Earnings call transcript Q4 2022

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Operator

Good day, and thank you for standing by. Welcome to the Fourth Quarter 2022 Silk Road Medical Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

to Bych. conference like speaker to now Marissa today, would hand over the your I ahead. go Please

Marissa Bych

Thank you today’s for joining call.

Operating Joining me Chief Chief Buchanan, Officer; and are Erica Rogers, Financial Chief Officer Executive Lucas Officer. and

released financial today, XX-months December the release XXXX. XX, Company’s Road press Earlier copy the available results ended of Silk A is the three for website. and Medical on

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

those our including and our and for physician expectations and relating our statements current expense financial reimbursement, based approvals, and various operating hiring adoption, estimates product future international opportunity forward-looking penetration, without development competition organization assumptions. upon trends business, performance, are our to commercial and All and and expansion, management, regulatory market and training growth in limitation,

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

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

disclaims forward-looking we or XX, any time otherwise. update events by except live of financial XXXX. contains law obligation new future revise to Road and have as Medical projections as the intention or This information, accurate today, sensitive is whether or information any required conference statements the February only or Silk broadcast call

And call Rogers, I Officer. turn will Executive over with the Erica Chief to that,

Erica Rogers

total revenue growth all XX,XXX XX% on at by supported Road, of books a over thank a XX% for XXXX $XXX.X us. procedures and respectively. Silk year-over-year afternoon we remarkable year you million, achieved Good joining representing closes the and

by driven to stroke of was We response territory the expectations guidance physician acceptance in demand. performance physician invasive trained full-year achieved minimally expansion solution our our increased growing and and prevention. adoption exceeded as Our TCAR in

made Silk We category to indication patients of leadership important toward expansion standard of complications. labeled our objective TCARs also at progress carotid the Roads treatment with surgical disease, risk strengthening in artery for of the include

The United carotid annual with are our Medicare to the a best access the our FDA project approval States, May XXX,XXX the the opened market coverage simplify core. TCAR by expanding procedures to expanded full $X.X in while addressable billion the annual U.S. treatment XXX,XXX to in entire able promptly preference of decisions surveillance patients followed within Physicians the at and diagnoses, interest representing now opportunity.

Our large expanding surpassed evidence success high data remains patients worth clinical and XX,XXX the body from XXXX, journals. supportive we clinical in reviewed and registries and of trials in medical factor peer impact published rooted TCAR. In of

broad reach XX fact, within States. the distinguished by with across authored XX TCAR In year publications over over physicians United we the saw

And to physicians we industry. TCAR quality in assess timeframe a QI Vascular real Society data to of that initiative, independent contemporary continues for vascular SVSV allows rapidly. are dataset the This performing grow Surgery, world pleased sourced the

way balance we Adding by drive million, for as XXXX investment profitability. sheet nearly our toward bolstered we growth $XXX to the and successes, ongoing our paving

our as capacity, workforce. Minnesota manufacturing facility brought to well and access also We a adding talented distribution online as

in in ROADSTER U.S. TCARs advancements team, R&D, ongoing will specifically to our continue and commercial X. product as clinical data prioritize We such

our business trajectory our overtime. is on focus and Our enhance scale strategies to meaningfully

grow. XXXX objectives. our me brings This Number to one

commercial we remains first consistent utilization strong increased driving objective execution. through our year ahead, TCAR shift focus our As to the

us is of of achieve We in in know expansion we returns commercial that from form up strong And higher that bringing the the increased usage. know adoption the on years TCAR curve physicians engagement. front we of opportunity largest physician

That driving with touch-points year and through campaigns. is expansion marketing territory remain why more comprehensive we physicians focused throughout on this

we more on focused the Now, TCAR other of benefits over are than ever, highlighting alternatives. patient

We continue evidence and support to patient reach commercial will decision-making generate to centered stakeholders. extend more patient to our

As to double-digits we the in from and roughly XXXX over year strong drive TCAR XX% market penetration beyond. mid-teens coming

