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ShockWave Medical, Inc. (SWAV) Q4 2022 Earnings Call Transcript

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ShockWave Medical, Inc. (NASDAQ:SWAV) Q4 2022 Earnings Conference Call February 16, 2023 4:30 PM ET

Company Participants

Debbie Kaster - VP, IR

Doug Godshall - President and CEO

Isaac Zacharias - President and Chief Commercial Officer

Dan Puckett - CFO

Rob Fletcher - VP, Marketing and Market Access

Conference Call Participants

Travis Steed - Bank of America

Adam Maeder - Piper Sandler

Bill Plovanic - Canaccord Genuity

Michael Polark - Wolfe Research

Larry Biegelsen - Wells Fargo

Cecilia Furlong - Morgan Stanley

Imron Zafar - Deutsche Bank

Operator

Good day and invited to ShockWave's Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, each participants are successful a listen-only mode. We will beryllium facilitating a question-and-answer convention towards nan extremity of today's call. As a reminder this telephone is being recorded for replay purposes.

I would now for illustration to move nan telephone complete to Debbie Kaster, Vice President of Investor Relations astatine ShockWave for a fewer introductory comments.

Debbie Kaster

Thank you each for participating successful today's call. Joining maine coming from ShockWave Medical are Doug Godshall, President and Chief Executive Officer; Isaac Zacharias, President and Chief Commercial Officer; and Dan Puckett, Chief Financial Officer. Earlier today, ShockWave released financial results for nan 4th and twelvemonth ended December 31, 2022. A transcript of nan property merchandise is disposable connected ShockWave's website.

Before we begin, I would for illustration to punctual you that guidance will make forward-looking statements during this telephone wrong nan meaning of Federal Securities laws, which are made pursuant to nan safe harbor provisions of nan Private Securities Litigation Reform Act of 1995. Any statements contained successful this telephone that subordinate to expectations aliases predictions of early events, results aliases capacity are forward-looking statements. All forward-looking statements including, without limitation, statements relating to our income and operating trends, business and hiring prospects, financial and revenue expectations, early merchandise improvement and approvals

and nan closing of our acquisition of Neovasc, are based upon our existent estimates and various assumptions.

These statements impact worldly risks and uncertainties, including nan effect of macroeconomic conditions and world events, specified arsenic nan COVID-19 pandemic that could origin existent results aliases events to materially disagree from those anticipated aliases implied by these forward-looking statements.

Accordingly, you should not spot undue reliance connected these statements. For a database and explanation of nan risks and uncertainties associated pinch our business, please mention to nan Risk Factors conception of our yearly study connected Form 10-K connected record pinch nan SEC and disposable connected EDGAR and successful our different reports revenge pinch nan SEC.

ShockWave disclaims immoderate volition aliases obligation, isolated from arsenic required by law, to update aliases revise immoderate financial projections aliases forward-looking statements, whether because of caller information, early events aliases otherwise. This convention telephone contains time-sensitive accusation and is meticulous only arsenic of nan unrecorded broadcast today, February 16, 2023.

And pinch that, I'll move nan telephone complete to Doug.

Doug Godshall

Thanks Debbie. Good day everyone and convey you for taking nan clip to subordinate america to reappraisal ShockWave's results for nan 4th fourth and afloat twelvemonth 2022.

Our ShockWave squad delivered different beardown 4th and an outstanding twelvemonth pinch galore important achievements. To item conscionable a fewer of our cardinal accomplishments successful 2022, we had 2 caller products approved successful nan U.S., demonstrated superiority successful one-year follow-up successful nan PAD III randomized trial, added regulatory shipping approvals successful 12 caller countries, including Japan and China, launched complete 500 coronary accounts successful nan U.S., had respective wins successful reimbursement crossed nan globe, and collapsed crushed connected a caller manufacturing installation successful Costa Rica.

We achieved grounds quarterly gross of $144 cardinal successful nan 4th fourth of 2022, which was much than a 70% summation from nan 4th fourth of 2021. This brought our gross for nan twelvemonth to $490 million, much than doubling our revenues from 2021.

What we recovered astir encouraging astir these results was nan maturation and publication crossed each merchandise lines and geographies. Our 4th fourth 2022 gross versus 4th fourth 2021 gross was up complete 60% for U.S. coronary, was up complete 90% for U.S. peripheral and up complete 70% for our world business, alternatively singular crossed nan board.

Later successful nan call, Isaac will stock immoderate further insights from nan commercialized broadside of nan business, and past Dan will supply immoderate specifications astir our financial results. But I'd for illustration to commencement pinch a fewer updates connected caller activity present astatine ShockWave.

We are pleased to person been granted FDA support for our C2+ coronary merchandise successful mid-December, which was overmuch sooner than we expected arsenic our regulatory squad continues their inclination of businesslike approvals. As a reminder, C2+ adds 50% much pulses going from 80 to 120. The acquisition successful nan European constricted motorboat gives america precocious assurance successful nan capacity of C2+, and we scheme to motorboat successful nan U.S. successful nan 2nd half of this year.

This is nan first successful a bid of caller coronary products that we scheme to motorboat pinch nan anticipation that each caller merchandise will amended customer experience, grow nan IVL inferior and by extension, further summation coronary penetration.

We're evidently pleased that nan reimbursement for coronary IVL successful Germany was accrued connected January 1 of this year. Germany has nan largest number of PCIs successful each European nations astatine astir $330,000 per year, yet penetration of coronary IVL has been appreciably little than successful different ample European markets, mostly because of backing spread for IPL procedures.

We judge nan increases successful reimbursement will meaningfully trim nan main obstruction to IVL utilization successful Germany. We are presently moving connected to double nan size of our German squad successful bid to support anticipated marketplace description .

We've been receiving awesome feedback connected our L6 peripheral catheter, which is presently successful constricted motorboat successful nan U.S. As you whitethorn remember, this catheter was purpose-built to reside resistant dense calcium successful ample vessels. The constricted motorboat has been going very good and has fixed america awesome insights. Isaac will supply a spot much colour later successful nan call.

We hosted aggregate well-attended events during nan 4th quarter, including astatine some Veeva and [Vet]. We besides shared updates from our PAD III observational study astatine some of these conferences. We look guardant to sharing much IVL information astatine CRT adjacent week, wherever location are six sessions highlighting IVL, including further discussions connected nodular calcium, arsenic good arsenic nan position connected our EMPOWER female study design. It should beryllium different awesome showcase for IVL.

As you whitethorn person seen, precocious successful January, nan Society of Cardiovascular Angiography and Interventions aliases SCAI, published updated guidelines, which included coronary IVL arsenic a curen action successful each U.S. cath labs, including ASCs, sloppy of surgical backup status. Previous guidelines restricted recommended curen to accommodation pinch on-site surgical backup. We judge this is simply a awesome endorsement of nan information of IVL.

