Good morning, everyone. Thank you for attending the William Blair Growth Stock Conference. My name is Margaret Kayser Andrew, I am the analyst here at William Blair that covers CVRx. I am required to tell you that you can find a complete list of research disclosures and conflicts of interest at williamblair.com. With that said, I'm going to turn it over to the team, and there might be some time for questions at the end. Thanks.
Super. Thank you, Margaret. I'm Kevin Hykes. I'm the CEO of CVRx. My pleasure to speak to you this morning on behalf of the company. These are our forward-looking statements. Additional risk factors are available on our website. CVRx has developed the world's first neuromodulation therapy to improve heart failure symptoms. It's a $2.2 billion annual market opportunity with a well-defined population who have few treatment options today, and a highly differentiated therapy with a remarkable response rate. What I'll share with you later is what we believe is a focused plan to drive this therapy to standard of care for the treatment of heart failure. Heart failure is a burdensome, significant condition affecting over 6 million Americans alone.
It results in over a million hospital discharges, over a million emergency room visits, 8 million physician office visits each year, and has annual costs that are expected to reach $70 billion by 2030. It is a progressive disease that is characterized by a steady decline in quality of life and increasingly frequent hospitalizations. When patients are first diagnosed, they are initiated on a regimen of four drugs called quad therapy. They are also considered for a therapy called cardiac resynchronization. At the end of their disease journey, less than 2% of patients are eligible for an LVAD or a cardiac transplant. The other 98%, unfortunately, are not and often move on to hospice. In the intervening 5-10 years, patients are stuck suffering with significantly decreasing quality of life and few options. This has been the paradigm in the treatment of heart failure for over 30 years.
These drugs, the quad therapy drugs, have been shown to extend life when taken compliantly and when taken at optimal doses. In the studies on the left to show they can extend life up to 1-6 years, but only 1% of patients ever reach optimal doses of all four meds. At the end of the first year, over 40% of patients have discontinued at least one of those drugs. These drugs have also not shown any significant impact on quality of life as measured by exercise capacity, which is the common surrogate for quality of life in this population. You see on the slide each of those four drugs low single-digit impact on patients' quality of lives. CRT, cardiac resynchronization therapy, has shown benefits in both survival and quality of life in a subset of patients, improving survival by 36% and quality of life by 19%.
Most patients, only 30%, are eligible for this therapy. Most are not and on that 30% that received the therapy, another 30% failed to respond. This limited set of options leaves the majority of heart failure patients suffering from significantly diminished quality of life. We know that 66% of them report mobility, sorry, mobility problems. 68% report pain or discomfort. 76% find the activities of daily living to be difficult. 50% suffer from anxiety or depression. Significant impact on their quality of life. Multiple studies have shown that the majority of these patients would choose living better versus living longer. Today we are delaying death with these drugs, but not necessarily extending life. Barostim addresses this paradigm, the significant unmet need in the heart failure treatment continuum.
The patients in the middle of this graph in the purple that the heart failure specialists call the walking wounded or the forgotten middle. Importantly, in December of 2024, the Heart Failure Society of America published a consensus statement in the Journal of Cardiac Failure that for the first time put a time domain, sort of a point of diminishing returns on drug therapy. They said if after 3-6 months of drug therapy a patient is still symptomatic, device-based intervention should be considered. That's the first time they've ever said that. It's an important first step in changing this paradigm that until today has largely been about endlessly tweaking medication with the hope that you'll get the right combination, that the patient will actually take the medication, and that you'll have some impact on their quality of life.
These are the patients that are indicated for Barostim. And that indication gives rise to a $2.2 billion annual net incidence for our condition. That's roughly 76,000 patients per year indicated for Barostim therapy. Importantly, less than 2% of that annual incidence is today penetrated with Barostim therapy. So significant opportunity to expand the adoption of this therapy. Switch and talk a little bit about the therapy and the mechanisms of action. The system itself is comprised of an implantable pulse generator that looks a lot like a pacemaker or an ICD. It has a battery life of about 6 years. A carotid sinus lead, a small flexible silicone lead that's tunneled from the implantation in the chest to the carotid sinus, and a programmer that's used to adjust device settings remotely. The implantation is relatively simple.
