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

Good afternoon, everyone. I'm Robbie Marcus, the medtech analyst at JPMorgan. Happy to introduce Tim Herbert, the CEO of Inspire Medical as our next speaker. But before we jump in, just want everyone -- slides will be here. If you want to follow along on your own, go to the conference website. You can submit a question there or feel free to e-mail me or chat me on Bloomberg, and I'll do my best to get to all the questions. So with that, Tim, I'll turn it over to you.

Thank you, Robbie, and thank you for hosting us, again. I wish we were live in San Francisco, but it's certainly a privilege to be able to talk to everybody and that's been a great lineup so far, and we've been able to talk to a lot of people. So absolutely wonderful. So let's go to the slides, Matt. And we'll bring them up. And we'll just jump through the first couple of slides of the disclosure. And really, the next one is talking about the rebranding of the company here with no mask, no hose, just sleep. And we really want to highlight that, we're really a consumer company with a Medtech product and really highlighting the simplicity of the therapy of just no mask, no hose, just good sleep. Let's start off by talking about our focus on a strong start to 2021. And our Q4 and full year numbers are still not out. So we're not going to pre-release our numbers today. But we did want to highlight that we did not see a significant negative impact due to COVID. And what's important there is we wanted to update this for the JPMorgan conference, to make sure that we put a statement out there for everybody that we didn't see the major impact. And because of that, there's no change to our previously announced guidance. We do want to comment that we did see a little bit of case spikes during post-holiday, and that is causing a little bit of deferrals and cases in January, but we don't think that's going to really have a significant impact going forward. What we do want to highlight in 2021, as we've stated, this is our first commercial year. And what I mean by that is, even though we've had approval since 2014, this is the first year that we haven't let off spending 20 minutes talking about reimbursement. Instead, we get to talk about the scaling of our business. Now talking about adding capacity and improving the conversion for all the patients that come to our website to learn about Inspire. So in the presentation, we'll talk a little bit about highlighting the expansion of training new centers. And we're really going to look to focus on ambulatory surgical centers because the reimbursement that used to be the big headwind are the strong tailwinds to date, going forward. With opening new centers, we always had a ratio of the number of centers that we wish each of our territory managers to manage. So we're going to increase our cadence of hiring territory managers as well, but we also will increase the staff, necessary to support the program, specifically FCRs. You see that there, FCR stands for field clinical representatives. They do a lot of the case coverage. They do a lot of support in the operating room. And we want to keep the territory managers really focused on driving new patients and driving patient flow. We will talk a little bit about our direct-to-consumer campaign. In fact, we filmed 4 new television commercials. And if we have time, we're going to run those. So everybody can see them. They are running live. And then when we start addressing conversion, it's all about the call center, what we call, the Adviser Care Program. And that is to capture a majority of the inbound calls. And we really saw a problem with a lot of lost calls. Almost 50% of the attempted calls from our website were not being answered. And so we instituted the care program in 2020 to solve that challenge of lost calls, to give those patients a chance. And then finally, of course, growing capacity at our existing centers. So Matt, let's jump forward and kind of just talk about the summary of 2020 with the major accomplishments that we had. Number one is reimbursement. No question about it. 100% Medicare coverage in all 50 states. And that took effect right during the shutdown period in about May and June. So we really haven't had the ability to really celebrate those policies. We increased our covered lives with commercial payers. We're up to 207 million covered lives in United States. And really, the only outstanding payer is Anthem, and we're working with them to show them the clinical evidence of Inspire, and we'll be pushing them to right policy in 2021. But further, with the Medicare coverage that implemented a increase in the physician payment. A year ago, today, the payment was maybe $600 to $800, with 64568, that's the base CPT code. But with the policies, all this time there's a payment for the T-Code, the 0466T, that has a payment of $400. So instantaneously, as we came out of COVID, the surgeons had a significant raise. Further, the ENT society called the American Academy of Otolaryngology, or AAO, they submitted and received a new Category I code approved for the entire Inspire procedure, and we're in the rough process right now to value that code, to set up the reimbursement and that code will be effective January 1, 2022. With those tailwinds, with the new reimbursement, with covered lives, with the Medicare coverage, the increased physician payment that now allows us to move towards a focus, our new ambulatory surgical centers. And we signed 2 national agreements with firms, one with 400 ASCs, another with 240. And it really shows the momentum of adding ASCs going forward. So let's go ahead, Matt, to the cross-functional priorities in 2021. We'll jump through these quickly, and then we'll get into a little bit more of the details. U.S. sales, first full year without reimbursement headwinds. So it's really our first commercial year. It's the first year that we really get to go and scale the business, grow capacity, both by opening new centers, but also increasing utilization at existing centers. Secondly, improved conversion. So marketing, we have a