Stereotaxis, Inc.

Please stand by. We're about to begin. Good morning. Thank you for joining us for Stereo Tax's first quarter 2022 earnings conference call. Certain statements during the conference call and question and answer period to follow may relate to future events, expectations, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the company in the future to be materially different from the statements that the company's executives may make today. These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. We assume no duty to update these statements. At this time, all participants have been placed in a listen-only mode. The floor will be open for questions and comments following the presentation. As a reminder, today's call is being recorded. It is now my pleasure to turn the floor over to your host, David Fischel, Chairman and CEO of Stereo Texas.

Thank you, operator, and thank you all for joining us this morning. On our last call two months ago, we provided a fairly comprehensive overview of Stereotaxis' mission, strategic focus, and progress. We'll keep today's call more brief. This is both a challenging and exciting period for Stereotaxis. On the heels of last year, where we demonstrated a restart in capital adoption and overall sales growth, a primary challenge has been driving consistent momentum and growth in capital activities. We are operating in a macro environment with a host of pandemic-related supply chain personnel and economic disruptions. In the face of these, we demonstrated the ability to successfully launch Genesys and start building a capital sales capability. While system orders and sales have progressed slower than expected, we are making progress. The $11 million in system revenue we recorded last year was higher than any other year in almost a decade. We received an additional Genesis order since our call two months ago from an existing U.S. hospital customer. Given only the orders we have already received, we are on track for system revenue this year that is approximately 90% of the total system revenue we reported last year. With multiple additional near-term opportunities, we are confident we will show system revenue growth this year. We view ourselves as in the early stages of setting ourselves up for a multi-year period of robust, consistent revenue growth. While many factors are outside of our control, there are factors within our control where we can improve our commercial sophistication, accountability, and strategy. It's our responsibility to focus on what we can control. We're developing a new capital sales platform that should provide better transparency into the global capital pipeline and more clearly flag risks and actionable items to focus on during the effort to advance any individual deal. Given the complexity of each capital deal, an organized platform like this is very helpful in creating clarity and providing actionable guidance. We hope this will fundamentally improve commercial execution while simultaneously making us better at forecasting results with relevant pipeline analytics. Beyond this capital sales platform, we're looking to enhance our team with new senior sales leadership in Europe, where we see a particular opportunity for both clinical adoption and capital sales with the upcoming launch of our Magic Catheter. Most important for broader adoption of robotics is that new users have positive experiences with our technology, good clinical outcomes, and successful growing practices. First quarter was particularly exciting for us on this front. During the quarter, we launched, for the first time in many years, multiple fully greenfield robotic E3 practices at hospitals entirely new to robotics and with physicians entirely new to our technology. These launches took place at Honor Health in Scottsdale, Arizona, the National Institute of Cardiology in Warsaw, Poland, and Fuwai Central Hospital in China. We are delighted to see utilization at these practices and across the installed base of Genesis systems greatly exceed global averages. Exiting the first quarter, these three new practices were performing procedures at a rate over 50% higher than the average robotic practice. When we look at our genesis systems globally, the utilization on these systems is over 100% higher than the average robotic practice. While there are various factors that impact utilization, the success of the genesis system and these launches reflects well on the real-world performance clinical value and relevance of our technology and the performance of our team. Qualitatively, in speaking with the physicians, it has been heartening to hear how pleased they are with the technology and how they find value across a broad range of arrhythmia procedures beyond their original expectations. This positivity is helping create and perhaps also mirrors a similar sentiment that is emerging in the field. I was recently at the Heart Rhythm Society Conference in San Francisco and and before that at the European Heart Rhythm Association Conference in Copenhagen. In both conferences, we sensed an increasingly positive tone emerging around stereotaxis and our robotic technology. We had busy booths with many physicians test-driving our system. Changing long-established reputations and countering misperceptions takes time, but there clearly seems to be a qualitative turning of the corner with stereotaxis being increasingly viewed as innovative, relevant, energetic, and reliable. Innovation is key to living up to that reputation. On our last call, we discussed in more detail our technology pipeline. Five key pillars of our innovation strategy serve as synergistic and independent growth drivers. Collectively, they enable a future where robotic technology is broadly accessible and can be used with a robust ecosystem of modern catheters in EP and for a wide range of endovascular procedures. We're continuing to methodically advance these technologies, and our progress remains consistent with previously provided timelines, with many of these approaching regulatory submission and initial commercialization within the coming year. Collectively, these innovations are transformational for us as a company and serve as the foundational product ecosystem for a preeminent medical robotics company that can broadly transform endovascular interventions. They allow for dramatic structural improvements to our commercial capability and we are excited by the impact these innovations will have in 2023 and beyond. Kim will now provide some commentary on our financial results, and then I'll make a few financial comments as well before opening the call to Q&A.

Thank you, David, and good morning, everyone. Revenue for the first quarter of 2022 totaled $7 million. This is down from $8.6 million in the prior year first quarter. primarily due to recognizing revenue on one robotic system this quarter compared to two systems in the same quarter last year. System revenue of $1.6 million reflects initial revenue recognition on the delivery of a Greenfield Genesis system. Recurring revenue for the quarter of $5.4 million compares to $5.8 million in the prior year first quarter, with revenue impacted by slightly lower service revenue and procedure volumes. Gross margin for the first quarter of 2022 was 70% of revenue. Recurring revenue gross margin of 85% remains consistent with previous quarters. System gross margin of 21% continues to reflect significant allocation of overhead expenses over low manufacturing volume. Operating expenses in the quarter of $9 million included $2.5 million in non-cash stock compensation expense. Excluding stock compensation expense Adjusted operating expenses were $6.5 million compared to the prior year adjusted operating expenses of $6.2 million. Operating loss and net loss in the first quarter were both approximately $4.1 million compared to $1.5 million in the previous year. Adjusted operating loss and net loss for the first quarter, excluding non-cash stock compensation expense, were $1.6 million. Negative free cash flow for the first quarter was $3.3 million. At March 31st, we had cash and cash equivalents of $36.9 million. I will now hand the call back to David.