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spk00: Good day, ladies and gentlemen. Thank you for standing by. And welcome to the CNTRA third quarter 2021 earnings conference call. At this time, all participants are on 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 the star then the one key on your touchtone telephone. Please be advised that today's conference may be recorded. If you recall operator assistance, please press star then zero. I would now like to hand the conference over to your speaker host, Oliver Bennett, General Counsel's Chief Compliance Officer. Please go ahead.
spk04: Thanks, operator. Good afternoon and welcome to the CIENTRA third quarter 2021 earnings conference 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 securities 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 will file on Friday. 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, Andy Schmidt, our Chief Financial Officer, and Denise D'Alias, Cientra's Vice President of Research and Development. I will now turn the call over to Ron. Ron.
spk07: Thanks, everyone, and thanks for joining us today in our third quarter 21 earnings call. The core mission of Cientra is to enhance lives by advancing the art of plastic surgery. This mission is reflected in our focus on board-certified plastic surgeons and our goal to become a market leader in this category. You're going to hear today that we're making significant progress towards becoming the partner choice to plastic surgeons, by providing both reconstruction and augmentation products and services. This focus has enabled us to deliver over 20% plus growth for the past five quarters in a row, including this quarter, which showed exceptional results and an all-time high for total accounts. Net sales grew 28% over the prior year. Importantly, this growth was primarily driven by a 33% increase in our reconstruction market demonstrating the strength of our product portfolio. We saw excellent Salesforce execution in the third quarter, driven by dramatic growth in existing accounts for both reconstruction and augmentation. As a matter of fact, the growth from existing accounts in the third quarter represented 75% of the overall growth. We also added more than 300 new accounts this quarter, bringing our total number of accounts to an all-time high of 2,700 accounts. We're seeing the benefit of a greater emphasis on creating patient demand for sanitary implants through unique marketing initiatives and partnering plastic surgeons. Our patient acquisition efforts have been key to driving greater physician loyalty. Year to date, we have referred now almost 17,000 patients to our plastic surgeon customers. Our reconstruction strategy and execution is working, as this quarter was the best quarter in Cientra's history. And based on the latest data obtained from IQVIA, Cientra's year-to-date share of hospital purchases has increased across both implants and expanders by three share points. And according to this data, Cientra is the only brand so far with sequential year-over-year market share gains for the past three years. We also reach all-time highs in revenue for both tissue expanders and implants used for reconstruction. And 75% of recon revenue came from existing accounts. Our strategy to expand market share with existing accounts while adding new accounts to drive future sales is working. We'll continue to accelerate our market share gain and we're well-positioned to grow in this space due to the demand created by the safety of our products and the strength of our GPO contracts. Our team is focusing on the highest volume hospitals in the U.S. while leveraging the momentum of new account gains and increased product adoption. We're delighted to see the addition of 130 new hospitals this quarter, which we expect to feel future growth as it typically takes four to six months for new accounts to start generating revenue. The reconstruction business favors product safety to provide the best possible patient outcomes and to minimize complications which can reduce re-operations. We're very pleased to share that an independent study from Stanford University's School of Medicine confirmed that Cientra's AlloX2 dual-port tissue expander enables efficient management of seroma and early targeted intervention in the pre-pectorial breast reconstruction. confirming that we're leading the way with innovative technologies designed to improve patients' lives and procedural outcomes. We also saw outstanding commercial execution supporting our strategy to expand our market share in medical facilities performing reconstruction surgeries. We hosted several education events with almost 90 hospitals and surgery centers represented at those events. We believe it's important that we do more than provide superior products and services, but that also we give back to the community. We recently announced that we partner with Mission Plasticos, a nonprofit organization, to provide access to breast reconstruction surgery for women in poverty across the U.S. We're excited to share that almost 100 surgeons already signed up to perform free surgery using our products. And contrary to expectations, the brass augmentation market continues to flourish. Market data shows that overall, year-to-date, brass augmentation is a four-year high. It's up 17% over 2020, 9% over 2019. In fact, it's the highest in history. The interest market share continues to grow and now is estimated to be close to 11% in brass augmentation. while the comparable quarter in 2020 was estimated to be slightly over 6%. Our customers' loyalty and stickiness is the real difference here for us. When they come to us, they stay with us. And consumer enthusiasm towards breast augmentation remains very strong. According to recent market research, 74% of women considering implants indicated they are likely to get breast augmentation within the next 12 months. Our brand growth is fueled by our efforts to consumerize the category, and when consumers ask for a brand, 71% of surgeons will use that brand of implants. 34 million consumers are reached online by multiple digital platforms, by serving up educational content for those considering breast augmentation and guiding them to a C-intra surgeon. Our online presence supports our message of safety and high patient satisfaction. That assurance and peace of mind is continuously opening doors for us. We started a new program called Cientra Academy to drive pull through at the count level. To date, we have experienced two times revenue growth among surgeons that attended the program. And based on initial success, we'll be scaling up this program next year. Cientra is refocusing innovation to fuel our future growth and is backed by our commitment to best in class safety profile. We're on track for year-end 510K submission for our next-generation tissue expander, Allo X2 Pro. As we move through the final quarter of the year, we'll continue to see strong momentum in both our augmentation and reconstruction markets, setting up for a strong finish to the year and, importantly, a healthy start to 2022. Andy will now give more details on our financial performance.
