Inogen, Inc. (INGN) Earnings Call Transcript & Summary

Welcome. I'm Robbie Marcus, the med tech analyst at JPMorgan. Very happy to introduce Nabil Shabshab, the CEO of Inogen. Just a reminder, some housekeeping, feel free to send me any questions I can ask in Q&A. Otherwise, Nabil, I'm going to turn it over to you, and I'll join you in a few minutes.

Thank you, Robbie. It's a pleasure to be here, and thank you for inviting us. So we're just going to forward to the slide with the forward-looking statement, just pause for 10 seconds guys, just to make sure that everybody has a chance to look at it. So if you can hit escape and just use the down button. Yes, perfect. Just let's pause for 10 seconds before we kick off. Okay. So let's get started, guys. Again, Good morning. For those of you who might not be very familiar with Inogen, we are a medical technology company that is a global leader in portable oxygen therapy solutions. Our products are sold in 60 countries around the world with an estimated revenue of about $357 million for 2021. We are uniquely positioned in the market as a med tech company. And additionally, as an HME, home medical equipment provider that is accredited in 50 states in the U.S. with a significant patient reach. At the end of Q3 2021, we had about 40,000 patients on service, and then we actually market directly to patients through our DTC arm that we'll talk about a little bit later. Over the last year, we have made tremendous progress, transforming our organization to enhance our commercial capabilities, our efficiency and organizational structure in order to capitalize on what we believe is the strong foundation that we have and the favorable market position that we have also. The underlying fundamentals of the business have allowed us to build a very strong balance sheet, and we have ample liquidity to invest in our business to continue to transform and drive significant top line growth and enhance profitability over the medium term. To ensure we capitalize on the opportunities ahead of us, we've made strides in assembling also a world-class leadership team who will be with me during the Q&A, and you'll get to meet in person. This team has extensive depth and a proven track record, better tested in terms of not only strategy, but also an execution around that strategy flawlessly. So I personally see tremendous opportunity to grow both stockholder -- stakeholder value as well as delivering meaningful advancement in what we call evidence-based chronic respiratory care and leveraging our strong foundation and market position to drive overall growth. So the foundation of our business is a leading portfolio of innovative portable oxygen concentrators that are best-in-class and optimized to deliver the highest output ratio to weight, superior sound suppression and the longest runtime in the industry. And I underline the word portfolio because we cover all the need states for people that are in need of oxygen therapy. These products additionally also have smart device functionality, and we are focused on continuing to invest in innovation to leverage that capability and further develop what we call a value-added device or a device plus portfolio moving forward, and we'll be able to cover that a little bit later. In addition to our superior products, the markets we serve is large and growing, and Inogen is uniquely positioned to capitalize on this growth across multiple channels. The oxygen therapy market in the U.S. is about 3 million patients growing at mid-single digit, but our source of growth relates to gaining penetration for the POC modality at the cost of other oxygen therapy modalities, such as transfillers, tanks, et cetera, et cetera. Today, we view oxygen therapy for COPD patients as the main opportunity but also have other disease states such as bronchiectasis, congestive heart failure and potentially obstructive sleep apnea as potential areas of expansion where oxygen therapy can play a significant role. We reach patients through a unique combination of direct access or what we refer to as DTC, direct-to-consumer, sales channel and indirectly through our physician or prescriber sales force as well as the partnership that we have with HMEs and distributors, both in the U.S. and around the world. And even though we operate in 60 countries, we have encouraging geographic diversification opportunities selectively ahead of us. In terms of financial metrics, we have delivered strong top line growth with a 12% CAGR over the last 5 years. Our revenue by channel is led by our direct-to-consumer segment, which is about 40% of the total revenue with the B2B channels. So coming in a second place, both B2B U.S. and B2B International, but also an important and growing rental channel that we believe will be the major growth driver moving forward and where we're focusing also on the prescriber and the majority of those patients going into rental. We have made progress on tightening commercial disciplines to improve the productivity and efficiency across all sales channels and to drive growth and enhance profitability. As part of that, you can see we have delivered strong gross margin improvements over the past year, driven by enhanced sales productivity, pricing excellence, among other initiatives. We see tremendous runway to capitalize on the inherent demand that exists, and we have a strong balance sheet from which to invest in the business to meet our growth aspirations. In addition to the large size of our market, the favorable underlying dynamics provide an attractive runway for growth. While POCs have gained penetration over the recent years. They still make up only about 20% of the overall oxygen therapy market based on the 2020 CMS data that they released. If you look at the more recent data set by IQVIA, that includes not only CMS but all the other players, POC penetration rates are estimated to be at 12% in 2021. To be clear, this doesn't mean that the penetration rates are declining. But since