Acutus Medical, Inc. (AFIB) on Q1 2021 Results - Earnings Call Transcript
Operator: Good day, and thank you for standing by. Welcome to the Acutus First Quarter 2021 Earnings Call. At this time all participant lines are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. I would now like to hand the conference over to Caroline Corner, Investor Relations. Please go ahead.
Caroline Corner: Thank you, operator. Welcome to Acutus' first quarter 2021 earnings call. Joining me on today's call are Vince Burgess, President and Chief Executive Officer; and David Roman, Chief Financial Officer. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. Factors that may cause results to differ from these forward-looking statements are discussed under the forward-looking statements section in the press release attached to an exhibit to Acutus' Form 8-K filed with the SEC today, and are also discussed in more detail under the Risk Factors section in Acutus' most recent filings with the SEC, including the risk factors described in Acutus' Form 10-K.
Vince Burgess: Thank you, Caroline, and good afternoon to everyone joining us today. During today's call, I will provide an update on our key strategic priorities that I outlined in March. I will also comment on our first quarter results, which highlight improved performance in our business and commercial execution, and its ongoing turbulence in our end markets. David will follow-up with details on our financial and operational results, as well as our outlook for the second quarter and full year. Our team remains steadfast in our mission to transform patient care and physician experience. There is nothing more important to us than improving clinical outcomes and changing the treatment paradigm for the patients and customers that we serve. As discussed during our last call, technology and innovation leadership is top among our three areas to achieve our vision and drive the shareholder value. Veterans of the med tech space recognize that disruption is not linear and innovation is extraordinarily difficult, and that companies who consistently deliver here, ultimately rise to the top of their segments. Over the last quarter and in recent months, we continue to excel in this regard. With recent approvals, product advances, anecdotal case outcomes, as well as registry, investigator-sponsored and company-sponsored prospective clinical trial data that we are seeing, I am confident that we now have the most innovative suite of products, in each of the three key areas of electrophysiology: access, diagnosis, and therapy. Before going deeper here, I would like to take a moment to share a recent case from Europe that highlights the Acutus' mission and our core value proposition. This case involves a 76-year old male suffering from complex atrial tachycardia and heart failure. Due to significant comorbidities including liver dysfunction, the patient was not eligible for anti-arrhythmic drug treatment, so cardiac ablation was viewed as the best option for this individual.
David Roman: Thank you, Vince, and good afternoon, everyone. During my remarks today, I will provide details on first quarter 2021 operating results, as well as your outlook for the second quarter and full year. In today's press release and 8-K filing, you will notice updated disclosures on our P&L. These changes include a full non-GAAP P&L, whereas previously, we only provided adjustments at the net income and loss line. In today's call, I will be referring to non-GAAP financial measures for all P&L line items. A full reconciliation of GAAP to non-GAAP financial measures is presented in our press release for your reference. Revenues for the first quarter of 2020 were $3.6 million, up from $1.6 million in Q1 of 2020. The Q1 year-over-year revenue increase was driven by procedural adoption for our broad range of EP products and transseptal access devices, direct capital sales of our AcQMap console and the implementation of the Biotronik distribution agreement. Sales in our direct businesses of $2.4 million increased nearly 60% from $1.5 million in the first quarter of 2020. Disposal, utilization and service contract revenue advanced 77% versus the prior year, and accounted for the majority of Q1 sales growth. Revenue through distribution agreements of approximately $1.2 million compared to $36,000 in the prior year's first quarter, driven by both procedure volume growth and capital sales. Non-GAAP gross margin was negative 89% for the first quarter of 2021, compared with negative 95% in the first quarter of 2020. As referenced in our press release, there were several discrete items that were significant gross margin headwinds in the first quarter. A meaningful impactor impacting gross margins with the write-off of excess and obsolete inventory, resulting from that transition to a new product line and fully in-house manufacturing for our transseptal access product lines. We also took additional excess and obsolete reserves for short shelf life products. In aggregate, excess and obsolete inventory charges impacted non-GAAP gross margin by approximately $800,000, or 23 points to the gross margin line. Excluding these charges, non-GAAP gross margin was approximately negative 66%. We have not excluded E&O charges from non-GAAP results, but wanted to highlight this number given its magnitude and our view that this is a one-time adjustment. As you may remember, on our last call, I discussed the importance of demand planning to support commercial