Q3 2023 Zomedica Corp Earnings Call

Speaker 1: Good afternoon, ladies and gentlemen.

Good afternoon, ladies and gentlemen, and thank you for standing by welcome to Sue Medical's third quarter 2023 earnings results and business update call.

Speaker 1: and thank you for standing by. Welcome to Zoomerica's third quarter 2023 earnings results and business.

I would like to remind everyone that this conference call is being recorded today Monday November 13th 2023.

Speaker 1: I would like to remind everyone that this conference call is being recorded.

430 P. M E T and all participants are in 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.

Speaker 1: I will now turn the call over to Elif McDonald.

I'll now turn the call over to at least Mcdonald Investor Relations. Please go ahead Mr Dance.

Speaker 2: Thank you, Renju, and good afternoon, ladies and gentlemen. Welcome to Zometica's third quarter 2023 earnings results and business update call. On today's call, you will hear from Zometica's CEO , Larry Heaton, and CFO , Peter Donato.

Thank you Andrew and good afternoon, ladies and gentlemen, welcome to the Americas third quarter 2023 earnings results and business update call on.

On today's call you will hear from <unk>, Medical's, CEO, Larry heating and CFO, Peter Donato <unk>.

Speaker 2: Before we begin, we would like to remind everyone on this call that we will be making various remarks about future expectations, plans and prospects that constitute forward looking statements.

Before we begin we would like to remind everyone. On this call that we will be making various remarks about future expectations plans and prospects that constitute forward looking statements.

These forward looking statements are based on assumptions and there are risks that results may differ materially from those statements.

As such no Madison.

Cannot guarantee that any forward looking statements will materialize and you are cautioned not to place undue reliance on them.

We refer for some potential investors to the forward looking information and risk factor sections of our public filings available on SEDAR at Www, SEDAR com and on MSR at SEC Gov.

Forward looking statements made on this conference call represent management's expectations as of today November 13 2023.

Finally, we would like to remind everyone that all figures discussed on this call are in U S dollars.

I will now pass the call over to so many cars Chief Executive Officer, Mr. Larry Larry.

Thank you Alicia.

I'd like to start by thanking our shareholders for your support.

Speaker 3: I wish our prospective investors and analysts and others a good afternoon and welcome all of you to the Zemedica third quarter 2023 earnings results and business update call.

Which are prospective investors and analysts and others are good afternoon.

And welcome all of you to the <unk> third quarter 2023 earnings results and business update call.

Speaker 3: I'll start the call by providing an update on the overall business, then Peter Donato, our Chief Financial Officer, will walk you through our financial results for the quarter and provide a corporate update. After our prepared remarks, we'll open the line and web to your questions.

I'll start the call by providing an update on the overall business and then Peter Donato, Our Chief Financial Officer will walk you through our financial results for the quarter.

And provide a corporate update after our prepared remarks, we'll open the line and web to your questions.

Earlier today somatic <unk> released its financial results for the quarter ended September 32023.

Speaker 3: Earlier today, Somatica released its financial results for the quarter ended September 30, 2023. Overall, this was a remarkable quarter. We delivered record revenues, our highest ever quarterly revenue, beating last year's record fourth quarter, all while maintaining high margins and reducing operating cash burns.

Overall this was a remarkable quarter.

We delivered record revenues, our highest ever quarterly revenue, beating last year's record fourth quarter.

All while maintaining high margins and reducing operating cash burn.

Speaker 3: Let me take a moment to highlight that revenues were $6.3 million, a growth of 31%.

Let me take a moment to highlight that revenues were $6 3 million a growth of 31%.

Speaker 3: over last year's same quarter with almost all the growth derived organically from previous acquisitions that have been fully integrated over the past year.

Last year's same quarter with almost all the growth derived organically from previous acquisitions that had been fully integrated over the past year.

Speaker 3: validating that our strategic plan to acquire, integrate, and grow is working.

Validating that our strategic plan to acquire integrate and grow is working.

During the third quarter, we launched our equine E ACTH assay for the true form a platform.

Speaker 3: During the third quarter, we launched our equine EACTH assay for the Truforma platform.

Speaker 3: This assay enables equine veterinarians in the clinic or stall site to diagnose equine Cushing's disease, known clinically as pituitary pars intermediate dysfunction, UPID, and monitor positive patients as they titrate therapy initially and then for the rest of that horse's life.

This assay enables equine veterinarians in the clinic or sell side.

Diagnose equine questions disease latest Terry parse intermediate dysfunction.

And monitor patients.

Patients as they titrate therapy, initially and then when.

The rest of that forces life.

Speaker 3: Accessing such a large and underserved equine market can make a significant contribution to our diagnostic sector.

Accessing such a large and underserved equine market can make a significant contribution to our diagnostics segment.

At September 5th we announced the acquisition of structured monitoring products S&P.

Speaker 3: On September 5th, we announced the acquisition of Structured Monitoring Products, SMP.

Speaker 3: converting our minority interest into full ownership, giving us exclusive commercial rights to VetGuardian products.

Converting our minority interest into full ownership, giving us exclusive commercial rights Tibet Guardian products.

Speaker 3: The VetGuardian platform improves the quality of care for pets in the ICU.

The vet Guardian platform improves the quality of care for pets in the ICU.

Speaker 3: during recovery from surgery, and for overnight stays in the clinic.

During recovery from surgery and for overnight stays in the clinic.

Speaker 3: By providing staff with real-time alerts when vital signs deviate from a preset range, it allows the staff to intervene in health issues more quickly, improving care.

By providing real time alerts with vital signs.

Reset range. It allows the SaaS intervened and health issues more quickly.

Proving her.

Speaker 3: It's unique patented Doppler technology allows the vicarious system to obtain vital signs in real time without wired leads or a harness on the pet, thus allowing the pet to rest comfortably during recovery.

Its unique patented technology that allows the majority of system to obtain vital signs in real time without wired millions of artists on the pad.

Thus, allowing them to rest comfortably during recovery.

Speaker 3: Much like D1EACTH, we're pleased with the early indicators. Let's see future outside.

But he ACTH, we're pleased with the early indicators.

Future upside.

Speaker 3: Subsequent to the end of the quarter, on October 5th, we announced the acquisition of Corvo Biotechnologies LLC, a wholly owned subsidiary of Corvo US Inc., focused on the development of point-of-care diagnostic solutions, leveraging their innovative bulk acoustic wave sensor technology in the development of the Omnia point-of-care diagnostic platform designed to perform assays for human patients

Subsequent to the ended the quarter on October 5th we announced the acquisition of <unk> Biotechnologies LLC, a wholly owned subsidiary of formal U S Inc.

Just on the development of point of care diagnostic solutions, leveraging their innovative bulk acoustic wave sensor technology and the development.

Hey.

Good morning care diagnostic platform designed to perform assays for human patients along with our true pharma point of care diagnostic platform to perform assays for companion animals, which we have marketed under license prior to this acquisition.

Speaker 3: along with our Truforma point-of-care diagnostic platform to perform assays for companion animals, which we have marketed under license prior to this acquisition.

Speaker 3: A primary focus of this acquisition will be on capturing margin improvements by assuming QBT's manufacturing systems.

A primary focus of this acquisition will be on capturing margin improvements by assuming <unk> manufacturing systems.

Speaker 3: as well as accelerating assay development for the Truforma platform.

As well as accelerating assay development for the two former platform.

Speaker 3: This acquisition will also allow us to avoid future operating and capital expenses incurred by building R&D and manufacturing staff internally, as we had planned to do, as well as eliminating remaining payments, including license fees, transition fees, and future royalties, which would otherwise be due to Corbo Biotech under the prior agreement.

This acquisition will also allow us to avoid future operating and capital expenses incurred by building, our R&D and manufacturing staff internally as we had planned to do.

As well as eliminating remaining payments, including license fees transition fees and future royalties, which would otherwise be due to <unk> biotech under the prior agreement.

Speaker 3: While we also acquired the human health business, currently we have no plans to commercialize it. However, we will continue to explore opportunities to realize value from this asset.

While we also acquired the human health business. Currently we have no plans to commercialize. It. However, we will continue to explore opportunities to realize value from this asset.

Strategically we continue to actively integrate and grow what we have already acquired and we will continue to seek M&A opportunities that meet our rigorous internal financial and strategic hurdles all while adhering to our five pillars, which are improving the quality of care for the pet and the satisfaction of the pet parent well.

