Allurion Technologies Inc. (NYSE:ALUR) Q3 2024 Earnings Call Transcript

Allurion Technologies Inc. (NYSE:ALUR) Q3 2024 Earnings Call Transcript November 13, 2024

Operator: Thank you for standing by. My name is John, and I’ll be your conference operator today. At this time I would like to welcome everyone to the Allurion Third Quarter Earnings Call. All lines have been placed in mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Mike Cavanaugh, Investor Relations. Please go ahead.

Mike Cavanaugh: Good morning, and thank you all for joining us today. Earlier today, Allurion Technologies Incorporated issued a press release announcing financial results for the quarter ended September 30, 2024, as well as a review of the company’s recent business highlights. You can access a copy of the announcement on the company’s website at www.investors.allurion.com. With me on the call today are Shantanu Gaur, Founder and Chief Executive Officer; Brian Conyer, Vice President of Digital Health; Adrian Wild, Senior Vice President, International Commercial; and Chris Geberth, Chief Financial Officer. Before we begin, I’d like to inform you that comments mentioned on today’s call contain forward-looking statements within the meaning of federal securities laws, including, but not limited to the financial outlook for 2024 and our expectations regarding profitability in the future, the market and demand for our products and elective procedures, the impact of cost reduction initiatives on cash burn and runway, the ability to compete with GLP-1 drugs or use of the Allurion Program in combination with GLP-1 drugs, timing expectations regarding our ongoing clinical trials and expectations regarding our ability to launch our products in new markets and growth in procedure volumes.

Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our Securities and Exchange Commission filings, including our most recent 10-K filed on March 26, 2024. Our SEC filings can be found through our company website at investors.allurion.com or on the SEC’s website. Investors are cautioned not to place undue reliance on such forward-looking statements and Allurion undertakes no obligation to publicly update or release any revisions to these forward-looking statements. Please note that this conference call is being recorded and will be available for audio replay on our website at allurion.com under the Events & Presentations section on our Investor Relations page shortly after the conclusion of this call.

Today’s press release and supplementary financial data tables have been published to our website. And with that, I’ll turn the call over to Shantanu.

Shantanu Gaur: Good morning and as always, thank you for joining us today. While we’ve had a challenging year financially, I have clarity and excitement about the path forward we are announcing today composed of five tangible levers for Allurion to maximize shareholder value given our products, our team, and the massive opportunity in weight loss, which we have not truly capitalized on to date. We will also discuss the success of our AI product, which I’ve only touched on in the past, but believe can have a significant impact for shareholders in 2025. You will also hear us talk about a more efficient commercial strategy for our balloon business both globally and in preparation for the U.S. market given our AUDACITY trial readout slated for the end of this year.

I have deep conviction that our balloon platform works very well as we have ever increasing data that demonstrates its effectiveness and we have a plan now to realize its full potential. First, let’s discuss financials. Third quarter revenue was $5.4 million, which includes a reduction to revenue of $1.2 million per product recalled during the third quarter that was sold in France in prior quarters. Our performance this quarter was adversely affected by the suspension of the Allurion Balloon in France, macro headwinds in certain markets, and the launch of compounded and in some cases counterfeit GLP-1 drugs in the UK. In addition, while no similar action has been taken by any other regulatory authority outside of France, we believe, we did incur some temporary disruption in other markets as patients and providers became aware of the actions taken in France.

In the third quarter, we worked with ANSM on a remediation plan, which we completed in October. We remain optimistic about resuming commercialization in France as soon as possible. We had certain areas of strength in the third quarter, particularly in the Middle East, where procedure volumes grew by 20% compared to last year and growth in parts of Latin America that appear to be recovering from a macroeconomic standpoint. We believe that what is occurring now in the Middle East approximately one year after the introduction of GLP-1 drugs is driven in part by patients who have tried GLP-1s churned off and returned to their doctors for a second-line therapy like the Allurion Program. We believe that we may see a similar phenomenon play out in other markets in the future, lending more credence to our belief that GLP-1s may be a short-term headwind but a long term tailwind for Allurion.

