Q3 2024 Ekso Bionics Holdings Inc Earnings Call
Greetings and welcome to the Exo Biotics, quarter three, it's 2024 financial results call.
Speaker Change: The question I wrote at this time, the participants are the listen only mode. The question after session will follow the formal presentation.
Speaker Change: and Benny Wichel require operator assistance. Please press star zero or you tell them to keep that as a reminder of this conference is being recorded. It is not my pleasure to introduce Matt Steinberg in partners. Thank you. You may begin.
Speaker Change: and the first time I've seen this video, I've seen it in the video.
Matt Steinberg: Thank you, operator, and thank you all for participating in today's call. Joining me from ExoBionics, our Scott Davis, Chief Executive Officer and Jerome Wong, Chief Financial Officer.
Speaker Change: Earlier today, Exo Bionics released financial results for the quarter ended September 30, 2024.
Speaker Change: A copy of the press releases available on the company's website.
Speaker Change: Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal security laws, which are made pursuant to the safe harbor provisions of the private security's litigation reform Act of 1995.
Speaker Change: and he statements made during this call that are not statements of historical facts should be deemed to be forward-looking statements.
Speaker Change: All forward-looking statements include statements regarding our business strategy, teacher financial or operational expectations, or expectations of the regulatory landscape governing our products and operations, or based upon management's current estimates and various assumptions.
Speaker Change: These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these four look few statements.
Speaker Change: and the Coringley, you should not place undue reliance on these statements.
Speaker Change: or List and Description on the risks and uncertainties associated with access businesses, so you see its filings with the Security Exchange Commission.
Speaker Change: Exo Disclamed Any obligation, except as required by law, to update or revise any financial or operational projections. It's regulatory outlook or other forward-lifu statements, whether because of new information, future events or otherwise.
Speaker Change: Are you for looking statements made on this call? Speak only as of the date of this call. I will now turn the call over to Exile Ion, Chief Executive Officer, Scott Davis.
Scott Davis: Thank you, Matt.
Scott Davis: The third quarter reflected a period of transition in progress, particularly within our personal line of exo health devices. Notably, in August, the approval and reimbursement of the initial CMS claim for our exo-indigo personal represented a significant milestone for exo and, importantly, patients with spinal cord injuries.
Scott Davis: After CMS established pricing determination for our exo-indigo personal in April, we immediately executed our field communication strategy to ensure that all targeted health care providers were made aware of the new CMS access and coverage policy that could impact thousands of Medicare and Medicaid patients living with a spinal cord injury.
Scott Davis: Additionally, we've been working closely with our extensive network of neuro rehabilitation centers across the country. Focus on education efforts on appropriate patient selection, screening, trialing, onboarding, and skills training for patients prescribed the next toe and to go personal for both at home and in community settings.
Scott Davis: I also want to highlight the success we've had with investing in various digital marketing programs and strategies designed to raise product and policy awareness, which have resulted in an influx of new qualified leads.
Scott Davis: Additionally, we continue to develop and evolve our educational access resources to support prescribing healthcare providers and navigating through the insurance process efficiently and effectively.
Scott Davis: We remain committed to enhancing our collaboration with healthcare providers by ensuring that our innovative solutions meet their needs and by streamlining our processes with their feedback.
Scott Davis: I want to emphasize that this is a program that takes time to build. We're excited to see that across all targeted sectors our pipeline is steadily increasing, which we believe will enable us to scale this program over time.
Scott Davis: With multiple claims now submitted through our DME to Medicare, we will continue to focus our efforts on continued customer education to improve process efficiencies.
Scott Davis: We are actively engaging with new potential customers. This not only enhances our understanding of their needs, but also allows us to showcase the benefits of the exo and to go personal advice.
Scott Davis: We are committed to expanding access to our innovative exo-indigo personal technology and empowering more qualified individuals to achieve greater mobility and independence.
Scott Davis: We look forward to providing updates on our continued work with the SCI community and eventually individuals with neurological conditions who could potentially benefit from our technology once we're able to obtain the necessary indications.
Speaker Change: and Scott Davis. Now I'll share an overview of our third quarter performance.
Speaker Change: We generated quarterly sales of $4.1 million and sold 33 exo-health devices in the third quarter of 2024.
Speaker Change: USAels were affected by fluctuations in procurement cycles for our integrated delivery network or IDN customers that have persisted since the start of 2024.
