Q4 2023 NeuroMetrix Inc Earnings Call
Josh: Good morning, and welcome to the NeuroMetrix fourth quarter 2023 business and financial update. My name is Josh, and I will be your moderator on the call.
Good morning, and welcome to the neuro metrics fourth quarter of 2023 business and financial update my name is Josh and I will be your moderator on the call.
Josh: On this call, the company may make statements that are not historical facts and are considered forward-looking within the meaning of the Private Security Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, are forward-looking statements. Any forward-looking statements reflect current views of NeuroMetrix about future results of operations and other forward-looking information. You should not rely on forward-looking statements because actual results may differ materially as a result of a number of important factors, including those set forth in the earnings release issued earlier today. Please refer to the risks and uncertainties, including the factors described under the heading Risk Factors, in the company's periodic filings with the SEC, available on the company's Investor Relations website at neurometrics.com and on the SEC's website at sec.gov. NeuroMetrix does not intend to, and undertakes no duty to, update the information disclosed on this conference call. I'd now like to introduce the NeuroMetrix Senior Vice President and Chief Financial Officer, Mr. Thomas Higgins.
On this call the company May make statements, which are not historical facts and are considered forward looking within the meaning of the private Securities Litigation Reform Act of 1995 statements that are predictive in nature that depend upon or refer to future events or conditions are forward looking statements any forward looking statements reflect current views of neuro metrics about.
Future results of operations and other forward looking information you should not rely on forward looking statements because actual results may differ materially as a result of a number of important factors, including those set forth in the earnings release issued earlier today.
Please refer to the risks and uncertainties, including the factors described under the heading risk factors in the company's periodic filings with the SEC available on the company's Investor Relations website at neuro metrics Dot com and on the Sec's website at SEC Gov.
Gov neuro metrics does not intend and undertakes no duty to update the information disclosed on this conference call I'd now like to introduce the neuro metrics Senior Vice President and Chief Financial Officer, Mr. Thomas Higgins Mr. Higgins.
Thomas Higgins: Thank you, Josh, and welcome to our Q4 2023 business update. By way of background, we are a commercial stage medical device company. Our two principal products are, first, Quell, a wearable neuromodulation platform addressing chronic pain related to fibromyalgia and with multiple emerging indications, including CIPN, long COVID, chronic low back pain, chronic overlapping pain condition, and others. And second, dpNCheck, which is a screening technology for peripheral neuropathy, particularly related to diabetes. Our business model is to raise a razor blade with aftermarket revenue as the primary financial objective. At our current operating scale, we are adequately funded with about $18 million in liquid assets. Our cash usage rate averaged about 1.5 million per quarter during 2023. Our capital structure is simple; it's debt-free, and common stock-based.
Thank you, Josh and welcome to our Q4 2023 business update.
By way of background, we are a commercial stage medical device company.
Our two principal products are the first is <unk>, a wearable neuromodulation platform addressing chronic pain related to fibromyalgia.
And with multiple emerging indications, including CIP and long covered chronic lower back pain, chronic overlapping pain condition and others and.
And second TPN check, which is the screening technology for peripheral neuropathy, particularly related to diabetes.
Our business model is razor razorblade with aftermarket revenue is the primary financial objective.
At our current operating scale, we are adequately funded with about $18 million in liquid assets.
Our cash usage rate averaged about $1 5 million per quarter during 2023.
Our capital structure is simple step free and common stock based.
Thomas Higgins: Earlier today, we reported Q4 2023 revenue of $1.3 million. DPNcheck continues to be the largest contributor, representing about 80% of revenue in the quarter. It was down by 32% from Q4 of last year. And as we've discussed in prior quarters, this significant decline was attributable to the Medicare Advantage CMS rule changes in early 2023, which initiated a two-year timetable to phase out reimbursement for a range of patient screening, including peripheral neuropathy. On a full-year basis, this business contracted by 25%.
Earlier today, we reported Q4 2023 revenue of $1 3 million.
<unk> continues as the largest contributor representing about 80% of revenue in the quarter.
It was down by 32% from Q4 of last year.
And as we've discussed in prior quarters. This significant decline was attributable to the Medicare advantage CMS rule changes in early 2023.
Which initiated a two year timetable to phase out reimbursement for a range of patient screening, including peripheral neuropathy.
On a full year basis this business contracted by 25%.
