Q1 2022 Milestone Scientific Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the milestone scientific first quarter 2022 business update call.
This time, all participants have been placed on a listen only mode and the floor will be opened for questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host David Waldman Investor Relations, Sir the floor is yours.
Good morning, and thank you for joining milestone Scientifics first quarter 2022 financial results conference call on the call with US today are Orient Hover Hall, Chief Executive Officer, and Keisha Harcum controller of milestone scientific the company issued a press release. This morning containing first quarter 2022 financial results, which is also posted on the come.
These website if you have any.
Any questions after the call would like any additional information about the company. Please contact crescendo communications at 2126711020.
Management will now provide prepared remarks, reviewing the financial and operational results for the first quarter ended March 31, 2022 before we get started we'd like to remind everyone that during this conference call. We may make forward looking statements regarding timing and financial impact of milestones ability to implement its business plan expected revenues and future success. These statements involve a number of risks and uncertainties.
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 milestones 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 rulings FDA or legal 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 Securities and Exchange Commission, including without limitation milestones report on Form 10-K for the year ended December 31, 2021 and mouth.
Jones report on Form 10-Q for the first quarter ended March 31, 2022 and forward looking statements made during this call are based upon management's reasonable belief as of todays date may 17th 2022 milestone undertakes no obligation to revise or update publicly any forward looking statements for any reason with that we'll now turn the call over to ion Hover Hall, Chief Executive Officer.
Please go ahead.
Thank you David and thanks to everyone for joining us today I'm pleased to report, we achieved revenue of more than $2 7 million, making it another solid quarter.
Although sales were down slightly from the same period last year. This was primarily due to the pent up demand and significant orders. We received from distributors last year as dental offices was starting to reopen in the first quarter of last year.
That said, we are very pleased with our results and believe we are gaining traction in the market.
As a result of a decentralized multichannel sales strategy, we are adding new domestic and global distribution partners.
As well as large dental service organizations or Dsos, which we believe will help accelerate our growth.
First we recently edits Keystone Dental group as a strategic channel partner for the SBA single tooth anesthesia system.
And Keystone Dental group brings a direct sales force of more than 60 sales representatives, serving surgical specialist in general dental practices across the U S with a particular focus on implants and regenerative procedures.
Implant dentistry is a natural fit for the SBA.
Since it allows for localized anesthesia across a wide range of dental procedures.
Through the use of our SDA implant dentistry can be performed without the disk going forward of potential risks and complications.
Could accrue when numbering in the entire quarter and documentation smoke.
Keystone Dental group has a proven track record of introducing new products, including specialized instruments that require hands on training and support.
Second as part of a broader initiative to target the DSO market, we established a partnership with the American independent Dental the alliance, which is America's Premier DSO network of private practices dentist.
<unk> is an ideal partner for us and they support over thousand dental practices within their network.
DSO play an increasingly important role within the domestic dental market to current DSO market penetration of approximately 30% to 32% is expected to grow to 75% to 80% over the next.
10 years.
Thirdly, we enhanced our education activities.
As an example, we entered an agreement with the aesthetic professionals, which provides continuing education classes that feature hands on dental training.
The FCA will be core to their curriculum.
In parallel we look forward to further expanding our international sales as we are adding new global distribution partners, specifically, we are targeting independent distributors with existing relationship within their respective territories and dental networks.
Our dental business continues to generate positive cash flow on a standalone basis as we continue to grow our revenues, we expect to benefit from economies of scale due to the recurring nature and high margins on the disposables.
Turning to our medical segment, we continued to advance our commercial efforts around the country flow epidural instrument in cash check system.
As a result of our combined sales and marketing activities. We have successfully trials are complete flow epidural system in key hospitals healthcare systems and pain management clinics last month, we were approved as a vendor to supply a constant flow of people holding tests gx disposables and the major northeast teaching.
Spittle, which despite a one of the leading health systems in the United States.
The addition of this hospital continues to expand our nationwide footprint into labor and delivery market.
This approval.
Follows a thorough trial, a devaluation with which further validates the safety and efficacy of our technology.
As a teaching hospital to provide residents fellows.
You can see since physicians greater accuracy through real time verification of epidural needle placements as well as subsequent monitoring skepticism placements.
Our sales strategy is initially focused on key regional markets, such as Florida, Texas, and the New York Metropolitan Tri State area.
In addition to our growing regional presence, we're also targeting tier one.
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 more recognized names.
It will add greater credibility and reduce the sales cycle with smaller institutions.
At the same time, we have expanded our focus.
Focus beyond labor and delivery to target the pain management market, which not only includes hospitals, but also specialty centers outpatient centers and sports medicine centers.
With over $11 million reported epidural procedures each year the pain market segment is at least twice the size of the labor and delivery markets segments.
We recently commenced sales of the <unk> epidural disposables with Cypress surgery Center, and the Galileo surgery Center of California. Both of these permanent pain management practices are owned by pain management specialist. In addition, we are receiving positive feedback among clinics and.
Based on our ability to achieve better outcomes at lower cost to major thought leaders stocks of harsco will adopt any global Augusta.