We ahead on toward trajectory and focused progressing excited remain care. the standard about are the TCAR immensely of

to is priority second strengthen Our business. the

key footprint the in U.S. commercial spent have a laying market operations. five broad plus carotid years the core of last growth foundation and We solid robust for products, our portfolio disease through

outlook, upon the building drive on path business. to of foundation category to profitable our extend this a are and the leadership We sustaining and operating creating leverage growth strength further we support our while

And are finally twofold. diversify where intentions our

one, For our extending reach. includes this geographic

shown our goal both of artery of this globally. carotid System and and in Japan in always for to Our the been progress has TCAR disease the made receiving ENROUTE make ENROUTE XXXX on standard for treatment approvals the care meaningful stent. Neuroprotection front, We

addition disease In This beyond. us preparing through on launches, the application expand leading to effort and core innovation. our to positions continue competencies our within category will begins of expand global for to technology product we carotid artery

exchange we recently rapid As for Enflate Enflate clearance the dilation our innovation of ongoing or Transcarotid our pursuit announced part in of balloon catheter of short. Transcarotid technologies,

We and in plan scale we TCAR full product The this in our to commence a the year. quarter initiated of the XXXX in of fourth for the TCAR portfolio. and commercial launch built launch our first quarter purpose limited second of balloon Enflate fifth

stroke. XXXX. continue study in have We ischemic learning progress and enrollment made also in X an we enrolling and NITE our And feasibility acute

medical. are optimistic Road future of about the Silk said, we enormously All

to We roughly in initiate XX,XXX of $XXX revenue, million procedures the XXXX are range. reflecting guidance midpoint full-year $XXX to pleased of million TCAR at the

our We the prospects are ahead in for long-term confident continued and in year growth.

turn the Lucas and over now our Buchanan, Financial Officer Officer. Chief will to Chief I call Operating

Lucas Buchanan

physician. XX% million, Erica. Growth increase per Revenue from adoption, prior as driven $XX.X XX.X straight growth TCAR ended trained you, evidenced by was of increased quarter three-months period primarily December by year. same a the was Thank million our and fifth XX, for in of the the procedures XXXX

over TCAR prior the of of to two fourth X,XXX XX% Gross quarter same XX% labor the manufacturing the was from the in by and number driven of costs materials manufacturing decline XXXX XX% increase quarter in year. fourth procedures of was maintaining quarter with The facilities. the prior higher associated margin compared the was for period The a year. and

with With margins our recent price than be but prior capacity, in slightly we discipline. anticipate time investment volumes gross and we the expect manufacturing our continued over periods to improved increased margins lower short-term, in

in million, XX.X The million programs. XXXX. growth quarter $X.X million, were in for million compared and increase in XXXX primarily from operating the by R&D investments fourth quarter quarter the driven personnel was Total XXXX of of a spending XX% to XXXX. R&D X.X fourth expenses new fourth along ongoing of for with $XX.X expenses the quarter in of fourth increase in were the continued

Sales, in administrative and fourth general $XX.X of XXXX. the quarter expenses were compared for $XX.X quarter fourth million XXXX of million, to the

manufacturing on with scale. ever, mitigate as increased focused risk supply to capacity costs. Now manufacturing than place, for we and increasingly and more focused manage year, resources greater we are human in excellence in our input are expanded initiatives chain, quality Last efforts design these and on we dramatically we operational achieve

operating and work commercial expect investment, as manufacturing, look we and have percentage office put We back forward behind years the R&D decrease and to of revenue to a we expenses going infrastructure leveraging forward. of

loss prior or for or loss a a short-term to ended quarter of loss XXXX share million the in $X.XX the million, and cash net of We Net $XX.X year. share, $XX.X fourth the was with for same per of million cash, of per loss $XXX.X a as period investments. equivalents compared $X.XX

quarter which approximately balance the refinancing while access $XX million million through initiatives. substantial in our net a and an Having contributed additional which XXX proceeds. equity these approximately providing to quarter, financing balance liquidity bolstered in also added raises flexibility support business cash to second our the Together sheet growth in provide and further of debt in our fourth