Speaker 3: Strategically, we continue to actively integrate and grow what we have already acquired, and we will continue to seek M&A opportunities that meet our rigorous internal financial and strategic hurdles, all while adhering to our five pillars, which are improving the quality of care for the pet and the satisfaction of the pet parent, while also improving the workflow, cash flow, and profitability of our veterinarian partners.

Also improving the workflow.

Cash flow and profitability of our veterinarian partners.

While we're pleased with the number and pace of acquisitions over only the last two years, we're not going to rest on our laurels and in fact, we have a robust pipeline of deals under consideration applying our five pillars.

Speaker 3: While we're pleased with the number and pace of acquisitions over only the last two years, we're not going to rest on our laurels. In fact, we have a robust pipeline of deals under consideration applying our five pillars.

Speaker 3: We're looking for even faster top-line growth opportunities without delaying our pathway to profitability.

We're looking for even faster topline growth opportunities without delaying our pathway to profitability.

Speaker 3: In other words, we'll remain opportunistically acquisitive.

In other words will remain Opportunistically acquisitive.

Speaker 3: Remembering that we have a strong liquidity position of $118 million in cash, cash equivalents and available for sale securities, we remain well funded for the foreseeable future.

Remembering that we have a strong liquidity position of $118 million in cash cash equivalents and available for sale Securities. We remain well funded for the foreseeable future.

Speaker 3: Achieving our strategic priorities requires a combination of growing revenue, efficient manufacturing that produces substantial margin,

Achieving our strategic priorities requires a combination.

Our growing revenue.

Manufacturing they produced a substantial margins.

Speaker 3: and investing in commercial and R&D capabilities to enable both organic growth as well as growth.

And investing in commercial and R&D capabilities to enable both organic growth.

As well as growth.

Speaker 3: On the R&D front, we plan to leverage our recent acquisition of Corvo biotechnologies with greater investment in new assays for our Truforma platform.

On the R&D front, we plan to leverage our recent acquisition of <unk> Biotechnologies with greater investment in new assays for our to form a platform.

Speaker 3: We'll also continue to expand the capabilities of our TrueView digital microscope platform and the usability of our VETGuardian monitoring platform while exploring new market options.

We'll also continue to expand the capabilities of our true view.

Digital microscope platform and the usability of our bed Guardian monitoring platform, while exploring new market opportunities.

Speaker 3: The launch of Equine EACTH is one example of where we're seeing signs of early success. This is a growth driver for us going forward and an opportunity to expand product offerings within our already large Equine customer base.

The launch of equine ACTH is one example of where we're seeing signs of early success. This is a growth driver for us going forward and an opportunity to expand product offerings within our already large equine customer base.

Speaker 3: On the heels of the Equine EACTH launch, we will soon launch another set of assays for small animals, these for non-infectious GI conditions like diarrhea and vomiting, one of the top three reasons dogs are brought to the vet on an emergent basis, giving us another shot on goal in

On the heels of the equine ACTH launch we will soon launch another set of assays for small animals. These for non infectious gi conditions like diarrhea, and vomiting one.

One of the top three reasons dogs are brought to the vet on an emergent basis.

Given us another shot on goal in the diagnostics segment.

Speaker 3: Similarly, as we continue to build a sales organization, I'm pleased to announce that subsequent to the quarter just ended, we welcomed a new Senior Vice President of Sales to the team, Kevin Klass, an accomplished executive from an outstanding animal health company.

Similarly, as we continue to build a sales organization I'm pleased to announce that subsequent to the quarter. Just ended we welcomed a new senior vice president of sales to the team Kevin class and accomplished executive from an outstanding Animal Health company.

Speaker 3: In addition, we continue to invest in sales and marketing programs, and while spending is down this quarter versus last year, we're seeing an increase in year-to-date spending versus levels seen in 2022, when we were first building our commercial infrastructure.

In addition, we continue to invest in sales and marketing programs and while spending is down this quarter versus last year, we're seeing an increase in year to date spending versus levels seen in 2022, when we were first building our commercial infrastructure.

Speaker 3: We're also pleased to report that we're continuing to see leverage developing on the G&A line as we continue our journey towards cash flow and GAAP profitability.

We're also pleased to report that were continuing to see leverage developing on the G&A line as.

As we continue our journey towards cash flow and GAAP profitability.

Before I hand, the call to Peter I want to reiterate that we're very happy with what we achieved during the third quarter and look forward to building on this momentum as we continue to be very optimistic about an even stronger fourth quarter with.

Speaker 3: Before I hand the call to Peter, I want to reiterate that we're very happy with what we achieved during the third quarter, and look forward to building on this momentum as we continue to be very optimistic about an even stronger fourth quarter. With that, I'll hand it over to Peter for the financial review and corporate update. After his remarks, I'll provide some closing comments. Thank you, Larry, and good afternoon, everyone.

With that I'll hand, it over to Peter for the financial review and corporate update after his remarks I'll provide some closing comments. Thank you Larry and good afternoon, everyone.

Speaker 4: Revenues for the third quarter of 2023 came in at over $6.3 million, an increase of over $1.5 million or 31% from the third quarter of 2022 of $4.8 million.

Revenues for the third quarter 2023 came in at over $6 $3 million, an increase of over one $5 million or 31% from the third quarter of 2020 to $4 8 million.

Speaker 4: The increase was primarily due to organic growth, products that we've now integrated and sold for over a year, within our Assisi, PulseVet, RevoSquared, and Truforma product lines, and the inclusion of our VetGuardian products, which were not part of the consolidated figures last year.

The increase was primarily due to organic growth products that we've been now integrated and sold for over a year within our C. C pulse VAT reversed squared and true form our product lines and the inclusion of our vet Guardian project products, which were not part of the consolidated figures last year.

Speaker 4: Revenues year-to-date, 2023, came in at $17.8 million, an increase of $5 million, or 39% from the same period last year. This increase was primarily driven by growth in PulseBet and True Forma product sales, the inclusion of four-year revenues from RCC and RemoSquared products, and once again, the inclusion of BetGuardian products, which were not part of the figures last year.

Year to date in 2023 came in at $17 $8 million, an increase of $5 million or 39% from the same period last year. This increase was primarily driven by growth in pulse back and true form of product sales. The inclusion of full year revenues from our CCN Raimo squared products.

And once again, the inclusion of Ed Garden products, which are not part of the figures last year.

Consumable revenues were $4 $5 million, an increase of approximately 29% over the third quarter 2022 revenues of $3 $5 million. These high margin products represented recurring revenue that is generally around 70% of our sales.

Speaker 4: Consumable revenues were $4.5 million, an increase of approximately 29% over the third quarter 2022 revenues of $3.5 million. These high margin products represented recurring revenue that is generally around 70% of our sales.

Speaker 4: Capital revenues were $1.8 million, an increase of approximately 38% over the third quarter of 2022 revenues of $1.3 million.

Capital revenues were $1.8 million, an increase of approximately 38% over the third quarter of 2022 revenues of $1 $3 million.

Speaker 4: We continue to be pleased with the number of devices being put in service in the field. This is a leading indicator of future consumable revenue, particularly in the small animal and mixed vet practices, which continue to be a focus area of our company.

We continue to be pleased with the number of devices being put in service in the field. This is a leading indicator of future consumable revenue, particularly in the small animal and mixed bet practices, which continued to be a focus area of our company.

Speaker 4: Therapeutic device segment revenues from PulseMed and the CC product sales were $6 million, an increase of approximately 28% over the third quarter of last year.

But there are few beauty device segment revenues from pulse that the heating product sales were $6 million, an increase of approximately 28% over the third quarter of last year.

Speaker 4: PulseVet product sales for the third quarter of 2023 were up 21% versus the third quarter of 2022, reflecting an acceleration in consumable growth in the high-margin trade business.

<unk> product sales for the third quarter of 2023 were up 21% versus the third quarter of 2022, reflecting an acceleration in consumable growth in the high margin <unk> business.

Speaker 4: We believe Paul Smith sales will remain strong through the end of 2023, and we're already seeing the seasonal step up usually observed in the back half of our selling year and continued efforts around the development of our small animal market.

