Q4 2019 Earnings Call
Please standby.
Good afternoon, ladies and gentlemen, and welcome to the fourth quarter and fiscal year 2019 earnings conference call for Apex Medical Corporation.
At this time, all participants have been placed and I'll listen only mode.
At the end of the company's prepared remarks, we will conduct a question and answer session.
Please note that this conference call is being recorded and not the recording will be available on the company's website for replay shortly.
Before we begin I would like to remind everyone data remarks and responses to your questions. Today may contain forward looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from that was vacated.
Including those identified in the risk factor section of our most recent annual report on form 10-K filed with the Securities and Exchange Commission as well as our most recent 10-Q filing.
Such factors may be updated from time to time in our filings with the FCC, which are available on our website.
We undertake no obligation to publicly update or revise our forward looking statements as a result of new information future events or otherwise.
This call will also include include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or gap.
We generally refer to these as non-GAAP financial measures.
Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with gap or available in the earnings press release on the Investor Relations portion of our web site.
I would now like to turn the call over to Mr., Charlie Goodwin apex, Medical's, President and Chief Executive Officer.
Thank you. Please go ahead.
[music].
Welcome everyone to our fourth quarter in fiscal year 2019 earnings call.
I am joined on this afternoons call by our Chief Financial Officer terrorism.
Let me provide you with a quick agenda for today's call.
I'll begin with a high level overview of our financial and operational performance in 2019.
Then discuss our fourth quarter revenue performance and highlights some of our recent operational accomplishments.
Terry will then provide you with a detailed review of our financial results for the fourth quarter in fiscal year 2019, as well I was our guidance for first quarter 2020, which we introduced in our earnings press release. This afternoon.
Oh, then share some additional closing remarks about our prospects and priorities for 2020, including the four strategic initiatives. We are pursuing as part of our long term growth strategy as well as our current thoughts on the potential business and procedure related disruption as a result, if the crisis.
Caused by the spread of the krona virus Kilobit 19.
And then we will open the call for questions.
With that let's get started.
2019 was a year of important progress for apex medical.
We are incredibly pleased to deliver total revenue growth of 69% year over year in 2019 exceeding our initial financial year or fiscal year guidance range of 52% to 58% growth year over year.
Our exceptional performance was primarily driven by advanced energy revenue growth of 73% year over year in 2019, reflecting the continued success of our commercial strategy to drive growth by increasing the adoption of our renewed me on generators and the utilization of our hand pieces in the U.S.
Cosmetic surgery market.
In markets outside the U.S.
We are focused on fulfilling demand from our distributor partners in existing markets and securing product registrations and new distributor partnerships.
We're very proud of the commercial success, we had in 2019 and believe it reflects both the strong execution of our team this year as well as the strong global demand for our helium plasma technology.
In addition to our strong financial performance. This past year. We also continued to make progress with respect to the four strategic initiatives, we are pursuing to position apex medical for a long term growth and the cosmetic surgery market.
We'll discuss each of these initiatives later in my prepared remarks.
Stepping back for a moment fiscal 2019, Mark the first full year following the sale of our core segment to cemetery surgical.
The symmetry surgical transaction provided us with the infusion of capital and the ability of focus our efforts on maximizing the potential of our helium plasma technology.
We entered 2019 with an enhanced sales team to expand our coverage at the U.S. cosmetic surgery market and a new name apex medical which we chose to reflect our commitment to peak performance and everything that we do.
Throughout the year, we have continued to invest thoughtfully and many key areas of our business in order to transform apex medical into a company that is well positioned to capitalize on our addressable market in the U.S. and internationally deliberate peak performance over a multiyear period.
Our financial and operational performance in 2019 reflect the success of these efforts and perhaps more importantly, we believe we're just getting started and have significant room for continued growth and improving profitability in the years to calm.
Turning to an update of our financial and operational performance during the fourth quarter.
We're pleased to bring fiscal 2019 to a strong close in Q4.
We achieved total revenue of $8.4 million, representing 41% growth year over year.
Our total revenue growth was driven by global demand for advanced energy products.
In our advanced energy business, we generated sales of 6.9 million, an increase of 58% year over year.
Our advanced energy revenue growth is primarily fueled by strong utilization based demand for our hand pieces in both the U.S. I know you asked markets along with revenue contributions from the sale of our generators.
