Earnings call transcript Q2 2023

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Operator

Thank you for standing by. Welcome to the Pulmonx Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session.

As a reminder, today’s conference is being recorded.

to at conference the like host, to now Morgan Laine Gilmartin would turn over the your I Group. Laine, please go ahead.

Dorothy Morgan

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

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

to expectations of you meaning statements forward-looking future are that events, like securities or make of the I’d during this provisions forward-looking Litigation Securities include results XXXX. or to harbor will which begin, performance contained Reform that statements statements we call Before the remind Any made pursuant this laws, are of management Act to call predictions safe the in within statements. of Private relate that federal

statements, and market based management, operating for operating hiring; expansion those for including trials; commercial expense in related expectations All performance; limitation, gross margin are results revenue; pipeline clinical guidance expenses; and our upon and organization; our various financial development, timing our future estimates current growth and product to without of forward-looking strategies opportunity; for commercial and assumptions. trends, the

that reliance undue involve by place these implied statements. or cause These Accordingly, to risks actual should from these uncertainties not statements anticipated those materially could forward-looking and material results differ or events on you statements.

the Exchange included on the on please refer to filed X, section the For report filings of Factors risks Form uncertainties business, Securities XXXX. Commission May with and our the a and and list SEC quarterly XX-Q description with associated in of Risk with our

as which most to not These we GAAP Investor will release, for comparable be measures. certain in directly by posted measures of measures XXXX. any our Also or law, sensitive results. GAAP the because to Reconciliations are on call intended of required forward-looking non-GAAP time during or whether conference substitute information, the X, broadcast This intention Relations projections financial live otherwise. contains except measures press financial disclaims future new website. these the is financial only events or is as provided statements, obligation, to our non-GAAP update financial of today, are this accurate any revise August information non-GAAP a or call, and Pulmonx discuss

that, I’ll with to the And turn over call Glen.

Glendon French

Laine. Good quarter Thanks, everyone, call. XXXX afternoon, second our welcome and to earnings

to the million our Derrick prior me a record U.S. delivered In strategy, sales, period in XX% year while new sales. performance of million the Financial Sung, continuing market Here high growth we and representing geographic initiatives. second driven expansion over by same worldwide commercial Chief $XX $XX.X another in with advance of Officer. executed of the we our QX, our on is quarter, In

Given the to $XX in prior year we full in XXXX second million revenue million, our momentum $XX be million. are million the our to guidance $XX range positive of saw updating from the to of quarter, guidance up $XX we

on progress Zephyr facilitate treatment of centers our U.S. awareness practices best of the one, be three, physicians patients. sharing hospitals Zephyr the have Throughout train focused existing COPD that performing and we our optimize make two, to local programs; centers; benefits quarter, strategy second high to to Valve to commercial build among their and the continued to: potential Valve of

our their in areas to year, accounts Valve many procedure investment. seeing Zephyr programs additional coordinators and allow for of of invest Increasingly, of the we hospitals are other strategic half chose first In view program capacity. resources this as to

cancer and of approach care to implementing treat and lung for up increasingly to severe protocols are hospitals with their working Valve screening emphysema, suspected Zephyr addition, patients standard identify In routine similar patients.

This its workup growth in changed other being emphysema otherwise protocol example, is by For recently referred a are a has substantial physicians routine of for at every with and for evaluations to the to the lung patients suspicion function endobronchial evaluated might that severe hyperinflated test ensure led been in in hyperinflation hospital this to valves. have patients missed account identified that system. at Midwest

early pleased I’m are and starting to we that report to are that increased productivity. translating see these efforts evidence into

number those been active, the based past a Zephyr on measure reminder, X established Valve performing by hospitals, given procedures placed our current and Zephyr revenue in the we cases are generating conducted order As Valve account quarter. of a quarter that productivity have the a in treating pver quarters have average which

average X U.S. and quarter average account has Over up back the center. account year, the cases trended in U.S. cases and per in account, of XXXX, X.X productivity X productivity past second to ranged per between the

seasonal some this to to productivity continue will we variability While trends from over metric on average, in drive account expect quarter-to-quarter, time, higher. move

U.S. second XX%. was in Meanwhile, XXXX account activity quarter the of

activity the generating treating of accounts quarter. revenue as that in given account a place As a order a define percentage reminder, we

