Greetings, and welcome to the CVRx Fourth Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Mike Vallie from ICR Healthcare.

Good afternoon. Thank you for joining us today for CVRx's fourth quarter and full year 2024 earnings conference call. Joining me on today's call are the company's President and Chief Executive Officer, Kevin Hykes; and Chief Financial Officer, Jared Oasheim. The remarks today will contain forward-looking statements, including statements about financial guidance. The statements are based on plans and expectations as of today, which may change over time. In addition, actual results could differ materially due to a number of risks and uncertainties, including those identified in the earnings release issued prior to this call and in the company's SEC filings. I would now like to turn the call over to CVRx's President and Chief Executive Officer, Kevin Hykes.

Thanks, Mike. Good afternoon, and thank you for joining us. I'm pleased to report another quarter of strong performance driven by continued solid execution within our U.S. Heart Failure business. We delivered total revenue of $15.3 million, representing growth of 36% over the fourth quarter of 2023, with U.S. Heart Failure growth growing 41%. We continue to be very excited about the trajectory of the business and the positive impact that Barostim therapy continues to have on patients. Throughout 2024, we made significant progress building a strong foundation to support future growth. After some disruption in the sales force early in the year, we stabilized the sales organization, brought in new commercial leadership and made significant steps towards building out a world-class sales team. This team is now implementing a go-to-market strategy focused on driving deeper penetration within new and existing accounts by implementing a disciplined targeting strategy and a program-focused selling approach. The team's execution, along with our expansion to 48 territories in the United States, allowed us to end the year with 223 active and planning centers, up from 178 at the end of 2023. Beyond the build-out and optimization of our commercial team, we focused on addressing key barriers to adoption by improving patient access to the therapy, increasing education and awareness among physicians, advanced practice providers, and patients, and developing a more robust portfolio of clinical evidence. Starting with patient access, we made substantial progress throughout 2024 on a number of important initiatives. In the final 2025 Hospital Outpatient Prospective Payment System Rule, CMS maintained Barostim in the new technology APC 1580 for 2025, preserving the current reimbursement level of approximately $45,000 for outpatient procedures. This decision, once again, appropriately recognizes the resource requirements associated with the Barostim implant procedure and supports continued patient access. On an inpatient basis, we successfully secured the reassignment of Barostim to DRG 276, which took effect in October of 2024. This increased the inpatient payment to hospitals from approximately $17,000 to approximately $43,000. We are pleased that hospital reimbursement has now been effectively equalized between inpatient and outpatient settings for 2025, allowing clinicians to treat their patients in the most clinically appropriate setting independent of economic considerations. Regarding coding developments, the American Medical Association CPT Editorial Panel has accepted new Category 1 CPT codes for Barostim therapy, which we expect to be implemented on January 1st of 2026. This transition from Category 3 to Category 1 codes is particularly significant, as it will eliminate the automatic prior authorization denials associated with Category 3 codes, which payers often consider to be experimental. It will improve prior authorization throughput and predictability and will unlock access to new markets where Category 1 codes are required for coverage. Importantly, the Category 1 procedure codes will formalize physician payment for the Barostim procedure and programming, reducing uncertainty for heart failure physicians and their surgical partners. Our second adoption-related initiative focused on increasing awareness among referrers and patients regarding the appropriate role for Barostim therapy in the heart failure treatment continuum. We expanded our therapy educational programs, including launching our comprehensive ASCEND program for heart failure fellows and piloted programs for referral physicians and affiliated practice providers, referred to as APPs. Additionally, our Barostim Connect program continued to be highly effective in providing education and prior authorization support to prospective patients. Our third focus area was developing a more consistent stream of clinical evidence supporting Barostim therapy. Throughout the year, we made progress in publishing additional scientific evidence that more fully describes Barostim's mechanism of action and the wide range of patient benefits. Several months ago, the first long-term post-COVID dataset was published by the University of Southern California, which showed a five-fold decrease in hospitalization one year after patients began receiving Barostim therapy, highly consistent with the pre-COVID Phase II Hope for Heart Failure data. The statistical significance of this result was particularly interesting, given that it was based upon a small subset of USC patients who were optimally medically managed. We plan to use real-world evidence data to further explore this impact, which we believe will be of interest to the payer community. In summary, we ended 2024 with tremendous momentum, delivering growth in U.S. heart failure revenue and increasing operating leverage through prudent capital deployment. With successful navigation of critical reimbursement milestones and growing adoption momentum, we are well-positioned to drive strong, sustainable growth as Barostim advances towards becoming standard of care for Heart Failure patients. Now, I'd like to turn the call over to Jared for a financial review.

