Q4 2022 Nuwellis Inc Earnings Call
Speaker 1: We.
Speaker 2: Good morning and welcome to the Nuelis fourth quarter in four year 2022 earnings conference call.
Speaker 2: All participants will be in listen-only mode.
Speaker 2: If you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker 2: After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. Now let's turn the call over to Ms. Vivian Cervantes, Investor Relations. Please go ahead. Thank you, operator. Hi, everyone. Thank you for joining us in today's conference call to discuss Newellis' corporate developments and its impact on the economy.
Speaker 3: today, Newellis released financial results for the quarter and year ended December 31, 2022. If you have not received Newellis' earnings release, please visit the investors page on the company's website. During this conference call, the company will be making forward-looking statements. All forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 19...
Speaker 3: and could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon current available information, and the company assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. Please refer to the cautionary statements and discussion of risk in the company's filings with the FCC.
Speaker 2: including the latest 10K and subsequent reports. With that, I now would like to turn the call over to Nestor. Thank you, Vivian, and good morning, everyone. Welcome to New Welles' fourth quarter 2022 earnings conference call. On today's call, I will provide an overview of our fourth quarter and full year performance.
Speaker 2: and given update on our strategic initiatives. Our chief financial officer, Lynn Blake, will then provide detailed financial resolver before opening the call for questions followed by my closing remarks. 2022 proved to be a year of growth for New Weller with 42% year-over-year revenue growth in the fourth quarter.
Speaker 2: a revenue increase of 13% sequential and an 8% revenue growth for the full year. Revenue growth in this quarter was led by our pediatric segment, which increased 92% year over year. This was followed by 47% growth in our heart failure segment and 24% growth in our critical care segment. Otherwise, our number of new migrations will be reduced.
Speaker 2: Our momentum continues to be fueled by the execution of two key growth strategies that we have mentioned in the past. First, our expansion in the field organizations, especially with our clinical education specialists, or CESs. Our CESs played an important role supporting our account managers.
Speaker 2: with growing our clinical body of evidence.
Speaker 2: A key area for off and investment at New Welles is having a robust clinical evidence. In doing so, we have more leverage to change practice guidelines towards making aqueduct the standard of care for fluid overload and further driving clinical adoption. We are pleased to be able to announce many new publications.
Speaker 2: Post-recentations and medical conferences and peer-reviewed data further reinforcing new wellness technology in cardiac surgery, heart failure, amphitheatrics throughout 2022 and thus far in 2023. As previously mentioned,
Speaker 2: Cargill surgery, we had two peer review publications. On August 31st, we announced the publication of a new peer review clinical data demonstrating 100% survival at 30 days following the use of ultra-fintraceous in high risk post-operative coronary artery bypass grafting for cabbage patients. In January of this year, the annals of thoracic surgery, the authors commented on a key turn on order set for hospital protocol for cardiac surgery associated acute kidney injury.
Speaker 2: that included a recommendation to use ultra-filtration for post-cardiac surgery patients that are unresponsive to direct. This recommendation validates our aqua dexterity to improve outcomes post-cardiac surgery and is supportive of our goals to leverage our body of clinical evidence to change practice guidelines for ultra-filtration. In the heart failure segment, we highlighted the multi-center controlled randomized clinical trial called AVOID HF that was analyzed under the newly-favorite statistical analysis called WINDRACIAL. This new analysis presented at the 2022 Heart Failure Society of America Scientific Meeting showed a strong benefit of ultra-filtration over-diuretics in reducing cardiovascular mortality and heart failure events at 30 and 90 days into it overload heart failure patients who are unresponsive to direct.
Speaker 2: In addition, in the fourth quarter, we announced a peer review publication of a single center 10-year real-world retrospective study of 355 consecutive patients supporting lower heart failure hospitalizations and re-admissions in a year after using the aqueduct. The data demonstrated 81% lower heart failure hospitalizations per year and 48% decrease in re-hospitalizations from the national average of 30 days. We are now actively leveraging this data to educate providers and facilities.
Speaker 2: of the economic benefit and cost savings the wellness can provide with the use of the aqueduct system in both inpatient and outpatient settings as well as the improved quality of life in patients. We also continue to make progress on our pivotal reverse HF trial. As a reminder, the primary effectiveness endpoint of reverse HF will evaluate mortality and heart failure events within 30 and 90 days as a comparison between aqueduct therapy and intravenous loop diuretic. This is responsible for establishing medical guidelines. Further, empty the atrix.
