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spk00: Good afternoon and welcome to the XINEX 2021 first quarter earnings call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Certain statements in this release are forward looking. and as such are subject to numerous risks and uncertainties. Actual results may vary significantly from the results expressed or implied in such statements. Risk factors that could cause actual results to materially differ from forward-looking statements are described in our filings with the Securities and Exchange Commission, including the Risk Factors section of our annual report on Form 10-K for the year end December 31, 2020, as well as Forms 10-Q and 8-K press releases and the company's website. Please note, this event is being recorded. I would now like to turn the conference over to Thomas Sandgaard, Founder, Chairman, and Chief Executive Officer. Please go ahead.
spk02: Good afternoon. My name is Thomas Sandgaard, President and CEO of Sinex. Welcome to our 2021 First Quarter Earnings Call. First of all, I'm excited to announce 140% year-over-year order growth as our sales force continue to gain traction. Our first quarter revenue of 24.1 million was an increase of 58% compared to the same quarter last year. We continue to see good order flow as the economy returns to normal. As I mentioned, the first quarter orders came in 140% higher than the first quarter of last year. and 15% sequentially compared to the fourth quarter of last year. As a comparison, previous first quarters had a sequential growth in the 4% to 8% range as part of the seasonality that is in our industry, and we'll touch more on that. And we were able to double that prior average as an indication that things are really picking up. The continued strength in order speaks volumes to the relationships our sales force has with many prescribers and the need for them to prescribe non-opioid, non-addictive prescription strength solutions for their patients in pain. As a reminder, the majority of cash and revenue related to an order comes in over the year or two following the receipt of an order, as the patient uses the device and related supplies, which should lead to expanding revenue and profitability in the second half of 2021 and beyond. During the first quarter, we focused on the productivity of our sales reps and also trimmed our sales for slightly below our year-end total of just over 500 sales reps. We still expect to have 600 sales reps by year-end. Many of these hires will be in the second half of 2021. The addition of a net of 100 sales reps compares to a net of 300 we added in the second half of 2020. The additional Salesforce growth is now happening at a much slower pace, which will directly help our bottom line, obviously. I also want to mention that our operations continue without issues, and our supply chain remains uninterrupted. It is our practice to keep several months of finished products on the shelf, have four months of components on hand for internal assembly, and 12 to 18 months of orders being placed with our vendors on top of the in-house materials. During 2020 and here early this year, we've taken a more conservative position in response to COVID and any possible supply chain issues, which again resulted in increased inventory of approximately up towards 3 million in excess of our normal levels. We should be back to normal inventory levels during the second half of 2021. As announced earlier this month, due to our growth, we're moving into a new corporate headquarter. The new building is just down the street from the existing headquarters, and we'll expand the footprint from approximately 86,000 square feet in this building to, starting Monday morning, being in 110,000 square feet with the right for further expansion within the building. The new building, combined with our production facility gives us an approximate 161,000 square feet under lease, and the facilities are now conveniently just a few miles apart. The opioid epidemic continues to be a serious issue in this country, and we are increasingly working to get patients off opioids and for physicians to use our prescription strength technology as the first line of defense when treating pain. Currently, the devastating impact has reached the level where tens of thousands die yearly due to opioid abuse. We continue to develop more tools to make physicians aware of our technology that literally has no side effects. Our products for pain management and rehabilitation still stand out as some of the best products in the industry. The NexWave for pain management, our Neuromove device for stroke rehabilitation, and the N-Wave for incontinence treatments are examples of products that puts us in a very strong product position in the rehabilitation markets. We continue to see great potential in both our product divisions, our existing revenue-generating area for pain management, as well as the huge unmet potential for our blood volume monitor. Earlier this month, we hired Don and Greg as vice president of sales and operations for our monitoring solutions division, where we have the non-invasive blood volume monitor, Don will be leading our sales, marketing, clinical research, and engineering efforts. With Don's background, I'm confident we'll soon have our technology become standard of care for early detection of internal bleeding in surgical and post-recovery situations, as well as being used to detect blood loss during surgery. While the CM1500 is already in full production, The next generation, CM1600, is well underway, and we hope to apply for FDA clearance for that model soon. Don brings a wealth of experience to Cynics. He previously held leadership roles at Smith Medical's Vice