Good day and thank you for standing by. Welcome to the Outset Medical Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] Please be advised today's conference may be recorded. [Operator Instructions] I would now like to hand a conference over to your host today, Jim Mazzola, Head of Investor Relations. Sir, please go ahead.

Okay, thank you and good afternoon everyone. Welcome to the Outset Medical fourth quarter and full year 2021 earnings call. Participating from the company today are Leslie Trigg, Chair and Chief Executive Officer; and Nabeel Ahmed, Chief Financial Officer. During the call, we will discuss our fourth quarter and 2021 operational and financial results as well as provide our outlook for 2022. After our prepared remarks, we will host a question-and-answer session. We issued a news release after the close of the market today and updated our investor presentation, both of which can be found in the Investor Relations pages at outsetmedical.com. This call is being recorded and will be archived in the Investors section of our website. I'd also like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events, market trends, results or performance are forward-looking statements. All forward-looking statements 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. Outset assumes no obligation to update these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of Outset's public filings with the Securities and Exchange Commission including Outset's latest annual and quarterly reports. With that, let me now turn the call over to Leslie.

Good afternoon everyone and thank you for joining us to review our fourth quarter and full year 2021 results. Before I begin I'd like to introduce and welcome Jim Mazzola, who recently joined us as Vice President of Investor Relations. Jim brings two decades of med-tech and life sciences experience to our team and we look forward to his contributions as we continue to grow our business. The fourth quarter capped off a truly exceptional year for Outset during which we thought record revenue growth, meaningful progress toward gross margin expansion, success with our land and expand acute strategy, and tangible growth in Hong Kong for placement, as evidenced by a tripling of our home installed base. This momentum resulted in fourth quarter total revenue of $28.2 million, representing 63% growth year-over-year and resulted in full year 2021 revenue of $102.6 million representing 105% growth year-over-year. Our business again proved resilient as we continue to grow through COVID-19. Our success in the fourth quarter extended beyond revenue with console bookings hitting a historic high. We exited 2021 with 1,251 consoles in backlog compared to 551 in backlog exiting 2020 with a significant portion of our 2021 exit backlog consisting of consoles intended for use in the home. This backlog provides us with significant visibility and confidence in our 2022 revenue trajectory. As Nabeel will touch on in his discussion of our fiscal year 2022 revenue guidance, we are projecting another strong year ahead with good visibility to continued sales growth within acute care customers and an inflection in units deployed for home use. In addition to growing the topline, we remain confident in reaching our gross margin expansion goals, specifically our 2025 goal to achieve gross margins of approximately 50%. Turning now to a review of our success in the…

Growing customer and install base in the acute setting directly feeds our home expansion strategy. In 2021, we took a deliberate approach to building our early home presence, focusing first and foremost on delivering an exceptional and highly differentiated patient and caregiver experience. Our second key objective last year was to build a solid operational foundation that was ready for scale, from training to distribution and logistics to patient support anytime of the night or day. I am -- Leslie is pleased to report, the team achieved both of these objectives, while tripling our home and clinic install base to 300 consoles, and in ways that allow us to scale in 2022 with an inflection beginning this year. After growing home revenue to mid to high single-digits as a percent of total revenue in 2021, we expect our home revenue to more than double in 2022, reaching mid-teens as a percentage of 2022 revenue. To achieve this level of growth, it is also our goal to exit the year with 100 home programs in place with both health systems and specialty providers.

I'm back. Teamwork makes the dream work as they say. Thank you, Nabeel. Given that home counsels were a significant portion of our Q4 active backlog, we believe we are set up well for strong velocity and volume in 2022. Additionally, macro factors in the home setting remain overwhelmingly in our favor. As we announced on our last call, we are very pleased to have received a favorable decision for Tablo under the Tiffany's program following the submission of our application in the first quarter of 2021. As a reminder, Tiffany stands for the transitional add on payment adjustments for new and innovative equipment and supplies. Notably, CMS deem Tablo a substantial clinical improvement compared to the incumbent device, making it the first and only dialysis technology to benefit from this new CMS rule. The Tiffany's decision and the End Stage Renal Treatment Choices or ETC model provide additional tailwinds we believe our sales teams will capitalize on in 2022. Beyond our ability to drive revenue growth and build a foundation for the future, our team continues to make impressive progress on gross margin expansion, despite macro headwinds. We reached fourth quarter non-GAAP gross margin of 12%, which was in line with our expectations. We're very proud of our teams across the business and how they've effectively managed through the macro supply chain and sector volatility during the quarter and the year. On the supply chain and manufacturing side, our ongoing cost down initiatives and programs continue to work for us, which helped drive sequential reduction in the cost of our console. On the cartridge side, we achieved an important milestone in late November when the FDA granted 510(k) clearance for a new Tablo cartridge. This approval enables a second source to produce Tablo cartridges in Mexico with a new…