spk05: Thanks, Ron. Our third quarter was a great quarter on many fronts in terms of commercial performance and in terms of key business milestones that will set the stage for a strong 2022. Before I dive into the financial results, let me address a key structural accounting item that is represented in our current period financial statements. The company worked to modify our convertible loan agreement documents to allow us to employ equity accounting in terms of our $60 million convertible debt. In essence, we no longer are required to treat the loan as a derivative instrument. The key outcome is that in Q4 and going forward, there will no longer be any quarterly P&L or balance sheet fair value adjustments related to the debt. The financial statements will reflect the loan exactly as it should be, a $60 million loan. Our current period results do show a much improved set of financial statements due to this loan modification. The final adjustment in third quarter was a reduction of liabilities, an increase in shareholders' equity, and a big plus on the P&L statement, somewhat offsetting prior period non-cash charges associated with the past derivative accounting. The second very positive finance-driven outcome this quarter was the forgiveness of our $6.7 million PPP loan. This also shows as income in the quarter, a reduction in liabilities, and is a true cash positive event for the company. An operations-related big win for the period was the physical move of our distribution center from Santa Barbara, California to Franklin, Wisconsin, where we manufacture our implants. This move will create a positive efficiency opportunity for us in 2022 and going forward. However, it does carry with it transition costs incurred in the third quarter that I will discuss shortly. Finally, We continue our ERP system migration August 1st to include our logistics and order-to-cash processes. This move will promote our ability to scale our future business processes to address the high demand we have for our products. Now, shifting to our Q3 21 financial results. We recorded record plastic surgery Q3 revenue results, which brings our running total to five consecutive quarters of record revenue performance. Cientra posted revenues of $19.6 million as compared to $15.3 million in Q3 2020, an increase of 28%. While a period that is seasonally affected by surgeon vacations we saw continued strong performance from our augmentation customers and a big performance from our reconstruction customers. Gross margins for Q3 21 was 54%, which is consistent with Q3 of 20. As a key driver to gross margins is product and channel mix, 54% may seem to be counterintuitive given our strong performance in the reconstruction space. We experienced consistent price stability across our entire product line and, as expected, product cost performance. What is unique for this quarter is the distribution move I mentioned earlier. Cientra expenses distribution costs in the period incurred to cost of sales. A natural part of our distribution center move is the additional cost of shipping inventory from Santa Barbara, California to Franklin, Wisconsin. In addition, we did not shut down our product shipping for a single business day in the quarter, requiring us to essentially run two distribution centers at the same time during Q3. This added cost reduced our gross margins by approximately two percentage points in Q3. In Q4, we will continue to see additional distribution costs as we expect to spend time in the quarter continuing to organize our new Franklin Distribution Center while shipping to anticipated strong customer demand. All said, we are still confident that the changes we are making in 2021 will help us achieve higher gross margins in 2022. Okay, switching to operating expense. Total operating expense for Q3 2021 was $22.3 million, as compared to $17.8 million in Q3 of 2020. The primary increase in expense was due to sales and marketing, which represented $2 million of the $4.5 million increase. The increase is as expected as the company has invested and will continue to invest in our go-to-market assets to capitalize on the future market opportunity that lie ahead. The current period operating expense is comparable with our Q1 of 21 and will vary period to period, primarily driven by sales and marketing activities, which has a variable cost component. Total gap profit from continuing operations for the current period was $28.4 million. The profit includes other income of $42.2 million, which reflects the final adjustment gain of $35.6 million related to the modification of our $60 million convertible debt agreement and the relief of our PPP loan of $6.7 million. Adjusted EBITDA for Q3-21 was an $8.3 million loss as compared to a $7.2 million loss for Q3 of 20. Switching to key balance sheet items. We ended the September 30, 2021 period with a cash balance of $66 million. This compares to a balance of $55 million at December 31 of 2020. The net increase in cash is due to our Q1, 