We treating range continue denominator activity in mid-XXs centers. grow of account to to remain our we expect the as

our second expectation new which bringing is adding XX communicated number toward new total of our having new previously of to U.S. end centers U.S. centers XX this quarter end year. of the the high centers, expanded year XX opened now our approximately the commercial to centers XXX. of XXXX, further also We expect to in footprint, of XX in We the

through expansion in to later in From this year achieved we post-market anticipate approval Valve of our perspective, Once study. in Japan Japan year. reimbursement we and initiate reimbursement established, Zephyr a geographic sales continue last Japan regulatory a establishment is the will of

As grow from option. XXX,XXX take stand who estimate Japan treatment anticipate patients awareness time We will our to a has new we to benefit this approximately it of treatment. reminder, though,

AeriSeal expand which the emphysema In track with our our patients collateral solution on Valve addressable clinical Zephyr for will remain timeline, development we with our market expect we ventilation. of program, severe

presented trial X data expect in be CONVERT announce happy that our final quarter second completed and to to we I’m year. during the enrollment next

X, form the next CONVERT basis of we trial, our from support discussions in AeriSeal this, preparing will X with We results and clinical Again, late multinational of are the our FDA. CONVERT PMA to submission. stage in are also launch

our In is confident the business. and go-forward execution growth XXXX, in our of our am long-term for expectations commercial our on I trajectory track. summary, strategy,

over to the I’ll With more our provide turn that, results. to detailed a call quarter Derrick now review of second

Derrick Sung

from a and $XX.X Glen, of year worldwide you, therapy. year. revenue and continued revenue of quarterly the good U.S. everyone. a in June the second growth in U.S. $XX of million, new ended $XX Total XX% months prior XX% from $X.X million sales reflected momentum The million Thank afternoon, the of a our XX, new in reached the the high X same Zephyr a record XXXX, prior adoption period commercial million, increase increase reached period. quarter during Valve for

in in year. quarter same second increase The the revenue overall driven during of period was sales International volumes. by XXXX $X.X of million, the million procedure growth Zephyr last $X.X was XX% a from international increase Valve

the for compared quarter the lower margin in reflecting was XXXX XX% prior slightly period, second to XX%, capacity year of Gross utilization.

the towards range XXXX year. margin XX% We trending the continue gross year to XX%, the to the to of in half of back fall within expect XX% for full

the $XX.X million, Total the Non-cash compensation XXXX. of XXXX of quarter was in XXXX. stock-based second $X.X the million second XX% a quarter $XX.X for million operating expense expenses quarter of were in from increase second

from same the in of year. prior expense, operating Excluding second the expenses increased total of quarter compensation period XXXX the stock-based XX%

take to Looking expect we of million XXXX compensation drive of full as expenses to ahead, prudent a to expense stock-based operating managing for to approximately inclusive invest while fall growth. million we continuing $XXX $XXX continue and approach to non-cash the between expenses, million, year to $XX disciplined

XXXX increase stock-based to expenses the increase as and increase R&D to AeriSeal was same primarily program, attributable prior an compared expense. compensation $X.X as an in second for million clinical The were the to costs quarter well in million, the year. of development period in related of our $X.X

for quarter attributable and Sales, as ramped quarter of XXXX as administrative selling increase as to $XX.X costs an to was activities the compensation general increase stock-based were second million, compared the second well million $XX.X legal commercial in XXXX. The expenses expenses. in we of and

Net of share of a determine loss the prior the was for million average per used was the share loss million quarter per XXXX. compared the An for share a $XX.X as to of loss $XX.X loss period second $X.XX year. to $X.XX of million count share of or weighted loss of net shares same quarter for per XXXX or a XX.X second

XXXX. to XXXX March the marketable We for in cash, second quarter and million loss XX, ended of cash EBITDA $X.X of of quarter million Adjusted second was June as million XX, million a the equivalents, securities, decrease from in $XX.X XXXX. $XXX.X with XXXX $X.X compared

flow good We about continue our top-line our as breakeven grow leverage. very cash and we deliver to to operating feel pathway

our we range $XX and to given XXXX, for of outlook growth revenue million. guidance revenue to full over year in our guidance XXXX from approximately of $XX first of year, $XX to strong to up million representing updating half the the in the our XX% XXXX, turning Finally, XX% million, to our $XX performance prior are million be

typically incorporates guidance third sequentially seasonality sales holidays. quarter, Our second the due to quarter in the down is which the to summer

call we like up will I’d attention your Operator? the that, to you open for With for now and thank questions.

