Q1 2020 Earnings Call
Greetings and welcome to the Ekso Bionics first quarter 2020 financial results Conference call. At this time all participants are in listen only mode. A question answer session will follow the formal presentation.
He wants to acquire a bigger assistant store the conference. Please press star zero under telephone keypad. As a reminder, this conference is being recorded its my pleasure I guess to show host David Kerry. Please go ahead Sir.
Thank you operator, and thank you all for participating in today's call.
Joining me from Ekso Bionics, our Jacques Chirac, President and Chief Executive Officer, Jack Glenn Chief Financial Officer, and Bill Shah Chief Commercial Officer.
Earlier today extra bionics released financial results for the quarter ended March 31st Twentytwenty.
A copy of the press releases are available on the company's website.
Before he began I would like to remind you that management will make statements. During this call that include forward looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Any statements contained in this call that are not statements of historical facts shouldn't be deemed to be forward looking statements.
All forward looking statements, including or future financial or operational expectations or expectations that regulatory landscape governing our products and operations are based upon managements current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to me.
Really differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements.
<unk> list and description of the risks and uncertainties associated with our businesses. Please see our filings with the Securities and Exchange Commission.
Exit disclaims any intention or obligation, except as required by law to update or revise any financial or operational projections, a regulatory outlook or other forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information is accurate only as of the broadcast today April Thirtyth Twentytwenty.
We'll now turn the call for the Jacques Chirac.
Thanks, David and thanks, everyone for joining todays call I'd like to start todays call by describing coated nike's impact on our operations the markets.
And then pass the call the Bell who'll provide a more detailed suddenly by medical device segment promotional strategy during Oh, Good night gene.
I will provide an update on our industrial segment in China joint venture before turning the call to Jack when an overview of our first quarter financial results.
Obviously, the health and safety of all that's all employees customers and their patients are always our top priority.
As the magnitude of this pandemic began to unfold, we took proactive steps to move all non essential EXL employees to work from home.
At the same time, we implemented a series of volumes to adapt new operating environment.
That's included stay connected with customers virtually and reducing costs.
Since mid March the epidemic has had an impact on our customers and subsequently our business. Many customers opted to delay orders, which are typically booked in the last few weeks of corridor.
As a result, we generated $1.5 million in first quarter revenue, which is well below our forecast and results in prior quarters.
It is important to emphasize the based on feedback from customers. Most orders are delayed and not canceled pending ever turned to a more normal environment. We maintained its strong pipeline, they're working on more creative selling solutions.
And tell them with near term challenges in front of US we took immediate action to address your business operations to the current environment.
We have implemented the virtual selling strategy, which enabled us to continue engaging with our current and prospective customers without the need for in person interaction.
This allows our sales and marketing team to initiate it continue discussions around the benefits of Braxton Skelton solutions in both the medical and industrial settings. We also adapted our support training and service models to ensure all customers can continue their actual programs without interruption and without Ekso bionics personnel.
Being present at their facilities.
In addition to these operational adjustments, we made significant expense cuts, including the difficult decision to furlough portion of our extremely dedicated talented valued employees.
These fields were made to whether that's quite to preserve our cash and enable us to resume normal business operations as soon as were able.
At this time I will turn the call over to Bill who will provide an update out or medical device segment and global commercialization strategy.
Thank you Jack.
This is a challenging time for everyone in the post acute care market that we serve including the patient physician clinicians.
As Jeff mentioned, many of our sales opportunities have been delayed as priorities have shifted.
This is an important distinction can cancel orders as we were generating strong sales momentum during the first two months I'm 2020.
At this point, we've already seen three opportunities that were expected to close a March now closed in April.
Although we are dealing with an unprecedented situation interest remains high for innovative extra devices, including several exciting pilots that closed in March.
Our ability to quickly adapt and implement virtual selling strategy have yielded solid results under these unique circumstances.
I'd like to share two examples of how we're continuing to make progress with our network strategy.
We signed a multi site pilot program with Vibra healthcare a leader in the field of medical rehabilitation Longtan acute care centers across 19 states.
We expect to launch this pilot Q2 early Q3.
As we've shared in the past our pilot rental program has allowed us to bypass a longer selling process to help us an experienced the benefits of that's a program sooner.
We also signed ignite medical resort <unk>, all the way based operator post acute care facilities at minus the high end skilled nursing facility network operating nationwide.
In addition to our virtual selling strategy, we are proactively engaging with customers by hosting online training.
These include Webinars Videoconferences, an educational events, the keep us connected and help educate our customers about the value in advance features of our Ekso devices.
Therefore, we started to fix we clinical educational Webinars series the perspective any current customers that has been well attended today.
We also launched a specific educational series for network operators pillar is more around their individual programs.
Are these virtual then we can sustain customer enthusiasm for our products in the near term.
We're also providing flexible acquisition option to make it easier for customers and school access our technology.
84%.
<unk> upside from rentals under contract assuming that all current U.S. rental units convert to sales as well as differed rental revenue exceed $2.5 million.
Internationally, we were able to close several new pilots with our new upper extremity device.
