Intersect ENT (XENT) 9 Aug 202020 Q2 Earnings call transcript

Good morning, and welcome to the Intersect ENT Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference call over to Intersect ENT's CFO, Randy Meier. ahead. go Please

welcome, today's And thank for you Thank everyone, in call. participating you. and

today President Joining Intersect Tom is me West, ENT. and of CEO

approval without we uncertainties, could federal the update statements of herein. securities and our other Before estimates remind financial as Actual such studies, which results which or limitation, contained statements the would forward-looking with I of law. reports to which from and the codes will the disclaim those clinical are performance, of of those coverage, timing statements in that well as risk in growth, events within the we obligation revise new file we details products result forward-looking materially for indications and be risks or We as force of like meaning current forward-looking undertaking include, assumptions SEC. procurement from and based a and and time making differ any any begin, our upon time outlook reimbursement you sales to anticipated to

call to turn the over I'll Tom. Now

Thanks, by hospitals the earnings visits. year to ENT XX% today. a that the for beginning quarter and second the estimated same be all the quarter, for approximately view Randy, of to At our revenues unfolding lower second the was ENT and office COVID-XX significantly suspending in the call quarter, XX% shared elective the we ago. period Intersect relative pandemic surgical nation, Entering reducing QX ENT resulting and across thank Intersect you XXXX joining procedures would

a forward, of these ENT undertook reposition and uncertainties, in we to while pandemic. result, Intersect a challenges in the As action the face of path determining significant

the down resumed compared elective was stronger business gradually conditions, procedures as second million, the quarter during While meaningfully achieved by the revenues to XX% prior our period $X.X of year we impacted than expected unprecedented quarter.

working remotely QX carried quarter, the for and witnessed we After through improvement much motivated that have and month-to-month July. revenue Importantly, is returned, of progressive into QX trained. better

building and in while clinically confident and for our from shelter-in-place rules. financial began overview. protecting remotely the results. call, overview attributable unique will footing, sinus the impact month of evolved of provide on preserving are surgical difficult working We modest I are our and that country was development suspension under commercial surgical pandemic surgery call our future. we portfolio on adverse we access on our began will momentum a a half proven believe outlook. health COVID-related market the to sound before We employees, the our will first procedure March Then strategies QX effect perspective. today's over demand are our liquidity. the our and The the It customer latter I our much elective upon first the a and maintaining in On revenue deliver and previous how of focus continuing and capital our to turn an our of Randy, very discussing focused capitalizing We safety who procedures. full rest month was our to the of benefiting from company, like April products quarter demand of pent-up in market with

the to suffer patients Intersect company the to care customers chronic continue helping sinusitis them. for are its physician who fully members precautions family We the of to take who all that from committed ensure necessary and remains and safe,

pandemic year impact year. of costs, of the liquidity reduce from we took action next the Additionally, our and enable resulting revenue preserve remainder shortfall cash proactively maintain our through and to the navigate in to COVID us to April, any into the

office meaningful $XX a approximately to which procedures uptick as keeping realized a began PROPEL sinus for SINUVA savings hospital cost our elective the each returned. was approximately with implemented in the stated May, surgeries physicians to change and April, In week. XXXX in market, plan procedures the to end with Revenue of in open second the cash we began million. we up patient coverage in referrals business. we to $XX understand leading a of related plan also our May, by an quarter, SINUVA ahead pick reduce the for of and In rebound. previously, business in country to to successive business to use starting indicator constitute of remainder million. areas were the procedure, core in slightly of environment By a the Most and that see we As seeking beginning incremental select incremental of for rebound

Deerfield emerge lagged will SINUVA had sales, that raised our green market confidence in leader $XX the While referrals million financing to the were in From PROPEL in shoots these we shared notes see. as we our shareholder. May, hoped standpoint, ENT successfully we Deerfield Group, from Management largest space. a a convertible

focusing growth business support, our execution, we while their resources drive initiatives, capacity financial the With market ensuring now liquidity at through development, commercial by XXXX. on innovation to least have our and other

sales COVID interactions As University the We allow new improve tailor our to our quickly in transitioned and pivot so-called with to environment. to working a the maximize to rigor customers improve force physician sales to the implemented of execution set and analytic targeted selling field. we activities team company elevating to daily while and rigorous our virtually, strengthen designed XENT messaging in a curriculum, targeting clinical enhanced developed skills to field knowledge

focus to their and and our and procedure hosted helped regular virtual customers and platform company face teach-ins support the This for and restrictions person In excellence. connections. maintain in us addition, access in contact meeting leveraging that education staff, our physician prevented webinars of well-attended the travel

