. I would like to remind everyone that in our remarks today, we will include statements that are considered forward-looking statements within the meaning of United States security laws. In addition, Management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current assumptions and expectations of future events and trends which may affect the company's business, strategy, operations, or financial performance. A detailed discussion of the risks and uncertainties that the company faces is contained in its previously filed annual and quarterly reports on Form 10-K and 10-Q, and in its quarterly report on Form 10-Q that the company filed this afternoon. Actual results may differ materially from those expressed in or implied by the forward-looking statements. The company undertakes no obligation to update or review any estimate, projection, or forward-looking statement. I would also like to note that Cientri uses its investor relations website to publish important information about the company, including information that may be deemed material to investors. financial and other information about Cientra is routinely posted and is accessible on the company's investor relations website at www.cientra.com. Today on our call, we have Ron Menezes, Cientra's President and Chief Executive Officer, and Valerie Miller, Vice President, Corporate Controller, and Interim Chief Financial Officer. I will now turn the call over to Ron. Ron.
spk10: Thanks, Oliver, and thank you all for joining us today on our first quarter 2021 earnings call. I'm very proud of the Sanford team for the outstanding execution of our 2021 priorities in the first quarter. On our last call, I identified three strategic priorities and growth drivers for this year. First, fueling organic growth within augmentation and reconstruction by growing market share within existing accounts and adding new accounts. while accelerating our efforts to be a top two implant and expander company in two years. Second, increasing our focus on innovation and executing our development pipeline. And finally, establishing a culture of focus and accountability. I'd like to take the next few minutes to highlight the exciting progress we have made on each priority. We'll continue this strong momentum in our brass products business during the first quarter. where we saw both revenue acceleration and market share growth. Net sales for the brass product segment totaled $18.3 million, a record quarter, representing 47% growth year over year. We believe that the brass augmentation market grew in Q1 as more patients continued working from home and used the extra discretionary income towards brass augmentation purchases. According to third-party market research data, this market grew 8% in Q1 year-over-year, while our U.S. breast augmentation business outperformed versus the market and grew over 90% year-over-year. Our U.S. reconstruction business, which includes both expanders and implants, grew approximately 19% over the same time. The growth in our breast business came from accelerating market share within current accounts and opening new accounts. We added over 200 new accounts in Q1, and ended the quarter with a little over 2,400 total active accounts. Now, turning to our commercial execution. In Q1 2021, we remained focused on accelerating market share growth through marketing innovation and executional excellence. We know that patients use company websites as one of the top two sources of information, and research has shown us that 71% of surgeons would add a new breast implant brand if more patients ask for it. In the first week of January, we launched a successful marketing program focused on driving consumer brand awareness and patient acquisition. This included a new brand campaign, a modernized Cientra website, and a highly focused DTC campaign, which included social media and digital marketing. Through these marketing efforts, we have reached now 3.4 million consumers with almost 90,000 web visits, yielding an exciting four-fold increase in traffic versus last year. The outcome of those website visits was 22,000 surgeon searches and thousands of referrals directly to those surgeons. We hit the ground running by hosting our national sales meeting the first week of January with a larger, fully trained sales force as well as a full relaunch of the central brand and sales toolkit. This readiness put our company in a position to capitalize on the market trends, an uptick in both cosmetic and reconstruction segments. If we look a little closer on the reconstruction market, the overall market started to come back in late first quarter, and we view our market expansion opportunity in this area as a significant midterm driver. We're successful in expanding our customer base during the quarter by targeting the high-volume hospitals and leveraging our innovative AlloX2 tissue expander. As a reminder, our patent AlloX2 expander is the only expander in the market that provides surgeons with access to the periprosthetic space for diagnostic sampling and treatment of seromas, leading to less complications and reduced re-operation rates for patients. We were recently awarded an innovative technology contract from Vizion, the nation's largest member-driven healthcare improvement