We believe pulse net sales will remain strong through the end of 2023, and we're already seeing the seasonal step up usually observed in the back half of our selling year and continued efforts around the development of our small animal market.

We are also pleased to announce this was the best quarter ever for a safety product sales, we are benefiting from strong demand from our retail channels, including our recently reestablished relationship on Chile. We take this resolve is further validation of our marketing strategies.

Speaker 4: We are also pleased to announce this was the best quarter ever for a CZ product.

Speaker 4: We are benefiting from strong demand from our retail channels, including our recently re-established relationship with Chewy. We take this result as further validation of our marketing strategy.

Speaker 4: Diagnostic segment revenues from Truforma, Revo, Squared, and VetGuardian product sales were $367,000, more than tripling revenues of $94,000 reported in the same quarter last year.

Diagnostics segment revenues from true former repo squared and bet Guardian product sales were $367000 more than tripling revenues of $94000 reported in the same quarter last year.

Pro forma nearly doubled revenues year over year, driven by organic growth. We believe the growth seen within the true form of product will continue as we continue our investment in the development of additional assays, including the first assay for horses, which was launched in September and a panel of assays for non infectious Gi disease, which plan.

Speaker 4: Trueforma nearly doubled revenues year over year, driven by organic growth. We believe the growth seen within the Trueforma product will continue as we continue our investment in the development of additional assays, including the first assay for horses, which was launched in September , and a panel of assays for non-infectious GI disease, which plan launches later this year. As Larry noted earlier, our recent acquisition of Corvo Biotechnologies LLC should improve margins and accelerate development.

<unk> later this year as Larry noted earlier, our recent acquisition of Corvo Biotechnologies L. L C should improve margins and accelerate development.

Speaker 4: We completed the acquisition of Structured Monitoring Products, SMP, giving us complete control over commercial activities, and we are encouraged by the early results that included record revenue for VetGuardian products during the month of September .

We completed the acquisition of structured monitoring products S&P, giving us complete control over commercial activities and we are encouraged by the early results that included record revenue for Vet Guardian products during the month of September.

Speaker 4: We are also seeing the early results from our new TrueView digital microscopy platform that we launched at the end of the second quarter. Revenue from this product is service-based and trails the actual placement of the instrument, and as such, we expect recurring revenue from these placements to increase over the coming quarters. Overall, we saw the expected sequential step-up in revenue from the first half of the year, and we expect an additional step-up in the fourth quarter.

We are also seeing the early results from our new true view digital microscopy platform that we launched at the end of the second quarter revenue from this product is service based and trails. The actual placement of the instrument and as such we expect recurring revenue from these placements to increase over the coming quarters.

Overall, we saw the expected sequential step up in revenue from the first half of the year and we expect an additional step up in the fourth quarter.

Our gross profit for the third quarter 2023 was $4 $4 million, an increase of <unk> $9 million or 26% from the third quarter of 2022.

Speaker 4: Our gross profit for the third quarter of 2023 was $4.4 million, an increase of $0.9 million or 26% from the third quarter of 2022. Our margins remain strong at 69%, up from 67% in the second quarter. And as I've stated previously, we expect margins to be around 70% for the upcoming quarters and then going higher from there.

Our margins remained strong at 69% up from 67% in the second quarter and as I've stated previously we expect margins to be around 70% for the upcoming quarters, and then going higher from there.

Speaker 4: operating expenses were $10.3 million compared to $10.1 million for the three months ended September 30, 2022, an increase of just $0.2 million, or 2%. That compares quite favorably to our growth in revenues, checking in at 31%.

Operating expenses were $10 3 million compared to $10 $1 million for the three months ended September 32022, an increase of just <unk> $2 million or 2% that compares quite favorably to our brokerage revenues checking in at 31%.

Speaker 4: Research and development expense was $0.9 million compared to $1.2 million for the three months ended September 30, 2022. That's a decrease of $0.3 million or 25%. The decrease was primarily driven by higher research fees for assay development in the same period a year ago.

Research and development expense was $9 million compared to $1 $2 million for the three months ended September 32022, that's a decrease of <unk> $3 million or 25%.

The decrease was primarily driven by higher research feeds for assay development and the same period a year ago.

Speaker 4: selling and marketing expense was $3.3 million compared to $3.7 million last year. That's a decrease of $0.4 million or 11%. Although we are starting to see some leverage on the selling and marketing line, this year's comparison in the quarter benefited from one-time charges included in last year's quarterly number.

Selling and marketing expense was $3 $3 million compared to $3 $7 billion last year after a decrease of $24 million 11%.

Although we are starting to see some leverage on the selling and marketing line. This year's comparison in the quarter benefited from one time charges included in last year's quarterly number.

Speaker 4: General administrative expense was $6.1 million compared to $5.2 million for the three months ended September 30th last year. That's an increase of 0.9 million or 17%.

General and administrative expense was $6 1 million compared to $5 $2 million for the three months ended September 30 last year.

Increased <unk> 9 million or 17%.

Speaker 4: Net loss for the three months ended September 30, 2023, was only $0.3 million or $0.001 per share. That compares to a net loss of $5.8 million or $0.005 per share last year.

Net loss for the three months ended September 30th 20, twenty-three was only <unk> $3 million or point or one per share that compares to a net loss of $5 $8 million or 0.005 per share last year.

Speaker 4: Although we are starting to see many operating improvements, the overall improvement in this year's number included many one-time benefits, such as the gain from the acquisition of the SMP and the related tax benefits, and we also had higher interest income this year.

While we are starting to see many operating improvements the overall improvement in this year's number included many onetime benefits such as the gain from the acquisition of the <unk>. That's M P and the related tax benefits and we also had higher interest income this year.

Speaker 4: Turning to the balance sheet, Somatica ended the third quarter with $118 million in cash, cash equivalents, and available-for-sale securities. Cash used in the third quarter was $24.4 million, but that included $21.5 million for acquisitions, investments, and other one-time items, leaving $2.9 million used for operating expenses.

Turning to the balance sheet. So America ended the third quarter with $118 million in cash cash equivalents and available for sale securities.

Cash used in the third quarter was $24 4 million, but that included 21, and a half million dollars for acquisitions and investments and other one time items, leaving $2 $9 million used for operating expenses.

Speaker 4: The adjusted cash for in this quarter of $2.9 million shows that we continue to decrease and was lower than our historical burn, which is usually around $3 to $4 million per quarter. As a reminder to everyone, we have zero debt.

The adjusted cash burn this quarter, a $2 $9 million shows that we continue to decrease and was lower than our historical burn, which is usually around $3 million to $4 million per quarter.

As a reminder to everyone we have zero debt.

Speaker 4: Before turning the call back over to Larry, I would like to address questions from investors, particularly related to a potential delisting of our stock by the New York Stock Exchange American.

Before turning the call back over to Larry I would like to address questions from investors, particularly related to a potential delisting of our stock by the New York Stock Exchange American.

Speaker 4: First, let me give you a timeline of actionable items mandated to our company.

First let me give you a timeline and actionable items mandated to our company.

Speaker 4: As disclosed in our current report on Form 8K, filed with the Securities and Exchange Commission on September 14, 2023.

As disclosed in our current report on form 8-K filed with the Securities and Exchange Commission on September 14th 2023, we received a deficiency letter from the New York Stock Exchange American on September 12, 2023, indicating that the company was not in compliance with the continued listing standards set forth in section one zero.

Speaker 4: We received a deficiency letter from the New York Stock Exchange American on September 12, 2023, indicating that the company was not in compliance with the continued listing standards set forth in section 1003 FV of the company guide because our common shares were selling for a substantial period of time at a lower price per share, which the exchange determined to be a 30-day trading average of less than 20 cents per share.

There are three <unk> of the company guide because our common shares were selling for a substantial period of time at a lower price per Sierra which the exchange determined to be a 30 day trading average of less than <unk> 20 per share.

Speaker 4: After confirming receipt of said notification, the company was required to do the following. Number one, issue a press release within two days to satisfy Canadian regulatory requirements. We met this requirement by issuing a press release in both the U.S. and Canada on the 13th of September .

After confirming receipt of said notification the company was required to do the following number one issue a press release within two days the satisfy Canadian regulatory requirements. We met this required by issuing a press release in both the U S and Canada on the 13th of September.