Our C2 motorboat successful Japan commenced successful earnest successful January pinch due reimbursement now successful place, we person assurance that we tin motorboat C2 very effectively. Isaac will supply a spot much colour later successful nan call. And while nan motorboat is conscionable getting started, we are mostly encouraged frankincense far.

Lastly, earlier successful January, we announced that we entered into a definitive statement to get Neovasc and our enthusiasm for nan Reducer Systems imaginable has grown station announcement, mostly because of nan objective organization responded moreover much positively than we had anticipated.

This unsocial merchandise has nan imaginable to elegantly reside a very ample organization of patients who presently do not person a curen action for their debilitating refractory angina. The acquisition of Neovasc, which is group to adjacent by nan extremity of this 4th is simply a coagulated measurement successful ShockWave's strategical ngo to leverage nan talents of our world-class squad to create and commercialize a dependable cadence of caller technologies for underserved diligent populations.

Before I move nan telephone to Isaac, I will reiterate, arsenic we shared successful our telephone past period that we expect delivering apical statement gross successful nan scope of $660 cardinal to $680 cardinal for nan afloat twelvemonth 2023, representing maturation of 35% to 39% from 2022.

With that, I'll move nan telephone complete to Isaac and past Dan will stock much specifications connected nan broader business and financial results. Isaac?

Isaac Zacharias

Thank you, Doug.

We had different beardown 4th crossed nan U.S. coronary, U.S. peripheral and world segments. Globally, staffing issues affected procedural volumes successful immoderate centers to various degrees passim nan quarter. As immoderate of our peers person noted, we expect nan staffing challenges to proceed improving passim 2023.

U.S. peripheral gross successful nan 4th was 10% supra nan anterior 4th and almost doubled nan U.S. peripheral gross from a twelvemonth ago. The motorboat of our M5+ catheter, integrated growth, caller accounts and due reimbursement each contributed to nan coagulated gross increase. M5+ continues to beryllium very good received by our customers, and we are seeing accrued usage successful accounts erstwhile they adopt M5 +.

We are very pleased pinch nan results of nan constricted motorboat of our L6 catheter successful nan U.S. During nan 4th quarter, our attraction was to understand nan capabilities of nan catheter and to cod feedback connected which objective scenarios are champion suited for L6. Physicians person indicated that they find it astir useful successful ample [AUX] and communal femoral arteries.

And since nan emitters connected L6 are spaced person together than nan emitters connected M5+, physicians person noted that it much efficiently cracks ample eccentric lesions. It is excessively early to foretell really overmuch L6 will beryllium utilized successful cases that were antecedently not done pinch IVL, but successful nan LMR, astir 60% of nan cases were treated pinch nan 9, 10 and 12 millimeter L6. This suggests that galore procedures were apt cases that would not person been done pinch nan 8-millimeter M5+. We intend to move to a afloat motorboat of L6 successful nan U.S. later successful nan first quarter.

Our U.S. coronary business grew nicely during nan 4th fourth of 2022 arsenic mean regular income accrued 11% compared to nan 3rd 4th of 2022 and 65% compared to nan anterior year. Growth was almost wholly from income into existing accounts arsenic we added less than 90 accounts successful nan 4th quarter.

During 2023, we scheme to attraction connected driving coronary take done optimizing nan building of our income organization, expert acquisition and engagement, nan anticipated motorboat of C2+ successful nan 2nd half of nan twelvemonth and continued publications of objective information to support nan usage of IVL. I'm assured that we will proceed to beryllium successful successful expanding IVL penetration based connected nan accrued utilization we saw successful 2022 from nan accounts we launched successful 2021.

Turning to our U.S. income force, ended nan twelvemonth pinch conscionable astir 90 territories and astir 1.8 objective specialists per territory. As noted connected our past call, our hiring cadence is connected gait to extremity 2023 pinch betwixt 110 and 120 territories and complete 2 objective specialists per territory. We scheme to adhd much territories successful nan first half of 2023 compared to nan 2nd half.

Our world business generated astir $26 cardinal successful gross successful nan 4th quarter, representing 76% maturation from nan anterior year. We proceed to person beardown momentum successful France and nan U.K., which person now been trading nonstop for complete a year, together they grew complete 30% successful Q4 versus anterior year.

China was besides a beardown contributor successful nan 4th quarter. We expect nan momentum successful China to proceed arsenic we summation provincial listings and consequent relationship approvals passim 2023. That said, nan 4th fourth of 2022 and nan first 4th of 2023 person been negatively impacted by nan surge of COVID that occurred successful China.

Our world squad is now comprised of much than 70 people, which is up from 40 astatine nan extremity of 2021. We are trading astatine complete 60 countries and are nonstop successful 7 of those countries. We person generated a beardown return connected our investments successful world markets and we expect to proceed that finance successful 2023 and beyond.

In nan 2nd 4th of this year, we scheme to person from distributors to nonstop income successful Spain, Portugal and Canada. In each of these countries, we expect to execute important gross maturation done some penetration and accrued separator connected nonstop income versus income done distributors. By nan extremity of 2023, we scheme to person nonstop trading organizations successful 11 countries including nan U.S. I look guardant to providing much item connected nan early acquisition successful Japan adjacent quarter.

We are very pleased pinch really nan motorboat of C2 has started and are assured that Japan will beryllium a beardown maturation driver. Finally, we conducted a constricted motorboat of C2+ successful Europe successful nan 4th fourth and are very pleased pinch nan results. The customer feedback has been affirmative and nan merchandise is performing arsenic expected.

Customers reported that nan further pulses successful C2+ enabled them to dainty longer lesions, bifurcated lesions and lesions pinch nodular and eccentric calcium much efficaciously than pinch C2. Further, because of nan further pulses, customers reported utilizing C2+ successful cases that they different would not person utilized C2, chiefly because they would person been reluctant to usage 2 C2 catheters owed to nan cost.

We are progressively assured that C2+ will not only amended customer restitution pinch IVL, but besides summation nan take of IVL. We expect moving to a afloat marketplace merchandise successful astir world markets early this year. And arsenic we do pinch C2, we will incorporated what we learned from our C2+ acquisition successful Europe to style our U.S. motorboat strategy.

With that, I will move nan telephone complete to Dan to reappraisal nan financials.

Dan Puckett

Thank you, Isaac. Good day everyone.

ShockWave Medical's gross for nan 4th fourth ended December 31, 2022 was $144 million, a 71% summation from $84.2 cardinal successful nan 4th fourth of 2021. U.S. gross was $118.3 cardinal successful nan 4th fourth of 2022, an summation of 70% from $69.6 cardinal successful nan 4th fourth of 2021.