bolstered DTC, direct-to-consumer program with new messaging to drive patient awareness, right? A key focus on building that call center to take the majority of the phone calls. At the end of the third quarter, that call center was really only taken about 25% of the calls coming from our website, and we're going to really push that upwards. Reimbursement, obviously, continue to push for added positive coverage policies, specifically Anthem. But we need to prepare all the centers for the new CPT code with their software. And we have an expansion of our international coverage and good progress made in Japan, we'll talk about in a second. Product development, we are going to be submitting our new remote, that will have Bluetooth, that will drive our digital program. We have several slides, specifically on the digital program going forward. And then finally, it's the international growth. Germany, we get to celebrate a brand-new DRG code. We used to use the NUB code, up to this point. But now we just graduated to a permanent DRG, we'll be negotiating that -- the payment on that code through 2021. And that will take effect, well, it's live today, but we'll have the permanent payment in 2022. Good reimbursement adoption in the Netherlands and also good growth in other EU countries. Finally, in Japan, we have decided we will be using a distributor. We've identified that distributor, and we have negotiated distribution agreement. We are not announcing who that distributor is, but it's a top distributor in Japan. We formally submitted our C2 application with the Minister of Labor, Health and Welfare. It has been endorsed by the minister, and we are in the final Q&A process with the insurance board, and we'll look to middle of February to have another in-person meeting with the insurance board. The goal is that Inspire will be formally listed in June of 2021. We will be allowed to do implants as early as 30 days after that. So we're going to be set up. All the products are ready to go. The manuals are all translated, and we're going to be ready to do implants late in the third quarter or in the fourth quarter that allows us to kind of set up for 2022. So Matt, let's go forward. I just want to give a quick update on COVID. So we talked a little bit about this in the third quarter. We did not experience significant delays in 2020, but we have seen a resurgence of cases in 2021. And in select states, Northeast, a little bit of Southeast. Everybody's seen the news, Los Angeles is having a difficult time right now. But we don't see currently a sustained impact. And we don't think it's going to have an impact beyond our normal Q1 seasonality that we have with the high deductible insurance plans and people rushing to get their cases done in the fourth quarter. With the ambulatory surgical centers, becoming a more important part or a higher percent of the cases, we do have flexibility to move some cases away from the hospitals that are strong COVID managing centers. And so it does kind of help a little bit during the lockdown period. Center hire opening and new territory manager hiring remained very, very strong. We're continuing with our prior authorization pipeline and approval rates remain high. And we'll continue to educate, engage physicians with our online platforms and using our virtual tools. And finally, of course, the direct-to-consumer. We haven't slowed that down. We've done a little bit more focused targeting of our DTC, but really going forward. So Matt, let's kind of jump forward into commercial execution. And I'm going to just briefly touch upon this. And the key is 3 steps: generating interest; qualifying that interest; and then driving the conversion. And really, the call center is going to really kind of help us manage this. We already know that we can drive people to the website because they want to be educated on Inspire, be educated on the whole process. And then with the website, we can educate them and qualify them and then get them in contact with the right doctor. And to do this, Matt, let's jump forward to the digital health. We really want to define what is our digital health program. And these are connected tools, not just for sleep docs, not just for surgeons, but also for the patients, that improves their outcomes and reduces the work and makes it easier for the patients to manage their own therapy. So jump forward, looking at the foundational customer needs on the next slide. For the surgeon, it's about strong, predictable outcomes. Look at that for the sleep physician, it's exactly the same, strong, predictable outcomes. And for the surgeon, we want to improve our products to make it easier, the implant procedure. And for a sleep physician, make it easier to manage those patients. For the patients themselves, they just want outcomes. They want to feel better. They want to reduce risks of their untreated moderate-to-severe sleep apnea. They want a comfortable therapy. And more importantly, it's got to be convenient. It's got to be easier to use. So one of the key challenge we have, we highlighted the sleep physician, that's going to be an initiative going into this year. So if we can click to the next slide, there are 6,000 sleep physicians in the United States. And there is a survey conducted, over 90% of them are aware of Inspire. Yet today, only 40% are actually referring patients to Inspire. Look down below, you can see where their basic training. For the most part, their internal medicine or pulmonology, there is psychology and neurology, there are older oncology. Those are surgeons who are dual board-certified in both ENT and Sleep. You can see the age parameters. We really focus on some of the younger ages. We have our own sleep fellows program to teach sleep physicians as they're coming out of school. But on the right-hand side, we always look at how does the sleep physician perceive Inspire today. And then we see -- they perceive it to be invasive and costly and complex, where CPAP is just like riding a bike towards the finish line. In Inspire today, they see all the challenges that we have to overcome from insurance, to the ENT