21 capital raise and other financing activities that netted $34.3 million in cash this year. Year-to-date cash used in operations was $29.6 million. However, $7.6 million of that amount was attributed to an increase in accounts receivable due to increasing 2021 sales and our transition in ERP systems in our current quarter, which caused the delay in delivery of customer statements. We expect to recapture much of that increase in accounts receivable over the next quarter to two quarters. We also increased inventories by approximately $12 million year-to-date to address increasing sales and robust product demand. Finally, the sale of Miradry resulted in an inflow of $11.3 million during the year, which was slightly offset by forecast CapEx of $4.9 million year-to-date. Total debt of approximately $76 million at September 30, 2021 reflects the relief of the $6.7 million PPP loan previously discussed. Total outstanding shares at September 30, 2021 were $58 million. Now turning to guidance for 2021. We are raising the lower end of our revenue guidance and now expect plastic surgery revenue in the range of 76 to 78 million, reflecting growth of up to 41% compared to sales of 55 million in 2020. We continue to expect 2021 annual operating expenses to be in the range of 85 to 90 million. Finally, looking at our investor relations calendar, we have a busy Q4, and we'll be presenting at the Stiefel Healthcare Conference next Monday, participating in the Craig Hallam Alpha Select Conference next Tuesday, and presenting at the Stevens Investment Conference in Nashville on December 3rd. At this point, I'll turn the call back to Ron.
spk07: Thanks, Andy. We are very optimistic, as we had in 2022, and very confident that we can accelerate our market share growth by leveraging our unique strengths. It all starts with people. Our commercial team is focused on innovation, including patient acquisition, surgeon education, and a partnership with Butterfly. We'll add to additional recon hospitals added during a time when the market is bouncing back. We'll also have products that have an unmatched safety profile. We believe they will become the partner choice for plastic surgeons as we focus on enhancing lives by advancing the art of plastic surgery. And now I'd like to open the call up for Q&A. Operator.
spk00: Thank you. Ladies and gentlemen, if you'd like to ask a question at this time, you will need to press the start and the 1 key on your touch-tone telephone. To withdraw your question, you may press the pound key. Please stand by while we compile the Q&A roster. Now, first question coming from the line of Alex North with Greg Helm. Your line is open.
spk03: Great. Good afternoon, everyone. I was hoping we could start out on the implied Q4 guide here. Just given the seasonally stronger Q4 versus Q3, can you just expand on next quarter, why you think that next quarter will be down the flat sequentially, and then perhaps can you outline how you're thinking about growth going into 2022?
spk05: Thanks. This is Andy. Well, first of all, we don't think Q4 is a seasonally down quarter. Q3 was our seasonally down quarter, which we thought performed quite well. We started Q4 with a lot of momentum, keeping us very busy. We're very optimistic about Q4, hence why we're bringing our guidance up, obviously targeting the higher end of the guidance. We're off to a great start. We think we're going to finish the year very strong.
spk03: And is there anything on the 2022 commentary?
spk05: We don't have guidance out at this point in 2022. Matter of fact, we'll be working with our board of directors in Q4 in terms of our approval of 2022 and forward-looking plans, and we'll look to the future to actually provide that guidance.
spk03: Okay. That makes sense. And then we obviously keep hearing about strong demand for implants in the market. So how do you think – this demand plays out here over the next couple of years? Do you think the demand eventually rolls over, or do you think this is some sort of renewed growth phase for breast implants that we're in?
spk07: Alex, it is a new normal. Right now, here today, it has been the highest ever number of augmentations in the U.S., and the new normal now is surpassed by 9% 2019 pre-COVID. The expectation that the market continues to grow in the next two years, we're not seeing a slowdown this quarter. We have not seen a slowdown here today. And what we've seen a lot the last four or five months is revisions. It's the women that come in once they have an implant for 10 to 12 years, they're coming in right now and getting new implants. So across both revisions and primary augmentation, the market is very, very robust. But the critical thing for us in this quarter was an all-time high for our reconstruction business. We saw all the strategic work that we did in the beginning of the year with results now for gaining market share across hospitals and really seeing the revenue that all the work that was done four or five months ago.
