Q4 2021 Milestone Scientific Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the milestone scientific fiscal 2021 year end business update call at.
At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments. After the presentation. It is now my pleasure to turn the floor over to your host Natalya Rudman of milestone scientific ma'am the floor is yours.
Thank you, Matt and good morning, and thank you for joining milestone scientific 2021 year on financial results conference call on the call with US today are Ari on Hooper Holmes, Chief Executive Officer, and Keisha hard home control or milestone scientific the company issued a press release today Friday April 1st completing 2021 year end financial results.
Which is also posted on the company's website. If you have any questions. After the call or would like any additional information about the company. Please contact crescendo communications at 21267110 to zero. The Companys management will now provide prepared remarks, reviewing the financial and operational results for the year ended December 31 2021 before.
We get started we would like to remind everyone that during this conference call. We may make forward looking statements regarding timing and financial impact of milestones.
<unk> to implement its business plan expected revenues and future success. These statements involve a number of risks and uncertainties and are based on assumptions involving judgments with respect to future economic competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond my phone control.
Some of the important factors that could cause actual results to differ materially from those indicated by the forward looking statements are general economic conditions failure to achieve expected revenue growth changes in our operating expenses adverse patent ruling.
Developments competitive pressures changes in customer and market requirements and standards and the risk factors detailed from time to time in milestones periodic filings with the security and exchange commission, including without limitation milestones.
I'm for 10-K for the year ended December 31, 2021 and forward looking statements made during this call are based upon management's reasonable belief as of today's date April 1st 2022 milestone undertakes no obligation to revise or update publicly any forward looking statements for any reason with that out of the way, we'll now turn the call.
New Oriental.
Chief Executive Officer. Please go ahead.
Yeah.
Thank you and Italia and thanks to everyone for joining US today, we achieved a 90% year over year growth in revenue to $10 3 million, surpassing our prior revenue guidance and exceeding pre pandemic levels. We achieved these results. Despite the impacts of COVID-19.
<unk>, which indicates that we are successfully navigating the pandemic and remain on a solid growth trajectory.
At the same time, we continued to carefully manage our expenses, while investing in sales marketing and new product development, along with analyzing new areas for our technology.
The growth in the dental division reflects the success of our three year multi distribution strategy to expand the worldwide global dental market. As a result, we are successfully adding domestic and global distribution partners.
As an example, we recently announced an agreement with <unk> medical to distribute the SDA single tooth anesthesia system in the United States, and Canada, and the United States. We are looking to bring on new strategic channel partners that can help sell through their network of dental customers, especially.
Realized areas of dentistry.
Such as implant dentistry and aesthetics as well as large dental groups also known as dental service organizations or Dsos and educate channel partners as they train the current and next generation of dentists.
In parallel we look forward to further expanding our international sales and are working closely with our new global distributors. We believe that through this decentralized sales strategy in combination with our increased marketing efforts. We can further grow the dental business in the coming year.
Yes.
Our dental business continues to generate positive cash flow on a standalone basis as we continue to grow this business, we expect to benefit from economies of scale June to the recurring nature and high margins on our disposables.
At the same time, we have made progress over the past year advancing our commercial efforts around the comp flow epidural instrument.
Check system.
And at the beginning of 2021, we had some major setbacks due to organizational issues and depend downtick.
However, due to the arrival of vaccines and vaccination programs.
<unk> started opening up again during the second quarter of last year.
That triggered our decision to invest heavily in our new sales force.
As of August when the real medical commercialization begin management decided that 11th salespeople over the first few months would be the correct number in the United States.
Irrespective of the individual changes within that group. It is still our goal to maintain 11 full time experienced sales representatives in the field that are calling on hospitals every day.
We are setting high performance standards for our sales team and monitor their performance closely on a daily basis.
We will continue to add sales speed personnel as appropriate.
During the second half of 2021, there was a strategic decision to focus additional efforts and resources in trade and consumer marketing communications.
Both the medical and dental brands received a soft image refresh to better align with product messaging.
Through the enhanced brand awareness and stronger digital presence new tools and tactics were deployed to aid our sales representatives and drive qualified leads.
These materials include training and brand videos educational literature, digital marketing materials, and consumer media relations, where milestone scientific was recently featured on <unk> net a media outlet with over 8 million monthly users.
From a digital marketing perspective, we've had success in our website traffic.
As an example from the first quarter in 2021 through the first quarter this year.
Website visitors have increased by 187%, we are deploying and integrated marketing communications strategy that elevates, our brand awareness and targets key audiences.
As a result of our combined sales and marketing initiatives, we have begun to sell our disposables to key hospitals healthcare systems and pain management clinics. Despite a setback related to the pandemic, which I will discuss in further detail in a moment.