organization sales We support our our payer brand repositioned access to marketing comfortable continue to execution. we leverage build customers, and our remain support recognition market how and team, leading physician commercial and with our

decline hospital from to with XX% decrease outlook activity confidence in well XX% revenue to as in in QX to we and referral As gave PROPEL to XX% quarter full for June, to June, as generated PROPEL our this an increased calendar uptick At significant the Mini procedures. in turned office-based the us XX% revenue our Contour the PROPEL momentum the SINUVA raise and year-on-year. Also pipeline. a further a publicly time,

quarter Our million PROPEL June. $X.X SINUVA with improve Total the to week-to-week we only revenue revenues with completing recovery was strong continue trend. April revenues closed quarter throughout June and with prospects growth $XXX,XXX, revenue of followed in $X of May million, and the company

delivered initially foreseen. million, we ago, better had than $X.X For considerably the revenue still versus year of quarter, total we second down but XX%

has positive sales preliminary plus the XX% trend into a with ago. continued up $X.X growth Importantly, million, QX year July July monthly of approximately versus

demand the of as monitoring cases the and using hospital better to the surgery COVID marked regions around While quarter a increase of and trends original rather manufacturing, surgery first our in with U.S. restarted prepared we early our than sinus we at June of across restrictions increase select many primarily in production run as world, third potential incremental we July the distribution areas procedure September, the demand in R&D. vehicle previously of rebuild and to outpatient PARK reopened as MENLO current are forecast, of in various hospitals an with demand a our earlier start sinus are are continually manufacturing we shared. beyond for Because revenue. manage in easing encouraged spikes facilities are also than the activities, COVID With country, of and expected

asset, of the cash. the beginning us use inventory enabling that sought our position You strong second pandemic generate to may the and at inventory we the a recall utilize strategic beginning to to of as quarter

We employees anticipated and needed. incrementally and significant demand selectively will formerly furloughed scale given quickly return more adding to others manufacturing was returning than previously by earlier as

commercial the our yielding results. ongoing and further support coverage. our develop SINUVA patient Our of the better patient market to of infrastructure physicians to nature capability seeking hub determine increased and actions SINUVA We to positive their are efficiency

Work among and reimbursement buy-and-bill. creating or and their dependency better on team reduce partners with specialty an the of distributors the benefit leading staff via to office AOB, two and is physicians to At same McKesson of Besse, buy-and-bill. the specialty educating benefits time, opportunities various expanding are with buy-and-bill authorization Our both payer. expanding the pharmacy physician use and field-based our to payers physician on are

prospect are the acceptance seeing categories, such indicative oncology. We increase in an therapeutic other is for in physicians of buy-and-bill of buy-and-bill embrace rheumatology ophthalmology, that and seen as

for in the X the buy-and-bill have strengthening Importantly, SINUVA opportunity. last and of commercial and number coverage expanded large office-based use economically of payers PROPEL, streamlining their code clarifying, J the months, of a

Blue put For have schedule in example, Highmark, recent JXXXX, among our Cross Shields code, additions Humana, place unique various J others. utilizing been with UnitedHealthcare, and Aetna, fee Blue

and that for announcement month the the under CMS, date centers surgery for system, and to market We payment payment the highlight center on A SINUVA. system. Medicaid transitional the status prospective are commercial and of further reimbursement strategies last to hospital an with made PROPEL and our Services, pass-through approved SINUVA outpatient was access OPS, our sinus progress for ambulatory implant Medicare or pleased look expand payment both quarter for

of sinus cost visit. with releasing of codes cost following PROPEL million took effect independent a new XX for demonstrated SINUVA study lives. sinus resulted potential products. incrementally postoperative economic for the sinusitis. the in Also no implant surgery in for The effect, use We are non PROPEL code patients on Medicare well results highlighting by associated for modest now with benefits created the SINUVA pleased for coverage physicians the will U.S. new compared years granting SINUVA as C following and market and lasts billing and existing by sinus surgery pass-through PROPEL X a with of XXXX. code as the risk and PROPEL use to has our the as In overall U.K.-based complications pass-through the of novel fewer Medicare patients status we patient supports savings. July treatment procedure return steroid July the a June, with a with outcomes to incremental and drug-eluting an a quality CXXXX. additional recognized associated analysis beyond covered a of can This The covering in worthy family population with their Medicare that announced code, effectiveness spacer CMS measuring The status life C X expand that implants endoscopic implant of independent sinus chronic of

