AtriCure, Inc. (ATRC) Q4 2022 Earnings Call Transcript

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AtriCure, Inc. (NASDAQ:ATRC) Q4 2022 Earnings Conference Call February 21, 2023 4:30 PM ET

Company Participants

Marissa Bych - Gilmartin Group, Investor Relations

Michael Carrel - President and Chief Executive Officer

Angela Wirick - Chief Financial Officer

Conference Call Participants

Robbie Marcus - J.P. Morgan

Bill Plovanic - Canaccord

Marie Thibault - BTIG

Mike Matson - Needham

Suraj Kalia - Oppenheimer

Rick Wise - Stifel


Good afternoon, and invited to AtriCure's Q4 2022 Earnings Conference Call. My sanction is Amy, and I will beryllium your coordinator for nan telephone today. At this time, each participants are successful a listen-only mode. [Operator Instructions] As a reminder, this telephone is being recorded for replay purposes.

I would now for illustration to move nan telephone complete to Marissa Bych from nan Gilmartin Group for nan fewer introductory comments.

Marissa Bych

Great. Thank you. By now, you should person received a transcript of nan net property release. If you person not received a copy, please telephone (513) 644-4484 to person 1 email to you.

Before we statesman today, fto maine punctual you that nan company's remarks see forward-looking statements. Forward-looking statements are taxable to galore risks and uncertainties, galore of which are beyond AtriCure's control, including risks and uncertainties described from clip to clip successful AtriCure's SEC filings. These statements include, but are not constricted to, financial expectations and guidance, expectations regarding nan imaginable marketplace opportunity for AtriCure's franchises and maturation initiatives, including nan take of Hybrid AF therapy and early merchandise approvals, clearances, reimbursement and objective proceedings outcomes. AtriCure's results whitethorn disagree materially from those projected. AtriCure undertakes nary responsibility to publically update immoderate forward-looking statements.

Additionally, we mention to non-GAAP financial measures, specifically gross reported connected a changeless rate basis, adjusted EBITDA and adjusted nonaccomplishment per share. Reconciliation of these non-GAAP financial measures pinch nan most straight comparable GAAP measures is included successful our property release, which is disposable connected our website.

And pinch that, I would for illustration to move nan telephone complete to Mike Carrel, President and Chief Executive Officer. Mike?

Michael Carrel

Great. Thanks and bully afternoon, and convey you for joining america today. 2022 was an outstanding twelvemonth for AtriCure. We executed our scheme to accelerate revenue, delivering 20%-plus maturation arsenic we accrued take crossed our portfolio of solutions for nan curen of atrial fibrillation, appendage guidance and postoperative symptom management. We besides drove leverage arsenic a consequence of our beardown topline capacity and nan expanding standard of our platform, while making strategical investments to thrust early growth. I americium incredibly proud of our squad whose difficult activity underscores our capacity and whose committedness to our ngo of improving diligent lives led to an effect of complete 100,000 patients astir nan globe successful 2022 alone.

We ended nan twelvemonth pinch different beardown quarter, achieving $88 cardinal successful revenue, reflecting 20% year-over-year and 6% sequential growth. Our 4th fourth capacity erstwhile again demonstrated nan extent of galore caller catalysts crossed our markets, led by singular take of nan EnCompass Clamp, continued description of our symptom guidance franchise, and enduring spot crossed nan AtriClip platform.

As we advancement into 2023, we are reaffirming our committedness to gross maturation supra historical rates arsenic shown done our guidance of $380 cardinal to $387 cardinal successful afloat twelvemonth revenue. We are besides reaffirming our anticipation to execute breakeven adjusted EBITDA successful 2023 pinch improvements annually thereafter arsenic we build sustained profitability of our business.

I will now move to a much elaborate reappraisal of our business successful nan 4th fourth and afloat twelvemonth 2022. Beginning pinch our unfastened ablation franchise. Our 2022 capacity highlighted nan powerfulness of invention astatine AtriCure pinch nan commercialized motorboat of nan EnCompass Clamp successful nan U.S. driving an acceleration successful revenue. The EnCompass Clamp leverages nan proven exertion of our Synergy Ablation System to supply a simpler and faster attack to ablation successful unfastened bosom procedures.

Momentum from nan motorboat built passim nan twelvemonth arsenic we quickly expanded to caller and existing physicians. Overall, EnCompass contributed astir 20% of unfastened ablation gross successful nan U.S. during 2022, reflecting tailwinds from caller take and further gross per process upon conversion to nan EnCompass Clamp.

Feedback from our customers has been exceptional, and we are excited for nan continued effect of this exertion successful 2023 and beyond. Globally, our unfastened ablation franchise saw 18% maturation successful 2022 arsenic process volumes astir nan world stabilized and we precocious diligent treatment. While this portion of our business has been a dependable driver of maturation for much than a decade, nan marketplace remains vastly underpenetrated and our opportunity is significant. We are assured successful our expertise to further penetrate nan cardiac room marketplace for galore years to come.

Innovation is besides cardinal to our occurrence successful appendage management. We first entered nan LAA marketplace pinch clearance of nan AtriClip strategy successful 2010. Today, pinch aggregate enhancements to our exertion and unrivaled diligent outcomes, AtriClip strategy products are nan astir wide utilized LAA guidance devices worldwide pinch much than 400,000 sold to date. We are pleased pinch nan accordant spot of our AtriClip franchise, realizing 20% maturation worldwide successful 2022 and continued to beforehand our exertion focusing connected little invasive and easier to usage devices.

In 2022, we initiated caller activities to grow nan use of appendage guidance pinch AtriClip done our LeAAPS objective trial. We received FDA support past April to statesman this landmark objective trial, 1 of nan largest cardiac instrumentality tests successful history pinch complete 6,500 patients.

The LeAAPS proceedings will study nan prophylactic usage of AtriClip devices successful cardiac room patients who do not person Afib preoperatively, which represents complete two-thirds of nan 1 cardinal cardiac room patients worldwide. The superior endpoint is simply a demonstrated simplification successful ischemic changeable and systemic arterial embolism, laying nan groundwork for a caller frontier successful changeable prevention.

We precocious announced nan enrollment of nan first diligent successful nan proceedings and are now focused connected a awesome description of some proceedings sites and diligent enrollment successful 2023. The LeAAPS proceedings will return galore years to complete. However, we expect consciousness for appendage guidance successful each cardiac procedures to summation successful nan interim. Further, we judge this proceedings will supply a meaningful hold of our addressable marketplace complete nan long-term.

Turning now to our Hybrid AF therapy, wherever we made advancement complete nan people of 2022, expanding our number of accounts by much than 50% since nan first approval. We are now ramping take successful 14 of nan 25 apical cardiac centers successful nan United States and liking successful processing hybrid Afib therapy programs remains high. We are encouraged by nan feedback from clinicians and nan affirmative effect of this process for patients pinch longstanding persistent atrial fibrillation.

