Intersect ENT's (XENT) CEO Lisa Earnhardt on Q2 2017 Results - Earnings Call Transcript
Intersect ENT (XENT) Q2 2017 Results Conference Call August 1, 2017 4:30 PM ET
Executives
Lisa Earnhardt - President and CEO
Jeryl Hilleman - CFO
Analysts
Brad Mas - Bank of America Merrill Lynch
Andrew Hanover - JP Morgan
Richard Newitter - Leerink Partners
Chris Pasquale - Guggenheim Securities
Brittany Henderson - Deutsche Bank
Na Sun - Wedbush
Kaila Krum - William Blair
Ryan Zimmerman - BTIG
Operator
Good afternoon and welcome to the Intersect ENT Second Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.
I would now like to turn the conference over to Jeryl Hilleman, Chief Financial Officer, please go ahead.
Jeryl Hilleman
Thank you, Rocco, and thank you all for participating on today’s call. Joining me today is Lisa Earnhardt, our President and CEO. Before we begin, I'd like to remind you we will make forward-looking statements within the meaning of the federal securities laws.
Actual results and timing in events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include without limitation, our outlook for financial performance, sales force growth, approval and commercialization of new products and indications, and procurement of reimbursement codes and coverage, which are based upon our current estimates and assumptions, as well as other risks detailed from time-to-time in the reports we filed with the SEC.
We disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein.
I'll now turn the call over to Lisa Earnhardt. Lisa?
Lisa Earnhardt
Thank you, Jeryl, and thank you everyone for joining us today. We are off to a fantastic start to 2017 and are proud to have delivered a strong second quarter, demonstrating that we are well positioned to drive both near and long-term success.
This past quarter we expanded our product portfolio with PROPEL Contour and achieved 24% revenue growth. In addition, the FDA accepted our SINUVA NDA filling and set a January 7, 2018, PDUFA date. Overall, we continue to distinguish ourselves with innovators in the ENT space as we define new standards of care for chronic sinusitis via localized drug delivery.
As it is visible from our Q2 growth, PROPEL Contour continued a very strong introductory ramp in its first full quarter on the market. The early adoption of Contour has exceeded our expectations, reflecting a winning combination of Contour's unique benefit with remarkable execution by our team.
To provide an ad-hoc metric to illustrate the success of the Contour launch, Contour is already 20% of our product mix with mini PROPEL each approximately 50% of the remainder as we've seen historically, while part of the rapid case of adoption could be physician and sales force preferential focus. We believe this is a strong indicator that the product addresses a true clinical need and that physicians are having positive experiences with the product.
It is also interesting to know that we are observing an increasing number of implants for the future. We are now slightly more than two PROPEL implants use on average per procedure. With the addition of Contour, the PROPEL family now provides physicians with the full range of products that customized treatments based on their patient’s disease and anatomy. Contour is approved for use in both the frontal and maxillary sinuses.
As we discussed previously, the frontal is viewed as the most challenging sinus to treat and is consequently represents the majority of the product used to-date. Physicians' feedback on your experience with both indications has been very positive. Contour has quickly found a distinct place among our PROPEL family and is as expected probably incremental product usage.
Today, over 500 accounts have purchased PROPEL Contour and more than half of them has already ordered the product by quarter end. We are also seeing that accounts adopting Contour often have above average growth in the usage of PROPEL mini as well. On launch efforts have focused on introducing Contour first to existing PROPEL users and we intend to expand this effort to include non-users as the year progresses.
On the reimbursement front, we continue to see stability. CMS recently released their annual proposals for 2018 and we know that as expected, they're maintaining the comprehensive APC structure established last year. The proposal also includes the modest increase of 6% in the Medicare facility fee reimbursement for sinus surgeries at hospitals. Overall, we remain confident that these and other proposed changes will not have an impact on our business.
Our experience with the implementation of last year’s Medicare changes remained consistent, specifically, that low reimbursement of the procedure facility decreased a budget impact to hospital has not led to changes practice. At this point, we do this Medicare payment changes as an element of constantly evolving cost conscious environment rather than as a distinct driver of change.
