APEN - Earnings call transcript Q1 2022

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Apollo Endosurgery First Quarter 2022 Results Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Matt Kreps. Sir, the floor is yours.

Matt Kreps

Thank you, John. participating financial call and for first discuss everyone XXXX quarter operating thanks in to today's Apollo's And results.

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

copy site, of those ir.apolloendo.com Events Presentations. a and us slides at you can by choosing For the telephone-only, our joining download you of investor relations and

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

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

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

to today financial call our to closest to X-K company. their turn like press and potential figures continuing the GAAP tables supplemental release a in corresponding assessing of in earnings its tool Additionally, uses metrics performance. evaluating evaluation reconciling And core measures, future we of comparable. I'd is the Management non-GAAP today's Included which believe provide discussion will for now our the operating an baseline issued additional filing, certain our include over financial and results non-GAAP the these for performance, Chas. own company's

Chas McKhann

Matt, really you, everybody, you, us today. and joining here We for thank Thank it. appreciate

our on year a we've a and excited transform in building go about poised And capitalize quarter So repositioned the Apollo. I'm that this with time. a opportunities, progress on as into of over a relatively afternoon, sales of and much performance larger to year, after course strategy acceleration new year markets opportunities well-balanced This our of across the to company market serve. growth X-Tack to made solid XX% was moving mode the we challenges, and wave the an even the of into look, macroeconomic those about we're building course the organization $XX.X the we eventually Omicron for energizing really, focus we call. the and positions stronger we really achieved short of period reported franchise, first the business companies But It We've ESS in million, are franchise. we'll we for and the that's leadership then our OverStitch impacted which and in that and nice of our it again, year-on-year world the intragastric products. highlights That's our XX% product. the lot global face that, a -- growth. was XX% And procedures of that quarter, the some in achieved balance around balloon and to I'll was so with device other then growth. refer we And and of also the despite over

over is interesting reported what XX% in and prior our the we've US with was franchise, our we the of US, XX% what ESS, an primarily nice really by observed, here growth fact This quarter, driven call. in so this XX% An IGB on for for the performance here growth extension US.

these are around And $X distributors, grew accounts by those the XX XX is sales in average Our top individual year-on-year. annualized. top right are accounts. not million XX% these accounts, And

achieve, it really XX% then we addition, growth gives accounts patient terms what sense in focus here quarter-on-quarter. when -- US. our the sequential sales of well sequential accounts as care. also and ordering ordering customers sequential really make a So growth achieved as so incorporate in a for their number of XX% we we Apollo's you And it can X-Tack growth sales of X-Tack in the achieved clinical products in practice And of up in into

also strong for come. broader but And of very quarter, so remain in the on focused the near delivering a priorities on set we also growth the foundation the year, both while delivering a to building for term on overall years

so, four priorities. main And our

is our inclusive preparing closure mark of expand It both to training And and for GI approval build to and that's and approval new outside X-Tack. and defect users, fixation. core of adoption OverStitch continue First X-Tack, US. involves CE business the the the

of back and in that very opportunities, ads to make third associated behind a very well is and to preparing while a making can and since with the regulatory been our it's bottom, preparing need and Second in We clearance we Apollo working right product those part which ESG we're the here, to the with We And franchise the sure the that. gotten for place balloon after have building really to launch priority REVISE. a that. focus sustainable priority, lot and intragastric will launch is top that. sure to capabilities to FDA big leveraging go and important I've And new of process done ORBERA. resurgence organization. of business, has continues our all a we've energy growth, with been make Apollo parcel We're I and grow. that come new and for putting The important that's through fits want for part the the

you against them. priorities So, on provide the quarter, will of these is give updates talk in going we're of updates on then to Jeff and doing I come results to each Jeff? and the financial some how back through four each

Jeff Black

everybody, call the and Chas, today. joining you, for thank Thank you,

across revenue, business I'll a then business, investments, strong over back Chas legacy ORBERA we of on large impacts, believe growth product still see markets, a We year-over-year again to efforts. enhanced update. was a concentrated impact XXXX. was And excluding foreign material minutes X continues said, planned our which typically our a was euro, And Apollo. strength Europe, to constant expand portfolio. can XX%. still will the growth to the OUS the for deeper a the $XXX,XXX while a a the our with specifically in of see so a largest little Apollo. COVID fifth don't successfully hospitals, this third-party effects. a because Chas saw a OUS currency with quarter as revenue, had few for start impacted than in again, particularly the Care very the bit on beginning revenue impact financial stages, impact Lap-Band hospital growth. on We for that growth. we On in direct basis, where some we're for it's access typically quarter continued business was navigate it here outside in foreign generally staffing, pandemic quarter and also impacted offset This in Other business ensure more performance we're strong. of first sales the It companies traction footprint. currency continued without similarly down is to to material, a Global our we that lingering to record on quarter XX%. double-digit to we're growth X% compared by marketing effects the nearly in of consecutive of not heels Apollo and while academic our scale our XX% to it be markets, we slow the pleased currency of revenue, ability the just reminder, planned turn outsourced to by particularly early such strong Starting as beginning overall spend which pressure financials Orbera, year-over-year the increased sales of have core Western of properly And more international GI Medtech. slide growth Significant demand on disproportionately detailed US, represent dive productivity. was US, distributor negative growth for are Medtech a into saw for a impacts where lingering support As in by in again, Orbera, beginning XX% force, revenue sized our the expansion and wind on Overall, and particularly