Thomas Higgins: The balance of our Q4 revenue reflects offsetting dynamics of Quell fibromyalgia revenue growth on the upside, nearly doubling from Q3, the sequential quarter, and continuing revenue shrinkage in our legacy products, primarily consisting of electrode sales for neuroconduction testing by long-time customers. For the full year 2023, revenue of $5.9 million was down by 29% from $8.3 million in 2022, principally due to the Medicare Advantage Gross profit in Q4 2023 was about $850,000. The gross profit reduction of about $400,000 from $1.2 million in Q4 of last year correlates with the drop in revenue.
The balance of our Q4 revenue reflects offsetting dynamics of qualified bromine out your revenue growth on the upside.
Nearly doubling from Q3 the sequential quarter.
And continuing revenue shrinkage in our legacy products, primarily consisting of electrode sales for nerve conduction testing.
Longtime customers.
For the full year of 2023 revenue of $5 9 million was down by 29% from $8 3 million in 2022.
Due to the Medicare advantage CMS rule changes.
Gross profit in Q4 2023 was about $850000.
The gross profit reduction of about $400000 from $1 2 million in Q4 of last year correlates with the drop in revenue.
Thomas Higgins: Our Q4 gross margin rate was 64.4%, a slight contraction from the prior year quarter, reflecting a reduction in the absorption of indirect manufacturing costs, which resulted from lower production volume. For the full year 2023, gross profit was $3.9 million at a margin rate of about 67%, down by 1.8 million from 5.8 million in 2022 at a margin rate of just under 70%. Operating expenses in the fourth quarter totaled $2.7 million
Our Q4 gross margin rate was 64, 4%.
A slight contraction from the prior year quarter, reflecting a reduction in the absorption of indirect manufacturing costs, which resulted from lower production problem.
Lower production volumes.
For the full year 2023, gross profit was $3 9 million at a margin rate of about 67%.
Down by $1 8 million from $5 8 million in 2022 at a margin rate of just under 70%.
Operating expenses in the fourth quarter totaled $2 7 million.
Thomas Higgins: The OPEX increase of about $600,000, or 30% from the prior year quarter, reflects the timing of R&D spending for outside engineering services, plus increased sales and marketing headcount during the year to support the launch of qual-fiber myalgia. Personnel costs, this would be headcount and compensation, throughout the organization were significantly higher in comparison with the prior year. Fully Europics of $11.1 million increased by 600,000, or 5. The net loss in Q4 was $1.6 million, or $1.43 per share.
The opex increase of about $600000 or 30% from the prior year quarter reflects the timing of R&D spending for outside engineering services.
<unk> increased sales and marketing head count during the year to support the launch of qualified for my Alger.
Personnel costs, this will be head count and compensation throughout the organization were significantly higher in comparison with the prior year.
Full year Opex of $11 1 million increased by 600000 or five 8% from 2022.
Net loss in Q4 was $1 6 million or $1 43 per share.
Thomas Higgins: The net loss increased by $1 million from a net loss of just under $700,000, or 73 cents a share, in Q4 of last year. Operating cash usage in the quarter was about 1.4 million this year versus 1.5 million in Q4 of last year. For the full year, our net loss of $6.5 million, or $6.27 per share, increased from a loss in 2022 of $4.4 million, or $4.97 per share. We closed the quarter with liquid assets of $18 million, as I mentioned previously.
The net loss increased by $1 million from the from a net loss of just under $700000 or <unk> 73, a share in Q4 of last year.
Operating cash usage in the quarter was about $1 4 million this year versus $1 5 million in Q4 of last year.
For the full year, our net loss of $6 5 million or $6 27 per share increased from a loss in 2022 of $4 4 million.
Our $4 97 per share.
We closed the quarter with liquid assets of $18 million as I mentioned previously.
Thomas Higgins: During Q4, we executed sales of common stock under our ATM facility of approximately $1.9 million, and of that, about $1.6 million settled during the fourth quarter. Common stock outstanding at the end of 2023 totaled approximately 1.5 million shares. And this is after the November 1st, 2023, date on which we implemented a reverse split in the ratio of 1.8% in order to comply with NASDAQ minimum bid requirements. So those are the highlights from the financial report. And now for the comments of Dr. Shai Goswami, our founder and CEO. Thank you, Tom.
During Q4, we executed sales of common stock under our ATM facility of approximately $1 9 million and of that about $1 6 million settled during the fourth quarter.