Speaker 2: The fastest growing segment of our business, we announced peer-reviewed data demonstrating 71% survival in kidney replacement therapy using aqua-dex in low birth weight pre-term neonates. Finally, completing our clinical program, I would like to extend my warm welcome to Dr. John Geferis, our new chief medical officer. Dr. Geferis brings with him over two decades of cardiology and heart failure expertise both adults and pediatric patients and we are excited to have him in our team as we continue to build our clinical body of evidence.
Speaker 2: Our second strategic initiative involves the targeted expansion of our commercial footprint to drive penetration. This includes both expansion of our commercial team and of installed days of active accounts. As of the end of Q4, we are pleased to be able to say that we have now filled all open sales leadership, account management and clinical education positions. As previously noted, our clinical education specialist or CSS, all of whom are trained nurses directly partner with the patient care team on the optimal use of our ultra-figuration system.
Speaker 2: In so doing, they facilitate not only successful patient outcomes, but also support increased use of our therapy across multiple specialty units in the hospital in addition to helping drive adoptions at new targeted facilities. As for our expansion of our installed base, console placement, the racer in our racer, racer blade model increased more than six times in the fourth quarter compared to the year-ago period and increased 44% in 2022 versus prior year with focused expansion in key geographic locations and high volume centers. We achieve record U.S. console sales in Q4 with 20 console sold. To date, we have established strong foot in the East Coast and in the U.S.
Speaker 2: Turning now to our third strategic initiative of targeting outpatient clinics to its tweeting heart failure patients. Through our research, we have found many real-world case studies that suggest the current standard of care for managing fluid overloads in heart failure patients is extremely costly for both patients and hospitals due to higher cost of care and high hospital re-admission rates. According to the data, it costs over $24,000 per patient per encounter to treat a heart failure patient hospitalized for average of eight days. In addition to the unreinversed cost of hospital re-admission within 30 days. As mentioned before, we now have the clinical evidence demonstrating that aqueduct reduces heart failure hospitalizations by 81% and lower heart failure re-admission rates by over 50%. Thereby decreasing both the total cost of care and unreinversed cost of the hospitalizations. Another major milestone of New World Health in 2022 was the assignment by the American Medical Association.
Speaker 2: to eliminate dialysis dependency, shorten ITU time, and restore the lives of critical EOPD atrop patients. This agreement further reinforces our previously communicated decision to focus on the pediatric segments and also further expand our product portfolio. In April .
Speaker 2: enabling us to say more lies in this under-deserved patient population. This term medical expects the FDA to complete its review of a humanitarian device extension for HDE for the use of its STD in children in the first half of this year.
Speaker 2: We look forward to keeping you updated on the progress in the coming weeks and months. On the product development front, we are on track with progress on our Pediatric Continuous Renewal Replacement Therapy Device and continue to anticipate ITE submission by early 2024. Early feedback from physicians and pediatric neoprologists in particular have been enthusiastic knowing how our technology uniquely addresses the unmet needs of this patient population and could potentially be a gain changer in pediatric treatments. In conclusion, I want to reiterate how excited I am for the future of New Wellers. Our goal of making aqua dexterity the standard of care for restoring fluid balance remains intact. We believe we are approaching an inflection point towards reaching this goal.
Speaker 2: The work that we did in 2022 advanced us down this path and I look forward to continue a strong execution in 2023 and beyond. Now I would like to turn the call over to our Chief Financial Officer, Lynn Blake, to discuss our Q4 and 4 year 2022 results. Thank you, Nester. Good morning, everyone. Thanks for joining me while it's last October . I continue to be increasingly excited about this company's future. Our Q4 revenue growth of 42% is attributable to the success of our commercial team expansion, advancements and our clinical evidence development and our tenacity and increasing market awareness of treatment options for patients who would overload.
Speaker 3: Turning to the Q4 financial results, revenue for the fourth quarter was $2.3 million, representing 42% year-over-year growth, and a 14% sequential increase from the third quarter of 2022. Our pediatric product segment once again has the strongest growth in the quarter, with a 92% increase year-over-year. This was followed by 47% growth in our health failure segments and 24% growth in critical care. So, it's margin for the quarter with 56.9% of sales, and increase of 250 basis points compared to growth margin of 54.4% in the prior year. This increase is primarily driven by increased sales volume in the quarter. Compared to the third quarter of 2022, SGNA expenses increased by approximately $413,000 or 10% reflecting increased variable compensation expenses and professional fees in the fourth quarter. Fourth quarter research and development expense is $1.2 million, and increases $70,000 or 6% relative to the fourth quarter of 2021. And a sequential quarter basis.