President and General Manager of Infusion Systems, and at Medtronic, Senior Director of Product Marketing and Business Development of Health Informatics and Monitoring. Don also successfully built a direct sales force, launched and commercialized infusion products, remote patient monitoring, and clinical decision support software applications. As a result of innovating new products, executing sales plans, and creating strategic distribution and partnerships agreements, he grew each of these businesses by double digits. As most of you probably already know, we managed to get FDA's clearance on our CM1500 monitor about a year ago and also recently obtained three patents on the blood volume monitor. The CM1500 is a non-invasive monitor intended to monitor patient's fluid balance in hospitals and surgical centers. We expect to initially target ORs and surgeries that typically display substantial blood loss as well as recovery rooms and ICUs where internal bleedings today are common and difficult to detect up until the point where serious complications occur. We believe this product will lead to safer surgeries, fewer complications, and less mortality, one of the biggest unmet needs in hospitals today. I should also mention that I recently filed a patent application for early detection of sepsis, a new technology we will soon begin prototyping. We continue to see solid preliminary results from a clinical study at Wake Forest, and are preparing to commence more studies on the device shortly. We're seeing interest in purchasing the device from hospitals that have devices on demo, and our engineering team is well underway with building prototypes of the next generation CM1600 that, again, will be even easier to use in surgical settings. I will now turn the call over to Dan Moorhead, our CFO.
spk04: Thanks, Thomas. First, I'll review our 2021 first quarter results. Orders grew 140% year over year and net revenue grew 58% to $24.1 million from $15.2 million in 2020. Device revenue increased 85% to $6.4 million compared to $3.4 million last year. Supplies revenue increased 51% year over year to $17.8 million from $11.8 million. Gross margins were 76% in the first quarter of 2021. As we mentioned previously, we transitioned our production and warehouse to a new facility in Q1. This will greatly enhance our efficiency, but in the short term, we'll put some pressure on gross margins. Sales and marketing expenses increased 148% year over year, as our sales force grew by 121% year over year. G&A expense grew 45% year over year. Much of the increase was related to increased headcounts in our reimbursement and patient support functions related to our order growth. First quarter had a net loss of $700,000, or two cents per share. Adjusted EBITDA, which is a standard EBITDA calculation plus an exclusion of non-cash stock-based compensation and severance and other income and expense, and is reconciled in our press release with a loss of $400,000 in the first quarter of 2021. On the balance sheet, as of March 31st, our cash balance is $33.4 million, which is down from year end, but much of this is related to the increased inventory, which will level out during the second half of 2021. Our working capital was $51.5 million at March 31st. With that, I'll now turn the call back over to Thomas.
spk02: Thank you, Dan. I'm pleased with our full-year growth in orders of $106 40%, and our revenue growth of 58%. It clearly justifies investments in our sales personnel, sales management, and inside support functions. Our focus for 2021 is increasing sales productivity as selling resumes to its normal course, continuing to leverage the investments we made in sales, as well as on the G&A side, to improve profitability, and most importantly, helping our patients in pain. We will continue our Salesforce growth in 2021 but at a slower pace than in 2020. We have made the investments in growing our Salesforce primarily in the second half of last year. This investment is showing all the right signs as Q4 orders grew 117% year-over-year and Q1 orders grew 140% year-over-year. These orders will eventually convert into revenue over the next year and further out. And therefore, we expect to return to a much healthier relationship between the top line revenue and sales expenses as we get into the third and fourth quarters of 2021. As always, with beginning of the year insurance deductibles, this seasonality means our first quarter revenue is always much lower than how it progresses throughout the year. We estimate our second quarter revenue to be between 31 and 32 and a half million with an adjusted EBITDA between three and four million. The second quarter revenue range is about 61 to 69% higher than the second quarter of 2021, sorry, 2020. And the full year 2021 revenue is estimated between 135 and 150 million. again with adjusted EBITDA between 15 and 25 million. The full year revenue estimate is approximately 68 to 87 percent above 2020's revenue of 80.1 million. My long-term goal for our electrotherapy and rehab division is to continue to grow our share of the huge market for prescription pain management and to take advantage of the huge void in the market after the disappearance of a couple of main competitors. This includes growing our domestic sales force as well as potential acquisitions of complementary technologies. Our long-term goal is still to fill all 800 territories in the US and get sales reps fully productive. We see that it typically takes, on the average, up to two years to make a sales rep fully productive. In summary, we announced strong growth in orders, which will drive revenue, and profit in the second quarter and the second half of 2021. And we will now take questions from our listeners.