spk03: That's great. Appreciate the update. Thank you.
spk00: And our next question coming from the line of Margaret Kaxel with William Blair. Your line is open. Hey, good afternoon, Des. Thanks for taking the questions.
spk08: So I wanted to maybe start with the account base, which maybe you can turn me up on the exact number, but I think your account base is up 25% to 35% this year or so. So as those accounts come up to the company average in 2022, assuming they can do that, Is that something that you guys would look for for augmentation or breast product revenue growth, or are there other factors that obfuscate those numbers so we shouldn't just draw a line up to the right based on accounts?
spk07: Yeah, Margaret, you're looking at a total of 3,500 reconstruction hospitals and roughly 6,000 to 7,000 plastic surgeons. Now, keep in mind, for those surgeons, some of them are in the same office. There's still a lot of growth. As a share, we have 11% share in augmentation, and we have a 12% share in the hospital for breast implants and 15% for tissue expanders. There's a lot of growth still ahead of us. Part of it will be in existing accounts. As I stated, we have right now roughly 2,700 accounts, and those have a lot of possibility to continue to expand our market share. On the other hand, you have the ability to gain new accounts as we move forward in the next 12 months. And those are the things we'll be assessing from a deployment, make sure we have the right number of representatives in some areas, and also assessing the right number of programs as well. But there's a long ways to go still to slow down our current share growth. We don't expect that. We expect to actually accelerate our share growth in 2022. Okay.
spk08: Yeah, that's useful commentary. And then, you know, one of the things that we're sort of curious about, and this is the same thing as my colleague had asked before, but, you know, do you have any visibility around patient surgeries today versus the last few quarters? Meaning, are surgeons still, you know, three to four months booked up, for example? Is that range changing, and is that something that you're watching or, you know, not really part of the business because you're seeing the underlying demand over time building?
spk07: I just returned from Accenture Academy. It's a program that we did down in Austin, Texas. There was a lot of buzz in that meeting because some of those surgeons will be January before you're able to go in for surgery. Some of them may be able to sneak in right before the holidays. They're very, very busy. They're adding more surgeons. They're adding more staff. And I don't see that slowing down at all. And again, from a reconstruction, we're seeing a lot of demand from the hospitals that we have contracts now. And the same thing, I don't see that slowing down the next six months.
spk08: Okay. And if I could squeeze one more in, you know, on that hospital side. So you guys, I think a year ago, had talked about getting into the contract with Health Trust Purchasing Group. You're obviously... able to add share, but still 75% of growth is being driven by your twisting account. So all of that seems pretty favorable. And the question ultimately becomes, have you really seen enough out of that partnership? Or frankly, can that be a catalyst to ramp as we go out over the next four to six quarters and recon starts to come back full force into the market? Thanks.
spk07: I missed the beginning of your question. Are you referring to Butterfly Partnership?
spk08: The health trust purchasing group?
spk07: Yes. All the GPOs that we have contracted right now, we're seeing the results. That was part of our strategic investment that we did at the beginning of the year to really focus on reconstruction. That includes all the GPOs. That's one of them. and we're seeing the results in this third quarter. We had 74% of our sales for reconstruction coming from existing accounts, about 17% from new accounts. You see that happening third quarter. We continue to see the acceleration in the fourth quarter. All that is the work that was done the first six months and supports and sustains our strategy to focus on reconstruction. And one of the critical things is in the past two quarters, We saw about 38% of total sales coming from recon, and actually this quarter it was 46% came from reconstruction.
spk00: Okay. Thanks, guys. Our next question coming from the lineup. John Block with Spiegel. Your line is open.
spk02: Great. Thanks, guys. Good afternoon. Andy, maybe I'll just start with you on the gross margins, and I think I get the moving parts for the third quarter. of 2021 and having the duplication this quarter, are these headwinds fully resolved in the first quarter of 2022? I think you said there'd still be a stub in the fourth quarter. And if so, does that mean that we can still start next year in and around the high 50% range? Essentially, I'm sort of up 200 to 300 bps from the 2Q. I'm just curious if that's a good starting point. Or are there other moving parts we hear from a lot of our companies you know, supply chain issues, et cetera, that have crept into the equation over the past couple months.