company. This distinction recognizes the unique features and benefits of AllX2, and it makes the product now broadly available to all major hospitals in the U.S. performing reconstruction surgery. San Andreas Field Force is ready to go, and they kicked off an accelerated promotion to pull through the contracting 3,500 reconstruction hospitals with a heavier focus on the top 10% of those hospitals. Now turning our focus on innovation in our development pipeline. We are very excited to announce our recent partnership with Butterfly Network to promote their ultrasound device. Plastic surgeons can now make more informed decisions about the condition of their implants using imaging information from the Butterfly IQ+. The partnership was in full display at the most recent American Statics meeting in Miami. Cientra's medical affairs and reconstruction managers have begun promoting Butterfly IQ Plus to hospitals and key customers. We have also made significant progress on our next-generation tissue expander that builds upon our novel patent dual-port design. The new expander will promote better patient outcomes due to its minimally invasive drainage system and will also allow for MRI and targeted radiation therapy. As previously reported, we filed our 510K application for this next generation expander last year and it's presently under active review within the FDA. We'll continue to work with the FDA on this application and are optimistic for a commercial launch in the first half of 2022. When I came aboard seven months ago, I was committed to accelerate Cientra's focus on our core business and remove distractions from our team. After a rigorous process, we're thrilled that we reached an agreement with 1315 as a buyer for Miradry. This is great for our customers and for patients, as Miradry is one of the mostly highly rated aesthetic treatments for hyperhidrosis. And we're committed to a smooth transition following closing to ensure a high level of customer service. In terms of our expectation for the full year 2021, and based on our strong first quarter results, we have updated our guidance and expect to achieve breast product net sales between 72 to 76 million, representing 31 to 38% growth year over year. We'll now turn the call over to Val for a more detailed review of our first quarter financial results. Val.
spk05: Thanks, Ron. In the first quarter of fiscal 2021, Cientra achieved consolidated net sales of 23.2 million, a 37% year-over-year increase, with the increase driven specifically by strong performance in our breast product segment, continued high level of operational execution and cost efficiencies, and substantial progress across the strategic initiatives Ron outlined earlier. Net sales for the breast product segment totaled 18.3 million in the first quarter 2021, representing an increase of 47% compared to 12.5 million for the same period in 2020. This was also the highest ever breast products quarterly sales number in company history. This represented sequential growth from Q4 2020, even though historically first quarter sales tend to be lower due to seasonality of sales. Net sales for the Miradry segment totaled 4.9 million in the first quarter 2021, a 10% increase year over year. largely driven by Biotip sales. On May 10th, we entered into an asset purchase agreement with 1315 Capital, where we agreed to sell certain assets related to the Miradry business for a total of $10 million in cash, subject to adjustment as provided in the purchase agreement and the assumption of certain liabilities. The sale is subject to routine closing conditions, and we expect to close within approximately 30 days. Gross profit for the first quarter of 2021 was $12.3 million, or 52.9% of sales, compared to gross profit of $10.1 million, or 59.9% of sales, for the same period in 2020. Excluding the impact of our mirror dry segment, which included unfavorable overhead absorption, gross profit for the first quarter of 2021 was $10.2 million, or 55.4% of sales. Operating expenses for Q1 of 21 were $22.1 million. This compares to $29 million in Q1 of last year, excluding impairment and restructuring charges. On a non-GAAP basis, adjusted EBITDA loss for the first quarter 2021 decreased by 66% to $5.3 million from $15.5 million for the same period in 2020. Net loss for the first quarter 2021 was $54.7 million or $1.01 per share compared to a net loss of $28.6 million or $0.57 per share for the same period in 2020. Net loss for the first quarter of 2021 includes a $42.7 million non-cash loss related to the change in fair value of the derivative liability related to the convertible debt of the company that was announced in the first quarter of 2020. Turning to our balance sheet, we ended the quarter with 80.4 million of cash and cash equivalents compared to 55 million at December 31, 2020. Turning to guidance for 2021, as Ron noted, we expect breast products 2021 net sales in the range of 72 to 76 million, reflecting growth of 31 to 38% compared to sales of 55.4 million in 2020. We expect 2021 annual operating expenses to be in the range of 85 to 90 million, compared to 101.1 million in 2020, excluding impairment and restructuring charges. With that, I would like to turn the call back to Ron for closing remarks.