Incorporating the conflict to our epidural instrument into their practice for pain management to utilize the instrument for both surgical cases in the office based procedures to access the epidural space safely and quickly.
Adoption of the comp flow epidural instrument I joked when we grow the like ours that follows approval by surgery partners one of the largest surgical services.
<unk> in the country for us across that network and pain management.
So to wrap up as we discussed on our year end conference call. The latest pandemic spike of the omicron vibrant had a disproportionate impact on the labor into different departments within the hospitals as many pregnant women opted out of the vaccine.
As a result, our sales team was unable to enter the Operatory, which limited our ability to demo and trial the instruments.
With the easing of the pandemic restrictions, we have resumed our sales activities as a result, I truly believe 2022 will be an important year for our medical business.
Our sales pipeline is solid and growing and advancing discussions with a number of hospitals and health care institutions. We will provide further updates as soon as we commenced formal commercial sales with these respective institutions.
Our comp with flow <unk> system offers objected to detection of pressure changes to verify true loss of persistence.
And confirm the epidural space within minutes.
Clinical and safety benefits of the Coca Cola system are backed by extensive published clinical data demonstrating significant reductions in epidural punches and complication rates as well as economic benefits for the institutions.
For these reasons, we are as confident as ever that our technology will become the new standard of care for epidural procedures in labor and delivery as well as Spain management by providing patients with effective pain relief, while reducing the risk of complications.
This point I'd like to turn the call over to Keisha Hawken controller to go over the financials in detail. Please go ahead, sir thank.
Thank you RJ.
Total revenue for the three months ended March 31, 2022 was $2 7 million versus $2 9 million for the same period last year.
Dental revenue decreased approximately $106000 for the three months ending March 31, 2022 as compared to 2021.
As art mentioned this was due in.
Parts of our sales in the first quarter of 2021.
And part two purchases from distributors and dental offices or starting to reopening.
Medical revenue for the three months ended March 31, 2000, 2018 was approximately $7550 versus $71050 for the three months ending March 31, 2021, specifically the spike in Omaha, and Valeant at the beginning of <unk>.
2000, and financing resulted in new restrictions on labor and delivery and departments within the hospital, what's the limit our ability to demo and trial.
Instrument and <unk> gross profit for the three months ending March 31, 2022 was $1 7 million or 62% of revenue versus one eight or 60% of revenue for the three months ended March 31 2021.
Operating loss for the three months ending March 31, 2022 was approximately $1 9 million versus approximately 1 million three months ending March 31 2021.
Operating expenses was due in part to higher sales and marketing events as well as higher R&D expense related to the development of a new instrument.
Net loss attributable to common shareholders was approximately $1 9 million.
<unk> per share for three months, ending March 31, 2022 versus a net loss of $1 million or 1% one.
The per share for the comparable period in 2021, now I would like to turn your attention to the liquidity and capital resources at March 31, 2022, the company had cash and cash equivalents of approximately $17 3 million total current assets of approximately $18 2 million and working capital.
$14 4 million at this point I'll turn the call back over to art.
Thank you Keisha.
As Kishore mentioned.
We continue to maintain a solid balance sheet with approximately $13 3 million of cash and cash equivalents as of March 31 2022.
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 investing in the development of a new instrument and pursuing new indications. Just one example of a new market for our technologies thoracic epidurals.
Where we are already approved for in Europe .
<unk> of complication, sometimes serious discounted crude will touristic epidural include that'd be dual hemorrhage or abscess setback at.
Sub Eric Noll with block spinal cord injury, leading to program most of the visits Ta associates cardiovascular respiratory call ups and local anesthetic toxicity.
We believe our <unk> technology platform can address many of these risk factors.
Thoracic is just one of many potential indications we plan to pursue.
So to wrap up we believe we have developed a cost effective and highly scalable platform to drive growth within both our dental and medical decisions.
We are witnessing growing interest in both our instruments and disposables and we believe we are well positioned to take advantage of the opportunities available in the market.
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.
Yes.
Ladies and gentlemen, the floor is now open for questions. If you have any.
Our comments please press star one on your phone at this time.
Ask that while posing your question you. Please pickup your handset is placing on speaker phone should provide optimum sound quality. Please.
Please hold while we poll for questions.
Yes first question for today is coming from Anthony Vendetti. Please announce your affiliation and pose your question.
Thanks Maxim group.
We are in.
I wanted to focus a little bit on.
The pain market opportunity, which as you mentioned.
<unk>.
Epidural.
Labor and delivery.
Market versus the pain market.
And I know I know that.
Beginning of the year, Obviously January was December January which was the spike in omicron and so.
That hindered our hampered the ability to get into new hospitals new customers.
We're halfway through this quarter.
Have you had any any issues.
Or any concerns any salespeople having.
Issues or.
Struggling to meet with customers in the first half of this second quarter.
Thank you for the question Anthony and good morning.
Yes.
I'm very happy and pleased to say on the contrary, we do not have seen any barriers of knott's trialing or demo ing.
Products and technology into hospital remember.
