Angela Wirick: Yeah. Matt. I think you know based on years here that we start the year and we want to make sure that we’re putting out a guide that we feel really good about executing against and gives us — positions as well to kind of beat and raise as we go throughout the year. The range does consider both the growth drivers in our business as well as the potential competition in our market. but I think to that point, we are working in markets that are very, very underpenetrated and that we believe that there’s still significant growth potential even with competitive pressure. So, long-winded way of saying it’s not 10 points of or that kind of loss relative to Medtronic share. More importantly, I think what informed our guide through 2024 is just the strength of our portfolio and the momentum that we’re seeing as we exit 2023 and start a new year in 2024.
But we want to make sure that we guide to numbers that we can execute strongly against. That’s been our philosophy for years and continues to be as we start the New Year.
Matthew O’Brien: Okay. And Angie, specifically, I know there’s a lot of trialing going on. Have you seen people flipping over to [indiscernible] and using it a lot more cases, or are you still seeing a dynamic where they maybe trial it and they just say, you know what, I don’t like this for the most part. I’m sure there’s some people that’ll flip, but what are you seeing specifically there? And I do have one more follow-up.
Michael Carrel: I mean, we’re definitely seeing people trial it across the country, but we feel really good about the strength of our franchise out there, Matt, and feel like people really love the AtriClip. It’s set a very high bar in terms of how well it works. People understand that we have a tremendous amount of clinical evidence and data behind it.
Matthew O’Brien: Order basis, so just curious what you’re seeing there in terms of adoption, expectations for growth there. Is it still another mid-teens? I don’t know if the guidelines can help a little bit as well. And then just any thoughts on competition? I know there’s somebody that’s filed to compete with you. Is that something that you’re building in a little bit this year, or something that potentially could impact that business as we head into ’25? Thanks.
Michael Carrel: As Angie mentioned on the guidance, pretty much all of our businesses we think being around that 15% to 17%. I mean, pun intended, they’re all converging around that particular area. And so, we feel like — obviously there’s upside potential in every one of our businesses, to your point, Matt. We’re seeing great growth there. I think that to be able to continue to grow on the kind of baseline numbers that we’ve got at that kind of rate in cardiac surgery the way we are, we feel really good about it. But we anticipate that being kind of in that 15% to 17%. Pretty much all of our franchises across that from that standpoint. And we’re always looking at competition. I mean, there’s nothing specific to comment on at this point.
And if competition does come in, I think that we will obviously address it. But we feel really comfortable with the guidance that we’ve given. And that — as Angie mentioned, we try to take a really conservative look at it at the beginning of the year to ensure that we can make sure that we can meet and beat it throughout the year.
Matthew O’Brien: Thank you.
Operator: Thank you. Our next question comes from the line of Marie Thibault with BTIG. Your line is now open.
Sam Eiber: Hey, Mike. Hey, Angie. You’ve got Sam Eiber from Marie. Thanks for taking the questions and congrats on a nice finish to the year. Maybe I can start on CONVERGE and just looking at the U.S. business growing for the MIS business growing 16% sequentially, 30% year-over-year. It does sound like things are really starting to click there. And I know you addressed some of it in your prepared remarks. But any more color you can give on any specifics and maybe does that give you the confidence now to push a little bit harder on new site activation this year?
Angela Wirick: Yes, Sam. I think we feel really good about the activity in the fourth quarter. I think this is reflective of a year plus of our team in the field, supported by many others in the business really trying to hone in on where programs had a really good interest in starting a CONVERGE program, why they’ve not been able to accelerate and see the kind of growth that we would expect. So, we feel really good that the activities are paying off and that we’re making a difference in the accounts that we’re focusing in on. I’d say longer term when you think through 2024, we’re looking for that to be more broadly replicated throughout the base of accounts so that we can continue these kinds of growth rates. But I’d say the efforts in the field are really what we’re seeing is starting to pay off and looking for that to have a broader impact in 2024.
Sam Eiber: Okay.
Angela Wirick: And it’s relative — I think the second part of your question was new account activations. We did see a couple of new account activations in 2023. I’d say the focus of our team at this point in time is on existing accounts. I think as they operate throughout 2024, there’s still a lot of interest from customers. There still were very under penetrated in terms of the universe of accounts that could have CONVERGE procedures or CONVERGE programs and are still training new accounts. And I think the work that we’re doing today to help existing accounts be more efficient and think about building their programs, I think long-term will help us initiate new accounts and have them scale quickly.
Sam Eiber: Really helpful, Angie. Thanks for the added color there. Maybe just flipping to AtriClip and maybe looking beyond maybe some of the competitive dynamics. But you also mentioned some guideline changes. And I’m just wondering if that can be maybe an additional tailwind to the underlying market and adoption for the Clip business. Thanks for taking the questions.
