Stereotaxis Inc (STXS) 2020 Q3 法說會逐字稿

Good day, everyone, and thank you for joining us for Stereotaxis Third Quarter 2020 Earnings Conference. Certain statements during the conference call and question-and-answer period to follow may relate to future events, expectations and as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance and achievements of the company in the future to be materially different from these statements that the company's executives may make today.

These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. We assume no duty to update these statements.

(Operator Instructions) Also as a reminder, today's call is being recorded. It is now my pleasure to turn the floor over to your host, David Fischel, Chairman and CEO of Stereotaxis. Please go ahead.

Thank you, operator, and good morning, everyone. I'm joined today by Kim Peery, our Chief Financial Officer.

The highlight of the third quarter was the successful installation of the first Genesis robotic systems at Helsinki University in Finland and Banner University in Arizona.

There's always increased uncertainty and challenge with the deployment of new technology in the real world for daily clinical use. This challenge is particularly true for complex robotic technologies being deployed and used actively at the most demanding medical institutions. We are excited that both installations were completed successfully and that our Genesis system has performed to the highest expectations of our customers. Approximately 100 patients have been treated with the systems to date for a broad array of arrhythmias. In addition, several dozen patients have had other nonrobotic procedures performed in the Genesis labs, leveraging our Model S imaging system.

The systems have proven to be highly reliable with no downtime or procedures missed due to technical issues. While I recognize such solid execution is expected by the investment community, there are 2 practical implications I believe are worth noting.

First, this accomplishment is a testament to the Stereotaxis team. Large medical device companies that have teams and budgets orders of magnitude larger than ours, have often struggled to develop robotic surgery system that can withstand the requirements of robust real-world use. There is significant value to the fact that Stereotaxis can design, build and deploy cutting-edge robotic technology. We stand as one of the few companies globally with this capability across surgical robotics, and the pioneer and clear leader in endovascular surgery. Our success with Genesis gives me great confidence in our other ongoing R&D efforts.

Second, having the Genesis and Model S systems actively used without issue at respective medical centers provides our commercial efforts a significant boost. New potential customers, even if they didn't explicitly state it previously, view these installations as derisking events for their own decisions. We have started hosting virtual visits and discussions for potential customers with the Helsinki and Banner teams. We have found these discussions beneficial in addressing customer questions and concerns, and in advancing purchasing processes.

This bottom-up boost to our commercialization of Genesis has coincided with the gradual improvement in the macro environment. Earlier this year, hospital purchasing processes froze as administrators were required to focus on operationally addressing and financially assessing the impact of the pandemic. The environment remains challenging and hospitals have reduced budgets and delayed purchasing decisions, but we have started to see a gradual return to more normal capital planning at several hospitals.

Since our last call, we received another order for the Genesis and Model S systems from a U.S. hospital that is establishing a new robotic electrophysiology program in a large new metro area for us. That program will be established in 2021. We have several additional hospital customers in various stages of a purchasing process or with tenders outstanding. While we watch with caution the increasing rate of COVID infections, given our pipeline and the status of several discussions, we are comfortable providing preliminary guidance of $10 million to $20 million in Genesis system revenue in 2021. This amount is expected to be relatively equally split between robots sold to existing customers as part of replacement cycles and greenfield installations to new hospital customers.

Our positive commercial outlook is partially also a reflection of the impact that several of our creative commercial initiatives are having. We enrolled 16 new fellows into the Robotic EP Fellows Program during the third quarter. Direct-to-patient and referral physician marketing materials have now been implemented in a collaborative fashion with several of our customers. And we have continued to refine, innovate and expand our TeleRobotic capabilities. We started our TeleRobotic effort focused on TeleRobotic support where our clinical team provided remote technical and clinical support to dozens of robotic practices. We then established TeleRobotic test drives as a creative way to engage with customers and accommodate interest in viewing our Genesis system.

We have by now hosted over 250 individuals from over 100 hospitals on such virtual visits. Last month, we launched TeleRobotic Live and TeleRobotic on demand, where leading robotic EPs can share live or recorded procedures to facilitate peer-to-peer collaboration and education of best practices.