the IQVIA data set that we're showing here in the middle includes more exhausted group of failures, the POC share of the adjudicated claims in totality is lower than the one that you see in CMS. No matter what data sets you look at, both of them point to the fact that the growth runway ahead of us is long and healthy and affords us significant opportunity to continue driving POC penetration versus the other modalities that we mentioned before. To further inform our perspective, we didn't only look at these data sets, but we've conducted our own primary quantitative market research in 2021. I'm just going to leave you with 2 things that are significant in our mind and are further augmentation of the opportunity ahead. There was a meaningful difference between POCs and tanks in the minds of patients, favorably towards the POCs and patients have a very strong preference for POCs, further cementing our conviction that the growth potential ahead is still at the beginning. So when I look at the last 10 months, and I've been here about 10 or 11 months, I look at this alignment that I have with the Board and the management committee around the transformation we're going through. We are in the midst of it. It focuses on building on our leading position in oxygen therapy, the deep patient reach we have and the HME capabilities that set us apart, but most importantly, evolving into a full-fledged global med tech company that is beyond only oxygen therapy as in respiratory care also that is capable of delivering long-term, durable and profitable performance. So of course, that involves a strategic evolution. And the way I'm going to characterize it is it's a simultaneous effort to strengthen what we have today, stabilize and to grow. And most importantly, we have a very strong base that we're going from. If I wanted to summarize this, the 4 critical strategic imperatives basically are as follows: strengthening our core business and infrastructure, continuing to invest in our commercial capabilities, accelerating innovation and diversifying our portfolio, enabled by our strong balance sheet, while we're being very disciplined stewards of capital. In the past 11 months or a year, call it, we've made significant progress in building sources of strength in the business, which will help us ensure that the investments that we put forward, deliver the desired growth acceleration that we're looking for. There's a lot on this slide, but I want to just characterize it where we've made dramatic improvements and expansion in terms of our organization capabilities in key areas like innovation, commercialization, clinical affairs, regulatory affairs, digital health, customer service while we are continuing to build a strong team as well as evolve the culture that we have in Inogen that actually is tied to the purpose that we have and patients being at the center of everything we do. So if we had to put a strategy on the page, this is what it would look like. So with a stronger foundation of organizational capabilities that are continuing to be built, Inogen is well positioned for its next phase of growth as we focus on driving increased penetration for POCs, accelerating innovation and opportunistic selective growth expansions. And these are in the organic. So let me click down a little bit on the organic side. So we'll continue to invest to enhance our commercial organization with new insights, data and data-driven disciplines to further build our presence in the clinical prescriber market, and that channel, which is the new focus that we have, where there's a lot of growth that we need to participate inequitably. We'll continue to enhance our innovation engine with even more advanced and smarter devices and as well as refine our product development processes and with an eye towards improving the overall customer experience that we are significantly putting effort behind enhancing both the CX from a patient, as well as from a prescriber perspective. Of course, inorganically always remains an option and is on the table. We have a very agreed -- we have a very clear set of criteria that we agreed to amongst the team as well as the Board in terms of what are we looking for in terms of the opportunities to accelerate our growth rates. And those efforts are ongoing, and we will always be open for a strategic opportunity that takes our growth level and enhances it beyond the core business that we have in place today. So if I look at the patient channel first, so in that channel, we're already benefiting from much of the work that we have put in place to enhance our commercial organization by improving productivity of our sales force, shortening our sales cycles and accelerating the conversion or the win rates, all driven by the right data and the insights that we are putting in place and the refinement. We've made progress in this effort by effectively using analytics to raise the quality of our lead generation, manage our sales pipeline better and more effectively and make our media spend more efficiently. We're also improving our operating model to make sure that we maximize the selling time for our sales force while optimizing or improving the customer experience and reducing the back-office burden. In the prescriber channel, which is the new focus area that we have, we are rebuilding our sales and commercial capability and discipline, supported by also data-driven insights to help target the highest value prescribers. So that's 5, 6 and above at the right frequency and right coverage. Through the partnership that we announced recently with Ashfield, we are confident in our ability to hire and place the best sales talent in the field, drive their performance effectively, expand selling time by roughly about 60% versus what they have today through the inclusion of a concierge sales force, which is about 12 people that will take all the administrative work off the hands of salespeople and make sure they deploy their time very productively only on