One of the most exciting things I have to announce today for the first time is that we have seen significant growth in recurring revenue from our AI native platform, the Allurion Virtual Care Suite or VCS, for a third quarter in a row. This business line is led by Brian Conyer and I will pass it over to him to provide further details.

Brian Conyer: Thanks, Shantanu. I’ve been with Allurion for almost a year now and have a track record as a digital health entrepreneur. I’ve always looked at Allurion’s rich data set and global footprint as right for digital product lines. We’ve been very quiet about our AI products until we add traction, but it’s clear to me now that our digital business could be a driver of value for shareholders. Our AI product revenues have grown more than 80% year-over-year despite having invested minimal resources into the team thus far. We’re on track to double revenues from our AI products by year end. This growth was driven by expansion in the United States where we on-boarded our first patients who are taking GLP-1s and in Europe where we’re seeing growth in GLP-1 prescribing and a growing need for remote patient monitoring and 24/7 coaching.

With revenues increasing at this pace, we believe we can expand this business further in 2025 and plan on testing Coach Iris, our verticalized conversational AI agent for weight loss, in different use cases in the coming months, including for patients seeking GLP-1s as a first-line option. I look forward to exploring these exciting use cases in the near future, and I’ll now turn the call back over to Shantanu.

Shantanu Gaur: Thanks, Brian. Our performance in the third quarter calls for a decisive and clear strategy for 2025 to maximize value for shareholders. Our new plan is built around five pillars. Number one, a new commercial plan focused on deeper penetration in a smaller footprint. Direct markets, and business-to-business-to-consumer or B2B2C marketing versus direct-to-consumer or D2C marketing. Number two, scaling our now proven AI product platform through a variety of business models. Number three, gaining FDA approval for the Allurion Balloon and preparing for U.S. launch. Number four, achieving profitability for the ex-U.S. business by the end of 2025; and number five, resuming commercialization in France. While macro headwinds and other pressures outside of our control remain a reality.

What we can control is the execution of our new plan. Before I expand on certain aspects of the new plan, I think it’s helpful to reflect on the commercial strategy that we have employed historically and how I see it changing. In 2021, we shifted our marketing strategy to be more heavily reliant on DTC advertising, primarily through online channels. While this strategy stimulated strong top-line growth initially with the rise of telehealth companies offering GLP-1s, these DTC channels became more crowded and less efficient. This year, we dialed back our spending in DTC. In the third quarter, our DTC marketing spend reduced by 77% compared to the prior year, but procedure volumes still increased by 2%, indicating that the demand lost through the drop in DTC was being replaced, at least in part by organic growth.

Our performance in the third quarter underscores that in order to return to growth in 2025, we need to deploy a strategy even less reliant on DTC with a team well versed in more sustainable and profitable B2B2C strategies. Our new commercial strategy will be led by Adrian Wild, Senior Vice President of International Commercial. I’ll now hand the call over to him to provide further details on the strategy.

Adrian Wild: Thanks, Shantanu. I’m excited to be leading Allurion’s commercial efforts at this pivotal moment. Our new strategy is inspired by the successful approaches taken by other cash pay medical devices, especially Invisalign, where I oversaw expansion in overseas markets for over a decade to achieve significant growth in a profitable manner. This new strategy involves three major shifts in our commercial approach. First, we are retooling our sales team from top to bottom with individuals who are experienced in deploying sustainable and profitable B2B2C strategies. We have already mapped the profiles and skill sets we need in our commercial team, and implemented a plan to ensure we have the right talent in each role.

Second, we will focus on going deep rather than wide. This will entail a number of changes, including that we exit less profitable markets and double down in markets with high potential, deploy a consultative sales approach that is focused on growing account productivity and increase our focus on core channels, including bariatrics, where we have built strong relationships in the past decade. Third, we are deploying rigorous sales management processes throughout the commercial organization related to account planning, execution and forecasting. We believe this will enable us to make more informed decisions, ensure that our commercial efforts are yielding the desired outcomes and more reliable forecasts for the business. We have already begun to pilot several of these approaches this quarter and are seeing positive traction.

