Photocure ASA
OSE:PHO
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
48.05
70.9
|
| Price Target |
|
We'll email you a reminder when the closing price reaches NOK.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Photocure ASA
You don't have any saved screeners yet
All right. Welcome, everyone. I'm Dan Schneider, President and CEO of Photocure. Welcome to our Fourth Quarter and Fiscal Year 2022 results. With me today is Erik Dahl, CFO.Reminder, next slide, disclaimers are in effect for today's presentation. Next slide. So fourth quarter and fiscal year '22 highlights. I think the highlight for the quarter is the launch of Saphira and the fact that we had a record number of installations, took a tremendous amount of effort from the sales force in the customer servicing support and training. I believe that also drew down some of their time in the U.S. from the typical balance in selling.Our revenue growth was 10%, but on a negative 8% unit sales. And again, I think, affected significantly by the amount of effort and energy that went into the installations, it bodes quite well for our future. As everyone knows from our past, the more installations brings on a momentum that carries ourself forward. But also the COVID and shortage -- staff shortage still are out there, and we'll get into that shortly. But there is signs of rebound. I will be showing you a couple -- looks at both U.S. and EU in terms of first quarter how its progressing, and we're quite pleased that we can kind of partition quarter 4 as an anomaly affected by extraneous factors and also the record number of installations of Blue Light Saphira that were put into the market.EBITDA was minus 16.9%, minus business development expenses that are one-off in each quarter. If it happens, it's a negative 7.8%. We continue to invest in the commercial. However, our OpEx is, for the most part have remained fairly stable. We'll increase investments. The quarter had increased investment in business development activities. Of course, I'm not privy to disclose all of that took place, but we continue to keep that as a very important part of our overall strategy in the inorganic developments of looking for synergistic and complementary assets to add to the offerings of Photocure.We also received a $1 million milestone from Asieris as they continue to make progress on the Cevira trial. On the news front, there was the advancement of the citizens petition. There were actually 13 public comments that were submitted. They were from large urology group practices, 2 manufacturers, multiple KOLs and and also the patient advocacy group, which is a very strong voice in the United States. One thing about citizens petitions is there is -- they're not held to the same -- or at least the process of reclassification is not held to a specific time line for the FDA. However, this amount of support -- public support is very, very important. And in addition to the final point, which is the Flex tower situation, the installations going forward will be on hold. There were 7 scheduled for first quarter this year. Those are on hold and Storz and us are assessing the situation, evaluating options to restore the equipment availability. That situation also will fuel the ability perhaps to speed up the attention or at least grab the attention of the authorities in the U.S. FDA to start a down class or a reclassification of the Blue Light system.And as a reminder, in the U.S., Karl Storz has roughly 40% share of the market where they have full on access. The other 60%, of course, we can bring Blue Light into, if it takes a little more effort. This citizens petition would essentially -- and the ultimate hope for a reclassification to a Class II device would open the market up for other manufacturers to come in, which we do know there is interest. And we think that would have a dramatic impact on our ability to get Blue Light into all the accounts in the U.S. We think this is possible, could come this year. But again, there is no specific time line given by the FDA on these types of things. In fact, that time line can be anywhere from a few months to years. So we believe we can get this current situation resolved quickly.All right, segment trends. Next slide, and we'll go to Slide 5. So Q4 challenges in the post-pandemic environment. This affects both regions of the world. A couple of snippets. You absolutely can go on to these various links and read about the impact that the hospital volumes under pressure with labor crises, COVID-19 impact on staffing shortages, sick leaves in Germany. I mean, I don't want to make the excuses over and over, but it is still overhang on anyone, I think, in the life science health system and particularly procedural selling spaces. So this continues to be something we deal with. The good news, I think COVID has as a pandemic and how to access counts is not the problem now, it's more around the accounts themselves, having the financial wherewithal and the staffing to support. The industry data suggests we get definitive data that TRBTs in the U.S. year-over-year were down a little bit. So we have little bit of headwinds, but we believe the way we've set up with new installations and as things are developing here very early in quarter 1 that things will resolve very, very quickly as we get through 2023.Next slide. All right. So a couple of trends in North America. Like -- the revenues are up by 12%, although unit sales were up by 11%. But Q1 have rebounded, and we'll show that slide shortly. It is impacted by staffing shortages, lower procedural volumes. And of course, I think probably the #1 thing is the amount of time and energy that went into placing 57 installations in quarter 4, and particularly towards the back half of a quarter 4 was a lot at the time that