Silk Road Medical, Inc (NASDAQ:SILK) Q4 2022 Earnings Call Transcript

Robbie Marcus: Got it. And as you contemplate expanding outside the U.S. versus the cash you now have on the balance sheet. How are you considering M&A at this point, is there something else you can add into the bag of the sales reps that you think might be worthwhile and accretive to the business or is the use of cash solely on TCAR in the U.S. and outside the U.S.? Thanks.

Erica Rogers: Yes. I appreciate the question Robbie. Look, you know the way to think about this business with 12% penetration closing out 2022 in the United States is there is so much room to run here. And as I said in my prepared remarks, our best investment for growth is right here in the United States in U.S. TCAR expansion. If you look at the total market opportunity of just the treated patients alone, we are just getting started. So I think it is safe to say the focus is on increasing the adoption of TCAR and driving the leverage we have right here at home in the United States.

Robbie Marcus: Great. Thanks a lot.

Operator: And our next question comes from Adam Maeder of Piper Sandler.

Adam Maeder: Hi, Erica. Hi, Lucas. Thank you for taking the questions and congrats on the progress in 2022. I did want to start with one on Q4 and just dig in a little bit more there. I’m curious if you are able to kind of talk about the trends, month-by-month, October through December, you know, certainly solid performance and good to see the business up 7% sequentially. But the quarter record growth was a little bit lighter than past quarter. So just wanted to understand, any considerations there and it frankly, could just be a difference in selling days or seasonality from holiday, but anything you’d call out, and then I have a follow-up or two. Thanks.

Erica Rogers: Yes, hi, good to hear from you. Let me just give you some high-level views. Coming out of Q3, we talked about the relatively more normal healthcare operating environment. We did caution around, the cold, flu COVID season potentially having an impact on labor shortages in Q4. But I think it is safe to say that we continue to see relative normalization and the operating environment. And I will let Lucas, talk about, you know, kind of specifically your points on selling days, etcetera.

Lucas Buchanan: Yes, and I guess the short answer is nothing specific to call out, we are not really providing month to month commentary. It was a strong quarter with the 70 territories going out to work, we had the normal seasonality that we always plan for. And we are excited about the momentum in between 2023.

Adam Maeder: Okay, thanks for the incremental caller there and then for the follow-up, wanted to ask about gross margin Lucas. A little bit of choppiness in 2022 I think because of the second manufacturing side and getting that up and running. How do we think about 2023? I think I heard in the prepared remarks may be some near-term challenges. But you know, how do we think about progression of gross margin this year? Thank you.

Lucas Buchanan: Yes, I think you should think about it similarly to kind of the top-line commentary, which is improvements more back half loaded. And I think overall, we will be roughly similar in gross margin percentage as 2022 for different reasons, we are carrying kind of higher labor and materials costs that have been capitalized in the inventory and we are obviously carrying the overhead of two manufacturing facilities versus one. And so as we as we maintain price, discipline and drive increased unit volume overtime, we will see some improvement potentially in the back half of the year and beyond and a little bit lighter in the in the front half of the year.

Adam Maeder: That is very helpful. Thank you.

Operator: Thank you. The next question comes from Joanne Wuensch of Citi. Joanne your line is open.