Q3 2023 Ekso Bionics Holdings Inc Earnings Call

Greetings and welcome to the <unk> Bionics quarter, three 2023 financial results call. At this time all participants are in a listen only mode. A brief 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.

Pat.

As a reminder, this conference is being recorded I would now like to turn the conference over to your host Matt Steinberg of Finn Partners. Please go ahead.

Thank you operator, and thank you all for participating in today's call. Joining me from XL Bionics are Scott Davis, Chief Executive Officer, Jason Jones, Chief Operating Officer, and Jerome Wong Chief Financial Officer.

Earlier today <unk> released financial results for the third quarter of 2023.

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.

Any statements made during this call that are not statements of historical facts should be deemed to be forward looking statements.

All forward looking statements, including statements regarding our business strategy future financial or operational expectations or our expectations on 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.

So disclaims any intention or obligation, except as required by law to update or revise any financial or operational projections, our regulatory outlook or other forward looking statements, whether because of new information future events or otherwise, which speak only as of today October 26.

23.

I'll now turn the call over to extra Bionics CEO Scott Davis.

Thank you, Matt and thank you to everyone for joining us today.

Pleased to announce that we achieved another strong quarter of sales for excellent and indigo devices.

All of us to grow our quarterly revenues by a significant 38% year over year.

In addition, we've established the groundwork for our XO works segment, resulting in a record quarterly number of Evo unit sales.

Finally, we continue to work hard to improve our bottom line by focusing on improvements in operating efficiencies and cost, resulting in a $700000 narrowing and our operating loss compared to Q3 of 2022.

Overall.

Our third quarter results reflect the growing adoption of our products across our target markets as well as the continued execution of our team.

We sold or recognized new revenue.

A total of 41 XO health devices in the third quarter, which includes devices within the XO and are an excellent wendigo product lines.

As in previous quarters, we believe are key to our growth will be our ability to continue building a strong multi unit order pipeline with top network operators like our 10, <unk> NR device order in the quarter from a large integrated delivery network.

Additionally, we remain committed to leveraging our long standing relationships with our existing customer base to heightened awareness for individuals who can benefit from long term use of our personal devices in their daily activities.

Our relationship with the U S Department of veteran Affairs for VA remains a critical part of our go to market strategy with our excellent when to go product line.

We were encouraged by the increasing adoption of our advanced technology through this relationship.

Light weight modular design and slim profiles of both our <unk> personal and our excellent therapy devices are compatible with many wheelchairs. He can bring much needed rehabilitation support to our valued veterans in both home and community use settings.

We remain committed to bringing our exoskeleton solutions to more VA hospitals and clinics in the hope of giving our veterans who have suffered a spinal cord injury better access to this potentially life changing technology.

On the international front, we secured several multi unit orders highlighting the success of our strategic investment in our indirect partnerships.

In Europe, we sold six XO and our devices as part of a multi unit order to one of our largest distributors.

In APAC in addition to an XO and our order we secured a three unit XO Indigo personal order, which is among our first global multi unit orders for indigo.

We remain focused on building relationships with larger customers in these regions, while raising awareness of our expanded XO health capabilities that now stretched across the continuum of care.

As mentioned on our second quarter call the centers for Medicare and Medicaid services or CMS proposed a new rule to include personal exoskeletons in the Medicare benefit category for braces and the updated 2024 home health perspective payment system right.

This proposed rule is important because it would classify certain exoskeleton type devices as braces for Medicare payment purposes.

If approved we believe this expanded coverage could significantly grow the addressable population for <unk> to go personal to the estimated 164000 individuals with spinal cord injury, who have Medicare or Medicaid coverage.

Importantly, these individuals' can obtain their XO indigo personal device at a fraction of the current cost.

Additionally, we recently applied XO indigo personal for Medicare code determination.

We look forward to cms's ruling including level of reimbursement, which is expected in late November.

Now turning to an update on our industrial product line <unk> works.

As part of our new volume pricing strategy, we secured a sharply higher number of Evo units sold compared to the third quarter of 2022, resulting in a record quarter for this product.

Driven by our commercial efforts employers are recognizing the meaningful productivity and safety benefits to Evo provides to industrial workers.

With several promising opportunities in our pipeline and the implementation of our new high volume contract manufacturer. We are encouraged by this initial momentum.

While revenue contributions from our industrial segment were modest our focus remains on placing an increased emphasis on <unk> placement and large industrial settings, which consists of an addressable market opportunity of approximately $5 billion.