Speaker 3: Reciptions Development Cost increased $273,000 or 29% all related to the plan development of our new pediatric dedicated developers. Total operating expenses were $5.9 million in the quarter and increased to the approximately $640,000 compared to the fourth quarter of 2021. Total operating expenses for the full year were $21.9 million, a decrease of approximately $2.1 million or 9% year over year as we focus on serving cash while the same time funding our top strategic expected. Our 2022 full year cash utilization decreased 15% year over year, reflecting continued expense vigilance. The net loss in the fourth quarter was $1.9 million or a loss by debt. The net loss of $4.3 million or $41.9 for share for the same period in 2021.
Speaker 3: The current period in that loss includes non-recurrent other income of $2.5 million related to recognition and revaluation of the warrant issued in conjunction with our October financing. Additionally, these loss for share amounts reflect the company's reversed cost list that was affected in December of 2022. Prior year earnings for share has been adjusted to reflect the impact of the reversed cost list as well. At December 31, 2022, we had approximately 536,000 outstanding common shares. On January 4, our stockholders approved the proposal allowing holders of the warrant issued in the October financing to exercise those ones. To date, 99% of the warrant have now been exercised. So essentially clearing our warrant overhangs as and as a result, we currently have approximately 1.2 million shares of common stock outstanding. From a liquidity perspective, we ended the fourth quarter with $18.2 million in cash, cash equivalent and marketable securities, and we have no debt on the balance sheet.
Speaker 4: This concludes our prepared remarks. Operator, we would now like to open the call to question. Thank you. Now begin the question and answer session. Ask a question, may first star them one in your touchstone phone. For using a speaker phone, please pick up your hands as people are pressing the keys. We'd draw your question please first star them two. This time, we'll pause them a fairly to assemble the roster. First, last income from Jeffrey Poulton and the Bergthalman. Please go ahead. Hi, Nestle, how are you? How are you? Yes. So a few questions from Aaron. Firstly, can you talk about CSTOR's SCD for pediatric A.K.I. It sounds like their submission is in and you would anticipate the being able to commercialize their unit in 2023. Could you talk about timeline there? And could you talk about commercialization specific to your I.I.I. Your three channels. Yes, you have to be glad to answer that question.
Speaker 2: This tar, the approval, they are applying for a humanitarian device extension. And as you know, FDA can all be unpredictable. But we expect that they would receive the HDE sometime in the first half of this year. The second part of your question was about the commercialization. We're going to do that in a stage approach. We're going to start with our key users of the SED device, which happened to be many of them, our top users of Aquaduct into the after. So we see a very strong strategic threat there. So we hope to be very successful once we can start commercializing the device. Okay, got it. And Linda, financial question, you talked about 47% increasing cardiac and 24 in critical care. What was the PEDS number?
Speaker 4: The number was 92% for the fourth quarter year over year. That's Q4 year over year. Okay, God. Do you think you'll break that out next year or this year by segment? You know, I think we'll continue to provide that color in our common areas. It's not official segment reporting from a financial standpoint, but that's how we think about our cost points in our market side. Okay. Okay, God it. And when you talk about the unit that you're working on, the pediatric sense, and you talk about ID early 24, what's left of you between now and submitting the ID? Well, two things. One, we need to complete the development, which is very far advanced. And then also, most importantly, test that the performance of the device from safety and efficacy 100%. We want to make sure that the product is as high as quality as possible when we do the...
Speaker 2: at the launch of this, we start the ID study. The next step that we have, the immediate next step is our pre-submission to the FDA. And this is basically for Mala TV where we inform the FDA of what our plans are, and then we have a conversation directly with them to see what is their opinion about our plans. It is a pre-submission come earlier this year or later this year. We're very soon to do that pre-submission. And then lastly, Linda, do you call out cash use, Q4 cash use? I didn't call out the Q4 number, but it was in the range of 4 million. Perfect. That's our first thing to take into question. Yeah, thank you, Joe. Thank you. Next question will be from Anthony. Is that a DEA of maximum groups? Will you go ahead? Thank you. In terms of the console sales, how many were from new accounts versus existing accounts? Good question, Anthony. We had about 60% were from existing accounts, and the rest was in new accounts. Okay, great. And obviously, really nice progress in the pediatric segment and, you know, the growth across the board. Can you talk about...