We have a set in Germany that it's working the pilot the device to a teller rehab program currently being developed we'll share more or less telling we have pilot in the coming quarters.
Last quarter, we highlighted a patient story that underscores the true value of an exercise program.
For today's call I'd like to highlight if success story with one of our <unk> Meghan Burns.
Meghan had a spinal script.
After having an operation to reset her spinal cord. She used a wheelchair then a wheeled Walker and then a straight cane and ankle braces.
Well the doctors were thrilled with their progress she was still not able to function at the level. She was happy with.
She discovered an opportunity to be part of a research project using x. So I put her first used with an extra device. She immediately found her balance with the help of the pregame functions in a posh or have improved after several more sessions in x., though making it was not only taking more steps for the higher quality steps.
She became very comfortable incompetent in the device, which led to her beginning to walk in the community without or came soon after that manuals golfing again and had her social life back.
She continues to carry the lessons from are actually training and now has been a walkie unassisted for nearly two years, we think imagine for her story in washer continued success.
Looking ahead the number one focus of our commercial strategy is to maintain consistent touch points with current prospective customers, particularly as different regions of the country. The global economy begin to open up once again.
We remain in touch with network operators key decision makers and are prepared to scale production as orders ramp up.
Long-term strategy remains unchanged further expand our shared the inpatient rehab market in our footprint with ideas and network operators to fulfill our mission of improving lives by accelerating a person's recovery inability to achieve movement.
At this time I'd like to turn the call back to our CEO Jack pure.
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Before I turn the call the Jacqueline I would like to provide update on our industrial segment and Chinajoy adventure.
Started with industrial similar toward medical device segment ordered a levels late in the first quarter were severely impacted by covert 19.
Near term adoption of purchasing decisions are likely to be delayed its customers continued to navigate through the pandemic.
As we said it over a fourth quarter recall, we are continually evolving or go to market strategy by diversifying our activities in the more vertical segments and new business development opportunities. Additionally, we evaluate customer friendly product acquisition miles to make it easier for our customers to optimum leans towards devices.
Based on their immediate needs.
Very optimistic what because from interest we're seeing the progress we're making.
Turning to our travel joint venture as discussed previously we along with R.J.B. partners voluntarily familiar with Joy notification to the U.S. Committee of Orange investments are <unk>.
Q for to review the joint venture.
We continue to engage recipients to address or concerns. However, due in large part to the measures imposed to deal with corporate 19 Kids move assessment of the Chinese J.B. is very extended for an additional 45 days.
<unk> no later than May 28.
I was reminded while the delay will not end product our revenue clans that may delay the production of some cost reduction activities.
Now I will turn the call over the Jacqueline review, our first quarter financial results.
Thank you Jack.
After generating record quarterly sales in the fourth quarter of 2019, our revenues for the first quarter of 2020 were significantly impacted by Kobe 19 is customer shifted their priorities to prepare for and manage their business during the pandemic.
X., so generated 2021st quarter revenues of $1.5 million compared to $3.6 million for the same period in 2019.
Jack mentioned, we have heard for many of our customers that they're originally planned opportunities, which are typically booked in the last few weeks, if a quarter or delayed and not canceled.
Are gross profit for the quarter was point $6 million, representing a gross margin of approximately 43% compared to a gross profit of $1.6 million and a gross margin of 44% for the same to read a year ago.
Decreasing gross profit is primarily attributed to lower volume of medical device sales.
Jacket mentioned, we have taken measures to reduce expenses in order to whether this global health crisis.
Operating expenses for the first quarter of 2020 were $5.4 million compared to $6.5 million for the first quarter of 2019.
Reduction of approximately $1.1 million for about 17%.
But the three months ended March 31st 2020, we recorder to gain on weren't liabilities or $2.5 million due to the revaluation aboard issued in 2015 and 2019 compared to 1.1 million dollar loss associated with the revaluation aboard issued in 2015 for the same period.
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Net loss for the corner with $2.5 million for about 44 cents per share compared to unlock at $6.6 million for $1.51 per share in the first quarter of 2019.
We continue to reduce our utilization of cash to adapt to current market conditions.
Houston operating activities for the first quarter of 2020 was $1.7 million compared to $5.3 million for the same here even 2019.
As of March 31st 2020, we had to cash balance of $8.5 million.
On March 24th we announced a one for 15 reverse stock split primarily intended to raise the pressure train price of the company's common stock.
As a result of this action extra regained compliance with the minimum price threshold requires by the lifting rules of the now that capital market on April 7th.
We see our 10 Q. filed earlier today for further details regarding the quarter.
Operator, you May now open the line for question.
Thank you know the conduct from your question and answer session to pretend to be placing the question to please press star one of the telephone keypad, a confirmation tone will indicate who lives in the question Q.
<unk> two if you'd like to move your question from the queue for participants using speaker equipment may be necessary to pick up her headset before pressing star one one woman. Please really pull for questions are first question to me is coming from shore leave for me see Wainwright. Your line is number one.
