Q1 2020 Earnings Call
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Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to stand by thank you for your patience.
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Let me first quarter 2020 earnings conference call.
Hi statements during the conference call and Shannon and after a period although.
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Litigation Act of 1995.
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Thanks, Pete and other factors, which may cause actual results.
[music] performance or achievements of the company into future to be.
Yeah, we differ from the statement that the company executives may make today.
These risks are described in detail in our public funding the Securities and Exchange Commission, including our latest periodic reports on form 10-K or tempt you.
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During this call will present.
Yeah, and non-GAAP financial measures.
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GAAP to non-GAAP measures is included in todays earnings press release.
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The biotelemetry website and go bio dot com.
At this time, all participants have been placed on the listen only mode.
It would be open for question and comments following the presentation.
Now my pleasure to trend to flow into your host Mr., Jeff Joseph capital, President and CEO that telemetry, Sir you may begin.
Thank you operator, and good afternoon, everyone I've joked copper president and CEO biotelemetry.
With me for today's call each other gets our chief financial Officer.
Well the world certainly has changed quite a bit since our last call just a few months ago.
First let me say that I hope and pray that younger families are staying safe and healthy.
I, usually wait until the close of these calls to say the biotelemetry family for the outstanding support they provide where many patients doctors pharmaceutical <unk> and commercial partners with the pad one our services.
Since there is nothing else I will say on this call, but is that we'll be nearly as important I need to say it now.
Gene Biotelemetry you are amazing.
You did in times of great the rest, but the real character of an individual comes out I.
Because of the way you react as to the challenges of cold at 19, I can say without a doubt that our company is filled with people have extra ordinary character.
That is tangible quality certainly helps explain how we have become the best in the business. It is truly impressive how quickly you adapt to the challenge is up a day.
Thank you from the bottom of my heart.
Why are you taking important work you do does not go on notice I have never been prouder to lead our exceptional company.
And then that's what could be responsive to whats top of my 40 investment community. We will start with comments about our first quarter performance because it's important that you understand just help create the company was performing prior to the outbreak. We will then share details that hopefully help answer the question investors and analysts.
Our trying to figure out these days, what does the near and longer term outlook for the company based on what we know today.
To that end, we'll update you on our business initiatives. The current state of the company, including steps, we've taken to fortify our business during the downturn.
And our expectations as we move forward.
I will then provide details on our Q1 financial results and that's all I was always well open up the call for questions. After our prepared remarks.
All in all the business performed exceptionally well during the quarter.
The revenue guidance, we gave for Q1 was 100 and Thirteentwo hundred $60 million.
Through the first two weeks of March our internal forecast, how that's tracking just finished between 117 and $180 million revenue.
30% over prior year quarter, and well the high end of our guidance.
All parts of the business, we're performing above expectations. However, the economic slowdown swiftly took hold just prior to mid March as numerous states began shutting down businesses and instituting stay at home orders.
Serious health care institution is starting to restrict outpatient services and in office visits comedy as doctors quickly attempted to convert the telehealth models, which was not very smooth transition.
In our market for urology outpatient work was also dramatically reduce acuvue office visit data show cardiology business down as much of 60% in parts of the country.
Our monitoring business experienced a sharp declines as well over the last two and a half weeks of March.
Despite the drop off we still believe business, 9% annually posting record quarterly revenue of $113 million.
This was within the range of archives and represented 34 consecutive quarterly revenue growth.
We estimate that the slow down cost us between four and $5 million revenue in the quarter, which would've put us well above expectations.
During the quarter, we also recorded $29.5 million in adjusted EBITDA built more cash on the balance sheet.
Okay.
Prior to the slowed down our health care services Division was off to an excellent start to 2020 with M. talked growth trending towards double digits and extend that were holter at close to triple digit growth.
This is the still division. However that was has been most impacted by the crisis as remote cardiac monitoring volume aligns closely with physician office visits.
Conversely, the Geneva business research and the other segments have performed much better than expected a trend that continues into Q2.
New account activation put the Geneva service, a business, which extended our remote monitoring capabilities into the plant in cardiac device management space continues to perform better than originally anticipated driving a 45% sequential revenue growth rate.
As mentioned on our last call the entire health care services sales team has been trained on the Geneva solution and is now carrying quota for the sale of the surface.