We look forward to providing additional updates as we drive further market penetration across our industrial verticals.

As we continue to scale XO works for future growth. We are pleased to have recently launched an E. Commerce platform that will allow customers to purchase IBO is directly from XO.

This new site provides customers with a user friendly experience to also acquire XO branded apparel and accessories, we invite all listeners and customers to visit our site at <unk> Dot <unk> bionics Dot com.

Overall, we are encouraged by our third quarter performance and the progress we have made throughout 2023.

Going forward, we're focused on driving greater awareness and adoption of our products expanding market access for our customers securing more multi unit orders with new and existing large network operators and on continual improvements in operating efficiencies.

Keeping 38% year over year revenue growth and driving sustained demand in our target markets across the continuum of care is a testament to the strength of our commercial team and expanded product portfolio.

Now I will turn the call over to our Chief operating officer pay zones.

Thank you Scott in the third quarter, our operations team continued to manage operating expenses tightly resulting in flat quarterly operating expense and narrowed quarterly operating loss both year over year, Despite higher head count and costs associated with our agency acquisition.

As part of our effort to achieve positive cash flow. We continue to look for areas, where we can improve efficiency without impacting quality or growth.

As I noted in our second quarter financial results call, we have been carrying higher than desired inventory to mitigate production risks due to supply chain disruptions.

Over the past couple of quarters, our supply chain has normalized which has allowed us to reduce our on hand inventory.

Evidence or decline in inventory at quarter end was the first quarter over quarter reduction in inventory since 2020.

As our updated inventory management approach closer to the entire supply chain. We believe further reductions are possible.

As Scott mentioned earlier, we are starting to see higher higher volume orders for Evo in response to lower pricing.

This strategy is enabled by our successful transition of the product line to our contract manufacturing partner in Malaysia.

In addition to significantly lower cost outsourcing the manufacturer gives us higher capacity and the ability to respond quickly to any potential increase in demand.

I look forward to providing additional operational updates on our future financial results calls I will now turn the call over to Jerome Wong, who will discuss our third quarter 2023, <unk> financial results.

Thank you Jason.

So generated third quarter 2023 revenue of $4 6 million compared to $3 3 million.

For the third quarter of 2022, an increase of 38%.

This increase was comprised of a $1 $2 million increase in <unk> revenue and a $1 million increase in extra works revenue.

Gross profit for the third quarter was $2 5 million, representing a gross margin of approximately 53% compared to a gross profit of $1 $7 million and a gross margin of 51% for the same period in 2022.

46% overall increase in gross profit was driven by an increase in salaries and XO health segment.

Margin expansion was primarily due to lower excellent health device and service costs.

Operating expenses for the third quarter were $5 4 million compared to $5 $3 million for the third quarter of 2022.

The increase was primarily due to additional head count associated with the acquisition of HFC, partially offset by a decrease in legal expenses.

Net loss applicable to common stockholders for the third quarter was $3 4 million or 24 basic and diluted share compared to net loss of $4 3 million or <unk> 33 per basic and diluted share for the same period in 2022, turning to year to date results revenue increased $4 1 million.

Our 43% to $13 4 million for the nine months ended September 32023, compared to $9 4 million in the same period of 2022.

The increase in revenue was primarily driven by an increase in XL health device sales of $4 7 million.

Gross profit for the nine months ended September 32023 was $6 $7 million, representing a gross margin of 50% compared to a gross profit of $4 $5 million for the same period in 2022, representing a gross margin of 48%.

The overall increase in gross margin was primarily due to lower device cost.

Operating expenses for the first nine months of 2023 were $18 4 million compared to $15 $7 million for the same period in 2022. The increase in operating expenses was primarily related to additional head count and integration activities associated with the acquisition of H M C.

Net loss applicable to common share holders for the first nine months of 2023 was $12 million or 88 cents per basic and diluted share compared to a net loss of $11 $9 million or <unk> 92 per basic and diluted share for the same period in 2022.

Cash used in operating activities in the first nine months of 2023 was $10 5 million.

<unk> from $11 million in the same period of 2022.

As of September 32023, the company had cash on hand of $9 9 million.

Please see our 10-Q filed earlier today for further details regarding the quarter. 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, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your <unk>.

Handset before pressing the star keys.

One moment, please while we poll for questions.

Our first question is from Sean Lee with H C. Wainwright. Please proceed with your question.

Oh, good afternoon, Scott and Jerome and thanks for taking my questions. So I just have a couple of questions.

