Sonendo, Inc. (NYSE:SONX) Q4 2022 Earnings Call Transcript

Michael Watts: And just to add to that answer and talk about the mix of GP endo. So, as we look at the GP segment, our focus is to make sure that we continue to support the endodontic segment. We have a very good position with endodontists today, and very good programs there. We want to make sure that they continue to get that level of effort that we put behind them in the past and that we don’t move too quickly into the GP segment going forward. So we won’t be breaking out necessarily the GP to endo split at the present time.

Erin Wright: Okay. Thanks so much. And do you have a target ending installed base that we should be thinking about in terms of how we should be mapping out the year in terms of placement trends? And sorry if you covered some of this already, but just want to make sure that should they be relatively even or lumpy throughout the quarterly progression throughout the year? Thanks.

Michael Watts: Yes. So Erin, I think without trying to break the guide up into its pieces of consoles and PIs, for us what we tried to do is just give color around what the mix and what the variability is between the $48 million to $51 million as Bjarne talked about. And a lot of that comes down to fluctuations just as you see in the capital environment drives that range.

Erin Wright: Okay. Great. Thank you.

Michael Watts: Thank you, Erin.

Operator: Our next question is from Nathan Rich with Goldman Sachs. Your line is now open.

Nathan Rich: Hi. Good afternoon. Thanks for the questions. I guess kind of building off of Erin’s last question. I just wanted to get a sense of how you’re expecting utilization to trend this year? It seems like — obviously, the macro uncertainty is out there, but it seems like the underlying procedure volumes have been pretty stable. And I guess as we move through the year, do you expect an increase in utilization as you transition to the new kind of tiered program for the PI?

Bjarne Bergheim: Yes, hi Nate. So maybe I’ll take the first part of that. If you look at our consumable reps right now, they have been substantially focused on driving conversion to CleanFlow, and also driving install of new units, that’s been their focus and that’s going to continue to be their focus until we have substantially converted the field to CleanFlow. And then we can have the consumable team actually be more focused on driving utilization. With regards to the GPs, you’re alluding to, I think an important point right there is some — in general, GPs are utilizing — doing less root canals. That’s exactly why we’re focused on the higher than the GPs that are doing the most root canal procedures. And obviously, we’re learning here as we go forward.

But in general, what we’re seeing is that GPs do own their own patient and their value proposition with GentleWave resonates, we think even more. So it’s very possible that we can see a higher share of wallet in this segment. I think the other thing that you’re alluding to obviously in your question is also the impact of how price can impact us. We’ve set up the price to help incentivize higher utilization. I think there is another element of the pricing structure here that will also hopefully help us on the GP side. Now if we have accounts that are doing less, they will end up paying a higher ASP. So as we continue to go through the year, we will be carefully watching obviously utilization in these different accounts, including utilization and the GP accounts.

But we will also be watching — carefully watching the revenue for these different accounts as we continue to build this out. So that’s going to be an important part of our thinking going forward.

Nathan Rich: Okay, great. And then, I was wondering if you could maybe just talk at a high level about the transition to CleanFlow. And as you started to see adoption, are there any procedures that endos like using this for more or less? And do you kind of envision that both for anterior and posterior procedures that CleanFlow kind of becomes the standard and becomes — endos are most kind of comfortable using that PI for those procedures? If you can maybe just speak to those dynamics at a high level.

Bjarne Bergheim: Yes Nate, good questions. Ultimately, like we’ve talked about in our prepared remarks, we have a goal to transition all of our procedure instruments over to CleanFlow. And like you’re talking about in your question, ultimately make CleanFlow the standard procedure instrument here going forward. What we see is that doctors have gotten used to a certain workflow with the old procedure instruments and that in order to convert them to CleanFlow, we need to go out there with our consumable rep and train them on this slightly different workflow, but also easier and more expedient workflow that you can achieve with CleanFlow. So that’s the focus at this point in time. And we’re really happy to report out that 47% of all procedure instruments sold in Q4 were done with CleanFlow.

And as we move forward, we also are working on obviously everything that needs to be done to start selling CleanFlow for anterior teeth as well. And so, I think that we’re doing behind the scenes at this point in time on anteriors is that, we are using CleanFlow in a small limited market release, specifically for anteriors, where we’re also looking at all the training materials and getting everything ready. And then for ultimately the full commercial release of CleanFlow for anteriors. And as we talked about in our prepared remarks, we expect that to happen midyear. And again, then that will offer a more holistic platform, where we can effectively now have on PI that can be done on all of these different procedures and that’s kind of — that’s a key step and an important step for us to transition all procedures over to CleanFlow by middle of 2024.