Michael Carrel: Yeah. Absolutely. We think that the guidelines are pretty monumental for the entire space. And it’s basically saying a Class 1A recommendation is basically saying you should treat this appendage every single time somebody has atrial fibrillation today. And that is not just the cardiac surgeons doing it, but it’s ACC and AHA to the referring cardiology community is basically saying everybody needs to treat the appendage when they’re undergoing cardiac surgery. And so absolutely, we think that’s a really good sign for this market overall. And obviously, AtriClip is being used to manage the appendage by many people around the globe. So it’s a great validation, just like competition is a great validation of the space and what we’re doing there.
And then obviously, we’re expanding that market with LeAAPS so that eventually the data we get with that changes the guidelines for every patient, not just those that have Afib. That’s our goal with that. That’s why we’re investigating it. And you can see the excitement with 1,700 patients already enrolled out of a 6,500-person trial. It’s pretty remarkable to see that kind of growth. That’s the excitement people have and the belief in managing the appendage.
Sam Eiber: Well understood. Thanks again for taking the questions.
Operator: Thank you. Our next question comes from the line of Joseph Conway with Needham. Your line is now open.
Joseph Conway: Hi, Mike. Hi, Angie. It’s Joseph on for Mike. I guess maybe just touching on gross margin improvement in the quarter, I think Angie called out some production efficiencies. And looking into 2024, I think in the comments, you guys talked about just being in line for 2024, potential modest improvement. I was just wondering if you could maybe give some more color around what happened in this quarter and some of those cost-saving initiatives that you expect to rollout this year, how you expect that to be phased.
Angela Wirick: Yeah. So, what you saw in the fourth quarter, really strong, I’d say, production efficiencies offsetting. We had quite a few headwinds coming from the mix of our international business. That led to an improvement off of 2020, 2022, the fourth quarter comp. And as we enter into 2024, I’d say kind of more of the same. You’re going to see nice improvements. If only thing that we saw was improvements to kind of production efficiencies with the same kind of mix of revenue, you’d see some nice improvements in 2024. But we are expecting some headwinds given the mix anticipation in 2024. We’ve talked about in the past a couple of areas where we expect to see some improvements to margin. The first would be with the launch of cryoSPHERE Plus probe to the extent that the adoption of that probe takes off in comparison or replaces our existing cryoSPHERE probe.
There is a nice benefit to our gross margin. Again, our launch is anticipated in the second quarter. So you would see more of that benefit in the second half of the year. And then the other thing we’ve talked about on other calls is the EnCompass clamp. Our operations team and engineering team did really nice work throughout 2023 to say, given the demand that we’re seeing in this particular product line, what are some ways that we can produce this product better and more efficiently. They also have come with some cost-savings that we would anticipate later in 2024. So I think the big driver in 2024 when you think about gross margin is primarily mix, but knowing that there’s some fundamental production efficiencies and some nice things happening within our operations that help be a tailwind to the overall number.
Joseph Conway: Okay. Thank you. That’s very helpful. And then I guess just a quick one on the new AtriClip product. You gave some commentary around timing for the launch, but just maybe if you could talk about pricing, what you guys are thinking about that, especially with Medtronic coming into the market, if there’s anything that you’re trying to hold back, any price increases for that?
Michael Carrel: Yeah. So, first, I’ll comment on the product. It’s called the FLEX Mini. We did file for a 510(k) and we feel like this product is going to be incredibly well-received. It’s about a third of the profile and size of our product, our FlexV product on the market today. It’s incredibly easy to deploy. All the testing that we’ve seen so far is that it is going to be by far and away the most superior product on the market going forward. We have not determined our pricing strategy at this point. And so we’ll probably hold back in terms of discussing that in any kind of detail, but we’re evaluating what the best pricing strategy is right now.
Joseph Conway: Okay. Great. Thanks so much and congrats on a great quarter.
Michael Carrel: Thanks.
Operator: Thank you. Our next question comes from the line of Danny Stauder with Citizens JMP. Your line is now open.
Daniel Stauder: Great. Thanks. Can you hear me?
Angela Wirick: We can hear you.
Daniel Stauder: Great. So, first off, I just wanted to ask broadly about procedure volumes. So I’ve just — we’ve heard from some of your peers commenting on elevated volume levels and just wanted to get your color on that and particularly as it relates to the open surgical market. Have you seen any notable change in valve or cabbage procedures that have led to some of the growth in open ablation and your open AtriClip procedures? Thanks.
Michael Carrel: Yeah. I don’t know that we’ve seen any kind of dramatic improvement. There’s been steady improvement since COVID, but I think we’re in a good normalized period now where typically you’ll see cardiac surgery going in that kind of 1% to 2% per year. And I don’t think we’ve seen anything different than that over the course of the last year or so. I’ve heard different reports that that might change and you might start to see some improved growth across the procedure in 2024 from some places. I know HCA talked about it on one of their calls on in terms of their cardiac surgery volumes. I don’t know that I’ve heard that across every single system. So I guess — I’d say right now I’m cautiously optimistic on that one.
