Nevro Corp (NVRO) 2016 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen. My name is Erin and I will be your operator on this call. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time.

(Operator Instructions)

Please note that this call is being recorded today, Monday, May 9, 2016 at 1:30 PM Pacific time and will be available on the Investor Relations section of Nevro's website, at investors.nevro.com.

I would now like to turn the meeting over to Katherine Bock, Senior Director, Corporate Development and Investor Relations from Nevro.

Thank you, Erin, and thank you all for participating in today's call. Joining me are Michael DeMane, Chairman and Chief Executive Officer, Rami Elghandour, President, and Andrew Galligan, Chief Financial Officer. Earlier today, Nevro released financial results for the quarter ended March 31, 2016. A copy of that 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 includes forward-looking statements within the meanings of 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 are not historical or statements of historical fact should be deemed to be forward-looking statements.

All forward-looking statements, including, without limitation, our examination of historical operating trends and our future financial expectations, which includes full-year 2016 guidance, 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 see our filings with the Securities and Exchange Commission. Nevro 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.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 9, 2016. I will now turn the call over to Michael. Michael?

Thank you, Katie, and thanks, everyone, for dialing in today. Good afternoon.

As you may recall on our February call, we announced a carefully planned executive succession in which current President Rami Elghandour would assume the role of President and CEO, effective June 1 of this year. We also announced that I would simultaneously assume the role of Executive Chairman of the Board and remain actively engaged with Company, with Rami, and with the Board on a go-forward basis. It is my pleasure to report that activities leading up to the transition are progressing quite well, as I anticipated. Rami has skillfully expend his involvement and control the organization as a whole, all the while quarterbacking our very successful US launch activities, for which he is to be commended.

For today's call, I'll start off with first quarter revenue and operating highlights. Given that going forward Rami will assume primary responsibility for delivering our revenue targets, it would seem only fitting that he cover the upward revision of our global revenue guidance for the full year in his remarks. Rami will also provide additional depth and color on our US launch, and Andrew will follow with his usual deeper review of the financials. Andrew also elaborate our global revenue guidance and expectations for gross margins and operating expenses in 2016. Then we'll open up the call for your questions.

So let's begin. Nevro's worldwide revenue for the first quarter was $41.7 million, an increase of 331%, as reported. As you can see from these results, global adoption trends remain quite strong.

The US launch performance in Q1 has continued to exceed our expectations and is consistent with the confidence we communicated to you on our previous earnings call back in late February. As a reminder, these first quarter results represent only the third full quarter of US launch of Nevro's HF10 therapy and reflect continued robust customer adoption and solid execution by our US field organization.

So if you'll allow, let me take this moment to make an observation regarding Nevro's approach to the chronic pain market at this juncture. Our success in Europe and Australia, now into its sixth year, and now in the US launch to date, further reinforces our belief that our organizational focus on clinical outcomes is the right strategy and a powerful unifying core principle for the Company. We have found that delivering better outcomes for chronic pain patients is a strong foundation upon which to build and we think that strategy will serve us well as we scale the business.

I also wish to reiterate that we are ahead of plan and making excellent progress with the thoughtful transition of CEO responsibilities to Rami. In my view, the Company could not be better positioned than is right now, and that belief is underscored by the excellent revenue performance to date and growth trajectory going forward.

Rami and the incredible Nevro management team have proven themselves and they are clearly up to the task of delivering on the ultimate promise of HF10 therapy and continuing to build this high-performance organization. I am confident that Rami and the executive team will take Nevro to the next level, and I look forward to continuing to work closely with them as I continue my involvement with the Company as Executive Chairman. So with that, let me now pass the call over to Rami.

Thanks, Michael. In our third full quarter of US launch, the organization continued to demonstrate measurable progress in driving adoption of HF10 therapy, hiring stellar talent and securing approval for our surgical lead. Underpinning everything we do is our focus on patient outcomes, which, enabled by our technology, strategy and people further distinguishes us as a leader in SCS.

Nevro's first quarter results were driven by continued execution in the third full quarter of our US launch, as well as sustained International revenue expansion in year six of our international commercialization. Worldwide revenue for the first quarter was $41.7 million. US revenue was $29.5 million and International revenue was $12.2 million, the latter representing an increase of 26% as reported and 31% in constant currency over the same period in the prior year.

