Good day. Thank you for standing by. Welcome to Pulmonx Third Quarter 2021 Earnings Conference Call. At this time, all participants’ lines are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Mr. Brian Johnston. Thank you. Please go ahead, sir.

Thanks, operator. Good afternoon. And thank you all for participating in today's call. Joining me from Pulmonx are Glen French, President and Chief Executive Officer; and Derrick Sung, Chief Financial Officer. Earlier today, Pulmonx released financial results for the quarter ended September 30, 2021. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance, the impact of COVID-19 on our business and prospects for recovery, expense management, expectations for hiring, growth in our organization, market opportunity, guidance for revenue, gross margin and operating expenses, commercial expansion, and product pipeline development, are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the Securities and Exchange Commission, including the quarterly report on Form 10-Q filed with the SEC on August 10, 2021. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 2, 2021. Pulmonx Corporation disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I'll turn the call over to Glen.

Thanks, Brian. Good afternoon, everyone, and welcome to our third quarter 2021 earnings call. Here with me today is Derrick Sung, our Chief Financial Officer. The third quarter of 2021 proved to be yet another demonstration of the resilience of our business, as we navigated the unpredictable course of the pandemic. Despite significant and unexpected headwinds from the delta variant, we generated $13.3 million in worldwide sales in the third quarter, our highest revenue results to date and another consecutive quarter of record sales. Our strong results were driven by accelerating performance in regions less impacted by COVID, highlighting the strong underlying demand for our Zephyr valve procedure. In the United States, despite experiencing significant impact from the delta variant, we were still able to grow third quarter sales sequentially over the second quarter and set a new high of $6.9 million in US revenue. We saw a strong acceleration of Zephyr procedures in areas that were less affected by COVID, such as the Northeast and the Midwest. This contrasted with sales deceleration of similar magnitude in regions hard hit by COVID, such as the South, where we experienced prolonged procedure delays due to hospital capacity constraints. Outside the US, sales were strong in Europe as hospitals reopened to procedures with COVID cases receding across the quarter. Though procedure volumes were geographically mixed, we saw clear evidence of the growing demand amongst patients and physicians for our Zephyr valve treatment. In the US, we added 18 new treating centers, an indication of the continued desire for new hospitals across the United States to bring our life-changing treatment to their patients. We now have a total of 198 treating centers in the US and expect to easily surpass our target of establishing at least 200 Zephyr valve treating centers in the US by year-end. We also saw continued patient interest in the procedure with sustained momentum in StratX volumes across all our geographies and an increase of both patient calls directly into our US treatment centers and patient engagement via our website and social media channels. In terms of milestones, I'm pleased to say that the growing demand and awareness of Zephyr valves has translated into the treatment of over 25,000 patients worldwide. We've also cultivated a social media community of over 125,000 followers worldwide, enabling patients to share stories and experiences of how Zephyr valves have transformed their lives. Turning to our commercial expansion plans, we have completed our planned sales force expansion for the year with 54 total territories now active across the US and 34 active international sales territories. We expect to continue to expand our commercial team throughout next year and will provide greater detail on these plans during our next quarterly call. On the reimbursement front, we extended our string of policy wins with a major positive coverage decision from Anthem Blue Cross Blue Shield, the largest family of Blue Cross Blue Shield plans covering 34 million lives across multiple states. We also secured wins with Blue Cross Blue Shield of Michigan and Horizon Blue Cross Blue Shield of New Jersey, which together cover an additional 10 million lives. These policy wins continue to validate the clinical acceptance of our technology and reduce the prior authorization time for patients waiting to receive our Zephyr valve treatment. Furthermore, outside the US, national treatment guidance documents in China, Spain, and Denmark were updated to recommend our procedure for patients with severe emphysema. These recommendations, together with those already in place in the UK, Germany, and France will support our efforts to penetrate these markets further. Finally, our longer-term growth initiatives remain on track. We remain excited about AeriSeal, the solution that we are developing to treat severe emphysema patients, who are not currently eligible for Zephyr valves due to collateral ventilation. Enrollment in our multicenter international clinical trial studying the use of AeriSeal to convert patients with collateral ventilation into Zephyr valve-eligible patients has picked up as the impact of COVID on our European trial sites has waned. In addition, our efforts to introduce Zephyr valves into Japan continue to progress, and we expect to submit our application for regulatory approval to the Japanese authorities before the end of this year. All told, we remain confident in both the near and long-term prospects of our business, despite both the lingering impact of COVID and indications of increasing hospital staffing challenges. As we look ahead, we maintain our strong conviction in the underlying demand for Zephyr valves and believe we are building the foundation necessary to deliver sustained growth in the years ahead. With that, I will now turn the call over to Derrick to provide a more detailed review of our third quarter results.

