EDAP TMS S.A. (NASDAQ:EDAP) Q4 2022 Earnings Call Transcript

So, if there are market pressures, and I can’t comment really on those, I can comment that our economic return is pretty much immediate. And we’ve shown that even with the prior study that was done by the University of California, San Francisco, where they were able to pay back their system in year one after obtaining it. So again, we work closely with hospitals to do these analyses, but we have not seen anything particular in terms of a broad hesitation to purchase disruptive capital equipment.

Operator: Thank you. Our next question comes from the line of Joseph from Piper Sandler.

Unidentified Analyst: I’m on for Jason today. Congrats, Ryan, on the transition. First, starting with guidance, I know you guys didn’t perform formally for 2023, but The Street’s modeling around 15% revenue growth for the year. Is that a level you guys are comfortable with for the full year?

Ryan Rhodes: Yes. I don’t think we’ve provided any guidance. I think, again, we’re looking — specifically, I’m talking on behalf of the U.S. side. Again, we continue to see market momentum. We’re building our pipeline. We’re adding salespeople. We’re executing with high discipline. And we’re following the playbook and road map that we’ve established for the U.S. Maybe — I don’t think anything is changing abnormally in — outside U.S. market.

Marc Oczachowski: Yes, absolutely, yes.

Unidentified Analyst: Great. And then just moving to gross margin here, staying on the 2023 track. So, forecasting gross margin has been a bit of a challenge given the lumpiness that comes with Focal One sales. How would you have us think about the trajectory for gross margins in the HIFU segment as you look over the next one to three years? And how much opportunity do you see for gross margins to move higher? And are you able to give us a sense what the incremental margins are in each Focal One unit that might be sold in a given quarter?

Marc Oczachowski: Well, actually, we don’t provide numbers by equipment sales. But as we explained several times, the overall gross margin with the Company will continue to increase as we increase our level of sales of Focal One and HIFU activity, in particular, as it generates the highest rate of margin for the Company. And again, we saw that this year with a strong increase in our HIFU business revenue that has helped to increase the gross margin. So that will certainly continue the trend as we continue to grow the business of HIFU worldwide.

Unidentified Analyst: Understood. Just one more from us. On the commercial reimbursement side, what’s the reasonable time line in which we could expect commercial payers to follow suit and bump higher their payment rates on prostate cancer treatments with HIFU? I guess, generally, is this a 2023 dynamic? Or do we have to wait here until around 2024 or beyond?

Ryan Rhodes: So, we do have commercial payers today paying for HIFU treatments. We track that and work closely with our customers and the payers. Currently, we have a plan, certainly, as we do more procedures and grow the visibility that we’re looking for new guideline changes, and we had notable change in language last year from the American Urological Association. And that kind of momentum in their language change is very helpful. But I think looking outward, we will continue to see data coming out supporting the efficacy of HIFU for men diagnosed with prostate cancer. And equally, looking for coverage policies from some of the larger payers over time, it’s really hard to pinpoint an exact time frame, but we have a road map in front of us and it affects us as well as others in the market. But we’re cautious and very optimistic that, over time, we’ll see improvements in terms of new guidelines as well as extending coverage policies across some of the largest payers.