procedure, to device programming and so forth. And we need to kind of show them though, that's not the case. And with our digital tools, we can make it easier for them to manage. Let's go to the next slide and just talk about a little bit of a history. So CPAP over the years has really grown adoption. It's an effective therapy. It's cost effective. Started back in the 1980s, of course, with the most rudimentary CPAP devices have obviously evolved over time. But they first increased comfort with the nasal pillow, and then they made it easier to use and integrated humidified air, heated air. Now as there's auto adjusting. And now it's a smart connected CPAP. Well, look below to the Inspirer history. We're on the same path. We got FDA approval in 2014. We went to a new remote that made it easier for the patients to use. We reduced the size of the neurostimulator and also allowed patients to have an MRI. In '18, we released Inspire Cloud that really allows us to track adherence and efficacy of the therapy. And here in '21, we're going to start our Smart, connected Inspire. And that's really the key step going forward. So we go forward one step. We can kind of look at the 2021 system, what it looks like today. And you can see that we have now Inspire Cloud, is a real key part of that, right? It's our cloud-based patient management system that a physician can look at on their web browser, on the hospital PC, and they can see how the patient is doing. The information for the neurostimulator is conducted to the patient remote inductive telemetry. But now the new remote is going to have Bluetooth. And the Bluetooth means that information can be sent to the patient's smartphone in the Inspire App, and you can go to your Apple store and you can type in Inspire Sleep. And you can download that app to your smartphone and make sure you give it a 5-star rating. But in that app, we can do things. We can ask questions with the virtual check-in. How are you doing today? How are you feeling tired? Are you able to use the therapy? Are you using it every night? What challenges do you have? But that information from the mobile app can get uploaded to Inspire Cloud and now the physician can review that information. A physician can prescribe a home sleep test, call it, Itamar or another device. And they can upload that to the cloud. And now when we do it in a virtual tool, a physician has the information necessary to do a telemedicine visit, and the patient doesn't have to be live. In short time, we're working with the FDA. We are looking for authorization to provide the physician, the tools to be able to do remote programming. Now we have a real telemedicine. If there's anything, that came out of COVID. It's certainly the ability to use virtual tools and to be able to do telemedicine and the physicians are reimbursed for all those cases. So let's go forward a little bit to our market development. Next slide. In our targeted approach. And we certainly have the direct-to-patient channels where our -- well, first off, let me talk about, we have our referral pattern, the classic Medtech marketing, where we work with physicians to refer patients. But we have a unique approach that we have a direct-to-patient outreach program, where we can do radio, Google ad, Facebook, and we can do television spots. And so far in 2020, we generated 3.6 million people come to our website. And from that, 206,000 people actually looked for doctor searches. They actually looked at that's down because we spent more time educating people and making sure that they're qualified patients. And 43,000 patients through the first 3 quarters of the year reached out to make an appointment with the doctor. We need to improve on that. Let's go to the next slide. Our direct-to-consumer program is -- the strategic pillars are really simple, drive awareness, number one, educate and segment on our website and get people started on their journey, get them to download the app. Number three, convert into appointment through the Adviser Care Program or our call center, and then here's the important part, convert those appointments to implants. And right now, I think our conversion rates are less than 10%, probably closer to 7%, of the 43,000 patients, end up with implant, and we need to kind of drive that forward. So let's go forward to the next slide, talking about the Adviser Care Program. The numbers on our website. If you went to our website, and you said, find a physician in my area, you'll see like here, we got NYU Otolaryngology Associates, just as an example. And there's a phone number there. And when you call that phone number, it actually is answered by the Adviser Care Program or an Inspire adviser, that call center happens to be in Winnipeg, Canada. And they talk to the patient, get the basic information, get their contact information, find out, have they been diagnosed with sleep apnea. Have they tried CPAP? Are they not using it? And from them, we can determine which physicians those patients should be seeing. Should they be -- are they ready to go directly to ENT? Or should they go to a sleep physician and be diagnosed. So right now, we have about -- less than half of our centers is actually on the call center today and taking a small percent, as I mentioned, at the end of the third quarter, just 25% of those calls are really being answered by the call center. And that's going to change. We're going to dramatically increase the number of centers that are on our call center and dramatically accept those phone calls from patients reaching out to make an appointment. It's going to be a very strong initiative. Let's kind of move forward. As I talked a little bit about television commercials. And we did film 4 and they're just 30-second spot. So we thought it'd be kind of fun. So let's go ahead and run these. So go to the next opening slide, anybody who's had a kid, has had at a kid that's slept in their bed. And we wanted to play off that when we did this first commercial. And really, the highlight is about it's a simple. It's just a click of the button. So Matt, go ahead. Let's run the commercial. [Presentation]