The first TeleRobotic live event was hosted by Erasmus University, and demonstrated 6 atrial fibrillation patients treated robotically by one physician in one lab within one standard working day. The commercial infrastructure and processes that we have implemented and continue to refine provide a tailwind to adoption, positive halo effect around our technology, and a solid foundation for when a much more substantial commercial effort and expansion of the sales team is warranted.

While a return to robust system revenue driven by Genesis is the first wave in our revenue growth strategy, we have previously described 2 subsequent waves of revenue growth. A significant increase in disposable revenue with the launch of a proprietary ablation catheter is the first of these. Stereotaxis' advanced robotically-navigated magnetic ablation catheter is advancing on schedule with initial commercialization and initiation of a pivotal U.S. trial expected in 2021. We are refining a robust manufacturing process for the catheter that will allow us to produce significant quantities with high quality and cost efficiency. We've performed animal studies and a broad array of other tests on the initial batches of catheters from the manufacturing line, preparing us well for formal validation studies and regulatory submissions for CE Mark and an FDA ID trial.

We are progressing a clinical, regulatory and initial EU commercialization plan. Given the feedback we received from physicians that have navigated our catheter in animal studies on Phantom, we are excited and confident that the catheter will prove to be a significant improvement to clinical care and the physician experience. We also believe the catheter serves as a platform supporting our strategy of building a robust open ecosystem of technologies around robotics.

Beyond the catheter, one of the highlights of the past month has been the progress in derisking of various aspects in our third wave of strategic innovations. We believe that ultimately, this wave will be the most impactful and transformational to our revenue growth, both within electrophysiology and in expanding our robotic technology into several multibillion-dollar adjacent markets. We've provided visibility into the focus and goals of our innovation efforts in previous calls and in our investor presentation, but will not be providing more specific transparency at this time.

We take seriously our responsibility to ensure the long-term success of Stereotaxis. Our public announcements are dictated by our reporting obligations and by what best supports that long-term success. Given our progress to date, we expect and look forward to showcasing key aspects of this third wave towards the end of next year.

Kim will now provide some commentary on our financial results, and then I will make a few financial comments before opening the call to Q&A.

Thanks, David, and good morning, everyone. Revenue for the third quarter of 2020 totaled $8.7 million, a 6% increase from the $8.2 million reported in the prior year third quarter. This increase was primarily due to the delivery and installation of our first Genesis system and was partially offset by lower recurring revenue driven by pandemic-related reductions in procedure volumes. The system revenue reported in the quarter did not reflect full pricing of the Genesis system and some additional portions will be recognized in the coming months during the warranty period.

Gross margin in the quarter was 54% of revenue. Gross margin on recurring revenue was 86%, consistent with prior quarters. GAAP gross margin on system revenue was approximately breakeven and reflects a significant allocation of overhead expenses and initial installation costs that were not reflective of cash margins or expected future GAAP margins from system sales.

Operating expenses in the third quarter of $6.2 million decreased from $6.4 million in the prior year quarter. The decrease in operating expenses reflects increased investment in R&D projects, offset by pandemic-related reductions to sales and marketing activity. Operating loss and net loss in the quarter were $1.6 million, with adjusted negative free cash flow of $0.2 million. The cash flow for the quarter is an improvement from our previously provided guidance for cash utilization in the year. At quarter end, Stereotaxis had cash and cash equivalents of $43.8 million, and we now expect to end this year with over $43 million.

I will now hand the call back to David.

Thank you, Kim. As previously mentioned, we are providing preliminary guidance of robust double-digit revenue growth in 2021 with Genesis system revenue of between $10 million to $20 million. Gross margin for system revenue is expected to be more normalized at approximately 40% with room for future improvement with increased volume.

We continue to invest in the team, infrastructure and projects that are critical for success. We are proud that we are able to advance our robust innovation and commercial strategy while maintaining financial discipline. We look forward to now taking your questions.

Operator, can you please open the line to Q&A?

