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.
spk05: Greetings and welcome to the exobionics first quarter 2024 financial results call. At this time, all participants are on a listen-only mode. A 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 Matt Steinberg with Finn Partners.
spk00: Thank you. You may begin. Thank you, operator. and thank you all for participating in today's call. Joining me from Exobionics are Scott Davis, Chief Executive Officer, Jerome Wong, Chief Financial Officer, and Jason Jones, Chief Operating Officer. Earlier today, Exobionics released financial results for the quarter ended March 31st, 2024. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including statements regarding our business strategy, future financial or operational expectations, or our expectations of the regulatory landscape governing our products and operations are based upon management's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with EXO's businesses please see its filings with the Securities and Exchange Commission. EXO disclaims any obligation, except as required by law, to update or revise any financial or operational projections, its regulatory outlook, or other forward-looking statements, whether because of new information, future events, or otherwise. Any forward-looking statements made on this call speak only as of the date of this call. I will now turn the call over to EXO Bionics Chief Executive Officer, Scott Davis.
spk03: Thank you, Matt. We closed out the first quarter and started the second quarter of 2024 with positive momentum as we were pleased to receive final payment determination for Medicare reimbursement of our EXO Indigo Personal. Additionally, our results for the quarter reflect continued improvements from both our scalable commercial strategy and operations. I'll touch on both of these developments shortly, but first I'll share an overview of our first quarter performance. We generated revenue of $3.8 million and sold 29 ExoHealth devices in the first quarter of 2024. Sales of the ExoHealth devices for the quarter were slightly more affected by typical seasonality due primarily to fluctuations in larger integrated delivery network, or IDN, procurement cycles. We remain focused on executing upon our commercial strategy in growing our IDN network. We continue to deploy resources to develop new IDN relationships that will help us secure larger and more multi-unit capital deals across our North American network. In doing so, we aim to convey the clear clinical and economic benefits of our ExoNR and our ExoIndigo therapy devices with the right decision makers. Our pipeline of potential deals remains solid with approximately $1 million of backlog generated in Q1 to be recognized over the course of 2024, and we remain confident that our commercial team will succeed in driving larger unit order growth. Now turning to an ExoIndigo personal update. As previously announced, CMS approved use of Healthcare Common Procedure Coding System, K1007, to bill Medicare for the ExoIndigo personal. On April 11, CMS established a reimbursement level of $91,031 for Medicare reimbursement under this code, the XO Indigo Personal, effective retroactively beginning April 1st. This pricing decision from CMS is an important next step in our commercial strategy to build demand within clinical, home, and community use settings. We believe there are thousands of Medicare and Medicaid covered individuals with a spinal cord injury that could potentially benefit from our differentiated personal exoskeleton device, enabling them to achieve better health outcomes along with new levels of independence. We're thrilled that our differentiated exoskeleton devices are now accessible to a larger patient population, and we look forward to providing future updates on our continued work with the SCI community, CMS, along with other public and private health insurance programs that generally follow CMS reimbursement practices. With reimbursement pricing secured, we anticipate growing the personal health business. We believe this growth will ramp up quarter over quarter as our commercial and clinical teams engage with skilled therapists and clinicians across our expansive customer base consisting of more than 260 clinical and rehabilitation centers domestically. We're leveraging our robust network to expand our reach to a potentially higher volume of individuals living with a spinal cord injury who could benefit from our XO Indigo Personal through establishing additional certified training centers across the U.S. Turning to our international performance, we're pleased that we continue to gain momentum across the EMEA and APAC regions. Results were particularly strong in EMEA as the French public health system has embraced the use of robotics in their neurorehabilitation programs. Looking ahead, we are working to continue to build on the strength of our vast international distribution network worldwide growth now i'd like to turn to an update on our industrial segment exo works in the first quarter of 2024 sales within this segment increased nearly 60 percent from the same period a year ago although against a modest level notably we delivered devices to an oem in the construction vertical along with continued shipments potentially large volume customers in aerospace and energy segments With improved cost structures driven by our new contract manufacturer, we remain focused on scaling our commercial growth through targeted customers in large industrial settings. Overall, our performance in the first quarter of 2024 demonstrated continued progress across both of our segments. Now, with CMS establishing reimbursement pricing for the XO Indigo Personal, we believe we are poised to take the next step in our evolution. At this time, I'd like to turn the call over to our Chief Financial Officer, Jerome Wong, to review our first quarter financial results.