almost presence by trained commercial territories. active XXXX to with ended XXXX XXXX and commercial served physicians our we Turning a over XX outlook hospitals in strategy, with XXXX sales

incremental our intent we with to We our and as of part territory as anticipate demand respond the beyond maximize investment goals. the TCAR growth on training and profitability in to return long-term XXXX physician strong

hospital per trained procedures critical a trained XXXX entering leverage. of driving physician to in mass territories, and we physicians accounts while operating are With growth also well drive positioned

XXXX range TCAR based revenue As on mentioned, of million the over XX,XXX Erica we XX% the expect revenue be of to in $XXX roughly $XXX to the XX% to range. growth midpoint at procedures of full-year million reflecting

our accounts macro in As variables, and the uncertainty hospital environment. operating ongoing assumes normalization including also guidance several always, continued for

of expect also risk label in benefit effect the opportunity and modestly layering inflate reflected gradual we procedure our range our of The our balloon. expansion the revenue standard from rollout surgical to guidance is per recent

will As and a out contributions surgical such level we risk reminder, by of profile, maintain patient procedures we not as forward reporting product going nor our will revenues. be framework TCAR breaking

this comments. call closing to to for I At point, like turn Erica would back the

Erica Rogers

building for to of TCAR Road growth and team platform for of Lucas. benefit on in our the will year you, Silk who like and I as put physicians, scaling hands many more focused would a as Thank XXXX and to several that possible. reiterate leverage patients years last has carried be our the by

at our the Company’s providers we and commitment of core driven Silk next to and our a know Road culmination these a excellence values growth be their of can patients we and Collaboration, will that best the of phase doing the by culture are factors. for the

access, in the many medical clinical based story. market at broad Road clinic evidence era and footprint our of next are of ways we Silk established With full arriving commercial and the

continue We in our work to are earnest. excited

now to will Operator. open questions. the We line

Operator

of Next Bank is Travis America you. caller Travis is Thank line Instructions] open. your Steed Securities. [Operator of

Travis Steed

is for the think And the maybe QX, single how modest the you to then to when quarterly about about will how in X.X That the about got penetration on low if for just And thanks market I penetration of you market year did. question. for mid the you risk, the like last have should billing XXXX market QX that? price you single just market first, that of about is we and XXXX can define start the upside and the everybody, about Hi the the did digits or our similar or with around to had looks guess, it benefit think penetration guide, guidance versus penetration despite we think level of the pricing. I start, points the on thinking XXXX think digits, about so three progression Senate guidance, it. taking of kind points and is

Erica Rogers

to much here. call the your thanks on you very Yes. Hi Travis, for have and question good

just takes the first So let all. puts about me and talk of top-line of kind

reflects, really and with ongoing we guide As the of some of hospitals the of would consider stability, to and what there, operating be I we and shortages. our here labor environment said in prepared remarks, normalization say course, pockets

your the the in access surgical represents business. also risk point, our increased it But And and momentum full standard to approval. market

those have still early say sort instead talked think but factor, important in days to about the even rollout and building. going of we is I risk of collectively. talk As we break out trends is surgical standard in momentum it to But safe QX, by do risk are that to it that before, that was not point approval out about it

question. Lucas take some to your answers let the will detailed I of

Lucas Buchanan

Travis Yes. the thanks question. for

a is the partly is which where year half another it of going a kind of back of territory of is terms cadence. quarterly to It our continued function expansion. loaded, be cadence In

last and for some the year, kind and so at up. goal and from was there noise are beyond range, to in that. is been that QX, our the met end we see reported still XX that that has so will XX XX we step we building we the year, flattish of throughout XX to QX, to historically And territories COVID of low

maybe modestly is we increase to from and flattish build it So there. then

revenue utilization, time pricing, In full what kind pricing to procedure gather need per market, per more terms to of data the be pricing what the as we the the will from procedure. units and some implied of in the Obviously, what inflate.