and manufacturing operations. We're making excellent progress in this regard, as well as executing several costs and yield improvement initiatives. In addition, several of our new product launches, such as our next generation AcQMap mapping catheter that is now available on both the U.S. and CE Mark countries, carry a better COGS position. The combination of better yields, forecasts alignment and new product update should all help drive improved gross margins starting in Q2. Non-GAAP R&D expenses were approximately $9 million in the first quarter compared with $7.8 million for the same period of 2020. The increase in R&D expenses was primarily related to investments in the AcQBlate Force-Sensing Ablation Catheter, our pulsed field ablation program, transseptal access products, software development and upgrades to our AcQMap mapping catheter. Non-GAAP SG&A expenses were $13.8 million in the first quarter of 2021, compared with $8.7 million for the same period last year. The increase was primarily due to the expansion of our commercial team in conjunction with our full global launch, and an increase in G&A for public company-related costs. Excluding specified items, our non-GAAP net loss for the first quarter of 2021 was $27.3 million or $0.97 per share, compared to a non-GAAP net loss of $19 million or $1.11 per share, after giving effect to the pro forma conversion of our convertible preferred stock. Our total cash balance at the end of first quarter of 2021 was $106.9 million. Looking to the remainder of 2021, I would like to provide some further detail regarding our full year and second quarter outlooks, that were included in today's press release. Our first quarter results showed better performance from where we exited 2020. In the U.S., COVID-related headwinds are fading and we are starting to see strong procedure volume at major accounts. At the same time, we continue to see shutdowns across key markets in Europe, that is making performance somewhat uneven. All that said, we are keenly focused on the variables that we can control, such as commercial execution, product launches, and manufacturing. As a result, we expect to see continued sequential improvement in the second quarter, and project sales to range between $3.8 million and $5 million. Based on current trends and planned internal initiatives, we continue to anticipate a more meaningful step up in Q3 and Q4. On our last earnings call, we outlined five key factors to support this growth throughout the year, I'd like to give you an update on each of these drivers. The first is the timing of capital sales and conversions. We have several evaluations that are reaching completion. Our teams are working to convert these into capital sales leases or capital utilization deals. Second is the pace of manufacturing ramp for AcQBlate and transseptal crossing devices. In response to higher demand, we are adding resources to support the AcQBlate commercial ramp in Europe. This should drive improve yields and facilitate higher production volumes, and correspondingly revenue. As for transseptal crossing devices, we've resolved all backorders as of the end of April, and are seeing manufacturing ramp accordingly. Third is new product launches. We expect to see increased contribution from new product launches over the course of the year, including AcQBlate, the AcQCross family of transseptal crossing devices, our next generation AcQMap mapping catheter, and the AcQGuide VUE sheaths. Fourth is end market conditions. As discussed earlier, we continue to see improvements in the U.S., while conditions in Europe remain variable by hospital, by market and by month. Regardless, our forecasts do assume that the global end markets that we serve show signs of improvement to the back-half of the year, and nothing we see today gives us pause on this assumption. Lastly, we continue to expect improved commercial execution in the U.S. to be a major driver. We are strengthening and expanding our team, investing in critical training resources and ensuring we have the right level of account coverage. With the first quarter now complete and taking into account our second quarter guidance, we reiterate our view that 2021 revenue will be heavily weighted to the back-half of the year, reflecting the aforementioned drivers and the well-documented headwinds we experienced entering the year. Putting this all together, we continue to project full year revenue to be in a range of $22 million to $30 million. I will now turn the call back to Vince for closing remarks.
Vince Burgess: Thank you, David. As I reflect on the cadence of our performance in the first quarter, and here early in the second quarter, the trajectory of our business is gaining momentum. Our commercial execution globally is strengthening, and I'm confident we have the right team in place. In addition, we continue to advance several key products through our pipeline, and expect 2021 and 2022 to be very active years for product approvals and registrations. Lastly, we are intensifying our efforts to improve operational performance. And these initiatives are starting to take hold. We appreciate your continued interest and support, and we will now open the call to your questions. Operator?
Operator: Your first question comes from the line of Robbie Marcus with JPMorgan. Your line is now open.
Robbie Marcus: Oh, great. Thanks for taking the question. And good evening. David, welcome to your first earnings call.
David Roman: Thanks, Robbie.