Despite nan advancement we person made successful marketplace development, sticky and acceleration take is slower than we anticipated. Cultivating a therapy that requires important coordination of resources has presented challenges, peculiarly successful an situation wherever staffing constraints are impacting infirmary systems astir nan world. But these challenges are not insurmountable, and we proceed to judge that Hybrid AF therapy will present accelerated maturation successful nan semipermanent arsenic a differentiated solution for millions of patients.

We person spent important clip moving straight pinch surgeons and EPs to understand nan nuances pinch logistics required for lawsuit maturation and to standard those takeaways, fostering deeper business betwixt attraction teams on pinch strategies to instrumentality greater efficiencies crossed sites. We will proceed to attraction connected providing broad support for nan galore programs we person successful nan early stages of take and expect 2023 to build nan instauration for early growth.

Finally, our symptom guidance franchise. Cryo Nerve Block continues to beryllium an outstanding contributor to our business, delivering 77% maturation worldwide successful 2022. We dramatically enlarged our scope successful nan U.S. pinch astir 600 sites purchasing successful 2022 and saw early traction arsenic we launched Cryo Nerve Block therapy successful Europe and Australia. Most importantly, we person helped complete 16,000 patients execute impermanent symptom alleviation aft thoracic surgery.

Like our different markets, a important opportunity remains successful beforehand of us. We proceed to grow our symptom guidance business pinch nan summation of commercialized resources, enhanced technology, economical studies and objective information and stay focused connected processing Cryo Nerve Block arsenic a portion of nan standard-of-care for guidance of postoperative pain. As we person indicated successful nan past, Cryo Nerve Block besides shows committedness beyond thoracic surgery. We are actively investigating applications successful sternotomy pinch our existing cryoSPHERE device, and we look guardant to updating you connected our early progress.

In summary, I would for illustration to reiterate that 2022 was an outstanding twelvemonth for AtriCure. Our results show that our maturation catalysts are diverse, and our products connection differentiated and proven solutions successful markets pinch important unmet needs. As we look guardant into 2023, we are cultivating some adjacent and caller markets by building upon our exertion and leveraging nan unsocial expert relationships we person developed.

My earlier comments touched connected nan ground-breaking objective trial, LeAAPS, which is intended to pass and amended specify objective believe and curen guidelines for changeable prevention successful patients undergoing planned cardiac room pinch an elevated consequence for stroke. This trial, if successful, unlocks nan full cardiac room marketplace to AtriCure, which is good complete $2 cardinal globally. We spot important opportunity to leverage nan spot of our relationships successful cardiac room and nan AtriClip level for amended semipermanent diligent outcomes.

I besides mentioned description of our symptom guidance business into sternotomy procedures, but we are elevating nan usage of our existing cryoSPHERE instrumentality to heighten existent solutions and supply impermanent symptom relief. The earthy synergy betwixt our symptom guidance and cardiac room business makes this an breathtaking opportunity on pinch nan imaginable to much than double our existing marketplace for symptom management.

Additionally, successful 2022, we announced that nan first diligent was treated successful nan HEAL-IST objective trial. HEAL-IST is studying nan curen of patients pinch inappropriate sinus tachycardia, aliases IST, utilizing hybrid ablation procedures. IST is characterized by an elevated bosom complaint and distressing symptoms of bosom palpitations contributing to nan inability to slumber aliases exercise. It affects millions of group astir nan world and presently location are nary effective aliases approved treatments for this debilitating condition.

We are focused connected driving further sites and diligent enrollment successful 2023, on pinch nan improvement of a dedicated instrumentality for nan therapy successful parallel to nan objective trial. We stay excited for nan imaginable of this caller therapy to unlock different important marketplace opportunity and supply a solution to nan galore patients pinch IST.

Treating patients successful unaddressed and underpenetrated markets is astatine nan halfway of AtriCure and we person proven our expertise to recognize meaningful maturation from our diversified platform. We will proceed to innovate and investigation solutions to lick these unmet needs and judge our persistence will output semipermanent maturation successful summation to benefiting patients each day.

I will now move nan telephone complete to Angie Wirick, our Chief Financial Officer, for much specifications regarding our financial performance.

Angela Wirick

Thanks Mike. Our 4th fourth 2022 worldwide gross of $88 cardinal accrued 20.2% connected a reported ground and 21.5% connected a changeless rate ground erstwhile compared to nan 4th fourth of 2021. U.S. gross was $73.9 million, a 20.7% summation from nan 4th fourth of 2021, reflecting patient activity crossed merchandise lines, enhanced by nan continued spot from our motorboat of nan EnCompass Clamp, symptom guidance and appendage guidance products.

International gross totaled $14.1 million, up 17.8% connected a reported ground and up 25.4% connected a changeless rate ground arsenic compared to nan 4th fourth of 2021. Activity successful cardinal world markets highlighted by robust maturation successful appendage guidance products drove a beardown 4th quarter. Sequentially, worldwide income grew $4.8 cardinal aliases 5.7% complete Q3 2022.

Gross separator for nan 4th fourth 2022 was 74%, down 110 ground points from nan 4th fourth of 2021. The diminution was driven chiefly by income of little separator products and proviso concatenation and inflationary pressures.

Turning to nan bottommost line. We are very pleased pinch our 4th fourth result. We had affirmative adjusted EBITDA of $6 cardinal for nan 4th fourth of 2022 compared to antagonistic adjusted EBITDA of $2.1 cardinal for nan 4th fourth 2021. The betterment successful adjusted EBITDA is simply a consequence of beardown topline maturation and moderated operating costs pinch notable leverage successful our trading and administrative spend, partially offset by unit to gross margin. Our nonaccomplishment per stock and adjusted nonaccomplishment per stock was $0.09 for nan 4th fourth 2022 compared to a nonaccomplishment per stock and adjusted nonaccomplishment per stock of $0.30 for nan 4th fourth of 2021.

Now to reappraisal afloat twelvemonth 2022 result. Worldwide gross was $330.4 million, an summation of 20.4% connected a reported ground and 21.8% connected a changeless rate basis. U.S. income accrued 21% to $277.2 million, while world income accrued 17.7% aliases 25.7% connected a changeless rate ground to $53.2 million. The effect from COVID and different macroeconomic situation factors created headwinds early successful 2022, but arsenic nan twelvemonth progressed we saw stabilization successful our markets globally.

The commercialized motorboat of nan EnCompass Clamp drove U.S. unfastened ablation income to $86.1 cardinal aliases 19% maturation complete 2021. As we person noted successful erstwhile calls, we estimate that nan pricing use from EnCompass accounts for astir half of nan yearly maturation pinch nan remaining from continued penetration of nan cardiac room market.

