Provident Bancorp Q1 2024 Earnings Call Transcript

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April 29, 2024

There are 6 speakers on the call.

Operator

Greetings and welcome to the Ekso Bionics First Quarter 20 24 Financial Results Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Matt Steinberg with Fin Partners.

Operator

Thank you. You may begin.

Speaker 1

Thank you, operator, and thank you all for participating in today's call. Joining me from Ekso Bionics are Scott Davis, Chief Executive Officer Jerome Wong, Chief Financial Officer and Jason Jones, Chief Operating Officer. Earlier today, Ekso Bionics released financial results for the quarter ended March 31, 2024. 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 include forward looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker 1

Any statements made during this call that are not statements of historical facts should be deemed to be forward looking statements. 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 are based upon management's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with Ekso's businesses, please see its filings with the Securities and Exchange Commission.

Speaker 1

Ekso disclaims any obligation, except as required by law, to update or revise any financial or operational projections, its regulatory outlook or other forward looking statements, whether because of new information, future events or otherwise. Any forward looking statements made on this call speak only as of the date of this call. I will now turn the call over to Ekso Bionics' Chief Executive Officer, Scott Davis.

Speaker 2

Thank you, Matt. We closed out the Q1 and started the Q2 of 2024 with positive momentum as we were pleased to receive final payment determination for Medicare reimbursement of our Ekso Indigo Personal. Additionally, our results for the quarter reflect continued improvements from both our scalable commercial strategy and operations. I'll touch on both of these developments shortly, but first I'll share an overview of our Q1 performance. We generated revenue of $3,800,000 and sold 29 EksoHealth devices in the Q1 of 2024.

Speaker 2

Sales of the EksoHealth devices for the quarter were slightly more affected by typical seasonality due primarily to fluctuations in larger integrated delivery network or IDM procurement cycles. We remain focused on executing upon our commercial strategy and growing our IDN network. We continue to deploy resources to develop new IDN relationships that will help us secure larger and more multi unit capital deals across our North American network. In doing so, we aim to convey the clear clinical and economic benefits of our EksoNR and our Ekso Indigo Therapy devices with the right decision makers. Our pipeline of potential deals remains solid with approximately $1,000,000 of backlog generated in Q1 to be recognized over the course of 2024 and we remain confident that our commercial team will succeed in driving larger unit order growth.

Speaker 2

Now turning to an Ekso Indigo personal update. As previously announced, CMS approved use of healthcare common procedure coding system K1007 to bill Medicare for the Ekso Indigo Personal. On April 11, CMS established a reimbursement level of $91,031 for Medicare reimbursement under this code, the Ekso Indigo Personal, effective retroactively beginning April 1. This pricing decision from CMS is an important next step in our commercial strategy to build demand within clinical, home and community use settings. We believe there are thousands of Medicare and Medicaid covered individuals with a spinal cord injury that could potentially benefit from our differentiated personal exoskeleton device, enabling them to achieve better health outcomes along with new levels of independence.

Speaker 2

We're thrilled that our differentiated exoskeleton devices are now accessible to a larger patient population and we look forward to providing future updates on our continued work with the SCI community, CMS, along with other public and private health insurance programs that generally follow CMS reimbursement practices. With reimbursement pricing secured, we anticipate growing the personal health business. We believe this growth will ramp up quarter over quarter as our commercial and clinical teams engage with skilled therapists and clinicians across our expansive customer base consisting of more than 260 clinical and rehabilitation centers domestically. We're leveraging our robust network to expand our reach to a potentially higher volume of individuals living with a spinal cord injury who we benefit from our Ekso Indigo Personal through establishing additional certified training centers across the U. S.

Speaker 2

Turning to our international performance, we're pleased that we continue to gain momentum across the EMEA and APAC regions. Results were particularly strong in EMEA as the French public health system has embraced the use of robotics in their neuro rehabilitation programs. Looking ahead, we are working to continue to build on the strength of our vast international distribution network, which serves as our focal point of achieving operating leverage and scalable worldwide growth. Now I'd like to turn to an update on our Industrial segment, EksoWorks. In the Q1 of 2024, sales within this segment increased nearly 60% from the same period a year ago, although against a modest level.