Robbie Marcus: Just wanted to start, as we think about guidance for the rest of the year, 2Q probably came in just a hair lower, the way the Street was thinking placements in first quarter were a bit lower. It's still calling for pretty meaningful acceleration in third quarter and fourth quarter. So I'd say, A, what gives you confidence that sales can accelerate like that in third and fourth quarter? And what kind of environment is that assuming? And then B, how should we think about the balance of what you're assuming for new system placements, and then utilization at system placements to get to those revenue numbers?
Vince Burgess: So, in terms of the environment, that's all kind of predicated on. I think, we're kind of assuming as we get into the back-half of the year, in the U.S., we're looking at an environment that approaches normalcy. So, really the lingering thing we're seeing, primarily on the East Coast, and Northern Midwest is some continued friction in terms of access to labs. So we can bring one person in versus one person plus mapper trainee or something like that. But other than that, I think most of our accounts are kind of up and running pretty close to normal operations. Europe, we're assuming that Europe will be relatively light in August, as it normally is, from a procedural perspective, and then start to get back towards normalcy in September, October and November, which have been historically quite good for us over there. And then obviously, the seasonality in December with the holiday and whatnot, we expect some kind of a normalized kind of reduction there. So that mean, that's kind of my sense of just the overall environment. In terms of systems placements, I think the models have it pretty well, that I've seen most recently have a pretty well right, in terms of what we think we can do, in terms of placements. Q1, in the prior call, when we talked about how we're thinking about Q1, I tried to get across with the targeting that we were really focusing in on, and with adding Duane and really thinking about where we place our systems, the types of physicians we want to be working with at this phase of our evolution. I kind of had the sense that we would probably move a few consoles around, and it might be a little bit lighter than the rest of the year in terms of placements, and then as we came into Q2, things would start to ramp up again. And as I mentioned in my prepared comments, I think our net new adds in April alone in terms of installed base equal to Q1. So, I think we're on track now Q1 was just a little light, almost intentionally. We really wanted to make sure everything we installed was in the right place, the expectations were set properly. And we have the right Doc's identified. Did I miss any of Robbie's questions?
David Roman: I think Robbie, the only thing that I would add, you commented on the second quarter a couple of variables impact that, which are obviously the pacing of capital sales. There is, as you know, each capital sales anywhere from $200,000 to $300,000 for us. So as those might move quarter-to-quarter, they can have an impact on our interim results. I would also point out, the COVID dynamic in Europe did have an impact on our business entering the quarter. But we have since started to see that moderate quite significantly and are encouraged by the trends we're seeing today in Europe. And the guidance for the balance of the year assumes that what we're seeing today continues.
Vince Burgess: We also with our Biotronik partner had forecasted a few additional placements in Q1, that were pushed out due to continuing COVID issues in Austria, Australia, and Malaysia.
Robbie Marcus: Got it. And then David, how do we think about expenses ramping through the year? Obviously, there's going to be more meaningful revenue in third and fourth quarter. How do we think about the scale up of SG&A and R&D throughout the year? Thanks.
David Roman: Sure, Robbie. While we are expecting -- you're correct, revenues ramp throughout the rest of the year, we would actually not expect a meaningful expense ramp to follow that. Let me walk through some of the specific reasons here. Starting with R&D, we have over the past couple of years really sprinted to pull together a wide and diverse portfolio of differentiated products. And a lot of that investment in call it the pure development or research phase is sunsetting. So as we think about our R&D investment, the rest of the product portfolio that we've been able to create is largely reflected in trailing R&D expense. And we would expect to be able to read to prioritize that more judiciously going forward.
Vince Burgess: And if I could just jump on that really quick before you move on. Robbie, you've been focused on the R&D spend throughout our -- getting to know you, and you're getting to know us. The thing I want to point out here is over the last 18 to 24-months, we have revved basically our entire system. And when I say revved I mean, executed on upgrades of the console, the software as many as six times. And each individual disposable component that we manufacture and sell has been revved from Gen 1 one Gen 2, and as of today, which we announced, are basically nearly our final CE Mark approvals, of those are now in production, approved and available for launch in the U.S. and Europe, and through our distribution partner Biotronik. So, I have to tell you, it's been a -- all these rounds, all these changes are intended to address the early feedback we've received from our customers, about things that are great about the products, things that need additional tweaking, and improvement and some cost reduction things we've been working on. I would say the majority of that heavy lift is now behind us, and we feel great about the full array of second generation products, which we have cranked out of our R&D organization.
