Release Date: February 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- FY '23 revenue of $22.2 million, up 89% year-on-year.
- Direct product sales increased by 195%, representing 76% of total product sales.
- Gross profit of $16.2 million, up 77% year-on-year.
- Successful completion of a capital raise in September 2023, resulting in $9.2 million in cash by year-end.
- Significant progress in woundcare sales due to the DME business model and strategic targeting of larger woundcare centers.
Negative Points
- Operating expenses increased by 48%, driven by a 96% rise in selling and distribution expenses.
- EBITDA loss of $14.8 million, compared to a loss of $11.8 million in 2022.
- Gross margin decreased to 73% from 78% in 2022 due to the startup of the DME business.
- Net cash operating outflow of $15.1 million in 2023.
- Continued need for significant investment in direct sales force and clinical studies.
Q & A Highlights
Q: With I.V. residing in Jacksonville as opposed to his predecessor who was remote in Australia, are there opportunities for executive staff reduction or cost savings?
A: (Harry Hall, CEO) Our goal is to have our leadership team co-located in Jacksonville with our operations. We have relocated the CFO position from Sydney to Jacksonville. We have reviewed our structure and do not see redundancies in the leadership team. We will continue to ensure our structure is efficient and effective.
Q: Is there any update on the FDA 510(k) submission for the integrated product mentioned in the Q3 2022 investor presentation?
A: (Harry Hall, CEO) We have lowered the priority on this project due to improvements in our DME model and business structure. We are conducting a reimbursement study to ensure economic benefits before introducing this product in the future.
Q: Could you provide an update on product royalties for the TBH range?
A: (Harry Hall, CEO) We have renewed our licensing agreement with York Street Brands and TBH for the continued development and access to the XBIO technology for their acne treatment line. We are excited about this portfolio and look forward to a long partnership.
Q: Will the acne treatments be introduced to the US market?
A: (Harry Hall, CEO) This is a question for TBH and York Street Brands. We are focused on providing the development of the pipeline and products for them. The actual marketing and introduction are their responsibilities.
Q: How is the orthopedic experience trial recruiting? Any update on timing to data?
A: (Harry Hall, CEO) We have over 300 patients enrolled with three sites recruiting. We anticipate enrolling another five sites to reach the target of 7,600 patients. Each site is expected to enroll close to 600 patients a year.
Q: Can you please talk us through the changes to the sales team and how it affects productivity?
A: (Harry Hall, CEO) We have combined the sales leadership team to have a focused XBIO strategy. This unified field strategy maximizes revenue potential within current customers and drives efficiencies from the top down, creating a more productive sales force.
Q: Will the HS indication require more clinical work?
A: (Harry Hall, CEO) We have launched our first pilot study and shown improved outcomes. We are preparing the literature, studies, and commerce channels to launch the product within the next quarter.
Q: Interested in understanding more about the gross margin improvements and expectations for margin going forward?
A: (Marc Zimmerman, CFO) The gross margin improvements in 2023 were driven by the DME channel. We continue to optimize our gross margin from a business perspective to achieve the best results.
Q: Do you see cost of sales falling or is cash flow positive driven by top line growth only?
A: (Marc Zimmerman, CFO) It is a combination of optimizing costs and driving top line growth. We see cost of sales improvement from a scale perspective as well.
Q: What capacity does the existing direct sales team have to take on new business or recurring business without needing to increase headcount?
A: (Harry Hall, CEO) We believe there is capacity to continue to grow at our projected rates with minimal expansion. There is quite a bit of capacity in our existing sales force.
Q: What portion of your annual senior leadership team's remuneration is linked to the creation of shareholder value?
A: (Harry Hall, CEO) A significant portion, up to three-fifths of my potential earnings, is tied to total shareholder return.
Q: Are you confident that the company will not need to tap the equity market in the next year?
A: (Harry Hall, CEO) We have put our forecast and guidance together and believe we have a path forward that does not require tapping into the equity market to achieve our opportunities and guidance.
Q: Do you have any comments on the H1 versus H2 revenue contribution for the full-year revenue guidance of $36 million to $40 million?
A: (Marc Zimmerman, CFO) We have given full-year guidance and are not breaking it down into half-year increments. We continue to look for ways to improve our top line.
Q: With Lang Walker's passing, do you expect your relationship with Walker Group to change?
A: (Harry Hall, CEO) We continue to receive strong support from the Walker Group and are extremely appreciative of that support.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