selling, expanding the coverage to reach prescribers that serve about 65% of the portable oxygen patients versus 40% that we have today. And we will be looking forward to updating the -- on that in our earnings call coming up in February. So in support of our strategy on the prescriber side also, we want to drive growth in that prescriber channel, not only through coverage and frequency and because of the fact that we have the best device, but we're engaging in market development efforts, anchored and very strong collaboration with key opinion leaders. So these are leading pulmonologists and cardiologists that will partner with us on a clinically based approach to drive advocacy for POC-based oxygen therapy with prescribers over other modalities. Prescribers look up to these KOLs and these leading pulmonologists and cardiologists, and they are, in turn, looking for industry partnerships to allow them to work on the right clinical facts that they need and the dossiers and be able to advocate on behalf of the patients. Additionally, we actually have put in place the Scientific Advisory Board, as you can see on the slide, of respiratory experts from around the world that work at renown medical institutions, but their collaboration with us is going to inform both our clinical and innovation strategies as well as benefit in the market development area I just mentioned before. So from an innovation perspective, one of the major things that we are highlighting now and adding to the rigor that we have is we've implemented a more disciplined approach to driving what I call predictability in our new product development efforts. This includes approaching innovation with a high degree of rigor and discipline around the target patient population, the clinical use cases first and foremost, clear evidence around a product's clinical benefit, customer value and differentiation as part of our overall product development process. So think of it simplistically as 4 lenses: a clinical lens, a technical lens, a regulatory strategy lens and a reimbursement lens. So in terms of our innovation pipeline, we wanted to give just a brief snapshot. We're continuing to focus our efforts on taking the high ground in terms of new and improved portable oxygen concentrators and making our product lineup smarter and more value added. So the devices today and what we call a device plus innovation strategy will allow us to harness the data that we collect on our devices and combining them with external data sources. So imagine in a place whereby my device actually can collect mobility data, knows what setting its on, how long it's been on, what's the heart rate of the patient and if I can combine it with SPO2 reading, I can make those devices take part of the burden in terms of managing the disease off the hands of the patient and allowing the device and the digital health aspect of it to aid in that disease management. We're also focusing on specific patient populations with hypercapnia to validate our hypothesis that there is a benefit of high-flow, high-pressure oxygen therapy as a result for those patients. Also, I want to just take a minute to cover our clinical focus. So our clinical focus, as you can see on this slide, extends into research as well, where we anticipate to conduct several clinical research studies over the next 24 to 36 months that are already being planned today that will seek to validate new indications for oxygen therapy, specifically in portable oxygen concentration modality, possibly around 2 things: long haulers in COVID and the impact that oxygen therapy can have on that as well as post-COVID COPD progression. We believe today in our discussions with clinicals and certain institutions that there is potentially room for us to look at that clinically and see if there's any benefit to oxygen therapy. So stay tuned on that one. So if I look at the progress we have in place, that progress is not possible without a very strong team that we have around the table today. It's clear that we've made good progress on the strategy, but there is much more ahead of us. But executing on that strategy is, of course, of the utmost importance. And with an executive team like the roster that you see on this slide, that has a proven, as I say, better tested and a lot of experience under their belt at leading organizations, all including transformations and tailored to driving the type of what I call an evolutionary change that we are pursuing at Inogen, I feel very lucky, very blessed and very comfortable with the capabilities that are around the table today and as evidenced by the progress we've made only in 11 months. So looking ahead, the underlying demand of our offerings is strong, and we are confident about our ability to accelerate performance through our commitment and focus on increasing the POC market penetration and improving patient access. To that effect, we remain focused on strengthening patient awareness of our best-in-class POC systems and expanding our effort in terms of increasing our coverage and prescriber channel while engaging in market development to increase awareness and advocacy of clinicians in support of POC-based oxygen therapy. In the meantime, we are committed to working through the ongoing supply chain challenges as we keep people posted on that during our earnings call, while we continue to invest in our infrastructure and enhance our clinical evidence, R&D and commercial capabilities from those investments to strengthen our market leadership position in portable oxygen therapy and take it to the next level. As I said just a few minutes ago, the team in place has made tremendous progress, and I believe that we are on the right path to create long-term, sustainable and profitable growth and value creation. With that said, I want to conclude the presentation part for today and make sure that we maximize the time for any Q&A. So if we can stop the presentation and go to all the teams, so people can meet the team also.