Common stock outstanding at the end of 2023 totaled approximately $1 5 million shares.
And this is after the November one 2023.
Date in which we implemented a reverse split and the ratio of one 8% in order to comply with NASDAQ minimum bid requirements.
So those are the highlights from the financial report.
Now for the comments of doctors <unk>, our founder and CEO.
Thank you Tom.
Dr. Shai Goswami: Our growth strategy is built on three core efforts. The first is to establish and grow the qualfibromyalgia indication in the U.S. market. The second is to advance the QUEL Neurotherapeutics Program, which will lead to additional indications and an expanded addressable market. And the third is to revise the DPN Check Business Strategy to account for the recent negative changes. upcoming eSports Training Videos, in person through feedback on
Our growth strategy is built on three core efforts.
To establish and grow that.
Fibromyalgia indication in the U S market.
The second is to advance the quell neuro therapeutics program, which lead to additional indications and an expanded addressable market.
And the third is to revise the DPM check business, which account for the recent negative changes.
Yes.
Thank you.
Yes.
With respect to groundwater.
Dr. Shai Goswami: QELT is our wearable neuromodulation platform. It is based on our proprietary adaptive transcutaneous electrical nerve stimulation technology, and it is the only daily multi-hour wearable treatment for chronic pain syndrome. It is FDA-cleared for the relief of lower extremity chronic pain and has received FDA de novo authorization as the first and only neuromodulation device indicated to help reduce the symptoms of fibromyalgia, although this latter indication is available by prescription only. At this time, our commercialization efforts are exclusively focused on the fibromyalgia indication. Fibromyalgia is a complex chronic pain syndrome that affects up to 15 million people in the U.S.
Wearable Neuromodulation platform. It is based on our proprietary adaptive transfer you changed electrical nerve stimulation technology.
And it is the only daily multi hour wearable treatment for chronic pain syndromes.
FTA cleared for relief of lower extremity chronic pain and has received FDA de novo authorization as the first and only neuromodulation device indicated to help reduce the symptoms.
About my algebra and this latter indication is available by prescription only.
At this time, our commercialized commercialization efforts are exclusively focused on the fibromyalgia indication.
Farmer Mac is a complex chronic pain syndrome that affects up to 15 million people in the U S.
Dr. Shai Goswami: The only FDA-approved drugs are pregastroxetine and monasopran, which can have a substantive status. Therefore, there is a critical unmet need for additional safe treatment. The fourth quarter of 2023 was the fourth quarter of the commercial launch of QELT for fibromyalgia. At this time, we are in a deliberate strategic phase that is intended to optimize the effectiveness of our prescription processing solution to refine the clinical and marketing messaging and to identify the most attractive patient cohorts for the solution. Our commercial team consists of the National Director of Sales and two regional business managers, which provide us with preliminary coverage in the Florida, Texas, and California markets. We have partnered with the National Online Pharmacy to fulfill both initial prescriptions and refills.
The only FDA approved drugs.
Thanks, Tina and Manasseh Bran, which.
Therefore, there is a critical unmet need for additional safe treatments.
The fourth quarter of 2023 was up for the fourth quarter of the commercial launch of quell fibromyalgia. At this time, we are in a deliberate strategic phase that is intended to optimize the effectiveness of our prescription processing solution to refine the clinical and marketing messaging and to identify the most attractive patient cohorts for the solution.
Our commercial team consists of national director of sales and two regional business managers.
Which provide us with preliminary coverage in the Florida, Texas, and California markets.
We have partnered with a national online pharmacy to fulfill both the initial prescriptions and refills at this time qualify my answer is available on a cash pay basis with the exception of certain VA facilities, where it is to cover treatments.
Dr. Shai Goswami: At this time, QoF fibromyalgia is available on a cash-pay basis with the exception of certain VA facilities where it is a covered treatment. We've also added a telehealth option that allows patients to receive prescriptions without requiring an in-person physician visit. We are pleased with the growth in the Quilt Fibromyalgia business in the fourth quarter of last year. There were 199 unique prescribers in Q4 compared to 125 during Q3. The most common prescribers are rheumatologists, pain medicine specialists, and neurologists. The number of Qualfibromyalgia prescriptions written increased to 583 in Q4, from 262 in Q3, with about 60% of prescriptions filled by patients, and the number of month refills increased from 315 in the third quarter of last year to 525 in the fourth quarter. Following the end of the quarter, we increased the refill price by 33%.
