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

Welcome back. I'm Robbie Marcus, the med tech analyst at JPMorgan. Very happy to have our next company presenting Inspire. We're going to have the CEO, Tim Herbert, and joining us for Q&A will be Rick Buchholz, the CFO. Feel free to send me any questions, I'll do my best to get to all of them after in Q&A. And with that, Tim, I'll turn it over to you.

Well, thank you, Robbie, and I certainly wish we would be live. But such is the life dealing with COVID world, virtual again. But it's great to be able to talk to people throughout the conference, and thank you again very much for hosting us. Just have a few slides that I want to run through today, and look forward to taking questions and discussing this further. So that's -- as we kind of move into it. We wanted to first start out with talking about our fourth quarter and full year in 2021. Typically, we do not prerelease our numbers. We'd like to use this conference to talk about our technology advancements, talk about how we've grown the adoption of Inspire therapy. But with COVID, it kind of changed the world a little bit. And we knew that we had a real successful fourth quarter in 2021. And we knew that we're able to operate in a COVID environment because the team has really got a lot of grit and really stays focused and flexible to be able to move, schedule cases to either a suburban hospital or to an ambulatory surgical center. So we thought it was really important for us to be able to get the early results, all so we could have a candid conversation with people this week. And so here we go. So we had a great quarter. We're going to be in the range of about $78.0 million to $78.4 million, which is approximately a 70% increase over the same quarter. Totaling up the year, we're going to be between $233 million and $233.4 million. It's actually approximately 102% growth over full year 2020, albeit certainly, with everybody, 2020 was impacted because of COVID. In the fourth quarter, we had a unique ability to open additional centers. Again, part of that flexibility in the COVID environment. So we did open 81 new centers in the fourth quarter. That brings a total to 684 U.S. territories to date. We're going to continue to stay aggressive in opening new centers going forward. And remember how we always want a ratio of new centers to sales reps to be consistent. Therefore, during the quarter, we also hired 16 new sales territories in the fourth quarter. That brings our total to 157 sales territories, and we're going to stay aggressive in growing our sales territories on our consistent cadence, quarterly cadence. Good news is the FDA approved our brand-new remote control. This remote has Bluetooth in it. And so we can take information from the neurostimulator and from their remote, and via a Bluetooth, bring that to a patient's smartphone where it can quickly be uploaded to Inspire Cloud, which is our cloud-based patient management system. And then finally, on the summary slide, we surpassed 20,000 patients who have been treated with Inspire therapy. Just a real significant milestone. Very proud of the team going forward. Here's our annual revenue and gross margin. We do have a guide between 85% and 86% gross margin. And you can see the steadfast growth in our revenue over time. And obviously, in 2020, we had a little impact due to COVID, but really a strong rebound in 2021 and really look forward to moving forward into 2022. We haven't put out our formal guide. We're going to be doing that during our earnings call, which will be February 8, in just a few short weeks as we continue to work through the financials, the auditing and also the evaluation of the current COVID climate. But here you see the quarterly revenue, you can see we typically have the regular seasonality that we see. I'm getting my laser pointer -- this typical seasonality that we see going from Q4 to Q1, primarily driven by the high deductible insurance plans where a patient -- at the end of the year, they really are excited. They want to get the therapy by the end of the year before there are 3,000 or whatever high deductible insurance plan resets on January 1. So with everybody, the last couple of weeks of December are very busy time frame. So we did see our normal seasonality in January. The problem in January of '21, that seasonality also is impacted by COVID research as everybody remembers. Well, here we are in January of '22. And lo and behold, we have another COVID research. I think the good news is New York is back up and running. We like that. We're starting to see activity there. We do have some issues in the mid-Atlantic Last night I was informed that Boston right now has gone through a surgeon and several hospitals right there are being cautious and deferring cases. The good news from what we're seeing in Europe -- and again, our experience in New York is that it's very quick-moving, and we don't think that we're going to see any sustained impact due to the COVID. But again, it will affect us in January, but we think February, March, we will be right back online. We made a new year's resolution. The new year's resolution is we don't want to talk about reimbursement anymore. We're proud of this because the team has done such a great job. And on January 1, the new CPT code took effect has very stable reimbursement for the