Inari Medical, Inc.
Q4 2020 Earnings Call Transcript

Published: 9 Mar 2021

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to Inari Medical, Inc. Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. And now I would like to introduce your host for today’s program, Caroline Corner, Investor Relations. Please go ahead.

[Caroline Corner:]

[William Hoffman:]

Thank you, Caroline, and thank you, everyone, for joining us today. As many of you know, based on our pre-announcement of revenue and procedure volume in January, we enjoyed a successful and productive fourth quarter. Most importantly, we treated a record number of patients. We are excited to share with you some of the detail about Inari's progress, including an update on all of our growth drivers. But first, as is now officially tradition, in our third earnings call as a publicly traded company, I'd like to share with you a patient story that will remind you about the powerful impact our technology and our team have on the lives of our patients. Late in January, a 32-year old mother of two young children presented at a hospital in Pennsylvania, with a systemic blood infection, endocarditis and an infected blood clot or vegetation in her right atrium and on the tricuspid valve in her heart, she was very sick. Surgery in which the chest is cracked, the heart is incised and the infected clot is removed is sometimes considered for these patients.

[Mitchell Hill:]

Thank you, Bill, and good afternoon, everyone. Inari revenues for the fourth quarter of 2020 were $48.6 million compared to $38.7 million for the prior quarter and up $28.7 million or 144% from $19.9 million for the same period of the prior year. This year-on-year increase was driven by the continued expansion of our sales force, the opening of new accounts and deeper penetration of our products in existing accounts. Revenue was split between our two products as follows. 36% of our revenue was derived from the sale of ClotTriever products during the fourth quarter of 2020 compared with 38% in the fourth quarter of 2019. And 64% was derived from the sale of FlowTriever during the fourth quarter of 2020 compared to 62% in the same period of prior year. Gross margin was 92.4% for the fourth quarter of 2020 compared with 89.2% in the fourth quarter of 2019. Gross margin increased due to a modest 3% increase in average selling prices year-over-year, as well as positive operating leverage in our manufacturing facility due to continuous improvement initiatives and the addition of a second production shift in Q4 of 2020. Operating expenses were $37.9 million in the fourth quarter of 2020 compared with $16.6 million for the same period of the prior year. R&D expense was $6.5 million in the fourth quarter compared with $2.7 million for the same period in 2019. The $3.8 million increase in R&D expense was primarily driven by an increase in headcount as well as product development and clinical evidence development costs. SG&A expense was $31.4 million in the fourth quarter of 2020 compared with $13.9 million for the same period of the prior year. The $17.5 million increase was primarily due to personnel-related expenses as a result of increased headcount across our organization and public company compliance costs. Net income for the fourth quarter of 2020 was $7 million compared with net income of $0.4 million for the same period of the prior year. As I did with our Q3 results, I'd like to make a quick comment on the company's positive net income during Q4. As Bill mentioned a few minutes ago, we believe Inari is well positioned for quarters and even years of sustainable revenue growth. We are not optimizing the company operations to produce net income. We plan to continue to invest aggressively in our growth drivers, and we do not necessarily expect to produce positive net income each quarter. The basic and fully diluted net income per share for the fourth quarter was $0.14 and $0.13 respectively, and the weighted average basic and diluted share counts were 48.7 million and 55.2 million respectively compared with a basic and fully diluted net income per share of $0.06 and $0.01 respectively, and a weighted average basic and diluted share count of 6.2 million and 44.7 million respectively for the same period of the prior year. The number of shares last year is significantly lower because of the conversion of the preferred stock and additional common shares issued as a result of the IPO. In terms of our full-year 2020 financial results, revenue was $139.7 million for the full-year 2020 representing an increase of 173% over revenue of $51.1 million in 2019. Our product mix remained constant, 37% of our revenue was derived from the sale of ClotTriever products during 2020 compared with 38% in 2019. And 63% was derived from the sale of FlowTriever during 2020 compared to 62% for 2019. Gross margin increased slightly to 90.6% for the full-year of 2020 compared to 88.4% in 2019. Operating expenses were $108.1 million for the full-year of 2020 compared with $44.4 million in 2019. R&D expense increased by 155% to $18.4 million in 2020 compared to $7.2 million in 2019. SG&A expense was $89.7 million for 2020 compared to $37.2 million for 2019. Net income was $13.8 million for the full-year of 2020 and net income per share was $0.43 on a weighted average basic share count of 32 million and $0.27 on a diluted share count of 51.6 million compared to a net loss of $1.2 million and a loss per share of $0.20 on a weighted-average basic and diluted share count of 5.9 million for the prior year. I'd now like to move on to a few balance sheet updates. Our cash of $114.2 million and short-term investment balance of $50 million at the end of the fourth quarter totaled a $164.2 million compared to $168 million at the end of the third quarter. We have not yet utilized our $30 million revolving credit facility, although we ended Q4 with borrowing capacity ended the credit line of approximately $20 million. Our cash flows from operating activities were $1.9 million in 2020 compared to cash used in operating activities of $4.9 million in 2019. As I mentioned in previous quarters, Inari continues to operate and grow with a relatively neutral cash flow profile. I'd now like to turn to guidance. While we continue to experience COVID-related challenges and uncertainties, we are comfortable providing forward-looking guidance as follows