When I said I think it was at the earnings call for the entire full year last year a month ago.
The Q1 results were heavily.
Affected by the old Mccrone, Varian, because pregnant women for good reasons and understandable reasons.
Site not to take the vaccine right and that also resulted that people were not able to trial our.
Products and the labor and delivery Department.
As of end of March beginning April .
As we speak.
Sales team is.
Very active in.
Number of hospitals in Trialing.
In doing patients.
Doing evaluation of our technology, So I do believe that.
That situation is returns or turns to a positive development for us now I cannot look into.
Into our Crystal ball right because.
Now if I look in the in our environment.
<unk> is another strain or variance coming up.
I don't know whats going to happen in the next couple of months I hope not.
Nothing is going to happen because we all.
We'd like to move forward with this.
Does this answer your question Anthony Yes.
Yes, I guess I guess.
It sounds like you have a lot of opportunity.
I'm just trying to figure out if if if the ramp in revenues.
Should we start to expect that.
This quarter and as we move through on the medical side as we move through the rest of this year and then I just had a question on the on the dental side.
Yes, so the.
The ramp up I hope that we will have a ramp up in the second quarter, but I believe more than we had a ramp up in the third quarter.
But it depends.
We are also working in hospitals, where we have had a longer existence.
Like <unk> for example.
Yeah.
They are reordering our products, we are opening up discussions with them for another facility. So it completely depends on the hospitals, what they are going to pursue with us and whether they want to food safety incidents as well.
So sure in an early stage it depends on.
The order flow.
Just in general if you had a average stay on average how often do your existing customers reorder or is it once every three months once every six months.
No that should be at a at a much shorter.
Three currency entity, because we also have changed.
Our sales model to that let's say the people in our sales team.
It's not the.
You know the Hunter only but we have also started working with.
What we call clinical specialist.
That task is to increase the volume at the hospital once we are in the whole Switzerland to secure.
And ensure that there is an increase in volume so if a hospital would be.
We ordering once.
For every three months period that will not be very happy.
Okay Alright.
More quickly than that that's great and then.
It looks like dental has really started to return.
Can you talk about because the dsos are large market opportunities.
Can you talk about the ability to penetrate those.
And is there any any particular DSO that you believe could be materially impactful.
Either this year or next year in terms of revenues.
Thats a very good question.
So we started with piloting the DSO program with Ada.
And that was through four of our distributors that we are already doing business with.
The challenge with the DSO is that.
The pricing structure, it's only tender pricing right.
But I do believe that our offering to a DSO can help them grow their business dramatically. So what we have we have the shortlist of dsos as we are contacting and working with amongst.
It's not so difficult to make to make those list on those dsos you have clear choices you have the aspens, you'll have to Pacific dental.
Service group.
And we were looking at opportunities too.
Discuss any potential cooperations with these organizations now.
From my own experience in the past it will take time to ramp up to your point you noted will be later on.
Could be a year from now but.
It is an importance.
It is an important market segment for us to be active in into not only to start thinking about but together fruits in the door because.
Dsos data are going to move the dentistry into next next 10 years.
Okay, Great I'll hop back into queue. Thank you.
Thank you Anthony.
Once again, if there are any questions or comments. Please press star one on your phone at this time.
Your next question for today is coming from Alan Liptak. Please announce your affiliation then pose your question.
Hello. This is al I'll, let dotcom forest capital. Thank you for taking my question.
So Ross thoracic epidural can you comment on the opportunity and plan.
Sure.
<unk>. Thank you for asking that question.
So let's forget the duals are about 13% so three zero, 30% overall.
Overall at the duals performed during the year so.
And it is important like.
The fluid example, the anatomy of the epidural space into higher you get up in the tourist and go into in the cervical spine.
And that to me.
The rules that the space is much smaller than <unk>.
Therefore.
If you do the normal procedures with the loss of resistance technique today, the morbidity rates and Dunbar was 5% into OSA. It's 17%. So my point is just you'll have more contra indications more side effects higher risk of.
Cheers.
And by providing the technology that.
We.
<unk> in the marketplace, you would be able to not having dose will be the two rates is all in.
The indication has been approved in Europe .
Already a year ago, we have filed for.
The SBA.
The FDA procedure in the United States.
It is an important indication.
For us as a company.
Always there will be questions by the FDA.
I don't know how it will be but.
I'm genuine very positive boost.
Gradually.
Positive.
Doubts.
Being able to get <unk> indication also within the United States, because it's definitely going to be an important impact.
The commercialization of our technology.
Great. Thank you so much for that clarification.
Thank you.
Welcome.
Once again, if there are any questions or comments. Please press star one on your phone at this time.
There appear to be no further questions in queue I would now like to turn the floor back over to the management team for closing remarks.
Yes. Thank you everybody for for your time today.
Again the company.
It helps the financial healthy we have the right products clinically proven direct to indirect spirit energy and.
I think it's still in a very unique opportunity to invest in our company given the current prices in the marketplace.
Again, thank you for your interest and stay safe Bye.
Bye bye.
Okay. Thank you.
Ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Okay.