Based on carrying for the strength of our future results and taking into account on mitigated view of the impact of the Medicare, we are generating our revenue guidance for the year from $89 million to $91 million to $91 million to $93 million. Our sales force remains stable at 109 field representatives, including 73 territory managers and 36 sales consultants. We continue to expect to grow our sales force modestly by approximately 10% over the full year.
We also continue to invest in our leadership with the addition of a new director, the appointment of dedicated senior leadership for SINUVA and the addition of commercial pharmaceutical experience to our team. To address these changes individually, we recently announced that Terri Kline has joined our Board.
Terri is a terrific addition who brings leadership experience from executive position and both the payer and provider world and we are honor to have her joint us. Terri is replacing Casey Tansey of U.S. Venture Painters, who has served on our Board for over a decade, taking the Company from concept well into commercialization. Casey will, indeed, be missed.
Next, Susan Stimson has stepped into a new role as General Manager of SINUVA. And many of you know, Susan has served as Head of Marketing and other functional areas over the past 10 years. In this new role, Susan is providing companywide leadership to deliver on the many activities leading towards the SINUVA launch and commercial ramp. We are fortunate to have a trusted veteran take on this responsibility.
Finally, we are also welcoming Drake Parker to our team as our Chief Business Officer. Drake just joined this last week and he's focusing primarily on marketing and market access along with other responsibilities. To give you a little bit of his background, Drake had worked in the pharmaceutical industry for the past 25 years, most recently as the Chief Business Officer at Berkeley Lights, an oncology company and prior to that as Global Commercialization Leader for Keytruda at Merck.
Let me now turn the call over to Jeryl to discuss our financial results and outlook. And then I’ll continue the discussion with SINUVA.
Jeryl Hilleman
Thank you, Lisa. We are pleased to deliver revenue of $24 million of the second quarter, which compares favorably to our guidance and represents a 24% increase over the second quarter of last year.
As Lisa referenced, this outperformance was driven primarily by higher than expected sales of Contour. We were also pleased with the growth in sales force productivity, increasing our revenue for territory manager to $1.3 million for the quarter and $1.2 million year-to-date, an increase of 20% over year-to-date last year.
Our gross margin continues to be strong at 85% and our operating expenses for the quarter were $22.9 million, roughly equal with the second quarter of last year of $22.4 million with the similar profile of R&D and SG&A spending. Our outlook for revenue for the full year as Lisa mentioned is raised to $91 million to $93 million.
Our outlook for third quarter revenue is $21 million to $21.5 million, anticipating a typical decrease in procedures that we see in the third quarter, offset impart by ongoing growth and product usage. Our outlook for gross margin remains the same as previously communicated targeted gross margin for the year of approximately 84%. We’ll also continue to expect full year operating expenses to be in the range of $96 million to $98 million.
Regarding cash flow, we have approached breakeven cash flow from operations in the second quarter and our cash balance increase from $98.4 million to $100 million. That noted, we do continue to expect to generate negative cash flow for the year.
I’ll now turn the call back to Lisa.
Lisa Earnhardt
Thanks, Jeryl. As I described, we continue to be excited about PROPEL Contour, which impacts on our business and most importantly the positive impact on the physicians and patients we serve. We are equally excited to be planning for the commercialization of SINUVA, arguably the most important product launch in our history. As we discussed, the FDA accepted our NDA submission and has set a PDUFA date in January of 2018.
SINUVA will be our first product regulated as a drug and the first of our products focused on treatment in the physicians' office setting of care. Those have important implications for our commercialization strategy. As we advanced towards potential FDA approval of SINUVA, we are focusing on several key aspects of commercialization. Our sales force already have strong working relationships with ENT physicians with approximately one in three sinus surgeons now using our PROPEL products as they've grown to appreciate the value of local steroid delivery.