spk10: Thanks, Val. We are very optimistic about the remainder of 2021, and we expect to continue to accelerate market share growth by leveraging our unique strengths. They're as follows. Our products, they have unmatched safety profile, which is more important than ever to both surgeons and patients. Our marketing and program innovation, including patient acquisition, surgeon education, and our new partnership with Butterfly. And also the addition of reconstruction hospitals during a time when the market is bouncing back. And now I'd like to open up the call for Q&A. Operator?
spk06: As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Margaret Caxor from William Blair. Your line is now open. Hey, guys.
spk07: Good afternoon. Thanks for taking the questions. I wanted to start first maybe with sales rep productivity because it seems like it's really been climbing pretty significantly, certainly versus 19 and even versus 20. So where is it today? Where do you think it can go? And do you feel a need to hire more sales reps to continue to grow at an accelerated pace or can that continue to increase?
spk10: Hi, Margaret. Thanks for the question. First of all, we did add three new PSCs in the beginning of the year. We had a couple of recon managers as well, but from the sales side, even with the three new ones, our productivity was close to 400,000 per PSC, so training about 1.6 for the year, which is much higher than last year's. We were about 1.2, rounded up to 1.2 last year. As I discussed before, we do this territory by territory. For example, we're looking at a couple of areas that as we get closer to 3 million business, but for a one rep, that's when it gives us inclination to split the territory. It's really systematic and it's slow assessing the current environment. and current productivity. And obviously, as we accelerate our growth and our revenue, we're going to continue to evaluate the need to add more representatives. So right now in the second quarter, we don't have any plans to add, but that's a quarter-to-quarter discussion with our operations and our head of sales. It's not a year-end or, again, a quarter-to-quarter discussion.
spk07: Okay. So as we look throughout the year, theoretically we should start to see hospital and recon start to accelerate, especially as hospitals reopen. You guys still, I think, grew 19% in the first quarter. So how many hospital accounts are you assuming in guidance that you will be able to add, and theoretically that should drive more PSP productivity, I would think, just given the ASPs per case?
spk10: The large majority of the accounts we added were the cosmetic side, but we did add over 200. About a third were hospitals, actually a little more than that, or hospitals as we continue to go. I think our key goal here is, one, is to go deeper in account as we add them because it does take sometimes four to sometimes as long as nine months. We're pretty much all X2s now available in every account, not every account, every GPO. Now the PSC and working with the recon manager goal is how do we pull through that contract down from the GPO and you go to that process and sometimes it takes us as little as four months, but sometimes as long as nine months to see your first sale in each account. So it's a long-term thing, but we did add a lot of accounts last year that we've seen productivity already. So that's what we're looking at the next six, nine months.
spk07: And are you assuming much of that guidance, I guess, from that in terms of some of these new contracts you have signed? Or is that more kind of a 22?
spk10: Yeah, we're building in that guidance that we are going to, you know, add more accounts from the hospital side, but also continue to drive our recon business as well. And Part of that is obviously as patients come back and more hospitals, which you've seen, start to open up their doors for reconstruction or elective surgeries. So that's all building on our guidance for the rest of the year.
spk06: Okay. Thank you. Thank you. Our next question comes from the line of Richard Neworder from SVV Laring. Your line is now open.
spk04: Hi, Ron. This is Jamie Morgan on for Rich. Thanks for taking my question. I guess just on the guidance, it seems a little bit conservative. You know, you raised it by the 1Q beat. 1Q is typically a seasonally lower quarter. So I was just wondering if you could talk about how you're thinking about the quarterly revenue cadence as we move through the rest of this year.
