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spk09: Good afternoon and welcome to Shockwave's third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Debbie Castor, Vice President of Investor Relations at Shockwave, for a few introductory comments. Thank you. You may begin.
spk08: Thank you all for participating in today's call. Joining me today from Shockwave Medical are Doug Gottschall, President and Chief Executive Officer, Isaac Zacharias, President and Chief Commercial Officer, and Dan Puckett, Chief Financial Officer. Earlier today, Shockwave released financial results for the quarter ended September 30th, 2022. Copy of the press release is available on the Shockwave website. Before we begin, I would like to remind you that management will make forward-looking statements during this call within the meaning of federal securities laws which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation, statements related to our sales and operating trends, business and hiring prospects, financial and revenue expectations, and future product development and approvals are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties, including the impact of the COVID-19 pandemic 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 refer to the risk factors section of our annual report on Form 10-K on file with SEC and available on EDGAR and in our other reports filed periodically with SEC. Shockwave disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 7, 2022. And with that, I'll turn the call over to Doug.
spk02: Thanks, Debbie. Good afternoon, everyone, and thank you for taking the time to join us to review Shockwave's results for the third quarter of 2022. We are pleased to share the results of another strong quarter delivered by our global team. Sales in the third quarter of $131.3 million represented an increase of 102% from the third quarter of 2021. The team delivered these results despite some of the macro headwinds that have been described by others in our sector. Fortunately, our team and our customers have become very nimble in their ability to adapt to the changing circumstances around them, and to remain focused on optimizing patient care. We continue to witness strength across the entire Shockwave franchise, which reflects the widespread appeal of our technology and bodes well for the long-term health of the business. In the U.S., coronary and peripheral sales both more than doubled from the third quarter of 2021. Internationally, our progress was also quite impressive, with sales up 68% from a year ago. The direct investment we have been making is paying off nicely, and our international sales and marketing team now stands at 53. Later in the call, Isaac will provide additional insights from the field, but I would first like to share some commentary around recent progress across the Shockwave organization. I will start with a few updates on some of the new products in our portfolio. We were pleased to be granted CE Mark of our C2 Plus coronary product in Europe in late August. C2 Plus adds 50% more pulses, going from 80 to 120. Since our initial launch of C2 in Europe, our customers have often wished they had more pulses so they could deliver more energy to a particular lesion or treat additional lesions identified during the procedure. The additional 40 pulses should go a long way towards satisfying our customers and further enhancing outcomes. We started a limited market release in Europe, and if all continues to go well, we'll move forward with the U.S. regulatory process. We also received FDA approval of our L6 peripheral catheter, a bit ahead of schedule, and are about to commence a limited release of that product. L6 offers two new features, larger diameters and more concentrated power. Our customers have expressed interest in larger diameters for the larger vessels above the SFA, and in response, L6 has 8, 9, 10, and 12 millimeter diameter versions. We positioned the six emitters in L6 closer together than in our other catheters, which concentrates the power and will enable delivery of the sonic energy over a greater distance. This approach will enable L6 to maintain the superb efficacy in large vessels that our customers have become accustomed to in smaller diameter vessels. Next, M5 Plus continues to perform extremely well, and we are encouraged to see an increasing use of the 3.5 and 4 millimeter sizes which indicates an increasing use for below the knee lesions. The longer shaft of M5 plus enables it to be used below the knee, whereas the original M5 was generally unable to reach those lesions. M5 plus offers a 50% longer treatment zone than S4, which is attractive for longer lesions. And we see the expansion of M5 plus into the BTK segment as a first step towards a more sophisticated below the knee portfolio. We are also continuing to invest in data generation to both support and expand the use of IVL in different patient populations. At TCT, we announced the initiation of EmpowerCAD, which will be the first ever prospective coronary intervention study consisting entirely of female patients. Historically, females with coronary artery disease tend to have less favorable outcomes than males, particularly when using atherectomy. Our existing data have consistently shown similar safety outcomes for IVL in both sexes, which caught the attention of our investigators and motivated us to explore a female-only study, which will include a broader set of real-world lesions than were studied in our earlier trials. There were multiple IVL datasets presented at TCT this year. The session that seemed to have the most significant impact was our symposium entitled Controversies in Calcium, an open-minded debate on approaches to nodular calcium. As we have