Thanks, Kevin. In the fourth quarter, total revenue generated was $15.3 million, representing an increase of $4 million or 36% compared to the same period last year. Heart failure revenue in the U.S. totaled $14.3 million in the fourth quarter, an increase of 41% on a total of 457 revenue units compared to $10.2 million in the fourth quarter of last year on 330 revenue units. The increase was primarily driven by continued growth as a result of the expansion into new sales territories and new accounts, as well as increased physician and patient awareness of Barostim. At the end of the year, we had a total of 223 active implanting centers compared to 178 at the end of 2023 and 208 on September 30, 2024. We also had 48 sales territories in the U.S. at the end of the year, compared to 38 at the end of 2023 and 45 on September 30, 2024. Revenue generated in Europe was $1 million for the fourth quarter of 2024 and 2023. Total revenue units in Europe decreased from 52 in the fourth quarter of 2023 to 41 in the fourth quarter of 2024. At the end of 2024, we had five sales territories in Europe as compared to six sales territories as of September 30, 2024. Gross profit for the fourth quarter was $12.8 million, an increase of $3.2 million compared to the fourth quarter of 2023. Gross margin for the fourth quarter was 83% compared to 85% for the same period last year. Research and development expenses for the fourth quarter were $2.8 million, reflecting a 25% increase compared to the same period last year. This change was primarily driven by a $0.5 million increase in clinical study expenses, a $0.2 million increase in consulting expenses, and a $0.1 million increase in non-cash stock-based compensation expense, partially offset by a $0.2 million decrease in compensation expenses. SG&A expenses for the fourth quarter were $20.2 million, representing a 19% increase compared to the same period last year. This change was driven by a $2.9 million increase in compensation expenses, mainly as a result of increased headcount, a $1 million increase in non-cash stock-based compensation expense, and a $0.3 million increase in travel expenses, partially offset by a $1.1 million decrease in advertising expenses. Interest expense increased $0.9 million to $1.5 million for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. This increase was driven by the interest expense on higher levels of borrowings under the term loan agreement. Other income net was $1.1 million for each of the three months ended December 31, 2024 and 2023. Other income net consisted primarily of income on interest-bearing accounts. Net loss was $10.7 million, or $0.43 per share for the three months ended December 31, 2024, compared to a net loss of $9.2 million, or $0.44 per share for the same period last year. Net loss per share was based on 24.7 million weighted average shares outstanding for the three months ended December 31, 2024, and 20.8 million weighted average shares outstanding for the fourth quarter of 2023. As of December 31, 2024, cash and cash equivalents were $105.9 million. For the three months ended December 31, 2024, the company issued approximately 869,000 shares of common stock for gross proceeds of $12.8 million under its at-the-market offering. Now turning to guidance. For the full year of 2025, we expect total revenue between $63 million and $65 million. We expect full year gross margin between 83% and 84%, and we expect operating expenses between $100 million and $104 million. For the first quarter of 2025, we expect to report total revenue between $14.5 million and $15 million.