Based on the strength and momentum of our US launch to date, we have sufficient visibility to raise our global revenue guidance. We are increasing the full-year 2016 total revenue guidance to $175 million to $185 million, which is an increase of $20 million above our February 29 guidance for the year. These figures also incorporate our forecast for the recently announced surgical lead launch, which I will discuss in more detail in a moment.

I couldn't be more pleased with the execution by our organization in maintaining our outcomes focus globally. I continue to hear from physicians that HF10 therapy not only meets, but exceeds their expectations, which is a reflection of our incredible therapy and the commitment of our commercial organization to our mission and values. There is an excitement to engage with the therapy and the Company that is building across US, as we continue to add the necessary headcount to provide increased access to HF10 therapy in a responsible manner. With over 7,000 patients now implanted and benefiting from HF10 therapy, we are exceptionally pleased with our global momentum.

It's important to underscore we expect this momentum to build for quite some time. As I noted earlier, we have continued to see growth internationally several years into our commercial efforts and we are just getting started here in the United States. While we continue to build for the long term, we want to ensure that focus is not lost on our near- and intermediate term opportunities. In addition to taking share in a growing $1.7 billion worldwide market, we have a significant opportunity to treat back pain and we'll also increase access to HF10 therapy through our surgical lead launch.

The back pain opportunity is truly our first indication expansion and one to which we already have access. As I highlighted on our last call, our in-market experience in the US and internationally demonstrates we are treating both back and leg pain, with back pain patients being the largest proportion. This experience matches our view of the market and supports the significance of our near-term opportunity.

The surgical lead approval further grows our addressable market by allowing us to support the neuro surgical community, which plays a meaningful role in the management of chronic pain, particularly in the United States. Placement of surgical leads is an important clinical option for many surgeons and their patients. We plan to initiate a staged rollout globally, with broader access to the surgical leads beginning in the fourth quarter of this year. As always, our priority with this launch will be to ensure that we deliver the clinical outcomes that are the foundation of our therapy and Company.

Now transitioning to hiring. As you'll recall, we ended 2015 with 100 hired and trained reps in the field. As we've said in the past, our hiring plan for 2016 is to fill the remaining empty territories in our launch plan and bolster existing territories with additional clinical support to continue to continue to drive broader adoption of HF10 therapy. We expect the peak quarters for sales floor hiring to be the second and third quarter of this year, with lower levels of activity in the first and final quarters of the year.

On the hiring front, we ended the first quarter of 2016 with 113 hired and trained reps and are on track to meet our year-end target of a minimum of 160 reps in the field. This target number allows us to fill the majority of our remaining empty territories and is consistent with our updated guidance.

As previously stated, there is no upper limit on the number of reps we are prepared to hire in 2016. As we continue building a foundation for peak adoption of HF10 therapy, we will continue to hire the very best talent, consistent with our launch plan and growth trajectory. Internationally, we ended the quarter with 53 sales reps trained and in the field and, similar to the US, we continue to add field support as needed to drive further adoption of HF10 therapy worldwide.

We are incredibly excited about 2016 and feel very well positioned to deliver on the promise of HF10 therapy and in doing so, build long-term value for the Company. We continue to focus on hiring the very best talent across the organization and on delivering superior patient outcomes across the globe. We have a large addressable market that we are uniquely able to access and have proven that we can execute on many levels to realize the value of that opportunity.

With the ability to treat back pain, coupled with the surgical lead approval and CMS pass-through payment, we believe there remain significant near- and intermediate term opportunities for growth. We additionally continue to invest in leveraging the platform potential of our technology for the long term.

I expect that the talented Nevro team will continue to execute at a high level and fully realize the unique opportunity ahead of us. Ultimately, it's up to us to ensure that patients with back or leg pain have access to this superior therapy, and we view that as our core responsibility. That is what excites us and drives us every day.

With that clarity of purpose, our highly differentiated and proven therapy, and great people and culture, I couldn't be more confident in our future and the future of SCS. And with that, I'd like to turn the call over to Andrew Galligan, our CFO, for a more detailed review of our financials and guidance. Andrew?

Thank you, Rami. Revenue for the three months ended March 31, 2016 was $41.7 million, an increase of 331% year-over-year on a reported basis. This increase was primarily due to the launch of HF10 therapy in the United States.

