Cardiovascular Systems, inc (CSII) Q4 2021 Earnings Call Transcript

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Cardiovascular Systems, inc (CSII)
Q4 2021 Earnings Call
Aug 4, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day. Welcome to the Cardiovascular Systems, Inc. Fiscal Year 2021 Fourth Quarter Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. Jack Nielsen. Please go ahead.

John E. Nielsen -- Vice President of Investor Relations & Corporate Communications

Thank you, Zenith. Good afternoon, and welcome to our Fiscal 2021 Fourth Quarter Conference Call. With me today are Scott Ward, CSI Chairman, President and Chief Executive Officer; Rhonda Robb, Chief Operating Officer; and Jeff Points, Chief Financial Officer. Approximately 30 minutes ago, we issued a press release announcing fourth quarter results. You may find a copy of this release on the Investor Relations section of our corporate website. Here, you may also find an earnings supplement that includes additional details on our performance and outlook. In a few moments, CSI management will discuss results for the fourth quarter and fiscal year ended June 30, 2021. After our prepared remarks, we will entertain your questions. During today's call, we will make forward-looking statements.

These forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include statements regarding CSI's future financial and operating results or other statements that are not historical facts. Actual results could differ materially from those stated or implied by our forward-looking statements due to certain risks and uncertainties, including those described in our most recent Form 10-K and subsequent quarterly reports on Form 10-Q. In particular, the COVID-19 pandemic has created risks and uncertainties for our business, results of operations, financial condition and prospects, which we will discuss on this call. CSI disclaims any duty to update or revise our forward-looking statements as a result of new information, future events, developments or otherwise. We will also refer to non-GAAP measures because we believe they provide useful information for our investors. Today's press release contains a reconciliation table to GAAP results. I will now turn the call over to Scott Ward.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thank you, Jack, and good afternoon, everyone. Thank you for joining us today. This afternoon, we reported results of a very strong quarter. With the revenues of $71 million, we grew 12% sequentially versus Q3 and 67% versus prior year. Three key factors contributed to our growth in Q4, including COVID recovery, new users and new accounts in our pipeline, and strong sales execution in our high-volume coronary and peripheral accounts. As a result, we achieved double-digit sequential revenue growth in both our U.S. peripheral and coronary franchises compared to our third quarter. In peripheral, we achieved 13% sequential revenue growth with a solid rebound in our hospital business and continued momentum in office-based labs. In coronary, we achieved a 12% sequential increase in Diamondback unit sales and increased revenue generated from the sale of our procedure support devices. International revenue at $3.7 million, increased 76% compared to last year.

New account growth in Japan and our successful launch of our -- of coronary in the EU both contributed to better-than-expected results. For the full year, fiscal '21 revenues increased 9.5% to a record $259 million. U.S. peripheral revenue increased about 7%, while coronary revenue increased over 17%. Our full year fiscal '21 revenues also reflect an $11 million or 4.4% increase over our pre-COVID fiscal '19 results. In peripheral, our strategy to target high-volume, office-based labs, combined with the migration of patients to this site of service during the pandemic, resulted in a 22% year-over-year increase in OBL revenue in fiscal '21. Our peripheral hospital business was about flat for the year due to COVID-related weakness in the referral pipeline and the deferral of procedures for patients with lower acuity claudication.

For the full year, U.S. coronary revenues increased over 17% versus last year, driven by COVID recovery, robust increases in new users, and deeper adoption of orbital atherectomy at high-volume cath labs that focus on the treatment of complex coronary artery disease. Despite the pandemic, demand for physician education programs has remained strong. In FY '21, we certified 384 new customers, including a 53% increase in coronary fellow certifications, and this drove strong unit volume and increased demand for our products throughout the year, even as a new competitor entered the space. Outside the U.S., we are encouraged by the resiliency of our international franchise. Revenue grew 8% in fiscal '21 to $11.3 million. Our peer-to-peer education model in Japan has resulted in strong revenue and market share growth in the three years since launch.

We deployed the same education model for the EU coronary launch, and we have built a strong foundation of new accounts that will accelerate OAS adoption and market expansion. Finally, we continue to make progress on our R&D milestones. And with the launch of WIRION and our JADE peripheral balloons, we are poised to drive strong revenue growth in fiscal '22. Rhonda will provide additional details on our commercial progress in a few moments. But first, Jeff will provide details regarding our financial results and our fiscal year '22 guidance. Jeff?