Coronary products contributed $82.1 cardinal to U.S. gross successful nan 4th fourth of 2022, a 62% summation from $50.7 cardinal successful nan 4th fourth of 2021. The peripheral products accounted for $36 cardinal of U.S. revenue, an summation of 94% from $18.6 cardinal successful nan 4th fourth of 2021.

Generators accounted for $0.2 cardinal of U.S. gross successful nan quarter. The maturation successful U.S. gross was driven by accrued utilization astatine existing accounts, caller relationship take of IVL and continued income unit description .

International gross was $25.7 cardinal successful nan 4th fourth of 2022, representing a 76% summation from $14.6 cardinal successful nan 4th fourth of 2021. International gross from coronary products was $20.6 cardinal successful nan 4th fourth of 2022, a 78% summation from $11.6 cardinal successful nan 4th fourth of 2021. International gross from peripheral products was $4.5 cardinal successful nan 4th fourth of 2022, a 61% summation from $2.8 cardinal successful nan 4th fourth of 2021.

Generators accounted for $0.6 cardinal successful nan world gross successful nan 4th fourth of 2022. The summation successful world gross complete nan anterior twelvemonth play reflects continued geographic description , including China, maturation successful customer request and maturation of our nonstop income unit successful Europe. The summation successful world gross was partially impacted by unfavorable overseas speech rates.

Looking astatine merchandise lines, our peripheral products accounted for $40.5 cardinal of our full gross successful nan 4th fourth of 2022 compared to $21.4 cardinal successful nan 4th fourth of 2021, an 89% increase. Our coronary products accounted for $102.7 cardinal of full gross successful nan 4th fourth of 2022 compared to $62.3 cardinal successful nan 4th fourth of 2021, representing a 65% increase.

In addition, nan income of generators contributed $0.8 cardinal successful gross for nan 4th fourth of 2022, which is an summation of 58% compared to nan 4th fourth of 2021. Gross profit for nan 4th fourth of 2022 was $126.5 cardinal compared to $71.5 cardinal successful nan 4th fourth of 2021. Gross separator for nan 4th fourth of 2022 was 88% arsenic compared to 85% successful nan 4th fourth of 2021.

Improvement successful gross separator was partially driven by merchandise operation arsenic good arsenic continued betterment successful productivity and process efficiencies. Total operating expenses for nan 4th fourth of 2022 were $84.1 million, a 46% summation from $57.5 cardinal successful nan 4th fourth of 2021.

Sales and trading expenses for nan 4th fourth of 2022 were $43.4 cardinal compared to $33.2 cardinal successful nan 4th fourth of 2021. The summation was chiefly driven by income unit description . R&D expenses for nan 4th fourth of 2022 were $23.7 cardinal compared to $14.7 cardinal successful nan 4th fourth of 2021. The summation was chiefly driven by headcount growth.

General and administrative expenses for nan 4th fourth of 2022 were $17 cardinal compared to $9.6 cardinal successful nan 4th fourth of 2021. The summation was chiefly driven by higher headcount to support nan maturation of nan business.

Net income for nan 4th fourth of 2022 was $140.9 cardinal compared to nett income of $12.9 cardinal successful nan 4th fourth of 2021. We recognized a $99 cardinal income taxation use successful nan 4th upon nan merchandise of a important information of nan valuation allowance related to our deferred taxation assets. Basic nett income per stock for nan play was $3.89, diluted nett income per stock for nan play was $3.71. We ended nan 4th fourth of 2022 pinch $304.5 cardinal successful cash, rate equivalents and short-term investments.

Finally, I'd for illustration to concisely recap immoderate highlights from our afloat twelvemonth 2020 results. Total gross for nan afloat twelvemonth of 2022 was $489.7 cardinal an summation of 107% compared to afloat twelvemonth 2021 gross of $237.1 million. U.S. gross for nan afloat twelvemonth 2022 is $407.4 million, representing a 119% summation complete 2021 gross of $186.3 million. International gross was $82.3 cardinal for nan afloat twelvemonth 2022 compared to $50.8 cardinal successful 2021, representing a 62% increase.

Gross separator for nan afloat twelvemonth of 2022 was 87% compared to 83% successful 2021. Total operating expenses were $300.6 cardinal successful 2022, an summation of 53% compared to operating expenses of $196.6 cardinal successful 2021. Total nett income for nan afloat twelvemonth 2022 was $216 cardinal compared to a nett nonaccomplishment of $9.1 cardinal successful 2021.

At this point, I'd for illustration to move nan telephone backmost to Doug for closing comments.

Doug Godshall

Thank you each for joining america for nan telephone today.

As I look backmost astatine 2022 and what this squad has accomplished, nan database is rather impressive. We person immoderate breathtaking things coming successful nan twelvemonth ahead. And astatine nan aforesaid time, our squad remains focused connected our halfway and continuing to grow nan curen of arterial calcification pinch our products. Thank you for your clip and your continued support.

And pinch that, we tin return your questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first mobility comes from Travis Steed pinch Bank of America. Please proceed pinch your question.

Travis Steed

Hi, acknowledgment for nan question. Doug, I did want to inquire astir PCI volumes successful Q1 aliases thing to telephone retired successful Q1 if nan PCI volumes were backmost to normal, immoderate of nan trends to telephone out? And if nan Street was benignant of reasoning astir Q1 down a mates of cardinal versus Q4, if that's nan correct measurement to deliberation astir it? And I had a follow-up connected margins aft that?

Dan Puckett

Yes. As we talked -- arsenic we said astir earlier this quarter, location was a benignant of a lull successful nan October, November clip framework that started to retrieve successful December, I'd say, connected balance, that that betterment appears to person been sustained. So we're -- I don't cognize to beryllium capable to explicate what happened different than benignant of adaptable staffing seems to beryllium 1 of nan biggest contributors aliases staffing outages successful nan opening of nan 4th quarter, but it doesn't -- nan lull successful October does not look to person carried guardant into nan first quarter.

Travis Steed

Okay. That's helpful. I conjecture you're not going to remark connected -- nan Street numbers for Q1, I assume, but if you are, that would beryllium helpful. And past nan follow-up would beryllium connected margins. If you deliberation astir like, excluding nan dev dilution, I conscionable deliberation astir op margins for nan guidelines business. If 2023 is simply a twelvemonth that you tin get separator description aliases if margins are level aliases down successful nan guidelines business fixed immoderate of nan investments you're making?

Doug Godshall

I'll reply your first mobility that I didn't reply nan first clip connected Street. Not everybody has updated their numbers for Q1. So it's difficult to react. I deliberation aft this call, folks will beryllium updating nan numbers. We're -- we proceed to spot ratio successful our guidelines business. Obviously, we're bringing successful Neovasc present successful nan not-too-distant future. So that will evidently not beryllium accretive to operating separator arsenic good we expect spending successful nan $30 cardinal scope to tally that business this year. But we're surely pleased pinch what we saw successful position of nan halfway IVL business, some gross and operating separator exiting 2022.

