Q1 2020 Earnings Call
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Pardon me, ladies and gentlemen, thank you for standing by and large conference call will begin momentarily. Please continue to hold and thank you for your patience.
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Good morning.
Welcome to that is no first quarter 2020 earnings conference call. All participants will be in listen only mode should you need assistance. Please send you know a constant specialists by pressing the star case, followed by zero.
After today's presentation, there will be an opportunity to ask question to ask a question you make press Star then one on your Touchtone phone.
So your question. Please press Star then too. Please note that this event is being recorded I would now like to turn the conference. We'll work to marry could go up and I are please go ahead.
Thank you operator, and good day to everybody I would like to welcome all of you too in molds first quarter 2020 financial results Conference call.
With us on the line today are Mr. machetes Rafi chairman of the board and CEO Mr., yet your Malka CFO and Shaquille at Cagny President of in mode. North America before we begin may I remind our listeners that certain information provided on this call may contain forward looking state.
And the Safe Harbor statement outlined in todays earnings release also pertains to this call. If you have not received a copy of the release. Please view it in the Investor Relations section of the company's website.
Changes.
Business competitive technological <unk> regulatory and other factors could cause actual results to differ materially from those expressed by the forward looking statements made today. Our historical results are not necessarily indicative of future performance as such we can give no assurance.
As to accuracy of our forward looking statements and assumes no obligation to update them, except as required by law.
Well she I will begin the call with the business update and pass it over to Shaquille to discuss our North American operations, followed by yet year with an overview of the financials. We we'll then open the call for the question and answer session I'll now hand over the coal to Mr. most chemise roughly in most CEO machete. Please go ahead.
Thank you become really Antares dual fuel will join me no first quarter 2000, and plenty financial results conference call.
The me in the on the line today on the won't all booked a micro acquiring them, Michael founder and the Chief Technology Officer mold micro. He's also board member form your sort of Texas, They still shipping Academy all present North America.
Chrome L. rights, California Mystery are you broke out your financial for sure and are from New York multiple scroll cool. Okay. Maybe could also also here with me and leaves one rafi recurring on our VP finance all of us wouldn't be happy to answer any questions you have formulate our pool.
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I would like to Baltimore addressed by sharing with you I called wouldn't that be squad push nicely enrolled square footage in lives on the cold brewed coffee 19 pandemic.
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Something or anything like that called benign seem quite [laughter], but we will knock left this quite as both away all scortese if slipping into an opportunity in this call. It. Okay got you. Unlike said we communicate to you I will start in January and Paul the cool read 19, even.
No the result.
In the quarter 2020 in mono wafer revenue was $40.4 million, it's 32% increase from the first quarter 4009 team.
And at what point $6 million net income on a non-GAAP basis.
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Pure indoors corridor for any bluntly, we'd be wife, approximately 61 example, fall you whats revenue for mouse or bigger platforms also bigger problems engaging minimally invasive and deep.
My update this treatment.
Sure, 30% to far revenue the wide from our recently introduced ballparks only parent free platform and only two cents a hobby whats revenue do I spoke to additionally, though and noninvasive hours dotcom <unk>.
In Q1.
1020.
Q1, 2000, and Friday was not the fourth quarter for anymore.
No we started walking at full speed, but the coffee 19 event was beginning to back in school.
That's our headquarter I'll based in Midland and thus we have presence in China enable us to realize early enough. That's cool 19, which broke out in China, what's shown spread to either on the bulk of the world This where do they shouldn't medidata our management to make a decision.
To drastically chief marketing and says that they would be and focus on your open deal nice it's in North America in timely manner and kept show as much business as possible.
In the market generally floorboards based decision turn out to be a wise one.
So it seems the mine mouth, the tile road Cam too sensitive.
Our non-GAAP operating margin for the first quarter, 2020, or 30% as compared with 34% into first quarter of 2019 degrees can be primarily be ought to be able to who the fact that I'll emphasize could be mild winter rocket.
Hi, good called benign thing and it's always on the marketing themselves activity and the related expenses did not result of seems said at the end of the quarter.
So all the war Oh revenue being the first quarter represent two months of says and three months of expenses.
The remote management has many joseph accumulated experience.
Once we live on form the 2008 2009 crisis. He's done every classes eventually come to an end. Therefore, we decided not to look to downsize the company and look to nail and he will follow in clearly, but rondo to propel says for that very often coffee line.
Yeah.
Before we immediately implemented five key initiative.
Boy inherent so marketing instead of snap tool to enhance our relationship with the physician and wouldn't potential customers.