Speaker 4: Number two, file Form 8K Section 301 within four days, followed by the Canadian equivalent informing of a material event. We met this requirement the 14th of September .

Number two final form 8-K section 301 within four days, followed followed by the Canadian equivalent informing them of material overhead when we met this requirement the 14th of September.

Speaker 4: Number three, we then inform the exchange that we met this requirement. The exchange notated this on his website and our ticker symbol accordingly.

Number three we then inform the exchange that we met this requirement the exchange notated this on its website and our ticker symbol accordingly.

Speaker 4: Number four, the final requirement was to file a remediation plan of action with the New York Stock Exchange American by the 26th of September 2023. This report was filed confidentially on September 25th, 2023 and is not a required public disclosure. However, let me share with you some of the plans.

For the final requirement was to file a remediation plan of action with the New York Stock Exchange American by the 26th of September 2023. This report was filed confidentially on September 25, 2023, and is not a required public disclosure. However, let me share with you some of the plants.

One as Larry noted in his prepared remarks, we continue to have rapid top line growth both organically and through acquisition. Two we continue to have industry, leading margins leveraging our recent integrations to improve those margins and accelerate our pathway to profitability three leverage our strong balance sheet and cash position.

Speaker 4: One, as Larry noted in his prepared remarks, we continue to have rapid top-line growth both organically and through acquisition. Two, we continue to have industry-leading margins, leveraging our recent integrations to improve those margins and accelerate our pathway to profitability. Three, leverage our strong balance sheet and cash position to continue to invest in commercial and R&D activities as well as remaining opportunistically acquisitive.

To continue to invest in commercial and R&D activities as well as remaining opportunistic, particularly acquisitive.

Speaker 4: And four, in addition to the operational plans, we shared with the exchange potential capital structure remediation that includes, but is not limited to, one, a reverse stock split, two, a share repurchase program, and three, other potential capital table restructuring.

And four in addition to the operational plans, we shared with the exchange potential capital structure remediation that includes but is not limited to one a reverse stock split to a share repurchase program and three other potential capital table restructuring.

We plan to execute on these factors as we believe that they are in the best interest of the company and its shareholders. Please keep in mind, we will not automatically be delisted and six months subsequent to receiving the notice we can receive an extension or Conversely, the exchange could be less important when your children failed to perform.

Speaker 4: We plan to execute on these measures as we believe that they are in the best interest of the company and its shareholders. Please keep in mind, we will not automatically be delisted, and six months subsequent to receiving the notice, we can receive an extension, or conversely, the exchange could delist us earlier, should we fail to perform, or is improving our position.

Moving our position.

Speaker 4: While Larry and I are very optimistic about achieving our strategic and operational objectives, we are likely to recommend a reverse stock split. Not only would this action bring us back into compliance earlier, it would also allow for potential expansion of our institutional investor base by removing share price barriers that limit certain institutional participation in our stock and potential inclusion into various indexes.

Well, Larry and I are very optimistic about achieving our strategic and operational objectives, we are likely to recommend a reverse stock split.

Not only with this action bring us back into compliance earlier. It would also allow for potential expand Shen of our institutional investor base by removing share price barriers that limit certain institutional participation in our stock and potential inclusion and the various index.

Yeah.

Speaker 4: We will continue to provide updates as we progress on this plan and we may be asking our shareholders soliciting their support. I will now hand the call back over to Larry for closing remarks before the Q&A session.

We will continue to provide updates as we progress on this plan and we may be asking our shareholders soliciting their support I will now hand, the call back over to Larry for closing remarks before the Q&A session.

Thanks Peter.

Speaker 3: Let me take a moment to further comment on future marks around a potential reverse stock split.

Let me take a moment.

Further comment on his remarks around a potential reverse stock split.

Speaker 3: Our management team and I am fully aware that many of you are opposed to such a plan given the stigma associated with reverse stock splits generally.

Our management team and I am.

I'm fully aware that many of you are opposed to such a plan.

Given the stigma associated with reverse stock splits generally.

Speaker 3: Keep in mind that many reverse tax splits are done under extreme duress because a business is underperforming and or needs desperately to raise capital to remain solvent.

Keep in mind that many reverse stock splits are done under extreme duress because of business is underperforming.

Our needs desperately to raise capital to remain solvent.

Speaker 3: Well, we can't guarantee positive results of any potential reverse split. Our company has a much different profile than most companies who explore a reverse split. Our operational performance remains excellent, and we have a strong balance sheet.

While we can't guarantee positive results of any potential reverse split our company has a much different profile than most companies to explore a reverse split.

Our operational performance remains excellent and we have.

<unk> balance sheet.

We also want to remind you of the practicalities of it.

Speaker 3: We also want to remind you of the practicalities of a reverse split.

Split.

Speaker 3: After such a split, while you would have less shares, your overall ownership percentage and investment dollars remain the same.

After such a split while you would have less shares your overall ownership percentage at investment dollars remain the same.

Speaker 3: and after a reverse split, the risk of delisting and the associated lack of liquidity goes away.

And after a reverse split the risk of delisting and the associated lack of liquidity.

[noise] away.

Speaker 3: which allows management to focus exclusively on executing the business and attracting additional investors which could help increase our market cap over the long term.

Which allows management to focus exclusively on executing the business and attracting additional investors, which could help increase our market cap over the long term.

Speaker 3: So why consider a reverse split now when I myself have said many times that we would not pursue one until we are cash flow positive and we are not yet at that point?

So why consider a reverse split now when I myself have said many times that we would not pursue one until we are cash flow positive and we are not yet at that point.

Speaker 3: Simply put, the New York Exchange notice of potential delisting has changed the game.

Simply put the New York Exchange notice a potential delisting has changed the game.

Speaker 3: the uncertainty around a potential delisting looming over us, not to mention an actual delisting itself that would put us in the over-the-counter markets, tend to put

The uncertainty around a potential delisting looming over us not to mention at actual delisting itself that would put us in the over the counter markets.

Tend to put downward pressure on stocks.

Speaker 3: Remember what Peter talked about earlier, there is nothing inherent in a reverse split that automatically results in a loss of market cap. The fundamentals of the business and other macroeconomic conditions are important factors.

Remember what Peter talked about earlier, if there is nothing inherent in a reverse split that automatically results in a loss of market cap the fundamentals of the business and other macroeconomic conditions are important factors fund.

Speaker 3: Fundamentally, we are stronger every quarter, which we believe would otherwise lead to broader interest from institutional investors that today simply cannot buy the shares since they are under their minimum price thresholds of $1 or $3 or even $5 a share. So the scale

Fundamentally we are a stronger every quarter.

Which we believe would otherwise lead to broader interest from institutional investors that today simply cannot buy the shares since theyre under their minimum price thresholds of $1 $3 or even $5 a share.

So the scales have changed.

Speaker 3: before we balanced the potential risk of a reduction in market cap value following a reverse split.

Before we balanced the potential risk of a reduction in market cap value following a reverse split.

Against a delayed opportunity to attract institutional investors and indices and came down on the side of waiting until we were cash flow positive.

Speaker 3: against a delayed opportunity to attract institutional investors and indices and came down on the side of waiting until we were cash flow positive.

Speaker 3: But now we have to add the risk of being delisted and moving to OTC markets.

But now we have to add.

The risk of being delisted and moving to OTC markets.

Speaker 3: to that limited potential of attracting institutional investors and indices.

Two that limited potential of attracting institutional investors and indices.

Speaker 3: It is because we believe that these factors would be more harmful to individual investors in Zomedica.

It is because we believe that these factors would be more harmful to individual investors until medica.

Speaker 3: than a potential loss in market cap following a reverse split that can be mitigated by demonstrating the differences in company situations to potentially be one of the exceptions to the norm.

Then a potential loss of market cap following the reverse split that can be mitigated by demonstrating the differences in company situations to potentially be one of the exceptions to the norm.

Speaker 3: that we are actively considering this to be in the best interest of our shareholders.

That we are actively considering this to be in the best interest of our shareholders.

Speaker 3: Now, please note a reverse split has not been formally approved by our board and is still one of several options.

Now. Please note a reverse split has not been formally approved by our board and is still one of several options.

So please keep an eye out for ongoing updates on the matter and please keep an open mind that the company will always work for our solutions in the best interest of our shareholders.