I look forward to expanding this strategy globally in the near future. With that, I will turn the call back over to Shantanu.

Shantanu Gaur: Thanks, Adrian. As we implement these changes, our goal is to create a resized and more focused sales team that can return us to growth. Given the depth and breadth of the changes we are making, we expect it to take several quarters to fully realize the many benefits that will come from it, with some short-term disruption as the changes are implemented. As a result, we expect 2024 revenue to be in the range of $30 million to $35 million and procedure volume to be flat compared to 2023. In addition to the changes we are making in the commercial team, we have also strategically streamlined our operational structure, which we believe will result in a significantly lower cost base and allow us to focus on a narrow list of high impact initiatives, bolster profitability and decrease cash burn.

Through this restructuring, we have reduced our global headcount by approximately half and consolidated functions under centralized leadership. Taken together, we expect these changes to result in reduction in operating expenses of approximately 50% in 2025. We have strong conviction that the combination of the change in commercial strategy and more streamlined operating structure is the right move for our business over the long term. Turning to our FDA pathway. We are very pleased to share that the last patient has exited the AUDACITY trial, putting us on track for data readout at the end of the year. I’m also very proud of our team for achieving another critical milestone in October when we submitted the first three modules for our premarket approval application or PMA to the FDA.

In a modular PMA application, the FDA allows applicants to submit discrete sections of the application for review to improve the efficiency of the process. We expect to submit the fourth and final module of the PMA containing the clinical data for the AUDACITY trial early next year. We believe that if approved by FDA, the Allurion Balloon can capitalize on the massive opportunity in the United States that has been created by the availability of GLP-1 drugs. In addition to the data we have published on the benefits of combining the Allurion Balloon with GLP-1s, we believe there’s an even bigger opportunity for the Allurion Balloon as a second-line treatment after GLP-1 discontinuation. In a recent study by Prime Therapeutics, a PBM, only 25% of patients who started either Wegovy or Ozempic remained on it two years later, and healthcare costs for patients taking GLP-1s actually increased over this two year period.

We believe that the Allurion Balloon can be a highly attractive therapeutic alternative for the millions of people in the United States who are trying GLP-1s churning off and then regaining their weight. Before I turn the call over to Chris, I want to touch on the impressive data that has been published or presented recently on the Allurion Balloon. In August, we announced the publication of a study in 486 patients showing that with ongoing virtual guidance and support through the VCS, patients can actually continue to lose weight even after the Allurion Balloon passes. In September, we announced the publication of three studies that underscore the advantages of the Allurion Program over other therapies and areas in which we could potentially expand our indication, including first, a study in 91 adolescents who achieved a 13% weight reduction without any serious adverse events.

Second, a meta analysis of 11 studies in 2,107 patients reporting an average weight reduction of 12.5% and significant improvements in comorbidities. And third, a study in 167 patients showing a 15.7% weight reduction after just four months, 94% weight maintenance at one year and no significant change in muscle mass. Recently, at the Obesity Society’s annual conference, we presented the largest ever real world experience of 19,428 patients treated with the Allurion Program across 72 countries. In this real world experience, patients lost an average of 12.2% of their total body weight in just four months with remarkable consistency across geographies. We now have 26 peer reviewed journal publications that collectively validate the safety and efficacy of the Allurion Program.

Very simply, our program works and I am more bullish than ever on the role the Allurion Program can play in a dynamic and rapidly growing obesity market. I will now turn the call over to Chris Geberth, our Chief Financial Officer. Chris?

Chris Geberth: Thank you, Shantanu. Our revenue for the third quarter of 2024 was $5.4 million compared to $18.2 million for the same period in 2023. The year-over-year decrease in revenue reflected destocking, macroeconomic headwinds in certain markets leading to lower reorder rates during the period, the temporary suspension of sales in France, and the resulting reduction to revenue in the period for product recalled in the third quarter of 2024 and reductions in sales certain accounts to manage credit risk. Gross profit for the third quarter was 58% compared to 77% for the same period in 2023, negatively impacted by the reduction to revenue in the period related to the product recalled in France and lower production volumes, which resulted in less manufacturing labor and overhead being absorbed into inventory costs.

