Sonendo (SONX) 8 Mar 232022 Q4 Earnings call transcript

Good afternoon and welcome to Sonendo's Fourth Quarter Earnings Conference Call. At this time, all participants are in listen-mode only.

We will be facilitating a question-and-answer session towards the end of today's call.

As a reminder, this call is being recorded for replay purposes.

I would now like to turn the call over to Louisa Smith from The Gilmartin Group for a few introductory comments.

operator. Thanks thank in and call. for you afternoon today's participating Good

President are and Joining Sonendo Berghei, and me from Bjarne CEO; CFO. Michael Watts,

Earlier the company's for results XXXX. the released ended website. release Sonendo press on XX, of A the available is December copy today, quarter financial

during the the made begin, statements of meaning Harbor Securities Securities which like are of to Act will I'd include the of provisions that we remind you Federal call Before management Litigation Reform forward-looking pursuant Safe that Private to make this statements within XXXX. laws

impact this statements our contained performance expense business, product and that differ Any actual forward-looking to financial estimates involve or expectations implied for growth of predictions these expectations statements. management, the could trends uncertainties commercial opportunity, forward-looking our future in pipeline by from statements various that or COVID-XX call development market results, material assumptions. on operating in statements. relate guidance, current those relating to based forward-looking materially These future our to our or statements events events, upon including hiring, and All and of revenue and are expansion, those organization, risks results are performance, cause

not reliance should place Accordingly, you on these undue statements.

with report periodically description annual and SEC. public reports Securities on to our and business Form our the EDGAR other and filed of please the list and a recent available uncertainties on XX-K For March with refer our Exchange of risk risks the associated filed XXXX Xth, most in with Commission factors and today, the section

broadcast the only accurate is on and of information time-sensitive contains call March XXXX. Xth, conference live This as

because by statements obligation, update or to financial revise new or future intention any events, whether information, projections or law, otherwise. or disclaims as any except required forward-looking of Sonendo

call the And to turn Bjarne. that, I will now over with

Good thank us. afternoon everyone you Louisa. and joining for Thanks

results, opening who regarding and will quarterly and the followed provide comments year I For business to full our before the Q&A. XXXX provide and opening update, detail additional today's call call, guidance will for by Mike

being We $XX.X are growth for full pleased XX% was was with as year Sonendo's Revenue the this year public a XX% $XX.X over Revenue of XXXX. million, of performance a XXXX full the quarter million, for XXXX fourth of our first with representing growth year-over-year. in company.

Our some fourth marked was milestones GentleWave procedure. of the by millionth GX the next-generation quarter console including GentleWave launch significant one our and

Coupled procedure CleanFlow root innovation the redefine with standard-of-care instrument and in in to therapy. of proud continuing the our since began year, look made canal of for the have the earlier to we're we commercialization advances launch we forward

of XXst, fourth was units compared December model we which the of GentleWave ultimately GentleWave's practice initial to our base XXXX. console, seen and ending As installed increased efficiencies GX approximately quarter, demand In lead XXst newer GX the launch over towards XXX shifting December console, consoles. GentleWave improved the Since primarily we've the XX an units to will sold XXX ASP mix. on approximately

also to been across for we With that CleanFlow were base XXXX. for have the our trend and quarter XX,XXX adoption launched by procedure the procedure installed approximately in April the pleased equating instrument utilization rates, respect to procedures we we strong with initial encouraged PI

therapy invasive its and painful operatory. creating less to system technology into provides while workflow and root traditional a simplified less CleanFlow alternative GentleWave a canal The also

are approximately we were conversion quarter, fourth our mid-XXXX. In achieve pace accounts CleanFlow. convert from by to legacy of to PI to maintaining stated our continue full previously PIs unit We CleanFlow and XX% sales the

onboard our the will recently of bifurcated responsibility continuing support to the This and procedure eventual force account sales critical practices to technology and CleanFlow our previous conversion our improve factor obsolescence coupled the team simpler instruments for new the is generation as CleanFlow, margin Customer consumable is inflection business, oversee users. of The adoption our in gross is of of components it margin assemble. uses a management of fewer to profile. our with doctors

support piece that how the XXXX able Providing efficiently the on practices and for dental critical of opportunity a to be expect throughout practice we approach that team's we'll incorporate into to volumes. has been the expand increased devices

higher model utilization. on for based launched pre-COVID. $XX a to and incentivizes discounts X, higher upon purchase price $XX multiple new available volume will what procedure have pricing ranging quarterly base PI. Lastly, a we discount PIs February quantities. instruments now tiered tier at we Pricing to tariffs set begins similar model pricing procedure new had from This per a with with