spk00: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time we will pause momentarily to assemble our roster. Our first question comes from Matt O'Brien with Piper Sandler. Please go ahead.
spk05: Hi, guys. Good afternoon. This is Drew. I'm for Matt. Thanks for taking the question. I just want to start off on the rep commentary. I have a kind of a multi-part question here. You know, one, particularly where you see as far as that group of reps that you're uncomfortable with, that kind of led you to trim your sales force. Two, what measures are you putting in place to make sure that you don't run into the same issues as you try to bring a lot of reps on board here? And then three, are you seeing anything abnormal from a voluntary attrition perspective?
spk02: If I take the last question first, because that's probably the shortest answer, we don't see any attrition in terms of leaving the company more than would be normal relative to having about 500 sales reps. So that's obviously a good sign. We actually see quite a bit of loyalty in the sales force. When it comes to the parameters we look at, we put a lot of emphasis on the first 90 days of a sales rep. We were probably a little more lenient and gave maybe one or two months more as part of the process of adding so many sales reps in the second half of last year. So it was literally in January... a lot of reps of all those new reps were put under scrutiny we put a lot of emphasis on those first few months on how their orders develop so it is very much a simply keeping up to the benchmarking we have and coming up to a minimum amount of orders within 90 days and there are obviously some that that won't survive. So we trimmed our sales force a little. At the same time, we were then hiring new sales reps at a slower rate than in the second half. So we started that in January, and up until today, we've hired sales reps at a rate that was about a third of what we did. So that barely just kept up with the attrition that we've seen here during the first quarter. So the net result of that is obviously later in the year and in the years to come that those particular territories that we now have filled here, we know they'll be high producing. That is something that is very deliberate. We take a break now until we get into the third quarter of this year so that when we start growing the sales force up through 600 and up towards 800 sales reps, that we don't have a whole lot of loose ends we need to tie up in perhaps not so great performing territories. So it'll be easier for our 15 regional sales managers to manage the addition of those reps, those territories as we move forward. So it's something that obviously is rough on our financials that we just hired that many new sales reps at the same time as when we have that seasonality of a relatively low revenue quarter because of the insurance deductibles. But you'll see, as we already indicated with what we think about the second quarter, you can see we're back to profitability. And then we'll start growing the sales force again later in the year. I hope that answers your question.
spk05: Yeah, yeah, that makes sense. And maybe you could share, I mean, as of, the end of April here, are you above or below 500 at this point?
spk02: The last number I saw was right below 500. Okay.
spk05: Okay. That makes sense. And then I just want to push a little bit on the guidance. You know, it looks like the Q2 guide is pretty much in line with the streets. And now you're obviously expecting to hire reps at a little bit of a slower pace until the second half. So that implies you need a fairly big step up in the second half from a productivity perspective from some of those seasoned reps.
spk02: Yeah, I see a much, much higher order growth in the second quarter than we saw here in the first quarter. Part of that is obviously because COVID primarily hit us last year on the orders in April and May last year. But you'll probably see something like a 300% order growth in April, 300% in December. in May and maybe 200% auto growth in June. That's the kind of numbers we're looking at right now. Again, that sets the stage for that we're pretty confident or beginning to be pretty confident about some significant revenue in 2022. Okay.