We expect gross profit to expand in the fourth quarter with the product recall in France now complete. Sales and marketing expenses of $5.2 million decreased by $8.8 million or 63% for the quarter driven largely by increased operating efficiency, reduced DTC marketing, and our cost reduction initiatives implemented in the fourth quarter of 2023. Research and development expenses decreased by $4 million to $3.2 million in the quarter driven by reduced costs related to our FDA AUDACITY trial. General and administrative expenses of $7 million decreased by $11.9 million driven by $10 million of transaction-related expenses and stock-based compensation expense related to the business combination with Compute Health recognized in the third quarter of 2023 and less bad debt expense recognized in the third quarter of 2024 compared to the third quarter of 2023.

Loss from operations for the third quarter decreased by $13.8 million to $12.3 million, compared to $26.2 million in the same period in 2023. The decrease in loss from operations was driven by $10 million of transaction-related expenses and stock-based compensation expense related to the business combination with Compute Health recognized in the third quarter of 2023 and our efforts to reduce operating costs partially offset by lower gross profit from less sales. As of September 30, 2024 we had cash, and cash equivalents of $28.7 million. I will now turn the call back over to Shantanu.

Shantanu Gaur: Thanks, Chris. We are making significant and difficult changes in our people, our processes and our commercial strategy to create a profitable and sustainable business around the Allurion Balloon. We are also firmly convinced that these are the right steps to return Allurion to meaningful, sustainable top-line growth. The obesity market continues to grow and as demonstrated by the growing library of clinical data in support of the safety and efficacy of the Allurion Balloon, the opportunity ahead of us remains firmly intact. We also believe that the growth we are experiencing in our VCS SaaS [ph] business, driven by a nimble and entrepreneurial team inside of Allurion and the rise of GLP-1s could accelerate our return to top-line growth.

Our AI native platform has become vital to our customers, managing patients on a number of different weight loss therapies and I look forward to the different use cases we will be testing in the months to come. Finally, I’d like to thank Chris Geberth for his service and dedication to Allurion. I could not have asked for a better partner to navigate the past four years with. During his transition period, Chris will remain on as a consultant and will assist Tara Brady [ph] who will be serving as our interim CFO as we conduct our search for a permanent replacement. With that, I will now turn the call over to the questions-and-answer portion of the call. Operator, please open up the call for questions.

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Josh Jennings with TD Cowen. Please go ahead.

Josh Jennings: Hi, good morning gentlemen. Chris, sorry to hear about your departure, but I’m sure your next chapter will be exciting. Thanks for the thorough download as well and wanted to just start on the PMA filing three out of four modules submitted. Shantanu, can you just talk, just remind us, I mean, have those three modules been signed off on? Just waiting for the clinical data module to be submitted. Once that data is in hand and packaged up and any interactions with the FDA, any details you can share would be appreciated?

Shantanu Gaur: Absolutely. Thanks for the question, Josh. The first three modules of the PMA cover a variety of topics including benchtop verification, validation, testing related to the product, an assessment of our quality system and certain regulatory controls, and also an assessment of our manufacturing processes and SOPs. It’s all three of those modules have now been filed. They are being reviewed by the FDA. So far the conversations with the FDA have been very positive around those three modules and we’ve addressed some minor questions that have been posed to us. Our plan with the AUDACITY readout at the end of that, and the end of this year is to package that data up early next year as part of module 4 and then complete the submission. Once we do have acceptance of modules 1, 2 and 3, we may very well communicate that externally as well.

