Inspire Medical Systems, Inc. (INSP) Earnings Call Transcript & Summary

Okay. Good afternoon. We're winding down here at the Goldman Sachs Healthcare Conference this year, almost at the end of day 3. But we've got one more very good presentation coming up here in the medical technology space. I'm Amit Hazan, the medical technology analyst, and we've got Inspire Medical with us -- Medical Systems with us for this presentation. We're excited to have both the CEO, Tim Herbert; and the CFO, Rick Buchholz. So first and foremost guys, it's a busy time for everyone and a tough time, too. So we just want to say thanks for making it to this virtual conference.

Well, thank you very much. It is just great to be here, and I always say, you save the best for last. So -- no, we're very happy to have a conversation and be able to talk about Inspire.

Great. Great. And excited to talk about it. I obviously don't cover the company. So what I thought we could do is actually use this as a good exercise to -- for those who might not know the story well enough to go through some of the details you may not go through on a regular basis. And so maybe we can just start with obstructive sleep apnea. And just give us a sense of the prevalence of the moderate-to-severe sleep apnea in the U.S. I suspect the conversation for us will focus on the U.S. market, maybe we'll touch on the international market later on. But is that a good place to start?

I think that's fantastic. I think getting a good baseline for what the therapy is all about and where we started, I think, is wonderful. We treat obstructive sleep apnea. There's 2 kinds of sleep apnea, central sleep apnea and obstructive sleep apnea. Obstructive is a physiologic collapse of the airway while you sleep. So if you're lying on your back, the tongue will fall back, and you're trying to inhale, but you're hearing a vibration of the soft pallet. That's called snoring. And if it gets so severe, the tongue falls back, it will block the airway. So the gold standard treatment is using continuous positive airway pressure, or CPAP. And the mechanism is simple, just blow positive air into the airway to prevent that collapse from happening. But the problem is you're wearing an apparatus on your face and you're blowing that constant pressure, so there's a little bit of a challenge with compliance. And that compliance is anywhere between 35% and 65% after a year's time. And there's a known association or a causal effect of untreated obstructive sleep apnea to several comorbidities, including hypertension, cardiovascular disease, even diabetes. And so there's definitely a need to treat the disease. We start looking at the prevalence of it there -- well, let's talk about incidence

Frozen here for a second. Rick, can you hear me still?

Yes, I can. Looks like Tim froze up.

He froze up. We'll get him back here in a second. Do you want to talk a little bit about just a top level prevalence in incidence numbers for moderate and severe?

Yes, sure. No problem. So we've talked about this in the past, but we look at the CPAP prescriptions on an annual basis. And Tim talked about the compliance rate ranging anywhere between 35% and 65% in the published studies. And so we look at that there's 2 million CPAP prescriptions prescribed on an annual basis. So if you take a conservative of about 65% CPAP compliant rate, what we do then -- that means there's about 700,000 patients that are really noncompliant. What we do then is, for our procedure, we do an anatomy test called the DISE, the drug-induced sleep endoscopy, and we actually screen out about 28% of those patients. That's what we screened out in our pivotal study. And so once you screen those patients out, we get down to 500,000 patients on an annual basis who are a good candidate for Inspire therapy. You take that times our average selling price is $23,000, and that gets to an over $10 billion market -- annual market opportunity for Inspire. Separate from that, there are about 17 million U.S. citizens with moderate-to-severe sleep apnea. So huge market opportunity, and we talk about our market opportunity, but we're more focused on working from the ground up, getting those interested patients in the process, in the cycle to get our therapy, and how we build the structure and framework for the company to get those patients the Inspire therapy.

And Rick, do you have a sense of the -- if you think about the CPAP population, the age breakdown of that population, in particular Medicare age CPAP patients?

Yes. So the average age of our patients in our pivotal PMA STAR trial, that was -- the average age was 54 years old. And right now -- we'll talk about revenue and so on, but our product mix has been historically 60% commercial, 30% Medicare and 10% VA. We have a military VA contract as well.

