Q1 2020 Earnings Call
Thursday
Thursday
Dead dead dead.
Thursday
Thursday Thursday
Good day and welcome to the vitamed first quarter 2020 earnings call today's conference is being recorded at this time. I would like to turn the conference over to mister Todd Xander Chief Operating Officer, please go ahead sir.
Thanks a good morning everyone. Please note that our remarks in this conference call may include forward-looking statements under the US Federal Securities laws are forward-looking information under applicable Canadian Securities legislation, which we collectively refer to as forward-looking statements such statements reflect the company's current views and intentions with respect to Future results or events and are subject to certain risks and uncertainties. I called the actual results or events to vary from those indicated in forward-looking statements examples of such risks and uncertainties are discussed in our disclosure documents filed with the SEC or the Securities regulatory authorities in certain provinces of Canada because of these risks and uncertainties investors should not Place undue Reliance on forward-looking statements. The forward-looking statements made in this conference call are made of of the day care of and the company undertakes no obligation to update or revise any forward-looking statements except as required by law. The first quarter Financial results news release including the related financial statements are available.
On the fcc's website now, I'll turn it over to Casey to get things started. Okay. Thanks. Good morning everyone and thank you for joining our call today. Once again, I am pleased to have the opportunity that report on another record-breaking quarter for 5 minute while we have plenty of updates from the first quarter to get to let me first address the question that seems to be on everyone's mind. How is biomass been part of the solution covid-19 demek.
Without somebody being the largest independent supplier ventilation in the country. You can imagine our product quickly became and high demand as Parental Guidance was showing ventilation for being the primary form of treatment plant a virus patients before the virus hit the states our management team was paying close attention to other countries struggling to treat the virus and made Swift and key decisions at Life Lock in our supply ventilators. We were able to secure orders and many manufactured cues, which led to us applying many patients within states such as Louisiana, New York, Illinois, Wisconsin and many others. We supplied over four thousand machines inclusive inclusive of invasive and non-invasive events and complex sleep apnea machine machine such as bypass.
We were we were able to also support and continue to support many of our hospitals and states with oxygen concentrators Mass p p e and many other respiratory supplies secondly and equally as important we were able to assist our Hospital partners with getting non covid-19 patients out of Harm's Way and treat it in the home. Our Hospital Partners were more relieved to lean on us to help free up those valuable hospital beds for the people in need our clinicians also sprung into quick action, and they created an investment an educational resource video library, which is currently hosted on our website at ww.w.
with many different
Brand names of equipment traveling across the country are Library allowed pulmonologist respiratory therapists in ICU nurses to have a central place for them to brush up on their clinical ventilation Skillet last week. We were able to provide RT and nurse staffing to Hospital Systems trying to deal with the large quantities of patience headed their way. I couldn't be more proud to be leading this batch clinicians to make these daily decisions to work long hours often times away from their families all the name of helping others. I'm also pleased with the way that CMS quick responding to the needs of the health care industry.
We saw many mood changes announced by CMS and all appeared to be adjustments to help seamlessly support treating more patients in the home.
Telehealth reimbursements were kicked up to being equal with a face-to-face visit professional clinicians who can conduct the Telehealth is it were expanded to nurse practitioners nutritional specialist dietitians et cetera. We also receive a 2% sequester in relief on all Medicare Home Medical Equipment from May 1st through December 31st, 2020.
CMS sent a memo to Medicare Advantage plans explaining that they must abide by all the Medicare rules for prior authorizing equipment.
Perhaps the most important announcement was the decision to not include non-invasive vents into the next competitive bidding round from 2021 to 2024. This announcement should protect our vet reimbursement for the future for many years to come.
The coronavirus being a respiratory illness that is treated with a ventilator. It was really no brighter light shine on the need for our equipment and our expertise while we always have to keep patients who struggled and others who lost their loved ones at the top of our mind. We still have a responsibility to communicate to our investors on the Tailwind that were presented to our company.
We had many other opportunities to tell our story to a much broader audience and we did so we recently have been interviewed and written up by hme lose a a home care in many Publications. We've also made it on too many TV shows. I was personally interviewed on multiple national news networks such as Fox Business News Max in a situation ask me why I went to local Syndicate if anyone is interested in viewing those videos and content and please visit w w w.
Before The Crisis began. We were having a great first quarter beginning with our Core Business. We hired a total of 17 new sales reps in q1, which is one of our best quarters month. We expanded doing business into New York and Connecticut which brought our total coverage area up to 36 States. We've been working on revising our training program and stand ready for pushing our model a new areas around the country when the stay-at-home pleases relax. Unfortunately. Our technology department was in Pilot mode with our patient engagement portal which recall pet we were able to wrap our lunch efforts tap provided our patients with a Continuum of Care to connect with our our T's it would tell a health platform.