Expedite our I wouldn't be activity, mainly for poor Guy. That's we'll see the market book called coffee 19 and to upgrade our infrastructure of manufacturing logistics I'm being financed young and to develop marketing and satisfy all of them that wouldn't motivates conditions persist.
<unk> platform, it's possible that recovery plan for Bill clinic.
Now let me describe each one of those five initiative.
Where do we go to all marketing and says let's walk in Q1 2020, we continue to while it was experienced direct Rex, including Experian swept that's when they go bye bye for how competitive.
We also establishing new marketing subsidiary.
For marketing them status in France.
With regard to enhancing go relationship with the position we have established livestream Bill shouldn't medical training framework pull out even more University Glassful and we conducted over 50, where do we know we were surprised at the numbers will physician and salespeople who <unk>.
Dissipated and this training.
In based training. This initiative led to creation of library of streaming video, which is a great S is moving forward with regard to hours the activity, we focus, though I wouldn't be projects on developing platforms and your procedure, which we believe will become the standard of care post Corbett.
19. This focus has been mainly on two technology.
First one minimally invasive procedure.
This is our main technology, we believe that we will definitely become the standard of care for facial and body reshaping seems we believe the patient will stay away from hospitals and hospital procedural we're staying away from food anesthesia and auto shortcoming or full surgical procedure.
Uhhuh, Phil customized Clinique base static surgical procedure.
The second technology is the hands free technology, we develop and were developing hands free procedure. Once again. This procedure, we customize it wouldn't be customized private quote procedure, that's maintain social distancing into privacy of the position clean.
Defining and selecting the right product portfolio for plus Corbin 19, it's important since we believe the suspicion would it be looking for unique platform that would enable them to recover and we start the bill clinical activity.
We know that it is as we go to medical equipment crisis always accelerate innovation adoption, we believe that medical aesthetics position, where do we friend from buying another petition the laser there's probably already have full five will be slaves only bill clinic.
We ended up even more invasive procedure is an excellent feed to the new and dynamic demand cost copied nine pm.
Our current R&D pipeline, including the three new platform, some procedure, which will be released to the market stopping the third quarter of 2020. In addition, we're continuing oh, well continuing our R&D activity for new medical community to develop mainly.
Minimally invasive clinic based procedures, mainly for M P's Jana colleges and ophthalmologists.
What do we don't do upgrading all infrastructure as we stated before we finalize the stepped up often additional manufacturing facility. In addition, we expanded our therefore filled the vendors and suppliers. We have also improved though I T support for financial inventory and supply.
Slide chain management.
With regard to developing marketing and selling program for the day. After Cobiz 19, well understand that the physician will face stuff would have difficulty wandering reopens, though clinic. We also understand the Dol platforms creates a perfect fee for their recovery of the screening therefore, we develop.
Access program that includes the Threed packages financial package incentive training and direct people in direct to consumer marketing.
Although this coffee 19 pandemic has calls at temple I already spoke on all elected a static surgical procedure in mall is in college by the positive global development.
Uh huh.
There was any there was a decrease of new cases worldwide and this down downward trend is continuing on a daily basis second right here, we tend to wall, which already started.
There are electrosurgical left to sell socially outbreak usually being permitted in the United States and other company.
Based on this assumption in won't believe the starting June 2020, and two out of the third quarter Imos business will gradually began to pick up go for email hits, we remain positive with regard to eat business prospects, we believed that the demand for body and face reshaping.
The increase was covered 19 since people who wants to get back to doing all my life and leave the feeding of current dean and locked down behind.
It's such a steady wouldn't be amazed to element in in regenerating the topic more for that as I said before we decided not to downsize the company and love to lay off any follow employee on the contrary in Q1 to 2020, we hired new direct sales.
People around the world and enhance our sales and marketing lets walk outside the U.S.
In addition, although we were approached by U.S. government sponsored fund providers to apply for the Paycheck protection program, which would enable us to get funds from the government. We decided unlike other companies in our industry not to take and to leave the PPP money. So.
Small businesses like physician clinics, who needed. Most we believed that this is the social responsibility to our customer synventive.
Now to the guidance seems visibility of 2020 slow in wealth management has decided to withdraw the previously announced full year guidance and elected belonged to provide and you detail guidelines.
Guidance currently based on our assumption our revenue outlook for the full year 2020 will not be significantly lower than our revenue in 2019, and we want to maintain gross margin of 84 to 8% to 6%.
Last but not least who out this crisis, we have taken care of our employees worldwide and have followed local and regional guideline to prioritize the health and welfare or falling employee and customer.
Now I would like to take the turning to take two parent the call to Mr. Shaquille Afghani, our president in North America, who will go into more detail on our activities in the North American market Shapiro.