In addition to all of our account executives and regional sales directors now have a responsibility, but you need to sales we had been in a process of adding 12 sales professionals across the country completely focused on selling the solution most of which are now in place.
Our research business posted unexpected growth of 7% in the quarter and again experienced a pick up in bookings momentum a positive leading indicator for this important segment.
The Corona virus.
They also create additional demand for both cardiac safety and long imaging services with many former sponsors planning randomized clinical trials with treatments and vaccines.
In our emerging population health business, you made good progress when our growth initiatives, while still relatively small and scale of pop health program is perfectly suited for the current environment.
We expect these areas of the business to be minimally impacted by the economic slowdown.
This is a really important point as it relates to the execution of our strategy.
One of each of these calls I remind you of the main elements of our strategic plan, which is centered on innovation and diversification.
Specifically, our focus has been all continuing to build our leadership position in a remote cardiac monitoring market two vertical and horizontal expansion, adding technology and additional service capabilities to our research business.
Creating new opportunities for growth in a fast evolving field digital population health.
Now more than ever it is evident that the actions we have been taking have made biotelemetry a stronger organization.
As we entered 2020, we expected our revenue to approach a half a billion dollars, 20% of that coming from Geneva, We search and pop health areas of the company. We have built as a direct result of executing our strategic plan.
The speaks volumes about the importance of having a well thought out a multifaceted growth strategy.
Moving on let's now turn to the current state of the business I am pleased to report biotelemetry is extremely well positioned to whether this challenge for a host of reasons.
First we want a positive cash flow business second we have an excellent balance sheet with plenty of cash in the bank and additional borrowing capacity if needed.
We're not highly levered with net debt of $120 million slightly less than one times, our 2019 EBITDA.
Third we support the critical function in the health care process.
And the use of our products can only be delayed for so long.
Fourth we are well suited and have you experienced operate our business remotely.
Yeah I stated on our last call. We were we are not overly concerned about supply chain continuity and last for business development efforts continue to uncover interesting opportunities accelerate our growth plans.
As mentioned are monitoring business began to decline starting in mid March consistent with the drop in physician visits.
We immediately took steps to curtail expenses and adjust to the lower business level without dismantling our team and infrastructure in order to provide seamless service excellence and ensure that we are poised for growth as we emerge from this crisis.
We were able to do this thanks to our strong financial position and sound business practices.
We'll also note.
But none of these changes to our cost structure will affect our business development resources, which will play a key role in our ongoing growth.
Throughout the month of April cardiac monitoring business less Geneva was down from Q1 by approximately 35% some uptick in the second half of them all as Dr. shifted to tele health models, requiring us to conduct remote patient activation outside of the Doctor's office.
Fortunately this was an easy conversion.
We have quite a bit of experience with that home patient starts in fact, it was a time when all of our patient Activations were done at home without having made the device directly to patients.
Over time to market shifted to win in office patient activation, which offer some benefits.
However, nearly 30% of our business.
Well still conducted using the original mail to patient model.
As he infrastructure and know how already established it was a smooth transition and ramp up.
We're also proud to be supporting and expanded service using m. caught to monitor Kobin 19 patients in several major institutions.
The use of hybrid pork and is this are myosin can cause an abnormality in the heart electrical system known as Qt prolongation.
This serious condition can unfortunately lead the sudden cardiac arrests or death.
As part of its ft, a five 10-K clearance and caught has a specific indication for use with patients requiring measurement analysis and reporting of Qt interval.
And talking to you sell positions monitor and adjust the dosing of covert 19 medications as well correct any other WIDIA is that may occur during treatment augmenting limited inpatient telemetry capacity.
Additionally, our research Division has a long history and deep knowledge in this area, having conducted thousands of Q2 studies on drugs as they move to various phases of development.
As such our company is particularly well suited to provide this assistance.
So what does the likely path forward in the coming quarters.
Like other companies, we have been tracking extra information as well as our internal sales trends help gate ultimate impact will be economic shutdown.
As mentioned, we expect our non cardiac monitoring businesses Geneva research and pop health to be relatively stable throughout the second quarter.
The research segment May start to feel some negative impact if new studies get delayed, but we have not seen any signs of this yet.
Our current business trends continue April will be our worst month with improvement in May June and beyond.