Are texts.
Being created another Telehealth app called by Meg connect and under two weeks to help those patients who were without a pep tablet.
Adoption from patients are both passed and I meant connect have been amazing and it's definitely Fast Track our technology initiative.
The VA has also been moving faster than normal that they helped us sign two large National contracts with their remaining third party payers. The VA has also pushed through payments for our services, which has been the confirmation that we have been waiting for to expand.
During the pandemic phase. We also provided multiple Staffing contracts through our Fe bosb partner to help with the underserved VA facilities.
Why we did have to cancel our bell ringing ceremony with the NASDAQ and a few other physical Road shows. We have been very active with virtually communicating to our institutional investors for more on the capital markets and the overview the financials for the quarter. I'll turn the call back over to Chief Operating Officer. All right, thank you Casey and reviewing the financial results. All figures are in US Dollars and the full result of the made available on the website as well as see. Are we generated net revenue of 23.8 million dollars during the first quarter of 2020 as compared to net revenues of 18.1 million and a quarter of 2019 which equates to a 31% increase. This is above our initial Revenue guidance and at the midpoint of our recently revised guidance.
Including included in the current quarter is approximately 1 million dollars of equipment sales in response to the ongoing covid-19 pandemic in addition to the sales of new equipment cited above. We took it in certain areas by deploying equipment that had previously been in our active rental Fleet. Those proceeds were recognized in the gain or loss on disposal of property and equipment and the gain during the quarter related those sales office approximately 1.6 million dollars.
Our vet patient growth was once again strong as we grew approximately 3% during the sequential quarter and 25% over prior year first quarter amount the new patient referrals were slightly lower in March as a result of slower hawkwood admissions with the ongoing pandemic, but we continue to admit new patients to our program albeit on a slower Pace than we were in January and February. Additionally. We have an active life treating this from patients who had not had complained utilization in order to assist in the need for events around the country historically. We would allow over. For our teeth to get patients compliant off during this pandemic. We have been more aggressively placing units on the most in need.
Well our vet patient growth is still solid We are continuing on our other product growth our vest business continues to be strong and while it doesn't make up a huge part of our Revenue stream locksmith business with continue to ramp up nicely since our National Rollout last year.
I've heard your gross margins are slightly lower than last year partially attributable to the sales of equipment during the pandemic that have lower gross margins than our traditional rental business model adjusted wage hit an all-time high and total 7.9 million dollars for the quarter which is a 33% Margin the affirmation covid-19 were created to historical ebitda margins in the rental dead. Yes.
or actually get a for the
Quarter to ten point six million as compared to 9.5 million in the prior year.
The rate of hiring slowed at the end of the quarter would travel restrictions, but we anticipate ramping back up when you employees can come in for training. We have continued to hire a central need like conditions and growing up and we are building out our inside sales team that will work remotely.
Investments into the future growth of the company continued and we have lost our pet pilot and we pivoted during the pandemic to launch our Vineland connect that this app was able to be fast-tracked as a result of Prior technology Investments. We have begun having patients interact with their therapist via the smart phone app, which is making our lower in-person visits more effective than just visiting on the phone's charging is no other vent provider that is conducting business like this. And we once again for pride ourselves on being the most patient-centric provider in the country as in Prior quarters. We were not have a very solid balance sheet with approximately eight point four million in cash at quarter in fifteen point four million dollars of accounts receivable and an overall Works in capital balance of roughly four million.
RAR during the first quarter grew primarily as a result of the sales of equipment later in the quarter for covid-19. But those amounts were collected in April our traditional AR was up slightly as cash. We're stronger in the first quarter and our first quarter of business continues to grow.
A long-term dad is approximately 9.5 million dollars in being serviced with operating cash flow. The majority of our long-term debt is for our building and our Term Loan and having the liquidity to help during this month and Emmett has been powerful. We plan to continue to minimize the amount of Leverage on our balance sheet in order to remain opportunistic to changes in business landscape along the lines of change in the regulatory landscape as Casey previously mentioned CMS has recently announced that non-invasive ventilation ventilators have been removed from the 2021 round of competitive bidding fully support this action. And then I V is a life-saving device that we feel should be frequently and substantially serviced our understanding of the latest guidance is that Vince are out of the program for three years and I just focus on Vin suppliers and the need for expertise. We hope that they will not be included in the future.