David Roman: On SG&A Robbie, as I look at it, I look at it sales marketing, and in G&A, we will continue to make investments in the sales force. And I see opportunities to manage tightly marketing expense, as well as drive down G&A. We did have some, I would say, transitionary expenses in the first quarter related to senior level management turnover that will not recur going forward. And then, while you didn't ask about gross margins, we brought up operating expenses, but I do want to point that out that gross margin will also be a significant lever as we go forward, and we are starting to see that materialize in real time.
Vince Burgess: And when you say in real time, we're talking about in Q2 and in April, specifically correct.
Robbie Marcus: And when do we see that turned positive?
David Roman: So for gross margin to be positive, we have to be at a run rate of about call it $9 million a quarter, with a mix of 80-20 disposables and capital, and that should occur exiting the third quarter with a full quarter of gross margin positivity in Q4. There are some opportunities we are working on right now, specifically around yield improvement that could pull that forward.
Vince Burgess: And to be clear, standard margins on our disposables are presently already positive. It's the overhead and obviously, we're getting ahead on.
Robbie Marcus: Great. Thanks a lot.
Operator: Your next question comes from Margaret Kaczor with William Blair. Your line is now open.
Margaret Kaczor: Hey, guys, thanks for taking the questions. Maybe first one for me, you guys brought Duane on board. You've talked about these commercialization changes. Can you give us good sense? It's a two-fold question. So one, can you give us a sense of utilization within accounts? The March rates were encouraging, but as we look at that, is that coming from accounts reopening backup post COVID, or share taking within them? And then as we think about utilization climbing from here, what's being assumed in some of those guidance assumptions and the ranges?
Vince Burgess: We're dealing with small numbers of hospitals and accounts, relatively speaking. In Europe, over half of our consoles basically have been down in all of Q1, 100% due to COVID. And couple of -- some of them are still down or doing very, like procedural volume, and some are actually still going up and down. In Rotterdam, the Netherlands, Belgium, we're still seeing some slowdowns, and then return to where -- we are seeing generally though, the center's getting back online. In the UK, they brought these state of the art hospitals that were really standing our EP labs over the last six or nine months down in a basically field hospitals to deal with COVID. And now they're bringing them back up in the state of the art EP labs again. And if you talk to our folks on the ground, it's taken a little bit longer than expected to get there. But they are getting there. And we expect the UK, probably to lead the charge in terms of coming back up to more normal utilization levels. We were on our update call with the entire European team for a couple hours this morning, getting an update. And this is just an outstanding team, highly mature, very experienced and tenured group with a great handle on the business. And we feel like they've properly positioned with the right customers this product, and the technology is generally being used in the more complex procedures. And, we see that we are becoming the technology, the product of choice in redos and more complicated persistent patients and complicated tachycardia. So that's how we drive utilization there. Now, I'd like to be at a place where we're at 25%-30% plus of complex procedures in accounts where we are installed. That's, I think, a great target for us. The U.S., I would say the U.S. is a bit more of a mixed bag. We have accounts that are rolling nicely and generating pretty consistent utilization. We have a number of accounts that had very low utilization. In the last quarter, we had a group of account or consoles that were in accounts that were part of a larger group, where we had some contracting issues that we had to get through, which we actually just got through last week, and we are excited to restart, particularly one of those accounts that did four cases yesterday with us in the single day, in a single room. So it's really kind of a mixed bag of those sorts of issues in the U.S. But for us, it's all about making sure that our mappers are well-trained. We have the right message. One of the things we're really leaning on heavily now is training our U.S. mappers to deliver over the core-to- boundary diagnostic and ablation strategy that came out of our European experience over the last couple of years, which was written up in kind of a cookbook step-by-step fashion and that quarter boundary paper out of Oxford. And having that recipe that playbook for our mappers, and our sales reps to deliver over to U.S.-based EPs, I think is going to serve us very well. So, those are some of the kind of the key drivers, and David, I don’t know if anything you want to add based on?
David Roman: Margaret, I would add, as we think about overall all the utilization, our guidance does contemplate that utilization rates continue to improve from what we saw in the first quarter. And that is, if I look across the different parts of the world, we are comfortable in that assumption, because we saw pretty consistently January to February to March sequential progression in utilization, and especially to bring back online some critical high volume centers, that also contributes to the overall revenue performance.