On the CMS front with the meeting coming up next month, assuming everything goes well.

With the new rules come into effect.

Yeah.

Okay.

How much of an impact would you say that will have on your sales in the U S.

Yes, Sean Thank you for your question.

Yeah, we're really excited about the potential that exists with with.

With CMS.

The end of November is the timeframe for notification that.

That we've been given.

The process.

From there.

As a bit is.

This is a bit complicated.

As we begin to.

Process.

Ah patients through.

Through the Medicare Medicaid process, so that but.

But we could.

Assuming this happens we could start to see.

A positive impact on the.

On the business starting in the first quarter of.

'twenty 'twenty four there is.

There's a lot of moving pieces.

Around this is a rather complicated process, but.

The first major step in it.

Would be.

Approval of this lump sum reimbursement in treating the exoskeleton has embraced that.

We will open up the.

<unk>.

Market potential and the ability for folks to access this technology to a much wider population of.

Individuals currently there are approximately 164000.

Individuals who have suffered a spinal cord injury.

Also have Medicare and Medicare or Medicaid coverage.

Great. Thank you for the additional color.

My second question is on the.

Well cost improvements.

Great to see that you guys are getting.

Better operating margins from.

And that's translating into greater volumes, especially into extra work side I was wondering.

<unk> on the medium to longer term say next two to four years, where do you see this.

Where do you see these margins could improve.

Okay.

Okay, Sean specifically on the.

The overall margins or you had also made reference to the works business as well are you specifically talking about works are just margins in general.

So overall annual works please.

Okay.

Yes, so we have been doing a lot of work, Jason and his team and operations have been doing a lot in supply chain too.

Really improve.

Our performance there certainly the additional volume that we have is.

Helping as well.

We anticipate that as we as we go forward.

As volumes continue to increase and as we continue to work on these improvements.

We are.

Yeah.

Optimistic that.

Margins will continue to.

To improve on the work side of the business.

This is.

Was really.

The contract manufacturing relationship that we've put in place now for high volume as volumes increase.

We have the mechanism within this.

Within this relationship to maintain.

Good margin as we continue to increase our volume so and again as that starts to blend into our in a meaningful way into our overall margins.

Operator: and welcome to the Ekso Bionics Quarter 3, 2023 financial results call. At this time, all participants are in a listen only mode. A brief 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. As a reminder, this conference is being recorded.

We see room for continued margin improvement.

As we go through the next several years.

Great.

My last question is on the international basis, it's good to see that.

You guys are getting multiyear orders, even from the Asia Pacific region. So I was wondering.

Matt Steinberg: I would now like to turn the conference over to your host, Matt Steinberg, a thin partner. Please go ahead. Thank you, operator, and thank you all for participating in today's call.

Where do you expect to see.

Market the international market could grow to in terms of your overall revenues.

Matt Steinberg: Joining me from ExoBionics or Scott Davis, Chief Executive Officer, Jason Jones, Chief Operating Officer, and Jerome Wong, Chief Financial Officer. Earlier today, ExoBionics released financial results for the third quarter of 2023. A copy of the press release is available on the company's website.

Okay.

Well. Thank you so the international market.

We have certainly a strong presence in Europe and in growing precious presence in Asia Pacific region.

In Europe, we have a very strong team.

It's located in Germany Cross discipline everything from sales to clinical too to support and we've built very strong relationships with distribution partners.

Matt Steinberg: 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. Any statements made during this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including statements regarding our business strategy, 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.

Throughout that region as well as some larger hospital networks that exist.

In region. So we are anticipating.

And believe that there will be good growth good continued growth in <unk>.

In Europe year over year on our enterprise business.

Enterprise health business and on the.

Personal devices.

That is an area that internationally we are.

Just really starting to grow we placed three devices in APAC.

Matt Steinberg: 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, they see our filings with the Securities and Exchange Commission.

This this last quarter. So we see that is also a great opportunity as there are mechanisms within various countries.

Offering some level of reimbursement to spinal cord injury individuals'.

We are anticipating continue.

Continued growth in these in these regions.

Matt Steinberg: ExoDisclaims any intention or obligation, except as required by law, to update or revise any financial or operational projections, our regulatory outlook, or other forward-looking statements, whether because of new information, future events, or otherwise, which speak only as of today, October 26, 2023.

Relative.

To the North American growth that we that we see today, so I think overall.

We see a positive outlook there.

Great. Thanks.

For taking my questions.