It's a 60-minute procedure done on either an inpatient or outpatient basis. It requires a small incision in the neck and a second small incision in the chest. Importantly, it's entirely extravascular. There is no hardware or leads that go into the heart or into the vasculature, which gives rise to a remarkably safe and complication-free procedure. We've demonstrated a 97% freedom from major complications in our most recent randomized controlled trial. A little bit about heart failure. The symptoms and the disease itself are driven by the body's natural fight or flight response. It starts with a weakened heart, which can be the result of multiple different conditions, which reduces the pumping function of the heart. That reduced pumping function results in reduced signaling from the body's natural pressure sensors, which are called baroreceptors, and they sit on the carotid artery.
That reduced signaling is interpreted by the brain as a cardiovascular crisis. The brain thinks you're hemorrhaging or severely dehydrated. As a result, the brain activates the fight or flight response. That fight or flight response is driven by sympathetic tone. It kind of jams on the accelerator and increases sympathetic nerve activity, and it increases the release of powerful neural hormones into your system to try to rescue the body from this perceived crisis. Those neural hormones and a chronic exposure to them is what causes the disease to progress and what causes the symptoms that patients experience when they have heart failure. It's important to note there is no natural off switch for this fight or flight response in heart failure except for the restoration of that signal from the pressure sensor to the brain.
Today's drug therapy, the quad therapies, are based on the principle of neurohormonal blockade. They are effectively trying to shield the heart and the kidneys and the vasculature from those circulating neural hormones to shield them from that storm. That has been the basis for drug therapy for 20 or 30 years. Barostim operates on that same mechanism, but upstream by restoring signaling to the brain, by turning down the fight or flight response and effectively turning down the neurohormonal storm that we are trying to block downstream. Very complementary to what the drugs are trying to do, but really addressing the issue at its source. Barostim has been proven to be effective, predictable, and durable. Our 2024 data showed a two-times improvement in exercise capacity and quality of life. 68% of patients improved at least one New York Heart Association Class status.
Remarkably, 94% of patients responded to the therapy in a clinically meaningful manner. That's remarkable for any drug therapy or device therapy today. To put those quality of life improvements in context, Barostim delivers an exercise capacity improvement roughly triple that of the best of these four drugs. A very significant impact on what patients can do and feel and experience in their lives. The BDHF trial published in 2024 also showed a positive signal in all-cause death, LVAD, left ventricular assist device, and transplant, despite the confounding factors related to COVID-19 that were underway at the time. That was not statistically significant, but certainly trended towards positive in favor of Barostim therapy. Most importantly, recently published data from a real-world evidence database demonstrates a significant reduction in hospitalization in patients receiving Barostim.
This was presented in February and published simultaneously in the Journal of Cardiac Failure. It was data based on the Premier Healthcare Database, which is one of the largest all-payer databases in the U.S., comprising data from 1,300 U.S. hospitals. In the 306 patients that were included in that database, we saw a statistically significant 85% reduction in hospitalization before and after receiving the therapy. That is remarkable. It's a p-value of 0.0001. This is powerful data that begins to then answer one of the two hard endpoints that people often look for in heart failure therapies. It also is remarkably congruent with smaller center studies that we had seen both before and after COVID. It's complementary and confirmatory of what we'd seen already and is already having a significant impact in the market today.
Switching to our commercial strategy, our revised strategy is focused on driving Barostim to standard of care. There are really three elements. The first is building a world-class sales team. The second is developing sustainable Barostim programs, driving much deeper adoption versus wider adoption. The third is relentlessly challenging the high-level barriers to adoption that exist for this therapy in the U.S. As it relates to the sales team, we are building a world-class sales organization that's focused on developing sustainable programs and driving deep adoption. That starts with recruiting the right sales team members. Those are people that have strong therapy development backgrounds. This is a very different sales process than you might find for a pacemaker or a TAVR valve or other more sort of incrementally improvement type devices.
This is a novel therapy, and introducing that is a very special practice. Second, we're optimizing the way we train and onboard these reps to make them as effective as possible as quickly as possible. Third, importantly, we're aligning our compensation strategy around these program-based metrics. As we've discussed, this has resulted in pretty significant turnover in our sales team. As you see in the pie chart, 26% of our team have been hired since the first of this year. 29% were hired in 2024. It is a relatively junior team, which is obviously our current challenge. While this was a very necessary transformation of our sales team, we acknowledge that it had a more significant impact on the Q1 results than we had anticipated. Second, in developing these sustainable programs, it starts with picking the right accounts.
There are about 5,000 hospitals in the U.S. that could implant a Barostim system. We believe, based on our early experience, there are three factors that describe the centers that have the greatest potential for our therapy. The first is a large population of heart failure patients measured by heart failure discharges. The second is experience with really the only novel heart failure device in the last 20 years, which is the Abbott CardioMEMS device in this population. That is a diagnostic, but centers that have embraced that diagnostic tool have demonstrated a progressive mindset towards treating this disease. The third axis relates to whether the hospital or the system has had experience successfully deploying cardiovascular technology. Where we find these three elements, and that is about 300-400 centers out of these 5,000, we see the greatest potential for success.
