Q4 2020 Ekso Bionics Holdings Inc Earnings Call

Greetings and welcome to the <unk> Bionics fourth quarter, 'twenty and 'twenty financial results Conference call. At this time, all participants are in a listen only mode.

A question and answer session will follow the formal presentation.

And he wants to require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded and it's now my pleasure to introduce Matt Steinberg of MS. Archs and partners. Thank you you may begin.

Thank you operator, and thank you all for participating on today's call. Joining me from XL Bionics are Jack <unk>, President and Chief Executive Officer, Jack One Chief Financial Officer, and Bill Shaw Chief Commercial officer.

Earlier today <unk>.

Bionics released financial results for the quarter and full year ended December 31st 'twenty and 'twenty.

A copy of the press release is available on the company's website.

Before we begin I'd like to remind you that management will make statements. During this call that will include forward looking statements within the meaning of the federal Securities Law, which are made pursuant to the safe Harbor provisions on the private Securities Litigation Reform Act on 1995.

Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements on.

All forward looking statements, including our future financial or operational expectations or our expectations of the regulatory landscape governing our products and operations are based upon management's current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements.

For a list and description of the risks and uncertainties associated with our businesses. Please see our filings with the Securities and Exchange Commission.

And so disclaims any intention or obligation, except as required by law to update or revise any financial or operational projections on our regulatory outlook or other forward looking statements, whether because of new information future events or otherwise. This conference call contains time sensitive information.

<unk> is accurate only as of the broadcast today February 25th 2021, I will now turn the call over to Jack <unk>.

Thanks, Matt and thanks, everybody for joining us today to.

To start I'd like to acknowledge the dedication of our entire team across our organization and their commitment allowed us to continue serving our customers and bring meaningful solutions to patients recovering from stroke and spinal cord and commodity traumatic brain injuries are a unique technology has enabled tens of thousands of patients to take over 130.

And steps to date, and we are proud to see a growing number of physicians recognize that excellent and our elevate the standard of care for neuro rehabilitation.

Now turning to a review of our fourth quarter performance, our commercial and clinical teams continued their strong execution and raising customer engagement levels, and expanding and physician awareness of our innovative exoskeleton devices and the medical community the.

And the introduction of our subscription selling model is gaining solid traction among our hospital and long term care facility customers, whose capital budgets remained under pressure by creating more opportunities to use the XO and <unk> as part of the patient rehabilitation process, we are facilitating and relationships that we expect will result in long term subscriptions or fewer.

True capital purchases.

Bill will discuss this in more detail shortly but we are pleased with the early progress.

For the fourth quarter, we recorded revenue of $2 $3 million in line with our preliminary announcement well.

While we saw initial signs of recovery and the rehabilitation space beginning in the second quarter and accelerating into the third quarter.

<unk> global Covid cases, and hospitalizations and the fourth quarter created a challenging selling environment.

During the quarter, we recorded 14, total XO and our bookings including for subscription units for the full year 'twenty and 'twenty, we generated a total of 61 bookings, which included 19 subscription units and nine rentals converted to sales.

On the industrial front.

We are pleased with the early customer interest and excitement of our Evo upper body exoskeleton devices. Following its first full quarter on the market. We believe Evo has a broad range of applications across a variety of industry verticals and look forward to penetrating this large and growing market.

Operationally by taking action at the onset of the pandemic, we quickly adapted to the changing market conditions to dramatically align our operations with current business expectations. As a result, we are now a leaner more efficient organization.

Supported by the proceeds from our recent financial offering we are well positioned to invest and our growth moving forward.

And that we'd like to turn the call over to Bill for an update on our medical segment and global commercialization strategy.

Alright. Thank you Jack our commercial team has been resilient and overcoming challenges related to the pandemic, our remaining engaged and increasing access with customers as well as making it simpler for them to adopt our leading exoskeleton solutions and.

Spider the persistent COVID-19 challenges, we undertook a series of actions to showcase the benefits of and extra program through our virtual selling solutions and educational webinars.

We are also exploring strategic partnerships to make these webinars more widely available for physicians and clinicians while building a platform to further illustrate the benefits of a robotic gait therapy program.

We are hopeful that Covid cases, and hospitalizations and will continue to decrease and now that our clinical team is fully vaccinated.

Active on site at rehab centers, we expect to see an uptick and live in person interactions going forward and in fact, we are now close to the number of on site demos and the first quarter of 2021 compared to the previous three quarters combined we have also experienced an increase and web visits demo request and so.