Thank you, Glen, and good afternoon, everyone. Total worldwide revenue for the three months ended September 30, 2021, was $13.3 million, a 25% increase from $10.6 million in the same period of the prior year and an increase of 23% on a constant currency basis. United States revenue in the third quarter was $6.9 million, a 28% increase from $5.3 million during this prior year period. The record US sales reflect strong growth in continued commercial momentum of our business in regions less affected by COVID, offset by a slowdown due to procedure restrictions at hospitals and regions of the US that were significantly pressured by the delta variant. International revenue in the third quarter of 2021 was $6.4 million, a 22% increase from $5.3 million during the same period last year. On a constant currency basis, international sales increased by 18% as hospital procedure volumes continued to recover in our European markets. Gross margin for the third quarter of 2021 was 73% compared to 70% in the prior year period. The year-over-year improvement in gross margin was driven by increased throughput and improved production efficiencies. Looking ahead, we expect gross margin to come in around 74% for the remainder of the year. Total operating expenses for the third quarter of 2021 were $19.5 million, a 52% increase from $12.8 million in the third quarter of 2020. Stock-based compensation expense was $2.8 million in the third quarter of 2021 and accounted for 34% of the increase in operating expenses from the prior year period. We continue to expect non-cash stock-based compensation to account for about $10 million of our total operating expenses for the full year 2021. We now expect operating expenses for the full year 2021 to fall between $83 million and $85 million, as we build out our commercial operations, invest in our research and development programs, and further scale our business. R&D expenses for the third quarter of 2021 were $2.8 million, compared to $2 million in the same period of the prior year. Aside from stock-based compensation, the increase was primarily due to an increase in personnel, clinical studies, and development-related expenses needed to support our product development and clinical research activities. Sales, general, and administrative expenses for the third quarter of 2021 were $16.7 million, compared to $10.8 million in the third quarter of 2020. Aside from stock-based compensation, the increase was attributable to an increase in sales and marketing expenses, as we expanded our commercial team and increased commercial activities, as well as public company expenses related to the scaling of our general and administrative infrastructure. Net loss for the third quarter of 2021 was $10.2 million, or a loss of $0.28 per share, as compared to a net loss of $3.9 million or a loss of $1.37 per share for the same period of the prior year. An average weighted share count of 36.4 million shares was used to determine the loss per share for the third quarter of 2021. We ended September 30, 2021, with $202.6 million in cash, cash equivalents, and marketable securities, a decrease of $8.9 million from June 30, 2021. Finally, turning to our outlook for 2021. We continue to expect our full year 2021 revenue to fall within our previously communicated guidance of $49 million to $51 million, albeit at the low end of this range due to additional pressures posed by COVID. This would represent at least a 50% revenue growth over 2020. Our ability to maintain guidance in the face of persisting COVID headwinds reflects our confidence in the growing momentum of our business and in the underlying demand for Zephyr valves. With that, I'd like to thank you all for your attention and we will now open the call up for questions.

Your first question is from Larry Biegelsen of Wells Fargo. Your line is open.

Good afternoon, guys. Thanks for taking the question and congrats on a nice quarter in a very difficult environment. Glen, can you hear me okay?

Yes.

Great. So I'd like to hear you talk about what you're seeing in the geographies that are less impacted by COVID in terms of the growth and utilization. And if you think we'll see those types of growth rates and utilization rates in other geographies once COVID subsides. And in addition, can you talk about the strong screening volumes that you mentioned in the press release? And I had one follow-up.

What we're seeing in the geographies that are less impacted is precisely what we expected. I mean, we're seeing strong revenue generation. We obviously were able to sort of overcome the tougher areas that were shut down. We had certain geographies that were completely shut down for part of the quarter. We all read about those in the headlines across the southern part of the U.S. and in the southeast. And so, those are the areas that we would expect that when COVID headwinds subside, that these things will continue to charge forward and we won't be sort of running along with one hand tied behind our back, so to speak. The second part of your question was related to?