Historically, okay. And for -- do you know what it is for CPAP? Or generally speaking, is -- with Medicare now coming on for you, I'm trying to get a sense of the -- of that opportunity is, the proportion of the prior CPAP conversion opportunity. Is Medicare -- is that 30% about right for CPAPs as well, about 30% is Medicare patients?

Yes. It's right in that ballpark.

Good. In terms of your own label for your procedure, are there any limitations or restrictions on the label that also kind of refine the opportunity for you?

Yes. So part of our labeling is, you've actually had to have tried CPAP and failed, but the failure is a very low hurdle for that. And we also think that was very instrumental for us in order to obtain commercial insurance policies, the fact that a patient had to have had tried CPAP and then failed. Otherwise, what insurance companies often said in the past was, well, just try harder on your CPAP, try harder on your CPAP. But they have volumes and volumes of documentation knowing that the compliance rates are not high. And so our labeling is -- has been 22 years old and above and then failure to CPAP and then moderate-to-severe sleep apnea. And moderate and severe sleep apnea, the measurement is the AHI, apnea-hypopnea index. That's the number of events per hour. And so you have those rates. And then also, we don't have a limitation on BMI. We didn't -- it's not formally in our label, but we've used 32 as a BMI, but then we've recently -- that's recently been changed for these recent Medicare policies. It actually indicates that a BMI of 35. And so some of our commercial policies were written initially with BMI of 32. And those, we've actually seen a couple of large commercial policies change to BMI of 35. Also late-breaking news, as you may or may not know that the age, we recently got that lower. We've been working on a pediatric study, and that's actually been lowered from 22 years old down to 18. And we're doing further work to actually even lower that on a longer-term basis. And we can talk about that. That's a Down syndrome pediatric studies that we're doing now.

Yes. So from a numbers perspective, the pediatric piece or even going from 22 down is -- in terms of the total number that you described of patient, that's your opportunity that you kind of build up to get to your $10 billion number. What -- how significant is that as a percent of the pie?

Yes. So that $10 billion number is the 22 and over. So it does not include that. And so that piece is not a real significant market for us, per se, but it's a real important market because it's kind of -- it's what we -- it's why we do what we do. We want to be able to really serve that other patient, the Down syndrome patients that we've seen really good results with.

Is there an opportunity to go after CPAP-compliant patients as well? Is that a pathway that you're pursuing or thinking about?

Possibly, long, long term, once we're out in the market and for a longer term. But we have just had a lot of success, since we've gone public in May of '18, with getting commercial policies and getting commercial lives. And so once we -- and we've just gotten -- we will have -- in about 10 days, we'll have 100% Medicare coverage through all the different 7 MATs. And so those will just be coming on board now. And so longer term, possibly, but right now, again, the market is so large that we don't feel we need to be first-line defense right now. Last year, we did -- in 2019, we did over $80 million in revenue. And we just treated just over 3,000 patients. So we're very low on the penetration rate.

Okay. There's a lot of info on your data in your presentations. I definitely don't want to go through all of it or even most of it. But if we summarize, you took the 2,200 plus, I'm sure, by now, trials that you've done and think about it, especially from a duration standpoint, how would you kind of summarize the -- that data and the importance from a doctor's perspective? When you pitch this, what are they actually most looking at?

I think what it really demonstrates is the fact that we've had so many studies completed in a couple of thousand patients. The consistency amongst all the different studies through different physicians, not only in the clinical trials phase when we're going through getting our FDA approval, but also in the commercial setting. And so the consistency there and the improvements of the AHI, not only that, but we -- with the improvement of AHI, but also the high patient satisfaction rates that we've had in our ADHERE study, so...

I see we've got Rick back. Can you hear us? I'm sorry, Tim back.

Yes. I can hear you. Sorry about that. When you're not in the office, you don't have the reliable interconnect. So we've got to get the office back open.

That's one reason to do it. Well, it's okay. Rick's been holding up court and doing quite nice. We're talking about clinical data and just summarizing the effectiveness and the strength of the data that you have so far. And I think there's the duration piece that I'm very interested in. If you kind of put your best foot forward, and I don't know if this is what the physicians are looking at, too, but what's kind of the best evidence we have so far and furthest out evidence for effectiveness of treatment?