from recessionary half million outlook a of continue to OUS euro, currency of pandemic expect which terms of headwinds to global impacts, dollar, our we represents for cognizant $XX revenue nearly of for In and foreign particularly XXXX pressures revenue. currently $XX million, the while lingering strengthened we're XXXX, potential

by lower both margin mix well lower that saw to Moving with a continued We over by and product distributor focused for our sales, seeing particularly margin Orbera on higher XXXX mix lines. gross from gross margin profile gross some improved the in a as COGS a seeing year higher which profile. improvements, Orbera XXX have impact we improved overhead price increased We're the and US, which margin expansion We're improvement margin the Gross also ago. X-Tack. expansion The a and In of has a on margin offset increase US OUS, OverStitch was margin OverStitch the our impact as ESS basis OverStitch, we margin of Slide remain on efficiencies, X. saw points than X-Tack. projects. gross

manufacturing mid-XX% we're three time, margin programs, blended to we'll to primarily And absorption, gross OverStitch. navigating five continue in scale-up drivers supply I to expansion mix, gross on focused and said, range direct major we years. but will that same be So improved margin drive the the confident improvement COGS in future complexities, product in the overhead chain remain at next the like be

to OpEx on X. Slide Moving

stock-based we've we investment a non-GAAP previously at year picture as States. marketing in the In it's get our an in investment non-cash As in remain as historical of the and run done underinvestment important said, sales the we United increased near-term, focused The us. we capabilities in think is is. look for building following And spend XXXX past, to of significant most exclude on just profile, to rate operating the what operating clearer core compensation we area business. is

the fourth our marketing our This as For quarter, primarily of planned the out growth ESG and the XX% of launch example, building anticipated we in OpEx products. initiatives, see our programs investments non-GAAP for about you'll ran at in marketing revenue. prepare channel, reflects sales

size we've year a progress footprint. As ago we commercial to a in our have the small of last made relative or our still team expanding substantial said We US, very before, the opportunities. year,

commercial team XX improvements up. in end the at and team with a to just and further as is additional continue quarter. At grew We the had under field. end gain the two that first of XX We ramping territory in products time of and managers they Endobariatric productivity to We do so. territory rep and of managers our This we XXXX, the regional customers. experience anticipate

the forward, the improvement. R&D. in in we reimbursement, will R&D, to and invest medical we of commercial and Going properly area appropriate sales and gross both and to Other see expect necessary. support team planned and as focused our education, scale investment the clinical evaluate And development but on thoughtfully staff to are we business, G&A of side, the in invest product continue marketing our margin continue we'll to infrastructure investments, heaviest

to we sheet these appropriate. perspective as from that well to ability balance spend investments. positioned a the make we're And Importantly, have modulate

it with comments So that of couple cash a turn before Ted, to over on said, use I and burn. just

recall, uncertain opportunities turned of without capacity, really well, This front required to in the XX, in may balance you on environment. sheet, which cash an positions capital is about concern what execute us us runway $XXX runway. and with the volatile over capitalize million and be a out especially enabling very has slide us business, begin our we to multiyear markets capital making to to now last borrowing a creating Moving important to as secured year, new investments in

was a expected, in the accruals expected represents to in $X.X up-tick we XXXX. capital, in Of support of saw planned to working burn As well inventory note, as first as XXXX in burn pay particular back nearly million well down growth builds that, over extremely which first products. on quarter we the year-end the for that X/X to with increase relative cash at committed call with of the our demand positioned we're nearly average initiatives planned the growth our And $XXX in I'll turn in Even million with burn, cash our execute to and Chas. quarter. the quarterly planned end cash of

Chas McKhann

Thank you, Jeff.