(Operator Instructions) And we'll first hear from Frank Takkinen of Lake Street Capital Markets.

Congrats on the progress in the quarter. Just a couple for me today. So first I want to talk about the 2021 installs. I'm backing into a number between about 7 to 13 systems next year. I heard your comment about 50% replacement, 50% greenfield, give or take. So my question is, one, could you kind of talk to the different levels of guidance between the $10 million and $20 million and what's driving the -- maybe a little bit larger range than I would expect just given between $10 million and $20 million. And then two, could you talk to the replacement cycle longer term getting back to that 10 system per year replacement cycle level?

Yes, sure. So first, I would say that your -- the ASP that you're using to estimate 7 to 13 systems is probably conservative. And so at those numbers of systems, you'll probably have higher revenues than what you're estimating. Just as kind of one comment. Second, the large range is really driven by the fact that we're rebuilding the capital sales capability at Stereotaxis. And so when you're doing so, you want to be conservative in terms of your ranges. You don't want to assume just because you're having advanced discussions or things are in late stages of negotiations, you don't want to assume necessarily that all of those are going to come through.

And so there is uncertainty; with every individual process, there is uncertainty. Fortunately, there's a sufficient number of activities taking place at multiple hospitals. And that is then -- and that kind of gives us that confidence with that range. But again, it's hard to give pinpoint answers. We're not yet a company that has a history of selling dozens of systems a quarter where you can do -- find statistical analysis of where exactly every order is and how exactly it's likely to play out. And so that's kind of the justification for the range.

If we think about kind of replacement cycles, it's actually interesting that if we look at kind of some of those advanced discussions that are taking place, it runs a spectrum from pure replacement cycles to second labs at existing customers, to complete new greenfield customers. And so there is that mix. I still think that 10 per year back-of-the-envelope replacement cycle opportunity is completely valid. One thing that has been interesting watching hospitals reenter a period where they can start to think about budgets, they can start to kind of to consider again capital spending and kind of plans for their labs, is that I think that the pandemic -- obviously it froze everyone earlier this year. But as some of the hospitals start to get back to normal planning, they prioritized building new labs more than they prioritize replacing older equipment.

And so I wouldn't be surprised if, obviously, we saw today's news on Pfizer vaccine, and let's see how kind of things evolve from a macro perspective. But I wouldn't be surprised if there's a return to new lab build-outs, which provide a real economic boon for the hospitals since electrophysiology departments are a large revenue driver for hospitals. I wouldn't be surprised if those return a little bit more quickly than pure replacement plans where you have an existing lab and you're planning to replace the x-ray and to replace the lab equipment. Again, unless things are breaking down, those are things that might be pushed out further by hospital administrators.

Okay, great. Just 2 more for me. And then -- on the Model S imaging offering with the system I was hoping you could just give us some feedback you've heard from the first 2 installs on that. And then just kind of frame the importance of the Model S imaging add-on for the installs in 2021.

Sure. So as a reminder, the Model S imaging system is a single-plane fluoroscopy system that was developed by Omega Medical Imaging in conjunction with Stereotaxis. And what it allows us to do is, it allows us to provide hospitals with a complete lab solution, a complete robotic lab solution. We're able to bundle it together, offer hospitals a significant cost savings over what previously establishing a robotic lab would cost them, and then provide also better experience by having one architectural planning team, one installation team, one service team, one service contract, one purchase contract.

And then -- and so that has really been kind of one of the core parts of our strategy -- of our innovation strategy and commercial strategy, is taking on that type of responsibility and control. I think that there's obviously when you start to deploy fluoroscopy systems that don't carry the name of a large, large global company with it, there is more questioning and concern. And I think that kind of we're glad that we can have existing potential customers look at labs like Banner and Helsinki and see that the x-ray is able to work well across a range of procedures. And then -- and there has been -- we're continuing to also refine products and to improve the product offering based on feedback. And overall, we're thrilled with how things are going.