normally is spent pulling through it at various accounts. This will remain a key strategy for us as we go forward. There are over 350 some-odd accounts that have the old standard definition systems in them. It is our hypothesis and belief that getting those old systems into the new system of high def Saphira will make an impact on utilization and reliability, increased usage by physicians in those institutions. So new placements will remain very, very high, but we'll also be, at the same time, switching out old systems with Karl Storz's support. But we did have a record number. We had 57. We had 24 new ones of Saphira 7 flexible scopes in the fourth quarter. And we had 26, I believe, was the number on the number of obsolescent protection plan. Those were the accounts that had bought the old system, but with the insurance policy, so to speak, that when the new system was available, they would be switched out. We also are seeing existing accounts, large systems that are on standard definition now requesting Saphira and those will be installed as we move through 2023, and we think will have an impact on the future.Demand for new Blue Light remains very, very strong. The pipeline is very strong. First quarter is going to be good in terms of installations. So we have no reason to believe that quarter 4 is a quarter that we would expect to repeat. We think that quarter 4 is an anomaly and will move forward. Contracting and CMS reimbursement remain an important driver for us. And I think the efficacy for the citizens petition along with a 4-pronged strategy to expedite the down class or declassification that we're putting into play will have an impact. And hopefully, we have good news as we move through the year.Next slide, please. I think this slide just to show the atypical unit sales pattern, signs of rebound in Q1. I'd like to go to the next slide, if you could. And this is a quick glance at basically the first 1.5 months of the quarter. You can see that January is the highest over the last 3 years. In fact, January was the highest we've ever had in our history. So that's always a good sign. And then we moved into February. We're still 6 days left to the end of February. But at least from our perspective, projecting out, we look at dailies, weeklies, et cetera, and then the overall demand, we project that it will be a double-digit growth in '23 over '22, final numbers to be obviously coming out when we do the Q1 presentation later this year. So very good development, again, gives us great confidence in the business and the health of the business going forward.Next slide. So in terms of the health of the business, I'd mentioned a couple of things I want to say about this slide record, obviously, a number of installations for the quarter. We had 24 Rigid 7 Flex and the upgrade of 26 obsolescence protection plan. But if you look at all the dark blue bars going backwards and even some of the 59 of 2022, those are standard definition systems. Those systems are eligible, particularly ones that go from 2019 backwards. Those systems are end-of-life into service. They are subject to breakdowns. We've talked about this in the past and why this Saphira launch is so important. We will be working vigorously with the folks from Karl Storz to get those 300-some-odd old systems converted to the new platforms where we believe that the utilization will improve. Let's put it this way. It will not have a leaky bucket syndrome where things break down and the systems are pushed into the corner because they got to wait for a repair. We believe the new systems will capture any losses of the past. So this is a very important part of our strategy moving forward. And we're very optimistic of its impact on the business moving forward.Next slide. Moving into Europe. Unit sales were down 5% -- revenues were down 5%, unit sales down 8%, again, affected by various things like staffing shortage and budget tightening. The other thing we're going to talk about this a little bit is the German phasing of hospital ordering. As we've gotten into Europe, we were not -- we got Europe right on the cusp of the -- or right in the midst of actually COVID. So our access to accounts and our understanding of the accounts continues to build. And one of the key parts of this is the way the German market watches in response in phases that's ordering according to market dynamics, and we'll get into that in a moment.I think 2023 is an exciting opportunity for the company. It will be our first 12 months with complete open access to Europe. If you recall, we had no access for the most part to Germany until about April of May last year, a very limited access, other accounts, the majority of them throughout Europe we're not open until March and April. So this year, 2023 will be the first year we have full on access. We're focusing on 80% of the existing accounts that we believe are underpenetrated. How will we attack them? The same way we're doing in the U.S. There's an opportunity to upgrade a lot of equipment out there, which will recapture and reinvigorate the business in Europe. You have to be present in those accounts to do these sorts of upgrades. So getting new scopes, whether it be the Saphira system, which is also been upgraded in Europe into those hospitals, or Richard Wolf, or in the future we know Olympus is working on its upgrade and will launch later this year. Those are all key tactics to get those accounts back up and running and back to the levels we expect them to be and growing.The new system is gaining traction and the upgrades are expected throughout 2023. We also expect new installations in Europe, particularly in the U.K. and France. And we've already had some of those already taking place as new accounts are grabbing on to it. And of course, the