Thank you, Jared. Before we open the line for questions, I'd like to share our excitement about the opportunities that lie ahead in 2025. We're entering the year with a strong foundation for growth, supported by a clear reimbursement landscape, increasing patient and physician awareness and a growing body of compelling clinical evidence. For 2025, we're focused on three key strategic priorities. First, we're building a world-class sales organization focused on developing sustainable Barostim programs with deep therapy adoption. This includes recruiting sales representatives with strong therapy development backgrounds, strengthening our training and onboarding programs, and aligning our incentives to support program-oriented sales processes. To support this evolution, we're implementing a new compensation structure that rewards the key elements of a successful program, including consistency of implants and the development of multiple physician champions at each center. Second, we will focus on targeting centers with the highest potential to develop sustainable Barostim programs. We plan to systematically replicate the elements present in current Barostim centers that have achieved the deepest levels of adoption, leveraging our learnings from our most successful partnerships. Specifically, we are targeting centers that demonstrate three key characteristics: large heart failure patient volumes, proven adoption of novel heart failure diagnostic devices, and a track record of successfully leveraging new cardiovascular therapies to strengthen their cardiovascular service lines. Within these centers, we will work to develop clinical champions and administrative partners who understand the positive impact of Barostim on their cardiovascular service line, and we'll work with these champions to educate their network of heart failure physicians, interventional cardiologists, electrophysiologists, and advanced practice providers. Third, we will continue to execute on our market development strategy, which addresses three fundamental barriers to adoption. On the therapy awareness front, we are engaging more deeply with referral networks surrounding our targeted centers through expanded regional medical education programs, our newly launched APP focused programs, and our ASCEND Heart Failure Fellows program. These programs represent the full implementation of the successful pilot programs that we ran in 2024. Regarding clinical evidence, we're developing a steady cadence of publications in two key areas. First, evidence supporting Barostim's mechanism of action, including reduced sympathetic nerve activity, restored cardiac parasympathetic control, and anti-inflammatory effects. And secondly, evidence of improved clinical outcomes, such as enhanced quality of life, reduced hospitalizations, and improved ejection fraction. This evidence will be sourced from a variety of internal and external data sets, including data from our randomized controlled trials, the Barostim investigator-initiated research program, our multiple internal registries, and importantly, a growing body of real-world evidence. We intend to present the first results of our first real-world data set analyses in early February at the THT meeting in Boston. Finally, on the patient access front, we will continue to build on our 2024 progress by maintaining appropriate payment levels for both inpatient and outpatient procedures, working towards permanent procedural codes, and leveraging our long-term data to positively impact coverage policies. We believe that we are well-positioned to drive strong, sustainable, efficient growth in the coming year as Barostim advances towards becoming standard of care for patients suffering from the debilitating symptoms of heart failure. Now, I'd like to open the line for questions.

Thank you. We will now be conducting a question-and-answer session. Our first question is from Robbie Marcus with JPMorgan. Please proceed with your question.

Hi. This is actually Rohin on for Robbie. Thanks for taking our questions. Two for me. The first is just starting off with revenue guidance for next year and specifically what's assumed as far as new center adds and utilization. Utilization is probably the biggest lever in the model. So I was hoping you could also just touch more on some of the specific things you're doing to drive this up on a per center basis? And then I have a follow-up.

Hi, Rohin. This is Jared. I'm happy to take the first part of that question. So, on the guidance for 2025, the revenue levels of $63 million to $65 million, there's a few components that are included into coming up with that number. The first is the average selling price. For our base expectation within the guide, we're assuming similar ASPs that we saw in 2024 for the U.S. Heart Failure business, which is approximately $31,000 per device. The second piece is the number of net new active implanting centers that we'd be adding on a quarterly basis. And as we mentioned at your conference earlier this year, we're expecting to see high single digits to low double-digit net adds on a quarterly basis. And when factoring in both of those items to get to the revenue totals that we guided towards, we're expecting to see the average revenue units or the utilization at these accounts get back to the levels we just delivered in Q4 of 2024 after seeing a slight dip here in the first quarter due to seasonality.

Thanks for the information. Regarding operating expenses, it appears you exceeded the annual guidance of about $100 million by approximately $2 million. Additionally, you anticipate expenses in the range of $102 million to $104 million for 2025, which indicates a modest increase. Could you elaborate on the allocation between selling, general, and administrative expenses, as well as research and development, along with your funding priorities? Also, what gives you the assurance that you can sustain this expense level as we continue through the year?

Yes. So we landed just north of $102 million of OpEx for 2024. And as a reminder, included in that total is a one-time stock option modification expense related to the first quarter, recognized in the first quarter of 2024, of roughly $8.4 million. And so the growth that we're expecting from 2024 to 2025 when removing that one-time item is around $8 million or $9 million at the midpoint of our guide. The vast majority of that spend in 2025, or the growth in spend, is going to be going into the sales and marketing organization. We're continuing to expect to add around three new territories on a quarterly basis throughout 2025, and we'll continue to spend on other marketing activities as well. So the vast majority of that growth in OpEx is expected to go into sales and marketing. And as we mentioned before, our expectation here is to start to see some increase in utilization at these centers, but it doesn't require a significant uptake to see some leverage play out in this model long term.

