Frank Takkinen

Frank Takkinen inquired about the projected revenue composition between MiMedx's wound and surgical businesses for the full year 2026, and the expected growth rate for revenue streams outside of Medicare wound care. He also asked for details on commercial investments and anticipated data packages within the surgical segment.

Answer

CEO Joe Capper and CFO Doug Rice estimated a near 50/50 split between wound and surgical revenue for 2026, particularly early in the year, with wound care growth accelerating in the latter half due to CMS logjam clearance and new PRP offerings. Mr. Capper highlighted the surgical business's high growth potential, nearing a $200 million run rate. For surgical investments, Mr. Capper noted a 50% increase in dedicated sales resources over the past few years, with plans for continued augmentation and support for new products with clinical data.

Frank Takkinen asked for color on the projected revenue composition between wound and surgical businesses for the full year 2026, and specifically inquired about the expected growth rate for revenue streams outside of Medicare wound care. He also sought details on commercial investments and anticipated data packages for the surgical segment.

Answer

CEO Joe Capper and CFO Doug Rice estimated the wound and surgical split would be close to 50/50 for the full year 2026, with surgical growing strongly and wound care compressing initially but picking up volume in the second half. They noted private pay business would continue normal growth. Capper emphasized continued investment in surgical commercial resources, with dedicated sales up nearly 50% over the last few years, and ongoing product development and licensing, supported by clinical data. He highlighted the company's vertical integration and ability to compete effectively post-transition.

Frank Takkinen asked how much of the 1,200 potential breast market accounts AxoGen can pursue with its planned 30-rep headcount. He also inquired about the company's long-term gross margin targets once manufacturing is consistently under the BLA.

Answer

Michael Dale (CEO) stated that the current 30-rep breast team can only pursue a portion of the 1,200 potential accounts, indicating that the organization could potentially double by 2028-2029 to achieve full coverage, with plans to continue growing the breast organization for several years. Regarding long-term gross margin targets, Michael Dale (CEO) said the company plans to address this explicitly in the second half of 2026, after capital infrastructure investments are in place, and expects improvements in 2027, maintaining the 74%-76% range for 2026.

Frank Takkinen asked about the proportion of the 1,200 potential breast market accounts that AxoGen's current 30-person sales team can effectively pursue. He also inquired about the company's long-term gross margin targets once manufacturing is consistently under the BLA framework.

Answer

CEO Michael Dale stated that the current 30-person breast team can only pursue a portion of the 1,200 potential accounts, noting that the organization could potentially double by 2028-2029 to achieve full coverage, with plans to continue growing the breast team for several years. Regarding long-term gross margin targets, Michael Dale indicated that the company plans to address this explicitly in the second half of 2026, after capital infrastructure investments are in place, and expects improvements in 2027, maintaining the 74-76% range for 2026.

Frank Takkinen from Lake Street Capital Markets asked for more details on the breast business, including rep hiring quality and ramp-up time, and sought clarity on the gross margin dynamics related to inventory write-downs.

Answer

President and CEO Michael Dale confirmed they are on track with hiring for the breast sales force, are attracting high-quality talent, and that the full training and ramp-up process takes about nine months. CFO Lindsey Hartley explained that while Q2 benefited from lower write-downs, Q3 gross margin will be impacted by BLA-related stock compensation costs, with an expected return to a more normal level in Q4 and potential for upside in 2026 from process improvements.

Frank Takkinen of Lake Street Capital Markets requested color on the relative growth rates across Axogen's business segments, the potential for surgeon adoption within existing breast accounts, and the remaining major checkpoints for the BLA process.

Answer

CEO Michael Dale declined to provide specific growth rates by segment at this time. An Axogen executive noted that the growth in surgeon count for breast resensation outpaces the growth in new programs, indicating successful activation of new surgeons within existing accounts and significant remaining opportunity. Regarding the BLA, Michael Dale identified the upcoming late-cycle meeting as the next major milestone and noted the ongoing, professional process of responding to FDA information requests.

Frank Takkinen asked about the cadencing of the 36%-38% pharmacy channel starts guidance for 2026, specifically if Q1 would see a higher percentage due to DME seasonality and how the trend would evolve throughout the year. Frank Takkinen also requested more details on the Phase IIb trial for Beta Bionics' Bihormonal System, specifically what the company aims to achieve or learn before proceeding to pivotal trials.

Answer

CFO Stephen Feider and CEO Sean Saint explained that pharmacy coverage tends to increase more in the first half of the year, and Q1 might see a higher percentage of pharmacy starts due to DME deductible resets, making the overall trend complex but directionally indicating a higher Q1 percentage. CEO Sean Saint stated that Phase IIb is primarily about building confidence for success in the pivotal trials, serving as a diligence step to ensure the system's capabilities are robust before committing to a large, year-long study.

Frank Takkinen inquired about the cadencing of the 36%-38% pharmacy channel starts guidance for 2026, specifically asking if DME's pronounced seasonality in Q1 would lead to a higher percentage of pharmacy starts in Q1 that then flatten throughout the year. He also asked for more details on the Phase IIB trial for the Bihormonal System, particularly what Beta Bionics is looking for before initiating pivotal trials.

Answer

Sean Saint, CEO, explained that pharmacy coverage tends to increase more in the first half of the year, and Q1 typically sees a higher percentage of pharmacy starts due to DME deductible resets, creating a complex interplay of factors. Regarding Phase IIB, Sean Saint stated that it is primarily about building confidence for success in the pivotal trials, serving as a diligence step to ensure the system's capabilities before a larger, more advanced stage of development.

Frank Takkinen of Lake Street Capital Markets asked for more detail on the source of off-label Type 2 patient growth and inquired about salesforce hiring expectations for the remainder of the year.

Answer

CFO Stephen Feider, while being careful due to the off-label nature, confirmed that Type 2 adoption is occurring in both primary care and endocrinology channels. He also stated that after expanding to 63 territories in Q1, the company does not plan a massive increase in sales territories for the rest of 2025, with the next expansion likely in early 2026.

Frank Takkinen inquired about the expected response of patients in the BENEFIT-HF trial's expanded HFmREF cohort to Barostim therapy, specifically regarding durability and whether earlier intervention might lead to a more durable response. He also asked whether the low versus high end of the 2026 guidance is more dependent on activating new centers or driving deeper adoption (same-store sales) in existing ones.

Answer

President and CEO Kevin Hykes explained that HFmREF patients (ejection fraction 35-50%) are expected to respond similarly to HFrEF patients, as it's the same neurohormonal disorder, albeit with differing severity. He noted the trial's large size is due to lower event rates in the mREF population. CFO Jared Oasheim stated that the majority of 2026 growth is expected to come from deeper adoption and increased same-store sales at existing centers, although new center adds will continue.