a as and development product be GI our focused are priorities loss. will market our you'll the XX, X-Tack elements those advanced to three to therapeutic to that and and continue focused weight got to see balloon all clinical on on product, required be different areas: slide for product different developing business we different the two turning who XX, from for as we've that's our quick year. well endoscopic our slide OverStitch opportunities after And Apollo, new opportunities. these we and also standpoint, mentioned really otherwise, ORBERA think but a reminder the focus reimbursement go four endobariatric So the as just I lines, across intragastric large or across

them. And update so let's provide of on each an here

unique We've our the product, OverStitch, in focused the primarily which a defect on and full core is fixation upper of business. side the got thickness really on GI. suturing First, one-of-a-kind closure GI,

to complement We That -- opportunities, continuing the core sure our users the such place fills well got to apply the to develop an gap they're make the business of a defect progress. then between we've where true We our this GI add defect overall we're the And patient of and customers really work to as the in and in build around of a plans outside you the executing really that OverStitch clips wide applications with closure that as in the U.S. chart, is fixation. can been and important as the X-Tack, training use in fact different again, time which that impact of business in nice launched in we involves with year. last U.S. and business familiar which therapeutic has OverStitch. know are it part continue the on durability new -- range OverStitch, defect build positively that complexity of the that lower very and and of of Through-the-scope also users for and OverStitch making size right see expanding care. percentage We side outside the It can of the just we the X-Tack good terms product a OverStitch. That's

good And we're with very still so seeing progress customers.

high-volume We centers. continue to focus refine and our on targeting

to continue develop our sales We training.

US half the with we reps within have last the new year. mentioned, As sales relatively Jeff a force more than the in hired

supporting preparing DDW We in the of which both minute well markets and OverStitch expect and process body and in for be continue build around the we're that and next evidence we'll CE The getting world it and to clinical then Meeting. we And to one on of meeting in be the one practices. just Week I'm Disease largest and device for this have things when clearance month. will X-Tack. launch we represented going the occurs, meeting. regulatory they're absolutely Meeting, their we our and -- the just into to face-to-face are of come from the US. recent the key a slide a through working presence -- for outside finally, that back to with this some The complements from through X-Tack. X-Tack very of which where It's still are that in GI upcoming Dufault few when hear just a Australia, did both Digestive has as clinical the commercially colleagues We're expanding getting already how the like preparing terms does. one X-Tack, as at new be the We here can Darin been OverStitch each as going shows webcast. OUS Mark of old-fashioned marketing Duke Dr. We peer-to-peer programs, but an applying other well University outstanding just meetings But most is select working excited

the don't procedures you You side aren't who dots showing in up on predominant are GI GI are the basically, opens can those it's right of is of the and have the in X-Tack the kind the that's And what that slides see of front lower of the where of for lower the polyp-removal -- page, and us. colon, you, procedures. for blue these

in colonoscopy defect needs the are are be for which to be prophylactically our centimeters, other need that addition, on when closed. customers for that's there's are think they But large about core a and finding in the many it's applications So, of an If you're polyp find about lot And that them that market those page. important and great of your a two defects target over removed. to evidence is the to listed see X-Tack. device, many

perforations, upper whole tear, there's procedure, which So, GI POEM a procedure, range. an and a of is fistulas more mucosal

so on and capitalize to And we're pleased and progress there to build that. continue the see

Next slide.

Again, So, with really to ensure for turnaround We've seen for a struggled with category been seen next product globally. momentum continue want up tremendous a that and ORBERA. to because years, we number is growth of that maintain the we've a it's frankly ORBERA it ORBERA. a nice but it's sustainable very and

capitalize continue and favorable in have Practice AGA during to of guidelines. Right We pandemic least evidence lot of on a has time at of pandemic, the last around to weight gain we loss. I coming macro Clinical product the of some factors total been a a has weight that new XX% out the think, terms this body year,

were therapy. seal balloon approval that's that a endorsed of as time ever kind and First intragastric it balloon for therapy a major of society intragastric

for are a to safety and which done few element the to of more the than in ORBERA then US, primarily in important to in We've intragastric by evidence trial. importantly, we're the physician important that's it's the contribute outside years. sustainability far, to There's marketing In balloon focus a on helping having intragastric of any has, We've in in that We of main and is market the US. balloons. early the ORBERA the And fact product. most the sales seen a for element around of a post-approval we're it do of in from months the are very clinical a increase results. we competitive seeing an market done some proud And available product we've stages entrant recent wins and interest. number US standpoint, training those an more very the the putting past still trust

good in but the it seeing to US, helping outside very our our with that are really around for Apollo US. the back Outside are broader launch preparation And and contribute really into of it ESG that we're long a the endobariatric, product comes wins to is So growth. And nice we've record competitive of Apollo ties US to track a market, we a our right and the that efficacy. you ongoing got safety then REVISE. strategy and

as updates working products. comprehensive So earnings we across we to on these I'll a are as plan last call, launch provide opportunity this just the some slide showed broad for and an important use this