hospitals. You can see the national average payment exceeds $30,000 now. That was increase over 2021. We had a little bit of work to do with CMS to clarify where the new CPT codes fall as far as ASC, Aboratory Surgical Center, payment. That has been fixed. The schedules out, and it's approaching $25,000 as a national average Medicare payment. Remember, commercial payers pay each of those facilities slightly higher hospitals at about 1.4%. ASC is almost 1.9 because they -- one, it's coming off a smaller base. But number two, they encourage procedures being done in ASC because of certain efficiencies. The good news is CMS did increase the physician payment for an RVU, or relative value unit. So our physician fee has been published now at $887. That's wonderful. That's -- for a 90-minute procedure, that's close to $10 a minute. It's stable for physicians in all facilities, and whether they're in academia or in private practice. Further, we now have a new Category I code for drug-induced sleep endoscopy, and that payment comes out at $113 as well on a national average Medicare payment. So really strong reimbursement. We have national Medicare coverage. We have coverage with all the major payers, government contract for VA and military. So really strong reimbursement. Great, strong momentum in therapy adoption from '21 going into '22. These are the same things you used at this meeting last year, talking about increasing capacity as well as becoming more efficient in establishing patient appointments. And we really have increased our capacity of adding territories. As we mentioned, we opened 81 in the fourth quarter, over 70 in the third quarter, and we've scaled up our team to open new centers, and we have added area Vice Presidents and area business managers in our sales organization. We now have 8 area Vice Presidents. Each of them have an area of business manager that whose sole focus is to open new centers. We call them the hunters. They hunt new centers to train them, get them active, up and running. And those are of Vice Presidents are now managing 157 territory managers, and their job is the farmer's. They cultivate existing centers to be able to grow utilization at existing centers. During the year, we transitioned to a new adviser care program beginning of August. Last firm that we used in Winnipeg, Canada, very effective company. We really like them, but we needed a larger firm that had a little bit more sophistication. And the data from the care program actually interfaces with Inspire's technology and the Inspire Cloud, providing us more access to that data and ability to track patients more easily through the process. We have our new direct to TV -- direct-to-consumer TV campaigns. We changed it up a little bit this year that we're going to some national buys, and made promises with previous meetings that today we're going to we're going to roll out, and we're going to show a new TV commercial for 2022 that I think you'll enjoy, and that's coming up in just a few slides. Very excited about the two-incision procedure that took effect midway through 2021. We now have 100% transition using this new technique, and reduces OR time down to 90 minutes. Very excited about the remote. Japan Lifeline is our partner in Japan. The first implants are anticipated early in 2022. In fact, the first patients have their sleep endoscopy is already scheduled. Our top trainer is in country, has already conducted 2 physician training courses already. We have a third one scheduled earlier in the year. So very excited about Japan. I want to switch gears a little bit, talk a little bit about our Inspire Digital Health. And the definition is really connected tools for sleep apnea surgeons to patients that improve outcomes, reduce work and improve just everybody's experience with the technology. And for ENT, it's all about strong predictable outcomes. That's across the board. ENT sleep patients, everybody wants to have strong outcomes. Patients want to feel better. They don't want to have a lot of risk. But with the ENTs, we continue to work the implant procedure to make it easier, two-incision is a perfect example of that, whereby we bring it down to a 90-minute procedure, and the 2 incisions to make it easier for the recovery for patients. As we move to Inspire V, we're going to prove that by eliminating the pressure sensor and incorporating that inside the neural stimulator. Sleep MDs or sleep positions, we need to work with them because we need to increase the speed and ease of their patient management, and that's the development of the Inspire Cloud tool, to make them more efficient. So that thereby increases their capacity, which in turn allows the ENTs to do more procedures and thereby allowing more patients to receive Inspire therapy. For the patients, they want comfort. They want ease of use. The patient's remote is going to be able to provide interconnectivity with their physician and improve just their experience with the therapy. With sleep physicians, we need to continually build their confidence in the therapy. And just a little picture, it just kind of shows what they think about patients on CPAP. It's just like riding a bike to the finish line to treated patients. Now we know there's challenges in there, too, because the compliance to CPAP is limited. But what they think about inspire today, it's just