Stereotaxis, Inc.

Good morning. Thank you for joining us for Stereo Tax's first quarter 2023 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 risk, 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 of 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 Fishel, Chairman and CEO of Stereotaxis.

Thank you, Operator, and good morning, everyone. Our last call two months ago included a fairly comprehensive overview of Stereotaxis and our strategy. We will keep today's call more brief, focusing on a few commercial and innovation updates. Revenue in the first quarter was essentially identical to last year's first quarter, barring the royalty payments that we no longer receive from John Johnson. System revenue in the quarter reflects partial revenue recognition on the shipment of one Genesis system that is completing installation as we speak. During the first quarter and subsequent to our last earnings call, we received a purchase order for a Genesis system from a US hospital. We received another Genesis system order from Europe so far this quarter. The combination of the partial system revenue recognition out of our backlog and the additional order into our backlog slightly increased quarter-end system backlog to just over $15 million. Hospital construction has remained relatively slow, weighing on the speed with which backlog converts into revenue and then into installed active robots. That said, we have a fairly busy schedule of installs planned over the coming months, and continue to expect the majority of our backlog to be recognized as revenue this year. Since the launch of Genesis three years ago, we have now received orders for 22 robotic systems. Building a capital sales capability, process, and infrastructure has taken time and required significant effort, but these 22 orders over three years is a dramatic turnaround from the period prior to Genesis when only one system was ordered over the same timeframe. Of the 22 robots ordered since our launch, nine have been installed and are doing procedures, five have been shipped to the hospital customer but are not yet installed or launched, and eight remain in backlog waiting to be shipped. Our orders have been broad-based geographically with just over 50% of orders from the United States and approximately 25% each from Europe and Asia. They are also evenly split between greenfield robots and upgrades with 11 of each. We are continuing to improve and refine our commercial capabilities and expect as we do so to see increasing orders of genesis. Our capital pipeline looks healthy and is seeing growth across our three focus regions. We have a few dozen, approximately 50, unique opportunities in our near-term pipeline where we see a possible order over the next 12 months. Order flow remains lumpy, the macro environment remains pressured, and we have still not fully benefited from a normalized replacement cycle. But given the engagement we see from the bottom up, there's increasing confidence in a consistent flow of orders. Most important to the adoption of robotics is the enthusiastically positive experience of the physicians who are using Genesis, along with the reliability and clinical value Genesis robots are demonstrating in the field. Engaged and happy customers who are able to provide great care to their patients and build successful practices are the best ambassadors through which to ultimately increase awareness, change historical misperceptions, and grow adoption. We are pleased with the procedure utilization we are seeing on Genesis robots, which is meaningfully higher than our average global utilization. This is playing out both at accounts that upgraded to Genesis and with those that establish entirely new robotic practices. Last month, I had the opportunity to meet physicians from two of our most recent Greenfield Genesis launches, Poland's National Institute of Cardiology and Broward Health Medical Center in Fort Lauderdale. Where at both, we have happy and excited users who are grateful for our technology and are using it to treat patients in ways that meaningfully improve the quality of care and access to care. Discussions like those reinforce the positive impact of our technology and the relevance and importance of robotics for the field. Our overall experience with Genesys serving as the spark to restart capital adoption and to support utilization is a reminder of the significant impact innovation has on commercial results. This segues well into a few comments on innovation. On our last call, we discussed in detail the key efforts in our strategic innovation plan. and how they deliver meaningful clinical, commercial, and strategic value. Apart from the minority of our users who have been able to upgrade to Genesis, most existing robotic electrophysiologists have remained limited to using essentially the same ecosystem of robot, catheter, and mapping technology for over a decade. SerioTexas' proprietary robotically navigated ablation catheter, MAGIC, is set to positively address this. Since our last call, we have made significant progress on both the EU and U.S. regulatory paths for MAGIC. In Europe, we have been awaiting receipt of the full spectrum of technical, clinical, and microbiology questions from the EU regulator. We have now received questions across all three of those categories and have fully responded to all the questions in what we believe to be a comprehensive and thoughtful manner supportive of CE Mark. It would not be surprising to receive follow-up questions to our responses, but we believe our previously communicated timeline is reasonable and still see receipt of CMRK as most likely to occur late in the second quarter or in the summertime. In the U.S., submission of an IDE application to the FDA has been dependent on successfully completing a dozen preclinical studies. As of our call two months ago, we had established a GLP-level institutional animal care and use program and run a few pilot cases, but had not yet performed those on-the-record studies. We completed all the required studies since that call and will complete all the required follow-up periods within the next two weeks. The results we have seen and physician feedback we received is very supportive of our confidence that the catheter performs well and will be enthusiastically adopted by the community of robotic users. Given this progress, we expect to make an ID submission to the FDA in the third quarter. Our other major innovation efforts, including a smaller self-shielding robot that frees us from the extensive planning and construction currently necessary to adopt robotics, a family of interventional guide wires and guide catheters that expand the benefits of our robot into new endovascular indications, a digital surgery hardware and software offering enabling broad operating room connectivity, and a full electrophysiology product ecosystem being built in collaboration with Microport. There is a significant amount of work and progress being made on each of these in parallel. As we provided much more color on each of these during our last call, I'll just reiterate that the timelines communicated on that call stand. We have line of sight to reaching multiple significant regulatory and commercial milestones this year, with growing commercial impact from each of these technologies next year. As these technologies come to market, we will host focused innovation days to present these technologies in greater detail. While the optics of Stereotaxis' financial results are unexciting, we see ourselves as being on the cusp of a strategic transformation. We have clear line of sight to a future with strategic independence, an attractive revenue model, broad robot accessibility, and platform indication opportunities. This core product ecosystem serves as a foundation for a high-growth, high-value medtech company pioneering endovascular robotics. Kim will now provide some commentary on our financial results, and then I will 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 2023 totaled $6.5 million, down from $7 million in the prior year first quarter primarily due to discontinued royalties from Johnson & Johnson. System revenue of $1.8 million reflects revenue recognition on the delivery of one Genesis system. Recurring revenue for the quarter of $4.7 million was predominantly impacted by the absence of the J&J royalty, along with a smaller impact caused by J&J capital production shortages, which pressured procedure volume. Gross margin for the first quarter of 2023 was 59% of revenue. Recurring revenue gross margin of 79% remained similar with recent quarters, with the loss of royalty impacting otherwise operational improvements. System gross margin of 7% continues to reflect significant allocation of overhead expenses over low manufacturing volumes. Operating expenses in the quarter of $9.5 million included $2.6 million in non-cash stock compensation expense. Excluding stock compensation expense, adjusted operating expenses were $6.9 million compared to the prior year adjusted operating expenses of $6.5 million, reflecting increased spending in R&D. Operating loss and net loss in the first quarter were $5.6 million and $5.3 million, compared to $4.1 million for both in the previous year. Adjusted operating loss and net loss for the first quarter, excluding non-cash stock compensation expense, were $3 million and $2.7 million. Negative free cash flow for the first quarter was $3.2 million. At March 31st, we had cash and investments of $26.8 million. I will now hand the call back to David.