Novo still things input clearance look working the with to the through XXX(k) progress. are on We as that De providing FDA forward and update an we'll

side. We both leading physician engaging the GI are societies with and the on actively surgery

of also ASGE, major American societies. There's groups the as well the ACG, Gastroenterology GI so societies as On surgical a side, societies. the of Association GI and lot leading two there's like the

describing training on time on. within and we've best again, where surgeons. productive development work and both education ASMBS, market reimbursement is of elements talking with things discussions. I Society. see care on fitting them which Surgery on therapies plans those then think to sure and been access. a And and a across, together of that ways process and continuum like and And support metabolic indications, alignment about of market got our around talking been we've efforts the like a then we're broader that And broader about part endoscopic working have the new them lot making important big can good the And things GIs spending very we we SAGES the of So

clinical number a underway these are already of efforts that aware have practice guidelines. things societies like of We on

procedures a into of the towards that practice Now sign are really efforts broader on those those is that where goes looking But time. a lot new processes good these fact set the the already that skylines. fit continuum will take new There's a they're in of working societies care.

customers, revisions well actively outside in of -- from early US as their as also and are learning practice. into our number There clinical the We a adopters. are incorporating already are both that in US the ESG

a OverStitch careful very are physicians procedures. use from standpoint, can for but We these promotional

are some we see mix necessary some GI a There before We've are them how And they're learning it's to commonalities we're possible customers. case. or internally the really We the seeing that world. we of that seeing everything focus surgeons sure really models and GIS from procedure the and kind of together. see is working most We led. outcomes achieve and patient models doing so, have seen those after outcomes on already during make a medical because of and models integrated, that of models. academic best call waven for groups success to private the that what clinical are that that And different the successful the The others procedure, nice accounts. centers they're led. though. And working seeing ones seeing the We're physicians in interesting physicians, in are are practice are follow-up surgeon procedure individual laser some are small centers, and that leading some either patients. We're some we're are in

get as renewed they so developing using And set those waves you customers. around marketing of going forward a the of once kind gain I can give experience we meantime, school I'll lot a initial example. ORBERA. practical the move the of the will on of we an We're we're ORBERA. playbooks indication. efforts with next with that accounts In new we mentioned be to

ability as demonstrated frankly, the that attract marketing, of patient other are about them accounts patients intragastric programs balloon, as doing results co-marketing We accounts, the that actual to marketing, well talk Wave the procedures to in ensure procedures. these you're have X it offer if and some and some doing who with that

And outcomes we so, here can forward support to obviously and the business, and do ORBERA with late this measurable had endobariatric this terms last ultimately we've experience ORBERA. and that really will both having but and also initiated of been year that learn play moving in a able We been results in how broader world. good

we're a learnings, building Reimbursement we're employee health excited strengthening access of early So team. announced by And absolutely added And going VP has to January, We, are keep them. are Engagement, we the payers. a and of last, then on Payer and we a market on will building economics those and reimbursement others. how Market joined but certainly Access. and is our least, in capabilities Chas not who we our specifically Director and work already like focused areas hiring of in since full-time out with new

skills capabilities and a market is at area a we critically building Apollo. are and development important here of a broader this that So and set really

Disease a times I've the mentioned Week really meeting, it. excited Digestive we're already few So and upcoming now, about

is the of last the is world. meeting years. three place gone meeting for in couple time to be person taking years. first in gastroenterology will the So in been virtual It's the the This this largest

talk we they're in to back as And so, to get together. really the excited medical community, people

an agenda. that, be part expect point, to next showcase procedures. of or in Apollo's two. looking put, is we excellent forward simply DDW as the More the of week I San it's doesn't products think But details only, we're the really and released be preliminary what They've this at will out fact coming that, hurt. that to in Diego

we of of procedures these products are XX posters the than and So podium and about even preliminary over lectures information video more Apollo presentations. aware based organizers, and off already from presentations and XX

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along revision on procedures inhibitors. the with revisional Anna Hoff therapy oral a GLP-X side, presentation focused combination of has On Dr. Carolina

plus brand plus ESG in level Hoff basically weight you combine when last DDW Wegovy, was outcomes. get the name was of recall year papers has study. may Dr. essentially loss that you XX% the surgical and that therapy was headline than semaglutide, of which body combination It total more meeting, a the semaglutide. the of It many randomized of at that had you top at controlled one As DDW ESG on trial focused

Lilly And from and to new recent see including the so excited and that presentation from Eli we're the medication medications, well Company. And newer semaglutide are some a new we from aware Dr. the of results Hoff.

