Release Date: June 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 6% to $969,000, driven by sales of the lead veterinary medical device Spryng.
- Gross profit improved by 6% to $740,000 with gross margins increasing by 40 basis points to 76.3%.
- Distribution of Spryng reached over 600 veterinary clinics across 49 states, with more than 4,500 syringes distributed nationwide.
- Positive results from two key clinical animal studies, enhancing the credibility and marketability of Spryng.
- Successful partnership with Covetrus North America, contributing $106,000 in sales, representing 11% of total revenues for the year.
Negative Points
- Operating expenses increased by 20% to $11.4 million, driven by higher G&A costs and R&D expenses.
- Net loss widened to $11 million or $0.17 per share, compared to a net loss of $8.7 million or $0.85 per share in the previous year.
- Sales to veterinary clinics decreased by 16% to $237,000 due to the transition from equine to companion animals.
- Cash and cash equivalents were low at $87,000 as of March 31, 2024, indicating potential liquidity issues.
- The company had to raise $1.8 million through a private equity offering to bolster its financial position.
Q & A Highlights
Q: Can you elaborate on the financial performance and key drivers behind the revenue growth?
A: Garry Lowenthal, CFO: Our revenues increased by 6% to $969,000, primarily driven by the sales of our lead veterinary medical device, Spryng, with OsteoCushion technology. The expansion of our distributor network, particularly with Covetrus North America, played a significant role, with distributor sales up 15% to $732,000. Gross profit also improved by 6% to $740,000, with gross margins increasing by 40 basis points to 76.3%.
Q: What are the key clinical studies and their outcomes that have impacted your product distribution strategy?
A: John Dolan, VP of Business Development: Two key clinical studies were completed last fiscal year. The first, by Ethos Veterinary Health, showed significant improvement in dogs with cruciate ligament rupture. The second, in collaboration with Colorado Animal Specialty and Emergency, demonstrated positive results in dogs with hip osteoarthritis. These studies are crucial for our distribution strategy as they attract endorsements from key opinion leaders and help in getting our product included in distributor catalogs.
Q: How has the partnership with Covetrus North America impacted your sales and distribution?
A: Garry Lowenthal, CFO: Covetrus began selling Spryng in January, and we recognized $106,000 in sales from them before the fiscal year ended March 31. This represents 11% of our total revenues for the year. Their involvement has significantly expanded our reach, helping us distribute more than 4,500 Spryng syringes nationwide.
Q: What measures have you taken to reduce operational costs and improve profitability?
A: John Lai, CEO: Starting in April, we reduced the cost of PetVivo operations by about 40%. We also made investments in manufacturing improvements to reduce syringe production costs, improve gross profit margins, and enhance product quality. Additionally, we have put our sales representatives on a new compensation schedule to motivate unit sales of Spryng syringes.
Q: Can you discuss the market potential for Spryng and its impact on your future growth?
A: Garry Lowenthal, CFO: The animal osteoarthritis market is projected to reach $3.7 billion this year, growing at more than 10% CAGR. Spryng provides an innovative treatment for osteoarthritis in dogs and horses, a common inflammatory joint disease affecting a significant percentage of these animals. Our expanded distribution network and positive clinical study results position us well to capture a substantial share of this growing market.
Q: What are the future plans for expanding your product portfolio and market reach?
A: John Lai, CEO: We plan to continue expanding our sales and marketing team and strengthening our intellectual property portfolio. We are also focusing on shifting from large animals to small animals, supported by positive clinical studies. Additionally, we are leveraging trade shows, social media, and continuing education credits to increase awareness and acceptance of Spryng among veterinary doctors.
Q: How are you leveraging educational initiatives to promote Spryng among veterinarians?
A: John Lai, CEO: We have been actively participating in major trade shows and providing continuing education credits. For example, on June 8, 2024, we presented at the Long Island Veterinary Medical Association, offering 2 CE credits. Starting July 15, 2024, we will offer a 1-credit webinar through Clinician's Brief, which has a large audience of veterinary doctors and vet techs.
Q: What are the key challenges you foresee in the upcoming year, and how do you plan to address them?
A: John Lai, CEO: One of the key challenges is maintaining and expanding our market share in a competitive landscape. We plan to address this by continuing to invest in clinical studies, expanding our distribution network, and enhancing our product offerings. Additionally, we will focus on cost reduction and improving operational efficiencies to sustain profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