Frank Takkinen asked about the expected reaction of the BENEFIT-HF trial's patient cohort (HFmrEF) to Barostim technology, specifically if earlier treatment might lead to a more durable response. He also asked whether the low or high end of the 2026 guidance is more dependent on the activation of new centers or on same-store sales (deeper adoption) at existing centers.

Answer

Kevin Hykes (President and CEO) explained that HFmrEF is a similar neurohormonal disorder to HFrEF, and therefore, patients are expected to respond to Barostim in a very similar fashion, despite lower event rates requiring a larger trial. Jared Oasheim (CFO) stated that deeper adoption and increased utilization at existing centers (same-store sales) is the primary driver for the 2026 guidance, although new territories will also contribute by activating new centers.

Frank Takkinen of Lake Street Capital Markets inquired about CVRx's reimbursement strategy, asking for details on the company's planned comments to CMS regarding a potential Level 6 neurostimulator APC. He also asked for color on the composition of new account additions, specifically the mix between Tier 1/2 and Tier 3/4 centers.

Answer

President and CEO Kevin Hykes stated that CVRx will continue to advocate for a Level 6 code but is very comfortable remaining in the New Technology APC 1580 for several more years if necessary. CFO Jared Oasheim added that the company's account targeting strategy is proving effective, with a higher percentage of new accounts added in Q2 falling into the Tier 1 and Tier 2 buckets compared to Q1.

Frank Takkinen asked for a more detailed profile of a 'North Star' or ideal target account for a sustainable Barostim program, including potential utilization. He also inquired about the company's current penetration into its list of 300-400 target accounts.

Answer

Executive Kevin Hykes described a 'North Star' account as having clinical and administrative champions, multiple prescribers, a broad referral network, and redundant implanting surgeons. Executive Jared Oasheim stated that while the company has 223 active centers, it is not yet disclosing how many are from the target list, as the strategy was recently implemented. Kevin Hykes added that there is 'lots of runway' for further penetration.

Frank Takkinen sought more detail on what constitutes a 'North Star' sustainable Barostim program and asked about the company's current penetration into its list of 300-400 target accounts.

Answer

Executive Kevin Hykes defined a 'North Star' account as one with a clinical champion, an administrative partner, multiple prescribing physicians, a broad referral network, and redundant implanting surgeons. Executive Jared Oasheim stated that while they have 223 active centers, they are not yet disclosing the breakdown by target tier, as the strategy is new. Kevin Hykes added that there is significant runway left to penetrate the top-tier accounts.

Frank Takkinen of Lake Street Capital Markets asked for perspective on 2025 growth expectations, which are currently around 30%, considering the various moving parts like sales force maturation and reimbursement changes. He also requested quantification of one-time operating expenses incurred in 2024.

Answer

CFO Jared Oasheim indicated that average selling prices (ASPs) should remain stable in 2025 regardless of the final OPPS rule. While acknowledging potential Q1 seasonality, he affirmed that the company is investing for high growth in the mid-to-high 20% range. He quantified a one-time option modification expense from Q1 2023 as $8-9 million and mentioned other unquantified one-time costs in 2024 related to new leadership hires that will not be repeated.

Frank Takkinen of Lake Street Capital Markets sought perspective on 2025 growth expectations, asking if the consensus of around 30% is reasonable given the maturing sales force and reimbursement dynamics. He also requested quantification of one-time operating expenses from 2024 to better model 2025.

Answer

CFO Jared Oasheim stated that the upcoming OPPS rule is not seen as a binary event for ASPs in 2025. He noted that while some Q4-to-Q1 seasonality is possible, the company defines itself as a high-growth company in the mid-to-high 20% range. He quantified the largest one-time expense as an $8-9 million option modification charge recognized in Q1, which will not repeat and will help manage 2025 OpEx growth.

Frank Takkinen inquired about the initial market feedback from the 3870 pump pilot, its influence on the launch scale, the expected gross margin profile throughout the year, and the R&D team's next projects following the 3870 launch.

Answer

President and CEO Roger Susi reported overwhelmingly positive feedback, noting pre-orders and the strategic purpose of the pre-launch to refine the product. CFO Jack Glenn projected gross margins to remain consistent in the first half, then trend higher in the second half due to increased volumes and higher average selling prices. Mr. Susi also revealed that the R&D team is already developing a next-generation MRI monitor, targeting a 2028 market release.

Frank Takkinen inquired about the future focus of the R&D team following the launch of the 3870 pump.

Answer

Roger Susi, President and CEO, stated that the R&D team had already begun working on a "facelift" or next-generation MRI monitor several months prior. He projected the new monitor would be on the market in 2028, succeeding the current monitor launched seven years ago.

Frank Takkinen of Lake Street Capital Markets inquired about the composition of the record backlog, the sales trend for the legacy 3860 pump ahead of the new 3870 launch, the expected ramp-up cadence for the new pump to reach the projected $50 million revenue target in 2026, and whether the 3870's new features could expand the total addressable market.

Answer

CFO Jack Glenn confirmed the record backlog was strong for both pumps and monitors, providing good visibility. Founder, President & CEO Roger Susi elaborated that 3860 pump orders will remain strong until a focused sales effort for the new 3870 pump begins in December. Susi outlined a limited 3870 launch in Q4 2025 for user feedback, anticipating weaker pump bookings in Q1 2026 (offset by revenue from the large backlog) before a significant ramp through the rest of 2026. He also noted that the new pump's enhanced usability is expected to attract new customers, representing potential upside to current forecasts.

Frank Takkinen of Lake Street Capital Markets inquired about the composition of IRADIMED's record backlog, the expected sales trend for the legacy 3860 pump ahead of the new 3870 launch, the projected revenue ramp to the $50 million target for the new pump in 2026, and whether the 3870's new features could expand the overall market.

Answer

CFO Jack Glenn confirmed the record backlog consists of both pumps and monitors, providing strong visibility for the second half of the year. Founder, President & CEO Roger Susi added that sales of the legacy 3860 pump will remain strong until a focused sales effort for the new 3870 pump begins in December. Susi detailed a limited 3870 launch in Q4 2025 for user feedback, anticipating a weaker Q1 for new pump bookings (offset by fulfilling the existing backlog) before a significant ramp through 2026. He also noted that the new pump's enhanced usability is expected to attract new customers, representing potential upside to his forecasts.

Frank Takkinen inquired about the sustainability of the strong Q1 disposables revenue, the factors driving confidence in the recovery of patient monitoring system sales, and the remaining steps for the 3870 MRI IV pump's FDA clearance.

Answer

CFO John Glenn clarified that the strong disposables number was partly due to working down backlog and that future growth should align with capital sales. Executive Roger Susi stated that Q1 monitor bookings were strong, supported by new sales incentives, and that recent interactive communication with the FDA regarding the 3870 pump is a positive sign, though clearance remains a mid-2025 expectation with revenue impact in 2026.

