Silk Road Medical Inc
NASDAQ:SILK
Earnings Call Analysis
Q4-2023 Analysis
Silk Road Medical Inc
Charles McKhann, reflecting on his early tenure at Silk Road, emphasized the commitment to delivering excellent patient outcomes and enhancing the healthcare system. The company's focus appears to be on deepening existing customer relationships, rather than only expanding its customer base. The organization has acknowledged having a significant portion of its sales force relatively new to their roles, with the expectation that their experience will grow throughout the year, positioning the company for stronger performance in the latter half.
Silk Road expects to build upon the solid market fundamentals, despite transitioning from a broad customer acquisition strategy to one centered on deepening current relationships and increasing utilization among existing customers. While anecdotes of competitors gaining traction were mentioned, Silk Road remains confident in their dedicated position in the TCAR market and expects to maintain demand for their specialized offering.
From a financial standpoint, the company has been consistent in achieving a gross margin above 70%. Looking ahead, growth in operational expenses (OpEx) is anticipated to be lower than sales growth. Additionally, the company is aiming to improve its adjusted EBITDA, driven by top-line growth and leveraging the existing infrastructure which can support higher sales volumes without a correspondingly large increase in OpEx.
The company plans to consolidate its workforce, having already grown its territory presence and invested in hiring top talent. Leaders are expressing optimism and readiness for the new sales representatives to climb the learning curve with the help of experienced team members. Further, while Silk Road does not have major plans for expansive growth in their sales force in the coming year, they do expect to add therapy development specialists to support increased case volumes.
Silk Road's leadership is focused on achieving predictability and accountability, while still being at an early phase of planning for maximized success. The company anticipates further growth in the U.S. market, international expansion, and benefits from ongoing R&D programs. Although currently in a period of strategic refinement, long-term sustainable growth remains the company's objective, and the 12% guidance for 2024 is reflective of near-term factors like integrating the sales force and evolving the market strategy.
In the realm of new products, efforts are directed towards improving the TCAR procedure and its adoption. The current product pipeline includes five products geared towards making procedures better and easier, and while certain products may offer pricing opportunities, all pricing dynamics are considered in the company's overall revenue per procedure guidance.
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Good day, and thank you for standing by. Welcome to the Silk Road Medical's 2023 Fourth Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Marissa Bych with Gilmartin Group Investor Relations. Please go ahead.
Great. Thank you all for joining today's call. Earlier today, Silk Road Medical released financial results for the 3 months and the year ended December 31, 2023. A copy of the press release is available on the company's website.Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements.All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance, expense management, expectations for hiring and growth in our organization and our business, physician training and adoption, market opportunity and penetration, commercial and international expansion, regulatory approvals, reimbursement, competition and product development are based upon our current estimates and various assumptions.These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our latest annual report on Form 10-K filed with the Securities and Exchange Commission.Additionally, Silk Road Medical refers to adjusted EBITDA and a non-GAAP financial measure. A reconciliation of adjusted EBITDA to net loss, which is the most directly comparable GAAP measure is included in our press release, which is available on our website.This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 28, 2024. The Silk Road Medical disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.And with that, I will now turn the call over to Charles McKhann, Chief Executive Officer.