Thank you Ms., Jay Hello, everyone.
During the quarter, we continue to expand our salesforce with the hiring of experienced telling in North America. We believe that in doing so we will be able to capitalize once things return to normal although the industry is consistent so each of the pandemics.
We've used the starting to strengthen our relationships with our customers. We've also been any to use the time to further develop our salesforce using multiple tree platforms for training and also through establishment of Inmobi University virtual training platform for the 20 physician stuff.
We've successfully hosted numerous virtual seminars through in the University since the crisis began experienced a great amount of interest.
Beginning of the year, we continue to credential ourselves by attending several studies medical conferences. Additionally, our team has four new studies that have been accepted by major peer reviewed journals.
Not to be crisis, we expect to see a windfall pent up demand for body and facial reshaping procedures as consumers aim to return to normal life. This will include the looking feeling or best. Furthermore, we believe that a minimally invasive as well as our hands free devices to be bulky ball will be increasingly attractive to the post pinned down.
Population based on historic data, we believe that people will seek to avoid high dollar invasive hospital based surgeries and up for minimally invasive experiences at physician offices.
We also believe that our hands free devices will be appealing to surgeons and patients as well currently evolve is the only hands free device for the treatment skinny subdermal spot and muscle Tony well evoke is the first hands free device for treaty skin laxity on both the space and the sub mental area looking.
To the second half in 2020, you'll be preparing ourselves for us for the launch of two new platforms, keeping up with our previous momentum. We accept you plan. We expect these new platforms to become significant contributors going into 2021.
Now, let me hand over the call key a year to review our financial results due to.
The institution good day everyone.
Total revenue in the first quarter of 2020 grew 32% to 40.4 million Bernard discourse monkey, 85% on a GAAP basis.
This growth was driven primarily by the continued expansion in moved to direct sales organization than I did state.
Additionally, in what continues to gain traction in the international markets is international revenue growing 49% year over year.
GAAP operating expenses in the fiscal 223 any thoughts on approximately 28.3 million girls, 72.8% increase from the fiscal 2018.
There's in marketing expenses increased 63.1% into fiscal 2020 compared to the fiscal 2019.
On a non-GAAP basis operating expenses totaled $22.3 million into fiscal 2020 compared to operating expenses of $16 million in defense go too many maintain an increase of 39.6%.
GAAP operating margin was 15% in the first go to 2020 comparative study 3% into fiscal 2019.
Non-GAAP operating margin into first quarter, 2020 was 30% compared to 34% into fiscal 2018.
This decrease was primarily attributable to the increasing sales and marketing expenses due to continued expansion in which they read his organization in the United States is really isn't increasing research and development expenses.
GAAP diluted earnings per share in the first quartile 2021, 15 cents compared to 28 cents, where they need to cheer into fiscal 2019.
Non-GAAP diluted earnings per share in fiscal 2020, or 30 cents compared to 29 cents, where they feel they need to chair in the first go to 2019.
We completed the fiscal two with a strong balance sheet.
As of March 31st when it's my need the company had cash and cash equivalent not gonna be securities and the proceeds of 201.7 million going up.
Out of which 70 million, though on a net proceeds raised the IPO in August 2019.
On the cash flow from the company generated 6.1 million doing though from operating activities.
This was well to 29.
In the twin.
With that we've turned the corner back to machine.
Thank you. Thank you I will turn it now to the operator for questions.
We will begin the question and answer Sasha.
Yes. Good question you May proceed Star then one on your Touchtone phone if you use speakerphone. Please pick up your handset before passing the key.
To withdraw your question. Please press Star then to at this time, we will pause momentarily to assemble a roster.
Our first question, it's from Matt Taylor from you be yes go ahead.
Hey, good morning, and thanks for taking the question.
The first thing I wanted to ask you about was.
You made some comments on recovery, which were helpful to understand how you're thinking about it I guess in talking with your customers I'm curious to hear if you.
Got any sense for how they are preparing to reopen in so many places that are going to have the lift the lock down on elective surgeries and if you could give us any color on what you think.
They're doing to get patients back into a funnel and maybe a any insights on how long or what normally they would have in terms of surgical procedure schedule.
Okay, and I believe you should answer that.
Yes, sure Hi, Matt.
So I after answering this will actually pass it onto a doctor Theodore who will also be able to use a numerous discussions or by which positions. So based.
Well the people who've been opening up has states have been opening up we've actually seen more some pent up demand, which we were expecting but we didnt really know for sure. If that is indeed, what was going to happen. So we have actually seen that people have been doing virtual consult throughout this entire time and most of our physicians that are slowly returning back I don't want to.