Josh Jennings: Thanks for that. And it sounds like your team’s in the process of unleashing the Virtual Care Suite. I was hoping to just better understand the revenue generation model where it stands today. And you called out first GLP-1 patients on-boarded in the U.S. and I guess it’s just a high level question about more details on revenue generation and then just, the path in the U.S. prior to the balloon approval and with this Medtronic collaboration as well in terms of on-boarding their patients. Sorry, it’s a general question on Virtual Care Suite, but looking just for a little bit more detail would be great.

Shantanu Gaur: Yes, our AI product or the Virtual Care Suite or VCS is really a quite versatile product. It allows providers to follow and coach and monitor patients who are going through a variety of different weight loss interventions, whether it’s the Allurion Balloon outside the United States GLP-1s. Now we’re seeing patients on our platform both in the U.S. and outside the U.S. ramp up with GLP-1 therapy or even bariatric surgery. And that if you recall, Josh was also subject of part of our partnership with Medtronic expanding the use of our Virtual Care Suite in the bariatric surgery channel. And so all three of those device GLP-1s and surgery, all three of those patients can be served on our Virtual Care Suite. The way we monetize the Virtual Care Suite is really twofold.

One, we work directly with the providers who are using the Allurion Balloon today. And we offer a basic VCS version and also a premium VCS version that gives the provider access to more AI features and also more monitoring features. That revenue generation happens on a per patient, per month model where providers are paying us a fee to use the software on a per patient, per month basis. What we’re doing in the U.S. is very interesting because obviously we don’t have any balloon providers in the U.S. using the balloon today. Once the product gets FDA approved, that will change. But for now what we’re focusing on are busy high volume weight loss practices that are seeing an increase in patient volume because of the rise of GLP-1s, but really don’t have the infrastructure to follow those patients.

We actually call these GLP-1 patients GLP-1 orphans. They’re given a drug, but they’re not given any sort of coaching, they’re not given any sort of behavior change program. And as a result, the results are nowhere near as efficacious as you would see in a clinical trial. And the adherence rates really suffer. And in the U.S. as well, that’s on a per patient, per month type of model. So we see a lot of potential in the U.S. with our software because there are now millions. In fact, one in eight U.S. adults have now tried a GLP-1 and the vast majority of them are not getting the coaching, the follow up and the treatment that they actually need in order to lose weight and keep it off in the future.

Josh Jennings: Excellent. Maybe just one more. You’re not giving 2025 guidance, but a multilayered question. Just thinking about the recovery in France. Probably impossible to forecast at this point, but that, France business was a $5.5 billion plus – million [ph] franchise in 2023. Can you just help us think about the recovery trajectory in 2025 as we’re updating our models and also anything you can just share on the Virtual Care Suite, revenue contributions in 2025 and maybe at a high level or even detailed color on how we should be thinking about revenue contributions from the AI platform? Thanks a lot.

Shantanu Gaur: Yes. With regards to 2025, we’re not offering any guidance to date with regards to France. We have had very productive conversations with ANSM. As you heard earlier, we did submit our remediation plan to ANSM in August and completed it in September. We’re now awaiting feedback from ANSM, but remain, very optimistic about getting the product back on the market in France and resuming commercialization. We’re not providing any sort of timeline at this point about when the product would get back on the market in France and hence it’s difficult to really provide any sort of contribution in 2025 from France at this point. With regards to VCS, we’re not breaking out VCS revenue separate from our balloon revenue just yet.

But I will say that the potential for VCS and our AI product in general is massive. When you look at how many people in the U.S. and outside the U.S. are now on-boarding onto GLP-1s. When you look at how these busy practices are failing to really keep up with that volume and you see all of the benefits that an AI product like ours brings to a busy weight loss practice, I think the potential is massive. So we are not breaking it out for now, but I believe it is a very high potential part of our business and could accelerate our return to top-line growth.

Josh Jennings: Understood. Appreciate it. Thank you.

Shantanu Gaur: Thank you.

Operator: Our next question comes from the line of Matt Taylor with Jefferies. Please go ahead.

Matt Taylor: Hi. Thanks for taking the question. So the first one, I wanted to ask was do you think you may be able to produce any revenue in the U.S. in 2025? And if you could help us with a little bit more specificity on gross margins in Q4 and whether that is a jumping off point for how to think about them in 2025, that would be very helpful for the model?