[Operator:]

[Mitchell Hill:]

And Jonathan, this is Mitch from Inari. I thought I'd mention that Bill and I actually were just joined by Drew Hykes, who is our Chief Operating Officer, and then by Dr. Tom Tu, who is our Chief Medical Officer. We thought they could be helpful for some of the questions that maybe asked.

[Operator:]

Certainly. And our first question comes from the line of Bob Hopkins from Bank of America. Your question please.

[Robert Hopkins:]

Great. And congrats on all the progress. I've two quick questions I wanted to ask. And yes, I hope you guys are doing well. But the first thing I wanted to ask because I was just wondering, Bill, if you could just sort of take a step back and maybe Drew could chime in here, too. Just clearly, despite COVID, it looks like things are just inflecting in your business and in this category generally. So I was just wondering if you could maybe take a little bit of a step back for us and just highlight like, what do you think is driving the inflection now? Is it maybe the cumulative effect of all the work that you've done over the past 18 months in the U.S.? Or wondering if there's anything more specific than that? Because really is quite a remarkable last 12 months in terms of your performance in the United States. So just would love to start there with any kind of top-down comments?

[William Hoffman:]

Yes. I'll jump in first and then we'll have Drew fill in some details if you like. So first of all, thanks for the good words, Bob. It's been a grind through COVID. We found ways to execute crisply. I would say – let me just say two things. First of all, I don't think there are any – there's not one driver, and we've said this about our potential for growth going forward as well. There is not an inflection point. There's not a one binary sort of catalyst that's going to drive things for better or for worse. This is a pure execution play. And I think all the variables from data to new products to crisp commercial execution and so forth play an equal role here. I will say this also, we had a VIP visit, we do these pretty routinely. And there was a physician here just a few days ago. And he was telling me about a patient that he treated and the patient was dying, right. The patient had that look. He said, this patient has that look and the patient was dying. And everyone in the room knows that the patient recognizes that their potential to die is right now. And a few seconds later, he took out a big chunk of clot and another few seconds after that, he took another big chunk of clot. The anesthesiologist commented that the – what did you do, right. The heart rate is down, the blood pressure is back up. The patient is joking about dinner and how bad the chicken sandwiches are going to be here at the hospital and the whole mood changes, right. That is visceral, right. That has nothing to do with data. It has nothing to do with the product per se or price, right. There's a visceral component to this that I think cannot be overlooked. And I believe there's a cumulative effect to those sorts of experiences that are going on in cath labs all over the country. Drew, I'm sure you probably got something – or a little more data like.