Great. Thank you so much.

Thank you.

Thank you. Our next question is from Margaret Kaczor with William Blair. Please proceed with your question.

Hi, everyone. This is Macauley on for Margaret tonight. Thanks for taking our questions. You spoke to aligning the sales rep compensation around going deeper, obviously, within these target high-volume accounts and driving those more predictable referral patterns. So first, wondering if that's officially been rolled out to the entire sales force now? How has it been received? And Kevin, I know you were barely in the role when the disruption happened in the first quarter of last year, but what did you change this time around to ensure you retain the strong sales team that you've built thus far?

Thank you, Macauley. I appreciate the question, and it's quite pertinent as we look back on what happened a year ago, this week, in fact. So I'd say, there are sort of three key differences. Number 1, the process through which the program was developed and rolled out and introduced to the team was radically different. This year, we started with our top sales leaders and their top lieutenants and ultimately our sales counsel and collaboratively worked with them to develop the program for the year ahead. We then rolled it out in succession to larger and larger groups within the sales organization, culminating with the rollout Saturday of this last weekend at our global sales meeting. And so the process was far more inclusive and did not involve the sort of surprise that caused some of the disruption last year. Secondly, I think the key difference to structure is, in fact, the core elements are the same, and it's clean and simple and understandable and driven by revenue. But this year, we've now built around that core revenue driver, a number of program-related kickers or accelerators that relate to the consistency of implants or the diversification of referral sources around a center or building redundant surgical partners within a center. So again, trying to really start to drive behaviors that we believe will lead to these much more productive, deep adopting predictable centers. I'd say the third difference is it was received resoundingly well this last weekend versus a year ago, which was not exactly well received by our team. So we're pleased at the reception we got. We have a team that's in the field this week, excited about the year ahead and energized by their comp plan.

That's great to hear. And then maybe just one for Jared. I think in our past conversations, you've talked about expecting that cash burn to decrease year-over-year this year. But as we look at the cadence throughout the year, I think we've historically seen that step-up in Q1 around $10.5 million to call it $11 million. So is that similar to how we should be thinking about it as we enter this year and then sequential decreases throughout the remainder of the year?

Yes. That's exactly right, Mac. Our expectation is that we will see a step-up in the cash burn in the first quarter, which is pretty typical for what we've seen in the past as we pay out our annual bonuses and have other one-time spending that goes out the door. Then from the first quarter, we would expect that cash burn to be coming down to where our lowest cash burn would be expected in the fourth quarter. And overall, with the guidance provided, our expectation is that our annual cash burn would be coming down in 2025 as compared to 2024.

Great. Thanks again for the question.

Thank you.

Thank you. Our next question is from Bill Plovanic with Canaccord Genuity. Please proceed with your question.

Thank you for the clarity and information on your plans. However, I'm curious about the challenges faced by HF specialists, as addressing these is crucial for significant growth. What steps are you taking to help them understand the benefits of the therapy compared to drugs and other options? It seems like the programs you are implementing will lead to gradual progress rather than a sudden breakthrough.

Thanks for the question. We've mentioned throughout the past year the three main obstacles hindering the adoption of our therapy among heart failure specialists and general cardiologists managing earlier-stage heart failure in the community. These barriers include awareness of the therapy, understanding the outcomes it can achieve, and its integration within the heart failure disease continuum. The second issue is providing the evidence necessary for these clinicians to feel assured about prescribing the therapy. Different physicians possess varying levels of caution and require different types of data to make that leap. Therefore, we remain committed to investing significantly in clinical data related to quality of life, hospitalization, and other clinical endpoints, as well as the underlying physiological mechanisms of the therapy, to help them fully grasp how and why it is effective. The third obstacle pertains to patient access; clinicians need to feel confident that their patients' insurance will cover the therapy. This is similar to providing air support for troops on the ground. While none of these obstacles represent specific turning points, we are persistently working to eliminate these barriers in the market gradually over time, and we will continue our efforts on all three fronts for the foreseeable future.