is but be the well so be therapies, think, who We in DDW. There business the Medical expect will everyday with combination Christopher data in represented on to at from interesting and more defects. that Yale be see will session, There's Dr. also a of OverStitch side global Gostout, that Dr. There Not epidemic, to X-Tack. closure. closure University Officer, colonic X-Tack. closure practice. include X-Tack There Chief Saturday that our new from study have will role an involved this coming EMR with case with outdone, that's about obesi in Harry is really a addressing is at is looking paper data another on on another is And a I our defect is suturing studies very co-chairing ESD and impact talking important in we specifically be the discussions Aslanian a at with new meeting. going experience defect will multicenter around

So that. we excited amount again, at meeting, this just be is we're of expect so what to of about the summary a a significant information

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the it more match study a It's by laparoscopic who received is the of just most out patient study of involves It of of to Dr. one Arabia. propensity And sleeve. the was -- study. element X,XXX element patients compared than is So scale authored Saudi impressive Alqahtani ESG pairs. the -- one

device X,XXX which a is than more in the patient that's really study, world. So unusual

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for a safety the also with either in was very excellent ESG better And, this fact, in they what very of patients it, leave clinical to showing procedure. they retightening, profile that, all that important safe or was comorbidity options hypertension. ESG still procedures. needed an slightly in that, just especially get of have revert the data In be options could was to good open shows and basically important, feasibility to similar And ESG we've in known ESG, It's patients. to in clinical an real-world to found different that addition, available additional a repeat And who that's them. study We're is remission they can if element know LSG that And LSG. important. to to patients. about Showed then like but the have practice, the areas audience able an evidence surgical could a a to provides that to dyslipidemia

our Turning the developing. of we're and now organization to things business side

strong culture it's the the is a company, of building culture a very core patient-focused, on. a it's of are. that we've focused left of the big really values customer-focused, focused of a Apollo that's and who On winning summary We're on part we

how manage introducing a we've of really from adding business. it our internally. we And top becoming to been organization the to big are bottom part were. So we the these It's all while, as

of President are to the ago, the pleased announced around of at the having she world. Alcon. of is in developing new a to Global and Jeannette experience our and brings Manager We commercializing hiring Bankes markets Jeannette technologies, General very announce And in Directors. the tremendous franchise weeks including Surgical join Board just few

as experience Board and global in a I good side. hires join VP the and got of mentioned new promoted reengage We've really additions very access R&D we market are on to Directors. so are reimbursement sure of our Head have new Jeanette So selectively to thrilled of we And Jeff right the grow. mentioned, the that throughout really scale and the make to renew development. and to targeted then efforts organization our making pipeline we've

of in numbers, team so are you on, just financial our the the on that it commercial of One are. biggest an update has and and where we focusing we areas been saw

US positions part mentioned, few in the to year as over the of plan the over the a – grown – continue are here first added Jeff the year. we've and of We course grow to

new improving seen sales out capabilities we adding do launch training new for are well. our forward. as but as We brought a board, team. in relatively increased We're ESG, building to planning and And And are productivity the analytics. of I that we absolutely as on some really expect continue have we as people we've described going our capabilities we marketing

during period, its markets XX% it to there our business, all had also outside travel. running Importantly, they key we And business, But training Jeff more large side launch. when developing especially international for programs a for X-Tack our require COVID into again, opportunities. as drive preparing reignited We has because we're many our in important have struggle expand of to selective fully the untapped on US. travel as making OUS the great next is adds challenges. really did know, side of the had are while They year Again, of market and and on ESS even we're and And well. participation. into we've additions trading mentioned, as than growth, the the do those plans programs physician

the in earnings today Japan. in announced we release, Just

continue had Japan, through have nice We clearance pathways, limited for on allow into that some build work market which do front, into some to expand we've the Japan and to got time. is we've grow us. also Chinese but a us for can the there. initial Sx will just opportunity to use kind We've in reimbursement So this of over grow some but build footholds received still access and OverStitch and

OverStitch, ironically, of not but we sale Intragastric somewhat to for the X-Tack international do clearances for as Balloon, yet have address currently well. our we're the clearances Canada, given have and in those and working business And

way, elements focus on Apollo as the are example, I significant and -- that able in growth as the develop So other focus we continued that around US grow for US while And in working ESG we well. we the we're we well, in on by opportunities reimbursement when have US the many REVISE, really the planning to the efforts outside will as on US applicability broad and prelaunch well. outside mentioned of markets, the because here the

And for markets the for prospects we the products of excited so our the can remain to have impact we our made macroeconomic of about in substantial and and a world. year, and the in across also each up, solid we have progress wrap the headwinds, we very priorities quarter and that despite delivered QX some our around procedures

And let to so back Q&A. over John the turn with it me that, for

Operator

floor is coming from [Operator question Thank you. Capital. questions. is first Hewitt here open the the Matt Instructions] and Okay. for Ladies gentlemen, with [Operator Instructions] And Craig-Hallum