Just a much as hard to say, which makes providing guidance for the second quarter and full year impossible until we know more.
Much of I recovery will be dictated by the economy at large.
We did however model a scenario for Q2 were May and June performance looks just like April which would cause our total revenue to drop by as much as 30% versus Q1.
We markedly we would remain EBITDA positive for the second quarter, even in this highly unlikely scenario.
An amazing Testament to the strength and flexibility of the company.
Because we already started to see some uptick in the business in the latter part of April and would expect us to continue as the economy reopens, we will manage through the second quarter in a relatively good shape and shouldn't record results better than the worst case scenario I just mentioned.
We would then expect accelerated growth in the third.
And fourth quarters, consistent with national economic forecasts, but slightly ahead of the curve given the nature and urgency of health care.
We also have reason to be extremely optimistic about the long term prospects for the company.
This crisis has necessitated rapid change in health care much of which will be permanent.
For instance, the adoption of Tele health solutions, which has been unnecessarily slow given the obvious benefits is experiencing a tremendous surge regulatory and reimbursement organizations. The traditional obstacles to change in health care have adapted like never before.
If there is a silver lining in any of this it may well be that regulators and payers will find it impossible to slide back into outdated positions and updated policies.
The post Corona healthcare environment will demand greater access and payment for tele health and remote monitoring applications.
We are fortunate to be so far out in front of this next wave and health care evolution.
And that's one of the largest fastest growing and most profitable connected health companies in the market, we're perfectly positioned to capitalize on this opportunity.
I'll turn the call over to Heather for detailed financial review of the quarter header.
Thank you Joe and good afternoon, everyone.
Kept announced we started 2020 with our 31st consecutive quarter of year over year revenue growth and our highest quarterly revenue in the company's history.
Total revenue grew 9%, reaching $113 million and within our guidance range, even with a significant drop in March volumes due to covert 19.
Basically if we hold it from revenue increases in all of our business line healthcare revenue increased 7.7 million or 9% to $95.7 million driven by patient volume growth.
Over 75% and extend it hopes or service lines as well as the addition of do you need this revenue from the monitoring of implantable cardiac devices.
Our research revenue increased 7% to $13.8 million benefiting from new studies utilizing our patch extended wear hold for device and the acceleration of certain imaging study lastly, our other revenue increased 17% to $3.5 million, resulting from partnership in our digital pen.
The way for health business.
Moving to gross profit.
Our margins for the first quarter was 62.4% versus 62.3% in the prior year period.
While we saw a higher margin in our research segment, Peter we should see created by automation put in place later in 2019 that benefit was offset by decreases in our health care segment, largely due to inefficiencies caused by the drop off in volume later in March.
Our first quarter adjusted EBITDA was $29.5 million, an increase of 600000 hours, representing a 26.1% return on revenue.
Increasing our adjusted EBITDA dollars was primarily due to the increased revenue, partially offset by the impact of investments, we're making your technology and our sales organization.
Our EBITDA margin percentage decreased slightly compared to the prior year period due to the increased investments as well as the impact of the acquisition in Geneva, which is at an early stage great stage and indeed as a result currently carries a lower EBITDA margin compared to our core business.
As for our tax rate.
The first quarter, we had a GAAP tax rate of 42%. It's higher rate is primarily a result, a permanent difference is largely due to stock comp that is not deductible on expense.
Ultimately, we will get a GAAP benefit when it related stock options are exercised.
While our GAAP tax rate for the full year will most likely be similar to Q1, we are expecting to only pay about $2 million in state and local cash taxes in 2020 due to the use of our federal net operating loss carry forwards.
Moving onto our balance sheet, we ended the quarter with $106.8 million in cash and $227 million have indebtedness, putting our debt to EBITDA ratio at 1.4 times year to date, we generated 12.7 million in cash from operation and you $7 million for capital expenditures beat expire.
I'm not sure if were driven by purchases of our MTT and extended wear holder packs devices as well as for capitalized software and hardware as we invest in our IP infrastructure.
Free cash flow was $5.7 million.
No well, we believe our operating cash receipts will continue to be sufficient to cover our operating needs.
For added flexibility and enhance liquidity early in the code. The crisis, we did drop $35 million on our line of credit, leaving an additional $168 million an undrawn capacity.