Since SINUVA would be used by the same physicians that we call in today both in the OR and the office. We believe that our sales force is well positioned it supports the SINUVA launch. We do intend to continue to grow our field representation over the next few years into the 125 to 150 rep range. We are also laying the groundwork now to ensure physicians and patients have access to SINUVA upon launch.
As discussed in our previous calls, we expect that SINUVA coding will follow the normal cadence for new drugs. Specifically, we anticipate that reimbursement claims will be submitted to payers during 2018 using an unassigned J-code, J3490, and not a product specific J-code will be assigned at the start of 2019.
We also expect that physicians may use existing codes for procedure reimbursement with where SINUVA is used. While many payers are aware of the PROPEL products and may have --and several have policies relating to the use of steroid-eluting implants, we expect that payer coverage for SINUVA would as is typical follow the FDA approval indication.
In anticipation of early demand, we are establishing a reimbursement access services and patient support centers, which will be available from day one of launch to assist providers with the claims profit. We are also establishing a comprehensive market access network to meet the needs of all customer types.
Regarding timing of commercialization, we expect to launch SINUVA early in the second quarter provided the FDA approves the product in January. This will enable us to fully train our sales force, complete product production, train physicians and build the foundation for access to the product.
Before we conclude our remarks, I will like to reinforce a few key points. First, we are delighted with the launch of Contour and the enthusiastic physician reception for this new product. We continue to see Contour as a strong driver of incremental growth for the Company. Second, we have not been adversely impacted by the hot-related changes that went into effect at the start of the year.
And based on our first half results and ongoing outlook are again raising our revenue guidance for the year. And finally, we believe that we're tracking well toward our anticipated SINUVA approval and launch and believe that, if approved SINUVA promises to deliver important therapy to help a large patient segment in need of innovative solutions.
We thank you all for being part of our journey and Jeryl and I will remain on the line to address your questions. Rocco, would you please open up the lines?
Question-and-Answer Session
Operator
Of course, we will now begin the question-and-answer session. [Operator Instructions] Today’s first question comes from Bob Hopkins of Bank of America Merrill Lynch. Please go ahead.
Brad Mas
Hey guys, it's Brad on for Bob. Hi, so just two financial questions and then one on SINUVA. Just on the Q3 guide, could you just give a little color on normal seasonality that you guys see in the market? I mean guidance obviously implies a pretty big step down sequentially just in terms of dollars. So just curious what do you typically see in terms of market seasonality?
Jeryl Hilleman
Yes, there's -- this is something that we have seen really every year as we navigate the quarterly seasonality and obviously some electric procedure you are going to see much lower election procedures in the summer vacation months. Procedurally, it's in the range of 15%, decreased in procedures and we obviously expect to mitigate that somewhat with increasing growth with the product as we have done in prior years.
Brad Mas
Okay and then on OpEx, I mean now in my mind a pretty big takeaway and clearly a huge step up in improvement in controlling OpEx with specifically SG&A. Was there any specific in the quarter? Or is that suppose to kind of foot backup above $20 million, just curios if there is anything one-time that drove a bit down sequentially?
Jeryl Hilleman
No, I think that’s really how we've been tracking the business, but I do want to say that as we move towards, the SINUVA launch, we will be incurring additional expenses in the back half of the year, which is really why reinforce that we will continue to generate losses and a lot of that will come out at the SG&A line.
Brad Mas
Okay. And then just on SINUVA and just curious, if you can talk a little bit about how you expect that ramp to look like, I mean, obviously Contour is significantly taking off above the expectations, but just any hurdles that you see would RESOLVE and any more clarity on why there's any [indiscernible] three months lag from FDA approval to full launch?
Jeryl Hilleman
Yes, well, that something will give more color to as we get a little closer and obviously contingent on FDA approval. It’s not -- there is a lot of things that need to occur between approval and when you actually launch the product, we’re giving ourselves time to navigate that and it's everything from initial learnings with physicians, training sales force. There is a number of factors that come into that also including getting physician products supply, so we are working through and fine-tuning our plans on all of those things. But we did want to indicate that there would be sometime between approval and really when we have broad launch of the product.