Well, it's really a combination thereof. So we started off, we're doing the STAR trial, which was published in the New England Journal of Medicine. It measures 2 things. It is objective measurements of whether you have obstructive events or not. That's called the AHI, or the apnea-hypopneic index. It's a gold standard measurement used for every therapy to treat sleep apnea. So the STAR trial was a randomized trial. It was a 12-month study for the initial study to get PMA approval from the FDA, where we followed those patients for 5 years, and we showed sustained benefit in the objective measures. The second side is the subjective measures or the quality of life, and that we also have 5-year data on with those patients. But as we moved beyond that and started getting into the post-approval studies, that we started still collecting apnea-hypopneic index as well as quality of life data. Our most recent study was the ADHERE, which is 1,000-patient study, we're following patients for a year and showing a sustained benefit. But we also added in a patient satisfaction score, and 94% of the patients after being implanted for 6 months said they would do it all over again. That's when we knew we really had something we really need to kind of step in and refine the therapy, refine the implant technique, refine the programming and continually improve those outcomes. And we're still running clinical trials today. We have not slowed down.

Okay. So let's talk about the implanter community a little bit. It's the ENT community mainly, give us a sense of how many are there in the U.S.? And then your penetration of them, how many are actually trained to do the procedure already?

Absolutely. So we -- it's ear, nose and throat, but we actually look for a subset or a specialty within ENT and its head/neck surgeons. The head/neck surgeons tend to be oncologists. They deal with a lot of cancer in the neck, but they are very well adept at working around the hypoglossal nerve and placing the electrodes. They don't necessarily need to be experts in sleep. The sleep positions fulfill that role and manage the patients long term. We want a highly qualified ENT or head/neck surgeon that can implant the device and then allow the sleep physicians to do all the device titrations and programming. So there are probably 8,000 to 10,000 head/neck surgeons in the United States. Right now, we've trained maybe 350 to 360. Now we're not going to train all 8,000 of those surgeons. What we're going to be looking to do is make sure that we have enough capacity at the centers for -- that offer Inspire. But I can see us definitely getting into the 3,000, 4,000 surgeons being trained in the out years.

Any incentive for these surgeons, in particular, that you're focusing on within that ENT community, the oncologists? Maybe just talk to what type of procedures they were doing before in terms of what they're getting paid per procedure and how Inspire fits into that and whether it's profitable and how you get them other than the effectiveness for their patients, how you get an oncologist to want to come in and do a sleep apnea-type procedure?

Absolutely. So as I mentioned, they are oncologists. And so they do a lot of cancer surgeries, but they do a lot of other general ENT procedures. They will do some sleep procedures, like a UPPP or uvulopalatopharyngoplasty, where they remove your uvula, your soft pallet, your tonsils. And so they -- those procedures are very comparable from a cost standpoint to Inspire. Prior to COVID and before we had these Medicare policies that just took effect in the last month and 2 more will take effect this week, this coming week, the national average Medicare payment was about $800. That was a little bit low for a 2-hour outpatient procedure. But now that the Medicare policies are in place, Medicare is paying for a category-3 code we had for placing the pressure sensor. We have a neurostimulator stimulated lead and the sensor. The sensor didn't have a CPT code. So there's a new tech code or a category-3 code that had 0 payment before the Medicare policies. Now that adds $600. So as we come out of this post-COVID, all of a sudden, all the doctors got a raise. They went from $800 to $1,400 for Medicare. Commercial insurance companies paid 1.4x that or close to $2,000. And the surgery times are coming down. So once you do 5, 10, 25, 50, 100 procedures, you get pretty adept at performing that and placing the electrodes in the right location. I think Dr. Ron Hanson yesterday was on the phone and quoted, he did a 90-minute procedure. So as they get more proficient, their OR time starts to come down. And the cost per reimbursement per hour obviously has gone up substantially. So now we're right where we need to be from a competitive standpoint. One other element to that is that previously, the -- they would have to fight through insurance. They would have to get a prior authorization, and that would just take time. And it would take them a good 3, 4 months to get a prior authorization approval. And even with Medicare, where you can't prior authorize, there's a risk of not being paid. But now that we have the policies in place, they're assured they're going to get paid. The payment has gone up, and they can spend their time practicing medicine and not chasing prior authorizations or reimbursement. That opens it up to more private practice physicians and physicians who practice in ambulatory surgical centers, which is another topic we could talk about.