In 2022, our U.S. symptom guidance franchise grew 75.4% to $40 cardinal from expanding activity successful existing accounts on pinch caller relationship adoption. U.S. MIS gross was $38.6 million, reflecting a diminution successful bequest procedures, offset by astir 6% maturation successful EPi-Sense income wherever we continued to laic nan groundwork for accelerated take of Hybrid AF therapy.

Finally, successful 2022 we saw beardown attachment rates arsenic U.S. appendage guidance income reached $112.6 cardinal aliases 19% summation complete 2021, driven mostly by our AtriClip Flex V device. Similar to U.S. trends and activity successful 2022, our world gross maturation was propelled by unfastened ablation, symptom guidance and appendage guidance products.

Gross separator for nan twelvemonth ended astatine 74.4%, a alteration of 60 ground points from 2021. The diminution was chiefly nan effect of inflationary costs and income operation wherever we saw a displacement to little gross separator products. We continued to research measures to trim costs and amended gross margin.

Moving guardant to operating expenses. In 2021, we recorded an accommodation to nan adjacent worth of contingent information and nan impairment of nan IPR&D plus associated pinch nan aMAZE PMA. After removing nan effect of these typical items for comparability, afloat twelvemonth operating expenses were $288.6 cardinal compared to $253.2 million, an summation of 14%. The summation successful operating costs successful 2022 resulted from investments to grow our headcount crossed nan organization, strategical objective and merchandise improvement task spend, arsenic good arsenic impacts from inflationary costs. We are pleased pinch nan leverage successful our operating costs successful 2022 and stay focused connected driving ratio and SG&A while maintaining investments successful R&D.

Full twelvemonth 2022 adjusted EBITDA nonaccomplishment was $2.2 cardinal compared to $8.8 cardinal successful 2021. Our nonaccomplishment per stock was $1.02 successful 2022 compared to net per stock of $1.11 successful 2021. Adjusted nonaccomplishment per stock was $1.02 and $1.16, respectively. We ended 2022 pinch $173 cardinal of rate and investments connected hand, a beardown moving superior position and nan elasticity to money early opportunities and investments.

Now yet turning to our outlook for 2023. Consistent pinch our announcement successful early January, we expect to execute betwixt $380 cardinal and $387 cardinal successful gross for nan year, reflecting maturation of 15% to 17% complete afloat twelvemonth 2022 results. As Mike outlined earlier successful nan call, we person aggregate maturation drivers successful our business globally and expect akin drivers starring our 2023 performance, exceptional publication from symptom guidance and continued beardown activity successful some unfastened ablation and appendage guidance pinch very humble publication from MIS ablation arsenic we fortify nan instauration for semipermanent success.

This past constituent is important to our outlook for 2023. While we attraction connected programme improvement for Hybrid AF therapy, we judge it is prudent to reset short-term maturation expectations for this area of our business. Our semipermanent expectations are unchanged and ultimately, we are assured that our attraction and efforts will lead to accelerated maturation successful MIS ablation successful nan years to come. We besides judge wide seasonality trends aligning pinch those we saw anterior to nan COVID pandemic will pass gross cadence successful 2023 pinch first 4th gross apt to beryllium level to our 4th fourth of 2022.

From a separator perspective, we expect 2023 gross separator to beryllium successful statement pinch our caller results pinch variability caused by geographic and merchandise mix. We proceed to make meaningful investments to support further explanation and marketplace description , enhanced reimbursement and innovative merchandise improvement wrong R&D expenses, maintaining our R&D walk arsenic a percent of 2023 gross astatine astir 18% to 19%.

This level of finance contemplates dense enrollment wrong our objective tests arsenic much sites activate successful 2023 on pinch galore exertion advances crossed our platforms. We are moderating SG&A investments successful 2023 arsenic we proceed to leverage walk and target efficiencies successful standard arsenic we grow.

With beardown gross maturation and cardinal strategical investments successful mind, we expect afloat twelvemonth 2023 adjusted EBITDA to beryllium breakeven. Our finance priorities successful 2023 are clear. We are balancing nan support of our galore maturation catalysts pinch wide preservation of capital. Our attraction successful 2023 is to beforehand objective tests pinch robust tract description and diligent enrollment, heighten our platforms pinch caller exertion while focusing connected improving leverage and profitability. We proceed to support a coagulated equilibrium expanse which enables these investments successful our early growth.

For quarterly cadence, accordant pinch our humanities results, first 4th 2023 will beryllium a heavier adjusted EBITDA nonaccomplishment that is expected to alteration each 4th arsenic nan twelvemonth progresses, and we execute our guidance of breakeven adjusted EBITDA for nan year. Further, rate pain successful nan first 4th is usually heavier driven by nan timing of adaptable compensation payments, stock vesting and different operational needs to commencement nan year.

Our adjusted EBITDA guideline translates to an adjusted nonaccomplishment per stock for 2023 of astir $1.14 to $1.19. We participate 2023 pinch determination to grow our diligent effect and are thoughtfully managing our business for semipermanent success.

At this point, I will move nan telephone backmost to Mike for closing comments.

Michael Carrel

Thank you, Angie. 2022 was a beardown twelvemonth crossed nan institution and successful galore ways, began nan adjacent shape of [indiscernible] arsenic we proceed executing against nan important marketplace opportunities successful beforehand of us, while besides thoughtfully investing to grow our markets and effect to adjacent diligent populations complete time.

We are building upon nan instauration we person created together complete nan past decade by continuing to innovate pinch a semipermanent maturation mindset. The totality of our business coming and successful nan early will guarantee occurrence successful 2023 and complete nan coming decades and we will proceed delivering connected our committedness to gross maturation supra humanities rates.

We are conscionable arsenic excited to showcase nan benefits of our expanding standard and operational readying arsenic we onslaught to cipher a equilibrium betwixt investing for nan early and our profitability.

And pinch that, I will move it complete to questions. Operator?

Question-and-Answer Session


[Operator Instructions]

Our first mobility comes from Robbie Marcus pinch J.P. Morgan. Your statement is open.

Robbie Marcus

Hi. Thanks for taking nan questions. Congrats connected a bully quarter. Maybe to start, nan MIS commentary was caller and a small spot disappointing to perceive successful nan short-term. I was wondering if you could walk a spot much clip connected it. Why has it fallen beneath your expectations for growth? And really agelong do you deliberation it will return to commencement to resume backmost connected way pinch wherever you thought it could be?


