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  Title	Q4 2024 AxoGen Inc Earnings Call
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  Published Date	Feb. 25, 2025, 11:27 p.m.
  Summary	Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now Q4 2024 AxoGen Inc Earnings Call Thomson Reuters StreetEvents Tue, Feb 25, 2025, 9:27 PM 34 min read In This Article
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  Content	Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now Q4 2024 AxoGen Inc Earnings Call Thomson Reuters StreetEvents Tue, Feb 25, 2025, 9:27 PM 34 min read In This Article: AXGN +0.13% Participants Michael Dale; President, Chief Executive Officer and Board Director; AxoGen Inc Jens Kemp; Chief Marketing Officer; AxoGen Inc Nir Naor; Chief Financial Officer; AxoGen Inc Chris Pasquale; Analyst; Nephron Research LLC Michael Sarcone; Analyst; Jefferies Caitlin Cronin; Analyst; Canaccord Genuity Mike Kratky; Analyst; Leerink Partners Jayson Bedford; Analyst; Raymond James Dave Turkaly; Analyst; Citizens Presentation Operator Good morning everyone. Joining me on today's call is Michael Dale, AxoGen's Chief Executive Officer and director, and Nir Naor, Chief Financial Officer, and Jens Kemp Chief Marketing Officer. Michael will discuss fourth quarter 2024 financial results, and Jen will provide a high-level introduction to AxoGen's new strategic plan. Nir will then provide an analysis of our financial performance and guidance and discuss our outlook for the year, followed by a question and answer session. Today's call is being broadcast live via webcast, which is available on the investors section of AxoGen's website. Following the end of the live call, a replay will be available in the investor section of the company's website at www.axogeninc.com Before we get started, I'd like to remind you that during the conference call, the company will make projections and forward-looking statements, forward-looking statements which are usually identified by the use of words such as objectives, will. Believe, expect, estimate, should guidance, intend, projects, or other similar phrases include but are not limited to statements relating to financial guidance, including revenue, margins, cash flow, future profitability, expectations for growth, estimated total addressable market opportunities, timing for future product and application. Launches, marketing opportunities within existing and new markets, and the company's expectations for approval of the biological license application of advanced nerve graft, including the anticipated timing of approval and the assumption that advanced nerve graft will be designated as a reference product for any future biosimilar nervo graft, and that such designation will provide marketplace exclusivity. Forward-looking statements are based on current beliefs and assumptions and are not guarantees of future performance and are subject to risks and uncertainties, including without limitation, the risk and uncertainties reflected in the company's SEC filings, including its Form 10K and 10. The forward-looking statements are representative only as of the date that they are made, and except as required by applicable law, the company assumes no responsibility to publicly update or revise any forward-looking statements. In addition for a reconciliation of non-gap measures, please refer to today's press release and the corporate presentation on the investors section of the company's website. Now, I'll turn the call over to Michael. Story Continues Michael Dale Thank you, operator, and thank you to everyone who is joining us today as we discuss our 2024, fourth quarter and full year financial results. 2024 was a solid year of key accomplishments for AxoGen. We are pleased with our progress as a team, and while we have work ahead of us to realize AxoGen's full potential, we are entering 2025 with increased confidence across all parts of the business. On my first call as CEO last November, we established three near-term priorities for the business. Number 1, successfully complete the submission of our BLA application. Number 2, meet our established revenue guidance for the year. And lastly, develop a new strategic plan for the business, engaging all employees and key ex external stakeholders in the process. These were in each case highly relevant commitments we made to all stakeholders. And the successful completion of these commitments explain in part our increased confidence as we enter the new year. Regarding future expectations for AxoGen, I am excited to introduce our new strategic priorities today and look forward to providing details about our new plans during our March 4th Investor Day event. The insights and opportunities identified from our strategic planning exercise explain the other part of why we are entering 2025 with increased confidence. Before I address financial results, I would like to provide background for anyone who might be new to our story. Whenever we reference AxoGen's nerve repair algorithm, we are referring to a broad product portfolio designed to address the needs of common nerve injuries, including bridging the GAAP resulting from transacted nerves, nerve protection for non-transacted but injured nerves, and termination of nerves when there is no opportunity for reconnection or reconstruction. Depending on the clinical situation, one or many permutations of AxoGen's nerve algorithm may be necessary to ensure the best possible patient outcome. Now to our financial results. Our full year 2024 revenue was USD187.3 million a 17.8% increase compared to 2023. In 2024, we saw broad-based growth across all of the markets we serve, which comprises extremities, oral maxillofacial, and head and neck. and