Although we are not always allowed to disclose the names in 2021, we announced sales to the following hospitals first we signed an agreement that were approved as vendor in a major northeast teaching hospital, which is part of one of the leading health systems in the United States We entered.
<unk> sat technology at Memorial Regional Hospital, the flagship facility of the Florida Memorial Healthcare system, and one of the largest hospitals in Florida. Additionally, we received approval to eventually supply a complete flow epidural and text check verification system disposables occur.
Ross Memorial Healthcare systems network of hospitals.
We're selling into University of Texas Medical branch in Galveston, and added health clear Lake, Kansas Hospital belonging to the same group of major academic Health Science Center of global influence.
We are setting into regional medical center, a premier regional healthcare system in South Carolina and internationally, we are selling into the University hospital of Wurzburg, one of the leading national hospitals in Germany in particular for the thoracic indication approved in Europe , where the incidence rates of morbidity.
<unk> are much higher for this indication.
In addition, we have expanded our global reach by adding new international distributors in markets, such as Austria, Switzerland, Canada, Slovenia, and United Arab Emirates. We're also in the process of bringing on new distributors in additional markets. Each of these distributors brings relationships.
<unk>, we didn't key global markets and proven track records introducing medical devices within their territories.
Turning back to our domestic sales initiatives in December alone immediately preceding to spike in only chrome cases, we announced the addition of three leading hospitals all of which belong to large health care systems. However.
Our activities came to an abrupt halt.
It is important to note that the pandemic had a significant impact on the labor and delivery delivery departments within hospitals much more so than all the departments. This was due to the fact that many pregnant women have opted out of the vaccine, resulting in stricter restriction.
Then other departments as a result, our sales team was unable to entity Operatory, which limited our ability to demo and trial the instruments.
With the pandemic and specifically the omicron Varian now waning the restrictions have begun to ease and we are resuming activities, although delayed by several months. This doesn't mean that there won't be another variant of spike that could impact our business, but assuming things remain.
Stable our reps back in the field and we are picking up where we left off.
Our sales pipeline is solid and growing and we are advancing discussions with a number of hospitals and health care institutions.
In addition to our growing regional presence, especially in Florida. We're also targeting tier one university teaching hospitals. Some of these hospitals are among the top 20 in the nation.
We believe that as we begin to penetrate some of these larger well recognized names that will add greater credibility and reduce the sales cycle with some of the smaller institutions.
We also continue to expand sales of our concrete floor epidural system, we didnt pain clinics across the U S with over $11 million reported epidural procedures each year. The pain market segment is at least twice the size of the labor and delivery market segment.
The pain management market not only includes numerous hospitals, but also specialty centers outpatient census, and sports medicine centers.
We are receiving positive feedback among clinics and physicians based on our ability to achieve better outcomes at lower cost.
We recently announced that a leading pain management specialists doctor harsh Gogo has begun using our technology within this practice at Piedmont healthcare <unk>.
Similarly, Dr. Meanwhile, Delek us a recognized leader in pain management, and President of the Florida Society of Interventional pain physicians has begun using our technology within this practice Dr de La Garza conducts these procedures that surgery partners, one of the largest and growing surgical suite.
As businesses in the country, which has also approved to compete <unk> epidural instrument for us across that network in pain management.
As a result of the pandemic of the pandemic and the issues I explained earlier, we've put strong emphasis on the pain clinics into first quarter of this year.
As you can see these efforts are paying off just this week, we announced we commenced sales of the <unk> epidural disposables with Cypress surgery Center in Santa Maria, California, and the Galileo surgery Center in San Luis Obispo Pain management specialist in California.
Both of these prominent pain management practices are located in California, and owned like pain management specialist.
We are now selling our disposables in the first two of pain management specialist three clinics.
The third clinic was closed as they shifted resources during the pandemic, but we aim to sell into the third clinic after it reopens.
Fortunately pain clinics have been less impacted than labor and delivery departments. Following the latest spiking cases, but we believe we have weathered the worst of the storm and are well positioned in both the pain management as well as labor and delivery markets as the pandemic hopefully continues.
To recede.
So to summarize we remain committed to our goal of establishing the comp flow epidural instrument as the new standard of care and epidural anesthesia by providing patients with effective pain relief, while reducing the risk of complications.
Our comparable epidural system offers objective detection of pressure changes to verify true loss of resistance and confirm epidural space within minutes.
The clinical and safety benefits of the comp we flow epidural system backed by extensive published clinical data demonstrating significant reductions in epidural punches and complication rates as well as economic benefits 40 institutions.