mined the data from our trials, the results across our studies confirm that IVL delivers consistent results in terms of stent expansion, minimum stent area, and procedural safety regardless of the presence or absence of nodular calcium within these target lesions. These findings have been very well received by our customers at large, and we are anticipating a publication in the not too distant future. Lesions with calcified nodules account for roughly 20% of the problematic calcified lesions, and we see a meaningful opportunity to move these nodular cases into the IVL camp now that we have such compelling data from our trials to help our customers make the right choice for their patients. And the final point on the clinical front, we were fortunate to be accepted for a late-breaker presentation at Viva for the third year in a row with the results from our PAD observational study presented last week. This study included over 1,300 patients, which is the largest number of severely calcified vessels treated in a core lab adjudicated peripheral study. Those present at the meeting were impressed by our commitment to generating robust data in the peripheral space. The key takeaways we heard from the attendees were that our results are remarkably consistent in terms of the efficacy of our therapy, regardless of which vessel is treated, and that IVL continues to demonstrate extraordinarily low adverse events in a very complex population. These data capped off an overall strong shockwave showing at Viva. And lastly, a quick reimbursement update. We were pleased last month to be granted a Category 1 CPT code for coronary IVL, which means that physicians will receive an additional professional fee when they use C2. This process now gets turned over to the RUC committee to determine payment level, which will be memorialized in the final rule about a year from now and will become effective January 1, 2024. We are also pleased to have recently been granted reimbursement for coronary IVL by the Ministry of Health, Labor, and Welfare, or MHLW in Japan, at a level of 429,000 Japanese yen, which equates to about 3,000 U.S. dollars given current exchange rates. Our C2 system will be officially reimbursed in December, and our current plan is for our team to launch C2 in January in Japan. We expect that the Japan launch will start slowly but will become a meaningful contributor to our business starting in late 2023 and will be a great complement to our other growth engines. Our global customers continue to adopt IVL across a wide spectrum of their patients, which has enabled us to deliver consistent results despite external speed bumps like staffing challenges and exchange rates. Given the various internal and external considerations, We now anticipate delivering top line revenue in the range of $483 to $488 million for the full year of 2022, representing growth of 104% to 106% from 2021. With that, I will turn the call over to Isaac, and then Dan will share more detail on the broader business and financial results. Isaac.
spk05: Thank you, Doug. As Doug mentioned, we had another strong quarter across U.S. coronary, U.S. peripheral, and international. The M5 Plus launch continues to go very well. Physicians appreciate the enhancements that M5 Plus brings compared to its predecessor, and we are seeing strong volume growth in the U.S. and international markets. Our target is to complete the launch in the U.S. this year so that we can enter 2023 focused on driving penetration versus launching accounts. We are very pleased with the unit growth we are seeing for the M5 product this year. In the U.S., the volume for the M5 product family year to date is nearly 70% higher than the same period last year. The M5 Plus price uplift further contributes to the revenue growth of M5 product line in the U.S. The team has executed very well in this launch, and we have seen year-on-year growth rates of the average daily sales for the M5 products accelerate in 2022, with Q1 up 52%, Q2 up 75%, and Q3 up 124% compared to the respective quarters in 2021. In our international markets, we added marketing resources last year to focus on the peripheral business. With the efforts from the marketing group and the launch of M5 Plus, we are seeing over 100% growth in the unit volume of the M5 products internationally. While still a relatively small component of our revenue, the international peripheral business will be an important long-term contributor. We also continue to see solid progress in the S4 business, and we look forward to increasing the growth in our BTK business with improved products and strong clinical data, both of which are currently being developed. Turning to the coronary business, we continue to see strength in all geographies. This is a credit to our sales teams and distribution partners, as they have been able to deliver strong growth in the coronary business while executing the launch of M5+. In 2023, we expect incrementally more focus on driving coronary adoption. Now I'd like to spend a few minutes providing some detail on how we look at the future potential of the coronary business. We've updated the investor deck with specific references from clinical studies that show moderate to severe calcium is present in at least 30% of stable and unstable coronary PCIs, a number that is reflected in our current TAM. Most of these studies rely on angiographic core labs to identify calcium. However, we know that when intravascular imaging is used, calcium is detected more often than it is by angiography. So, the prevalence of moderate to severe calcium is likely higher than 30% of PCI and is growing as the prevalence of significant predictors such as age and diabetes are on the rise. The use of intravascular