[Andrew Hykes:]

No. I think those were all the key points here. I think it's the aggregate impact of all the growth drivers coming together. So it's the expansion of the field team and the methodical addition of new reps and territory expansion. I think we are making progress in driving deeper and deeper penetration in our existing accounts and some of the investments and programs we've developed along those lines, I think are really starting to bear fruit. Some of the new products and some of the new R&D investments that we've made continue to improve the speed and the efficacy and the safety of the procedures and then the clinical evidence portfolio building along with that supporting all of the immediate impact that docs are seeing firsthand with hard clinical evidence that supports the impact we're having. So I think it's all those things taken together, that’s really driving the growth, Bob.

[Robert Hopkins:]

Okay. Yes, I realize it's kind of a softball question, but just wanted to get your overview taken. The second question I wanted to ask really quickly is just on – you're starting to talk about some new opportunities both in terms of outside the United States and then in the U.S. and specifically with closure. And I was wondering if you could put any more kind of meat on the bone, if you will, in terms of quantifying the opportunity that comes from these new markets and new technologies specifically again with the venous closure system? Thank you.

[William Hoffman:]

Yes. Thanks, Bob. I think we're maybe a little too early to be talking about quantifying these opportunities. I will say that we developed the FLOWSTASIS for our own procedures. The full intent was just to include this in our per-procedure price as part of our FlowTriever pricing and system. It certainly looks like there are opportunities beyond our procedures. There are lots of structural heart, electrophysiology and other venous closure type procedures for which we think this might be useful. It's a really simple method of tensioning the compression stitch that can very often be used to close venous wounds. The venous pressure is much, much lower of course. And so this is a really simple system. It doesn't leave anything behind and it doesn't kind of get into the vein. There's no stitch into the vein. So we like the simplicity. It’s a pretty interesting story here. It seems to work through our limited market release, but we are certainly in the very, very early stages here. We just completed our limited market release. We'll be getting into more full market commercialization. We’ll have more to say on that in upcoming calls.

[Robert Hopkins:]

And have you included that in the guide that you gave, to any meaningful degree?

[William Hoffman:]

No. We haven't really quantified any meaningful revenue for FLOWSTASIS. Certainly, nothing in the guidance would suggest there's a meaningful number for FLOWSTASIS.

[Robert Hopkins:]

All right. Great. I'll circle back. Thanks again.

[William Hoffman:]

Yes. Thanks, Bob.

[Andrew Hykes:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of David Lewis from Morgan Stanley. Your question please.

[David Lewis:]

Good afternoon, and congrats on the quarter and a very constructive guide. I want to start with the guide and then I'll kind of maybe follow back up with Bill. But just thinking about the guide here and I appreciate it's still COVID, but you’ve been doing anywhere from 15% to 25% sequential growth and obviously 13% sequential into the first quarter even with obviously a tough January. If you kind of take out the first quarter there, the guidance implies kind of 2Q to Q4 low single-digit type sequential growth. So is there sort of anything momentum wise comps trends in the business that would drive that? Or is it just simply early in the year? And we're still dealing with some COVID dynamics. Let me just sort of flush out how you see the business sort of first half, second half or across the quarters given that drop-off here into the second quarter?

[Mitchell Hill:]

Sure, David. Thanks for that question. As you mentioned, the Q1 guidance would be about sort of a low double-digit sequential improvement compared to Q4. So that's something that we really feel comfortable and confident in. This March 9, actually, today is the one-year anniversary of what we affectionately Inari call the meltdown day. It's the day we were supposed to start our road show for the IPO last year. We didn't really know what would happen after the meltdown day. We kind of shut things down a bit for those next couple of months and we felt fortunate that we're able to do the IPO in late May. But we've really operated under this COVID cloud for the past three quarters now. This is our third public report. I think we just want to kind of start out with something and not get ahead of ourselves. And we really look forward to updating our annual guidance as we move along through the year.