Thanks Leslie. Hello everyone. Our fourth quarter revenue grew 63% year-over-year to $28.2 million, driven primarily by increased console shipments to acute customers, higher consumable shipments, increased services to support our growing installed base, and the impact of XT upgrades. Our full year revenue was $102.6 million, an increase of 105% over the prior year. Product revenue grew 80% year-over-year to $23.7 million. Console revenue grew by 70% year-over-year to $18.1 million, driven by higher console placements and increased ASP given the availability of and demand for Tablo XT. Similar to prior quarters, we continue to see better uptake of our XT upgrade than we had initially projected. Consumable revenue was $5.6 million, an increase of 119% versus the prior year. We saw q4 cartridge utilization in line with our expectations. Service and other revenue grew by 11% year-over-year to $4.5 million as we service the larger installed base. Moving to gross margin and operating expenses, I will highlight our non-GAAP results. I encourage you to review the reconciliation of GAAP to non-GAAP measures, which can be found in today's earnings release. Our fourth quarter gross margin was 12%, an improvement of approximately nine percentage points versus the prior year period and the sequential improvement of 60 basis points. This improvement compared to the prior year period was primarily the result of our ongoing cost reduction activities related to moving our console manufacturing production to Mexico, which have meaningfully lowered console costs while enabling increased console output. Operating expenses in the fourth quarter were $39.4 million, up $13.6 million versus the prior year period, driven primarily by headcount growth resulting from investments in our commercial organization, investments in R&D, and G&A expenses tied to operating as a public company compared to the prior quarter non-GAAP OpEx increased $9.1 million, primarily…

Thank you. [Operator Instructions] Our first question comes on line of Amit Hazan with Goldman Sachs. Your line is open, please go ahead.

Thanks very much and congrats on the quarter and the year. I thought maybe what we could do is just start with the macro and you gave some good color, but I want to just follow-up on it and just ask about the supply chain and some of the issues there that have come up that I know investors are thinking about. So, the componentry, it sounded like you've got your kind of hands around this. Implied in your comments suggest that -- if we think about your backlog or units you expect to deliver in 2022 that you think you have the components you need to be able to deliver that. I just want to get a confirmation there. And then just as an aside, separately on dialysate in the shortage that companies like [indiscernible] are talking about, I think there's some confusion out there on the extent to which you guys are even exposed to that. Maybe just if you could spend a minute helping to clarify that it would be helpful?

Yes, Amit, absolutely. So, let me maybe start with your with the first part of your question on the supply chain. So, we've seen a couple of things happen over the last year. Number one, the component shortages, as I talked about, we do have one of the best supply chain teams in the business, we have leverage our balance sheet to make sure that we have enough raw materials and components on hand, we also make sure that we've got enough Tablo's on hand to service forward demand. So we are not concerned from a component perspective at all with respect to 2022. The other thing we saw, and I talked about this in my prepared remarks is the cost of freight, particularly as it related to transporting cartridges from Southeast Asia to the United States. Now, again, now that we have our Mexico-based cartridge manufacturer, there'll be ramping up here in the first half of the year. And so, again, structurally, we've mitigated that situation and we won't have these freight costs going forward. anymore.

Yes, maybe I'll I can jump in on the second part of that. I mean, we -- yes, we have been hearing about and reading about in the newspaper, the dialysate shortages as well. We certainly gotten our fair share of calls from hospitals being put in a pretty difficult position by that. The short answer is we are open for business and anticipate being open for business well into the far future. We don't source from any of the providers, I think that have been struggling with such shortages and we haven't missed a beat. And so if anything, it has provided us with an opportunity to help out at a really critical time since we have been able to maintain a very, very strong continuity of supply.