imaging is increasing in the US, particularly in complex PCI. And as you know, it is used nearly 100% of PCI cases in Japan. Bottom line, it is increasingly evident that the prevalence of calcified PCI likely exceeds 30% and is growing. Our goal is to maximize the penetration of IVL and calcified PCIs. Relative to the prevalence just mentioned, we are still in the early innings. To realize this potential, we need to have a steady cadence of new products supported by robust clinical data. The first of these new products is C2+. We are also well into the development of the next version of our coronary product that will follow C2 plus in the market in the coming years. We have invested in the EMPOWER study and are currently assessing other coronary trial opportunities. We have recently initiated new sales tactics and organizational changes intended to drive continued near-term penetration increases. In the U.S., we spent the early part of this year analyzing rep, physician, and account behaviors to determine why we have variable penetration in accounts. For context, we have many accounts that are already using IVL at mid-teen percentages of their PCIs. We also have many accounts that are using IVL in the low single-digit percentages of PCIs. Based on this work, we have initiated six work streams that will help our team increase adoption of coronary IVL. These include acquiring better procedural and physician-level data to improve our targeting, enhancing our sales training, and increased peer-to-peer physician education. I'm confident that this work will help us continue to change how and when IVL is used. We are also focusing on optimizing the structure of our territories. We currently have approximately 1.6 clinical specialists in each territory. The ratio of clinical specialists to territory managers had increased from 1.2 in Q3 of 2021, as we added approximately 20 territories and 50 clinical specialists over the last year. The territory managers focused primarily on launching accounts and managing the business aspects of the territory, while clinical specialists worked to drive penetration within those accounts via training, education, and case support. In Q3, our average territory generated approximately $1.3 million of total revenue. Note that this compares to average territory revenue of approximately $1 million in Q1 of this year. By the end of 2023, we expect to have between 110 and 120 territories and will average over two clinical specialists per territory. As we grow next year, we also expect our territory productivity to increase so that our average territory in Q4 of 2023 will have substantially more revenue than our average territory does today. The additional territories and increased ratio of clinical specialists to territories will result in having fewer accounts to service, which enables the team to work closely with all physicians in each account. It will also ensure that we can support the peripheral business while launching new coronary products and vice versa. In addition to evolving sales tactics and organizational structure, we expect to see continued progress on coronary reimbursement. The procedure economics for the hospital and physician both have an impact on expanding adoption of new technologies. Using the peripheral U.S. business as an analog, I noted previously that we have seen the average daily sales growth of the M5 product family accelerate each quarter this year in the U.S. This acceleration was based on the launch of a new product coupled with improved hospital economics. With the reimbursement change this past January, hospital payments for an outpatient above-the-knee procedure involving IVL increased by $5,000 to $7,000, which is greater than the hospital's cost to purchase an IVL catheter. Currently, coronary IVL catheters are reimbursed under a transitional pass-through payment, which is intended to offset the cost of the device. This clearly has helped facilitate access to the C2 device, while CMS gathers data on the cost of coronary IVL procedures. As we look beyond the transitional pass-through program to the eventual long-term reimbursement scenario, we're on a path that is similar to peripheral. The incremental payments to hospitals for procedures involving coronary IVL should exceed the cost of the device. We expect that the cost data from the TPT program will support an incremental $7,000 payment to hospitals for coronary IVL procedures compared to the payment for a standard stenting procedure. Similar to our above-the-knee situation, this incremental payment would be greater than the cost to purchase a C2 catheter. Turning to the physician fee, we are pleased that coronary IVL was granted a level 1 CPT code starting in 2024. This should enable physicians to receive incremental professional fees when using IVL. So, looking ahead in the U.S., we will have a new product in C2+, and a larger field footprint with improved hospital and physician economics that will enable a deeper penetration of coronary IVL. Outside of the U.S., we are fortunate to have very strong payments set in Japan at the outset of our launch for both the hospitals and for physician fees. We are also working on reimbursement in other countries, although they tend to be less predictable than Japan. While uncertain if we can improve the reimbursement in any country, it would be an incremental tailwind for future growth. Our highest volume customers already have an IVL-first mentality and have quickly changed their behaviors when it comes to treating calcified PCI. With the efforts discussed above, we hope that every customer will have an IVL-first mentality when it comes to calcified PCIs. With that, I will now turn the call to Dan to review the financials.