I'd updates, by on business quarter commentary establishing and environment gross impacted potential throughout and chain pleased those third business. additional our foresee call, we stability headwinds In we inventory have supply of navigated reviewing channels. the supply that provide to the perspectives negatively impacts have our uncertainties our some like chain observed Before to We're margins. how current macro our on

realize forward, we as efficiencies to the impacts rates growth adoption the going new our well as seeing We model. rise expect pricing improve higher gross CleanFlow margins operational as as of related to and

increased to the fourth of habits our buying sequentially tax QX XX% customers and year-end placements quarter launch. than anticipated, GentleWave incentives, As in system the higher the likely GX due

QX with and and lowest As our into the we we seasonal periods XXXX, continue QX trends expect historical move being highest. QX to being

interest the And conservatism have based underlying cycles we see throughout year. and environment upon result, of longer continue selling purchases a macro experience as may higher around we we to capital previously, discussed rates, Still the as equipment.

strong and their is practices technology Although we confident improving and well that doctors in point to positioned experience. We're lead demand our still our is expanding patient in value that opportunities. it the our steadfast to is important remain sales support proposition and pipeline remains out strong, generation experiencing that capital team

to more finish I'll recent with business before in results asking Mike some highlights detail. review financial

to the utilization for performed of testament increased revolutionary Sonendo's hit a innovation of we millionth the milestone commercialization. my significant adoption start to started dentistry This As and technology. and commitment I since endodontics mentioned our one in GentleWave commentary, the briefly is in at a Sonendo, December procedure we and

As to cleanliness an preserve structure its underscored the consumers GentleWave all the pain. level enable healing while a of well recent results because with with faster promoting ability procedure and by no to of survey, resonates to minimal of enhanced

conducted root the willing survey did procedure indicated December of provider therapy search would for and that undergo new to canal be that traditional that their over XX% of GentleWave would if to respondents in doctor technology prefer The not. XX% existing a offers our patients

least XX% Additionally, access at $XXX technology. the to willing be to would pay

elevating delivering incredible forefront the to is canal in So we that invasive be We're modern root it therapy. procedure. at patient clear thrilled the are minimally through this experience outcomes of

the canal more doctors the hands into to their experience many and help decay. practice of elevate the committed patient of we're end, become GentleWave care that getting tooth root therapy and system for standard to To efficiency,

endodontic near-term support evidenced endodontists on XX focus of to over XXXX. root by continues programs of who canal perform treatments as Our the our therapies since be for their residency majority

invested education remain We clinical we specialty. of supporters clinicians the and have in established training of emerging and and

American system clinical Sonendo Endodontics' we'll keep XXXX of Month was GentleWave the of of Save education. the on part in Tooth Your advocating the their and endodontists training as Association sponsored for XXXX and

XX% that general of opportunity, Canada. practitioners represents With market that recognize a and we said, performing US therapies all across also root canal significant

well-positioned across improve GX workflow system to Our is practices. efficiency all GentleWave

to less endodontists. to are root to GP likely canal to beginning procedures refer We're the introduce that technology to practices higher-volume

the to incorporating their experience to multiple benefit while an procedure, our GPs GentleWave procedure. across of be With offer experience able technology will patients laboratories GentleWave the elevated these the seamlessly