Good stuff. And just ask one follow-up and not jump back in queue. Just on the 2022 guide, just thinking about folks still getting to know you all and thinking about the backlog that you give at the end of the year, 550 last year, maybe help us understand how last year's figure ended up materializing? How much of it and how fast? And if that informs how we should be thinking about the 1,250, how much forward visibility does that afford you? And then just generally around visibility, as you think about the guidance that you gave, just the puts and takes on a low -- in the high end that you're thinking about for the year would be super helpful. Thanks so much and again, congrats.

Yes, of course, Amit. So, three things there. So, one, we entered 2021 with 551 consoles in backlog as you mentioned. Now, if you rewind the tape, we talked a lot about that backlog being very 1H 2021 focused, right. The composition of that backlog and when our customers expected that backlog to deploy was really in the first half of 2021. And you may recall that it sort of led to a large amount of growth concentrated in the first half of the year in 2021. Now -- so that's that. When we look at the backlog, we have entering 2022, so we have 1,251 consoles in backlog entering 2022 and backlog for us represents an agreement with our customers to take an order, it's a binding order. And then we work with them to determine the ship dates of that backlog, right. So, the backlog of 550 entering 2021 is very different from the backlog entering 2022. Based on the backlog we have entering 2022, the 1,251 consoles and the visibility we have in our pipeline, we have a lot of confidence in the guidance range that we talked about, the $142 million to $150 million. So, we have a lot of confidence around the range and it's afforded by the visibility here that the backlog starts to provide. Now, when you think about our guidance range, the $142 million to $150 million, we have baked in the fact that COVID has not really been a headwind for us. As Leslie mentioned, we've managed to grow through that. We baked in the fact that nursing shortages have by and large been a tailwind for us. Again, as Leslie mentioned, we have seen situations where we have been able to step in where a hospital incumbent outsource provider has had their staffing shortages and been unable to service the customer, right. And so we have a lot of confidence again around the range and look, we still have three and a half quarters of execution left to go here in 2022 and so sitting here today, we've got a lot of confidence in the range afforded by the visibility given by our backlog and pipeline.

Thank you.

Thank you. And our next question comes from line of Josh Jennings with Cowen. Your line is open, please go ahead.

Hi, good evening. I'll echo Amit's sentiments on the -- and congratulate on a strong first of the year. And I wanted to have just two questions on home opportunity, sounds like you're really experiencing some meaningful momentum and it was great to hear the guidance you laid out. I wanted to just get a better understanding of where Tablo is winning? Is it mostly new patient starts in home or are there competitive swap-ins going on? And also just whether or not the PD burnout patient opportunity is contributing to some of the momentum? And then how you're feeling about attacking that -- those PD patients that have burnout and already on some form of home dialysis? And then the second follow-up is just on the pandemic. We've seen in 2021, pandemic tailwind in terms of more end-stage renal disease patients choosing home hemodialysis, just staying out of the clinic being high risk and wanting a safer dialysis even in their home. Thanks for taking the questions.

Yes, sure. Josh. Thanks. Thanks for listening. Well, I'll start maybe from the top, you talked about where is Tablo winning new patients or existing patients on a competitive home hemo device? And the answer is both. I would be hard pressed to give you any sort of precise breakdown there because each provider -- some of them are pursuing slightly different strategies. But I would say by and large, most providers adopting Tablo are doing so to grow their total home population to expand it, and they're purchasing Tablo because they believe that Tablo's ease of use, time saving, fewer supplies will result in more patients saying yes to home. So, I would say that some of our patients at home today have been on an incumbent technology in the past. Like there's a couple that I mentioned on the call earlier, but probably the majority are new to home as providers are looking to grow their total home population. As a result, I think also with the ETC and this Tiffany's benefit associated with Tablo. In terms of -- you'd also mentioned the PD, the population of patients kind of offboarding from PD. I would say -- I'd like to be able to take early innings. I think we're whatever comes before the early innings, we are pre-early innings. We have I think, always viewed a PD transition to HHD on Tablo has a really fantastic and obvious opportunity for patients to be able to stay at home. And I do anticipate in the coming years that we will invest in more patient education and more transition programs. But for today, we're really focused on helping our providers do what they want to do, which is grow their HHD population. lastly, on the COVID and has the pandemic served as a tailwind? I would say qualitatively, yes. When you talk to patients, and again, very anecdotally, you will hear many of them say yes, this started really sort of enter my equation about dialyzing in a center versus dialyzing at home. But thus far we haven't necessarily seen or generated any hard and fast data about how many and how quickly, but anecdotally, absolutely that comes up all the time, at least, in the conversations that I have with patients about why they're choosing home.