Pretty fun. The kid is -- he was so good, filming that commercial and really turned out very, very well. But we wanted to stay just a simple press of a button, but we also talk a little bit about relationships and untreated sleep apnea. In fact, during our STAR trial, 36% of our patients were sleeping in a different bedroom. And about a year later, that was down to less than 5%. So we know we have a real strong impact on relationships, and we wanted to play on that. So let's go forward. This commercial is called Lights. So go ahead and run the commercial. [Presentation]

It's great. Okay. So then the next step because we know that from our ADHERE registry. We have a 94% satisfaction score. And those patients that are treated with Inspire are really energetic, and they want to talk about it. And we have a extensive network of patient ambassadors. And with that, we created a character called the obsessed dad, and let's run that commercial. [Presentation]

Again, pretty fun. But again, just talking about simplicity of just a press of a button. We're talking about a therapy. We're not talking about the surgical procedure. And then finally, really just highlighting the support groups and those struggling with CPAP. And we ran a commercial just for the support group. So go ahead and run this. [Presentation]

Fantastic. So there you go. So go to the next slide. What it's all down to? Yes, it's our first commercial year. Yes, we're talking about adding capacity, we're talking about improving conversion, but we can only grow as fast as we can maintain control. And control is defined as strong patient outcomes. We want to make sure that we don't step out of bonds. We make sure that we train centers properly, we will significantly increase the size of our training team to make sure we hold those same outcomes. We will increase the cadence of hiring territory managers, we will be increasing the number of field clinical reps that we hire. We wanted to be closer to a ratio of 2 territory managers for every 1 field clinical rep. So it's really the year of kind of scaling our business. We're pretty excited about it. Just going to the next slide, we can just show where we have from an annual revenue. You can see a steadfast growth since 2016. Average improvement in our gross margins. And again, we haven't put out our numbers, but you can see where we set our guidance for 2020. With that, Robbie, I think we'll stop there and answer any questions that people may have. And if we need to go to some backup slides, we can certainly do that. But I want to make sure we spend sufficient time answering questions.