Margaret Kaczor: Okay. And part of what I'm trying to get is, what did April look like, how does that set up for Q2, it sounds like maybe there's some easier low-hanging fruit as some of these centers still come back. So, we should start to see that utilization rise just across the installed base, without assuming huge cheer taking until hopefully later in the back-half of the year. Am I hearing that right?
David Roman: That's correct.
Vince Burgess: I think that's fair.
Margaret Kaczor: Okay. And then, if we look at the new installs, the four that you gave in April seem pretty good. I couldn't quite tell based on what you told Robbie, how much of that maybe had moved from Q1 to Q2. How should we think about that as a good monthly rate going forward? What would you guys be happy to see?
David Roman: I think that would be an okay starting point as a monthly rate.
Vince Burgess: Globally, I mean, global. Yes, Europe and I think kind of that pace.
David Roman: I would say, yeah, at least at that pace Margaret, it would be our expectation. And in terms of the shifting of timing, whether it's Q1 into Q2, we don't have a ton of control necessarily over when systems get placed, it is around contracting and hospital availability to do an install. The key thing that we want to make sure we communicate coming out of Q1 is, as we think about being highly targeted of their accounts, being targeted does not necessarily mean limiting the number of opportunities. We still see a significant opportunity to grow our installed base, as we come out of that account segmentation and targeting initiative in Q1, we start to execute on that with more vigor in Q2, that helps us with -- that contributes to the U.S. placements. And then, there clearly still is some COVID overhang outside the U.S. that is resolving and should continue to resolve as we move forward.
Margaret Kaczor: Okay. Perfect. Thanks, guys.
Operator: Your next question comes from Bill Plovanic with Canaccord. Your lines now open.
Bill Plovanic: Great. Thanks. Good evening. Thanks for taking my questions. So, just clarification of Margaret's question. The four installs in April, you said you'd be happy to see that. Is that four a month or four a quarter globally? Just for clarification.
Vince Burgess: Yeah, that'd be a good monthly figure. I think we'll have months where we do more than that, we have a month or two, we do less. But that's I think is a good pace for us.
Bill Plovanic: Okay. And then, just as we get out here, definitely last year is a challenging year given the macro environment, bringing new technology to market. I think you've covered that in your opening remarks. But, what is the first year of learnings or the launch learnings? How have you implemented that into the commercial strategy, both direct in the U.S., OUS and with your distributor partners?
Vince Burgess: In talking with our European team, we really spent a lot of time on that in the last couple months, making sure we're crystallizing that and trying to think about how it translates into the U.S. So Europe, we feel great about not only where we are, but where we're headed utilization wise, and where we're headed in terms of additional console installs and ablation. We call it equipped electronics stack installs. We've got a nice number of therapy electronic stacks already, and I think we expect to double that installed base of electronic stacks in this quarter alone. So, we're trying to bring that over now to the U.S. I think, for me, the number one -- two things, I guess. Number one, we need to do a better job of bringing over that European experience in our training of our commercial team here in the U.S., and we're really focused in on that. And number two, it's really about targeting. And when I say targeting, the place for us to go is centers where there are one or more physicians, who aren't satisfied with their current procedural technique for persistence, for redos, for tachycardias, and are ready, willing and able to think about modifying their workflow, modifying their technique to try and improve their acute and long-term success, versus just taking a cool new system that has a lot of whiz bang, or optics to it, but be unwilling to actually modify their technique. That's just not a great place for us right now. And frankly, it never will be. The only way you can deploy our system to make to do things differently, as if you're willing to go away from just a standard PVI ablation approach, or PVI plus posterior wall. If that's just what you're hell bent on doing, as an electrophysiologist, the competing systems do a very adequate job of an empiric anatomically-based ablation approach. We think in Core-to-Boundary and UNCOVER really point to that. We think that there's more that can be done. We can be more patient-focused, more adaptive, more individualized, for each individual patient. And, hope and expect to see better outcomes. And we think only our system really has the potential to facilitate that, because the current systems, it's just biologically implausible to use a conventional contact mapping system to map an individually ablate, a patient who's in a non-regular rhythm. So someone that has an irregular rhythm, not in sinus rhythm, it's just not really plausible to map those patients. We think with our system, we bring that to the party, and that can help take the physician and the procedure to the next level.