Great. And then just last one from me on the utilization of the system. It sounds like over 90 procedures out of the first 2 installed systems is tracking fantastically from a utilization perspective. Just curious if you could share with us your learnings about how some of these -- how you believe utilization could trend following install versus the utilization of your currently installed base of Niobe systems?

I think it's still a little bit premature. You're right, both the procedure volumes at Helsinki and Banner are above our average. I don't know whether to allocate that, though, to the customers involved and the physicians involved, or whether it's driven by Genesis versus Niobe. And so I think it's a little bit too premature to come up with kind of models for that at this point. I apologize.

Congrats on the progress.

Next, we'll hear from Josh Jennings of Cowen.

Thanks, David, and congratulations on getting those initial Genesis Systems up and running. We're looking -- just to ask a question on the timing of your guidance issuance for 2021. I think, it implies that the sales funnel is in a very good place and hence these discussions you're having with the potential hospital purchasers of Genesis are going extremely well. But I was wondering if you could give us any kind of color in terms of the timing decision to issue guidance today, and then any incremental details on the replacement pipeline. Is it spread out between U.S. and international customer base evenly? That would be great.

Sure. So I think the rationale for providing that kind of guidance on the system side today is really driven by the fact that I recognize that that is important for the investment community to have additional color on that. I think we feel that we're in a position where we can provide such color. And given that the next call is likely only to be in 4 months, that leaves a large gap where we would be -- we would have a feeling for how things are going and yet wouldn't be able to communicate that until March when the next earnings call takes place. And so it just felt like the right thing to provide kind of some directional color as people start to look towards next year. And we obviously didn't provide guidance on operating expenses or on kind of other aspects of the business, but I thought kind of since again, Genesis is our first wave of revenue growth, it made sense to provide kind of more clarity on how that is going.

In terms of kind of the split between Europe or the U.S. or between kind of replacement cycle and others, I do very much see it kind of distributed fairly equally between the 2 regions, the 2 broader global regions and between this mix of greenfield, new, completely new customers like the order that we announced that we received already from the U.S. and there are kind of late, late-stage tenders, which kind of also at least one is a greenfield tender in Europe. And then also kind of replacement projects.

And so I think kind of obviously, with any individual deal can kind of can push the numbers significantly in one bucket versus the other given the number of deals that we're talking about, but I expect kind of a roughly equal mix between those 2.

Excellent. No, that's great and I understand that it is timing...

Something like a second robotic lab at an existing customer, I don't know where that exactly gets categorized; that falls somewhere between both, right?

Understood. Understood. And I understand the timing makes a lot of sense, but I also just want to confirm as a follow-up that your ability to issue the 2021 guidance today is because you have through your discussions with these potential hospital customers, you feel like the sales funnel is in a very good place, and then you've had good discussions, and there haven't been any kind of canceled discussions over the past 6 months for potential customers.

Yes. There are several hospitals that are in later stages of negotiating with us or have confirmed with us inclusion of a robotic program in the 2021 budget. And so those are the types of factors that guide our decision-making.

Excellent, that's great to hear. And then just on -- in terms of the sales funnel and the evolution over the last number of months and as you see it going forward, I mean TeleRobotic capabilities in an era of COVID, is that driving some incremental demand or moderate demand, do you think? Or do you see this partnership in terms of Acutus being integrated into Genesis, how are those 2 buckets kind of helping build demand here?

I think those are all part of it. I don't think any one is individually changing the dynamics in a dramatic fashion, but we are thrilled with our collaboration with Acutus, and that's kind of a collaboration that is growing and becoming stronger. And there we're also going to be releasing soon integration of contact mapping capabilities between our robotic system and their mapping system.

So I think kind of that's -- there's a clear positive influence that I think both companies have on each other. And so that has obviously been kind of one helpful dynamic. And the whole TeleRobotic capability, I think there is a little bit of a positive halo effect there where customers see that that is a positive way for the future to evolve, and they like seeing that and they like to see that activity. I'd also say that, that's probably not the main driver of their -- not even a very significant driver of their purchasing decisions at this time.