Your line live is

Matt Hewitt

bucking congratulations headwinds the normal And you drive with seasonal X-Tack, guess January on regarding you. your quarter, you Thank given utilization. on COVID. strong kind pattern, faced especially my think I the really the from focus in desire progress to of I started quarter, to first is last question

you this remarks, I over have of correctly. growth, you should think the a XX% mentioned going how and we at remainder forward? of you year Do from target a that utilization I or prepared if be your to kind heard hoping during you're hit standpoint, that looking

Chas McKhann

the sequential Yes. overall as we question. new with a thank well No, you. was in in here improved as X-Tack. It COVID the often We both progressed. patterns despite there do first as utilization as the as part Appreciate pleased what growth, some Matt, in significant That seasonal see well impact quarter. with accounts pretty were of was the quarter

tech very consistent other well. med a that's with companies theme as think I

new we speed kind elements to our it look continue were growth to will out, we comes the that quarter-on-quarter so And all up as of additional mentioned. -- as I different reps as on get as data newer same build to

time, prime our side that's on add as we'll well. feel that what the be growth good US for from of looking about a sales we US so and And And continued team. quarter-to-quarter, we'll sequential then over

Matt Hewitt

Understood.

you through the couple Okay. side of a could here through This reporting should lot, we rebound you and this or in it's over to getting a even a I business getting have to how back we on of forward? back been the a seeing normal normal from you're through? to question that work of that there some -- especially is about just device be when kind now so the are a And past is were questions rate backlog was what April, then weeks much growth get much And maybe QX, walk of seeing others backlog. normal, not expecting the for if one what going

Chas McKhann

But have a nice varies and improvement a the snapback say that, to course in I example, late the larger early come out, have year. but and impacts that last and centers those some We did. and rebound Yes, Europe, year like hard those good I'm COVID, have you Because because all a of it's staffing-related tease an over medical but see a I different segments markets. more the and think both equivalents orthopedics, saw in academic impact didn't -- same various where a little think, and it sort guys a you of institutions. we some the different of impact gradually biggest certainly one of the were that's also about we did combination to bit this We that heard a in quarter. for question by see except lot sure places back, saw of issues

right direction. haven't improvement, as just in an good a we we're the I felt a snapback we're gradual improvement tracking more it seeing So really think rebound and but

Matt Hewitt

to just a been of and that Are adoption, group leg to with familiar the bring hiring And queue issues as think, to some hospital the it transferring and kind at on the we're least actually it. of does the opportunity that, hitting you one saying some going of there, some just imagine doctors is what leaving in hop you're payment of me, that as and you or a as staffing the issues Got But from it to bringing -- other what I side, you maybe I'll drive one OverStitch of that then represent cases, one well, doctor some you gives seeing and on that's could along next hospital healthcare it In practice the last seeing one the far what is and can in touches new that a they and back another, new for -- or for and has on with X-Tack side, as to speed. up think I and is train Orbera are market. introducing just or that leaving do going an products. reading you are another. that, would

Chas McKhann

Yes.

Now let two things. out separate me

out we've been the nurse the mentioned. been think have in And to side been a I coming just again, but like types side. just I they're of documented I think the the the settings handle get on improving. I certain well has challenge COVID, and improving, physician it more for starting said, and on of a situation that's it's institutions. on constraint And And bigger than seen I've is these think,

mostly the they new movement, making On but matter leg products. really doing, someone and the as with a to devices procedures and the really co-marketing can the you the the where case expanding kinds of of once the of to is X-Tack. develop for of is Orbera they users train side, become patient case some for some us, procedures comfortable some use -- totally sure trained, the different the marketing is then physician continuing said, there our just it work across areas And things, elements. And understanding how we're and practices OverStitch those in both side it in other of for and their of doing of

Matt Hewitt

very Got much. it. Thanks

Operator

The question Piper Sandler. Adam Maeder coming Okay. next from with is

line is live. Your

Unidentified Analyst

a I'll and quarter, start on I guess just recovery. QX, this of exiting business kind some is guys. with for Jeff, off Adam. and you great your momentum said Simran on Charles there's about asking Hi, Congrats

the throughout So cadence duration quarterly about models how and should we the think year? in of QX

Chas McKhann

of we've Sure. Jeff growth. -- been mentioned, investing, aspects in different as We've

on like things our that. some globally to the are QX, focused certainly continue so distributors year, a progress. saw with as to well. patterns that range to the step will see order expect I US of We evidence achieve And of in up results but to that are delivering guidance get of be certainly to based good outside that on continue expect And we And to some see our looking for that. to and do that

and exceed with just to of and size, -- And companies headwind side, delivered focused feel this, most want guidance have our we a nice the we've so FX than and really are do still clear, even to bit that. to more but on progression our a alluded the be good a about internally, Jeff here we guidance on but reiterating we