No, that's -- I mean I'm also willing to just watch more Inspire commercials. If you want to do that and fill out the rest of the time.

I will comment. If I can comment on that is, when we went on and hired our marketing team, our lead marketing person is not a Medtech marketer. We all know Medtech, well, we don't know its consumer. So our lead marketing person we hired from General mills. And he used to do marketing for cereals and Fiber One bars and really brings that consumer element to it. And then we've got Georgia to our Board of Directors, and Georgia was the Chief Commercial Officer at Estée Lauder, really a consumer base to really help us kind of understand that and be able to leverage that. So we're having fun with it and patients like it as well.

Oh, great. There's a lot I want to get to, but I want to ask one question that came in from the audience that I think kind of ties into some of the advertising. This is -- how does the captive call center help in directing patients towards its doctors, who do Inspire therapy. Can you build upon more of the marketing and direct-to-consumer advertising to help drive and convert the patients who are aware but don't get it? And the doctors who don't currently offer it, but absolutely could.

Yes. No question about it. So the way the call center is, is we just want to make sure we give patients a chance. So when all those patients come to the website and they spend the time to educate themselves, they find a physician in our area. And they say, "okay, I'm ready. I want to reach out, I want to make an appointment." And then they call a number that doesn't get answered, that's really frustrating. And so the call center step number one, answer the phone. And find out who the patient is and who's the right doctor for them? Is it a sleep physician? Is it an ENT, are they ready for Inspire, maybe they need to go back and have a diagnosis of sleep apnea. 1/3 of the patients that, when we did a research, had never had a diagnosis before. They need to have a sleep study. They need to find out what's the severity of their sleep apnea. They probably have to try CPAP and start at the beginning. And that way, the patients that go to the ENTs, we -- our goal is to send 75% of the patients going there are going to be qualified patients. And how we do that is after we communicate your needs and we find out that you're ready to have an appointment, together we will white glove. It's a concierge service. We will do a conference call to that doctor's office, and we will call the person who has the appointment booked to make the appointment. And the center has to have a commitment that those appointments have to be within 2 weeks. Could you imagine calling the schedule appointment and young Dr. Young is scheduling out in May? So no, we make sure that they have reserve time for those patients, get them scheduled, and then we track metrics on that. We are able -- everybody is in the network, so it's all digital data. So we can track our progress, and we can track improvement and success.

I mean I'll tell you, I've called to make specialist appointments, and it's 2, 3 months out sometime. So I totally get it. So let's talk about the current trends. You put out the other day and you reiterated in the slides that we're reiterating our guidance for fourth quarter. And I definitely had some investors come to me saying this is -- look, Inspire has a long history of beating their guidance and just reiterating here is a negative. I just want to let you in your own words say, is that the way to interpret it? Or is it more just you feel comfortable putting the guidance out again that you gave on the third quarter call, and it's not implying anything to the negative?

No, it's not implying anything. What we actually try to say is that based on the impact we saw from COVID, there's no reason to change our guidance, right? And yes, we're not trying to imply that. We're -- our earnings call is February 23, and we'll be able to provide full release of all the information then as well as be able to really strongly set our guidance going forward for 2021.

And I apologized, Rick, I didn't introduce you when we started Q&A here. Rick is the CFO, as most of you know. So who was it that put 3 exclamation points on the 2021? And is that a reflection of how excited you are for 2021?

Well, it's so unique for us to be able to say, 2021 is our first commercial year. I know we got approved in 2014, but this is the first time that, Robbie, we didn't start this conversation to spending 20 minutes talking about reimbursement. We're talking about taking care of patients and scaling their business. So we're calling this our first commercial year, where we get to really focus on scaling the business and adding capacity. Capacity is twofold. Capacity is adding new centers, but it's also increasing utilization at existing centers. And then conversion, we talked a little bit about with call center, of course, and giving patients a chance.

