Ekso Bionics Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
July 27, 2023

There are 6 speakers on the call.

Operator

Hello, and

Speaker 1

welcome to the Ekso Bionics Q2 2023 Financial Results Conference Call and Webcast. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over Please go ahead, Matt.

Speaker 2

Thank you, operator, and thank you all for participating in today's call. Joining me from Ekso Bionics are Scott Davis, Chief Executive Officer Jason Jones, Chief Operating Officer and Jerome Wong, Chief Financial Officer. Earlier today, Ekso Bionics released financial results for the Q2 of 2023. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call That will include forward looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor provisions Should be deemed to be forward looking statements.

Speaker 2

All forward looking statements, including statements regarding our business strategy, Future financial or operational expectations or our expectations of the regulatory landscape governing our products and operations Based upon management's current estimates and various assumptions, these statements involve material risks and uncertainties that could cause actual results or events For a list and description of the risks and uncertainties associated with our businesses, please see our filings with the Securities and Exchange Commission. Ekso disclaims any intention or obligation, except as required by law, to update or revise any financial or operational projections, Our regulatory outlook or other forward looking statements, whether because of new information, future events or otherwise, We speak only as of today, July 27, 2023. I will now turn the call over to Ekso Bionics' CEO, Scott Davis.

Operator

Thank you, Matt and thank you to everyone for joining us today. We are very pleased with our 2nd quarter results, most notably a record number of EksoHealth device bookings strong revenue growth of 36% year over year, driven by the ongoing performance of our EksoNR, The positive contributions from our Ekso Indigo products and continued solid execution of our team, we are making tremendous progress in reaching more patients Ekso has taken an approach of using our technology and rehabilitative programs to follow patients from post acute to outpatient care and on to continued home and community use. This helps differentiate us in the industry and provides our patients With more options for use of technology in the recovery process. We believe this differentiating strategy Gives us access to a sizable addressable market. Specifically, we believe the VA alone with its programs around the Ekso Indigo Personal provides us a market opportunity of more than $300,000,000 Additionally, with the full Indigo product line, Our reach now expands to outpatient facilities that total almost 63,000 centers domestically, Along with wellness centers, which is an emerging market for us that total approximately 31,000 across the U.

Operator

S. Our commercial and marketing teams are hard at work to drive greater awareness as we seek to penetrate these large markets. In the Q2, we booked a total of 44 EksoHealth devices, a quarterly record. This includes devices within the EksoNR and Ekso Indigo Among these bookings was another significant multi unit order from an integrated delivery network or IDN 12 of our EksoNR devices. This represents the 2nd straight quarter of sizable booking number with a large IDN customer.

Operator

We believe that our customers are seeing firsthand how our cutting edge devices elevate the standard of care for neurorehabilitation. Our research suggests that post acute care centers gain clear benefits with our EksoNR and Ekso Indigo devices in the form of Positive patient outcomes, a differentiated and more efficient offering and better economic value. Furthermore, we are leveraging our current customer base to heighten awareness for individuals who can benefit from the use of Ekso Indigo Personal. These adoption drivers are among the reasons our commercial team is generating strong demand from new and existing network operators, We're pleased to have recorded a strong booking quarter, particularly in Europe. One exciting deal of note is through a distributor in Hungary that resulted in a 6 unit EksoNR deal.

Operator

The strength in Europe underscores our investment in indirect partnerships in the region. In APAC, we secured our first Ekso Indigo booking. We continue to see these regions as important growth drivers in the years to come. Turning to an update on the progress with our industrial product line, EksoWorks. During the Q2, as we previously mentioned, We continued focusing on a different go to market strategy, placing increased emphasis on EVO and its placement into Large industrial settings where we believe there is an addressable market opportunity of approximately $5,000,000,000 This refocus takes time with a longer sales cycle, but I'm pleased to report subsequent to quarter end, we won a competitive bid EVO from our new contract manufacturer, which brings us a better pricing structure.