Unidentified Analyst

revised this in Perfect. the of cadence just what launches we product potentially can you approvals? Okay. Japan, and you these new that Should of well launches be of seeing be meaningful kind having say as of year in terms the impact OverStitch as from impact any ESG about could

Chas McKhann

year. ESG was so novo revise, Sure. average, that in -- we almost XXX(k) a No, data QX by bars which for we more Yeah. traditional on because XXX(k). about wide is That There in uncertainty little to XXX(k) those is a submitted back there de have FDA, and average. novo take late are de in of when said -- than the error definition, year, last bit a

pinpoint. little hard it's to a So

We preparing are that big clearly, in the X-Tack year is everything -- it, of are another the that working launch that The and process. launch US. the the and for to on, outside hope see can support second we we half doing we to

previous a there's the regulations device in a calls on transition on medical There's MDR. going spoken have Europe. regulatory to in We about change paradigm

guys may are net other with just as The follow familiar is longer. companies taking You med result things you your tech of be well. that

clearance. that we do it's very while. for going the we said be and if get year so would the it And that an in a that expect, to throughout we to pleased And later the take side see we're impact, OverStitch, then Japan

have OverStitch, the up As but I margin, on positive US in to still my business. our work market the to think, be on there's mentioned open comments, some will, I it impacts done some really regulatory around

Unidentified Analyst

then supply of gross standpoint? projects we that guys you I year how going in those just this with off for trajectory working OverStitch And on about could one out a particular? margin gross should that, Perfect. are from chain And think to call Okay. more. in if margin improvement squeeze Anything

Jeff Black

overhead or you step I said And change we'll Yeah, margin. -- in what think that I will we've Serena a gradual as It saw Jeff. this sort past, is you in Yeah, be don't improvement. think [ph], lot any what in see of the in expect of a impact saw see executed efficiency. absorption. we -- the to start We'll last improvement number a start as We top continue see line, see mix efficiencies to year. factors, QX a better cost that And was we'll on of of overhead the of the to even did really those. we we projects improve

in So quarter. gradual of step opposed as say change single to any expect I a improvement would any more

significant characterize is and we've any Your that supply we're to supply working run contract that either staffing. not I concerned and where with not constraints about overly capacity our on on we're we're question we are able situations supply costs not chain our incremental expecting chain, capacity about less ensuring into manufacturers But just or that complexity would about more address. closely

Unidentified Analyst

taking for questions. you Thank Perfect. Okay. my

Chas McKhann

you. Thank

Operator

Chris Instructions] next, have with Up we [Operator Cooley Stephens.

is live. Your line

Chris Cooley

a great Good the afternoon year. and congratulations to start on

quick may. if two I for me, Just ones

when the we at you I'm you. when that. in step-up to are the the XX? approximately what's us XX annual Thank assuming rate endobariatric top million think about how characterization $XXX,XXX your dollar these run do better First, $X year you quick help those was accounts, scale leading growth? accounts? about And think follow-up or practices, then understand of that after of the but beyond to these one that got I've sequential coming growth now. about top impressive end primarily of kind very you implied from that last Could

Chas McKhann

accounts. And terms nature Yes, in the a see excited the Chris. of We're of are it's traction accounts that to some getting. larger the mix these of

majority of internationally I and these are kind inclusive adopters this really endobariatric users -- -- the I some just both global Some centers. US side of it's is embracing things. of say and are would the of portfolio, of early broad-based of them are larger some they're not the list, so across a mean academic endobariatric. the of But the

true bit revisions, frankly, goes right? intragastric and And for that are procedures a that pay reimbursement markets, the homework also cash access kind of I've primarily environment even many case-by-case nice in for a between they're of the can to their today most. that's do that a seeing with with all, proposition endoscopic And good But that indication we're response situations the ways value mentioned of or that before, really be a others patients. in on group, balloons see. to, to to. when and support of some in them, right, as then it's being But have for or so offering, They doing the resonates we follow really us how at it's time to to that And the but not say nice back they're look part a excited we have approaching we how do ESG the will affirmation a for footsteps. that been

Chris Cooley

you and Appreciate seasonality we've the to just that here XX the to about make going back started going a would the But on and focus post the But But touched a of which XXXX? still growth But assuming math kind Thank us in prior I I kind appreciate just trend think to of and now, think and days back on bit quarter as OverStitch then the decent in of the ramping XQ how the I'm I we quarter, year from this it's sure calendar early in rate about COVID, additional growth X-Tack, up. were I my color if I there in XX XQ? fully the just high rate. as deceleration underlying want there. should we to study. when realize the would And question, little little have last kind you in forward we arbitrarily on and help understand of that here. trends there. had calendar quarter, a you throughout just you but a some the it very MERIT us correct we year, sequentially touched fairly heightened be the unpack third you. then sequential that was fourth assume deceleration And then help think can obviously, third bit XX,