We phase industry-leading level overwhelmingly next and of and our rollout teams. our GPs initial from we has same support has we to believe plan of strategy measured feedback adopters to this endodontic to receive a to been clinical ensure they The landscape. GP and positive throughout received XXXX the implement opportunity from that the early commercial the responsible transform sales

the teeth will enhance finally, to And root middle to PI Transitioning CleanFlow XX% looking account to year. support improved anterior technology performed the approximately and of anterior for increased for forward adoption, to margin efficiencies. being Anterior cases XX% CleanFlow procedures practice profile we're canals today. the towards commercialize of able

to excited and single customers root therapy about CleanFlow's the teeth, opportunity all present Adding molar for clearance canal to applications. a for we're offer premolar PI

over Mike? Financial With to that, Michael Officer. will Watts, turn the call I Sonendo's Chief

Thanks Bjarne.

the of console $XX.X compared of product fourth $X.X Sonendo quarter million, segment, an to XX% million the and which total revenue. mentioned, for well grew product XX%. quarter Growth was GentleWave in fourth as increased increase by our the was in instrument previously As of XXXX, XXXX for primarily driven other segment sales, revenue quarter procedure as

million was million, ASP with prices $X.X were fourth to XXXX. $X.X attributed mix. the of console compared average selling In GentleWave fourth quarter, higher GX roughly $XX,XXX console quarter in quarter in the favorable revenue to the GentleWave

an XXXX, an growth X% in primarily $X.X $X base, prices GentleWave to was to PI Turning increased period. the in to quarter XX%. PI instruments revenue the approximately of procedure the was selling million fourth of and million compared average sold instruments. prior-year procedure revenue approximately driven by installed increase compared increase

$X.X Procedure in software of Total the XX,XXX. X%. million revenue approximately quarter for quarter revenue instruments an quarter. to XXXX, totaled $X of sold compared Total million increase product the quarter other the $X.X million in in related fourth the was was fourth

revenues. was provided the rates of and calls line will XXXX. with as adoption continue of Gross during quarter quarter previously earnings CleanFlow XX% stated compared is XXXX along prior for the This with range XX% fourth fourth our to in increasing increase margin and in improve

commercial in as fourth with of quarter and administrative was associated higher to million, expenses year. $XX as the the increase company. were well higher by The accounting expenses the personnel to compared as public our prior same XXXX related operating million primarily driven of period Total revenues, $XX.X general operating a in costs, relating and legal and expansion primarily

Employee compared QX, million our acceptance $XX.X the the of in expense, the of of XXXX. a to XXXX. in million on of was government's, was for XXXX, Net compared credit $X.X the Please million note gain of loss we and million relating quarter income the fourth US review other for Retention fourth in of funds million recorded was the to program. to quarter from $XX.X quarter Loss Credit $XX.X XXXX, application. services revenue operations $XX.X the The fourth fourth in dependent with recorded receipt internal ERC that and quarter

our results. year to Turning full XXXX

XXXX, million, million console an XXXX in the XXXX, company. the XXXX. price XXXX GentleWave was public as in revenue a marks compared year full to $XX.X console Sonendo's Bjarne $X.X $XX.X full year previously, XX%. full As first million, $XX.X $XX,XXX. revenue Total increase mentioned selling GentleWave approximately in Average year of for to million of was compared for was

million, $XX.X PI revenue software million compared $X.X to was in for XXX,XXX in an $X.X instruments was of an XX%. compared units. increase XXXX. Total approximately totaled XXXX, in year full product-related sold million in the XX%. XXXX, revenue for of million Procedure XXXX, $X.X approximately million the to other $XX.X increase XXXX Total revenue was year

margin Loss $XX.X year million to Gross XXXX, loss the for to XX%. in was million the XXXX million in $XX.X million, for XXXX. $XX.X million was compared in full operations from year XXXX $XX.X compared XXXX. full XXXX, operating million in were $XX.X to for $XX.X was compared Net expenses XXXX. Total

cash investments December our XXXX, and approximately of while cash as $XX long-term short-term borrowings million, XX equivalents Our $XX.X totaled and were million.

guidance. Moving to financial our

anticipating we For to are be annual million. XXXX, $XX of the million in our $XX range to revenue

$XXX we corporate to of we commonly up as called today registration matter strictly good view with to statement, of which filed a housekeeping. an shares, allowing value Lastly, register the registration S-X a Shelf us million,

call up for At like questions. this point, the I'd open to

Jason from Instructions] with is [Operator first Our Piper question Bednar Sandler.