spk05: John, when we look forward, we still see, again, that line of sight to getting to the high 50s plus. As you commented, Q4 will have that stub of our DC, maybe part of Q1, and then we're past that. And also, we expect 2022 to be a growth year. We don't have guidance out yet, but we expect it to be another strong growth year for us And we're going to grow in to that distribution center cost, the size of it, based on volume, based on, again, the efficiencies that we see ahead. So, again, we don't necessarily see headwinds that way, but I think you put it the right way. Each quarter is going to build on each quarter as we go into 2022 as we're going to keep building this company very consistently. We see the demand, and we now have the right facilities, the right people in place. We did see, like everyone else in the COVID environment, slightly increasing labor rates. But for us, in terms of our high margin product and type of business that we're in, it really doesn't affect us as it would affect a 15% to 20% gross margin type business. So we see it somewhat on the labor side, but not significantly in terms of the overall equation. We do not yet see any issues with materials in terms of supply chain. From that perspective, we've been consistent and in very good shape.
spk02: Great. That's very helpful. That's a lot of color. Thank you. And then just to pivot, Ron, I know you're not going to give 2022 guidance right now, but can you just at a high level talk to some of the new opportunities next year? You know, they appear pretty fulsome. Canada, Alex2Pro. Are there any other international opportunities that we should be thinking about Despite the three-player structure of the market, typically I don't think there's really been much of any price realization, maybe more headwinds in this inflationary environment. Can that prove to be more of a tailwind in 2022? We just love your high-level thoughts on some of the incrementals next year. Thanks.
spk07: John, I think the opportunities are still in the U.S. are still the number three player from augmentation at 11%, and they're accelerating the market share increase. And we saw that as well in the hospital environment, where we quickly went at the beginning of 2020 of a 12% share for tissue expander. We're at 15% share now. That's the 22 opportunity, the continued acceleration share growth. In Canada, yes, we are expecting to hear from Health Canada this quarter. And in regards to LX2 Pro, I do have our vice president of R&D with us and the head of regulatory, Denise Dials. As you know, she joined Cientra back in June, and she's from Established Labs. So, Denise, any comments about LX2 Pro?
spk01: Yeah, sure. Thank you, Ron. Well, we're very excited about this upcoming submission with AlloX2 Pro, not only because of the innovation and all the features that are really designed for patient benefit and patient safety, but also because it's a buildup up on our platform of AlloX2 that we know has a lot of benefits and resonates with the plastic surgeons. So we'll be building up on this platform, and this will be a continuous rollout of innovation in our pipeline. AlloX2 Pro brings Benefits such as MRI compatibility, less interference with imaging, less interference with radiotherapy treatments, but also enhanced patient comfort and state-of-the-art location technology. So we're very excited about this new product because, again, it's a refocus on innovation, and you will see a constant rollout in the coming months.
spk02: That's great. Thanks, Denise. Thanks, Ron.
spk00: As a reminder, ladies and gentlemen, to ask a question, please press star one on your touch-tone telephone. And our next question coming from the line of Anthony Bonetti with Maxim Group. Your line is open.
spk06: Thanks. Yes, just talk a little bit about the market share gains. I think you said you're at around 11%, Ron, up three percentage points. You know, do you see, as you move forward here, what do you think the opportunity is by the end of 22 in terms of the ability to continue taking market share? I know it's not just, you know, taking market share from others, but just growing the business. It's a two-pronged approach. But do you see that trend continuing at the current pace, increasing, staying about the same?
spk07: Anthony, it was slightly over 6% annualized last year, and now we're close to 11%. I see us expanding the market. The market is robust right now versus what it was back in 2020, obviously. The market is growing, so you have the opportunity to continue to accelerate share growth with all the programs that we do in regards to physician loyalty and ensuring the physicians stay with us when they come on board. When they flip to a Sientra, they stay with us. So we have the opportunity to continue to accelerate that in the next year. We see an acceleration. Are we going to double from 11 to 22? I don't know, but we have very, very aggressive goals for next year because we are confident that our products and our 10-year safety that we have for our products set us apart. And you also have our 20-year platinum warranty that our competitors do not have. Once those physicians attend our programs, we've had over 45 surgeons attend our Sientra Academy, They come out saying things like, this is the best program they've ever been to. And this program I just came back from last weekend, I had surgeons tell me over lunch, they said, I've never had a company help me help my business and do the things you guys are doing to help bring the patients. We have referred 17,000 patients to different surgeons. They're on the Ciantra network. But some of those patients are lost because by the time they go to the website, they don't understand the website. So we're teaching them how to redo their website. We're teaching them how to retain those referrals so they're not lost in space. We're very excited about next year when we see acceleration of share growth next year.
