Ekso Bionics Holdings, Inc.

Greetings, and welcome to the Exobionics Q2 2024 Financial Results 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, Matt Steinberg with FIN Partners. Thank you, Matt. 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, and Jerome Wong, Chief Financial Officer. Earlier today, ExoBionics released financial results for the quarter ended June 30, 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 operating 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 ExoBionics Chief Executive Officer, Scott Davis.

Thank you, Matt. We kicked off the second quarter on a positive note with our at-home ExoIndigo personal device receiving a payment decision from CMS for lump sum Medicare reimbursement and continued the momentum throughout the quarter by generating record quarterly sales in our ExoHealth segment. We're pleased with our progress and even more excited about the potential of bringing our innovative robotic exoskeleton devices to more patients across the continuum of care from the clinic to the home. As initial claims for reimbursement have been submitted for the ExoIndigo Personal, and as we have gained momentum in working with our current customer base to make this potentially life-changing technology available to more individuals living with an SCI, we remain encouraged by the possibility of meeting this multi-billion dollar personal mobility health addressable market in the U.S. I will touch more on this major development shortly, but first I'll share an overview of our second quarter performance. We generated record quarterly sales of $5 million and sold 37 ExoHealth devices in the second quarter of 2024. The performance in the quarter was driven by continued growth within our enterprise health business, which is comprised of our ExoNR and our exotherapy devices. We believe our growing worldwide network of leading neurorehabilitation centers continues to recognize the clinical and economic value of our innovative XONR. Today, there are XONR devices at nine of the top ten rehab centers in the U.S., which we believe is an indicator that XONR is becoming the standard of care for lower extremity neurorehabilitation. We believe we are well positioned to build upon this momentum and drive growth for both our XONR and our XO Indigo therapy devices as we continue to strengthen our distribution network and deepen our pipeline of opportunities. While we're pleased with the quarterly sales volume of the XO Health devices, U.S. sales were slightly affected by typical fluctuations in procurement cycles for our larger integrated delivery network, or IDN, customers. We anticipate these cycles leveling out later this year. In spite of these challenges, we maintained strong sales to individual clinics and hospitals and expanded our global customer base. which is a testament to the dedicated effort of our global commercial teams. Internationally, demand remains strong, mirroring our robust performance in the first quarter. Notably, uptake in the EMEA region was driven by adoption of robotics within neurorehabilitation programs by the French public health system. Sales in Asia also contributed to our international growth, with multiple orders for exo-indigo therapy as neuro rehabilitation centers in the region are adopting our potentially life-changing technology for individuals with lower extremity impairments. Not only did we place more devices globally, but we also expanded our international distribution network, which enabled us to gain greater operating leverage abroad. Looking ahead, we remain focused on continued development of our relationships with IDNs to secure larger multi-unit capital deals across North America as an initiative that is integral to our ongoing commercial strategy aimed at expanding our market footprint. We are optimistic about future prospects and our pipeline of potential deals. Now turning to an ExoIndigo personal update. We previously announced CMS confirmation that healthcare common procedure coding system or HCPCS code K1007 falls under Medicare's brace benefit category and should be used to bill Medicare for the ExoIndigo personal. At the start of the second quarter, CMS established a Medicare reimbursement level of $91,031. With pricing determination in place and initial claims pending reimbursement, we have achieved an important milestone that we expect will now enable us to significantly expand access to the thousands of Medicare and Medicaid covered individuals living with a spinal cord injury. We believe these individuals now have the potential to achieve improved health and new levels of independence through the use of our XO Indigo Personal in their daily lives. This is just the beginning of what we view as a possible inflection point in expanding access to our potentially transformative technology for individuals who can most benefit from its daily use. As part of our scalable go-to-market strategy to drive patient engagement, we've been collaborating with our large network of neurorehabilitation centers throughout the country to facilitate patient screening and begin training and onboarding individuals so they can use the XO Indigo Personal at home and in community settings. Additionally, we are conducting educational webinars featuring end users who showcase how they integrate the XO Indigo Personal into their daily lives. We invite you to view these inspiring stories on our social media channels, including Facebook, LinkedIn, and X. Early demand trends resulting from Medicare CMS reimbursement of the XO Indigo Personal are promising as evidenced by the increasing traffic through our website and growing pipeline of interest from individuals currently living with an SCI. These potential users are learning firsthand about the XO Indigo's purposeful design and how it can offer them potentially life-changing benefits in their daily lives. Moving forward, we are increasing our content marketing efforts, leveraging patient testimonials, and continuing to educate potential users, therapists, and clinicians on the device's potentially life-changing mobility benefits. We believe these initiatives have been crucial in driving further interest in adoption in the market, and we are thrilled that our differentiated exoskeleton devices are now accessible to a larger patient population. We are committed to ensuring that more qualified individuals can gain access to the Indigo Personal and are bullish on the potentially robust growth opportunity. We look forward to providing updates on our continued work with the SCI community and future possibilities of adoption from individuals with neurologic conditions who could potentially benefit from our technology. Now I'd like to turn to an update on our industrial segment, ExoWorks. During the quarter, device revenue increased by approximately $150,000 from the same period a year ago as we shipped the bulk of EVOs internationally. These shipments include a large paint supplier in Germany and a distribution partner in Korea. We are working to continue to raise awareness of the benefits that EVO provides for workers with strenuous overhead jobs, such as reduced fatigue, increased productivity, and a lower frequency of workplace injuries. EVO fits into a variety of industries, including automotive, aerospace, construction, and renewable energy, with multiple additional vertical segments possible where overhead work is required. As we look ahead, we believe that XO is a pioneer in this nascent market and that we are poised to take greater share by continuing to target customers who can drive potentially large volumes of EVO devices in their various industrial segments. Turning to our operations, we remain focused on achieving positive cash flow through scaling our top line growth while continually gaining operating efficiencies. Over the past year, under the leadership of Jason Jones, our Chief Operating Officer, we have worked to bolster our operating leverage while enhancing our inventory management. As Jerome will detail shortly, these initiatives helped us increase our gross margins in the second quarter by 500 basis points compared to the second quarter of 2023. We believe that our disciplined approach to spending combined with our improved operating efficiencies and scalable strategy have us on the right path as we work to generate positive cash flow. In summary, It was a significant quarter for ExoBionics, highlighted by key CMS accomplishments for our ExoIndigo personal device and continued execution of our commercial strategy that resulted in a record sales quarter. With a product portfolio that now potentially offers a broad reach to a significantly larger addressable market across the continuum of patient care, we believe we are well positioned for future growth. At this time, I'd like to turn the call over to our Chief Financial Officer, Jerome Wong, to review our second quarter financial results.