That's super helpful. Thanks for the answers, Leslie.

Yes.

And our next question comes from a line of Suraj Kalia with Oppenheimer & Co. Your line is open, please go ahead.

Hi, Leslie, Nabeel. Can you hear me all right.

Yes.

Perfect. Hey, congrats on the quarter. So, Leslie couple of questions -- actually, Nabeel, let me start out with you. Nabeel, the commentary implies approximately a $20 million to $22 million home hemo contribution in FY 2022. If I just do back of the envelope calculation, a little over 500 home hemo patients expected for FY 2022, up from let's say, around 175 or so in FY 2021. How off is my math on this?

Suraj, I mean, you're not -- I don't want to comment on the specific number and that's not something we want to guide to. But what we did say is that our home revenues were more than double to gets to this mid-teens as a percent of 2022 revenue. And so your math tracks to that statement. Now, we will publish our installed base annually. We'll do the same thing next year when we print Q4 2022 results. But your math tracks.

Fair enough. Hey Leslie I'll throw one year away and hop back in queue. When and look at the bell curve of distribution, especially in the acute centers and the 1,250 consoles and backlog. To the extent that you can help us understand how the bell curve looks like you because you did have some pretty big contract from some concentrated users. And I'm curious how you're seeing the bell curve, is it widening? Is it narrowing? Any idea about recurring revs from acute centers would be greatly appreciated? Folks, thank you for taking my questions.

Yes, sure. Happy to and I'm going to assume that by bell curve, you're really maybe referring to the installed base and facilities and customer expansion et cetera. I guess my first comment would be in 2021, the expansion was both wide and deep. So, in that sense, I would call -- if I'm interpreting your bell curve analogy correctly, and please jump back on the line if I'm not, but if I'm interpreting that correctly, yes, bell curve is getting wider. What?

Just the utilization bell curve per center? And then how does the bell curve look like or how is it shifting?

Suraj, let me maybe take a crack at that. So, if we look at our utilization in Q4 and just let me back up a little bit. So, internally, we look at utilization at spot rates, spot utilization rates, but what we're really focused on is trailing 12-month utilization because it gets sort of rid of some of the noise. We look at our utilization across our portfolio or across our installed base, things are trending right in line with where we expect them to be. Now, we're growing and so as you can imagine, the new facilities that we're adding, start out at lower utilization rates and the more tenured facilities, they end up above where we want -- where sort of the midpoint utilization is, if you will, unbalanced in a growing environment, it all sort of works out. But we -- from a utilization perspective, we're trending right in line with where we expect across the portfolio, both in the acute and for the consoles in home. Does that answer your question?

Fair enough Nabeel and Leslie, thank you.

Thank you. And our next question comes from a line of Rick Wise with Stifel Your line is open, please go ahead.

Good afternoon everybody. Plenty of congratulations on the excellent quarter. Leslie I congratulate you on your new title and hiring one of the best IR professionals in the business. Great move. The -- turning to a question on acute. Single-digit penetration, the land and expand strategy, I was wondering if you could maybe just expand on your comments there. What's the 2022 agenda, is it more about -- it's signing big new systems, is that going to be the news we're looking for? Or is this -- your landed enough -- 2022 is more a year of expand to drive growth in Tablo adoption? And rephrase it -- the question, however, makes sense Leslie. Thank you.

Yes, sure. Thanks. Thank you, Rick and thank you for the compliment, that's very, very kind of you. Well, I guess I would say it sort of started down this road was with Suraj's question, which is, if you looked at sort of the bell curve from a customer concentration standpoint, the spread is getting wider. So, we are proliferating Tablo usage not only with new customers, and also with new facilities within those existing customer networks. Tablo today is now used in almost every state in the country, including Alaska and Hawaii, something we're really proud of. But I think I use the verbiage tip of the iceberg, because when you look at the performance in 2021, which was great, and we're very proud of it, also on an opportunity set of $2.5 billion, there's a lot of runway there to go. And so said differently, the runway that exists, exists both in new customer acquisition. Now, there's a lot of hospitals that could benefit from Tablo, as well as expansion within the customer, both the regional health systems and also certainly in those national health systems where we have failed agreements, but are some -- are still somewhat in the process of implementing and installing Tablo at more and more of their hospital facility. So, both deep and wide to answer your question.