Speaker 2

Notably, we delivered devices to an OEM in the construction vertical along with continued shipments to potentially large volume customers in aerospace and energy segments. With improved cost structures driven by our new contract manufacturer, we remain focused on scaling our commercial growth through targeted customers in large industrial settings. Overall, our performance in the Q1 of 2024 demonstrated continued progress across both of our segments. Now with CMS establishing reimbursement pricing for the Ekso Indigo Personal, we believe we are poised to take the next step in our evolution. At this time, I'd like to turn the call over to our Chief Financial Officer, Jerome Wong to review our Q1 financial results.

Speaker 3

Thank you, Scott. We generated Q1 2024 revenue of $3,800,000 compared to $4,100,000 for the Q1 of 20 23. Gross profit for the 1st quarters of 20242023 was CAD2 1,000,000 in both periods, representing a gross margin of approximately 52% in the Q1 of 2024 compared to a gross margin of 49% for the Q1 of 2023. The overall increase in gross margin was primarily due to lower EksoHealth device and service costs. Operating expenses for the Q1 of 2024 were $5,200,000 compared to $6,400,000 for the Q1 of 2023.

Speaker 3

The 19% decrease was primarily due to a decrease in general and administrative expenses stemming from lower legal expenses, headcount and the absence of costs associated with the acquisition and integration of HMC in the comparable quarter. Net loss applicable to common stockholders for the Q1 was $3,400,000 or $0.20 per basic and diluted share, compared to a net loss of $4,400,000 or $0.33 per basic and diluted share for the same period in 2023. Cash and restricted cash as of March 31, 2024 was $8,800,000 compared to $8,600,000 as of December 31, 2023. Please see our Form 10 Q filed earlier today for further details regarding the quarter. Operator, you may now open the line for questions.

Operator

Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer Our first question comes from the line of Sean Lee with H. C. Wainwright. Please proceed with your question.

Speaker 4

Good afternoon, guys. This is Sean from H. C. Wainwright. How are you?

Speaker 2

I'm well, Sean. Thank you.

Speaker 4

My first question is on the recent approval by Medicare on the reimbursement. So I was wondering, it's been about 2 weeks since, have you seen any increase in lead generation or interest in this device as a result of the Medicare approval?

Speaker 2

Yes. So thank you, Shlomo, for your question. In general, we are seeing strong demand from individuals with spinal cord injuries who are interested in the technology. So we saw a definite uptick from the announcement of final payment termination. So yes, is the short answer to that question.

Speaker 2

And we are working to support our DMEs to be able to get those Medicare claims submitted.

Speaker 4

That's great to hear. On the elaborating on these claims, so I was wondering, does having a standardized reimbursement number streamline your sales cycle such that it makes it easier for you to market and sell these devices?

Speaker 2

Again, the short answer to that is yes, absolutely. Previously, with the code approved, but on a case by case basis, the level of documentation that's required for that is fairly significant. And it's a rather unusual process to physicians who might be submitting a prescription for this or to DMEs who need to process it. With CMS establishing a payment determination, this claim now has an actual cash value behind it. So as those claims are being submitted, there is a recognized value that has been definitively provided by CMS.

Speaker 2

So it is a more of a standardized process at this point in time.

Speaker 4

That's great to hear. Thanks for that. My final question then is on the international sector. You mentioned that you're gaining momentum, especially in India. So I was wondering, is that something that we could see going forward for the remainder of the year as well?

Speaker 4

Or is it more of a one time bolus in the Q1?

Speaker 2

Okay. In the EMEA region, yes. So we are seeing good growth there and part of that growth is attributed to the strong distribution network that we've built throughout both EMEA and APAC regions. We've been hard at work in developing our distributor network over many years now and we are definitely seeing scale through that use of that channel. Additionally, there's been a significant project within the French healthcare system this year where they are adopting robotics for use in many of the hospitals throughout France to which Ekso is being selected for many of them.

Speaker 4

I see, I see. That makes it more clear. Thanks for that. That's all the questions I have.

Speaker 2

Thank you,

Operator

Sean. Our next question comes from the line of Ben Haynor with Lake Street. Please proceed with your question.

Speaker 5

Good day, gentlemen. Thanks for taking the questions. First off for me, you mentioned the strong demand that you've seen on the Indigo Personal side. Can you maybe share a little bit more color on where that's coming from? Is that directly from the patients?

Speaker 5

Is it kind of referrals from neuro rehab providers? And then kind of the process once you do see that you see the demand if it's in this particular case, if it's directly from a patient, how does that kind of work its way through the system and ultimately to get fulfilled by DME?

Speaker 3

Okay.

Operator

Thank you.