that So some as will we forward. go color we on give

here $X,XXX If you the the higher of range. our is implied our metric estimate, of as a do the That the sit at will lower potentially guidance, in that year, procedure we math, end $X,XXX obviously, at to are And best the end. kind and roughly beginning be about at revenue per on talking we the today.

the And full up procedures this the have are of have then the with question, job. procedure, curve the is evidence is mass roughly right, at and you moving and done label the the penetration adoption the math per midpoint the on organization clinical you right, the doc and and goal the we critical

slightly very the but year slightly a sensitive are really on output we focused curve better so worse, of in commercial are adoption if is we is is it It XXXX such, or the metric where will and that as be is driving a execution.

Travis Steed

Great, better leverage Lucas, very for the it you this year. can on would get got follow-up And I helpful. the be

market happen curious Erica follow-up you around there? if for numbers of the on then can NCD that And be or bit breakeven? that how penetration sense get Just a is curious the put are the some it would come review. Anything that leverage what would out for the CMS just reimbursement

Lucas Buchanan

faster expenses expect to Yes, than revenue certainly grow so year. we operating this

the full-year of quite XXXX, of we a XXXX. did hiring bit effect are in We have in will

a but do of I down. as expansion, as salesforce expect to tick revenue in to continue invest expenses incrementally also percentage will mentioned, operating We we

not we really capable us profitability what label, timing XXXX the year of did the product to portfolio a of with commercial scale provide revenue the additional and execution again, overall specific product of mass. the we critical full want of We or show are the

the revenue that about and can on operating that path growth, to to year see as leverage, profitability. we progress think so we And that start throughout

Erica Rogers

question. Travis NCD and Yes, reconsideration on your

welcome continue range wholesome We to and generally for Road And for of there outcomes evidence. this favorable review Silk we believe the are of a TCAR. a opportunity for

on more peer prepared impact daily As are greater and basis surveillance generated sitting evidence of patients high heard project. real with data. of worth than in world here you XX,XXX a the the data journals the TCAR in were remarks factor In review,

restrictive we are metric, things of the been criteria, training have so So patient posted our those that with pleased that less all in We are let’s know outcomes the far. with so favor.

where public see comment. first behind do from that and the In comment in is meantime. can process decision them. of see our CMS of and are a wait to course, period And we will first good we public, of memo work you the are, we view, The July and point doing the public a happens comments draft from keep terms we so will are down us. come what heads the did post

Travis Steed

for Thanks questions. great. Okay, taking the

Operator

Morgan. Our next is question comes line your from JP Robbie Marcus open. of Robbie

Robbie Marcus

in us at per Great, the all Maybe about congrats think year. of a per first take I be that abnormal the building or the follow-up XQ, the it are we how XQ anything procedures, XQ ramp there through the on questions. you balloon, after should we about territories is and do the the the a asked procedure I XX,XXX nice it as color. revenue is Travis more procedure similar Lucas for to year appreciate out second about the about? gives But half weighted cadence you thinking add quarter. to If revenue $X,XXX How quarter

Lucas Buchanan

Yes.

XX nothing the going XXXX in over. XX that scale to would I is would XX,XXX been up be towards the First X,XXX I average there under has yes, it the always think quarter-to-quarter of likely probably But all, interpret the from And range variability. the range. on to is roughly again, range,

as some those per that and Again, and is into pricing utilization and in administrative still full the how things. beyond get on there units we uncertainty a and market of and exactly churn full much requires release release contracts market committees the QX procedure

on terms in progress of contribution throughout expansion, margin. and the both So the the year we flight territory procedures per-physician will the the on

Robbie Marcus

versus you be is Got is you at How cash the use add something expanding the are you this that the you the solely in cash considering to outside M&A accretive point, TCAR reps now U.S.? it. of there can and the have on balance else as And contemplate the U.S. bag the the on might or you the worthwhile outside of business and Thanks. into U.S. think sales sheet.

