Q2 2021 Ekso Bionics Holdings Inc Earnings Call
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Okay.
Greetings and welcome to the ex L. Bionics second quarter 2021 financial results call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded.
I will now turn the conference over to your host not Steinberg. Thank you you may begin.
Thank you operator, and thank you all for participating in today's call. Joining me from ex So bionics are Jack <unk>, President and Chief Executive Officer, Jack 1 Chief Financial Officer and Bill.
Sure Chief commercial officer.
Earlier today, and so bionics released the financial results for the quarter ended June 30th 2021of.
A copy of the press release is available on the company's website.
Before we begin I would like to remind you that management will make statements during this call that.
Include forward looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
And he's statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements.
All forward looking statements and putting 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.
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 the 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 ex.
<unk> disclaims any intention or obligation, except as required by law to update or revise any financial or operational projections of regulatory outlook or other forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information and is the accurate only as of the broadcast today July 29th 2021 and I will now turn the call over to Jack Burak.
Thanks, Matt and thanks to everybody for joining today.
We are pleased with the progress we've made and the second quarter, which.
The extended our solid start to 2021.
During the quarter, we focused on building momentum with network operators and driving adoption of our subscription of access model.
2 of these combined initiatives, we closed several multiunit orders with top network operators globally during.
During the quarter, we recorded 20 ex.
<unk> and our bookings, including the 11th subscription bookings worldwide.
And the up from the first quarter.
For the second quarter, we generated revenue of $2.2 million up 16% from the first quarter.
We are pleased the onsite demos are now back to pre COVID-19 levels as business conditions gradually.
However, we are closely monitoring the very fluid landscape as the spread of Covid variance may potentially affect in person interactions.
Our ability to be flexible with our virtual selling solutions and online educational Webinars has us well prepared and the event of any sudden changes.
Okay.
The industrial side, we are pleased to see of continued high level of customer interest and an increase and onsite evaluations and pilot programs.
As I will discuss later, we are building awareness for Evo, which has generated positive feedback to date and several market verticals.
Financially we achieved solid gross.
Margins as we continue to see the benefits of the cost initiatives, we put in place last year.
Now I would like to turn the call over to Bill for an update on the medical segment and global commercial strategy.
Alright, Thank you Jack our commercial team made excellent progress during the second quarter their efforts and meeting with and educating.
Kate and customers resulted in successful execution, and our direct and partner markets for <unk>.
Scripture model accelerated the speed and size of new orders as a reminder, within our network strategy. We are focused and launching multi site programs with network operators. We have opened up more doors with this market and we now continue to execute orders.
With the number of leading inpatient rehabilitation operators.
For the second quarter of 2021, we delivered approximately $1.9 million and XO health revenue.
The rolling 12 month renewal rate and the healthy 80% and we now have more than $1.3 million of contracted unrecognized revenue under our new.
Subscription model up sequentially from approximately $700000.
We have discussed on previous calls the benefits of moving to a subscription model as we previously mentioned is offering and churches multi unit orders and lowest customer capital barriers and also shortens our sales cycle accelerating sales Congress.
For stations with both new and existing customers, we are generating greater inroads with our target customers more quickly under this new model and it sets us up well to increased order flow and per.
Shortly while subscriptions deferred revenues across the life of the contract the faster.
Option rate and the resulting a recurring revenue stream.
And accelerate revenue growth and longer term.
We are most excited that our customers can realize increased access to our excellent our devices, which bring meaningful outcomes to more patients.
On that note we are proud to say that not only is excellent and our standard of care for all of kindred inpatient rehabilitation hospitals.
We also expanded our partnership with kindred healthcare into its long term acute care business with a multi unit order and for of the Florida locations.
We also continued to expand our presence with skilled nursing facilities or sniffs.
For example, Excelsior of care group of rapidly expanding Premier health care consulting firm that provides consulting.
