Q2 2020 Ekso Bionics Holdings Inc Earnings Call
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Thank you operator, and thank you all for participating states call.
Joining me from extra Biotics, or Jack Kerouac, President and Chief Executive Officer, Jack Glen Chief Financial Officer, and Bill shot cheap commercial officer really today extra Biotics release financial results for the quarter ended June 30th 2020.
A copy of the press releases available on the company's website before we begin I would like to remind you that management will make statements. During this call that includes sports looking statements.
[noise] meeting at the Federal Securities laws.
Which are made pursuant to the safe Harbor visions that'd be private securities litigation or a format of 1995.
Any statements contained in this call that are not statements have historical facts should be good to before looking statements.
I'll forward looking statements, including our future financial or operational expectations or our expectations of the regulatory landscape governing our products in operation are based upon management current estimates various assumptions.
These statements involved material risks and uncertainties that could cause actual results or events too, but you really differ from there was anticipated or implied bodies forthcoming statements.
Accordingly, you should not place undue reliance on these statements.
Or listen description of the risks and uncertainties associated with our businesses cruise C. R filings with the Securities and Exchange Commission.
So just claims any intention our obligation except as required by law to update or revise any financial or operational projections R. A regulatory outlook or other forward looking statements, whether it because of new information future events or otherwise. This conference call contains time sensitive information is accurate only as of the broadcast today.
July 30th 2020.
Well now trying to call over to Jack Kerouac.
Thanks, David and thanks, everyone for joining us today.
I'd like to start today's call by discussing or overall second quarter performance.
Fantastic called the Bill.
Will provide a more detailed summary of our medical device segment and commercial strategy.
Then I'll provide an update on on industrial segment and other items before turning the called Jacqueline for an overview of our second quarter financial results.
At the end of the first quarter and entering the second quarter, the emergence or the Cove at 19 pandemic impacted the priorities in purchasing decisions of our customers.
We took immediate action prioritizing health and safety ball extra employees, our customers and their patients by moving all non essential extra employees to work remotely.
Additionally, we implemented a series of measures designed to reduce expenses and to just do the operations to match customer needs. This includes a reduction of our workforce and transitioning to a more virtual interaction with existing and potential customers.
Thanks to our strategic get operational flexibility, we generated second quarter revenues of $2.3 million represented in a sequential increased from first quarter revenues of $1.5 million and record quarterly gross margin of 56%.
Additionally, we enhanced our financial position by raising your approximately $11.1 million and gross proceeds from our recent financing and subsequent warrant exercises.
Under these difficult and unforeseen circumstances or second corner performance reflect strong execution dedication of the extra team and I'm very proud of the way we responded to the challenge.
As we previously stated feedback from our customers indicated that most orders are delayed and not cancelled which allows us to maintain as strong pipeline.
Our ability to remain connected with customers through a virtual sewing strategy reduces the need for in person interaction, while allowing our team to initiate it continued discussions around the benefits of our exoskeleton solutions in Bolton medical an industrial settings.
And while we improved performance during the quarter. They remain some regional challenges due to Kobe hotspots, that's actually will continue to manager of course prudently the weather.
[noise] crisis.
At this time, a little turn the call over the Bill will provide an update on a medical device segment global commercialization strategy.
Thank you Jack.
Let me begin by complimenting our team of extra for their remarkable efforts to keep a mission driven focused during a challenging time.
A commercial team executed at a high level and we were pleased with their ability to quickly adapted virtual environment, but still allowed us to demonstrate that you need capabilities are powerful product portfolio.
And the second quarter, that's still health generated seven new orders and seven rental conversions, keeping a rental conversion rate at 84%.
We delivered to point 1 million and revenue led by the U S. <unk>.
Considering the uncertainties related to the pandemic. We were please the U S orders were broadbased across all regions in the country.
It was a more challenging quarter internationally, the impact of Kobe, and the APAC and Emba region, let the earlier shut downs a delayed acquisition.
Well, we continually monitor the uptick in Colby cases, we remain actively engage with several customers on potential deal.
We continue to gain traction with our network strategy as evidenced by a collaboration with Kosta cute medical as we work together to convert three more pilot programs with their network.
We now have a possibly 430 extra units place globally will continue to focus on driving adoption throughout the world.
In spite of the challenges brought on by the pandemic are clinical in customer service teams maintain a level support our customers expect from X O Biotics, we instituted virtual training and I've begun carefully training on site again.
We have plenty of to receive five 10-K clear from the FBI. Some market are innovative excellent robotic exoskeleton for use with patients with acquired brain injury.
R E D I S.
Excellent hours, the first exoskeleton device to receive FTA clearance for rehabilitation use with Abi and there's the broadest category of brain injury comprised of boat traumatic brain injury or T V I and non tbi causes.