spk05: I was just wondering if you could speak to kind of what you're seeing from some of those season reps that kind of give you confidence in that larger revenue ramp in the third and fourth quarter of the year.
spk02: Right. Actually, we see if you take our top 10 or top 25 sales reps, we actually have a pretty good mix of a few of our brand new reps getting up in that category already, as well as the seasoned reps that are just either running at the normal cadence or just inching up a little more all the time. So it's not just the very seasoned reps. There are actually a few few of the newer ones that are up there pretty quickly. Again, I think we have here over the past couple of years gotten better at recruiting, better at training, and now with 15 regional sales managers holding their hands in the first several months when they get deployed to make sure they eventually become highly productive reps.
spk05: Okay. Thank you very much.
spk02: Yeah, thanks, Brooke.
spk00: Our next question comes from Jeffrey Cohen with Ladenburg Thalman. Please go ahead.
spk03: Hi, Thomas and Darren. How are you? You're doing great. How are you doing, Beth? Just fine. So first, I know I typically always like to ask this one, but any read into the mix in particular through devices and supplies? It looks like supplies was... a bit higher than what we expected. Is that just a function of utilization?
spk04: Yeah, it's pretty close to normal. We're usually running 2575 and it was 74% in Q1. We talked about Q4 sometimes having a little bit of a variance, but generally we should be in kind of that 2575 range.
spk03: Okay, got it. Can you talk a little bit about where you're seeing traction? I know that Two ones a little wonky with the providers out there, but you see more traction between more doctors that your sales force is getting into that are new starts, or you've seen more traction with the existing physicians that are now higher prescribing in their territories?
spk02: Yeah, I think things normalized, meaning that clinics, doctors found a way in terms of dealing with patients as well as dealing with sales representatives. That changed from the second quarter into the second half of last year. So what we saw from the end of last year into the first quarter here was about the same. So it's entirely a reflection of that A lot of our new sales reps are now beginning to start sending in some real orders. That's really what you've seen here. We probably need another three or four months before we'll see significant changes in terms of how easy it will be for our sales force to come in and do in-services and show up without masks and just move around more freely. try to grab doctors in the hallway. Sometimes that's what opens up a new account, et cetera. So it's entirely a reflection of the sales repetitions we have made right now, and especially the percentage growth we're going to see in the second quarter is a reflection of that second quarter last year was a little rough on us in terms of orders and and we still keep increasing orders pretty dramatically.
spk03: Okay, got it. And lastly for me, any commentary on the blood volume on it as far as the 1500 unit? Is there a particular number that you're planning on producing during 2021? And then what's that look like for the 1600? Is that something planned for 2022? I'm thinking...
spk02: So the engineering efforts and manufacturing is two separate animals. In terms of the CM1500, we made enough so we can finish up about 130 of those. For the most in these days, it goes out on clinical studies and just to be placed in hospitals for them to get used to it and maybe eventually keep it with an invoice being sent to them. And how long, how many of those we need to make will literally depend on how the next generations, how fast we can get them done. I have a feeling as I look at it now, we're already looking at a CM 1700 that the CM 1600 could well be more of a stepping stone to get quickly to the CM 1700. But again, in terms of how many we'll sell, meaning how many we'll need to make of the 1,500. To some degree, it depends on how fast we can be ready with the 1,600 or the 1,700. That will obsolete that first model pretty easily, partly because of the wireless and the easier user interface and all that. That would be obvious for us to make the other one obsolete.
spk03: Okay.
spk02: Right now, it's 1,500.
spk03: Got it. And the step-down in inventory that you spoke about, we'll see that throughout the balance of 2021, or will it be more pronounced in the second quarter?
spk02: Yeah, that's a slow-moving thing. It's simply a matter of making sure that the shipments we have on the way in, for those orders we have placed out well over a year, on items we keep buying, that they are spread out. So we indirectly, as a result of that, we will end up with lower inventory values. We also benefit from having been able to negotiate better prices on many of the components, as well as the assembly costs. We've been able to negotiate better prices. So our cost prices in general are decreasing as well. So that will help on that too. Before it really hits and it kicks in on the financials, et cetera, it'll be later in the year that you'll see that.