Frank Takkinen of Lake Street Capital Markets inquired about the expected normalization of growth between the IV pump and monitor business lines leading into 2025, the current composition of the company's backlog, and the reasons for operating expense growth outpacing revenue growth in the quarter.

Answer

Executive Roger Susi explained that IRadimed plans to de-emphasize sales of the current pump in 2025 to prepare for the new model, creating a temporary dip in pump revenue. This will be offset by adjusting sales compensation plans to aggressively promote the monitor business. CFO John Glenn added that the backlog remains strong for both pumps and monitors, providing good Q4 visibility. Glenn also clarified that higher operating expenses were driven by sales commissions, noting that Q3 2023 had an unusually low commission expense, and the current quarter's spending level is more representative of the go-forward rate.

Frank Takkinen with Lake Street Capital Markets inquired about Inotiv's profitability, specifically the impact of RMS margins and OpEx on adjusted EBITDA, and how adjusted EBITDA is expected to trend seasonally. He also asked about the continued positive trend in DSA awards, the reasons behind Inotiv's outperformance compared to the industry, and how this trend is expected to translate into DSA growth for fiscal year 2026.

Answer

Bob Leasure, President and CEO of Inotiv, explained that Q1 is typically weaker due to seasonality and holidays, with potential weather impacts. He noted that margin improvements from pricing changes have a 9-12 month lag, and the significant reduction in NHP volume overshadowed some operating leverage benefits in RMS. He expects NHP volume to recover and margins to improve in the back half of the year. Regarding DSA awards, Mr. Leasure attributed the strong performance to Inotiv's smaller size, focus on on-time delivery, communication, building customer trust, increasing recurring sales, attracting new customers, benefits from sales force expansion, and strong scientific innovation, particularly in new approach methods (NAMs).

Frank Takkinen asked for more detail on the consistently positive trend in DSA awards, which have been above industry averages, and how this momentum is expected to translate into DSA revenue growth for fiscal year 2026.

Answer

President and CEO Bob Leasure attributed the strong DSA awards to the company's smaller size, enabling quicker impact, and a focus on on-time delivery, communication, and customer trust, leading to increased recurring sales. He also highlighted the benefit from new customer acquisition, the expansion of the sales force initiated two years prior, and the company's scientific strength and innovation in discovery, particularly with new approach methods (NAMs).

Frank Takkinen inquired about the specific headwinds faced during the quarter, particularly the impact of the cybersecurity incident on revenue and expenses, and sought clarification on quarter-to-date ordering patterns and typical seasonality affecting revenue recognition.

Answer

CEO Bob Leasure confirmed the cybersecurity incident as the major headwind, noting its unquantifiable impact on earnings, expenses, and awards due to intangible costs and diversion of effort. He also discussed the typical seasonality of the December 30th quarter as the weakest due to holidays and provided an outlook on DSA revenue and awards growth, emphasizing the focus on cost reduction in RMS and incremental margins in DSA.

Frank Takkinen of Lake Street Capital Markets asked for metrics on the potential EBITDA leverage from growth in the Discovery business, inquired about recent trends in customer satisfaction and on-time delivery, and questioned future cash flow expectations given the recent NHP inventory build-up.

Answer

CEO Robert Leasure quantified that the Discovery business could see an incremental bottom-line contribution as high as 70-80% due to its fixed-cost structure. He noted significant improvements in on-time delivery, which is driving repeat business. Regarding cash, Leasure explained that the company intends to maintain a higher NHP inventory level as a 'new normal' to better serve clients and will factor this into its balance sheet strategy, though it could be converted to cash if necessary.

Frank Takkinen from Lake Street Capital Markets inquired about Inotiv's Non-Human Primate (NHP) business, asking if the company has worked through its high-cost inventory, about current customer ordering patterns, the potential impact of Cambodia's NHP export situation, and the expected cadence for adjusted EBITDA throughout the fiscal year.

Answer

President and CEO Robert Leasure confirmed that Inotiv has moved past its high-cost NHP inventory. He noted that for calendar 2025, the company has secured more solid commitments and presold inventory, which should reduce revenue volatility compared to the prior year. Regarding Cambodia, Leasure stated the company is prepared for any outcome and has diversified its supply chain. On adjusted EBITDA, Leasure and CFO Beth Taylor indicated that they expect year-over-year revenue growth in the remaining quarters of fiscal 2025, which is necessary to meet debt covenants, suggesting a significant improvement in performance is anticipated.

Frank Takkinen from Lake Street Capital Markets asked for quantification of the gross margin headwind from high-cost NHP inventory, inquired about the 2025 outlook for the NHP business regarding contracted sales and customer inventory, and questioned if the long-term 18-22% adjusted EBITDA margin target remains reasonable.

Answer

Executive Robert Leasure and Executive Beth Taylor explained that Q4 NHP margins were about half of their normal rate due to selling off high-cost inventory. Leasure confirmed that it was critical to clear this inventory to make room for lower-cost models, as boarding capacity is a bottleneck. For 2025, he noted stronger presales than the prior year, growth in recurring colony management services, and expectations for more consistent demand. He anticipates margin pressure in fiscal Q1 2025, followed by a return to more normalized levels. Leasure also affirmed the 18-22% long-term EBITDA margin target is still achievable, though reaching the high end would require a broader industry recovery.

Frank Takkinen from Lake Street Capital inquired about AngioDynamics' gross margin outperformance in the quarter, asking why the mid-50% gross margin might not be sustained throughout the year and into future years. He also asked for more details on mechanical thrombectomy, specifically AngioVac's performance given a tough year-over-year comparison, and the anticipated impact of the APEX-Return study and right heart initiatives on the growth profile of that product line.

Answer

Steve Trowbridge, EVP and CFO, explained that the strong gross margin in the first half was driven by positive pricing, product mix shift towards Med Tech, and accelerated benefits from manufacturing transfer initiatives. He noted that the second half would see some structural underabsorption due to the finalization of product moves from Queensbury to Costa Rica, with offsetting cost cuts already realized. Jim Clemmer, President and CEO, and Steve Trowbridge, EVP and CFO, addressed mechanical thrombectomy, highlighting strong AlphaVac performance with new accounts and physician feedback. They acknowledged AngioVac's tough Q2 2025 comparison but expressed confidence in its long-term trajectory, noting 11% year-to-date growth. They emphasized AlphaReturn's importance in overcoming adoption hurdles by allowing blood reinfusion, expecting it to be a catalyst for AlphaVac's accelerated growth.

Frank Takkinen inquired about AngioDynamics' gross margin performance, asking why the mid-50% gross margin might not be sustainable throughout the year and into future periods. He also asked for more details on mechanical thrombectomy, specifically AngioVac's performance given a tough year-over-year comparison, and the potential impact of APEX Return and Right Heart initiatives on the growth profile of the mechanical thrombectomy line.