Speaker Change: This was compounded by several customers delaying capital purchases into the fourth quarter and into early 2025.
Speaker Change: However, our demand and pipeline for exo health products remain strong and we're focused on delivering our innovative devices to individual clinics and hospitals while expanding our global customer base.
Speaker Change: We believe our expanding network of leading neuroreabilitation centers recognizes the clinical and economic benefits of our innovative exo and our device.
Speaker Change: Currently, XONRs are deployed in nine of the top 10 rehabilitation centers in the United States, which we believe is an indicator that our technology is becoming a standard of care for lower extremity neurorevalutation.
Speaker Change: We plan to leverage our strong reputation to drive growth for both our exo and our exo and go therapy devices.
Speaker Change: As we continue to strengthen our distribution network and expand our pipeline of opportunities, we remain confident in our ability to grow our presence among neurorevalentation centers and enhanced patient outcomes.
Speaker Change: Internationally, demand remains strong, mirroring our robust performance in the first half of the year.
Speaker Change: Sales in Europe achieved record levels in the quarter as no rehabilitation centers in the region are adopting our potentially life-changing technology.
Speaker Change: In addition to placing more devices worldwide, we also expanded our international distribution network, which has allowed us to achieve greater operating leverage and foreign markets, which we believe positions us well for continued success on a global scale.
Speaker Change: As we look ahead, we are committed to further developing our relationships with our ideas to secure larger multi-unit capital contracts across North America.
Speaker Change: and this initiative is a key component of our ongoing commercial strategy to expand our market presence. And we are optimistic about our future prospects in the growing pipeline of potential deals.
Speaker Change: Now I'd like to provide a brief update on our industrial segment, ExoWorks.
Speaker Change: In the third quarter, sales of Exos, Evo Exoskeleton were impacted by labor strikes in U.S. manufacturing industries.
Speaker Change: Nonetheless, we are committed to raising awareness about the benefits that Evo offers for workers engaged in demanding overhead tasks, including reduced fatigue, increased productivity, and fewer workplace injuries.
Speaker Change: Ivo is suitable for a range of industries, notably in automotive, aerospace, construction, and renewable energy verticals and numerous other sectors where overhead work is necessary.
Speaker Change: Now shifting to our operations, where we continue to create more efficiencies throughout our business.
Speaker Change: Our improvements in supply chain and inventory management along with efficiencies gained in production resulted in strong gross margins for the quarter despite a concentration of our revenue being sold in Europe which reflected lower ASPs as a typical with distribution.
Speaker Change: Overall, we are pleased to have improved our operating margins in the quarter by reducing our operating expenses.
Speaker Change: In summary, this was a quarter of progress for exobiotics, marked by the receipt of initial CMS claims reimbursement for our exo-indigo personal device and increased global demand for exo-NR.
Speaker Change: with our total product portfolio that has the potential to reach a larger dressable market in excess of $13 billion across the continuum of care. We believe we're trending in the right direction for future growth.
Speaker Change: At this time, I'd like to turn the call over to our chief financial officer Jerome Wong to review our third quarter financial results.
Jerome Wong: Thank you, Scott.
Jerome Wong: We generated quarterly sales of $4.1 million in the third quarter of 2024 compared to $4.6 million for the third quarter of 2023.
Jerome Wong: Gross profit for the third quarter of 2024 was $2.2 million representing a gross margin of approximately 53.5% compared to gross margin of 53.3% in the third quarter of 2023.
Jerome Wong: The increase in gross margin was primarily driven by cost savings in supply chain and a reduction in service costs. Partially offset by lower margin sales related to increased volume through distribution.
Jerome Wong: Operating expenses for the third quarter of 2024 or $4.8 million compared to $5.4 million for the third quarter of 2023. The decrease was primarily due to lower-hack count, discretionary payroll, and consulting costs.
Jerome Wong: Net loss applicable to common stockholders for the third quarter decrease to $2.1 million or $10 per basic and diluted share. From a net loss of $3.4 million or $24 per basic and diluted share for the same period in 2023.
Jerome Wong: Now, turning to our financial results for the first nine months of 2024.
Jerome Wong: Revenue was $12.8 million for the 9 months and its September 30, 2024 compared to $13.4 million for the same period in 2023. We saw the total of 99 extra health devices in the first 9 months of 2024.