Got you. And my home related question, just responding to your use of the word inflection, strong language. What's giving you so much confidence now? I mean, obviously, the numbers look good. It's still very early on, but here too, can you discuss next steps and logistics? And again, this time next year, I guess, have you doubled the number of home programs? Is that what we're looking for? Or no, it's focused more narrowly and drive patience and sort of get more competence in your logistics and team and everything? Again, how are we thinking about priorities there?

Yes, happy to answer that. Well, I think I've said this on past calls, I mean, I have always personally believed in doing things well, not quickly, no matter what market we're serving. But particularly, at home where the device company-patient relationship is especially personal and obviously paramount. So, here's sort of the bottom-line entering 2022, we took a hard look at everything we strove to ready for scale during 2021. And determined, we're there. We are prepared to grow both well and quickly. And so that's kind of the inflection in our thinking and in the velocity and pace that we think we can approach home with in 2022. Second, I'd say that, Tiffany's and the ETC has accelerated the urgency with which progressive providers are moving to grow their home populations, and that's continued to change in a good way, a bit too, which is colored sort of our bullish expectations for 2022. So, we're ready. I think a year from now to hit it the last part of your question, we'd want to be able to come back and report that Tablo was in robust use that 100 home programs across the country. We'd want to be able to come back and report, as we can report today, high retention rates -- highly differentiated retention rates. And I think we want to come back and report that we were ready to kind of further push the accelerator down for 2023. That's what we're going to be focused on reporting back to you this time next year.

Got you. And just one last one for Nabeel. Nabeel, you're kind of to give us a little color on the quarterly revenue flow throughout the year. Maybe you could help us on the gross margin front as well. Clearly, you're heading toward higher teams, if I'm understanding as you exit or during the by the time you reach the fourth quarter. But do we see steady pickup? Is it a sharper step up fourth quarter to first quarter? How do we or more -- or slower start because the programs cost programs or volumes pickup? How do we think about that flow? Thank you so much.

For sure, Rick. So, on gross margin, just a couple of things. Number one, the drivers of margin expansion for us, number one will be so on the console side, our cost down programs that have benefited us in 2021 will continue throughout 2022, which is where we're looking at suppliers, components, and individual parts to redesign them to drive down costs. So, number one, that's going to continue. Number two, we now have our Mexico-based cartridge manufacturer who is ramping up. And so you'll see that ramp primarily over the first half of the year where they go from zero to the majority -- or from close to zero to the majority of our cartridge production. So, when you take all of that together what we would really look for Rick is gross margins to expand sequentially as we move through the year from the levels that they were at in Q4. So, from the 12%, we just printed, we'd see expansion. Now, the commentary I gave our margin expectation is that for full year 2022, our gross margins will be in the high teens.

Got you. Possibly suggesting you end up later in the year a little higher. Thank you so much Nabeel?

Of course.

Thank you. And our next question comes from the line of Danielle Antalffy with SVB Leerink. Your line is open, please go ahead.

Hey, good afternoon, everyone. Thanks so much for taking the questions. And congrats all around on a good year, Leslie, on your new role, and, Jim, welcome to one of the more exciting small cap growth stories in med tech. Leslie, my question is going to be similar to the question I feel like I asked every time and it's why not bigger, faster, with home adoption. As you know, we did a lot of work on this back in June-July timeframe. And it just feels like all the tailwinds are in place. I appreciate the guidance you're giving for the year and wanting to be conservative. But I guess what's the tipping point? Like at what point are we at a tipping point where the avalanche really starts to come here?

Yes, sure. Thanks for the editorial there. Well, I think first and foremost, as I look out to 2022 sort of doubling our revenue contribution coming from home. I mean, I think it's a big deal. We could quibble over words, but I think it's something that we're excited about, and we're bullish. I think that is bigger and that is faster. So, I think we're there. And we're going to reach for bigger and faster for the next many years to come. I don't see a slowing down on this thing. We will always have our eye on the patient experience at the same time. We've talked about this a lot. I mean, I really have had my eye on patient retention in the home, really since day one studying this market for a very, very long time. In the IDE, our patient retention rate was really high. In our early experience with small number of patients, our retention rate was really high. And I think the question through last year, at least in my mind was, hey, as we really start to scale here, will the patient retention rate remain high? The answer is yes. So, I think that we feel very confident of now about our ability to do bigger to do faster, and to do it well. Again, it's defined by an exceptional patient experience, which is at the end of the day what this is all really about.

