This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk01: and welcome to the Biotricity Fiscal First Quarter 2023 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Walter Pinto, Managing Director, KCSA Strategic Communications. Please go ahead.
spk06: Good afternoon, everyone. Welcome to Biotricity's Fiscal 2023 First Quarter Financial Results Conference Call. As a reminder, Biotricity's Fiscal First Quarter ended on June 30, 2022. Therefore, all figures presented for this period will reflect that end date. Today, we issued our fiscal 2023 first quarter financial results press release. A copy of this press release is available in the investor relations section of our website. Additionally, our financials will be filed with the SEC on Form 10Q and posted on EDGAR. Before beginning our formal remarks, I'd like to remind listeners that today's discussion may contain forward-looking statements that reflect management's current views with respect to future events. As such, statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. Biotricity does not undertake to update any forward-looking statements, except as required. I'd now like to turn the call over to Biotricity's founder and CEO, Dr. Waqas Al-Sadiq. Please go ahead.
spk02: Thank you, Walter, and thank you, everyone, for joining today. Welcome to our first quarter 2023 earnings conference call. During the first quarter, we continue to advance our product development and commercialization strategy in order to position our company as the all-in-one go-to solution for cardiac diagnostics and disease management. The majority of our revenue for fiscal Q1 2023 continue to come from BioFlux, our high-precision, single-unit mobile cardiac telemetry device, real-time monitoring, and transmission of the patient's ambulatory ECG diagnostics. Revenues earned with respect to this device are sales and technology fee revenues, or technology as a service revenue. During the fiscal first quarter, our revenue increased to $2.1 million. I'm pleased that our technology as a service revenue increased to $1.9 million for the quarter year over year, which is a testament to our business model. This recurring revenue model provides the technology to the doctor who can prescribe and hook with our device within the clinic. This creates a more streamlined process for the patient and doctor, while also creating an additional revenue stream for the doctor as our product is fully reimbursable. Today, we have hundreds of centers across 29 states with over 2,000 physicians using our BioFlux product. I was also pleased in our ability to maintain gross margin 60% during the fiscal first quarter. Gross profit margins can be improved over time as we reduce discounts provided to customers. We expect that the cost of devices sold, as well as cellular and other costs associated with technology fees, will become lower as a percentage of revenues as our business expands. For moderate to severe cases, remote real-time life-saving tool. However, it is critical we capture the life cycle of the patient and follow them through their cardiac care journey. Through our internal innovation capabilities, we set out to build a complete ecosystem that fills in the current gaps in cardiac care. We commercially launched BioTray, our FDA-approved wireless wearable cardiac monitoring device. BioTray is a technology that represents the future of remote patient monitoring and the delivery of real-time diagnostic data. It serves as a three-lead device designed to continuously record ECG data. This provides a significant advantage over a conventional one-lead patch Holter monitor, which requires a longer analysis and diagnosis time. BioTray is a complementary product to BioFlux. The key differentiator between these two products is the patient profile that each is designed to serve. BioFlux is for high-risk patients, which naturally and thankfully results in lower volume of patients. BioTray, on the other hand, is designed for low-risk patients, of which there is significantly higher volume. Because BioTray is a high-volume product, we will also be able to go deeper within our distribution network and also focus on hospital integrated delivery networks. These integrated delivery networks, or hospital networks, centralize purchasing for the largest hospital systems in the country and therefore represent a central target market. where BioFlex is meant for clinics and specialty groups with an estimated TAM of $1 billion through the hospital integrated network and other large distribution outlets has a much larger TAM of approximately $5 billion. Since the introduction, reception has been overwhelmingly positive. We are currently collecting data from our early adopters and are strategically launching the product in limited release while establishing our expansion plans. We also launched BioHeart, a cardiac monitor now directly available to consumers. This device offers the same continuous heart monitoring technology used by physicians, allowing patients to manage heart conditions with retrospective snapshots and long-term data collection in a true state-of-the-art manner. BioHeart is currently available for purchase by consumers at www.bioheart.com for $199. We are excited to roll out our ecosystem. For the first time, cardiologists will have a suite of products available for their patients. all within one portal. We have purposefully designed our ecosystem in a way that when we bring on new