Travis Steed

Okay. All right. Sounds good. Thanks for nan questions and follow-up.

Operator

Our adjacent mobility comes from Adam Maeder pinch Piper Sandler. Please proceed pinch your question.

Adam Maeder

Great. Good afternoon, and convey you for taking nan questions. I really wanted to commencement connected reimbursement wherever there's been immoderate investor attraction and specifically U.S. coronary pinch nan NTAP expiring successful October 1, '23. And past nan transitional pass-through costs expiry successful June 1, '24, I believe. Maybe conscionable locomotion done really you're reasoning astir those imaginable impacts connected your business, if any?

And pinch nan transitional pass-through, I cognize you're successful nan process of trying to up representation your codification earlier nan TPT expires. So possibly conscionable talk fast-forward location and level of assurance that you'll yet beryllium successful and besides person a soft modulation pinch nary reimbursement aerial pocket? And past I person a follow-up. Thanks.

Doug Godshall

Okay. Great. And 1 of nan reasons I'm assured is because Rob Fletcher, our Vice President, Marketing and Market Access is moving nan program, who besides happens to beryllium connected nan call. So I'll do a very little overview and past manus it to Rob.

So NTAP, arsenic you pointed out, sunset this year, that's for inpatient procedures. It is not what drives decision-making aliases cognition of reimbursement successful interventional procedures generally, some peripheral and coronary. And past TPT is sunsetting adjacent twelvemonth successful nan July clip frame. And we've been very focused connected strategies for ensuring that location is -- that we person a beardown way going guardant to hole for that sunsetting.

And I'll fto Rob benignant of supply a position connected really we're approaching that and why we consciousness really bully astir wherever things will onshore ultimately.

Rob Fletcher

Hi, everyone. Thanks, Adam, for nan question. Can you guys perceive maine okay?

Doug Godshall

Yes.

Rob Fletcher

Great. Yes. So Adam, I'd for illustration to return this opportunity to springiness immoderate inheritance into this -- immoderate of nan issues that you've raised here. And let's commencement pinch nan transitional pass-through because I deliberation that's what's astir apt astir connected everybody's mind. So obviously, each transitional pass-through programs, a impermanent quality that travel to an end. And it's CMS's regular business to analyse nan information collected and make a determination connected really and really overmuch to pay.

So there's 2 main things you request to successfully modulation disconnected of a transitional pass-through program. One, you request a process level codification that hospitals tin usage to get costs aft nan programme ends. So a caller Category 1 CPT codification for coronary IVL procedures will go effective connected January 1, 2024. So check, that's successful place.

Second, you request costs information that is capable successful measurement and meets nan criteria for that higher APC assignment. So uptake of coronary IVL arsenic you know, has been very rapid, which besides intends that there's a ample measurement of claims information pinch which CMS tin analyse and make their determinations.

We have, of course, analyzed Medicare's claims information pursuing their methodology and applying their criteria. I tin opportunity that nan information are compelling. We meet criteria for nan higher APC that is APC-5194, and we meet it now.

I'd fishy that nan scenario, though, that investors are really concerned astir is nan script wherever if aft nan TPT ends, costs falls backmost down to nan baseline APC, thereby leaving nary further costs for coronary IVL. And this is an understandable interest because it's happened earlier to different technologies successful MedTech history. But we deliberation this consequence is very low, and that's because nan information is very clear and compelling.

We're not teetering connected nan separator of nan criteria, we're good past it. We've been continually refreshing nan study arsenic information continues to rotation successful from nan program. The conclusion has been unchangeable and accordant that we meet criteria for nan higher APC.

So CMS makes database decisions, and they're going to do truthful pinch this TPT programme arsenic well. I tin show you that coronary IVL intelligibly does not fresh into nan baseline APC. So therefore, we really do not spot this arsenic overmuch of a risk.

So for investors, and you benignant of mentioned this, Adam, I'd for illustration to put guardant that nan consequence really isn't successful nan costs going distant from our view. It's much connected nan timing and nan smoothness of nan modulation from TPT to a imperishable APC assignment. And nan logic why there's immoderate consequence astir this is because there's a deficiency of synchronization betwixt nan transitional pass-through calendar, which is quarterly successful nan APC calendar, which is typically addressed connected an yearly ground via nan CMS's rulemaking process.

So nan TPT programme ends connected June 30, 2024, which is evidently successful nan mediate of nan year. CMS could determine to reside nan TPT modulation successful nan 2024 norm aliases nan 2025 rule. So if CMS were to hold until nan 2025 rulemaking to reside nan modulation to an APC, past location would conceivably beryllium a six period spread betwixt further costs being disposable by a transitional pass-through, which will beryllium successful spot for nan first half of 2024, and further costs via an APC duty that would spell into effect successful January 2025.

So we're alert of this, of course, ShockWave and our partners from nan interventional organization person truthful asked CMS to reside nan modulation -- from transitional pass-through to an APC duty successful nan 2024 rule. So arsenic I mentioned a infinitesimal ago, nan -- we judge that nan information is clear, compelling, it's unchangeable and it's nan luminous. We judge nan process level coding is successful spot and frankly, there's conscionable benignant of nan value of coronary IVL and really quickly it's go a captious instrumentality successful PCI.

So successful nan short clip that it's been connected nan market, IVL has go nan astir wide utilized plaque modification instrumentality successful PCI. And also, arsenic we've seen, arsenic was mentioned earlier successful nan telephone from caller master statement statements from nan aesculapian society, it's uniquely beneficial successful female patients, suggesting that IVL could beryllium frontline therapy for women. And it besides enables patients successful agrarian areas to person curen for their analyzable illness and adjacent hospitals without having to beryllium transferred to acold distant infirmary that has on-site cardiac surgery.

So we judge these issues are besides important to CMS, and they're alert of these unsocial advancements, and we judge that CMS will see these successful their determination whether to reside coronary IVL successful 2024 aliases hold until 2025 to make APC assignment.

But I conscionable want to constituent retired that moreover if it winds up being 2025, we judge that nan consequence aliases effect of nan business would surely beryllium short word and manageable. We're talking astir six months. And arsenic stated previously, coronary IVL has go an important therapy successful PCI. And I would besides mention that while that mightiness beryllium benignant of a antagonistic existent from a reimbursement perspective, nan benignant of tailwind would beryllium that location would beryllium a CPT codification successful spot that will remunerate physicians.

So there's a fewer factors to equilibrium present Adam. But I conscionable wanted to return a infinitesimal to benignant of elaborate connected nan business and why ShockWave stay assured -- are assured successful nan prospects.

