APEN - Earnings call transcript Q3 2021

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Operator

Good afternoon, ladies and gentlemen and welcome to Apollo Endosurgery’s Third Quarter 2021 Results. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Matt Kreps. Sir, the floor is yours.

Matt Kreps

Thank you and thanks everyone for participating in today’s call to discuss Apollo’s third quarter 2021 financial and operating results.

Joining me on the call are Charles McKhann, Chief Executive Officer and Jeff Black, our Chief Financial Officer. slides the include presentation. will call to audio accompany Today’s

ir.apolloendo.com telephone, joining download at For and site, you by our choosing you Presentations. Relations slides those of the us can Events of a Investor in copy

sales. Apollo’s we product securities that made listeners financial laws, call include including by to the development within and conference comments forward-looking this Apollo’s begin, statements I plans during meaning Before for like will caution and and would timing management of outlook federal

there about ongoing and the it differ may operations, uncertainty addition, economic COVID-XX general. forward-looking virus products, may our activity materially. of In continued spread and These our statements is the on supply actual for and impact the uncertainties involve Apollo’s results chains in and global material the demand have risks

to a Commission our previously factors, revise circumstances of annual of XX, update that this Apollo contains date conference of on encourage undertakes Form review the ending of content by to the for X, with call Form risk Securities XXXX report live this you and December obligation the as broadcast, the only most after November no Exchange year the recent company’s to as date information is XXXX. statements law or accurate any Except time-sensitive reflect XX-K call. XX-Q. The this filed events discussion For I required or and of

and with evaluation these filing which financial continued press financial of tables its their future non-GAAP are release figures GAAP believe a results performance the and baseline company’s in issued company. tool Included non-GAAP earnings Additionally, an X-K certain the in performance. evaluating comparable. potential measures, we for core closest metrics to reconciling today’s will and supplemental corresponding the uses discussion our include today assessing own operating the for provide Management additional

the to call Charles. to like I’d turn Now, over

Charles McKhann

and third of as results webcast participating marks discuss X-month Thanks, joining us joining this to well. afternoon Today the Matt and for CEO format thank as Apollo. you quarter our my in since everyone for anniversary the

the to are also X accomplished want so addition going perspectives an we where forward. in covering on to And we in update quarter, have on the heading first months what I and give

and I position On first the I and and have leadership new the some to as key that people QX, a accelerate that implementing over with call phases energize put after it team opportunities. then a supplementing some did Apollo over and of laid focus then that after us the best forming really time. on additions we had we out involved three a in great large business, then that been takes that to board that has And we market lead really strategy go

made made. that have And across three In areas revitalizing am the then see have of energized to delivering the phase very And are with the we a so all for on of can success. I near-term three slide, our progress as and of you very foundation the progress pleased report we strengthening we first today talked and growth building on growth main about focus: strategy, future that the phase, team, pleased we them. really

is some Jeff to our team, CFO, as the we our sales as Black, here additions to made team, the and leadership additions who today, organization. On have including me well with marketing

– have that out XX frankly the ground. we to had U.S. We the started the sales building not on country been in have team large adequately here. reps, enough was which we also cover We the

the the by end so And reps. we are as to projecting year, have of XX many as

very others space. Apollo as some in back as well nice a are who so experienced GI And bringing experienced from hiring addition, the including reps

we go then future to with been build we really made for key facing them, the with the around business. functions plans additions about to targeted in the also as have And with our we time, organization very spending talking and our business. customers, also want and meeting into have engaging scale outwardly other where them We the enrolling

on near-term Secondly, delivered growth. we the have

We for U.S. year-to-date, the got you suturing pleased across quarter, equally results growth look very the also the but are if outside U.S. and quite our with intragasic our XX% have equally also, endoscopic and business spread we across balloons and

are across so products So, this the look our really nice And at as been X-Tack balance, a of geographies. foundation launch very the we launch as the I I And we of use, then well. for are then big pleased a it’s all will updates the there while, has building And far progress well. and X-Tack opportunities. and future as and the we growth word making are I with across component success the some that year balance provide

days announced at touch Just am study MERIT meeting the the I about results from XX those. going to ago, we the and on IPSO

first the for X-Tack. announced morning this just publication also clinical We

that positions the other another then more the approval in a completed important some received we a novo for balloon got of few markets Australia, us the endoscopic potentially. approvals fund strengthen progress loss just gotten world, we not we’ve huge NASH year, opportunity And and in also a X-Tack and for And this Apollo step designation is future approval the one have in ESG but submission de we’ve make OverStitch for treatment to critical Early we device. of weight of XXX(k) on designing here FDA path for and our weeks well, for sets helped continue months. the We certainly we up, indication which balance the us already the have our us we a ago, new sheet the forward Apollo for the in in outside revise, U.S. with base the the a for last, for in least, developing Orbera NASH, the submitted the us around think, which breakthrough and then for growth. coming in front but