Thank you, Marissa, and thank you all for joining today. I'm pleased to share that Silk Road Medical achieved full year 2023 revenue of just over $177 million, supported by more than 25,250 procedures, reflecting 28% and 29% year-over-year growth in revenue and procedures, respectively.In 2023, more than ever, growth in the business was driven by deepening adoption of TCAR within our trained physician base. As we begin the call today, I'd like to take a step back and offer a brief introduction on my background since there are some of you with whom I've not had a chance to connect since joining Silk Road Medical in November 2023.I've been focused on the advancement of minimally invasive medical technologies throughout my career. And over the last decade, I've been dedicated to the development and commercialization of several innovative products, most recently as CEO of Apollo Endosurgery, where we accelerated the company's growth through a transformational strategy rooted in product innovation, robust clinical evidence and commercial discipline before successfully being acquired by Boston Scientific early last year.Following the sale of Apollo and after 25 years of developing and commercializing medical devices, I was afforded the luxury, taking a step back to look for the right next opportunity. In my diligence, I focused on 3 core tenets, which I see as the foundation for success as measured by positive patient impact and durable growth.First, the technology must target a critical deficiency in the current practice of medicine. Second, the solution for that deficiency must consistently yield best-in-class outcomes in a generalizable fashion. And third, the solution for the market must be supported by an experienced team that can adapt to an ever-evolving commercial landscape to drive success.And so, I took this opportunity here at Silk Road because I saw all 3 of those factors. And 3 months in, my experience has only served to further validate the market for TCAR and our opportunity at Silk Road.So, before turning to our 2024 strategy, I'd like to reiterate some of my remarks made at the recent JPMorgan Healthcare Conference, which underscore the winning tenets I just described.First, the deficiency in current carotid treatment is indisputable when we look at the devastating burden of stroke on patients and their families. The consequences of stroke by the numbers are staggering.Stroke is a leading cause of morbidity and mortality in the U.S. with millions living in a state of persistent disability and billions in stroke related cost to the health care system. And in particular, prior treatment modalities for patients with carotid artery disease fall short of addressing the issue.Patients historically chose between carotid endarterectomy, an invasive surgical procedure with significant patient morbidity and procedure-related complications or transfemoral carotid stenting, a minimally invasive approach in which procedural difficulty and lack of effective neuroprotection can lead to excess procedure-related stroke risk.When patients are presented with an informed choice, evidence shows that they prefer TCAR, which leads me to my next point. TCAR works with incredible consistency and the TCAR base of adoption is growing and healthy.Silk Road is built on extensive evidence collection through the VQI registry, a vast base of real-world evidence that includes nearly all of our commercial experience its launch and has contributed to more than 300 TCAR publications to date.Through the registry, we see market consistency and outcomes across different settings of care, operator experience levels and patient profiles.TCAR is just as effective in a rural community hospital as it is in some of the most accomplished medical centers in the country. And the consistency of TCAR was recently highlighted at a presentation in November at the 2023 VEITH meeting, in a retrospective study conducted by Schermerhorn, which studied real-world results in nearly 45,000 patients.The study, which showed very low rates of perioperative stroke and death across both symptomatic and asymptomatic patients well below acceptable thresholds represents one of the largest applications of real-world data in the analysis of carotid treatment. And in my more than 25 years in Medtech, I have very rarely seen data sets of this size supporting medical therapy.The consistent outcomes and generalizability across patient cohorts speaks to an exquisite technology with a short learning curve. And these are critically important factors when the brain is at stake. Broad real-world clinical evidence and a short learning curve already have driven robust adoption, and we expect to see further to wins as TCAR becomes further entrenched in the marketplace.And third, Silk Road was founded by pioneers in carotid treatment, and today, Silk Road is the only scaled company focused on addressing one of the leading causes of ischemic stroke, carotid artery disease.In my first 100 days, I spent significant time with our leaders, most of whom have spent the majority of their careers focused on better treatments for carotid and other cardiovascular disease. That includes Lucas Buchanan, our CFO and COO, who is with me here today, along with the rest of our management team, who have all worked extensively in large cardiovascular enterprises in Medtech.That also includes Andrew Davis, our experienced Chief Commercial Officer, who leads a strong commercial team, employing a high-touch model to wrap around our physicians and their staff to offer unmatched support to their carotid programs.The outstanding clinical outcomes for TCAR are a testament to the excellent support that our team provides to our customers every single day.And with the guidance of Dr. Sumaira MacDonald, our Executive Medical Director is one of the leading experts in the world on the treatment of carotid artery disease and the leadership of Bill Whealon, our EVP of R&D, our R&D team leads the way in carotid innovation to ensure that we remain at the forefront of minimally invasive carotid treatment.And so, with these strong fundamentals I've outlined, our focus in 2024 is optimizing the transition