Our impressive advanced energy sales performance more than offset modest declines in our OEM business, which decreased by $64000 or 4% year over year consistent with our expectations.
From a geographic standpoint.
Our total U.S. sales for the fourth quarter of 2019 increased by 1.2 million or 28% year over year, and our international sales increased one point threemillion or 81% year over year.
Turning to our operational progress during the fourth quarter of 2019, we made important progress with respect to our regular straight strategy to pursue clinical indications for the use every new be on technology, and both German resurfacing procedures and skin laxity procedures.
Consistent with our stated expectations, we began enrollment during the fourth quarter into clinical studies designed to support our pursuit of the new clinical end to indications for these target procedures.
Both studies are I'd east prospective multi center single arm evaluate are blinded studies that will be conducted at up to five investigational centers in the United States.
In addition to our regulatory progress we expanded our portfolio of clinical evidence supporting the use of renew the on technology.
In November a new study was published in the journal plastic and reconstructive surgery really surgery Global open and open access peer reviewed journal owned by the American Society of plastic surgeons.
The study is titled a single site post market retrospective chart review of Subdermal quite revelation procedures with renew the on.
And it was conducted by Dr. do lob.
Who examined de identified data for 32 patients.
The studies objective was to collect safety and procedural information for patients who had undergone liposuction procedures were renewed beyond was used for subdermal quite violation.
Dr. Do lob found that none of the patients required to revision or a secondary procedure, suggesting that all had acceptable final outcomes and that no device related adverse events or complications were noted.
Lastly, during the fourth quarter of 2019, we began the limited commercial launch of our apex plasma RF or a PR hand piece. The latest addition to our renew the on product portfolio.
As we have shared with you on prior earnings calls the a PR hand piece is available and multi configurations and designed to be used per continuously in order to meet the needs of our cosmetic surgery customers.
It features several important enhancements.
A smaller diameter instrument shaft.
A bullet shaped instrument tip.
A new handle design.
And distance indicators to help surgeons minimize unwanted energy application near the incision entry site.
The development of our a PR hand pieces was informed by extensive feedback and input from both our cosmetic surgery customers and members of our medical Advisory Board.
Based on the strong surgeon feedback received in response to our limited launch phase. It is clear that this informed development process resulted in the creation of a hand piece that really resonates with cosmetic surgeons.
I'll now turn the call over to Terra to review, our fourth quarter and fiscal year 2019 results in detail and discuss our financial guidance for first quarter, 2020, which we updated and this afternoon's release Cara.
Thanks, Charlie I want to start by providing an overview of the restatements and revisions that we're making to our historical financials as announced in a separate press released after market close today and as detailed in the 8-K filed with the FCC. This afternoon.
Capex medical is committed to upholding the highest standards a financial reporting.
Throughout 2019, we had been working diligently to remediate material weaknesses and internal controls identified in 2018.
As discussed on our third quarter earnings call. We identified two items during the preparation of our form 10-Q filing for the period ended September Thirtyth 2019.
The first item related to the treatment of certain components included in the calculation of our stake stock based compensation expense.
The second item related to the accounting for Predevelopment activities on certain OEM contracts.
Ill revisions related to these items were incorporated into our Q3.
It's a three and nine results and we are detailed in separate tables in our form 10-Q for the period ending September Thirtyth 2019.
During the preparation of our 10-K for fiscal year 2019, we identified two new items, which we described in a separate press release and detailed in a reconciliation table both of which were filed in an 8-K. This afternoon.
First we reevaluate that re evaluated our subsidiary consolidation process and discovered an error in the accounting for the elimination of markup on intercompany sales.
This resulted in the company, including intercompany markup in cost of sales and a corresponding understatement of selling general and administrative expenses.
Second we identified errors and tax accounting for employee income and payroll taxes related to the exercise of stock options in 2018 and 2019.
Due to the aggregated impact of the Irrs identified our audit committed committee concluded after consulting with management and our prior auditors that the previously filed financial statements for the year ended December 31st 2018, and the three in nine months ended September Thirtyth 2018.
And the three months ended March 20 for March 31st 2019 can no longer be relied upon and will be restated.
To complete the restatement, we intend to request a 15 calendar day extension to file our form 10-K for fiscal 2019, and we'll make every effort to file within this period.