spk10: Yeah, usually a seasonality from a cosmetic side, you have a very high second quarter. The number two quarters is either the first quarter or the fourth quarter and then these things drop down the third quarter so our expectation is that obviously we're going to go back to a Seasonality for the cosmetic which we have not seen by the way in the second quarter. It's still a very Fast-paced very busy offices of plastic surgeons but we are going to enter in third quarter competing against our high numbers and Unlike most years, third quarter is always the worst quarter for cosmetic-specific plastic surgery. In this case, it was not the case last year for obvious reasons because of COVID in the second quarter. So we're going to compare against those two. So that's where we're looking at 72 to 76, but really being sensitive of what is going to happen in the next six months.
spk04: So it sounds like the assumption then would still be to see your typical strength in the second quarter and maybe something a little bit lower in the third quarter just from a seasonal perspective, and then obviously 4Q is typically a little bit stronger as well. Is that the right way to be thinking about it just relative to the roughly $18 million that you saw in the first quarter, just trying to get a sense of whether we should be thinking about that dollar gap stepping down in the second quarter relative to the first quarter strength?
spk10: Now, I think if you look at second quarter and the way we started second quarter, it's still very similar trends that we saw in first quarter, even some acceleration. So you see that the expectations from a high volume second quarter as, you know, patients get ready for summer. And then you see the back off in third quarter. So we're assuming seasonality back after second quarter. But obviously, again, second quarter is always a busy quarter for everyone.
spk04: Okay. That's helpful. And then I guess just between the two different market segments, You know, it sounds like the recon market is coming back a little bit. What are your expectations for when that market should see some more normalization? And I guess just kind of how should we be thinking about the two businesses and kind of what's contemplated in the $72 to $76 million?
spk10: Some of the teaching institutions did not see a whole lot of impact of their reconstruction surgeries. It was more the other hospitals. They did see an impact. They were closed for any elective surgeries, and those are now coming back. So we obviously see a slowdown in diagnosis and for mastectomies. So you're really, if I'm sorry, for surgeries. So you see the whole thing was backed up. So that's going to start coming in now as hospitals are opening up. We're seeing more and more hospitals open up. There's some more interest in our expander and also our implants in hospitals. And so we see the next, again, six, nine months, even from our recall, accelerating in the second half, specifically third quarter and fourth quarter. And individuals that were on the sideline waiting to see what happened from elective surgery, now would be probably making that decision. And what's the acceleration of Q3 and Q4 for reconstruction?
spk04: Okay, that's helpful. And then I guess if I just squeeze in one more, you know, how's the CFO search process going and when can we potentially expect to learn a little bit more about that?
spk10: It's going very well. We are hoping, shooting a target to get somebody on board by the end of June. That's the goal, depending on this individual's commitments. But that's our goal right now, end of June, beginning of July-ish. That's what we're looking at.
spk04: Thanks for taking my question.
spk10: Thank you.
spk06: Thank you. Our next question comes from the line of John Block from Stifel. Your line is now open.
spk02: Ron, maybe the first one, I think you alluded to 200 new accounts. seem like a big number and accelerate notably from, I believe, what was 100 the prior quarter. So solid step up there. Maybe if you can elaborate on the acceleration, was there any, I don't know, changing comp plans or incentives to help aid that? And then if we think about the 2,400 active accounts that I think you also alluded to, you know, how do we think about that longer term in terms of where that goes over the next maybe 12 to 24 months?
spk10: Yeah, you're right on the money there, John. It is a double what we saw in first quarter in regards to addition of new accounts. It is one of the goals that Kirk, our head of sales, set is to, you know, a certain addition of new accounts for each of our PSE, our representatives, and we've seen the results of that. We're, you know, we're tracking how they're performing versus those goals and also certain guidelines in regards to number of calls per day, et cetera. But keep in mind, again, We did add over 200 new accounts, but over 90% of our growth in the first quarter came from existing accounts. It's just existing accounts that had a low market share, and they were expended on market share. So a lot of the growth coming from existing accounts that were not the big, what I call the big whales or the tier 1 It's really from accounts that they had opportunity to expand, and that's why our PSCs did a fantastic job from executing there and expanding market share. So that's a really way to go. From total accounts at 2,400, it is like a 15% growth over last year. We're about a little over 2,000 accounts last year at the same time. So you've seen that acceleration. But the key thing is how do we ensure growth? that counselor come on board, stay with us. So we're close to about 60% reorder rate right now of accounts. And that's part of our goal is not just one order, but multiple orders in the future.