invasive. It's costly, it's complex, and we're starting to change that. And Inspire Cloud is going to provide a tool for them to see that insurance the reimbursement is now stable, sleep physicians get paid for telemedicine visits. They get paid for interrogating the device. They get paid for doing device programming. The procedure is relatively simple, down to a 90-minute outpatient procedure with a quick recovery time. Programming is simple. We teach physicians and sleep techs how to do the programming. We don't have our sleep reps do the programming. Our sleep reps, our teachers to teach the physicians to do their own programming. It's not difficult. It gets them involved with therapy. They can handle it. So I think what we're going to see over the years is really a streamline of our overall procedure. We're following CPAP. ResMed or Respironics or Philips really had a straightforward program. I mean the old CPAP, the reverse vacuum cleaners kind of changed or vacuum as you can see, the rudimentary CPAP is actually an actual device going to increase comfort going to ease of use with unification. Now going to auto adjusting and [ Auto PAP ] now they have smart connected CPAP. We're doing the same thing. We started with our first approved system in the INSPIRE 2 with the old remote. Now we have the new remote. We've gone to a 40% size reduction with the fourth generation device. We're going to a fifth generation to eliminate the sensor and incorporate sensing inside the can. We've launched Inspire Cloud. And ironically look at the pictures of the screenshots there, very similar to [ Resvent's ]. And we did that because we want familiarity for the sleep physicians to say, hey, I've seen this before. I know how to manage these patients. using this tool and be able to build their confidence. From a patient management platform, very excited about the new remote being approved because it has Bluetooth and it can take the information from the implant and via patients smartphone, provide that directly to the club. We have our new physician programmer were being developed. And this programmer will no longer come with a tablet. Physicians are now going to log into their surface or log in to their laptop, and just have an apparatus with an antenna that will communicate with the implanted product, but it will be actually logging in and interfacing directly with the cloud, so all that information for the patient is stored in their file inside the cloud. We'll be able to do home sleep studies that will upload to the cloud. There are smart devices that can sense and monitor your sleep, either with sensors underneath your mattress or in your bed that will continuously upload to the cloud to really provide a full cloud-based tool for physicians to be able to manage their patients and then to be able to communicate with the patients via the Inspire app and send notices to patient. And congratulations on a job well done. You're hitting your goals using their device and you sleep consistency and benefiting from Inspire. So really, our digital tools are working to really combine all this together. All of this is tied together to drive patient appointments and accelerate patients' ability to get therapy. You can see with our direct-to-consumer, we had over 7 million people come to our website in the year. That's significantly up from 2020 and 2019 because we become so much more efficient in being able to identify patients, get them to the website, get them educated and expand our advisor care program to be able to help those patients get an appointment with a physician. We're going to continue to expand that. Today, we have about 80% of our centers participate on the Advisor Care Program, and now we're improving the digital tools and interfacing that again with Inspire Cloud and really help the patients connect. The growth is going to be continuing. We did approximately 8,800 implants in 2021. We're going to continue to grow that going forward to try to improve the conversion rates of patients coming through the [ call ] program, or we're still kind of hovering around the 10%. Here it is. So what we've done with our direct-to-consumer, we've made a little bit of a change this year. So for the first time, we're going to national purchasing of TV spots. Before historically, we've all been just local TV in certain markets. But now that we have geographic coverage across the United States we can go to more national buys. We started this just in 2022. On the first day of January, we started the national campaigns. It was the #1 largest day on our website. So it's certainly going to have a strong impact. It's actually more cost efficient. The key to it, you have to commit for a full quarter, a quarter in advance. We've already committed to the first 2 quarters. We know we're going to spend that anyways. And so we have done that. We really like the TV commercials that we had in the past. And you'll see the common theme to these commercials as we always talk about ease of use. We always talk about a transition from CPAP, and we want patients to connect to be able to get to a website for where they can be educated. And so this is just 1 example of 1 or 4 or 5 new commercials that were filmed in December. This is a rough cut. I had to make sure I said they're not done editing yet, but let's run it and enjoy it. [Presentation]