Screening. You talked about in the press release strong screening volumes?

Yes. We have seen one of the strongest indicators of screening is StratX scans, depending on the geography that happens either early on or later in the assessment process. And we saw an increase in StratX scans in the U.S., low double digits in terms of percentage increase. And on the international front, most particularly the bulk of our business is in Europe outside the United States, we saw a significantly stronger increase in StratX scans when you look at the third quarter versus the second quarter, which makes complete sense to us, given that the U.S. and the challenges that we're facing with COVID are challenges that the Europeans have already gotten through, at least on this last very large wave of COVID that hit around the world.

That's helpful. And just one follow-up for Derrick. So Derrick, we understand Q3 was a challenging quarter. But you kind of came in line with consensus. So what are you seeing that leads you to believe you'll be at the low end of the full-year guidance? Historically, you guys have shared a metric with us about the number of percenters doing procedures. Anything you can share with us on Q3 compared to Q2 and kind of what you're seeing now? Thanks for taking the question.

Yes. Thanks for that question, Larry. So just in terms of what we saw in Q3 and what we're moving forward to in Q4. In Q3, we saw coming out of Q2 really strong sales momentum building through the quarter and it built through into July. And so we saw strength in July across the board, across all our geographies. And then as the COVID delta variant really began to impact the US, we started to see deceleration in specific regions of the US that were impacted by COVID. So our Q3 strength really comes from strength in July across the board and then continued strength and momentum in the regions both within the US and outside the US that were not as impacted by COVID through the remainder of the quarter. So as we look to Q4, the dynamics that are at play here are really the recovery in those regions that were impacted by the delta variant. And what we're seeing is that that recovery, while we've clearly bottomed, we seem to have bottomed in late September and early October. We expect that recovery to be gradual. Given the strength of what we saw in the early part of Q2 and July and the increased impact of the delta variant that we hadn't fully factored into our guidance when we provided it last quarter, that's what leads us to determine that we'll likely fall at or near the low end of our guidance for the year, and that applies to Q4.

Just to put that additional context around that. I think one of the things that's important to remember, as you look across this quarter in particular, is that though the sort of this bottoming out happened in September continued into October, we saw strengthening in the back an improved in the back part of October. And as we look forward into November, we effectively lose nearly a week in November in the United States and the better part of two weeks in December. So this sort of flatness across the quarter, if you were to calculate it on an average daily sales basis taking into account those challenges in November and December. I think that the curve is going to look pretty strong.

Thanks, Glen and Derrick.

Your next question is from Bob Hopkins of Bank of America. Your line is open.

Thank you and Derrick, good afternoon. Just a follow-up on that. So are you saying Glen, that the guidance for Q4 contemplates improvement throughout the course of the quarter in average daily sales numbers? Just want to make sure I understood that is what you're assuming for the fourth quarter relative to how you kind of exited the third quarter?

Yes, there are a few points to consider. The exit from the third quarter was not strong; the number of active accounts in the US decreased during that time and continued to decline slightly into October. However, we did see some solid improvement towards the end of October. While we didn't have a strong exit from the third quarter, we performed reasonably well in October, and we expect similar results in November and December. It's important to note that November and December will have fewer selling days, which means the average daily sales will show improvement as the quarter progresses.

Got it.

I would like to add some insights regarding this matter. Considering that there are fewer selling days in Q4 compared to Q3, especially since, as Glen noted, there are not many procedures performed in the US during the week of Thanksgiving and the final weeks of the year, we anticipate that the US dollar amount for Q4 will remain relatively flat sequentially compared to Q3.

I understand. I have another question. I know it’s still early, but do you have any initial thoughts about how unusual this year has been? How long do you think it might take to start gaining new accounts again? The consensus revenue estimate is $77 million for next year, which indicates a healthy growth rate; however, it seems a bit aggressive given all the work that needs to be completed. Any early insights on that, or is it too soon to say?