Operator

Looking ahead, our ExoWorks commercial team is focused on targeting large customers and increasing engagement to drive demand and ensure the success and safety of our customers' workforce. Another exciting development at the end of the quarter was the recently updated 2024 Home Health Prospective Payment System rate from the Centers For Medicare and Medicaid Services or CMS with a newly proposed rule that is relevant for our business and our patients. This rule would codify the longstanding Medicare definition of brace to provide clarification on the scope of the Medicare Part B benefit For leg, arm, back and neck braces and as a result, we classify certain exoskeleton type devices as braces for Medicare payment purposes. This is a positive step in facilitating the potential for Medicare coverage of personal exoskeletons, such as our Ekso Indigo Personal should contact you with any additional information regarding the financial results of the call. Overall,

Speaker 3

we are encouraged by

Operator

our performance, highlighted by record quarter results of revenues and bookings, Securing multi unit orders with large network operators and inroads we are making in large markets across the continuum of care. Driven by the strength of our commercial team and newly expanded portfolio, we look forward to bringing our life changing solutions to a greater number of patients in need worldwide. Now, I will turn the call over to our Chief Operating Officer, Jason Jones.

Speaker 4

Thank you, Scott. Within operations, We continue to execute on our mandate to reduce our cash burn and have a number of related initiatives underway. Among these are improving processes and efficiencies, tightening OpEx and cost controls and optimizing inventory. That said, our operating expenses did increase in the quarter on a year over year basis. This is in line with our expectations due to the costs associated with HMC or human motion control integration.

Speaker 4

On the inventory front, since the second half of twenty twenty two, we have carried higher than optimal inventory to mitigate production Due to pervasive supply chain disruptions. While not completely back to normal, our component lead times are much more predictable than they have been in past quarters. In response to these improvements, we are working diligently to optimize our inventory levels to free up additional working capital. The integration of HMC continues to progress smoothly. From a product perspective, all former HMC products are now fully integrated into our portfolio, Which now covers a broad portion of the continuum of care for rehabilitation and mobility.

Speaker 4

As a result, our production and revenue potential are significantly higher. The former HMC team is also now fully utilizing our combined operational systems, which we are continually working to improve. In addition, the process to combine our engineering and quality systems is well underway with the target completion of mid-twenty 24. I look forward to providing additional updates as the year progresses. I will now turn the call over to Jerome Wong, who will discuss our Q2 2023 financial results.

Speaker 3

Thank you, Jason. Now on to a summary of our Q2 2023 financial results. Ekso generated 2nd quarter 2023 revenue of $4,700,000 compared to $3,500,000 for the Q2 of 2022, an increase of 36%. This increase was comprised of a $1,500,000 increase in EksoHealth revenue, partially offset by a $200,000 decrease in EksoWorks. In the quarter, EksoWorks revenue was affected by delays from our transition to our contract manufacturer.

Speaker 3

Gross profit for the 2nd quarter to was $2,300,000 representing a gross margin of approximately 48% compared to a gross profit of $1,600,000 and a gross margin 47% for the same period in 2022. The 37% overall increase in gross profit was driven by the sharp increase The increase in gross margin was primarily due to lower device costs. Operating expenses For the Q2 were $6,500,000 compared to $4,900,000 for the Q2 of 2022. During the Q2 of 2023, the company incurred increased expenses related to the acquisition and integration of HMC, Net loss for the Q2 was $4,200,000 or $0.31 per basic and diluted share compared to net loss of $3,000,000 or $0.23 For basic and diluted share for the same period in 2022. Turning to our 2023 first half results, revenue increased to $2,800,000 or 46 percent to $8,800,000 for the 6 months ended June 30, 2023, compared to $6,000,000 in the same period of 2022.