spk04: Thank you, Scott. We generated first quarter 2024 revenue of $3.8 million compared to $4.1 million for the first quarter of 2023. Gross profit for the first quarters of 2024 and 2023 was $2 million in both periods, representing a gross margin of approximately 52% in the first quarter of 2024. compared to a gross margin of 49% for the first quarter of 2023. The overall increase in gross margin was primarily due to lower ExoHealth device and service costs. Operating expenses for the first quarter of 2024 were $5.2 million compared to $6.4 million for the first quarter of 2023. The 19% decrease was primarily due to a decrease in general and administrative expenses stemming from lower legal expenses, headcount, and the absence of costs associated with the acquisition and integration of HMC in the comparable quarter. Net loss applicable to common stockholders for the first quarter was $3.4 million, or $0.20 per basic and diluted share, compared to a net loss of $4.4 million, or $0.33 per basic and diluted share for the same period in 2023. Cash and restricted cash as of March 31st 2024 was $8.8 million compared to $8.6 million as of December 31, 2023. Please see our form 10-Q filed earlier today for further details regarding the quarter. Operator, you may now open the line for questions.
spk05: Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you'd like to ask a question, you may press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would 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 key. Our first question comes from the line of Sean Lee with HC Wainwright. Please proceed with your question.
spk01: Good afternoon, guys. This is Sean from HC Wainwright. How are you?
spk03: I'm well, Sean. Thank you.
spk01: Okay. My first question is on the recent approval by Medicare on the reimbursement. So I was wondering, it's been about two weeks since. Have you seen any increase in lead generation or interest in this device as a result of the Medicare approval?
spk03: Yeah, so thank you, Sean, for your question. In general, we are seeing strong demand from individuals with spinal cord injuries who are interested in the technology. So we saw a definite uptick from the announcement of final payment termination. So, yes, is the short answer to that question. And we are working to support our DMEs to be able to get those Medicare claims submitted.
spk01: That's great to hear. Not only elaborating on these claims, so I was wondering, does having a standardized reimbursement number streamline your sales cycles such that it makes it easier for you to market and sell these devices?
spk03: Again, the short answer to that is yes, absolutely. Previously, With the code approved but on a case-by-case basis, the level of documentation that's required for that is fairly significant, and it's a rather unusual process to physicians who might be submitting a prescription for this or to DMEs who need to process it. With CMS establishing a payment determination, this claim now has an actual cash value behind it. So as those claims are being submitted, there is a recognized value that has been definitively provided by CMS. So it is a more of a standardized process, you know, at this point in time.
spk01: That's great to hear. Thanks for that. My final question then is on the international sector. You mentioned that you're gaining momentum, especially in India. So I was wondering, is that something that we could see going forward for the remainder of the year as well? Or is there more of a one-time bolus in the first quarter?
spk03: Okay. In the EMEA region, yes. So we are seeing good growth there. And Part of that growth is attributed to the strong distribution network that we've built throughout both EMEA and APAC regions. We've been hard at work in developing our distributor network over many years now, and we are definitely seeing scale through the use of that channel. Additionally, there's been a significant project within the French healthcare system this year where they are adopting robotics for use in many of the hospitals throughout France to which, you know, EXO is being selected, you know, for many of them.
spk01: I see. I see. That makes it more clear. Thanks for that. That's all the questions I have.
spk03: Thank you, Sean.
spk05: Our next question comes from the line of Ben Hainer with Lake Street. Please proceed with your question.
spk02: Good day, gentlemen. Thanks for taking the questions. First off, for me, you mentioned the strong demand that you've seen on the indigo personal side. Can you maybe share a little bit more color on where that's coming from? Is that directly from the patients? Is it kind of referrals from neuro rehab providers and then kind of the process once you do see the demand if it's, in the particular case, if it's directly from a patient. How does that kind of work its way through the system and ultimately get it fulfilled by a DME?