Operator

line Instructions] [Operator Wise comes Our of question the Rick from first Stifel. with

now open. is line Your

Rick Wise

was always not? it. step I salesforce quarter? range to Hi, you good not even I could you productive, hoping the The just and sequential of new docs, and see. Why sort color curious starting training imply Derrick. and see does more much utilization why this to add And third sequentially active in step up in nice not seem seasonality, extra this know, raise, third quarter, or in guide. doing? off opening solid down to beaten the to you’re and how you just I’m quarter clearly wanted higher Maybe are you accounts. Nice on gets I Hi, How the asking the afternoon, Glen. new understand doing the of and some I’m keep new a It’s argumentatively. the centers

Derrick Sung

for Sure, Rick. Derrick. question. Thanks is This your

super traction our seeing customers we hoped. guidance obviously exactly we quarter, right? the raise the both hospital are We’re as and with engagement range did top our the increased performance with and in happy And year. our second overall for we yeah, bottom So, that

impact, saw out, slowdown, substantial. more to our and no different summer summer said, aware typically as QX. very or believe acutely that any of we pronounced are reason the year be pointed we that which have perhaps we will you Now, seasonal Last summer, a this even affects

reason So expect into that’s guide, that for down be and contemplated primary that we our belief sequentially. our has to the been QX

X% given I order factoring what would X% we’ve somewhere what in. what the in and of the seen be to we’re around past we’d think expect,

that dynamics see step particularly get saw to QX, the in just ahead positive back don’t this dynamics ourselves given But, and up year. we that how step we nice see of summer out we and said, we in we want all QX, really expect of do a saw, to QX that expect to to kind nicely. up plays the want We really the

So that’s the explanation. primary

Rick Wise

you. backlog and continued these recovery, recovery Are making several addition post-COVID or maybe about characterize Is best on? to Are you Got build in you meaningful are a issues. backlogs and awareness? a practices however, noticing, for that do been difference lingering patient and, There’s seeing evolve and as here? in pipeline share you to with given obviously, Glen, of seeking be you. a like feel everything the a stable in patients staffing treatment it? what to the difference patients quarters other now that’s discussion you going else back would or you But local or, patient any intersection programs seems environment, for coming lot the improving

Glendon French

Yeah. Thanks, Rick.

COVID behind was to to regard a all, first of large out of with so the us extent our year. quarter So first activities, last coming of

has Our focus there have then all been account on The along. efficiency. really since always patients been

calls, in are and many prior XXX,XXX us patients through that so I think engaged forth. with and our others talked about through and we’ve the with social website media of

than us. thought we’ve a things and really treatment So that Was popped actually when been standard that our to the focused had became the was care accounts case. out patients what as that one of on established we the that it we of a little there really way was different are COVID of and out the a bit obvious in

full of the relates around been these to advantage last by over system quarters. few now. them around opportunity so hospital that’s and that up, very sure are treating that and And practices taking much we’ve primary right make the sharing looking on it the accounts best as hospital for and then around really their curve learning bring been trying the that, to there patients And the to focused focus the right that’s they’re

good as progress that about nice patients about we move very We to ahead, the to And think we into foundation And feel provides we accept those look ready we’ve us a it plan. good begin to with made. them. feel hospitals are the

Rick Wise

Yeah. maybe for on ask just outlook And analysts when help I year. about me And know now. the it for the last for next these hates everybody Can’t calls myself.

about setup is? positive articulated. for reasons you As is XXXX, the I where seems comfortable we you’ve like consensus mean, thinking think Are we’re about growth. XX% the it with all

You keep talk might year to high want much. a sensitive delivering be ahead. as just Thanks us we think so we it. through about the Maybe at to drivers level, the

Derrick Sung

lot outlined, the place year half feel Rick. of seen to Thanks, right? this us what first we’re to Yeah. a in foundation putting we’ve of what as We growth builds certainly continue in year, drive that forward. this And for good kind of Glen about

like to year. what seeing to relative hoping our to execute we’ve were really how we plan relative been we So this

the sits Now, so we’re about that and I around. would I consensus going comfortable need and a we’re next what grow obviously comment next that’s year. foundation most playing to feel currently way that’s where But today, like we this feel strong it’s do move guide, think, something build year. cetera. to not next year, and currently, to a good feel We not going things out to I premature us et on for year, are seeing