Well, I guess that's one of the benefits of just picking up coverage. A few months ago, I got to sidestep all the insurance coverage and started the good part.

Right, every year, it's just talking about what do you do with reimbursement this year, right? So...

Right. So let's talk about that, right? Because you do have some new codes in place, insurance coverage is not really an issue at all anymore. How does that change the discussion when you go into a doctor's office, when they're talking to a patient? And how much less -- how does eliminating the reimbursement friction help drive sales to Inspire?

It's still the first question. If you go to our website and you stay on there for a couple of minutes, you get a little person pops up a little chat page. And if you type the question, the number one question we still get today is does insurance cover this. People come in to the doctor, and the first question they ask is, does my insurance cover this? And so that's still going to take some time to kind of ease people's mind that, yes, Medicare covers it. All the commercial payers cover this. And let's move forward and talk about the therapy and what it can do to benefit you. But from a surgeon standpoint, we can ease their mind that they don't have to worry about reimbursement. When we get into the economic discussion, they can start talking about this is what you can expect to be paid from a surgeon. If you're a part owner of a ASC, this is what your ASC is going to get reimbursed. And so they can -- when they start building their own business plans, they understand the ability to generate enough revenue to commit a greater portion of their practice to Inspire. And that's really what's important. They -- whereas before, they felt like they're almost doing us a favor because they'll do Medicare cases, but they're not going to get paid. Or they're going to do so many commercials, but it takes 3 months to get an approval. So Inspire, you can't ask us to commit too much of our time to Inspire. Now it's different. Now we're driving patients, and we can make patient flow quickly from the first visit, which, by the way, can be a telemedicine visit, which is fully reimbursed, to getting into the sleep endoscopy under the diagnostics and right into the procedure itself in a timely fashion. And then they're able to go to the sleep physician who can do the programming and the longitudinal management of the patients, and we're sitting -- setting up those digital tools to even make that easier. So really what it comes down to is removing the headwind of reimbursement and telling the physicians, it's actually a tailwind for the company. It actually is an advantage now that you can make Inspire a significant part of your ENT practice because it generates income to help you pay the bills, right? And it can be a really important part and the therapy works. So you're really helping people in the process.

So looking at a few years out, Inspire V is in the works. Where do you stand on this device? Do you think that's what's needed to drive more penetration in the market? Can you do it with the current version? And really, just remind us what in the Inspire V is so different from what you have today?

I think the current product will continue, the adoption will continue to grow. With the inbound interest we see, the real challenges, we just simply do not have capacity. We do not have the proper amount of surgeons and centers to be able to treat the patient's demand that we're getting today. So I think that we can continue to grow from that standpoint. And we're growing our training team to make sure that we can properly train centers and train the physicians and still maintain those same strong patient outcomes. We're developing all the digital tools and the patient management system, Inspire Cloud, to allow sleep physicians to manage patients long term and get feedback on how the patients are doing. So if patient Rick isn't using his device 3 nights in a row then the physician's office will get alerted via Inspire Cloud that, "hey, we've got a disruption here, somebody call patient Rick to make sure he's okay and everything is there." And we can have that kind of feedback loop in Inspire Cloud. And sorry, Rick, I always use him as the patient. But longer term, when we go to Inspire V, our ENTs implant the device, right? Ear, nose and throat. They don't like going much soften here. We do have a closed-loop system. So we have a stimulation lead, a neurostimulator. But we also have a sensor that we place underneath the pectoris muscle. It's a little bit soft. ENTs do the procedure without a problem. It's very, very safe. They're comfortable doing it. But probably if they didn't have to go that far down, it just they wouldn't want to. So number one, we can do the sensing inside the can and eliminate the pressure sensor altogether, that will be a key part of Inspire V. The other side to it, Inspire V is now going to be a microprocessor based system with downloadable software. So we're already planning Inspire VI, VII and VIII going forward, which will be software, which will be adding automation to the process. The device will be able to detect if you're on your back, left side, right side, and that changes the amount of energy you need all the air reopen. The accelerometer will be able to detect respirations and will know, that we'll be able to stimulate during the inspiratory phase, which is the only time that the airway collapses. And then finally, longer term, we want to detect it for patients having apneic events and eventually, we're going to want to be able to do auto programming. And with this new device, we're going to have that capability in the future to start to develop that.