Yes, okay. And then I guess my next question is your go-to-market strategy has been so focusing on the health system. I'm just curious about whether you're getting interest from other sort of major dialysis providers out there. And at what point you might sort of entertain that idea of going out to a DaVita, for example? Thanks so much.

Sure. Danielle, are you talking about on the home side or the acute sides?

I'm sorry. On the home, on the home side.

On the home, okay. Yes, sure. Well, a couple comments there. I think that Tablo is already being used by many of the major dialysis providers across the United States, in addition to health systems that are establishing their own home service dialysis, chronic service lines, for the first time. So, those are the segments that we're engaged in right now. And I don't see that changing, I see both growing equally. And if you again, look at the size of our backlog, I think the demand and the interest in Tablo was equally high, both from health systems and also from conventional dialysis providers. I think as our goals, to use your words, are really focused on bigger and faster. Our partners for today and for the foreseeable future will be with those that want to be progressive and those that want to move really fast. And so those are our North Stars that guide us to partner selection, and I see that remaining intact for 2022.

Got it. Thanks so much.

Thank you. [Operator Instructions] And our next question comes from the line of Drew Ranieri with Morgan Stanley. Your line is open, please go ahead.

Hi, everyone. Thanks for taking the question. Maybe for Nabeel, just on OpEx, I heard that you said that you're expecting an increase year-over-year, I was just hoping that you could put maybe a finer points on kind of where you're expecting OpEx to shake out? And maybe what investments you're kind of putting that money towards? Is it more on the commercial side? More on the R&D? And how that might translate into catalysts over the next 12 months?

Yes, Drew for sure. So, first of all, OpEx, we invested in 2021, in our commercial organization and in R&D, we hired a Chief Technology Officer, as you as you know, back in the summer. And it is this investment that we believe has helped get to kind of the demand that we've seen and the large backlog that we enter 2022 with. Now, Leslie talks about all of the tailwinds that we see both in the acute setting, where again, we still have a lot of penetration to go in an even larger markets, right, $2.5 billion market. And then in the home, we are still in early innings. And in a year where we do expect inflection and do expect home to double as a proportion of our revenues. So, our 2022 investments will be primarily in our commercial organization, around marketing around clinical sales and around support of our installed a growing installed base. So, that's on the commercial organization. And then secondly, on the R&D side, we will continue to make investments there around hardware engineering associated with driving down costs and improving Tablo. And then around software and data with respect to our strategy to innovate around data over the long run. You'll see some smaller investments in G&A, but those will largely moderate in 2022. We've made the bulk of those in 2021. Now, to put a finer point on a Drew, if you think about our 2022 OpEx as our Q4 run rate times four, you're in the zone.

Got it. Thank you. And then maybe just a longer term margin question. But I think he said you're still anticipating 50% gross margins by 2025, but kind of given the commentary that home is kind of moving from a gradual build to something more of an inflection point in this year. Should we be expecting something higher than 50%?

Drew we still believe in our long-term target of getting to roughly 50% in 2025. We're sitting here a month and a half into 2022 and so there's still a long way to go from here to 2025. And our progress to-date as well as our expectations for margin expansion in 2022 give me confidence in that journey. I don't know -- like I'm not prepared to say well above 50% at all, but what I do -- what I will say is I have a lot of confidence in our ability to go down this journey, given that we have like a little under three years to go here.

Got it. And sorry, just one last one on XT. Can you maybe talk about what you are seeing in terms of attachment rate, and maybe what your 2022 guidance implies? Thank you.

Yes, Drew. So, we've always said that we expect XT to be round numbers in a quarter of the consoles we sell. We have seen strength, meaning we have seen higher uptake than that over the last couple of quarters here. We do think over the long-term XD will likely converge at that roughly one in four. But we have seen strength in the last couple of quarters.

Thank you. And this does conclude today's question-and-answer session. And I would like to turn the conference back over to Leslie for any further remarks.

Thanks operator and thank you all for joining today. Have a great afternoon or evening depending on what time zone you're in. Thanks again.

This concludes today's conference call. Thank you for participating. Everyone, have a great day.