Biotricity, Inc.

Greetings and welcome to the Biotricity Fiscal Year 2024 Financial Results and Business Update Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Koontz, Investor Relations. Thank you, Paul. You may begin.

Thank you, and good afternoon, everyone. As a reminder, Biotricity's fourth quarter and fiscal year 2024 ended on March 31st, 2024, so all figures presented for this period will reflect that end date. Earlier today, Biotricity issued its earnings press release for the period, which highlighted financial and operational results. A copy of the press release is available on the Investor Relations section of the Biotricity website, and the full financials have been filed with the SEC on Form 10-K and posted on EDGAR, which you can find at www.sec.gov. Before beginning the company's 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. Any 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. At this point, I am pleased to turn the call over to Biotricity's founder and CEO, Dr. Makas Al-Sadiq. Please go ahead.

Thank you, and thank you everybody for joining us today. Fiscal 2024 has been a transformative year for Biotricity, marked by significant advancements and strategic initiatives that have positioned us on a clear path to profitability and positive EBITDA. We have increased revenue, significantly improved margins, and reduced EBITDA losses by almost half. Our commitment to innovation, strategic partnerships, and operational efficiency has allowed us to make remarkable progress across multiple fronts. One of our most significant achievements this year has been the expansion of our cardiac AI cloud platform. This initiative, powered by strategic partnerships with industry giants such as Amazon AWS and Google's TensorFlow, leverages over 500 billion heartbeats of anonymized data. Our AI-driven platform is designed to enhance diagnostic accuracy, improve patient outcomes, and increase clinic profitability. As we pursue FDA clearance for our groundbreaking AI clinical model, We are setting new standards in cardiac care, ensuring every patient receives the highest quality of care. Our recent strategic alliances with three of the top group purchasing organizations, otherwise known as GPOs, has been pivotal. These partnerships provide us access to approximately 90% of all hospitals in the US, significantly expanding our market reach. We have a robust pipeline that is growing and active with active pilots at major groups around the country. This positions us to capitalize on expansive market channels and secure advantageous terms for medical devices and supplies, strengthening our presence in the healthcare technology sector. Moreover, the Health Canada approval for our BioCore device has opened new avenues for revenue growth outside of the US in the $1.56 billion Canadian cardiology devices market. This approval aligns perfectly with our strategy to promote accessible high-quality care, and improved patient outcomes. During the fourth quarter, we also launched the BioCore Pro, a next-generation cardiac monitoring device, and entered into several key partnerships, including a collaboration with HealthAid Africa to provide complementary heart health screenings at high-profile events. These initiatives underscore our commitment to expanding our market footprint and delivering innovative solutions. Looking beyond fiscal 2024, our recent initiatives continue to build momentum. We have launched a major cardiac monitoring pilot program with a network of nine hospitals and 10 clinics, and we are accelerating our path to break even with the rapid adoption of our BioCorp probe by both existing and new customers. Additionally, our strategic entry into the pulmonary and neurology fields through partnerships with leading home-based diagnostic companies marks a significant diversification of our market reach. Furthermore, we are extremely excited about the recent launch of HeartSecure, our direct-to-consumer heart health screening service. This service targets the $1.1 billion home heart health market and represents our commitment to making heart health services more accessible in response to the global challenge posed by cardiovascular disease. In summary, our strategic initiatives, technological advancements, and operational efficiencies have positioned Biotricity for sustained growth and profitability. We remain focused on delivering innovative, high-quality cardiac care solutions and are confident in our ability to continue driving value for our shareholders and improving patient outcomes globally. With that, I will turn the call over to our CFO, John Iannoglou, to provide more detailed financial insights.