US revenue was $29.5 million in the first quarter, the third full quarter of our US commercial launch. International revenue was up 26%, to $12.2 million from $9.7 million during the same period in the prior year. This represents constant currency growth of 31%. Going forward in this call, all revenue growth rates will be stated on a constant currency basis. Europe had 30% year-over-year growth for the quarter and Australia had growth of 33% compared to the prior-year quarter.

As mentioned on previous earnings calls, due to constraints, such as capitation and increasing market share in international markets, we expected our international growth to moderate. We have seen this in the first quarter of 2016 and continue to expect a moderation of international growth rates in the future.

Gross profit for the first quarter of 2016 was $26 million, or 62% gross margin, as compared to $5.8 million, or 60% gross margin in the same period in the prior year. Gross margins increased year-over-year, partly as a result of a decreasing impact of foreign currency exchange rates on our margins.

While our product costs are primarily incurred in US dollars, international revenue overall has been negatively impacted by the appreciation of the US dollar, which negatively impacted our overall gross margins for the period. With the expansion of US revenues, the currency impact on total margins will be less significant to our results. As we continue to grow revenue, we additionally expect to expand margins by improving efficiency and further leveraging our manufacturing overhead.

Operating expenses for the first quarter of 2016 were $35 million, an increase of 93% compared to the first quarter of 2015. The increase in operating expenses was driven primarily by increased head count and related personnel costs.

Net loss from operations for the period was $9 million, compared to $12.3 million for the first quarter of 2015. At the end of the first quarter of 2016, we had $163.2 million in cash, cash equivalents and short-term investments.

Turning to our outlook, we are increasing our revenue guidance for 2016. We are updating our worldwide revenue guidance for FY16 to be in the range of $175 million to $185 million, up from our previous worldwide revenue guidance, which was in the range of $155 million to $165 million.

We are still projecting productivity in the range of $1.3 million to $1.5 million per rep in 15 to 18 months. In the nearer term, productivity is positively impacted by the uptake of early adopter accounts. Over time, we expect productivity to be in line with our current guidance. For gross margins in 2016, we continue to expect to end the year at approximately 65%, with progress towards this number during the year.

With regard to our operating expenses in 2016, we expect quarterly operating expenses to trend upward to a total of approximately $165 million to $170 million for the year, an increase of $5 million to $10 million over our previous guidance. As Rami outlined, we also plan to continue hiring experienced sales representatives to support the rollout of HF10 therapy, with a minimum of 160 reps in the field in the United States by the end of 2016. Now back to you, Rami.

Thank you, Andrew. First and foremost, on behalf of the Nevro team and the physicians and patients we serve, I want to thank Michael for his many contributions to Nevro. It's incredible to think how far this company has come in the past five years and, like many others, I certainly wouldn't be here without him. We are grateful to have had you as a leader, and I am grateful to have had you as a mentor.

Michael brought many things to Nevro. Credibility and experience come to mind. But the most important thing he brought was passion. His passion for serving our customers and making sure we stay humble and dedicated to the task helped Nevro transition to the company it is today. I want to thank him and recognize him for taking the risk he took to join Nevro and for his tireless effort throughout the years.

I know to the outside world, Michael and I may seem different, most notably in our stature; however, we are incredibly close as a function of our values and mutual respect. I truly and sincerely look forward to working closely with him to continue to build this incredible Company, and know that we will remain close. We are well-positioned to carry out our mission and look forward to the opportunities ahead of us. And with that, I will turn it over to Michael. Michael?

Thank you, Rami. And of course, the feeling is mutual and I look forward to continuing to work with you.

So that will conclude our prepared remarks today. But before we go open up the call for questions, I would like to say how fortunate and privileged I feel to have had the opportunity to lead this remarkable organization over the past five years. I can say with certainty that it has been one of the most fulfilling experiences in my 35-year career in the medical device space. Chronic pain can be a truly devastating and life-altering condition for those who suffer from it, and I shall never tire of hearing from patients and treating physicians alike about the power of HF10 therapy to improve the lives of those patients.

Okay. Erin, now let's open the call up for questions, please.

Certainly.

(Operator Instructions)

Mike Weinstein, JPMorgan.