There have been many other programs through the government to help companies during this time. Our company has received approximately 3.5 million dollars related to the cares act and we have a tested to our use of these folks will clearly be redeploying these dollars in the covid-19 costs to help with our patients are employed and the new areas are company evaluated the payroll Protection Program, exclusively. And after much as Iowa szen we decided that we were not the right type of company to request each phone's therefore we did not submit an application we feel the right decision was made as that program was intended for smaller less capitalized companies around the country moving on to the first quarter. We have provided net revenue guidance of the forty-two to forty-four million dollar range, which includes approximately twenty million dollars of sales of equipment related to the covid-19 pandemic.
Our margins will be deaf.
Call to estimate currently as a result of the changes in our Revenue composition related to our efforts in the pandemic. Our organic business model should have relatively consistent margins as in historically as I was such major changes to our model. We can't currently guide margins.
In conclusion of my prepared remarks, I would like to say how incredibly proud I am in our entire staff or stepping up during this ongoing prices from our clinicians to our inventory purchasing a maintenance teams to our technology team to our back office Squad. Everyone is teaming up to provide the best solutions to our existing patients as well as the hot spots around the country long as we have always said we put our patients needs first and the rest will take care of itself at this time. I'll turn it over at Casey Iraq thing.
Okay, thank you Todd. So we were a ghost story before the covet prices. We helped a ton of people during the crisis resulting an incremental business. And now we have our sunset on nurturing our new relationship to grow while we establish the new normal and Healthcare this pandemic proved what we've said all along. We just don't have enough hospital beds with this country wage and we must take care of more take advantage of more patients treating more patients inside of the home.
The government is easing up on the programs and regulations that do not support home-based Healthcare to prevent these future outbreaks and help the masses of elderly patients that are with the new phone number will include a more simplified approach for our position to seamlessly transition patients from the facility to the home a rapid adoption of Telehealth and remote patient-monitoring is underway all in an effort to keep patients and clinicians safe from spreading another outbreak payers will be needing more Home Medical Equipment providers, especially one equipped with clinicians administering care off. I company is already strategically in place to be the premier provider in this new healthcare environment. Our clinician salespeople Tech Team and executive staff are extremely attached to perform this new world with that being said, we must not forget about the many folks who lost their loved ones during this time. We also have a country of grieving families and many who have lost livelihood.
The result of economic slowdown by Matt will continue to do our part as a company to develop Solutions create jobs and stimulate the economy as best. We can while helping a lot of people live their best lives.
This concludes our prepared remarks will now open it up for Q&A.
Thank you. Ladies and gentlemen, if you'd like to ask a question, please single by pressing star one on your telephone keypad. If you're using a speaker phone, please make sure you meet functions turned off by your signal to reach our equipment choices again, press * 1 to ask a question will pause for just a moment. Hello, everyone an opportunity signal for questions will take the first question from the line of Brooks O'Neil with Lake Street Capital, please go ahead. Good morning guys. Congratulations on all your accomplishing. Can you hear me? Okay.
We can't bring cambri.
Great. So the question I got this morning I have to say is when we look at your cue to guide obviously, the the twenty million of products are incremental. Is there any implied or actual softness in your core business invite you to that might cause a shortfall relative to our previous expectations on the course, I'd
Yeah, I mean just like in the month of March April has been slower than our initial expectations just because Hospital systems are extremely slow. I mean, I imagine people that have chronic diseases or doing everything they can not to go to hospitals and many clinics have been shut down in the month of April. So Monday, we're starting to see some of that loosen up around the country but we've taken a more conservative stance with our guidance. And then also we've done a really really good job of not having patient attrition. Thursday is from covid-19. But as we've been pretty upfront on this is a very vulnerable Patient Group, so we're we're not seeing any higher attrition than we have in the past, but we're just taking a more measured approach for guidance just because of the current situation in the system.
Okay, that's very helpful. Technically. I'm glad to hear about progress with the VA. Can you just talk a little bit about what steps you need to take to begin to wrap patient population that that's covered in that v a national contract?