breast for each market, positive performance was driven by improved commercial execution of our growth strategy focused on driving adoption of our nerve repair algorithm and development of high potential accounts. EBITDA was similarly positively impacted by our improved sales productivity and resource allocation. Now turning to our fourth quarter results, revenue increased to USD49.4 million up 15.1% compared to the prior year. Like the year, fourth quarter performance reflected broad-based growth driven by adoption of our nerve repair algorithm across all clinical applications. We continue to execute our strategy to focus and deepen our presence in high potential accounts which are primarily characterized by the following criteria larger hospitals, including Level One trauma centres and or academic affiliated hospitals with a high number of nerve repair procedures, and lastly, already trained microsurgeons. We aim to drive growth in these types of accounts through targeted expansion of nerve repair indications by building on the existing experience and nerve repair in the account. The inherent potential of the account to grow based on size and procedure volume and by expanding adoption of our nerve repair algorithm to other surgical specialties. We believe our focus on these high potential accounts is the reason for our improvement in sales productivity. Next, I would like to address the status of the biologics license approval, also referred to as BLA for advanced nerve graft. As a reminder, a BLA approval will complete the regulatory transition of advanced nerve graft from a 361 tissue product to a 351 biological product. Importantly, we believe event will be designated as the reference product for potential biosimilars, providing 12 years of market exclusivity. We submitted the BLA in the third quarter of 2024 and continued to engage regularly with the FDA as part of the application review process. Consistent with prior guidance, we expect BLA approval in September. I would now like to turn it over to our Chief Marketing Officer Jens Kemp so that he can share and highlight the key insights and priorities resulting from our strategic planning exercise. Our investments and market development priorities over the next 4 years will be guided by this plan, and the AxoGen team is excited about our opportunities. As mentioned, we will discuss the plan in detail during our investor day on March 4th. Jens Kemp Thank you, Mike. To start, we believe AxoGen's planned peripheral nerve repair market development priorities represents a USD5 billion USA opportunity with significant potential to improve patients' health and quality of life based on a superior benefit to risk value proposition. We believe AxoGen's nerve repair product portfolio and expertise remains significant advantages which we can build upon over the next 4 years. AxoGen international presence is limited today, but we believe the market opportunity for nerve care outside the US is just as large and attractive, and we look forward to taking concrete steps towards developing these markets in the coming years. Our objective for the 4 year planning period will be to achieve a (CAGR) of 15% to 20% by executing on the following strategic priorities, which include. Number one, We will prioritize investments towards markets with elective and planned procedures which are characterized by a more efficient market development and customer creation process resulting in more predictable and consistent revenue growth. Number 2, We will advance the AxoGen algorithm towards standard of care in extremities. Our extremities business, which consists of traumatic and chronic nerve injuries in the upper and lower extremities, represents more than half of our business today. We have a large customer base, Level one clinical evidence and strong KOL and societal relationships. Growth in this market has been impacted by commercial payer coverage policies, a challenging customer creation process, and a complex patient journey. To address these challenges and accelerate growth, we will execute on the following strategies, which include. We will continue to drive advocacy for advanced nerve graft as a standard of care option in extremity nerve reconstruction and work to expand coverage by leveraging the BLA approval, level one clinical evidence, and societal support. Next, we'll optimize the patient journey through education and therapy awareness of the referral base to drive more patients to our neurosurgeon customers. We'll continue to develop the market for nerve protection and expand our market development efforts to lower extremities. And finally we'll continue to drive commercial excellence with higher sales productivity by execution of our high potential account strategy with a dedicated sales organization to drive focus and adoption of the AxoGen nerve repair algorithm. Number 3, We will establish leadership in the breast notation market and drive our re sensation technique towards standard of care in breast reconstruction procedures. AxoGen resensation surgical technique is designed to address post mastectomy numbness, a significant consequence of breast cancer surgery by restoring sensation to the breast as part of the reconstructive surgery. Breast Notation represents a significant market opportunity and it's AxoGen's fastest growing business with a consistent, predictable, and scalable business model. To accelerate growth, we will focus on following on the following strategies, including significantly increasing investments in our press commercial infrastructure to support growth. This includes growing our dedicated sales and marketing organization, as well as expanding our professional education capacity. We will