Clarence reinforces our commitment to the patient and coalition within the narrow rehabilitation market.
It's indication Bryan who's the market opportunity of an X O L. R. As the combined and you'll incident a P. P. I N stroke represent an estimated 3.7 million patients in the U S and 84 million globally.
Over the past few quarters, we've been sharing success stories, a patient that'd be covered with the benefit of an extra product.
[noise] today, the highlight of story of a patient that recovered from a traumatic brain injury.
Saint Joseph Borough Neurological Institute inpatient rehabilitation Center in Phoenix, Arizona.
Right away as a young woman, who was in a car accident and sustained traumatic brain injury as well as the cervical spine fracture that did not a factor spinal cord function.
And she progressed out of the ICU and end up barrels inpatient rehabilitation center the team trial various therapeutic intervention.
You too are low social mobility her physical therapist travelled many therapeutic intervention that proved unsuccessful.
Despite her inability to speak her physical therapist was able to create a successful communication strategy and introduce D. S O.
With extra trunk support intuitive software impatient engagement actually was able to create a walking experienced steely wait an intrinsic response to engage her brain and recovery.
Extra taps into cognition imbalance, which are two primary deficits traumatic brain injury.
With assistance provided by X O Reilly regained functional ambulation progressive the stages of recovery.
After being discharged from impatient rehab rightly continue to use the XO, an outpatient rehab and what's remarkable successful we regain functional ambulation.
He's or the stories that inspire a vision of amplifying human motion.
Looking ahead, we anticipated challenging environment, what the uptake of coated cases.
Our pipeline of opportunities remain strong, but the future it's difficult to predict.
We will continue to be flexible in business offerings and committed to supporting patient and customers.
At this time I'd like to turn the call back to our CEO Jack pure off.
Thanks, Bill <unk>.
Before I turned the call the jackpot and I'd like to provide an update on our industrial segment and trying to join adventure.
Starting with the dust real near term adoption in person decisions in the second corridor delayed is customers continued to navigate through the pandemic.
To alleviate capital barriers, we're excited to launched a new service model, allowing customers to access extra technology without an upfront capital purchase.
I quickly adapting to challenge your business conditions. This service awkward is already generate attraction with new customers.
Our focus continues to be on driving adoption in a high value change regarding extra works devices.
Send their productivity and safety benefits.
We are pleased with the initial customer interest and look forward to sharing additional updates on future calls.
Now turned into a Chinese J V.
[noise] announced in me, we received a notice from suit D. As in connection with its review of the trying to J V transaction.
If he was determined that it's national security concerns regarding the JV could not be mitigated.
On July 13th together with a J D partners, we entered into a national security agreement, which among other things requires the termination of the company's agreements animal with the J V.
The company is working cooperatively with a J V partners M C P as to implement the terms of the National Security agreement.
Termination of the JV should not have a material impact on her revenue and operations. During the remainder of 2020, we're confident in our ability to Chiba cost reduction targets two alternative initiatives to build on the starting to work record cute too gross margins.
No I will turn the call over the Jacqueline to review your second quarter financial results.
Thank you Jack.
Get the challenging backdrop at the pandemic, we achieve sequential revenue growth versus the first court.
Well, we are pleased with this growth our revenues remain under pressure some customers delayed orders to prepare for and manage their business during the pandemic.
X O generated second quarter revenues of $2.3 million compared to $1.5 million in the first order of 2020 and compared to $3.3 million for the second quarter of 2019.
Ah Grossberg. So the second order was $1.3 million, representing a record gross margin of approximately 56% compared to a gross profit of $1.6 million and gross margin of 48% for the same to you read a year ago.
It's <unk> mentioned, we refocused our cost structure to navigate through this challenging operating environment.
Operating expenses for the second quarter of 2020, [noise], where $4.4 million compared to six $7 million for the second quarter of 2019.
[noise] reduction of approximately $2.3 million for about 35 per cent.
So the three by the end of June 30th 2020, we recorded a lost on weren't liabilities of eight $6 million do you do the reevaluation of wars issued in 2015 2019 and 2020.
To a 2.7 million dollar game associated with the reevaluation of Morris issued in 2015 and May 2019, but the same period in 2019.
Net loss for the second quarter of 2020, which with impacted by the revaluation divorce was $11.8 million or $1.88 per sure.
Her doing that loss of $3.1 million or 65 cents for sure can the second quarter of 2019.
We continued to reduce our utilization of cash to adapt to current market conditions can use $3.8 million in cash little operations, excluding restructuring charges compared to $4.6 million in Saint <unk> in 2019.
Turning to your to date results revenue for the first six months of 2020 with $3.7 million compared to $629 million for the same period in 2019.
Gross profit for the first six months of 2020 with 1.9 million compared to gross profit a $3.2 million for the same period in 2019th.
Gross margin for the first six months of 2020 increased 51% from 46% for the same period in 2019.