bladder cancer tour is high visibility in Germany with over 20 stops throughout Germany and Austria showing the demand. So we look forward to 2023 with Europe. We think the trends are going in the right direction.Next slide. So just looking back, though, at Germany, in particular, and its reaction to the market. The 3 arrows you see on this slide are all German reaction to 3 things. First one, the dark blue in 2020 was reaction to the Ipsen transfer to us. German hospitals anticipated this. They built inventory ahead of it assuming there might be disruption, there wasn't disruption. Therefore, they went in with some heavier inventory on the transfer. In 2021, they had budget headway or headroom. They bought in. This is a typical buying pattern at the end of the year for many of the European countries if there's budget available, they will buy various products, devices, et cetera. We have that buy-in. And then this year, in 2022, if you look at the second quarter, there was a buy-in ahead of the price increase in Germany that then had to bleed out through Q3 and Q4. So again, we looked at Germany in the -- as a as a phasing effect on the overall European progress and performance.Next slide, please. So looking forward, the first 6, 7 weeks of 2023 looks very, very good for Europe. January, a little soft, but projecting February looking at the dailies weeklies coming in, it looks very, very strong. So we look like we're back on to recovery. Momentum is building. Teams have 100% access, and we think we can really make the necessary changes. Just one thing about Europe putting in perspective with COVID affecting access for the first 2 years of our ownership of that market. It also is a little bit longer process. We had to reengage and reenergize the KOLs. We're working on the guidelines. That feed is in the reimbursement. You then go from reimbursement to getting funding and funding through pull-through. The process takes a little bit longer. I'm disappointed, to be honest with you, that we didn't have better access through COVID and could have accelerated the developments in Europe, but I do have complete confidence that we can impact this market. And I think the 80% accounts that are underpenetrated and are going to be focused on by the European sales team with now access, I think will have a residual or have return for that effort in terms of performance in the future.Next slide. I think the untapped potential in the European market. Key to this is France, U.K. and Italy, I mentioned new installations will be a part of it. Also a lot of old equipment out there, they're going to be upgrading. So they're highly focused on it. These markets were also affected by staffing shortage, financial pressures and equipment availability in the Q4 2022. However, customer interest is extremely high. And we believe that with our participation throughout Europe, 68 Congresses events and workshops will be held in 2023 to really accelerate and ignite the business in Europe now that we have full access. So I'm really excited about where that will be going in 2023.So with that, I think I'd like to turn financials over to Eric. Eric?
Thank you, Dan. Well, I will give you a financial review, including the consolidated income statement. I'll give details about the 2 main segments, North America and Europe. And finally, the headlines from the cash flow and the balance sheet. Before that, foreign exchange, it had a significant impact this quarter as well on our results. In short, the year-over-year FX impact in Q4 was for revenue, positive approximately NOK7 million and for EBITDA negative NOK2 million. Full year revenue impact was positive, approximately NOK14 million and for EBITDA negative, about NOK6 million.And as we review the financials, please keep in mind that unless other currency is specified, all amounts that I mention in this presentation will be in Norwegian kroner.So looking now at the consolidated income statement. Total revenue was NOK104.2 million in Q4, an increase of 10% from Q4 2021, and main drivers were the milestone revenues related to Saphira. It was foreign exchange impact as well as an increase in average selling price. Full year revenue increased 9% and was impacted by the same drivers. In addition, the comparison with 2021 was impacted by the upfront payment from Asieris of the NOK6.4 million in the first quarter of '21, and this payment was for the partnership agreement with Asieris for Hexvix in China and Taiwan.Total operating expenses, excluding business development expenses, increased NOK16 million or 18% in Q4 compared to Q4 '21. And the increase was mainly driven by FX, a total of NOK9 million of the NOK16 million increase. In addition, we had general inflation, obviously, as well as investments in our commercial operations. Full year, the year-over-year growth in our operating expenses, excluding business development expenses was NOK59 million or 19%. And contributing to this increase was FX with NOK20 million as well as the investments in Photocure's European commercial organization throughout 2021, which was required to support and grow the European sales.During this morning, actually, I received a few questions about the business development line or the business development expenses in the company. So a couple of words around that. If you look at the report, the earnings report, the business development expenses is included in other operating expenses. And on this slide, we have actually split it out as a separate line item. You can see that on the slide.Operating expenses within business development are related to the objective to increase our product offering. And as you know from the last many, many quarterly presentations, we have a clear ambition in this direction, maybe in-licensing, may be M&A, et