some metrics. So, key

quarter, mentioned growth. look and strange XX% year I was already and difficult Clearly, the comparison. a challenging year-on-year also a As through we XXXX

across accounts came equally new ESS the showing well. XX that accounts nice year-on-year, from important we our businesses as progressing continue also in I the utilization real direct and XX% growth And spread there utilization, that’s really metric additional from so U.S. So outside well. of XXX% an to well while to our third building because mentioned, of also, also the U.S. you accounts, top IGB in while is addition, a can both is X-Tack, metric our see as that’s our grown And have sales real in accounts issuing business that depth reorders. in breadth usage, XX% XXXX, key as and quarter, compared expanding open and

that for publication multi-center XX are It’s pleased patients, We the New just trial, came York excellent centers involved, University. very Hopkins, a Johns with out. Meo, including X-Tack the

on demonstrated first in presented, we big a will for publication. as the publication to – the Remember, and it’s And results X-Tack. in today, issued here a that excellent was a efficacy and had touch new So minute. clinical a And this I for us. press then chance milestone you as is very mentioned, us, MERIT the that see I just release for trial, product if you

of are I call device. which on randomized study, you’re not, controlled familiar if is ESG trial think OverStitch it, utilizes a our MERIT with Apollo the it are the new but many procedure, the and So to

subjects So, ESG exercise. versus to endoscopic that a was patients diet sleeve enrolled of an this was BMI who with is It ESG trial of standard XX gastroplasty. and XX. a care And XXX receive and between randomized monitored a medically

Houston, Dr. from field; leading the have – We or Ameo Eric and Barmabadeo the in are of investigators, surgeon. leading University thankful very GI Wilson Texas a Clinic, principal to from Dr. a the

a we on the throughout GI partnership close have surgeons. had study so And and

the at having excess weight points on primary of of the see serious a can rate event the safety, study less least than You adverse of XX% end loss X%. body page, and

We also patients, with X importantly patients hypertension pre-specified a patients diabetes. number type and with of enrolled

by that presentation were body achieved presented targets was based the highlights of the at a by set guidelines to excess session they excess patients of of slide. a the loss therapies developed which point. and of Abada, on society the a XX%. endoscopic out again, end did was primary are the this We gastroenterology a ESG. weight white And a was a that of set developed used society. target was months ASMBS, at weight or loss XX underwent That made is And weight virtual ASGE, target XX% here off XXXX who from a importantly, Dr. surgical least at to paper IFSO XX% Some for compared body loss is the which a and

SAE patients of loss weight versus – body a and investigators XX% XX%. weight see defined all in as control The by XX% was and XX% in a right achieved exhibited we side very of study. importantly, the events. difference X% the body Importantly, also a as those there durability of recovered rate at was loss the good compared you excess on the target to least page, patients the from excess

years, patients ESG patients excellent majority well who as crossover the of So to received the weight results. out loss maintained after X had X as the years

other also can with the hypertension on slide, improvement significant in in called impact very the on pleased measured key see Type of syndrome, compared a at showed And Same XX% areas true questionnaire standard the to XX%, improvements, SFXX. as one was mentioned, on I significant by results we was differences study you or of looked syndrome, with diabetes, and As metabolic control. comorbidities. comorbidities. the X metrics we’re life as that quality Metabolic the the

no GERD increase GERD. the worsening reduction of around we interesting evidence one stomach. preserves is the is ESG finding because and bariatric in of was traditional surgeries interesting GERD an And which or a finding that symptoms saw actually actually Another result an of in in the The often GERD, procedure that, symptoms. new function

this and nice study. finding a important MERIT So from the is clinically

have these with continue coming about results, the novo the formed data other submission, ESG to for along look will of in that we de basis the so with in dialogue and FDA months. And support

and update the we going serving and with, me an To market we’re So for step the on bit on update start let a back we opportunities. are the where with little heading. large that over where company vision a of quarter, years provide view take coming

we weight call business what our GI products have products, and opportunities. advanced and two X-Tack, endoscopic We three loss large the Revera OverStitch opportunities, across

have In the fatty third addition, in future, liver potential which is NASH, we area non-alcoholic in opportunity a disease. the of

really we’ve and being the growth is near product we and got term nice X as of the continue weight creation opportunities really foundation and value area. big lines product over already I each are increase those to three that With really some lines, And of things main number one build for the I applications like for of medium growth that users for the opportunities range So, in. we the both of able across OverStitch, nice look across in term, two a over time. of again, the to building the product, areas loss momentum are and

that we’ve if As be we for launch a submitted I to submission FDA the Apollo to a months. and Apollo is new position in then successful, mentioned, Revised ESG, ESG indication the in coming and would