Yes. Great. Thanks, Nabil. Lots of questions and lots of things to talk about here. So let's start with the preannounced fourth quarter. This came in a little better than the sell side was expecting. Maybe talk to the trends you saw in the quarter versus your expectations coming into the fourth quarter.

Yes. So the trends that we saw in the quarter -- so let me start with underlying demand. So far, we have continued to see the underlying demand to be very stable and strong. And it's -- whatever we're going through now is more of a supply constraint, it showed then a demand issue at the base of a therapy. So the trends both -- when I talk about demand, when I look at DTC, so the cash sales in our DTC channel as well as the B2B channel. The signals so far that we're seeing is that it remains very, very strong.

Great. And it looks like you had good success in the quarter in the DTC channel also outside the U.S., at least as it compares to what we were thinking. Maybe talk to -- we'll get to Europe, the EU MDR in a second, but talk to the demand trends you're seeing in Europe through your business-to-business partners. And then after that, let's talk about the U.S. DTC.

Yes. Yes. So let me maybe start. The demand across the channels remain strong. Of course, we've been very selective in how we manage the mix. And the supply-constrained environment, it's upon us to make sure that we're prioritizing certain channels that can give us the highest revenue and the highest ASP. So some of the demand in the B2B channel, specifically in the U.S. is not being met today. We wish we had more -- ample supply to be able to do that. But that's part of the plan moving forward in 2022 as supply chain constraints ease up. The demand in the B2B channel in Europe remains strong. This is pre-omicron, because maybe we're not picking up the signal yet, which would be later. But people went back to the diagnosis levels and respiratory assessments, the centers that we had before. That seems to be the case also whereby diagnosis rates are remaining strong in the U.S. also. And then the demand from a patient cash sales perspective also was at the right level. We've also seen encouraging signs at the beginning of the year now, even though we're not talking anything forward-looking, that, that channel, the DTC channel remains also steady and strong.

How do we think about what you're seeing in terms of volume growth versus pricing growth? Because you did put in some price increases recently. How much of the sales is volume versus price?

Yes. I don't have a specific breakdown on that. But definitely, let's start with the pricing increase. So we benefited from the price increase. It was low double digit. That's the way we talked about it. And we said that about 70% of it is going to stick. So if you do the math, some of that benefit is coming from the price variances that we have that is accretive. And that is showing up in terms of the units, not growing at the same level. But we are, again, in a supply-constrained environment, Robbie. So there's not a definitive dividing line in the sand. If we were not supply constrained, we don't think that would be the case. But that's -- in general, definitely, there's the benefit of the price increase that we're seeing and the revenue numbers that you are looking at.