Rick Wise

Thanks the to I see really quarter. both. that. to Nice appreciate you

Glendon French

you. Thank

Operator

question. question comes with Jason next And Sandler. Bednar the next your from moment your of for line One Piper

now Your line open. is

Jason Bednar

echo business, here, well part but it I’ll the a comments concentrated in U.S. to Can as international markets? had actually focus afternoon. that also seeing I good Really in quarter, than look guys. demand talk of improvements because a the your Rick’s I Hey, to we – market on given there. was broad-based, nice about procedure, better two? thinking. at international strength there always been want wanted the the Was we was what or you’re you or lot

Glendon French

year any represents you is United our I outside one-third as in is know, the it’s it’s business. direction. States. And XX% XX-XX, We’ve got Jason, including moving of think, U.S. Well, to actually over X of about business that U.S., the of date. global that, in our case, in that about countries, two-thirds the But

in think look of across If you all I direction. positive those It markets, looks headed them solid. were a

a them of I is up. the think back X set set weakest half up, of year. the The really really one is I strong think, of for

about United good feel that foundation outside we exists So that States. the

Jason Bednar

I you don’t confidence think how of million outlook, maybe enough. Okay. of when quick looking the about as again, here built consensus. a coming $X And, kind the just guidance, Derrick, to into I that’s or a back pretty for the guess press the this But beat of I guess, at than that the your context the XQ, XXXX we of I thought, All kind but responded for here then more it XQ, versus guys you’ve conservatism. you the for right. directional level little quarter appreciate year. Fair color than on in of nicely second with in bit, beat And half that conservatism then, lighter guess do math on you just know Rick’s question I’m the I implied if I little have would I’ll looks

were the $X pointing guide. You end the your upper by but to raised quarter, last guide million, of you prior already

to as that I all marry together, into XQ me trying model out help drill appropriately? maybe really, So

Derrick Sung

that, the guidance to be think the year goes our front And, of it’s that the the will into last center there we by think it in some We this I year, don’t that of is kind U.S. uncertainty point, were half question. quarter. summer to at I or and think, think and as how there’s of impactful things we’re this is folks the that and QX. and be Again, think, some in. uncertainty that be vacations great both of that back different. excess these outside really any I will And, mind and Yeah, implied the I what it summer, think, inside I appear And, again, to But any worse pronounced is summer are surprised the U.S. could seasonality certainly the more indications of into really, due better. I be as severity taking there a frankly potential factoring

at for of been quarters would historically the that QX, historically account So and QX. year seen QX into this the case nice has of up QX to be the we very look if year. us, strongest you you one step that between expect we’ve again and a and take

again, into forward again, So, our about good the ahead we we through don’t business But, showing building, to of that fundamentals just I next feel look think foundation and that and ourselves. momentum get to we’re of we itself want the and year. QX

Jason Bednar

Okay. queue. hop back Congrats again. Fair in the enough. I’ll

Operator

your for next of with the question question. your Bill moment One Plovanic And comes from next Genuity. Canaccord line

Your line open. now is

Zachary Day

it’s guys, today. taking you question, the congrats on Thank Bill the and Zachary Hey, for on for quarter.

you you Japan, regarding, expecting for long much regulatory that on would said Do two expect commercial would year. be an be? between approval launch? With later Thank the the gap idea that you’re the going So what taking and the reimbursement of those you how into question. very you this think events cadence have that, do still

Glendon French

trial. year, of nearly and of back in begin last will the we a and clinical within anticipating in approval regulatory end this a we reimbursement trial to year, half commercialization the got commence are We Zach. post-approval of by sort Thanks, place

to we process the have us those of approval, patients and don’t a require patients there study, will so the into enroll study commences. under that. we’re in long the before go over will of now, post-approval XXX already training one in lag government to right physicians Because anticipate be Japanese we the slightly every that So first

going the and of on accounts into opportunity which to take that’s increasing order year in, that completion expand over point be we’re we’ll idea reference the those expanding we I the to And a in the and were think limited from going be just beyond to the broadly. of we’re time that patients of this post-approval substantial awareness number it’ll able at And reading that of get trial. then because that script of made enrollment to all the to more to be

Zachary Day

you – much you Okay. for very that Great. thank sorry, Thank clearing up.