endoscopic see loss In a standard establishing that addition, over time, of care. we can as weight

patients. approval, we pleased in as likely move time, of closure. U.S., by a utilization X-Tack has with near-term into position CE the new able as trial evidenced the balloon a an we AGA, have Over product are have market integrated global putting that of as XXXX can practice endobariatric Agograstic is see options. now favorable. which defect this then be a building in terms of performing in is some And a on suturing are very conditions position But clinical the in in primarily the issued the component the And the results. year pathway can you those design well, for American will development Orbera us the And been European of X-Tack, Gastroenterology balloons approvals. indication For working NASH, There and Over event. a OverStitch, practice to balloon balloon for leadership the addition, in both key we be the the been reimbursed we more a line new create and potentially mark, and weight combination brand-new our guidelines are Association incorporate earlier will see then time, which and a right over create to that loss experience. see for here AGA of we guidelines, to a time,

can – So, been product moving the to a futures it are education, creates through of developing in growing through different more through the U.S. I’ll It endobariatric the heavily to ESG being applications, training, procedures OverStitch of OverStitch, GI advanced able U.S., it’s stomach. see do provisions, the mix, and that back the applications. flagship a both Outside in full XX% And you and is thickness business for through company. procedure are Primarily, bariatric weighted additional minute. called users, come procedures, data. GI each we’ve products, right, the medical what the is really the to for of these unique therapies, new which in our advanced offering about

creates and For and addition used important it new defects large can value often through GI has in where than cases the X X-Tack clinical OverStitch in fills for defects. the are X-Tack, need you full our upper might scope it’s an lower thickness, especially between be proposition, important the that or through good used clips, scope typically used clips. quite – and GI upper need and an which portfolio. more X a the clinical It for to is in small

product first We are are and process emphasize I the we’re early pleased clinical and we’re product progress of with in the targeting with building being account of making. the in published with and just today. data of quite just the still accounts penetration building And experience U.S. days with here high-volume utilization, the experience the in

So, continue to room lots and to of opportunity grow.

is side endobariatric large virtually opportunity. is really it’s the clearly epidemic significant an to unabated. things, that Moving Obesity and really, a of continuing

are XXX XXX,XXX globally obesity, primary the from U.S. in who some have see U.S., than adults translates adults. of a XX. of that, suffer people yet And surgical numbers That U.S., there more XX% currently XXX procedures in only million over million can BMI the to in about You despite the

believe over is bariatric the talking for data opportunity based but much loss the in primary the very fastest in events. side. surgical In market, opportunity or undergone Hospital, Xx This revision a volume were of a a procedures some and But that was endoscopic procedures from events surgeries. for reason be the lower be serious XX,XXX procedures. increasing revision is accounts endoscopic performing an we’re of that, a procedures, the adverse in see us. safety X-year right-hand adverse it surgical that to surgery already is leading XXXX. two at revisions there potentially is weight least The important last One billion why to are who and that then procedures, are our published gastrectomy. growing XXX And Women’s on U.S. equivalent on gastric very And the close there revisions that role it X.X patients And at surgeries, bariatric at of patients. those the It’s we gastric are segment of of some showed a other done essentially profile, about rate potentially to of of for place. in procedures evidence prior least previously were believe data laparoscopic better especially is compares the have XX% the the taken – study meaningful that and addition $X that procedure off these bypass the study have were sleeve what to million third decade. conducted revisions summer. of OverStitch And a for almost a in that Building often revisions. a of you bypass is It already of were lot weight last evidence what procedures in within we fact, decade. a it’s clinical fact, that half will, And a in And in there X-year suggests about to and and a was regain least Brigham of in patients is top at there clear, to a the period.

to for well. addition submitted reasons So for ESG revisions cushion, we’re one also the encouraged de for novo we it’s why, main of by that. And into in as submitting

that addition the no in procedure, gastroplasty, the are weight it’s the rate if that well. ESG which for we developed than benefits another or we’re abstracts of completely anatomy it the And publications tissue. be endoscopic For efficacy results X,XXX It’s other patients consistently, in ESG patients study. years procedure to showed And study now. is be MERIT is eight showed device. not in because been good scarring. SAE then a more over page analysis the earlier. what is taking shown pooled interestingly, of pooled been again, MERIT procedure, return work. there weight OverStitch have sleeve be. I There on outpatient XXX using development done sparing And body loss of X,XXX And saw can a there and performed both already has profile. need number very exactly a show an referenced and The that promising out right those that reversible inherent a can nearly are part the to a studies loss. total same to procedure excess any the X%, very as relatively have body and has an of as data It quick is There the of there It side analysis

the reasons it. of procedure, conscious also the So of there why but already for seeing benefits. practitioners one potential are marketing very a are number we we And not of some embrace explicitly are

estimate processes on the months. of indication. novo we would forward to de XXX(k) are and with new XX take FDA look work so We period about the average potential going through a approval a And in the to

a that line around of flatting new be for a And launch. so kind will we time

an But where going a to let to update it turn into the that Jeff. on business overall financials, vision you dive the we’re standpoint an hopefully, forward. and more quarter-to-date from gives So me for

