Earnings call transcript Q1 2023

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Operator

Good day. Thank you for standing by. Welcome to the Silk Road Medical's 2023 First Quarter Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

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

Marissa Bych

you thank today's call. Great, for and joining

for Executive me Chief Buchanan, Lucas A Erica copy financial Operating XX, press ended Chief on are Rogers, Officer; the results released Chief Medical is Earlier of Silk and X XXXX. today, months March Joining Officer. Road the release Financial available the Officer and website. company's

federal this within I'd that made the management Act statements Securities of during you the are like statements will Litigation forward-looking remind call laws to begin, include pursuant we safe Before of that that harbor Reform securities meaning the XXXX. make to of provisions Private

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

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

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

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

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

Erica Rogers

you for joining thank and afternoon, us. all Good

alleviate Road Silk reflecting lives. year drive growth, strong the burden supported on year-over-year start We procedures. over on as marks built devastating X,XXX the of progress million, and at quarter of an foundation the first stroke we adoption $XX.X XX% we of Our to important revenue have capitalize by delivered TCAR patients'

demand our far pleased outlook our And to guidance revenue. see progress we TCAR. $XXX $XXX total for thus are considering ahead, and million strong XXXX We underlying for our million to in are reiterating

As year, our The make most objective through we we drive adoption through business physician comes so opportunity towards care. our leveraging do standard march commercial way physician the grow our broad across footprint to to remains U.S. important of from the to our our as base. largest trained utilization

this and we with and our and includes expanding onboarding sales training in promotions sales, year, to our customers. other design. expand as Early we initiative our through further carried field in organization and territory new the increase sales an forward touch management align with points hiring, This professionals mind, to territories objective optimize

for out strong, And ability have pleased this effort Road looking balance right the we recruiting We with creates believe and continued Silk of our quality candidates seek that Medical. structural the growth forward. been

prospects risk surgical leadership as patients of we surgical strengthening to year following and category our last of include commercial Simultaneously, market addressable standard expansion are complications. our the

data population, has the Neurology, JAMA and et in Vascular a pleased from on patients VQI, vascular at largely al's patients in over reflect demonstrated outcomes this built in exceptional patient in paper see TCAR outcomes standard or Meeting in recently TCAR propensity-matched Liang published the we the to which treated XX,XXX were real-world CEA. investigated initiative quality XXXX. with from presentation Outcomes versus risk Annual publication surgical

a piece endpoints for incidence The paper important and momentum procedure of using in time primary cranial strong equivalent injury found with provides of statistically represents and population. outcomes our study patient this another expanded significantly lower The clinical foundation early TCAR. nerve evidence across

continue TCAR's population in matter, In through eligible for proposition all analysis XXXX TCAR-related and in papers the were that reinforce continued first medical the outcomes patients, XX VQI alone, another We this to of of there major journals expanded this published year. in quarter VQI. real-world and value in the will collection and XX

carotid enrolled The ROADSTER we X, to XXX continue complications, our undeniable carotid to of excited eclipsed patients are risk accrue. stenting progress benefits for recently prospective at standard the versus endarterectomy date. post-approval the study for TCAR surgical patients and about transfemoral and mark,

As core we around neuroprotection our of we expanding innovating our lead by prevention stroke forward, field portfolio competencies. the and transcarotid are and diversifying

we limited Plus. excited many by Early I'm a announce We first portfolio. TCAR centers. system traction the use and and designed support balloon ease and market release are broader to the of cases further patterns NPS XXX(k) commercial the risk the as for a utilization TCAR purpose-built the the for first to recently also launch our This through product contracting neuroprotection full-scale initiated was this complications. market-leading and our product a After encouraging limited followed across market received release, work hospital minimize release we continue conduct that or and successful of ENFLATE, later clearance next-generation to ENROUTE anticipate of we year. fifth

in ENROUTE and reach, to for groundwork QX China to geographic share clearance lay continue China broaden that Finally, the neuroprotection we starting received I to Japan. our in pleased with we system. am our

following our year. system actively this ENROUTE future In stent We are stent ENROUTE of while focused as ENROUTE Plus. submission we the as ENROUTE the work NPS now potential clearance neuroprotection distribution are a regulatory clearance last and supporting we of well partners on towards Japan, investigating later our activities approval year, for reimbursement

working NPS also towards of clearance are Plus. We

countries, unlocking on international we steps path to commercialization on way there are billion these ahead in While our opportunity. several market $X.X are to well our the

business are to deliver and we diversify deliver. investments to expansion our In geographic growth strong product our pleased to through summary, in while begin