Yes. A few things that you touched on there I want to follow up on. But just staying with these surgeons, with the implanters, give us a sense of procedures per week, when you look at kind of your higher-end users, how many procedures are they able to do per week? And then what lessons do you draw from that, that you can then use to try to incentivize the lower utilization folks to get higher?

Well, the top center last year was the Ohio state, and they did 100 implants last year. So basically 2 implants a week. What he does is, he's a single surgeon now, it's a teaching hospital, so he has his fellows assist him. So they're very proficient in the procedures. But he basically has 1 OR day a week. And he can do 2 cases, but he can also do 2 of those sleep endoscopies, the final diagnostic that we do. He can do 2 to 4 to 6 of the DISE procedures as well. He probably still has a little bit of time to do some of his other general procedures. That leaves him 4 days for both his office procedures as well as his other procedures. Oftentimes, Thomas Jefferson in Philadelphia is probably the largest implanting center for Inspire. They have 2 -- 3 surgeons trained to do the procedure. KU, Stanford Health and Fargo is really our top center. They all have multiple surgeons that can do the procedure. So it kind of spreads the capacity and allows them to do more procedures.

So let's start talk about the setting then. As you mentioned, what -- how many -- if you can give us an idea of just how many hospitals -- hospital outpatient facilities there are that are doing this now? How many ASCs are doing this now? And who's driving the process for you to manage that growth? And I imagine, especially with Medicare reimbursement now almost at a point where you're pretty much done with that as a challenge, how do you think about managing the growth in facilities that are going to want to do this procedure?

Yes, several really good questions kind of embedded in there. But let's start with the top. We estimate there's about 4,000 hospitals in the United States, maybe a equal number of ambulatory surgical centers. So let's just say, 4,000, 4,000, we're never going to penetrate all of those. It wouldn't be prudent to do that. But if we can get 1/3 of those, that's kind of our end goal. So if we can get up to a 50% mix between ASCs and hospitals and be somewhere over 2,000 centers. Today, we're at 327 centers or 325, of which less than 10% are ASCs. But we're just in the process right now. You don't necessarily go to the ASCs until you have the reimbursement wrapped up where you have Medicare. On June 21, we will have, as you mentioned, 100% Medicare coverage in all 50 states. And we still are coming along with commercial insurance companies. We still have Anthem is reviewing a trade policy, CIGNA, Humana and maybe a couple of the blues. But other than that, United and Aetna and all the Blue Cross/Blue Shields have already written their policies. So with that and along with the increase in physician payment, really allows us to start opening up the ambulatory surgical centers. So we're going to really start putting a key focus to that. Last year, we reorganized our sales team because we knew that we were going into a larger expansion. And instead of having just 2 Vice Presidents manage the entire United States, we now have a Senior Vice President, Ivan, and he has 4 Area Vice Presidents. Each of those 4 Vice Presidents has 6 Regional Managers or the capacity for 6 Regional Managers, we're building towards that. And each of those can manage 6 Territory Managers. So I think, Rick, help me out, I think we ended the first quarter with about 81?

82.