Thanks, Rukos. Let's review the audited highlights of our fourth quarter and fiscal year 2024. Our recurring revenue generated from our technology-as-a-service subscription model, as well as our usage-based subscriptions, remains robust, driven by the popularity of our FDA-cleared cardiac monitoring devices, BioCore and BioFlux. both continue to see strong demand in market adoption, particularly the next generation BioCorp Pro, which features cellular connectivity. Atrial fibrillation, a primary contributor to strokes, remains a significant focus. To date, we estimate that biotricity has monitored and recorded over 500 billion heartbeats, providing early intervention opportunities and improving patient outcomes. Over the last two years, we estimate that we have facilitated the diagnosis of over 250,000 patients with atrial fibrillation, providing them the opportunity for earlier medical intervention. This not only improves patient outcomes, but also underscores significant healthcare cost savings for both individuals and the broader healthcare system. For the fourth quarter ended March 31, 2024, revenue increased by 15.9% year over year to $3.2 million. For the fiscal year, revenue rose by 25% to 12.06 million compared to 9.64 million in the prior year. This growth is a testament to the efficacy of our strategic sales initiatives. Underlying this, though, is a significant improvement in the quality of earnings. our focus on transitioning our new and existing customer base to a flat fee subscription-based model, which establishes higher quality and a more predictable revenue stream. Technology fees accounted for over 93% of the quarter's total revenue, reflecting our strong customer retention and the quality of our support services. Gross profit for the quarter totaled $2.3 million, up 48% from $1.5 million in the prior year period. Our gross profit percentage was 69.3% for the fiscal year ended March 31, 2024, as compared to 56.5% in the prior year. For the fourth quarter, gross margin was 71.5%, up from 56% in the same quarter last year. These are significant improvements. This increase in gross margin was a result of expansion in recurring technology fee revenue, the revenue base, as well as efficiencies gained in using proprietary AI in operational automation and improvement in monitoring cost structure. Through the continued success of our sales team, we have expanded our geographic footprint to 35 states, serving thousands of cardiologists across hundreds of centers. Our insourcing business model allows cardiac medical professionals to have direct control over our services, enhancing efficiencies, and enabling broader market penetration. Operating expenses for the fiscal year ended March 31, 2024, were $17.2 million, a decrease from $20.9 million in the prior year. For the fourth quarter, operating expenses were $5.3 million compared to $5 million in the same period last year. Our SG&A expenses decreased by 17% and we reduced our R&D expenses by 20%. The increase in quarterly SG&A was largely due to a one-time expense. It should be noted that on a full year basis, we reduced SG&A by $3 million or 17%. We've strategically transformed our sales force to focus on longer sales cycles and larger accounts, including independent hospitals, and GPO networks, that's group purchasing organizations that sell into hospitals. As Rakats mentioned, we've now signed three of the largest GPO networks, providing us access to approximately 90% of hospitals in the US. Our shift to rewarding new device sales within our sales compensation structure has paid dividends, resulting in increasing device sales that will positively impact future subscription tech fees. This approach, combined with our streamlined operations and proactive cost management, has set us on a path toward achieving EBITDA neutrality, EBITDA breakeven later this calendar year. We are pleased with the progress made in building our technology, obtaining FDA registrations, developing an effective sales force, and implementing cost-cutting measures. On a year-to-date basis, our total operating expenses were reduced by $3.7 million resulting in an improved loss from operations by nearly $6.6 million. Net loss attributable to common stockholders for the fiscal year ended March 31, 2024 was $14.9 million compared to a net loss of $19.5 million during the prior fiscal year. For the fourth quarter, net loss decreased by $4.4 million from $4.9 million in Q4 fiscal year 23. despite the expenses associated with infrastructure growth and rising variable interest rates. Adjusted EBITDA for the fiscal year improved to a loss of $7.8 million from a loss of $14.8 million in fiscal 23. This improvement underscores our progress towards break-even and profitability. Looking ahead, we remain committed to advancing the commercialization of our BioCore, BioFlux, and BioCare products. Our tech is truly useful globally. Cardiac is the number one chronic care condition in the entire world. We've recently made inroads or received approvals from the regulatory bodies of other countries that will allow us to sell in other jurisdictions. These set us up for new initiatives that we intend to move on in 2026. The growing market interest and demand for our suite of products dedicated to chronic cardiac disease prevention and management reinforce our confidence in our market position. Importantly, our focus on innovation and development continues to yield significant advancements in remote monitoring solutions for both diagnostic and post-diagnostic products, bringing us closer to achieving positive cash flow. We're excited about the future and are confident in our ability to deliver sustained growth and profitability for biotricity. And that concludes our prepared remarks. Operator, please open the line for questions.

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation time will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please, while we poll for questions. Thank you. Our first question is from Michael Donovan with HC Wainwright. Please proceed with your question.

Thank you, operator, and congratulations to the class. About the year, can you discuss a little bit more about expanding into pulmonary and neurology fields and how you see kind of a product pipeline in these areas as more research comes across linking cardiovascular disease with especially neurological conditions and how this plays into your current product lineup? Thank you.