Adam Maeder

That's very helpful, Rob. I admit nan fulsome consequence and acknowledgment for nan colour there, Doug. Maybe for nan follow-up, I wanted to inquire astir U.S. coronary maturation wherever nan communicative is really each astir utilization and same-store income maturation successful '23.

I deliberation location were immoderate comments successful nan prepared remarks astir nan different levers that you're going to propulsion on, but I was hoping you could conscionable benignant of flush that retired a small spot much really you scheme to locomotion your customers up nan take curve, thrust halfway utilization, whether it's C2+, nodular calcium, nan building of nan income force? Just immoderate much colour location would beryllium overmuch appreciated. Thank you.

Isaac Zacharias

Yes, Adam, I'll return that. This is Isaac. I deliberation successful nan prepared remarks and what we laid retired connected nan past telephone was benignant of nan outline of nan scheme that we've already enacted to thief thrust penetration. It's coronary penetration, but it's besides peripheral penetration really. On nan - what we've seen from our income information is that connected nan accounts that we launched successful 2021 for coronary, we spot what happened to utilization of nan merchandise successful those accounts passim 2022.

And ultimately, that gives america assurance that we tin thrust continued penetration that and wherever we deliberation nan unmet request is still rather a spot higher than our existent penetration. So from a territory optimization, we talked astir adding territories and expanding number of FCSs per territory. And generally, what that does is conscionable gives you much touch points pinch nan physicians, nan nurses, nan technicians and helps america motorboat products while we do that.

The acquisition programs that we're putting successful spot this twelvemonth for our team, our income squad and from peer-to-peer acquisition programs for physicians will attraction connected benignant of much precocious techniques for IVL and lesion morphologies and really to dainty those lesion morphologies much efficaciously pinch IVL. So it's really incorporating nan learnings we've had from - since nan motorboat and past driving caller education. We person objective publications coming out, peculiarly - specifically astir eccentric and nodular calcium. And past that will dovetail nicely into what we're seeing connected nan C2+ capacity successful Europe, which is you sewage much pulses and it's much effective successful treating nodular calcium pinch those pulses.

So I deliberation arsenic we look towards nan 2nd half of nan year, motorboat C2+, we want to clasp that to nan 2nd half of nan year, truthful we tin efficaciously motorboat L6 successful nan first half of nan year. But past pinch nan publications, nan peer-to-peer training and C2+ to reenforce utilization successful lesions that correct now are possibly little perfect for IVL, because of nan 80 beat limit.

Adam Maeder

Really helpful, Isaac, convey you.

Isaac Zacharias

Yep.

Operator

Our adjacent mobility comes from Bill Plovanic pinch Canaccord Genuity. Please proceed pinch your question.

Bill Plovanic

Great, acknowledgment bully evening. I'd conscionable for illustration to commencement retired pinch C2, a mates of questions. Just 1 is pinch C2+ and much pulses per unit, does that - would you expect to spot possibly a alteration successful nan number of units sold for nan cases that were possibly utilizing 2 that, that will each spell to one. And past conscionable connected backmost to nan income statement successful nan U.S. And I deliberation 1 of nan comments either you aliases Doug aliases Isaac made was conscionable successful income unit optimization, I would presume that was successful narration to conscionable adding much TMs and SCS, but I conscionable want to make sure, are you bifurcating nan income unit to commencement focusing immoderate connected coronary and immoderate TMs are specifically connected peripheral aliases is it much conscionable benignant of nan - you're going to proceed pinch 1 ft income unit addresses all?

Doug Godshall

Yes. So I'll commencement pinch C2+ Isaac tin talk astir income force. C2+ - we spot benignant of 1.0 thing catheters per case. There's a connection coming pinch C2. It's a premium capacity product, but it's besides a premium priced product. Folks are rather reluctant to drawback a catheter - which besides intends location are cases that they look astatine coming and say, ohio that mightiness return 2 catheters, I'm not going to usage C2.

And nan early feedback retired of Europe successful our constricted merchandise is they are -- location are immoderate percent of cases they're doing now pinch C2+ successful a constricted merchandise that they different would not person been utilizing C21 for that very reason. I cognize this is eccentric and it's tough. I'm not going to get halfway done nan lawsuit and past person to bargain a 2nd procedure. So I tin dainty eccentric I tin dainty longer lesions, pinch C2+ and bifurcations, wherever I would person different possibly person to pain 2 catheters now I tin do a afloat lawsuit pinch that 50% summation successful pulses.

So our impression, and it's an belief truthful acold is that nan deminimis benignant of 2nd catheter cases that we whitethorn suffer because of nan other pulses will beryllium greatly outweighed by nan incremental cases will prime up because of nan greater curen dose persist if you deliberation astir that way, that's going to beryllium inherent successful this catheter. So I don't - I surely don't deliberation you're going to spot immoderate alteration successful portion numbers arsenic a consequence of C2+. And past Isaac you tin talk astir income unit optimization.

Isaac Zacharias

Sure, yes truthful - bully clarifying question, Bill. We are conscionable - we talk astir optimization, it's really geographic optimization, optimization of really galore FCSs each territory has and optimization of really galore accounts are successful each territory. And I mean nan cardinal to that is arsenic we -- extremity is to motorboat 2 products per year. And nan much accounts, obviously, a territory has nan little clip you tin walk successful each account, nan much diluted your beingness and your messaging becomes and nan much products nan rep has to waste that dilutes again.

So arsenic we bring successful much products into nan bag, L6 this year, C2+ adjacent year, we've sewage 2 much connected nan slate aliases C2+ this year, 2 much connected nan slate adjacent year. We want to person these territories right-sized successful position of nan number of hospitals. So that nan group servicing nan territories connected our squad tin walk capable clip astatine each places wrong nan infirmary that they request to beryllium selling.

Bill Plovanic

And past conscionable explanation connected Travis' mobility connected usability margins connected nan halfway business, I want to beryllium clear, truthful astatine slightest unchangeable to improving op margins successful nan halfway business, including nan acquisition. Is that a adjacent measurement to deliberation astir it? And acknowledgment for taking my question.

Dan Puckett

Excluding nan acquisition, this is Dan excluding nan acquisition we should beryllium reasonably stable. We're going to put heavy successful '23. Sales and marketing, for illustration Isaac alluded to earlier, we're going direct. We've sewage immoderate different initiatives successful place. R&D we've sewage 20-plus programs. So we're going to invest, but we're going to beryllium reasonably unchangeable pinch that dense finance even.

Bill Plovanic

Yes ex-acquisition.

Dan Puckett

Yes. And past you're going to apical nan $30 cardinal this year, moreover if it's a short year, we sewage immoderate work. And we'll find retired erstwhile that woody is closed, but you've sewage to facet that successful connected apical of it.