Chas McKhann

going a you impacts numbers. a Chris. in there is of Yes, bit there and COVID see factors those example, around, I seasonality One on, things terms some are what of some impacts, think number for both of which is

a on early to it launch environment an stocking from with accounts where moving some do move you of to in utilization. as new the lot and see, true also of has We

utilization see even like focus think a sales our from so growth. And growth our with little sustainable of of to probably we're And certainly, quarter-on-quarter underlying that I standpoint. and continuing, growth. utilization And in improved is think, building in the I team that kind continued higher we'd -- our then

at speed is expect it folks and producing that to. some of fully getting some up we newer And of level the just to and the delivering them

to additional for it's area clinical us help think I make sure So, DDW will and it. example, lot. validation do X-Tack, big continue a focus information to meeting, that sustain at a we And around critical for

Chris Cooley

you. Thank

Operator

Okay. The with Matthew next question is coming Blackman from Stifel.

line Your is live.

Unidentified Analyst

Hi. on focus This for I X-Tack a Colin wanted is for Matt. minute. to on

focused As mentioned, in is the lot, new opportunity? underweight that Are lower data, than guys first or really different a focus education which that segment, practices, to a steps is you market clinical sort it's it to practices plan really the at that next as present guys are use opportunity. priority, really or it you overage which in What ORBERA addressing GI and with adding use of access DDW? your OverStitch Thanks. you is you a much broader on currently

Chas McKhann

It's little of bit Yeah. above. Thanks, Colin. all the a

the to easier pushing on a That broader territories. base that in are got doing to as our One, they've customers expand have established it's here. customer surprising so established really touched kind that of of You've think really I in an been, and set. is do not we move smaller of kind GI, into familiar is more have beyond emphasizing team upper and we reps the the the of are process things a number that our of and but we kind

absolutely that. doing we're so And

where have the experts piece with clinical volumes of sure right targeting the and in key that be We're very engaging to are I make But are allows does recent also lower the and more in doing better GI We more engaging focus having think of KOLs really there. last terms numbers data the procedure to the able experiences really do on some that -- around with physicians of data good them clinical them. some good the they're matter.

-- some in be data I We heard those done. colonic opening don't the will very of comments, that we have of about but anecdotally, the in EMRs, outcomes important. things how so people good sets mentioned we've my know studies, And

peer-to-peer of making and really face-to-face, and a is certainly about this medicine, hearing sure is to again, from a presented their what marketing and once and is conversations. those we being important. leverage are lot looking they powerful are And both just know webcast of new of So outcomes doing practice. that people their in the able that. mentioned kind in the change at presentations posters DDW, Inertia I colleagues thing approach incorporating how clinical into we're to

Unidentified Analyst

quarter, on either would the I be releases I preparing there U.S. in and the X-Tack Thanks. Any bag U.S. the focused the a late the revised launches XXXX color -- products? or ESG three of really at if and selling on appreciate hires XXXX was late helpful? And approvals wondering or if new full the they're that. and then the for they're during focused first on

Chas McKhann

Sure.

really managers as of two got them, getting supporting procedures, around And are training on In what comments kind role the typically slides doing territory focusing we're procedure, we've and three we're of and patient and after procedure the accounts Apollo, his procedure the components We've products. and all endobariatric a different So mentioned, a before Jeff this come and either the on are a efforts. the on help to back cases, the across of products. that simultaneously. really calling new will can in from or the of successful during a understand support hire kind one some hired parallel, to These are required those have that newer especially or practice of been all of speed manager. focused develop regional things up our who the be selling the standpoint, that each rehired folks to

forward much as know efforts roles that's now, those an end involved. enhance move assuming, very to with a quarter, Jeff pilot can. much kind have of it very way delivering focus now, on mentioned, was of it's at those For And plan practice the and of it two does on the the to the getting they ORBERA, for focused can we the on we we indication, because we phase sure make label while it's as is right it's think grow. And and then area would to and that us,

So you sales of different have of kind capabilities. of but layering not the force, a splitting a

Unidentified Analyst

very Great. Thank much. you

Operator

I for to floor McKhann turn remarks. would Chas closing back to now like the

Chas McKhann

have we all really appreciate welcome your you for upcoming On joining Thank thank time support. And today. appreciate to much. this you listen, otherwise, time your of them. Well, We very then join much your activities, today. and and slide, us very you're we

Operator

ladies you, conference and today's does This conclude call. gentlemen. Thank

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

Apollo Endosurgery (APEN) 4 May 222022 Q1 Earnings call transcript