Jeffrey S. Points -- Chief Financial Officer

Thank you, Scott, and good afternoon, everyone. I will now provide a brief review of our Q4 financial results. Before I begin, please note that the impact of the pandemic on our business' last year's results and substantial revenue comparisons year-over-year. For additional details, please refer to the earnings supplement slide deck on our website. Worldwide coronary revenue increased 96% to $23.2 million. In the U.S., coronary revenue increased 101% to $19.6 million, led by 102% growth in units sold and a 153% increase in coronary support products. We believe that COVID recovery may have contributed up to $1 million of incremental coronary revenue in Q4 as customers addressed a backlog of cases that were deferred from Q3. Outside the U.S., coronary revenue increased 72% to $3.6 million as a result of continued strength in Japan, combined with the successful launch of Coronary OAS in Europe.

Worldwide peripheral revenues increased 56% to $47.8 million. In the U.S., peripheral franchise revenue increased 55%, led by a 79% increase in OBL revenue and a 46% increase in hospital revenue. Similar to coronary, we observed a favorable uplift in revenue generated from deferred cases in our peripheral hospital segment. We believe that the backlog of procedures may have contributed up to $2 million in Q4. U.S. peripheral revenue also benefited from the late Q4 launches of the WIRION Embolic Protection system and JADE angioplasty balloons. In total, peripheral support products generated over $800,000 in Q4 revenue. Turning to expenses. Gross profit margin was 70.9%, in line with our expectations. We forecasted that Q4 gross margin would be in the 70% to 71% range due to two factors.

First, we incurred a one-time charge to cost of goods sold related to our recent decision to upgrade saline pumps that will be reaching end of service over the coming 24 to 36 months. This is a normal course of action to replace the remaining older generation pumps over several quarters beginning in fiscal '22. Upgrading these pumps now will benefit our gross margin over time, while we assure uninterrupted support for our customers. Additionally, as we stated at the outset of the pandemic, one of our primary goals was to invest in our business to ensure that we were able to support our customers and patients throughout the duration of the pandemic. Throughout the first nine months of fiscal '21, we operated both of our production facilities to ensure that we maintained adequate safety stock in the event one of our facilities experienced a pandemic related disruption.

With the recovery now underway, we lowered build levels during Q4 and reduced the accumulated safety stock. Both of these factors were isolated to the fourth quarter, and we do not expect them to have an ongoing impact on our gross margin going forward. Operating expenses totaled $55.3 million. SG&A increased 31%, primarily due to higher sales compensation related to the 67% increase in overall revenues, increased marketing activity related to conference participation, and the launches of our peripheral support products. R&D expenses declined $2.6 million compared to last year. The comparable period a year ago included a $3.3 million non-cash charge related to patents that were no longer associated with our commercial activities. We ended the quarter and fiscal year with $207 million in cash and marketable securities and no long-term borrowings.

Looking ahead to fiscal '22, we expect that the sustained improvement in the state of the U.S. healthcare system, combined with strong sales execution, new product introductions, and international expansion will accelerate our growth. We note, however, that the COVID pandemic is not over and uncertain market dynamics may persist that could impact our fiscal '22 forecast. With that in mind, we forecast fiscal '22 revenues to be in a range of $295 million to $305 million, representing an increase of 14% to 18%. Turning to expenses. Increasing peripheral procedure next in the OBL increased sales of distributed procedure support products, and ongoing international expansion are expected to result in gross margins of approximately 76%. On the bottom line, we forecast a net loss equal to 2% to 3% of revenues and positive adjusted EBITDA of 6% to 8% of revenues.

First quarter is typically our lowest revenue quarter of the year due to lower procedure volumes in the July and August timeframe. This seasonality typically results in Q1 revenue that is approximately 5% to 6% lower than Q4. As a result, Q1 typically results in the largest quarterly loss of the fiscal year. We anticipate that our financial results, both on the top and bottom line will improve sequentially as we move throughout the fiscal year. I will now turn the call over to Rhonda, who will provide a commercial update. Rhonda?

