Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Xvivo Perfusion AB (XVIPF, Financial) reported the strongest quarter in its history with record sales of SEK210 million.
- Gross margins remained strong at 75%, with plans to improve abdominal gross margins to 70% by 2027.
- EBITDA showed a significant improvement to 24%, indicating a scalable and profitable business model.
- Increased interest and growth in thoracic and abdominal segments, particularly in the US market.
- Successful milestones in heart and kidney projects, with production capacity scaling up as planned.
Negative Points
- Q3 is expected to be sequentially weaker due to lower activity during the summer months.
- Gross margin for abdominal disposables decreased to 63% from 70% last year due to interim production costs.
- Service segment growth remains modest, with a 10% increase in sales but still recovering from the loss of high-volume centers.
- Continued heavy investment in commercial and field force, which may impact short-term profitability.
- Uncertainty around the exact timeline and outcomes of ongoing clinical trials and regulatory approvals.
Q & A Highlights
Q: On the lung side of the business, have the two new experience accounts contributed meaningfully to sales in the quarter? Should we expect them to ramp up further during the back half of the year?
A: Yes, they have contributed meaningfully during the quarter. There will be a ramp-up process, and we anticipate that to increase over time.
Q: Regarding the production scale-up project, what are the remaining boxes to tick to finish this project? Is there any specific critical roadblock?
A: We are running according to the communicated time plan. The critical components include investing in production equipment, which we have concluded, and validating that equipment. We don't foresee any delays and are on track.
Q: What is driving the increased utilization of lung machine perfusion at existing customers?
A: The main drivers are the pressure from the American transplant system to increase transplant volumes and the increased interest in EVLP technology post-ISHLT. The hub model also helps reduce workload, translating to higher usage.
Q: When should we expect contribution from new kidney customers now that you are able to take on those?
A: We believe the highest interest will come after Labor Day in September, as there will be holidays in the US, affecting the start of new programs.
Q: Should we expect Q2 heart revenues to be the new normal, or will it come down once recruitment in the US trial has finished?
A: Up until the trial is finished, we can probably maintain this level. Post-trial, it depends on the continuous protocol and the number of transplants, which we are discussing with the FDA.
Q: How is the discussion with potential European customers for the heart product? Any new insights on expectations for heart in Europe once launched?
A: The interest from European trial centers and the heart transplant community is very high. We are preparing our launch plan and will provide more insights in Q3 and Q4.
Q: Will there be any additional costs for the new DCD Heart trial, and will you earn any revenue from the consumables in the trial?
A: Prior to CE marks, we won't earn any revenue. There will be some additional costs, but they are manageable and modest.
Q: How do you see the new service initiatives impacting revenue and gross margin?
A: We aim to incorporate services more into product service revenue, which we believe will generate more revenue. The current gross margin is reasonable to maintain over time.
Q: Any update on the heart trial recruitment process and initial experiences?
A: We are halfway in terms of enrollment and continue to include trial centers. The initial feedback has been overwhelmingly positive regarding the product's ease of use.
Q: Are there any one-offs or extraordinary revenues in the quarter that we should keep in mind going forward?
A: No such orders. The only extra was the heart trial in the US with the cost recovery model, which performed better than expected.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