Speaker 2: usage rates. I think you did give the, did you give the percentage increase in the single use, consumable piece of that and if not, I must not, I may have missed it if you can just repeat it. Yeah, no, we did not give a breakdown of the consult versus disposables. I hear what you're saying Anthony is something that we would be preparing for the future. But I think it would be a good metric for you to understand our growth, especially as we increase the placement of consults, which is our racer in our racer blade model. Okay, great. And I don't know if Dr. Jeffrey Sasson, but I had spoken to him during my due diligence process. If he is on, can he speak to, you know, the benefits of aqua decks and then the,
Speaker 2: ability to convince his peers in the benefits of using aqueducts in terms of increasing adoption. Yes, he's not here with us right now Anthony, but yes, that's one of the key roles that we have for him is to be able to talk to his peer, but as well as the medical society. There are influences the guidelines. Okay, and you said the expected timeline for the reverse HF study is, can you just review that again? Yes, we have our goal for this quarter, first quarter of 2023 is to have 12 sites activated. We are at nine right now. So we have communicated in the past that we expect enrollment to be about two years before we close the enrollment and start this statistical analysis. Okay, so the other three sites you expect by the end of March.
Speaker 2: ability to convince his peers in the benefits of using aqueducts in terms of increasing adoption. Yes, he's not here with us right now Anthony, but yes, that's one of the key roles that we have for him is to be able to talk to his peers, but as well as the medical society that have influenced the guidelines. Okay, okay. And you said the expected timeline for the reverse HS study is, can you just review that again? Yes, we have our goal for this quarter, first quarter of 2023 is to have 12 sites activated. We are at nine right now. So we have communicated in the past that we expect enrollment to be about two years before we close the enrollment and start this statistical analysis. Okay, so the other side you expect by the end of March. A precise number of sites.
Speaker 2: Yes, I'll end that. Okay, great. And about two years. Okay. I'll hop back in the queue. Thanks. Thank you. Thank you. Can if you have a question, please, for our stars and ones. Next question will be from both of them now. Like three capital markets, please go ahead. Good morning, everyone. Really nice momentum in queue four. I'm just curious if you see any evidence of continuing momentum as we have entered into 2023. Yes, in the past, we don't give guidelines broke that you know, but yeah, we're very confident that we're going to have a good quarter. Thank you, one. And I think the fact, you know, the drug staff we've mentioned that we now have fully staffed and filled all keeping up with. We've been in positions in the field. We have new RVP critical CES positions starting year and we didn't start quarter that way. So the, the, the good start to hear from commercial teams as well.
Speaker 4: Great, great. And then, you know, I just fit here in a little bit of a major and thinking about the reality that hospitals are penalized for readmissions and we know that CHF is one of the key areas in which readmissions are pretty common and just curious how you sense the customer-based doctors and hospitals, you use the aqua deck as a way to both provide superior care to patients and-
Speaker 2: prevent re-admission, is there any sense you have of growing awareness that this is a, you know, win-win-win situation for the hospital, for the doctors, for the patients, sort of for everybody? That's right, Brooks. We just finished our national sales meeting about two weeks ago. And in that meeting, we did nothing but to train the sales organization on the economics of the cost of tweeting our failure and the potential savings that we can provide hospitals and the health care system in terms of saving money due to the prevention of unwimbursed re-admissions within 30 days. And in the past, we have not had the clinical evidence to prove and to show that in this lack was there, can save, can reduce the number of hospitalizations and the re-admission rate. Now that we have that information in the last seven months, now we can aggressively talk about what are the economics of the hospital and we have all that information because it's public information, we know exactly that we admission rates by hospitals and we can provide in actual financial number showing the savings in number of dollars.
Speaker 2: That's great with the drug sales organization and all this information. I'm pretty excited about the outlook for you guys this year. So good luck. I hope that deck blazes out. Thank you. We are in the library. Thank you. This concludes the question and answer session. I'd like to turn the conference back over to Mr. Gerner over call. Thank you operator. I would like to conclude by thanking all of our stakeholders. New well as employees, stockholders, physicians, nurses, patients and the healthcare workers in the field. Without your support, we would not be able to achieve key advances in transforming the lives of patients suffering from fluid overload. So thank you for your participation and support. Have a nice day.