Rhonda J. Robb -- Chief Operating Officer

Thank you, Jeff, and good afternoon, everyone. Today, I will provide my thoughts regarding Q4 results, share some of the key drivers for fiscal '22, and discuss recent reimbursement developments. In total, we are encouraged with the momentum that we achieved throughout the quarter across our peripheral, coronary, and international franchises. Our success was driven by COVID recovery, the addition of new users and new accounts, deeper adoption of orbital atherectomy in high-volume accounts, and the introduction of new products. In total, Q4 revenue grew 12% sequentially compared to Q3. In peripheral, we achieved double-digit sequential growth in the OBL and hospital market segments, with the addition of new users and success in high-volume accounts. Our peripheral hospital business improved in Q4, but is still hindered by COVID-related weakness in the referral pipeline and the deferral of procedures for patients with lower acuity claudication.

We do see light at the end of the tunnel, but this remains a very dynamic situation. The pace of continued recovery will depend on multiple factors, including patient confidence to return to clinic visits, speed of vaccinations, fear of Delta, staffing shortages and fatigue, and the ability of hospitals to manage through surges. Of course, we will continue to provide updates as more data and trends are known. Towards the end of this quarter, we completed the full commercial launch of the WIRION Embolic Protection Device and our JADE peripheral angioplasty balloons. As Jeff mentioned, we generated over $800,000 from the sale of our peripheral support products, with much of this revenue being generated in June. Physician response to these products is consistently strong, and we believe these products will drive strong sequential revenue growth going forward. Turning now to coronary.

U.S. coronary revenue growth was driven by strong sales execution, the addition of new customers, and increased penetration of high-volume hospitals, and the continued adoption of our coronary support products. We focus on hospitals that treat complex coronary artery disease, and we support our customers with case coverage and train new users and coronary fellows on the use of our product. In Q4, we trained and certified 113 new coronary users in the United States. With increased case coverage and our differentiated product offering, our revenue per coronary procedure continues to grow. During Q4, we sold $645 of support products for every coronary OAS sold. In total, sales of coronary support products were $2.9 million in the quarter. Q4 international revenues of $3.7 million were stronger-than-expected and marked the first time over 2,000 OAS cases were performed in a quarter outside the United States.

Our case volume in Japan remained stable despite the COVID lockdown. And in addition, the launch of coronary OAS in Europe is ahead of pace. We continue to experience strong demand for physician training and certification in all of our international markets. We certified nearly 350 coronary interventionalists outside the United States during fiscal '21, including over 90 in Q4, exclusively using remote training and case support. Looking ahead to fiscal '22, we believe we have the components in place to continue our strong top-line growth. In peripheral, the introduction of peripheral support devices and our WIRION Embolic Protection Device, are expected to be a substantial driver of peripheral revenue growth in fiscal '22. Finally, as the pandemic wanes, we look to reintroduce physicians to our expanded offering of peripheral atherectomy products, and we expect to drive deeper adoption within our existing accounts while capturing new volume from recently trained peripheral interventionalists.

In total, the treatment of PAD is expected to grow in the upper single-digits, and we believe we can exceed that level of unit growth. In coronary, we will leverage our focus channel to drive increased adoption of Diamondback and increased utilization of our support devices. We will continue to focus on high-volume, specialized hospitals and train new users and coronary fellows. With nearly 400 newly certified U.S. physicians, we will be working closely with these physicians to enable the full adoption of our technology for their most challenging patients. Turning to international. We look to build on the increased use of imaging in Japan to drive revenue growth and market share. In Europe, we will continue to remotely train and certify new physicians and support cases. And finally, we plan to launch OAS in as many as 15 new countries in fiscal '22.

In total, we are confident that our plans will yield the desired results, driving attractive and sustainable growth for CSI. Now before Scott provides his closing remarks, I will briefly comment on recent developments related to the reimbursement of our atherectomy procedures. And as always, this is a rather complex topic with some reimbursement rates increasing, while others are decreasing. Starting with the easiest topic first. For 2022, the proposed in-patient and outpatient payments for peripheral and coronary atherectomy would increase by approximately 2% to 3%. Now for the physician fee schedule, CMS released the 2022 proposed rule in July and they unexpectedly proposed a 22% rate reduction for peripheral vascular CPT codes. In summary, CMS proposed to increase general clinical labor rates and offset this incremental cost by reducing fees in numerous unrelated procedure categories, including all device intensive procedures performed in physician office based labs.