is line open. Your now

thinking fourth the had have maybe, looks net afternoon, versus Can you here. in you sales? talk to how the $XX might guys. here for about good several the user maybe ask upgrades million to guidance replacements systems? close about, for you to occurred that $XX And the capital year taking what's Hi, have questions, in Nice replacement around Wanted or are It Thanks here growth revenue. like embedded may quarter. million

XXXX? piece out, just So, and expect to I'm what net trying in to your growth growth

part. second thanks the first for then the that Hi, question. take of add and I'll on can to Jason Mike, part the Maybe and

I necessarily we other last is course, similar what equipment been sit lot we trends and don't has further. capital and a as half further of look horizon here, as have equipment into demand there shorter-term in of us the out we a key it economy. think on seen in of QX, for we've other that In see But, XXXX. unknown to the capital the a deteriorated companies year, words,

remain At interest the very here though, specifically excited rates going the And or about also thinking not the time, growth we have same macro a Sonendo. hard long-term whether landing. of thinking course environment, a story economy or about soft about landing to at is the

for the endodontists. But the focused is going far, Specifically after obviously, for been GPs. us on upside really we've so this the year, specialist

us. we're to Now starting is big GPs, which after for a the opportunity go

to easier to sale. side. resonates We on are very still very still our an significantly Obviously, sales excited have reps the found we giving very, opportunity, but typically think early, an already this call opportunity, that about now we The add more And GP doctors the pipeline well. endo will value proposition strong it's we on.

So as platform start we year, obviously about and procedure have sit a the GX excited here that we also CleanFlow. a of we're we that's at fact the new the being new have GentleWave

ahead. about commercial the So, excited opportunities very

ahead, the is reflective the first think think part I I question of we're the giving So opportunity that's guidance which about guidance, we're as macro we think your environment. on here, about excited but really the

regards growth, we being just going acutely focused GX obviously, with it's on acutely be in in kind of big focused the the user specifically control we're this which lever And on the what is a right. main then business, business driving obviously to to year, lever can sales,

CleanFlow both growth anything long-term the us to add? Mike, in GP story. I into don't for sales endodontist also segment know, continuing to a course, there's want setting Of and if you else up drive

No.

second Just net of just about question, users the versus the part replacements. answer to Jason, your

program in a come we certain QX. people lot a QX, very it in So QX saw did we customers and existing we and excited we as offered were limited of out had launched for

were in placements XX. the quarter actually growth our So

math do XX You'll we had and see net. the that

XX roughly upgrade took of So the of program. our advantage customers

a program as we have through will XXXX, their any GX QX that this in year. up The have But offering incentives. Now, in special of good system work place into not GX. into head trade some the excellent. that QX did any in advantage have we're for still system. customers incentives special right people It's very to We now, we of don't GXs taken is

that our of look need what many to for continue providers, offer. they we it's programs and the sufficient For we today, at

hope So that I answers your question.

yeah, come opportunity. or to Yeah, us want something, to for of a it talking some been that I time with I kind about the GP the much. Thanks know the at, does. so quite back do initiative. definitely lot you're no actually potential story have of looking

the you to planning right partner just this maybe, like channel? activity? I alone. going to go-to-market It guess you support and how So now you're sounds support a are it Do need assist in

several I'm the strategically different after the so to referral of there the just are upset market now curious with But the there. changed frustrate to large endos really in in part planning your maybe going how you out what's way move thoughts I this GPs, past to opportunity? after the guess, this dynamic said, a is disrupt navigate time right pattern that here. and to know here or in or the makes having a not pack and hesitancy of I and GPs go

good question. Jason, Hey,

with has to do. is we start And strategically? changed that procedure So we segment, this have and that's to straightforward is a very procedure go a believe GX after product really nice coupled we do part easier CleanFlow now has the last What simple it appropriate the makes the have to because GP now. What very simpler very, and I'll platform, by instrument first. changed tackling that this procedure that, maybe

part through about. the lot Then another time that of have I to spent question we with your of of that's not other terms and regards pattern, think referral thought the frustrating thinking thing in a

that not XX,XXX out in-house referring of meaning going GPs initially that keep you that roughly and we're to to the after. segment the their majority is the they're subset there's here, a do that If endodontists, GPs go cases analysis about of