Speaker 2

Thank you, Ben, for the multipart question. So I think we'll get okay. We'll get started with where the leads are coming from. And we're seeing leads both from individuals themselves who are basically coming to our website and inquiring and we are also seeing them through our network of neuro rehab facilities who have spinal cord individuals in their individual spinal cord injuries in their programs. So it's a combination of really the 2 where we're seeing demand.

Speaker 2

I would say it's almost evenly matched as we look at the at where those leads are coming from. Now further to your question of what happens and how does the process work from here. Generally speaking, our approach to this is to work with our current customer base. We've got more than 260 centers throughout North America that currently are using Ekso products for neuro rehabilitation. And many of these centers have individuals who have suffered a spinal cord injury in their networks or in their programs.

Speaker 2

And we will generally where it makes sense connect that individual with the center for their onboarding and their training. We're also working with DMEs, Durable Medical Equipment Providers, who are processing these claims. So it's not our intent to process individual Medicare claims ourselves, but rather to support our DMEs in getting the information required for that claim and also tying it into a center who can do the onboarding process and training.

Speaker 5

Okay, got it. And those and the documentation requirements and such that the DMEs need to fulfill, how much easier is it than the kind of the previous situation?

Speaker 2

It's substantially easier now that there is final payment determination set. And I think the level of comfort by physicians who are writing prescriptions for this is at a much higher level, at least from what we've seen. So in general, having final payment determination makes this a substantially more straightforward program. However, as with any new program, we do expect a ramp up over time. So this is not quite as easy as turning on a faucet.

Speaker 2

It is a new program for reimbursement. Reimbursing exoskeletons in lump sum as a brace is something that is new. And so we are taking a very deliberate approach to this with our DMEs, with the supporting physicians and with the patients to ensure that we have good and comprehensive claims that are being submitted through CMS.

Speaker 5

Okay, got it. And it's kind of the physicians default mindset like I'll write a prescription and make sure this goes all the way through before I write another one or are they comfortable with the reimbursement level being in place to go ahead and write a handful of scripts right out of the gate?

Speaker 2

Well, I think that's a difficult question to answer as the early claim submissions that we've been supporting on have been from multiple physicians as opposed to through a single one. So it's I can't really answer that at this point. I would imagine that once a physician has done one successfully, it will become easier. That's my assumption.

Speaker 5

Okay. That makes sense. And then on the 2 60 plus centers that you're in, have you seen increased interest on the XLNR side just now that the reimbursement for the personal

Speaker 2

devices is available? I certainly think that the continuum of care story that we can now tell with being able to bring a patient from hospital through to home resonates with the centers. We've heard that from many of our centers that they're excited about that. Will that actually result in potentially more NR sales? That's TBD.

Speaker 2

We do know that there's been a lot of positive feedback around our Gate Coach software, which has been newly introduced in the North American market that really helps drive ease of use in operating our exoskeleton. So where we do anticipate seeing some growth in centers that are beginning to do more with individuals with spinal cord injuries in their outpatient facilities, some of those centers may elect to look at using our Ekso Indigo therapy, which is really a resizable version of our personal device. So we have seen some additional interest in that particular product category.

Speaker 5

Okay, got it. And then lastly for me on the $1,000,000 increase in the backlog. Was that sorry if I missed it, was that worldwide or is that just U. S. Or North America?

Speaker 5

And then is France with their rollout a big portion of that or what's the right way to think about that from an international standpoint?

Speaker 2

Yes. So great question. Largely the backlog that we have, it represented both North America and EMEA. And I will say that probably a larger portion of that is reflective of the EMEA opportunity, specifically the one with the French healthcare system.

Speaker 5

Okay, great. Well, congrats on the progress gentlemen and getting the reimbursement at close. Thank you very much.

Speaker 2

We're excited. Thanks a lot, Ben. Appreciate it.

Operator

There are no further questions in the queue. I'd like to hand it back to Scott Davis for closing remarks.

Speaker 2

All right. Thank you, Doug, and thank you to everyone joining us today. Overall, the Q1 of 2024 was an encouraging start to the year, particularly following the final pricing determination for the Ekso Indigo Personal. With thousands of individuals with spinal cord injuries that could benefit from our personal device, we believe this is a potentially transformative event for Ekso. In addition to this positive development, we look forward to sustaining our commercial growth, while continuing to work to expand the market for our enterprise health products with new and existing IDNs and for EVO in large industrial settings.

Speaker 2

We look forward to providing updates on our continued progress. Thank you and have a great day.

Operator

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.

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Earnings Conference Call
Provident Bancorp Q1 2024
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