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

Lucas Buchanan

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

The XX% number same in increase from procedures of was prior X,XXX, quarter approximately of the TCAR a the period the year.

fluctuations As a suggest, seen in was in product below our we results despite from of historical by performance period divided average, time standard strong level revenue to procedures ASPs, trended have on continued period which the quarterly time. as function the

growth first for demonstrates unfavorable ongoing down procedure components. was the quarter year, margin of for Gross first TCAR. but with sequentially of to underlying variances the Our associated prior XX%, XXXX in strength production due to the quarter demand select similar

gross and resolved specific margins, have impact We issue, into of we this a expect margins back to gross higher the year. half second modest quarter the expected beyond

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

the XXXX administrative Sales, million The was XXXX. the were stock-based increased driven to compensation increase first by personnel growth and general expense. first quarter compared of and in largely $XX.X quarter of expenses in for $XX.X million

and infrastructure and our leveraging drive line top leverage. of forward, years in back-office investment manufacturing, look we commercial, we to As durable operating are R&D, growth

loss Turning and first $XX.X period to same back $XXX $X.XX loss for million compared equivalents was quarter results. Net investments. for as a year. over quarter share loss the of cash, to the share million first net a ended of quarter per a or the of or prior in loss We the of $XX.X million with cash $X.XX per

us debt and and with completed with our to optionality current a we terms capacity financing reminder, and balance forward. available initiatives favorable roughly capital XXXX our $XXX substantial a financial flexibility committed growth looking support sheet million. at great business As at Together, in provide

our to outlook. Turning XXXX

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

Our from a expanded TCAR organization the reflects the balloon. ENFLATE including commercial of for expansion, our tailwind of access and progress variables, rollout guidance pace several the modest and market

a reminder, over mass and for in our call and on a have hospitals additions physicians trained we we last territory expect sales served X,XXX a continue XXXX almost commercial training presence incremental We and by we with cited believe X,XXX critical throughout As year ended sales territories. ongoing beyond. physician with adoption, that we to the active XX TCAR achieved

proud standard resiliency. leadership summary, our continued to of In establishing to of on path are progress forward look We we TCAR the as the care. and

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

Erica Rogers

stroke a May educational leading in the in TCAR a Medical by close around month. to coming few to series especially the acknowledge the in our panel analysts first discussion the like benefits to awareness over amidst Thank Executive host between open disease. to us practitioners on investors treatment you, Lucas. artery directly for plan experts a we landscape, Macdonald weeks to we the that broader Dr.Dr.Sumaira and I'd year be events the connect dialogue everyone of join as This carotid will inviting of just and treatment XX the of Director,

we long-term us. TCAR May value standard the evolve join current light to into and of patients We're positioned for how as our and is hope event excited XX the We the landscape you'll providers hope sheds we deliver and discussion, to care. treatment uniquely

up With open that, to it I'll Q&A. Operator?

Operator

question of first line of Our JPMorgan. the from Instructions] Robbie comes [Operator Marcus

Robbie Marcus

quarterly been quarter of came quarters with first guidance normal The first to Wanted raised. is start trends. Great. The This Lucas, talked hadn't in fluctuations. the you about below quarter one Street.

stall hoping most utilization? in into because Is number I were I aren't what's a trend this. it it than less you a some Is aware bit going other on. dig risk of exactly think standard So seasonal there could was higher the that indication? Is expecting we investors a

trends to So underlying here. I'd love into the dive

Lucas Buchanan

little kind Maybe Robbie. we Erica broader quarter within give turn adoption further bigger trends we Erica was variation said, modeled, later, then procedures bit we've the The turn but that as were Sure, to the can the the about I'll light I'll quarter. But a than That's to we dynamics back per talk in answer, great. for and a of back procedure. Where revenue nicely, and in the for we it historically. picture. I'll and slightly less were seen it grew quick