Answer

Steve Trowbridge, EVP and CFO, explained that strong gross margin in the first half was driven by positive pricing, product mix shift to Med Tech, and accelerated benefits from manufacturing transfer initiatives. He noted that the second half would see some structural underabsorption due to the finalization of product moves to Costa Rica, partially offset by accelerated cost cuts already realized. Jim Clemmer, President and CEO, expressed satisfaction with AlphaVac's performance and AngioVac's year-to-date growth despite the tough Q2 comparison. Steve Trowbridge added that the AlphaReturn product is expected to be a catalyst for accelerating AlphaVac's growth by addressing a key adoption hurdle related to blood return.

Frank Takkinen inquired about the current hospital penetration for mechanical thrombectomy products and its expected future trend. He also asked for an update on the mechanical thrombectomy sales force size following recent hiring and broader commercial investment plans across the med-tech business.

Answer

CEO James Clemmer reported good uptake and interest in hospitals for mechanical thrombectomy, leading to successful value analysis committee approvals. He highlighted positive physician feedback on device features and confirmed continued investment in the space, including the addition of new sales representatives. CFO Steve Trowbridge added that new customers are being acquired quarterly for both AngioVac and AlphaVac, indicating early stages of penetration with significant growth opportunities. Clemmer specified that the mechanical thrombectomy sales force now stands at 50 dedicated representatives, up from 40, and outlined plans for similar expansion models for NanoKnife's urology sales force in the coming years.

Frank Takkinen from Lake Street Capital asked for an update on AngioDynamics' mechanical thrombectomy hospital penetration and its expected future trend. He also inquired about the current size of the mechanical thrombectomy sales force and broader commercial investment plans across the med-tech business.

Answer

CEO Jim Clemmer highlighted strong hospital uptake and conversion through value analysis committees for mechanical thrombectomy, driven by positive physician feedback on device features. CFO Steve Trowbridge added that new AngioVac and AlphaVac customers are being acquired quarterly, indicating early stages of penetration with significant growth opportunities. Jim Clemmer further detailed that the mechanical thrombectomy sales force has increased by 25% to 50 dedicated representatives in FY26, with plans for similar expansion in NanoKnife urology sales over the next three years following CPT-1 code implementation.

Inquired about potential bottlenecks for the successful LU Pro launch, the two-step regulatory and launch strategy for the new NXT 41 platform and its relation to Simpladerm, and the timeline for upcoming business development news.

Answer

Management stated that the primary factor for LU Pro growth is scaling VAC approvals, not production or inventory bottlenecks. The NXT 41 launch is staggered as a derisked regulatory strategy, with the base matrix launching in 2026 and the drug-eluting version in 2027; it is a new platform distinct from Simpladerm. The company declined to provide a specific timeline for business development news to maintain negotiating leverage.

Inquired about the potential for establishing distribution agreements with other pacemaker companies besides Boston Scientific, the expected cadence of new account additions in 2025, and requested a breakdown of the quarterly cash burn between operations and litigation settlements.

Answer

The agreement with Boston Scientific allows for other partnerships, but the company's 'dance card is full' for now with current demand and the upcoming Boston rollout. New account additions are running at 15/month but may slow slightly due to longer VAC cycles, though the Boston partnership could offset this. The higher Q4 cash burn was driven by settling a significant number of legacy lawsuits, reducing the outstanding cases from 79 to 43, with litigation-related cash use expected to decline in 2025.

Frank Takkinen of Cantor Fitzgerald inquired about the early implant mix for EluPro across different pacemaker brands, the size of the existing CanGaroo account base, commercial team hiring status, and the potential for sales disruption during the Q4 transition from CanGaroo to EluPro.

Answer

C. Mills (Executive) explained that it's very early, but they see no brand bias in EluPro adoption, with all major pacemakers being covered. He noted there are around 400 CanGaroo accounts, representing the majority of the target market, and about 10% have already activated EluPro. Mills stated they feel 'great' with the current hybrid sales team (direct and independent reps) but will continue to add opportunistically, especially in the West, without compromising on quality. Regarding the CanGaroo-to-EluPro transition, Mills acknowledged potential 'noise' but expects it to be marginal in Q4, highlighting that initial EluPro orders are, on average, 20% larger than CanGaroo orders, suggesting an upside to the cannibalization.

Frank Takkinen of Lake Street Capital Markets asked for quantification of the sales funnel to support the significant second-half growth implied by guidance and questioned which growth opportunity would be the most powerful driver.

Answer

CEO Maria Sainz explained that the company manages separate, robust sales funnels for both hospital and office opportunities in each territory, in addition to country-specific funnels for international markets. She emphasized that the primary growth driver is not a single market segment but rather the transformative improvement in image quality from the new OptiV AI software, which is activating the market, expanding use cases, and driving demand across all channels. Sainz also noted that the sales team, hired at the beginning of the year, is now fully mature and effective, providing additional sales power for the second half.

Frank Takkinen of Lake Street Capital Markets asked about the initial feedback from Hyperfine's office setting pilot program, the potential for recovering lost grant-funded deals, and the current receptivity from international distributors.

Answer

President and CEO Maria Sainz reported that the office pilot program is yielding very positive feedback, making the company "more bullish" on the opportunity. She noted that pilot accounts are now accredited and scanning, and the rapid enrollment in the Neuro PMR study shows strong enthusiasm. Regarding the lost grant-funded deals, Sainz stated they are considered lost business due to a "very sobering" and uncertain grant environment at academic institutions. On the international front, she confirmed continued strong interest and progress in establishing user networks, reiterating the plan for market entry into India in the second half of 2025.

Frank Takkinen of Lake Street Capital Markets inquired about the revenue potential from biologic partners, specifically early commercial therapies versus larger opportunities like UniCure for Huntington's disease. He also asked about the market reception and financial impact of the new ClearPoint 3.0 software.

Answer

CEO Joseph Burnett explained that initial commercial therapies are for rare disorders with small patient populations, serving more as symbolic milestones and a 'dress rehearsal' for operations. He contrasted this with the much larger market opportunity for UniCure's Huntington's treatment, which could involve tens of thousands of patients. Regarding ClearPoint 3.0, Mr. Burnett stated it has seen the fastest deployment in company history, with 35 sites installed, and that it carries a similar margin profile to MRI procedures while lowering the capital barrier for new hospitals.

Frank Takkinen inquired about the biologics partner opportunity, specifically the potential revenue from initial commercial therapies and the outlook for larger opportunities like UniCure. He also asked about the market reception and financial impact of the new ClearPoint 3.0 software.

Answer

President, CEO & Director Joseph Burnett explained that initial commercial therapies like Tability and REGENXBIO are for rare disorders and serve more as symbolic milestones than major near-term revenue drivers. He contrasted this with the significant potential of UniCure's Huntington's disease treatment, which targets a much larger patient population. Regarding ClearPoint 3.0, Burnett noted its rapid adoption, with 35 sites installed, and confirmed it has no negative margin impact as it uses the same disposable kit. He emphasized that its efficiency helps create hospital capacity for future drug delivery procedures.