economic While intention the is U.S. markets rationale the and international, as during design in we for than nicely greater quarter, and And of of endpoints continue with submission. topic largely economic to pipeline, our our virtually German coverage to and all implants are balloon support on program. business. U.K.-based in regarding faster European With clinical and our relatively positive indicative efforts to the have safety and time and clarity health evidence-based strengthen as across this use on our intended our to We while Europe, drug-coated this PROPEL well eventual received analysis support to instructive have small, type and of rebounded PMA met to regard expanding study requirements health markets globally. feedback support again our recovering product now FDA

are trial, for the use we the of ongoing the confident development specific trial, our due and pilot and our of X to with we their delaying upon program. path we drug-coated in final June in to clinical constraints the in can pandemic. trial furoate of device based fully pivotal We At achieved complete present, January so forward balloon in results that sinus in our commercial direct mometasone ASCEND our our ensure trial we cavity in FDA the the and experience to understand the risks our XXXX interactions are our delivery and start

the comprehensive of begin to be our are time clinical challenges the drug-coated launch no and expect XXXX. the the pandemic advancing in And to make based more commercially later early in than our half ENT on final to goal many Despite We space. a integrated work on mission that balloon the line, player ENT XXXX. we the current created, would second Intersect

and to expect ASCs to to to both growth growth the quarter-to-quarter second is devices to pandemic, multiple Based across sound that XXXX of patients revenues in outlook risks hospitals, relative subject with on in of goal length and our well recognize depth revenue Our And and XXXX. sinusitis sequential as half sites we to offices. drugs. we uniquely related our treat and of the XXXX as current experience leverage care, achieve

particularly this At and business situation, business in of with I the quarter, on time, dynamic, into call global to the trends activity and based While PROPEL take of our the to past in results. the US, through are the the have acceleration remains in financial over will strength SINUVA. clinical we experiencing been we turn now quarter the over the the confident and third Randy

sales and and summary Tom, more morning, Thanks, a top on a financial our of good ENT from then well with $X.X in million the start of to decrease of net reported of of In our Intersect period, quarter provide little XXXX, statement. like our outlook. original I'd million but XXXX, to income everyone. prior the same compared the overview detail XX% a the line period results second $XX.X above

decreases Net Tom sales $XXX,XXX, million $XX.X million on $X to May for suspending These the we sales resulted million. in the months elective July trend procedures sales X particularly $XX.X pandemic. June a were first COVID-XX reduced period were revenue preliminary hospitals ENT of As XXXX noted, and XXXX. office basis, with as of million, visits and from the the $X.X April were the only a pleased impact over million. related were of in same $X.X were decrease line XX% approximately And were

the ago. from XX% XXXX, to the XX%. recent was representing decrease to of decrease XXXX. family $X.X XX% mix XX% of For ahead in at the in a price at Sales quarter slightly XXXX a was was compared XX%, in in SINUVA PROPEL QX positively XXXX $XXX, for quarter product was second Product margin Mini a compared the a period second second Contour million, of And PROPEL impacted for ago. quarter PROPEL by million, revenues XXXX. the year of of revenue QX increase. XX% PROPEL ASP were Overall, of were $X.X X% quarter a with quarters at XX%, Gross similar PROPEL year

XXXX, was manufacturing to approximately incurring impacted XXXX. million decrease gross adversely months pandemic, decision periods approximately of X XX% The XXXX. our idle months XX% $X.X driven $X.X in in in the of due For both second our margin by first by to half for X which was in approximately us the me, XX% to million resulted -- the in X quarter the gross months compared of for approximately XX%. COVID-XX facility by and the quarter charges first and of XX% charges XXXX the first second margins in These excuse the

with of low to original XXXX, impact of gross XXXX first in and in both the margin Excluding was COVID-XX consistent guidance second quarter the half range. our mid-XX%

in expenses year gross XXXX our actions $XX.X of enabling as year-end. COVID-XX expect X of XXXX, in by improve the versus operating shelter-in-place a a result levels million, first were in the the decrease quarter range and of period orders. of response we in the extent the were volumes XXXX the second period to in the XX%. months to of again, second half expenses to direct Here decrease expenses a the Operating XXXX were in $XX.X to $XX.X steadily XX% and million Total the over production margin pandemic million in for margin for us second quarter $XX.X of The the a improve, mid-XX% operating million reduction same the achieve of better same ago.