expand surgeon education and training programs to increase surgeon activation and re-sensation procedure adoption. We will accelerate patient awareness and activation by increasing the quality and reach of our campaigns while growing relationships with advocacy groups and healthcare providers. And finally we will advance level one clinical evidence generation to expand coverage and drive societal support for standard of care. Number 4, Our all maxo facial and head and neck business represents a large and attractive market opportunity for AxoGen with high procedural concentration in about 900 hospitals with strong overlap with our extremities high potential accounts. Isogenic nerve injuries are common in OMF and head and neck surgical procedures, but are often not treated due to lack of certain education on available nerve repair options, as well as awareness of the quality of life impact for patients. To accelerate adoption of the AxoGen nerve repair algorithm in OMF and head and neck and drive towards standard of care, we will execute on the following strategies. Expand surgeon education and training programs to grow the number of trained surgeons and care sites that incorporate AxoGen's nerve repair algorithm in targeted OMF and head and neck procedures. We will increase field-based market development support to raise brand awareness and KOL engagement to drive advocacy, best practice, and adoption in the head and neck market. We'll leverage the societal support in OMF and inclusion in the AA OMF ParCare guidelines to drive societal support and standard of care designation for nerve repair in mandible reconstruction with key head and neck societies. And finally, we'll drive increased patient and surgeon awareness of the quality of life impact from nerve damage in OMF and head and neck surgical procedures. Number 5, There are numerous large underdeveloped markets for nerve repair, and addressing these is an important long-term growth driver for AxoGen. We will invest in the development of those with substantial market potential and opportunity to improve patient outcomes. Our initial focus will be for nerve repair and protection during prostatectomy. Prostatectomy represents a large and attractive market opportunity due to a motivated patient population and a well-defined clinical problem that can be addressed with the AxoGen nerve repair algorithm. Number 6, we will increase our investment in innovation programs that aim to improve the standard of care and nerve repair and in level one clinical evidence generation that meets payer requirements for coverage, advances support for standard of care designation, and drives consensus for incorporation of our nerve repair algorithm into clinical guidelines. Number 7, we will drive operational efficiencies in manufacturing by investing in systems and processes to optimize gross margin in the upcoming years. And finally, we expect to maintain positive cash flows over the planning period sufficient to fund our organic growth initiatives consistent with our strategic plan. We look forward to providing more details on our upcoming investor day. Now I'll turn the call over to Nir to provide a review of our financial highlights and guidance, Nir. Nir Naor Thank you again. We're excited about our results for the quarter and the year. We have seen good progress in our commercial execution and resource allocation, both yielding results in terms of topline growth, bottom line stability, as well as cash flow positivity for the year. For this quarter, our revenue reached USD49.4 million representing 15.1% growth from the fourth quarter of 2023. This growth is attributed to an approximately 11% increase in unit volume and mix and a 4% increase in price. A growth profit for the quarter was USD37.6 million an increase from the USD32 million recorded in the fourth quarter of 2023. This represents a gross margin of 76.1%, up from 74.6% in the same period last year. Our total operating expenses for the quarter increased to USD35.6 million up slightly from USD35.2 million in Q4 of 2023. The marketing expenses as a percentage of total revenue decreased to 40.6% from 46.9% in the fourth quarter of 2023 as we saw an increase in our sales productivity and so execution of our strategy focusing on high potentials. Research and development expenses decreased by 6.2% to USD6.7 million from USD7.2 million in 2023, driven by the completion of the development of Agartala at the end of Q2 of 2024. As a percentage of toll revenues total R&D expenses were 13.6%, down from 16.7% in the last quarter of the prior year. General and administrative expenses were USD8.8 million in Q4 of 2024, up 11.8% from the USD7.9 million in Q4 of 2023, driven mainly by stock compensation expense reversals in Q4 last year due to the departure of some of our leadership team. The quarter ended with a net income of USD 0.4 million or USD 0.01 per share compared to a net loss of USD3.9 million or USD0.09 per share in the fourth quarter of 2023. Adjust the net income for the quarter was USD3.5 million or USD0.07 per share compared to an adjusted net loss of USD2.6 million or USD0.06 per share in the fourth quarter of 2023. Adjusted fourth quarter, EBITDA was USD6.7 million compared to an adjusted EBITDA of USD0.6 million in the per year. As of December 31, our balance of cash cash equivalents and investments was USD39.5 million compared to USD30.5 million at the end of the third quarter. Turning now to our guidance, we expect full year 2025 revenue growth to be in the range of 15% to 17% versus per year. We also anticipate full year 2025 gross margin to be in the range of 73% to 75%. This range includes approximately USD 2 million of one-time cost related to the BLA