Jerome Wong: Gross Profit for the Nine Months, and its September 30, 2024, was $6.8 million for presenting a gross margin of approximately 53%. Compared to a gross margin of 50% in the third quarter of 2023.
Jerome Wong: The increase in Ghost Margin was primarily driven by a cost savings and supply chain and a reduction in service costs, partially offset by lower margin sales related to increased volume through distribution.
Jerome Wong: Operating expenses for the nine months ended September 30, 2024, were $15 million compared to $18.4 million for the same period in 2023. The decrease was primarily due to lower-head-count discretionary payroll, accounting, consulting, and legal costs.
Jerome Wong: Net loss applicable to common stockholders for the nine months and its September 30, 2024, with $7.9 million, or 42 cents per basic and diluted share compared to a net loss of $12 million or $88 per basic and diluted share for the same period in 2023.
Jerome Wong: Cash and Restricted Cash as a September 30 of 2024 was $8.3 million compared to $8.6 million as a December 31, 2023. In September, we close an underwritten public offering resulting in net proceeds of approximately $5 million.
Jerome Wong: Please see our Corly Report on Form 10Q, filed earlier today for further details regarding the quarter. Offer it here and may now open the line for questions.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 or you telephone keypad. The confirmation tunnel indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment and may be necessary to pick up a handset before pressing star keys. One moment while you pull for questions.
Speaker Change: and the
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Speaker Change: and our first question comes from RK, HC Wayne Wright.
Speaker Change: and Jerome.
Jerome Wong: and I'm here with you. Thank you.
Speaker Change: and like to know all these 33 placements, how many of them were the X-U.S because you are saying that the X-U.S geographies are doing pretty good.
Speaker Change: Correct, approximately half of those were...
Speaker Change: We're in Europe and several of them in A-PAC. So I would say the majority of those placements.
Speaker Change: or outside of U.S. and within.
Speaker Change: you know those
Speaker Change: Those devices, we had in terms of revenue, we had about 20% of revenue that was reflected by the personal product.
Speaker Change: and then um
Speaker Change: in terms of claims that you filed with CMS, you were saying that you're pretty much caught up with terms of filing.
Speaker Change: So, is that a way you can give us the number in terms of how many have been filed and what percent of those files have been reimbursed?
Speaker Change: Sure. You know, on the personal devices, I can give you a sense of this. We've submitted multiple claims, you know, a year to date, the majority of which happened in the third quarter.
Speaker Change: and today our DME partner has received reimbursement on one claim. We've had two claims that have come back and required additional information for recent submittal.
Speaker Change: but in general, we almost doubled the sales of personal health products from Q2 to Q3.
Speaker Change: and we believe today that represents as I said about 20% of ourselves for the quarter. I will say that...
Speaker Change: You know, the claims that we are submitting are taking some time to move through the reimbursement process.
Speaker Change: and the BIME cycles of some of the customers you were saying that some of the folks have been pushing and they're buying into fourth quarter of this year and fourth quarter of 25.
Speaker Change: So, based on...
Speaker Change: Work yours, work yours, seeing.
Speaker Change: What do you think is generally the backlog now in the sense that you have a lead, but has not been filled because of their pushback.
Speaker Change: and you know, is it a way for us to figure out how that backlog is in a skating taken care of?
Speaker Change: In terms of backlog, we have ordered backlog that is on the books.
Speaker Change: Wright now for Q4.
Speaker Change: I think the way to think about this is that we have continued strong demand in Europe and as it relates to North America.
Speaker Change: you know, this has been a bit of an off cycle year for us with our IDNs we had.
Speaker Change: and the very strong sales in 2022 and 2023 relative to our IDN Procurements. 2024 remains impacted by being slightly off-cycle with these customers in North America.
Speaker Change: and Oliver, we do believe that we're coming around again to renewable cycles, which we anticipate will positively impact us in 2025 and in Q4 as well.
Speaker Change: You know, we have strong pipeline and demand which supports future growth on our enterprise segment as well as in our personal segment.
Speaker Change: Thank you.
Speaker Change: Thank you and our next question comes from Ben Hainer, Lake Street Capital.
Ben Hainer: Good afternoon, John. Thanks for taking the questions.
Ben Hainer: for the series and due to the CMS reimbursement for the personal units and both waited and tried to take a look at maybe adding some indigoluses to the clinics or anything like that or any dynamic set play related to the personal units.