spk02: Got it. Very helpful. Thanks for that. And then, you know, I hate to use sort of the word rumor, but on the competitive landscape, there are some chatter rumors out there that certain businesses may be for sale. Just your thoughts, Ron. I mean, does that further embolden what you've laid out as your roadmap, if you would, to a top two implant and expander company in two years? If we were to see something like that take place, does that bring into the equation a certain level of disruption that which would even give you further conviction on your market share gains in coming quarters.
spk10: Yeah, John, there's a lot of rumors out there from the competitors. We are looking at what can we do to really improve patient outcome, and that's where I'll focus in regards to innovation and execution, and we've seen that from a commercial team, both the sales and marketing teams, The teams did a fantastic job, and also for our manufacturing as well. We have our plant in Wisconsin now going seven days a week all the time. They still have production abilities there, but the goal is how do we control what we can focus on, and we saw that at the last aesthetics meeting in Miami two weeks ago. Sandra was the center as he walked in the floor. We had a lot of surgeons coming by our booth and talk to us. They know Sandra is committed to plastic surgeons. They know that Sandra is committed to improve patients' outcome. And that's where they are seeing the difference right now versus a lot of companies out there that have different questions about their future. So we're really focused on what can we control right now, which is accelerating our growth, accelerating our market share, taking away from competition, and find a way to support patients and surgeons.
spk02: Got it. That's helpful. One last one for me, Val, maybe over to you. I want to make sure I heard some numbers correctly. So the GMs, you know, I think we're 53% in print or 52.9. I think you said maybe specific to the breast business, it was 55 and change, if I have the right number there. And then maybe talk to us going forward, do you still think you can exit the year in the high 50s and is Mid-60s still attainable when we think about the back part of 22. Thanks, guys.
spk05: Yeah, in terms of gross margin, the breast product business was 55.4%, as you mentioned. We still expect to end the year in the upper 50s, and we have a target for next year in the 60s.
spk02: Great. Thank you.
spk06: Thank you. Our next question comes from the line of Kyle Rose from Canaccord. Your line is now open.
spk01: Great. Thank you for taking the question. Obviously, strong performance on the breast side. I wonder if you could just talk a little bit about what you're seeing internationally. Japan was a new entrant in 2020. How is that trend to start this year? And then expectations for any additional new countries, I'm thinking Canada, when we think about over the course of the next six to nine months.
spk10: Hi, Kyle. Japan came in at close to 600,000, so it's kind of in line our expectations. which will be in line for the whole year as well at the end of the year. In regards to entering new markets, we're still waiting for Health Canada. We are assessing different markets within the next six to 12 months. So we have a team that's looking at how do we get into different markets where there's a possibility of a good margin for the product. Obviously, we've discussed that in the past. There are some areas and regions where the margin is too low for us to get into, but there are some areas that make sense for us. So that is part of our expansion from adjacencies to look at different markets.
spk01: Great. And, you know, you talked a little bit about expectations for recon when we think about the, you know, growth in the Q3 and the Q4. Maybe help us just better understand what How much of that comes from the backlog you're seeing in the channel as far as your account, recon accounts you have now that are going to have new patients coming in that were not diagnosed or not operated on versus just progress as far as bringing on new accounts? Just help us understand those dynamics in recon.
spk10: If you look at Q1, the majority of our growth and reconstruction actually came from what we call the Tier 2, which is the accounts that have been with us. They already were purchased from us, and they just really did extremely, extremely well. I have an example of a well-known academic teaching institution in the southeast. that we were able to flip 100% to Cientra. But it took a while, and it's taken a while to get the inventory they had for the previous company and get the residents and the surgeons training our product. So that's why I said in the beginning, this is a four to six month, sometimes nine months process. After you get the hospital on board, it takes about four to six months to get everything moving. So that's why I'm thinking Q3, Q4. But the majority growth for Q1 still came from existing accounts, just like the cosmetic side.
