CVRx, Inc. Q1 FY2025 earnings call

Key Points

• Revenue in Q1 was $12.3M, 15% growth, but fell short of expectations due to sales force realignment and seasonality.
• Sales force realignment: New CRO led to evaluating the team, resulting in 25% of territory managers hired Dec-March. Transitions caused disruption, but productivity improvement expected as hires gain experience.
• Seasonality: Q1 is typically the lowest quarter for medical devices, affected by insurance/deductible scheduling.
• Strategic Priorities:
  • Build world-class sales force: New compensation plan, recruiting therapy development reps, strengthening training/onboarding.
  • Target high-potential centers: Centers with large heart failure patient volumes, novel device adoption, and cardiovascular service track record.
  • Address adoption barriers: Improve patient access, education, and clinical evidence. Reimbursement work ongoing with CMS for level six neurostimulator APC.
• Clinical Evidence: Data from THT showed 85% reduction in heart failure hospital visits. Planning pragmatic RCT with 3,000+ patients at 100-150 centers, seeking CMS coverage for trial costs.

Revenue in the first quarter was $12.3 million, representing 15% growth over the prior year quarter. US revenue was $11.2 million, an increase of 14% over the prior year quarter, with heart failure revenue in the US totaling $11.1 million in Q1 2025 compared to $9.7 million in Q1 2024. Revenue generated in Europe was $1.1 million, an increase of 23% over the prior year quarter. Gross profit was $10.3 million for the quarter, an increase of 13% over the prior year quarter. Gross margin was 84% for Q1 2025 compared to 85% for Q1 2024. R&D expenses decreased $500,000 or 18% to $2.5 million, and SG&A expenses decreased $7.1 million or 25% to $21.2 million. Net loss was $13.8 million for Q1 2025, better than the prior year's net loss of $22.2 million.

Guidance

• Full-year 2025: Expected total revenue $55M-$58M, gross margin 83%-84%, operating expenses $95M-$98M.
• Q2 2025: Expected total revenue $13M-$14M.

Risks

• Sales force transition disruption leading to account productivity issues.
• Seasonality impacting Q1 performance.
• Uncertainty in CMS reimbursement and trial coverage for the planned RCT.

Q: Details on Salesforce changes, self-inflicted vs natural turnover, impact of new comp plan.

A: Vast majority of changes initiated by the company, not related to new comp plan. Turnover expected to normalize in the next few quarters.

Q: Guidance implications on center adds and productivity.

A: New center adds in high single to low double digits, continuing to add territories, revenue units per center expected to tick up as sales reps become more productive.

Q: Softness in quarter related to seasonality vs rep ramp.

A: Majority of softness due to sales team disruption, not seasonality; sales team transitions caused account-level disruption.

Q: Rep tenure and account impact.

A: 25% of territory managers hired Dec-March, others have varying tenure. Accounts saw decreased productivity but not abandonment of the therapy.

Q: Medical education and dabbler accounts.

A: Some dabbler accounts sunset, others reengaged with a new playbook to build sustainable programs.

Q: Rep profile and RCT timelines.

A: Need reps with therapy development experience. RCT timeline involves FDA and CMS approval; expect to post trial design on clinicaltrials.gov in Q2, with enrollment of 3k+ patients at 100-150 centers.