That's very fun. We look forward to moving forward with that and getting people's feedback. So Robbie, I'm going to stop right there, and I can continue on with some basics of the technology and talking about core morbidities in our patient pipeline. And -- but let me check in with you do we have -- do you want to answer -- ask any questions that we want to address upfront or want me to just kind of keep going?

Yes. I mean it's up to you. I have lots of questions for you. So maybe we can -- I'll ask a few. Let's start with the fourth quarter preannounced results you put out last week. I mean almost a 20% beat over what the sell side was expecting. So I want to start there, what drove fourth quarter results to such a high degree, 70% year-over-year growth even in the face of ongoing Delta headwinds and the onset of Omicron.

Right. I think the key was we're kind of on the downside of COVID Delta variant, right? And we did have, during the quarter, challenges in Colorado, maybe a little bit in Minnesota. But for the most part, it wasn't as disruptive as it was earlier in the quarter or as it was in Q3. And so we had most large centers being able to do full procedures. And we had a very efficient call center, and being able to get the patients in to see their physicians. We opened up a lot of centers in Q3, right, 70. Opened up over 80 in Q4. So we added our capacity, and we just had such a demand coming through with our direct-to-consumer and through the website and through the call center and our conversion rate was certainly improved to be able to get patients or therapy. So I think that COVID didn't really have a disruptive factor for us in the fourth quarter. We were very flexible to be able to move cases to either suburban hospitals or more importantly, to now ambulatory surgical centers. And so we really took advantage of that to be able to get the momentum. The other key to it is we knew at the end of the year that those last 2 weeks of the quarter are very competitive for OR time because everybody has to deal with the same high-deductible insurance. The advantage we have is that we do have line of sight with our patients. And we can see the patients in the pipeline 30 days out because we helped them with the prior authorizations. We know they're getting approval. We know they're coming through. And so we're able to kind of lock in our OR time for the last 2 weeks to be able to get the cases scheduled. So even when COVID would come through centers, hospitals would maintain their existing centers to -- existing schedules to keep those cases going, but they would limit adding new cases. But we have most of our cases scheduled by the beginning of the quarter. And so we're able to just execute throughout the quarter. That's why we had just such a strong Q4. That momentum is going to carry forward. I do think we -- as I mentioned, we are going to see seasonality in January. But I think by Feb and March, we'll hit our stride again.

I'll touch on first quarter in a second. But sticking with the fourth quarter, what did you see in areas like New York where Omicron hit more severe, and a little earlier in the quarter. If I think back to Delta, you were able -- that was much more of a localized impact in certain areas, and you were able to relocate to suburban hospitals or outpatient centers. What about in areas like New York and other areas impacted with Omicron where it's more widespread, and staffing and patient issues rather than just filled up.

But it happened late in the year, right? And Omicron really took New York by storm towards the mid-, late part of December and holidays. And for the most part, we were able to get most of the cases performed in the city, upstate, [ SUNY ]. I know [indiscernible] said they delayed several cases. So we had a little bit more of a challenge just locally in upstate New York, but that was about it in the fourth quarter. And now people today, Boston is having delays. I saw that announcement last night that several hospitals right there are dealing with it earlier in the week or last week, we're kind of more in the mid-Atlantic states. And Omicron will move. It will move quickly. But we didn't see too much disruption even in New York City as far as surgical procedures go for Inspire and we're able to continue those cases.

And are you seeing cancellations or just rescheduling for a week or 2 later?

It's just a rescheduling. I think we see everything -- just like everybody else, we have our staff, unfortunately, have COVID. And therefore, we're going to have to fly back up into -- from other parts of the country to support cases. We do that actively. We'll have patients come in for the procedure. They'll get a rapid test in the morning, test positive, and they get sent home for obvious reasons. And we'll just be able to schedule them in the next couple of weeks. And from a staffing standpoint, the really only challenge we've been seeing is if really it's affected on the surgeon. And I think from the nursing staff, it's -- they're certainly dealing with it as well. But in ASCs, we've been able to kind of keep procedures moving forward.

Tim, what about moving -- you move from the three-incision procedure to the two-incision procedure, how much of a benefit is that shorter procedure in posting your 70% year-over-year growth?

Well, that had a big impact to it. And so the key to it is, number one, yes, it reduces 30 minutes of the procedure, you're going from 120 minutes down to 90 minutes. But psychology -- psychologically, think about an ENT surgeon, right? They're head and neck surgeons, and the old center was placed around the fourth intercostal space, it's pretty far down in the body. And while the ENTs are very skilled surgeons, and they had no problem performing that, there was always a source of being a little bit uncomfortable. And going to 2 incision, they make the incision where the neurostimulator is placed, they can now place a sensor with direct digitalization from within an open pocket, and it's higher up in the body. It's just so much more comfortable, and the surgeons have confidence in doing that procedure. The 30-minute reduction in time, the confidence with the surgeon from a patient viewpoint, it's 1 less incision. And when they place it, they can be a little bit more precise in placing that sensor so they don't get too close to a rib because that's where the nerve bundles run, and can be a little bit uncomfortable in the fourth intercostal space. So there's just so many benefits about going to the 2 incision. That's why we immediately went to 90%. And now, of course, is at 100%. We're training in Japan, we only train 2 incision in Japan, right? So just had a dramatic impact. When you get to the fourth quarter -- and we have late in December, and we have an OR day block, but we have 1 more case. We want to kind of slide the end of the day. We have that flexibility because of the reduced OR time. So it really had a strong impact through the year. call center did. And then I think just the reimbursement environment was the other key driver.