John: Yeah, that's a great question, you know, in general, I would say the issue really isn't so much around distraction, you know, as it is.
John: and a lot of these enterprise accounts are lumpy and we had
John: Absolute Records sales in North America.
John: in 2023. We're having absolute record sales in Europe this year. So, you know, some of this is just, you know, really following procurement cycles. We have...
John: and C U 3 in North America. We had multiple.
John: Customers on the enterprise side that made the decision to delay their purchases to either Q4 or into 2025.
John: you know, just citing you know, some uncertainties, sort of macroeconomic uncertainties that they had, you know, perhaps even relative to politics.
Speaker Change: and then Europe obviously is a bright spot here. How much insight do you have into how the remainder of the year could look on that front? Should we expect international to be a strong and cute force as it wasn't cute three or what to write away to think about that to the extent you could share?
Speaker Change: Yeah, demand in Europe remains strong for us. We've also accumulated a solid backlog coming into the quarter there.
Speaker Change: So as we look at Europe in Q4, we believe that we will once again have a strong quarter there.
Speaker Change: is a very good job.
Speaker Change: Yeah, we um...
Speaker Change: I'll say that we have coming into the quarter we had at the end of Q3 we had more than a dozen devices in backlog at the end of Q3.
Speaker Change: and then on the legal inspection that you mentioned earlier in the Northern orological conditions, is there anything that's just to be on the lookout for there's there kind of a timeline that you can speak to on any of these things?
Speaker Change: and nothing definitive yet, but I will say that Exo has a history of working very closely with some of the top.
Speaker Change: Neurological Research Hospitals and Facilities in North America and throughout the world. And our clinical studies, which can often be quite expensive, particularly when you're looking at new FDA indications for use.
Speaker Change: We have been able to leverage those longstanding relationships.
Speaker Change: with those centers and with...
Speaker Change: The new personal products with our Indigo family of products.
Speaker Change: We've had significant interest from those research hospitals to engage in those studies.
Speaker Change: to expand, to potentially expand indication for use for our Indigo family of exoskeleton. So this is something that we are working on currently.
Speaker Change: and the time frame on these sorts of endeavors is somewhat undefined.
Speaker Change: It certainly takes some time to be able to do this and we're lucky to have partners who can help us because it really helps us to contain the expenses that are related to gaining those clinical trials.
Speaker Change: Okay, got it. And then lastly for video, just one point of clarification. It's at 21% of the revenue of the personal property. I'd not sure if I could caught that with that overall or with that for.
Speaker Change: specific to the U.S. or International.
Speaker Change: and a copy of their own general, our top line total revenue for the quarter, approximately 20% of that was directly related to our personal products.
Speaker Change: Got it. Okay, that's all I have, gentlemen. Thanks for taking the questions.
Speaker Change: and I thank you, Ben.
Speaker Change: Thank you. There are no further questions at this time. I would like to turn the floor back to Scott Davis for closed remarks.
Scott Davis: Okay, thank you, Julian, and thank you to everyone for joining us today. In closing, we are pleased with the progress we made this quarter and the strides that we've made on both the reimbursement and the operational fronts.
Scott Davis: While we recognize that there's still work to be done, the initial reimbursement approval for our Exo Indigo personal device marks an important milestone for us and the SCI community. Enabling access for covered individuals at a fraction of the cost.
Scott Davis: We believe our ongoing collaboration with physicians and neurorevalitation centers is vital to our success and we are committed to providing the resources and educational support necessary to drive patient engagement.
Scott Davis: We believe that as more physicians become advocates for our devices, we will see corresponding increase in submissions and approvals.
Scott Davis: and in terms of our enterprise customers, we're optimistic about the future as procurement cycles with ideas, normalize in the near term. We remain focused on collaborating with our partners to ensure that we can meet demand and capitalize on the opportunities ahead.
Scott Davis: As we continue to expand our reach, we believe we are well equipped for sustainable growth ahead and as a result of our scalable commercial strategy, we close the quarter with a strong pipeline of future placements.
Scott Davis: Moving forward, we're enthusiastic about building upon this progress.
Scott Davis: Thank you for your continued support and we look forward to updating you on our progress in the coming quarters.
Scott Davis: and John Wong.
Speaker Change: Thank you. This does conclude today's teleconference. We thank you for your participation. We made this connection lines at this time.
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