approval, which would impact full year gross margin by approximately 1%. The timing of most of those costs would be around the anticipated BLA approval they currently expected to be in September. Notably, we estimate that 2/3 of those costs are non-cash and pertain to the vesting of our BLA-related stock compensation. From a cash perspective, we expect to be net cash flow positive for the entire year and expect to self-fund our new strategic plan. However, we expect similar seasonality of quarterly cash flows, as we have seen historically with Q1 expected to be a net cash outflow due to the yearly bonus payments in the national sales meeting, both of which take place during the first quarter, followed by positive cash flow for the remainder of the year. In summary, we're pleased with our fourth quarter performance. We will continue to execute our strategies and invest in innovation, improve our resource allocation while maintaining our full year cash flow positivity and striving towards greater bottom line profitability. And this time we'd like to open the line for questions. Maria. Question and Answer Session Operator Thank you. We will now be conducting a question and answer session. (Operator Instructions) Our first question comes from Chris Pasquale with Nephron Research LLC. Please proceed with your question. Chris Pasquale Thanks. Good morning, guys. A lot to ask about with the strategic plan you laid out looking forward to getting more details next week. Just as a starting point, I noticed that the USD5 billion dollar US tan you called out. I believe that's about 2X how the company had previously thought about their opportunity and frankly, even that prior estimate had gotten some pushback at various times from the street in terms of whether that was real. And so I'm curious of what the difference is now as you look at a USD5 billion dollar opportunity, how much of that has to do with new opportunities like prostatectomy that you talked about that really weren't part of the calculus previously versus a rethinking of the core markets. Michael Dale Sure, Chris, now I'm aware of the questions about the town historically. I can share with you that as part of the new planning process, those very basic and critical questions were evaluated and we've looked at all the permutations on incidents presentation of the various problems whether they be elective or emergent. And we're very comfortable with the estimates of the overall TAM in terms of the actual components of what makes up that TAM we'll obviously during the investor day walk through that discreetly in terms of each part of the marketplace, but there's a pretty comfortable based upon all the coding that that that's available to us to look at. The actual eligibility of who could use our products from a graph size standpoint versus simply reconnecting nerves, all of that was evaluated that allowed us to get to that. I think the key question as with almost any market, I don't care which market you're speaking to, is not so much even what how big it is, big it's important because if you're off a little bit, obviously you still have a target. Remaining and that's why people are interested, but there's also addressability and so while the markets are large, we do believe there are differences in addressability. We're simply sharing with you the facts so as as they as they exist as we've been able to deduce. Chris Pasquale Thanks, that's helpful. And then just as I think about that list that you laid out, a lot of investment in better market development, in driving adoption, and new opportunities. I'm curious whether you can do all those things that you guys laid out while still continuing to improve profitability. Companies come a long way. You're cash flow positive now, which is a great A step relative to a couple of years ago. Is top line going to be the focus going forward, or can you balance that with margin expansion? Michael Dale We can absolutely balance it, so that's what our plan reflects. I mean, the last thing we want to do is embarrass ourselves as we go forward here. So the plans that we put in place we think are very practical, they're very doable, the investments that we need to make we've looked at top to bottom. And we've tied these to a cause and effect by a clinical application. So, now, obviously we need to prove it, we need to execute, but the plan is pretty straightforward in terms of that cause and effect relationship and unless there's something grossly off, we believe we'll be able to do what we just described. Nir Naor Yes, continuance of last year as we've said, yeah, we, we're not just focusing, obviously on top line growth, it is balanced growth with optimization of resource allocation and as we mentioned, yes, with those investments we expect to be, cash flow positive, for the year for 2025. Chris Pasquale Thanks. Michael Dale The key thing I would share, Chris, with everybody is that Accrington Chronologically is a company that's, for all practical purposes at least 15 years old, but from an actual market penetration market development, this is still a very young company. It's very immature in terms of any individual marketplace, and while we want to believe that we've done everything as possible, the truth of the matter is we still have customers who don't even know our name. And so there's much opportunity left in terms of improving basic awareness while we continue to also teach nerve care. So, the market opportunity is very large, but we still need to go out and develop that market. Operator Our next question comes from Michael Sarcone with Jefferies. Please proceed with your question. Michael Sarcone Good morning and thanks for taking the questions. I guess just, one on some