We have also receive finest from various cozy related government stimulus programs in Q2.
If you recall in January 2020, we refinanced our term debt to an upside five year $400 million revolver with more favorable terms, including lower pricing of about 50 basis points.
The company will benefit from any additional capacity no set amortization payments and the flexibility to pay down and draw on that facility, while maintaining access to capital.
Shifting gears I will now petrone outlook for 2020.
On a year on call we provided guidance for the full year and first quarter 2020 as stated we delivered results in the range of this guidance for both revenue and EBITDA in the first quarter, even with the impact of Colgate in March.
Looking forward to the second quarter and the remainder of 2020, we're withdrawing our full year guidance and will be unable to provide specific guidance for Q2 due to the uncertainty surrounding the extent and impact of the pandemic.
Our results will be dictated by the length of time next day to localities remain in locked down and how quickly they reopen their economies.
That being said is Joe stated our business its flexible in terms of our ability to adjust the cost structure to the appropriate level in response to the demand for services.
As such were off our topline maybe down sequentially. In Q2, we believed that we will still be EBITDA positive. In addition, we believe we have sufficient operating cash flow to meet or operating along with the added insurance of our credit line and government stimulus payments and advances we will be able to weather the storm.
And come out in a healthy position I will now turn the call back to jail.
Thanks Heather.
As you've just heard we had an excellent quarter, especially in light of the challenges posed by the growing virus outbreak.
We started 2020 strong out of the gate, who used to shutter expectations. When the crisis hit you made adjustments necessary to scale back or operating cost structure without dramatically changing our capabilities.
As mentioned earlier these modifications coupled with an excellent financial position allow us to remain EBITDA positive, even if the reopening slower than expected.
Under a former likely scenario April will be our most challenging month with growth in May and June and then into the second half of the year.
Naturally our focus is the guide the company through just prices as effectively as possible.
However, because we did not need to make major alterations to our business structure, we're well positioned for a manageable downturn and ready to meet a spike in demand in the event of a rapid recovery.
We're also in position to leverage our excellent financial condition in order to advance business development opportunities opportunities geared towards accelerating our strategic plan.
Before I close I would again like to sincerely. Thank those of you who helped deliver our 30 onest consecutive growth quarter.
And on behalf.
I'll be entire biotelemetry team, we want to extend our deepest gratitude to the many health care providers around the country one of the frontline battling the Corona virus each day as well all the other critical workers putting themselves at risk reformer, Josh. Thank you all.
That went up halls and open the call to your questions operator, we're ready for our first question.
Thank you to ask a question you need to press star one on your telephone to withdraw your question Chris apparel key please stand by where we compile that you in a roster.
Our first question will cost line of Brooks Oneil from Lake Street Capital markets you may begin.
Thank you good afternoon, congratulations on your rapid tidbits here that sounds great guys.
Thanks, Brooks books are comedy really broken up I'm not sure. If it's the line were on where.
Your phone.
It's probably just me Joe you know thats not getting a little over.
I think we can you hear me better now.
A little better yeah.
All right so.
Youre right its interesting did very well for.
Food hesitant to give us.
So what gross margin if I look like.
Under this scenario you kind of laid out.
So I think what I heard you say Brooks with you are asking for our gross margin in this scenario that Joe worst case scenario with gross margin I don't know the correct. Yeah. Yeah. So so what I will tell you is that.
We we would expect to do you know we had a certain amount of fixed.
Expenses, while we did adjust our operating structure.
In Q2.
You are going to see a decline in our gross margin I can't give you an exact perspective of that because I don't know what the volumes going today.
Hi, just.
Okay. That's that's.
Helpful. So one question I had is Joe again talked a little bit about population health is uhhuh I hope remember I'm very excited about the opportunity there how scalable do you believe you're population health platform is today.
Well, what did you see that really take off and the current environment.
It is its a relatively small business for us today, Brooks and I think I.
Spoke a little bit about this on the path in past calls.
We're excited about it because of the size in the market and because of some of the inherent capabilities. We have in the business, which we believe our leverageable into that market.
We do Hello.
Admit that it would take a pretty significant investment.
To sort of ramp it up and catch up with maybe some other folks that you're familiar with and.
And we don't feel like we are in a position to do that.