from broadening our reach to now deepening adoption among our trained physician base while recognizing improving leverage that comes with skilled operations. I'll start by focusing on deepening physician adoption.Silk Road has built a formidable commercial presence. Today, our team is as strong as ever following issues we took last year to optimize our commercial model and to achieve greater scale and continue to evolve from going broad to going deep.In the process, last year, we experienced some growing pains, but we are confident that we are entering 2024 with the right talent and leadership in place to continue driving strong TCAR adoption.At the start of this year, approximately 1/3 of our sales reps have been with the company for less than a year. And we are already seeing that these additions to our team are strengthening their relationships and growing their case volumes across the physicians and staff they serve. And we look forward to seeing these reps continue to move up the adoption curve or the experience curve as our entire organization executes against the Silk Road mission of treating more patients at risk of stroke.And over the long term, we know that we will be able to increase our leverage with this organization to maximize adoption while moving towards sustained profitability.As we drive deeper adoption, we will continue to emphasize effective clinical data collection to complement our sales and marketing efforts. We are actively building on a track record of more than 85,000 patients treated to date and most of whom are captured in the VQI database.And we continue to analyze outcomes across all patient cohorts and profiles. This includes our prospective ROADSTER 3 post-market study, investigating outcomes in standard surgical risk patients, which is enrolling at a strong pace. We anticipate completing enrollment in ROADSTER 3 in the second half of this year.Beyond the right commercial infrastructure, deepening adoption requires we continuously innovate on our key product lines to extend our leadership position in carotid treatment and enhance the offerings for TCAR.Last year, we rolled out our purpose-built TCAR balloon catheter or ENFLATE, which is seeing steadily increasing adoption even with a premium price position relative to competitive balloons. And in 2024, we are introducing a tapered configuration of our ENROUTE Transcarotid Stent and our next-generation Neuroprotection System or NPS+.Today, I'm excited to announce that we've initiated a limited market release of our tapered stent. Customer feedback has been outstanding, and we plan to ramp up to a full market release in Q2.We are also finalizing preparations for the launch of NPS +, which features important ease of use and technical advances, and we anticipate initiating the launch of NPS + in the second quarter.In addition to our core commercial and product advancement strategy, we are looking beyond the horizon at the next phase of growth for Silk Road. Cultivating international markets offers an extension of TCAR growth in the long term.Our international focus has centered around China and Japan, 2 markets with compelling strategic and commercial dynamics for the treatment of carotid disease. In Japan, following clearance of our ENROUTE stent and ENROUTE neuro protection system, I'm excited now to be signing an agreement with a leading distribution partner, Medico's Hirata, and we are actively working towards establishing reimbursement before initiating a post-market study.In China, I'm excited to announce that we've received clearance in January for ENROUTE Stent following approval of our NPS in 2023. And more recently, we signed an agreement with Genesis MedTech Group, a leading distributor in China.While market development activities in both countries will take some time, and we do not anticipate a meaningful revenue contribution in the near term, we are excited to move to this next phase of expanding TCAR internationally.Finally, we'd like to touch upon our efforts to expand into new disease stents from our core competencies in carotid. Earlier this quarter, results of the night 1 study, or Neuroprotection and Transcarotid Embolectomy was presented at the International Stroke Conference. We are pleased with the outcomes of this early feasibility study, which showed that transcarotid acute stroke thrombectomy with flow reversal is feasible and safe.And importantly, there was a clear signal that flow reversal could potentially offer incremental clinical benefits to patients.While advancement into night 2 is not a strategic priority of the near term, results of the study directly inform other active R&D initiatives we are working on to extend our lead within carotid disease. And with our portfolio over 250 issued and pending patents globally and our core competence in transcarotid access and neuroprotection, we are well positioned to serve our stroke prevention mission and drive durable long-term growth.I'd like to close by discussing what all this means for our financial profile in 2024 and beyond. I hope it's abundantly clear that durable growth remains our #1 priority. In 2024, we anticipate full year revenue of $194 million to $198 million, reflecting 10% to 12% year-over-year growth as we capitalize on the strength of our commercial infrastructure to drive deeper adoption among our active physician-base.At the same time, we are committed to driving sustainable progress towards profitability with a strong capital position and scale of infrastructure we have today. To that end and to chart our path forward for investors, we are introducing adjusted EBITDA to our reporting framework, and we are targeting annual improvement in adjusted EBITDA in 2024 relative to 2023, building off our progress in recent years. Lucas will provide more detail shortly.And so, in sum, I am very excited about the year ahead. Silk Road is a world-class company with a world-class opportunity, and we expect to capitalize on that opportunity for the betterment of patients and shareholders.And with that, I'd like to turn it over to Lucas, our Chief Financial and Chief Operating Officer, to review our results in more detail. Lucas?