spk03: Thank you, Isaac. Good afternoon, everyone. Shockwave Medical's revenue for the third quarter ended September 30, 2022, was $131.3 million. 102% increase from $65.2 million in the third quarter of 2021. U.S. revenue was $110.5 million in the third quarter of 2022, growing 109% from $52.8 million in the third quarter of 2021. Coronary products contributed $77.3 million to U.S. revenue in the third quarter of 2022, 109% increase from $36.9 million in the third quarter of 2021. Perforal products accounted for $32.9 million of U.S. revenue, an increase of 111% from $15.6 million in the third quarter of 2021. Generators accounted for $0.3 million of U.S. revenue in the quarter. The growth in U.S. revenue is driven by increased utilization of existing accounts, new account adoption of IVL, and continued Salesforce expansion. International revenue was $20.8 million in the third quarter of 2022, a 68% increase from $12.4 million in the third quarter of 2021. International revenue from coronary products was $15.7 million in the third quarter of 2022, a 54% increase from $10.2 million in the third quarter of 2021. International revenue from peripheral products was $4.1 million in the third quarter of 2022, a 95% increase from $2.1 million in the year-ago quarter. Generators accounted for $0.9 million in international revenue in the third quarter of 2022. The increase in international revenue over the prior year period reflects continued geographic expansion, including China, growth in customer demand, and the growth of our direct sales force in Europe. The increase in international revenue is partially impacted by unfavorable foreign exchange rates. Looking at total revenue by product line, our coronary products accounted for $93 million of total revenue in the third quarter of 2022 compared to $47.2 million in the third quarter of 2021, representing a 97% increase. Our peripheral products accounted for $37 million of total revenue in the third quarter of 2022 compared to $17.7 million in the third quarter of 2021, a 109% increase. In addition, the sales of generators contributed $1.2 million in revenue in the third quarter of 2022 compared to $0.3 million in the third quarter of 2021, a 369% increase. Gross profit for the third quarter of 2022 was $113.5 million compared to $54.2 million in the third quarter of 2021. Gross margin for the third quarter of 2022 was 86%. That's compared to 83% in the third quarter of 2021. Improvement in gross margin was primarily driven by product mix, as well as continued improvements in productivity and process efficiencies. Total operating expenses for the third quarter of 2022 were $76.7 million, a 49% increase from $51.4 million in the third quarter of 2021. Sales and marketing expenses for the third quarter of 2022 were $42.1 million, compared to $28.4 million in the third quarter of 2021. The increase is primarily driven by Salesforce expansion. R&D expenses for the third quarter of 2022 were $20.2 million compared to $13.7 million in the third quarter of 2021. The increase is primarily driven by headcount growth. General and administrative expenses for the third quarter of 2022 were $14.4 million compared to $9.3 million in the third quarter of 2021. The increase is primarily driven by higher headcount to support the growth of the business. Net income for the third quarter of 2022 was $35 million compared to net income of $1.9 million in the third quarter of 2021. Basic net income per share for the third quarter of 2022 was $0.97. Diluted net income per share for the third quarter of 2022 was $0.92. We ended the third quarter of 2022 with $250.7 million in cash, cash equivalents, and short-term investments. Additionally, in October of 2022, we entered into a $175 million revolving line of credit as a matter of routine corporate governance and to provide further financial flexibility. At this point, I'd like to turn the call back to Doug for closing comments.