We're talking about a really significant investment which would require us to lower operating margin is quite a bit. So our approach has been.
Look to leverage other relationships, we have as an organization to kind of flank and find other ways into the market without such a huge investments.
So you know not the not the way you'd love to do it but it certainly going to be more of an incremental approach.
I love the right.
I love to Rip the band it I'll spend a lot of money and and go after the market, but I just don't think I'll read our investment Investor base would I don't think our investor base is actually looking for that from US. We have a court right. This is highly liquid business is very profitable. It grows we have a leadership position in it.
No that we have double digit growth in front of assume that core business.
So we think we could take advantage of that and to build up the sort of business that we're talking about.
Yes.
So you talked a.
A little bit.
Prepared remarks about the explosive growth Tele medicine, which we see it here about pretty much everywhere, which is great. But we also continue to be very very excited about the potential of remote patient monitoring.
When I think about your cardiac monitoring business, it's a little bit more short term that some of the other sort of chronic maturing needs. We see in the marketplace. How do you think about the opportunity for bio telemetry to go after some of those.
For more chronic patient monitoring needs in the market.
It's a good question remote cardiac monitoring our traditional core business is more acute it's transactional.
And you're right the bigger dollars in health care 80 cents. When every dollar is being spent in the chronic markets and now you're starting to see.
<unk> monitoring applications.
Applied in those markets and so again, we think we're we have the good news is we have a channel right. We have a a sales channel we have a distribution channel into the health care market. This established that we can leverage and that's some of the areas that we're working on.
And then the important thing is a cardiac cardiac disease is co morbid with a lot of these other products that we're talking about so it does open up opportunities congestive heart failure to same channel you would sell into so.
You're right.
The bigger dollars longer term will be in those chronic markets and that's really what we're attempting to do our strategy is all about leveraging what weve built.
And and you know again, we're wondering if you companies out there that has demonstrated a remote patient monitoring business that can be both scalable and profitable. So we think we've got some good core competence is there to leveraging some of these other sectors.
Perfect. Thank you very much isn't just keep it up I know, it's going to be champion.
Thank you guys are up to it.
Thanks.
And our next question comes line of Kayla Crow from Suntrust you may begin.
Hey, this is David Rescaling per kilo can you guys you mean alright.
Hi, David.
Hey, sorry, I had some technical difficulties from the beginning of the call. So I apologize if I'm not asking is kind of what you've gone over.
But first I wanted to start on the top line revenue kind of came in at the lower end of guidance you wish to shoot at the end of February which it was great. Obviously, given the effects of cold and so far and and at that time, even about two full months or revenue under the belt. So I was wondering if you could provide some commentary first around the trends in the first too much of the year that led to the 13%.
Thank you mentioned.
And second to that you know run the dynamics at play out specifically within March that enable you to hit that low end of guidance versus potentially could offend or could have brought you up towards the upper end again, the pre covert world.
And then insofar as the how that's playing on April and then maybe specifically you know around am caught a meal any color around how revenue was recently recognized.
Given that it's a 30 day device, whether or not you know some other revenue that you recognized at the end of March could have been patients who initially had visited a clinic regard to hospitals.
Yes, just at the beginning of March or February.
Really what those implications would be done for how trends play out in Q2.
So.
And try to get to most of that if I leave anything else feel free to jump back in and ask me, but.
So January it's got to really strong.
And what we saw even through the first two weeks in March of two and a half almost two and a half months ended the quarter before we saw the drop off was that we were trending well above expectations.
We would have finished the quarter somewhere around 117 to 118 million lives. So we lost about four or $5 million in Atlanta.
Two and half weeks, which makes sense so.
So we were trend if you break it down by week, we lost.
Probably 23% of the last two half weeks or something along those lines. So.
Again, the business was extremely healthy it was coming from Mt. Todd.
There was double digits. It was coming from extended wear holter high high double digits closed triple digits and it was coming from the Geneva platform and then research performed better than we had expected remember from Alaska, We talked about research being flat to maybe even down as we cycle through the backlog they performed well and we saw a little bit of uptick in up.
Pellet business, where everything was kind of.
Firing on all cylinders Hamann looked like a great start to two great year.
And then obviously that happened late.
So as we come to April the business. The first two weeks of April all with a cardiac monitoring business dropped lay off.