The discussion of our unaudited financial results today reflect the impact of these restatements as well as revisions to our historical financials.
We have detailed the impact of these items in a separate press release and reconciliation table both of which were filed on form 8-K. This afternoon and are available on the Investor Relations page of our website.
Turning to review of our fourth quarter and fiscal year 2019 financial result.
As a reminder, our results are reported on a continuing operations basis for the period ended December 31st 2019.
Any financial impact related to the divestment and sale of our core business segment.
Appear in our financial statements for fiscal 2018 as discontinued operations and are excluded from the commentary that follows.
Total revenue for fourth quarter, 2019 increased 2.5 million or 41% year over year to 8.4 million compared to 5.9 million last year.
By business segment total revenue growth in the fourth quarter was driven primarily by advanced energy segment sales, which increased two and a half million dollars or 58% year over year to 6.9 million.
Oh, we EMS segment sales decreased 64000, or 4% year over year to 1.5 million in the fourth quarter of 2019.
Advanced energy and OEM sales represented approximately 82% and 18% of total revenue in the fourth quarter of 2019, respectively compared to 73% and 27% in the prior year period.
Revenue in the United States increased approximately 1.2 million.
Or 28% year over year to 5.6 million and international revenue increased approximately 1.3 million or 81% year over year to 2.8 million.
International revenue represented approximately 33% of total sales in the fourth quarter of 2019 compared to 26% of total sales in the fourth quarter of 2018.
U.S. sales were driven by a 44% increase and advanced energy offset slightly by a 2% decrease in OEM sales.
The 44% increase in advance energy sales in the U.S. in Q4 was driven by strong utilization based demand for our renewed the on hand pieces, coupled with contributions from sales of our generators.
Our Q4 international sales growth was driven by strong utilization based demand for advanced energy hand pieces and generators from distributors in our existing international markets with Latin America in Asia Pacific being the largest contributors to our growth during the quarter.
Moving down the piano gross profit increased approximately 2 million or 58% year over year to 5.6 million compared to 3.5 million for the fourth quarter of 2018.
The primary drivers of the increase in gross profit margin were higher advanced energy sales as a percentage of total sales.
As well as efficiencies realized in our manufacturing processes in the fourth quarter of 20 light team.
Gross margin for the fourth quarter of 2019 was 66.4% compared to 59.4% last year.
The primary drivers of the gross margin improvement this quarter.
Higher advanced energy sales as a percentage of total sales.
Efficiencies realized in our manufacturing processes.
Which was partially offset by a higher mix of advanced energy sales outside the U.S. in the fourth quarter of 19 compared to the prior year period.
Additionally, approximately 330 basis points of the year over year change in gross margin was the result of GPL fees included in cost of goods sold in the prior year period, which did not impact cost of goods sold in the fourth quarter of 2019.
GAAP operating expenses for fourth quarter, 2019 increased 2.3 million or 25% year over year to 11.5 million compared to 9.3 million for the fourth quarter at 2018.
The year over year change in operating expenses was primarily driven by a 1.4 million dollar increase in professional services.
8.7 million increase in selling general and administrative expenses.
8.5 million increase in salaries and related costs.
Any point 4 million increase in R&D expenses.
Total GAAP operating expenses were partially offset by point 7 million of severance costs related to the departure of the company's former CFO, which impacted Q4 2018 expenses and did not impact Q4, 2019, GAAP operating expenses.
Excluding the impact of these nonrecurring expenses fourth quarter operating expenses increased 2.9 million or 34% year over year.
Loss from operations for the fourth quarter, a 2019 was 6 million compared to operating loss of $5.7 million last year.
Net loss from continuing operations for fourth quarter, 2019, with 5.4 million or 16 cents per diluted share compared to a net loss from continuing operations of 3.9 million or 12 cents per diluted share for the fourth quarter of 2018.
Fourth quarter 2019, adjusted EBITDA loss was 4.8 million compared to an adjusted EBITDA loss of 4.6 million last year.
Excluding the impact of the nonrecurring severance costs in the prior year period, adjusted EBITDA loss increased 1 million or 25, 27% year over year in the fourth quarter of 2019.
As a reminder, we've provided a detailed reconciliation from GAAP GAAP net loss to adjusted EBITDA in our earnings press release this afternoon.