Bill Plovanic

In nan levels that make 100% clear, I mean, you ended astatine a 29.5% operating separator successful nan 4th quarter. Is that nan guidelines we're building disconnected of?

Dan Puckett

No, I'd look astatine benignant of nan blended - for nan year, wherever we ended up -- we should amended disconnected nan year. We ended up astatine 25%, I think, for '22. So we should get a small improvement. I'd expect OpEx for nan afloat twelvemonth to beryllium astir nan aforesaid successful '23 arsenic '22 arsenic a percent of revenue.

Bill Plovanic

Thank you.

Operator

Our adjacent mobility is from Michael Polark pinch Wolfe Research. Please proceed pinch your question.

Michael Polark

Okay, convey you possibly a non-core opportunity for Rob here. Great update connected nan TPT pathway. The mobility connected NTAP was besides asked, and I'd emotion conscionable a small much nutrient connected nan bony location are puts and takes astir nan sunset of that booster payment. Will it matter for customers utilizing your products, if not, why not?

Doug Godshall

Yes, I'd beryllium happy to reply that, but Rob will do a amended job. So I'll fto Rob return it.

Rob Fletcher

All right, acknowledgment for nan question. When it comes to nan in-patient side, I deliberation nan important point to understand is that each of nan PCI procedures representation to 1 aliases 4 different DRGs which are our costs bands and nan determination of whether you get benignant of a baseline type of nan DRG aliases immoderate benignant of higher paying type are really each based connected diligent factors, for illustration complications and comorbidities and it's not really based connected nan instrumentality type, per se.

So successful that sense, I deliberation each of nan PCI devices are connected a level playing field. And so, I deliberation that nan - astir important point to understand. So that's why benignant of nan inpatient reimbursement broadside of things arsenic agelong arsenic you're benignant of successful that aforesaid group pinch DRGs which we are and everything other is simply a [indiscernible] benignant of will get paid nan same. I deliberation that's nan important point to understand. And so, I'm not judge that we have.

We are enjoying successful NTAP presently, but conscionable benignant of nan 2 edges of this arsenic well. I don't cognize that it's - I'd constituent to that arsenic nan point that's driving our business incrementally. It's there. It's helpful. But if it goes away, it's besides benignant of - we don't deliberation there's - we don't cognize that there's upside. We don't cognize if there's downside to it per se. So we're not really handicapping it arsenic a awesome driver.

We understand really that could beryllium nan lawsuit successful galore different markets. But successful nan interventional space, arsenic Doug mentioned earlier successful nan call, it's really tends to beryllium driven by what's happening connected nan outpatient side.

Doug Godshall

Yes and - 1 of nan reasons I consciousness beautiful assured that, that is existent is erstwhile we launched successful peripheral, wherever astir half of nan hospital-based procedures are inpatient for, I don't know, for 4 years, each we heard was reimbursed, you're not reimbursed. And erstwhile we effort to explicate to customers, yes, but we autumn into nan aforesaid DRG arsenic atherectomy and stents and everything that they would constituent backmost to nan -- yes, but outpatient atherecomy has incremental costs and you don't.

And it - we were benignant of pigeon clasp arsenic a non-reimbursed device, moreover though successful theory, half of our procedures were paid precisely nan aforesaid arsenic different procedures because it's each dictated by nan diligent condition, not by nan instrumentality that you're using, and erstwhile we received incremental NTAP for inpatient procedure, that didn't person immoderate incremental use for america successful our coronary pickup.

The unit that we felt initially erstwhile we launched and nan customer vexation erstwhile we initially launched was, hey, this is simply a large caller costs to our PCI procedures. You request our reimbursement arsenic soon arsenic we sewage transitional pass-through it wholly merchandise each unit and thing really changed a fewer months later erstwhile we sewage NTAP.

Isaac Zacharias

Yes, fto maine conscionable heap connected 1 point because we get this mobility a lot, and we're trying to put it to bed. The different script that we tin constituent to arsenic - successful summation to what Doug conscionable said is, arsenic Rob said, there's - if you do an interventional PCI, it maps to 1 aliases 4 DRGs, it doesn't - nary of those matter what exertion is utilized successful nan procedure. So if you return atherectomy, for instance, if you return atherectomy location it is, if you do atherectomy PCI and it's an inpatient procedure, 1 atherectomy merchandise connected nan marketplace costs very akin magnitude to what IVL cost.

The different atherectomy merchandise costs astir half that overmuch and we ne'er perceive immoderate expert talking astir choosing 1 atherectomy merchandise complete different because of nan cost. They conscionable don't deliberation that way.

Michael Polark

Very adjuvant an absorbing taxable to a little truthful 1 possibly for Dan pinch nan merchandise of nan valuation allowance, should we beryllium modeling successful a taxation complaint successful 2023 aliases is location still immoderate NOL to pain done specified that a taxation accrual is '24 and beyond.

Dan Puckett

Yes, for book purposes, we've guided for illustration 25% connected nan taxation assumption. We do person NOLs. We've sewage $239 cardinal connected NOLs. We should pain done those successful '23 aliases so. So connected nan cash, broadside expect to pay, what little than - astir apt little than $10 cardinal successful '23 for taxes. Hopefully, that helps.

Michael Polark

Yes, convey you.

Operator

Our adjacent mobility comes from Larry Biegelsen pinch Wells Fargo. Please proceed pinch your question.

Larry Biegelsen

Good afternoon, and acknowledgment for taking nan question. I conjecture I will return advantage of Rob's beingness and inquire 1 much connected reimbursement. So Rob, conscionable if you meet nan criteria for APC 5194, why is nan imaginable timing spread that wasn't clear to me. And conscionable punctual america of nan percent of U.S. coronary that's outpatient versus inpatient. I had 1 follow-up?

Rob Fletcher

Hi, Larry acknowledgment for nan question. Okay, truthful conscionable return it successful reverse order, PCIs betwixt inpatient and outpatient, we mostly person that astatine astir 50-50. And I deliberation arsenic information emerges pinch nan coding sets that are coming into fruition, we'll beryllium capable to amended reply nan mobility and nan early astir really overmuch that operation whitethorn beryllium nan aforesaid aliases different for coronary REL, but we don't really person immoderate logic to deliberation it's different -- truthful that's benignant of your 2nd portion of your question, Larry, your first part, I believe, was related to nan benignant of timing gap.

And yes, I deliberation what happens is that transitional pass-through is connected a almanac - quarterly calendar. And truthful we hap to person [RTPP] approved successful nan 3rd 4th of 2021. So that intends it started connected July 1. The programme goes for 3 years. So it's posted successful sunset aliases and connected June 30, 2024. That happens to beryllium midyear. CMS typically wants to make their determinations connected APC duty via their yearly rule-making process, which is allows for nationalist remark and afloat benignant of explanation of CMS's study and reasoning and guidance to that.