Speaker 3: So please keep an eye out for ongoing updates on the matter, and please keep an open mind that the company will always work for a solution in the best interest of our shareholders. Remember, there's nothing inherent in a reverse split that diminishes our loyal individual investors' abilities to hold on to their ownership of Zomedica. We appreciate each and every one of our shareholders and continue to make every effort to drive long-term value.

Remember there is nothing inherent in a reverse split that diminishes, our loyal individual investors abilities to hold onto their ownership of somatic we.

We appreciate each and every one of our shareholders and continue to make every effort to drive long term value.

Speaker 3: Now, let me close with why we're here, the good news of the business. We had a very strong, record-breaking third quarter.

Now let me close with why we're here the good news of the business, we had a very strong record breaking third quarter.

Speaker 3: we were able to grow revenue by 31% while maintaining near 70% gross margins. We expect to see incremental sales from our recently launched products, that Guardian and TrueView, and have new assays on the way for TrueForma.

We were able to grow revenue by 31%, while maintaining near 70% gross margins.

We expect to see incremental sales from our recently launched products that Guardian and to review and have new assays on the way for tomorrow.

Speaker 3: While we're pleased with the early success of the expanded sales organization, we expect even more performance from the consulting team.

While we're pleased with the early success of the expanded sales organization, we expect even more performance from X gene.

Speaker 3: with new leadership and as they become more seasoned. This, coupled with efficiencies gained through the Corvo and S&P acquisitions, and the centralization of manufacturing and distribution capabilities, combined to make for a bright future for Sabatica.

With new leadership and as they become more seasoned.

Coupled with efficiencies gained through the corvo and S&P acquisitions, and the centralization of manufacturing and distribution capabilities combined to make for a bright future for sabbatical.

Speaker 3: Looking into the remainder of 2023, we'll continue to work diligently to bring Zometica's suite of world-leading products to an even greater number of veterinarians and their vet families, while continuing to leverage our growing network of vet professionals using our products.

Looking into the remainder of 2023, we'll continue to work diligently to bring somatic a suite of world leading products to an even greater number of veterinarians for their pet families, while continuing to leverage our growing network of professionals using our products.

Speaker 5: So let me end our call by again thanking those that have been supportive of Zomatica, including animal health professionals and pet owners worldwide, and the many shareholders of Zomatica. With that, I'd be happy to open the line for questions.

So let me end our call by again thanking those that have been supportive of so medica, including animal health professionals and pet owners worldwide and the many shareholders of somatic <unk>.

With that I'd be happy to open the line for questions.

Thank you.

We will now be conducting a question and answer session.

Speaker 1: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up a handset with a microphone.

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.

Start to if you would like to remove your questions 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 poll for questions.

Our first question comes from the line of Jason Kolbert.

Austin teams. Please go ahead.

Hi, guys can you give me a little bit of more of a breakdown of the revenues and how they cut across the categories like true form a pulse, but that guard repo and maybe even the FCC products.

Speaker 6: Hi guys, can you give me a little bit more of a breakdown of the revenues and how they cut across the categories like Trueforma, PulseVet, MedGuard, Revo, and maybe even the Assisi product?

Speaker 6: Generally, Jason, this is Peter. Generally, we don't break out publicly what those numbers are, but I tried to be as precise as I could on the call. We had $6.347 million in overall revenue for the quarter, roughly 70- You don't need to repeat what you said. You don't want to provide the breakdown. I'm a little disappointed in that. The numbers were about $2 million below my expectations.

Yes generally Jason this is Peter generally we don't break out publicly what those numbers are but we were.

I tried to be as precise as I could.

On the call we had 6347.

And overall revenue for the quarter.

70.

Yes, you don't need to repeat what you said you don't want to provide the breakdown of a little disappointed in that the numbers were about $2 million below my expectation.

Speaker 6: So, and they were only incrementally up from the prior quarter. Although I saw your expenses, you know, were proportionately lower. At least COGS of good, cost of goods was. But SGNA was not, it was higher. So, this was not a good quarter.

So and they were only incrementally up from the prior quarter, Although I saw your expenses were proportionately.

Lower at least Cogs or cost of goods was but SG&A was not it was higher. So this was not a good quarter.

Speaker 6: Um, can I understand what you're trying to say about the stock split? You know, and I wrote this down. You said the lack of liquidity goes away when you reverse the stock, you directly cut your liquidity.

Can I understand what you're trying to say about this stock split you know when I wrote this down and you said the lack of liquidity goes away. When you reverse the stock you directly cut your liquidity, so I'm a little confused as to the.

Speaker 6: So I'm a little confused as to, you know, the reverse stock split is upsetting for sure because you guys were very emphatic that that wasn't gonna happen. And you do have the alternative of going to the OTC. So I'm trying to understand your positioning this as, you know, it takes a lot more for an institution to buy a stock than just the price. And so, you know, you're cutting the liquidity.

The reverse stock split is.

He is upsetting for sure because you guys were very emphatic that that wasn't going to happen and you do have the alternative of go into the OTC. So I'm trying to understand your positioning that this as you know it takes a lot more for an institution to buy our stock than just the price.

So you know you're cutting the liquidity.

Speaker 6: as you're trading low stock price for liquidity. I don't know that that's a good trade. I don't understand it.

As you you're trading low stock price for liquidity.

That's a good trade I don't I don't understand it.

Speaker 4: You know, this is Peter, Jason, you know, we can talk about that. But essentially, you know, OTC does limit, you know, liquidity, it limits participation and pretty much excludes any institutional investors, not to mention it will preclude us from joining any of the indices, which would over time be a much better situation for the company, that's how I see it. Again, you know, we're free to disagree on that point, but that's how I see it.

Yeah.

This is Peter Hi, Jason we can we can talk about that but essentially you know OTC does limit liquidity at liberty participation in pretty much excludes any institutional investors not to mention it will preclude us from joining any of the indices, which would over time be much better.

<unk> for the company, that's how I see it again.

Sorry to disagree on that point, but that's how I see it.

Speaker 6: Well, I can understand that. But then why were you so emphatic that you weren't going to reverse the stock? I guess you were anticipating that, you know, quarterly progress would drive a higher stock price and that just didn't happen.

Well I can understand that but then why would you sell in static that you werent getting a reverse of the stock I guess you were anticipating that quarter.

Quarterly progress would drive a higher stock price and that just didn't hear it.

Speaker 4: Yeah, so I'll let Larry speak to that. I think, you know, since I've been here, which is three quarters now, the position has always been to consider the reverse stock split, but we, and I'll speak for Larry, I think at this time, thought a more opportunistic time to do it when the company was indeed cash flow positive and we could commit to, you know, that $40 million run rate or something that resembles that on the top line that would promote bad cash flow profitability.

Yeah, So I'll, let Larry speak to that I think since I've been here, which is three quarters now the position has always been to consider the reverse stock split, but we and I'll speak for Larry I think at this time thought at more opportunistic time to do it when when the company was indeed cash flow positive and we could commit to that.

$40 million run rate or something that resembles that on the top line that that would promote bad cash flow probably profitability. So the thought Jason was the timing if we had to do it would be better if we could wait but with the letter that arrived in September I think that changed or at least my thinking on it.

Speaker 4: So the thought, Jason, was the timing, if we had to do it, would be better if we could wait.

Speaker 4: uh... but with the letter that arrived in September i think that changed our at least my thinking on it

Speaker 6: Yeah, I'm just surprised because this isn't a surprise, right? You knew this letter was coming, so that's why I'm just a little bit confounded.

Yes.

Surprised because this isn't a surprise right you knew this letter was comment so that's why I'm, just a little bit confounded.

It actually though Jason I think that that I'll, just challenge that right I mean, as we continue to post quarterly revenue growth. We continue to post significant revenue growth year over year much much higher than other animal health companies are as we continue to Wow the quantity.

Speaker 6: Actually, though, Jason, I think that I'll just challenge that, right? I mean, as we continue to post quarterly revenue growth, we continue to post significant revenue growth year over year, much, much higher than other animal health companies are, as we continue to put forward markets as... The sequential growth is really what matters, and your sequential growth was incremental.

The sequential growth is really what matters in your cigarette sequential growth was incremental.