There are certainly others where we have opportunity, but this really describes the sweet spot on which we are now focused. As we focus on those centers, we're trying to replicate the sort of characteristics of our highest performing centers from our first sort of commercial chapter. What that represents here is sort of an ecosystem, as you see on this slide, that starts with a clinical champion, but also an economic or an administrative champion. A CFO or a service line leader or a revenue leader who understands that this can be a very profitable procedure for the hospital and one that can bring new patients into their system and expand their service line. That's very important to have that partnership.
It also starts with refers in the community across the spectrum of specialties, referring patients into not one, but multiple heart failure specialist prescribers in the center who are supported by not one, but multiple surgical implanters, often vascular or cardiothoracic surgeons. Where we see this ecosystem, we see deep adoption of the therapy, and we see centers that treat it not just as something they needed to be reminded to think about, but something that's part of how they treat the disease day in and day out. It's part of the treatment continuum. That's what we're seeking. That's the path to standard of care. Third, we are relentlessly focused on what we believe are the three primary high-level barriers to the adoption of this therapy in the U.S. market. The first is awareness. The second is evidence. And the third is patient access.
As it relates to awareness, we're focusing our efforts around these centers to raise awareness throughout that ecosystem in the value of this therapy in treating heart failure. As it relates to the referral community, we are engaged on a face-to-face level in the field every single day with referral development events and MedEd events. We're also seeking new channels. There's an example on this screen. We partnered with the American College of Cardiology earlier this year to distribute an informational piece to 50,000 members of the ACC, introducing them to Barostim therapy. Again, trying to raise the general awareness of this therapy, it's novel, and help people understand how and where it would fit in the disease continuum. We're also significantly increasing our focus on APPs or Advanced Practice Providers and the physician assistants who typically see heart failure patients 80% of the time.
It is 80% of what they spend their time on. This is a group that is extremely important in heart failure because they are highly focused on quality of life in a way that the physicians cannot find the same amount of time for. It is a really important piece of our strategy this year. We have dramatically increased our focus and investment in reaching out to the APPs, and we are seeing some very encouraging results even already this year. Finally, we are continuing to optimize our DTC efforts to identify patients in the community who can benefit and connect them with physicians and programs that have experience deploying Barostim therapy. The second barrier relates to evidence, and you can never have enough of it. We are focused on creating a steady stream of evidence in two key areas. The first is improved outcomes.
Beyond just quality of life and hospitalization, as I've showed you, but focused on additional outcomes, mortality, obviously, but arrhythmias, ejection fraction, diuretics, kidney function. There is a number of kind of secondary clinical outcomes that are of great interest to different types of physicians. Each physician has hot buttons. Our goal here is to fill in the gaps in the clinical evidence to address as many of those physician interests and hot buttons as we can. On the right, the second bucket of focus is on physiology and further building out the evidence that supports why this therapy works as well to think that you can stimulate a nerve in the neck and affect something in the heart.
Effectively, we're affecting the whole body, but we need to better demonstrate why that works, what the role of the baroreceptor is, how it affects inflammation in the body, the reverse remodeling of heart failure, hemodynamics, etc. Really building out the physiologic explanation for why this therapy works the way it does. We'll do that using a combination of bench studies, single-center studies, RCTs, and real-world evidence, like I had recently shown you from the Premier Healthcare Database. The third barrier relates to improving patient access. We've made great strides over the last year, have two key milestones here on the near-term horizon. Importantly, in October of last year, we almost tripled the permanent inpatient payment for this procedure to the hospitals from roughly $17,000-$23,000, all the way to $45,000.
This is important because it effectively now matches the outpatient reimbursement and takes economics off the table as physicians consider site of service. In July of this year, we will receive the CMS response in their proposed rule to our request to create a permanent outpatient code called a level six code for this procedure. That's important. It's a process we've been involved with for a number of years. If approved, it will replace our current temporary new tech code, which pays $45,000, with a permanent level six code that will pay $45,000. Not a high hot button issue for hospitals or physicians, but one that would make permanent a situation that we've already been in for a number of years. Perhaps most importantly, in January of 2026, our permanent category one code will become effective.