of the strategic plans you laid out, you talked about, your objective being a 15% to 20% CAGR for the planning period. I know we're going to get into more. Details at the investor day but you know any color you could provide on you know what are the assumptions at the low end versus the high end there and and how much of that is related to kind of penetrating your existing core markets versus newer markets? Michael Dale Well, we have obviously history in terms of the growth rate to look at and so very simply and we'll go into the detail on Mondays and try to answer those questions more clearly, but fundamentally we're expanding parts of our organization so for example, breast, we will double that organization in terms of footprint. We have a lot of history in terms of the business model, so we know, or at least we believe we know how extendable that business model is so long as we execute that expansion on schedule, that should result clearly in in in in new customer creation. We also have a lot of history with regards to training. So for individual surgeons that we bring awareness to of these types of techniques who go through our programs in some of these areas we have more than an 80% probability that those individuals will go on to do cases and we know how many cases they will do on average. So again, we've tied the math out you still have to execute, but there's nothing that's a hope pass where you're throwing the ball downfield and saying, gee, I hope someone catches it. So everything has pretty simple math that we've tied to if there's any errors, it's some sort of error and assumption that we didn't foresee, but we think this plan is imminently executable. Michael Sarcone Got it. That's helpful. Thanks, Michael. And maybe one for near maybe just, comment around the key assumptions for the 15% to 17%, sales guide for the year? And then, maybe some colour on how you're thinking about sales cadence through the year. Nir Naor Yes, so, the key assumptions are basically, counting on the existing organization and the existing momentum, and then we have some investments, some of the investments already start obviously in 2025 that they're staggered, and in addition to that they will take time until they're bear fruit. So for instance, if we're hiring more sales reps, obviously there's some time that it takes to train them and so on and so forth. So the key assumption is that some of those investments that are being carried out in 2025 will bear fruit already this year leading up to the high end of the guidance. Obviously we'd be happy to beat it, but this is the range that we feel confident with as of now. And then you asked also about the margin. Michael Sarcone No, just about, how you're thinking about seasonality on the top line through the year. Nir Naor Right, so again, we, as we have, we launched some products last year and we have had an uneven year over year growth last year. So obviously it's not going to be all smooth this year. There are all sorts of events, for instance, Easter and others which fall this year in different times of versus last year. Overall, yeah, we do expect to have some sort of upward trend in terms of growth for this year that is led by the investment that will take time to bear fruit more towards the latter half of this year. Michael Sarcone Great thanks . Operator Our next question comes from Caitlin Cronin with Canaccord Genuity. Please proceed with your question. Caitlin Cronin I think that's a great finish to the year. I guess just starting with long-term margins, I appreciate the longer term growth revenue guidance. Any longer term gross margin guidance given your plan to drive operating efficiencies? Michael Dale Well, really more general, I think 2025 is all about getting through the BLA process. So it doesn't mean that we're not focused on continuous improvements, but that the BLA on the plant approval inspection. Events, all of these are predicated on an existing quality system and expectations as part of the license approval and so dramatic changes or improvements in that while we're working through that process with FDA mean that at some level there's a governor, if you will, in terms of how quickly we could layer in process improvements. So long winded way of saying that the margin guidance that near shared with you is what we should all rely on this year. Longer term we expect to incrementally continue to improve as any operations situation would in terms of shortening cycle times. Further improving waste, yields, all the normal, measures that you try to take advantage of, but in 2025, I think that the range that we've shared with you is what's prudent to plan around. Caitlin Cronin That's great, thanks. And then just any concerns or changes to your expectations with the new administration in regards to the BLA application? Michael Dale So far, no. The pace of the information requests that we're receiving from the FDA continue without a break, so that's a good sign. Everyone's working very hard on both sides of the FDA in terms of their review and then requests for information, and then our side in terms of responding so. There's literally activity weekly, so far I can't point to anything that's suggested delay. Caitlin Cronin Thank you so much. Operator Our next question comes from Mike Kratky with Leerink Partners. Please proceed with your question. Mike Kratky Hi everyone. Thanks for taking our questions. Maybe first, can you help us understand to what extent you're going to increase sales and marketing as part of your growth strategy this year? I think you mentioned doubling the size of your footprint and breast. So how large of a salesforce expansion are you expecting to implement this part of this and how