spk01: Okay. And then the last one for me, I know you talked about overall sales rep metrics. I appreciate those numbers. But you did talk about also adding on the three reps. I think in a couple of key states, you think about, you know, you know, the Great Lakes areas there. Maybe just how has the underlying productivity in those new reps trended? And I guess what will trigger you to bring on, you know, an additional cohort when we think about the back half of this year or even into 2022?
spk10: Yeah, our PST in Nebraska did extremely well in the first quarter. Obviously, you know, the individual has a lower base because that person is growing the business. In Florida, if you look at the top three states, is that where you think from a – actually – New York is not top three, it's really number one California, number two is Florida, and number three is Texas. And New York's right after from cosmetic and augmentation. So those are the areas that usually assess territory by territory. And our kind of our metric goal is if a territory gets closer to $3 million per PSE, that's when we'll assess and start thinking about dividing the territory. And then you have to 1.5 or close to $1.5 million. But the way we're moving and growing fast will be assessed every quarter. And if there's a need to add more, we'll be adding more. But probably I will not be surprised if those three or four states, if you add New York, other states will be looking at opportunities to add a PSC if we see territories getting to that $3 million mark.
spk01: Great. Thank you very much for taking the questions.
spk06: Thank you. Our next question comes from the line. of Alex Nowak from Craig Callum. Your line is now open.
spk08: Great. Great. Good afternoon, everyone. So the company really solidified this shift to a plastic surgeon-focused organization with the mirror dry sale. So, Ron, you mentioned a new expander, the Butterfly Partnership, but what other products do you develop internally using your manufacturing facilities that you have and put through the existing sales channel into the plastic suite?
spk10: Yeah, so I share in the beginning, you know, some where we're doing from a new expander and new technology for next year. Obviously, Butterfly brings us a value added that brings the safety in the forefront. It is the number one thing that patients, potential consumers look for when they're researching. Cost would be number two. It used to be cost number one, safety number two, and I flipped. And that butterfly network ultrasound device gives us the ability to give that surgeon an ability to assess the implant or assess where the patient is, et cetera, and supports our platinum 20-year warranty, which is one of the things we talk about in regards to 10-year data is the safety of our implants. Now, there are products we're looking at as well in regards to within breast augmentation and within reconstruction as well. But also starting at the end of this year, next year, we'll be looking at is anything within plastic surgery that makes sense for us to get into. But everything we'll be looking at is started with our core business. which is breast augmentation and reconstruction. Then we'll look at any growth products out there that we can invest and make sense for us. And I've shared in the past, a lot of those ideas are coming from surgeons. They have ideas and products. A lot of them have prototypes. They just need help with development. They need help with commercialization. So we're assessing those ideas coming in as well, in addition to look at different things outside our expertise. But our focus right now is really the core business. The core business, we are very busy with it. Lots of opportunities to take share away from the competition. Lots of opportunity to enhance our current offerings, the core products. And then we start thinking, how do we expand our offerings outside the core business, most likely in 2022 and 2023.
spk08: That's great. It makes a ton of sense. And then you said that Cientra wants to become a number two in plan in two years. what would the best product revenue be to hit that number two provider status? And then a third question here is just what other DTC programs do you have planned for the rest of the year?
spk10: Yeah, I think if you want to be at number two, you've got to be, you know, north of a hundred million dollars in us sales. And keep in mind, a lot of our competitors have outside us and we're focusing us. So we have to be thinking, how do we get to the acceleration above a hundred million dollars? And that's a key goal for us sooner than later. On the other side, from marketing, we're transitioning and continuing to leverage our great digital work, our great social media work on getting patients to ask for Sientra now into physicians and surgeons education. Peer-to-peer education, help them understand the uniqueness of our products, the uniqueness of our implants, the uniqueness of our expander, and do a lot more peer-to-peer education in the second half, and really expand our name, our brand out there in front of the surgeons as well. to support our PFCs, support our reconstruction managers, and that will be the shift. Again, we're not going to walk away from consumers. We're going to continue to do everything we're doing for consumers, but we're going to be adding a lot of peer-to-peer education in the next six months.