Yeah. Really adjacent question. And we consciousness nan aforesaid measurement wide astir nan benignant of MIS business successful position of benignant of wherever we are. Obviously, nan information from -- that came retired from nan CONVERGE proceedings has been exceptional. More and much information continues to travel retired clinically to show that erstwhile you adhd epicardial ablation to nan endocardial ablation, it really benefits a batch more. And endocardial by itself conscionable does not activity connected nan longstanding persistent patients. So, successful nan look of this awesome information that's retired location and continues, why is it taking america a small spot longer to get up and running? I deliberation it's a very adjacent mobility for us. And really, it comes down to immoderate of nan comments that I made, Robbie connected there, which is that nan logistics person proven to beryllium a small spot longer to benignant of get that stickiness going.

There isn't pushback connected whether aliases not this is going to use patients and whether aliases not this is going to beryllium thing that long-term, we're going to person a batch of patients that are going to travel done this funnel. It has much to do pinch really getting room and electrophysiology and their groups moving very intimately together and getting that diligent travel successful and having that confidence. And past that's conscionable benignant of, I'd say, a world benignant of point that we're benignant of facing comparative to that.

On apical of that, I deliberation we underestimated nan effect of coming retired of COVID and nan staffing effect of erstwhile you're trying to coordinate 2 different groups for illustration that, getting group to benignant of get their attraction and get nan staffing to activity wherever you get their attraction upfront because we had a batch of activity moreover during COVID to get sites up and moving and training, but past to get them to do nan difficult activity of really moving done nan logistics and moving done really we're going to move that diligent done nan process, that's nan portion that's taken america longer than expected. I do consciousness for illustration we've sewage a really bully grip connected it now, but it's going to return america a small spot longer. And I deliberation ramp-up connected each individual tract is taking america a small spot longer connected that side, which is why we've group guidance this twelvemonth supra our humanities numbers astatine that 15% to 17% and consciousness really bully astir that, and that includes a anemic hybrid number.

And so, obviously, we would emotion to spot that travel backmost faster. I can't springiness you an nonstop 4th date, but hopefully, it does and that we person immoderate upside to those numbers astatine immoderate constituent and further upside that you mightiness get comparative to nan different really accelerated increasing parts of our business. But moreover pinch a anemic hybrid facet of it successful 2023 from a gross side, we're going to make a ton of advancement successful these sites, and I consciousness for illustration it really is going to accelerate our maturation agelong word connected that side.

Robbie Marcus

Great. I admit that. And possibly to dovetail pinch that now pinch little MIS expectations. Maybe you could speak to nan different business statement items and really we should beryllium reasoning astir reallocating that gross wrong nan guidance scope done nan year? Appreciate it. Thanks.


Yeah. So -- yeah, I'll spell done each individual franchise. So erstwhile you deliberation astir nan unfastened ablation franchise, I deliberation nan opening portion of this year, we're going to proceed to spot really bully spot disconnected nan unfastened arsenic we benignant of thigh that 1 twelvemonth from rolling retired EnCompass. We are seeing awesome traction successful that portion of our business. It has exceeded each expectations that we had internally. We consciousness really bully astir adoption. We're redeeming clip and we're making it a batch easier for surgeons that different were not performing cardiac room ablations connected their patients and those patients getting benefit. And so, it's benignant of met that people and beyond, and we deliberation that there's a batch of room for growth, some successful 2023 and beyond connected that peculiar side. So that's going to beryllium decidedly 1 awesome maturation driver.

Number 2 is, Cryo Nerve Block continues to beryllium a very robust maturation driver for us. We're going to proceed to adhd a batch of caller group into nan business successful that portion of our business because we request thief connected lawsuit coverage. It's really expanding. As I mentioned, we're successful complete 600 sites coming and we -- and we're conscionable opening to penetrate that market, not conscionable successful position of number of sites, but to physicians and each nan different procedures. So, we deliberation that that's going to beryllium different robust maturation twelvemonth for america overall. Maybe not nan aforesaid percent growth, but we do deliberation that it's going to beryllium a really bully beardown maturation twelvemonth for us.

We're not including really overmuch into our guidance comparative to sternotomy. As I mentioned connected nan call, we're really excited astir sternotomy, but we're really doing -- we're laying nan groundwork this twelvemonth truthful that adjacent twelvemonth and beyond, it's going to beryllium sticky gross for a really agelong play of time. And we cognize that marketplace incredibly good because arsenic I mentioned successful my script, we person relationships pinch beautiful overmuch each azygous cardiac surgeon successful nan country. So, it's a really -- it marries very good pinch our cardiac room squad besides and they're really moving very collaboratively successful nan field. And past Clip continues to beryllium a very beardown driver for america of benignant of wide maturation for nan business and consciousness for illustration that's going to beryllium a coagulated performer for us. So benignant of successful that order, I'd say, are immoderate of nan large maturation drivers for america this year.

And past internationally, we've decidedly seen, arsenic you benignant of saw this quarter, we're starting to spot that go a much meaningful portion of our business, and we consciousness for illustration that's going to proceed into 2023. We put caller activity location a mates of years agone benignant of correct earlier COVID, and we're starting to spot nan existent tangible benefits of that some successful Europe and successful Asia.

Robbie Marcus

Great. Thanks for taking nan questions.

Michael Carrel



Thank you. One infinitesimal for adjacent question. And our adjacent mobility comes from Matt O'Brien pinch Piper Sandler. Your statement is open.

Unidentified Analyst

This is Sam [ph] connected for Matt. Thanks for taking our question. I guess, starting off, could you springiness america a small spot much accusation connected symptom management? Obviously, it was a bully maturation driver past year, coming successful astir 75%. What could we expect moving forward? And really could this play retired passim nan year?

Michael Carrel

Well, we expect decidedly continued maturation successful that market. We are astatine astir 60 group aliases truthful now. If you look backmost astir 4 years ago, we were sitting -- that was -- we were conscionable benignant of getting that therapy started. So, we've benignant of gone from 4 group to 60 group complete nan past 4 years. We're going to adhd much group to that group because lawsuit volumes proceed to turn each week arsenic we unfastened up caller accounts and get deeper and deeper into those accounts.

As I mentioned, we're not going to spot nan aforesaid percent growth. I deliberation that nan numbers are conscionable getting larger from that standpoint, but we do expect that we'll still spot robust maturation wrong each of those individual accounts arsenic we standard that business. I don't cognize if that's what you're looking for. If you're looking for much item than that, I'm not judge wherever to spell pinch it.

Unidentified Analyst

That's good. I conjecture 1 much from america connected MIS. And I deliberation a batch of it was covered previously, but would you beryllium capable to conscionable springiness america a small spot much accusation connected what CONVERGE did this past quarter? And erstwhile do you -- could you estimate erstwhile we could spot nan benignant of inflection constituent successful nan future?

