Biotricity Q2 2024 Earnings Call Transcript

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Provided by Quartr
November 14, 2023

There are 5 speakers on the call.

Operator

Afternoon, and welcome to Bio Tricity's Second Quarter Fiscal 20 24 Financial Results and Business Update Conference Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Deborah Chen with Investor Relations. Please go ahead, ma'am.

Speaker 1

Good afternoon, everyone, and welcome to Biotricity's 2nd Quarter Fiscal 2024 Earnings Conference As a reminder, Bio Tricity's Q2 2024 Fiscal Year Ended September 30, 2023. So all figures presented for this period will reflect that end date. Earlier, Biotricity issued its fiscal 2020 for a Q2 press release, which highlighted financial and operational results. A copy of the press release is available on the Investor Relations section of by Artricity's website and the full financials have been filed with the SEC on Form 10Q and posted on EDGAR at www.sec.gov. Before beginning the company's formal remarks, I'd like to remind listeners that today's discussion may contain forward looking statements that reflect management's current views with respect to future events.

Speaker 1

Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward looking statements. Biotricity does not undertake to update any forward looking statements except as required. At this point, I'm pleased to turn the call over to Biotricity's Founder and CEO, Doctor. Waqas Al Saddiq. Please go ahead.

Speaker 2

Thank you, Deborah, and thank you everybody for joining us today. This quarter, we continue to make substantial progress reporting double digit sales growth. Our recurring technology fees, device sales and gross margins all demonstrated positive growth, while we maintain cost control in order to progress on our plan to achieve positive cash flow and profitability. To address the increasing interest and demand for our suite of products, we And we're pleased to announce that as of September 30, 2023, we have customers in over 32 states in the U. S, contributing to an impressive 21 Our gross margins have also improved significantly, rising from 54% during the same period last year to an impressive 69%.

Speaker 2

We also saw a reduction in our SG and A by 22% to $3,500,000 which was something that we said we could continue to monitor and trim in the previous quarters. Through diligent cost structure management and strong growth across the board, We achieved a reduction of our net loss by 20% year over year from $4,900,000 to $3,900,000 or $0.446 per share. As we review our Q2 financials, I think it's important to highlight a few takeaways for why we are here and what we are trying to achieve. Since founding Bioelectricity, our mission has been to innovate and create transformative healthcare products in preventative care. Today, we deliver pioneering remote monitoring solutions to the medical, healthcare and consumer markets, focusing on diagnostic and post diagnostic solutions for lifestyle and chronic illnesses.

Speaker 2

Although it remains an unmet need, we are witnessing the paradigm shift within the healthcare world from reactive to proactive and seeing how technology propels the emergence of solutions We address the diagnostic aspect of remote patient monitoring by innovating within established business models that already have reimbursement structures in place. This method, we believe, mitigates the risks typically associated with traditional medical device development and speeds up the journey to generating revenue. In the post diagnostic sector, we incorporate medical grade biometrics, empowering consumers to self manage. This approach aims to enhance patient compliance and ultimately lower healthcare costs.

Speaker 3

For a

Speaker 2

full suite of products in the Bioelectricity platform, Please visit www.biotricity.com. Turning to our Biosphere platform and complementary products, Our BioCare app has garnered tens of thousands of downloads and BioCare continues to attract industry wide interest among both new and existing customers. It is clear that AI has become a big component to what we are developing in our realm of remote cardiac care. We are leveraging proprietary AI technology to develop Suite of predictive monitoring tools to enhance new disease profiling, improve patient management and revolutionize the healthcare industry for disease prevention. Additionally, we have strengthened our partnerships with major players, including Amazon and Google.

Speaker 2

With the healthcare AI market anticipated to reach $208,200,000,000 by 2,030, We've already positioned ourselves as a significant player. Our powerful proprietary cardiac AI model integrates Google's TensorFlow, AWS infrastructure, Big data and a continuous learning engine, allowing for rapid advancements in our cardiac technology. This has led to increasing Sales of our remote cardiac monitoring devices and the ramp up of our subscription based service, increasing our recurring revenue over the past few quarters. Our ability to grow this type of revenue is predicated on the size and quality of our sales force to place these devices with clinically focused healthcare providers operating in the cardiac sector. In the coming months, we will continue to use our team to address new markets and achieve sales penetration in the markets currently served.