discussed $XX production, we quarter million in we reductions million products. call, realized in targeted $XX expense approximately our As for capital savings. and research workforce, million suspending of cash which expenses in freezing our hiring, which reductions, about included delaying discretionary approximately near-term expenditures conference XXXX, the we furloughing clinical new second last In and reducing XXXX, reducing of operating and $XX were cost

million of quarter and included reconciliation adjusted excluding of or derivatives in a to $X.XX $XX.X are release the in loss, restructuring second a of operating loss press loss we XXXX, of The quarter second which costs the XXXX. $X.XX, net $XX.X $XX.X share a of impact share. diluted a of value or in share per details of million, our million table net fair or embedded loss is $X.XX the compared per loss of per of recorded loss of million the $XX.X For diluted net the

share a $X.XX share $XX diluted For a net per half net a for the in $X.XX Adjusted of million net million $XX.X loss of loss per $X.XX share. XXXX operating of or XXXX. we XXXX, recorded first diluted loss million loss net the $XX.X $XX.X million, was or a half of loss first to the loss half first of per compared a or of of of

to turning the XXXX. at to $XX.X and Now our the the short-term totaled million $XXX.X of second end end balance Cash, equivalents cash quarter compared investments sheet. at million of

convertible benefited Our second value note, In issuance for the accounted notes. recorded GAAP convertible we so, separately significantly and the certain XXXX. we capital non-operating reconciliation to that are share note. to changes in cash May, net the concluded additional in cash adjustments doing loss income flexibility increased are of estimates through in and fair and as actions These were derivatives were liquidity the each we in early we and common statement. in fair a features from from association embedded and $XX items quarter. cost value position These through non-GAAP quarter. the per In operating between in maintain we raised announced be a the sufficient loss reduction balances are million And have believe our net a with took included valued the

levels. elective on referral the during XXXX volumes of from we expect meaningful -- half procedure the second sequential quarter and Looking ahead and second growth and trends, revenue second

second the to more half expect of XXXX, in range. also normal in the gross returning We to mid-XX% steadily margins improve levels

in and for procedures that continue second duration the not that the of extent of our has will we patients operating on XXXX return treatment. and begun pandemic most or half recovery do the financial we in will impact predict and COVID-XX While the of believe results,

exceed return or out, revenue XXXX levels. further XXXX should we that believe to Looking

to Now turn the I'll call back Tom.

Randy. you, Thank

Before would market opening for for questions, outlook on the like ENT. Intersect call as to it comment I the to relates our

to incremental the seeing SINUVA rise PROPEL. and ASC-based COVID Outpatient with for our access PROPEL need execution greater third We for business financial by quarter-to-date, themselves. both in in procedures procedures supported hospital on to strength, and and hospitals and office-based in are patient and response procedures taking market an are poses demand hospitals an increase pent-up the challenges commercial both a at in role the

our payer over We centers surgical are our price product increase both of as from position migrate office-based time. encouraged with procedures in also improves lines away a across and broad procedures coverage

achieve half to growth and is revenues expect subject during position, related the the prudent We relative revenue in length depth in sequential to of XXXX in XXXX financial the to all will and managing second of pandemic. costs. a but strong to company growth risks XXXX, The the remain

are Our and early through are I company down time. footing taking navigate helped confident of and an the this We environment decisive rebound. thank employees, frontline all unprecedented believe in and to has workers during us shareholders our the our we customers and advantage patients, actions market would like future. on and

inspiring resilience laudable. Your are commitment and and

call over and Now the Operator, call would you for please open I'd to the like to operator questions. the turn the back open lines?

The sir. Newitter Thank SVB from you. ahead. [Operator Sure, from go Please question comes Instructions] Richard first Leering.

Rich. question. Jaime taking guys. Hi, for is on This my Thanks for

preliminary revenue, at it you wanted the XX% Just to on July growth. I said trended year-over-year start believe

sort about if the on reasonable us kind So be going gauge but second is we help potentially that a then correct, actually two basis way just it forward And of sequential C, that it? say into said, think improvement? you about year-over-year that sure correctly. month-to-month to that acceleration what's improvement? is you the moderation, you a, businesses? share trying could of Just wanted some b, reasonable to of growth color just the how dollar I to potentially, as see or make to And I on heard thinking year half the calibrate that if between rate some could higher, of should off

let up a are July in. jump Yes, results same Jaime. first at you versus ago. Sure. and period Thanks, a crack hear the you take that did XX% year I'll Randy, correctly.

pent-up at there. a demand things chronic were you've rhinosinusitis And got number of that missed know one a require time May work in frame. of treatment. couple of element does need Certainly we a state, think it I obviously, that April, is as procedures

we're on seeing basis. So patients return that

you that's see of the driving of I that side level in business. a think hospital the fair volume PROPEL

in is the the space, I quickly think that you procedures that think to on accustomed more true our see of starting acceleration well is that's pandemic. the office and piece the how with outpatient with as occupy COVID used what I see back be is in the growth balloon now setting. business. side that combination And But sinuplasty both second seeing that's coming bed to in hospitals the we're for as they going we're thing the long-term now PROPEL, to that at often don't terms revenue in durable other SINUVA to in of pickup they've work become manage to