We have also added a telehealth option that allows patients to receive prescriptions without requiring an in person physician visits.
We are pleased with the growth in the fiber miles our business in the fourth quarter of last year. There were 199 unique prescribers during Q4 compared to 125 during Q3 the.
The most common prescribers, a rheumatologist pain medicine specialists and neurologists.
The number of qualified Remodels are prescriptions written increased written increased to 583 in Q4 from 262 in Q3 was about 60% of prescriptions filled by patients.
And the number of month refills increased from 350 million in the third quarter of last year to 525 in the fourth quarter.
Following the end of the quarter, we increased the refill price by 33%.
Dr. Shai Goswami: Overall, we are pleased with the early commercial experience with qualified fibromyalgia, and we hope to see continued progress leading to material revenue this year. Now, in terms of the overall QLD Neurotherapeutics program. It is the second element of our growth strategy, and that is to increase our pipeline beyond the fibromyalgia indication. The program that is furthest along is for the treatment of chronic chemotherapy-induced peripheral neuropathy, or CIPN, which affects as many as 30% of the approximately 1 million people who receive chemotherapy every year. It is a chronic and debilitating side effect of cancer treatment.
Overall, we are pleased with the early commercial experience with qualify Brian Alger and we hope to see continued progress leading to material revenue this year.
Now in terms of the overall quality of our therapeutics program it.
It is the second element of our growth strategy and that is to increase our pipeline beyond the fibromyalgia indication. The program that is furthest along is for treatment of chronic chemotherapy induced peripheral neuropathy or cips.
Which affects as many as 30% of the approximately 1 million people who received chemotherapy every year.
It is a chronic and debilitating side effect of cancer treatments.
<unk> received FDA breakthrough designation for treating moderate to severe CIP and in January of 2022 based on our pilot study conducted at the University of Rochester.
NIH funded multicenter double blinded randomized sham controlled trial completed enrollment in the third quarter of 2022.
Dr. Shai Goswami: QWEL received FDA breakthrough designation for treating moderate to severe CIPN in January of 2022 based on a pilot study conducted at the University of Rochester. An NIH-funded, multi-center, double-blinded, randomized sham control trial completed enrollment in the third quarter of 2022. And we recently submitted a pre-market notification, or a 510K, with the FDA for a QOLSIAC indication that was done in December. Depending on the FDA review timeline and ILFM decision, we could be in a position to initiate commercialization before the end of this year or early next year. We also reported positive results from a positive study of QL and post-acute COVID-19 syndrome, which is also called Long COVID. About one-third of patients with Long COVID have a fibromyalgia-like presentation, and we are currently evaluating whether this recent clinical data is sufficient to support a 5-10 case submission with QL fibromyalgia as the predicate device.
And we recently submitted a premarket notification or a five 10-K with the FDA for <unk>.
<unk> that was done in December.
Depending on the FDA review timeline Nelson decision, we could be in a position to initiate commercialization before the end of this year early next year.
Okay.
We also reported positive results from a pilot study of quell in post acute COVID-19 syndrome, which is also called long COVID-19.
About one third of patients with lung Covid have fibromyalgia like presentation and we are currently evaluating whether this recent clinical data is sufficient to support.
Tickets submission with Quad fibromyalgia is the predicate device.
Now moving onto VPN check.
<unk> is a rapid point of care test for peripheral neuropathy, such as diabetic peripheral neuropathy or <unk>, which is the most common long term complication of diabetes.
<unk> is the only point of care peripheral neuropathy tests based on gold standard nerve conduction studies technology.
Our <unk> business has been comprised of <unk> sales into the U S. Medicare advantage market and international sales in China, and Japan through distribution partners.
Historically, 80% of our <unk> revenue has come from domestic sales.
We have a value based commercial care team.
Dr. Shai Goswami: Now moving on to DPN check. DPN check is a rapid point-of-care test for peripheral neuropathy, such as diabetic peripheral neuropathy (or DPN), which is the most common long-term complication of diabetes. DPN-CHECK is the only point-of-care peripheral neuropathy test based on gold-standard nerve conduction study technology. Our DPNCheck business has been comprised of B2B sales into the U.S. Medicare Advantage market and international sales in China and Japan through distribution partners. Historically, 80% of our dp-intrick revenue has come from domestic sales.
