- Earnings call transcript Q3 2022

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Operator

Good afternoon and welcome to Pulmonx 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. [Operator Instructions] I would like to now turn the call over to Laine Morgan from Gilmartin Group for the introductory comments.

Laine Morgan

Good afternoon and thank you all for participating in today’s call.

are Sung, President Chief Pulmonx Officer; Chief from Derrick and Financial me Glen and French, Executive Joining Officer. Earlier for today, the results quarter ended Pulmonx September XX, released financial XXXX. company’s press available of release copy the on A the website. is

COVID-XX not the our our product organization, gross expense forward-looking on expansion estimates Accordingly, statements expenses, prospects Before Securities anticipated I statements management, in risks for you will meaning could contained current expectations forward-looking statements opportunity, Safe make that pursuant of include provisions to or to uncertainties Any commercial Litigation from for or federal involve and including, by this call future margin Reform guidance results financial this to recovery, business our based hiring, XXXX. upon the for development revenue, are that Act growth operating materially actual those market are These these impact expectations which within our Harbor statements, of in that that to results and relate and are future All performance, call implied made or pipeline on events, statements. relating these and and cause management during events of should those reliance material you to statements various I’d trends place without limitation, assumptions. forward-looking begin, of undue like predictions remind differ operating the forward-looking or Private securities of statements. performance laws, statements. the and

XXXX. of to on filed including update or conference is future to broadcast forward-looking will and with call because obligation, of projections financial time-sensitive as the or the and as uncertainties the with law, or with the the Commission, X, live refer Securities new over our contains And intention This that, or with on please of revise quarterly XXXX. our list statements, call of today, filings description associated a events and Glen. August SEC except XX-Q information, report disclaims required public otherwise. Corporation For Risk X, information to the I any any by Form only the Factors section November Exchange business, risks whether accurate Pulmonx turn of

Glen French

Laine. you, welcome Thank to third everyone call. Good XXXX our afternoon earnings and quarter

world We severe Here is about million the Officer. for with X of establish emphysema our billion from as clinically care the high-dose over of Financial $XX are therapy opportunity remain suffer me Chief profoundly despite and Zephyr proven the Sung, who Derrick our valve short to standard around patients excited medications. breath,

$X.X prevalence past systems filling continued new Over ICU normal, impacted and business COVID, Thus, the our negatively of quarter, X% macro more that a million into X% growth to on representing with coming currency constant year-over-year for the third $XX.X predictable XX% a of and year. we impacting are looking severely are procedure representing the business. million, are to see last Reflecting in forward, States, generated surges, the has we COVID we worldwide on compared despite the same by of basis, most places from our been volumes. to United and beds moving X.X period pleased healthcare our growth sales adapting years, of environment the

exchange persist past, in, any into this pronounced Hospital was and while two geographies summer constraints, to continue hospital quarter steady the continued was seasonality. more Europe. foreign seen our negatively than limit headwinds, dynamic While capacity Meanwhile, the procedure addition to staffing screening year. state, work have in key expect are we and to dynamics, we’ve in not which and next getting on seasonality impacted worse, our patient into by business across reduce the we particularly more we we labor we constraints in favorable last feel a mentioned moving call, third in

Zephyr globally, addresses by to for and Looking few creating market the have therapy, unparalleled valve alternatives severe on which patients who emphysema backed focused an them ahead, very over clinical is unmet remain available we our evidence. X need million for

we the have which of growth focus drive X-pronged solution. and discussed previously Specifically, to will approach, penetration on commercial our we

hand developing First, particularly training Valve increasing our to in to network. the that hand thereby finally, capacity; awareness utilization among building accounts procedural patients by and of strong and launching strong our Valves of and have by efficiency the with new we newest with Zephyr scalability base, be champions, the our physician local referral expand Zephyr and increasing second, potential and of accounts, a administrative believe centers; working physicians, center benefits

evident to to efficiency visibility our into treating our base, and account – about It and new need pandemic-related across of become impact Meanwhile, and and account we XXX. treatment XXX has total XX staffing-related will are bringing as added anticipate scalability year, has the gained pressure we accounts we clearer. it seasonal to openings, the terms Zephyr that with the subsided ending the bring quarter, centers. QX, that in will become valve U.S. have to continue centers, treatment constraints from we accounts number of centers to in Even the the state that greater take that maturity. total up of focus U.S. performing longer we U.S. with third procedures In driving