Angela Wirick

Yeah. Sam, I'll commencement pinch what CONVERGE did successful nan 4th quarter. We were down somewhat year-over-year, but if you recall, nan 4th fourth of 2021 was 1 of our strongest connected record. So, we're down sequentially and past down year-over-year successful nan 4th quarter. We saw bully activity wrong nan wide number of accounts, but I deliberation nan situation that we're seeing wrong accounts of -- being capable to do procedures many times connected a benignant of a wide scale, meaning reaching a bigger number of patients passim nan 4th and nan twelvemonth has decidedly been a challenge, and that's nan logistics and nan workflow wrong programme improvement that Mike referred to earlier.

Michael Carrel

And arsenic we look astatine inflection points, we're not -- I'm not fresh to springiness you a date. What I tin show you is this - is that from nan feedback we've gotten from some electrophysiologists, cardiologists and surgeons, they want to build programs. They want to put successful nan clip and effort, but it does return much clip than we had expected. So, I can't foretell nan nonstop date.

What I tin stock pinch you is that I perfectly judge this is going to beryllium a maturation driver for america from now to nan extremity of nan decade. This twelvemonth is going to beryllium a small spot tight arsenic we get these sites up and running, but location are millions of patients that person longstanding persistent atrial fibrillation. And study aft study, insubstantial aft insubstantial shows that if you adhd epicardial ablation to endocardial ablation, these patients do astatine slightest doubly arsenic good and are overmuch much durable from -- successful position of nan liaison group than conscionable nan endocardial by itself. So, nan operation is really powerful. And much and much information is coming retired to beryllium that. And so, from our standpoint, we really deliberation this is going to beryllium sticky long-term, moreover though this twelvemonth is going to beryllium a building twelvemonth for us.

Unidentified Analyst

Great. Thank you truthful much.


Thank you. One infinitesimal for our adjacent question. And our adjacent mobility comes from Bill Plovanic pinch Canaccord. Your statement is open.

Bill Plovanic

Great. Thanks. Good evening. Can you perceive maine okay?

Michael Carrel

Yeah. Perfect.

Bill Plovanic

Great. Thanks. So, conscionable to piggyback connected nan MIS question, nan commentary of a foundational year, you're building it. I deliberation expectations person been astir apt successful nan 20% aliases 30% to 40% year-over-year maturation rate. If you're building it, does that mean it's a level year? Does that mean it's up 10%, 20%? How do we deliberation astir nan maturation successful nan twelvemonth you're building? And what specifically are you focused connected pinch nan accounts? Because I deliberation 1 of nan different words that keeps popping up is stickiness. So, it seems for illustration you're getting accounts started and past they mightiness way off. So, conscionable benignant of funny what that anticipation is and past really you get to it?

Michael Carrel

Yeah. Really adjacent question. So, there's nan -- erstwhile we build our guidance for nan year, and I deliberation that's nan astir important point to really deliberation astir is that we build -- that 15% to 17%, we're assuming that our hybrid business is good beneath that. That's benignant of nan measurement to deliberation astir it, and that nan different businesses are driving nan maturation for nan business. And so, our dream is evidently that there's immoderate upside to that astatine immoderate constituent and that these sites get sticky and they benignant of really statesman to thrust that logistics and get nan diligent travel done and get those lawsuit volumes to beryllium benignant of much accordant crossed nan board.

But successful absence of having nan consistency yet, I'm not fresh to benignant of perpetrate to being adjacent that firm maturation complaint astatine this point. So, it's going to beryllium beneath -- importantly beneath that firm maturation complaint successful position of really we built our guidance up, and past obviously, that tells you that nan Cryo Nerve Block and nan Clip are apt supra that and that nan unfastened ablation is going to beryllium having a coagulated year. We person historically said connected nan unfastened ablation broadside that you're sitting successful nan tune of benignant of nan precocious azygous digits. Obviously, we've exceeded that rather a spot this year. And from an wide standpoint, it's going to beryllium supra that overall, but possibly not rather arsenic growthy arsenic you'd spot connected nan Cryo Nerve Block side.

Bill Plovanic

Okay. And past a follow-up connected expenses. Your SG&A, I mean that's a beautiful absorbing to spot it driblet nominally from Q2 and Q3 successful nan highest gross quarter. And I'm conscionable funny if there's immoderate one-time use that you received successful nan 4th quarter? Or is this much of nan baseline we should beryllium reasoning of for nan future? And those are my questions. Thank you.

Angela Wirick

Bill, location was 1 one-time item, 1 use of a postulation of a receivable that had been reserved respective years agone to nan tune of roughly, let's say, $1 cardinal that benefited nan quarter. We besides saw, successful immoderate cases, amended benignant of leverage of our walk successful immoderate of nan areas that person trim against america connected nan disbursal side. Travel is 1 that comes to mind, conscionable a small spot favorable successful nan 4th quarter.

I deliberation arsenic you look backmost historically, nan shape connected SG&A walk would opportunity look astatine a higher percent to commencement nan twelvemonth and past mean arsenic nan twelvemonth goes. And portion of that is, we consciousness for illustration we're entering nan twelvemonth pinch really bully investments benignant of globally wrong nan income team, but we'll beryllium selective astir adding -- Mike touched connected a mates of areas wrong our Cryo Nerve Block squad and past our world teams will proceed to adhd and past a small spot much connected nan lawsuit support wrong cardiac arsenic well. We consciousness for illustration we're entering nan twelvemonth pinch a really bully and coagulated squad that tin thrust robust maturation for nan year.

Bill Plovanic

Great. Thank you.


Thank you. One infinitesimal for our adjacent question. And our adjacent mobility comes from Marie Thibault pinch BTIG. Your statement is open.

Marie Thibault

Hi, Mike and Angie. Thanks for taking nan questions this evening. I wanted to inquire 1 present connected unfastened ablation. I want to understand really acold that maturation tin beryllium sustained. I cognize successful nan past, you've fixed america immoderate specifications for illustration it making up 20% of gross successful 2022. And I cognize that value uplift arsenic good arsenic measurement person some contributed to that growth. So, I wonderment if you tin thief america understand wherever we are successful position of scope pinch that device. How galore of your accounts, if you've gone into that pinch each of your accounts? And really overmuch longer benignant of immoderate of this value uplift tin continue?

Michael Carrel

Yeah. I'll start, and past I'll fto Angie benignant of travel up connected immoderate of nan pricing questions. When we deliberation astir this market, I deliberation we're successful nan really early beginnings of it. When you deliberation astir nan cardiac room marketplace and nan Afib curen there, we're still, arsenic an industry, only treating 28% of those patients successful nan champion numbers. More and much information is coming retired to opportunity that it mightiness moreover beryllium little than 28% treatment. Yet it's still a level 1 line crossed each nan societies.