spk02: Thank you all for joining us for the call today. I'm encouraged by the results we achieved this quarter, despite the continued macroeconomic challenges. Our global team remains focused on execution and operating efficiencies, balanced with investment in our pipeline to drive continued growth as we strive to provide the best solutions to improve the lives of patients. That will open the call for questions.
spk09: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Our first question is from Adam Mader with Paper Sandler. Please proceed.
spk04: Hi. Good afternoon, guys. Thank you for taking the questions and congrats on another nice quarter. Maybe to start just on the new guidance, I think it implies Q4 revenue of about $140 million. At the midpoint, if I'm doing the math right, which is up about 6% quarter over quarter sequentially, Q4 is typically a seasonally strong quarter for MedTech. You grew close to 9% sequentially Q3 over Q2. Maybe just walk through some of the assumptions in the new guidance range and how you're thinking about Q4, any color on how the business has trended in past weeks. Was there some conservatism baked in? And then I had a follow-up. Thanks.
spk02: Yeah, thanks, Adam. Isaac and I will probably tag the team on this one. Certainly, as reflected in the past quarter, we have great underlying momentum in the business and traction across all of our product lines and all of our geographies. So business is very healthy. What we tried to factor in to our sort of the next – well, this quarter is – the that strong momentum overlaid against the fact that there are there are other things like we do have more FX headwinds as we get to the back end of this year than we've seen historically there are a few shorter a few fewer days selling days than in the third quarter and while the team has executed incredibly well in the face of staffing shortages and the like, there are some larger centers where we see some impact on their volume, and we tried to, as best we could, factor in the fact that they're both in the U.S. and to some extent internationally. There are some procedure movements that we tried to consider what modest impact they might have on the quarter, so we factored in. what we considered some impact on the volumes that we might see in the top line versus the fact that we see tremendous traction with our customers.
spk05: Yeah, I think, Adam, hi, it's Isaac. We don't see anything that gives us pause. The momentum in the business is good. We're seeing great momentum internationally and in the U.S. We had TCT, Scripps, and Viva recently, and the customer interactions there were great. Talking to the team, our team members that were there, I think we like the momentum we've seen going into the quarter and think it'll be a strong quarter for us in Q4.
spk04: Very helpful color, guys. Thank you. And then for the follow-up, maybe for Dan, it looks like another nice step up in In operating margin, I have Q3 at 28% in my model. That's, I think, 350 basis points improvement quarter over quarter. We've been making some pretty significant jumps here over the past few quarters on the operating margin line. So how do we think about op margin and Q4 and also for 2023? And just walk us through kind of some of the key puts and takes there. Thank you.
spk03: Sure. You know, we're not providing guidance next year just yet. But Q4, I think, will be fairly consistent with Q3. We're going to see some fluctuations based on mainly our R&D line. We've got timing in there between clinical and just straight R&D that could cause some variations. But we've had a very favorable trend. And looking forward, we're going to continue to focus on the full P&L, the revenue, and the OPEX and the gross margin. But we're not tightening the screws to optimize our margin. We're spending what we need to spend to grow the business long term.
spk01: The main focus on obviously R&D. Thank you.
spk09: Our next question is from Bill Klovenick with Canaccord. Please proceed.
spk00: Hey, great. Thanks. Thanks for taking my questions. I'd like to zero in kind of on the guidance and maybe on the U.S. coronary. In the past, you've kind of provided us, and maybe I missed it, on what the reorder rate was on C2 in the U.S. And just, you know, as you think about the fourth quarter guidance, it looks like the U.S. coronary sequentially is kind of the slowest quarter we've seen nominally since the launch of C2. And just some of your thoughts is, do you think that may be you know, are you just starting to hit kind of more of a penetration rate where it'll be a little slower sequentially going forward, or was that potentially some summer slowdown that we saw in the quarter? Thanks.