Scott Davis: I will now turn the call over to ExoBionics CEO Scott Davis. Thank you, Matt, and thank you to everyone for joining us today. Please do announce that we achieved another strong quarter of sales for ExoNR and Indigo devices that propelled us to grow our quarterly revenues by a significant 38% year-over-year. In addition, we have established the groundwork for our ExoWorks segment, resulting in a record quarterly number of EVO unit sales. Finally, we continue to work hard to improve our bottom line by focusing on improvements in operating efficiencies and costs, resulting in a $700,000 narrowing in our operating loss compared to Q3 of 2022.

Thank you Sean.

There are no further questions at this time I would now like to turn the floor back over to Scott Davis for closing comments.

Thank you Maria.

Before closing today's call I'd like to reiterate some key takeaways as we enter the final quarter of 2023.

First we're building growth momentum with another strong quarter of XO NR in indigo device sales, we continue to elevate the standard of care for neuro rehabilitation across the continuum of care.

The proposed rule for CMS, if adopted in November to potentially expand coverage for <unk> to go personal to thousands of spinal cord injury patients. We fully support the proposal to further enhance potential access for Medicare and Medicaid beneficiaries.

Scott Davis: Overall, our third quarter results reflect the growing adoption of our products across our target markets as well as the continued execution of our team. We sold or recognized new revenue on a total of 41 ExoHealth devices in the third quarter, which includes devices within the ExoNR and ExoIndigo product, as in previous quarters, we believe a key to our growth will be our ability to continue building a strong multi-unit order pipeline with top network operators like our 10 exo-NR device order in the quarter from a large integrated delivery network.

<unk>.

We're starting to see promising results from our commercial strategy for Evo with a record unit sales quarter.

Supported by our new contract manufacturer, we're poised to take the next step to bringing these innovative devices to customers worldwide and finally, we continue to execute on our plan to achieve scale and positive cash flow through revenue growth product line expansion and operational improvements.

We look forward to updating you on our progress ahead, we want to thank you all for joining us today.

Scott Davis: Additionally, we remain committed to leveraging our long-standing relationships with our existing customer base to hide an awareness for individuals who can benefit from long-term use of our personal devices and their daily activities. Our relationship with the US Department of Veteran Affairs or VA remains a critical part of our go-to-market strategy with our exo-indigo product line. We were encouraged by the increasing adoption of our advanced technology through this relationship. The lightweight modular design and slim profiles of both our exo-indigo personal and our exo-indigo therapy devices are compatible with many wheelchairs and can bring much-needed rehabilitation support to our valued veterans in both home and community use settings. We remain committed in bringing our exo-skeleton solutions to more VA hospitals and clinics in the hope of giving our veterans who have suffered a spinal cord injury better access to this potentially life-changing technology.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

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Scott Davis: On the international front, we secured several multi-unit orders highlighting the success of our strategic investment in our indirect partnerships. In Europe, we sold six exo-nr devices as part of a multi-unit order to one of our largest distributors. In APAC, in addition to an exo-nr order, we secured a three-unit exo-indigo personal order, which is among our first global multi-unit orders for indigo. We remain focused on building relationships with larger customers in these regions while raising awareness of our expanded exo-health capabilities that now stretch across the continuum of care.

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Okay.

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Scott Davis: As mentioned on our second quarter call, the Centers for Medicare and Medicaid Services or CMS proposed a new rule to include personal exo-skeletons in the Medicare-benefit category for braces in the updated 2024 home-help prospective payments and rate. This proposed rule is important because it would classify certain exo-skeleton-type devices as braces for Medicare payment purposes. If approved, we believe this expanded coverage could significantly grow the addressable population for exo-indigo personal to the estimated 164,000 individuals with a spinal cord injury who have Medicare or Medicaid coverage.

Uh-huh.

Yes.

Uh-huh.

Okay.

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Hello, Matt.

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[music].

Okay.

No.

Scott Davis: Importantly, these individuals could obtain their exo-indigo personal device at a fraction of the current cost. Additionally, we recently applied exo-indigo personal for Medicare code determination. We look forward to CMS's ruling, including level of reimbursement which is expected in late November.

Uh-huh.

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Scott Davis: Now, turning to an update on our industrial product line, exo-works. As part of our new volume pricing strategy, we secured a sharply higher number of EVO units sold compared to the third quarter of 2022, resulting in a record quarter for this product. Driven by our commercial efforts, employers are recognizing the meaningful productivity and safety benefits that EVO provides to industrial workers. With several promising opportunities in our pipeline and the implementation of our new high-volume contract manufacturer, we recurred by this initial momentum.