82 Territory Managers and we continue to add, and we didn't stop hiring during the pandemic period. We continue to hire territory managers to continue to grow that. But we want those territory managers to focus on driving patient flow and not per se to assist and open new centers. So each of those are business -- each of those Area Vice Presidents, each hired an Area Business Manager whose sole job it is to hunt. To identify new centers, work through the logistics process to get them up and running and trained. And that includes a focus on now ASCs as well as opening new hospitals. During the pandemic period in April, Rick signed a national pricing agreement with Ascension Health. Ascension Health has well over 100 hospitals and the significant number of ambulatory surgical centers that they privately own. So we really are putting the focus to that. We weren't able to open new centers during the pandemic period because naturally, we couldn't schedule cases, but we could get all of the logistics done. We could do the business associate agreement, get the pricing agreements done, do a lot of the training all being -- now we're doing it virtually. We can get all that in place such that now that we're doing implants, and Rick maybe mentioned, we've done implants in over 35 states already, and we have implants scheduled in 40 states, and we only have centers in 44 states. So we're really getting everybody back online scheduling and doing cases. And we've already opened up new centers as well. The centers that were just about ready to implant and then COVID-19 hit and then they had to, obviously, for good reasons, delay their cases. But they have rescheduled and they have restarted. So we're really able to kind of get that back up and running and get our program going again.

So just to get a sense of the ramp that -- let's keep COVID aside for a second and think about where you might have been in February as you were thinking about, okay, over the next year, how many centers were you thinking you could -- roughly speaking, you were looking to add over the course of the next year prior to COVID?

As we came out of our annual earnings, we upped our guidance on the number of centers that we are going to open, between 20 and 24 new centers per quarter. And so we're hiring the staff to be able to really ramp towards that. And Rick, did we -- how many did we do in the first quarter?

We did 28 actually.

28 in the first quarter. So we had really good momentum, and that was really going to be the focus going forward. It still is. We're not walking away from that. We obviously have the pandemic period when we weren't able to open -- or perform the procedures, but we want to get back to that cadence, get back to opening the new centers. But the centers that we're opening now is different than the centers that we opened in 2014 and 2015 in that we've really gotten learned on what it takes to have a center become more successful, make sure that they have a complete system. A good sleep physician, a good ENT support from the hospital administration, and make sure they have good patient flow, a good referral network, and we will also do some direct-to-consumer to build awareness around the community and build awareness that they're opening the center. That way, having consistent patient flow and getting them up to rate because it doesn't do a center a lot of good to just do 1 case every other month, nobody learns. You have to keep doing continuous cases to get good at the implant, that the OR staff gets good at the cases, that the patient navigator, the patient -- the navigator that manages the patient through the whole process is really proficient in their practice and even the sleep position in doing their programming. So really get into 1 a month, then get into 2 a month, then get into 1 a week to 2 a week is really what it's all about is to build utilization at centers as well as grow the capacity and opening up new centers.

Okay. One quick one on reimbursement. You've mentioned a few things already, but just in regards to prior authorization, I would love to know just data points on -- right now, what percent of prior authors are actually getting through and maybe versus where we were a year or 2 ago? And then as you mentioned, just the time to that actual result, where are we these days? How much has that improved?

Q1 was going very, very well. I think we always used to talk about 2 different percentages. Those patients that were able to get their prior authorization approvals within a period of time. And then those that stuck with all 3 levels of appeal, first appeal, second appeal and finally, an external arbitrator, which is called an external medical review. If we get patients all the way through that process, we're getting about 95% of the patients approved. Now the good news is the time to approval has dropped dramatically to less than 20 days. The majority of patients are now all approved in 2 to 5 days. So if you look at the chart, you're either approved in 2 to 5 days or we have the cases that have to go all the way through the appeals and they're approved at 3 to 4 months. So if you kind of take the median scores, the median is just below 20. The median's slightly higher showing that it's a binomial distribution of it. We're almost through that. As we get Anthem and the other key payers, those late approvals will all come forward, we won't have that same problem anymore. What surgeons used to have to finish their diagnosis and then tell patients, well, I have to get your insurance approval, then we'll schedule your surgery, that doesn't happen anymore. Now once we do the sleep endoscopy, where we see that you're a good candidate, the surgeon can schedule the procedure right away and says, we'll get your insurance approval in parallel with that because they can get it in 2 to 5 days. So the reimbursement environment has really changed. And that really is the transition that 2020 is, is we're transitioning really from a reimbursement stage company to really a commercial stage company. You're seeing that with improved payment. You're seeing that with Medicare. And now you're seeing it with more of a focus towards ASCs. Look at some of our other players out there, like Axonic, Medtronic -- I'm a Medtronic vet so I worked on InterStim, the sacral nerve stimulation for urinary. And I worked on the spinal cord stim for pain for Medtronic and Nevro. Just about half to -- excuse me, 2/3 of those cases done in ASCs today. We're not dissimilar to that. We will be at that point someday, too. But you've got to get the reimbursement done first, and now we can start that process.