Media engagement from potential customers and while we are cautiously optimistic about the current COVID-19 outlook.

Festival and completion of our first virtual training sessions and leave us well positioned to address existing pipeline opportunities mitigating the effects and future COVID-19 related lockdowns or.

And where travel restrictions.

In addition to engaging with customers our focus is to make sure their adoption decisions are easier and they faced increased budgetary pressures. The introduction of our subscription model helps remove capital barriers, while creating greater access to our technology.

While this has led to faster adoption and shorter sales cycles.

And we did this model facilitate more sales conversions and strengthen our long term customer relationships and also helps extra develop a stable and predictable base of recurring revenue.

Moreover, we are seeing added interest from network partners and this is of particular importance since roughly one third of our users have more than one device on site.

Our continued focus on network operators is proving successful as we position our new subscription program and.

And the past we would pilot with one site and then add additional sites. After a successful pilot, but now supported by our subscription offering we are working toward multi site pilots with these network operators and we look forward to sharing more information on this and the month to come.

Internationally, we generated strength throughout our global network, especially in the EMEA region and.

I'm pleased to report we made progress with one of the largest health systems and Germany BG Hospital group, we executed two successful pilots and look to grow our partnership with P. G H in 'twenty and 'twenty one.

For the fourth quarter of 'twenty, and 'twenty, we delivered approximately $2 $1 million and XO health revenue or.

Our conversion and renewal rate remained strong at 87% the.

The increase and Covid cases, and hospitalizations throughout the quarter resulted in a delay of several orders into 2021, However, no orders have been canceled.

Today, we share and exciting customer milestone and the quality of life Institute or to ally and Omaha, Nebraska achieved their one millionth step with their extra device. The 1 million staff. The QL I was taken by Tyler Brock and 28 year old spinal cord injury patient with Q O I's physical rehabilitation lab.

Power received a tremendous innovation for hitting that milestone step because he was surrounded by <unk> clinical team associates.

<unk>, followed that remarkable occasion up with an announcement that he completed his XO rehab training and encouraging sign for US recovery as you re learns how to work independently.

<unk> partnership with Axa will begin in early 2013 with the first exoskeleton introduced at their facility. They have since acquired multiple devices and have helped many patients like Tyler recovering from stroke and.

And traumatic brain and spinal cord injuries, we are proud to support <unk> on their mission and providing life changing rehab and look forward to continuing our relationship for many years to come.

Going forward, we will continue to closely monitor COVID-19 cases, and its regional impact on hospitals and rehab facilities. So that we can remain engage with current and prospective customers.

We exited the year at a much more agile organization that can quickly adapt to a rapidly changing selling environment our.

Our commercial team is highly motivated and committed to driving adoption of our XO and are providing more patient access to our advanced platform. We expect to achieve this by leveraging our virtual engagement strategy conducting more on site activities and building on the momentum of our network strategy.

At this time I'd like to turn the call back to our CEO Jacques Chirac.

Thank you Bill.

I'd like to provide and update on the progress with our industrial segment.

We view the industrial market opportunity across our targeted industry verticals as greater than $5 billion annually.

Our initial target segments include construction and food processing, where we have already seen promising early order trends for Evo devices.

EBITDA was specifically designed to address productivity and health risks challenges faced by industrial workers and we are encouraged by the customer feedback around usability durability and strength argumentation so far.

Challenges of the pandemic notwithstanding we're pleased with the launch and are seeing a high level of customer interest given the budget challenges facing so many businesses are subscription model provides flexible purchasing and utilization options designed to meet customer needs going forward, we look to bring our game changing technology.

Just to those verticals, but also to warehousing logistics and utilities and mining verticals.

Now I will turn the call over to Jacqueline and review, our fourth quarter and full year financial results.

Thank you Jack.

And so generated fourth quarter revenues of $2.3 million compared to $3 $7 million for the fourth quarter of 2019.

Our gross profit for the fourth quarter was $1 $4 million, representing gross margin of approximately 60% compared to gross profit of $1 $9 million and gross margin of 50% for the same period a year ago.

The increase in gross margin was primarily due to higher average selling prices and lower production cost of the company's XO and our devices coupled with the introduction of vivo.

Our actions to preserve cash and align our cost structure enabled us to lower our operating expenses.

Operating expenses for the fourth quarter of 2020 were $4 $4 million compared to $4 $7 million for the fourth quarter of 2019.

For the three months ended December 31, and 2020, we recorded a loss on warrant liabilities of $1 $5 million due to the revaluation of warrants issued in 2019 and 2020.