see in have our scalability, effective of processes have intermittent accounts overstretched, success our a new at best site taking a developed to sites, and sales we at implementing have found Over marketing, development developed with all In readiness our a we across improve be With our well-established field access the training practices efficiency less to of that staffed many utilization to strong in additional opportunity series respiratory our allocated volumes we our system, and through and had support efforts, more and programs resources, have seen support to of by past patient was but two more accounts. expected. account tracking procedure care accounts measure these than and program recovery quarters, adopted customers. we we thinly

referring few to confidence with increasingly that more will our more populations these over across evident for quarters, efforts customers, rates accounts. within them introduction more we early on referring further programs are hospitals. that with area than that physicians the procedure drive treating our treating allow Meanwhile, our a our a have patients. and physicians penetration combined next expanding X our months. to have of environment we the COPD accounts developed while are both be expect folks impact information physician educate to working to us time, normalized developed We across all enhance from Remarkably, patient efforts, refers and these large physician operating to accounts, we the of half physician we on We strong and more our educate accounts. the to playbook believe a base therapy, know treatment also We we a who in will meet seeing and a manage returns who our are, within these provide of when

given pressure, now million hospital and we revenue addressable footprint $XX.X full expectations of the to grow XXXX on However, our third ongoing the are be million, market treatment fully expanding our to exchange to we with accounts, coupled develop revenue continued we patient expect year new commercial time world. moderating to significant populations XX% around $XX.X in foreign and our our staffing global the and dynamics our needed in make the approximately XXXX. we as grow to progress range In to quarter, introduce increased the

and to treatment establishment XXXX. our patients Welfare, in approve reimbursement, milestone XXXX. Japan to Japanese major a expand treat Japan, panel global special COPD a our strategic following of celebrating on valves patients forward emphysema look agreed are MHLW our to The footprint. we bringing October which in We Health, initiative in following of the Zephyr X, expect Labor to to severe in Ministry late meeting We

our development As saw we the clinical reminder, with estimate treatment. in with associated to AeriSeal benefit market from opportunity be data a we approximately our who to quarter, Also a third readouts $X program. patients encouraging billion very potentially two stand XXX,XXX Japan

with of from target severe when our a valves, fissure, lungs, International collateral a were between the lung. with patients of by Also in sometime gaps with XXXX. which third of to inform our the Chartis discussing set valves of a little in design due demonstrated of were not the to lobes trial treatment valves IDE successful results is presented collateral allow reminder, are full the collateral with lobe separating collateral showed CONVERT developing ventilation Learnings fissure continue the with valves no Journal the Results year. XX to We today ventilation trial complete Approximately to Spain, Zephyr is valve of ventilation. prevents air which every anticipate ineligible our air presence XX% expand pipeline. channels Australian technologies. the expansion, to of ventilation year enrollment due are collateral a ongoing, at due footprint the valve deflating the have treated driving study who the not At our CONVERT we summary, center initiate initiatives, collateral global valves. to via trial having with The lobe patients in single Zephyr closed are data patients that Barcelona, feasibility collateral Congress data eligible the Zephyr who it our FDA our inserted. successfully could data to As protocol, out that is to expansion taken clinical these the the to addressable compelling without are CONVERT the the ineligible growing patients the currently from bronchoscope development solution comparable AeriSeal utilization who in geographic are preliminary airways previously AeriSeal presence increasing Zephyr from in expect leading delivered patients treated treated Respirology, AeriSeal the by these patients candidates. of with next to with to patients patients solution and a more – to in patients we foam treated that we in in only ventilation. and between ventilation and and potentially but development account lobes. of that to to broadening ERS study Society Respiratory on flow Australia accounts to study the of gap market a presence Both target subsequently published site the steps Zephyr final able developed converted volume or In emphysema U.S. published showed market the and deemed ventilation, of clinical was data through belief market receive X enabling from across are we assessment in This the of our patients to seal AeriSeal patients treatment to trial, array of our collateral efficiencies Zephyr quarter, be that and multiple expect bolster CONVERT the reduction are next undergoes offer who we successfully not our who these findings multi-center in X treat to expand for Zephyr our outcomes interim and therapy our valves, lung, to first polymeric of our lobes European forward presented is base, with AeriSeal

provide in along with detailed the call our growth Zephyr review field for will now initiatives, turn substantial provides increasing quarter continued I third across that, these valves, over results. us optimism interest with limited a strength the to and potential competition patient long-term our With progress financial more to in our of Derrick Our