Salting services, the sub acute rehabilitation and nursing centers and the New York City Tri State area has partnered with XO bionics to introduce XO and are to multiple locations within their network Excelsior as member of facilities are offering our technology to provide advanced neuro rehabilitation options to their patients differentiate themselves.
We also from other skilled nursing facilities and the region and attract more patients from the referring hospitals and communities they serve.
We are excited to work with the Excelsior and hope to further grow our partnership and the coming years and.
Increasing penetration with National and regional network operators is a key initiative for <unk> bionics.
And these announcements demonstrate our encouraging results.
From an international perspective, our EMEA business has been gaining strength and had a strong performance through our partner network..1 of the many highlights include the multi unit order and executed by our <unk> partner from an existing customer. We are pleased that EMEA has placed more XO and our devices.
Themselves and the first half of 'twenty, 'twenty, 1 and and all of 2020.
In tandem with in person interactions educational Webinars are a key component of our strategy to build the physician and clinician awareness.
And such example of how we have driven success on this front as demonstrated by our strong partnership with U S. Physiatry.
Together, we have generated greater recognition of our devices and education and successful implementation of robotics into rehabilitation centers earlier. This month, we held the second of our 4 part webinar series, which discuss the clinical and economic benefits of exoskeleton technology.
We look forward to our next webinar event alongside.
And so the dietary and September.
And so that's helped patients take millions of ex weighted steps, including 1 of our customers and Poland Ergo Hestia, who reached 4 million steps on July 23.
Today, we highlight another success story with the Olympics happening now and the Paralympics beginning at the end of August we thought.
Did you have a perfect time to share Margaret Mcintosh of story.
Margaret is of lifelong equestrian, who sustain of spinal cord injury, and 2000, but that didn't stop or continuing with their passion and excelling and the sport.
Margaret went on to compete and the 2016 Paralympics, which and her words was the culmination of our equestria and dreams.
<unk>.
Margaret starting using the ex ONR as part of the rehabilitation and even 20 years post injury continues to improve function and mobility with the assistance of our therapists and good Shepherd rehabilitation.
Looking to the second half of the year, we are quite optimistic about the traction we're gaining with their subscriptions.
<unk>, both and accelerating sales cycle and increasing the number and size of each order, we will continue to educate our customers and the beneficial impact of our innovative devices clinical training and program support we look forward to further acceleration of our progress based on the strategy and the coming months.
At this time I.
I'd like to turn the call back to our CEO Jack Purion.
Thanks Bill.
I'd like to provide and update on progress with our industrial segment, which we call XO works with.
We generated solid order growth and the second quarter with our <unk> business revenue, increasing 91% sequentially we're focused.
The author of spanning awareness of Evo and <unk> zero G across several new market verticals.
Evo is gaining traction with the prominent large industrial companies as employers are incorporating these cutting edge devices and do their industrial related workflows to mitigate employee fatigue regulate productivity.
An increase worker retention and reduce the risk of injury.
We continued to add new customers, while conversations with potential customers have picked up across the diverse set of industry verticals.
Currently our primary extra work markets include aerospace automotive construction.
And logistics and distribution as we are targeting applications, where evo enhances worker productivity and improves worker safety.
I will now turn the call over to Jack Glenn to review, our second quarter financial results.
Thank you Jack.
<unk> generated second quarter revenue of $2.2 million compared.
<unk>, a $2.3 million for the second quarter of 2020, reflecting the continued shift to our subscription model, which defers revenue to future periods.
Our gross profit for the second quarter was $1.3 million representing of the gross margin of approximately 58% compared to gross margin of 56% for the.
Compared to the 8 a year ago.
The increase in gross margin was primarily due to our manufacturing efficiency improvements and a better cost profile of vivo compared to the prior generation product.
Gross margin tends to fluctuate quarter to quarter based on geographic and channel mix.
Operating expenses for the second quarter of 2000.
21, or $4.6 million.
Compared to $4.4 million for the second quarter of 2020.