Turning to a brief summary, our fiscal year 2019 result.
Total revenue for fiscal year, 19 increased 11.5 million or 69% year over year to 28.2 million.
By segment total revenue growth of 11.5 million in fiscal year, 2019 was driven by an increase of 9.5 million or 73% year over year and advanced energy sales and an increase of 1.9 million or 54% year over year and OEM sales.
Advanced energy and OEM sales represented 80% and 20% of sales and since fiscal year 2019, respectively, compared to 78% and 22% of fail in fiscal year 2018.
By geography total revenue growth of 11, and a half million in fiscal year 2019, what's driven by an increase of 6.7 million or 52% year over year in U.S. sales and an increase of 4.7 million or 124% year over year and international sales.
Yes, and international sales represented 70% and 30% of sales in fiscal year, 2019, respectively, compared to 77% and 23% of sales in fiscal year 2018.
Gross margin for fiscal year, 2019 was 67.9% compared to 64.7% in fiscal year 2018, an increase of 326 basis points year over year.
Operating loss for fiscal year, 2019 was 20.9 million compared to 14.2 million in fiscal year 2018.
The change in operating loss was driven primarily by an increase in operating expenses of 15 million or 60% year over year offset partially by an increase in gross profit of 8.3 million or 77% year over year.
As of December 31st 2019, the company had cash and cash cash equivalents of 58.8 million and no short term investment compared to cash and cash equivalents of 16.5 million and short term investments and US Treasury bills 61.7 million as of December 31st 2018.
The company had working capital of 64.4 million as of December 31st 2019, as compared to 81.2 million as of December 30, Onest 2018.
Now turning to review of our guidance for first quarter of fiscal year 2020.
For the three months ending March 30, Onest 2020, we expect total revenue in the range of 5 million to 5.6 million, representing a decrease of 11% to zero percent year over year.
This total revenue guidance assumes advanced energy revenue in the range of four to 4.6 million, representing a decrease of 8% to an increase of 6% year over year.
And OEM revenue of approximately 1 million, representing a decrease of 21% year over year.
In terms of our profitability guidance for Q1 2020, we expect.
GAAP net loss in the range of 9 million to 8.6 million compared to GAAP net loss of 5.6 million in first quarter of fiscal year 2019.
And adjusted EBITDA loss in the range of 7.8 million to 7.4 million compared to adjusted EBITDA loss of 4.7 million in first quarter fiscal 2019.
As a reminder, we've included a full reconciliation from GAAP net loss to non-GAAP adjusted EBITDA in our earnings press release this afternoon.
Lastly for modeling purposes, our first quarter of 2020 total revenue guidance assume.
Sales in the U.S. increased in the range down.
7% to up 3% year over year and sales to customers outside the U.S. decrease in the range of 17% to 7% year over year.
We expect Q1 2020 gross margin of approximately 64% to 65% compared to 64.6% in Q1 2019.
Stock based compensation expense of approximately 1 million.
Depreciation and amortization of approximately 165000.
And weighted average diluted shares outstanding of approximately 34 million shares.
With that I'll turn the call back to Charlie for closing remarks, Charlie Thanks Tara.
In 2020, we expect to build on the progress we have made in this past year.
We will continue to execute our commercial strategy and Investor TJ weekly to expand our share of the 1.5 billion us cosmetic surgery market and we'll capitalize on the strong international demand for our products as well.
In addition to executing our commercial strategy, we will continue to pursue our four strategic initiatives that we started in 2019 to enhance the foundation for long term growth.
I'll now take a minute to review these four initiatives and provide you an update on specific priorities for each in 2020.
Number one the pursuit of specific clinical indications that will enable us to market and sell renew beyond for new targeted procedures.
Building on our progress this past year in 2020, we are focused on conducting our to us I'd. He clinical studies in Durham, or resurfacing and skin laxity to support the pursuit of clinical indications for these two target procedures.
The second is to secure new clinical evidence demonstrating the safety and efficacy of our renewed the on technology.
2019 was an important year for expanding our clinical evidence, including a peer reviewed publication in the journal of plastic and reconstructive surgery Global open a peer reviewed publication lasers in surgery in medicine.
Four abstracts, and one poster presented at the medical meetings and booked chapter the art of body contouring.