Next question, David Lewis, Morgan Stanley

Hello. This is actually Jon Demchick in for David.

Hello, Jon.

Very good quarter. And Michael, not a bad quarter to go out on. The launch seems to be going very well. Guidance took a nice step up, but actually doesn't seem to imply a ton of sequential growth beyond this point throughout the rest of the year to reach guidance. Sounds like momentum's going very well and there's lot of tailwinds that we're looking at, from International maintaining strength, back pain penetration. You're really going to be starting the surgical lead launch at the end of the year. CMS pass-through. Is there anything from the quarter that should leave us perhaps a bit more cautious on the ramp from here, or is this more a reflection of it being early in the year in the launch and not really trying to get ahead of yourselves?

So I will take that. Thanks, Jon for the question. So I think we always have to kind go back to the basics here, which is we've always said this is a controlled and responsible launch. And we're really planning for the long-term adoption of the therapy. I think we've been consistent in communicating our launch plan, that certainly one way to have gone about this is to flood the market with much larger sales force and to kind of do a land grab. And that really hasn't been our approach. Our approach is for a sustained and long-term adoption of the therapy. And that is reflected in both how we operate our operating results quarter to quarter and how we think about our long-term guidance.

Understood. And on the paddle lead approval, clearly you're going after a market that you weren't really able to attack before. And how are you thinking about attacking it? Is it more going to be going after new docs that haven't really used the Senza before, because they were heavily focused on surgical leads, or are you going to be converting some docs that were more interested in surgical leads but started over with the percutaneous, just because it gave them access to the therapy?

Certainly a combination of both. So you do have neurosurgeons and physicians who are typically used to paddle leads that also do some percutaneous placements, and we certainly are working with a number of those in the US. But there are also a number of physicians that only use or prefer to use surgical leads, and so we will be going to them for the first time. So I would say it's a mix of both on a go-forward basis.

And just lastly on the sales force, mostly rep utilization. Obviously, the 13 hires seems very much in line with plan, perhaps a slightly ahead of schedule. But the revenue per rep seems to be ticking a bit higher than we would have thought this early. You mentioned that you think longer term, it's still in the $1.3 million to $1.5 million range, but why doesn't it go a bit faster than that or a bit higher than that?

Well, I think what we're seeing at the moment is driven by the early adopters who have been rapidly moving over to 100%. And I think longer term, when we get into the more conservative middle majority, we expect that to normalize back to our $1.3 million to $1.5 million number. It's still early in the launch, so I'd be very -- we are very cautious before leaping to the conclusion that there's been a sea change in our productivity expectation.

Following up on that point a little bit, cascading the proportion of physicians that you've started to go after, when you think about how many of them are 80% committed to Nevro versus how many of them are just trying Nevro along with a handful of other options, where do you break out how many, what proportion of the current physicians that you guys are selling to are really fully utilized on Nevro versus various stages in between?

I think for obvious reasons, we don't go into that level of depth. But I think we have been consistent in saying that the number of physicians that have, if you will, fully adopted the therapy has, frankly, been the biggest surprise of the launch and obviously, certainly a positive surprise. But we haven't really divulged that level of detail.

And Jon, I think we're going to have to move on to some other people, as well. So thank you.

Thank you.

Mike Weinstein, JPMorgan.

Sorry about that. This is Andrew in for Mike. Just wanted to congratulate you all on a great quarter.

Thank you.

I wanted to touch upon the paddle lead approval for one second and try to gain some more clarity on the contribution, both in the near term, as well as when you have a broader launch in the fourth quarter and what your guidance is including now, if you can give some color on that?

So I think the best way to think about the paddle leads is that we've, again, had a very controlled launch. So whatever number of accounts our particular rep was going to, if we had the paddle available since launch, it wouldn't have really materially impacted our launch trajectory. It would have been perhaps that we would have substituted some accounts for others. So I think that's the most important thing to realize is that this isn't going to really change the way we approach the market or our strategy. And again, to reiterate, we will be launching in the fourth quarter of this year, and at this juncture, that launch is incorporated into the guidance we just announced.

Okay. Great. Just to dig on that a little bit further, is there a number of docs that have been sitting on the sidelines that you love, that you would expect to come right in, of is this a slow ramp? How do you think about it?