Net operating loss and the second quarter of 2021 was $3.3 million compared with the net operating loss of $3.1 million and the prior year period.
The increase and net operating losses.
Losses, primarily result of higher research and development expenses and the previously noted revenue shift to subscription.
Gain on more of liabilities for the quarter ended June $32021.9 million from the revaluation of warrants issued in 2019.2020 and 2021.
Per.
Point $6 million loss associated with the revaluation of warrants issued in 2015, 2019 and 2020 for the same period in 2020.
Turning to year to date year to date results revenue for the first 6 months of 2021 was $4.1 million compared to $3.7 million.
For the same period in 2020.
Gross profit for the first 6 months of 2021 was $2.5 million and increase of 33% compared to gross profit of $1.9 million for.
For the same period and 2020.
Gross margin for the year to date period increased to.
61% from 51% for the first 6 months of 2020.
Operating expenses for the first 6 months of 2021 were $9 million, a decrease of $8 million for about 8% compared to $9.8 million for the prior year period.
Net operating.
And in the first half of 2020, 1 fell the $6.5 million from $7.9 million in the first half of 2020.
<unk> higher year to date revenues and a leaner cost structure.
For the first 6 months of 2021, we recorded a gain on warrant liabilities of $9 million.
Operating due to the revaluation of warrants issued in 2019, 2020, and 2021 compared to a $6.1 million loss associated with the revaluation of warrants issued in 2015, 2019, and 2020 for the same period and 2020.
Cash used in operating activities for the first.
Most of 2021 was $5.6 million.
As of June 32021, we had a strong cash balance of $45.9 million.
Please see our 10-Q filed earlier today for further details regarding the quarter of.
Operator, you May now open the line of questions.
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1 moment, please all the poll for questions.
Our first question is from RK of H D with Wainwright. Please state your question.
Thank you.
Good afternoon, and John John.
So we see that.
We see the the subscription model.
Working right and I'm just to get a little bit.
More.
Our insight into placements.
No.
Trading day.
And the increase.
Not only increased the.
And some low but also the increase in terms of the size of the orders.
But before we get into that detail could you.
Alright good.
And the idea of how many units are placed them whether they are subscription of debt on so in total you know how many of our players.
So basically that kind of talks to the recurring revenue that can come and post placement.
I think hey, RK. This is Jack thanks. Thanks for the question I think I understand your question how many units.
Currently in our subscription.
At least I'll try to answer the question this way of 26.
And it's currently and our.
And our subscription sleep.
Okay.
And then and <unk>.
When you say there is an increase.
And the size and.
And.
And but of the auditors.
And of what.
What was it before like in the sand and.
The first quarter and also led to fourth and late last year, but like the fourth quarter and what is it now and the second quarter because that kind of the tell how much.
<unk>.
And of the model is really working.
Yeah, let's see I'll introduce it and now I'm going to pass it over to pull a little bit we had a really great quarter with.
The network operators I think the larger driver of of.
Increasing the unit.
Of the per order is really shifting into the network operators.
And.
The majority of our orders this quarter were too.
Network operators.
Bill Oh, Adam is going and also work on getting the number but you happen to know that or at least how many different.
Units went into different network operators.
Yes.
The.
Hmm.
And again.
And in the area.
The something's wrong on your side.
Okay, sorry, RK just to answer your first question in terms of the size of of the orders were talking about in terms of how the increase obviously, if we're doing a multi unit order.
And that's gonna be more revenue over that contracted period of time and.
So we look at it and not only and increase and actually how many units but also.
The revenue captured and so we positioned both 12 months and 24 months in terms of of how we structure of these ease.
Subscriptions and.
So this quarter that we just had out of all of the subscriptions. We had we had 24 I'm sorry, 2 subscriptions were 24 months.
Okay.
Okay.
And then the rest of the morale 12 months.
Correct.
That's right.
Okay.
Okay, and I think I'll follow up offline and I think you have some more questions.
But I'm proud of all up on offline, but.
Just to keep them.
