Stereotaxis, Inc.

Good afternoon. Thank you for joining us for Spare Tax's first quarter 2024 earnings conference call. Certain statements during the conference call and question-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 on 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 afternoon, everyone. Our last call two months ago included a fairly comprehensive overview of stereotaxis and our strategy. We'll keep today's call more brief. I'll focus on three specific topics, our commercial results, progress in our comprehensive innovation strategy, and the acquisition of APT, which was just announced in a press release this afternoon. It's an exciting period with a lot of progress. Our commercial goal has been to maintain sales momentum and preserve our financial strength while preparing for a breakout enabled by our comprehensive innovation strategy. While the structural challenges of our old product ecosystem serve as a significant headwind, we continue to show commercial progress. Revenue in the first quarter grew 5% over the previous year, driven by increased robotic system sales. We grew system backlog since our last call with the receipt of two additional orders for Genesis robots. Both orders came from existing customers in Europe that are upgrading older labs to Genesis. The net impact of receipt of those orders and system revenue recognition in the first quarter has increased our current system backlog to $16 million. As discussed more fully on our last call, there remains a healthy, active pipeline of greenfield and replacement cycle customers for Genesis across our three key geographies, though the weaknesses in our historic product ecosystem, including the recurring catheter shortages of Johnson & Johnson, harm and delay purchase decisions. Our recent regulatory submissions of MAGIC and the positive clinical experience observed in our clinical trials partially helps. Our recurring revenue remains impacted by J&J's catheter shortages, which is impacting procedure volumes. We continue to see inconsistent availability of the J&J catheters flare up in various geographies and accounts, but expect overall recurring revenue in 2024 to be consistent with 2023. Our innovation strategy remains key to driving substantial commercial success. and we are making significant progress on multiple fronts. Theriotaxis' proprietary ablation catheter was submitted to the EU-notified body and FDA during the first quarter. We were pleased with the responsiveness of both regulatory agencies. In Europe, we received a completeness check shortly following submission of our CE application and soon after received a first round of clinical questions. We responded to those questions and at the very end of last week, received a single follow-up question. That question did not raise concern, and we intend to respond shortly. We are still awaiting technical and biocompatibility questions, though note that there was substantial progress on those topics during the review last year. In the U.S., the FDA reviewed our PMA supplement, and during a collaborative discussion, determined to convert the submission into a traditional PMA. That conversion took place and the traditional PMA is now going through its initial review, leveraging the data we continue to collect from the MAGIC study taking place in Europe, along with the broader body of preclinical and bench data. Enrollment in the European study has progressed well, with a continued perfect safety record for MAGIC and overall excellent performance. We plan to enroll additional patients in the study, appreciate the responsiveness and collaborative nature of both regulators, and look forward to working with them in the coming months to ensure the MAGIC catheter becomes available for patients and physicians who depend on it. Our second major innovation effort is the development of a smaller self-shielding robot to significantly enhance the accessibility of our technology. We are methodically working through the extensive testing needed for regulatory submission and successfully completed the majority of all tests, with the robot performing very well. We continue to expect regulatory submissions in both the United States and Europe this quarter, with European regulatory clearance expected mid-year, followed by FDA clearance in the second half of the year. Following approval, we plan to use the current year to demonstrate the reality of the robot in the real world use, enhance compatibility of the robot with various x-rays, and prepare our supply chain, manufacturing, installation, and commercial processes for a full launch in 2025. Our initial demonstrations of the robot to physician customers reinforces our confidence that the availability of a smaller and more accessible robot will serve as a significant structural improvement to the pace and scale of adoption. Our third effort is to expand the scope of our robot's value beyond electrophysiology into a broader range of endovascular indications. This has been predicated on the development of a family of robotically steered guide wires and guide catheters. The ramp up in manufacturing of the guide wire is slightly slower than expected, but we expect regulatory submissions later in the third quarter with commercial availability at the end of the year. The guide catheter is being manufactured by APT and we are delighted to be bringing that project in-house with the APT acquisition. We expect the catheter to be commercially available in early 2025. In China, Our partner, Microport, has submitted all the key aspects of our product ecosystem for regulatory approval and has been responding to questions from China's NMPA regulatory body. Microport continues to expect approval of Genesis this summer and approval of the robotically navigated ablation catheter as well as integration with their mapping system before year-end. Microport is ramping up training of its commercial team in anticipation of the launch. and we have begun a methodical program that provides group and one-on-one training on our robotic technology to all approximately 100 members of the Microport EP clinical sales team. Our last key innovation effort is our digital surgery platform for broad operating room connectivity. The SYNC cloud-based connectivity app remains in limited release during which time additional features and improvements are being incorporated. as we await the launch of the Synchrony integrated lab display. Synchrony should begin formal regulatory testing in a couple months, with regulatory submissions later in the third quarter. While this is a synergistic and opportunistic venture to our core strategy, early feedback has been very positive, and I can see this