That has been focused on increasing <unk> adopt <unk> adoption in the Medicare advantage market. This includes large medical groups integrated delivery networks health systems and health assessment companies.
We're a substantial portion of their patients are covered under Medicare advantage the <unk>.
Business had been growing for several years, however, substantial uncertainty was injected into the Medicare advantage sector last year due to policy changes announced by the same instrument at care and Medicaid services or CMS.
In April CMS announced significant changes to the hierarchical condition condition categories, our Hec risk adjustment model for the calendar year 2020 for the new model alters the risk adjustment environment and among its many changes essentially eliminates HCC codes for peripheral neuropathy or detected by <unk> screening programs.
Dr. Shai Goswami: We have a value-based commercial care team that has been focused on increasing dpn-check adoption in the Medicare Advantage market. This includes large medical groups, integrated delivery networks, health systems, and health assessment companies where a substantial portion of their patients are covered under Medicare Advantage. The business had been growing for several years, but substantial uncertainty was injected into the Medicare Advantage sector last year due to policy changes announced by the Centers for Medicare and Medicaid Services, or CMS. In April, CMS announced significant changes to the Hierarchical Condition Categories, or HCC, risk adjustment model for the calendar year 2024.
We are evaluating the evolving landscape and at this point believe it will be necessary to alter our strategy to move away from Medicare advantage focused business to one more broadly addressing value based care.
We are currently exploring various alternative alternate markets within value based care in retail healthcare and attempt to reconstitute a profitable scalable business model.
We're not yet in a position to outline the new commercial strategy.
As we saw this quarter the Medicare advantage changes have caused a material downward pressure on the deep <unk> revenues implementation of new strategies will take time, and therefore, we do not see a reversal in revenue. This year. Nevertheless, we expect the <unk> business line, we will continue to generate positive cash flow.
Dr. Shai Goswami: The new model alters the risk adjustment environment and, among its many changes, essentially eliminates HCC codes for peripheral neuropathies that are detected by DPN-CHECK's screening program. We are evaluating the evolving landscape and, at this point, believe it will be necessary to alter our strategy to move away from Medicare Advantage-focused business to one more broadly addressing value-based care. We are currently exploring various alternative markets within value-based care and retail healthcare in an attempt to reconstitute a profitable, scalable business model. However, we are not yet in a position to outline a new commercial strategy.
So if it's attractive operating margins.
Now to move on to our recent release on executing US a review of strategic options.
While the company management and the board are disappointed by the impact of external forces on VPN check we remain enthusiastic about the potential for a quote neuromodulation business and in fact also our <unk> business.
Of course, we're also mindful of the divergence between our stock price and the potential of our product lines and strong balance sheet.
A few weeks ago, we announced that we were initiating a process to review strategic options to promote growth of our product lines and to maximize shareholder value.
We intend to consider various options, including changes in marketing strategies, the acquisition of new assets potential self company assets and merger or other strategic transactions.
Dr. Shai Goswami: As we saw this quarter, the Medicare Advantage changes have caused a material downward pressure on DPN check revenues. Implementation of new strategies will take time, and therefore, we do not expect a reversal in revenue this year. Nevertheless, we expect the DPNCheck business line will continue to generate positive cash flow by virtue of its attractive operating margin. Now to move on to our recent release on executing a review of strategic options. While the company management and the board are disappointed by the impact of external forces on DPNCheck, we remain enthusiastic about the potential for our coiled neuromodulation business and, in fact, also our DPNCheck business. Of course, we are also mindful of the divergence between our stock price and the potential of our product lines and strong balance sheet.
While we are exploring these options, we do not to make that expect to make any fundamental changes in the company's commercial operations.
We have engaged lindenberg thalmann, with whom we have a longstanding relationship to help us in this process.
There can be no assurances that any specific actions will be taken.
Or emerge from this process.
And that represents our prepared comments and at this point, we'd be happy to take any questions.
Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
One moment for questions.
As a reminder.
Thats Star one one.
To ask a question one moment for questions.
Our first question comes from Gerard Cohen with JM Cohen <unk> Company you May proceed.
Yes, just.
I know you want to.
Is there a broader opportunity for DPM check in the.
Dr. Shai Goswami: A few weeks ago, we announced that we were initiating a process to review strategic options to promote growth in our product lines and maximize shareholder value. We intend to consider various options, including changes in marketing strategies, the acquisition of new assets, potential sale of company assets, and merger or other strategic transactions. While we are exploring these options, we do not expect to make any fundamental changes to the company's commercial operations. We have engaged Landenberg-Thalmann, with whom we have a longstanding relationship, to help us in this process. There can be no assurances that any specific actions will be taken or emerge from this process.