Brad Mas
Okay. And then just one, last one quickly, if I can. I mean I’m just curious why you think you’re seeing an increase in units for procedure. Is that driven by a Contour? Is that driven by something else?
Jeryl Hilleman
Yes, and we truly do believe that's because of the addition of Contour and then physicians really seeing utility there in combination with both PROPEL and/or PROPEL mini.
Operator
And our next question today comes from Mike Weinstein of JPMorgan. Please go ahead.
Andrew Hanover
Hi, thanks for taking our questions. This is actually Andrew in for Mike. Great. Nice quarter. Just a question on just start on Contour. The contribution in the quarter just to clarify, it was 20% of product mix. Is that correct? And two, how many of the hospitals I guess its 500 are buying in their initial orders on average? And how does that compare to current PROPEL inventory and the launch of PROPEL?
Lisa Earnhardt
Yes, Andrew, you’re correct, about 20% of our revenue in the second quarter came from PROPEL Contour. In terms of order size, it's very typical of what we typically see an average order for us is between like 5 and 10 units per order.
Jeryl Hilleman
Yes. So, we have 500 accounts ordering SINUVA about 200 of those accounts have already processing reorder during the quarter.
Andrew Hanover
Got it. And then in terms of how this launch is going, when I think about it. Are these existing doc being trained on the product? And then just as a secondary this is. How much of the sales force efforts are being used around existing versus docs that haven’t really necessarily found role for PROPEL? And what’s the traction been in each of those customer groups? And I know you’ve talked about the competitive ones maybe towards back half of this year, but what is that sort of look like?
Lisa Earnhardt
Yes, Andrew, you’re right. Our focus of that, of our commercial team has really been driving utilization in existing accounts with Contour and that’s exactly what we’ve seen. Clearly, lots of energy focused on bringing two larger existing customers especially where we believe there would be incremental growth opportunities. And to your point, we will expand beyond that especially as we have the PROPEL Contour data should be published this fall and so that gives us a great reason to knock on doors especially of those physicians who may yet have found the role for PROPEL in the practice. So, it’s all part of the plant, it’s just a matter of focus right now. And the team has done a phenomenal job of keeping focus and delivering what we believe is a fantastic start to the launch.
Operator
And our next question comes from Richard Newitter of Leerink Partners. Please go ahead.
Richard Newitter
I have two questions. One on SINUVA and then just one on the PROPEL and Contour franchise. Maybe starting with SINUVA, so once do go full blast and in early 2Q do launch this. Just help me understand, if there is any reason why once this is available and commercial, this launch shouldn’t be ready to just kind of take off, get drug dropped right in the bag and to drive even accelerated productivity increases kind of all other way Contour has in its launch. In another words. Is there anything that we should be thinking about that would get the launch? Or is this kind of good to go and once you get to drop in, you should have pretty significant acceleration throughout 2018?
Jeryl Hilleman
This is Jeryl. Let me begin to answer that. But we really are excited about the potential for SINUVA. I think that we will see it as an unmet need. We will be navigating some new items for us and for physician as we sell this product into the office. And we just will be working through the streamline reimbursement, all the things that just become part of the product at physician process. We think we will have very good solutions in place to that. But I think that we'd do what reinforces, this is a new product, and we have to balance the potential enthusiasm for the product to just get approved. We have just practicalities of first quarter of walking and tackling that we have to do.
Richard Newitter
I guess I told we appreciate that. I’m just saying, let's just say, once you got to 2Q and beyond. Is there anything that we should be thinking about as kind of this launch and kind of moves forward that structurally would stop you cancelling aggressively? Or should we just kind of think once your commercial, once you’ve trained and you’re relied within 2Q. There should be a pretty significant step function as the quarters progress it just dropped it in the bag more or less correct?
Jeryl Hilleman
Yes, I think based on our current level of assumptions and knowledge, we certainly think that the demand will be there and I can tell you this will certainly be a high priority for our sales force. And I think that would certainly support to becoming an important product worth.