Jeff Black

financials Thank some for then profile everybody. commentary you, minutes a give here Chad just and good today and couple spend operating the brief our of reviewing and spend afternoon I’d cash review profile. on

starting ended third products, the across growth. – with consecutive all revenue, our So, strong we quarter of the product all of growth with double-digit quarter

nice As growth. saw Chad XX%. outside XX% mentioned, we growth we in balance a the U.S., saw U.S., In the that a

was would Our QX OverStitch in than ago product year and our demand balloon just elective against of a XX%, rebound over number that’s a for what in patient basis, and grew endoscopic and up we XXXX. products, XX% a suturing suturing On Orbera more indications. both highlighting stronger-than-expected and across that X-Tack grew continued procedures was consider XXXX. year-to-date a XX%, lines

revenue In this the – And was million full XX% it XXXX, impacted terms which revenue growth XXXX, $XX over of which we COVID, year represents I’m $XX represents XX% we acknowledge impacted by in million heavily acknowledge in endobariatric outlook, expect more was over than sorry, XXXX. heavily XXXX. for to growth also over we but

the points gross We to basis Moving we basis. margin, on a XXX third improve basis margin points in saw year-to-date saw over improved by gross an XXX quarter, XXXX. QX

over second basis We points. sequentially also quarter gross saw by XXX margin improve the

continue focused and Orbera has absorption to overall particularly about, continued focused overhead on OverStitch, COGS drivers very on we direct remain and talk margin be Major we than profile will particularly programs, As improved which gross improvement product of margin OverStitch. X-Tack. mix, expansion with margin lower of a improvements,

margin the mid-XXs that confident from over will a early in factors. impact the years. blended X the We’re we see still but X And these to next beginning to of we innings, all remain we’re gross very see

marketing, in focus We there improvement expansion, like. exclude combination for investments we stock-based sales important midterm at and non-GAAP is will operating and invest running a we revenue, rate core development expense the non-cash of reimbursement, areas programs. that’s to the and what sales marketing, Moving XX% channel look be a profile, medical of get about. OpEx which spend of growth fixed expense over top overall clearer development, like on operating plan and channel our about run to at variable much is operating product And today, education, compensation compensation been and and to think and non-GAAP line COGS clinical our it’s picture XX% talking of expenses, looks we’ve our do to

as investments. think a of sheet in see expect to to absolute from in we dollars have well and me to, particularly I do XXXX, And Slide usage. and leverage positioned make importantly, we’re But operating start we expense to the expenses, and ‘XX and we these ability So perspective in see need on XX we some spend both percentage beyond. sales, to operating balance should to that modulate brings cash increase

average cash the million. that – burn months $XX was was year, the our a includes gross $X.X from ago. forma weeks over quarter We we of executed first net X proceeds $X $XX You’ll this the net million. pro gross quarterly burn our with ended cash million see follow-on under million, few That the of

base. execute only we’re fundamental cash well very shareholder high-quality not number So now to this solid substantial growing do a financing provide on our of very growth healthcare positioned runway, investors initiatives. and a added it to But us with

so cap our existing don’t that on issued show and And a finally, here picture given And investors continued confidence. of that table, elements I up it few count. our important complete a just the before thank paint couple there in support outstanding it’s turn for to we back and are we a regarding comments Chad, to think our share new XX here, Slide then both and

XX So today, issued outstanding just in million have we and under common shares.

warrants. under million addition, funded shares there XX just In in prepaid are

XX would common in to this equate So shares outstanding common and million equivalents.

underlying $XX We about million debt. X.X also convertible our have in shares million

to important I as over shares with turn historical call mechanics And given And this to over all we table diluted for the just recent million XX on represent Chad. So our the think we it’s outstanding forma call, and cap in, back raise we common pro will basis. Apollo. provide the clarity just that, about think on fully a funding is