should we see that play out in 2025? Michael Dale Sure, so Brest, for example, is 12 people at the moment and so we'll double that to 24 and in addition across various parts of the organization, whether or not direct salespeople, there's about another 10, I think, is that right? Yeah, and these are market development and professional education staff. They're required to also do the training, so you have the customer facing headcount. Which will increase in breast and then across both extremities as well as in breast will have a fairly significant number of teachers and trainers and these are required to put people through those programs that we that we mentioned, so they have a they have a significant impact on customer creation. And then finally on the prostate side, not expected to be a lot of revenue this year as we're essentially what we're doing is we are developing with this small organization which will involve physicians, professional education and market development managers to develop the business model that we intend to use to scale with a sales organization as we as we complete that development towards the end of the year. In addition, we need to develop the surgical techniques that we're willing to, guide and teach to, and that's a process that's underway today, where we're doing different evaluations what we ultimately need. Settle on a protocol just like we did for breast re sensation. We need to do the same thing for prostate. We have a lot of early clinical data that makes us excited. That's part of why we've chosen this particular marketplace, but we still need to be able to teach it at scale. So I hope that answers the question. Mike Kratky Great. Yes, that's very helpful, thanks. And then just separately, can you talk about some of the commonalities you've seen across the high potential accounts and how you've been able to identify some of those in advance. Michael Dale Kemp why don't you go ahead and speak to that. Yeah. Jens Kemp We look at. As Mike mentioned on the call, we look for commonalities in terms of level one trauma centers, a large A body of microsurgically trained surgeons in the facility. We look at nerve repair cases, etc. So we have a whole algorithm that we use to identify high potential accounts, and that's really what we use for our targeting. So all of these accounts, there's about 600 of high potential accounts we're focusing on right now. And they all share these common characteristics which we believe has very high potential for expanding our nerve repair algorithm. Mike Kratky Understood thanks very much. Operator Our next question comes from Jayson Bedford with Raymond James. Please proceed with your question. Jayson Bedford Good morning. Maybe just a few here. On nerve repair for prostatectomy, you have some data, but do you need additional data like bigger studies here before you go into kind of a full launch? And is there a different regulatory dynamic to think about, or does it fit within the BLA? Michael Dale The latter question, it fits within the BLA, but in each case there's virtually no part of our business where we will not have to continue to engage in development of additional data. So prostate in particular, breast, we will continue to develop data. We already have studies in the way we're going to do more and the same thing with regards to certain areas of extremities. So, I just want to be very clear about that. So when we as part of our strategic plan, primary assumption is that significant high quality data in addition to quantity of data is going to be required to fully develop the opportunities we're targeting. Jayson Bedford That's helpful. Maybe for near you did what, 76% gross margin in 2024. The 2025 guide captures this kind of at the high end if we back up the BLA expense, but I guess the question is what needs to happen for a gross margin to trend higher. Nir Naor Right, so, as we mentioned last year, gross margin is impacted by this growing proportion of advanced products sold that were manufactured the new processing facility at a higher cost. So as time goes by this proportion growth and that's one of the drivers for which the gross margin went down absence of those BLA-related costs. On the other hand, and as Mike mentioned before, yeah, we have been working actually already as of 2024, and that will continue, especially after the BLA approval on efficiency improvements. And regardless, we expect to capitalize more on higher capacity utilization. Those are the things that need to take place for the margin to continue to improve. Jayson Bedford Okay, that's helpful. And then maybe just a quick one for Mike. On the last call you talked about implementing these different business models for different applications and the focus on high potential accounts. Was that evident in the fourth quarter results or are these models and actions being implemented now? Michael Dale Yes, but they're still being implemented, so maybe to more discreetly describe this. So for example, in the small breast team. If you use the bell curve, from an overview, it's extremely tight. In other words, we know exactly what an individual will be able to produce, how many customers they can manage, how many they can create, and it's a very common distribution. And so, that business model we can characterize and we can do the math on, say, okay, well, let's do that times two. With regards to extremity, depending upon which part of extremities, it's much more varied. And because of some of the different changes in approach historically, that business model is less clear and so the high potential focus, which is pretty basic when you think about it in terms of the strategy that we're trying to employ, is just to go deep in