Shantanu Gaur: Yes. In terms of 2025, we’re expecting some U.S. revenue to come on the Virtual Care Suite, AI product side of our business, at this point it’s difficult to assess what the FDA timing is going to look like for the Allurion Balloon. So for now, that’s really all we can offer in terms of 2025. And with regards to your question on margin, I’ll hand it over to Chris.

Chris Geberth: Hey, Matt. It’s Chris. So as far as margin goes, it was negatively impacted by the reduction in revenue for the charge we took related to recall and also just lower volume as we could see. Our numbers were down. Margin would have been in the low 60s without that France recall. And I would expect that in Q4 without those France adjustments, margin would still be in that low to mid 60 area. And then with the restructuring that we implemented in November, that goes across all departments, including operations, and we’re looking at our volume forecast and I would expect that March to creep back up to the mid-70s through the year, mostly towards the end of 2025.

Matt Taylor: Okay, great. And then I did want to ask one about the restructuring. When you’re talking about the 50% reduction in expenses, can you help us with a little bit more specificity of where that’s coming out of between sales and marketing, R&D and G&A? And I guess the follow up to that is that, you have historically relied a lot on DTC to drive demand, I know you grew volume 2% with a 77% DTC reduction this quarter. But as you look at next year, I guess I’d love for you to comment on whether you think you can grow overall from the revised guidance midpoint of $32.5 million.

Chris Geberth: Yes. Let me start with the reason why we did the restructuring. I mean, considering the revenue levels that we’ve achieved to date and then the forecast going forward, we really evaluated the entire structure across all departments and we looked at ways to gain efficiency and work towards profitability at the end of 2025. So expense reductions are across all departments. And that 50% really does kind of equal what you would see from a change in each department. But we were really cautious about what we reduced, especially in the sales side of the departments. For instance, we did lower a lot of our marketing expenses, like you just pointed out with DTC. But we have increased the number of heads in the sales department in order to work more effectively with our customers.

So, I think we positioned ourselves to work through the plan that Shantanu laid out in the prepared remarks regarding the commercial strategy going forward in order to get back to growth. But I mean, I would expect that without France in our numbers for the first half of 2025, say, versus last year, I would expect that our revenue growth would be more weighted towards the second half of the year, especially as we complete the restructuring efforts. And also as you know, with any change in commercial plans, there’s a ramp up period. I think as Shantanu said, it could take several quarters to really get the full benefit of those changes. So I think for next year, we’re looking at is, a base sort of business in Q4 in the first half and then growth in the second half.

Matt Taylor: Okay, great. Thank you. Thanks for taking the question again.

Operator: [Operator Instructions] Our next question comes from the line of [indiscernible]. Please go ahead.

Unidentified Analyst: Hi, thanks for taking the questions. Just if you could maybe you said this in the beginning, can you quantitate the impact from France and destocking in the quarter?

Chris Geberth: So for France, we haven’t acknowledged before that France used to be about 15% of our revenue. I would say it’s, just to give it some numbers, over a $1 million that we would have had in France, plus we had a recall adjustment of $1.2 million that went against revenue. So that was not related to sales in this quarter, but for sales related to prior periods where we had kickback the inventory and for accounting purposes, that requires an adjustment against revenue in the current period.

Unidentified Analyst: Okay, great. Got it. And then in terms of the cost reduction plan, did I hear that correctly that that will be implemented over the next few quarters? Or is that something that kind of completes by the end of the year? What is the staging on that reduction?

Shantanu Gaur: Sure, Jason. So we actually already started the implementation of this with a reduction in force and expenses. So most of that will come in the fourth quarter. We will have a charge in the fourth quarter, approximately $3.5 million as above the normal trend in operating expenses. But most of that should be done. There will be some in Q1, just some cost, not people related subcontracts I need to complete in the first quarter. But most of it will be done in the short term.