And you know overly rosy picture as things open up however in areas, where they have opened up we have seen that they've actually been quite heavily book Dr. Theodore did you want to common Columbus. Please.
No I think it's absolutely true matte and thank you for your questions are always a excellent questions I.
I think it's important to delineate the fact that the elective surgeries that or are coming on board right now through the hospital system.
Our stratified according to different levels typically as to what had been prioritized quite a pandemic opening so the the plastic surgery cosmetic surgeries and things that were involved in our typically delegated or relegated to a different position. However, the majority of what we do is Oh.
This space to the majority of the cosmetic procedures out there are usually done the offices officially certainly New York.
So it's called right into what we have always seen in Bakken Oh, either onein that.
The demand is not going to go down the patients want this really bad and we're getting called emails in virtual councils steadily through this whole time, but.
Have you done in the office like 2002, or even 2009, where the practices that adopted technology, a minimally invasive procedures did very very very well so.
Falls back into our treatment gap population in the falls back into the fact that we have our technology position in such a way where these procedures how the short downtime office space will come across a very powerful so we're quite optimistic in talking to positions everywhere I get calls are constantly about a local anesthesia.
How do administered it how to get better it it because there is a awareness out there at this point there was not well was not president before the pandemic as far as general anesthesia ventilators are concerned the public now knows what ventilators means they don't want to get stuck on one which means general anesthesia is lot more scarier now than it was before the reserve.
Oh, Oh, the local anesthesia technology combination that we provide a is becoming quite.
Quite interesting and definitely at the demand for learning how to do these things and that's kind of a virtual training program as well.
I hope that answers your question that yeah that was a lot of great color. Thank you for that and I guess as a follow up to that on the same theme here you know given youre seeing some pent up demand do you maybe you can tag team. This again and just talk about it both says the physician and have an office or the company you know what do you think.
You'll you'll have to do differently over the next coming months. This thing it's kinda start to slowly real is your practices in New York, So one of the harder hit right.
Are there things you're gonna have to do differently operationally is that can be limiting.
And where we've also heard some practice the saying look we're going to do more cases per day, we're going to run more hours.
So what do you think we could see for places like New York and for other places on different into that spectrum.
Okay not great question, certainly in New York is probably to be the last two open up a regarding that's sort of the feeling I got regarding whats going on out there, but the American society of plastic surgery has given up so give me recommendations as to how the structure things spacing appointments.
Where no one's in a waiting room, so the flow is different.
Obviously, you're gonna have to extend the hours.
That's one thing virtual consultation is definitely a big deal and be able to accomplish as many things as possible prior to coming in right.
They've given recommendations as well as to the types of anesthesia and how to how to be protected and during a general anesthesia anticipations for patients.
But again that doesn't necessarily fall for us.
The social distance spacing in the clinics is not just for plastic surgery patients. It's across the board all clinics are being set up that way so.
They're just going to have to stay up long stay open longer in order to accommodate that volume and that's part of the discussions are taking place a as far as a protection.
Masks and shields and US also as it relates to testing discussed about just testing patients prior elective surgery or probably two to three days probably elective surgery you have to do co. The testing is what the recommending and as a result run after that is according to yourself prior to surgery.
Some physicians have gone to the extent to over in the West coast about putting the consent forms for surgery, adding a cobot clause.
Saying that if you do have something done you know, it's not our responsibility as to if you bought it or not so certainly.
Some ways a different world, but we have to always remember that demand to look good it's not going away you look back in the recessions or everything lipstick and cigarettes is what we always say so very strong believer that.
We'll overcome these things and it just has to operate a little differently.
Got it got <unk>.
Maybe I could speak one last one in there on that I think that's a very interesting point and investors would be curious to hear more about the context, but you had from your experience in the financial crisis.
We'll have to look good for or zoom causes the telecom Oh me, but [laughter] what it what did you see in your practice and what can you tell us anecdotally about some of your colleagues in terms of how they were able to grow during that period of time.
Absolutely. So what we saw during that time was a very very interesting we were a technology based practiced at at that time. It was cynosure smart life, which was a technology and during that time, what happened is two things or the price cost.
For the actual procedure was around the magical number was between three to 5000 for one area of Liposuction, Andrew Arbitration was doing three point area as the year.
During that time, but what was interesting was at the age dropped so the parents. So at that time, we're concerned in some of the tightening their belts, but the younger patient population went from 36.4, our population down to 26.5, so the younger population.
What is a lot more aggressive in seeking procedures plus they have a disposable income at the time that no Jewish never had before so $2500 for a laptop $600 for smartphone for them to spend 5000 for an area of at the time, which was smart life, but it was not a big stretch, especially because.