I think it's probably too early to comment. We're looking forward to providing more specifics on that in our next call. Regarding COVID, we don't expect it to disappear. However, we have noticed that the healthcare systems globally have become increasingly skilled at managing it. As more people get vaccinated, fewer are going to hospitals or intensive care units, which is something we are very mindful of. A good example of this is that our numbers for 2020 were essentially on par with 2019, as we were shut down for a significant part of the year. While the impact of COVID on 2021 was at least comparable to what we faced in 2020, we are still tracking toward our target, which suggests over a 50% increase year-over-year. This indicates that everyone is getting much better at managing COVID. Looking ahead to next year, I anticipate that while COVID will not be completely gone, we will continue to improve our management of it.

Got it. Thank you.

Your next question is from Cecilia Furlong of Morgan Stanley. Your line is open.

Great. Thank you for taking the question. Glen and Derrick, I wanted to start just on the second straight quarter of very strong new account growth in the US, but just how you're thinking about going forward, the potential to continue to add at this closer to 2020 accounts per quarter rate? And then just alongside that, any other commentary you can provide from a physician training standpoint, what you've been able to do over the last several months, notwithstanding COVID headwinds?

We feel fortunate to have secured new accounts in 2020 and 2018. However, I believe the COVID-related challenges make this fourth quarter particularly difficult. It would be optimistic for us to achieve similar numbers as we did in the past couple of quarters. Therefore, we're projecting new accounts in the range of 10 to 15 for the upcoming quarter. Regarding doctor training, we've improved our remote training capabilities during COVID but have transitioned back to in-person training, which we find more effective. Currently, we are conducting at least one training class per month, and these classes are quite popular, resulting in waiting lists for each session.

Okay. Great. And I wanted to ask as well on the staffing shortage commentary that you touched on earlier. Just how much of a headwind that was in Q3, when you really started to see this evolve? And as you think about Q4 just how much pressure you contemplated from that standpoint? Thank you.

That's a great question. We've definitely been hearing about it and experienced some of it in the third quarter. If I had to compare COVID to staffing shortages in the third quarter, I would say COVID had a bigger impact. However, what has happened is that many people seem to be experiencing fatigue from COVID. There are various reasons why individuals are stepping away, both related and unrelated to COVID, such as vaccination and general fatigue. This has constrained the availability of resources, and there's significant competition among hospitals to secure those resources, especially those that enable them to perform procedures and generate revenue. The demand is high, and both individuals and groups are being attracted away from centers, leading to a very intense situation. Looking ahead, I don't know how COVID and staffing will balance in the fourth quarter, but I believe staffing issues will be a more significant theme than they were for us in the third quarter.

Great. Thank you for taking my questions.

Yeah.

Your next question is from Rick Wise at Stifel. Your line is open.

Good afternoon to you both. Glen, let's begin with the impressive international performance. Is this a result of the recovery from COVID? I know you've added a few new international sales territories. In the second quarter, you reached 30%, but I'm not sure if that has increased since then. Perhaps you could provide some insight on that. Also, looking ahead, you exceeded my expectations for international results. Should we anticipate another strong quarter in the fourth quarter?

Certainly. In some of the markets where we operate, particularly in about 25 worldwide, most of our international sales come from Europe. Notably, the United Kingdom has been significant for us as it has struggled to cope with disruptions. Over the last six years, there have been times when our business was down for a month due to challenging flu seasons. Thus, the recovery in the UK has been a real advantage, contributing notably to our results as our third largest international market in the last quarter. Germany and France also performed well, reinforcing our presence in these key markets. While the number of territories increased, it wasn't substantial; we merely optimized opportunities in areas that weren't fully covered. We added personnel in Western Switzerland and brought in new resources in Italy. By the end of the quarter, we had 34 territories. Although this represents over a 10% increase, it didn’t significantly affect revenue. Nonetheless, we remain opportunistic and willing to add representatives where it makes sense, and we acted on the opportunities we identified.

Great. And just as part of that to make sure I'm thinking about it correctly. I think the U.S. revenues per procedure are something like $11,000 if I remember correctly, please correct me if I'm wrong. Is it the same internationally less or more? Just a quick reminder?

Just a little bit less. We talk about $10,000 as our average revenue per procedure, and our number in the US is about $11,000.

Great. And if I could finish up with a couple of guidance questions. Just want to make sure Derrick I'm understanding some of your comments. The commentary about the fourth quarter revenue not unlike the third, if I'm adding up correctly here and bumpy up, let's say more in the 13.5% range for the fourth quarter. That would be a little over $48 million slightly below your range. When you say at the low end of the range does that incorporate a little below, or not trying to get too cute – but just want to make sure I'm hearing you correctly.