And then we so first two weeks of April it stayed pretty low and then we started to see a little bit of an uptick.
In the third week fourth week as of April So we started to see a build back up.
If you just take the April average.
And apply that to on a per day average you apply that business to May and June that was that worst case scenario that I kind of talked about.
Realistically, we anticipate the business continuing to build back up if you break down within remote cardiac monitoring the four modalities that we offer our m. caught event.
Culture and extend it were holter.
The M. caught has experienced the least decline.
And that's probably because it is the only real connected solutions available and his patients need to be monitored and evaluate its outside to pools of hospital. It becomes more important that they are connected.
Right and I think if that's an interesting.
Data point, because that's the future right. The future is patients are going to be connected.
So.
Again, we saw a drop off on all four modalities, the least amount of drop off and the fastest recovery has been with.
I think that was most of your question was there anything else I left out David.
Just around kind of specifically for I'm caught when and how you guys. We recognize revenue from cut so just thinking about when patients you potentially have Ben we came into the clinic or came into the hospital and where you know prescribed a patch if that kind of plays out where you recognize that revenue of 30 days after that so therefore I.
And that kind of came in toward the end of the month of February March could have been eventually going from a patient that was previously seen hospital.
At the end of February yes, so.
It's not any different than any other quarter and the fact that our volume started to drop off at the end of March there the numbers that James talking about or actual patient starts coming in the door.
And the rebound that we've seen has had happened in concert with so from a revenue perspective, there is revenue that get.
Deferred into the next quarter or the next period, if a patient comes on service and it's still on service at the ended the month.
But I don't think that you can read anything special into our numbers in a quarter given what has occurred.
Okay, great yet that's really helpful and so I know you mentioned you touched a little bit around kind of how I'm cuts for for coated patients.
Been used more even given the increased risk of Qt prolongation.
So I was wondering you guys mentioned that theres kind of a stronger growth there are less off of the decline.
Typically there's weren't if you could either cheese out or kind of quantify what type of benefit or net benefit maybe you saw from from increased usage on actual cobot patients versus what was kind of the overall downturn and I'm kind of prescriptions in general just due to the overall drop and physician visits.
Yeah. The the use of M. caught in the Cobiz 19 monitoring a program that we've talked about is relatively small and it's a certain regions of the country that had high concentration of code 19 patients and the attempt there was to be able to dose.
Hydrochloric with monitor the patient for potential for.
PT prolongation and not have them lane in the hospital bed.
So there is not a lot of volume a really good program really critical for those places that needed it.
It doesn't really move the needle one way or any of it.
Okay. Thanks, and then just the last one them and maybe you guys mentioned this.
Colon Geneva, I know you previously guided to hiring reps and bringing on reps this year as part of.
You know growing that business and I'm just wondering if there's any update as far as how the hiring process has done as far as building out there I think maybe you mentioned you're trying to build out to 12 RUPS. So direct reps are just wondering if there's any update there and then also kind of how the growth in that business has been just given the effects of cobot and whether or not you are able.
Just still going into new accounts and still.
Well to.
Still able to kind of drive that business I think our check so far of.
Demonstrating that is something that would be definitely a useful business too are useful service toward cardiologists.
Yeah.
So the sales thing we did two things we took.
We.
We assigned sales responsibility to the remote cardiac monitoring sales team which is.
North of 100 folks we.
For the first time, starting Jan one they have responsibility to sell that product. They have quoted they have commissions assigned to it.
The other thing we did was put in place.
Dedicated sales professional one per each of our 12 regions.
To to drive that whose sole responsibility is to try the.
Sales process and I want to see we have 10 to 12 of them something along those lines.
Well have 12 in total, but I think all but two of them are are filled.
The GE lever sale has has been going better than we had anticipated.
If you remember you may recall that at the outset, we talked about potentially doubling the revenue.
Year over year March 1st we.
Annualize the first year.
Owning the company and we surpassed that objective on a run rate basis, we have more than doubled that business.
We are bringing we're.
Early on in the years, we were signing the counts on at a higher rate, obviously thats slowed down new account activation has slowed down a little bit, but we're able to pull through more patients into the same account. So we haven't really seen as a slowdown in that business. Remember this is at home monitoring recurring revenue.