Operating expenses for the first six months of 2020 $498 million, a decrease a $3.4 million whereabout 26 per cent compared to the prior year period.
For the first six months any June 30th 2020, we recorded I'm off on word liabilities $6.1 million do do the revaluation divorced issued in 2015 2019 N 2020.
Compared to a 1.6 million dollar game associated with the revaluation of wars issued in 2015 and May 2019.
The same period in 2019.
Net loss for the first six months of 2020 also impacted by the revaluation Flores with $14.3 million or $2.37 per share compared to nine $6 million or $2.12 for sure can the same period in 2019.
Yeah. She used in operating activities for the first six months of 2020 was five $7 million compared to nine $7 million for the same period in 2019.
How's It June 30th 2020, we had a cash balance of $13.3 million <unk>.
In June and July we should definitely raised the combined 11 $1 million and gross proceeds from a registered direct offering and the exercise of orange related to the current and previous offering.
The net proceeds from these offerings strengthen our cats position and will be used for general corporate purposes and to meet working capital neat.
Please see our 10-Q filed earlier today for future further details regarding the corner.
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[noise]. Our first question today comes from Rama cough of H C. Wainwright. Please proceed with your question.
Thank you good afternoon Jackson's.
A couple of quick questions and congratulations on the extra and you know just saving to five 10-K.
The tallest close reception plus receiving the five 10-K I'm just trying to figure out the commercialization off that then you know any.
Yeah. If you have installed any are on the way to install any of the accident and hours how different is that email from your other devices.
Especially I believe this is Susan Moore to the T V I patients.
Any commentary that'll be helpful.
Sure Hey, Kansas is Jack P rock.
You know the the just for clarification D X O N or has been our <unk> is our standard project for all neurological rehabilitation.
It was <unk>. It was cleared to also be applied to acquire green injury diagnoses. So the product itself is is the same problem was previously cleared for stroke and spinal cord.
Just for clarification no Ah.
I'll I'll quickly introduced sorted the impact that is having an and they'll ask bill <unk> two to provide a little more color but.
You know.
[noise] customers are inpatient rehab facilities, who C. A variety of different patient types when it comes through their facilities.
Often stroke as as a major a major condition that those in page, we absolutely Street, but brain injury is is also very critical part of their page patient population. So this allows them to.
Use the product odd label on a much broader set up their patient population.
And then some cases, where there there are in Patriots as soon as you know more targeted are geared towards.
T B I R. A b I type of patients has opens up a new opportunity with those customers.
So that's.
That's really the impact we've seen from it maybe I'll I'll spell that too and a little bit more information if you care too.
Yeah, absolutely Jackson I I, just say from a commercial strategy standpoint, right. Our focus is driving adoption give patients access to our technology. So this just problems the conversation for our commercial organization.
We'll give you. An example, there's a few centers and in Colorado that we actually we're working with because we didn't have this education.
They weren't willing to move forward with us so there's opportunities for us because of this new indication to reengage with customers that maybe weren't comfortable moving forward because we didn't have that specific indications. So we do see an uptick of opportunities to go after for sure but overall I'd just say it just allows us to kind of Brian.
The overall conversation on approach to our customers.
Okay. Thank you very much for that I, just know Colo in terms of.
A dog strategy you know obviously there was some coupons to come in for you and your remarks, but is could you put lettuce some additional color.
Two how that's working and you know how much I've heard of you're putting into their networking strategy.
<unk> currently you know well I'll just need that the T V with a a large of snow.
That that's point How's that working and I believe you said there are some trials going on and do you have an idea of how long. It takes for these trials to convert interest you.
Yeah sure.
Oh, sorry go ahead check.
Okay I'll I'll, let me just introduced really quickly and then happy to Bill you know the the networks tried you'd still very important part of our go to market and you know we we do have a number of of trials or pilots under way.
We also have some there we need to start as as they pre up.
Through the they turn cold crisis, but it it it is a very important a way to drive adoption for us and get a braugher.
More efficient sales process and get our our technology can do a broader set of customers and more efficient quick way.
We've also work a lot that'll be more flexible.
Solutions for them in the in providing different whether it would be services or different acquisition models and finance seem to <unk> and then to fit it into their into there specific situation. So I think we've tried to do as flexible as possible as well and I think that helps us a lot as we as we tried to advance these.
I'll I'll do a talk about specific to your bill.
Well I I I figure you answered it really well Jack the only at I'd have it's just that I'm working with these idea and so we can really engage with the executives at a higher level to make sure that we're really aligning the programs that we're developing to key matrix that are important it out so taking a step back in and it really focusing on the programmatic piece and developed.
[noise] those programs for future success, but no I think Jack answered it well.
Okay and then the last question for me is.
You know during the second word I use you did stated that the international market, then work as well as it used to because of of swollen 19.