And Nabil, maybe spend a minute on how rental fits into the strategy here. It's something that Inogen has been talking more about. I've been following Inogen since before the IPO, and it was originally a rental-focused company than it deprioritized rental and then over the past 2 years, it's something I've been hearing more and more about. So how does rental fit in today and also your plans for the future?

Yes. So let me approach rental from a slightly different angle. The focus where we believe the growth lies today, Rob, is in the prescriber channel. Let me characterize it as follows. Today, if I want to get patients at the onset of care and be able to bill for the full duration, let's call it, 36 months out of the capped 5 years, I have to get them when they get diagnosed and prescribed, and those happen in the prescriber channel basically. And those patients, in general, are rental patients. So a sort of like a longer answer to the fact that we believe that the rental channel will continue to increase in importance, specifically with our focus on going and attaining the growth in the prescriber channel because the bulk of those patients will be on rental. And the approach we're taking there is increasing the level of service and continuing to focus on margin enhancement opportunities within that channel. But I don't think it's a very difficult conclusion to say at some point in time with the continuing increase in ASP on the cash side, that is the gift that we'll keep on giving. We have to refine it and polish it and we have to make it more productive, both in terms of efficiency, productivity of the sales force as well as optimizing the spend. But at some point in time, at these ASPs, now we're talking average ASP is 2,700 to 2,800. You're going to get to a point whereby you have to get that penetration to a higher level like we talk about, and it has to be rental channel driven. So a very important area of focus. It's part of our strategy in terms of the prescriber sales force that we're investing in, and it will continue to increase as a portion of our total sales.

So how do we think about the shift to rental down the P&L? Lower -- it's a recurring revenue item. I've always heard the margins are good. But how do I think about -- for me, it's about the net income dollars per patient. How do I think about the net income benefit to Inogen from a DTC patient versus a rental patient?

Yes. So there are pluses and the minuses. So let me go back. So of course, it's a deferred revenue stream because you're billing monthly moving forward. I think the balancing factor is as long as I keep adding those patients and keeping them on service, that is a very accretive business model. So despite the fact that some of the cost is front-ended, that's a little bit also more stability in terms of revenue prediction. So a couple of things is adding patients, adequate patients on service, keeping them on service as well as being able to continue to optimize the margins, which we've done already. And we are continuing to focus on making sure that that is an equal margin business to our other sides of the business, including the DTC side.

Great. Maybe we can shift a little bit to 2022. And you had 2 announcements in the press release this week. First was on supply and it looks like you're going to be pausing production in Texas, in California and the Czech Republic for a period of time. So walk us through the reason for the delay how, much inventory you have on hand? Should we just expect sales to disappear for some period of time? And what gives you confidence in when you can start in mid- to late February?