Speaker 2

With that, I will turn the call over to our CFO, John Ayanoglou.

Speaker 4

Thank you, Vikas. As Vikas has already addressed the fiscal year 2nd quarter numbers at a high level and the market and the industry And key operational matters, I will now delve into the anonymous highlights of the Q2 and some of the details for the Q2 of fiscal 2024. Our technology as a service subscription based recurring revenue from our cardiac monitoring device, BioTray, And our FDA cleared BioFlux device continue to see demand and market adoption. BioAtricity has previously announced that they have monitored over 2,000,000,000 heartbeats for AFib, atrial fibrillation, a primary contributor to strokes. Over the past few years, this initiative has positively impacted well over 14,000 patients diagnosed with AFIB and We continue to do that, offering them the potential for earlier medical intervention.

Speaker 4

This not only enhances patient outcomes, but also underscores The substantial healthcare cost savings for both individuals and the broader healthcare system. Revenue for the Q2 ended September 30, 2023 increased by 21.4% year over year To a stable level of $2,900,000 just under the $3,000,000 mark posted for the immediately preceding quarter, but on higher quality of earnings. The months of August December have traditionally been slower months as patients and doctors go on vacation or otherwise reduce office Hours over the vacation and holiday periods. However, there is more going on here. This quarter, we continued to transition Our usage based customers to our subscription based service ramping up our efforts to do this.

Speaker 4

While this shift to a higher quality of earnings May result in an initial dip in revenues, it lays the groundwork for quality in the form of increased recurring and predictable revenue and benefits us in the long term by helping us chart a clearer path to profitability. This quarter is a testament to the improvements in our business Our gross profit percentage was 69.1% for the quarter ended September 30, 2023, as compared to 53.8% in the corresponding prior year quarter and 63.5% in the immediately preceding quarter. This increase in gross margin is due to our expanding recurring technology fee revenue base and proportion of our sales mix in that component, which has consistently stayed above 70%. We also gained efficiencies in using AI in data processing and improved our monitoring cost structure. This is in line with our expectations on improving both performance and margins as our recurring business grows.

Speaker 4

Looking ahead, we anticipate continued improvement in an overall blended gross margin over time. Technology fee revenue comprised 94.5 percent of the quarter's total revenue for the 3 month period ended September 30, 2023. Gross profit totaled $2,000,000 up 56.2 percent from the $1,280,000 comparatively for the same period in the prior year. We have expanded our sales efforts across a broader geographic footprint with the intention To expand further and compete in the broader U. S.

Speaker 4

Market using an in sourcing business model, our technology has a large potential Total addressable market, which can include hospitals, clinics and physicians' offices as well as other independent diagnostic testing facilities I want to remind you that cardiac is the number one chronic care condition not only in the U. S, But all around the world and our connected technology is useful across the globe. But there's more. Our sales expenses decreased or improved by 1% and our R and D decreased or improved by 2% this quarter such that we reduced our loss from operations by $140,000 this quarter. With respect to sales expenses, we've been able to do this through the retooling of our sales force, Focusing on hunters rather than farmers in terms of the profile of each of our salespeople, our professional salespeople, thereby leading to a variable sales compensation for our external and more senior salespeople that is more direct drive and aligned to growing our recurring profitability.

Speaker 4

While we've taken the job of maintaining our customer accounts and improving their satisfaction levels By using a focused internal sales team that is less expensive. This is a good news story because we've been able to earn our higher quality revenue With a smaller professional sales force that is less expensive, thereby reducing our overall sales expense, while at the same time managing cash and putting our product that will enhance our hospital and strategic footprint. Our efforts to improve the quality of our earnings and our cost structure are visible in this quarter's results. Despite the slight dip in revenues, we've improved margins, reduced sales and operating costs and improved our loss from operations to under $2,200,000 reducing operating losses by over $1,800,000 from the corresponding prior year quarter and $131,000 from the immediately preceding quarter. Net loss attributable to common shareholders for the 3 months ended September 30, 2023 was $3,900,000 compared to a net loss of $4,900,000 during the comparable quarter in the prior year.