spk03: Okay, thank you. Thank you, Ben, for the multi-part question. So I think we'll get started with where the leads are coming from. And we're seeing leads both from individuals themselves who who are basically coming to our website and inquiring and we are also seeing them through our network of neuro rehab facilities who have spinal cord individuals in their individual spinal cord injuries in their programs. So it's a combination of really the two where we're seeing demand. I would say it's almost evenly matched as we look at where those leads are coming from. Now, further to your question of what happens and how does the process work from here, generally speaking, our approach to this is to work with our current customer base. We've got more than 260 centers throughout North America that currently are using XO products for neurorehabilitation. And many of these centers, you know, have individuals who have suffered a spinal cord injury in their networks or in their programs. And, you know, we will generally, where it makes sense, connect that individual with the center for their onboarding and their training. We're also working with DMEs, durable medical equipment providers who are processing these claims. So it's not our intent to process individual Medicare claims ourselves, but rather to support our DMEs in getting the information required for that claim and also tying it into a center who can do the onboarding process and training.
spk02: Okay, got it. And the documentation requirements and such that the DMEs need to fulfill, how much easier is it than kind of the previous situation?
spk03: It's substantially easier now that there is final payment determination set. And I think the level of comfort by even physicians who are writing prescriptions for this is at a a much higher level, at least from what we've seen. So in general, you know, having final payment determination makes this a substantially more straightforward program. However, as with any new program, you know, we do expect a ramp-up over time. So this is not quite as easy as turning on a faucet. It is a new program. program for reimbursement. Reimbursing exoskeletons in lump sum as a brace is something that is new, and so we are taking a very deliberate approach to this with our DMEs, with the supporting physicians, and with the patients to ensure that we have good and comprehensive claims that are being submitted through CMS.
spk02: Okay, got it. And it's kind of the physician's default mindset, like, I'll write a prescription and make sure this goes all the way through before I write another one, or are they comfortable with the reimbursement level being in place to go ahead and write, you know, a handful of scripts right out of the gate?
spk03: Well, you know, I think that's a difficult question to answer as the, you know, the early claim submissions that we've been supporting on have been from multiple physicians as opposed to through a single one. So I can't really answer that at this point. I would imagine that once a physician has done one successfully, it will become easier. That's my assumption.
spk02: Okay, that makes sense. And then on the 260 plus centers that you're in, You know, have you seen increased interest on the XLR side just now that the reimbursement for the personal devices is available?
spk03: You know, I certainly think that the continuum of care story that we can now tell with being able to bring a patient from hospital through to home resonates with the centers. We've heard that from many of our centers that they're excited about that. Will that actually result in potentially more NR sales? You know, that's TBD. We do know that there's been a lot of positive feedback around our GateCoach software, which has been newly introduced in the North American market that really helps drive ease of use in operating our exoskeletons. So where we do anticipate seeing some growth in centers that are beginning to do more with individuals with spinal cord injuries in their outpatient facilities, some of those centers may elect to look at using our indigo, our exo-indigo therapy. which is really a resizable version of our personal device. So, you know, we have seen some additional interest in that particular product category.
spk02: Okay, got it. And then lastly for me on the million-dollar increase in the backlog, was that – sorry if I missed this – was that worldwide or is that just U.S. or North America? And then is France – with their rollout, a big portion of that, or what's the right way to think about that from an international standpoint?
spk03: Yeah, so a great question. Largely, the backlog that we have, it represented both North America and EMEA, and I will say that probably a larger portion of that is reflective of the EMEA opportunity specifically the one with the French healthcare system.
spk02: Okay. Great. Well, congrats on the progress, gentlemen, and getting the reimbursement in place. Thank you very much.
spk03: We're excited. Thanks a lot, Ben. Appreciate it.
spk05: If there are no further questions in the queue, I'd like to hand it back to Scott Davis for closing remarks.
spk03: All right. Thank you, Doug, and thank you to everyone joining us today. Overall, the first quarter of 2024 was an encouraging start to the year, particularly following the final pricing determination for the XO Indigo Personal. With thousands of individuals with spinal cord injuries that could benefit from our personal device, we believe this is a potentially transformative event for XO. In addition to this positive development, we look forward to sustaining our commercial growth while continuing to work to expand the market for our enterprise health products with new and existing IDNs, and for EVO in large industrial settings. We look forward to providing updates on our continued progress. Thank you, and have a great day.
spk05: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.
Disclaimer