During 2020, we expect to expand our portfolio of clinical evidence with additional publications and presentations. This year. We have submitted one study for publication already and expect to submit at least three more clinical manuscripts for publication in 2020.
The third is enhance our physician practice support for our cosmetic surgery customers.
In 2019, our sales and marketing team did an excellent job, providing support and training for current and perspective surgeon customers by expanding our selection of in office marketing materials and hosting our physician mentor programs.
In 2020, we will continue to host new physician mentor programs in the U.S. and we plan to expand this effort in select markets outside the U.S. as well.
Additionally, our market share and overall awareness of renewal beyond has increased in recent years and we plan to expand our presence at industry conferences and trade shows in 2020.
Importantly, this expanded presence will further amplify our plans to focus on educational programming at these events with podium presentations from our key opinion leaders and advocates in the cosmetic surgery market.
And lastly number for improve our manufacturing capabilities inefficiencies. The progress we have made on this front began to evidenced itself in the gross margin improvement we saw during the second half of 2019, and we expect to see continued improvements in 2020.
While we are understandably pleased that our efforts to improve our manufacturing efficiencies are already contributing to our gross margin results. It is important to understand that this is a multiyear strategic initiative. We will continue to focus on implementing new lean initiatives in order to drive.
Yes in the years to calm and look forward to providing you with updates.
On our future progress.
Finally, I would like to share thoughts today on the crisis caused by the spread of the Corona virus also known as Cove at 19.
This is an evolving situation that we are monitoring very closely and we are focused on the health and safety of our employees patients customers and international distributor partners around the world.
We have a global business with customers in more than 40 countries outside the U.S., representing 30% of our sales in 2019.
Importantly, our commercial exposure to the most affected regions outside the U.S., specifically Europe and APAC represented approximately 11% of our sales in 2019.
We do not currently sell in China.
Adoption and utilization trends in these markets. So far in Q1 have understandably come in below our expectations coming into this year.
In the U.S. after a solid start to the corridor adoption and utilization treads have slowed beginning in March and we have experienced a notable slowdown over the last week.
The high level of uncertainty and the rapidly developing story of Cobot 19 represents a huge challenge as it relates to providing the formal financial guidance for fiscal year 2020 as would be our normal practice on a Q4 call.
Given the environment is anything but normal we have decided to provide our expectations for growth in Q1, 20, and we'll revisit our formal guidance strategy for 2020 as part of our first quarter earnings call in May.
As detailed in our press release. This afternoon, we expect total sales in the first quarter of 2020 in the range of approximately 5 million to 5.6 million compared to 5.6 million in the first quarter of 2019.
By segment. The total revenue range will be driven by approximately 1 million, an OEM sales and approximately 4 million to 4.6 million an advanced energy sales.
The year over year, well, we change in OEM sales was entirely expected and at this time is not impacted by the coded crisis the year over year change in our advanced energy sales in the first quarter is driven by the Colvin related weakness in sales in the U.S. and outside the U.
As compared to last year as a result of slower than anticipated demand.
Outside the us the demand is slowed dramatically in March as Cove at 19 crisis continues to deteriorate.
In the U.S. as mentioned earlier after a solid start to the corridor adoption and utilization trends have slowed materially in March and over the last week in particular also.
We are in contact with key customers around the world and key surgeons in the you asked to determine how they are managing the uncertainty in their practice.
Our guidance for Q1 is based off the best information, we have today and have factored in significant impacts to our business from coal that 19 over the balance of the quarter.
Finally, I want to highlight two important points for consideration.
First while our first quarter guidance expectations reflect materially lower growth than we had expected coming into the year. We believe the underlying tailwinds to the multiyear growth story remain intact.
We believe our helium plasma technology is truly unique energy modality with its ability to deliver heat to tissue and incredibly efficient and controlled manner.
Our growth performance and clinician patient experience in 2019 enhanced our conviction and importantly, we think we've just begun to tap the potential in the cosmetic surgery market.
This gives us confidence that once this cobot 19 situation resolves itself, we are well positioned to continue to elevate the global cosmetic surgery market for the benefits of surgeons patients and our shareholders.
Second we have an incredibly strong balance sheet with more than $58 million in cash at the end of 2019 that we expect will allow us to execute our strategic growth initiatives for a number of years.
