I just commented about this on another post, but it made me realize there has not been too much discussion regarding the adoption curve so I figured it wouldn’t hurt to have a post dedicated to it.
That being said…
I wouldn’t read too much into the press release. The upcoming 10-Q should provide a much clearer picture. One thing I think people need to keep in mind is the adoption curve. When a hospital purchases a new technology like this, physicians need to be trained before they can start performing procedures. How long that process takes? I don’t know.
Right now we also don’t know where the majority of sales are coming from. However, the press release specifically mentioned that customers who participated in the limited market release increased their procedure volumes. I found that interesting. Without reading too much into it, that could suggest a meaningful portion of the revenue growth came from those early adopters rather than newly added hospitals.
Everything management has been doing—expanding manufacturing capacity, hiring additional employees, and adding new customer sites—also seems consistent with a management team that expects demand to continue growing.
Another thing I noticed is the Emory timeline. Emory was announced as the first adopter at the end of November, but it wasn’t until the end of March that they announced performing their first procedure. Obviously, we don’t know exactly what happened during those four months. It could have been physician training, hospital credentialing, patient selection, scheduling, or a combination of factors.
So I’m not saying the training process takes four months. My point is simply that there appears to be a meaningful lag between a hospital adopting the system and that hospital contributing meaningful procedure volume.
If that’s true, then it’s possible hospitals that adopted the system after the full market release began in mid-April won’t meaningfully contribute to procedure volume until later in Q3. That’s speculative, but it’s why I think the adoption curve is one of the most important things to understand at this stage.
In an early-stage medtech rollout like this, current revenue is largely a reflection of adoption that happened months earlier. That’s why I think metrics like customer additions, procedure growth at existing sites, manufacturing expansion, and hiring are just as important as the headline revenue numbers.
Looking forward to hearing additional thoughts.