Yes. Thanks for the opportunity to clarify. So when I was referring to relatively flat, I was speaking about the US specifically. So we do expect a sequential increase in OUS revenue. To get to kind of the bottom end of our guidance of $49 million. Another way to look at it would be to say, roughly we might expect kind of a 50-50 or so mix between the US and OUS in Q4. But the flatness on an aggregate dollar value is the US and we would expect a modest increase sequentially outside the US in revenue dollars.

Got you. And two more P&L questions if I could. You said that gross margin, you said 74% – if I heard your words correctly, 74% for the rest of the year. Does that mean for the full year or for the fourth quarter? Just wondered what you intended there just to make sure?

For the fourth quarter, we expect revenue gross margin to be around back up to 74% in Q4.

And that's because of roughly similar equal volumes, right?

We have averaged a gross margin of about 73% for the first nine months of this year, mainly due to increased production throughput, which has enhanced overhead absorption, along with various cost reduction initiatives we have implemented. We expect these initiatives and overhead absorption to help improve our gross margin going forward. In particular, for Q3, we experienced some higher scrap costs that are one-time expenses. Therefore, we believe we will return to 74% next quarter and gradually increase from that point over time due to these ongoing initiatives.

Got you. And one last one if I could, OpEx if – again, if I'm understanding correctly, I think your prior guide was 85% to 90%, now you're saying 83% to 85%. Can you help us – I mean that's excellent, good. Can you help us appreciate what's happening there? Thanks so much.

Sure, Rick. So on the OpEx side, we continue of course to focus on expense management. And certainly, we were happy to see this drive some incremental leverage across our P&L throughout the first nine months of the year. So that's one piece to it. The other piece is timing related, it's simply timing related and that there's some spend on the R&D side, particularly on the clinical research side related to AeriSeal that has been impacted by COVID. So some of that clinical spend we expect to be pushed out a little bit into Q4 and maybe into next year. So those I'd say are the two drivers of the OpEx, our expectation of OpEx coming in slightly lower than the range that we had originally set out for 2021. I will say that in Q4 we do expect a meaningful step-up of a few million as our guidance implies from Q3 to Q4. And again, we expect that to be coming from clinical spend in AeriSeal on the R&D side and continued investments in SG&A as well as some sort of typical year-end increase in professional services that we'll see on the SG&A side.

Thanks for all the detail.

Your next question is from Bill Plovanic of Canaccord. Your line is open.

Great. Thanks for taking my question. Really, COVID obviously masks a lot of things. So what I'm trying to get a feel for is in the areas, at least the geographies in the US that weren't impacted. I was wondering if you could give us any color granularity on what the penetration of an account looks like a mature account and kind of what volumes you might be getting to and whether that be your top 10% of your accounts that weren't impacted in the quarter, or you've had them for two years, the longest mature accounts. Just trying to get a feeling for what a top account looks like that maybe didn't have a significant impact from COVID?

Yes, COVID has affected everyone to some degree, and the latest wave is just part of that. Almost all businesses have experienced challenges at some point, with some being hit harder than others. When considering a two-year period, no one has been entirely unscathed; many have experienced significant downturns. However, we had about 200 accounts in the United States, and typically, disruptions have not affected everyone simultaneously but have varied geographically. Businesses aim to achieve annual run rates of $500,000 to $2 million, which reflects what success looked like before COVID and what it looks like now. We observed solid growth in areas that weren't heavily impacted, and despite some challenges, the growth we reported was substantial compared to the same quarter last year. This growth was not only due to those resilient accounts but also helped mitigate the declines we saw in major markets like Texas and Florida.

Okay. Thanks for taking my questions.

Your next question is from Joanne Wuensch of Citibank. Your line is open.

Good evening, good afternoon, and thanks for taking the question. I have two; I'll put them out at the same time. The first has to do with covered lives. You added quite a number in the quarter. And I'm curious, I don't want to say how many more, but what significant pockets are still open? And my second question is for outside the United States. Could you remind us of what the opportunity in Japan looks like? Thank you.

