Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved Medicare Part B physician payment rate assignment for the CompuFlo Epidural System, covering key states and representing a significant market opportunity.
- Partnership with Actual Biologics to leverage their extensive experience and relationships in the pain management sector, aiming to accelerate market penetration.
- Regulatory approval received from Brazil's national health surveillance agency to market and sell the CompuFlo Epidural System, opening a significant market opportunity.
- US E-commerce sales increased to $1.3 million in Q2 2024 compared to $1.2 million in the same period last year, reflecting successful strategic shifts.
- Gross margins improved significantly to 76.1% in Q2 2024 from 65% in the same quarter last year, driven by cost efficiencies and direct sales strategies.
Negative Points
- Total revenue for Q2 2024 decreased to $1.9 million from $2.9 million in Q2 2023, indicating a significant drop in overall sales.
- International revenue decreased by $710,000 compared to Q2 2023, primarily due to issues with freight forwarders and halted sales in China.
- Operating losses for Q2 2024 were approximately $1.8 million, although reduced from $2.3 million in Q2 2023, still indicating ongoing financial challenges.
- Net income for Q2 2024 was only $0.2 million, a marginal improvement from a loss of $1.3 million in Q2 2023, suggesting limited profitability.
- The company recorded no revenue from China for Q2 2024, compared to $270,000 in Q2 2023, impacting overall international sales performance.
Q & A Highlights
Q: Can you talk about the potential for broadening adoption and getting other MAC coverage? Are you in discussions with other MACs at this point, and what does this mean in terms of the price assignment and your internal plans to expand the sales force and drive adoption?
A: Yes, we are in discussions with other MACs. The JMAC coverage in Florida, New Jersey, and Texas is significant, covering about one-third of the total epidural injection procedures in the U.S. The Medicare Part B physician payment rate is $325, plus an additional primary code fee of about $280. We are focusing on a disciplined commercial launch, targeting larger institutions and clinicians. We have expanded our team with clinical service specialists and trained representatives from our partner, Actual Biologics. We aim to have revenues in the third and fourth quarters of this year.
Q: Have any claims been submitted yet? If so, what does that look like so far?
A: We have submitted close to 200 claims since the start. We are currently in the process of getting clinicians to commit to the new pricing and sales agreements. It is early, but we expect to provide more updates following the third quarter results.
Q: Regarding the dental business, were there lost revenues this quarter that you believe will be recovered in Q3 2024, or should we not expect any revenue to shift over into Q3 that was potentially lost in Q2?
A: The second-quarter results were lower than anticipated due to freight forwarder issues, which were out of our control. We had about $250,000 worth of products ready for shipment that were not picked up in time. However, we had a strong month of July, and we expect international and domestic sales to improve in the third and fourth quarters of this year.
Q: What are your plans for the international expansion of the CompuFlo Epidural System?
A: We have received regulatory approval from Brazil's national health surveillance agency to market and sell the CompuFlo Epidural System in Brazil. Brazil presents a significant opportunity with over 200 million people and a high number of epidural procedures performed annually. We have established relationships with leading medical institutions and hospitals in Brazil and are in final negotiations with commercial partners.
Q: Can you provide more details on the financial performance for the second quarter?
A: Revenue for the three months ending June 30, 2024, was approximately $1.9 million, down from $2.9 million in the same period last year. US E-commerce revenue increased to $1.3 million from $1.2 million. International revenue decreased due to freight forwarder issues. Gross profit was $1.4 million or 76% of revenue, up from 65% last year. Operating losses decreased to $1.8 million from $2.3 million. Net income was $0.2 million compared to a loss of $1.3 million last year.
Q: How is the company managing its liquidity and capital resources?
A: As of June 30, 2024, the company had cash and cash equivalents of approximately $5.8 million and working capital of $7.7 million with no long-term debt. We believe this provides sufficient resources to support growth within both the dental and medical divisions without the need for additional outside capital.
Q: What are the future plans for the dental division?
A: US E-commerce sales increased to $1.3 million in Q2 2024 from $1.2 million last year. We have transitioned from previous distributors to our own online platform, improving gross margins to 76.1%. We expect steady growth in domestic sales and have resolved temporary challenges with international distributors. We believe international sales will improve in the second half of this year.
Q: What steps are being taken to enhance the company's intellectual property and patent portfolio?
A: We have received multiple notices of allowance for key patent applications in both the US and Europe, broadening the IP protection around our injection and drug delivery systems. This is part of our ongoing efforts to increase the value of our intellectual property.
Q: What are the key takeaways from the recent Medicare Part B physician payment rate assignment for the CompuFlo Epidural System?
A: The Medicare Part B physician payment rate assignment is a significant milestone, covering key states and representing an initial addressable market of approximately $250 million among Medicare patients alone. This validates the safety and benefits of our technology and is a major step forward in increasing penetration and adoption.
Q: How does the company plan to achieve positive cash flow?
A: We have taken steps to streamline operations and reduce selling, general, and administrative expenses by over $1.1 million compared to last year. We believe we have developed an efficient and scalable platform to drive high-margin recurring sales and are focused on achieving positive cash flow company-wide.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