customers, they have full access to the portal, allowing seamless data collection as they adopt new devices for the entire cardiac care journey. With BioFlux and BioTrain in the market today, we have successfully increased our total addressable market from $1 billion to approximately $6 billion. More importantly, we have designed scalability with minimal marginal cost into our business model as we can now offer additional products and services to current clients for little to no increased marketing spend. During the remainder of 2022, we look forward to introducing BioCare, our virtual clinic and disease management platform with secure HIPAA compliant technology, enabling clinicians to provide outstanding patient care remotely, ensuring at-risk patients and those needing remote cardiac monitoring do not have to leave the safety of their home. This user-friendly platform ensures seamless integration to the clinic's current workflow, saving time and reducing costs. Monthly care is a large market opportunity roughly about $35 billion. We have seen other industries such as diabetes be very successful with this model, but no one has attempted to execute this model in the cardiac space. We are the first. We are, of course, at the beginning of this journey. Our newly expanded product portfolio combined with the upcoming BioCare Clinic platform will enable us to enter this market in the near future. Cardiac disease often afflicts patients for the rest of their lives and is the leading across the globe. The current approach to care is often disjointed and unintegrated. BiOctrusy's technology assists the patient throughout their cardiac care journey, beginning with diagnostics, monitoring, and lifestyle management. This comprehensive integrated approach could help solve some of the major issues in cardiac care today in an efficient and cost-effective manner.
spk07: I will turn the call over to our CFO, John.
spk04: Thank you, Akash. During the quarter ended June 30, 2022, the company revenues totaled $2.1 million. During this period, biotricity incurred a net loss of $5 million, or a net loss per common share of $0.098. For the three months ended June 30, 2022, biotricity's net loss included one-time expenses related to convertible no conversions, as well as one-time fair value adjustments on derivative liabilities. We are pleased that year over year, we saw an increase in $425,000 in technology fees this quarter compared to the prior year quarter, which corresponds to a 30% increase in technology fees. Gross profit for the fiscal quarter ended June 30, 2022, totaled $1.2 million, yielding a gross profit margin of 60%. We expect margin to improve as we reduce sales discounts provided to customers in order to generate increased volume sales. As Lacoste mentioned, we expect that the cost of devices sold, as well as cellular and other costs associated with technology fees to become lower as a percentage of revenues as business sales volumes expand. In other words, economies of scale. Total operating expenses for the fiscal quarter into June 30, 2022 were $5.7 million compared to $4.2 million for the fiscal quarter ended June 30, 2021. Our general and administrative expenses for the fiscal quarter ended June 30, 2022 increased to $4.9 million compared to GNA of $3.6 million during the fiscal quarter ended June 30, 2021. The increase in GNA expenses was a result of investment made by the company in building its professional sales force. That has been a focus. During the fiscal quarter ended June 30, 2022, we recorded research development expenses of $821,000 compared to $589,000 incurred in the fiscal quarter ended June 30, 2021. The increase in R&D activity is directly related to the development of new technologies for our ecosystem, as well as the development of continuous product enhancements to our existing products. You can see these developments as we announce various clearances from the FDA that will allow us to commercialize these products. Biotricity ended the fiscal quarter with $7.2 million in cash. We remain focused and confident in our fundamental business strategy to innovate, commercialize, capture share of a fast-expanding marketplace, and grow revenues. While revenue growth has been strong, we believe the business has great potential for growth. We expect to continue disrupting the cardiac care marketplace for devices and Biosphere cloud-based subscription services. I would now like to turn the call back over to Wakas for his closing comments. Thank you.
spk02: Thanks, John, and thank you again for everyone who has joined our call today. We're more confident than ever that our technology pipeline will produce major growth over the years as we build our cardiac ecosystem to further penetrate and monetize the patient population that we have already touched with our cardiac technologies, a small portion of the cardiac patients that need these services. For our most advanced remote cardiac monitoring solutions, we expect our services will follow those customers throughout their lifetime to monitor, protect them, and ensure they are provided with technologically sophisticated and superior chronic care. Doing so within a recurring revenue business model is a powerful means to scale the business, increasing both revenues and gross margin. We are excited for what fiscal years 2023 and 2024 have in store for our company and our shareholders. I would now like to open up the call for questions.