Erica Rogers

room States is U.S. Look, best in Robbie. question TCAR way penetration out know is in this the the And with States the appreciate so to in I business is said growth in there XX% right my think for remarks, United much United Yes. here. expansion. investment as here you prepared closing I the run XXXX our to about

If you we just total look the of at patients opportunity treated just are getting started. market the alone,

safe adoption is we the on I United So is have increasing driving at of the right it to here the think TCAR in home the leverage focus States. and say

Robbie Marcus

a Thanks lot. Great.

Operator

comes And of from Maeder question Adam our next Sandler. Piper

Adam Maeder

bit QX Hi, taking Erica. there. Hi, on little kind the Lucas. talk up and in Thank was month-by-month, know, a for performance the business you But and the want XXXX. little you the one with curious past congrats dig certainly progress on see you if than of trends, in to questions did good start I’m record to a December, to more X% the I and able quarter. October just growth lighter through bit solid about quarter sequentially. are

there just So or in to then anything seasonality difference or and have just call two. understand, wanted from it could a any and Thanks. frankly, considerations be you’d a follow-up holiday, out, I selling but days

Erica Rogers

you. hi, Yes, hear to from good

just views. QX, environment. give normal impact we potentially see continue and is an on caution you the operating normalization having operating the relative talked did I healthcare me environment. labor in some we to We out But around, that cold, think flu more it high-level COVID QX. Let to say safe of Coming shortages relatively the about season

about, talk you And I etcetera. your of will know, days, on let points kind specifically Lucas, selling

Lucas Buchanan

momentum month in normal is quarter we call and for. XX always the we about we commentary. work, strong not And plan the providing had to excited nothing guess month are I between a out to was out, the Yes, that we the answer with are seasonality going specific short to It XXXX. really territories

Adam Maeder

about prepared of choppiness do think do think running. and challenges. about follow-up, in XXXX margin little Lucas. incremental thanks may then I heard because and caller and think know, bit some up of think How that about we gross XXXX? second manufacturing the A how this for in I for we gross wanted margin Thank near-term the ask side But you the there you. getting remarks year? to I the Okay, of be progression

Lucas Buchanan

are the I to as that one. which kind think of are capitalized loaded. in carrying in reasons, costs of commentary, be versus gross and half manufacturing think have higher And similar will margin roughly I we we different is Yes, should kind improvements two we labor the XXXX been similarly back think you carrying for more about facilities overall, of the percentage and inventory materials it overhead obviously top-line

And so half increased as the and we the overtime, of unit will back improvement half year. year in potentially the we in drive a discipline little front as we of maintain and beyond and price, lighter the in bit the see volume some

Adam Maeder

helpful. is you. very That Thank

Operator

Thank Wuensch of question The Joanne line your from open. comes Joanne you. Citi. next is

Joanne Wuensch

of just follow-up trained. I physicians a a evening ended math Good the sequential question. the I XXXX thinking I will roughly to make establish sure for the revenue for how you XXXX? If you XXX and and commentary. to gets did with delivery, the that question. Are want set ask I I up. quarter in my you correctly, goal about a thank first appreciate quarter you terms in position mean, taking sequential are

Erica Rogers

and take those Well, us much reverse why order, so we and for your thanks question. joining don’t in for Joanne

year, in guided year of setup had with XXX part the ending XXXX, how of great is roughly the physicians XXXX. physicians trained, greater was achieved So, which year roughly X,XXX which for we trained, in a excess in than the we the of first

our number won’t we specific future. Joanne, year physicians about is this go trained guide investment an that we a for in not and And physicians probably talked of and of we forward. XXXX before, have on noticed, did As probably you kind training to

de the is, physicians up because is is minimis of curve. of adoption number compared being real moving it to growth and are that already driver that physicians And kind it the train these the trained

the way mid that would physicians every physicians old retiree. in about and is And course, to replacing fellows, percentage high-single-digit So on growth the forward. coming train and think include, of best it year kind here from of to younger

Lucas Buchanan

this And, correct? is year, that year versus question QX Joanne, last sequential QX on growth of your of was

Joanne Wuensch

Yes.