[David Lewis:]

Okay. That's super helpful. And then just my second kind of follow-up question is really sort of two-part, if we think about sort of the trends in PE versus DVT that we saw through the back half of 2020. Is there any reason to believe they’re in a percent of mix where that PE, DVT mix materially changes in 2021 and sort of what's implied in guidance? And then just, Bill, I want to push you a little more on this international question. I mean, it was our current estimates basically call for zero international revenue, I guess, given the approvals and some commercial agreements you signed here in the first quarter, that's looking a little conservative. So is there any international specifically modeled in your guide for 2021? Those two questions and I'll jump back in queue. Thanks so much. Congrats again.

[William Hoffman:]

Yes. Thanks, David. So with regard to the mix, one of the characteristics, I don't know that we would have necessarily predicted this. But the mix has been remarkably consistent from quarter-to-quarter with no – there's no emphasis on one product versus the other either nominally or through compensation or anything of that nature. I think both of these markets are growing equally based on the way that we've chosen to communicate our story, based on the data that are emerging and product development, products being introduced into the mix and so forth. So we are not modeling any change in the percent of revenue or percent of cases represented by one product versus the other, that’s been pretty consistent. They bounce around a percentage or two, but that's no change. With regard to international, I think we've characterized this multiple times as is being measurable, but not really meaningful. So I don't think I would characterize any of the guidance as representing a significant chunk of international sales. And I think that's a pretty healthy way to think about it. The COVID environment in Europe is considerably more challenging than it is here in Europe. I suspect you're hearing that from most of our peers and other Medtech companies. And it's been – that's been a challenge. There's a lot of interest, a lot of enthusiasm these physicians have seen and heard about Inari devices through data releases and through anecdotal communication back and forth with their American counterparts for a year or two. That’s been highly favorable. And so it's a little frustrating that with procedures total that we can't be on the ground training and getting people through their learning curve very quickly. So it's all Zoom-based. And those challenges persist. So I would just ask, you don't get too far ahead of us here on international as well because there’re some things to work including reimbursement as well. So I’ll leave it there.

[David Lewis:]

Okay. Thanks so much.

[William Hoffman:]

Thanks, David.

[Mitchell Hill:]

Thank you, David.

[Operator:]

Thank you. Our next question comes from the line of Larry Biegelsen from Wells Fargo. Your question please.

[Lawrence Biegelsen:]

Hey. Good afternoon, guys. Thanks for taking the question and congrats to really strong 2020.

[William Hoffman:]

Thanks, Larry.

[Mitchell Hill:]

Thanks, Larry.

[Lawrence Biegelsen:]

Two for me. Let me start with just salesforce adds and center adds that you expect in 2021. For salesforce adds, should we think about 10 per quarter and as center adds, I'm not sure I heard you give the Q4 number. But it looks like you added about by my math, call it, 400 centers in 2020. Is that accurate? And what should we expect for 2021? And I had one follow-up.

[William Hoffman:]

Want to take, Drew, take that one?

[Andrew Hykes:]

Yes. So Larry on the salesforce adds, as you heard, we added 10 heading into Q1, so exactly in line with what our historical kind of average cadence have been. I think we're going to reserve the right to flex that up or down depending on what we're seeing on the ground as we get into any specific quarter and what we're seeing in our target territories. But I do think that that 10 per quarter is a pretty good starting point to how to think about the rest of the year. Keep in mind, if we bring on 10 incremental territories, we're actually hiring more bodies than that given our promote from within kind of approach to sales leadership. On the center adds, I think the number you quoted is about, right. We believe we exited Q4, someplace north of 800 active accounts using the technology. And that's a combination of accounts that are using just FlowTriever, just ClotTriever or both technologies. We think about half of our accounts are using both technologies. So we have quite a bit of a runway still even within that group of 800 accounts to pull in the respective secondary technology where that's an opportunity for us. Keep in mind, we think there's, call it, 1,500 potential targets or 1,500 cath labs in the U.S., there's 1,300 some hospitals with 200 or more beds, which would also be a way to gauge the ultimate opportunity here. So we still think we're in kind of early-to-mid innings in terms of the account penetration at this stage.