Erica Rogers

much Robbie, for thanks on. so being

architecture. the of we some organization some territory on tech, prepare took continued high geographies, first growth. course we balancing accelerated increasing to look, catch necessary planned of in of creating points. normal med service quarter new business creating to up a fast-growing in all sales new And our that's but pace It's really positions, physician So for leadership touch us territories,

do we adoption. we when data, own our this, see from know We accelerated

territory-balancing we're result efforts. a and the attracting, slightly in the pace of temporal we quality seen say orders, of some As with and that timing we're in was the the therefore, range. you the But leaders before, these people really pleased of revenue. exacerbated we we're to, in distortions already we've confident our and of and alluded guidance And this have saw fluctuations all professionals that, as adding I our by business people with sales will of in the

Robbie Marcus

do think And on still does procedure maybe year which quarter about XX,XXX the it there under And you I thinking per stocking guidance ASP trained about the for Are slowdown with range. year. to for something just XX the was the in to and first year from of it. that? physicians? -- procedures in same Got Are changes any have full anything the touch $X,XXX revenues, about to

Lucas Buchanan

address happy Sure, to that. Robbie. I'm

for nuance the slightly is the total year. we're confident procedures more So in

the call So the on was last under. roughly XX,XXX the

Now it's over. the

To So procedure are was $X,XXX, last your trends average again, $X,XXX. of the the good. year point,

higher the bit range. revenue divide our XX,XXX than do and procedures. So per the $XXX And at procedure brought expectations in take where we we $X,XXX, our guidance XXXX came slightly. and in, math came we midpoint of less to in at And the that's we would in little that of it math, just rounded, by in get that of us XXXX down million $X,XXX, if side at If own came modeling, towards a our is we if $X,XXX the on math. roughly

relative and slightly our revenue ASP procedure increased per at our our So the on plan lowering we've up We're at same our end reduced to -- discipline, we've we're expectations point. procedures. to

Operator

Stifel. comes question Wise next Our from of Rick

open. now is line Your

Rick Wise

it. Let me start off, and to understanding I make really want I'm just sure

procedure just really the I on were going understand really the a the make disruption. Your be year. have procedure the per if why could me exactly with that's helpful anything understanding in do color were look what to for. to dollars understand expansion less. numbers basically But we that, Help I doesn't just point. this the better more later force the -- to I'm that little sales give I you us or sure want mean

Erica Rogers

Rick, you Yes. asked I'm so that. No, glad

leadership, Let me we add clarify we from that, which generally within. are sales is when promoting

we about doing and now left a we're balancing leading leader that also talk territory have so And around. managing splitting who's they we is behind. moving When what and people territories, sales

what so is And vacancies, holes does in some that leave leave in territories. effect some

And our planning professionals. not at in terrific they're just aspect, cases development case therapy while the specialists are that quota-carrying and covering

revenue back that pick up will, case. And sweeping to or order, so from there's a the the you lag if around in

expansions. why And it temporal we as these to so talk about that's distortions relates

year. in revenue and good feeling guidance the for we're overall, so confident And the

Rick Wise

that. make That's -- understanding. got I'm that. appreciate just I And sure maybe to No, I

flattish, think maybe have third, second shade that, Or flattish. third been the that the "Can I second of quarter the that it the does to quarter quarter through exuberant. to result? about the as suggest fourth." You is of So and it to get sort help first us who say one might thinking the not that you just cadence first says, I more into as again, correctly? did am right. understanding revenue a a I some was to I'm But be part Lucas, of procedures are the second, And in first maybe falls of

to the to in distribution think help the your midpoint you how sequentially us of get to range. think can through guidance So

Lucas Buchanan

Rick. Sure,

X-part a I that's think question.

were things Again, different it's the keep was per the revenue to QX, revenue. comparisons In per sold And before. a revenue pandemic Obviously, And seen per somewhat of matches and mind, be in first That a make we've -- at $X,XXX trends year. from when In -- like and the that's So organization $X,XXX. of the derivative it the hard over yes. units this recognize scale and we were shy procedure, our prior procedure. the with dynamics we of it is procedure we answer could timing that. issue? QX, answer is quick just just of

how is $X,XXX per our hospitals that why by And a territories? the docs there have, many many time? the we The product the we hospital we par quarter a kind units sold in a and actually levels that whether pressures, the how quota-carrying we in at function are that hospitals territories there we somewhat new SKUs, hospitals pressures rep lines ranged $X,XXX, have, being Is affected uncertain makes between which of that of many have, it metric how trained the total their Is hospitals financial particular many splitting the carry how have, body? different territory pandemic where and is of all are across own $X,XXX historically. and or at has