Thank you, Charles. Revenue for the 3 months ended December 31, 2023, was $47.3 million, an 18% increase from $40.1 million in the same period of the prior year.Growth was driven primarily by increased TCAR adoption and continued healthy demand following expanded Medicare reimbursement, which went into effect October 11 of last year. The number of TCAR procedures in the quarter was approximately 6,625, a 20% increase from the same period of the prior year.Gross margin for the fourth quarter of 2023 was 74% compared to 73% in the fourth quarter of the prior year. The increase was a result of larger production volumes, which allowed us to spread fixed and overhead costs over a larger volume of units, as well as the benefit in stent unit COGS that will continue through Q1 before normalizing in Q2 and beyond.The benefit is related to a temporary favorable purchase price variance.For 2024, we anticipate modest gross margin improvement over full year 2023. Total operating expenses for the fourth quarter of 2023 were $49.2 million, an 18% increase from $41.7 million in the fourth quarter of 2022.R&D expenses for the fourth quarter of 2023 were $10.1 million compared to $9.2 million in the fourth quarter of 2022. The increase in R&D spending was driven primarily by growth in personnel, along with continued investments in new and ongoing programs.Sales, general and administrative expenses for the fourth quarter of 2023 were $39.1 million compared to $32.5 million in the fourth quarter of 2022. The increase was primarily driven by the commercial expansion efforts we conducted throughout 2023.Now more than ever, we are leveraging the years of work and investment we have put behind commercial, R&D and back-office infrastructure. Accordingly, we expect our forward revenue growth rate to outpace growth in operating expenses.Net loss for the fourth quarter was $13 million or a loss of $0.33 per share as compared to a net loss of $12.6 million or a loss of $0.34 per share for the same period of the prior year. As Charles noted, we are introducing adjusted EBITDA into our reporting framework to further illuminate our operating profile and path to sustained operating profitability.Adjusted EBITDA for the fourth quarter of 2023 was a loss of $4.1 million compared to an adjusted EBITDA loss of $4.4 million in the prior year period. On a full year basis, 2023 adjusted EBITDA was a loss of $17.7 million, reflecting an improvement of $7.4 million over full year 2022 adjusted EBITDA loss of $25.1 million.Our expectation is for adjusted EBITDA improvement in the full year 2024 relative to 2023. However, note that we expect our first quarter 2024 adjusted EBITDA loss to be larger than the loss we saw in the fourth quarter of 2023 given standard first quarter expenses against an expectation for a mid-single-digit sequential revenue decline related to seasonal patterns.Finally, we ended 2023 with $190.9 million in cash, cash equivalents and investments. In combination with our modest burn profile, we remain confident in our ability to achieve profitability with existing capital.Turning to our 2024 outlook and commercial strategy. As Charles mentioned, we expect full year 2024 revenue to be in the range of $194 million to $198 million, reflecting revenue growth of 10% to 12% over 2023 driven primarily by growth in procedures and relatively stable revenue per procedure with normal quarter-to-quarter variation.As a reminder, we recognize revenue when we sell units to hospitals and those hospital-owned inventory units are later used by physicians and procedures, leading to some quarter-to-quarter variation in revenue growth relative to procedure growth.We are actively focused on driving adoption within our 2,800 strong trained physician base, supported by 85 active sales territories, and we are excited to expand our patient impact as we execute on our 2024 commercial strategy with this established network. At this point, I would like to turn the call back to Charles for closing comments.
Thanks, Lucas. At this point in my career, it's all about delivering excellent patient outcomes, supporting an unmatched provider experience and contributing to a better health care system. And I want to emphasize that we have a special opportunity to do just that at Silk Road.And so, in closing, I'd simply like to say thank you to our customers and our team at Silk Road, who impacted the lives of more than 25,000 patients undergoing the TCAR procedure last year.And with that, we'll turn to our operator for questions. Gerald, please open it up for questions.