Frank Takkinen inquired about the long-term procedural mix between MRI-based and operating room-based surgeries. He also asked for an update on the company's progress toward GLP certification, including remaining steps and the level of pent-up customer demand for these services.

Answer

Executive Joseph Burnett explained that the OR-based system helps create MRI capacity for upcoming drug delivery therapies, which are expected to remain in the MRI suite. He anticipates DBS procedures will grow faster in the OR, but the MRI mix could increase again in 2-3 years as new drugs launch. On GLP certification, he cited standard operating procedures and facility expansion as key remaining steps, with a goal to be operational in the second half of the year. He confirmed significant pent-up demand, with at least five partners expressing interest in converting studies once the capability is live.

Frank Takkinen inquired about the long-term procedural mix between MRI-based and operating room-based surgeries following the launch of the 3.0 software. He also asked for an update on the company's progress toward GLP certification, including remaining steps and the level of pent-up customer demand for these services.

Answer

Executive Joseph Burnett projected that while DBS procedures may shift more to the operating room to create capacity, crucial drug delivery therapies will likely remain in the MRI suite, potentially increasing the MRI mix again in a few years. On GLP certification, Burnett confirmed they are on track for the second half of the year, with remaining work focused on SOPs, quality systems, and hiring. He noted significant pent-up demand, with at least five pharma partners ready to convert studies once the GLP capability is operational.

Frank Takkinen asked about the revenue potential from partners' fast-tracked assets, the necessary global site footprint, and the 2025 operating expense outlook.

Answer

Executive Joseph Burnett explained that just 1% penetration into the addressable patient populations for fast-tracked therapies could represent $250 million in revenue for ClearPoint. He noted the company aims for 150 active centers in the next three years to support this demand. Regarding spending, Burnett stated that while investments will be made to seize opportunities, the company will remain thoughtful with its cash and is not providing full-year cash burn guidance to maintain flexibility.

Frank Takkinen of Lake Street Capital Markets asked for details on new system activations, specifically how many were driven by the SmartFrame OR system, the current adoption rate of SmartFrame OR within existing accounts, and the long-term outlook for gross margins.

Answer

CEO Joseph Burnett clarified that of the 19 new system activations year-to-date, only 2-3 were net new sites enabled by SmartFrame OR; most were existing customers expanding their capabilities. He noted this is typical for a limited release and that the technology's real power is also in increasing procedure volume at existing sites by removing MRI-access constraints. Burnett stated that about 6-7 accounts currently use SmartFrame OR, with another 10+ in the hospital value analysis committee (VAC) approval process. Regarding margins, he projected that disposable gross margins could reach 70% at scale, and while lower-margin capital sales can impact the overall mix, the consolidated gross margin should comfortably reach the 70s as disposable revenue grows.

Frank Takkinen of Lake Street Capital Markets asked about the company's long-range plan, noting that the exit from the Dixie Medical business implies a need for accelerated RNS growth to meet targets. He also requested an update on the strategy of using direct-to-patient (DTP) marketing to drive volume in Project CARE geographies.

Answer

CEO Joel Becker and CFO Patrick Williams acknowledged the Dixie divestiture will remove that revenue stream but reiterated their strong conviction that the core RNS business can grow at 20% or more, consistent with the LRP's goal for RNS. They stated they will provide a formal update to the LRP after gaining more visibility into 2026. Becker also confirmed that the company continues to successfully use targeted DTP marketing to build the patient pipeline for both CARE centers and Level 4 centers.

Frank Takkinen of Lake Street Capital Markets questioned the reimbursement pathway for the potential generalized and pediatric indication expansions, asking if additional work is needed with payers. He also asked about the expected revenue cadence for 2025, noting the historical lack of seasonality and the typical step-up from Q4 to Q1.

Answer

CFO Rebecca Kuhn clarified that while the product and billing codes for new indications will remain the same, NeuroPace will need to work with private payers to update their coverage policies to align with the new FDA-approved indications, a process they are confident in. Executive Joel Becker addressed seasonality by noting that while quarterly results can vary, viewing the business in six-month increments shows steady growth. He expects a cadence in 2025 similar to past years, where the second half has typically been stronger.

Frank Takkinen inquired about the primary drivers of core RNS system growth, questioning whether it stemmed from the Project CARE initiative, market share gains, or market expansion, and asked about the durability of these trends. He also asked for an update on the productivity of recently hired sales representatives and future hiring plans.

Answer

Joel Becker, an executive, attributed the growth to successful execution of their three-part strategy: increasing adoption in Level 4 centers, expanding service sites via Project CARE, and pursuing new indications. He confirmed growth is a mix of market development and share gains, with Project CARE now making meaningful contributions. Becker also noted that new sales reps are fully deployed and positively impacting growth, and that future hiring will be opportunistic to support upcoming expansion opportunities.

Frank Takkinen of Lake Street Capital Markets asked for more detail on President Jeff Blizard's comments about eliminating ineffective spending and investing in a patient-centric culture, and also requested an update on the impact of new reinforced tissue matrix (RTM) contracts.

Answer

President Jeffrey Blizard explained that cost control measures include revising the T&E policy and better managing trunk stock inventory to reduce waste. He stated that investing in a patient-centric culture involves recruiting sales personnel with strong clinical capabilities. CEO Antony Koblish added that while the company has secured approximately 25 RTM contracts, the new patient-centric approach focused on superior clinical outcomes is a key strategy to transcend hospital bundling and pricing constraints.

Frank Takkinen of Lake Street Capital Markets inquired about the expected revenue cadence for the remainder of 2025 and the key drivers for sequential growth. He also asked for an update on the competitive hiring environment and whether it has stabilized since Q4 2024.

Answer

CFO Roberto Cuca outlined a typical revenue cadence, expecting a significant step-up from Q1 to Q2, a smaller increase in Q3 due to summer holidays, and another large step-up in Q4. He credited this growth to rising rep quotas and the new Account Specialist (AS) structure. CEO Antony Koblish added that the new sales structure is reaccelerating growth and providing stability. Koblish confirmed the competitive hiring environment has stabilized and returned to a 'natural process,' emphasizing TELA's strong value proposition for its sales team, including innovative products and a significant market opportunity.

Frank Takkinen asked for details on the gross number of Q4 sales representative departures, the underlying assumptions for unit volume versus ASP in the 2025 guidance, and the company's confidence in reaching breakeven with its existing liquidity.

Answer

CEO Antony Koblish disclosed that 11 Territory Managers (TMs) made unplanned departures in late Q4, primarily poached by competitors offering large financial incentives. He explained that 2025 volume growth will be driven by lower-ASP products like IHR, while new larger PRS products could increase PRS ASP. CFO Roberto Cuca affirmed confidence in reaching profitability, supported by a plan to hold operating expenses flat year-over-year.