Charles McKhann

company fund joined the to well both Thanks, raise. time our with Jeff. appreciate We who as it. in And you for the those us let as thank who’s very recent me of investors, much been long comments echo a existing Jeff’s

the wrapping process very the with across and product need And and the X-Tack, potential of our we rate potential We work kind here, big and forward could FDA, but approval, our procedures the successful, the the right? the practices still submission basis then on but years. if to announced reimbursement catalysts in which looking the up, year, us, evidence for form and U.S. of for endoscopic and a of is XXX(k) also published it of absolutely view for these a first through a next launch, number expanding approval loss with already, basis just months good developing step and touched significant each coming progress clinical today. So a the of potentially I’ve looking With lines OverStitch recently over time. we in with

new also We what and to is as our so a the a essentially extensions in of will new for towards that year. the be who the the hold ideas product over NASH a indication. as coming potential outside U.S. have very X-Tack working are development studies broader And and using others early in R&D doing use in And forward new that with for of platform for coming have XXXX next more globally. launch out great and clinicians updates the I of we of as aware initiatives will also would well line some has well are that. we move X-Tack more course There product potentially future we’re X-Tack. and the expect looking meetings we there calling developments. trial engineers which coming mentioned, as the and developments year, they on we have the about In with start then been And balloon,

are there previously, an X, for the integrated loss XXXX. practice line January that for announced new CPT codes globally. be as product then key balloon as a in of we driver critical starting endoscopic the a component also implemented we’ve weight As will see And

XX% And year, we’ve as energized $XX overall growth that at all very million seen look so essentially to to of finish the And pleased outlook, this the with this of XXXX phase. growth growth guidance with over underlying our $XX million. you we’re

and very U.S., really our our and growth, category, overstated outside grow position globally, both product all believe, organizations and the that to new well continuing then energizing And adding an team fortifying enhancing of as customers, from building line our leadership. then U.S. standpoint things within the ultimately, to the importantly, for in organization top as next that we So and phase the the acceleration creates the sheet. next X-Tack and the then advanced the balance GI commercial R&D foundation, it, developing of

you so your the for and for interest. with open questions. you thank we up that, joining for And Thank call, will we it

Operator

Capital [Operator coming first is from Frank Street question Takkinen Instructions] Your from Lake Markets.

live. Your line is

Frank Takkinen

in couple large how the things? that step as for quarter? a a take if How to can couple times just types of and you those sizes can you’ve to frame the of a step product your large of as with Thanks was from congrats much far quarters like questions back on third be generated and great to I take market feel just now just X-Tack about my opportunity. results. and as that, spoken and the And then if could a Apollo? for we total we’ve line X-Tack taking is under Want guys But you out up had how start a belt, X-Tack, wanted of curious account you follow-up clip back market a revenue tease could

Charles McKhann

Yes.

comments. Appreciate Frank. thanks, your So

X-Tack It’s well. to do still reasons, out competitive for individually. not separating continued So we’re

the across becomes utilization in from upper X-Tack we’ve been the continue as – each which closed, – us. able mark, delayed be of are colonoscopies for a And line big of they X-Tack, risk significant that a cases, performed do of are of colonoscopies. predates that we’re that lot XX of it an right, potential based a global those an of There growing. QX market, require the And is important and that should As $X That’s X-Tack the year, the was half be number just the There is pivotal you right? especially data a for see was lot million Otherwise, year we’ve of there ACG close. We to GI. that think was lower off the important some million by manufacturers closed. talked as a a of there. others. bleeding. our the equipment should there studied to very inclusive growth, study pleased studies. call, discussion X% both milestone among aspect know, that product least on with to XX% that we for actually portion passed clinical of that It’s at meeting, it’s a positioned And a first at about to and sponsored but we well that of we opportunity need contributor mentioned to us. grow recently that much I is

So we see it OverStitch growth along as for the as well us driver with as being balloon. as well an important

it play forward. very a so can going And important role

Frank Takkinen

Got it.

Okay. question. to And then little to broader bit a I back maybe just wanted up

whole? growing I basis, understanding top slides revenue line a go-forward midterm a that basis. correctly this plus can you you’re I on XX% be a target think in on XX% your I as a regular CAGR saw about Am thinking

Charles McKhann

really through Yes. process and went a lines summer our product opportunities I markets. team and looked planning strategic we as the mean a over – at across that’s a across

that that’s – target what level It’s company, guiding of it that want to for achieve. aiming right year that we But and can at that longer an we overall are to is for consistent to kind be next believe our sort in we a potentially believe is, we so that of we we aiming yet. growth term can the we’re from not a – view, that And and we’re medium achieve.

Frank Takkinen

little you on helpful. give That’s easier to just am one the a reimbursement me, One, then in wanted just as place bit it’s Okay. maybe background reimbursement and around place I through OverStitch is working, revisions the be two, I touch last And specifically relates with there a to know ESG can market for reimbursement things you’re product. understanding specifically it that’s more, is But to the it some working I as revisions? it some sense as little correctly? this reimbursement. bit little my a for us to And in is to relates revision relates there reimbursement,

Charles McKhann

Yes.

have the additional procedure. So the often of right, revisions and weight a had and a well. When prior they experienced an right, is inpatient that a And alternative patients procedure, in loss. regain, interesting often is like have have surgical because benefits the also lot are as of they have which you’re procedure comorbidities

procedures. get we are I able talk using they to of what least There as many for prior is revision at typically our unlisted authorizations or dedicated code. an So no are to case-by-case is pursue They find that customers, revisions. hear an But to able for being lot that in revision what is code right endoscope we is make be and the case quite success go the frequently reimbursed. those able to procedures way a of to

