Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for Q2 2024 increased to $2.2 million, doubling from $1.1 million in Q2 2023.
- Adjusted net loss per share improved to $0.07 in Q2 2024 from $0.09 in Q2 2023.
- The proposed merger with KARL STORZ has received support from over 80% of the shares that have voted.
- Leading advisory firms ISS and Glass Lewis recommend stockholders vote in favor of the merger.
- The merger proposal aims to provide some returns to stockholders, potentially avoiding a worse outcome in bankruptcy.
Negative Points
- Total operating expenses increased to $23.1 million in Q2 2024 from $18.9 million in Q2 2023.
- Net loss attributable to common stockholders increased to $25.7 million in Q2 2024 from $20.7 million in Q2 2023.
- The merger proposal has not yet received the necessary proxies to proceed, leading to an adjournment of the Special Meeting.
- If the merger is not approved, the company faces significant near-term financial obligations, including a $20 million repayment to KARL STORZ.
- In the event of bankruptcy, common stockholders may receive little or no consideration for their shares.
Q & A Highlights
Q: Can you provide an overview of the financial performance for the second quarter of 2024?
A: Shameze Rampertab, Chief Financial Officer, reported that the company achieved revenue of $2.2 million, up from $1.1 million in the same period last year. The breakdown includes $0.8 million in system revenue, $0.6 million in lease revenue, $0.6 million in instruments and accessories, and $0.2 million in services. Total operating expenses were $23.1 million, leading to a net loss of $25.7 million or $0.09 per share.
Q: What is the status of the proposed merger with KARL STORZ?
A: Anthony Fernando, President and CEO, stated that the Special Meeting of stockholders to vote on the merger has been adjourned to August 20 due to insufficient votes. Only 55% of outstanding shares have voted, with over 80% of those votes in favor of the merger. The company is urging all stockholders to vote.
Q: What are the implications if the merger with KARL STORZ is not approved?
A: Anthony Fernando explained that failure to approve the merger would lead to significant financial obligations, including repayment of a $20 million securitized note to KARL STORZ. The company would likely seek bankruptcy protection, and common stockholders might receive less than the merger consideration or nothing at all.
Q: Why is the merger price set at $0.35 per share, and is there a possibility of a higher offer?
A: Anthony Fernando emphasized that $0.35 per share is the best price reasonably obtainable. The company explored various alternatives, including partnerships and acquisitions, but no higher offers were received. The price reflects the best available option given the current circumstances.
Q: What are the three proposals stockholders need to vote on regarding the merger?
A: Anthony Fernando outlined the proposals: 1) Approval and adoption of the merger agreement with KARL STORZ, requiring a majority of all outstanding shares; 2) Advisory vote on executive compensation related to the merger, requiring a majority of voted shares; 3) Approval to adjourn the Special Meeting if necessary, also requiring a majority of voted shares.
Q: What are the recommendations from ISS and Glass Lewis regarding the merger?
A: Anthony Fernando noted that both ISS and Glass Lewis, leading independent voting and corporate governance advisory firms, recommend stockholders vote in favor of the merger. Their recommendations are influential for many institutional investors.
Q: What are the company's current cash and cash equivalents?
A: Shameze Rampertab reported that as of June 30, 2024, the company had approximately $7.8 million in cash and cash equivalents, excluding restricted cash.
Q: What are the potential outcomes for stockholders if the merger is approved versus if it is not?
A: Anthony Fernando explained that approval of the merger would provide some return to stockholders, whereas a bankruptcy scenario would likely result in little or no consideration for their shares. The merger offers a more favorable outcome compared to the financial distress and obligations the company would face otherwise.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