Richard Newitter
Okay. Great. And then just on the performance that you’re having with Contour. You’re trending at about 24% for your existing franchise today. I mean given that you’re now kind of seeing to on average implant for case maybe a slightly mitigated view of what the overall CMS reimbursement change. What impact that might have on the business? Is it kind of fair to think of your base business as a 15% to 20% grower sustainably for the next two years? Is that that feel like the right pace?
Lisa Earnhardt
Yes, we haven’t given a quantified number on that and I think as we get and give greater visibility to next year, I know this is going to be a big part of our ongoing growth assuming as approved. And I think that we also are very excited about Contour, so I can’t give a direct answer to your question. But I think we are very pleased with the contribution Contour is making to continue to drive growth and we are excited about SINUVA coming in next year.
Richard Newitter
Okay and if I could just squeeze one more in. Your gross margin two quarters in row this year already is above 85% or 85% or above. You’re still kind of guiding to 84%. I guess, is there any reason why gross margin to step down? Or why this level isn’t sustainable?
Jeryl Hilleman
Yes, there actually is because we have some ad-hoc in a one-time thing in the first two quarters where we secured raw material and produced Contour prior to approval. So, it was expensed in the fourth quarter and we are seeing some benefit of that in Q1 and Q2. Absent that, our gross margin would have been about a percentage point less. And then also as we ramp Contour and continue to optimize having three products in our production line, we are continuing to build efficiencies. So, we really do feel 84% remain the best outlook for the rest of the year when we factor in those two things.
Operator
And our next question today comes from Chris Pasquale of Guggenheim Securities. Please go ahead.
Chris Pasquale
One on Contour and then wants to go back on SINUVA. So first on Contour and the number of implants per procedure, I was under the impression that your average was already around to prior launch. So can you just clarify how much of the change we have really seen there? Where were you before Contour and where are you today?
Lisa Earnhardt
Yes, so we're at -- you're correct, Chris. We were just right around it two implants per procedure at word sort of a tick up from that at this point. So probably maybe a 10%, 15% increase, in utilization which we think is something very positive trend especially, so early in the launch of Contour.
Chris Pasquale
And then what’s your expectation looking ahead to next year for the amount of reimbursement trouble shooting. You’re really going to have to do any really stages with SINUVA. Is there a good benchmark in terms of other products that have launched this way and had claims submitted under unassigned J-code? And how many times those were ticked back?
Lisa Earnhardt
Chris, this is a good question. I mean the unassigned J-code for our physician administered drug is the normal operating procedure for new drugs that' are launched. So that is a path that’s well trodden. We are investing as I alluded to you on the call, heavily to make sure we are well prepared to support our physician accounts, as it relates to ensuring they have access to our technology. So I did allude to some of these services and support that will be adding to make sure that isn’t a significant barrier, as we drive adoption of this technology.
Chris Pasquale
Okay. Any thoughts at this point on pricing for SINUVA? And how that’s going to fit relative to the rest of the portfolio?
Jeryl Hilleman
Yes, we think that on a realized basis that SINUVA will be priced similarly to our other products.
Operator
And our next question today comes from Brittany Henderson of Deutsche Bank. Please go ahead.
Brittany Henderson
I thought the ad-hoc metric that you gave earlier in your prepared remarks is interesting. The 20% mix of your sales was Contour, PROPEL Contour this quarter. So I guess just based on what you seeing thus far. I know it's early, but what are your latest thoughts as to the level of cannibalization for PROPEL mini versus PROPEL Contour in the frontal as PROPEL Contour is just continues to gain significant traction here?
Lisa Earnhardt
Yes, I mean, there certainly is a two-question, Brittany. There is certainly is the potential for cannibalization between PROPEL mini and Contour. Both are approved for use in the frontal sinus. Fortunately, each played a distinct role in that indication. As you know, mini is more likely to be used when that frontal is open widely and Contour is really a benefit for those who are making a smaller opening that could be post-balloon or making a hybrid procedure on the frontal. So clearly some physicians are using and may use Contour preferentially, but our success today really underscores that we are driving incremental product usage in growth. So, we're as you know pleased with the results to-date and excited about the physician reception.