As it was under local the real way they could tweak their friends about a talk about it and it wasn't as scary. So the practices that did establish and did a adopt technology. In this respect did very well we published our experience in to a after those years in 2012. The article came out and we have done about a thousand.
Cases, it's under 18 months. So in this respect minimally invasive in this type of environment is uniquely positioned.
To do well and if you if you correlate that together with injectables or the companies are pushing injectables and botox fillers as a minimally invasive a in their respect they did as well also so the numbers have dropped with a major operations by the one of the record hospitalization 'cause it was a lot more expensive to pay for general anesthesia and the hospital.
So in line with the Democratisation a plastic surgery, let you always mentioned and we also have adopted.
I think we're perfectly positioned for these types of procedures in the office and obviously the recession and now a little different but we see those trends.
Let's continue as the majority a lot of the patients calling are also young but that's just not limited to that there's a different element here, where we have two groups of patients that one group would be the younger group, who is going to go and do this regardless and then the second group, which is different than before it gives you. So exasperated because the points you know, they're going to want to come out and do something.
Practically getting a lot of times eight meal in this respect. So this group will come out and do it. However, they will not engage in large procedures because of the fear of basically surviving a pandemic and end up getting a wound up getting something that will give them. A nice result in 48, our downtime done in the office. They can go back at home so.
Those are the patterns were predicting which are a little different but very similar along those lines.
Yes.
Well, that's X rather sounds a lot of interesting points I'll, let some others jump in here. Thanks.
Welcome Matt.
Our next question is from Kristen Stewart from Barclays.
Go ahead.
Hi, Thanks for taking my question.
I do you guys could just remind us about the payback on that cap Oh.
For most practices and just what the general timeline looks like and you can never procedures that well.
I would have to game in this environment.
Sure Hi, Chris and Mr. Shaquille here, Hi, So typically hi, so during during normal had during normalcy I should say a and not at a time a pandemic. We've typically been able to see some physicians who've paid off the equipment in two to three months and others that take 18 months it depends on the physician the price.
Yes, and what they do and obviously their staff, however, and how aggressive there and marketing. However, during this time of course is gonna be a little different now overall as an average we typically see people pay these things off anywhere between six to 12 months on average and the reason for that is mostly <unk> motion technologies that we have whether it's our hands free or minimally in both.
Jason typically are within those price ranges that dr. Theodore on just mentioned so somewhere between 2500, all the way up to seven or $8000 and the equipment cost is then are easier to pay off for the physician yeah that makes sense.
Yeah.
Perfect and then I'm just a question on that the the gross margins I was.
I'm pretty impressed with the ability of course margins remain in that 85% to 86% in that even though I what might be kind of a fall off which I went back to see I'm in the second quarter is there any anything to kind of think about.
Yes in terms of like absorption of any sort of fixed costs or overhead or is that just representative maybe some of the contracting that you have with.
Some of the contract manufacturing partners that you use.
Okay. This is mostly I will answer that 85% gross margin for us is a math, it's not nice to have.
So basically every product will they be platform. So as we hand piece. So indication that we will develop formed as white labeled a we have on on formal as we know exactly what would be the gross margin. Since we know we do some focus group one understand what out the needs what will be the price of this.
Platform, how much will cost us to manufacture it.
And therefore, we know what are what is the gross margin. Furthermore, well very lean and mean companies. So we don't have a you know a huge fixed cost Oh, we walked through outsourcing company, who manufacture flaws.
And don't fall, we have only three four people in our organization or managing the entire logistics supply chain and manufacturing some of that some of that any frankly, we don't mean house a we have a smaller facility mainly for a special laser and optical base.
A hand pieces, but most of that though electronics and our medical electronics, we do outside regarding without regarding fixed cost I'm sure you'll notice that our DNA is very low compared to competitors well lessons about $5 million a year and if you looked at fuel Taylor.
They do $24 million a year on DNA, so fixed cost are very low.
Oh, we have most of our Crossties is not fixed costs and a an 85% gross margin I basically we have a three level to ensure that one we manufacturing is right.
In a very high sophisticated facility, a and I'm sure that many affecting me Israelis a little bit a cheaper than manufacturing a in the United States second a when you generate a I'll, let energy compared to optical energy and I'll give you. An example, if you wanted to generate 20 Jordan Softlayer.
Sure.
Our energy compared with 20 Jews off our energy.
Cost about 50% to produce.
Oh, that's comparable to energy on the same level of Philadelphia energy. So this is another thing and ER and second we have a lot of experienced in designing and a and development off bipolar with <unk> Vifor, our equipment I believe that Oh, well the most.
Thanks, and have all the knowledge and IP.