to Florida, population work you we is Texas, consider encouraging would more find see we've to what So enter California. would XX% relative when levels going Arizona QX, expect Maybe much be particularly now it it the growth strong I subject that to to than impact closer last as in of make again, July, a normalized remainder But the get going QX the growth we have will will we're to and I as be you're year stronger to continued out the to ago Obviously, modest growth and to going and with third of the would sequential for pandemic the is, But comment the year. the think to in unfolds. about into forward, me XX% states Southern growth all say a QX. got through the environment I presumptuous I of there. as say from

that. helpful. can towards of reimbursement the in potential X%? the as my code, with payers C eventually converge the that plus sustainability payment favorable code what's higher more UNH you little then bit talk about some Thank taking could risk levels just And follow-up, light Thanks like you and was the that these of the ASP of Crosse's discussed these That for of questions. of the guess rates a super for the you C level Blue some I

the either Any quite falling Yeah. But think I an in J those SINUVA antibody, as the strong use have, the the as is particularly the of incentive re-evaluated there reimbursement to to you code. consider to of health strong re-looked. for there's under our clearly, use being proposition treatment monoclonal alternative a value products But we expensive continue of time and risk care, an always FESS those rates revision to is paradigm. a motivate payer alternative SINUVA surgery or other more much that

to what likelihood that In to value cost I surgery. focus for of addition, the we provide again, armamentarium we effectiveness to my folks returning the on, continue around in continuing briefly the data to of economic health comment our demonstrate and, study and is UK highlighted reducing add

us I our to think payer to position the ASP that's enable going community to current in continue - environment. to and maintain enable strengthen reimbursement dialogue our and with our

line Marcus Thank of the you. The question next JPMorgan. is Please ahead. from Robbie from go

is guys. sales Allen Robbie. Hey, actually for I one question quick on the force. on had This

on But given bring you rep XQ I sales that impacted base about followed you kind as to cut we not on plan in that some so think form up those the call, whether going saying or back sales is first that And you to should and out guess, offensive of guys by that are pent-up people quarter I So some How XXXX? can plans seeing, a know for on return the of the you the in your much. like you also go better even forward, demand. if stronger I XX% like force headcount. know of is called by wasn't the

feel question. right Allen. We where is now. really force sales Yes. good about Thanks, Good our

really much our of out a We've the your highlight your weeks force meeting thing performance, I under have of think kind the as I a level order take in that eight to and on in their is enables now better curriculum, skills, adding their to and go an selling University impact people tailoring selling of of We've buy-and-bill the manager, when getting the to individual never in doctor. training hands XENT ring able their tighter on comfort analytic for to sales really better knowledge, we job sales a luxury I get do have out rigor a with you the been to to that annual have just what to force message focusing of field right for we your daily targeting you clinical circumstances, week than them said general an by talent to probably would the normal the of afforded and new training. are needs field been their have.

addition, that have. and out cut did while back take to tried you facing What management we overall. on we is In it, we layers as folks touched the of do heads on opposed to field number of

our availability about strategic regional very our structure managers, consultants of robust, we and reimbursement like directors our we and and specialty where sales players are. account and territory, our good remains So feel

opportunities. course, at look to Of going key we are

need in with was my other just on and Houston lead. East fact, in I just day our the In to about a coverage Tampa, the call sales strengthen

will those sales to see demand as don't is us So going a and incremental on the kind we think opportunity said. go doing opportunity as and continue grow. force Though, there, you But adjustments we're of immediate I obviously, about offense, we make future. is demand to to change as how large there continue wholesale in

idle to had year like I year. I like gross under the And you understand when would And So Is little about I back correct was quickly. that year? you to margins. then that of impression getting half the range quarter to about think highlighted to last into kind are cost to to that that XXX%, range some to mid-XX% get get that of the bit special costs which back said because some was the do it in you until the those you There we that charge. And inventory. it. you next comes this that facility up range to way once guys But guess, like I be you of believe we be should capitalized $X.X the of guys Got we a million saw XX% return your maybe back half can expecting still looking fair, back through work to you that think manufacturing like it? pretty mid-XXs this year, will year? that

Randy. the through improving be monthly is change From of and sort profit Allen, the year. on will Yes, this gross of margin I end a think perspective, a incremental it basis

stop that second As in we profit get will to in quarter, we've depressed full which expenses we period the production, experienced led the having values gross back up margin. predominantly the to

that occurs, that into and inventory the rate So the will your improve. go run capitalized as costs

gradual year, but I be mid-XXs. year, probably in will that the a improvement of rest ending think the we'll the probably take throughout this

get And next with are trends. so and depending volumes the the are where back we we confident on year into as as

think see our are we we'll to look and to what get levels. about to as ability opportunities year, start to gross when higher to the back That's really out margin. confidence I gives sustainable more it to us next XX% get revenues

year. we mid- sort think I think to now, right of as I end range we're with towards the high of get the that XXs comfortable

guys. Thanks,

you. Thank

Thank you.