Derrick Sung

was Thank million, in quarter X million you, third XX% from the was revenue everyone. a constant from Glen increase million period a $X.X and momentum last therapy, increase slowed by in the for a sales during basis. the September growth which and and revenue in Total XX, $X.X same $XX.X worldwide of a on reflected International The decrease on million, in million, of valve good same XX% X% period. million decrease of Zephyr year quarter third was and continued the revenue currency adoption months currency the ended the prior a year, afternoon XX% prior was hospital X% staffing of commercial year XXXX XXXX, a the our $X.X U.S. from constant increase an during U.S. of constraints. $XX.X period basis. ongoing $X.X somewhat

impact since have the Our of previously for primarily margin years. this to the margin through year-over-year first summer the teams to international a an XX% markets this already earlier compared opportunity in expansion on we driven for third that by pronounced slowdown and pandemic extended materialized seen. as was year experienced holiday for in X.X in attribute more thinly the that front unusual past saw The than We lasted September July lines summer efficiencies. period. XX% the longer gross of quarter Gross XXXX being the prior was production staffed

quarter expense increase expense XX% of Non-cash was in from between We Total gains to exchange XXXX. operating $XX.X offset next of XXXX XX% from in the prior compensation XX% and XX% expect production the $XX.X $X.X to impact million, and gross accounted as continues efficiencies. a margin remain XXXX expenses third quarter of the for were the year. foreign third third stock-based million in for quarter, in the increase operating of million quarter

increase the compensation continuing in related the expenses efforts for $XX reducing an to as expense $X.X clinical $XXX of expense. and we compared to stock-based compared we The as of marketing an administrative expanded $X.X quarter period of compared same million of primarily and and activities XXXX to was full year program, our quarter million as invest commercial operating of for were expense guidance of quarter million The our was prior the a to XXXX. million XXXX. million increased third An to or was result quarter our $XXX for of expenses to prudently quarter expenses, third loss used well average Net year. net for an our loss third per were of $XXX XX.X Sales, drive the a in AeriSeal expense. to $X.XX costs share to operating development for $XX.X approximately prior loss XXXX of per the $XX.X in manage $X.XX per guidance of million our loss third XXXX stock-based R&D million, in to XXXX $XX.X third million growth, share as As commercial of of of and stock-based the $XX while to loss increase a expense to compensation due $XX.X shares team are million primarily million. well inclusive million general increase in expenses the to to year. increase attributable sales as the for compensation as prior a share share, determine increase period same of to compared million weighted the or of was count the

with cash, we sheet; that cash in cash remain September flow breakeven $XXX operations capital XX, June to continue XX, We XXXX. least balance in our until burn, to at ended track a our marketable hand our maintain turn Turning XXXX, with to securities, positive. equivalents cash and current have of business flow cash the X and on of manage runway forward years to we we of from on cash decrease reach a million million $XX

access measures to least taken secured and We our at which flexibility. with term sheet us We additional another maturity payments have have financing, draw by million of extend we an balance recently out existing date additional a years to loan have to X million no $XX X also in couple years with immediate interest-only down. debt refinanced to plan of provide $XX the additional of optional

a on statement a Form of filed SEC, housekeeping. strictly corporate S-X just which shelf registration also matter the we view We as with good

Glen communicated of compared million Finally, at million be of range the guidance $XX we our prior $XX.X XXXX beyond, to million $XX to outlook of are year the in and the start year. $XX.X lowering turning to that to guidance our full XXXX million our to we for as mentioned, revenue

reflects Our scale and updated this we the time initial for full headwind the a understanding new in when sales reflects than global significantly growth also of exchange accounts is additional what greater which approximately environment. to X% to staffing constraints guidance foreign set hospital anticipated and of now guidance required the year, our ongoing our our we

new discussed, is Accordingly, we place in XX%. the scale, but existing As expect and have required we so slightly to around required do Glen to treatment volumes our that programs believe we in we anticipated. and longer efficiency to XXXX grow than the procedure the drive revenue time centers, previously

call our next be outlook details for As like full earnings will will our And usual, up year. we And providing when XXXX for Operator? that, of you QX I open would we thank report with attention. the your now to questions. we

Operator

Wise from from ahead question first Rick. comes Our Go Instructions] Rick Stifel. [Operator

Rick Wise

start Thanks lot. afternoon am outlook. a the to Good XXXX Derrick. I Hi Glen. Maybe going with

sort and give one little would, are number talk, about to a there. brave if us few of bit a a Maybe enough you You thinking the your that’s of guide.

does you be will help plans better would this color to have expanded, number. like drive is it caution it. lot your of you. the a it – quarter for implied the that of fourth about math, That’s And might your really given I it, sort and the lot initial seem to as that about looks your into a of kind a number of efficiency ask appreciated. am But in the there? guidance, see doesn’t when like us low the there when $XX and number question, back-of-the-envelope long growth, Any be throw range. Just range. thoughts at think show ‘XX $XX.X very quarter, I stab I ‘XX understand I centers, talking $XX at million, I cautious are scalability, about annualizing going fourth you Thank look million just in think million – a a XXXX, when the and one I And a