Okay. That's good color. Let's spend a couple of minutes on commercialization, probably more than a couple of minutes, and just get the sales force piece out of the way. You've mentioned some numbers already, but in terms of just where we are with the impact from COVID, are you -- were you suggesting, are you basically on track with hiring from where you thought you would be despite COVID or has that had some impact on your hiring process?

No. I think we're on track for hiring. We hired the territory -- we don't like our Territory Managers to spend all their time in the operating room. So we do have, what's called, Field Clinical Engineers that are implant specialists that do a lot of that work. So some of the supporting roles, we slowed down on the hiring during the pandemic period, but just focused on the sales reps. What we call the quota-carrying employees, right? And so we have built and we're staying on that pathway all the way through. The key is getting them back up to speed and getting the centers back up to rate and doing -- working through the backlog of procedures, but not having an air gap, meaning not just work through the backlog and all of a sudden you have a lull because you have that -- the referral networks are all shut down. We kept going with referrals. We kept doing direct-to-consumer. So when we start coming up to rate, we want to keep going, and we don't want to have any air gap because once you have that, you start losing the learning again and losing efficiencies. And I think we're in pretty good shape to be able to do that.

Well, that's an encouraging comment. And on the DTC piece, what's the latest data you can share on whether it's visits to your website or clicks, eyeballs? The metrics that you follow, how has that been through these last few months of the pandemic?

Yes, absolutely. Well, the 2 key words that are themes going into 2020 were going to be conversion and utilization. We've already talked about building and improving utilization at centers. The other was conversion because we had 1.5 million people come to our website in the first quarter. That was a 60% -- 66% growth year-over-year from the prior year. We did a lot of things. We changed our website. We changed our brand to our new logo. We changed our communication to patients to let them know that we're a therapy for obstructive sleep apnea. We improved the number of patients actually reaching out. Rick, how many people contacted a doctor in the first quarter?

14,000. It was a 48% year-over-year increase.

And so 14,000, and we're less than 1,000 implants on a quarterly basis. So the conversion rate is well less than 10% for the number of patients who are making contact to actually getting the Inspire therapy. So we need to improve that conversion rate. Beginning of March, we opened up a call center. Because when we went and did some market research, we realized that the patients calling the centers about 1/3 of the patients or 1/3 of the calls never made contact. They would call the center after hours. They may leave a message on the voice mail. The center will call -- try and call back and get voice mail, and they would never connect. And we knew the first step was we need to improve on that. So the call center is designed to answer all phone calls, number one. Number two, you have 2 different groups of people. You have people who are ready and qualify to go to Inspire therapy. And then you hear people that hear the direct-to-consumer communications and they said, "You know what, I have that sleep apnea." Those are patients that need to be diagnosed with sleep apnea. They need to go try CPAP first. And so there's 2 different groups. Those that have not been diagnosed. We need to get them to good sleep physician to be able to see the severity of the sleep apnea. They'd be able to get them on CPAP treatment, and then that's -- we also know that a lot of them will circle back around to Inspire in time. But those that are ready, send them to the ENTs because they're ready for Inspire. So the patients that are going to the ENT, we fill the appointment book with qualified patients, and that's going to improve the conversion from that standpoint. We opened 2 centers in March, New York and Houston. Unfortunately, New York was a hotspot for COVID. Since then, we are up to -- how many markets, Rick, 20 markets?

Yes. 20 markets at 75 centers, yes.