Speaker 3: So in the animal health industry, as I'm sure you're super familiar with, the first and third quarters are generally lower than second and fourth, just because of the cyclical nature of visits to pets. But having said that, we still are presenting not only significant growth year over year, but also sequential growth. And our growth this quarter is all, essentially all organic growth. So that's not revenue we bought, this is revenue that we grew over a year ago.

So in the animal health industry as I'm sure you're super familiar with.

The first and third quarters are generally lower than second and for just because of the cyclical nature of visits to pass, but having said that.

We still are presenting not only significant growth year over year, but also sequential growth in our growth. This quarter is all essentially all organic growth. So that's not revenue. We bought this is revenue that we grew over a year ago.

Speaker 3: We continue to put up margins of 70% at or near 70% and

We continue to put up margins of seven.

70% are at or near 70%.

And so we.

Speaker 3: We don't expect, I mean, we expect that that's good news for investors. And frankly, I think if you look at.

We don't expect I mean, we expect that that's good news for investors and frankly I think if.

If you look at.

Speaker 3: you know, what our expectation would be was not that the stock price would deteriorate, that as we increase revenues and maintain high margins, made acquisitions, brought, you know, two years ago, we had no products on the market. Now, we have five product lines on the market. And as we did all those things, that the stock price would grow.

What our expectation would be was not that the stock price would deteriorate that as we increase revenues and maintain high margins made acquisitions.

Two years ago, we had no products on the market now we have five product lines on the market and as we did all of those things that the stock price would would grow.

Speaker 3: So it was really it was, in fact, a surprise to us that that it fell below 20 cents for more than 30 days. I mean, obviously, we saw it coming during that during that period of time when it was below that.

So I think it was in fact, a surprise to us that that it fell below 20 for more than 30 days.

I mean, obviously, we saw it in plumbing during that during that period of time when it was below that.

Speaker 3: As to why now, I mean, Peter said it, right, if we did not get the notice of delisting, we would better...

As to why now I mean, Peter said it right.

If if we did not get the notice of delisting.

We would balance strength.

Speaker 6: the fact that our shareholders have previously rejected a reverse split, our shareholders have made it clear to us that they would rather not have one, I think that's based on the fact that the majority of companies lose market cap after a reverse split. Not all of them do. I can't think of one that gains market cap. They all lose it.

The fact that our shareholders are previously rejected.

Reverse split shareholders have made it clear to us that they would rather not have one I think that's based on the fact that the majority of companies.

Whose market cap after a reverse split not all of that I can't think of one that gains market. They all lose market share.

Speaker 6: Nothing but I mean, I cannot think of one example. If you have one, I would love it. If you'd share.

Nothing.

For our first stock split I cannot think of one example, if you have one I would love it if you would share it with me.

Speaker 5: I don't happen to have some of our yet, but we've got, I mean, you're, you're absolutely right. The vast majority are there. There are some out there. I don't know. I don't want to. Well, I mean, it was like a handful. If you look at the hundred companies, you might have five or six that that have not and I'm talking about a particular point in time, six months later, three months later or whatever, but I think so.

I don't happen to have some of our yet, but we've got great.

You're absolutely right. The vast majority of them are there there are some out there I don't know Adam.

It was just like a handful if you look at the 100 companies you might have five or six that have not and I'm talking about a particular point in time six months later three months later or whatever.

But I think so there is a risk of that.

Speaker 3: a pretty good risk. And so why not mitigate that risk by wading through a cash flow positive? That's what I've been saying all along. But now that's not the scale.

Pretty good risk and so why not mitigate that risk by waiting to a cash flow positive that's what I've been saying all along but now that's not the scale, there's a risk of a potential loss of market cap, which I do think we can mitigate by showing that we are a different company. We're not doing a reverse split. So that we can then can be authorized to issue more shares. It raised more money, we have no intention of raising capital.

Speaker 6: There's the risk of a potential loss in market cap, which I do think we can mitigate by showing that we are a different company. We're not doing a reverse split so that we can then can be authorized to issue more shares and raise more money. We have no intention of raising capital in that way. I understand this is you're being forced to, but I think this was something, well, again, I don't need to go over the same ground. But I and I would also challenge the assumption.

I understand this is you're being forced to but I think this was something well again I don't need to go over the same ground, but.

And I would also challenge the assumption well I don't want to be too antagonistic, but in my opinion and based on my numbers and our previous conversations. This was not a good quarter. The plan for rising revenues look like it's delayed it's a brutal market agree.

Speaker 6: Well, I don't want to be too antagonistic, but in my opinion and based on my numbers in our previous conversations, this was not a good quarter.

Speaker 6: The plan for rising revenues look like it's delayed.

Speaker 6: It's a brutal market, agreed. It's a very tough market right now that you have a lot of cash to weather the storm. That's great news. You're making smart acquisitions. That's great news. But it would also be great, and we've discussed this in the past.

That's a it's a very tough market right now that you have a lot of cash to weather. The storm, that's great news Youre, making smart acquisitions, that's great news, but it would also be great. When we've discussed this in the past of having a really a better more granular breakdown to the topline revenues and being really transparent.

Speaker 6: of having a really a better more granular breakdown of the top line revenues.

Speaker 6: And being really transparent with investors, putting positive spin on a reverse stock split, like saying the lack of liquidity goes away, which is, again, I wrote it down, that's what your guy said, that's just not true. So I think it's very, very important.

Parent with investors you know putting positive spin on a reverse stock split like saying the lack of liquidity goes away, which is again I wrote it down that's what you guys said, that's just not true.

So I think it's very very important given you know where you are to just be as transparent as possible with people, but thanks for taking my questions I appreciate it.

Speaker 6: given where you are, to just be as transparent as possible with people. But thanks for taking my questions.

Speaker 3: You're welcome, Jason. And let me just say one last thing is I think we're we're it's a semantics issue and we're referring to the lack of liquidity. We're talking about for our individual shareholders, not for the company. For the company. I agree with you. You reduce number of shares, liquidity, all the flow goes to how liquidity goes.

Youre welcome Jason and let me just say one last thing is I think we're just semantics issue when we're referring to the lack of liquidity, we're talking about for our individual shareholders not for the company for the company I agree with you you reduced number of shares.

Costar liquidity, but.

Speaker 3: With a billion shares outstanding, I think we'll still have, after reverse split, plenty of shares to be traded. What we were concerned about and what we were addressing was the lack of liquidity from our retail, individual retail shareholders. Today, if they need money, they can go and trade those shares pretty easily.

With 1 billion shares outstanding I think we will still have after reverse split plenty of shares to be trading what we were concerned about and what we were addressing was the lack of liquidity from a retail individual retail shareholders today, if they need money. They can go and trade those shares pretty pretty easily.

Speaker 3: But after, if we go to the pink sheets or whatever, then it's going to take, it's going to be a bigger process for them. And that's really where our concern lies.

But after if we go into the pinksheets or whatever.

And then it's going to take it's going to be a bigger process for them and that's really where our concern lies.

Other questions.

Operator.

Speaker 1: Thank you. We will now be taking online questions. Please go ahead.

Thank you.

We will now be ticking on that questions. Please go ahead.

Oh.

Okay, what do we got online.

Speaker 3: Okay, first one. What was the primary motivation to acquire Orvo biotechnology? That's a great question.

Okay first one what was the primary motivation to acquire hormone biotechnology.

That's a great question.

Yeah.

Speaker 3: Primarily, it was the ability to immediately realize improvements in margin.

Primarily it was the ability to immediately realized improvements in margin.

Speaker 3: and to do that with a very, very high probability of success from an execution standpoint.

And to do that with a very very high probability of success.

From an execution standpoint and.

Speaker 3: And secondly, to accelerate the ability to develop and launch new assays.

And secondly.

To accelerate the ability to develop and launch new assays.

Speaker 3: So, when you think about margin improvement, once we start manufacturing the products ourselves, then, you know, we're cutting out the middleman, Corvo Biotech.

So when you think about margin improvement.

Once we start manufacturing the products ourselves then we're cutting out the middleman corvo biotech.

Speaker 3: Instead of staffing up down in Georgia and equipping Georgia to be able to manufacture the products, instead of staffing up in Ann Arbor from an R&D standpoint to develop the new assays, by acquiring Formal Biotech, we just acquired the people and the team that have been doing it. And so that puts us in a quicker position to realize those efficiencies and that reduced price.