cetera, et cetera. I have received -- also received questions about the line item, other operating expenses, which you will not see in this slide, but you will see it in the report. And this line includes G&A and supply line, including manufacturing, and it also includes all business development costs, which was a total of NOK20 million in 2022.I think I want to explain the expense growth for the item -- the line item, other operating expenses. And I'm using second half of 2021 as my baseline or starting point. The average cost per quarter in this period was $17.5 million. And compared to that, the average cost per quarter in 2022 has been NOK24.3 million. However, excluding business development, we spent about NOK20 million on business development, average NOK5 million per quarter. Excluding business development, the average quarterly cost is therefore NOK19.3 million. And this is 10% above the 2021 average. The inflation has been on an average 5% to 7% year-over-year. Our average FX impact between the 2 years has been 5%. We have a NOK20 million FX impact on the operating expenses on a cost base of NOK400 million.Now I can't run away from FX, but we can mitigate the inflation to a certain extent. But overall, the 10% expense increase we have, excluding business development is driven by FX and inflation. EBITDA in Q4 after business development expenses of NOK9.1 million was negative NOK16.9 million. This is a decline from last year Q4, driven mainly by the business development expenses. Full year EBITDA after business development expenses of NOK20 million up was NOK24.6 million. This is significantly different than the full year 2021, but driven mainly by the investments in the European commercial operation during 2021 after the takeover from Ipsen at end of 2020.Depreciation and amortization, NOK6.2 million in Q4 and full year NOK24.4 million. Main cost item is the amortization of the intangible asset related to the return of the European business from Ipsen. Net financial items in Q4 was a net cost of NOK5.5 million in full year and net cost of NOK22.1 million and the comparison with 2021 is significantly impacted by the reevaluation of the earnout liability end of 2021, and the net currency gain at the beginning of 2021.Tax expenses were an income of NOK7.1 million in Q4 and full year and expense of NOK0.7 million. The net tax expense for 2022 is driven by intercompany items. After net financial items and tax, we have full year a net loss of NOK71.9 million compared to a net loss last year or in 2021 of NOK30.9 million. And main single driver is obviously the investments in the European commercial operations during 2021 after the takeover from Ipsen at end of 2020.Just as a general comment to the OpEx and the operating expenses. When you try to understand the difference of the increase from 2021 to 2022, you first need to understand the increase within 2021. You will see that with the cost increased significantly during 2022, and it has an obvious explanation. We acquired the Ipsen operation in Europe, and we had to fit with new people and we had to incur spending in that operation.Next slide, segment performance. Thank you. Well, in the segment reporting, we will focus on the 2 main markets, obviously, North America and Europe, and the North America segment includes Canada from the first quarter of 2022. In January, we launched our own commercial operation in Canada for the direct sales of Cysview and this sale was previously partnered to Bioscience. We have not restated 2021 financial segment number to include Bioscience in North America as these were deemed not significant.Total revenue for the year 2021 was less than 1% of U.S. sales the same year. We have, however, restated in-market unit sales. And in-market unit sales for North America in Q4 decreased year-over-year 11% and U.S. unit sales alone decreased 10% year-over-year. Revenue increased 12% in Q4, of which U.S. had a growth of 10%. The revenue growth was mainly driven by significantly stronger U.S. dollar as well as a price increase. Full year volume in North America increased 1% and revenue increased 20%, and the revenue growth was as for the quarter, driven mainly by foreign exchange and the U.S. price increase.Q4 direct costs increased year-over-year with NOK12million or 35%. This increase reflects, first of all, the strengthening of the U.S. dollar, but also operational items such as the investment in the launch in Canada, the launch of the new scope from Karl Storz and also medical programs and initiatives to develop relevant data, which we need for selling purposes.The contribution was negative NOK8.5 million in Q4 compared to negative NOK0.5 million in Q4 2021 and a year-to-date contribution negative NOK16.9 million. EBITDA, which is excluding allocated business development expenses, was negative NOK17.5 million in Q4. Looking at Europe, the European business experienced a year-over-year decline in revenue in Q4. This is driven by the phasing of the German business in the quarter, partly offset by a price increase in Germany in the second half of the year. In Q4, European volume declined 8%. Full year European volume increased 1% with revenue declining 2%. And the difference between volume and revenue development is mainly explained by foreign exchange.Direct costs increased year-over-year NOK2.6 million or 10% in Q4. The increase is driven by the investments in the local European commercial structure. As we got control of the Ipsen business in Europe in Q4 2020, we carefully increased staffing and cost during 2021, and we have continued to increase headcount and costs somewhat in 2022, given improved access, but also taking into consideration staffing shortages in the health care sector in Europe. And we ended Q4 with a contribution of NOK22.6 