spk01: Thank you. If you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question, and we'll pause for a moment to allow everyone an opportunity to signal. We'll take our first question from the line of Frank Takinan with Lake Street Capital Markets. Please go ahead, your line is open.
spk03: Hey, thanks for taking my questions. Wanted to start with the 29 states and over 2,000 physicians using the product that seems like it ticked up a little bit since last quarter. A nice work. Wanted to understand the utilization opportunity. When I say that, I'm kind of talking about depth into the accounts. Sounds like you have a lot of breath right now. And I assume there's a really solid utilization opportunity for both BioFlux as well as new products out there. So it was hopeful you could provide any commentary or metrics around that to give us a little better color.
spk02: Yeah, excellent question, Frank. So what I will do is I will speak to it in, you know, in terms of an opportunity. So, of course, we're expanding the network and the bioflux cardiac telemetry is, and as I indicated in the call, higher risk patients. There's a smaller percentage of them in these clinics and in the networks. So if you're talking about a typical doctor who's got about 2,000 patients, how many of them are high risk on a monthly basis? It's going to be 1% to 2%. It's a small percentage. But as we build our product portfolio, that product portfolio is complementary and designed to touch the other profiles within that clinic. And so that's where we get that depth and that increase in utilization into patients. your point, you know, and how does that utilization and what does that opportunity look like? So when we look at the BioTray product, and we were talking about early adopters, who are those early adopters? They're existing customers who have lower risk patients, and we are now offering them BioTray. And the same thing is going to happen as we build out our chronic disease management and chronic solutions. Now, in terms of me giving you numbers and ideas on utilization rates. It's early days right now. Probably you'll hear us talk to that in one or two quarters. As I mentioned in my earlier remarks, BioTray, we just launched it, so we're collecting data. We have it with early adopters. What are those utilization rates going to look like across the network? How much better usability and penetration do we get in terms of patient profiles within existing customers? I think within a quarter or two, we will be able to really nail it down. What I can say is the premise of the product development approach was to go deeper and to increase utilization by creating complementary product portfolios. BioTrade was the first of that. And what I can say is, based on our early data, that is holding true. as well as the interest from existing customers. So, you know, we had a strategy. We tested that strategy through our surveys and through contacting customers. Then we implemented a product. We launched that product. We're now bringing in some revenue from that project. But all of it has lined up with our initial assessment. So I think that that's a positive, and I think about that, you know, coming down over the next couple quarters.
spk03: Okay, that's great, Culler. And then I wanted to ask my next one on the commentary around IDNs. It sounds like it's a great opportunity too. So maybe just dive a little bit deeper into that opportunity and how you're thinking about these contracting conversations as you're looking out over the next year or two.
spk02: Yeah, absolutely. So IDNs, for those who are not familiar, are hospital network purchasing groups where they are purchasing across multiple network systems. Of course, the sales cycles on these things are much longer, and they do take a long time. But, you know, when you go into a higher volume product, when you go into, you know, something like a BioTree or a Holter solution, you know, when you, and just anecdotally, I'm going to go a little bit technical in the world of cardiac. So when you talk about Holter monitoring within a hospital system, it's not just a cardiologist and electrophysiologist that utilize that product. In fact, the bigger users are the internists, right, the GPs. and the family medicine docs. And so what ends up happening is that the volume in a hospital system generally is not actually coming from the cardiac specialty group. It's actually coming from the family medicine and the GP and the internist stuff. Now, they have a much less patient population in terms of demographic, but there's just so many more of them. And so when you go to the hospital system opportunity, this is why you really need a Holter-specific solution for that network. And the BioTree has And so that's why we are now really looking at that. The BioTrade product is truly a product that is designed for the IDN and the hospital system network, just because of the way the physician is set up there. And the contracting process is very long for sure, but our products are unique in terms of what is out there in the Holter market today. And we are able to provide results much faster. And another thing that we have done is we've used standardized disposable elements that the hospital is already purchasing. So it's not like they have to purchase our device plus personalized consumable. The consumable electrodes that they're already purchasing gets digitalized. So I think all of those actually reduce the barriers. Of course, the IDN strategy is a longer-term strategy. We have actually Um, a couple of people that are just focused on building that channel out for their sole job every single day by electricity is to build out that IDN, uh, strategy. And that has been a big, big, uh, shift for us. Um, and you know, we expect to see fruits from that, you know, longer down the line, but, uh, with our existing network, we can provide the data and the evidence to show. uh, the importance and, and of course show the efficacy of our product, because that's another thing IDNs want to see, you know, what is your footprint today? How do you, how do you. So I think all of that works, uh, in tandem together to really put us in a very strong position. Um, but you know, I, I will be, you know, and as anybody in healthcare knows that the, the IDN strategy is a longer term play. So we will continue to focus on building out our existing network with our, with our Salesforce. and this is an add-on strategy that is going to be worked on in parallel.