Good sums quotes not saying that there will be opening up anything side, but but internationally and I would think simultaneous I'm. Other places have opened up.
But I I would like to hear your commentary on that.
Yeah the.
Yeah, we're seeing a pretty.
It is the situation is really dependent upon what's happening.
Regionally or locally and even in many cases, so if you look across.
You asked here up in APAC, you know within the U.S.. It's different in different places same is true for both Europe and Asia Pac. However, we are seeing.
Activity and.
And certainly from our customers perspective were seen rehab happening.
And so so most of our customers are now are our Bakken business not all been but most work back into.
Put getting back to pretty full levels of patient volume.
And as that happens.
The activity on our side is also.
Also opening up so so I would say that we're still very.
Cautious.
We're seeing activity.
I think we're seeing activity pick up a little bit Isle are doing good some more color on that but it's still it. So cautioning people are still in different regions dealing with this in the more extreme ways and then than in others and the place where there.
It's less intense I think there more more engaged.
Bill maybe you can add some specifics to that.
Yes, Mark had to say the broad brush, we've seen our inpatient centers in the U.S. rebounding pretty well over the past few months, but obviously right now with with some uptick of October cases will specific regionals.
You know there are some situations or its impacting our ability to get on site in trade and I think.
The mining operations or certain centers in those areas.
I'll speak for Europe, or just Jeremy.
We have done a really nice job driving kind of our virtual selling strategy and keeping engage with customers.
And they have started open up nicely, but they're also starting to see slight uptick and cases as well so for US. We're just keeping the conversation going on and keeping engaged just really trying to be flexible with our offerings. So if anything I think maybe there is delayed.
Sales cycles out of that but we have not seen any business lost to this just delayed.
Thank you.
Thank you.
Although.
Thank you for taking all my questions and talk to your books.
Thanks, Chuck I think Youre can you.
As a reminder, if he would like to ask a question. Please press star one on your telephone.
Our next question comes from Nathan Weinstein.
Please proceed with your question.
Hi, Jakone Jaktwo incur taking my question on a nice to see the progress of the business amidst a challenging environment I'm actually actually ended up doing better than I was expecting I'm in the quarter and and one of the things I've noticed a lot of care well call.
Oh digital engagement from you guys and maybe you could just speak a little bit about that is it right to say that there's been an increase in that activity and those types of activities from their company and then what kind of level of engagement on kind of bank for the block do you see your from from approaching the market through those channels.
Okay Great question.
Obviously, we we are working very hard to be creative about how we stay in touch with both our customers and.
And potential customers, we've done a lot of.
Different start you know.
Webinars and other sort of educational formats, and either about something related to Ekso bionics are suddenly related to the industry interviews has the way to to stay connected with our customers in a meaningful way to them.
And that's been extremely well received.
Buyer.
Generated a lot of.
New relationships through that.
To that mechanism and maintain a lot of existing relationships with their customers. So it's been very it's going to I think it really surprising baby positive that has come out of Vincent.
Tapping inefficient way to just broaden our.
The strength of our voice and seem to take them a lot of these discussions.
In terms of what you expect him how this will impact our our business more directly maybe I'll, let bill talked to that but this has been really.
Poured part of the way, we've been interacting with our customers in the industry in general.
Bill payment and the only thing I'd really added just Jack said, it but I think for for us to the more we can learn from our customers of the more we can evolve.
Our go to market approach or pathway and so.
One examples we are setting up some advisory.
Councils or boards. So we have different groups, whether it's a clinical advisory group or an executive Advisory group.
The more we can learn about the different market segments that we serve and kind of pressure trip pressure test some of our strategies or ideas on that is going to help us make better decisions on our business and.
Definitely arm or commercial team to make sure that we're adding value in the right areas.
Great. Thanks, Bakken barrel for the color there a much appreciated.
Thank you.
There are no additional questions at this time I would like to turn the call back to Jack pure luck for closing remarks.
Yes.
Thank you all for joining us today in closing it was certainly a challenging quarter for a company and managing through these unique times.
I'm pleased that we were able to achieve sequential revenue growth maintaining a strong order pipeline launch a new flexible service offering for our industrial customers and deliver online support and train for innovative exoskeleton devices.
Moreover, our operational flexibility enable us to adjust our cost structure and together with our recent financing.
In the strong cash position.
I'm proud of Ekso Bionics is recognized as the best Health care Robotics company by Medtech breakthrough winning this award is a testament to our industry, leading innovative approach and the hard work of the entire Ekso bionics team.
Well the pandemic may impact the near term outlook for the customers that we serve.
Being creative and committed to deliver long term value for patients customers and our shareholders. Thank you for joining us today I Hope you your family stay healthy insane.
This concludes todays conference you may disconnect your lines at this time. Thank you for your participation.
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