So we we don't anticipate slowdown it may be slightly slower growth through the next couple of months, but even that I think will be minimal seems does has done a really good job building a funnel and once they are stable and we have activated new accounts, we just can't can't do it at quite there.
Very difficult to do in accounts are close so.
Pulling through the patients that actually has been an area where the team has done a good job going to business.
Okay. Thank you that's it for me thanks for taking my questions.
Thanks, David.
Thank you and our next question first line of Jason Bedford from Raymond James You May begin.
Hi, good afternoon, and congrats on the.
Durable revenue growth in the in the first quarter and I hope everyone is healthy. So I do have a few questions maybe just to pick up in the last line of questioning.
Joe that the up 45% quarter on quarter on Geneva is it just due to new a new center ads and then I don't know if this is appropriate but is there way to kind of update us on kind of where you are in terms of the number of centers et cetera.
Now we haven't put up a number of centers and it's really not a great metric because you can have accounted or vary in size.
But we haven't put this up either but the key metric for us is really new patient activations.
And that's trending better than expected.
And actually two last question you talked about the first quarter being better than anticipated and maybe not as many new accounts activate in March but March patient active patients was executing April paces were actually higher than March. So we did see even a step up as we moved into the second quarter.
[music].
Okay. It really is a key long winded key metric theres, new patient activations it'll be a time will be probably for the public so yes.
Okay and.
I guess in terms of the revenue model with Geneva is it more subscription based it just kind of builds each quarter, meaning.
Once you have activated a patient that revenue kind of recurs either every month every quarter you had a new one on it just kind of builds on on on top of that correct.
Yeah, I mean, it's a recurring typical recurring model like that.
The challenge is keeping patients compliant or adhering to.
The ovary protocol.
So keep keeping them doing what they need to do they're supposed to do and then obviously you have patient attrition.
Splits, but you got to write idea.
It's a recurring revenue model.
Okay.
And just for clarification I think comment was if may and June look similar to April that's you're kind of worst case scenario down 30% from one Q is that total revenue or just the health care services line X Geneva X research.
Total revenue.
Okay.
Yes, so total revenue is it the other businesses.
We're assuming they stay stable in the second in this scenario, we assume they say relatively stable.
Research, even actually drops just a little bit yes, but the other businesses stay kind of where they are and then.
Geneva would do it it's doing healthcare within healthcare the remote patient monitoring remote cardiac monitoring am Cock research holter extend it were holter on one of volume basis on a per day average they would be.
The the exact seen in May and June as we saw on average.
In April that's important point, because the back half of April was better than the first part of it so look better hates when I say, there [laughter] because it sounds like.
[laughter] States my sense.
I would I see this as a as a highly unlikely worst case scenario, but I think we wanted me here. It just in case, a and B probably more important point is we're still profitable at that level, we're still running to even out positive cash positive business at that level.
Right, but I guess the silver lining here is that trends in the back half of April seemed to tick up and I think thats similar to most.
Companies that we've spoken to Okay, and then research up 7% in the quarter I guess my impression coming into the year that that line would be kind of flattish.
The up 7% is that something that can be sustained.
Well, we're not forecasting that at this point, we you know we came in a year. We said, we would be flat to down a little bit had a better than anticipated.
First quarter second quarter, I think we're forecasting but slightly down year over year.
We did have a couple of really good bookings month, the first part of your.
Lot of times, you don't see that until the following year 24 months. So it depends on how those those study start.
So our biggest concern frankly would that this is Jason is do you have delayed starts we haven't seen yet, but you never know.
And we offsetting factor in any of these one off studies that may be done in response to tell them that may be quick cats. This is really based on the backlog that we saw coming into the here.
Right.
Okay I'll get back in queue. Thank you.
Thanks.
Our next.
Our next.
I will leave from Mitra Ramgopal from Sidoti May begin.
Yes, hi, good afternoon. Thanks for taking the questions. I was just wondering first if you can give us a sense of so maybe incremental costs are expenses you experience as a result of having to comply with covert 19 from a safety pp standpoint et cetera.
No not a whole lot matrix. So so we're kind of fortunate as we went into this rate. We're a health care services platform. So we're highly dependent on human resources, we always had the capability to work remotely some of our employees work a portion of their time remotely under ordinary times, the Geneva business is almost all virtual.