Okay. And then just one with the increased inpatient reimbursement, have you seen a shift in the business with that now that you're equalizing that? And then two is just internationally, you lost a territory. That's been pretty consistent for a long time. Do you plan on replacing that territory? Or was it in an unprofitable country or geography? Or how should we think about that going forward? Thanks for taking my questions.

Thanks for the question, Bill. Yes. First on the reimbursement front. So we do have internally reported metrics that we're tracking on site of service between inpatient and outpatient. And we did not see a material shift in where procedures were being done in the fourth quarter after that new inpatient code went live in October. However, we will actually receive the CMS reported data for multiple quarters to confirm that we actually got it right based on our internal reports for inpatient versus outpatient. So I think it's something that we're going to continue to track over the next couple of quarters and see if there ends up being a shift in where patients are being treated when they receive Barostim. On the OUS side, we did see a reduction in the number of territories from six at the end of September down to five at the end of December. That was a decision on our part to pull back a little bit in spending in Europe based on the level of revenue that was being generated over there. So, same as Kevin mentioned, for the barriers to adoption in the U.S. There are similar barriers to adoption on the OUS side of the business. We're not investing as significantly to reduce those barriers, but we'll continue to put efforts forward there. In the meantime, I think our expectation is that the revenue levels would stay relatively flat despite seeing territories drop by one.

Thanks.

Thank you.

Our next question is from Matthew O'Brien with Piper Sandler. Please proceed with your question.

Hi. This is Samantha standing in for Matt. Thank you for taking my questions. To start off, it appears you ended Q4 with a record number of units per center, at least in the last few years. Could you explain what contributed to that performance in the quarter and whether you are observing increased usage in these new target centers? Or is this related to the previous pause and delays from the older centers?

Hi, Samantha, happy to take that one. Yes, we did see an increase in the number of revenue units per active implanting center in the fourth quarter that was above levels that we had seen throughout the rest of 2024. I think part of this is some of the work that Kevin has been doing and employing the team to do since he joined a year ago is starting to come forward. We're focused on getting the right centers activated and where the centers maybe aren't the right target for us, we're allowing them to sunset. So part of this is making sure we're removing the centers that aren't productive out of the denominator from that calculation. I think the other piece of this is that we've hired a lot of really good individuals in 2024 that helped to educate physicians and APPs so that they understand the benefit of this therapy, allowing us to see that revenue unit per center increase here in the fourth quarter.

Great. Thank you. And then just one more on the guidance for the year. Q1 obviously implies a slight deceleration quarter-over-quarter. Could you talk to the rest of this particular cadence throughout the rest of the year?

Yes, happy to cover that. Yes, we are expecting a little bit of seasonality to hit as we go from Q4 to Q1. It's something that we've seen with other companies as they approach this $50 million revenue mark and something that we did experience as we look back to Q1 of 2024. So expecting to see a slight dip in revenue compared to what we just delivered for the fourth quarter. As we go throughout the rest of the year in 2025, our expectation is that we'd see pretty consistent growth from what we'll deliver in the first quarter throughout the rest of the year. So we're not expecting any other dips or seasonality to be impacting the business.

Thank you.

Thank you.

Our next question is from Frank Takkinen with Lake Street Capital Markets. Please proceed with your question.

Great. Thanks for taking the questions. Mine's kind of around point two that you've talked about kind of priorities for 2025 about sustainable Barostim programs. I heard the comments around large heart failure volumes, appetite to adopt new novel devices. But I was hoping you could provide a little more color around just what does this kind of translate into for CVRx? What's the North Star account look like? How many implanters are there? What could utilization trend to? And then maybe how does that trend over a longer period of time from a growth perspective?