spk03: Okay, and then maybe just last one, gross margin looked really solid again for the quarter. Maybe provide any additional commentary on how new products are going to impact that gross margin profile on a go-forward basis.
spk02: Yeah, and I think you'll see that there's always a little bit of, whenever we're bringing in a new product, there's a little bit of that upfront hardware cost. So it's called hardware light. But as we get to steady state on these products and as we get economies of scale, work in favor that more of our revenue is going to shift more into the software as a service and technology as a service play. So, you know, I expect our margins to really be where they are and improve significantly. you know, a little bit, but I expect them to really settle around, steady state around the 60 to mid-60 range, depending on what mix of products we end up in terms of percentages, right? So, if you have, you know, 25% bioflux, 25% biotray, do the disease management. So, what does that mix look like? And that'll indicate what our steady state margins are, but I think they're going to really stay around here, because I know we saw some fluctuation before, but now what has certainly happened is that we are becoming more and more a service and software as a service.
spk07: Okay, that's good, Culler. I'll stop there. Thanks for taking my questions, and congrats on all the progress. Thank you.
spk01: Once again, if you'd like to ask a question, that's star 1. We'll take our next question from the line of Kevin Deedy with HC Wainwright. Please go ahead. Your line is now open.
spk05: Thanks. Hi, I'm John. If I may, can I just expand on where I think Frank was going? Is there, I mean, I understand, obviously, 29 states, 2,000 physicians, but is there any other quantitative measure you can offer in suggesting the success that you've had in selling through to physicians?
spk02: So I guess what are you exactly trying to ask? I'm like unsure. I can speak to like what is our percentage of, you know, shelf control within those physicians. So once we Once we deploy, like let's say they're doing mobile cardiac, we have basically, I would say in most cases, in most physician cases, we have 100% of their mobile cardiac telemetry business, right? Now, with the Holter solution, you know, BioFlex could be used as a Holter product, but many of these doctors were still using, you know, their commodity Holter devices because those devices are not capable as mobile cardiac consumption. They had already invested in it or they were using some other Holter provider just because, you know, they weren't really generating a lot of revenue off of the Holter as it was. And so, you know, the biotrade really provides the same type of model where it actually becomes, you know, a profit center. So, you know, my expectation is that we will have uh, you know, control of that shelf with customers. So, you know, if, if you're asking about, you know, what is the success rate of mobile cardiac telemetry in a doctor? So if you have 2000 physicians, you know, how, who else is sitting beside you on that shelf? You know, I would say 85 plus percent of those doctors, if we in their clinic, we control that shelf right now, it takes time, right? So one of our customers, It took us six months to convert just because it was a very big group. And, you know, we launched with them. It was like 10, 15 years. But, you know, over six months, we controlled the shelf. So now any mobile cardiac telemetry they do, they do with us. Now, they were still doing Holter, but they were not using the BioFlux for Holter. Just the economics didn't work for them on that device. And so now with the BioTray, they're piloting the BioTray and they're taking on that shelf. So I can speak to that. If you're asking me about, it just depends on what lens you're looking at, right? Like how much of those patients can we conceivably touch? Well, that all depends on which product's And what does that mix look like? And have we made that product available across the board, right? So I can speak very, very openly and candidly about BioFlux because we've been in the market and we have enough data. And that's where I can say, listen, 85 plus customers, we have 100% control of the mobile cardiac telemetry shelf there, right? Will that stand true for Botre? I suspect it will, but it's early days.