The proposed rule is currently open to public comment and after hearing from societies, physicians and providers about the direct impact of the proposed changes, CMS may reduce or reverse the reduction in the payment rate. However, if this proposal is approved, it is possible that more interventional PAD may be performed in the hospital setting where we have sustained high market share over the years. In any case, the relative value of using atherectomy in a case remains intact. And on balance, we do not believe these changes will negatively impact the adoption of OAS for the treatment of calcified peripheral artery disease. The final rule for the physician fee schedule will be published in November and become effective on January 1. Last week, we also learned that the review of the lower endovascular vascularization codes is currently listed on the agenda for the CPT editorial panel meeting scheduled for October.

And although we do not know how the codes will be changed, it is possible that they will be stratified to reflect disease complexity, addressing the difficulties of caring for patients with critical limb ischemia, which may favor approximately 60% of our peripheral cases. As we've been saying for a few years now, this can be a long and arduous process, and we look forward to learning how the new codes may or may not impact our peripheral franchise. And we still believe that it could be 2024 or later before these new codes are implemented. That completes my prepared remarks. Scott?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thank you, Rhonda. Well, in closing, let me say that I am confident that we are emerging from all the disruptions caused by the COVID crisis as a stronger company, with a great set of near-term opportunities to further accelerate our growth. In parallel to these efforts, we also bolstered our long-term pipeline with several important product development initiatives such as CTO catheters, peripheral and coronary DCBs, hemodynamic support products, and other innovative products that we will continue to share with you over the course of the next 12 months. Each of these products are designed to open new markets and sustain an attractive growth rate for many years to come. Our entire organization at CSI is energized to execute on these opportunities, support our customers and improve patient care. I want to thank all of our CSI employees for their commitment to our mission and the patients that we serve.

We believe fiscal '22 will be an exciting year, and I look forward to sharing our progress with you going forward. For those of you in attendance today, we appreciate your continued interest in CSI. We will now take your questions. So, Zenith, if you would please repeat the instructions, please.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Danielle Antalffy of SVB Leerink.

Danielle Antalffy -- SVB Leerink -- Analyst

Hi. Good afternoon everyone. Thanks for taking the question. I have one question on the competitive landscape, and then another question on the potential cuts to the OBL physician fees. So maybe, Scott, I'll start with the competitive landscape. I mean, obviously, that's top of mind. You alluded to it in your prepared remarks, but just wondering if you can give any color on how you're seeing your customers adopt the competitive product? And is it, in fact, not the same pace -- are you seeing it not being the same patient population as OAS?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thank you for the question, Danielle. I think what we are seeing is that the IVL product is really expanding the marketplace. We are seeing some crossover, albeit limited, and in accounts where IVL has launched, we have continued to grow, and we've continued to get our cases. So, if you looked at our results over the course of fourth quarter, I think we continue to grow very well. And as we look to the future, we expect that to continue. So, still early days, but I think at this time, I would say that we expect to continue to grow and coexist with IVLs going forward in the future.

Danielle Antalffy -- SVB Leerink -- Analyst

Okay. That's helpful. And then, I don't know if this question is for Ronda maybe, but just on the proposed cuts last week, I mean, we'll see what happens in the final, I imagine there's still a lot of pushback from the field on these. But how did you think about, this has been an area of growth, but it's been an area of growth really because the site of care has shifted. So I guess I'm curious about, my perception here is that, the in-patient population isn't really going to change just where they're getting treated. Would love to hear how you see this playing out if we're in a hypothetical world where these cuts do go into place. Thank you so much.

Rhonda J. Robb -- Chief Operating Officer

Yes, Danielle, I'll go ahead and take that. I mean, as you can imagine, there's a tremendous amount of energy. I think we were not expecting to see a 22% decrease by any stretch. But there is a history of some of these more dramatic proposed coming out and then the societies, physicians, rally, they reevaluate the information and they ultimately improve. And that's really our expectation as to what will happen here as well. Yes, and clearly, the migration of patients to the OBL has continued through this last year. We see that continuing into the future. But if there are drag of cuts, physicians will really take a look at that and things may migrate, as I said in my prepared comments back to the hospital, which is again where we have a strong position from a market share standpoint. So very dynamic. I think the key thing that we're focused on is just really getting patients treated, who need to be treated and reducing abdication.