Brittany Henderson
Yes, I was curious if you could follow up a little bit on your comment on the maxillary as well. I know that a lot of growth right now is being driven by success within the frontal, but you mentioned that within the maxillary sinuses as well. So what types of adoption are you seeing for PROPEL Contour in the maxillaries and what type of opportunity I guess is that represent?
Lisa Earnhardt
Yes, Brittany, it is -- we are on the maxillary just because is the -- our comfort is the first part we have with that indication. Anecdotally, we’ve had some great examples of success with patients who had the Contour product in the maxillary. So, it was the minority of our usage, but certainly something we’ll continue to track and report on. Obviously, the preponderance of our clinical evidence has been generated in the frontal sinus. And as we know, that’s where physicians typically see the largest need for localized drug delivery. But it is something that we will continue to work on and provide another avenue of growth for us moving forward.
Brittany Henderson
One just quick one on the SINUVA launch. Is there anything from a manufacturing standpoint that would contribute to that pause from the PDUFA date approval to the launch within Q2? Or is it all just simply from ramping up the sales force, training the sales force and also kind of training and ramping up the reimbursement strategy that you have in place as well?
Unidentified Company Representative
Yes, it’s more the latter SINUVA would be produced within our current manufacturing facilities as we within our current capability. So there’s nothing getting about that other than our time turning the switch.
Operator
And our next question today comes from Tao Levy of Wedbush. Please go ahead.
Na Sun
Hi, this is Na, on for Tao. Congratulations on a great quarter. Just one question for the use so far. Are you guys anticipating any important upcoming clinical publications or presentations?
Lisa Earnhardt
Yes, Na. This is Lisa. There are a couple of different things that we are looking forward to. First and foremost, as I mentioned early year is that we have data from 80 patient randomized blinded clinical trials for Contour that was performed. We anticipate that publication in the coming months, so very much looking forward to that. Secondly, we do have a couple of presentations that are forthcoming. This fall at various physicians meetings, probably the most notable is a presentation of med analysis of the two trials we did for SINUVA product. So that was the result and the result two trials that will be a med analysis presented at the fall, American Rhinologic Society Meeting which is happening in Chicago. So that will be -- we think it's very compelling data and a strong interest to many in attendance.
Na Sun
Great. Another question on the balance of the products. I see that Contour is taking off which is great. What is ultimate sort of balance between these three products do you think?
Lisa Earnhardt
Really, we think about, our focus is driving expanded use of the entire PROPEL franchise and our goal is to make sure the physicians have access to whatever technology meet the patients need. And so, we’re really -- our goal is really to offer those physicians choices. And what we’ve seen today Contour will be a significant part of the product mix going forward. We don’t want to provide any guidance as it relates to product mix as we say all about choices for the physicians to make sure that meeting the need of their patients.
Operator
And our next question comes from Kaila Krum of William Blair. Please go ahead.
Kaila Krum
So just a couple of quick ones for me. So, first off I realize, there is clearly a time excitement around Contour already is about $5 million in revenue in the quarter. So, I guess on an annualized basis, I mean you’re doing about $20 million in revenues. So, keeping that in mind, I mean is it fair to assume that I mean SINUVA sourced your contribution could be at least around that range? Or I guess to ask another way why wouldn’t SINUVA ramp as quickly as we’ve seen Contour around?
Lisa Earnhardt
There are some differences, Kaila, in terms of the product and its associated launch. I mean first and foremost, the Contour product is being used much like our PROPEL products in the operating room in a sinus surgery. That’s going to happen regardless of whether or not our products are used, so versus as you know with SINUVA that will be the procedure that's done in the physician office setting. So, there are some new onsets there in terms of the differences. We think it certainly something that we will be able to tackle and be successful with. But I do think there are some differences in terms of being a drug, being done on physician office setting, some additional training required and it certainly something that we’re looking forward to as we move forward with the commercialization of this product.