Yeah, great question. Um, so basically what we've, uh, we're seeing was that, uh, and you know, we've obviously have a pretty good footprint now, so we understand where the market is going. A lot of our referrals were coming from pulmonologists and neurologists. So when those patients are going in, they have a higher risk for cardiac issue. And similarly, if a patient is referred to a cardiologist and they don't have a cardiac issue, they'll end up at a neurologist or pulmonologist to rule that out. Or if they have a cardiac issue, they have a higher risk for a neurological issue or a pulmonology issue. And so what we did was we partnered with organizations that are providing sleep diagnostics to pulmonologists, home-based neurological tests to neurologists, and partner with them to deliver cardiac diagnostics through them. And so what that has done as an initial phase one for us is to test the market and really deploy this combination of doing a cardiac and sleep diagnosis at the same time, as well as doing a cardiac and a neurological study at the same time. Now, if we see that opportunity and we see that growing and and these organizations are across 50 states. It's early days, but our idea is to look at that over the next nine to 12 months, and as we see that rollout, and if it's effective in their network, we expect it to be effective in our network, our cardiac network, and begin offering sleep and neurological tests to the cardiac patients that are already doing diagnostics. Our goal is not to develop new technology in that space, There are people that have already developed fantastic home-based neurological testing equipment and people that have built great sleep tests out there. And so our idea is to really bring that into our ecosystem, but first test it within our partner's ecosystems.

Okay, that makes sense. And taking a little bit of just a quick recap on it, pilot studies that you have ongoing right now. My count shows you guys that two ongoing pilot studies. Is that accurate?

So, we're adding, you know, our pipeline is growing all the time, but yes, we have two active ones right now, and we have quite a few in the pipeline, and that pipeline is growing, you know, every month ever since we got onto the GPOs, and so These pilots in these systems are usually multi-site pilots. They take a few months, but they're significant opportunities for the company.

Okay. That's a good lead-in to my next question for the GPOs. For GPOs, are you seeing this also help you guys with them New markets such as Canada. I know it's more of a an at-home type of test but but that how this Do your current mark partners within the US? does that translate to to Additional expansion that will help you in in Canada or your new markets?

So in in The GPO world, most of that is very U.S. focused. There's not much support there for the Canadian side. In the Canadian market, we have some anchor relationships. There's customers that we have that were Canadian and did their specialty over here. So there is a very good Canadian-U.S. just a general relationship. I myself am Canadian, so we do have a network out there. Our focus in the Canadian market was get our Health Canada approval, which we did, go and find some anchor sites to showcase and then focus on building out a distribution relationship. A lot of the diagnostic equipment in Canada is actually sold through distributors. So it wouldn't be a GPO-style relationship because it's a different payer model, right? It's not a private public model, it is a pure public model. And so the distribution approach works better there for at least the cardiac diagnostic side of things. So we're actively working on building out a distributor network in Canada.

Okay, and final question, do you expect to see similar margins in the Canadian market and then as your expansion proceeds? And the U.S. market, are you still seeing, you know, like the 70% for the U.S. margin?

Yeah, so I think that margins, you know, there's that edge of margins. I think, you know, John spoke really well about, and I'll unpack that again, is about the percentage of revenue that is recurring revenue. And, you know, if we have a heavier device sale rate, a quarter, you know, especially when you're, you know, going into newer markets like Canada, you may see a blip on device sales. So, you know, that may impact your margin here, you know, a couple points here and there. But when you look at the revenue mix, I stand by, you know, what I said a couple years ago, which, I mean, you guys have been, you know, looking at the company and following us for a while. You know, we are growing every single year. Our margins are improving, right? And you've seen that, that when we do have a heavier quarter on hardware sales, you'll see a couple of points, but generally speaking, as the in the marketplace and the recurring revenue becomes 99% margin improvement will occur. Go from where they are. There's probably another five, 6% that we immediately see. And then whether or not that five, six shows up on the blended overall margin. it's going to, as we put out more devices, essentially our steady state margin will become our subscription margin. And our subscription margin is trending, you know, 70s going into the mid 70s and upper 70s. So we do expect margin improvement to continue with some, you know, aberrations here and there.

Great, great. That's very helpful.

I'll hop back into queue and Thank you, Akash. Thank you, John. Congrats on the year. Thank you. Thank you.

There are no further questions at this time. I would like to hand the floor back over to Akash Al-Siddiq for any closing comments.

Thank you, and thank you, everybody, for joining our fiscal 2024 year-end conference call. I just want to highlight the trending that is happening with the organization. And I think that a lot of organizations can benefit from revenue growth and margin improvement as well as operational efficiency. Biotricity is experiencing all three of those at the same time, which is making us very excited. At the same time, we have launched a very new product just a few months ago, which is our BioPro which is having a great reception, which is also a product that is a higher margin and a higher AS product that both our existing customers and users are very interested in. And on top of that, the market expansion and access that we now have as a result of having those three GPOs has really set us up foundationally to you know be at that point of scale you know a lot of companies struggle to get to a ten million dollar revenue and you know that's a big goal post for the maturity of an organization for their ability to set up for scale and you know we see ourselves at that inflection point so you know thank you again for joining us and please Stay tuned and we will be announcing and putting out news as some of these major milestones continue to occur.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.