So I think we talked at the last call that the market is 25% to 30% neurosurgeons, or that they may predominantly use paddle leads. Now the question is what percentage is ambidextrous, where they use both paddle leads and percutaneous leads? That I don't think we know. But I would say it's a relatively small number, just anecdotally. So look, we're just going to have to get out there, as Rami said, and be, as we always are, deliberate, careful and move forward in a way that we properly support the accounts and that we get the outcomes we know that we can get with this therapy. And we will, of course, report more as we get there.

Great. And one last one, at this point in the launch, understanding docs' preference is to implant a handful of patients and then wait and see for the results, just wanted to get a feel for the breadth and depth of your penetration over the past six months. So breadth meaning how much of the sales rep time is being spent training new docs and being present in their first couple of cases? And on the depth side, what's been the penetration in getting deeper into these accounts and what percentage of your customer's position does this group represent? And thank you.

Thank you for the question. I would say that largely our success has been built on going deeper into existing accounts. From an analytics perspective, I'm not going to get into the numbers. We do track it. But I would say we're very much on strategy. Our reps are in a very small number of accounts, and the success that you've seen so far is really driven by us continuing to drive deeper and deeper into those accounts.

Danielle Antalffy, Leerink Partners.

Thanks so much and congrats on yet another great quarter. Just following up on Andrew's question, actually, as it relates to the accounts, I know you don't guys don't want to get into detail, but I'm just wondering, so it sounds like you're in very few accounts and you're just going deep into those accounts today. How long before you guys feel like you'll ultimately be fully penetrated into all accounts, and is there any reason to think there are any type of accounts out there that you would not be able to penetrate? And if so, what does that type of account look like?

So first of all, we haven't yet projected that we're going to get to 100% market share. So I think we're certainly not going to be in every account. But we are --

Although it's a good aspiration. (Laughter)

That's what I'm modeling.

We'll have to revisit that with sales management and see how they feel. We feel, as we continue to drive adoption into those existing accounts, certainly we'll be able to expand, from two perspectives. As you gain adoption, you add clinical resources to support those accounts. You can certainly, from that particular perspective, expand and provide access to a larger number of centers in that particular geography. And don't forget that we're also, obviously, trying to fill the remaining territories that are empty for us, and that will expand access to the therapy, as well.

And then one other thing to touch on is from the surgical lead perspective, there are accounts that because of their preference for product, we really couldn't work with. So that's certainly going to expand our broader access, as well. So I think there's a number of things, as we get into the later part of this year and next year, that I think are going to start to play into us expanding that geographic footprint. But again, we're very much centered on ensuring that we go to the right accounts, we drive deep penetration of those accounts, and (Audio Difficulty) therapy.

The only thing -- I think Rami is spot on -- the only thing I would add to that is you asked are there any accounts that we won't go to. I think we've been very clear that we want accounts and physicians and surgeons that make it a key part of their practice to treat chronic pain patients and use spinal cord stimulation therapy. And those practices that dabble and do one or two a year, we're not sure that that really fits in the sweet spot of where we're going. So I would say that that would probably be a type of an account that we would unlikely be to visit.

Got it. That makes a lot of sense. And I was wondering if you could give us a brief update on what you're seeing from your competitors from a counter detailing perspective. Obviously, there are no randomized control trials like the Senza RPT trial, but they're getting out there with registry data and retrospective analyses. And I'm just wondering if you're seeing that resonate at all with physicians and how you guys are selling against it, clearly well, but I'm wondering if you could provide any qualitative commentary around that, what you're seeing?

Sure. I think the overarching comment is we haven't really seen anything materially different of late. There is, I guess you could say, more noise in the market about different studies and the strength and weaknesses of those studies relative to ours. But we feel pretty comfortable with our position. We've run the first randomized control pivotal study in the history of this space. That evidence base has been recognized from a publication perspective, from an FDA perspective, with superiority labeling, and then from a CMS perspective, with the pass-through payment uplift. So I think we, frankly, feel very well positioned in playing and battling along those lines in terms of clinical data and the strength of our data relative to the field, and we'll continue to emphasize that.

Dave Turkaly, JMP Securities.

Thank you. Just to follow up on that last question, obviously you guys are focused on clinical outcomes, and you're helping these guys even track their implants. Any thoughts there from the competition? And I know that this is something new that no one's really tried. I'm just curious if, given your success, if any of them are trying to maybe come up with a scenario or a similar plan as they're competing against you? Have you seen anything like that?