And foundation our we that we think so indication. Again, a pursuing good are build customers have that’s to individually. That’s on. don’t the

actively we that. So not are supporting

might success. we thinking place and with similar we’re we about have want to customers having to support indication successful if other customers, We’re in team are, learning fact, an help the and from our in

Frank Takkinen

stop Perfect. Thanks. it. there. I will Got

Operator

you. Thank

is next Your Chris coming Cooley question Stephens. from from

line live. Your is

Chris Cooley

piece you’d you revenue us I the period? the as do just to COVID-related? and in me, help for maybe balloon concerns then looking two think with? past, I willing here some questions the to accounts. color on about attribute U.S. you’re the could at quarterly dollar the if And about One, the quick talked give States afternoon to appreciate still about quick similarly, about of curious States now how there In competitive well. a operational at the the Do stats that Maybe that’s outside if Good extrapolate strong and the there might decline you ESS willing that this the we help got Just I’m IGB guess, the we then out. one us help follow-up. these number franchise United you’ve XXX%, in have be statistic a U.S. and growth – up correctly. components were from think know X-Tack? And not I’m there. you us growth, United is bit would I just then more just little during two look the to approved internationally, when Could congratulations just was think though, could is in little think this I a franchise the stellar quarter. really a contribution bit the you which

Charles McKhann

the let me – question. Sure. decline. Chris, sure on to IGB on line make sure your What want just make question I’m clear when talked I’m the you I addressing about

Chris Cooley

actually at I’m apologize. number. queue the only I quickly. the I up there. picked it’s here It’s looking – up wrong

to just if maybe growth? could you more So the speak U.S.

Charles McKhann

Yes. Sure.

clear was pleased So, the the to Actually, the answering the least I are Important in a year, gastric for to very just sure wanted quarter of kind actually on we was at balloons. in question. IGB, U.S. right rebound last growth. recall make with

seeing so that, of top very with. pleased growth on were And we

the months look growth U.S. I we navigating OverStitch still we comparable – did if navigating have surprising and quarter-on-quarter. of lot number with still in we procedures depending that. utilizing that. COVID of pretty growth about the can quarter a But the summer and both accounts look about the kind in that’s not been through of balanced, On X-Tack year-on-year, of think on as are in as as if think nicely impacted a again, be see all and setting a endoscopic talked the – OverStitch, the and double-digit growth with we growth, core we has growth are, care of for previously you well suturing, as especially, And

much is on than focused utilization more growing accounts. Our strategy just

to team account on actually, continuing already So, we we targeted are team and frankly, accounts growth do our within our incentivizing continue in in see to the the that but add base. while we focusing accounts, are growth

Chris Cooley

the It those here as looking the if That’s through a will versus on quickly could back kind like as least revenue improved cash and conversion like DSO of pass get I in sales and at fact, at helpful. just prior ratios. if, significantly distributor cycle. impacted I percentage of queue, things year. metrics of standard the look well, I when And just in first pretty in terms But increased that see well doesn’t seem you as here that like

are metrics, the So that in distributor expand of seeing anything the sales? just outside so distributor U.S. in you when of of are And we on one, just short doing hoping step in could expansion you at efforts run look increase the much. those with any was such I not we different kind kind two, that of up Thanks maybe there kind if

Charles McKhann

elaborate. faster sales Jeff The be lumpy, Distributor and can historical I U.S. then it, of than the year comparison in did the recover side last sales And right. sometimes, They I the distributor markets. say will then is Sure. large somewhat can be hit can orders. would that. important

important is orders longer good kind we with to solid distributor take But kind a of it quarter-to-quarter. terms view the about we so term of And feel of where and geographies. are orders then across of in

distributor comparison So, there to lumpy wasn’t order a distributor markets. come results year that of market much just where really for was sort here. comment last the big It across again balanced back. to was affected one the different pretty the slower our My reference was

metrics? the probably important And about other Jeff, year-on-year. as so to that as comparison you is look

Jeff Black

really U.S. the done customer a am I or in of have – you, And team Yes, whether has actually almost Chris, I think tell it’s customer. call the their customer, base direct phenomenal or OUS been guess, in can I really now, days distribution. to I that them that Mike you XX collect. particularly the the I days and a a in knowing impressed DSOs, really XX at building you and and job been just thank distributor ability OUS otherwise have both with I team today. understand his – in function, a was on company’s really

we have pleased. really And been so

new And issues we well not had as have are on very distributors, bring vetted. We to-date. they collection

so on think had have collections And continue there. of we a we to success lot and push I really

Chris Cooley

much. Thanks Super. so

Operator

you. Thank

next Your Matt Capital. from question Hewitt from is Craig-Hallum coming

Your line is live.