being a substantial independent business in the coming years. We will dedicate a future event to showcase the technology fully. These innovations, each individually and especially in combination, are leaps forward clinically, commercially, and strategically. They improve the care we can provide patients, experience we provide physicians, and our ability to meaningfully scale a business with a healthier and more attractive revenue and cost profile. As these key puzzle pieces come together, we are setting ourselves up with multiple shots on goals for breakout growth in 2025 and beyond. I want to recognize the Stereo Texas team driving this progress forward. It is amazingly impressive what our small team has been able to accomplish. The breadth of innovation, the quality of our work, and the ability to advance multiple projects forward and parallel as a lean team in a financially prudent fashion. We really have unique expertise and capabilities that are second to none. As we reflect on our experience advancing this wave of innovations over the past several years and look forward and strategize for the coming years, it becomes clear that one gap in our expertise is the lack of in-house capabilities to develop interventional disposal medical devices. Our reliance on various contract manufacturing partners has worked as a reasonable solution but is unlikely to be ideal for a future in which we are driving robust innovation and manufacturing of a broad family of interventional devices that work with our robots. With that eye towards the future, I'm very excited that APT will be joining Stereotaxis and contributing that expertise and capability. Our acquisition of APT is opportunistic, synergistic, and strategic. By way of background, I was introduced to APT by highly respected electrophysiologists that were using APT's differentiated, manually navigated diagnostic catheters and wanted a robotically steered version made to work with Genesis. As we had the opportunity to engage with APT's team, we were impressed with their expertise and the quality of their work. We began collaborating to develop a unique high density mapping catheter. first magnetically, robotically steered diagnostic catheter for our community of robotic users. As that collaboration advanced well, we expanded our efforts to include a vascular guidance catheter. Earlier this year, the opportunity emerged to consider bringing APT into Stereotaxis. An acquisition made a lot of sense from a commercial and strategic perspective, and we appreciate that we were able to reach agreement on a transaction that ensured long-term alignment of interest and was financially prudent. From a commercial perspective, APT currently uses distributors and sales agents around the world to sell its catheters. A substantial majority of these sales come from outside the U.S. The opportunity for these differentiated high-quality catheters in the U.S. is meaningful but requires a dedicated sales team. which Stereotaxis can provide with synergies from a practical and messaging perspective. Stereotaxis has over 20 people in the field across the U.S. who are particularly skilled and focused on enabling and improving the treatment of the most complex arrhythmias. APT's catheters have the potential to contribute incremental value and revenue in the practices our team already calls upon and to serve as a door opener at centers focused on complex arrhythmias to pave a path for the adoption of robotics. We expect APT to contribute approximately $5 million in annual revenue during the first year post acquisition. From a strategic perspective, I mentioned earlier how the lack of in-house catheter development and manufacturing expertise has been limiting. APT's team, expertise, and capabilities will significantly amplify and accelerate Stereotaxis's next wave of innovation efforts as we look to develop a broader family of interventional devices that are navigated by our robots across a range of endovascular procedures. I warmly welcome the APT team to Stereotaxis and look forward to their contribution as core members in our mission. While specific financial terms of the transaction are not being disclosed, the majority of acquisition consideration is predicated on meeting key regulatory and commercial milestones. Those milestones include regulatory approvals for specific robotically-steered catheters, both in electrophysiology and endovascular applications, and revenue milestones that will play out over the coming five years and are predicated on meaningful growth and adoption of APT catheters. The upfront and milestone considerations can be paid fully in stock. The acquisition is expected to close in the third quarter, subject to customary closing conditions. I'll now hand the call over to Kim, who will provide commentary on our financial results, after which I'll make a few financial comments as well before opening the call to Q&A. Kim?

Thank you, David, and good afternoon, everyone. Revenue for the first quarter of 2024 totaled $6.9 million, a growth of 5% from $6.5 million in the prior year first quarter. System revenue for the first quarter was $2.6 million, and recurring revenue was $4.3 million, compared to $1.8 million and $4.7 million in the prior year first quarter. System revenue in the quarter reflects revenue recognition on the delivery of a Genesis system and partial revenue recognition of other ancillary systems. Recurring revenue continues to be pressured by Johnson & Johnson catheter shortages. Gross margin for the first quarter of 2024 was 58% of revenue. Recurring revenue gross margin was 76% and system gross margin was 27%. Operating expenses in the quarter of $8.7 million included $2.6 million in non-cash stock compensation expense. Excluding stock compensation expense, Adjusted operating expenses were $6.1 million compared to prior year adjusted operating expenses of $6.9 million. The lower adjusted operating expenses reflect natural reductions in spending on various R&D projects as they have neared fruition and a general effort to be financially prudent across the organization, partially offset by increased clinical trial and regulatory spending. Operating loss and net loss for the first quarter of 2024 were 4.7 million and 4.5 million, compared to 5.6 million and 5.3 million in the previous year. Adjusted operating loss and adjusted net loss for the quarter, excluding non-cash stock compensation expense, were 2.2 million and 1.9 million, compared with 3 million and 2.7 million in the previous year. Negative free cash flow for the first quarter was 2.3 million. At March 31st, we had cash and cash equivalents of $18.2 million and no debt. I will now hand the call back to David.