That is important because it eliminates the easiest way for payers to automatically deny a prior authorization. In today's world, if you are a category three device, which means it never intended to mean experimental, but the payers have said anyone that is category three is experimental, and therefore we will deny it out of hand. With AI, it never even sees a human. It is denied 100% of the time immediately. Once you can secure a category one code, you eliminate the ability to simply and easily deny these claims. It has to then be reviewed by a medical professional, and it cannot be denied unless a clinician has done so personally. That is a major change in the amount of friction we see in our network and the time and the speed and the percent of these prior authorizations that are ultimately approved.
Turning to financials, in 2024, we had worldwide revenue of $51.3 million, representing 31% growth. We had U.S. heart failure revenue of $46 million, representing 35% growth, gross margins of 84%, and a cash balance at the end of the year of almost $106 million. That represents a 71% cumulative annual growth rate since the inception of the therapy commercially in 2020. Turning to 2025, for Q1, we reported worldwide revenue of $12.3 million with U.S. heart failure revenue of $11.1 million. We had 45 U.S. sales territories that were active. We had 227 active U.S. centers, gross margins of 84%, and a cash balance at the end of the quarter of $102.7 million.
As was communicated on our most recent earnings call for 2025, our Q2 guide is revenue of $13 million -$14 million, and our full year guide for 2025 is revenue of $55 million-$58 million, gross margins of 83%-84%, and operating expenses from $95 million-$98 million. In closing, oh, I may have screwed that up, but we believe Barostim represents a significant opportunity to change the standard of care for the treatment of a major condition to positively impact the lives of hundreds of thousands of patients and ultimately to build an organization that can scale and grow profitably and predictably over time. Thank you for your time. We'd be happy to take questions.
First of all, I have to say good job despite the last slide.
Thank you.
Clearly, you know the story well. Obviously, questions in the audience, feel free.
Maybe just to start out with, you know, what update can you provide on the Salesforce recovery since March?. You know, we saw the 26%. You've kind of alluded maybe to a quarter being new in 2025, but just maybe walk through, are you still hiring?. You know, what's the typical progression of these reps and why might these reps be an improvement?.
Yeah, great question. I would say the bulk of the company-initiated terminations are behind us. We are hiring certainly both to replace those sales reps that have moved on, but also to continue to grow the size of this sales team. We're continuing to hire, of course, and we hope, indefinitely. The bulk of the dislocation and the necessary change in our kind of the DNA of our sales team is behind us.
We would expect to return to normal turnover rates, you know, in the near future. What I can also say importantly is we're thrilled with the quality of the people we are attracting. We have never had talent like we are now bringing into this company. We have some great people that are here from the earlier chapter, but we're adding a significant number of experienced therapy development representatives that understand the unique challenges of changing how medicine is practiced. We're thrilled with them as individuals. They're thrilled with the company and the comp plan, but it takes time to get them up to speed. We are heavily focused on onboarding and getting them productive as fast as possible.
And are these folks with prior relationships that they can draw on?. Are they new to this as a segment?.
Yeah, in some cases, yes.
In many cases, they have both therapy development experience and an understanding of cardiovascular medicine and relationships in their territory. That's the ideal, the trifecta. In other cases, they understand therapy development. They come from places like Inspire or Relievant that understand that process of changing medicine, but they don't understand cardiovascular medicine or perhaps don't have relationships. That dictates the speed with which they can become productive. Obviously, if they're going into a brand new territory, it takes longer to start these centers from scratch. If they're going into a territory that has a lot of dabblers, it takes longer because they need to start good programs that represent like the blue box I showed in that Rubik's Cube.
The target has, in a way, been folks that know how to build a franchise and aren't intimidated by the barriers to driving that growth.
Some people love it.
Yeah, no, absolutely. And then, you know, as we look at, oh, please. Yeah. Can you repeat the question too?
Yeah. Do you want to take it?
Yeah, happy to cover that. So the question was just the European portion of the revenue, the difference between the worldwide revenue and the U.S. heart failure revenue that Kevin talked about. Right now, we're seeing about $1 million of revenue per quarter coming out of Europe. The vast majority of that is from direct revenue sales in Germany. It's been pretty consistent now for a few years where we're seeing about $1 million of revenue per quarter. Right now, our focus is on developing the U.S. market. We think that that is the greatest return on our investment. We continue to have employees over in Germany, specifically working to knock down the barriers to adoption.
Right now, the focus is having that team pay for themselves. As those barriers get reduced, we could consider investing at a faster pace in the future. Right now, expecting continuation of about $1 million of revenue per quarter.