Great. Maybe if we touch on first quarter because you did mention that you're saying expect a slower slightly impacted January, less so in February and March. Maybe just help us understand how you're coming up with that. How are you able to look forward to a normalized February and March? And what assumptions do you have underlying that?

I just think it kind of goes back historically. We always have a little bit of seasonality going from Q4 to Q1. And this one is just going to be a little bit more pronounced because of the current COVID environment. But usually, it's multifactorial. Of course, it's, number one, because all the commercial patients rush to get their procedures done in December before the high deductible resets, we talked about that already. Number two, we fatigue everybody. We fatigue the surgeons, we fatigue our staff. And so in January, that's the time that everybody catches a breather. We do our national sales meeting. Unfortunately, that's also gone virtual this year, but we're still going to be able to meet at Zoom to get together on for annual training. And that usually consumes January, and now we had stride back in February and March. In this case, we're going to continue with our campaigns direct to consumer. We're having strong activity at our website already. The call center is staffing additional people. and we continue to open up new centers. But COVID is going to help slow it down a little bit in January, but we don't think it's going to have a big impact on the year.

So let me ask it another way. There's about a $20 million range of sell-side forecasts for the first quarter. For next year, the Street's setting at $62 million. Is that a good place for us to be thinking about?

Well, we're going to continue to analyze that. We're going to come back at February 8 in our earnings call to give full year guidance. We're going to guidance on all the other metrics, but we're going to stay focused. We do know -- as I say, we're going to have an impact in January. But again, I think Feb, Mar, we're going to come back strong.

Great. Tim, maybe we could spend a minute on Inspire V. This is your next generation -- I'll put it in the framework of -- you have some competitors who are coming down the pipe, different types of technologies, but still, let's call it, the first sort of real competition you may be facing in the future. Maybe compare it how Inspire V is different versus Inspire IV, and how you feel about your competitive positioning with Inspire V versus what we'll see in the future potentially from competition?

Right. Well, let's just focus on Inspire V, focus on our investments in our technology and here just showing our investments in the digital platform. But a key element of this is the -- as we move to Inspire V is we are going to a microprocessor-based neurostimulator. And we are taking that pressure sensing lead that we talked about three-incision down to two-incision. And that's actually a pretty complex device, and a challenge to manufacture. But we're going to take that sensing capability, and we're going to put it inside the neurostimulator can. Here you see a picture of that can, a smaller version of it. And it's going to be an accelerometer on the circuit card and completely eliminate the sensor lead. So right here, you can see we have 2 ports. We're going to be going to a device with just 1 port for the stimulation lead. We have done testing on this. The trial we've done is with patients with the Inspire IV device that you see here. And we can externally attach and Inspire V device and use the accelerometer to detect respiration, and we have the patients in sleep study or a polysomnography. And we can measure the synchronous stimulation with respiration. That is a very key element proper treatment for stimulation for sleep apnea. You have to stimulate the hypoglossal nerve as the patient is inhaling because that's when the airway collapses. So the new sensor, we think is going to improve our sensor quality. Therefore, it will improve our ability to synchronize stimulation with inspiration. Here's another really key factor here. If you go to our website, you can download all of our quality documents. You can see historically, any expat rates, it's a very small percent as well as any revision rates, which is also a very small event. The majority of the revisions that we've had in the past are caused by that pressure sensor because it is a little bit of difficult device to place as well as it is a little bit of a complex sensor at the end of a lead. So by getting rid of this, we're going to have an inherent improvement in our reliability and the reduction in our revision rates, and we're going to have improved outcomes and improved patient experience. So really a lot of positives tied to the Inspire V. It is in final test. We have communicated our plans to the FDA. We've been open and candid and transparent with the FDA and the trials that we're doing, the data that we have are scheduled for submission. And that's how we have such a relationship with the FDA. We tell them in advance what we're doing, and then we do it. So we will be submitting to the FDA this year in 2022. We are in the process of manufacturing the final version of the ASIC, the application-specific integrated circuit. We'll build up the qualification units, and do the final qualification testing, submit to the FDA and was still looking for approval in 2023 -- late '23. I think the key to it, as we're talking about from a competitive standpoint. The #1 important factor, it's closed loop stimulation. And you need to have synchronous stimulation. This will be the only neurostimulator that's approved by the FDA, which has a closed loop function. All the other spinal cord simulators, secular simulators, deep brain stimulators, gastric simulators are all just open-loop devices. All of our competitors are just open-loop devices where they just provide a stimulation, timing. And so it's going to be very difficult to be able to synchronize with respiration. I think the other side to the competitive tools is really all about the digital tools, providing a full patient management system via Inspire Cloud and be able to interface with the patient with the new remote and the information uploaded -- uploading information from the home sleep study. And where we're going with this, with the new physician that -- physician programmer that we will have, we will be able to have a full active system. The next step here is we're working with the FDA already for the physicians to have remote programming from their office to a patient's home through the physician programmer, the cloud, to the smartphone, to the remote, to the implant. This has already been approved by the FDA. FDA has specific group that focuses on digital health. We've already had discussions with the FDA on the steps necessary to ensure a safe implementation of our digital platform. We will be partitioning the cloud. A part of it will be regulated by the FDA to ensure safety, to prevent patients from hacking the new remote control, actually has a lot of the safety parameters already in place, already approved by the FDA. So we're in a really strong position to be able to implement our digital platform, get to remote programming, go back to Inspire V. Inspire VI and VII now will be just firmware upgrades. And Inspire VI, as an example, will be able to do auto detect. And that will detect when a patient falls asleep, and the device will turn itself on. It will detect when a patient wakes up and the device will turn off, and that will solve any issues we have with therapy adherence. As we move forward, since we have all this data and all this major database with Inspire Cloud, we will have AI, and we're going to have smart neural stimulators that we'll be able to have auto-adjusting features. It will detect if patients will have apneas and be able to auto program around that. So Inspire V is just the beginning, and it's an interface with all of our digital tools to really focus on patient experience and focus on continuous patient outcome improvement.