And what it has allowed us though to do, these TeleRobotic capabilities like I described a little bit in the prepared remarks, it has allowed us to really continue engaging with customers in a regular fashion. And despite the restrictions on travel, despite the lack of conferences, we're able to have a very robust kind of dialogue with a broad range of customers. And I have to say, from a personal perspective, this has been kind of one of the most exciting periods of my time at Stereotaxis given how much interaction I am able to have with customers and yet how efficiently that's able to happen. And so really kind of my 2 biggest kind of enjoyments working with the R&D team and working with customers can both take place kind of simultaneously throughout the day, both kind of in a very robust fashion.

Excellent. And just one last question for me. I understand in terms of how your team has decided on disclosing some pipeline indication developments. But maybe if I could ask, just from a high level, how would you have the investment community think about the evolution of the pipeline? Is the development team working on multiple indications at once or is the focus on a single indication at a time and just building on new indications, say, just as an example, neurovascular and then moving on to the next indication? Just I guess, from a high level, just how would you have the investment community think about next indications and then how the development team is pursuing those?

Sure. So the comment on the third wave was really to -- I recognize that, obviously, revenue models are being built upon the first wave of innovation, which is Genesis; the second wave of innovation, which is the proprietary ablation catheter. And I just kind of wanted to make clear that there has been a significant derisking of some of the activity in that third wave over the last few months, which makes me much more excited about that actually having a positive impact on revenue growth kind of in the coming quarters. And so we hope to be able to share more with you next year, at the end of next year. And that has implications both in electrophysiology and outside of electrophysiology.

When we think about indications outside of electrophysiology, I would think more along the lines of you want to have tools that can be used across several indications. And so if you can think, imagine interventional devices that are not necessarily one indication-specific, but that allow a range of physicians to experiment with the benefits of improved navigation, improved stability, improved precision, ability to navigate complex kind of tortuous anatomy, that kind of -- you want tools that allow that, and then you provide physicians the ability to experiment where necessarily -- where the clinical value is best.

And obviously, we do that with certain indications in mind where we expect the clinical value to be best, but you want kind of to provide the tools that allow physicians to also experiment for themselves and develop clinical indications where, where we might not have necessarily thought about it.

Next one is from Jason Wittes of Northland Capital Markets.

Just a follow-up on Genesis sales for next year, especially. You've gone from selling 1 or 2 systems a year, actually, maybe 1 in '18, 1 in '19 from my estimates, to now you're going to do -- it sounds like 7 to 15, perhaps more. Is there a change -- first of all, 2 questions related to that. One, how long is the sales cycle on these? And secondly, in terms of your salesforce, has it been reorganized or what is the sales support behind the Genesis sales effort at this point?

Sure. So the sales cycle can be very variable, and it depends really on kind of the hospital and their -- how the parallel tracts of preparing a room for installation or for replacement versus the contractual negotiations take place. And in certain hospitals, one leads the other and in other times, the other will lead. And I would kind of expect generally a time line of about, let's say, about 3 to 9 months from the order till kind of installation, revenue recognition. And if you see kind of both orders in Helsinki and Banner ended up right around the middle of that. We have kind of -- there are kind of cases in mind right now where I can imagine that being much shorter and others where it could be longer.

But I would kind of use that 3 to 9 months as probably a good metric. And I would also just remind again that when we announce orders, those are firm, firm orders. So unlike sometimes other capital equipment companies will report backlogs and order books and kind of those orders could be canceled, in our cases a cancellation would be -- have financial consequences for the customer. And so kind of orders are expected to be very, very firm orders.

And on the sales portion? Yes, sorry, go ahead.

So we still have a relatively modest salesforce. And with the vast majority of the sales team focused on clinical adoption, supporting existing customers, ensuring that they can do procedures, that they can get trained, that the nursing and support staff at the hospital is kind of running efficiently. And so that is still the vast majority of our sales team. We have several individuals who are predominantly focused on capital sales, including sales management. And we have experimented with some additional kind of marketing relationships or co-marketing relationships to try to improve kind of top-of-funnel activity.