And 1 of nan large pieces of feedback that we received was, really do you amended that? Well, nan number 1 point was you needed to make it easier to execute for surgeons that don't usually get down nan heart. And so, EnCompass, which has been successful improvement for complete 4 years and is now connected nan market, was really targeted towards that assemblage to benignant of do a very robust ablation for those patients and make it overmuch easier for them to do it and get down nan bosom by going done nan oblique and transverse sinus and past harvester that pinch making it a small spot quicker, and we've seen each of those benefits. And so, we deliberation that our extremity is to return that 28%, and hopefully, we're going to get to complete 80% immoderate time of patients that are undergoing cardiac room pinch Afib are getting treated. And so, I deliberation we've sewage a immense marketplace successful beforehand of us, important opportunity that sits there.

And really that applies to our growth, I don't want to -- we're not getting excessively acold up of ourselves erstwhile we put our guidance astatine 15% to 17% conscionable because we've only had successful nan marketplace for six to 9 months really aggressively. And so, we benignant of wanted to spot really that shakes retired this twelvemonth earlier we tin benignant of springiness possibly much semipermanent what it could look for illustration connected an annualized basis. But we are emotion very assured successful nan consciousness that it's moving really well. Surgeons that were not utilizing immoderate merchandise to do immoderate ablation are now doing immoderate ablation helping these patients out, different surgeons are uncovering it easier to usage than immoderate of nan different products and devices that we had. So, we're benignant of capable to grow successful aggregate different ways, and we're learning arsenic we're rolling it out. So, it's been a awesome product, received very well, and I deliberation that we've sewage many, galore years up of america of beardown maturation pinch that. And hopefully, we'll get ourselves to 80% and thief these patients retired for a agelong time.

Angela Wirick

Yeah. Marie, successful position of nan reach, we're successful conscionable complete one-third of accounts arsenic we -- accounts successful nan U.S. arsenic we ended nan twelvemonth successful a beautiful precocious condemnation complaint erstwhile you deliberation astir nan number of accounts that started early connected successful nan motorboat that person continued to bid passim nan year. And past we'll thigh nan motorboat use really successful nan 2nd half of 2023 erstwhile EnCompass is simply a much meaningful percent of nan unfastened ablation revenue.

Marie Thibault

Okay. That's really helpful, some of you. Thank you. I conjecture I'll inquire my follow-up present connected nan cryo description . You mentioned you're doing immoderate exploration successful sternotomy. What does that look like? And erstwhile mightiness we commencement to spot much meaningful gross from nan sternotomy opportunity? And tin you besides punctual america connected nan sizing of that market? Thanks a lot.

Michael Carrel

So, I'll commencement pinch nan sizing. So, we've been looking astatine nan sternotomy marketplace for respective years, and we've been studying really overmuch symptom is there. What is nan quality betwixt nan sternotomy symptom versus nan thoracic pain? And what we're -- we sewage feedback from a batch of our customers that they judge there's a tremendous magnitude of use to adhd this to their benignant of CABG procedures aliases their sternotomy procedures overall. There's astir 255,000 CABG procedures successful nan United States alone. To conscionable springiness you a comparative comparison, there's astir 140,000 to 150,000 thoracic procedures. So, it increases -- it much than doubles nan size of nan wide marketplace opportunity for us, and truthful that's evidently vast. And we person relationships pinch group performing that surgery.

I mean, we person relationships successful almost each 1 of those accounts successful nan United States and globally. And so, we've sewage very bully expertise to penetrate and person entree into that market. The measurement that we're rolling it retired is, first, complete nan past twelvemonth aliases so, we've really studied really does it work, do nan free spins work, wherever should we ablate? Like clinically making judge that earlier we rotation it retired to everybody that we understood that it could beryllium safe and effective and really use patients first and foremost. So, our squad has really done heavy dives pinch KOLs astir nan country, tested retired and learned from that.

Next measurement is nan shape that we're successful correct now, which is, we're going to rotation it retired to a prime number of sites truthful that we tin study from those sites astir nan champion exertion for it. It is different than thoracic successful position of it's a different portion of nan nerve. So, what do we study from that, really agelong does nan use past for that diligent successful position of helping them get retired of nan infirmary and amended their wide symptom scores and things specified arsenic that. So, those are things we're going to really study successful these first really mini number of accounts complete nan people of nan adjacent six months aliases so. Based connected that feedback, nan backmost half of nan twelvemonth will statesman to rotation it retired a small much aggressively and past really spell into a large motorboat early portion of 2024.

Marie Thibault

All right. Very helpful. Thank you.


Thank you. One infinitesimal for our adjacent question. Our adjacent mobility comes from Mike Matson pinch Needham. Your statement is open.

Mike Matson

Yeah. Thanks for taking my questions. I wanted to inquire 1 connected nan gross margin. So, Angie, I deliberation you said you expect it to beryllium level successful 2023, but things for illustration -- there's possibly still imaginable for immoderate ostentation and immoderate of nan operation issues that you had successful 2022 could transportation into 2023.

Angela Wirick

That's right, Mike. As we exited 2022, I deliberation nan past 2 quarters were deed a spot much by costs increases benignant of crossed our proviso chain. And arsenic EnCompass and cryoSPHERE became a bigger percent of our wide revenue, we saw immoderate really bully activity successful our world markets that does travel pinch a spot of a deed to nan gross margin. So, our expectation, arsenic we deliberation astir 2023, beautiful adjacent to wherever we've been benignant of much precocious successful nan 74%, 75% range, but pinch upside arsenic nan squad continues to really measure ways to thin production. EnCompass, for example, will beryllium successful our first afloat twelvemonth of accumulation present coming up successful nan outpouring and person targeted areas really to trim costs and thin retired nan costs wrong some that and past our cryoSPHERE probe.

Mike Matson

Okay. But conscionable to beryllium clear, you deliberation -- you still deliberation it could beryllium level moreover pinch immoderate of those issues possibly remaining successful place?

Angela Wirick

Yes. Correct.

Mike Matson

Okay. And then, I want to inquire 1 astir nan world business. Good to spot nan spot there. Maybe you could talk about, are location immoderate much opportunities to participate caller markets and conscionable wanted to return a somesthesia connected China and benignant of what you're seeing there? And do you spot immoderate consequence of nan worth based purchasing effect successful there?

Michael Carrel

So, our world business, arsenic I concisely mentioned, is really -- we put caller activity successful spot respective years agone and that really had a affirmative effect connected conscionable nan wide acumen and really we're going to marketplace passim some Europe and Asia.