Bill Plovanic: That's actually really helpful. And then, Vince, how does that translate into the funnel of potential accounts, as you said, the targeting? Does that take the funnel of what you originally expected and cut it down by 10%, 50%, 90%? How should we think about that, in terms of kind of this initial ramp? And then as you think of the accounts that have come on board, I think you gave us some clarity on that the U.S. accounts are doing the more difficult cases, and it's really that's what they're using it for. Have you seen it kind of move into that paroxysmal case yet? And those are my questions. Thanks so much for taking them.
Vince Burgess: As you look at our initial models that we worked with our analysts to put together last spring, in the rollout of consoles and the pace of those consoles, and just the sheer number of consoles set against the total number of EP rooms in the U.S. and around the country. We mapped out a pretty modest share of rooms. When you go around the world and you talk to doctors about how they feel about the tools they have, and how confident they are and their success rates in treating persistent cases and redos and quickly treating tachycardia that are complex, the vast majority of the physicians we talked to feel like there's plenty of room to improve. Now, not all of them want to go through the sometimes arduous process of changing workflow to do that, and those folks probably aren't for now, for us. A lot of these physicians, however, give all signs of being ready, willing and able to roll up their sleeves and do that work, and work with us. And I would say there are plenty of EPs out there that feel that way, and certainly a sufficient number to hit that three and five year kind of rollout trajectory, that we spelled out a year ago. So I see no major change in how we think about the funnel, based on what we've learned and experienced.
Bill Plovanic: Great. Thank you.
Operator: Your next question comes from Marie Thibault with BTIG. Your line is now open.
Marie Thibault: Hi, good evening. Vince and David, thank you for taking the questions. I want to ask one here on AcQBlate and the full market release that you're headed into. In Europe, I know you mentioned you're adding some resources there. And given some of the COVID constraints, I would love to hear how you're thinking of the cadence of that rollout? Is that mostly kind of a second-half event as we think about our models? And what's the latest on feedback from AcQBlate users? What's it doing to their utilization? And sort of any qualitative anecdotes you can give there?
Vince Burgess: Okay. Yeah, I've been in med tech for a long time. And usually, in emerging companies, emerging technologies, you go over there first and then you focus primarily on the U.S., because of reimbursement and other issues that make Europe hard to do well in. We're doing really well in Europe. And I think it's a great proof point for us in terms of the value proposition that we bring with our mapping system. And as we have now put our mapping system together with the AcQBlate, and I want to -- this is an important distinction here, this is not just a catheter, this is the AcQBlate catheter paired together with the force monitoring unit that we have, that is our unit, together with a concurrently designed RF generator and pump, that was designed by our partner Biotronik as one unit, basically, it works just seamlessly together. I think it is the best electronic stack in the therapy business presently in the market, anywhere in the world. And when you pair that up with a catheter, which I think can go toe to toe with any catheter, it's just a great, great unit. We are also finding that when we take our mapping system, and have it used along with an Abbott catheter, comp generator, force-sensing unit, these weren't designed to work flawlessly together from the get go. And it just imposes some workflow issues. You have a higher likelihood of having to do troubleshooting, and things like that you may not have as clean as signals consistently room to room to room. What we really like about all this being designed from the ground up to work together, every single element to work together, which is getting better results. And then the nurses and the techs that work in these rooms really appreciate the way the consoles and electronics were designed, they're very small, they're literally very light. They're very simple and easy to set up and use. The alarms, everything they have are very sensible. And they work very well with the catheter. And, we think that we're going to be able to make some hay with that. The other thing we love is just, when we have that controlled set of systems, all the different individual elements, we know where the noise is, we know how the connectors are supposed to be set up, we do it the same way every time when we set it up along with our mapping system. And we're just getting better and more consistent results and happier customers. So we're kind of pedal to the metal over there, in terms of that AcQBlate catheter and system launch as we speak. We're not really governing that back. We up to now have had some production capacity issues with the catheter, and I believe we are getting through that. We've invested significantly in our production capacity there from a catheter perspective. So, we're really pushing hard to really get a significant installed base. And we'd like to be one to one with our mapping systems, and also have some ablation stacks, even in centers where we don't have mapping systems as well, because it works very well on a standalone basis also. So, we're not really holding back in Europe, we're really pressing over there, and the team has just done a terrific job. And we're super eager to have all of that in the U.S. We've already -- we have, I think we have four or five stacks up and running in the U.S., supporting our IDE trial, which is just great for us, because our U.S. team now gets to experience the benefits of a system that was designed to work together, and they're having a lot of fun with that.