[Lawrence Biegelsen:]

That's helpful, Drew. And second for me. Could you talk about other new product launches in 2021 and data that we might see this year, just specifically on new products? Could you give us an update on FlowSaver? Thanks for taking the questions.

[William Hoffman:]

Well, Larry, there's one thing we've learned is – early phase here of our history as a public company is don't over promise on new products. We certainly stepped in that. First opportunity we had in our first earnings call, we talked about FlowSaver and we’re dealt a curveball by FDA. So we expect to see that a little later on this year, but probably, we shouldn't make the same mistake and tell you a month or week and date. So we'll leave it there. But there are number of other products beyond FlowSaver that we like. The pipeline is full, some of these products are inclusive in our per-procedure pricing, so there'll be no new revenue like FlowSaver, perhaps for example, and others will be TAM expanding. But we'll have much more to say about those as we get a little closer. There's FDA risk, of course, there's LMR risk, what will we see will the devices be ready for prime time? So there's a few things to work through, but we're very pleased with our pipeline.

[Lawrence Biegelsen:]

And data, Bill?

[William Hoffman:]

Yes, clinical. We have – we continue to run – thanks, Larry. We continue to run our FLASH and our CLOUT registries, 500 patients plus, we are going to expand our FLASH registry and we'll have more detail on that as it emerges here. But I think we'll see some additional readouts over the coming quarters. There are any number of investigator initiated trials that we'll get to the starting line so to speak here with regard to submission and publication. So we'll have other readouts and data coming down the pike here as well. And again, just as a reminder, none of them are inflection. None of them will represent some sort of an important binary inflection point. They're all contributory to the same sort of story and execution play that we've been sharing with you all along.

[Lawrence Biegelsen:]

Thanks for taking the questions.

[William Hoffman:]

Yes. Thanks, Larry.

[Andrew Hykes:]

Thanks, Larry.

[Operator:]

Thank you. Our next question comes from the line of Bill Plovanic from Canaccord. Your question please.

[William Plovanic:]

Hey, great. Thanks. Good evening, and thanks for taking my questions. A couple here, just first, and I might have missed this. Was there any commentary regarding the FLAME study? And have you begun enrollment on that?

[William Hoffman:]

You did not miss anything. Let's Tom take that.

[Thomas Tu:]

Sure. Thanks, Bill. So just to remind everybody that FLAME study is our trial in massive pulmonary embolism, which is the most mortal of all PE conditions, and is planned to be the largest contemporary trial in this disease state. The trial design has been completed and we are anxiously awaiting enrollments of our first patient.

[William Plovanic:]

Okay. So you have ID approval and you're good to go. You're just waiting to get the first patients enrolled?

[Thomas Tu:]

Yes.

[William Plovanic:]

Great. And then how – what is the size of this study? Are there any details you're willing to provide on time? How long do you think it will take to enroll and when we could see some of the first data off of this?

[Thomas Tu:]

So massive pulmonary embolism represents about 5% of all pulmonary embolism, so it is not very common and these are quite critically old patients. So you can imagine enrollment in this study, maybe somewhat hard to predict. We anticipate it will probably be 18 months to complete this study and we have no plans to present any preliminary data. So we hope to complete that study before.

[William Plovanic:]

Okay. And then – thank you for that. And then on just – I was wondering, if you penetrate in your – in over 800 facilities, I think that was roughly the number last quarter. But I'm trying to get a handle on as you look at those facilities that you're in, have you been able to fully penetrate any? If so, what does that look like? And how long does it take to get there?