[Operator Instructions] Our first question comes from the line of Rick Wise with Stifel.
Maybe we could start off just first, if you could talk about the guidance and just help us think about 2 aspects of the guidance. Just, one, talk about what's incorporated in your guidance, some of the key elements, particularly if you would, some of the headwinds and tailwinds related to the CMS' TCAS decision. What are you baking in? And are there any other sort of larger concerns that you want us to be sensitive to?And just the second aspect of that, if I heard you correctly in terms of the first quarter, Lucas, I mean, it sounds like something like a $44 million number, if I'm doing my quick math correctly, would be somewhere in the kind of territory you'd hope we would center around as the first quarter guidance gets put into place.
Sure. Why don't I take the first part, Rick, and then I'll hand over to Lucas on some of the details. But as we think about overall on the guidance and kind of key puts and takes that went into it.First and foremost, I hope you heard me loud and clear, we are feeling very good about the overall fundamentals of the market and where we can take things. I think areas that factor into our guidance, first is just, as I mentioned, our sales force experience and time and territory.We do have about 1/3 of our team who are kind of working their way up the experience curve and so, we do see that progressing over the first couple of quarters this year and really teeing us up on the back half of the year.I will say, we just recently had our national sales meeting, and it was great. The energy levels there were fantastic. People are excited, but a lot of new faces, and so we're working through that.The second piece to it is, we are moving from going broad to going deep as an overall approach. It doesn't mean we don't have some new customers, we will. But a big part of it is going deep, and that's a bit of an evolution for us. And so, we're focusing on that.And then you asked specifically about the NTD and CAS and I'll just hit it at a high level, the NTD was put in place in early October. So, we've got, what, about 4 months here. And while we are aware of anecdotes of some people picking up CAS, it's not a big broad wave of new users for transfemoral stenting.Our customers feel very good about the ongoing demand for TCAR. We're going to keep watching it incredibly carefully. But as the only company that really is dedicated to this space, we feel good about our ability to keep driving demand for TCAR in a world that over time will move to be more endovascular, but we think that we're well positioned for that.So, those are some of the high-level comments, but Lucas, other specifics on the guidance you want to add it up?
Sure. I'll tackle the second half of your question, Rick. I think the historical pattern we've seen Q4 into Q1 has been flattish. And as I mentioned, sometimes there's kind of flat to slightly up on procedures and flat to slightly down on revenue, just given some of those timing effects.So, I think carrying forward the Q4 result into Q1 is probably not the right approach because we do see and expect kind of that normal dip in revenue per procedure, even if procedures are strong. So, I think you're in the right ballpark, maybe a slight tick higher.
Just if I could follow up on one comment you made, Charles, you clearly are emphasizing your focus and you're making innovation a priority. Maybe just broadly talk about the innovation pipeline. What are you excited about? What do you want us to be excited about and expect from you in that pipeline?
Sure. Yes. I appreciate the question. For the pipeline, we've got the immediate opportunities, which now really are coming to fruition. And so, just happy to see, as I mentioned, very good uptake with the balloon and nice progression there, having the tapered stent. And, as I mentioned, and a pretty limited number of accounts initially with very good feedback from customers.And then NPS+, which I know was discussed last year, but we're putting the final touches to be ready to launch that as well. And so just showing the marketplace that we are innovating and staying on top of the existing TCAR procedure.And then beyond that, since I've come in, I have spent a lot of time with our R&D team. And we've got some really interesting things we're working on to extend our leadership in the carotid space.I want to get a little further along, frankly, in terms of those development efforts before we talk about it a lot publicly, just so we know where we have and what sort of the time lines are, et cetera. But the team has been doing some very good work, and I look forward to sharing more on a future call here.
Our next question comes from the line of Frank Takkinen from Lake Street Capital Markets.
Congrats on a strong first 90 days, Charles, I look forward to many quarters going forward. I wanted to start with a follow-up on your previous answer. You talked about the going deep strategy, increasing that utilization rather than broadly.I heard the comment still adding incremental here and there, but clearly, the focus on going deeper. Maybe walk through that strategy, what does that look like in the field? Any changes you think you need to make related to the selling organization to achieve that strategy?