Frank Takkinen of Lake Street Capital Markets asked for an initial reaction to the 2025 consensus growth estimate of 25% and inquired how lessons from the strong international performance could be applied to the U.S. market.

Answer

Executive Roberto Cuca stated that while official 2025 guidance would come later, a 25% growth rate is not out of line with their trajectory. Executive Antony Koblish highlighted the U.K.'s 'shared decision-making' model, which favors TELA's products, as a key lesson. He believes a similar shift away from permanent plastic mesh is happening in the U.S., positioning the company favorably for long-term growth.

Frank Takkinen of Lake Street Capital Markets, LLC questioned why the revenue guidance wasn't raised more significantly given the strong Q2 momentum. He also asked how customers are using the new OmniEdge device and whether it is cannibalizing existing sales or expanding the market.

Answer

CFO Ali Bauerlein explained that the company prioritizes setting appropriate and achievable guidance to avoid getting ahead of market factors. Chief Commercial Officer Matt Link described OmniEdge as a customization tool that offers higher viscoelastic volume to meet specific surgeon preferences, evolving the OMNI platform rather than simply replacing the prior version. CEO Paul Badawi noted that further innovations on the platform are planned.

Frank Takkinen of Lake Street Capital Markets asked for an update on the potential for the OMNI procedure to qualify for 'device intensive' status for 2026. He also requested commentary on the expected cadence of revenue for the remainder of the year after the strong Q1 performance.

Answer

CFO Alison Bauerlein stated that while the company will not speculate on the outcome, they have a strong conviction that OMNI should qualify for device-intensive status. For revenue cadence, she guided for sequential growth from Q1 to Q2, a typical slight dip in Q3, and a seasonally strong Q4. She also noted potential upside from the pseudophakic stand-alone market and any material TearCare reimbursement decisions.

Frank Takkinen requested deeper details on the upcoming OMNIEdge product, including launch timing, target patient cohorts, and pricing strategy. He also asked about the expected revenue ramp for the dry eye business following reimbursement policy establishment and any planned commercial investments.

Answer

CEO Paul Badawi and Executive Matthew Link positioned OMNIEdge as a key iterative advancement in the OMNI platform, designed to enhance usability and efficacy, forming part of a broader 'OMNI family' portfolio strategy. CFO Alison Bauerlein stated that the TearCare revenue ramp depends on the timing and scope of reimbursement wins, but the company is prepared to 'hit the ground running' thanks to its established base of over 1,500 trained facilities.

Frank Takkinen asked for details on the updated revenue guidance, specifically the expected performance cadence between domestic and international markets for Q3 and Q4, and inquired about the drivers behind the success of pre-filled syringes in Europe.

Answer

President & CEO Linda Tharby and CFO Tom Adams explained the guidance raise is primarily driven by accelerating international growth from pre-filled syringe conversions. Tom Adams noted a Q3 headwind from a large US distributor's inventory reduction program, with a recovery expected in Q4. Linda Tharby added that the Freedom system's compatibility with pre-filled syringes is a key differentiator, driving significant market share gains in Europe as pharma partners convert their drug presentations.

Frank Takkinen asked about KORU's long-term strategy for pursuing new drug indications without pharmaceutical partners, questioning the impact on market timing and capital needs. He also requested clarification on the revenue cadence for the remainder of the year, given the international distributor stocking in Q1.

Answer

Executive Linda Tharby explained that the strategy to independently pursue new drug labels, like for iron chelation and antibiotics, originates from strong specialty pharmacy relationships where off-label use was already occurring. She emphasized these projects have paybacks of less than one year and do not require additional capital. Executive Tom Adams addressed the revenue cadence, projecting full-year international growth around 30%, with Q2 being impacted by the Q1 stocking pull-forward. He added that U.S. growth will continue to outpace the market, and Novel Therapies revenue is expected to be between $2.5 million and $3 million.

Frank Takkinen asked about the drivers behind the strong Q4 outperformance in the core domestic business, its replicability, the market dynamics of the ePump opportunity, and the long-term gross margin outlook.

Answer

CEO Linda Tharby attributed the Q4 domestic strength to a focused go-to-market model, new account agreements, pricing impacts, and accelerated market growth. While reiterating 10-15% growth guidance, she noted potential upside. She described the ePump consumable strategy as being in the 'early innings' and a significant growth driver. For long-term margins, she and CFO Tom Adams pointed to the new consumables launch, automation, and operational excellence programs as key drivers toward a 65%+ target.

Frank Takkinen inquired about the reasons for the next-generation pump's 510k submission delay, the current structure of the commercial team, and the primary growth drivers anticipated for 2025.

Answer

President and CEO Linda Tharby clarified that the submission delay to mid-2025 was due to the new consumables line, not the pump, and will not materially impact 2025 revenue. She noted the commercial team consists of about five U.S. reps focused on key accounts and 26 international distributors. For 2025, she highlighted strong momentum in the Domestic Core, international expansion including Japan, and increasing consistency in Novel Therapies revenue as key growth drivers.

Frank Takkinen of Lake Street Capital Markets asked if a competitor's supply issue contributed to RestoreFlow cardiac's strong unit growth and questioned whether the large Q1 sales force hiring materially impacted Q2 results.

Answer

Chairman & CEO George LeMaitre stated that while a competitor (Artivion) had issues, LeMaitre's strong RestoreFlow results have been durable for several quarters and are driven by success in Canada, the UK, and now the U.S. Regarding new hires, he noted that while counterintuitive, the company's data suggests new reps have an immediate impact on sales.

Frank Takkinen of Lake Street Capital Markets inquired about the ramp-up time for new sales reps and when to expect operating leverage. He also asked if changing med-tech valuations altered the company's M&A strategy toward potentially larger or more novel devices.

Answer

CEO George LeMaitre stated that recent data surprisingly shows new reps ramp up much quicker than the previously assumed full year, with performance becoming indistinguishable from tenured reps after just two quarters. President Dave Roberts responded that while lower valuations make targets more affordable, the company's M&A strategy remains focused on synergistic targets in its core markets and is not changing based on valuation shifts.

Frank Takkinen of Lake Street Capital Markets requested a geographic breakdown of the sales force and asked about long-term hiring plans. He also inquired about the drivers behind the strong performance of the Carotid shunt product line in 2024 and its sustainability into 2025.

Answer

CEO George LeMaitre provided the rep count: 74 in the U.S., 51 in Europe, and 27 in APAC. He affirmed that the hiring cadence will continue, especially in the U.S., to reduce territory sizes. He attributed the 14% growth in shunts to competitors exiting the European market due to MDR regulations, a dynamic LeMaitre successfully capitalized on through continued supply and pricing actions.