[Thomas Tu:]

Dive in, Drew?

[Andrew Hykes:]

Yes. I think if you looked across those 800 accounts, Bill, you'd see evidence of accounts at different stages of their evolution and how they're thinking about VTE. You'd certainly see a group of accounts that are just starting, they're focused on initial outcomes. They're getting used to the technology. They're adopting it into their existing treatment paradigm. You'd see a group of accounts that have progressed past that are in the middle. They are trying to understand the economic value proposition at that stage. They're probably more proactively trying to identify these patients. There maybe refining their clinical care pathways at the account level and really trying to proactively investigate and invest in these patients in a way that was not like they had thought historically. And then the last group of accounts are at the final end of their evolution. And they are accounts that have really made a proactive commitment to VTE program development, like you've seen with MI and stroke, for instance. They have a very sophisticated approach to this patient population. They are making significant investment in time and other resources to manage these patients. And if you look at our product adoption across those phases, you'd see obviously growing adoption across those phase at least in that last group of accounts, you'd see our technologies being used frontline as standard of care, as the go-to option for both DVT and PE patients. That evolution takes a different amount of time based on the account dynamics and specifics. But we have seen accounts kind of move methodically through that evolution. It gives us some confidence. We are developing a systematic approach to helping support that evolution with different programs and different investments and learning how to help support accounts move through that process.

[William Plovanic:]

Great. And today, Drew, what percent of your accounts do you think has kind of hit that endpoint to the final phase and you have the penetration you're looking for? The bucket at the beginning, middle end?

[Andrew Hykes:]

So that last group has got to be our top. Probably 10% of accounts are in that final group. So we've got a small number that have made that evolution. It gives us some confidence that we're doing the right things, but there's not many that have navigated their way all the way through that evolution yet.

[William Hoffman:]

If I could add just a bit of color, there was a paper just presented out of – published out of University Hospital in Cleveland, which is a very old established PERT, Pulmonary Embolism Response Team program. And they showed not surprisingly that patients who were admitted to the hospital or who see come into the hospital with a pulmonary embolism and see the PERT team as a hospital designated pulmonary embolism experts, they not surprisingly do well on almost – by almost every measure, almost every clinical measure you can imagine. The problem is that 70% of the patients who should have been seen by the PERT, by their own admission, by their own criteria were not seen by PERT. And that's the challenge that we face, even in the best – our best centers. The consistency with which these patients are identified and triaged to the VTE experts remains limited. Those aren't problems that you face that we see in MI and stroke. Most of those problems certainly in MI have been fixed a long time ago. So there's a lot of heavy lifting to do with regard to surfacing, identifying and triaging these patients consistently through systems and processes. And we're spending quite a bit of time and energy with that kind of that last bucket that that bucket of customers that have progressed to that point.

[William Plovanic:]

Got it. That's very helpful. Thanks for taking my questions.

[Mitchell Hill:]

Thanks, Bill.

[Operator:]

Thank you. Our next question comes from the line of Danielle Antalffy from SVB Leerink. Your question please.

[Danielle Antalffy:]

Great. Good afternoon, everyone. Thanks so much for taking the question. Congrats on a really strong year despite COVID. And I just have two questions. So my first question is probably for you and it's around – you know, you touched on it a little bit, but like how do you think about the guidance and the COVID situation we're in now and the COVID recovery? And I appreciate that a lot of your patients are urgent/emergent. But there is some component of the business that's likely driven by patients getting diagnosed, getting into the system. And I guess that's more what I'm focused on. And is there any sort of recovery baked into the guidance? Or is it kind of just sustaining momentum from where we are today and there's no sort of backlog that we should be thinking about here? And if there is that sort of upside? That's my first question.