million compared to NOK24.9 million in '21, and the EBITDA, again, excluding allocated business development expenses for Q4 was NOK5.6 million. Full year contribution was NOK102 million and EBITDA excluding the business development was NOK42.4 million.Now let's look at the cash flow and the balance sheet, new slide, please. Thank you. So net cash flow from operations, NOK0.7 million in Q4 and full year negative NOK2 million, a negative development from 2021 is mainly driven by EBITDA after business development expenses. Cash flow from investments was in Q4 positive NOK0.8 million, and cash flow from financing in Q4 was negative NOK17.3 million and full year negative NOK51.3 million, which was driven by a repayment of the long-term loan from Nordea, as well as the Ipsen earn-out payment. So this gives a net cash flow in Q4 negative NOK15.8 million and full year negative NOK54.8 million. And the net negative cash flow reflects the funding cost related to the long-term loan as well as the Ipsen earnout. And with this cash flow, we end 2022 with a cash balance of NOK268 million.Looking at the balance sheet. We ended the quarter with total assets of NOK719 million. Noncurrent assets was NOK360.8 million at year-end. This included customer relationship with NOK129 million, and the customer relationship is the intangible assets identified in the purchase price allocation for the Ipsen transaction. The noncurrent assets also include goodwill from the Ipsen transaction of NOK144 million and a tax asset of NOK55 million.Customer relationship is amortized over on a straight-line basis over 10 years, while the goodwill is subject to impairment testing. Inventory and receivables were NOK90.2 million at year-end at level with year-end 2021 of 2021 of NOK90.3 million. So this is mainly driven by increased revenue, but it's -- that's it.Long-term liabilities is NOK167 million include -- it does include the earn-out liability of NOK135 million. And the earnout liability represents a capitalized value of estimated future earn-out payments to Ipsen, the liability is subject to a 10-year annuity. And finally, equity at the year-end was NOK462.7 million, which is 64% of total assets. This concludes the financial section. And thank you.Dan, back to you.
All right. Great. Thank you, Erik. Let's move to Slide 19 with the summary of results. Just reiterating, we see Q4 as an anomaly caused by staffing, sicknesses throughout Europe, it's well documented, budget impacts and limited access in the first 3 months in Europe. But we believe proof of the rebound is showing very early in Q1 and also the fact, especially in the U.S., the number of installations towards -- I mean, literally towards the end of Q4 bodes quite well for the U.S. and its rebound.The pipeline of Saphira remains extremely strong still. We expect a good installation throughout 2023. We expect Europe to benefit from health -- the European sales force that benefit from having full access to the Saphira to the accounts and also upgrades and new placements of Saphira and Richard Wolf's new equipment in Blue Light, and we look forward and hope to have a potential down-classification of Blue Light equipment in the U.S. that would unlock the market in the U.S. going forward with more than one manufacturer.Next slide. The anticipated milestones, the corporate objectives, the guidance -- we make this guidance with the realization that there's still some uncertain times surrounding the business, whether it be the current hold - supply hold on Flex, the impacts of staffing shortages still exist, but we think they will slowly recover throughout 2023. So we make this guidance with that in mind with 65 to 75 installations of Saphira, a positive EBITDA and a 20% revenue growth minimum for next year -- this year 2023.We'll continue the geographic expansion, looking at partnerships around the world, license agreements, presenting and publishing additional data, there are over 16 active studies in 25 active publications that are in work for 2023 forward. So I think that continues that groundswell of interest in Blue Light technology now that we have full worldwide rights to the product and the commercialization. And we'll continue to evaluate product or business opportunities, leveraging our organizational strengths across the globe, so our business development efforts will not stop.So with that, I think we can go to the final slide, which is Q&A and open it up. David, I guess, I think your [ Indiscernible ]
Okay. Thanks. I had to just switch from the slides to the queue here. All right. Great. I think Eric went over this in the presentation. But the first question we have is the business development expenses of the NOK9 million 4Q. How do we see these expenses developing over the course of the year? And there's a little -- there's a follow-up to that question, but I'll get to it.
Yes. As a general comment, I mean, the NOK9 million that we saw in fourth quarter is probably not going to repeat itself. I mean, every quarter, definitely not. It was a high peak. And if you look at the remaining 3 quarters of 2022, we spent about SEK10 million in those 3 quarters. So that's an average of NOK3.3 million approximately per quarter. I mean this is very hard to estimate. It's actually impossible to a testament. And that's why we -- when we provide guidance, have to look at, let's name it normalized EBITDA. I need to take this out of the equation. Otherwise, I'm never going to make an estimate. I'm never going to be able to do an estimate.So the estimate is without that expense line. And how much that expense line will be, well I said, I don't expect NOK9 million to be the overall average. I also can say that NOK3 million will be the overall average. It's depending on opportunities and what we're doing.