Thanks to everyone on our team for their hard work in 2019 to our customers to our shareholders for their support and those on this call for their interest in apex medical.
With that operator, now, let's open the call for questions.
Thank you.
If you'd like to ask a question. Please signal by pressing star one on your telephone keypad.
If you're using a speakerphone. Please make sure your mute function has turned off to allow your signal to reach our equipment. We do ask that you limit yourself to one question and one follow up.
If you would like to ask additional questions. We invite you to add yourself to the Q again by pressing star one.
And our first question will come from Matt Hewitt with Craig Hallum. Please state your question.
Good afternoon. Thank you for taking your questions maybe the first one any provided a little bit of color on the impact that you're seeing from cobot 19, but I'm just wondering.
As you're talking to some of your surgeon in physician.
Customers and partners what are you hearing from that but what are they seeing from.
A demand up a patient.
Demand standpoint, how has that changed over the last couple of weeks any additional color on that front would be helpful. Yeah. Unfortunately at this point in time, Matt It's all over the map.
You know some some doctors are not changing really anything and a couple of them. We just found out today have closed their practice until a couple of them have closed their practice, where they're not going to open for that to the ended the month at least so Europe as Ben.
Obviously, a little bit.
More hampered by the out in the recent thing, but it really is area by area state by state country by country, It's all over the place.
Okay, and then I guess, what my follow up.
How are.
You are working on two clinical trials right now we're hearing from others that there may be does some disruption to the clinical trial processes are you seeing that are yours or is this are you able to kind of a jet the work done meet the patients and should lead to me to get those trials completed thank you have yet.
At this point in time, we're not seeing anything change with that but just like everything else that could change tomorrow and we could have a slowdown there potentially we did start enrollment in 2019 and December and we're working through it but just like everything else with this it's fluid.
Understood. Thank you.
Q.
Our next question comes from Matthew O'brien with Piper Jaffray. Please state your question.
Good afternoon, Thanks for taking my questions.
Just a follow up on and math question.
As you think about the guidance you provided here for Q1.
You know you're I think you're probably on track to do something more in that mid seven David. Thank our revenue goes for the quarter, you're not guiding to kind of you know.
Five to five and a half millions of 5.2 issue at the midpoint by 0.3 does that essentially mean that your business.
Almost gone to zero here in March and what Ken.
That math as anywhere close to the accurate what what should we think about.
No in the April may timeframe as were his we're working through cobot.
Well. So the first thing is is that we're very confident in the guidance that we gave.
And for Q1, and it's obviously very few fluid situation and so the reason that we limited. The first quarter is we can't really speak to April and May and going forward, because you know, it's pretty tough to predict right now.
It has not dried up our business has not went to zero in March and in some countries. It it's significantly decreased but we haven't seen that yet in the United States.
Okay, and then maybe a question for Terra just on the spending side of things obviously.
We're going to keep the salesforce in place you're going to continue to spend on the R&D side with these studies, how do we think about but the EBITDA loss for the quarter into Q1, not surprisingly is much higher than we had been modeling. So how do we think about your leverage points on the spending side and then I know you've got 58 million issued and cash coming out of last year, but how do we.
I think about the burn rates here in 2020 and more specifically on the on the need for additional capital.
Going forward. Thank you.
Well and as far as the burn rate and then we definitely feel confident that will the cash that we have will carry us into multi years.
Q1 is generally higher than than other quarters as far as Opex, we have insurance premium renewals a lot of trade shows.
Which so that showed an increase of 1.8 million, where weve started spending on the R&D clinical trials.
But obviously, we'll continue to monitor the situation and make adjustments to discretionary spending on an ongoing basis.
In response to what's happening with sales.
Okay, So a burn rate sorry.
Follow up there, but just the burn rate something in the 20 to 25 million range. This year seems about right. We're yeah, we're not giving guidance for the whole year end as Terry mentioned, the the first quarter is always higher and remember this too is that a lot of the events. We had been planning to go on the first quarter, we already paid to serve their canceled now and.
The second and third quarter, obviously, we're not spending the money for there. So you can think of it being less but we're only given guidance through Q1.
Very helpful. Thanks, so much.
Thank you. Our next question comes from Dave Turkaly with JMP Securities. Please state your question.