Matt Hewitt

you waiting been afternoon. from but been committee but MERIT what investment I it’s procedures Good questions. and the the people the years, are release initial the has am or data. I the practitioners, have first know one the or the is This these has taking several that Thank basis only interest that final waiting you Maybe likely realize that inbound week, receive following feedback for too. been would for calls I a daily of just I something so on doing think, a curious

I just what week. have curious in So, you heard past am the

Charles McKhann

lot talk of to It excitement. which there. at fun really that, of the immediately of Thanks, if a confirmatory Matt. much after you that as have lot of was in know space so was and follow to still meeting collected, to ACG Yes, already was a there proposition. virtual value nice were been that control see, very a customers but It lot has to the the data to be meeting, so, data terms supports and randomized data been it’s the right, a

as activities. had in role the a leaders the other and have the lot like general both a certainly and But from well looking the play feedback things are GI side we positive. of forward is excitement reimbursement to things. good with so also indication And and surgical of obviously People because conversations that will very

Matt Hewitt

slide near-term for the see meeting, thinking OverStitch? cadence code, the of you we we codes first, of need next, in more it’s be Thank or place on mid-term it just generic through then is possible CPT great. in the a what’s get kind to on that could even Do label But if labels that see CPT And catalysts. the I the kind you appreciate should the there? of January you. That’s one didn’t what’s really about – there, going and how

Charles McKhann

Yes. No.

led societies. is So, the the CPT really by process

thinking very are of and primary GI CPT so about And around societies revisions the both codes, and are aware ESGs.

they actively working that. on are so And

would meetings are just XXXX. next take place way X, the cycles would We the being That’s towards for January year be new in code point CPT that the those three a just getting cycle into work. the next effect over that

submission a combination And so publication making about primarily those aligned actual it. of thinking the and know ducks are deadlines and are process. sure they with all the then It’s the

working ensure support. are societies is we other there fact, across In to together

that activity ongoing. so is And

of societies one timeline. within But in to to these three the And XXXX to January is it going meetings are that that cycle. that drive happen more optimistic are work do. be next We there ultimately,

be our that. to the able got have We do will they to do need make sure best to they information

Matt Hewitt

it. Got Yes.

like hop maybe And where understand I back I me that. kind that charge then then one with ORBERA of for Just will had you and last societies the to, were in. led

if Regarding could those been do the starts Thank you early think would stand, has as as there next you. the ORBERA that, far year, provide Where be on appreciated? because NASH any it but on the update I trial? study, specifics update it an

Charles McKhann

at next year. previously, Matt, Yes. of the beginning had start potentially communicated we

the with phase, in and working as frankly, quite We are with it that work the both FDA and through CMS we still of design through.

around discussions with We the Is exclusively balloon have information having interesting trial. as an ORBERA it are balloon an also some potentially ESG as well as trial, comorbidity effects the with an trial. ORBERA maybe multi-arm also a ESG

to get towards approved by to the sure want make we a reimbursement. lead positive us So, study we agencies whatever and design pathway does that

the taking right. advisers are our with get time we sure that So, make to we

that are still And move us but the on so allow to a we there. from study of we working forward would design next be that early year, won’t starting

Matt Hewitt

Thank you. it. Got

Operator

you. Thank

next is Maeder from coming Piper question Sandler. from Adam Your

line live. Your is

Adam Maeder

near-term and Hi Charles. one on then guys the here mid I and success the Jeff. appreciate the me, questions. longer one term. all Hi Congrats you to for on taking Two

you the $XX just on So to revenue that up $XX foremost, million million. to guidance, took first and guide,

so I the at implies some or midpoint exiting million in quarter-over-quarter math, about think Clearly, momentum by growth. X% that and the $XX.X sequential underlying business QX. for QX that’s good my

the guess little a I I the wanted environment, dig on construction to seems and prudent, guidance. in it pretty So, just the given of reasonable bit but

staffing in accumulating we issues medtech potential what’s like then companies for talk capacity other heard backlog various some COVID-XX, And guide maybe the constraints. have or a things So, during embedded QX. about other

be have backlog have you well? as through then worked And needs just So, a if to that wondering a follow-up. I

Jeff Black

inpatient even we procedures. Yes. COVID the impact. it centers. fair to there talked outpatient surgery was of I a was have upon exposed definitely others hospital Jeff. – that are this I about maybe in appreciate Adam, dependent amount QX We business have And Look, question. than less are our we more and is is as think do

we probably less where the we of think think impacted, outpatient. And But of that greater being see we impacted. of geographies will I are got So, it’s the amounts saw extent have And impact. have to certainly in but an business lumpy. I be benefit we certainly impact we and concentrations the

pressure have within benefit said, having We we dispersed, the geographically being of pressure. globally. are continue got and not that but But some just still seeing seeing expect geography, U.S. we to

us. would So, feel forth. We guidance like we is certain the are pretty backlog. quarter, we That’s huge I are would being case but we great the set it love the And not been good there would with cautiously been the and not start that about represents going to we put for have a the that’s backlog, into optimistic say business that demand. fourth that to And our experience. backlog. are the seeing rate run