Just a couple of more questions on other things so.
I also noted that and.
On the operational side, there was an increase not only on the R&D, but also on the on the marketing activities. So my.
My question for you folks is on the marketing side.
You know are we going to be seeing this gradual increase and hoping you know the world is going to really open up and not closed down on US again and also in terms of the product development work.
What do you mean by.
The new product development, what are the what are we thinking about a rethinking on the on the health side are you talking on the on the industrial side.
And.
Thanks, RK, so first on the marketing expenses and and I'd say overall expense structure of the company.
We're being extremely cautious.
We have seen our business come back.
And we are making some selective investments at least starting to come back and making some.
Selective investments and in some areas.
Those would be customer facing.
Facing.
And then operations oriented investments along with some and investments in R&D.
So I you know I don't believe thats going to scale.
Significantly and most areas right now and I think you'll.
And we're pretty stable on the on the marketing side most of those.
The investments are.
Variable investments and we're not investing in infrastructure. So those are the things we can turn on or stopped as we speak.
And the R&D side.
And we we've invested in and.
And started to invest and and we'll continue to invest in developing.
Products both on the <unk>.
Medical and on the industrial side.
And.
So I think there is activity going on and both sides I think.
We're starting to get a lot of feedback on the EBIT side. Both in terms of additional features people would like to see and Evo, but also other solutions.
And being part of.
Ideas and opportunities.
To pursue and that on the medical side, we're just really continuing to refine our offering and so it makes it make the product better and better to meet the customers. That's what I would say about where our R&D investment is going.
Yes.
Okay and then.
We're getting a lift into the Jack Glenn.
And any commentary on.
What's sort of the revenue run rate.
See I know youre, not giving guidance, but I'm just trying to understand how we should think of it for the.
The second half of the year.
Well of course, yeah, we don't give guidance, but I would just.
The last from what we're seeing and bill can probably speak of it is to I think where we're seeing things to open up.
And they're in.
And in getting out in front of customers, which we and certainly we hope leads to.
A good second half of the year, but.
And if things are always.
Still the uncertainty of timing, but yes, we don't.
Don't give guidance as you know so but I don't know if sales do you want to add any more color to that.
And I'd just add debt, we definitely had our strongest quarter and probably the last 18 months with just overall commercial activities.
So we performed more technology events of demos and we did all of last year on this past quarter. So I think that that's.
The positive and and obviously, we're feeling good about that met in person activity.
However, we do have to monitor the.
The uptick right now closely so if we have to return to a hybrid model will be prepared to do that.
Okay, and archaic and thank you, Jeff maybe yeah, I would just add to that too and just to note.
With the the nice part about the subscription model is as we build those units and that fleet over time, we'd get to the some more consistency and.
Of revenue and being able to forecast better.
Yeah, Yeah. That's good. Thank you. Thank you gentlemen.
Sure.
Okay.
You know we have reached the end of the question and answer session and I will now turn the call over to Jack <unk> for closing remarks.
Thank you operator, and thanks to everyone for joining us today.
To recap we are pleased with the progress we made and the second quarter and with what is shaping up to be of solid 20.
Only 1 for.
And we're targeting and gaining traction with top inpatient rehabilitation of operators, who recognize the value of that XO and <unk> can bring to their patients Act.
Activity in the U S and Europe has increased significantly this year and we are cautiously optimistic heading into the second half of the year.
Second our <unk>.
Subscription model is playing an important role and increasing order flow and.
Especially driving multi unit orders.
This model helps establish a foundation for us to create predictable and sustainable future growth, making it a critical part of our strategy.
Third we are encouraged by the strong sequential revenue growth on the industrial side, we continue to.
To add new customers and conversations with potential customers of really picked up across the diverse set of industry verticals.
As we head into the second half of the year, we remain focused on building sales momentum by facilitating faster XO and our adoption to our subscription model targeting network operators, we look forward to providing updates.
And our continued progress throughout the year. Thank you and have a great day.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great day.