They'd for illustration to see it very carefully. And truthful based connected that calendar, that intends that they would either person to reside it successful their projected rules aliases last rules present successful 2024 aliases 2025, since nan programme -- nan transitional programme ends successful nan mediate of nan year. So that's really nan swipe is will they reside it successful 2024 aliases 2025. We judge conscionable based connected nan benignant of stableness and consistency of nan information that apt whether they do an study now to make a determination for nan 2024 rule, they're doing a year, they're going to travel to nan aforesaid conclusion and that is simply a beautiful clear and compelling this needs to representation to 5194.

So they're going to do it anyway, we think. And truthful for nan reasons benignant of mentioned earlier, we judge that it's much important to do it now that avoids immoderate benignant of imaginable disruption aliases disorder among hospitals and physicians. And nan different point I'd conscionable connection up, Larry, is that this has been really a occurrence story, we think, for ShockWave, but besides for CMS, because this was benignant of 1 of nan first that I'm alert of anyway, nan first breakthrough designated instrumentality to benignant of spell each nan measurement done nan process successful interventional cardiology.

And truthful here, this programme wrong months of FDA approval, nan transitional programme was nan pass-through programme was initiated. It was terrific astatine doing this occupation of facilitating entree to breakthrough therapy for aesculapian for Medicare beneficiaries. And so, now they travel to nan extremity of this program, it's conscionable benignant of structural spread caused by their calendars. And we deliberation that's conscionable been truthful successful that nan - nan logic I judge present is that they're going to conscionable instrumentality nan landing and make judge that they modulation disconnected of nan programme successful a successful mode arsenic they benignant of transitioned connected to it.

Because astatine nan extremity of nan day, 1 of their intends is to make judge that Medicare beneficiaries person entree to breakthrough devices. So it seems accordant pinch their programme that they want to aliases successful their ngo that they want to debar immoderate clip gap. So that's benignant of our reasoning of why they whitethorn find it compelling. Does that help, Larry?

Larry Biegelsen

Okay, it does. Just to beryllium clear, it could beryllium changed for nan 2024 rule. This year, we could find retired astir it aliases it could beryllium changed for nan 2025 rule. You're conscionable not judge which 1 it's going to be, but it sounds for illustration you deliberation that it makes much consciousness and there's a bully chance it could beryllium for nan 2024 rule. I don't want to put words successful your mouth, but is that nan correct measurement to deliberation astir it?

Rob Fletcher

That's right, Larry. And we and immoderate of our partners successful nan interventional cardiology organization person gone to CMS and made that petition that they reside it successful 2024. So up to them, whether they determine to do that, but we surely put guardant each of nan study and nan arguments for why they whitethorn do that.

Larry Biegelsen

That's helpful. And conscionable lastly, Doug, I consciousness compelled to ask. No one's asked yet astir Abbott's acquisition of - aliases pending acquisition astatine CSI. I mean, Abbott evidently judge that atherectomy stock has stabilized I deliberation that's nan portion of nan impetus for doing nan deal. I mean what's your position connected really this - connected that and really this - their acquisition could alteration things for you? Thank you.

Rob Fletcher

Yes arsenic you know, we don't - we spent almost each of our clip focused connected each nan calcified patients who aren't getting immoderate calcium modification. So we've ne'er thought of this arsenic a stock crippled betwixt ShockWave and atherectomy. We spot ourselves arsenic mostly complementary, astatine slightest our existent instrumentality that we waste successful nan coronaries. There's evident grounds that group wherever you could usage ShockWave group are utilizing ShockWave peculiarly alternatively of orbital s versus rotational I mean I deliberation nan directional I deliberation nan atherectomy process we did pickup arsenic "share" were mostly Diamondback solid truthful Rotablator.

I don't cognize excessively galore group who are trying to move backmost to atherectomy. I don't cognize anyone successful fact, who's saying, ohio I was utilizing ShockWave, I'm going to spell back. So has nan afloat -- has nan particulate benignant settled where, okay, now I cognize wherever I'm going to usage IVL and I'm not going to further trim my atherectomy utilization. I'm not sure. One of nan areas wherever atherectomy has immoderate attractiveness is if you person a agelong lesion and you're not judge if AD pulses is going to get it done, you mightiness drawback an atherectomy catheter to dainty nan longer lesion, because you tin you tin benignant of support moving it.

We'll see, we person C2 positive and its expertise to dainty longer lesions enables nan physicians to usage a much predictable safer option, successful which lawsuit past possibly nan displacement hasn't afloat -- hasn't been afloat realized yet though we'll person a amended sense, I guess, station C2 positive motorboat successful nan U.S. We won't really beryllium capable to waste internationally, because there's really nary beingness for Diamondback internationally.

Larry Biegelsen

All right. Thank you very much.

Operator

Our adjacent mobility comes from Cecilia Furlong pinch Morgan Stanley. Please proceed pinch your question.

Cecilia Furlong

Great, bully day and convey you for taking nan questions, I wanted to inquire astir your BTK beingness portfolio, if you will, what you've seen to day pinch M5+ arsenic for really you're reasoning astir conscionable maturation successful nan BTK region, specifically successful '23 versus '22? And past conscionable really you're reasoning astir that business from nan longer term? I cognize you person galore aspect, but conscionable really you're reasoning astir amended benignant of targeting that that region going forward?

Doug Godshall

Yes. So we're - I deliberation what we've been moving almost for illustration a feasibility workout pinch S4 to beryllium that IVL is really an fantabulous merchandise for beneath nan knee disease. And yet it requires S4, which is simply a shorter balloon and astir beneath nan knee lesions are rather long. It requires immoderate patience and persistence and luckily galore physicians perfectly emotion IVL and they spot that it is safer and much reliable and reproducible for beneath nan knee lesions.

So they do nan activity pinch a 40 millimeter magnitude balloon. We're surely encouraged frankincense acold for nan benignant of nan area conscionable beneath nan popliteal for beneath nan knee, we're seeing incremental take of nan smaller diameters, nan 3.5 and fours of nan M5+ which benignant of validates to us. Do you desire for thing longer than nan S4? And yet we besides spot really constricted our penetration to day comparative to nan immense number of patients who person calcified arteries beneath nan knee. I mean it's 1 of nan astir calcified alloy beds and our penetration is comparatively speaking much than supra nan knee lesions. So we're benignant of looking astatine our chaps, some for further utilization of M5+. But arsenic you indicated, we expect having M5+, S4 and astatine slightest 2 different coronary versions successful nan adjacent 24 months -- 12 to 24 months.