Adam Maeder

you the helpful, Very MERIT that. for compelling. question, just look then really Thank now Jeff. in data And the for hand, Okay. second results

about little thinking could the that very if growth nicely, or the push pandemic. bit the you curious for year, last have exception I even to are of guys which by forward? You How longer outlook OverStitch. mid going product XX% above to range Just with that impacted term on a XX% grown is

that curve? there? so broader the potential think Just reimbursement label hop dynamics much back Does will how queue. So, durability? I we it does in do future sustain guys. And the the ESG about the steep in Thanks

Charles McKhann

three have for phases to against defining indication timeline back accelerate I is the from the – going critical trigger energized those. of mind, moving we strategy, and for of so the originally sort the exact my that an to put Adam. in laid phase never right. out the The Yes, But ESG revisions,

being of learn working a are as so of potential do even the think see broader we reimbursement that But indication, just them sort there again, do physicians that significant have is already we connect institutions discussed. to dots, that And medium-term the opportunity accelerator pathways and here. from an we that able even I in a with on while started to

phase. And we in that learning are so

we very We standpoint. a then potential be from successful getting OverStitch. from the appropriate that But standpoint accelerator we a are and are if indication, an going new to absolutely, for of in growth careful promotional a see as

Adam Maeder

helpful, so That’s much. Thanks Charles.

Operator

Thank you.

next Josh Your is from question Jennings from coming Cowen.

is live. line Your

Josh Jennings

that about just do of study positive Hi. and the and just and the in and thanks results. for with see ask Good crude the to quarterly wanted outcome front results evening the thinking taking about what questions. strong to effectively curious you X-year durability great is MERIT up? It’s terms be think think I ESG loss what the body durability saw MERIT the the for the we about the and was will going in team in thinking how weight durability should or like of just this wind Marriott, does of what demonstrated the you procedure I that sustained your of forward. I was mean study, MERIT seems

Charles McKhann

are endpoint. Thanks, Josh for the right. question. Yes, the MERIT had study a X-year And you

effect published saw time you including that as just years ago. of of out years. There to slide of maintenance has the on consistent well, X really That summarized out period. one that’s we was that analysis study in weight have nice As number loss also is a set. there in a showed to pool demonstrated to results the maintenance been And have a years. show out does also that was and that of nice out years X today, ESG data that That a studies few the other nice really X durability there

to And an what investigators example. term be encourage certainly for we because But longer so especially will are payers, for durability with will open we we keep data, collecting our question, pleased seeing. are

and investigators typically – some new nice think gap presenting time medications, a horizon whether really an shorter been or ESG well has medications, MERIT the very important the between for are ESG study compliance good proposition. bloom And both medications There very really bypasses. it’s think and fill We gastric then an value that costs issue interesting data then which some gap the it and often for really term durability overall can important good so the between about have have right. as an we surgeries, durability think those and talked do laparoscopic sleeve a potentially filling as I but good

were we with outcomes. pleased so the And

Josh Jennings

Excellent.

CPT be issuances. submitting Just on and about will – is the anything this de But thinking the do payments, while one to quick approval and coverage need taking that FDA do for front just you to novo start payers reviewing there is have in follow-up data can get payer the societies understand that decisions process code the on the first Apollo Thanks or of discussions those application I before for questions. start?

Charles McKhann

are to don’t can we line, of there get carefully tread but because a our ourselves Yes. all want to in get we – No, absolutely from we right. just going of ahead pretty ducks

for results would that with on MERIT the encourage with study Now, referenced the benefit comorbidities, reinforcing their the top that, to of example, the together value of I on the continuing to our of then putting value aspects studies all proposition. multiple like really things and investigators publish economic dossiers the need, you different

got we really a tell. So, to story good have

actual do a it’s again, got indication that, sort the preparation to out of right publication, and but on the now, been and we will first, filling depend the have place working think of, the on, I So, group. matter we planning well. have team in as importantly, But sure that making activities

Josh Jennings

again. Thanks Great.

Operator

questions further in queue. are you. Thank the no There

Charles McKhann

appreciate for all Listen, much good thank support us and evening. evening. joining your We you a this very have very much

Operator

today’s This and event. concludes Thank gentlemen. you, ladies

and disconnect Thank wonderful participation. time have may you this a You day. at for your

Apollo Endosurgery (APEN) 2 Nov 212021 Q3 Earnings call transcript