And we are cognizant that at some point, as you want to -- you want to become a company that doesn't sell individual systems every quarter, a few systems a quarter. You want to become a company that can sell a hundred or hundreds of systems a year, and that requires both improvements to and obviously augmentation of the commercial capabilities and improvements from an innovation perspective to the product offering. And so we're very much working towards that type of future where we can do that. I don't think that you're going to see us grow the salesforce in perhaps the more traditional way of just hiring many capital reps and sending them to fly out constantly to knock on doors.

We're trying somewhat more creative things right now. And we're also constantly assessing the external macro environment. So if we assess the -- so we assess both the external environment, and we work internally on certain commercial capabilities or tools and innovation efforts that we think can get us to that kind of point of being able to sell kind of order of magnitude more systems.

Okay. When you talk about collaborations at the top of the funnel, are you talking about things such as your relationship with Acutus? Is that the way we should be thinking about it?

That would be a reasonable guess.

Okay. And then I don't know if I can push you on -- so 2021, you will have the ablation catheter at least CE-marked. And then you'll also -- it looks like you'll have the FDA submission or IND.

Can -- is this -- in terms of Europe at least, is this more of a second half event? Or how could we pinpoint it more in terms of when it might hit the numbers?

Yes. We still -- obviously, there's a lot of moving parts in getting a catheter regulatory approved. I would assume from a revenue perspective, I would not put anything in the first half.

Okay. And related to the earlier question, I know you talked about when the disposables or the recurring revenue stream gets, I guess, large enough per procedure, you would think about adding salespeople. Does this ablation catheter get you there? Obviously, not in the U.S. but in Europe? So is there -- I suppose you'll see how it goes, but assuming it goes well, does that support additional salespeople?

Yes. As I mentioned before, one of the challenges of Stereotaxis is that from a commercial team perspective, larger companies in this field as well as many other medical device fields do hire salespeople almost dedicated per hospital, and they're able to justify that given the revenue per procedure. That would be something that we could do now. It would boost our procedure volumes now, but it would be a highly unaccretive strategy.

With a new catheter at volumes below our average volume per account, having a salesperson per account would be very much financially feasible. That doesn't mean that you necessarily want to do that at every account, but it means that you have the flexibility now to be much more aggressive on the commercial team.

Okay. That's very fair. And then on capital budgets, it sounds like that's not been an issue in your discussions with hospitals. It sounds like other than the comment that they're more -- go ahead.

It has been an issue. There are still many hospitals out there that are suffering and having difficulty planning for things that they previously were planning for. Or they have pushed out replacements for their labs for a few years. So there is definitely still stress in the market. I think kind of what I tried to convey in the prepared remarks is that there is a return to more normal capital planning at a range of hospitals, but there are definitely others that are still suffering.

And also, I guess last question, you mentioned you've got these sites up and running; congratulations, and it sounds like they're running quite smoothly, which is also impressive, given some of the other capital equipment companies out there and the complexity of this system.

Do I take it that a lot of your customers are on the sidelines that are actually -- I don't know if they can actually visit at this point, but are clearly looking for -- it sounds like they're going to clearly look for that stability or that -- or a couple test subjects before they wanted to pull the trigger on your new system. Is that kind of how some of your discussions have went? And am I characterizing this correctly?

Yes. I think that there is a level of confidence that comes from seeing not just from hearing that we have installed the systems at the Stereotaxis headquarter, and we have tested them and we've done animal studies on them, but seeing that peers who aren't compensated by Stereotaxis, who are kind of independent, that they're using it in a day-to-day fashion with similar patients to what you as a potential physician customer would be looking to use it with and that it's been working smoothly, I think that is kind of -- it does provide a lot of confidence to physicians and those at the hospital. And so that kind of, while they can't -- while traveling is largely restricted using our TeleRobotic capabilities, we can allow visiting -- kind of a visiting physician, so to speak, to virtually visit and view a procedure at Banner or Helsinki, obviously with Banner or Helsinki's permission. And then obviously, just by phone discussions between the physicians also helps.