Yes.
So we it's a pretty flexible business model.
We were able to flex to a higher percentage of our people upwards of 90% of our folks working from home. The only people. It really are coming into any of our locations are ones that.
The kind of half two there are some job functions, where you need to be on site to exit certain technology, and obviously like or distribution centers.
Folks have to be one location to pick pack and tick boxes. So.
It was kind of an easy transition for us.
Because of the way we're set up.
And you know, even our cost structure, a decent amount, it's tied to the product and monitoring time. So we were able to to flex the business pretty smoothly.
Okay notice, great and then I know obviously.
As a result of scope of 19, you had talked about the Qt prolongation as it related to solve the drugs be used et cetera, just wondering I'm in light of the increased visibility you have gotten from there I think you mentioned a few large institutions et cetera have contacted you got you gotta requests or number a lot of paces et cetera. If this what sort of help just from a.
Increasing the potential for greater reimbursement coverage for Amkor going forward.
Your list the God's ears [laughter].
I'd be happy if it's just protect and grow the downside I do look if nothing else. Once again proves that there is a critical critical need for real time, because this is an especially from patients you can put on an extended wear holter. These are patients that you really need real time monitoring for either patients that are at risk for sudden death that they.
Qt prolongation, you have to dr. have to to intervene and adjust medication. So.
If you're putting them on an extended holter holter, you send them home.
You're not monitoring a recording of result, and hope and you're going to downloads somebody or point, but it's it's not real critical care and I think this again reinforced the need.
Some scenarios to have a patient wired in Connecticut and eyes on that patients in the very first patient we monitored we found and arrhythmia that was not kobin related.
Never would have found that at that pace. It wasn't on this product.
Okay I notice.
That's helpful. Thanks, a lot and finally I know, obviously, you're trying to rationalize your costs and again the volumes et cetera, not predictable given the environment, but I know you also want to continue to go to business and you certainly as you mentioned you have the capital of the cash et cetera on hand, so I'm just trying to get a sense of the balance sheet.
We're trying to achieve as you look to obviously at salespeople et cetera, and invest into business. While also try to monitor your costs in this environment.
Well the first couple of weeks into this we really.
Like most companies where existing want to bottom out we just really didnt know so everything was on the table and then we instituted changes as we saw necessary again, we're fortunate that we have such a flexible.
Business model that were highly liquid lot of cash in the bank.
I'm going to cash flow positive. So all those things are helpful. Lastly, Sol where the business sort a stabilized in mid April.
Then we could then or dis our decision tree changes right you start to think okay. We can carry this excess cost for a period of time, we don't need to cut and deeper and then that will position us.
Better relative to others when we come out of this so if there's a rabbit recovery, we believe we're incredibly well positioned for that.
Okay. Thanks, again for taking the questions.
Thank you and your next question will come from the line gene Mannheimer from Dougherty.
They begin.
Thanks, Good afternoon, and congrats on a good quarter in spite of the circumstances here.
You know certainly the last couple of months, which we've seen a kind of a surgeon telehealth visits.
Decline in person visits. So my question is can can your device orders from Tele health.
Replaced the decline in person visits that we're experiencing or said differently and your models are you assuming that the patient volumes do not quite come back to the way they were pre coated.
Tell it doesn't matter to us one one of the other Jane the patient as active as a telehealth visit doctors prescribe the product we ship it to the patient reactivate the patient remotely our infrastructure is completely set up for that escalate as to where the business grew up.
So we're we're incredibly flexible from that standpoint.
Okay, So you're saying that a cardiologist Ken can prescribe a patch or a monitor without seeing the patient just based on a work up over the telephone.
That's correct as long as their meeting their requirements on there and it doesn't affect us one where the other.
Gotcha good excellent what is.
Hi, there whats your thank you for that Joe What's your view on how long you are and the wells will last.
Okay, well it kind of depends on how quick thing back obviously, you know our expectation is that bill last well into.
2021 at this point on depending on you know what things look like it it could go further.
Okay.
Gotcha very good thank you.
Thank you and I'm not showing any further questions at this time I'd like to turn the call over two speakers for any remarks.
Thanks, operator, thanks, everyone for your continued support and interest in the company take care yourselves and we'll speak you next quarter operator that concludes today's call.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
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