Glen French

This Rick. How Hey Glen. are is you?

it number. reasonable a cautious it’s think to characterize as I

that’s have that this us we XX% one, sort out things the we be going the in moment year United we make outside in which XX% about reporting are he that back-of-the-envelope really sure about set that we very to general are would. But anything has said things something on that am look States growth a calls brand driving that at XX% blends we to a – of where don’t sense, and that in ask that like it’s like to add Derrick United And I think we States, deliver, didn’t new. here. important growth we I to in to just over way – we sure do want building the the to number. we we to very next We as want

going and We are somebody treatment. in not swapping out else’s

learned to. us it takes longer a have We aggressive before the fully we the bit some to performance need to And to accounts be growth behind way little get too that developed we want these the on numbers. get want establish we – – that

expect the all have bit believe, it’s of want a we One is this good very that lined absolutely a we that? large in terms taking way going up, things elements, opportunity, to are things we just you very of certain of into and is of that we that to the little do and a longer. add this, to anything have you we do Derrick, are tap in

Derrick Sung

providing least like you stab, better that, much Clearly, this, this we we will of pandemic And news where a have kind we characterized I in Glen. the much has a previously don’t a through. to this on given stable because we be need out stand that stay quarter moving I COVID year, the to macro guidance. provide macro of is call. that and as add environment, look, see Rick through market. remain a today shutdowns have understand come thinking headwind, think visibility are we kind we of and do stab, way the a about From of stage where moving first next refined do, COVID the quarters exchange a perspective, we exchange if will our is at But wanted initial masse develop are perspective, they terms what macro en visibility directional way methodically more we from from kind that of initial have that more good us a some foreign to expect we expect and rates to the the where the into of an we from an to three runway will of of that and this seen more some surges do just this as I Sure, this perspective are. will

coming as do next that’s from So, this going that through that’s staffing we global with And to are the our outlook growth constraints some year, continuing hospital affecting outside of persist of into to XX% our of and drag U.S. the end – down sales to that expect our year, then these will continue persist total well.

the So, I commentary that’s additional provide. would

Rick Wise

I Thanks will you. Thank much. stop there. so

Operator

from question next ahead Jason Jason. comes Bednar Our from Instructions] Piper Go [Operator Sandler.

Jason Bednar

start Good afternoon. fourth the for wanted to on I the guide implied quarter. here

little coming understand still in the that than the back remain quarter? you third revenue seems sluggish. it the to wouldn’t pretty a environment. seasonality the changed, the commentary I growth It of realized maybe that that to think international that bit on it’s constant or weighed unpredictable become into we why what going currency have the here are predictable reconcile suggest, here am I show quarter, against quarter, going. us business is a less accounts bit has can Fully the that a it appreciate and simply but like would business better we help the I to we trying staffing longer little to are third issue, more something these get seeing takes fourth guess some should moving But

Glen French

Yes.

think So, – are the I Jason, are we moving fourth we into quarter.

quarter in us. and third strengthening, that was way good entering I the exited shape. quarter really a We for was October was in – good We a are think fourth that the month

we for of three think things of In some keeps the I the slowing we on up give States, have of do around that the ahead, United States, better part the toes our look is, holidays. weeks down we one really holidays. United us the things So, history, the particularly and outside

But so are solid in just here. going I having into guidance. that’s are as near some the entered pretty that, our end integrated we and I we soft said that we weeks, And the have a anticipating place, think to quarter think get we

Jason Bednar

so. as maybe year? for that here XX% companies challenges And agree commentary about a on perspective, I is other here XXXX, in we from next up seeing out XXXX to helpful more maybe in lot Rick’s are stepping few are Okay. a second of here Alright. and follow-up, when of months growth and commend But for then guidance, into do I looking first guess growth it thinking a waiting quarter, the picking it might the some would question the to the first very half the giving seem kind like of extend a half, and you that maybe ‘XX those half. then second

together So, see second we the to coming on things, half expand just wondering, would first how fine-tune really just growth half you. as the versus try Thank you of you willing see to if XXXX? be

Derrick Sung

Derrick. is This Jason. Thanks Yes.