That are now on the call center, and we're not slowing down. We ended the quarter -- first quarter with about 325, 327 centers. And you can see we're just kind of working through adding those centers to the call center. We think that's really going to help. During the pandemic period, we didn't stop direct-to-consumer, but we changed it. And so we kind of stopped on the radio part of it. We didn't do television in the big markets, such as New York. We stopped all that, but it allowed us to do television in some of the smaller markets, such as Minneapolis, our home town. And that was really effective, being able to really reach out and get another big group of patients coming in. And that's okay. We wanted those patients coming to the website. We couldn't do the in-person community health talks, so just like this, we went to Zoom, and the doctors are doing virtual health talks. And you can go to our website, inspiresleep.com, and you can sign up for a virtual health Doc. And you can listen to the doctor talk about therapy and listen to other patients and some of the questions they ask, and they will be, how long does the battery last. We've had people, they're hunters. And so can they use a rifle? Can they stand in front of their microwave? It's amazing, the questions that they asked, but it really is a valuable session. And then the first appointment where the ENT doesn't need to be live. So we used a lot of telemedicine. I think the virtual tools and the telemedicine is here to stay. And we're going to keep using those tools post-pandemic. And the first time that the patient may actually see the ENT would be when they're having their sleep endoscopy. Because in that first meeting, they can talk about their history of sleep apnea. They can talk about the CPAP devices that they've tried. How long have they had sleep apnea? How tall are they? What's their body weight? What's their habits? And what other comorbidities they may have? So there's a lot of things that you can effectively treat or address with the telemedicine to move forward getting the patients through the process.

It's good stuff. We've got a few minutes. I want to make sure I get it in here. Here we are, we're nearing mid-June. You've been pretty good about giving your 4-bucket example of patients in the update. In just a couple of minutes, are you able to provide a little bit more color on those buckets and where we are today?

We are scheduling all the first bucket. And the first bucket member is those patients that have their cases suspended. The second bucket were those that had the diagnosis done. And we took them all the way through their insurance approvals. They also are being scheduled. Now the really good news is the third bucket were those that need to have their sleep endoscopy, and there was a concern that there was a high risk of -- the drug-induced sleep endoscopy is high risk because you insert a nasal scope that excites a tissue at the back of the nasopharynx, where a lot of the bug is and you create airborne pathogens of COVID. And so there's a concern. Just today, the International Sleep Surgical Society downgraded the risk of those DISE procedures because the doctors work together to identify procedures. And so it went from a high risk just down to a moderate risk. We are scheduling those sleep endoscopy procedures in all of our centers or all of the states that we're talking about. So the third bucket is really moving forward. And the leading indicator that we see is starting to see another increase in the prior authorization submissions. And that's cool. We kept it going through -- halfway through the pandemic then, of course, the inability to do sleep endoscopy, it starts to fall off but now we're starting to see it ramp back up. So we're really encouraged by what we're seeing. And the fourth bucket, we've been building that all along, doing the virtual tour [indiscernible] of medicine.

You feel more confident today than you did back on the earnings call about the second half of the year.

A year ago, you said or this pandemic?

Yes. It's just from the earnings call to today, do you feel better about the second half of the year?

I think we were confident that we were going to come through the pandemic period, and you got to get up and you got to make your bed, you got to go to work, you got to be purposeful. And we weren't -- we didn't slow down staffing. We kept hiring. We didn't cut payroll. We didn't lay anybody off. It was actually a real strategic time to hire people because other companies were really kind of hunkering down, we were leaning forward. And so we're going to come through this and make sure that we stayed purposeful, take the time to get all your training done. All the surgeons, all the sleep physicians have updated training that they have to do. Keep opening new sites, keep doing the logistics. So we did everything we could working remotely, but to stay as proficient and as productive as possible. And I think you're going to see this paying off. Yes, we're confident going forward. We're just confident in therapy because the therapy works, and we're able to help a lot of people.

Well, that's a nice way to end it. We're right at the end of our time. So I wanted to thank you again for just making the time. I know it's tough out there these days with everything going on. So we wish you the best of luck, of course, and we'll be talking to you very soon, but both Tim and Rick, thanks so much for joining us.

Thanks for your support, and in remote, you've got to deal with the technical challenge. So I apologize for that. But thank you very much. Look forward to talking to you soon.

We made it through, no worries. Take care, everybody.

Thank you.

All right, bye-bye.