Piper Matthew The from third ahead. question Sandler. go O'Brien Please comes from

COVID-XX all I'd at the I you're pharmacy XX% your on doing about know makeup side, for taking more Good really and on This XX% in commentary you patient I on Patrick of broadly is with shift and SINUVA channels. and start hear on term morning, itself. thoughts The just is longer the this SINUVA for we questions really previously the it. you've characterized on work DME to encouraging Thank love to specialty pharmacy. referrals Matt. guys. wanted appreciate our the

So your of you're work changes the you. Thank some on and of given doing to over curious I'm COVID that how kind the time, with players? specialty see thoughts

Yeah.

First say let me off, this.

We have momentum, couple SINUVA. high in that traction now. years, the of has hopes authentic company while over way get a very for struggled the we right And feel begin really to and last

into the with a procedures as came an high the to those of fact, out and in the not back June February, January, now We In high level before fruition. at referrals referrals we lot pandemic, and through a hit same of see that we saw did July. come same return to all-time we

it. very we're So encouraged by

in analytics universe, think targeting reimbursement the adequate I the that. and because recognition right ago, patient a early of now those we're because or we're a was of docs have is now, J of buy-and-bill. given comfortable Buy-and-bill that of not them moment that piece we whether is an of is mentioned levels identify code actually pattern and I lot attractive and shoots docs against channel is was it there that the that with that Whereas feeling with green the of mix, able to for there a payer uncertainty that's the where that good composition terms before, days the attractive And increasingly evolving participate. their more coverage alternative terms coverage the focusing of commercial coverage in in. to have

opportunities targeting to get who physicians some in respects, and calling appropriately. have channel level on to a attractive SINUVA of use of paid and have So they we're who able developed be comfort and covered some that will mix by driving that

And onion to specific the that's that the we're think open peel continue peel beginning pattern up - that, to on And then your comment COVID. and will the into we future. So business. a

procedure surgery think be to the over physician. in do should doubly be lieu patient going With office setting And that's time. the both attractive growth to COVID the ability be able and to the the of for a environment, to a to again, in we catalyst revision

back shift. On of is one really in know the flare cases PROPEL a An curious you there you out the is I'd some advocates which of setting. of be you've increased shifting the I the setting? into year Texas, due these in element should flare-ups impacts as more regional to anything Or really seen were for the been that That's questions. to that in encouraging half office the to movement in color. called state that to PROPEL some is point, Were there when any Thank you've taking we've building the office previously And comes of helpful we into thinking momentum big else it about of my ups? hear. be adopters having early or follow-up, Thanks. for those

likely office for traditional degree but around to uptick preliminary, PROPEL of the outside marked function looking in a are a insightful activity results, we which saw the an It's still are Again, Yeah. office. environment. And our a as question of COVID some in PROPEL July folks suite. in procedure surgical

I we a was little PROPEL business But But relatively significant think elsewhere. business. reach about national in part in in with encouraging PROPEL office-based on, that, the Texas office basis. been the state it largely saw broader most July, increase our and you're spot had on of historically,

of of the setting the is is So open principal the a for with the hold it to PROPEL before, and That in opportunity, office And a a PROPEL. an healing. behind sinus for that PROPEL on us where source greater the code of, J I dilation piece. placing office you're coupled growth the PROPEL use we sinuplasty opportunity in desire and allow combination complementary said is the you've balloon is done with the cavity procedures driver really as boost after giving extra renewed realization order for that think,

[Operator question from Please Instructions] go line Pasquale from you. Thank Guggenheim. is of next ahead. The Chris the

A Thanks. from questions me. couple of

you comment offer? willing surprising First, that yet, takeover an but it submitted news to recent the asked all Has proposal little Board? Medtronic hasn't a on been been indicating at that to reports a are there

know, that. You on comment we can't Chris,

Okay.

say anything other? the So or not way -- one won't you

No.

up with what really stepping seen would have done a we that in on circle to relative to combination little wanted more. significant bit often have considering this Mini previously. bit and Contour back the are thought just I dynamic then sinuplasty move, would office I fact And the that a mix maybe Okay. being we've if with seen this a these was

to just pre what sort you're is? the in a ago, that us quantify levels, scale comparison best business procedures base try I COVID of give office-based year of of So Can relative the were to and the want whatever to percentage relative the seeing there. you

Yeah.