Speaker 4

When compared to the immediately preceding quarter, Our net loss to common shareholders degraded by $280,000 due to increased interest costs, rising rates on variable term loan interest caused that And accretion expense, earnings per share was $0.441 versus $0.41 compared to the preceding quarter. Adjusted EBITDA improved by about $66,000 such that adjusted EPS was an improved $0.23 per share versus $0.24 per share in the immediately preceding quarter. Underpinning All of these improvements in the quality of our earnings and our cost structure is the fact that month to date November is shaping up to be an excellent month, perhaps Our best month of device sales ever. As we advance the commercialization of BioFlex, BioTray and Biocare products, we anticipate a continuing growth trajectory and we've just launched our BioTray Pro, which our sales force tells us is going to be a groundbreaking product that will have a lot of demand. The market's growing interest and demand for our Suite of products dedicated to chronic cardiac disease prevention and management reinforces our confidence in our market position And our focus on commercialization and development has resulted in significant advancements in remote monitoring solutions for both diagnostic and post diagnostic products, bringing us closer to achieving positive cash flow.

Speaker 4

I will now turn the call back to Lacoste for his closing comments.

Speaker 2

Thank you, John. In looking at the near term and long term prospects for Bio Tricity, there is a lot to be excited about. We recently announced a patent application for our groundbreaking Biotrade Device. This filing is part of our broader strategy of expanding our IP portfolio with trade secrets and patents. As we consistently innovate and expand our IP and FDA five Finally, we just expanded our current product portfolio with the release of our BioTrain Pro with critical capability of cellular backup for offline connectivity.

Speaker 2

This is a game changing product to our current product, the BioTray, which is our 3 channel technology for preventative and comprehensive cardiac care. Previously, BioTrain offered up to 30 days of recording and automated data offloading while connected wirelessly. But with the addition of BioTrain Pro's innovative cellular connectivity, There are no longer delays in data retrieval that may have occurred previously due to low connectivity. This marks a significant leap forward as our BioTray Pro offline data storage With the addition of BioTrey Pro, BioTrey now has the most comprehensive remote cardiac monitoring portfolio in the market. That concludes our opening remarks.

Speaker 2

I will now turn the call over to the operator for questions. Thank you.

Operator

Thank you, sir. We will now be conducting the question and answer session. And the first question comes from the line of Kevin Dede with H. C. Wainwright.

Operator

Please proceed with your question.

Speaker 3

Thank you, operator. This is Michael Donovan calling on behalf of Kem and Didi. Congrats, Wachos. And for the BioTrust Pro, can you discuss a little bit more about that cellular backup for connectivity feature And how it I see how it helps patients, but also how it help Clinics just provide a little bit more color on that aspect. Appreciate it.

Speaker 2

Yes, sure. So As a backup, I mean, sometimes when you end up having these patients might forget to charge a cell phone or the connectivity is interrupted because The BioTrace is a Bluetooth based device and so in that case data may not be fully uploaded by the time the device is returned. So when the device is returned to the clinic, may have to plug it in and it will charge and while it's charging, it might upload, taking 10 minutes to upload the data. So to remove that and having cellular backup, so that even if connectivity is interrupted, it It will continue to upload in the background.

Speaker 3

Okay, great. Appreciate that. Now what are you guys seeing? You mentioned hospitals, clinics, independent labs. Where are you seeing most of the demand right now?

Speaker 3

Is there one segment that is Producing more demand for you guys?

Speaker 2

Demand for us is pretty much across the board. I think the way to look about it is more about where are we focusing our time. So previously we were spending a lot of our 80%, 90% of our time on the independent market like the specialty cardiac center group And about 10% of our time on the hospital market and as we build the business and since we've been Able to drive revenue now, what we are looking at is creating a more blended mix. So 60% of our time is still focused on the independent market, but 40% of our time is now spend on the hospital markets. We understand that the sales cycles are longer with the hospital, but once you close the system, you generally have Multiple orders and a long term relationship as well as a much bigger order in the long run.

Speaker 2

So but we want to continue to close business on a monthly basis and on a quarterly basis. So we have this blended mix now. So as opposed to what we were doing before, Now we've taken a chunk of our commercial team and have focused it towards going after the hospitals.