Danielle Antalffy -- SVB Leerink -- Analyst

Thank you very much.

Operator

Next question comes from the line of Travis Steed of Barclays.

Ian -- Barclays -- Analyst

Hi. This is actually Ian on for Travis today. Maybe just asking one on international here. How is the European launch tracking relative to expectations and relative to the Japan launch? Were you able to get 40% share in a couple of years? Is that kind of the trajectory you're on here? Any idea of how much share you've been able to get in a shorter amount of time there?

Rhonda J. Robb -- Chief Operating Officer

Yes. Thank you for the question. We're pretty excited about the progress in Japan and in Europe, particularly in the last quarter. And the physician reception, I will say, in Europe has been exceptionally strong. We're pleased with the efficiency of the training. We're pleased that we're able to do this so successfully remotely. And it is early days, though, to be able to really understand our share position. So, maybe ask us again in a quarter, we'll have a better understanding of kind of where things fit there, but really strong and strong reception. Japan, also continued momentum and we now have crossed the 40% share mark in Japan, so continued progress there as well.

Ian -- Barclays -- Analyst

Perfect. Thanks. And then maybe just on COVID a little bit. Just as COVID kind of cases drop-off in certain regions, are you seeing a reversal in any of the market dynamics that happened during the pandemic? Like maybe cases moving back away from sort of the OBL environments? And then last quarter, I think you also said inventory in the field is as lean as it's ever been, which is kind of helping manage manufacturing operations in a more specific manner. Is that -- are you still seeing that the last few months? Has that kind of gone back to sort of pre-COVID dynamics at all? Just anything you're seeing there?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thanks, Ian, for the question. Regarding the inventory management, what we had done during COVID-19 was to build up our inventory, really so that we would have a safety stock and protect against the possibility that we may have an outbreak in one of our manufacturing facilities. And as we build up that inventory stock, ultimately, that served as a good safety outlet for the company. As we moved into fourth quarter, we felt that we no longer needed to retain that inventory. And as a result, we slowed our production and basically flowed more of that inventory into the market, to really balance out our factories and get our inventory situation back in line with our normal expectations. So, that is really what our commentary has been as it relates to the adjustment since the COVID crisis.

Now in regards to the site of service, we really have not seen much change. Patients choose to be treated in office-based labs for a number of reasons. I mean they -- it is obviously more preferred by patients, they are not having to go into the hospital and physicians prefer it as well. So we expect to see this migration to the office-based lab continue, not unlike what you've seen perhaps in other medical technology markets that have the same characteristic. So really, post-COVID-19, there has not been much change. We see about an equal ratio of our patients being cared for in the hospital versus those in the OBL segment.

Ian -- Barclays -- Analyst

Okay. Thank you. Congratulations in the quarter.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thank you.

Operator

Next question comes from the line of Brandon Vazquez of William Blair.

Brandon Vazquez -- William Blair -- Analyst

Hello. Thanks for taking the question. First one, just on -- in terms of the backlog commentary, that was really helpful color that you all provided. I guess the question though is, DO you get the sense in talking to your accounts that they treated all of their backlog or is there some backlog that you're kind of expecting in the next couple of quarters in fiscal 2022? I think some other med tech peers have described it less as the -- like a quarterly bolus, but maybe a small tailwind as more patients trickle in. So, curious what you're all assuming in terms of guidance for any remaining backlog?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yes. I would say that that is very similar to our circumstance. I think we just saw throughout the quarter that consistent kind of improvement, that most likely came from the rebound of some of these cases. Most specifically in peripheral, we saw that in the lower acuity claudicant patients in our -- in hospital segment. And that was very similar to what we saw in July of last year, when we last saw a significant rise in cases, followed by a recovery. So we saw a very similar circumstance. I think the same circumstance occurred in coronary, where we just experienced a slight uplift over the course of the quarter. As Jeff said, in the case of coronary, it's probably somewhere up to $1 million, probably somewhat less than that. But it gives you an idea that we do think we saw throughout that quarter some of an uplift that was due to the treatment of cases that were deferred from Q3 into Q4.