Okay. And the second part of that question was do you expect these expenses to decline going forward? And I think you just answered that, that they may be volatile depending on the opportunities we're evaluating. Right?
Yes. And the key mode is normalized EBITDA.
Okay. And whoever asked that, we can follow up, hopefully, we got to that -- we answered that second part. Next question is, will you report cystoscope upgrade placements in coming quarters and the impact on scope productivity?
Yes. That's our intention to start talking about the number of old -- old Karl Storz equipment in the U.S. has been upgraded. As far as productivity, it's going to take time to measure that. So we do intend -- at least internally, we're going to -- we've begun the process of measuring the productivity, but it's going to be several quarters before we were able to get a good read on what and to quantify that impact. But we do expect, I think the hypothesis is solid, that more reliable, better equipment with better visualization will actually increase interest and usage of Blue Light technology.
Yes, I might add to that in terms of scope uprate placements, I think we will report that. I mean the focus on the chart, obviously, is on the growth of new accounts that we're adding to the spectrum. But what's interesting about scope upgrade placements going forward, it's different than the OPP. The OPP, those accounts were asked to surrender. To upgrade, they had to surrender their old equipment. With upgrades going forward, the legacy accounts that kept their old equipment were starting to see upgrades there now, and those accounts are actually keeping their legacy equipment and bringing in the new Blue Light, the Saphira system. So it's really interesting. The -- those accounts do intend to run 2 scopes or multiple scopes in their facility and keep running the old equipment until it is fully end of life. So that's, I think, really an interesting phenomenon. And brings up another point, and that is the OPP accounts. Keep in mind, when they were making that transition from their old equipment to new equipment, their old equipment went offline, they had to surrender it to Karl Storz. So there was a period of lack of productivity for those accounts in the fourth quarter. So that's another thing to bring up and probably impacted the fourth quarter performance on kits.
Yes. Good point.
So next question from Richard. So you mentioned focusing on the 80% of accounts that are underpenetrated. Can you talk a little bit about that? And do you have an absolute number of how many accounts that means that is?
I don't have the exact number, to be honest with you, at hand right here. We can get back to you Richard with Susan and answer that more directly for you.
Right. And in terms of the 80% that are underpenetrated, yes, so the granularity on that essentially is -- so the 80% of the accounts that have towers from the Ipsen transaction, many of them are barely using it or they're not using it really at all. So it can even be unpenetrated or kind of off-line right now. So there's a huge opportunity there. And as Dan mentioned before, throughout the pandemic and even a good part of last year with the flares of different variants of COVID, we weren't able to access those accounts. So yes, we're excited to really get to that part of the business that we haven't been able to access.
Yes. And just maybe one to qualifier for Richard, but for everyone. When we say underpenetrated, our expectation is 35%, 40% penetration in accounts. So anything less than that is underpenetrated. And David's point, some of these accounts have equipment that is almost inoperable. So -- or maybe the person who used it at the time has gone or stopped using it. So getting those 1%, 2%, 5%, up to 35%, 40% is a tremendous opportunity for us. Some of it, and I'll be honest with you, a lot of it has to do with the equipment specifically, but a lot of it is also activating the physician base to see the value of Blue Light technology, support them in the operating theater and begin helping their patients.
Yes. And I think a theme in Europe, and I think Suzanne, who runs our European division really was beating us over the head with the word image quality upgrades. It's somewhere in the presentation. But that really is the theme. There are a number of Saphira replacements that are going to happen this year. There are really upgrades of the existing base. And that's really the -- what we're going out with as a marketing theme is you're not really seeing what you need to see in Blue Light until you upgrade. And so I think that's a big part of the momentum going forward.
So another 2 questions for Richard. One, what type of assets have you been assessing for in-licensing or M&A?
I won't say specifically what, but it's assets that would leverage our current commercialization footprint across the U.S. and Europe. If you look at our corporate presentation, I believe we talk about the pathway of the patient, the non-muscle invasive bladder patient. We do look for assets that fit in that cycle. But we also recognize that we -- our call point is a uro-oncologist, and uro-oncology treats more than just bladder cancer. So we can get to that same position and also sell other items, whether it's drugs, devices or diagnostics. So it's -- again, it's all about leveraging our footprint that we have today. I'm not looking to get into a completely different therapeutic area like cardiology or something like that, which require entirely different sales force. We really want to leverage our corporate capabilities. So we'll leave it right there.