places that you have a chance for the plants to grow and to that end, we have about three quarters under our belt where I could say we have consistency and a stable organization. Realistically, I think we need another quarter more on the extremity side to get comfortable enough that we think that this particular strategy is sufficient. It's certainly showing progress. I wouldn't look anyone in the eye, including ourselves, when we talk internally, to say that. That we have our arms fully around it on the extremity side again, the part of the challenges with extremities as we've touched upon is that there's more than 5,000 service providers potentially and so there's lots of activity, but with a relatively small organization like ours of 100 people, you've got to be careful not to be everywhere because then essentially you're not building enduring recurring revenue based upon standard of care status. And so this strategy is at the end of the day pretty simple insofar as we're trying to develop a more concentrated care approaches to nerve care by focusing on a small number of accounts with the people that we have. We're seeing good results but we're not ready to suggest that that this is the last thing we need to do on the extremity side based upon our footprint. Jayson Bedford Very helpful. Thank. Operator Our next question comes from Ross Osborne with Cantor Fitzgerald. Please proceed with your question. Mike Kratky Guys, congrats on the progress and thanks for taking our questions. Starting off with the guide, for 2025 and apologies if I missed this, but can you parse out volume growth versus price baked into your 2025 revenue guidance? Nir Naor Yes, it's pretty much in line with past years, so, price growth is around the CPI and the rest is volume and mix. Mike Kratky Okay, great. And then looking at your breast recon business, what is your comfort level with existing data and what area of economic, clinical, etc. Do you need to generate more data to support incremental adoption? Michael Dale Sure, when we at the investor day, we'll make sure that we highlight that breast, but we're very comfortable is the wrong word. We're very confident that, from a benefit risk proposition, our breast resensation technique is 100% justified. So zero safety risk, a very high probability of benefit to the, to the patient. I, sadly I can't recite, off the top of my head, all of that data, but we just literally this last couple of weeks have prepared the updated. Executive summaries of exactly how breast looks, So we're very comfortable that the data is, what it needs to be. What we need to do, however, in terms of breast is we just need to do more data. When you're establishing a new therapy and trying to pursue standard of care, there's a certain data quality type that's required, and we need to do more studies than we presently have. We have one. Underway that's almost complete, and we have one more that we believe we need to do over the next three to five years. Mike Kratky Great, thanks for sharing the questions. Operator Our next question comes from Dave Turkaly with Citizens. Please proceed with your question. Dave Turkaly Hey, good morning guys. I think you had mentioned that your APC has 3 times the previous capacity that you had. I was just curious, I don't think there's any issue with you, but as you look at your plans ahead, how comfortable are you that you have? Enough to kind of meet where you're going that may be any comment even on longer term. Michael Dale Over the planning period, we're comfortable that we have capacity. Now beyond that, I can't speak to you definitively, but we would be able to plan for that would be obviously an exciting requirement in the near term, but we don't presently believe during the planning period that that we have any kind of capacity constraints. Dave Turkaly Got it and then maybe a follow up for near. I know you're profitable in the quarters of the share account like the, went up a bit, but I was just curious, is that a good level that we should use for 2025 and then any thoughts on sort of. A timing of any incremental sort of bump ups that we might need to consider. Michael Dale Dave, could you repeat that question? Did you say, did you ask about the share count? Dave Turkaly I did. You were profitable. Yeah, I know you're profitable, so I think it bumped up a bit, and I was just wondering if that's the number we should use sort of carrying forward to 2025 or and if there's anything else we should consider in terms of, any other bump ups as we look through the year. Michael Dale I think that shared count is the one that was reported is what you could, you can use for now. Nir Naor Yes, I know, I mean, as, and as we mentioned, we expect to self fund ourselves, so we don't expect to do a raise in the, near future, that answers the. Dave Turkaly Yeah, that's fine thank you. Operator There are no further questions at this time. I would now like to turn the floor back over to Michael Dale for closing comments. Michael Dale Thank you, operator. On behalf of the actiongen team, I want to thank everyone for their time and interest in our work to fulfill the promise and potential for all stakeholders in our business purpose to restore health and improve quality of life by making restoration of peripheral nerve function and expected standard of care. We look forward to updating you on our continued progress and our plans for the future at our March Investor Day and our earnings call next quarter. Thank you. Operator This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. View Comments Terms and Privacy Policy Your Privacy Choices CA Privacy Notice More Info Recommended Stories
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