Rick, I want to get you involved here a little bit as well. We hear about supply chain issues, rising cost issues from many companies that have been presenting this week. Are there any issues with the supply chain for Inspire V? I imagine it's a bit different component tree than Inspire IV. Anything that worries you as you sit here today ahead of the launch next year?

No. We've been very active early and during the pandemic, we looked at all of our supply chain, suppliers, and address that. And then now with Inspire V, we're actually going to add a second supplier with Inspire V to further support our demand and our supplies going forward. So we take a lot of time and take that very serious. And from that perspective, we're in a good position once Inspire V comes out. With our existing product, we've had some items come up through the supply chain, but nothing disruptive, and we have adequate inventory on hand. So...

Great. Clearly, fantastic growth on the top line through 2021. And you're launching the national advertising program here. How should we think about the pace of investments in 2022? And is the focus still on driving top line growth? Or are we going to see a little bit of margin drop down in '22?

Yes. We have demonstrated some leverage throughout the course of 2021. But we're still very -- and we know profitability is important, but we're still very early in our commercial footprint. We're in 684 centers. And we gave you the metrics there. And on average, our centers are doing about 1.5 procedures per month. Recently, we went through some strategic planning. And we're really trying to set up the company and ask the question, what do we look like when we're doing $1 billion in revenue. And so back at the end of '19, we had 300 centers. As we sit here today, we're at just under 700 doing 1.5 procedures per month. To get to $1 billion in revenue, we need about 1,600 centers. Each of those centers doing 2 per month versus 1.5 now. And so given the fact that we have a new code in place, we have a new two-incision procedure, that's being 100% implemented. Getting to that 1,600 procedures -- 1,600 hospitals per year, we want to keep that ratio of 4 to 6 sales reps per center. And so we're at 157 sales reps now. We envision that we'd have a sales organization about 350-plus individuals in that sales organization. And so we're going to continue to run our plan of adding new centers to build the capacity, adding territory managers to support that. And so we're going to continue to lean forward on our DTC efforts. And so with our 86% gross margins, that's when we'll be talking about more traditional 30% operating margins on a long-term basis.

Great. Unfortunately, we're out of time. I want to thank you. Great discussion, and wish you and everybody else on the line a wonderful rest of their day.

Thank you, Robbie. Thanks for having us, and look forward to connecting live.

Yes. Absolutely.

Be safe, everybody. Thanks very much.