Excellent. How many endoscope manufacturers, excluding Karl Storz Olympus and Richard Wolf are evaluating Blue Light launches in the U.S?
It's interesting. I think I've answered that question before. It was like 12, including Karl Storz, at one point. I believe I now heard of 2 more. Some of these manufacturers are clip-on type devices that are agnostic to any scope that's out there. There's other ones that are full systems for the OR theater. The big guys are obviously interested in the U.S, but there's a lot of others out there with ending from -- the big guys are interested in the big system Rigid stuff. And there are a couple of others on Rigid. A lot of the other stuff is disposable flexes et cetera, et cetera. So I would say north of 12 that are interested, particularly in the U.S. market. Of those 12, I would say maybe about 1/4 of them also have worldwide or European interest as well, which is obviously very important to us equally.
Okay... Great. And last one from Richard. When do you believe the Olympus scope will hit the market in Europe?
I mean, we don't work for Olympus, but what they have indicated is their intention is to launch it later this year. These things are -- devices are -- it's not always the easiest thing. There's engineering requirements and there's a lot of testing that goes on. We thought the Olympus system would be out beginning of this year. It looks like it's going to be later this year. But we will update you and the market if and when Olympus gets that launch later this year or.
Yes, I believe there's still a regulatory approval that has to happen.
Here's a question. How much can you expand the revenue with the present cost base that you have?
Put it this way. The way I look at the revenue development is that I'm looking at the incremental contribution I can get out of the incremental revenue. I'm not going to get 100% because that means that I have a total the same cost, but with increased revenue. Increased revenue even with the same staffing will require additional activities and in itself drive cost. But I do expect to see a significant positive incremental contribution out of the additional revenue that we get the incremental revenue. But it's not going to be 100%, but I would -- it shouldn't -- I mean it will not be 0. We will be able to increase the revenue significantly without adding incremental or adding significant costs, but there will be some.
Great. Since I have on here is another question for you, Erik. When will the Nordea loan be paid off?
30th of June this year, we have NOK12.5 million left.
Okay. Very good.
Hey, David, I do have an answer for Ricard because Susan just WhatsApp'd me, so I'm a will give you the answer live. I'm going to just round it up. There's approximately 800 towers out there, about 640 we believe are under penetrated accounts. So that's what we'll be targeting. And she did confirm late this year, maybe early '24 for Olympus launch. So we -- what I told you earlier was correct. It's probably later this year or into early '24.
Okay. Is there any news about Cevira, and that's Cevira, not Saphira, the new cystoscope? There's 2 Saphira's in your life.
Well, one Saphira -- now you got me say it wrong. Is there any news. Still progressing. They had their last patient in. The follow-ups are taking place. They expect a midyear read on the data that could precipitate either; a, filing or; b, they could decide to do another trial of some sort. So a little more to come on that as we get more information. That program is 100% under their -- pretty much under their control, although we do support and advise where they ask us to versus the Hexvix trial that's taking place in China. That trial, we are the sponsor for them, so we are heavily involved in that one. So I will update you as they update us and are public. They are a public company. So we have to be conscious of what they make public as well when we're communicating to our investors.
Okay. Great. And another Saphira question, but you answered it.
Is it Cevira?
No, no, no. That was same question, but different participants. Next question is kind of similar. What is the status of Hexvix in China? How is that going?
They're enrolling as we speak. Multiple sites are up, enrollments going to continue. The the plan, the expectation is that this trial Phase III is completed by third quarter and pack it up for the FDA for an approval in '24. And there's a reason for us to believe that, obviously, we're well well educated on Hexvix and how it performs, et cetera. So provided that the investigators are doing the right things through the protocols, we should expect a 2024 launch.
Got it. Here's one from Tomas, our analyst at Norm. Do you see staffing shortages improving currently? What are you seeing in terms of that trend?
Yes. I think everyone's -- I mean, I think we're in line with everyone else on this. It's still still an issue. And the staffing charges also caused some of the budgetary constraints because people had to go out and get nursing staff or medical staff support, they had to pay a premium for it so that put more pressure on these systems. But we do, like anything, it will resolve. The medical world is not -- is a sophisticated sales force, requires education and training. So it's not like if you're out of nurses, you put an ad out and also a bunch show up, they have to go through schooling and certifications, et cetera. So that is, and we're hearing that there's a swell of future nursing and medical staff coming through the pipeline. So we expect it to continue to resolve through 2023.