spk06: Great. That's very helpful. And then just I know you touched on the supply chain issue a little bit. It sounds like you're well prepared for that. But are you seeing any cost increases in any of your products on the manufacturing side?
spk05: No, actually, we're seeing it the opposite. We keep finding new efficiencies. We've made tremendous gains over the last year, year and a half, and continue to make those gains. And, again, Denise is with us here. She is a key hire in terms as well of terms of new product but also innovations in terms of productization and also in terms of what we're doing in manufacturing. So I'm seeing actually a lot of stability in the model to where as we grow, we're seeing great price stability, not discounting, just real strong price stability. Okay. Again, and we're seeing dropping costs. Even though, again, labor rates might be up, we have volume buying opportunities on materials, which actually is the opposite of what perhaps other people are seeing with supply chain. We see opportunities to reduce those costs as well as, again, reduce costs from efficiency perspective. So when we go into 2022, we're going to see market expansion, but we will see, again, the ability to take advantage of the efficiencies. based on the infrastructure we've invested in to date, payoff years are going to be 2022, 2023, and on. Well, that's great to hear.
spk06: That's definitely refreshing from what we've been hearing from other companies as they report their third quarter earnings. Andy, maybe just, you know, obviously the move from Santa Barbara to Wisconsin is going to save costs. What are the expected savings on an annual basis just from a, from an SG&A perspective or a real estate perspective in 2022? I know there's some, like you said, there's some charges associated with that, but what would be the ongoing annual savings after you eliminate the one-time costs with the move?
spk05: I'll start with the easy one to quantify. Moving from Santa Barbara, California, the Franklin, our distribution center, takes roughly a million dollars of non-value-added shipping fees from taking finished product that's produced in Franklin, putting it on a truck, and sending it to Santa Barbara, then to be distributed. So that million dollars comes into play next year on an annualized basis. The other part that comes into play is we now have a facility and an organization that can scale with the business. Obviously, a big growth year for us this year. Again, we do not see or have any plans to slow this growth. So we're going to be able to grow in to basically that facility, which will then, as a percentage of sales, bring the cost of distribution down. So we'll be looking at that, and I don't have a specific number for you, but we do have eyesight in terms of how we actually take advantage of scale. So that will be in front of us in 22 and especially 23 and onward. And otherwise, in terms of SG&A, so I was talking more of COGS, we were in a total of four facilities here in Santa Barbara, and we're bringing that down to where we'll have one lease in Santa Barbara in 2022, be doing a lot of consolidation out of our Franklin, Wisconsin sites, and be minimizing our presence here in Southern California, but we'll still have a presence. But that alone, as well, will produce some significant savings in 2022 and 2023. Okay, great.
spk06: Thank you very much. I appreciate it.
spk00: And we have a follow-up question from John Bluff with Stifel Yolanda-Sopin.
spk02: Yeah, guys, sorry for the follow-up. I really usually don't do this, but I'm getting a lot of emails. I'm sure my colleagues are as well. Can we just go back to the way we led off the Q&A? I mean, it's another strong quarter. There's market share gains that are very apparent. You think the market's in really good shape, and you have a seasonal tailwind sequentially, and you have more accounts in 4Q going into 4Q than you had going into 3Q. And I think what we're all just sort of scratching our head a little bit trying to reconcile is, why would the midpoint of the range imply flat sequential revenues? And if the answer is just, you know, it's still a COVID environment, we want to leave some room for error, a sense of conservatism, that's certainly more than fine by me. I just want to make sure we're not missing anything or there's not a message being conveyed that shouldn't be. So can we just sort of go back to that starting point and try to address that? Thanks for the time.
spk07: Yeah, John, we are not seeing, even now, coming to November, a slowdown. We're seeing exactly what we saw in the third quarter and the normal patterns for Q4. And that's why I'm very comfortable, if somebody asks me the upper end of our guidance, I'm very, very comfortable with that. But until you actually finish the year, You don't know. But we are very confident this is going to be by far the best year ever for the company, and we're very confident being at the upper end of our guidance based on what we expect for Q4.
spk02: Fair enough. Thanks, guys.
spk00: And I'm showing no further questions at this time. I would now like to turn the call back over to Mr. Ron Menezes for any closing remarks.
spk07: Well, thank you, everyone. I will look forward to see some of you in the next two weeks at the different investors' conference. Appreciate your time. All of you have a great afternoon.
spk00: Ladies and gentlemen, that does end our conference for today. Thank you for your participation. You may now disconnect.
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