spk07: Well, Kwas, I think I lost you. No, I'm here. Okay. Sorry about that.
spk05: Okay. Okay. Maybe we could slice it a different way. I'm sure you don't want to speak to the specifics here, but could you talk to how you framed out your sales team's quotas and how they're measured, at least, you know, from a 20,000-foot perspective?
spk02: From a 20,000-foot perspective, we have a baseline rep analysis that we have internal, and we cannot share that, obviously. And we benchmark reps against that, and we have an expectation that at plan, they earn a certain amount of – a certain salary. And if they are at, that they are opening up a certain amount of clinics, and there's a certain revenue target that they have to meet.
spk05: don't meet the revenue target their commissions are obviously not that pleasant um but if they meet those targets their commissions are are good um and if they exceed those they're very good okay could we expect at some point what was that you might speak to the number of physician doors that you open i mean in terms of more specific terms yeah on a say maybe not monthly, but certainly in the quarter.
spk02: So as we get bigger, I think we will certainly disclose that information. The problem with us today is, you know, I think that that is just competitive intel that, you know, why give that out in terms of how many doctors I'm knocking on or what does my comp plan look like, my rep, because somebody can go in and offer a better comp plan. Oh, yeah, no, no, I wouldn't. I wouldn't be targeting my reps, right? Yeah.
spk05: No, I just wanted, you know, just, I guess, just some color on how they're targeted, how you're weaponizing them. How I'm weaponizing my reps. Yeah. That's extremely helpful. Can you talk to, now I know it's still early days with its recent introduction, but can you talk to the the synergistic effect that you might be seeing at least so far with BioTrace and BioFlux offered in a combination?
spk02: Yeah, for sure. So what I can say, you know, a clinic that I was telling you about for six months that we transferred, it's a great example, right? So we went to them and we said, well, you know, BioFlux is Holter capable, right? Why won't you use the BioFlux, right? And they said, look, thing, right? The Holter reimbursement for us, I think it's like 100 bucks and where they are, right? And they said, so we have to invest in your device, right? Then we have a technology fee. And realistically, with the flow of the patient, how long it takes for the patient to come back and go back and whatnot. Basically, they can do two Holters, right? On a monthly basis. And so the economics on that side, and this is very specific to this clinic just because of where they're located, how far patients are, et cetera, whatnot. It's a good example. And so they were using different versions of, they were certainly using the BioFlux in certain cases for Holter, but they were also using some legacy devices that they had already bought and purchased. And then they were also using a third-party service provider, right? Like a Zio or a Bardi or one of these guys in the marketplace. When we introduced BioTray, suddenly they're like, oh, well, this is a much cheaper device from a purchasing standpoint. And so they're able to justify the turn better. So economically, it started making a lot more sense. And so then they ended up making one of – I think they were the first or second customers that came in. And so that became a very complementary device. approach for them, right, where they have got a BioFlux, they're already using the portal, Clinix is already familiar with our ecosystem, the BioTrace, all the same system, same environment, but now that device and that economic play in terms of rotation, device cost plus reimbursement that they're receiving, all of that started lining up just like the BioFlux did with the MCT. So, you know, that's an early day example of something that complementary customer that gave us all of their business on mobile cardiac telemetry, was even using BioFlux in some cases for Holter, but that last mile without having a Holter-specific product was not possible, and now it is.
spk07: Asked there are no further questions. Now, of course, all examples won't be like that.
spk01: So sorry. As there are no further questions at this time, we'll turn the conference back over for any additional or closing remarks.
spk07: Thank you, everybody, for joining the call.
spk02: As you all know, John and I are always available for questions. If you have any questions that we did not address or did not come up on this call, please feel free to reach out to the company. We will get back to you and happy to set up a call.
spk07: Thank you. Thank you that does conclude today's conference. We thank you for your participation.
spk01: You may now disconnect.
Disclaimer