Yes. It's simple supply and demand. I mean with the prices that -- or the salaries that nurses can earn these days, you can expect that it's attracting new people to the field. But it does take some time. That's right.Okay. Here's the question. You stated that the TURBT volumes declined during Q4. What is your source? Can you elaborate on how much the volumes decreased?
Yes. Well, it's definitive health. We pay for that data. So you probably, the average person probably isn't going to have access to unless you bought it. The decline was -- and part of this with definitive data is you're looking at both commercial and government pay, government paid lags in terms of its reporting. So by looking and triangulating to it, we think it was probably a single-digit decline in the fourth quarter. David, you had actually a little closer analysis with it. I don't think I'm... Yes, there's actually another source, which one of our investors pays for. So it may be something that is, it's called the Strata decision technology. And this is actually urology procedure volumes. But what it shows is just pull this up again on my desktop.
4.6%.
Yes, it's about 4.8% decline sequentially from November to December, and then you sort of have to extrapolate on the chart, and it looks like it's about a 3% to 4% decline from October to November. So just those 2 months alone, it looks like you had about an 8% to 10% decline just over the back 2 months of the quarter. And I think -- if I just look at -- you look at the charts that we showed in the prepared remarks, both in the U.S. and in Europe, and you just see December just wasn't there. It wasn't there for the hospitals to exhaust their budget in Germany, and it just wasn't there for our U.S. customers. We were running around putting in place new cystoscopes, but the volumes just did not come through, we did not see surgeries or something that's life saving versus a TURBT that can be postponed another month. So -- and the data really backed it up. So it looks pretty drastic for the back half of the year. And as you can see, we're coming back in the first quarter. So thanks for that question.
Okay. And then I think it's the last question I have, a good set of questions today. How is the 20% minimum revenue growth projection comprised? What is assumed for the relative contribution new account installs? I'm not sure if we give that level of granularity. But EriK, do you want to take that? You are muted, Erik.
Thank you. What I said is that I can only give a very high-level view of that. We're talking about 65 to 75 new installs during the year. That means, on average, about, let's say, 40% for the year average. And that compares to well over 300 installed base. So the kind of the relative importance of the new installs for the year is -- I mean, the value of that is less -- significantly less than the installed base.
Yes. And I'd like just to add to that. You're getting to an important question, the person who asked this question, is the U.S., I mean, there's significant growth in the U.S. I mean if we were to break out the 2 territories, Europe is moving slowly because Germany is a big contributor. And that market historically is in the mid-single digit to high single-digit range. So that kind of drags down the German, I'm sorry, the European performance as a whole.If we were to look at U.S. performance, it's significantly north of 20% and could be better assuming some of these restrictors come off. If we had Flex coming back to the market or if the staffing shortages alleviate more significantly, you could see growth rates in the 30% range in the U.S. So hopefully, that's helpful. I'll just add -- let me add just additional one other piece to this. What became very obvious to us through the Karl Storz transition from the old system to the new system, we have limited installations is a sort of uncovered what we call the leaky bucket syndrome, which was these old machines that go back to 2015, '16 and '17 were having breakdowns and they weren't being utilized at the levels they were historically. So that leakage at the bottom, and we have a rough idea of a couple 2,000, 3,000 units.With new installations, there weren't as many new installations to sort of cover up and overtake the losses on the bottom. That's why the Saphira upgrade system and getting these switchover so critically important to us. One, we get back the old business that was lost through equipment that was unreliable, broken and maybe the visual quality was low, so the high interest from a surgeon wasn't quite there. But the other thing is just to get that back, but also then in the interest of new accounts coming on, 57 new installations, 26 new accounts towards the last, basically 6 weeks of the quarter bode well for the kickoff in '23, which we're already seeing placing out in the numbers. And then, like I said, first quarter already interest is high, installations pipeline is strong. So the new is great. It fuels the future. It's an important part of it. Also getting the old equipment upgraded will sort of seal off any of the losses of the past, and we think we can grow that business. And we look forward to reporting on that in the future once we get the analytics behind it over time.
Excellent. Okay. So that's all the questions we have. We appreciate it. Dan, do you want to wrap up with some final remarks.
No. I think it's a challenging quarter. Fourth quarter, we believe is anomaly. We got proof in the first 6 weeks to 8 weeks of this quarter, 2023. We're looking forward to a strong 2023 going forward. A lot of good development, as we mentioned, from publications to hopefully, a down-classification, future capital equip manufacturers coming into the U.S. market and actually on a global stage as well. So with that, I wish you all a great day and look forward to talking to you at the next quarterly update. Thank you.