Great. Thanks, So just wondering if you could possibly provide us a little more color.
In terms of what you're seeing from the the capital standpoint, and then maybe utilization I. Appreciate you said about March and then the follow up comment on the U.S. not not it's zero, but I mean are we assuming that.
You won't sell capital until this goes away or is it is both third I guess I'd like some color. If you could give it on on those two components, yes, no I don't think so I think in certain areas of the country in certain countries.
Things are fairly standard and back to Biz and people are still doing business I think the thing that could affect in the us as if we had a total locked down like they did in China, where everybody can't do anything we still have a lot of customers today that are doing cases, as we sit here today and we still have people that are evaluating the technology.
Energy so it's not an all or nothing it's based on the country. It's based on the situation. There. It's based on what's going on in each individual regions. So it's that that's what makes it tough is every every minute we get a different thing that comes up where in other closing restaurants and bars in New York City and.
And that then effects, New York City, but Topeka, Kansas Theres nothing Thats affected there right now so it's it's all over.
And then in terms of patience I guess like actual.
[noise] folks going into the procedures I imagine, it's too early to kind of know exactly what's happening but.
It sounds like some of your maybe some of your good legacy counts are not impacted so theres still seeing folks, but I guess.
Any thoughts on you know just plastic surgery generally in it it's elective nature sort of what you kind of anticipate.
If you have a thought on sort of the actual patients.
You know I.
What has happened what did it could look like thank you yeah. Yeah again, I think that comes up that the individual patient I know, it's hard to make broad brush comments about that but personally if I had 14 days to where I had to stay home and I need to have a low worked on that might be the perfect time to do it. So I think it's I think.
Yes, it's just too dynamic.
To do that I mean hospitals right now our canceling all elective procedures that are happening in the United States. Fortunately, we're not part of that because most almost all of our procedures are done in the doctor's office or in their surgery center. So it's up to them, whether they want to keep working and that's up to the individual patients in that area whether.
They are going to seek treatment at that at that point in time.
Thank you.
Yep.
Thank you are just a reminder to ask a question press star one on your telephone keypad to remove yourself from the Q Press star too.
Our next question comes from Kyle Bowzer with Dougherty. Please state your question.
Hi, Charlie Antero good evening, thanks for taking the questions.
Maybe I'll start on the trial so.
How many patients enrolled in skin laxity trial, when might you be able to have done.
One month follow up safety data submitted to the FDA for that first phase and then kind of same question for the dermal resurfacing how is that trial progress in terms of enrollment.
Yeah, we're not going to get into the practice of what we did last time with give kind of things. We'll let you know when the enrollments finished.
And when when we get.
Something back from the FDA, we'll let you know when we get to move forward with that and we'll give updates on a broader scale like that the thing that you do need to know and that everybody needs to know is obviously these are incredibly important to us and there are major focus for us moving forward and so we will keep doing that but we're just not going to give the the updates of where exactly we are.
Our until things are.
Until we start to move forward and as we stated before we believe that both of these studies are 2021 events and not 2020 events anyway.
Okay. So is it safe to say you do a press release once the FDA gives you a nod to move into phase two of the skin laxity trial correct, Okay, and and then just on that new hand piece that was cleared back in October with the smaller diameter and bullet shape tip.
Hey from from Marchexs actually been quite a big enhancement and has allowed.
For the operators to be a bit more aggressive, particularly neck procedures and around the job aligned.
Can you speak to what you're hearing in the field and if you think this is something that.
Good.
Actually drive utilization or are these just kind of nice features that.
That are nice to have in maybe won't necessarily drive volumes.
First thing I like how that you always do your homework that is very good but yes, we do expect it to drive utilization and you did talk.
Specifically about the neck in the face and the problem with the other device with its size and it is limited surgeons to do certain things and so you know the great thing is we had always talked about the other hand pieces being a little bit of a headwind and that they were laparoscopic surgical devices and these were designed for.
You know plastic surgeons and cosmetic surgeons with all of their input and so we actually gave them a tool that will help do that and we really think it will help.
Help us drive utilization over the long run there isn't theres no question about it so.
We did 100% agree with that statement.
All right that's great. Thanks for taking the questions. Thanks Kyle.
Thank you that does conclude our conference for today.
Thank you all for your participation.