As it relates to Europe, I don't cognize if there's immoderate caller markets we tin spell on. We're beautiful overmuch successful each marketplace successful Europe whether nonstop aliases connected a supplier basis. We've sewage very bully maturation prospects there, but nan biggest portion of maturation imaginable is that we're really astatine nan early, early stages connected nan hybrid therapies and connected Cryo Nerve Block conscionable started there. And so, we've seen really beardown -- coagulated maturation connected nan Clip franchises arsenic well. And so, I'd opportunity that there's opportunity successful each that rather frankly passim Europe.

The penetration complaint connected nan unfastened broadside of our business is moreover little successful Europe than it is successful nan United States. So, we deliberation that there's moreover much opportunity location long-term. We don't person EnCompass location yet. We're moving connected that. We deliberation that's respective years out, but location is much consciousness that they request to beryllium treating. And I deliberation there's a batch of bully maturation and now that we've sewage really beardown and coagulated activity there, I deliberation we tin make immoderate really bully inroads there.

In nan Asian markets, we saw awesome maturation successful Australia this year. That was 1 of our large increasing portions of our market. Japan continues to beryllium a coagulated contributor. It's our number 2 state successful nan world pinch galore of our products successful line. China has been -- amazingly has really been a reasonably benignant of solid. It's not for illustration decreasing, but it's besides not increasing. So, it's benignant of been a coagulated marketplace for us. We've only sewage our RF products location today. So, we don't person an expansive portfolio. We're moving connected that, but we still deliberation it's astir apt respective years up earlier we commencement to spot immoderate maturation coming retired of -- backmost retired of China. But astatine slightest it's successful a very coagulated place, which 3 years ago, it was not arsenic coagulated and a small spot much volatile. And today, I deliberation we're successful a very coagulated spot and person really beardown marketplace stock and a beardown beingness pinch nan supplier that we person there.

Mike Matson

Okay. Great. Thank you.


Thank you. One infinitesimal for our adjacent question. And our adjacent mobility comes from Suraj Kalia pinch Oppenheimer. Your statement is open.

Suraj Kalia

Mike, Angie, tin you perceive maine each right?

Michael Carrel

Yeah. Hey, Suraj.

Suraj Kalia

Perfect. Hey, Mike, truthful conscionable picking up connected immoderate earlier questions. So, nan stronger outlook for unfastened and nan lukewarm outlook for hybrid successful your prepared remarks somewhat counterintuitive. And I was wondering if you could conscionable juxtapose -- you and I person talked astir this offline also, but I would emotion for you to juxtapose really you spot immoderate imaginable denotation creep from PFA? And if your caller outlook, if CAPLA besides has thing to do pinch nan measurement you'll spot unfastened versus hybrid moving forward?

Michael Carrel

Yeah. So, PFA and CAPLA person perfectly zero effect connected our some short-term business. And successful fact, I really deliberation they're going to beryllium long-term, very beneficial to us. The information that came retired from CAPLA, arsenic I cognize you've looked into, fundamentally says that nan endocardial catheter by itself connected longstanding persistent patients does not person semipermanent durable effect, and nan numbers were almost identical to what we saw successful nan CONVERGE proceedings successful that limb of nan trial.

In nan CONVERGE limb of nan trial, we saw a important betterment successful durability pinch that. So, we deliberation CAPLA is incredibly supportive that for these astir difficult to dainty patients, for these semipermanent Afib patients that CONVERGE and each nan papers that person travel retired afterwards that CAPLA further supports that erstwhile you adhd epicardial ablation to endocardial ablation, you get a amended semipermanent result. And endo by itself is not effective and that were complementary to it. So, I really deliberation that, that's really made maine moreover much bullish, not needfully this year, but really much arsenic we look long-term. And arsenic we get these logistics worked out. This twelvemonth is each astir logistics and workflow, not astir information because nan information supports that we should beryllium increasing moreover faster. And I judge that, that information is going to beryllium successful effect arsenic we look astatine 2024, 2025 and 2026, erstwhile we get done each of nan workflow that's retired there.

As it relates to PFA, again, I deliberation it's complementary. I deliberation PFA is simply a awesome and really absorbing technology. It is retired location to amended velocity and amended information and beryllium adjacent to nan aforesaid effectiveness arsenic RF and cryo. And almost each of nan first devices are being tested and worked connected and looked astatine for mostly PVI, and immoderate of them are opening to, obviously, arsenic you know, look astatine immoderate of nan posterior wall. I deliberation they're going to tally into nan aforesaid useful results that they're going to spot pinch cryo and RF erstwhile you look astatine it connected -- erstwhile you look astatine nan posterior wall. A study conscionable came retired from Europe called nan MANIFEST study, and erstwhile you look astatine that data, it's very clear that successful paroxysmal and moreover early persistent patients, nan PFA useful reasonably good astatine 1 year. Actually, very accordant connected nan results comparative to RF and cryo. And so, past physicians -- and that has thing to do pinch our business. That's conscionable -- I mean that's not nan -- we're not successful those markets per se today, but what it does show is that it's reasonably adjacent connected efficacious, and past group are going to person to make decisions upon nan velocity and nan information facet of it arsenic much and much information comes out. But if you really look successful nan specifications of that study, it shows that astatine 1 year, there's a important drop-off successful nan longstanding persistent diligent population, and those patients sewage a posterior wall ablation.

And so, I deliberation -- and those numbers again are very accordant pinch what you spot successful each nan studies that we did pinch CONVERGE and different studies that person been retired location for years astir trying to do conscionable endocardial ablation. So, again, that to maine makes it that our epicardial ablation is complementary to PFA to cryo to RF. And it really, rather frankly, emboldens maine for our semipermanent maturation prospects, again, needing to activity done immoderate of nan logistics successful nan short-term.

Suraj Kalia

Fair enough. One different question, Mike. So Mike, possibly I'm jumping nan weapon present connected LeAAPS and location is accusation you are not successful a position to share, I tin admit that. So, 1 of nan endpoints you mentioned, Mike, was, if I retrieve correctly, systemic embolism. And conscionable fixed nan idiopathic quality of thrombus statement successful these patients, Mike. How do you reliably hypothesize nan arena rates? Any further colour location would beryllium great. I mean you tin occlude nan LAA. I'm funny really do you forestall aliases relationship for everything other and systemically, which mightiness person thing to do pinch what you -- really you guys intervene. Thank you for taking my questins.

Michael Carrel

Yeah. No, it's a really adjacent and awesome mobility and 1 that we studied rather a spot successful nan creation of nan trial. When you look astatine -- erstwhile you get a sick atrium, whether it's caused by atrial fibrillation aliases caused by immoderate different root for illustration bosom failure, that atrium is not operating correctly, which allows for nan humor to statesman to excavation and nan earthy spot for that to excavation is successful nan appendage. And so, not only person we hypothesized, but erstwhile you looked astatine nan ATLAS study aliases you look astatine that we did pinch 562 patients, and albeit it was only 1 twelvemonth outlook and it did not person a beardown -- it wasn't powered for nan afloat portion of this.

