Earnings call transcript: CVRx Q4 2024 shows revenue growth, stock dips
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: strong revenue growth and positive reimbursement changes are offset by ongoing financial losses and operational risks. The Q&A reveals management's focus on expanding market penetration and addressing awareness issues, but also highlights uncertainties in cash burn and target account strategies. The issuance of new shares and stable gross margins suggest financial stability, but the lack of clear guidance on certain metrics tempers enthusiasm. Given these factors, a neutral stock price movement is expected over the next two weeks.
Key Financial Performance
Total Revenue $15,300,000, representing an increase of $4,000,000 or 36% compared to the same period last year.
U.S. Heart Failure Revenue $14,300,000, an increase of 41% compared to $10,200,000 in the fourth quarter of last year.
Gross Profit $12,800,000, an increase of $3,200,000 compared to the fourth quarter of last year.
Gross Margin 83%, compared to 85% for the same period last year.
Research and Development Expenses $2,800,000, reflecting a 25% increase compared to the same period last year.
SG&A Expenses $20,200,000, representing a 19% increase compared to the same period last year.
Interest Expense $1,500,000, an increase of $900,000 compared to the same period last year.
Net Loss $10,700,000 or $0.43 per share, compared to a net loss of $9,200,000 or $0.44 per share for the same period last year.
Cash and Cash Equivalents $105,900,000 as of 12/31/2024.
Shares Issued Approximately 869,000 shares of common stock for gross proceeds of $12,800,000 under its At The Market offering.
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Operating Highlights
Barostim Therapy: Barostim therapy continues to have a positive impact on patients, with significant progress made in building a strong foundation for future growth.
CPT Codes: New Category one CPT codes for Barostim therapy accepted by the American Medical Association, expected to be implemented on 01/01/2026, improving access and reducing prior authorization denials.
U.S. Heart Failure Revenue Growth: U.S. Heart Failure revenue grew 41% in Q4 2024, driven by expansion into new sales territories and increased awareness.
Active Implanting Centers: Total active implanting centers increased to 223 from 178 at the end of 2023, with expansion to 48 sales territories in the U.S.
International Revenue: Revenue in Europe decreased to $1,000,000 in Q4 2024, with a reduction in sales territories from 6 to 5.
Sales Force Stabilization: Stabilized sales organization and new commercial leadership implemented a go-to-market strategy focused on deeper penetration in existing accounts.
Patient Access Initiatives: Improved patient access through initiatives addressing reimbursement and education for physicians and patients.
2025 Strategic Priorities: Focus on building a world-class sales organization, targeting high-potential centers, and executing market development strategies.
Reimbursement Strategy: Maintaining appropriate payment levels for procedures and working towards permanent procedural codes.
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Risk or Challenges
Regulatory Risks: The transition from Category III to Category I CPT codes for Barostim therapy is significant as it eliminates prior authorization denials associated with experimental treatments, but the implementation is set for 01/01/2026, which poses a risk until then.
Competitive Pressures: The company faces challenges in increasing awareness and adoption of Barostim therapy among heart failure specialists, which is critical for growth.
Supply Chain Challenges: The company has experienced disruptions in the sales force, which they have since stabilized, but this could impact future sales performance.
Economic Factors: The company is navigating a reimbursement landscape that is subject to changes in CMS rules and hospital payment structures, which could affect revenue.
Operational Risks: The company has seen a net loss of $10.7 million in Q4 2024, indicating ongoing financial challenges that could impact operational capabilities.
Market Development: The company is focusing on expanding its sales territories and increasing the number of active implanting centers, which involves risks related to market penetration and resource allocation.
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Guidance & Outlook
Sales Organization Development: Building a world-class sales organization focused on developing sustainable Barostim programs with deep therapy adoption.
Targeting High Potential Centers: Focusing on centers with large heart failure patient volumes and proven adoption of novel heart failure diagnostic devices.
Market Development Strategy: Executing a strategy to address barriers to adoption, including therapy awareness, clinical evidence, and patient access.
Clinical Evidence Development: Developing a steady cadence of publications supporting Barostim's mechanism of action and improved clinical outcomes.
Patient Access Initiatives: Maintaining appropriate payment levels for procedures and working towards permanent procedural codes.
2025 Total Revenue Guidance: Expected total revenue between $63,000,000 and $65,000,000.
2025 Gross Margin Guidance: Expected gross margin between 83% and 84%.
2025 Operating Expenses Guidance: Expected operating expenses between $100,000,000 and $104,000,000.
Q1 2025 Revenue Guidance: Expected total revenue between $14,500,000 and $15,000,000.
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Shareholder Return Plan
Shares Issued: Approximately 869,000 shares of common stock were issued for gross proceeds of $12,800,000 under its At The Market offering.
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Key Q&A
Q:What's assumed as far as new center adds and utilization for revenue guidance for next year?
A:For the guidance of 2025, we expect high single digits to low double digit net adds on a quarterly basis for new active implanting centers. We're also expecting utilization at these accounts to return to the levels delivered in Q4 of 2024 after a slight dip in Q1 due to seasonality.
Q:Can you talk more about what's assumed between SG&A and R&D spending priorities?
A:The growth in OpEx for 2025 is primarily going into the sales and marketing organization, with expectations to add around three new territories on a quarterly basis and continue spending on marketing activities.
Q:Has the new inpatient reimbursement led to a shift in the business?
A:We did not see a material shift in where procedures were being done in Q4 after the new inpatient code went live in October. We will continue to track this over the next couple of quarters.
Q:What are you doing to get heart failure specialists to understand the therapy versus drugs and other options?
A:We're addressing three key barriers: awareness of the therapy, developing evidence for clinicians, and ensuring patient access to the therapy.
Q:What does the North Star account look like?
A:The North Star account involves multiple heart failure specialists, a clinical champion with an administrative partner, and redundancy in surgical partners, which leads to sustained utilization.
Q:What is the status of the 300 to 400 target accounts?
A:We have 223 active implanting centers, but we are not disclosing the breakdown of the centers we are targeting at this time.
Q:What is the expected cash burn throughout the year?
A:We expect a step up in cash burn in Q1, typical for the company, and then a decrease throughout the year, with the lowest cash burn expected in Q4.
Q:What are the expected RBUs for the new Category one code?
A:We expect the RBUs to fall in the range of $500 to $800 or $850 per procedure, similar to what is currently being negotiated with payers.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding the specific details of the expected cash burn and the breakdown of the 300 to 400 target accounts. Additionally, there was a lack of clarity on the exact impact of the new inpatient reimbursement on the business.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
APPs
CBRx Hi
CMS
Capital Group
Capital Markets
Category code
Chase Knickerbocker
Hallum Capital
Knickerbocker Craig
Officer CBRx
Plovanek
RBUs
Tackanan Lake
access
barrier adoption
basis
cadence
cash burn
center end
champion
clinician
community
device
dip
disruption
element
failure physician
hospitalization
implant
market
outcome
partner
payer
point President
practice provider
procedure code
seasonality
world
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Earnings call transcript: CVRx Q4 2024 shows revenue growth, stock dips
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The earnings call presents a mixed picture: strong revenue growth and positive reimbursement changes are offset by ongoing financial losses and operational risks. The Q&A reveals management's focus on expanding market penetration and addressing awareness issues, but also highlights uncertainties in cash burn and target account strategies. The issuance of new shares and stable gross margins suggest financial stability, but the lack of clear guidance on certain metrics tempers enthusiasm. Given these factors, a neutral stock price movement is expected over the next two weeks.
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Frequently Asked Questions
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