spk05: Yeah, hey, Bill. I think, you know, we chose this quarter to provide a little more color on long-term corn area and how we're going to get it from where we're at today, which we're pleased with, to where we think it can be. And from a kind of launch metric standpoint, we're 18 months into that launch, so the kind of metrics on centers and who's using both and reorder rates, that's it. Everything's moving in the consistent direction with what we've reported previously, but it's just not very interesting going forward as we've launched most of the accounts at this point. We've still got some to go, but we've launched most of them. I think from a sequential standpoint in the quarter, we expect it to be a strong quarter for Q4. So again, we're pleased with the momentum. I think as we get through launching the accounts, now it's going to be more of a focus on driving penetration within the accounts. And I think we got the structure and the tactics going forward to make that happen. And also, we're really focused as I said in the call, to close out our M5 Plus launch in the U.S. this year so that we turn the corner next year. We've got that conversion of accounts to M5 Plus behind us, and we're focused then on penetrating all the product lines that we have versus flipping accounts from M5 to M5 Plus.
spk00: Okay, and just clarification from Dan. Just when you said for fourth quarter in the operating margin, you'll take it to be consistent. And, you know, except for maybe the R&D line could move around, I would assume that there might be more R&D spend in the fourth quarter versus less. And then on the P&L, how do we think about taxes? You basically don't pay taxes. Do you think you'll start paying taxes? And if so, what should we plug into our models?
spk03: Thanks. Sure. And, yes, expect more spend in R&D in Q4 than Q3. On taxes, at the end of 12, 31, 21, we had $351 million in NOLs. So we're burning through those. And once we're burned through those, we'll have a nominal rate of about 25%. That's 21% U.S., 4% other. Thank you.
spk09: Our next question is from Michael Polark with Wolf Research. Please proceed.
spk07: Good afternoon. Thank you for taking the questions. You know, clearly not evident in your performance, but I am curious for anecdotes on what you see in the field. You know, staffing challenges is kind of a catch-all description, but what does that really mean for your customers day-to-day? Kind of, you know, what limitations are most pronounced and, you know, kind of how did 3Q feel in the cath lab versus, you know, the first six months of this year?
spk02: Yeah, it's an interesting dynamic, very different than, say, COVID, where it would be like a wipeout in some areas. This is more, and Isaac and I were comparing notes. We were at Viva last week, and both have spent a bunch of time in the field. In some hospitals, no difference. They've ratcheted down on travel nurses, gotten things under control in other areas. One big center I was talking to last week, they were struggling to even get travel nurses, so they were for a couple of weeks on sort of emergency cases only. So it's pocketed. Certainly in the past we've talked about staffing challenges being the new norm, and I'd say they are the new norm, although there are sort of severe problems centers of pockets and then no change whatsoever with momentum being quite strong in the procedure volume. So it's not a, it's not like a major downdraft, but it does affect volume when hospitals have to restrict cases. And so it's a factor. It's, I wouldn't say it's, so we're certainly, obviously we're not terribly concerned other than it's frustrating for our customers when they can't get the cases done at the time they want to get them done.
spk05: Yeah, and I'd just add to that, it's not worsening. And I'd say generally across the U.S., the staffing is improving and has been this year. Where we see some problems, though, it will limit the ability of the typical Q4 surge of procedures if that center doesn't have the staff to support it. And that's where we hear pockets of that happening today. you're not going to be able to get procedures going from Q3 to Q4 like you typically will because they're just not letting them schedule that many electives.
spk07: Appreciate that, Culler. And maybe for the follow-up, on coronary, Isaac, you provided a lot of good detail in your remark. And, you know, you said, hey, you see accounts where penetration of PCI is low singles with IVL, and you see accounts where consistently folks are mid-teens. And I guess as you bridge that divide, kind of what are the one, two, or three things that stand out? You know, what are the kind of – what's the hand-holding and support that your team can provide to take that low single-digit account up towards 10 or beyond?