Yeah, it's in and it's know there was really to other payers Brooks that we were trying to get on with nationally beyond the BC a contract which we announced in the last call. We ended up. Yep. Thinking those skills. We ain't those deals in q1. So from from a pair standpoint, we're we're good to go. The the next piece as you probably remember we were waiting on getting paid that has been installed as well. We started collecting on payments and then you know as as the pandemic fittest month, you know, a lot of the work that we were going to be doing for the VA was on the front end getting our teeth into the home and assessing the home environment and and recommending equipment and services that they would need well wage as you can imagine that I put on a halt however, just because they saw the need for the vent. They were quickly wanting us to get a network with the other two large payers. And and so we were
Able to accomplish that we have we have orders that are being uploaded into a v a q right now. So we're seeing the shift and in folks getting ready to release that to go out into the home again, and that's exciting for us because now we know not only do they want it. We we knew they wanted it. We just didn't know that we were going to get paid for it. We found that problem as we started collecting on payments. So we're very we're geared up and ready to ramp up here in the queue to or for doing business with a V8 fantastic. But let me just ask one more appreciate the color. So I think Padme have mentioned that a little bit but how do you view the investment you made to prepare for competitive bidding? Obviously, you look into many other states beyond the ones that the 36 that you're in now and do you see that as kind of a wasted effort or do you suck?
Opportunities to leverage some of that investment in time that you made to grow The Core Business.
It's going forward.
It's absolutely not a wasted investment. We you know, we continue to leave our bids out there the real cost to being in competitive bidding was getting our licensor ready for around the country with which we would have to do overtime anyway, cuz we always had a goal of getting to the lower Forty-Eight. So we just kind of compressed that in the last year we have bonds out there that will remain with our object in in past bids and if we win and we'll execute on those and if we don't we don't so the the amount of money we spent I wouldn't say would be significant and I definitely would not say it's a wasted effort cuz we are going to continue to grow into metropolitan areas. We just don't have to split to be there on January 1st in the event that we would have won the bid and I might just add that during the crisis we did business from states that we currently were not in New York being probably one of the largest and it was just nice being licensed in that state being ready to go and easily to be a bath
Auditioning for their system. So where we can service them. So that was helpful.
Great, I guess maybe I'll just ask one more question, but can you just talk a little bit more about the equipment sales? I assume in general. Those are one-time transactions, but you could clarify just so I understand and then could you just talk a little bit more about sort of the profitability or margin on those sales and how you see that maybe now and going forward. Thanks a lot.
Yeah, I mean clearly their sales that we we want to consider on one time, but they're going to be over a period of time right and you know margins are all over the board. But and that's why you've been you know in my prepared remarks. I was up front. I don't we're not guiding a gross margin or an ebitda margin because we're not done selling, you know, we've sold everything from Vince to buy Pabst. Mm consumables to p p e we have a we have a website for both PPE orders now, so I just I don't feel comfortable throwing guidance numbers out. All I can tell you is that we're continuing to sell things that are quote unquote one-time in nature all at the same time with keeping our Core Business rolling. So anything we do in conjunction with helping these hospitals around the country is just a credit to sales.
Right. Thank you very much and congratulations guys. Keep up all the good work.
Thanks, Brian. Thank you.
We'll take the next question from the line of Nick Corcoran with a human capital, please go ahead.
Good morning, I think broadcast Volkswagen questions. But do you have any visibility on whether the new event sales and all the equipment sales you'd be doing? Well, we'll continue to talk to 3 and key for
you talking about the sales two systems net. Yeah, exactly.
It's hard for us to say, you know, I mean here's the thing.
If you would have asked as a month ago how how long we last this thing was last we would have told you a lot longer than we feel like today because things feel like they're stabilizing and I think everybody seems the same things around country. However, we all know that people are preparing that this thing May raise his head again in the fall. So it we don't have any better I guess crystal ball with you on that, but we're continuing to make investment to be ready to sell better people and I'll just saying a different state have been having different Peaks and demands at different times so long we've seen a little bit of a a second run from some of these less hit States just getting ready. You've also seen hospitals which are inundated with all sorts of different types of equipment there now trying to back into getting the right equipment that they need that for for their care plans. So we're seeing a lot of different demands coming out of the hospital. That's yep.
You on a day-by-day basis. So it's it's really just hard to guide at this point in time the phase that we're in.
Great, and then just looking at the revenue per patient per month. Can you give any insight into the maybe the sequential growth or the year-over-year growth and wage color.
Yeah, I think just in general as the vent revenue is not as large. I mean it's still making up I guess lower 80s and percentage-wise of our total revenue. But when you look at the ancillary Services, primarily the Sleep business and the best business as those take up a larger share than the incremental Revenue per patient should go up, you know, we we don't implicitly guide by product. So as long as as long as this continue to grow or stay stable and these other products continue to grow you should be a little bit of growth in that number.
Great, and then the last question for me is are you able to get your regular financing with the vents just to I'm just wondering how your your financial in the short-term?
Yes, we can we continue to use some of our cash to buy equipment and some of our short-term leasing through some of our strategic Partners in order to lease those and we have plenty of credit line under that as well.