in the in month we July. where uptick So significantly saw the PROPEL of office activity, was very

the dominant I element, the to incremental and but to PROPEL. of reflected individual the expect So for setting, recovery predominantly and PROPEL We to growth we did and full for therefore, numbers source reported noted. I a in hospital the continue period the say, moment break numbers were that a quarter. us it would largely ongoing rebound is through second out as Randy forward. that the it's not the year going again, in was the QX help growth of PROPEL not And that that of ago restore part

And July for was just to then year-over-year just in nothing like I That's growth that number, helpful. period wanted lastly me. It guys? year-over-year unusual 'XX, of the soft unusually July with wasn't that for you Okay. confirm there's right? an comparison,

nothing The the period. comparable was unusual comparable there about No. was -

Okay, perfect. Thank you.

you. Thank

Thank next ahead. the of line question from Please from Ryan The Zimmerman comes you. go BTIG.

mentioned about as just from quarter, is innings are demand Ryan. I what you your for that field completed? follow-up driving XX% been that quarter. on sinus XX% to half questions. backlog delayed benefit But in of you guys. bit. in taking what XX% year? for in back surveys PROPEL growth that on XX% something to the or you have that think of know to the the that pent-up procedures in and the have that cancel. some those of Max Hey, do little this benefit postponed of of of? This saw demand you opposed the And you Is between that how delayed, Thanks early an the you're indicated were know a estimate dynamic of recent actually kind for from our I you I wanted do portion the thinking of mentioned pent-up still previous were kind portion during procedures

break have level say be time hard at us like those unfold the work do to one expect continue with behind, regions are of would Yeah. a hotspots and would Texas, a demand It's a good California. you. those We through lagging that our challenges still in we honest Arizona, and question, that front Florida, the fair and out, within minimum from of over I pent-up to to way it's see markets. see the markets we to that we as a

slower It's it's relief in is a in go still is quantify. point but still call number those would they're to because further demand. And hard halfway pent-up that again, recover further think I -- terms on specifically guess they're of there. to of are the pandemic. an say providing - we're quite probably the candidly, it I would going a I'm depth to So terms and of - to it And that to managing estimate. that's, I in opportunity where the states But

you outlook that tell to early margins? move where of then the margins And margins, commentary Got long-term think your and I of actually and ended XXXX? helpful. XXXX maybe just terms little for to about Or as year. in you've very around implemented up But too net level by end in just it. margins, you opportunity Is initiatives this through improve appreciate of beyond, in XX% kind term, of cost I we do to the bit there thinking getting to mean XXXX Yes, gross the the not upon long back terms looking up the an in quarter. it's guys looking still in all a

we inventory higher We think up profit prior and margins. volumes. finished perspective, from gross our due that some I pretty in indicated margin cost to Max, and that with gross guidance shifting we lower some strong a XXXX had focus

balance So you that to out into some through start inventory and get still to we pick up still up working and get XXXX 'XX. that and we're our of volumes sheet. on out to When XXXX is start

some PROPEL, particularly with a that opportunity, the higher-margin SINUVA of to there's levels. product mix regain think real start to I

those to the think the categories, get we we or to early into too - little product of the if back that within out as a XXXX. might it's there look think future, XX%. tail end it to But can - say towards we - XXXX we and can I get certainly,

Thank you. it. Got

Thank next line Misra you. question Berenberg. the go from of ahead. Please comes The from Ravi

question. the Hi. Thank you for taking

from some understand you impact of sort else So guess, just biologics what any weaker stronger the I perspective of anything a be one, out you the my first seeing in us just would the help there you're or competitive or pandemic. around if space? had in from Can

biologics answer - understood are out Ravi, business The really. impacted in not do is they think don't I was meaningful shift that It's and a otherwise. sprays the there towards more no, good question. pretty can there routine what the as clearly as our it's nor is Yes, and simple competitive alternatives I of another the or think a terms and what - what answer offer. do significantly direction well sinus one set

as easy unique. that think fairly from alternative business, SINUVA kind do. I standpoint, relates position provide quite value benefit strong. remains our we proposition there's is our I that the on do competitive a would profile Certainly, an it PROPEL think of not to the

the to of In can as that revision the the well alternative biologics efficacy to a terms we deliver and relative of surgery. as compliance certainty

exploit I strong, in think and that back to to value that as proposition quite market go we'll continue we meaningful a remains more way.