spk05: Yeah, I think – I mean, so probably the number one thing still is economics or perceived economics. And I think some centers – and maybe our team with some centers has done a better job of bridging that with the administration. And that's, you know, kind of an ongoing effort. And we talked about how we see that improving, you know, over the midterm. I think beyond that, our best centers are centers where you have, you know, there might be five interventional cardiologists doing procedures there, and all five of them have kind of bought in and have adopted coronary IVF. And a physician at that center is as good as a physician as we have anywhere, but you'll have other centers where you have a physician who's doing a lot of complex work, they've bought into IVL, and they're doing it as appropriate and kind of where we see it should be. But you have other cardiologists at that center who, for any number of reasons, we haven't been able to spend enough time with or to convert kind of into a higher volume user of IVL. So a lot of the work is kind of this territory refinement where we can continue shrinking territories in terms of the number of hospitals that a territory has, add FCSs into that territory so that you now have kind of people per hospital that give you more time to focus in the account with each customer in the account. And what that then will enable is us to continue pushing penetration of M5+, for instance, when we launch C2+. or continue, like we did this year, pushing the penetration of coronary while we executed a big launch with M5+. So I think as we go forward and as our revenue base grows, we'll be able to continue refining our territories so that we've got time to really work in the accounts and launch products while continuing to drive penetration. And bottom line for us, we see a lot of upside to the penetration still. We're in the early innings.
spk06: Thanks for the questions.
spk09: As a reminder, it is Star 1 on our telephone keypad if you would like to ask a question. Our next question is from Larry Beagleson with Wells Fargo. Please proceed.
spk06: Hi. This is Nathan Trebek on for Larry. Congrats on a great quarter. Well, I appreciate you're not giving guidance for 2023. In light of the macro factors that you called out impacting Q4, can you just help level set if consensus revenue growth of 30% is directionally an appropriate way to model?
spk02: So, yeah, you are right. We're not going to guide 2023. Yeah, we see strong growth as we head out of this year and into next year and sustaining it for multiple quarters to follow.
spk06: Okay. And how should we think about the contribution from Japan and China? you know, you previously ranked growth in 2023 as, you know, U.S. coronary, U.S. peripheral, and then China and Japan. Is this still kind of the right framework? Like, those are the top three drivers?
spk02: Yeah, I think they're still the top three. Japan will come on more slowly and we think be sort of analogous to our U.S. peripheral reimbursement, a very nice, steady, slow, methodical, not slow, methodical growth engine and sustainable growth engine. And China, as we've seen, came on quickly, second quarter with a stocking order, but third quarter all on reorders. So we don't expect, given the sort of the nature of the market in Japan, that it will step up that quickly, but will contribute very handsomely. And given all the Given everything we're putting in place and continue to see in terms of the traction we're getting in the U.S., Coronary will continue to drive handsomely next year, and we're really pleased with what we're seeing on the reimbursement and new product combination on the peripheral side. It's doing what we had hoped it was going to do with M5 Plus combined with a step up in payment level for the hospital.
spk05: Yeah, I would just add to that. I think I agree with Doug. We're seeing, you know, I feel like we've got great momentum kind of across the business product line and geography. The Japan team is ready to launch. We're pleased with MHLW and kind of where they've valued the product from a reimbursement standpoint. And I'd say if I go back, you know, 12 months, I'm most surprised this year by the strength of our US peripheral business. I would not have predicted it to be this strong a growth this year, even after we knew about the reimbursement uplift. But I think that's a great sign of what we will continue to see in the U.S. peripheral business and then what we'll see in Japan with the reimbursement and what we'll eventually see as reimbursement improves in the U.S. with coronary. Thanks.
spk01: Thanks.
spk09: This will conclude our question and answer session, and this will conclude our conference. We would like to thank you for your participation. You may disconnect your lines at this time.
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