I know you don't want to answer it in the.
Broader diabetes market.
But it's more for the older population.
Well, yes Jared.
That is it is used extensively.
<unk> for diabetic peripheral neuropathy, so yes, the diabetes market, we have been focused on the diabetes market within Medicare advantage.
Because of the strong clinical benefits as well as the economic benefits to the medical groups that were using it.
And maybe could continue to use it but sort of to your point.
Expanding our reach outside of Medicare advantage it to other diabetes.
Sectors is part of our strategic consideration.
Okay, just hasnt been used so far beyond the broader okay alright.
Operator: And that represents our prepared comments. And at this point, we'd be happy to take any questions. Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.
And just.
And doctors.
I know it because they use codes, but.
Further we are encouraged because.
I guess I'm trying to get those.
They want to use the <unk>.
<unk> device or the diagnosis, even if we're in a broader scale to help diagnose the patient.
Operator: One moment for questions. As a reminder... That's star number one one, to ask a question. One moment for questions. Our first question comes from Gerard Cohen with J.M. Cohen and Company.
What else do they have to do it.
Well I think thats.
A good point, so I think the.
Yes, there is a cost to.
Gerard Cohen: You may proceed. Yeah, just, um, I know you want to... Is there a broader opportunity for DPM checks in the, just I know you don't want to answer it, broader diabetes market? It just seems odd that it's, or for the older population.
To the device and Theres a cost of the consumables. So they do not to be compensated for their time and materials in some fashion and that was.
Dr. Shai Goswami: Well, Jared, I mean, we that it is used extensively for diabetic peripheral neuropathy. So yes, the diabetes market, we have been focused on the diabetes market within Medicare Advantage because of the strong clinical benefits as well as the economic benefits to the medical groups that were using it. And many, many continue to use it.
Well established in the Medicare advantage market right. There is a there is in fact, a CPT code.
For our nerve conduction testing technology.
The challenges that most insurers.
And this includes Medicare as well as commercial insurers typically do not reimburse for screening testing as opposed to clinical testing.
Dr. Shai Goswami: But sort of to your point, expanding our reach outside of Medicare Advantage into other diabetes sectors is part of our strategic considerations. Okay, it just hasn't been used so far, yeah, in the broader, okay, all right. Uh, and, uh, just, and doctors, I know because they use codes, but don't they use other things beyond codes? I guess I'm trying to get, don't they want to use the device or the diagnosis, even if we're on a broader scale, to help diagnose the patient? What else do they have to do to do it?
So meaning they just annual screening is not something that typically.
<unk> is reimbursed for really most most diagnostics with some with some notable exceptions so.
But the larger it's the largest part of the market is on the screening side. So that was established for Medicare advantage and then unfortunately CMS.
I had to make some broad broad changes to that again not just for <unk>.
Peripheral neuropathy, but for many other other test as well so.
Dr. Shai Goswami: Well, I think that's a good point. I think the, you know, there is a cost to the device, and there is a cost to the consumables, so they do need to be compensated for their time and the materials in some fashion, and that is well-established in the Medicare Advantage market. There is, in fact, a CPT code for our nerve conduction testing technology. The challenge is that most insurers, and this includes Medicare as well as commercial insurers, typically do not reimburse for screening testing as opposed to clinical testing.
Your point is well taken but there has to be some sort of economic model that a lease covers the cost of the test for physicians.
Okay.
Alright, thank you.
Thank you.
One moment for questions.
Our next question comes from Joshua Horowitz with Palm Global small cap Master Fund LP you May now proceed.
Good morning.
I'd like to know who is advising the company that it's a.
Proper and efficient.
Use of the company's capital strategy to co invest in <unk> stock every quarter under the ATM.
Dr. Shai Goswami: So, meaning, just an annual screening is not something that typically is reimbursed for really most diagnostics, with some notable exceptions. But the largest part of the market is on the screening side. So, that was established for Medicare Advantage, and then, unfortunately, CMS decided to make some broad, broad changes to that. Again, not just for peripheral neuropathy, but for many other tests as well.
As opposed to doing a legitimate.
<unk> offering with institutional investors.
Yes.
