Arun Menawat: Yes. So I know Rick was asking something similar to that, so maybe I can elaborate a little bit. So I think the bottom line, I don’t envision that there will be a negative impact to the economics, whether it’s radical prostatectomy or TULSA. I think that there is logic and a lot of data that supports that we will be in the same league. So that’s certainly one of the points. The second point, I think, is that, as we’ve talked before, there is a temporary code, a C-Code, and leading hospitals are using that C-Code. And in 2023, that C-Code, the payment amount of that C-Code, it changes kind of every year, but in 2023, that C-Code was paying $12,700. And that amount was based upon the cost analysis that was done by CMS on the patients that were treated with TULSA.
So logic, and I want to underscore the word logic, because, basically, the analysis that the CMS does for the permanent code is fairly similar to the analysis they do for these temporary codes. So the logic is that it should not be very different from where we are in the temporary phase. Now, having said that, I want to emphasize explicitly that ultimately, CMS can do anything they want they do. And so I cannot promise you that that’s where it’s going to be. But this is the best I can provide, that I do think that there won’t be anything that will be negative as compared to radical prostatectomy. I feel fairly comfortable with that. And I think that the logic, at least, is that we will be in the same range as where the temporary code is.
Rahul Sarugaser: That’s very helpful. Thanks very much Arun, and I’ll get back in the queue.
Arun Menawat: Thank you.
Operator: One moment for our next question. Our next question comes from Michael Sarcone with Jefferies. Please proceed with your question.
Michael Sarcone: Hey, good afternoon, and thanks for taking the questions.
Arun Menawat: Good afternoon Michael.
Michael Sarcone: Yes, I just had a clarification on one of your responses, Arun, to one of Rick’s questions. When you were talking about the kind of pluses and minuses for 2024, it sounded like, or I thought I heard, you said you might start to see a mix of capital and recurring revenues, which can ramp the top line a little faster. But then in some of your prepared commentary, I thought you might have mentioned sales of the combined solution with Siemens Health in years might start in 2025. So just wanted to get a clarification there.
Arun Menawat: Yes. No, I think that’s a good question. So I think what we are beginning to hear, Michael, first of all, we have multiple sites that are now increasing their usage, and that was one of the reasons, obviously, Q4 was in terms of the usage and the revenue was a decent number. But we’re starting to certainly hear from number of sites that they might very well be interested in more of the standard medical device model where you are paying a certain amount for the upfront system and then you are paying perhaps slightly lower amount for the disposable part of this. And so we have evaluated a number of these models. And so, I think that my comment related to the Siemens and my comment related to the capital plus recurring are two separate things.
So my point is that I think even in 2024, we’re likely to see that we’ll start to see some capital revenue starting to come in for those hospitals that already budgeted for this and will have budget even in 2024, I think some of those will close this year. So that is related primarily to TULSA business. And then second half of 2025, I think at that point, when we get closer to it, we’ll sort of describe the business models in more detail, but that’s a separate thing.
Michael Sarcone: I see. That’s really helpful. Thank you. So I guess just to stay on that topic, you’re expecting to end the year at 75 TULSA systems. So I mean, could you give us any color just as we update our models for 2024, right. That’s an incremental 25 systems from where you are today. What portion of those systems could be sold under this kind of revised capital sales model, and then any color you could provide on where you think system ASPs might be for some of these new arrangements you’re going to have with some of these sites.
Arun Menawat: Yes. Michael, for today, I only wanted to give the heads up that you will start to see some capital revenue. I think what our plan is that – as that evolves, I think we will try to provide more color every quarter. But I think all in all, at this point, what we’re saying we grew 60% last year, we grew about the same the year before that. And I think we’re sort of in that league at the moment. And the mix of how we get there could be a little bit different. And that if it changes as we get to the quarters, I think we will – we want to. We just don’t think that we have enough history to be able to provide that type of guidance just yet, Michael.
Michael Sarcone: Okay, totally fair. I understand. And then I guess one last one on this topic, and that’ll be good for me. What are the reasons that some of these systems that you’re working with now are saying they’d prefer to pay up front versus the more higher price consumable model? What’s making them change their tune now?
Arun Menawat: I think it’s just usage. They’re finding that they’re using it more frequently. They can start to see that once the reimbursement comes in, that the usage can increase. So it’s more related to, hey, we want to go to more standard models and service agreements, capital allocations for the product. There’s nothing unusual. I think it’s just hospitals saying, hey, we want to go through a standard model and our product is much more. It’s stabilized in the sense that we’re not necessarily updating software every day as compared to when we started, where lots of things were changing, it’s pretty stabilized. And I think we are also looking at it from the perspective that when we introduced it, the best way to do so was with a recurring revenue.