At this point I'd like to turn the call over to our key Shanghai can controller to go over the financials in detail. Please go ahead. Thank you sure.
Thank you Arjen total revenue for the year ended December 31 2001.
Pinpoint 3 million versus $5 4 million for the same period last year digital revenue for the year ended December 31, 2001 was $10 1 million versus $5 4 million for the same period last year.
Dental revenue increased approximately $4 7 million for the year ended December 31, as compared to 2020 due to the reopening of dental offices throughout the country and the rest of the world.
Medical revenues for the 12 months ended December 31, 2020 was approximately 182000 versus 16000 for the year ended December 31.
2020.
Hello.
<unk>.
Again opening new customers through direct sales force and medical device distributors gross profit for the year ended December 31, 2001 was $6 3 million or 61% of revenue versus $3 6 million or 67% of revenue for the year ended December 31.
2020 operating loss for the year ended December 31, 2021 was approximately $7 4 million versus approximately $7 5 million for the year ended December 31 2020.
Net loss attributed to common shareholders was approximately $6 8 million or <unk> 10 per share for the year ended December 31, 2021 versus a net loss of $7 3 million or 12.
<unk> per share for the comparable period in 2020, now I would like to turn your attention to the liquidity and capital resources at December 31.
2020.
2021, the company had cash and equivalents of $14 8 million total current assets was approximately $18 9 million and working capital of $15 8 million at this point I'd like to turn the call back over to Arthur Thank you Keisha.
As Kieran mentioned, we continue to maintain a strong balance sheet with approximately $14 8 million of cash and cash equivalents as of December 31 2021.
Which provides us substantial resources and the ability to accelerate our sales and marketing activities around both our dental and medical instruments.
Given our strong cash position. We are also planning to new to launch new instruments and pursuing new indications.
Within dental we are encouraged by the growing interest in our instrument and expect our momentum to continue in 2022.
Through our new decentralized sales strategy and our enhanced marketing efforts around the SDA single tooth anesthesia instrument. We believe this will increase our market penetration as we focus on the significant value drivers of our instruments, including safety efficiency and.
Importantly, supporting the growth of dental practices.
We believe we have developed an efficient and scalable platform to help drive our dental instrument and handpiece sales in the coming years.
In addition, we remain confident in the market potential of the company flow Epidural system, which we believe will transform the industry and ultimately become the standard of care.
Importantly, we have begun selling our complete flow epidural disposables to a number of hospitals medical centers and pain management clinics in the United States and Europe .
But we have barely scratched the surface in order to capitalize on this opportunity we are expanding our sales and marketing initiatives, which has resulted in a solid sales pipeline, including trials underway that we believe will convert to a new coach.
<unk> orders.
We remain committed to driving shareholder value and look forward to providing further updates as developments unfold.
I'd like to thank you for joining the call today and at this point, we would like to open the call up to questions operator.
Certainly ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do ask that what posing your question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.
Once again, if you have any questions or comments. Please press star one on your phone.
Please hold while we poll for questions.
Your first question is coming from Anthony Vendetti from Maxim Group. Your line is live.
Thank you.
Ann.
I wanted to focus on the <unk>.
<unk> market, because you mentioned, it's twice the labor and delivery market.
And you have 11 salespeople you've signed up some.
Some good accounts some of which you see.
Well known accounts do you you mentioned on the call.
And and I was wondering if you could talk about.
A little bit about how you're increasing the marketing spend I know you have 11 salespeople what exactly are you targeting to continue to grow.
The pain market.
And and then.
As you sign up these hospitals.
How do you get the hospitals to increase their utilization so that the contract start resulting in <unk>.
Material revenues.
<unk>.
Thank you Anthony Thank you for asking these excellent question. So let me.
Start with the with the paint segment.
Like we like I mentioned in the India introduction this morning.
We emphasized on the pain market segment, and what is important I would assume that people know how the.
Private pay market would work as well.
Portions of the reimbursement code and.
So that's part of our strategy as well because prior management over the years looked at the submission of a CPT codes.
Reimbursement code.
But the rules at that time prohibited a submission as for example data of about 25000 patient procedures performed.
Needed to be provided.
However, we learned and we have evaluated whether these rules still apply and very fortunate.
Fortunately learned.
The game changed.
We engaged a consultant.
Specialized into submission of such code and.
And we have submitted and file for a technology specific codes in February this year and of course this is not a guarantee.
But I'm guardedly optimistic to obtain.
Reimbursement of temporary reimbursement code in a year time.
And that would potentially you have a great impact on the commercialization.
Within the pain, both the private and the chronic pain market segments and.
Entity the same account.
For this thoracic indication I mentioned that the thoracic indication is used.
Approved in Europe .