Well, if I understand your question correctly, Dave, I think one thing we have seen is if you look at the press release that has just gone out from St. Jude on their DRG Axium product, I think that's pretty much a careful, very closely controlled launch to make sure that it's used properly and that the physicians are trained properly. So I guess to some extent, you could say that that is taking a similar page and, frankly, we would commend them for that.

Beyond that, in terms of tracking outcomes, I'm not sure we're seeing widespread utilization of that, other than standard registries that have been done for many years and, as you know, are typically thought little out of holes of data and missing data. It's just hard to draw robust conclusions from registry data, typically.

Thank you for that. And obviously, the paddle leads surprised us a bit, in terms of how quickly they came on. Are there any other product developments that you're expecting in the next year or two, even if it's just the old school features, is there a next gen device coming or a smaller battery, anything like that that we should be expecting? Thank you.

Thanks, Dave. Look, I think we've said this before, we certainly aren't ignoring the features and benefits game, as well, and we're working on a number of R&D projects that we haven't really talked about publicly, so I won't be able to address at this point. But we certainly are investing heavily in R&D, both from a clinical pipeline perspective, as well as from a technology perspective. And we'll look forward to future updates on that as they materialize.

Joanne Wuensch, BMO Capital Markets.

Thank you, and thanks for taking the question. When you look at your model a couple years out, what do you think of as peak gross margins?

I think we've been pretty consistently saying that low to mid 70s is where we see our gross margins, at peak.

Okay. Thank you. And how long does it usually take for one of your sales reps to get up to speed?

Well, that's where we said the 15 to 18 months, from when they're in the field.

Fully trained and in the field. Clearly, Joanne, there's a period, the hire period, and then you've got to get them in, get them trained and in the field. But once they're in the field, as Andrew said, it's the15 to 18.

And the other nuance there is because of the unique characteristics of our marketplace, where there's a trial before an implant. And the trial to implant can take up to eight weeks. Typically, in their first quarter in the field, they're not very productive, if at all.

(Operator Instructions)

Greg Chodaczek, CRT Capital.

Thanks. Just a couple quick ones. In terms of the paddle lead, they're a surgical lead, do you know what the procedure time is, the difference between the paddle and sub q?

The short answer to that is, no. And of course, as you might imagine, whether it's a percutaneous insertion or a paddle insertion, it's going to be highly physician or surgeon dependent. So I'd never seen any publications of averages across the market on either. What I would say, though, is with a surgical lead, you typically do have to do -- well, you have to do a laminectomy -- and there is a bone removal. And so that, depending on the skill level of the surgeon and probably the complexity of that patient, that's going to drive that. So there is an extra step, but I think it's going to be highly variable.

Okay. And in terms of location, exactly the same with the surgical lead as compared to a sub q lead?

Yes.

[Sirazh Palia], Northland.

Good afternoon, gentlemen. Congrats on an excellent quarter.

Thank you, Sirazh.

Can you hear me okay? Forgive the background noise, I'm on the road. So either Michael or Rami, you guys have done a phenomenal job in the US launch. The US numbers right now, quarterly, are roughly 2.5 times that of the OUS numbers. Can you give us a perspective on what is happening in the US market that is different from the OUS market? The clinical data from Senza RCD is the same. Is it a difference in interpretation, patients, reimbursement, your efforts in the market? Any color would be great.

Thanks, Sirazh. So I think this is a going back to basics question, as well. So if you'll recall that 80% of the worldwide neuro modulation, and specifically SCS (Indiscernible), is in the United States. So that alone can explain the difference. But I think if you add to that the fact that a large portion of the international market is capitated, particularly in Europe, and we have a rechargeable device only, that also further magnifies the difference between the size of our addressable market internationally and the size of the addressable market in the United States. So that largely drives the difference that you're seeing here. It's not really a function of execution or acceptance of data or any other factor than purely the constraints of the markets that we operate in.

There are no further questions at this time. I turn the call back over to the presenters.

Okay. So thank you once again for joining the call today. We appreciate your continued interest in Nevro and look forward to our next progress update Have a good day.

This concludes today's conference call. You may now disconnect.