Sure. Thanks for the question, Frank. Yes. So, I mean, going deep, it's something that happens naturally in the evolution of a lot of medical technologies and it's not binary, right? The company has been evolving towards this for a while.But as we look at it, partly it's having the scale of the organization sort of fully up and operating on all cylinders so, 85 territories, we think, is a good number. We don't have plans to have large growth over that. But if we see opportunities incrementally, we will.We'll also probably add some additional of our therapy development specialists just for case coverage will be a piece of that. But a big part of it then is just refining our playbook as we go forward there.So, things like customer segmentation and being really smart about what do we and what our approach is with someone who's a TCAR first adopter how do we help him or her be the most successful in growing and developing their practice versus someone who may be a more mid-level adopter and earlier in that adoption curve, what are all the tools in the toolbox that we can use to help them expedite that.That could be things like our therapy awareness team that really helps work with and educate referring physicians that could be patient marketing, which we do see playing an important active role here. And I mentioned also fellows and early career physicians.And we have made a change. I haven't made a lot of big changes to the team, but I have made a change organizationally and promoted. Jorge O'hara is now our VP of Marketing.Jorge has a lot of experience in his background starting at P&G and marketing and then at Medtronic and EV3 as well as a lot of really good other health care experience. So, Jorge already was at Socrate led our marketing and strategy and business development efforts.He's now going to lead our marketing efforts and take on this work, working with again, an already strong team. I mentioned Andy Davis and the team that he has. So, it's an evolution, but I think areas of emphasis and focus, a lot of which we just talked about at the sales meeting I mentioned.
And then maybe just one follow-up related to the reimbursement changes around transfemoral stenting. I know you've only been there for a limited amount of time, and so the feedback is only anecdotal.We haven't seen any of this play out. But if we were to speak theoretically, how do you think the share shift ends up playing out? Obviously, open is still the lion's share of procedures TCAR second and then transfemoral stenting third. But if transfemoral spending is more successful, do you think that's more likely coming out of open? Or is there a possibility of something that comes from TCAR you would think, theoretically?
Yes. I think we do see a world that over time becomes more endovascular based, right? And we certainly expect that TCAR is very well positioned to capture the majority of that growth. And that, as I said, Silk Road Medical is well positioned to capture and continue to be the leader in treatment of CAD, right? We know this space really well, and we've got a level of commitment to it that others just don't have.The other thing I would emphasize though is just the time element to it. I think as I was going through my interviews and processed last year, you had a little bit of sort of this feeling that somehow there was this wave that was going to happen. Frank, we're not seeing that. We just aren't.There may be pockets where we see some changes in end views, but a lot of it's already existing carotid stent users. And so, the steps to them getting new people doing the procedures, it's going to take time. And so, it doesn't mean it can't happen over time, and we're going to watch it all really carefully. But our primary area of focus, our primary driver continues to be evolving behavior among what is still the bulk of the market, that being CEA.
Our next question comes from the line of Robbie Marcus with JPMorgan.
This is actually Rohin on for Robbie. I just had a question on the outlook on the P&L. Still growth has proven the ability to obtain a pretty healthy 70% plus gross margin for some time. But just trying to gauge what's required on the OpEx side to maintain revenue growth while also achieving profitability ultimately. I know you talked about how you expect kind of the forward OpEx growth to be lower than sales growth.So, I was wondering if you could just give some more specifics on that in 2024 and maybe a time line for potential adjusted EBITDA profitability as well?
Sure, Rohin. Thank you for the question. I'll tackle that one. So, the short answer, and as we've mentioned in these prepared remarks and talked about prior is, we are really at critical mass across our key functions. And we do have a hiring plan in 2024, of course, but it's much more modest than years prior.And so, the infrastructure we have, whether you're thinking about the manufacturing capacity or the commercial organization or the commercial support, R&D, G&A back office, that can support a much higher unit volume, much higher revenue line. So, we like where we sit today on kind of our base of OpEx. And if you take kind of a Q4 run rate, $29 and change tick it up ever so slightly. That's where we think we can be instant for the quarter.And so, OpEx as a percentage of revenue was 105% in 2023 is 104% in Q4. We want to continue our march towards 100% this year. Obviously, we want to really put our main focus on top line growth because that can now start to flow through more and more against that relatively fixed OpEx base.So, as you mentioned, we are highlighting adjusted EBITDA as a new reporting metric. We were 17.7% loss in '23 versus $25 and change loss in '22. And so, we do expect to have another year of improvement on that important metric as well, sitting here with $191 million of cash on the balance sheet.