Speaker 3

The increase in revenue was primarily driven by an increase in EksoHealth device sales of $3,600,000 Gross profit for the 6 months ended June 30, 2023 was $4,300,000 Representing a gross margin of 48% compared to gross profit of $2,900,000 for the same period in 2022, Representing a gross margin of 47%. The overall increase in gross margin was primarily due to lower device costs. Operating expenses for the 1st 6 months of 2023 were $13,000,000 compared to $10,300,000 for the same period in 2022. The increase in operating expenses was primarily related to the acquisition and integration of HMC severance expense and marketing costs. Net loss applicable for the 1st 6 months of 2023 was $8,600,000 or $0.64 per basic and diluted share, compared to net loss of $7,600,000 or $0.59 per basic and diluted share for the same period in 2022.

Speaker 3

Cash used in operating activities in the first half of twenty twenty three was $7,100,000 down from $8,500,000 in the As of June 30, 2023, the company had a cash balance of $13,300,000 Please see our 10 Q filed earlier today for further details regarding the quarter. Operator, you may now open the line for questions.

Speaker 1

Our first question today is coming from Sean Lee from H. C. Wainwright. Your line is now live.

Speaker 5

Congratulations on a great quarter and thanks for taking my

Speaker 3

questions. Thank you, Sean.

Speaker 5

My first question is on the Indigo. It's Glad to hear that product is going well and adoption is increasing. I was wondering if you can provide a bit more color on How much of the how much is Indigo contributing to the overall increase in revenue that we've seen in the last quarter? And Where do you see it going for the rest of the year?

Operator

Okay. Thank you for your question, Sean. I appreciate it. This is Scott Davis. With the Indigo devices, Ekso considers these devices as part of our EksoHealth bookings.

Operator

So generally speaking, we contain those within that category. However, within that family of products, The Ekso Indigo Therapy and Ekso Indigo NR are typically used by clinics for patient rehabilitation and the Ekso Indigo Personal is used by So in Q2, our Home and Community Health Segment of the Indigo product line represented in the neighborhood of 20% of our revenue overall. And if we talk specifically about our legacy EksoNR product And strip out the Indigo, we are seeing year over year growth even within that product line alone. So Indigo

Speaker 5

Great. That was very helpful. In the prepared remarks, you also mentioned You guys won a bid with an auto manufacturer for EksoWorks. I was wondering whether you can provide some more details on that?

Operator

Well, we're really excited about the win with the auto in the auto industry. We booked an initial order from that. However, in the quarter, due to Some supply chain challenges in late delivery of our EVOs, we were unable to fulfill those in the quarter, but We carry those as backlog into Q3, and we continue should have additional development in that category as well with new customers coming into our

Speaker 5

On the margin side, you mentioned an increase in the margin increased last quarter because of lower device prices. I was wondering Whether we can see that trend continue for the rest of the year?

Operator

Sure. We continue to work to improve operational efficiencies And we are, as a result, seeing lower costs in our So it is a trend that we are constantly working toward. Jason Jones, would you like to maybe shed a little more light on that?

Speaker 4

Could? Yes. I guess I would just say that we are not satisfied with our current margin level. We think it should be higher. I don't think we're in a position to Forecast is going to be higher, but that's a focus of ours along with reducing our inventory.

Speaker 4

So that's how we're operating. I don't think we're in a position to forecast higher numbers in the future yet.

Speaker 5

I see. I see. That's all I have. Thanks again for taking my questions.

Operator

Thank you very much, Sean.

Speaker 1

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Scott for any further or closing comments.

Operator

All right. Thank you, Kevin. And to everyone, we are very proud of the progress we made so far this year highlighted by our quarterly record number of EksoHealth bookings and revenue. Our commercial team continues to generate new demand by strengthening our relationships with top network operators. We're generating new multi unit orders and combined with the strength of our sales team and our expanded product portfolio now reaching across the continuum of care.

Operator

We believe that we are well positioned to sustain this momentum into the second half of twenty twenty three and beyond. We look forward to providing additional updates throughout the year. Thank you all and have a great day.

Speaker 1

Thank you. That does conclude today's teleconference webcast. You may disconnect your line at this time And have a wonderful day. We thank you for your participation today.

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Earnings Conference Call
Ekso Bionics Q2 2023
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