Unidentified Analyst: Okay, got it. And then again another sort of follow up question here. Did I hear correctly that you’re still kind of committed to reaching breakeven sort of by the end of 2025, especially with this new cost structure. Is that the right way to think about it?

Chris Geberth: Yes. What we’re looking at measuring is a late 2025 adjusted EBITDA target of profitability.

Unidentified Analyst: Okay, great. And then I don’t know if you can give any kind of regional discussion in terms of how revenues look. Were there certain regions that were stronger than others and maybe some commentary around what the drivers might be?

Shantanu Gaur: Yes, one thing we did note this quarter, and we’ve actually seen it in previous quarters as well, is that in the Middle East, we’re starting to see a recovery of both the balloon business. So overall bariatric surgery volumes, what we have witnessed in that part of the world where GLP-1s launched approximately one year ago is that they launched with a lot of excitement and frankly, a lot of hype. And over the past 12 months, what we’ve seen is patients start a GLP-1 churn off, regain their weight, and then come back to their doctor looking for a second line therapy. So that’s, I believe, one phenomenon we may see in other territories as the GLP-1 markets mature. In Latin America, we saw some abatement of some of those macroeconomic headwinds that we have talked about previously, which led to more favorable growth in parts of Latin America.

And I’d say more broadly, what we are seeing in almost every territory in the world is that we’re starting to see tangibly how GLP-1s can really help our business. More of our providers are using the Allurion Balloon in combination with GLP-1s. 33% of our patients now have previously tried an anti-obesity medication. That’s up from 25% last year. And what we’re seeing now is that Allurion is increasingly being positioned as a fantastic second-line therapy for someone who has tried a GLP-1 churned off and regained the weight. So from a macro perspective, we’re seeing some really positive trends which, related to a question that was asked earlier, could actually help us fuel procedural volumes in the future, but without a significant investment in DTC marketing.

Unidentified Analyst: Okay, thank you. It’s very helpful. And maybe just one last one. In terms of those patients that are going on GLP-1s plus your product, what kind of profile is that patient?

Shantanu Gaur: Typically, these are patients that have a body mass index between BMI 27 and 40. They are trying GLP-1s as a first-line therapy. They may very well have heard about GLP-1s either through their doctor or online. Many of them are right in our target demographic, mostly female in their mid-40s who are looking to lose weight quickly, safely and effectively. And what we have found with the combination therapy is that when they started GLP-1, either they experience a plateau in their weight loss or they’re just not losing as much weight as they had expected. And that’s a perfect opportunity to bring the balloon online. We’re also seeing the reverse in certain practices where the provider likes to start with the Allurion Balloon.

They may tack on a GLP-1 in combination with the balloon near the end of our balloon residency so that the patient can continue to lose weight or at least maintain their weight loss over a longer period of time. And when I think about the United States, for instance, where our balloon is not present, one of the things I’m very excited about with the launch of our VCS platform in the U.S. Is that if a patient is on-boarded on our VCS and is taking a GLP-1, it’s very likely that they may very well churn off of that GLP-1 and then potentially be ready for the Allurion Balloon if and when it’s FDA approved and we launched in the U.S. So that’s another interesting thing that we’ll be watching in the U.S. as we expand the footprint of our software here in the United States.

Unidentified Analyst: Got it. Thanks. I’ll jump back in queue. Thank you very much.

Shantanu Gaur: Thank you.

Operator: As there are no further questions at this time, I would like to turn the conference back over to Shantanu Gaur for any closing remarks.

Shantanu Gaur: Thank you very much. As we close our call here, I’d like to extend my thanks to everyone who joined us today. We really appreciate your time and interest in Allurion. I appreciate the continued support and loyalty of our shareholders, all of our clients and customers around the world, and certainly our employees. Your belief in our mission, commitment to our company is really inspiring and is going to be instrumental to our future success. And we look forward to updating all of you on our progress in the next quarter. Thank you again, everyone. Have a great day.

Operator: That concludes today’s meeting. Thank you for your participation. You may now disconnect.