Frank Takkinen of Lake Street Capital Markets asked about the global rollout status of the pricing floor strategy and sought an update on the approval timeline for allograft products in Ireland and Germany.

Answer

CEO George LeMaitre confirmed the pricing floor strategy is now active in all major geographies. He also explained that the German allograft approval is slightly delayed by a scheduling issue, while the path in Ireland has become more complex due to new government requirements, causing a strategic reassessment.

Frank Takkinen of Lake Street Capital Markets asked for a refresh on account targeting metrics, including the number of high-potential accounts and the planned rollout strategy as the sales team expands. He also inquired about the latest market trends in carotid procedures, specifically the mix between endovascular methods (CAS/TCAR) and open surgery, and the expected progression toward an endovascular-first standard of care.

Answer

Chief Commercial Officer Shane Gleason explained that the company uses claims data to target a portion of the 4,000 U.S. physicians performing 60,000 annual procedures, focusing on high-volume centers. He noted the market is shifting, with stenting now over 40% of procedures, and expects it to reach a 50/50 split with surgery within a year. The initial strategy is to target physicians with a current need for their CAS-indicated stent, with a long-term plan to serve all approaches.

The analyst requested a refresh on the company's account targeting strategy, including the number of potential accounts and rollout plan. He also asked about the current market trends between stenting and open surgery and the expected progression towards an endovascular-first approach.

Answer

The company is using claims data to target high-volume physicians and accounts in dense geographies. They are tracking a sales funnel which is progressing as expected. The market is shifting towards endovascular procedures, expected to reach a 50/50 split with surgery within a year. InspireMD's initial focus is on the transfemoral stenting market, with a long-term plan to address all approaches, including TCAR.

Frank Takkinen followed up on the CGuard Prime timeline, asking if the delay was purely procedural or related to FDA resource issues. He also inquired about the company's hiring cadence for the commercial team in light of the new timeline and asked for perspective on the potential market impact of the upcoming Crest 2 trial results.

Answer

The company clarified the FDA delay is a matter of prudent timing due to inter-departmental processing and not a specific issue with their submission or the FDA team. The commercial hiring plan is unchanged, with a foundational team in place and plans to scale upon approval. Regarding the Crest 2 trial, the executive team believes its impact will depend on the patient risk profile enrolled and expects it will likely confirm existing clinical knowledge rather than significantly changing practice.

Frank Takkinen asked about the pre-launch commercial strategy, specifically regarding engagement with hospital value analysis committees (VACs) and the expected pace of physician adoption. He also requested details on the structure of the newly onboarded commercial team and sought guidance on the trajectory of operating expenses throughout 2025 given the significant hiring.

Answer

Chief Commercial Officer Shane Gleason explained that the sales team is leveraging existing relationships to 'hold the place in line' for VAC reviews post-approval. He anticipates a mix of adoption speeds but noted significant physician enthusiasm. Gleason detailed that the initial team of 13 includes 4 regional sales directors who will build out their teams. CFO Craig Shore added that operating expenses will continue to see significant growth in 2025, driven by sales organization expansion and ongoing R&D costs for the C-GUARDIANS I, II, and III trials.

Frank Takkinen of Lake Street Capital Markets inquired about the revised 2025 guidance, seeking a breakdown of Q3 vs. Q4 expectations and the U.S. vs. OUS growth outlook. He also asked for details on the slowdown in StratEx scans and the magnitude of their recent rebound in June and July.

Answer

CFO Mehul Joshi clarified that the guidance revision is due to a slower-than-expected ramp in U.S. initiatives, while international performance remains on track. He projected Q3 revenue to be flat year-over-year and U.S. revenue to comprise at least two-thirds of the total in the second half. CEO Steve Williamson attributed the earlier StratEx slowdown to capacity constraints at IP centers focused on lung cancer screening, noting that new commercial programs have longer conversion cycles. He confirmed record StratEx levels in June/July as a positive leading indicator but did not quantify the increase.

Asked about the most impactful initiatives within the 'Acquire, Test, Treat' strategy, the number of active LungTraX accounts, and the impact of tariff discussions on international ordering patterns.

Answer

Executives highlighted marketing and peer-to-peer education as early successes, with therapy awareness reps and LungTraX being key future drivers. It is too early to disclose the number of active LungTraX accounts, but dozens are in the contracting phase. Regarding tariffs, besides some anticipated stocking from their Chinese distributor, they haven't seen significant changes in ordering patterns from other international partners.

Frank Takkinen from Lake Street Capital Markets asked for management's reaction to 2025 Street growth expectations and inquired about which economic benefits of the Zephyr Valve are resonating most with hospital C-suite executives.

Answer

CEO Steven Williamson and CFO Mehul Joshi declined to guide for 2025 but highlighted strategic drivers like LungTraX and targeted advertising as catalysts for future growth. Williamson explained that C-suites are most compelled by the large underserved patient population, the procedure's strong economic value proposition and reimbursement, and the company's blueprint for building a comprehensive lung health program.

The analyst asked for management's view on current Street expectations for 2025 growth and inquired about the specific economic benefits that are resonating most with hospital C-suite executives to drive utilization.

Answer

Management declined to provide 2025 guidance but highlighted strategic initiatives like LungTraX and targeted marketing as catalysts for future growth. They noted that C-suite executives are most compelled by the large underserved patient population, the procedure's strong economic value proposition with good reimbursement, and its status as the standard of care. The company helps hospitals build lung health programs to convert this interest into utilization.

Frank Takkinen questioned how the recent financing and subsequent sales force expansion would impact the revenue growth cadence through the back half of the year. He also asked for early physician feedback on the new HCPCS mapping code and its potential impact on TriNav adoption.

Answer

CEO Mary Szela explained that new sales reps will be added over the next couple of months, with the biggest impact expected in Q4 2025 and more significantly in 2026. Regarding the new mapping code, Szela reported 'really favorable' feedback, noting it was a bigger adoption barrier than previously appreciated. She and Dr. Richard Marshall added that full reimbursement allows physicians to use TriNav more broadly without worrying about reimbursement hurdles.

Frank Takkinen of Lake Street Capital Markets asked for more color on the Q1 performance and the expected cadence of the 50%+ full-year revenue growth. He also questioned the reason for the slowdown in new account openings in Q4 2024.

Answer

CFO James Young stated he could not comment on Q1 specifically but noted that full-year growth might be 'lumpy' and not 50% every quarter. CEO Mary Szela explained the slowdown in new account openings was a deliberate strategic shift to focus on driving deeper utilization within the existing 284 accounts, rather than continuing the rapid pace of new openings.

Frank Takkinen of Lake Street Capital Markets asked about the ordering patterns for the initial European MAGiC catheter adopters and the remaining steps for U.S. FDA approval of MAGiC.