Sure. Thanks, Frank. I'm happy to address that. At this stage, we believe there are several characteristics present in the accounts that have most fully embraced this therapy. Firstly, these accounts are not only led by a clinical champion, who often initiates our involvement, but also by an administrative partner who supports the program financially at the center. This partnership is crucial. Secondly, the process involves multiple heart failure specialists at the center who prescribe the therapy, receiving referrals from several community-based physicians, including heart failure specialists, APPs, electrophysiologists, and general cardiologists. Importantly, these prescribers collaborate with multiple implanters or surgical partners who perform the device implantations. We have observed that by establishing this kind of redundancy within the ecosystem, we achieve sustained and predictable usage of the therapy. This is our primary objective. To support this, we have integrated some of these elements into our compensation plan for the upcoming year, where we will offer increased compensation for implants from centers that possess these characteristics. We are focused on incentivizing our team to develop more centers that embody this model.

Okay. That's helpful. And then thinking about the 300 to 400 target accounts you've spoken about in previous calls, where do you stand in that group of 300 to 400 target accounts where these Barostim programs really could exist?

Frank, happy to take that one. So as you know, we have the 223 active implanting centers at the end of the year. At this point in time, we're still not disclosing the breakdown of the centers that we're focused on targeting, but could be something that we consider disclosing at some point down the road. Again, this strategy is something that we just rolled out at the beginning of October. And so it's going to take some time to start to see more and more of these centers get activated because it does take time to get through value assessment and get on contract with those centers.

But I can say that we still have a long way to go. There is plenty of opportunity ahead, and our 223 are definitely not all from the top tiers. Therefore, we believe there is significant potential to optimize our account mix further.

Perfect. Thanks for taking the questions.

Thank you. Our next question is from Chase Knickerbocker with Craig-Hallum Capital Group. Please proceed with your question.

Good afternoon, guys. Just maybe following up on Frank there for a second. In the example of that North Star account that you gave, in your most developed accounts at this point that look like that, call it, top decile, what the units per quarter look like?

Yes. Chase, we haven't broken it down at the account level at this point in time, but we are seeing those centers get well above our goal of treating at least one patient a month. In some cases, we know there's dozens and potentially even hundreds of these patients available at these top-tier centers. So it's on us to really go drive utilization and drive deeper adoption at each one of these centers. But we're not breaking it down by center at this point in time.

One thing I could add, though, Chase, we took this relatively new definition of Tier 1, 2, 3, 4 and applied it retroactively against the accounts that we've developed over the last three years. We were pleased to see that the Tier 1 accounts did outperform Tier 2, 3 and 4 in that exact order. This somewhat validates our belief that these indicators of what success looks like in the right centers do indeed outperform their peers for the reasons we've mentioned. So that was encouraging.

Agreed. Regarding reimbursement, is there any advocacy you can conduct in anticipation of the 2026 decisions on the interim side when we receive the proposed OPPS in July? Is there any outreach your market access team can undertake at this time or anything we should be monitoring?

Yes. That's a great question. The answer is yes, absolutely. And our team is already engaged along with the other now four members of the coalition. That work is well underway. And so we are meeting with folks at CMS, bringing in additional statistical and consulting resources to help CMS really understand that the only way to solve this issue on a permanent basis is to create that Level 6 code. So we're pleased that the interactions so far, we're pleased that they've not been disrupted by the administrative changes in D.C. over the last couple of weeks. And we're increasingly confident that we will ultimately, if not this year, then soon, achieve that final permanent Level 6 code.

And then as we think about the Cat 1 code effective Jan 1 2026, is there any kind of moving pieces we should be thinking about around kind of the RVUs that you're assigned as far as how it could kind of indicate an uptick in potential demand if things kind of skew positive? Anything that you can kind of give there as far as how you're thinking about kind of the RVUs that could be assigned your procedural code?

Yes, we are not permitted to influence that process in any way. The survey is now complete as we understand it. Our first look at the actual RVUs that will be assigned will come in July with the proposed rule. We believe those RVUs will fall within the range currently being negotiated with the payers, roughly between $500 and $800 or $850 per procedure, as they often relate it to a carotid endarterectomy. Therefore, we have no reason to expect a different outcome from the survey. We are eager to see the results in July, but we do not foresee significant risk at this point.

Great. Thanks, guys.

Thank you. There are no further questions at this time. I would like to hand the floor back over to Kevin Hykes for any closing comments.

Thank you, operator, and thanks again to everyone for joining us for our fourth quarter and full year earnings call. We appreciate your ongoing support, and we look forward to updating you on our progress at our next call. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.