Is there any risk around lower revenues when you -- for the doctors when they don't implant the sensing lead? And how does that play into the new reimbursement?

The new code that was approved. We have a brand-new Category I code for the whole system. It was approved in October. The American Academy of Otolaryngology is in the process of evaluating that code. And I think they'll be going to the AMA RUC committee in the very near future to start to propose what their reimbursement level will be. That survey was conducted with the sensor and as part of the process. And certainly, when 20 -- when the new Inspire V device comes out without the sensor that code will still be used because it is able to be used with or without a sensor. They'll have a benefit there for a while. But down the road, if it's ever revalued, the reimbursement will go down. But remember, the OR time is going down significantly as well. So the cost per minute to do the procedure will still be beneficial because the OR time is so much less.

Got it. Tim, a question from the audience. How do we think about the ASC pipeline for Inspire?

We're going to focus and I'm going to turn it over to Rick and get him involved here, too. But I think right now, with the reimbursement benefits as far as -- not a big demand, it's not a challenge to get prior authorization approval, a surety that you're going to get paid for Medicare cases. And with the increased reimbursement levels, we can now rely more on ASCs. And if you look at some of the other neurostem companies that 50% to 2/3 of their procedures are done in the ASC to date. We're going to be the same thing. But today, only 15% of our centers are ASCs, and that's going to be changing and have Rick talk about the 42 centers we opened in our pipeline.

Yes. So we did add 42 centers in the third quarter, and about half of those were from ASCs. We entered into 2 large national network agreements for ASCs. USPI, they have roughly 400 ASCs. And then SCA, they have about 230. And so of the 42 centers we added, half of those were ASCs. And just a handful of those, we're from those national agreements because we continue to focus on stand-alone hospital networks as well as ASCs. And so because of those agreements, it allows us to have good confidence on the robust pipeline that we can add several centers going forward and moving that 15% of our centers, up closer to 50% on a long-term basis.

Great. Well, we just have a minute or 2 left here, and I've got a couple of questions that just came in, going to pick and choose here in the time left. Tim, why did Anthem not accept coverage this time around? And is it something you expect could happen in the future?

Yes. I think they did a tech review, and they said that they wanted to see some more evidence. Specifically, level 1 evidence of randomized trials. And I don't think they really interpreted the STAR trial, which was published in the New England Journal of Medicine. And the reason it was in the New England Journal of Medicine is it is a randomized trial. So we did complete a new randomized trial in Germany. It had -- the manuscript has been prepared, and it's been some minutes in review out in a journal. That will be one piece of evidence that we're going to use to provide to Anthem saying, "Hey, this does work. And here's another critical piece of evidence to show it. We'll continue to have additional studies published that will show ongoing safety and efficacy of the therapy. And more importantly, we continue to push Anthem patients through the prior authorization process. And if we go all the way through the appeal process, we get 87% of the Anthem patients approved. And a number of Anthem patients -- a significant number of patients from Anthem have received therapy. And we're even looked to collect that information. Maybe we'll bundle that into its own paper to show Anthem that these are the patients you paid for, and this is the results that they've had.

Got it. Well, I apologize. There's a handful of questions here. I didn't get to, that came in late. Feel free to reach out to me if you still want to discuss. And Tim and Rick, thank you so much for joining us today. I really appreciate it.

Robbie, thanks for having us. It's always great to do this. And hopefully, next year, we're in San Francisco to do this.

Yes, in person, no COVID. Thanks, everyone. Have a great evening.

Very good. Thank you very much.