spk08: That's great. Appreciate the update. Thank you.
spk06: Thank you. Our next question comes from the line of Chris Cooley from Stevens. Your line is now open.
spk00: Good afternoon, and thanks for taking the questions. Just two for me. First, when you think about just expanding account base, they're very impressive. They're, again, a little over 2,400 active accounts now. And so if we think back to kind of pre-Brazil MFI, I think we were running right at around 4,000 accounts here in the US. One, could you give us a roadmap for kind of how you see that 2400 account kind of scaling to help you achieve the goal of becoming the number two or potentially, you know, a top two, let's say, player here in the U.S.? And then so you can also maybe characterize where you are now within the existing account base just in terms of share. Help us kind of think about that existing 2400 account base, kind of where you are there relative to where you could go in terms of growth. if you just drove deeper within that existent 2,400. And I've got a quick follow-up after that. Thanks.
spk10: I'm trying to answer your question because it sounds like it was hard to understand because your phone was cracking up a little bit. But from how do we go and grow our 2,400 accounts, and number two is our market share. Yeah, market share is an interesting thing because we've got the data from the different societies And they are one society of plastic surgeons had to mark it down 5%. The other one had to mark it down a little over 30% in 2020 versus 19. So it's hard to figure out. But we were able to get data from Ronan Solutions is a team that is able to track live data on 380-plus surgeons. So they have live data on 380-plus surgeons. And what they share with us, the market was down 5% in 20 versus 19. And the market was up 8% in the first quarter this year versus last quarter. So if you're utilizing that data and adding as well as not just surgeries augmentation, but also anyone that went in for a revision, which is you've got to go in and for some reason you make a decision, a patient make a decision to get a new implant. You add all that, we actually went from a 6% share to a 9% share in the first quarter of this year. So it's a three share point increase in one quarter. So that data is kind of interesting because it's live data, 380, and it's extrapolated to the market, and it's a plus-minus 5% from a confidence interval. So that is where we're about 9% now. So how do we grow to be a number two? It's one, it's continue to add new accounts, but it's just like not adding new accounts, but also the ability to sustain those accounts to make sure they're reordering as well. and continue to accelerate our expansion of market share within our existing accounts. And that's where a lot of our growth was in Q1. Like I said, 90% came from existing accounts. So we have programs now, marketing initiatives, that reward surgeons to expand the market share. We have initiatives that reward a new surgeon that comes on board fresh out of residency. So those are programs to get that surgeon involved. used to Sientra, and we'll also have programs to have surgeons try out Sientra to see and be comfortable with our implants and comfortable with expanders as well. So those are the kind of things we do to expand our market share. And once they see the outcome, they see the patient outcome, how happy the patient is with their Sientra implants, in fact, a large majority, over 90% of our patients, that once they see themselves with a Sientra implant, They are very satisfied with the outcome of that surgery. So those are the kind of things we're doing to get the surgeon comfortable. And, again, part of the goal is to expand accounts. So we don't have a specific goal of we need to be the 3,000 accounts, 4,000 accounts. I prefer to have 2,500 accounts with a higher market share, like our Tier 1, to have a 70%, 80% share, than have 4,000 accounts that we are somewhere between 5% to 15%. Now, the challenge to get a market share for each account, because most surgeons carry two manufacturers, sometimes three. Majority of them carries two manufacturers, is they don't share that data. And so it's hard to figure out if our share is 5 or 20. But we know that the acceleration of some of those officers are buying from us once they've seen the patient outcome. So I'm hoping I answered some of the questions. It was hard to hear your question. Did I miss anything?