Compared to a $300000 gain associated with the revaluation of warrants issued in 2015 and 2019 for the same period in 2019.

Net loss for the fourth quarter of 2020 was $4 million or <unk> 48 per basic and diluted share compared to a net loss of $2 $7 million or <unk> 53 cents per basic and diluted share in the fourth quarter of 2019.

Turning to year to date results revenue for the full year 2020 was $8 9 million compared to $13 $9 million for the same period and 2019.

Gross profit for the full year 2020 was $5 $1 million compared to gross profit of $6 $8 million for the same period and 2019.

Gross margin for the full year of 2020 increased to 57% from 49% for the full year of 2019.

<unk> expenses for the full year 2020 were $18 $4 million, a decrease of $5 million or about 22% compared to $23 4 million for the prior year period.

For the full year 2020, we recorded a loss on warrant liabilities of $3 $1 million due to the revaluation of warrants issued in 2015, 2019, and 2020 compared to a $6 $4 million gain associated with the revaluation of warrants issued in 2015 and 2019.

For the same period in 2019.

Net loss for full year, 2020 was $15 $8 million or $2.21 per basic and diluted share.

Third to $12 $1 million or $2 53.

Basic and diluted share and the same period and 2019.

We made significant progress throughout the year to reduce our use of cash.

Cash used in operating activities for full year, 2020 was $8 $8 million, a decrease of $7 million or about 45% compared to $15 $8 million for the prior year period.

As of December 31, 2020, we had a strong cash balance of $12 $90, which included net proceeds of $3 $3 million from the exercise of warrants and 2020.

Earlier. This month, we received gross proceeds of approximately $40 million from a public offering and strengthens our cash position and gives us the cash runway to execute on our growth strategy.

Please see our 10-K filed earlier today for further details regarding the order and full year on.

Operator, you May now open the line for questions.

Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Information tone will indicate your line is and the question queue.

Press Star two if you would like to remove your question from the queue.

For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys and <unk>.

And please while we poll for your questions.

Okay.

Our questions come from the line of Sean Kang with H C. Wainwright. Please proceed with your question.

Hi, Thank you for taking my question I.

And I guess and.

A question on the <unk> side.

So how.

And how many pilot programs are ongoing right now.

And also is there any additional.

Discussion that could lead to a pilot programs all evil.

Yeah.

So hey, Sean.

Let me make sure I got interest and the second part of your question.

Can you just repeat the second part are there any and just repeating.

Oh, Yeah, and just I was wondering.

And I E. There.

So the first question was the how many pilot programs out there on <unk>.

And I think on one is.

Is there any additional discussion on that could lead to pilot programs old evil.

Oh got it okay. So we have.

And <unk>.

Several pilot programs going.

And are we haven't.

Disclose exactly on many yet but we have.

But a number of them each of them are roughly so less than 10, but each of them and have about between.

And between 20 and 30 units.

On hand and.

And that's.

And because shared between those two industries and.

And we have conversations going on with the number a number of additional companies and those industries.

To start edition and pilot programs.

Okay.

Second question right.

Yeah.

Just a follow up to that.

Is there any cross selling opportunity for other external works products, including I think you also have a zero zero G.

Yeah.

There is there is actually.

There's a.

A portion of the customers and customers of both products.

But theres actually.

And number of <unk> customers, who are not yet customers and vivo and <unk>.

And the same holds true for Evo. So we don't sell them as a package we pursue on.

Opportunities for both but we're seeing and <unk>.

Somewhat organically that there are customers who use both.

And I see that's helpful. Thank you.

Thank you and there are no further questions at this time I would like to hand, the call back over to management for any closing comments.

Thank you for joining us today.

To summarize our commercial team has proven to be flexible and adapting to the rapidly changing market conditions, we are continuously engaging with their customers with the goals of increasing their adoption and education of our excellent and our devices with.

With the implementation of our subscription model, we are focused on further expanding our installed base and supporting a path to sustainable future growth.

Moreover, we are encouraged by EBA is growing customer excitement and solid adoption trends following its initial launch.

Looking ahead, the proceeds received from our latest public offering and are critical to our success and executing our growth goals I'd like to thank all of our new shareholders.

And we intend to focus on on.

And on expanding our customer base and both the medical and industrial segments will continually innovating, which is a hallmark of our company. Ultimately we are determined to improve patient outcomes and solutions to the industrial work force and deliver long term value for our shareholders.

Look forward to providing updates on our continued progress throughout the year. Thank you and have a good day.

Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time.

Have a great evening.