Yes. A lot of the things backed inside. So let me start with why it happened. Let me start with context in 2021 first. So it's not an unknown fact that we've managed through 2021 purely by sourcing what we needed in terms of supply and specifically chips on the open broker market. And that is something that we fairly did well. And at that time, the broker market or the open markets were a little bit more available and relaxed. But as the year progressed, we started signaling in our messaging during our earnings call that that is becoming a little bit more constrained, and we are sort of getting into a place whereby instead of us being able to buy in tens of weeks of supply at the time, we're getting down to very few weeks of supply. So what happened at the end of the year is we had certain commitments from brokers that got canceled at the last minute, which was not an unknown event. It happened throughout 2021. The difference at that point in time as your runway has expired. There was not a lot of time for you to react. And at that time, our regular supply chain was not providing anything for us. So all the reliance was purely on the open market. So with that happening late in December, there wasn't a lot of opportunity for us to react, and we decided to actually just seize production for 6 weeks based on the plans that we have in place. So let me talk a little bit about what happened. So we built some inventory. And actually, that would meet part of the demand in Q1. We actually kept it as inventory until we entered the quarter in 2022, because we knew that there would be a little bit of a shortage. But let me just quickly cover what did we do with the time down that we have on our hands. So there are a couple of things that are very helpful for us to make lemonade out of lemons here. So one thing is we're adding capacity in our Texas plant, just to make sure that we have enough capacity and production as we ramp up beyond what we need and to fuel the growth that we have moving forward. We also engaged in finishing a few things. We were moving the last few departments from the older production locations into the new Plano, Texas, which, by the way, is a plant that is about 60% bigger capacity than we've ever had before. We finished a few operational efficiency things that we wanted to do, kaizen events. We are cross-training people on the ability to produce multiple devices because of any potential anticipated absenteeism because of COVID and/or labor shortages, and we use that time effectively. And let me -- maybe let me put the right lens on it. We say we've shut down 3 plants. There is a reason why 3, but the bulk of our production comes out of our Texas plant, call it, 70% plus, comes from one location. The reason we see is as that shortage in December of the last 2 broker shipments that did not come through at the last minute is a shared supply chain among the 3. So we actually decided to pause production. More importantly, let's talk about how do we feel about 2022, Robbie. Of course, people ask me, do you feel more or less concerned about '22 versus '21? I feel less concerned about '22 for the following reasons: Since those orders got canceled, we still received in January some open market broker shipments. So it opened up again. It's not going to be very flexible, and it's not going to be all the quantities that we need, but at least there's a revival sign in the open market sourcing. So that's #1. So we received a shipment already. We're expecting a few more. #2 is on the regular supply chain, we have now seen some incremental movement and conviction that people are going to be able to deliver on the committed quantities and shipment dates. Are we happy with the fact that some of them are back ended into 2022? No. But we've already received commitments for shipments in January, and they will come in on time, hopefully. So at least there is a sign of revival of our regular supply chain. And then the third point is we are redesigning some of the motherboards on our products. And the question there is why did it take that long to redesign. The answer is fairly simple. We have to have line of sight to availability and the chips that are replacement chips. As soon as we got that, we accelerated the redesign efforts as of the beginning of December throughout the holidays. We're making progress in terms of the testing and validation to meet all the regulatory requirements. And we are going to be -- and by the way, we went out and we bought the quantities. Once we get to a certain conviction that the redesign will work, we forward both the quantities that we need in 2022 for most of the year to make sure that we stabilize 2 things: the frequency of these supply chain events happening as well as the magnitude of that event. So once we hopefully get through the redesign process and everything is done and we resume production like we had said mid- to late February, we believe that it will be a relatively more stable supply chain situation than we've seen in 2021. So that's my summary on that.

So a couple of questions off of that. 1, how long will the redesign take to go from start to validation to in production? And 2, I guess, the important question is how much of a revenue headwind should we be expecting in first quarter from the supply shutdown?

So let me start with the -- first, with the duration. So I think end-to-end, we can ask also Stan to comment a little bit on that. But end-to-end, just as a summary, about, call it, 8 weeks -- 6 to 8 weeks of work, including the validation that happens in-house as well as with our partners. So we are comfortable with that falling within the window that we have because we started in December. And then we're progressing now adequately in terms of testing, in terms of all the testing required and the things that we have to put in the file. Just for clarity, this is going to be -- once we do all our change control processes, all our QMS systems and check off all the variables, we compile the dossier and we put it as a letter to file. So there will be no regulatory review, Robbie. So there's actually potentially later on during an audit, there will be a review of that letter to file, and then it will be complete and comprehensive in accordance with all our regulatory and quality systems internally. So comfortable that I think that mid- to late February. So far, we're trending on that date, and it will happen. So let me talk about the revenue headwind without talking -- without forward looking or talking about guidance. So part of that demand that we have in Q1 is going to be met with inventory that we built in Q4 2021. The other part is expected to be met once we start production mid to late February. The only thing I'm going to say in general as a generalization, we are hoping to be able to meet most of the demand we would have expected in Q1.