Glendon French

Just proposition to will just clear, a fairly low that level. generating be revenue be at it’ll be us, for although a

Zachary Day

Awesome. Thank you so much.

Glendon French

You bet.

Operator

[Operator from the line Citi. Instructions] next with And your Felipe question of comes Lamar

now is line Your open.

Unidentified Analyst

is on Wuensch. taking Anthony this for Hey, you Joanne questions. for actually [ph] Thank our

on another Japan. Just one

whether So this had there meaningfully, past anything and into be more once should or in the account a maybe you the expand we trial after. structurally workup? And the the differences I follow-up taking of get about market sort it’s you is referral then pathway that in Japanese year initial just

Glendon French

and that’s Japanese most the it’s do world. no complicated a things you a big if big asked you simply, be market really question to market probably paid order, hierarchical very very that’s hierarchical price you mystery, And, – in the market the well, to need it’s in that a a don’t. The in I’m therefore, but there’s specific aware that

based the and Japan. global working leaders together thought process. We’ve leaders national with approval have are are reimbursement process the both that been We the them in and engaged that through with thought

So very and people we’re that we working path. right we’re the with on the confident are right that

may to of doing, as interesting Japanese is another really is United as play a it’s relates we followed. like nature markets in to medical I’ve professor is experiences even communicating our standards in doctor of expect the that curve is relative of hierarchical by that doesn’t doing of what town accepted doctor all the whereas benefit maybe that out consequence care case fact out something drive kind through some typically States, other this the across and Japan, our had as may have adoption one key that the community U.S. sort what about in and And aren’t, across this that it to there in ultimately town the

It’s So we’ll see how still that out. plays be to determined.

Unidentified Analyst

Okay, like a account sort Thank low- on you Is room there mid-XXs hovering in been level you. past of that mid-XXs this I Or quarters. to And think feel ceiling? makes to for the that it’s do is push activity, then few natural for sense. up? the

Glendon French

do Yeah. It everything define how to with has you it.

in mid-XXs. the we that’s about where We We’re talk expect be. to

we goes or are sort denominator up, of for more on exactly the though literally, of been And the X% X number minus I we’ve last even activity top where years. the less think, or stays flat. plus

is there Now, a here. dynamic

period more and stock, time, we’re when more We’re and stocking. stocking everything’s of getting trunk we out are first we people so – after start move more who that accounts then are having to more and accounts I think some

case, And start order they after we in – if the don’t place until that follows an and of the quarter. of the end at so quarter next any placing the somebody’s one quarter

example, You’ve to to say, to goes for XX% I got was horizon from X-month X XX%. months, months to challenges that this If expand X there.

assume and I people absolutely the XX%, see case. our not lost that’s customers, think that XX% of we’ve when they

XX% centers. of around. our those interventional the what is in academic to much I are that is think to well flip pulmonologists XX%. A reality the business side of is, these And number the happened moving lot

from trying than one to of certain to moves is We centers leader there’s focus amount each in that last explanation if is downtime. a there at Chicago that biggest of smallest these just the account. physician part make of of selection University more of for the probably typically the is, the probably Columbia the York, in that leader XX% doing last we then didn’t folks bit, And the Press on procedure And that New XX%. good who’s get inefficiency one think I the then of little movement a

haven’t of very that scraped of those that’s that sort got out small some bottom mistake single-digit accounts, in we’ve a proportion picking barrel probably whole. a So at we but stuff the the made of

Unidentified Analyst

very you Thank much. Great.

Operator

the I back questions turn right. in will [Operator call French. Glen queue. see I Instructions] to now the over All no

Glendon French

Great.

very quarter reported. just We are with record this that we’ve pleased

very in with in and confident our longer-term expectations revenue pleased strategy bar our full to place, trajectory. to the also growth both raise the We’re and we’re with also that regard we have year

interest that, Pulmonx you the you like I’d So best. wish to with and for all in and all thank time your

Operator

today’s This call. your you concludes Thank conference for participation.

You disconnect. may now

Pulmonx (LUNG) 2 Aug 232023 Q2 Earnings call transcript