[noise] good afternoon, Jack to Bill and Jack just like to get a better idea on the scope of the impact them decoded. So <unk> because different areas have different locked down rules in some areas that began to reopen could you could provide an idea on maybe what percent.
<unk> customers have remained open or have reopened and what what percentage, maybe our steam closed and it's a full on on that.
Stuck to be open would you how quickly can you turn to switch back koblin resume normal selling activities with it will we see any impact on human trees supply and distribution. Thanks.
Hey show and this is Jack Ti.
Thanks for the question you know.
Reduces and turn it over to Bill you know the the customers are custom typically.
[noise] impatient rehab centers, where we use.
Any of those clothes, but we have seen them limit or or restrict the operations that they they undertake so.
We have seen some facilities closes when you get to outpatient rehabilitation, where you know they're serving people here at home and they may be needed sheltering. Please conditions, so that the patients coming in from an efficient perspective, they they're all open that.
Just have limited limited operations and somewhat rigid restricted or worn down patient well, a blue talk a little bit about that in terms of.
You know our ability to recover on the you know we've continued to maintain a connection with all the customers that we then all the potential customers that we've been working with and certainly all of our existing customers.
And so we don't really is as soon as as soon as the the customers are ready to go I think we are we are ready to go there's there's really not going to be a delay there I'll turn it over to build now to add some more color.
Yeah, I I, just say overall, you know that patient volumes are are definitely down across inpatient rehabilitation. However, I think the general feeling is that there will be a significant uptick as things begin to normalize over time. There's some sites that are actually at are over capacity, but those are fewer.
So we are hearing that that certain regions have started to experience of slow recovery with an uptick in volumes, especially as elective procedures open backup. So you know we're cautiously optimistic but the real recovery is still moving target.
Oh, great to hear that and thank you for additional color.
Oh, sorry, they turned the prepared remarks, you mentioned and you deal with Germany on a remote health thing I was wondering if you could provide some more details on that.
Yeah, it's a little early to give give too much on that so I did comment will provide more of the bugs to calm, but essentially we have a customer that definitely sees utility of our our new upper extremity device being useful for <unk>. So you have a lot of centres right now they're looking at different ways that they can continue to.
To take care of patients, obviously, given that the environment and so he's looking to run a pilot with our device screw tell a health. So I think we'll be able to give a little bit more detail on that is that gets up and running but to us that that presents you know an opportunity I think we we feel like we're well positioned with our technology.
Post cold dead, just with the one to one relationship that we offer.
Oh. Thank you that's all I have.
Secretive question to me is coming from Newton Weinstein from interest capital Your line, there's no alive.
Hi, guys. So thanks for taking my question and and good job on preserving cash in the difficult environment. So I guess.
Talk about this but I just wanted to confirm is it the case that patients who have a spinal cord injury or stroke. At this time and are in dire need up the rehabilitation care can get it from your exoskeleton currently if they need it.
Oh <unk> yeah, that's that's still a case there's so.
Patients who have strokes to end up in in H. rebuild teachers, who leaves using our product I think when there's a discretionary oh I'm into that either through an elective procedure or if they're condition essentially they might be able to go straight home versus into it patient, which which we'd be a subset. They they me not have access.
Immediately and and those would be things seems to come back in the future, but certainly for the more critical conditions right now they still have access to where c.
<unk> utilization of our products in those centers.
Is that utilization rate that you're able to see I mean does that come through from the x.. So and are connected device or is it basically from Poland costs your customers.
Both actually.
Okay. Thanks alone. That's another question about your company and operating and in a ritualized environment made some nice comments on how you've adapted just in terms of fulfillment I could send a unit to a customer now to most of them have the capability of sort of unbox that and put it to use through remote assistance.
Yeah, I'll I'll tell Jack so okay, though.
Yeah, I just say so as it relates to training you know that's probably one of the the favorable consequences of this whole situation of that it's forcing us to innovate in real time, how we deployed our training. So you know it's a great question. Because obviously you know that that's really important so right now are training team has done a very nice job.
Quickly adapting to a new training pathway that can be delivered between a balance of online in on site. So I think the reality as we do have a backlog of trainings and so.
Something that we're monitoring when we can get on site again, but we are pivoting right now to doing more online and we have customers that are open to piloting not with us. So of course, we're going to handle it you know side by side in terms of the timing and when we can get back on on site lives.
But it is an opportunity for us to to drive a more efficient pathway.
Okay. Thanks, a lot that's really helpful.
Sure.
Thank you we region of our question answer session.
On the floor back over to jump trunk 20 further closing comments.
I think you all for joining us today I want to reiterate that Exobox is taking the necessary actions to enter the health and safety of our employees for maintaining business continuity too aggressive costs reducing actions.
In virtual selling strategies.
Although market uncertainties related to that endemic make it difficult for us to project full impact on our business and customers. We are prepared to restore full service activities when market conditions begin to normalize we continue to see interest in our product to remain optimistic about our prospects to create value for patients customers and investors in the long term.
Thank you for joining us today.
Thank you it doesn't <unk> Teleconferencing me disconnect Carolina, this time and have a wonderful day.
Participation today.