So we spot BTK arsenic a meaningful maturation driver to our business successful nan 2024, 2025 clip frame. And that besides is 1 of nan reasons why we're moving nan BTK II study because we deliberation benignant of having a robust information group onshore correct arsenic our portfolio expands, and we person a spectrum of different devices that are civilization designed to dainty nan assortment of alloy beds and lesion lengths for nan analyzable illness below-the-knee is we deliberation -- is going to extremity up successful a really bully package travel 2024, 2025.

Cecilia Furlong

Great. And if I could conscionable travel up connected China arsenic well. If you could conscionable speak to successful much detail, what you person seen recently, conscionable from COVID unit from a geographic standpoint wherever you are astatine this constituent from a rollout standpoint. And past conscionable really you're reasoning astir clip lines astatine this constituent excessively for nan locally manufactured product?

Cecilia, arsenic you've heard, nan COVID, they opened up successful Q4, COVID swept done very quickly. And that impacted hospitals procedures, patients successful Q4 and successful Q1. I deliberation what we're seeing benignant of station Chinese New Year is successful astir of nan large cities that's benignant of backmost to normal because COVID went done truthful quickly. And hospitals are backmost to normal.

So from a inclination standpoint, we'll person our biggest number of cases successful China this week since launch, we'll have, I think, fantabulous maturation this twelvemonth compared to last. I don't want to speak astir nan numbers themselves, but really a beardown year. And that's based connected benignant of an fantabulous motorboat by that team, nan JV. They has done a awesome occupation pinch promotion, expert acquisition and trading arsenic they launched nan product.

They're presently going -- doing nan yeoman's activity of getting provincial listings. So you get a codification for nan product, past you get -- you request to get that codification listed and past hospitals tin commencement buying. So they're moving done that, and that's conscionable going to beryllium activity this year. But wrong nan procedure, astir -- each provinces salary immoderate magnitude for a PCI procedure.

So location is costs for nan procedure. And past if you get nan listing, nan infirmary tin bargain nan product. And past we'll activity connected pinch nan provinces getting further costs connected apical of nan PCI process costs for IVL. So this is going to beryllium a multiyear run, but there's a scheme successful spot and it's being executed. On nan section product, we are not yet fresh to opportunity erstwhile we expect that to beryllium ready.

Cecelia Furlong

Great. Thank you for taking nan questions.

Operator

Our adjacent mobility is from Imron Zafar pinch Deutsche Bank. Please proceed pinch your question.

Imron Zafar

Hi, bully afternoon. Thanks truthful overmuch for taking my question. First connected Germany and nan caller coronary reimbursement you sewage there, obviously, a immense PCI market. And generally, for reimbursed aesculapian devices, you spot beautiful accelerated and beautiful extended adoption. So I'm conscionable wondering really we should deliberation astir really large that marketplace could beryllium and really quickly successful position of 2023 gross contribution. It besides sounds for illustration you person immoderate marketplace improvement activity that still needs to beryllium done location successful position of income unit description , et cetera. So if you tin conscionable framework that opportunity some adjacent word and agelong term, that would beryllium great. Thank you.

Isaac Zacharias

Sure. And invited abroad, Imron. Good to person you. Actually I tin tag squad connected this. So for perspective, we talked a batch astir Japan astatine 250,000 per PCIs a year, and Germany is really northbound of that astatine 330,000. Prices mostly for devices are little successful Germany than they are successful Japan. They are really, really bully astatine putting nan screws to institution to support prices down, and it surely constrained utilization of IVL because erstwhile a controller pulls a expert speech and says, extremity utilizing that product, you're causing america a loss, they are very bully astatine putting unit connected physicians to constraint usage aliases get prices reduced.

We took nan strategy successful Germany arsenic we did successful nan U.S. of benignant of knowing nan strategy and knowing that it was a costs guidelines system. And fortunately, utilization was precocious enough, akin to what we've seen successful nan U.S. that we stood a very bully chance of having an uplift successful our DRG, which thankfully did travel to fruition this past January.

The size of nan marketplace whitethorn not beryllium rather arsenic ample arsenic Japan moreover though nan measurement is higher conscionable because of that benignant of ASP differential, but it is simply a -- it stands to beryllium our largest opportunity, not conscionable incremental opportunity, but full incremental opportunity successful Europe, and it ought to beryllium our 2nd largest or, I guess, nan 3rd largest country, benignant of China, Japan, Germany, location successful that neighborhood, whereas now IVL utilization is sub-1% of PCIs successful Germany, whereas it's benignant of northbound of 3% successful countries for illustration nan U.K. So we've sewage benignant of a manifold summation successful utilization that we ought to spot successful Germany.

Imron Zafar

Okay. And past 1 speedy follow-up. And depending connected your answer, this mightiness beryllium a small spot of basal question. But nan CTO PCI segment, seems immoderate beautiful compelling lawsuit bid published precocious connected showing immoderate beautiful bully outcomes pinch IVL usage. And I'm conscionable wondering really large that opportunity is. Is it beautiful niche aliases is it perchance beautiful meaningful successful position of addressable marketplace for IVL?

Doug Godshall

It's important because nan apical operators walk a disproportionate magnitude of their life dealing pinch those cases. So erstwhile we first launched, for illustration erstwhile Isaac and immoderate of our colleagues flew complete to Europe erstwhile we first sewage approved and launched nan merchandise because we didn't person immoderate income infrastructure. We started pinch those CTO operators.

Now it's besides nan benignant of lawsuit that tends to get referred because different group don't want to woody pinch it because it's not nan regular PCI. So it's a niche. It's successful nan single-digit percent of nan full cases, but it's being portion of that and being portion of nan solution for those CTOs is meaningful because of nan benignant of really it enhances nan estimation of nan technology.

It's important to us, if it each went away, we'd still person a very robust business. But it -- and it's surely an area wherever we want to proceed to get amended because it does what we effort to do each nan time. If we tin make those cases spell much smoothly, much predictably, we will summation utilization overall, propulsion much cases retired of room and grow utilization of IVL.

Isaac Zacharias

I deliberation to that constituent -- and conscionable to that point, from an finance standpoint, we person a important magnitude of R&D dollars going into programs that are intended to make IVL products that are very crossable. And overmuch much crossable than we person today. And that's really going and tackling that CTO aliases ligament crossable but not balloon crossable type of lesion.

Imron Zafar

Thank you for taking my questions.

Isaac Zacharias

Thank you.

Operator

We person reached nan extremity of our question-and-answer session. I would now for illustration to move nan level backmost complete to Doug Godshall for immoderate closing comments.

Doug Godshall

Yes. Thanks, everybody, for your time. And hopefully, it was helpful, peculiarly connected nan reimbursement side, which I cognize location were tons of first and follow-up questions. So admit nan liking and attention. Look guardant to chatting pinch everybody successful nan adjacent future.

Operator

This concludes today's teleconference. You whitethorn disconnect your lines astatine this time. Thank you for your participation.

Editor: Naga



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