I wouldn't describe it as co invested but I will let Tom Tom address that question.
Sure. That's an interesting choice of words that you use since whenever we do use the ATM that's reported every quarter. So.
Perhaps you want to write one center.
I'm not going to Archrock.
But let me let me answer we don't find out or out of Australia, you guys publish right. So it's sort of clandestine I'm out there in the market interested in the company buying stock you guys are sitting there pressing a button and selling it.
Dr. Shai Goswami: So your point is well taken, but, you know, there has to be some sort of economic model that at least covers the cost of the test for physicians. OK. All right, thank you. Thank you. One moment for questions. Our next question comes from Joshua Horowitz with POM Global Small Cap Master Fund LP. Good morning.
It's pretty ridiculous structure and that sort of makes the company Uninvested well don't you agree.
No I think you've absolutely got it wrong. If you look at our company, we are a consumer of cash.
Joshua Horowitz: I'd like to know who's advising the company that it's a proper and efficient use of the company's capital and strategy to clandestinely sell stock every quarter under the ATM, as opposed to doing a legitimate stock offering with institutional investors. Yeah, I wouldn't describe it as clandestine, but I'll let Tom address that question. Sure, that's an interesting choice of words that you use since whenever we do use the ATM, that's reported every quarter. So perhaps you want to reconsider some of the ways you're characterizing this. But let me answer your question. We don't find out about it until you guys publish it, right? So it's sort of clandestine.
Also a company thats looking to grow.
And so we do have two choices here, we can either do as you recommend which is to try to put together an offering to the market, but you may since we're in this business you may be aware that the the market hasnt been very receptive to.
Pipe deals, particularly for for Microcap companies over the last couple of years and so.
We think that it makes a little bit more sense.
<unk> two <unk>.
<unk> shares directly to people that are interested in buying on a small basis when the opportunity presents itself.
And so if you're asking who gives us this advice.
It comes from investment bankers that we speak with.
Joshua Horowitz: I'm out there in the market, interested in the company, buying stock. You guys are sitting there pressing a button and selling it. It's a pretty ridiculous structure, and it sort of makes the company uninvestable. Don't you agree? No, I think you've absolutely got it wrong.
And as discussed internally.
There were $10 billion of issuances last year, So I don't know, what what youre talking about but I would recommend that you canceled a pipe do a legitimate offering bringing long term value oriented institutional investors that will support the company maybe that comes along with some governance changes and absent that you said Jeff.
Thomas Higgins: If you look at our company, we are a consumer of cash. But we're also a company that's looking to grow. And so, we do have two choices here. We can either do as you recommend, which is to try to put together an offering to the market. But you may, since you're in this business, you may be aware that the market hasn't been very receptive to... pipe deals, particularly for micro-cap companies over the last couple of years. And so, we think that it makes a little bit more sense to sell shares directly to people that are interested in buying on a small basis when the opportunity presents itself. And so if you're asking who gives us this advice, well, it comes from investment bankers that we speak with, and it's discussed internally.
Literally closed down melt the whole thing down and return the cash to the stockholders because the current setup is the recipe for disaster you can't.
Two one legitimate company thats used in ATM.
Well. Thank you very much for your for your input.
Thank you and as a reminder to ask a question. Please press star one one on your telephone.
And I'm not showing any further questions at this time I would now like to turn the call back over to Dr. <unk> for any closing remarks.
Well. Thank you for joining us on this conference call and look forward to updating you over the course of this coming year. Thank.
Thank you for your attention.
Thomas Higgins: There were $10 billion of issuances last year, so I don't know what you're talking about, but I would recommend that you cancel the pipeline, do a legitimate offering, and bring in long-term value-oriented institutional investors that will support the company. Maybe that comes along with some governance changes, and absent that, you should just literally close down, melt the whole thing down, and return the cash to the stockholders because the current setup is just a recipe for disaster. You can't point to one legitimate company that's used an ATM.
Thank you for your participation you may now disconnect.
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Thomas Higgins: Well, thank you very much for your input. Thank you. And as a reminder, to ask a question, please press star one one on your telephone. And I'm not showing any further questions at this time. I would now like to turn the call back over to Dr. Ghazani for any closing remarks. Well, thank you for joining us on this conference call, and we look forward to updating you over the course of this coming year. Thank you for your attention. Thank you for your participation. You may now disconnect. www. NeuroMetrix.com. Thank you for watching!
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