And I just had a quick follow-up more on the top line guidance. Is this assuming any kind of increases in revenue per procedure from the new product managers like the NPS+ or the new tapered stent?
Yes. I'll give a quick kind of math answer and Charles, feel free to weigh in. There's a lot of puts and takes in there. As I mentioned, we expect revenue per procedure to be slightly less variation, but still quarter-to-quarter variation.So, I think we ended just over 7,000 on average for the year. And I think around 7,000 maybe slightly less is a good ballpark to be in for 2024. But as you point out, there are various kind of puts and takes that lead to that average. So, all of our price assumptions, our units sold and ordering patterns, product launches, things of those sort are all baked into that number.
The only thing I would add is that our pricing really is stable in a good way. And so, the variability we're talking about does have to do with things like order patterns. But we feel good about the overall health there and the primary driver will be procedure growth.
Our next question comes from the line of Suraj Kalia from Oppenheimer & Co.
So, Charles, congrats on a nice quarter. I hope to see many more, Charles, I want to focus on 2 things. First, sales force. Can you characterize -- in your prepared remarks, you said 1/3 of them were, I think so you said new or non-tier-some word you used, just split it out a little more that in terms of what has been the sales force churn, especially given the NCD, how many feet on the ground currently, where are you expecting to end calendar '24?
Sure. Yes, what I said, just to recap, was that as of the beginning of this year, about 1/3 of our sales force, especially at the rep level, is new within the last year, so within the last 12 months. And it really is a variety of factors that impacted that.Primarily, it was the expansion, right? We went from about 70 territories to 85 territories. We promoted some people into either manager level roles or into things like sales training. We had some attrition or this we go back to early 2023. But nothing out of the norm of what I've seen in my career and certainly not in the back half of the year as you would think would be related to the NCD.So, it was just a variety of factors that led to a lot of change last year. But I will tell you, we feel good about the people we hired. We hire from the best places in Medtech. I met pretty much all of this group at the sales meeting I mentioned. The mood is good. The attitude is good. The excitement for the year is good.We just got to help them get up the learning curve as fast as we can. And the good news is we've got a lot of really good experienced reps who can help them do that as well as our marketing team and our reimbursement team and all the other folks that help do that are sales training, obviously. So, hopefully that gives you a little more color.And then to answer the final part. Right now, we don't have big expansion plans at the rep level over the course of this year. It doesn't mean we may not add some in certain spots, but it's much more about kind of consolidating with the group we have.We will probably add some additional therapy development specialists who, as you know, support the reps for things like case coverage over the course of the year to make sure we've got everything we need to support the growth in volumes we expect.
And Charles, in terms of your accounts, one of the things you mentioned in your remarks was you are focusing going deep. So, if I use that context, right now in 1,200-or-so accounts to the rough math. Average utilization is about 5.5 units per quarter per hospital.Charles, walk us through, if I were to divide your accounts into high volume, medium volume and low volume buckets, right? Arbitrary, I define them in these 3 buckets. What does the stress test show you right now with NCD? Just given what's going on with the NCD, are the high-volume accounts pulling back a little bit versus medium? Just compare and contrast for us.