GPs GentleWave the be cetera, CAD/CAM of who And can we the we that, GPs, of we're and GPs. of the top almost are on procedure as then ones specifically, subset that and to roll which XX,XXX very what are complement complementary the the analysis another doing have out is doing – technology procedures, that, canal at non-referring most doing like are who that that looking root are et those out

there So GPs. the how about that's the exactly we be careful very thinking to profile

-- With current to not question alone. is for we we're distribution We sales regarding regards to support go plan a the set to to actually do first currently this part example the our up this alone to our have your do of with partner reps. do and think we plane well segment after

Thanks queue. I’ll much Understood. right. in guys. back hop All so

Thank you, Jason.

Our is Jon next question with Stifel. from Block

Your line is now open.

Good the Mike, Bjarne, the about of got the new the think, tier then on sort for $XX PI realized. to and afternoon. I've that call you usage the ASP guys. I utilization. And quarter Thanks, for on a talked $XX $XX of for I PIs call depending the believe

$XX just PI's we that And realized XXXX back talk versus does ASP So that ASP? the the it the you when $XX can does for mean tiers on to to to walk or $XX the what model for for that XQ?

I'll this then -- pass to first it you look to Bjarne a provide February Jon, at X. But take the came initiative when out color. pricing so additional step and at we when back launched

radically make January. certain you course, allowed buy need significantly on ins up is over and in customers, fight dependent that in But front. to it a we purchase pricing to so volumes So not that program of is the stocking those their quarter volumes

higher pricing range as we're range as can looking $XX. from they So the on when what they're at we're most land QX focused system throughout then $XX around people to at our in utilization that people or that pricing pricing to is for mid-XXs And start higher the on and at how and will the between -- QX will we move $XX QX to model. benefit land we at that we using move from you on look new pricing how look the average as year in adopters expect expecting the it's to

I'll canal that Jon procedures. I And second for maybe in and and root a right would extract take that. the and endodontic about context price as a effectively order we part three think kind of other say are. where where we maybe step case. of some at file company roughly about And of back that typical $XX we're look are extracting to times per That's on we would the now procedures

right. other general is The in thing

why done doing quite charged have haven't And believe increase that leading offering for research we significant to increase price value We price the reason we that and here. looking at bit sensitivity is a value lot we that that we're aggressive And of quite this we're up an price also a the quite so and a elasticity rather far. of procedure. did this quite of

that So recognize we that feel goes we're move. the to move we about it though even good we it an feel that in procedure. the value offering is this just aggressive And back

Yes. understood. No

the price number. just not of of for moved CleanFlow. are of on guys contingent a everything the clarifying of CleanFlow then sort one to price. a you're whether of new just I XX% just fatter The think I'll of an is lot the if us a ask that It's that all-in One of I discussed make upfront. you them not. sure that the and want PI you're was clarifying or sort to both so one question proponent or that's on

the clarifying. was that So

the throughout second fourth can the and as and It And then year good then the XX% question number margin call gross band where quarter? XQ? you guys Thanks, progresses you the was the to was XXXX margin talk for the a that XX-and-change do guys. a are ramp within just of to well? gross exit XX%, And thoughts how but what a it throughout

first So question then to that I'll part of I Mike. and hand take the over maybe the it back clarifying

charging yes same premolar also your to instrument for CleanFlow current our So anterior procedure procedure the point our molar procedure our CleanFlow we are instrument. instrument, and

price differentiation time. at this there there in So no point actually is

to it So over hand Mike. I'll you

Yes.

had good So, about Jon, how in calls about QX. feel how in some we challenges very talked had gross margin, we just XXXX. We I think we for prior exited

through expected to early We and played it just out we as to those worked mid-QX challenges be expected.