strong adoption procedure strong gives growth and us curve strong pricing is metrics. what discipline, confidence Again,

the And -- year, mentioned, to We rest that wanted the the XX to last of Erica so end we territories. as range. get the low of of cadence to were we year, look as hit we XX at

really going catch-up some through So the not first we had disruption creates were catching again, really back based half but to do. the on marketplace. focused beyond. up as we the you're but only And well half some us on the kind that in change, accelerating talent up, seeing sets we year of of And really that for

while of cases there's I on continue per and hospital are the all HR more the their the that the in hiring in hiring transitioning -- the and of touch physician to in we the balloon would margin sales right And organizations business get done. we're now. contracting now, And the the right? busiest the revenue, half of doing first the release, but benefit based and people conduct obviously, back market say of TCAR. Right partners have and to we we'll so of organization second managers getting year, will on also the we're in full the half points training

year second QX well up of set of activity QX. the really for on we're so all in half And and the the based

Rick Wise

let somebody ask the or I'll quarter second flat if will up. else Yes, sequentially be

Operator

comes from Sandler. question Adam of next Our Maeder Piper

Adam Maeder

Great. I just QX around on question I guess QX for and $XX.X ask, take revenue I'll that consensus. showed million

implies growth X% results. think X% to follow-up figure? I that I X. have your quarter-over-quarter sequentially that QX versus reaction to And Any then a or

Lucas Buchanan

Yes.

year commercial organization That fourth flattish. trends. prior we're I in trend, again, quarter step-up first implies inputs in the QX, reiterating the all with with like versus QX things kind What QX, of seeing a QX of over matches we're expansion of and curve, is QX quarter the think, what that with seasonality our and growth adoption we investing QX, other quarterly and over guidance, the that. obviously, all over model

I expectation. think a reasonable that's

Adam Maeder

Okay. And China. then maybe to we can turn

congrats already system. ENROUTE you pathway on that line. across study? Do stent for more the data? one just getting genesis this China you're follow-up. in the XXXX? for use the or is a And about for question clinical revenue goal Or need year the So forward the Maybe a on from the of really I the 'XX potentially is, of could clearance Japan then talk have like It focusing available And event? see run regulatory you that there sounds Can to we stent. later

Erica Rogers

us. that the right, I'll And Yes. Thanks to Yes, for really take we're we're China. stent. NPS in working see Sure. you're on joining excited one. Adam, clearance

regulatory the part haven't the specifics with in because We given we're authorities. working Chinese

we've not either said be think to can fair given or stent. is Japan there What the going in contribution on revenue as is will from China XXXX. and prior process in a I say as haven't specifics. well we it's I that those calls, approval So But say ENROUTE expected

Adam Maeder

Erica. clarification appreciate then just one one. And It's there, the last from the CAS around NCD reconsideration Okay. I CMS.

there wondering saw and And I document any to likelihoods that how and there's outcomes if you potential you timing. CMS. thinking about of Just a common update are submitted

Just on of the says NCD was the version hoping could document reopening. walk what you kind that Cliffs Notes view us through and your of

Erica Rogers

Absolutely.

So the just NCD passed is of reconsideration period. comment underway. open kind We the

of endarterectomy, And so the that the evaluating is do exists of all off CAS, that and doing transfemoral around therapy, work evidence carotid body medical they the CMS, above. optimal TCAR, Medicare clinical

exists just body the surgical TCAR pleased positively And we couldn't you we within for of be well kind into leaned said so CMS as covering that as TCAR VQI know, Adam, before, TCAR. with evidence of And more the risk around Surveillance standard Project.

so like feel is CAS in good removed be place. whether the or expanded and we're And sitting really question a overall should transfemoral not we being that's TCAR. of coverage and some The asked on restrictions

And I so CMS they do say safe review is work to think going do the to the and it's evidence.

transfemoral As to comparisons. database large excel side-by-side and VQI, continue we both alluded CAS, the prepared we over in remarks, historically the in outcomes in comparisons to from

So in a we process, what means for said, positive next a of TCAR. now, we've decision we XX range us. draft with July or of the that memo be come confident. sorry, June for and think we're feeling step as XX you outcomes to back kind there we'll -- will And But right see

Operator

Joanne Citi. from comes Wuensch question next Our of

Unidentified Analyst

for on Joanne. This is Anthony

I still had commercial the is impact supposed The ongoing? first, reorganization. to just to one be back follow-up. contained from this quarter? just to then this Or first the going And Is the