[William Hoffman:]

Yes. I know the question you're asking. Thanks, Danielle. I think the short answer is there is no backlog. Approximately 70% of both PE and DVT patients in the studies that we've conducted in the ways that we keep track of these things for FLASH and CLOUT, for example, present through the ER. So they are emergent by that definition. And so I think this has protected us in ways that many of our peers and other Medtech companies didn’t benefit from devices that treat that sort of patient population. So we have benefited from that through the pandemic. Our procedures were probably a little bit more insulated from the pandemic challenges and the challenges that the elective procedures faced, for example. PE cannot be – you either treated at the moment that the PE presents or there's very limited capacity to treat it later. DVT on some cases can be delayed for a week or two, but the problem is even when patients may have been entering a hospital that was on diversion, for example, come in with a painful, really painful and swollen leg and were sent home simply because there was no capacity. I don't think most hospitals have any mechanisms for keeping track of those patients. And so again, the short answer to that, I don't think we're going to see a bolus of patients coming down the pike here for 2021 or beyond. I think those patients were either treated or not.

[Danielle Antalffy:]

Okay. Totally fair. And then my next question, it's a two part question. I'm really asking three questions, not two. So Drew, this is probably for you and both of these are probably sort of in your camp. So just trying to get a sense of same-store sales versus the new center adds, and how to think about how that progressed in 2020? And how that will progress in 2021, sort of what's reflected in guidance? Anything you can say there?

[Andrew Hykes:]

Yes. I think the short answer is we like what we're seeing. We think the growth we're seeing is sustainable and not overly weighted towards the addition of new accounts. I'll give you a couple of metrics that I think support that belief. In Q4, we believe about 90% of our cases in that quarter came from existing customers. Only 10% came from new account adds in that quarter. And if you look at it through the lens of growth in cases – sequential growth in cases that we saw incrementally in Q4, it was balanced about 50/50 between existing accounts and a brand new accounts acquired in that quarter. So we like what we're seeing there. We think there's a nice balance where we are seeing evidence of success in supporting accounts for broader and deeper adoption of the technology. I think you see that reflected in those metrics.

[Danielle Antalffy:]

Got it. That was very helpful. And then last question for you. So you gave some good color on half the accounts are using both devices. I'm just curious what percentage of the accounts you're in today are not using FlowTriever and what's the barrier to getting them to adopt that? Is it just a matter of time getting them to adopt FlowTriever? And I'm obviously asking, because it feels like that's where the longest growth runway is and where you guys obviously have the biggest, I think, competitive advantage and price advantage there? So thanks so much.

[Andrew Hykes:]

Yes. No, I understand where we’re coming from. I'm not sure I'd completely agree with some of the things that were kind of folded in there. Maybe first, of the 50% of accounts that aren't using both technology, it's really a mix of accounts that have adopted just ClotTriever or just FlowTriever. So we don't see it necessarily bias towards accounts just starting with FlowTriever and pulling in FlowTriever. It's really a balance between the two. And I think going forward, we would anticipate continued kind of balance between the two. We don't necessarily need to manage the growth of one of the platforms versus the other, at least historically, we haven't. They've really developed and grown organically right alongside each other at roughly the same growth rates. And I think that would be what we would anticipate going forward as well.

[Danielle Antalffy:]

Okay. That's fair. Thanks so much.

[William Hoffman:]

Thanks, Danielle.

[Operator:]

Thank you. Our next question comes from the line of Marie Thibault from BTIG. Your question please.

[Marie Thibault:]

Hi, good evening. Thank you for taking the questions, and Bill, Mitch, Drew and Dr. Tu, congrats on a very strong year. I wanted to ask one more follow-on here on guidance. I wonder if you could parse out for us a little bit more the COVID impact you've seen so far in Q1? And then because we haven't seen you as a public company without COVID impact, I'm wondering if you can sort of set out for us any seasonality or sort of how we should think about cadence throughout the year going forward?