So many sexual such equipment the second thing, but determined to gross margin is of course, the pricing of the system.
So I Oh platform.
Which cost in the U.S. is between 120 to $130000.
If you compare that to a laser equipment, which is about 70 $75000 and the reason why you are able to child high price is because once that technology is protected with several patton.
Second I took a fixed she has to get at the airport work, so competitor swing or if they found a way to overcome the IP and develop something different for the same application, which will take them long way and long time to come even close and the third element is of course the law.
Okay sure everybody now now what is the body tied for the faced guy would be difficult for others to come close so it enables us to child higher prices fall system, we know how to design a system.
Oh, we manifest showing a very lean and mean I would say Oh operation and we will continue some intended 85% gross margin even into first quarter. When we had the difficulties finding sources.
So several sub sub component and ER and subassemblies Phoenix, the Chinese operations shut down in general already we managed to get 85% gross margin and I can tell you that just to make sure that facility will continue to run we bought component for higher price.
But but you know even with debt, we went down by 1% into first quarter and I'm sure that that Oh. Once we go back to normal we wouldn't get these 1% to our gross margin again, so they did I answer your question.
Oh, yes, that's very helpful. Thank you so much.
Our next question if some Kyle rose from Canaccord go ahead.
Great. Thank you very much for taking the questions.
So I just had a couple of follow ups and some of the previous commentary you provided and I. Appreciate all the extra color on this earnings call given some of the uncertainty out there. So maybe just help us understand just a little more information specifically around the the packages are the focus as you put to.
Got it to help develop the sales and marketing programs for the for the positions I think you've talked about three of them that had a one has a DTC advertising component of financial component sales training, maybe just help me understand what kind of programs you had in place prior to this and then how these will act.
So structurally change.
The recovery for the physician customers and what the early feedback was up on those programs.
Okay.
Sure I count.
So essentially what we've done.
Asking about what we did historically so we would have certain things in place third party partners of ours, who would.
Oh positions generate business lead generation or open houses in order to get patients through the door educate them.
During this time, what we've had to do as we've had to pivot and do a complete 180 by going virtual like many other companies of course, so in doing that we've actually created similar platforms that we were using before which were very successful well we've had to bring them over to the eat experience, where the virtual platform. So when it comes to virtual console to patients or virtual open house.
This is these are things that we're working on with our third party partner parties in order to actually help these physicians get back up and going now in terms of packages. We are going to help some of our physicians out a as we start you know start and continue to distribute equipment. It will take some time as they open up a we definitely want to go.
When it make sure that we take care of our positions and let them know that we're here for them as we always have been but now more than ever there will be certain things that we put together from a package type of situation to help we can get up and going a lot of people are suffering with cash flow issues right now because they've been close for so long. So it's our job and we feel it started beauty in order to actually assist them with this.
Especially because there are customers. So for those who are gonna be looking at you know incorporating products like evolve or evoke for example that our hands free we're gonna have certain things as there are patients I want to get these things done there are people that are obviously waiting to get out there one sequence things were turned back conductor Theodore mentioned, the psychology and beat.
Pent up we are seeing are being held up we have seen that so we do plan on incorporating these things. The response from our position. So far is good we are in the early stages of this but we look forward to continuing to move along that line.
Is that answer your question.
It does take thank you I appreciate it and then no pursuant to talk about when you. When you look at the U.S. business in the Q1, particularly the 30% of revenues coming from the hands free that's a great start out of the gate I guess help us understand maybe what you what surprised you are with that one foot what win.
Possibly versus negatively obviously covis impacted but just trying to understand what stage of that launch we're in and how big of a runway you think that that could be from a gross 2020 and 2021 perspective.
Yeah, that's a great question golf, So we actually did an official launch out our sales meeting which happened towards the end of January. So frankly, we really only had talking really about a month or that was with the book. So evolve. We obviously launched last year a in the latter part of 29 team.
And we had some tremendous success as I mentioned earlier it is the only device, but that address a skin it addresses fat and in terms of muscle all in one device. So typically for physician has to purchase that from from a competitor or a number of different competitors there they're looking at.
Double or if not triple the price. So we've been able to put that into one platform, which we believe there's a reason that we saw someone's great success would evolve and a short period of time. So we really on evolve we just kinda scratched the tip of iceberg.
Yes, we certainly saw that there was a tremendous amount of interests. Initially and then we saw in March as practices quote you know started closing up and elective surgeries were no longer loud in many majority of the stage, we did see a drop there with evoke evoke is the only devices I mentioned earlier, that's able to do facial reshaping.
But from a hands free standpoint, so as Dr. Theodore mention physical distancing social listening thing people will be in that mindset for some period of time, we believe.
