Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Genie lab products have shown resilience in revenue, returning to pre-Covid levels despite challenges.
- The Torbal pharmacy scale business is experiencing rapid growth and market share gains after a difficult first half of the year.
- The launch of the VIVID workstation is expected to accelerate growth in the automated pill counter market.
- The bioprocessing segment saw a 16% increase in sales compared to last year, with strong growth in the US market.
- Cost management efficiency programs have generated significant savings, improving EBITDA by roughly 20% compared to last year.
Negative Points
- The Genie lab products faced a collapse in demand from Chinese distributors and competition from knockoff products.
- The Torbal pharmacy scale business was negatively impacted by changes in billing and reimbursement by pharmacy benefit managers.
- The bioprocessing segment experienced weaker demand in Europe and Asia, affecting overall performance.
- The company had to implement a voluntary salary waiver program to manage costs, indicating financial strain.
- The bioprocessing segment's sales were slightly softer than expected, despite the overall increase.
Q & A Highlights
Q: Can you provide more details on the impact of the "double whammy" period on the Torbal pharmacy scale business?
A: Helena Santos, CEO: The "double whammy" period, which started on January 1, 2024, significantly affected our Torbal pharmacy scale business. Retail pharmacies had to pay accrued fees from the last half of 2023 and current fees at the point of sale, leading to a collapse in their cash flow and a halt in capital purchases, including our VIVID pill counters. However, this period is now over, and we have seen a huge inflection in sales and rapid growth in market share gains in the beginning of the third quarter.
Q: What are the future plans for the VIVID workstation?
A: Helena Santos, CEO: The VIVID workstation, our newest product, will begin shipping in the fourth quarter. It completes the hardware portion of our product line and has been well-received at major shows. Our distribution partner believes this $13,000 product could match the current unit volume of our lower-priced VIVID-LITE S and VIVID-1, solidifying our position as a technology and market leader in the automated pill counter markets.
Q: How is the bioprocessing segment performing, particularly in Europe and the US?
A: Daniel Donadille, CEO of Bioprocessing Operations: The bioprocessing segment faced challenges in Europe, with weaker demand historically, but saw strong growth in the US, with an 84% increase in topline performance compared to last year. Overall, H1 sales were up 16%, and improved gross margins and lower expenditures resulted in a significantly improved EBITDA, roughly 20% better than last year.
Q: Can you elaborate on the cost management efficiency program in the bioprocessing segment?
A: Daniel Donadille, CEO of Bioprocessing Operations: We executed a company-wide cost management efficiency program, generating net SG&A savings of around 20% in the first half of 2024. This included a 23% reduction in force, resulting in annual cost savings of around $1 million. Additionally, most of our team participated in a voluntary salary waiver program, highlighting their belief in our bioprocessing vision.
Q: What is the significance of the DOTS platform launch?
A: Daniel Donadille, CEO of Bioprocessing Operations: The launch of the DOTS platform is a significant milestone. It offers a cost-effective scale-up alternative, allowing customers to remain innovative and speed up time to market at a lower price point. Early feedback and endorsements from accounts like Merck and Central Carolina Community College are promising, and we have seen a 70% increase in our commercial pipeline value since the beginning of the year.
Q: How is the company leveraging AI and machine learning in its product offerings?
A: Helena Santos, CEO: We are working on an AI replacement for our geometric pill recognition system, scheduled for a 2025 launch. This feature is a key component of our strategy to dominate the retail pharmacy automation markets. Additionally, our DOTS platform generates around 5 million raw data points per cultivation, providing valuable data for AI and machine learning models.
Q: What are the financial highlights for the first half of 2024?
A: Helena Santos, CEO: Despite challenges, we have made significant progress in slowing our cash burn. The first half of 2024 saw improved gross margins and lower expenditures, resulting in a significantly improved EBITDA. We are focused on growing revenues while controlling costs and optimizing cash utilization.
Q: How is the company positioning itself for future growth?
A: Helena Santos, CEO: We are excited about the second half of the year and our future. We will continue to add software features to our products, extend our competitive advantage, and grow our subscription revenue. Our strategic investments and cost management measures position us well for future growth and success.
Q: What are the key takeaways from the recent industry events and customer feedback?
A: Daniel Donadille, CEO of Bioprocessing Operations: At the SIMB event, Merck endorsed our technology as a cost-effective alternative for strain engineering, generating significant interest. Central Carolina Community College also published a paper highlighting our technology's role in bridging the gap in workforce education. These endorsements and early feedback are promising indicators of our product's value.
Q: What are the company's strategic priorities for the remainder of 2024 and beyond?
A: Helena Santos, CEO: Our strategic priorities include accelerating growth in the automated pill counter markets, launching the VIVID workstation, and continuing to innovate with AI and machine learning features. We will also focus on cost management, optimizing cash utilization, and leveraging our DOTS platform to capture more value from our business model.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