[William Hoffman:]

Yes. I'll dive into that. We get the seasonality question, maybe not surprising, we get asked quite a bit. We don't – we have not seen it thus far, but I just was peeking at some numbers this morning in our – Q4 of 2019 was the last quarter in which there was no COVID impact for all of us, of course. In 2019, we did less revenue than we are projecting for Q1, the entire year of 2019 was less revenue than we're projecting for Q1 of this year. And so the point here is that we really don't have anything to compare to, right. We don't really know what a non-COVID or post-COVID environment looks like. So we only see seasonality. We have not seen it thus far, is that because, we're insulated from it in some way. Or is it because we were just very, very early in our growth phase and it'll start to emerge at some other moment. I think we just don't know. So with regard to guidance, we want to make sure that we're not getting out ahead of ourselves because there's any number of things that – there's any number of potential risks and we've learned one thing through the pandemic, won’t learn many things, I guess, but humility is one of them. So we just want to be a little thoughtful about the way we're thinking about guidance.

[Mitchell Hill:]

And Marie, if I can add to that just a bit. In terms of some of the signals that we see for COVID impact, actually, as Drew, was talking about our accounts. We see the case mix fluctuate in the accounts sometimes week-to-week, sometimes definitely month-to-month depending on the relative sort of impact of COVID on that hospital. And that's something that we've noticed. You see the case mix for the year as a whole, it was kind of the 54, 46 thing that we sometimes see the case mix fluctuate and it could be sort of a disproportionate number of PE cases in some months in some hospitals. And that tends to correlate with a higher amount of COVID impact in that hospital. But then sometimes when the ICU beds kind of go down, then the case mix kind of returns to the historical relationships. I don't know – I don't think we went into that really level of detail, but in terms of thinking about how that would play out through the remainder of 2021, as I mentioned, we're hoping to continue to update as we go along here.

[Marie Thibault:]

All right. That's really helpful. And I understand that there's no easy comparable, so I appreciate you helping me make sure there's nothing I'm overlooking here. I guess my follow-up would be around gross margins, your Q4 gross margins, again, very stellar. And I know in the past there's been some talk about pricing trends and that gross margins aren't necessarily going to stay at this very healthy level. So I wondered if you could help us think about that given some of the new products you have rolling out. And then your earlier comments on the international opportunity, if there's any change there on the gross margin outlook?

[Mitchell Hill:]

Sure. I can start that, Marie. So we're pleased obviously with the 92% plus gross margin for the quarter, up just a bit. As we think about 2021, we had a very productive Q4. The efficiency of our manufacturing operation, the second shift we added, we're continuing to build up inventory. I think we've announced that we're moving into a larger office here in Orange County kind of mid-year in 2021. So we're taking steps to prepare for that move. Some of the things that we think – and we're in a great position in terms of our average selling prices, they were up just a bit in Q4 as well. And so we feel like we're in a very strong position. Should we ever need to respond from a competitive point of view to price – sort of pricing we could, we're not currently seeing that. And I think we've been successful selling our services to the hospitals based on the value of the procedure, essentially compared to the alternative interventional techniques, which, all involve a ICU stays. So they're not really positive contributors from a hospital point of view. From a future thinking point of view, as we put more products into the FlowTriever price per procedure bag, that's something that could have a drag on the margin. I think as we're continuing to build our international business that could likewise have a drag on the margin as we go forward. And we've talked in a longer-term sense about a kind of a low-to-mid 80% gross margin target for the business. I think it may take us some time to get there. I don't know if it's going to be one or two years or if it's going to be more of like a three to five-year thing, but yes, that's kind of how we are thinking about the business over a longer term for modeling purposes.

[Marie Thibault:]

That's great. I appreciate the time tonight. Thank you.

[Mitchell Hill:]

Thanks, Marie.

[Andrew Hykes:]

Thanks, Marie.

[Operator:]

Thank you. This does conclude the question-and-answer session as well as today's program. Thank you, ladies and gentlemen for your participation. You may now disconnect. Good day.