spk03: Okay, perfect. That does it for me. Thanks for taking the questions. Yeah, thanks, Jeff.
spk00: Our next question comes from E. Chen with H.C. Wainwright. Please go ahead.
spk07: Thank you for taking my questions. My first question, just to follow up on the avian trait, So would you say the normal level of inventory is somewhere between 3 and 5 million?
spk02: No, between 6 and 8 million. That would be an appropriate level for the business we're running at right now.
spk07: Okay, okay. So, I mean, the COVID-19 pandemic is somewhat subsiding in the U.S., but if there is another wave hitting the country, the inventory level will go up again?
spk02: Yeah, well, one of the things we have improved since the COVID pandemic started is also we have more second sources that are actively up and running rather than just having sent us samples of their products. So we would potentially be able to be a little more lean even during a a disaster period like that simply because we have more suppliers up and running that effectively allows us to take a little more risk on that. We will see those products eventually hit the dock here. So not necessarily, but I see what you mean. Okay.
spk07: And for those sales personnel you train up, are they all coming from the group of personnels you hired during the second half of 2020, or are there any members that are with the firm at the beginning of 2020?
spk02: I'm sorry, I didn't really understand your question there.
spk07: Oh, I'm asking those sales personnel you have trained off your sales team. They are all relatively new reps, right?
spk02: They are, yeah. Most of them hired in the second half of last year, yeah.
spk07: Okay. But there are a few that has been with the firm for quite a long time also, right?
spk02: Oh, yeah. Their website has been with us for over 10 years, yeah.
spk07: Okay. So last question is, you said that you expect the floodwater monitor 1600 to be approved in the near term. Is that going to occur this year, sometime later this year?
spk02: That's a good question. I need to see, be a little more comfortable with how the prototyping that we are looking at right now, how that plays out. That would obviously be the basis for the data we send in to the FDA. But going forward, it will obviously be a lot easier than the first generation because we can use the CM1500 as the predicate device. and then just keep improving on it and expand indications, et cetera.
spk07: So if it does get approved later this year, would it make more sense that you would just commercialize the 1600 model instead of the 1500 model in the future?
spk02: Yeah, we have a decision to make there. It would be a fairly easy jump over to the CM1700, which... which will physically look more like your more traditional monitor, but else in terms of the data collection, et cetera, and the ease of use will be the same as the 1600. We might skip right over to that one for commercial reasons, but in terms of the FDA clearance process, we obviously take them one at a time. I want to make sure we stay on the safe side for that instead of trying to I think that would be helpful too.
spk07: Just to clarify, there is 1,500, 1,600, and 1,700. That's right.
spk02: And of course, in the future, it will probably continue like that. Maybe we'll either continue that numbering system or we'll come up with some fancy names like other companies do for their product.
spk07: Does each new model require a separate FDA approval?
spk02: They probably wouldn't, but I'd like to play it strategically so that as we try to add more indications for use, that we use the next generation of product to tag along with. We could probably get away with that, but there's no need to do it. We will try to add more indications for use. Okay. by following simply when we have a new generation product-wise. So it's part of our strategy to do it that way.
spk07: Okay, thank you.
spk00: Our next question comes from Mark Weisenberger with B Reilly Securities. Please go ahead.
spk06: Thanks. Good afternoon. Can you talk about the payer mix in the first quarter and how that's evolved year over year and sequentially as well?
spk02: It is pretty much the same, and it always has been. The mix of payers is still fairly constant. Who is the most difficult insurance company today or this month? That is definitely a moving target. Sometimes things loosen up in one area. And then you see another insurance company be more difficult in terms of how they can slow down payment to us. With a lot of medical terminology as the excuses, that's really all it's about. How can they slow down payment to us? That's the industry we're in. Overall, it's pretty much the same thing. And obviously, the way we direct our sales forces is obviously there. They're also incentivized to hit clinics that give us better paying orders, et cetera. So fundamentally, nothing has really changed. Obviously, first quarter is always hit heavy by insurance deductibles, and we try to take that into account when we report revenue for the first quarter of a year.