Instead of staffing up down in Georgia, and equipping, Georgia to be able to manufacture the products instead of staffing up in Ann Arbor from an R&D standpoint to develop a new assays by acquiring portable biotech. We just acquired the people and the team that had been doing it and so that gives us puts us in a quicker position to realize those.

Those efficiencies and that reduced price.

Speaker 3: Also, by doing this, we eliminated substantive payments going forward, right? So we had transition service payments, we had payments due for the finalization of the new assays, and we also had a royalty that we were going to have to start paying once we started manufacturing them ourselves.

Also by doing this we eliminated subsequent payments going forward right. So we had transition service payments, we had payments due for the finalization of the new assays and we also had a royalty that we're going to have to start paying once we started manufacturing them ourselves.

All of those go away in fact, we think from an economic standpoint.

Speaker 3: In fact, we think from an economic standpoint, it was a really good deal. The one thing I will say is that we've always been paying for the R&D expense and other associated expenses, it's just we've been paying those expenses in the form of a higher price to us for the assays.

It was a really good deal.

The one thing I will say is that we've always been paying for the R&D expense and other associated expenses. It's just we've been paying those expenses in the form of a higher price to us for the assays now we will pay those expenses directly as part of opex or wherever they fall.

Speaker 3: Now, we'll pay those expenses directly as part of OPEX or wherever they fall, but our margins will be better. And when we look at the long term and the long haul, the desirability of high margins is really what's going to sustain the company and propel it to profitable growth in the future.

But our margins will be better and when we look at the long term and the long haul.

The desirability of high margins is really.

What's going to sustain the company and propel it to profitable growth in the future.

Speaker 3: Next, two questions. Do you still plan to release the GI assays this quarter? And two, what has been the reaction by horse vets on the equine assay?

Next two questions do you still plan to release, the GI assays this quarter and to what has been the reaction by horsepower on the equine assay. So we'll take the first one first yes, we do still plan to release the GI assays. This quarter, we talked about that a little bit in the in the text of the.

Speaker 3: So we'll take this the first one first. Yes, we do still plan to release the GIS phase this quarter. We talked about that a little bit in the in the text of the

Speaker 3: of the initial comments, and we're very optimistic about those as those are absolutely assays that

Initial comments and we're very optimistic about those is as those are absolutely assays that.

Speaker 3: are not currently available at the point of care that vet veterinarians would really like to have available at the point of care because you bring your dog in for diarrhea and vomiting they'd like to know right then and there what's the what's the issue so that they can start treatment right away.

Are not currently available at the point of care.

Veterinarians would really like to have available at the point of care, because you bring your dog and for diarrhea and vomiting.

All right then and there what's the what's the issue so that they can start treatment right away.

Speaker 3: Horse vets have been very receptive in our early rollout of the equine EACTH assay. The ability to, you know, there's a number of different ways that this that this assay is used.

Of course, that's been very receptive and our early rollout of the equine ACTH assay.

The ability to to.

There's a number of different ways that this that this assay is used today.

Speaker 3: Today, when a vet sees signs of potential Cushing's in a horse, then they need to test right away. So that's one. Test those with signs. The second, once they come up positive, then there's one drug on the market that's manufactured by an animal health company, and it's sold, and it works really well. But in order to figure out the dosage, you need to test EACTH frequently during that initial two- or three-week period.

Today, when a bet see signs of potential cushings and a horse.

Then they need to test right away. So that's one test those with signs.

The second once they come up positive then there is one drug on the market Thats manufactured by an animal health company and it's sold and it works really well, but in order to figure out the dosage you need to test the ACTH frequently during that initial two or three week period, and so that's multiple tests.

Speaker 3: And so that's multiple tests. And then that horse either.

And then that horse either twice a year or four times a year. Some bets do it quarterly some every other quarter. They test again ACTH to titrate that therapy for the rest of the horses life and so all of that business is open to us now.

Speaker 3: twice a year or four times a year. Some vets do it quarterly, some every other quarter. They test, again, EACTH to titrate that therapy for the rest of the horse's life.

Speaker 3: And so all of that business is open to us now. And then what we really expect to do is to leverage the convenience and ease of use of the Truforma platform, the ability to do the stall side, to move from testing only when you see signs, at which point the disease has already progressed significantly.

And then what we really expect to do is to leverage the convenience and ease of use of the true pharma platform. The ability to do this stall side to move from testing only when you see signs at which point the disease has already progressed significantly.

Speaker 3: and in some cases the horses, 30% of the time, never show signs, we'd like to move to a screening opportunity because there's 5 million horses over the age of 15 in the United States and their prevalence of this disease in that group of horses is 25%. So we see a screening opportunity which would be very significant in terms of potential revenue for the company.

And in some cases, the horses, 30% of the time never show signs, but we'd like to move to a screening opportunity because theres 5 million horses over the age of 15 in the United States and in their prevalence of this disease in that group of horses is 25%. So we see a screening opportunity which.

Would be very significant in terms of potential revenue for the company.

Speaker 3: Why do we feel a reverse split would be more beneficial than a buyback? Why not buyback now while the price is low?

Why do I why do we feel the reverse split would be more beneficial than a buyback why not buyback now and where the price is low.

Speaker 3: If you look at the data that we've been looking at, the performance of a stock after a buyback 30, 60 days later, it usually reverts right back to where it was. And in a case of ours where we have such a huge float, no buyback is going to substantially reduce that float, and we're going to have, there's still going to be plenty of opportunity for day trading.

If you look at the data that we've been looking at.

The performance of the stock after a buyback 30 60 days later, it usually reverts right back to where it was and in the case of ours, where we have such a huge flow no buyback is going to substantially reduce that float and we're going to have there is still going to be plenty of opportunity for day trading.

Speaker 3: and as a result there's no assurance that we wouldn't find ourselves in the same position except for

And as a result, there is no assurance that we wouldn't find ourselves in the same position except for we would not have that cash and so we would not be able to take advantage of opportunities to acquire companies or product lines in the marketplace or fund organic growth.

Speaker 3: we would not have that cash and so we would not be able to take advantage of opportunities to acquire companies or product lines in the marketplace or fund organic growth.

Speaker 3: And so we believe that a reverse split, because it's permanent.

We believe that.

The reverse split.

It's permanent.

Speaker 3: would be the better alternative for shareholders over the long haul. It's not, listen, nothing gives me pleasure about this, especially the timing of it, because we respect the investors in our company.

Would be the better alternative for shareholders over the long haul it's not listen nothing gives me pleasure about this especially the timing of it because we respect the investors in our company.

Speaker 3: but we also have a responsibility to do what's best for all the shareholders and for the company itself.

But we also have a responsibility to do what's best for all the shareholders and for the company itself.

Okay.

Speaker 3: Please discuss how the acquisition of Corvo will affect the G&A line. Peter, you want to take that? Nominal. Nominal on the G&A line. Yeah. What is the Zomedica team looking forward to the most going into 2024-2025?

Please discuss how the acquisition of <unk> will affect that G&A line, Peter you would take that nominal nominal on the G&A line.

What is this a medical team looking forward to the most going into 2020 for 2025.

Speaker 3: Um, that's a good question. I think, uh.

That's a good question.

Thank you.

Hello.

Speaker 3: Yeah, growth and profitability, but I think really it should be a fun year, right? It's a year of execution. As we begin the year, we have a full slate of products, you know.

Growth and profitability, but I think really it should be a fun year right.

It's a year of execution as we begin the year, we have a full slate of products.

No.

Speaker 3: the TrueView and the VetGuardian we launched during the year, there's always a ramp up. Remember, we're not going in and selling the same thing as someone else. We're not trying to say this is a slightly better widget than that. We're going in and saying, for the first time ever, you have a product that will give you the ability to monitor a pet without having any wires or harnesses on that pet. It's a whole new category and certainly a new product. Many of our assays are new products not previously available.

This review and the bed Guardian, we launched during the year, there's always a ramp up remember, we're not going in and selling the same thing as someone else. We're not trying to say this is a slightly better widget and that we're going in and saying for the first time ever you have a product that will give you the ability to monitor our pet without <unk>.

And any wires or harnesses on that pad, it's a whole new category and certainly a new product many of our assay as our new products not previously available.

And so we.