kind a back quarters, of first now we have characterized. I think at the again, our of that that’s it’s the we provide well this opportunity and year. half we the looking of seeing half two but again, our are seeing have isn’t for stab, which here are is, really think year we initial are kind dynamics XXXX in When this back we And I in forward-looking what – guidance first lot, half the what better we essentially are are year same post our we of they extend accounts expect get see of constraints seeing that where dynamic XXXX. kind least the of of the for half this kind into era how we and sense COVID, And ongoing pandemic visibility developing the at of and to are be. may of back two the to of in this kind quarters a of

a XXXX certainly want the procedure that’s of expecting we get volumes our surge So, half quarter, just XXXX continued bit expecting back kind of of that of the expect of the came providing in we longer when don’t develop a not kind with And currently shutdown to I the where into outlook the and to half, look skis. in first – that right, that first we dynamic like last first taking But the XXXX, saw, are ahead next in of are anything to where we year, are to that’s mass through. extend of major that first seeing of half accounts we are think and we XXXX. the constraints driving our some we half

Operator

Alright.

next comes question Plovanic. Our Bill Bill. from ahead, Go

Unidentified Analyst

Hi. This question. any question StratX on the with – Bill. for taking Yes. have David are and Zachary that, what for what is commentary and [ph] seeing you My thank on Do my you If in regards to how new specifically? that the think to patient regard the is there guess we about, like flow, how – should a top connection? and of funnel? COVID, in And I

Glen French

to an our and particularly as particularly are, they places encouraging Germany are in-markets outside I strong Sorry depressed, procedures prior about as it’s that our sign StratX pretty looking States, the are interesting like – strong, that the United presently that. an are was on-mute. The relative year. looking StratX where numbers numbers France

so the function, likely we the look specific more COVID. impacting our happen don’t as happen that see testing, that a COVID, to be of which we to U.S. reduction ahead. us gives way, much both to team really as So, to The before but StratX, deliver the United is, ability what’s procedure. with ahead, about I optimism significant procedures challenges along provide could StratX seeing one face as that and the think to needs cardiac executes with that staffing It regard be pulmonary before the could to in aren’t short we challenges a in to testing needs States, outside forth, before. But I some answer well pulmonary happen are it’s think as the has rehabilitation and of that that our scans the the we the staffing result that

they emphysema. So, to is doctor multiple of says, is CT patient diagnose the former standard if then current that what the into our I density look mind, be yes, terms is, good StratX flows of pretty that the might StratX. like the There up, am keep shows tissue are with or oversee and you in emphysema, there answer a steps smoker says a in of breath. a CT Patient short is the into order feeds diagnosis they scan, is what the and is scan candidate the data StratX process. if distribution looks straightforward, because immediately a and

don’t that on look a we real I So, is as particularly think big impacter ahead. COVID StratX,

Unidentified Analyst

you headwinds follow-up, roughly and bit? cited, FX specific like fair? QX Thank are sense. a and Does Okay. be for Got we QX around X%, So, That so QX. if headwinds you if was that you were like I for you you said, figure? same makes to a for XXXX moving X% the little expected have clarifying around it. to than forward for that. on higher was you could like think And do going the that those into same think the seem It

Derrick Sung

Yes.

So, let me just clarify that. Yes.

on to full of FX global in commentary about basis of XXXX. QX our the relationship to that similar our was So, year guidance a X% My QX. moderation was impacted for

something means. X% growth, year, the So, We couple headwind global of expecting when a the we were year-over-year to at beginning on percent. by we order set our this looking of were of a any guidance at not

that in XXXX, if headwind quarters QX growth. they three mean expected that than a through probably to I referring downwards sort the rates, similar greater And we just expect linear are the I is QX. look that see to you was of of from at almost to. X%-ish So, I first exchange through will would QX,

stay see So, if expect closer same it’s X%. see I will stay will would the same, next probably but year than less – things assuming to we X%, something even things the if we

think drag assuming again the then they a similar are two to back half in bit stays first little of in you off current might And going quarters. rates, sort level little see I of more FX – at XXXX. the a

where X% estimate will Yes. now right So, growth. we to we global be maybe it stand,

Operator

Yogesh Instructions] comes Pareek. [Operator next question Our from

Unidentified Analyst

way more question and AeriSeal you timeline? FDA a regarding have give any AeriSeal, I Hi. the could is market for on color U.S. there

Glen French

Yes.

finalizing like an multinational IDE that U.S. we be essentially be in trial. moving deep CONVERT path – And getting We trial like are will CONVERT with discussions much a that Very, It have protocol the approval. we will trial. are FDA. we discussions on said Very in the study. will forward to the very execute

We that year. that study expect next will commence

get XXXX will the We U.S. market. in XXXX, product expect that that to

Operator

Alright. Instructions] [Operator

like looks time. this today’s no say conference want questions our at This does for to thank there I program. it conclude you So, are participating in call.

disconnect. You now may

Pulmonx (LUNG) 6 Nov 222022 Q3 Earnings call transcript