Okay.

Yeah.

Okay.

Scott Davis: While revenue contributions from our industrial segment were modest, our focus remains on placing an increased emphasis on e-boast placement in large industrial settings, which consists of an addressable market opportunity of approximately $5 billion. We look forward to providing additional updates as we drive further market penetration across our industrial verticals. As we continue to scale exo-works for future growth, we are pleased to have recently launched an e-commerce platform that will allow customers to purchase e-boast directly from Exo. This new site provides customers with a user-friendly experience to also acquire exo-branded apparel and accessories. We invite all listeners and customers to visit our site at stop.exo-bionics.com.

Scott Davis: Overall, we are encouraged by our third quarter performance in the progress we have made throughout 2023. Going forward, we are focused on driving greater awareness and adoption of our products, expanding market access for our customers, securing more multi-unit orders with new and existing large network operators, and on continual improvements in operating efficiencies. Achieving 38% year-over-year revenue growth and driving sustained demand in our target markets across the continuum of care is a testament to the strength of our commercial team and expanded product portfolio.

Jason Jones: Now I will turn the call over to our chief operating officer, Taysonce. Thank you, Scott. In the third quarter, our operations team continued to manage operating expenses tightly, resulting in flat quarterly operating expense and narrowed quarterly operating loss, both year-over-year, despite higher head count and cost associated with our H&C acquisition. As part of our effort to achieve positive cash flow, we continue to look for areas where we can improve efficiency without impacting quality or growth.

Jason Jones: As I noted in our second quarter financial results call, we have been carrying higher than desired inventory to mitigate production risk due to supply chain disruptions. Over the past couple of quarters, our supply chain has normalized, which has allowed us to reduce our on-hand inventory. As evidence, our declining inventory at quarter-end was the first quarter-over-quarter reduction in inventory since 2020. As our updated inventory and management approach flows through the entire supply chain, we believe further reductions are possible.

Jason Jones: As Scott mentioned earlier, we are starting to see higher volume orders for EVO in response to lower pricing. This strategy is enabled by our successful transition of the product line to our contract manufacturing partner in Malaysia. In addition to significantly lower cost, outsourcing the manufacturer of EVO gives us higher capacity and the ability to respond quickly to any potential increase in demand.

Jason Jones: I look forward to providing additional operational updates on our future financial results calls.

Jerome Wong: I will now turn the call over to Jerome Wong, who will discuss our third quarter 2023 financial results. Thank you, Jason. Exo-generated third quarter 2023 revenue of $4.6 million compared to $3.3 million at the third quarter of 2022, an increase of 38%. This increase was comprised of a $1.2 million increase in Excel Health revenue and a $1.1 million increase in Excel Works revenue. Gross profit for the third quarter was $2.5 million, representing a gross margin of approximately 53% compared to a gross profit of $1.7 million and a gross margin of 51% for the same period in 2022.

Jerome Wong: 46% overall increase in gross profit was driven by an increase in sales in exo-health segment. Margin Expansion was primarily due to lower exo-health device and service costs. Operating expenses for the third quarter were $5.4 million compared to $5.3 million for the third quarter of 2022. The increase was primarily due to additional headcount associated with the acquisition of HMC, partially offset by a decrease in legal expenses. Net loss applicable to common stockholders for the third quarter was $3.4 million or $24 cents basic and diluted share, compared to net loss of $4.3 million or $33 cents per basic and diluted share for the same period in 2022.

Jerome Wong: Turning to year-to-date results revenue increased $4.1 million or 43% to $13.4 million for the nine months ended September 30th, 2023, compared to $9.4 million in the same period of 2022. The increase in revenue was primarily driven by an increase in exo-health device sales of $4.7 million. Gross profit for the nine months ended September 30th, 2023 was $6.7 million, representing a gross margin of 50% compared to a gross profit of $4.5 million for the same period in 2022, representing a gross margin of 48%.

Jerome Wong: The overall increase in gross margin was primarily due to lower device costs. Operating expenses for the first nine months of 2023 were $18.4 million compared to $15.7 million for the same period in 2022. The increase in operating expenses was primarily related to additional headcounts and integration activities associated with the acquisition of HMC. Net loss applicable to common share holders for the first nine months of 2023 was $12 million or 88 cents per basic and diluted share compared to a net loss of $11.9 million or 92 cents per basic and diluted share for the same period in 2022.

