Vericel Corporation (NASDAQ:VCEL) Q2 2020 Earnings Conference Call - Final Transcript
Aug 05, 2020 • 08:30 am ET
[Operator Instructions] Your first question is from the line of Ryan Zimmerman with BTIG.
Hey. Thank you. Thanks for taking my questions this morning. So I wanted to just follow-up on the commentary about the third quarter and the patient flow that you expect into the third quarter. I think, Gerard, you said about 80% will be normal patient flow and 20% is catch up. And I'm just curious if you can elaborate a little bit on those metrics and kind of how you came to that? Only because, I guess, the question that people may have is, are those 80% in any way being made up from patients that just didn't show up necessarily in the second quarter. And so, to parse out some of those dynamics in the third quarter in terms of biopsies that we know were lost versus new patients and -- those patients that are being made up. I'll stop there and let you elaborate.
Sure. So we have, as you know, a bit of visibility in into the back end of our pipeline because of the biopsies that come in. And if we look at the biopsies that came in hand, okay, that we know we have sitting in liquid nitrogen at the moment, we can predict how much should have converted in the very end of the first quarter and throughout the second quarter. We know those that didn't convert, and we don't know exactly which ones should have converted, but the law of large numbers, those that did not convert we view that as our catch-up pool that we know about, all right? And we're predicting that about 20% of the third quarter numbers will come from that catch-up pool. And that will almost fully exhaust, not quite probably fully -- come close to fully exhausting that catch-up pool. Going forward after that, we think the normal biopsy flow and conversion flow is going to normalize. And therefore, looking into the fourth quarter, for example, we think we'll probably under just normal patient flow, get about the same growth we're expecting in the third quarter, just to give you a little bit of light as to what's going to happen a little later in the year based on the model.
Now, we're not assuming that there's a dramatic increase in biopsy catch up. We're not looking for a big tidal wave of biopsies to catch up. That might happen. We're not placing that into a forecast. We don't think that's prudent. We think things are going to just kind of get back to normal. We'll get a catch up out of the biopsies that already occurred, and then things are going to kind of get to more steady state thereafter.
Nick, I don't know if you want to add anything here? Yeah. No, I think it [Phonetic] captures it well.
That's very helpful. And just lastly, you talked about surgical capacity, and I think it was around 10% in April, 16% May, 80%