Speaker 3: We've had the year to sort of ramp up into that. Now, as we look into 2024, we have a full year, we have a full team, and I really look forward to realizing a return on the investments that we've made. So for example, during 2023, and you'll see it in the OPEX, we had to build and assemble a team to do remote pathology reads for our customers for TrueView.

We've had the year to sort of ramp up into that now as we look into 2024, we have a full year, we have a full team and I really look forward to realizing a return on the investments that we've made right. So for example, during 2023 and you'll see it in the Opex. We built we have built and assemble a team to do remote pathology reads.

For our customers for <unk>.

Speaker 3: Now, in 2024, we get to see the revenue from TrueView to overtake that expense. Same thing with the R&D expense, it costs us like a million and a half bucks to create the GI assays. In 2024, we're going to see revenue from those.

Now in 2024, we get to see the revenue from true view too.

To overtake that expense same thing with the R&D expense cost us like a million and half bucks to create the Gi assays in 2024, we're going to see revenue from those.

Speaker 4: So, I mean, most of all, it's really driving for a cash flow positive and profitability. Yeah, I see it, Larry, you know, we grew 31% in the quarter, 39 or so percent year-to-date, right? That's essentially with our CC Impulse Mint products, right?

So I mean, most of all its really driving towards cash flow positive and profitability yeah exactly Larry.

33, 1% in the quarter 39, or 7% year to date rate, that's essentially with our CCM phosphate products. Brian those are predictable right, we're not going to comment whether that's the right growth rate for next year, but if you assume as we disclose most of the $18 million year to date has been from those two products and those are growing.

Speaker 4: predictable, right? We're not going to comment whether that's the right growth rate for next year. But if you assume as we've disclosed, most of the $18 million year to date has been from those two products.

Speaker 4: and those are growing quarter over quarter, and to your point, you know, and to the question, what are we excited about? Trueforma, Vanguardian, and Trueview, right? We have almost no revenues for those, are very little nominal, and those are three best. So, you know, it doesn't take three for three, although that's the goal, to have a very meaningful year next year, certainly well above where we finished last year, right, which is $19 million or just under 19. So,

Quarter over quarter and to your point and to the question. What are we excited about true pharma that Guardian interview right. We have almost no revenues saw for those or very little nominal and those are three bets. So it doesn't take three for three although that's the goal.

Have a very meaningful year next year, certainly well above where we finished last year right, which is $19 million or just under 19. So to answer the question directly I'm excited about the possibility of those three new products, while continuing to grow the other business and that should is that we've said repeatedly get closer to that 40.

Speaker 4: To answer the question directly, I'm excited about the possibility of those three new products.

Speaker 4: while continuing to grow the other business. And that should, as we've said repeatedly, get closer to that $40 million annualized run rate. We're approaching cash flow break-even.

Our annualized run rate.

We're approaching cash flow breakeven.

Speaker 3: There's a number of questions on the subject of international sales and so let me just comment on that. Right now about 20% of our revenue, depending on the quarter, about 20% of our revenue comes from the international sales of ThruView.

There's a number of questions.

On the subject of international sales.

So let me just comment on that right now about 20% of our revenue dependent on the quarter about 20% of our revenue comes from the international sales up through view I'm sorry.

Speaker 3: take that back, PulseVet and Assisi products, right? And, of course, we expect to continue growing those products in Europe , in South America, in Australia, in Japan, in the Middle East.

That back pulse fed and OCC products right.

And of course, we continue we expect to continue growing those products.

In Europe in South America in Australia in Japan.

In the Middle East.

Speaker 3: In addition, we expect to begin in the first quarter of next year launching VetGuardian.

In addition, we expect to begin in the first quarter of next year launching bet Guardian.

Speaker 3: and TrueView products, both of which right now are undergoing the sort of final testing that needs to occur to get the CE mark so that they clear regulatory

And true view products, both of which right now are undergoing the sort of final testing that needs to occur to get this the CE mark.

So that they clear regulatory.

Speaker 3: requirements in Europe primarily and generally every country wants the kind of certification that they're, you know, safe and all that.

Requirements.

In Europe, primarily in <unk>.

Generally every country once the kind of.

Of certification that there.

Safe and all that so we expect to launch those beginning in the first quarter of next year, we should have a full year of those two pharma will lag a little bit and that's because the true pharma cartridges require refrigeration.

Speaker 3: So we expect to launch those beginning in the first quarter of next year. We should have a full year of those.

Speaker 3: Truforma will lag a little bit, and that's because the Truforma cartridges require refrigeration. And so our first priority is to rationalize the distribution network we already have in place, put new distributors in place where we don't currently have distribution, focus on the products that don't require refrigeration, and then figure out logistics. And once everybody's up and running, then we would bring Truforma into that mix.

So our first priority is to is to rationalize the distribution network. We already have in place put new distributors in place, where we don't currently have distribution focus on the products that don't require refrigeration and then figure out logistics and once everybody is up and running then we would bring to form it into that mix.

Speaker 3: Here's one. Has the company considered partnering with veterinary cage manufacturers to incorporate the VetGuardian technology? And then it talks a little bit more about other opportunities. And let me just say the answer to that is yes.

Here's one has the company considered partnering with veteran veterinary cage manufacturers to incorporate the vet Guardian technology.

And then it talks a little bit more.

Other opportunities. So let me just say the answer to that is yes.

Speaker 3: And we see that monitoring applying not only to the use cases in the VETS practice, meaning

And we see that monitoring apply not only to the use cases and the best practice.

Meaning ICU.

Speaker 3: post-surgery recovery and overnight stays, but also extending to boarding kennels, for example, or to, in some cases, places where they're selling animals or what have you, the ability to, in some way, to monitor pet vitals would be, I think, an advantage in a number of scenarios outside of the sort of classic vet practice.

Post surgery recovery and overnight stays but also extending to.

Boarding kennels for example, or two in some cases.

Places where there.

Selling animals or what have you the ability to to in some way to monitor your pet vitals.

Would be I think an advantage in a number of scenarios outside of the sort of classic best practice and now that we have.

Speaker 5: and now that we've finalized the acquisition of SMP and acquired VET Guardian in total, we're able to look into that and that's actually pretty encouraging.

Finalize the acquisition of of S&P and acquired Guardian on total we're able to look into that and that's actually pretty encouraging.

Let's see what else we got here.

That pretty much takes care of it.

Speaker 5: that pretty much takes care of it.

Okay.

Alright, well then let me just say that.

Speaker 3: I know that we're probably going to get a lot of commentary on some of our discussions today. I would ask you to keep an open mind there.

I know that we're probably going to be.

A lot of commentary on some of our discussions today I would ask you to keep an open mind there.

Speaker 3: and remind you that no reverse split.

And remind you that no reverse split can.

Speaker 3: can be approved unilaterally by our board or by the company.

Can be approve unilaterally by our board or by the company that it requires a.

Speaker 3: that it requires a vote of shareholders. All of you will have an opportunity, those of you who are shareholders, will have an opportunity to weigh in on this as you vote your shares. We would encourage you to vote regardless of which way you do because we appreciate the input and participation and we will communicate often and early along the process along with data.

A vote of shareholders. All of you will have an opportunity those are your shareholders will have an opportunity to weigh on our weigh in on this as you vote your shares.

I would encourage you to vote, regardless of which way you do because we appreciate the input and participation and we will communicate.

And early along the process along with data so that you could see that there have been some examples of where it hasn't gone awry and maybe you will also provide some data on what happens after you do a stock buyback, but with that I will.

Speaker 3: so that you could see that there have been some examples of where it hasn't gone awry, and maybe you will also provide some data on what happens after you do a stock buyback. But with that, I would say

I'd say.

Speaker 3: You know, while everyone might not share the same perspective, I think we had a pretty good quarter. And we're looking forward to an even better one in the fourth quarter. Thank you for your participation today.

While everyone might not share the same perspective, I think we had a pretty good quarter and we're looking forward to an even better one in the fourth quarter and thank you for your participation today.

Speaker 1: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Thank you <unk>.

Fluids todays teleconference. You may disconnect your lines at this time, thank you for your participation.

Yes.

Speaker 7: Do you still have that gun handy? We have. Yeah, we can end the call.

Hum.

Okay.

Well yeah.

On the comp.

[music].

Speaker 7: © BF-WATCH TV 2021

Speaker 7: © BF-WATCH TV 2021