Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tenon Medical Inc (TNON, Financial) reported a 21% year-over-year increase in revenue for Q2 2024.
- The company achieved a gross profit of $470,000, representing a 142% increase compared to the prior year quarter.
- Gross margin improved significantly to 52%, indicating better cost management and operational efficiency.
- The company successfully expanded its sales operations to cover five geographic regions in the US.
- Significant progress was made in clinical research, with interim analysis of the Catamaran System showing promising results in safety and effectiveness.
Negative Points
- Operating expenses remained high at $4.3 million for Q2 2024, only slightly lower than the $4.5 million in Q2 2023.
- The company reported a net loss of $3.8 million for Q2 2024, though this was an improvement from the $4.3 million loss in Q2 2023.
- Cash and cash equivalents decreased to $2 million as of June 30, 2024, down from $2.4 million at the end of 2023.
- The company expects to incur additional losses in the future, indicating ongoing financial challenges.
- Despite the revenue growth, the company has yet to achieve profitability, which may concern investors.
Q & A Highlights
Q: Hi. Good afternoon and thanks for taking my questions. I wanted to ask about the publication of the study results. Is this going to be the same six patients that we saw the early data on previously? Or will this be a slightly larger group of patients?
A: Yeah. Thanks, Bruce, and good to hear from you. So this will be a larger group of patients. This is an interim analysis to the degree that we've cleared 33 enrolled patients. And of course, those patients are all at different time points. Some were very recent. Some have been 12 months or more post-op. And so what this interim analysis will do is document the progress that we've made on all the things that we're measuring, everything from adverse events to patient outcomes and feedback and things of that nature. Not to mention everything that happens in the operating room, how long the procedure took, blood loss, all the details of a study like this. So this interim analysis will cover those 33 patients. And as -- and just to remind, this is a up to 50-patient trial. So it's a significant portion of the full enrollment.
Q: Okay. And then is the study fully enrolled yet? And is this the type of study where we're going to keep getting a larger and larger patient base, and we're going to be getting a stream of publications over the next couple of years?
A: Yeah. That's exactly right. This is the first formal publication from the study, Bruce, and it's in every way, an interim analysis. As we proceed and as we get to bigger and bigger numbers that are hitting 6 months, 12 months, these critical milestones and we follow-up patients up to 24 months in the study and its protocol, we'll continue to provide updates and publications to support for obvious reasons. We're trying to drive a statistical and clear message about the capabilities of this technology. So that's what we're doing here. So the answer is yes. You'll see a cadence, if you will, of publications and updates from -- as the data is gathered and tabulated, et cetera, as part of the study. You asked about enrollment. Enrollments are virtually finished. We have maybe a couple, three more patients to go here, and we'll be closing enrollment officially. So very close to wrapping up the front end of the enrollment.
Q: Okay. Great. And then just a clarification question on the definition of normalized surgical procedures. Is this like a same-store sales type of measure? Or is it like a -- just tell me what's -- how that's defined?
A: Yes. That's exactly right. What we're doing is assessing total surgical procedures. And of course, everything with revenue fluctuates based on average selling price and things of that nature. So that's what we're referring to there is the number of procedures that have actually been done.
Q: Thank you. Steve, I was wondering if you could just talk about the physician workshops. How many were hosted this past quarter? What's the expectation for the rest of this year? Just a little color on that would be great.
A: Thanks, Anthony. Appreciate the question. So we hosted 36 sessions in Q2 and that was a significant increase over Q1. As mentioned in the prepared statements, we did restructure our selling organization, some of the positions in our organization in Q1. And so we had a slower Q1. We expanded that pretty dramatically in Q2 almost to an all-time high. And we expect that to continue as we onboard these professionals. They go through their training and they're ready to go out and get after it in their assigned geography. So that will continue to grow. And as we've talked about before, this is our mechanism to fill a proverbial funnel, if you will, with opportunities to show the technology, to train, put the physicians in a great workshop environment with faculty. So they can get their questions answered, get comfortable with the technology. And of course, we hope that a large percentage of them will adopt the technology and begin using it in their clinical practice. So critical for us to train effectively to execute these workshops effectively. And we think that's not only happening but expanding very quickly now with our new team.
Q: That's great to hear. Maybe just a little more color. So once they obviously complete these workshops, the hope is that they adopt the Catamaran System and the technology going forward. Do most of them or some of them act as references for other physicians? Are they willing to act as, let's say, KOLs or how can you best utilize their experience once they attend the workshop?
A: Yes, indeed, of course, at the workshops, there's some work to do usually with their facilities and things like that to get approvals and the facilities and get things squared away, so they can begin using the technology. And yes, absolutely. Once they get experienced with Catamaran, many, not all, but many of the physicians love to teach. They'd love to pass the word on if they're satisfied with what they're using and how it treats their patients. And they can. They can become faculty either in live training events, virtual training events, all different kinds of pathways to get that job done because, quite candidly, there's nothing more powerful in our world than peer-to-peer work in education. They'll listen to us company guys for a while, but they like to hear from their colleagues. And so absolutely, Anthony, once they get comfortable with the technology, we're always in conversations about their willingness to represent, if you will, the technology in training environments and informational environments.
Q: Okay. And then lastly, you're mentioning about the sales force. Do you have a target for the end of the year in terms of the number of salespeople? Or is it you're going to be selective and grow when you get the right people in place?
A: Well, we were very selective. So we've fully filled now all five of our sales regions around the country. These area sales managers are assigned to building that geography through independent distribution networks, right? As things get too big for them to manage, certainly, we'll contemplate expanding to more regions and things like that. But right now, we feel like those five regions properly focused, et cetera, are going to be able to deliver the kind of results that we're looking for going forward. And these guys are very experienced, very professional people, and we're really encouraged by some of the new team members that we brought on here in the last four to six months.
Q: Okay. And then lastly and then I'll hop back in the queue on the follow-up there. So you have the five territory/regional managers, and you have the independent distributors, how many independent distributors are there that report or work with your five regional/territory managers?
A: Yeah, indeed. So of course, they don't report to them, they're independent by
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