spk06: Got it. Understood. You have made big investments in the sales force to reach prescribers. However, have you or do you plan to engage in any direct patient marketing that could further drive order growth?
spk02: No.
spk06: Okay.
spk02: I'm so old now and I've dealt with sales and marketing all my life on different continents, different industries, etc. It would make absolutely no difference if we spent a dollar or $10 million or $100 million on end-user advertising for this. This only works through a pull strategy, not a push strategy.
spk06: Got it. Okay. Maybe just looking at some of the impacts on the quarter, would you say that the access to prescribers was maybe a larger factor or maybe a reduction in some elective surgeries or the fact that people maybe aren't doing normal activities and maybe injuries are less than they might be in a normal year and kind of what's baked into your growth outlook in terms of kind of maybe a normalization of those different aspects?
spk02: I would say that if we look at historically up until today, what we saw in April and May last year, The dip in orders was definitely impacted by the uncertainty and, therefore, the much more restricted access to prescribers. Since then, it has reached a more normal level, not exactly what it used to be before COVID, and that's probably going to take several more months before we see a change there. However, our numbers, because of how many reps we've been hiring, and some of them are now becoming very productive, some somewhat productive, and some are still being monitored for if they can stay on board long term. Our order growth is much more impacted by the addition of sales reps and anything there, but it's As long as we behave appropriately in clinics in terms of how we come in and ask for their business and ask for their time, then it's not a real issue today. It's not exactly the same as it was a year or two ago, but again, as long as you behave professionally and appropriate and respectful, these clinics still see patients is are there a few people getting into it because there's less activities throughout the country? Maybe a little bit, but again, that's more of a slow-moving microeconomic thing that I don't think impacts our numbers that much. Elective surgeries, some of that is in the orthopedic area. Yeah, maybe it's still a little slower than it used to be. but it's not something that significantly impacts our numbers. It's really all internal. Make sure we make our sales reps, our sales force as it is, as productive as possible. And there's still a long way to go. The average rep can easily double or triple the orders they're producing right now. And obviously we need to hire long-term 300 more sales reps to get up to the 800 territories being filled.
spk06: Understood. And final one for me. Can you talk about the expectations for increases in spending throughout the year? Maybe how much was removed last year as a result of COVID and kind of how should we think about that bouncing back throughout the rest of 2021?
spk02: I don't think we've removed a whole lot because we decided to go the opposite direction. direction than most companies and double down. We started hiring more aggressively, so we had the infrastructure to keep up with increasing orders. And because other companies were scaling back or dropping out entirely, we actually, during last year, had access to a much better talent pool and more applications than normal. So we now have a workforce that are smarter and bigger than it normally would be. And still, we were able to grow. the G&A portion of our expenses slower than the top line. And what we really, you could say, heard on the bottom line was that we aggressively add that many sales reps. And so, I don't know, Dan, do you have any areas you can point to where we have saved?
spk04: We've saved on a couple of things. started doing training remotely for the big sales classes that were coming in. And I think we talked about saving, you know, between $100,000 and $200,000 a month related to that and those trainings. Those were the biggest ones. I think we did have some efficiencies. I think all companies had some efficiencies that came in because of Zoom and some other things and doing things a little different than we had in the past. But I would say the travel was probably the largest one.
spk06: Great. Thank you very much. Yep. Thanks, Mark.
spk00: As a reminder, if you have a question, please press star then 1 to rejoin us to the queue. Our next question comes from James Terlinger from Northland Securities. Please go ahead.