Lucas Buchanan

Yes.

So roughly various I up, but has there of will and the the been a some in let prepared comments reiterate But follow again, periods. time historical flat, the COVID spikes trend includes if me some historical trend is know.

again, We and with ended territories to the with XX a have the started goal year And expand. year XX.

lot so of continue about all is growth think a of way expansion as initiatives the I think sequential continue and as rollout. and and QX. we right the on-slate get the to And continue we progressing our And then year commercial

utilization seasonality We at some there and more the ups that their really doc day, the and step procedures the field, we is make. per end thing normal and around goal. driving out more But do is have physician driving, adjustments inputs folks the what the touch from are to obviously, more sequential of points with having go the in will the it with

Joanne Wuensch

Thanks good. Sounds answer. you for the incremental

Operator

Thank you.

comes [John open. question (Ph) next of you Our Stifel. are from John McKolly]

Unidentified Analyst

operating for taking point Erica it. guess Hi look taking finer start Maybe for a leverage Lucas, my today. XXXX. to In at on a hi thanks putting questions I XXXX. off,

You reach do XXXX kind Salesforce grow GAAP OpEx mid-XXs scale OpEx you of you line is a potentially like in do you continuing XX% as percentage the that to see more with and you grew in What kind widening, delta. around see top XX% or XXXX, do see that range? of around

Lucas Buchanan

company is did growth. answer people guidance, across fair XXXX. amount the hiring Short did Yes. biggest think functions a we we line to costs cost but the and in the is And have item OpEx in specific things compensation don’t again, and we mid-XXs of all about,

salaries get like will effect bonuses and comp of full-year and the we and stock that. things So

then territories sales territories. is and to the resources The the second drive those number expansion continued human the of of

things state, pencils line they item including to a cash XXs is compensation think I have perspective, going growth, things, said at specifically. all non where quarter quarter mid as there prior, But always and steady on expenses, that are variability. really are I G&A always perspective R&D that from stock to think out those I roughly

Unidentified Analyst

picture do kind you then of taking what of XX%, one for bigger you critical just trained XX%, that in doc’s from me, mean, a of for I talking factors, think kind CAGR helpful. more of And are a mass or data. your for Thanks clinical Great, other picture Erica, perspective, place reaching about is to kind looking thoughts do XX%, there. my else penetration questions. accelerate XX% the what growth Lucas need you to just of big

Erica Rogers

you hospital is And recognize physicians, the there right, absolutely. accounts with open success access open to Yes, are John, and territories, that for trained setup really the full market.

So we we I to question overall. in think that and and answer the growing meaningfully are short per your is procedures are physician growing

of where carotid more And year switching And a is endarterectomy. brain individual experience and to more a just that takes one versus the business treating the before and said an and get physician to have it to with this patients half time comfortable we year TCAR matter.

that we of physicians, areas And key experience, quota which beyond. of adoption, is that for caring their the and drive increasing our that of our from to one know are own front in times focus touch-points, helps professionals year the of number the this

And said informing disease decisions. remarks And our and around any my in work I themselves here is artery than true And also attention just carotid that patients we returning patients. doing more ever, that this state, disease. on to not and more prepared treatment are more of know

TCAR but really had think is also we and patients to and have up really TCAR have focus particularly area, more. and how some capitalizing TCAR patients our results some work taking have of for one patients and many material that providing assessing patients they carotid we on so both need, And done terms educational there of patients of both have engagement just And with that prefer and who our asking in TCAR. more on in this that about the early endarterectomy leveled example

Operator

Thank for turn like this to you. call back to would remarks. Rogers closing the Erica time, I At now

Erica Rogers

Thank joining us. for you all

Operator

Thank in the does program you may your today’s conclude you for participation This now disconnect. conference.

Silk Road Medical (SILK) 28 Feb 232022 Q4 Earnings call transcript