And any impact that should fall into 2Q?

No. We believe that -- so let me qualify it now. Because we decided not to furlough anybody, there is not a long ramp in starting the plants again. We decided to use the people for the other things that I talked about. And I think that was a very prudent decision because in this constrained environment, you're not going to be able to get people back quickly. And we believe that we can ramp up. As soon as the parts become available, we can get back to full production that we were at before in a very short period of time.

Great. This is probably a longer question, but we only got about 3 minutes left. So the European MDR submission, sounds like you're not going to be able to sell in Europe starting May 18, possibly until third quarter. First question, why is there a window where you're not going to be able to sell? Was that Inogen's fault? Or was that just out of your control? And what gives you confidence that third quarter is when it will be resolved?

Yes. Good question, Robbie. Let me start with, as usual, full transparency. This is a mistake that we made, and let me characterize what happened. And also, I will say, even though this happened outside the window, I was here, it's my responsibility. So there is no -- I'm not trying to push this off on anybody. Companies that needed to extend their MDD certificates moving forward should have applied before May 2020. So this was 15 months ago. And at that time, there was a decision that potentially we can get that renewal through another venue. So the decision was made for some reason, not to actually apply for that extension. After I arrived, we did a couple -- we did a review on the EU MDR MDD situation. And nobody understood what the underlying assumption was and that confirmation that will get the extension. It's very simple. People felt that they were going to get that extension de facto through an MDSAP audit, which is not correct as an assumption. So in December, we did another review because of turnover. And with a new fresh set of eyes, people said, well, there's an underlying assumption that is not correct. So again, it's a mistake. I'm not going to put lipstick on the pig. It's something that will never happen again as evidenced by all the changes that you're seeing in the organization. Now let me talk about the remediation. There are 2 paths of remediation. From a regulatory perspective, we had already started the EU MDR applications, testing and building the dossier for a new and improved version of G4 and G5. So that was ongoing. Because these systems are very similar to each other, the current version versus the version 2, we will be able to use the same testing and validation data to apply for now an emergency EU MDR for the existing products. So longer term, the process is progressing for EU MDR to replace MDD. And shorter term, we can use the data to apply for that. Let me talk a little bit on the remediation in terms of what we painted as the -- this is the gap that we're going to see in Europe. So there are -- we have to go back and try one more time to appeal for an extension using specific articles in the MDD legislation. Most probably, we're going to get the same answer. So it's probable. We have to do it, but I'm not very hopeful about it. What we're hopeful about is there is a pathway to get to a country-level exemption by the country regulators. And if you go that path and you can build a strong case that is about a medical need and a humanitarian need, most probably we can get an approval. We're in the process of validating that in the current week that we're in. And that basically, I don't have to apply in 20 countries. If I apply in 4 countries, it's 2/3 of my revenue in Europe. We'll see how fast that takes, depending on the country, France versus Germany is a little bit different, but that's one path of remediation. The third path is, today under MDD legislation, and we're in the process of validating that our understanding is 100% correct. You are allowed to put product into supply chain as long as it gets cleared on customs in Europe and enter supply chain before the expiry of your certificate. That's May 2022 for us. So provided the supply chain situation improves and I can ramp up capacity a little bit more, there is a potential remediation of sending the product a little bit earlier. I'm not saying we're going to plug all the gap that is there, but I'm saying we're working earnestly on clawing back how big the gap is from a revenue perspective, and we'll be in a better position to update during the earnings call that's coming up in 6 weeks.

Well, great. Thanks, Nabil. Unfortunately, we're out of time, but I appreciate all the discussion and look forward to the earnings call and wish you and everybody else a great rest of your day.

Thank you, Robbie. Thank you for the opportunity, and thanks, everybody, for listening.