Yes. I'll provide some overall thoughts and then Lucas feel free to chime in as well. I mean, I like a lot of medical device situations, we certainly have a version of our top customers are the ones who are the primary drivers of a lot of our volume.Those are the ones who truly have adopted what I said, at TCAR first mentality, and we certainly aim to grow that group. I mentioned in my remarks at JPMorgan, we've got a lot of data to show that does, in fact, happen over time. The learning curve with TCAR is slow, I mean it's fast. The learning curve is quick.The adoption curve takes a while as people continue to move from I'm going to do some TCAR on just the right patients to then eventually why wouldn't I do a TCAR, meaning TCAR first. And that does happen over time.So, we still have a lot of, I mean, you asked about accounts, but let's talk about physicians, physicians who are in that sort of middle bucket that we can continue to work on and develop and grow their adoption to keep moving forward.And all the comments I've made are really independent of the NCD because, again, our surgeon customers are not reverting to transdermal CAS. And we do monitor very carefully, and we're not seeing a widespread change in, for example, in referring patterns. We're going to keep watching it. It's early, but the dynamics are much more again on us and our customers and how we move that adoption more than the NCD, I think. Lucas, what else would you have there?
Yes. Suraj, I think I'll just add. It's a hospital level in the treatment of carotid disease. You've got value analysis committees. You've got credentialing committees, you've got data collection of CEA and TCAR. And if they do CAS as itself as well, you've got kind of multidisciplinary folks kind of weighing in, first and foremost, on what's best for the patient, right? And then you get into what's best for the hospital bottom line. And TCAR stacks up really favorable when you consider all those variables at the hospital level.First of all, we're already there. We're already entrenched. We continue to collect data showing that this works. We continue to show hospital administrators and CFOs, the money they're making, the money they're saving, the throughput they're getting. They're now surveying their patients and realizing this, indeed, from the patient perspective is a great procedure.So, the NCD, the physicians, our sales team, right now, it's really viewed as an opportunity. And folks are excited that a few additional administrative barriers have been removed from a TCAR perspective, and we can go out and compete against CEA primarily, but certainly CAS too where there is interest or ongoing activity. But ultimately, this is all in service to the patient, right? Having options is a good thing and we'll lead with the best option in most cases.
Our next question comes from the line of Kristen Stewart from CL King.
I just wanted to ask, Charles, if you think that the 12% guidance towards, [Technical Difficulty] I think the company long term about? Or do you think there's some things that you're factoring in '24 that are leading to a slightly lower than you otherwise expect in the outer years?
Yes. Thanks, Kristen. You cut it in and out just a little bit on your question, but I think you were asking about the 2024 guidance in relation to sort of views over time. Is that correct? Okay. I think it was. Sorry, you cut it out just a little bit.Yes. I mean, as I think about the guidance at this point. I did mention a few factors that I think impacts us here this year as we sort of head into the year, a big one, as I mentioned, is just the sales force piece of it and just getting kind of fully up to speed with a pretty significant portion of our group.I feel really good about our ability to do that. I already touched on that and mention the just overall positive elements at this meeting. I think evolving our strategy on the going broad to going deep element is important. And we already have a lot of the ingredients, but I think there's more we can do there, and we're working on it.And then honestly, I've been in my role for about 100 days. And so partly, I'm also feel very good about the fundamentals, but I'm still working with the team to really dive deeply into sort of the specific plans that are going to maximize success.And so, for the year, we want a heavy, heavy emphasis on predictability and accountability going forward. And then over time, we'll layer in additional growth in the U.S. to be able to move adoption further.International growth will eventually start kicking in and will be a factor there. Other R&D programs that I know has a little cryptic, but I alluded to will help. And so, our view is to be a sustainable grower over the long term, and we're going to keep working on a range of plans to do that.
And then I just want to clarify [Technical Difficulty] whether or not the NPS, the new one and the taper would have a premium pace. You said that there's a lot of moving parts to thinking about things, but are those coming out in the premium price?
Hi, Kristen, it's Lucas. I'll take that one. Fundamentally, it is factored into that overall kind of 7,000 or slightly under revenue per procedure guidance.Ultimately, all of our kind of new product efforts are in service to the adoption curve, right? We want to make this procedure better, faster, safer, easier. And so, across what is now 5 products that make up the TCAR procedure and iterations thereof. At the product level, you might have price opportunity in certain times and certain products and price pressure elsewhere and all of that is factored into our guidance.
This concludes the question-and-answer session. I would now like to turn it back to Charles McKhann for closing remarks.
Listen, thank you all very much for joining us again today and look forward to keeping the dialogue going over the course of the year. I appreciate it.
Thank you for your participation in today's conference. This does now conclude the program. You may disconnect.