Brandon Vazquez -- William Blair -- Analyst

Got it. And then we've also been -- maybe some from med tech peers as well, we've been trying to get a better sense. We've heard both ways in terms of pronounced seasonality. I know you all had talked about expecting seasonality, this is pretty typical for your first fiscal quarter, but there's a lot of talk and rumors about pent-up demand for vacations between both physicians and patients. Curious what you're all hearing? Are you kind of expecting something more in line with historical seasonality in your fiscal first quarter? Or is there a potential for that to be a little bit more pronounced given more vacations in your accounts?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yes. Thanks for that question. I do think that we typically see seasonality in our business. And I can't say that it's more pronounced than it has been in the past, but we are anticipating a relatively traditional summer season, and that normally impacts our business in Q1. The July and August time frame is normally a slower time in most cathodes across the country. And Jeff, I think in your commentary, you mentioned what our typical reduction is. So I'll just let you respond to that.

Jeffrey S. Points -- Chief Financial Officer

Yes, Brandon, thanks for the question. Typically, if you look at the last three years prior to COVID, we usually see a seasonality effect in Q1. Normally, our revenues are down about 5% to 6% in Q1 versus Q4, so that's something that you want to factor into your model.

Brandon Vazquez -- William Blair -- Analyst

Got it. That's helpful. And if I could just ask one last one. It might be helpful in terms of the CPT Editorial Panel Meeting, can you all just remind us of what the catalysts are coming up after this next meeting. I think that's happening next month in September. If they decide to move forward with it, what are kind of like the time lines we're looking at for updates on that code set? Thank you.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thank you, Brandon. The process is actually rather opaque. It is a process that remains cloaked in confidentiality. And in fact, we really won't be able to share a whole lot about this process after it gets started. But at least regarding the specifics of what's been proposed. In terms of timing, what we expect is that, this will remain on the agenda in October, that the meeting will happen even with all of the COVID concerns. And that this will be followed most likely by a rock process, which will take some number of months and will ultimately lead to an approval of a new set of codes that would go into effect probably in 2023, but maybe also in 2024. If a special study group is required for these codes, then we would expect to see that delayed probably to 2025 and maybe even later. So, I think that is about the best I can give you in terms of what you should expect for timing.

Brandon Vazquez -- William Blair -- Analyst

Got it. That's very helpful. Thank you.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Okay. Thank you.

Operator

[Operator Instructions] Our next question comes from the line of Suraj Kalia of Oppenheimer.

Suraj Kalia -- Oppenheimer -- Analyst

[Indecipherable].

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yes Suraj. Thank you.

Suraj Kalia -- Oppenheimer -- Analyst

Perfect. Congrats on the quarter. So Scott, let me start out with a generic business question. We see the overall numbers, but maybe if I can drill down one additional step, what are the utilization metrics, specifically on the coronary side, U.S. versus OUS, you all are seeing, i.e., these many accounts, these many characters for case. Could you just kind of give us a sense of where the trend line is, so that through that, we can glean the new store versus same-store sales.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yes. I think in particular -- well, first, thank you, Suraj, for that question. But in particular, we are launching outside the United States, really in almost all of our markets using what we refer to as a peer-to-peer training approach. And that allows us to utilize remote technology, train and educate a local key opinion leader, who then trains and educates his or her colleagues, who then educates others. So really, the most important metric that we watch in that is our accounts trained and then new accounts and then new users, because we can open up, let's say, a new account, but then within that account, we will be training additional physicians who then are able to use our technology to treat their patients. So those are really the key metrics that we use. Now as Rhonda said in her remarks, if we look at how Europe, in particular, how Europe coronary launch is performing, we are actually a little bit ahead of pace in comparison to where we were when we originally launched in Japan. So, our new accounts in Europe for coronary are actually a little bit ahead of pace, and we're very pleased right now with the progress that we're making with the European launch. I hope that addresses your question. Were you -- is there something more specific that you're seeking?

