CVRx, Inc. Q3 FY2024 earnings call

• Reimbursement Wins: Secured a higher DRG payment for inpatient procedures (increasing payment from ~$23,000 to ~$43,000 effective Oct 1, 2024) and Category 1 CPT codes approved for Barostim therapy, effective Jan 1, 2026, to improve patient access.
• Education and Awareness: Expanded outreach to general cardiologists, launched the ASCEND program for heart failure fellows, and continued the Barostim Connect program for education and prior authorization support.
• Clinical Evidence: Published new data in journals showing improvements in quality-of-life and long-term efficacy, with five abstracts presented at the Heart Failure Society of America 2024 Meeting.
• Commercial Execution: Strengthened the sales team under Robert John, optimizing the go-to-market strategy to target accounts with multiple heart failure champions for deeper adoption.

Total revenue for Q3 2024 was $13.4 million, an increase of 27% compared to Q3 2023. US revenue was $12.3 million, up 28% year-over-year. Heart Failure revenue in the US totaled $12.2 million in Q3 2024, with 391 revenue units, compared to $9.4 million and 303 units in Q3 2023. Europe revenue was $1.1 million, a 15% increase year-over-year, with 56 total revenue units. Gross profit for Q3 2024 was $11.1 million, with a gross margin of 83%. Research and development expenses were $2.5 million, down 7% from Q3 2023. SG&A expenses increased to $21.6 million, up 38%, driven by higher compensation, stock-based compensation, travel, and advertising. Net loss was $13.1 million or $0.57 per share.

• Full-year 2024 revenue is expected to be between $50.5 million and $51.5 million.
• Full-year gross margin is expected to be between 83% and 85%, with operating expenses approximately $100 million.
• Q4 2024 revenue is expected to be between $14.5 million and $15.5 million.

• Uncertainties in the finalization of the OPPS rule and its potential impact on revenue and adoption.
• Dependence on successful commercial execution and continued development of clinical evidence to support Barostim therapy.

Q: Narrowed the guidance by $1 million at the midpoint despite a relatively in-line quarter. What led to this decrease?

A: Looked at Q4 and adjusted based on momentum, but remains bullish on the business.

Q: Could you talk about how the team has been successful with reimbursement wins and what else is being done to drive access beyond the upcoming outpatient rule?

A: Bonnie Handke led efforts on inpatient and Category 1 codes, with ongoing engagement with CMS and stakeholders for OPPS.

Q: What potential financial impacts could come from the Category 1 code long-term?

A: Streamlines the process, reduces prior authorization denials, and increases payment predictability.

Q: How should we think about OpEx priorities into 2025?

A: Investments in sales, marketing, and leadership, with one-time expenses in 2024 affecting OpEx.

Q: Has there been an early increase in adoption in the inpatient setting since the reimbursement update?

A: Too early to see specific impact, but higher payment may rebalance procedures over time.

Q: Can you talk about the new accounts and the new commercial strategy?

A: Deliberate approach to target accounts with the best chance of deep adoption, using targeting principles and best practices.

Q: Comfort with cash flow breakeven with debt drawdown and ATM?

A: Financings provide flexibility for growth, bullish on the business's potential.

Q: Site of service for the device, outpatient vs inpatient?

A: Outpatient for stable patients, inpatient for decompensated patients, based on patient presentation.

Q: Runway in existing accounts before shifting focus to new account growth?

A: Low penetration in existing accounts, with significant upside for deeper adoption in current target accounts.