spk01: Hey, Thomas. Can you hear me? Yeah. Hey, James. Loud and clear. Great. Thanks. Most of my questions have been answered, but, of course, I've got a couple. So, first of all, nice growth numbers in this environment just looking at the release. My first question is really the deductible issue is kind of behind us. There's nothing you can do about that. That's from a seasonality perspective, and everyone has it. But did you see as you moved from 2020 to 2021 any significant change in the reimbursement rates from the insurance companies, or is reimbursement pretty stable? I thought that's what I heard, but I just wanted to ask the question a different way.
spk02: Yeah, there are two moving parts here, not just pricing or, I should say, allowable amounts that insurance companies have established. They move around a little bit. Overall, you could say that it's fairly stable. Some areas we've been able to improve pricing a little bit. In some areas, they just keep hammering on us. The other variable is the allowable quantities of supplies we send out to patients, and you could also say the the success rate or the probability that one of our devices is approved or not for coverage with patients. Those are moving target as well. So the quantity side of it, what's allowed by insurance companies. Again, some are improving, some are going down a little bit, and it changes all the time. But both on the pricing side and the volume in terms of what's allowed from insurance companies
spk01: overall seems to be constant so no change yet not a whole lot different from what it looked like 25 years ago and you've been answering the question for 25 years so thanks for that my second one not that I want to age you or date you my second question is really on the sales rep so if I heard it correctly you're at approximately 500 today and the target is to go to 600 by the end of 2021
spk02: Correct.
spk01: And is that, how should we think about that? Is that kind of evenly spread throughout 2021? Because when I look at my model, it was really the second half of 2020 in Q3 and Q4 that the sales and marketing as percentage of revenue really had an increase. So as you move into 2021, is it maybe evenly spread or are you kind of catching your breath now and you're looking more to higher digest what you have and maybe higher more reps in the second half of this year. How should I think of the timing of your hires for 2021? Hopefully that's clear, my question.
spk02: Right, yeah. For a different reason than last year, we are hiring very slowly, basically to the same point of the attrition rate the first half of this year. And I would assume that July... will still be fairly quiet. I think during August and September we'll start stepping it up to not the same rate as last year, but at a rate that's about a third of what it was last year. That'll still keep adding 15 plus reps a month net to our sales force, maybe as much as 20 net. And as we get into I would say late November, early December would probably slow down again simply because of the practicalities of training people, et cetera, of getting them deployed right around the end of the year. But that should leave us with approximately a net of 100. So that would be a rate of a third of how we added sales reps in the second half of last year. So it'll be a lot easier to manage, but it'll start getting more expensive. However, the order growth we're seeing right now is directly correlated to the amount of revenue we're going to see in the third and fourth quarter of next year and into the following year. So the base salaries that are hurting so much right now will be proportionally a lot less when we get into the third and fourth quarter of the year.
spk01: Okay, fantastic for taking that one. And my last question, I think you guys touched upon it earlier, but how should I think of, and this might be for the CFO, I mean, how should I think of, for modeling purposes, the, you know, you talked a little bit about maybe the patient support functions and kind of the reimbursement function, which I believe is in GNA. How should I think of, and to support this growth that you're putting up, you've got to invest in those patient support functions. How should I think about maybe the G&A expenses going forward in 2021? You've given like a revenue guidance, maybe as a percentage of revenue or however you're comfortable answering that, but I'm just trying to make sure I'm on target with maybe my G&A expense bill to support your growth.
spk04: Yeah, James, I would look at it, you know, Q1 was about 23% of revenue. it'll start to kind of trickle down from there, even though the expense will increase from a dollar perspective. I think, you know, if you took 23 and then kind of layered it down to probably closer to 20% by the end of the year and you did that evenly based on, you know, the current revenue model we have out and, you know, the consensus that's out there, that should get you pretty close.
spk01: Okay. Well, thanks, guys. And again, thanks for the clarity and nice job on the impressive growth numbers. Take care, guys. Thank you.
spk02: Thanks, James.
spk00: This concludes our question and answer session. I would like to turn the conference back over to Thomas Sangard for any closing remarks.
spk02: Thank you. I hope today's earnings call has been informative for everyone, and I appreciate the interest in signings and listening into this call. Thank you and a great day to all.
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