And to give you a little bit of flavor to thoracic indication.
It's about.
For over 30% of all epidural procedures in the United States alone.
A study in this indication with our technology was completed at the University of Iowa.
The results were presented at a major anesthesia meeting into first half of 2021.
And we are planning to submit.
500, 10-K, FDA submission for obtaining the approval of this indication and again I'm guardedly optimistic to receive a positive outcome by the FDA approval in the second half of this year potentially which also might have an impact on increasing adoption and penetration in hospitals and pain clinics because this touristic.
<unk> is an important indication also for pain.
Pain management.
Now to go to the second part of your questions.
If I understood correctly, you were interested how would we increase.
The utility.
Once we are in a hospital and I. Thank you for asking this question because I didn't address that in my.
In my presentation.
So we call it and we have applied a land and expand strategy. So.
We have in our team territory managers that are.
Particularly very well skilled in hunting activities and closing activities.
But then also when we are inside the hospitals to further increase the volume and the utility at the hospitals.
We have recruited to clinic.
Clinical specialist that are going to stay at the hospital on a daily basis, helping with the nursing staff and the anesthesia staff to to push and two to increase the penetration and the adoption and the utility at these hospitals so instead of.
Our sales reps being in there every day, we have a dedicated specialist.
Clinical specialists, which the background.
Two people that we have recruited.
Our nurses in anesthesia that no new Operatory room environment.
In this way can further increase.
<unk> used it survive disposables so does that answer your question Anthony.
Yes no.
That's very helpful. Yeah, I think thats.
You've correctly identified.
It is critical.
We see this across many medical device companies over the years.
If you don't have.
If theyre not well trained.
You don't have someone on site.
To help increase that utilization, sometimes that utilization doesn't pick up in.
So so having anesthesia nurses that know exactly.
How to use this.
And training.
I think critical for increasing utilization, so very helps dilutive much al.
Youre welcome Anthony Thank you.
Yes.
Thank you once again, ladies and gentlemen, if you have any questions or comments. Please press star one on your phone at this time.
Your next question is coming from James vis debt. Your line is live.
Thank you I would go back to the revenues.
2016.
$10 million 482000, 2017, $11 million 282000, and after that the revenues continue to decline.
So we've done the company has got a long way to go to.
Get back to even where they were somewhat.
It appears that the majority or almost all of the sales coming from the dental.
The question would be one of the questions would be direct sales reps of 11 people are those full time people would just try to introduce slash sell the comp flow to facilities or do they.
Capital a package of things that they're trying to sell two facilities.
Yeah. So thank you. Thank you for your question.
I would like to comment on your observation, which is absolutely correct that going back to 2016, we sales.
The revenues were 10 $11 million and then there was a decline I would like to explain why that was because.
During those years.
All the money that we earned in the dental business was invested in the medical business and also.
The focus of the company was.
<unk>.
Yeah, like I said investing in the research and development of the country flow epidural system and disposables.
And then also result of that it was almost a one man show for the dental business. So in other words, there was not enough.
Human and working capital available.
To really focus on the dental business also including investing in the right marketing and sales activities and that was the reason why the board of directors in 2002.
'twenty.
Decided.
To recruit people with a background in the dental industry.
To revamp the dental business and more importantly, the board at that time decided to.
To raise capital and that resulted at the end of 2022 have about $14 5 million in passion has equivalent by the end of the year. So.
That made it possible for current management to put the shoulders under it and to invest in marketing and sales activities to revamp the dental business and the mandate. The board has given me and also <unk> management team is to grow the dental business exponentially in the coming year. So I just wanted to make.
That's clear the second part of your question, yes, absolutely.
11.
Territory managers that we are having they are full time equivalents. So they only focus on our portfolio and they only focus on the content flow epidural system, including the disposables, the cat jet disposables and de Paul on hospitals and the.
Private pain clinics. So they are not $10 99 today do not have a diverse advice.
Product portfolio day, a laser focus on our company on our product portfolio and our customer targets, which encompasses the anesthesiologist to see rnase the pain physicians to C suites, the admin suite financial risk management procurements.
And.
Material supply.
Thank you that concludes our Q&A session I will now hand, the conference back to <unk> CEO of milestone scientific for closing remarks. Please go ahead.
Yes again, thank you for your time.
And interest and trust in our company.
I would like to highlight that I am pleased with the results that we were able to obtain in the past years.
Management digital so.
Please.
Convinced about.
The positive outlook that we see for our company.
<unk>.
And in this year.
If you need and if you have any further questions.
Please reach out to me.
Visit our website at milestone scientific Dot com.
And please do stay safe.
Thank you for your time and have a good day.
Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.