Suraj Kalia -- Oppenheimer -- Analyst

No, fair enough. I mean, at the end of the it, I can take it offline. Scott, I was really -- what I was trying to get at or at least try to understand is, just kind of put a framework here this way at OAS and at least on the coronary side and ultimately map it out to IBL, but we could certainly take it offline. Scott, I'll quickly throw two other questions. One is, if you could give us an update of the appeals process with IBL? And the second thing is, at this stage of the case, are you sales guys picking up any price elasticity of demand, i.e. OAS versus IBL in the field because that's a huge price differential per case right now? And I'm curious if that is even a factor that is being talked about below the surface. Any color would be great.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thank you, Suraj. The update on the IPR appeal process is really the same. There's been no change. We are still awaiting a decision on all three IPRs. We expect to hear on at least two of those by the end of this calendar year and then the third, probably in some period over the course of the next coming year. So, that's the update there. And then, as we look at pricing in the marketplace, the -- about the only thing I can tell you is that, our pricing in coronary over time has been very stable and continues to be so. We do not incur large ASP erosion in our coronary segment. The IBL price as has been published, is out there. We know that in some accounts, they were surprised by that. But of course, the NTAP and other means will probably balance out that pricing of it anyway. So thus far, we're pleased that our pricing has been stable, and we've continued to grow despite the introduction of this competitive product.

Suraj Kalia -- Oppenheimer -- Analyst

Thanks, Scott. Just quickly, can I ask one more question? Scott, at least this is anecdotal, have you seen in the field any cases where the physician says, you know what, I would have used IBL, but I've used OAS or vice versa? Is this too early in the game, maybe we're talking a bit? And the reason I ask is, subliminally, I'm just trying to think, is the market by far seeing into longer, more diffuse lesions being treated, let's say, the OAS versus shorter, more focal lesions with IBL? Or is this too early in the game right now? Thank you.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thank you, Suraj. I think most definitely, we have seen cases that have converted from what were thought to be IBL balloon case is back to orbital atherectomy cases. And the fundamental reason behind that is largely due to the stenosis of the lesion that's being treated. So, if you think about this interventional cardiologist may be looking at an angiogram and detect that, in fact, some calcium is present, they drop a wire down, thinking that they can expand that lesion with a balloon. As they then position that balloon and try to open it, they find that they can't and maybe they can't even cross the lesion with the balloon. And under those circumstances, they really need to then convert to orbital atherectomy and treat that patient. Following the use of atherectomy that then would use a balloon to further expand the lesion, and then, of course, they would drop their stent and stent the lesion from healthy to healthy tissue.

So that is a very common thing that happens. We see that in the more sophisticated sites, they will oftentimes decide which technology to use based upon the percent stenosis that they're experiencing. In other words, they have to be able to get a balloon across to use a balloon. Secondly, the -- it's important that you have nearly concentric calcification. So, if there's 360-degree calcification, you have sufficient containment for the pulse of the IVL wave to be effective. If you have less than that, then you, of course, can lose a portion of the energy generated by the IVL out of, let's say, the uncalcified portion of the lesion, and you don't have as effective response as you otherwise might have. Finally, for sites that are using OCT or IVUS imaging, those sites oftentimes can detect the presence of nodules, and in these more severely calcified lesions, nodules are present 45% to 50% of the time.

When these nodules are present, it is important to use an atherectomy device to treat them, and that's also a primary indication and has been for the use of orbital atherectomy. The lesion length, as you referred to, is also important because I think physicians are reluctant, both through the time and cost considerations, to use more than one IVL balloon in a case. So if they come across long coronary lesions, so they're generally still using orbital atherectomy to treat those cases. Hopefully that's helpful and thank you again for the question.

Operator

There are no further questions at this time. I would now like to turn the call back to Scott Ward. Please go ahead.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Okay. Thank you, and thank you, everyone, for joining today's call. We -- I think you can tell that we are very proud of the way we executed our plan in Q4, and we are quite confident about our outlook for FY 2022. So, thank you for your time, and we look forward to updating you again soon. Thanks, everyone.

Operator

[Operator Closing Remarks]

Duration: 44 minutes

Call participants:

John E. Nielsen -- Vice President of Investor Relations & Corporate Communications

Scott R. Ward -- Chairman, President & Chief Executive Officer

Jeffrey S. Points -- Chief Financial Officer

Rhonda J. Robb -- Chief Operating Officer

Danielle Antalffy -- SVB Leerink -- Analyst

Ian -- Barclays -- Analyst

Brandon Vazquez -- William Blair -- Analyst

Suraj Kalia -- Oppenheimer -- Analyst

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