David Roman: And Marie, maybe just to clarify. So from a modeling perspective, how this weaves into our guidance. A couple important things to point out here. First is, when we launched AcQBlate earlier this year, we did that through what we call limited market release, with the intention to understand how the product performs in a real world setting. During that time, we don't generate any revenue. We moved into full market release very late in the first quarter. There are some additional factors in the UK, where you have to get the NHS catalog listing to generate revenue. We applied for that in February, it's about a six month turnaround time. In the interim, we can sell AcQBlate on consignment in the UK, but have to defer that revenue. And we expect to recognize all that deferred revenue in Q3, which is another one of the factors that impacts the back-half loading of our year, but we would also expect production volumes to ramp materially throughout the year, as well. And as volumes ramp, we get this in the hands of our reps across all of Europe, as well as Biotronik, you should see an increased contribution quarter-by-quarter.
Marie Thibault: Okay. Helpful insights from both. Thank you on that. Maybe I'll ask then on AcQCross. Tell us a little bit about how you're envisioning the launch here in the U.S., and then pushing forward in Europe as well with that product? Again, it's one I know that you've called out as a promising part of the whole portfolio. So, I'd love to hear how that adds to procedure ASPs over time here as well? And thanks for taking the questions tonight.
Vince Burgess: Yeah, so the AcQCross launch in the U.S., if you've been following this, this is part of the acquisition we made a couple of years ago, a company called Rhythm Xience, we acquired that product line, we iterated it, we launched it into the market as a combination of the central crossing along with our own set of steerable and fixed per sheaths. And we saw really, really good feedback and uptake in both EP ablation and in structural heart. So we were seeing great utilization in LAA procedures and WATCHMAN procedures for that product line. One of the limitations that we saw in the EP space was by forcing a user to use not only our separate crossing device, also our sheath, we saw some friction from EP doctors around moving away from their sheath of choice. So what we did is we said, look, why do we want to fight that fight, let's meet them where they are, let's make this really novel effective, safe, fast, simple crossing device, compatible with the vast majority of the market leading sheaths that are used in ablation. And we identified that opportunity and executed on that very well. And we are now compatible with the Agilis from Abbott with the first cross from -- or the Vizigo from Biosense with SL1, and with the cryoballoon sheath from Medtronic, and of course with our own sheaths. Those catheters are linked to diameter matched, and transition matched and they lock into the hub at the back. So you can just go right in, cross the septum, hop out, and you've got your sheath of choice to guide your ablation without having to change your technique. Order magnitude from a procedural revenue perspective, I think we've talked publicly about our per procedural revenues for mapping base catheters of being a bit north of $5,000 a case. And I think, you can see a pretty clear path towards increasing that by about 10% in cases where they use our AcQCross products. So very nice opportunity there. I should point out about half of the accounts that are using these products, they don't even have our mapping systems yet. They're just using them on a standalone basis, because they love them and want to use them for their ablation cat procedures and their structural heart procedures. Those accounts where we don't have -- it's really fertile territory. It's a great brand builder for us, and door opener for us. We got a couple of accounts that I can think of right off the bat that once they get to know our rep, once they get to know our product and how we think about this market, all of a sudden they started asking about our mapping system. And it was a great door opener for us to get in there and start the contracting process to get a mapping system installed.
David Roman: And one of those specific examples that Vince is referencing, actually I believe will be installed this week or next. So, we are seeing this as a nice door opener into new accounts.
Vince Burgess: So we expect to see the same in Europe, as relates both ablation and structural heart opportunities. There is a nuance in Europe that we're still trying to kind of wrap our heads around, which is the vast majority of cases they cross the septum under fluoro guidance, or using pressure differential as opposed to ice image guided septal crossing. And so we're going to go over there starting this month and work through the workflow issues. We're highly confident that it will be well-liked over there. We just have some workflow differences that we need to better understand, now that we have approval, and really make sure we work with those structural heart and EP partners to get this right coming out of the gate.
Marie Thibault: Makes sense. Thank you.
Operator: Okay. There are no further questions at this time. This concludes today's conference call. Thank you for joining. You may now disconnect.