XXXX, we into as model. pricing at look look So forward the we new

we're levels. begins One cost had and to initial XXXX, expecting when similar CleanFlow, what starting to the of of higher production the GX production to larger of are big rate hit higher levers mid-summer. for middle the rate as to we GX of just overhead GX be as mix also from with And we a run volumes well than it larger GX, of Production the and GX. experienced going at And ramp we're hit run the leverage up, is that of lower production.

whole we're look QX. And you jumped of gross not all of as then, with QX off a from significant uplift when expecting in at for that XXXX, said, margin we the

So in ended because XX%. largely we same QX, at of seasonality. range, that we're QX

year. to we sales in seasonality capital business, a this play QX seasonality ultimately our lot sales lower volumes have anticipate talked out about the volumes. QX And will and where So has we of QX and tend QX QX highest in that

with some XX% So the And then, offset year but we but look in to price we little at we come margins, higher margin lower and we a are on bit, as downward more improvement the in I of expecting give that rest as the still but we volumes position. pressure QX. move XXXX, think see for with see forward continued insights progress, into the our we as things gross can to expect to

Thanks for the color, guys.

you, Jon. Thank

is Erin Wright Stanley. And our question next with Morgan from

open. now is line Your

the over mix think next years, be that A like of And meaningful endos, should we Does on of base we about you? look think for Thanks. the the several measured a follow-up endo GP Thanks. does that year? Hi. the initiative. what installed of guidance versus or more the by GPs as that end the about And reflect approach? a from GP versus contribution will how

Yes.

XXXX. guidance. But to the other -- we through about to go to your to guidance maybe thinking the as it's guidance, about One point, in is your the are context. a here is think, on worthwhile give right, I in uncertainties the on the we Erin this, after maybe, So bit economy. elements opportunity GPs there's you really the point key little And of go side, two

you where look endodontist the our our and right our substantially pipeline the pipeline is deal of segment, if that, of meaning in So pipeline now, at deals majority that's resides.

XXXX. the going have We practitioners general in after piloted

we're go all Now, after allow to GPs. as sales to into the of our that going go XXXX, we reps after go to --

We are currently the GP after, most to I they earlier, going procedure. -- at technologies the GentleWave like doing X,XXX they're go that GPs, to doing they're of have the alluded majority because about root canal cases and complement

So calling we're to those that's -- going so where who be upon.

at so, the higher starting call and these increases. beginning if we GPs pipeline, on the contribution GP of sales to go, we're year of as activities the towards them going see as GPs, the higher our the we into on here, think, And so a capital team year the we have and of will, the sales moving deals to you

year. way. going going and in we to are side, about remarks, to prepared now such can our year this help this in such into measured the build will KOLs, demand continue as such the continue continue that professional We're building more to out we go into we talked that, building cetera, infrastructure as we as out responsible do we as go to et a more after our the And move drive GP aggressively, education GPs more out as to

that and to mix talk add about of to answer endo. GP And the just

sure we at the our continue to make to support segment. as we the that focus segment, is GP So, endodontic look

very effort endodontists the in the that and a position good move don't quickly put good to segment they want and forward. there. behind that past into programs We that we we them today, have GP too very that get sure continue going make level with to of We

won't present we breaking the split time. out at endo necessarily be So to GP the

to that so we how year Thanks sorry you covered they be the year? be but should mapping that base terms throughout installed of thinking even Thanks. should do want out the throughout And a we or just be placement in you quarterly this terms in much. trends? target should have And relatively some progression of sure about lumpy ending already, make Okay. the if of

Yes.

between its think the I break of So into we consoles us for what Erin, the without to give to fluctuations and do the is range. variability you million to up And see guide pieces just color in lot $XX the that that capital trying about. around as $XX a environment what million and as the comes down of drives what tried talked PIs, is mix just to Bjarne

Great. you. Thank Okay.