Erica Rogers

joining for thanks Anthony, us. Yes.

tech. really would it's I very the territory refer We in we've to kind And as a this this done balancing choice use. might commonplace out words and reorganization of I think historically, med of geographies. not be

and of grows, to ahead demand adoption. sales the kind ahead getting of and so driving of organization As does that business the meet get

here, distortion out taking medicine Anthony, create over accelerate So plan was our more own and upfront the of a slowly kind and what spread of did year. rather the more of in disruption QX the pace little we than

being talent be Road. or now And taking that of in way wanting to out available and Silk seeking part, we and available amazing that were our responding the advantage coming talent to is

be in here, training to more and training progress, QX, but say about do right some significant I'd now. So I made TCAR the in couldn't and folks more are real excited their who we that there's

Unidentified Analyst

maybe modest my Got just then that. That's in way second any to know Lucas, helpful. if gross quarter, one, it. And -- margin is you you I second around could there put any impact can you said numbers quantify the

the Just looks back trying of what year. to understand the the ramp half in like

Lucas Buchanan

at Well, referenced. just I was in XX%, last QX margin gross came as shy of year of Sure. XX%.

the And impact So you manufacturing gives relatively point against discipline. -- strong fixed that with a you have facilities. overhead volume higher at this main because of kind that we had X quarter, of range gives we each a price unit sense

will And other to That's and related to back so we needed mostly took that QX we barring as some get solve. QX impact. period It to specific issues well, expense normal a issues. impact then some partially we'll any

Operator

question comes Chatterji Riley. Neil Our next B. of from

Neil Chatterji

that first Just curious know in I -- said quarter. the procedure growth you was healthy

if and any Just any operating could on factors kind volumes? quarter quarter, maybe second or the first staffing you curious from the just in move an give kind to on other COVID early update the us or of impact as environment of we

Erica Rogers

Neil, here of in others, there are of that I'm I business large, you've inpatient you and to physicians There shortages. that pockets kind question. business and of the think our physicians range -- getting reiterating screened back Embedded still hospitals. we're labor are from kind inpatient as patients back and seeing hospital normalize. are, by asked hospital that doing the U.S. their fact of seeing guidance is heard in some the glad But Yes. procedures and to

So environment, it of which guidance. one the in operating feels our like assumptions a more is normalized

Neil Chatterji

on ENFLATE. Great. Maybe just

some touched to starting full get on there feedback from launch. You the

if us a impact revenue still with Just And just on positive curious, any expecting procedure. per initial the more of kind then sites? you're remind color those

Erica Rogers

of part Yes, and we step and in out be that to solve the the positive, just procedural benefits, some true. kind the challenges improving ergonomic particular expected. was feedback procedure. balloon, really that The developing all to the I'll very is was the of ENFLATE purpose margin of safety as take that, turning That ease-of-use of Sure. of been some balloon Neil. has

the release, So which happened positive. is of feedback full early the really We're in market QX. quite the days in

pricing, And that hospital so sort take your back the question. contracting, half working Lucas hospital still I'll thing. of of through let we're

Lucas Buchanan

Yes. Yes.

over given in last do revenue a In the it's that the about be we on procedure, per tailwind spoke product, call, it's terms that expect fifth as of our to product, a new we to other question. of lower procedure of per the the time revenue a slightly per listed units headwind of for the against prior the reasons procedure all I products some all

So effect there. there's net a

We've of and of level taken this unit step revenue of product get always assuming We've ultimately would and a procedure there's to back. to the TCAR actual in growing come really orders, reorders stocking as we closer to a utilization-driven procedure mass very We fewer that critical we per focused of revenue said kind come our X each of kind ASP, want that kind it's accounts on way. in and and our And new investor kind all from new deck the and we're utilization. revenue. our business show fewer that managing

And valleys business. have big and focused revenue closer up a a front on But again, and impacts seen timing small But very for factors. we're changes getting or to other for going in that the per normalized forward. we've metric procedure down peaks

Operator

remarks. it Officer, now like Erica Chief would I for Executive Rogers, back closing to turn to

Erica Rogers

very you joining for Thank us. much

Operator

Thank participation the program. you does conclude conference. in This your for today's

may You now disconnect.

Silk Road Medical (SILK) 9 May 232023 Q1 Earnings call transcript