Kaila Krum
Okay. Thanks. And then just on Contour usage trends. Can you talk a little bit about whether or not you’re actually seeing any much if any in office usage with Contour today? And if yes, are you getting pushback on the reimbursement fund there?
Lisa Earnhardt
It's very consistent with our other products. It's very minimal use of them in the office setting today.
Operator
And our next question today comes from Suraj Kalia of Northland Securities. Please go ahead. Hello, Suraj, you’re live. Okay, while we clear this question. [Operator Instructions] Today’s next comes from Ryan Zimmerman of BTIG. Please go ahead.
Ryan Zimmerman
Just to begin you called out pricing in the press release. And I’m just trying to marry the increase in price with the increase in productivity or units per procedure that you talked about or I’d say. Is the increase in price reflection of the increase product usage? Or is it on a per unit basis up about consistent with your past price and increases?
Lisa Earnhardt
To answer your question, we did put through a price increase consistent with past increases in the first quarter of this year. Typically, we think that is basically a cost of living type of adjustment.
Ryan Zimmerman
Okay, so the price -- there wasn’t no again just to be clear no respective price increase per unit this quarter?
Lisa Earnhardt
That’s correct. Now, we put the increase through and the beginning of the year and there's not done anything further.
Ryan Zimmerman
Okay wonderful. And then just to kind of as a follow up to that I guess. What we have been seeing as that you have certainly has been able to increase price historically relative to the unit growth quarter-over-quarter. I am just curious if you can kind of expand on the feedback you are getting from customers in terms of the pricing increases that you have put in place that you have been able to do these successive quarters and not just from hospital customers necessarily but from insurers as well. I am just curious what the feedback has been?
Lisa Earnhardt
Really, there has been very little there, right. I mean it's been a very modest price adjustment and so it's gone through very routinely at the start of each year. And we've gotten, as you know, our price are typically paid out of the procedure or facility fee. And so, there is no input from payers on our pricing specifically.
Ryan Zimmerman
And from hospital customers, anything?
Lisa Earnhardt
Yes, the similar to what we commented on our earlier call. There has been minimal impact there and we've been feedback the last couple of years.
Ryan Zimmerman
And then just another one for me. In terms of in marginal increase in productivity from sales - and your numbers has stayed relatively the same from last quarter, but it does look like you called out has count increase in the press release. Just wondering if one there has been any attrition that we should think about in the territory manager and sales - role that you back filled this quarter and then two, if you there is any comment or color you can give on productivity metrics specific through the sales consultant for the territory that they are located in? Thank you.
Lisa Earnhardt
Yes, so the sales team has been extraordinary stable. We're at a 109 total field representatives right now to 73 territory managers, 36 field consultants, which I think was identical to the what we had at the end of Q1 and very little turnover. I will ask Jeryl to comment on the productivity numbers.
Jeryl Hilleman
Yes, productivity measures would be comparable through how we have always calculated so that we can track historically which is based on territory managers and we have continue to see a very strong rise in that part of the contribution to that is the addition of sales consultants and there incremental productivity, the other contributors have just been overall growth. And also some smaller benefits from increases in price. So those are really the key drivers of the overall productivity. And of course expanding product indications such as we did with many last year and adding Contour this year.
Ryan Zimmerman
Wonderful and then just lastly from me and I’ll hop back in queue. Contour sounds like it's off to a really strong start. Was there any sales incentive or dynamic that allow the sales force to really hit gate running or come out the gate running for the commercialization of Contour, that should -- we should think about carrying forward. Or is there any dynamic or is it consistent with historical practices in terms of how you incentivize the sales force?
Lisa Earnhardt
Incentive has been consistent. It's just fantastic execution by the team.
Operator
And thank you. This concludes our question-and-answer session. I’ll turn the conference back over to Lisa Earnhardt for any closing remarks.
Lisa Earnhardt
Well, thank you all for joining us today. We greatly appreciate your interest and support. And look forward to staying in touch with you all. Have a nice evening.
Operator
And thank you, ma’am. Today's conference has now concluded. We thank you all for attending today’s presentation. You may now disconnect your lines.