Thank you, Erin.

question from is next Our Goldman with Nathan Sachs. Rich

open. Your line is now

as Hi. you do kind get to sense I just Good underlying It the trend of the off seems as kind an in question. is you -- the volumes wanted last there, guess transition increase seems like out but stable. it macro been the afternoon. Thanks questions. program the uncertainty new how have like procedure of I this utilization pretty building the year, for And of I Erin's year? PI? guess to a for we tiered expecting of you're expect through utilization to obviously, move

Yes, hi Nate.

first the part So maybe I'll that. take of

actually been to focused have install driving and If And reps continue conversion our consumable they substantially CleanFlow, converted right be have consumable focused focus new units, the that's that's be to also to can driving then you of their focus team until their the utilization. on CleanFlow. we to we going field more look now, driving at on have been and substantially

canals. exactly you're why patient utilizing we're do learning the higher is go forward. important GPs But root as the is some -- less are that GentleWave in GPs more. there than GPs, focused here even That's general, own to, I obviously, And most proposition we we're the think with canal procedures. general, right doing value seeing we their regards doing With think -- in the and resonates, point GPs we're root to on their what own an alluding that are

possible we that very of share higher wallet can it's in see segment. So a this

utilization. I price up the the incentivize impact We've in think can of question to other thing higher impact you're price is obviously alluding to the us. how set your that also help

is think that side. help structure there the the will another I also us GP pricing on here hopefully element of

a Now are they accounts will paying if that less, we end doing have up ASP. higher

So year, the continue also including watching build these GP go we be will as accounts these out. different utilization carefully as continue we to accounts, in this watching obviously be different the -- for we accounts. will watching to carefully we through But and revenue utilization the

part important that's going thinking So be to going forward. an our of

kind as Okay, that more talk are at any And you wondering there you could like for and CleanFlow I anterior -- of high CleanFlow. that speak you of that if both using are to to adoption, at kind this endos procedures using dynamics transition the or that And maybe about can then, a to great. was envision becomes and those most If endos a kind level. just becomes high And just level you those the less? do started see standard procedures? posterior for PI of procedures maybe for comfortable

talking with easier more there old procedure to CleanFlow. train a different that Yes CleanFlow over about have can out gotten like them certain slightly workflow Nate, convert What but procedure achieve your all to going consumable we questions. prepared need this the And good our question, also to a ultimately have used in in talked that procedure of order you're that like our the forward. doctors go standard about make instruments workflow our we've and here is expedient workflow, and transition we see to instruments CleanFlow. them in Ultimately, remarks, to with on you to we CleanFlow, and goal with instrument rep

that's point at focus time. So the in this

sold we obviously out working in teeth we're with that on are CleanFlow as everything done CleanFlow. we to selling forward, happy also of procedure all start that done to needs And were to really as XX% for be instruments And anterior move report QX well.

And that behind also think we where a I limited anteriors, anteriors training so, CleanFlow at this And anteriors. using time commercial we're that, full scenes for everything and the we're point looking specifically of in release, small market the release getting the materials at for is all doing ready. on then CleanFlow ultimately for are in

offer -- procedures important for different to be XXXX. done will that transition to in CleanFlow procedures on middle these again, And key can step all to platform, over talked And can more we that's as of by PI on happen us remarks, where a kind holistic an and and midyear. that we we a prepared have now about that that's all of effectively our then of expect step

Our Cherny with next is from question of America. Bank Michael

is open. Your line

prior Hi. This to the for demand is cycle Cherny. Hanna you of equipment? Lee any there's on to the Thanks been And the my for current been talk just trends for capital conversion Michael about far seeing changes the you've question. quarter? taking so if lengthening compared Could

Hanna. Hi, Yes.

change talked to of is a a really here talked we is And trends bit seen we haven't similar right, part part that are of the first what little when seeing we in latter guidance, the in deterioration As or about about we any QX equipment capital the XXXX. that.

longer the the previously cycle talked that we've Yes. So conversion same. remains that about substantially

And of Yes. you question. more as expect part marketing push? one to the up GP Do just step spend

first the part take can that. of I So

the get and sales leverage both of support, we our at grow. to out that look commercial we to we're when continue looking efforts, as So,

So, we're initiatives the increase that move we hope at your answered costs think looking overall. GP can related special question. Operator, any to I in I forward. not

I have lost might caller. think the we

over the questions. the call team closing remarks. back There more are for I'll management pass no to

million we very started over wrapping procedures Thank you, operator. commercialization. excited XXXX about completed, We're with one GentleWave since

also new with and procedure a GentleWave brand-new easier platform offering, GX the before. instrument makes simpler that CleanFlow console started product a a the than new procedure GentleWave and year We ever

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That concludes your for you call. Thank the conference participation.

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