And I think there's kind of stepped it up where they can go when they purchase the treatment they ship down teach them how to stop it on or their staff will and then they have this procedure done that procedure as rates are that product as I said, we really only launched it in the latter part of in January. So we really haven't even seen what type of runway we have with that however, knowing that it's for.
One of its kind in the history that we have in the industry typically when something is Newman novel and it excites position, which we've seen very early on its it's actually a very very powerful thing.
Great and then I'll sneak in one last one here I know that tend to keep things type lift just given the competitive purposes, but you talked about a couple of launches in the second half of the year.
Any insight you want to give as far as are the anatomical focus or some of the technologies, we might see there I'm sure that I'll hop back into queue.
Sure So I'll leave it at this.
<unk> minimally invasive is one of the products and the other one is a buildup on something that we already have been taking it to a totally different level, that's not sorry for to be vague, but for the reasons that you mentioned [laughter] hopefully that gives you enough color, though it will be minimally invasive addressing a treatment that people have tried to address for years that have not had very much successful.
We will take a different approach to it using our minimally invasive expertise and specialty and for the other product it'll be let's just say it'll be a building on or on our RF microwave.
Great. Thank you.
Sure.
Our next question is from Jeff Johnson from Baird go ahead.
Thank you good morning, guys.
Motion maybe start.
Just haven't heard yet anything there much on the international markets, especially what have you been seen maybe in Brazil, India. We think is a big opportunity, but obviously they've been dealing with some cobot issues. There. So maybe how to think about India in the near to intermediate term and also a any update on plans are to enter China.
Thank you.
Okay.
Well it depends on the territory, Brazil right now is a you know just because the coffee 90 in style that in South America, and there's a bit later than in the rest of the world. All the countries himself in Latin America now almost close Argentina work need another I'm sure.
So Oh, we announced last saw last earnings call that died down the visa has Ah I pools are minimal invasive product and the minimally invasive platforms and we plan to.
To do and into adoption, then lounge with the big event.
In a in June which of course, we will delay a life now those are there was no. There was no nobody there is operating.
By the way in a in Brazil, though more plastic surgeon, a then in the United states into or waiting for that we'd be to all the training. We have the luminary dock those are the for spelt out there was another doctors will supposed to be though for the openings for two claiming but everything is delayed I like in Argentina.
In other countries in South America, I would say that South America like now it's in the same stage that Europe was being in the beginning of March all going to the second week of March It will take some old time to get a to see what would happen though.
So in both in everything is right.
Yeah, what do you station their approval of the Lisa the training going to salespeople off all the distributor for I'm, not going direct in Brazil, and knocking the and locked in and out in Argentina, the saying in Mexico and other cancers in South America, everything is ready, which sells it at the based in the fourth quarter.
Ah, but Dan a into fell score, though Brazil, it's still a standstill in a in a in ER in Asia. This situation is that it's a bit different China, we see some opening right now and the fact that that we just we seem to see a view poor weather would help us.
Hopefully oh, putting this quarter, but that the first quarter I believe in China will be a great quarter for us for the first time, we have to a pool, where we can sell to hospital, we can send to private clinics, which we can cover Oh and medical community.
It seems like now plastic surgeons, though my thought was do we have several American doctors, who will help us well well long, though like Dr. walk away a man hour went on in a in Texas and in the United States. The plastic surgeon Spiro would help us booked oil as Diane and other.
And well, putting some plan right now how to launch the in more than less the minimally invasive which is the major powerful follow says all of the world right now.
In China.
In in countries like Korea, or what doing right.
We even saw the you know the fuel system in the into fills month.
Does that that that pandemic is welcome to all there and we will continue hopefully the second wave of endemic in ER in a in a in Japan will ensure a and we would allow we've continued to stand. There are there was a there was a big money we see.
Out of the big momentum data with the lack of marketing investment we don't want to lose it in the eyes. You know we opened the subsidy elite a late 19 2019.
Right now in yeah. He's in the complete kill fuel up until the 14 of May well following the situation, though we have four cents people. We have an office, we sold nicely on Q4 and hopefully sometime in the immediate or May until the end of June we will do a couple of hundred.
It wasn't dollars, though is what the families in Australia, we opened a company last quarter and Ah we have they the complete infrastructural, including training salespeople technical office inventory control and Tetra, we tried to keep it twice now lean and mean and not to spend a lot of.
Money, but hopefully this quarter or sometime towards the second half of this quarter, we will see some revenue from bill.
In Europe.
You know it depends on which country a UK, we believe me, okay, and staying not coming out and sometimes doing may and June we will see a some mild revenue generation, though.