Jerome Wong: Cash used in operating activities in the first nine months of 2023 was $10.5 million down from $11 million in the same period of 2022. As of September 30th, 2023, the company had cash on hand of $9.9 million. Please see our 10Q file earlier today for further details regarding the quarter.

Operator: 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. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Sean Lee: Our first question is from Sean Lee with HC Wainwright. Please proceed with your question.

Scott Davis: Good afternoon, Scott and Jerome, and thanks for taking my questions. So I just have a couple questions on first on the CMS front with the meeting coming up next month. Assuming everything goes well, when will the new rules come into effect? and on your basis, how much of the impact would you say they'll have on your cells in the U.S.? Sean, thank you for your question. You know, we're really excited about the potential that exists with CMS.

Scott Davis: The end of November is the timeframe for notification that we've been given. You know, the process from there is a bit complicated. We begin to heal process patients through the Medicare Medicaid process. But assuming this happens, we could start to see a positive impact on the business starting in the first quarter of 2024. There's a lot of moving pieces around this is a rather complicated process. But the first major step in it would be approval of this lump sum reimbursement and treating the exoskeleton as a brace that will open up the market potential and the ability for folks to access this technology to a much wider population of individuals. Currently, there are approximately 164,000 individuals who have suffered a spinal cord injury, who also have Medicare or Medicaid coverage. Great. Thank you for the additional color.

Scott Davis: My second question is on the process performance. It's great to see that you guys are getting better operating margins from, you know, and that's translating into greater volumes, especially in the exoskeleton. So I was wondering, speaking on the medium to longer terms, say next to the four years, where do you see these margins could improve to? Okay, Sean, specifically on the overall margins, or you had also made a reference to the works business as well, are you specifically talking about works or just margins in general?

Scott Davis: Both overall and for words, please. Okay. So we have been doing a lot of work. Jason and his team in operations have been doing a lot in supply chain to really improve our performance there. Certainly the additional volume that we have is helping as well. We anticipate that as we go forward, as volumes continue to increase, and as we continue to work on these improvements, we are optimistic that the margins will continue to improve on the works side of the business.

Scott Davis: This was really the contract manufacturing relationship that we put in place now for high volume as volumes increase. We have the mechanism within this relationship to maintain good margin as we continue to increase our volume. Again, as that starts to blend into our in a meaningful way into our overall margins, we see room for continued margin improvement as we go through the next several years. Great.

Scott Davis: My last question is on the international business. It's good to see that you guys are getting multi orders even from data-specific regions. So I was wondering, where do you expect the international market to grow to in terms of your overall revenues? Well, thank you. So the international market, we have certainly a strong presence in Europe and growing presence in a specific region. In Europe, we have a very strong team that's located in Germany, cross-disciplined, everything from sales to clinical to support.

Scott Davis: And we've built very strong relationships with distribution partners throughout that region as well as some larger hospital networks that exist in region. So we are anticipating and believe that there will be good growth, good continued growth in Europe, year over year on our enterprise business, enterprise health business. And on the personal devices, that is an area that internationally we are just really starting to grow. We placed three devices in APEC this last quarter.

Scott Davis: So we see that as also a great opportunity as there are mechanisms within various countries for offering some level of reimbursement to spinal cord injury individuals. So we are anticipating continued growth in these regions relative to the North American growth that we see today. So I think overall, you know, we see a positive outlook there. Great. Thanks, and thanks for taking my questions. Thank you, Sean. There are no further questions at this time.

Scott Davis: I would now like to turn the floor back over to Scott Davis for closing comments. Thank you, Maria.

Scott Davis: Before closing today's call, I'd like to reiterate some key takeaways as we enter the final quarter of 2023. First, we're building growth momentum. With another strong quarter of exo and R and indigo device sales, we continue to elevate the standard of care for neuro rehabilitation across the continuum of care. 2nd, the proposed rule for CMS. If adopted in November, the potentially expand coverage for Exo Indigo personal 2000s of spinal cord injury patients. We fully support the proposal to further enhance potential access for Medicare and Medicaid beneficiaries.

Scott Davis: 3rd, we're starting to see promising results from our commercial strategy for EVO with a record unit sales quarter. Supported by our new contract manufacturer, we're poised to take the next step in bringing these innovative devices to customers worldwide. And finally, we continue to execute on our plan to achieve scale and positive cash flow for revenue growth, product line expansion, and operational improvements. We look forward to updating you on our progress ahead.

Operator: We want to thank you all for joining us today. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Thank you. Benjamin Haynor, Matt Steinberg, Swayampakula Ramakanth