spk00: No, no. I appreciate that. That was a great response and I appreciate all the color. And just maybe lastly for me, I guess I'll be the one to ask a little bit here about Miradry at the end. I'm just curious, the operating expense guidance for the year that you did provide of $85 to $90 million, I'm assuming that's still inclusive of Miradry's contribution here in the first quarter or Is that excluding mirror dry? And then similarly, the $10 million sale price, the company paid $20 for it up front and had $14 million in milestones, performance-based, not all of which had been paid out. Just curious if you could elaborate on the process there for the valuation on the sale of mirror drying. Completely support the focus on the breast aesthetics, but just trying to level set one, the valuation, and then two, what was or was not implied there in the OpEx guide. Thank you.
spk10: Yeah, let me answer the second question. I'll let Val answer the first part of your question. In regards to evaluation, we did look and talk to at least two companies, actually a little more than that, and discuss what makes sense for Miradrive, companies that could bring on board. And obviously, as you discussed that, you also assess the fit. You assess also how the valuation economics of it. And at that time, we're looking what made sense from our revenue goals for 2021. And the $10 million seemed to be a proper fit for where we're at in 2021. At the same time, it is really the goal is place Miradry with a company like 1315 that's set up a great team to take over Miradry. And so we can refocus 100% on brass augmentation reconstruction. It gives that freedom for us to do. We may not have a commercial team in the U.S. dedicated 100% to Miradry, but all the shared services are working very closely in supporting Miradry. After we close this deal, we'll be able to dedicate 100% to Sientra and not be distracted by all the different activities of Miradrive. And in the meantime, Miradrive is going to have a fantastic support from 1315, a great team that's going to focus 100% on capital equipment, 100% tip sales, 100% our customers and their team, which would be really a great advantage for them. Val?
spk05: In terms of OPEX, we still expect our range of OPEX to be 85% to 90%. We had nearly moved all of the GNA into our normal operating inside the Shared Service Center, so we're not going to see a big downturn in OpEx because of the elimination, because we had already eliminated most of the costs during the process of the 2020 initiatives taking place.
spk00: Thank you.
spk06: Thank you. Our next question comes from the line of Matt Bullock from Maxim Group. Your line is now open.
spk03: Hi, yeah, this is Matt on for Anthony Vendetti. I was hoping you guys could touch a little bit on the cadence you expect for OpEx going, going throughout the rest of 21. Do you expect slightly higher in second quarter and then scaling down a little bit in the third and coming back up on higher sales in the fourth? And then if you could touch on your production capacity, if you, foresee needing to increase your manufacturing going forward to support growth. Thanks.
spk05: In terms of the OPEX cadence, we expect the quarterly cadence to be pretty flat over the next three quarters, so about even.
spk10: And in regards to manufacturing in Franklin, Wisconsin, the team have done a great job improving yield, improving and lowering the cost of manufacturing implants there. to the point that we're in really good shape for the future in regards to our cost of goods sold. But what we're making today, we're not selling tomorrow. What we're making today, we're probably selling this fall or in the middle of the fourth quarter. We're still selling inventory from last year. So that's an outstanding performance. And like I said before, we are working seven days a week right now. I'll have two shifts right now going on. We'll have capacity to add more shifts. We added additional... space right now, right there in Franklin for office space. So we're in really good shape right now from our manufacturing facility and making our implants. And obviously, we'll make our expanders in Montana. But really well supporting the demand that's been created by the commercial team.
spk03: Excellent. Thank you.
spk06: Thank you. At this time, I am showing no further questions. I would like to turn the call back over to Oliver Bennett for closing remarks.
spk09: Thank you, Operator. We would like to thank everyone for joining us on our first quarter 2021 earnings call. As Ron mentioned in his closing remarks, we are very optimistic for the remainder of 2021 and look forward to updating you all on our progress at our second quarter earnings call. Wish you all a wonderful day. Thank you.
spk06: This concludes today's conference call. Thanks for participating. You may now disconnect.
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