Yeah in Italy, we don't know yet it depend what or how fast they would go out of the kill fuel and the loss of Dallas.
But we also believed that the month of June something would open, though and we will see some some my some activity as well surprisingly the east Bluebell, Russia and other country. We got some older already in the already in the fit in a in a.
In the first quarter and also in the month April hopefully it will continue a thing although we don't know exactly the situation there because they're not publishing a weird numbers, but ah, but hopefully that that will generate that it's a big time of the revenue for the year.
Being top.
Middle East is again, depending on the country, a Israel or just started to pick up again.
We sold a fuel system in the last time, the last few weeks and also into first quarter why not.
Electric elective surgery static so too and that's why is that allows the needs when they open it and and also hopefully we will or we wouldn't see some reigniting the momentum in this country Oh outside the U.S. in Canada, we believe that.
Yeah, a in in Q2 Ah things will start up gradually.
To pick up again during the second half of the quarter how much the revenue will be visibility is very low we don't know what would happen with the second with the second wave of the pandemic hopefully not as bad as the first one but you know we're still optimistic.
Very helpful. Thank you must pay for that a broad overview, but.
Dr. Theodore I wanted to go back to a point you made about testing patients maybe a few days before procedure.
You know given where we are as a country for me testing or perspective, do you think that could be a rate limiting step number one in some of these procedures coming back do you think all doctors are going to require that for an aesthetic procedures number two can you just remind us [laughter] creation rate of in low technology in the plastic anesthetic Surgeons office.
You know my gut feel is that even if patients are somewhat slow to come back eight still have interest in your technology or in the in low technology because of the marketing advantage it might bring things like that so even if patients are slow to return there's still an opportunity to go in and sell systems to eat offices, because they're going to be looking does the.
Great their visibility or competitiveness.
In the field, so just like to take your temperature on that as well. Thanks.
That's a coupon question thinking for asking <unk> excellent question I'll start with the second part first I think it's very important to delineate that were not just the technology company that sells boxes were systems, we develop new operations that require our technology to do it. So in this respect we're very unique and.
Thanks, Tim O'shea and his support and nothing submission.
Be able to developed an idea that's on the napkins and hit the streets to be able for for the distribution to take place. It's eight to nine months on average. So that's unheard of so those advantages are very very significant because we use a lot of resurgence as almost in a crowd sourcing kind of way.
We get our feedback we know what to what what problems are out there that need to be solved in plastic surgery that haven't been solved and we go after that and that's been our model. So so in a way if you're selling a new operation as a physician.
And addressing a problem that was not addressed before immediately you have a huge advantage over anybody else who doesn't have that technology. So that's sort of our core DNA and the ability to do R&D and innovate so quickly and deliver product will put physicians that have our equipment.
In a very good position to take advantage and especially delivered in a way that we deliver it.
As far as the testing I don't think it's going to be an issue.
Remember this is not the first time any physician office has involved in testing probably the procedures.
You go back to the days of HIV, we required that for testing and then never really limited anything it just made sure that the Doctor is.
We're careful.
You know initially might have been an issue, but most the doctor is basically have adapted to that and never comes up anymore. Other than the fact that there's recommendations as far as protective gear and what to wear and double glove and things like that so I anticipate the same thing to happen here initially.
The recommendations for face masks and unclear shields and all that's in place and as we move along I think those standards will be a certain loosened up but there are no different than the universal standards, we all practices surgeons.
They shouldn't refusing to have surgery, because they need to have kogut test I see I see that highly unlikely I.
I think at least you know remember I'm in New York, So it's a little different stuff from the physicians I've talked to across the country. A they don't see this is a rate limiting factor because it's been so much education about that from the government that most most most patients Oh, we're okay with it I have I have yet to speech a physician, saying my patients.
Using the have just done or is not aware of it so or does not want to do it. So does that answer your questions.
Yeah. Thanks very helpful last one just shack or most shade. We have a are you western Canadian sales force updated talent I think you were at 110 coming into 2020, just where that's gone with some of the new hires. Thanks.
Yes, sure. So we're actually now at approximately 130, fives, and that's Canada, and ER and the U.S.
Thank you.
This concludes our question and answer.
Well I will now turn the conference back over to most mid to high.
Go ahead.
Hi, everybody again, thanks for joining us today and thank you for your question.
You know you know how to reach us if if you want to continue discussion all question to us.
We will I would please email to us anything that a that you need any clarification or inflammation.
Mike satisfy shaquille yeah here.
Dr., Michael Klein data and off those people tell doors would be happy to answer a I hope that everything is okay with you on your family I wish you well and safe.
Thank you thank for joining again, thank you all bye bye.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
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