all. not at shift So big a

get - or that think reasonable bit the of - improving your given the be I it - we sequential little ramp go we half kind that we decades go for high of on growth. that then out can reconcile the -- Okay. about of Or if here? we original here Great. one and with almost of please? guidance if January, uptake? back granularity, year to single-digit how in step the given on And do I would this environment to we kind comments you But on hear that to want maybe take back, this to about I ago we should about level, just second a think just mid- world. if back mean, the How was calling and is you're some should to think back a in the about kind should January

positive our SINUVA our in fundamentals too I portion not outlook. growing, ways really but positive it that I It's and why clearly a business, positive see is in at early know it's in had I and we is business Yeah. before. would backlog. hold another suspended is our a which look is at put question. the the beginning say to of in PROPEL call take outlook. feel strength efforts a the on signs. gratified I we've That's business office-based I of is that that that and look to that place guidance. good of the full, The July

challenge But solid ago, going noted and feel a is environment, any the the in in I versus estimation improvement do year challenge what a saying, now. I So is you're of confident is, marketplace the we and the that predicting performance. I year. to growth think - business And part more the makes think of see back very continued in sequential

April May, attach back specific say clearly June, QX. growth. to year-on-year in June see a QX saw from of as and is than that to me stronger to for But as will than QX and July, number to Just May terms to we I continue half month-to-month think we'll think, it's, be stronger QX I premature

of the out fundamentals very to impact we As I sound. the our other of than pandemic, think are to continue come say,

expand a little bit. Maybe on to that just

as Tom got out, markets pointed think I two here. really you've

meaningful some the Tom's pretty expansions market traditionally, things of that products out starting You've breadth with significant the we got see sort Tom highlighted, been traction our family not the to well back sequential market markets you're goes significant into seeing in pointed that as levels. operate that to as I we as to PROPEL market the products the it's the of and of the SINUVA. has gain uniqueness also and strength But office in we as have us I we're that ahead, for think the with where to recover opportunities some growth. some fairly phase just recovery of we operating look the XXXX think But out

we market real growth for we on the expand us. already regain get very once we talked back of is even to I ability think the that our sort or So of that to opportunity that sort had, rates a about

Great. Thank you.

Oppenheimer The comes go Kalia you. from Suraj from ahead. & next question Please Company. Thank

hear you Tom, me, can okay? everyone. Morning,

Yes.

been have Perfect. Tom, of questions lot asked. a

you forward parlay QX? maybe new is we second are to for and some come forward in been we question. of tie you the FY time average the as Maybe is the color we what the just half? it does seeing one. What the can for can also What I'll has And as 'XX. the guys? different my you Thank to you versus on - to half patient -- you backlog together - July. stick hopefully, And I for all shed questions into patient have acquired, time So that focusing perspective terms how look at from been We patient can through. conversion can and once of a taking this look trends, second flow in acquisition

to ultimately, level which hub dispense in benefit, then at It's based specialty how to relevant appropriate From an on terms interesting of acquire to business triage start order whether is one medical we XX pharmacy. would SINUVA them through the We of question appropriate finish, about the looking and that's our than Yes. Yes. coverage XX pharmacy most benefit product through in probably days, that's longer we determine wish. in folks.

scheduling lot we looking through to order as procedure because But and and unusual we language insurance you're the was in availability talk initial yield. maybe that is QX, also is pandemic. times that in sand a of conducted from improves, and interest, you about, that out time that patient's for the our impacted our will insight of it XX And also the how to scheduling, -- period about do things use of it's of come XX adversely days the by office is do that that accelerate being to adjudication to we the procedure to But interest. dispensing, take in in the order it. improve to of Clearly, this we gears the is expedite insurance itself. the accelerate COVID still adjudication the for to one the the how that that in initial go As the obviously, that the in part is the of patient

of they're Our in a yields patient. we the would in them but terms of be solid, landing time like each referral, are not XXX% where to

people feed what the absolutely of accelerate in And funnel, again, funnel impacted do of that and how and rate how the is can is we I that will customer into of we And year. many on focus the we this the terms the COVID. to around of SINUVA focal the grow how improve put the was part But to patient. it through funnel? we conversion some a the adversely the expect improve the So business experience in through back point to continue say both

Thank you.

Ladies any the to and gentlemen, back session. I Tom this concludes our closing question-and-answer West would like turn conference remarks. to for

continued and your interest support Intersect appreciate I everybody. Thanks, very ENT. much for

As have that manage as ability seen I hope demonstrated us, a history our patients through And to that. serve but that you've to chronic that I We're our of now. in There feel footing. about very the right We've are good of where pandemic. on good uncertainty COVID challenges weathered we the progress. the we front are solid made We've continue to we've said, with rhinosinusitis company. we still throughout

your for thank forward again, you soon. Take care. Bye-bye. we and speaking look So interest, to you with

conference Thank you. for today's Ladies gentlemen, has Thank presentation. now concluded. attending you and the

You may now disconnect.