Great, that's all for me. Thank you. Thanks, Nick.
Your next question will come from the line of Doug Cooper with insecurities, please go ahead good morning guys a couple of things. First of all the twenty million that you've got it to 4 covid sales in Q2 Thursday. We're only five weeks into the quarter is that orders in hand or you making some assumption that you're going to sell more throughout the court or in other words? Could that number grow over the quarter?
those are
in hand dog
Okay. Now moving on the casing qualitatively given your expanding relationships with States Navy hospitals and people becoming more familiar with non-invasive Vans versus intubation. What do you think this means for your business in the referrals given educating the community is one of the Prime priming the pump for future growth. I mean you're establishing relationships across the country now deeper relationships and they're getting more comfortable with the advocacy of the non-invasive vents in particular. I imagine during this process. Can you just talk about how this could translate to maybe accelerated patient growth as we move forward once this crisis has abated.
yes I'm glad you asked that done because that's the most important piece let's just say it's the one that I'm most excited about we as you know we're have always been a leader in developing these clinical studies we we have KPMG a few years back and and our precision and Harvard study here is is going to be published within the next month or so we hope wage that was all in an effort to educate folks on the benefits of non-invasive ventilation and the hospital think of prevention and so on and so forth that education wage has been fast-tracked and there's there's not many clinicians not me pulmonology groups RT Staffing are registering that before is if you will I don't understand the benefits of working with a non-invasive event right now because they just had to use it they had to use it in so many different settings and and that was the value that we really brought to the table for Thursday
Distributor who knows how to work all the different types of equipment we were being leaned on whenever they would just get trying to get their hands on any kind of ventilated they could get their hands on so they were they were overloaded with these various piece of equipment not they weren't familiar with that's why we created that video library, but that's also how we helped build the relationships as a thought leader with Hospital groups all across the country and you know, they were calling on us and leading on us for our clinical expertise and guidance and and we were able to respond and be there for them. Not only would you he's fine equipment but really through education which which was probably some of the most important needed things that they needed to help save lives at that moment in time.
So that's the kind of thing that people don't really forget. What's up Circle back around and hopefully build some more strategic Partnerships and these areas that we help serve the by net name is Jose. It's got a brand now of just being one that's very helpful and just the leader in respiratory. And so we'll continue to build off of that momentum and see how many more people we can help around the country.
Great. Thanks. Thank you for that time. Just just looking at even excluding the the Cole did respond sales a million dollars in the quarter van or excuse me, the ventilator rentals are now down 82% of sales vs. Almost 90% in q1 last year. I guess is you start selling the you know, whether the percussion vests are oxygen so forth, but where do you do? You think that continues to Trend wage? I guess lower over time and you think by the end of the year, we're below 80% I think we could definitely get their our goal is to be able to offer more products to our patients, you know, we don't want to be selling every product out there. We're very focused on these chronic patients, but we have found a few products that our referral sources really need and like and many of our patients will ultimately have multiple devices. Maybe they'll
and a vest or
To an event or they'll have a vist a bit end of that. So that's the goal. We don't have a set number we're shooting for but obviously the dead vest an O2 and sleep businesses had a much smaller base. So they have the ability to grow it very high percentages. It's just that the keep up with the VIN grows. It's sometimes pretty tough even in this environment wage, you know, things may be a little slower in the clinics. We're still growing and you know, I think all the products will grow
And my last question just on the on the business. Is that a you know, if the kids are doing remote monitoring and we'll check it in the patience. Is that a separate billing Revenue stream package that in captured under the monthly billing for the for the vent under CMS?
Right now it's all captured under the existing billing code and but we have you know, visions and aspirations and we're working on models to have other ways to monitor off our technology Investments right now everything we've been doing from a technology perspective is in the attempt to keep patients out of the hospital to save the system money down to keep patients alive longer and that's what we've made these Investments 4 and we just went in the pilot with the path and then as we mentioned pivoting to vomit connect during the pandemic was was caught by our technology team just to be able to give people the ability to communicate with a smartphone. They don't need the tablet in the home that is really a much more Dynamic package that form. So, uh, the investment was made for the you know, as we always say invest in the patient and the rest will take care of itself. So we're investing in the patient and the payers and so forth down the road dead.
We have many different ideas that we're thinking through but we just have to have the concept proven out that you know, we're working on right now.
Great. Thanks very much, All right. Thank you.
Ladies and gentleman. This will conclude that you in a session and this also concludes this call. Thank you for your participation and you may now disconnect your lines.
Thursday
Thursday Thursday
Thursday Thursday
Dead dead dead.