Got it. As for covered lives, it's important to note that 75% of our business is government-funded, while 25% comes from commercial payers. Within the government segment, about a third consists of managed Medicare, which requires prior authorization through commercial payers. This is why we are focused on reducing the authorization timeline. In particular, at Blue Cross Blue Shield plans, especially in Michigan and Anthem, it was taking up to 90 days or longer to receive prior authorization for procedures. Streamlining these processes will help decrease that time. We generally receive authorization over 95% of the time, so the issue isn't the ability to treat patients but rather the efficiency of the process. Currently, we have secured relationships with most of the major players. There are not many large ones left, including Horizon, which we recently engaged. The Blue Cross Blue Shield Association is the only major payer that is uncooperative. Before we partnered with Anthem, we had flipped about a third of the Blue Cross Blue Shield Association affiliates, and with Anthem, we've effectively managed two-thirds of them. The remaining third consists of smaller plans that we believe we can handle. Overall, all the other affiliations are either neutral or positive regarding reimbursement. This has been a significant time for us in acquiring 44 million lives. Regarding Japan, we estimate the opportunity there to be about 20% of the U.S. market, making it our second-largest national opportunity. We are excited about our progress in Japan and plan to submit our application by the end of this year, with expectations for approval by the end of next year. Following that, we anticipate a six-month reimbursement process, aiming for commercial launch in the latter half of 2023.

Your next question is from Jason Bednar of Piper Sandler. Your line is open.

Hi. Good afternoon. Thanks for taking the questions here. I did want to ask about the recovery here in business trends that you spoke to kind of coming out of the latest COVID wave. Derrick, I think you alluded to business coming back in a gradual fashion here for the fourth quarter. But I think in the past, you've talked about business coming back and maybe more of a quick fashion following past COVID waves. So I guess was this wave a bit different in how it's impacted you? Are you factoring in additional conservatism? Is it the staffing dynamic that's maybe holding back the normal post-COVID wave surge? Any additional color there would be appreciated.

Sure. Jason, I'm going to address that. As we look toward the end of the year, the situation is quite interesting. We are observing a trend where, due to some staffing issues, many are indicating they prefer to wait until the New Year to restart. This has been a significant theme we've encountered. Staffing, as I mentioned earlier, will affect us as we progress through the fourth quarter. We have taken this into account, and we are moving ahead. We are still recovering from COVID in various regions. In some areas, COVID is still a concern, and we are all looking at the same data. This is also part of our considerations. Regarding the typical recovery we’ve seen over the past month or two after previous COVID waves, we do not anticipate that here. The dynamics I mentioned earlier play a role, along with the year-end sentiments where people are saying let's wait until the New Year. We are scheduling numerous cases and maintaining a lot of activity, but I do not foresee a stronger rebound typically spread over two months. Instead, it will be more uniform due to the year-end effects and the reasons I outlined.

Okay. That makes sense. That's right. And then I guess, Glen, you and I have talked about this in the past but maybe hoping here you could provide some color just really how the approach is playing out and having those assessment centers that you've got on your site, just serving as a feeder network into your training centers. Is this something that you're looking to expand further as we think out of 2022 or any learnings from that experience and having those assessment centers that you can use here going forward? Thanks.

Yes. Last time we discussed this topic, we noted that there aren't many assessment centers, and most are transitioning to treating centers. The original idea was to explore various ways to enhance the profile of patients arriving at treating centers. We envisioned assessment centers in locations like Missoula, Montana, sending patients to local treating facilities. However, the process of moving patients through the system requires considerable effort. The most challenging aspect of our treatment is not the procedure itself. Physicians at these centers are suggesting that it might make more sense for them to function as treating centers, which is beneficial for us. We have been developing tools to assist clinical coordinators at treating centers in efficiently managing the patient workup process by decentralizing the assessment to referring doctors or centers. This initiative is aimed at improving patient flow towards treatment.

All right. Very helpful. Thanks so much.

You bet.

At this time, I would like to turn the conference back to the presenters for any further comments.

Well, thank you very much. I'd just like to close by saying that we are very pleased with having delivered another record quarter. This was largely driven by performance in the less COVID impacted geographies. The fundamentals related to our business, specifically patient engagement, StratX scans, case volumes remain strong and strengthening. Thus, we remain quite optimistic about what's ahead for us, and we thank you all for your time and your ongoing interest in Pulmonx.

And this concludes today's conference call. Thank you for participating. You may now disconnect.