Okay. And then last quarter, you did mention, I think you did something like over 200, but you marked something like over 200 demos. I don't know if you care to update that number, how it progressed this quarter.

You mean the TeleRobotic visits to St. Louis, where we're hosting?

Yes.

So yes, we've had by now over 250 kind of individuals, physicians, hospital administrators, who visited us over the last, I guess by now it's about 9 months or so since we started that.

Guy Judkowski of Waterloo Partners.

My question is this. I'm just curious when you're -- and we talked about this earlier, months before, when you're talking to the hospitals about enhancing the ROI on the machines, to what extent are you able to convince or is it such that there are procedures that currently cannot be ablated in that, as you go up from Niobe to Genesis and perhaps from the Johnson & Johnson catheter to your own proprietary, does that pool of conditions where you cannot do a manual ablation -- does the robot then allow you to perform a robotic procedure so it can be done?

Yes. So actually, we did implement on our website, on the hospital page of our website, we did implement a kind of a short form of an ROI calculator that's actually open access for anyone.

And we have a more sophisticated model behind that, that we do share with hospital customers, and that was just implemented and kind of completed over late summertime. And the core aspect of an ROI calculation is being able to do more procedures. And doing more procedures can either take place because we're able to help physicians treat patients that otherwise wouldn't be good candidates for cardiac ablation with manual catheters, or by attracting patients.

What's nice, at least in -- obviously, internationally every country is different and reimbursements are different in every country. But in the U.S., the average -- the Medicare reimbursement and private payment reimbursement is overall very attractive for hospitals and you need very few incremental procedures a year, definitely less than one a week to have IRRs in the tens of percentages, in the 50% range. And so that is a core part of our ROI discussion with hospital administrators. And I don't think Genesis necessarily changes that. I think the catheter does allow us to change some of the dynamics there.

But I'm not sure Genesis versus Niobe change that ROI calculation.

But we have been -- as I've mentioned sometimes before, we're building out a whole range of tools and capabilities and infrastructure that allows us to become a company that can sell dozens, hundreds of systems a year. And that's obviously one small part of that infrastructure, which we've now implemented.

I see. One other question. It seems like you like -- you enjoy marketing and sales, which is great. I'm curious, is there a head of sales at the company? And also, what is your -- how many people do you have in sales? And how many are in Europe versus the U.S?

Sure. So we have about -- so we have a head of North American commercialization, EMEA commercialization and Asia Pacific commercialization. And then we have about -- depending on how you count sales team, we have about 40 individuals globally; that includes things like training, kind of -- obviously, a lot of that is clinical support for procedures, sales management, and about a dozen of those are in Europe and less than handful in Asia and the rest in North America.

(Operator Instructions) We'll now hear from Christopher Hillary of Roubaix.

I just wanted to ask, it seems like your outlook and your visibility has improved. Do you feel like something has changed over this most recent period of time? Or is it simply the passage of time and the cumulative efforts that you've been doing on research and sales?

So I think kind of if you remember in the beginning of March when we had our annual call this year, we were fairly bullish about the level of activity across multiple hospitals that were kind of seriously planning for installation of Genesis. And then obviously, kind of the pandemic hit us from left field, and that froze a lot of those discussions kind of through April, May, June, July. We've been able to restart many -- or several of those conversations and we had other conversations that have emerged. And that gives us the confidence now that the environment is still pressured, but there's sufficient activity that allows us to feel kind of that type of confidence.

Great. So a real tribute to your product that you can see that despite the challenging backdrop for your customers.

It's a big world. We're still a very small fish in a very, very big ocean. So again, at some point, kind of, I think Intuitive is still selling 100-plus systems a quarter. That's really kind of the goal we have to go to, but it's a step-by-step process and so kind of we'll continue.

(Operator Instructions) And it appears there are no further questions at this time.

Okay. Thank you for all your questions and for your continued support and interest. We wish you a healthy and successful end to the year and look forward to speaking with you in 2021. Thank you.

That does conclude today's conference. Thank you all for your participation. You may now disconnect.