Answer

David Fischel (executive) explained that initial MAGiC orders are typically for smaller batches (5-10 catheters) to allow for training and familiarization, with repeat orders now starting. For the U.S. FDA submission, Fischel mentioned they are addressing detailed questions, supplementing with final tests, and providing ongoing clinical data from the European study. He noted the process is collaborative and expressed optimism for a quicker U.S. adoption ramp post-approval.

Frank Takkinen of Lake Street Capital Markets inquired about the necessary steps for the U.S. approval of the MAGiC catheter and how the new MAGiC Sweep mapping catheter will integrate into the product ecosystem and affect existing partnerships.

Answer

David Fischel, an executive at Stereotaxis, detailed the ongoing U.S. regulatory process for MAGiC, which involves continued patient enrollment in Europe and a collaborative dialogue with the FDA. He explained that the MAGiC Sweep mapping catheter addresses a significant physician request, aiming to improve workflow efficiency and attract new users by robotizing the mapping portion of procedures. Fischel assured that partners are aware of this strategic development.

Frank Takkinen inquired about key learnings from the initial AMDS launch, including surgeon training, and whether physician feedback suggests the $150M market opportunity could be larger. He also asked for commentary on cash flow expectations for the year.

Answer

Executive James Mackin described the AMDS launch and surgeon training as very positive, noting they have learned how to accelerate the hospital IRB approval process. He suggested the market could be larger, as AMDS's ability to reduce high mortality rates in acute Type A dissection with malperfusion could expand the treatable patient population. CFO Lance Berry added that the company expects to be free cash flow positive for the year, explaining the Q1 burn was seasonal and impacted by cyber-related collection delays, which should normalize by Q2.

Frank Takkinen from Lake Street Capital Markets asked about the total addressable market for AMDS in the U.S., the specific operational bottlenecks from the cyber incident, and the expected impact on Q1 adjusted EBITDA.

Answer

CEO James Mackin stated the focus for AMDS is on the top 600 U.S. centers, where Artivion has existing sales coverage. CFO Lance Berry explained that the cyber incident forced manual processes, extending lead times for tissue processing. Both executives confirmed Q1 adjusted EBITDA would be the lowest of the year due to the revenue timing shift but reiterated confidence in the full-year guidance.

Frank Takkinen of Lake Street Capital Markets inquired about the Q4 placement mix, seeking a breakdown between new customers, competitive swaps, and legacy LLS system upgrades. He also asked for an update on LENSAR's market penetration strategy and the current competitive landscape.

Answer

Executive Nicholas Curtis explained that 75% of 2024 U.S. placements were new to LENSAR, with about 30% being competitive replacements and nearly 22% being femto-naive. He noted the strategy of targeting high-volume practices is working well, with femto-naive customers now proactively seeking out the ALLY system. Executive Thomas Staab clarified that they will continue to target 70-85% new customers. Regarding competition, Nicholas Curtis stated that while competitors are strong, LENSAR is not technologically threatened, and the key challenge is overcoming bundled pricing with ALLY's superior productivity and outcomes.

Frank Takkinen inquired about the Q2 mix between sold systems and lease placements, LENSAR's manufacturing capacity to meet new international demand, and the company's expectations for business performance in the second half of 2024.

Answer

CEO Nicholas Curtis clarified that of the 17 new ALLY systems placed, 10 were sold and 7 were leased, with an additional 6 prior leases converted to sales. He expressed confidence in manufacturing capacity, noting LENSAR had proactively built up inventory in anticipation of EU and Taiwan approvals. For the second half, both Curtis and CFO Thomas Staab guided towards a strong Q4, explaining that Q3 is seasonally slower but will benefit from new system installations, with the full recurring revenue impact from recent placements and new OUS shipments expected to materialize in the fourth quarter.

Asked for details on the 18 new system orders signed in Q2, the process for ramping up utilization at new sites, and the company's current manufacturing capacity to meet rising demand.

Answer

The 18 new orders are all new business for LENSAR, with 13 replacing competitive systems. It takes 30-90 days for new sites to ramp up procedure volume, with utilization growth driven by superior astigmatism management. The company is currently running a single manufacturing shift but has sufficient capacity and has been preparing its supply chain for the anticipated growth.

Frank Takkinen asked for details on the 18 new ALLY system orders signed early in Q2, the process for scaling up utilization at new sites, and LENSAR's current manufacturing capacity.

Answer

CEO Nick Curtis explained that of the 18 new orders, 13 are replacing competitive systems, and all represent new business for LENSAR. He noted it typically takes 30 to 90 days for new sites to ramp up procedure volume, with utilization often increasing due to ALLY's superior astigmatism management. Curtis also confirmed that the company is running a single manufacturing shift with sufficient capacity to meet the anticipated demand without backorders. CFO Tom Staab added that the new orders are exciting for future recurring revenue growth.

Frank Takkinen inquired about the post-merger strategic prioritization between Isoray's commercial assets and Viewpoint's precommercial pipeline. He also asked for details on Viewpoint's Phase I trial timeline and the combined company's pro forma share count and cash runway.

Answer

Executive Lori Holmes-Woods emphasized the shared vision, while Viewpoint CEO Johan Spoor detailed the portfolio approach of balancing short and long-term initiatives. Spoor noted that guidance on trial timelines would be provided closer to the merger's close. Executive Jonathan Hunt confirmed the pro forma shares would be around 300 million and expressed confidence in the cash runway to support both businesses.

Frank Takkinen of Lake Street Capital Markets inquired about the current business environment, asking for month-to-month trends from January through May and whether conditions were normalizing. He also asked about the progress of internal investments in sales and marketing and the potential for diversifying the company's isotope supply chain away from its two Russian reactors.

Answer

Executive Lori Holmes-Woods responded that while January and February saw some lingering COVID-19 impact, access to healthcare has since stabilized. She confirmed that IsoRay is actively investing in its sales and marketing presence, with hiring underway. Regarding the supply chain, she expressed confidence in the current Russian suppliers, noting there have been no disruptions and that while other options are always reviewed, there is no immediate need to diversify.

Frank Takkinen of Lake Street Capital Markets inquired about the catalyst for the increased internal investments in sales and marketing, whether this signaled a shift from a prior focus on external investments, the expected seasonality for the upcoming March quarter amidst COVID-19, and the factors impacting gross margin, including the new reactor and material costs, and the timeline to return to the 50% range.

Answer

CEO Lori Holmes-Woods explained that the investment shift is driven by improving access to hospitals as COVID restrictions ease, making it an opportune time to expand the sales team and territories. She clarified that the company has not lost focus on external opportunities but is shoring up internal resources to support them. Regarding seasonality, she noted that COVID surges have disrupted typical patterns, but hopes for a return to normalcy if the Omicron wave subsides. CFO Jonathan Hunt addressed gross margins, stating the new reactor startup caused some additional costs but expects margins to improve back towards the 50% range as sales growth allows for more efficient isotope use. He also confirmed no significant supply chain disruptions for other materials.