You harvester that pinch different information that's retired location astir benignant of bosom nonaccomplishment patients and their changeable rates comparative to aft cardiac surgery, we've been capable to benignant of travel to a really bully complaint to fundamentally heighten that and look astatine nan diligent organization that is astatine a precocious consequence of having fundamentally a anemic atrium, whether caused by atrial fibrillation because they're apt to really get Afib aliases caused by bosom failure. And mechanistically, we judge that, that is going to lead to a higher changeable complaint successful patients erstwhile they don't person that appendage because wherever does nan humor pool? The humor pools and -- into nan appendage, and we do cognize that. And we do cognize that nan appendage is originated for that because of nan trabeculation of nan appendage and rather frankly, conscionable based connected nan measurement that it is situated astir nan heart. So, we consciousness very assured that this is going to beryllium a affirmative result. It's evidently a agelong proceedings and tests person to beryllium proven complete a agelong play of time. So, there's nary guarantee connected that front, but it's a operation of a batch of that information that I conscionable described benignant of put together and complete nan people of researching complete nan past 4 years that we consciousness very assured that this is going to beryllium a successful trial.

Suraj Kalia

Thank you.


Thank you. One infinitesimal please. And our last mobility is from Rick Wise pinch Stifel. Your statement is open.

Rick Wise

Good evening. Hi, Mike. Hi, Angie. Just 2 speedy ones for me. One, conscionable connected nan macro picture. The only facet I deliberation of your comments if I heard correctly, Mike, wherever you talked astir immoderate of nan macro headwinds we're each acquainted with, benignant of really mentioned overmuch was staffing constraints comparative to CONVERGE. I conscionable was curious, we've heard from a batch of companies truthful acold astatine nan commencement of nan year. Do you consciousness for illustration macro pressures for illustration staffing are getting amended aliases getting worse aliases stable? How are you reasoning about?

And nan aforesaid thing, possibly it's much for Angie, connected nan benignant of costs ostentation side. You're getting aft immoderate of those arsenic you said, Angie, but are things getting worse aliases slowing down? Just arsenic we commencement nan year, I wanted to framework that.

Michael Carrel

Yeah. As it relates to staffing, I'd opportunity that it's not getting worse aliases better. I'd opportunity it's comparatively unchangeable pinch astir of nan extremity of past year. My comments astir staffing comparative to america very specifically pinch it. I deliberation we underappreciated nan effect coming retired of COVID that nan staffing constraints would person connected starting caller programs and getting their clip to activity connected nan logistics and activity done really they were going to manus disconnected and attraction for that patient. And that was a small spot of a miss connected our portion comparative to benignant of reasoning done nan expectations coming retired of COVID and Omicron and arsenic we're benignant of ramping backmost up. But overall, though, I'd opportunity that they're comparatively consistent. They're not getting worse astatine this constituent successful clip by immoderate means. For us, I conscionable deliberation we request much clip to get done benignant of connected nan CONVERGE broadside to benignant of ramp that backmost up and get nan logistics to work. And there's still immoderate -- location are staffing constraints that are retired location that do effect benignant of getting their clip and energy.

Angela Wirick

Yeah. Rick, connected nan costs side, I would say, from nan proviso concatenation area, we consciousness for illustration we've sewage bully visibility astatine this constituent and tin understand benignant of wherever nan costs are coming from pinch our cardinal suppliers. I do deliberation that we exited nan twelvemonth emotion a spot much alleviation successful immoderate areas specified arsenic recreation wherever I deliberation early successful nan year, I deliberation that nan pricing that we were seeing, nan costs conscionable wide comparative to our teams recreation was getting a small spot retired of hand. So, benignant of a operation there, I'd say, emotion amended from immoderate of nan areas wherever there's a small spot much discretionary walk and benignant of person a grip connected wherever nan suppliers are coming in, successful a longer word basis.

Rick Wise

Great. And conscionable 1 mini follow-up really. Mike, fixed nan important finance successful objective trials, LeAAPS, it seems for illustration it's evidently a important and important investment. How do we deliberation astir R&D disbursal going forward? Do we -- because of immoderate of nan spending, could we get backmost towards 20% of income that we saw successful -- I deliberation it was 2020? Is -- does nan dollars move higher than we saw past year? How do we deliberation astir modeling R&D? Thanks a lot.

Michael Carrel

Yeah. Before -- I'll fto Angie reply nan modeling question, but possibly philosophically, I deliberation I conscionable want to make judge I laic nan onshore on. When we deliberation -- I mean, I judge that 1 of nan things that we do good and that we're going to proceed to do good complete nan adjacent coming decades is grow into caller markets wherever patients are undertreated coming and find therapies for them to beryllium treated. Whether it's -- arsenic we talked astir pinch LeAAPS investing there. IST, I talked about; sternotomy. These are caller markets. They are marketplace expanding pinch existing products that we fundamentally person today, and objective tests really thief benignant of specify what that occurrence could look for illustration successful nan marketplace description opportunity.

I deliberation these are things that let america to beryllium a really robust and benignant of large institution complete nan people of nan adjacent decade aliases truthful and really grow that marketplace into aggregate billions. So that's why we're making nan investments. And we're uniquely positioned because we're going to beryllium nan first to marketplace and nan first into those areas. And we deliberation nan objective -- not conscionable differentiation, but it's also, we judge subject matters successful position of really getting nan correct level of take truthful that erstwhile physicians are making decisions, they're making it based connected nan technological grounds that is retired there.

With that, I'll benignant of move it complete to Angie to talk possibly much specifications astir immoderate of nan numbers.

Angela Wirick

Yeah. Rick, our prepared remarks, we said for nan year, we expect astir 18% to 19% R&D walk arsenic a percent of revenue. I deliberation quarter-to-quarter, based connected gait of enrollment, you whitethorn spot a small spot of variability disconnected that number. But we deliberation successful nan near-term complete nan adjacent mates of years pinch nan lens of objective proceedings -- existent description of nan objective tests and a committedness to continuing to beforehand our exertion level that R&D arsenic a percent of gross will enactment successful nan precocious teens.

Rick Wise

Thank you.


I would now for illustration to move nan convention backmost to Mike Carrel for closing remarks.

End of Q&A

Michael Carrel

Great. Again, convey you everybody for joining america aft an outstanding 2022. We look guardant to demonstrating nan sustainability and maturation motor that we person present astatine AtriCure. Thanks for joining america and for your liking successful our company. Have a awesome one.


This concludes today's convention call. Thank you for participating. You whitethorn now disconnect.

Editor: Naga

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