Okay. Yeah, you know, maybe we can talk about guidance a little bit and the kind of implied assumptions of utilization as we go on throughout the year. Maybe just for folks in the audience, provide a little bit of context over what's happened with utilization within accounts, the strategies that you guys have taken within those accounts. Which ones are you pruning, maybe investing more in? On a go-forward basis around guidance, you know, Q2, I think, does have an acceleration or an improvement in utilization off of the low Q1 comp.
What are you seeing to provide the confidence, I guess, as you set that guidance range?
Yeah, I mean, just bringing a little bit backwards first. If we look back at Q4, I think our revenue units per center in the quarter was north of two revenue units per center. We saw a step back in the first quarter down to about 1.5-1.6 revenue units per center and an expectation of that number growing in the second quarter. Based on our understanding of the types of accounts that we have in place today, those that are still productive, where we're spending a lot of our time and energy, and where our reps are focusing a lot of their energy.
Margaret alluded to the fact that we are expecting to sunset some of those active centers that Kevin talked about, those 227 centers, which aren't necessarily in that blue box that Kevin mentioned during the presentation, those that were really focused on driving deep adoption, where we think we can drive this therapy to be standard of care. We do expect some of those centers to go more than 12 months without an implant and fall out of that number of active implanting centers. We are continuing to add new centers at the exact same time, those that we believe we can build deep penetration and deep adoption and drive this therapy towards standard of care. It's understanding the number one, the reps that we have out in the field.
Number two, the centers that we have active to really come up with the guide and the expectation that we would see that revenue units per center increase in the second quarter and again throughout 2025.
One of the things, Jared, you and I have talked about in the past has been kind of vintage of accounts that are within there. I think it's gotten a little bit murkier, at least for us, because there are new accounts that maybe didn't fit the exact profile that you were looking for and so on. What kind of data could you provide for us around utilization a year or two from now? How will that mix of three categories look like?
Yeah, it's a good question. In the past, coming out of the IPO early on in the commercial ramp, we did look at vintage.
How long centers had been active and what trends we were seeing out of those accounts. I think now, as we look at the new go-to-market strategy that was implemented late in 2024 and really getting off the ground here in 2025, it's about finding the right types of accounts, those that have all the elements that you can build a program that Kevin mentioned during the presentation. Focusing less on the tenure of the accounts, the amount of time that they've been active, and focusing more on all of the attributes.
What we found in the first quarter, where we saw a decrease in the revenue units per center from the fourth quarter, was that where we saw disruption, where we saw a new sales rep taking over accounts, those accounts were twice as likely to see a decrease in the number of revenue units in the first quarter as compared to the fourth quarter. Part of this is really all about us creating a consistent rep relationship with those centers, but then also making sure that we're spending the right time in the right accounts, those that can develop deep penetration. I think the key thing is just build consistency around those types of centers where we think we can drive deep adoption.
Yeah, I just said we want to build centers. Yeah.
Yep.
That was well handled.
We want to build trying to sell a slightly better pacemaker, slightly better, you know, aortic valve. We are trying to change the way they treat heart failure and have for 30 or 40 years. We do not want centers that are using this because they have a relationship with the rep and are doing somebody a favor. We want them to use it even when our rep is not there or when our rep leaves or there is a change, right?. We want them to bake this into how they treat the disease. That is what drives predictable behavior and robust deep adoption. That is a typical transition that companies like this go through.
You know, I do not want to go too far along, and I know you are going to turn me down on this anyways, but maybe we can find some middle ground here on, you know, long-term growth profile, whether that is 2026, whether that is longer term. You know, historically, we have viewed you as a 20%-25% plus grower. You know, at what point and what stage do you think you can get there? And what are kind of the two or three things they have to knock down maybe to get back to that profile?
Yeah, so maybe I will touch on the numbers. Kevin can talk a little bit more about those barriers to adoption that we are working to lower. Built into the updated guide that Kevin mentioned is an assumed sequential growth rate of about 8%-10% going from Q1 to Q2 to Q3 to Q4.
We always expect a seasonal step back as we move from Q4 to Q1, but it kind of sets the expectation for what growth rates could look like into 2026 and beyond. We believe with this market opportunity and the investment we're making in the sales and marketing organization that we should be a mid to high 20% grower long term. It's about building the right foundation with the right sales organization and the right approach to really go achieve that growth rate in the future.
Did a wonderful job, by the way. Thank you for providing some context.
Yep.
Yeah, I think we're out of time, so maybe we'll cut it there. We have the breakout up in Burnham B. Thank you guys so much.
Thank you.
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