Speaker 3

Great, understood. And in terms of focusing your time And efforts, are you planning to expand beyond these 32 states Or is your sales force kind of focus on those clinics And those hospitals, those 32 states prior to further expansion?

Speaker 2

We are always looking at And always looking to expand a lot of our customers have colleagues, friends that they went to medical school with or Dave moved from a different state. So we go into our existing network and existing customer network and look for referrals. And as opportunities arise in other states, we absolutely go after them. So it's not something that we are Specifically saying, hey, we don't want to go into other states. It's more about we have a footprint that is primarily driven by where we have reps and the geography where our reps are based.

Speaker 2

And then the secondary Aspect of where we are is really based on opportunities that are coming in from our referral network. So the goal is to be in 50 states, But we are not chasing a particular state. We are chasing and focusing on building The most powerful commercial team that we can and so it's really about finding the right types of reps and expand our commercial team and our commercial capability. And then as time goes on, I think we will see ourselves going to and have a full national footprint across all 50 states.

Speaker 3

Okay, great. Now in terms of your aim to enhance patient Compliance, is there a way to quantify that at this stage?

Speaker 2

So patient compliance, It's tough. We are looking into it. We've implemented an app to look at how many patients are downloading and following the rules. We've seen A good impact on that we've seen a lot from a percentage perspective, a significant percent of patients download the app. We are going to be Looking and analyzing that data and are looking to put out an impact report, and part of that will be looking at patient compliance.

Speaker 3

Okay. Okay. And last question, can you expand upon your partnership with Amazon and Google In terms of what TensorFlow means to overall operations as well as with Datathon's infrastructure. And given that Bio Tricity has This proven track record, do you see any potential for further Opportunities between you and Amazon and Google?

Speaker 2

Yes. So what we've done is we've built our proprietary analytics and data cloud using the Technologies within Amazon's automation and scaling infrastructure and Google's AI and deep data systems. So we've taken those the elements that Our most powerful and applicable to our product category and our use case and built our own Proprietary Data Cloud and Ecosystem in terms of measurable improvements and how that's I mean, I think you can see that in our financials, right? Our margins are improving. Expenses are going down.

Speaker 2

A big part of this is Our proprietary systems becoming more automated, becoming smarter, being able to And deal with data in a more efficient way and allowing us to do more with less. So that's essentially What we've been doing and I think that that is going to come through and it's going to continue to come through over the next couple of quarters that we will see Margins improvement, data costs coming down, our cost of Servicing and maintaining data, there's economies of scale that will come through as We have quite a bit, but as we get more devices out there, as we collect more information, we're going to get economies of scale. And You're not proactively thinking about it and looking at how to automate and develop something that is Not only efficient, but also predictive, right. So our next move is to really go into prediction because that again can save

Speaker 3

Great. Thank you, Lacoste. One final question. For BioTrustys' online store, can you kind of Give some reasoning for launching this and does this help Bio Tricity with reimbursements versus Your devices on Amazon, what are the pros of having your store versus What the other online avenues for acquiring biotristy devices? Yes.

Speaker 2

So our model is a very is a subscription based model. Amazon is really something that you purchase as a one time expense. Amazon is really not set up for Subscription models, I mean, you can do it, but it's incredibly complicated. So that's not the right platform to be utilizing for that. And the main reason we built the store, First of all, it simplifies operations for us in terms of anyone being able to purchase and buy Our technology, but more importantly, we get inbound interest on occasion.

Speaker 2

And so allowing people Purchase of Technology streamlines our ability to operationally manage the whole sales and ordering process.

Speaker 3

Got it. Got it. Well, thank you, Klas. Congrats on the quarter. I'll hop back into queue.

Operator

Thank you. There are no further questions at this time. Gentlemen, we'll turn the conference back over to you for any additional or closing remarks.

Speaker 2

Thank you everybody for joining us on And this quarterly call, I would like to just leave one parting remark. I think that the key takeaway for this Quarter was really the execution and what we've been talking about for the last couple of quarters where we're going to continue Focus on top line growth, but also expense management and margin improvement. And last quarter, we were talking about how we made changes. We implemented new optimizations. We enhanced our AI technology and the result of that was going to be Margin improvement in the coming quarters, and so we showed that this quarter.

Speaker 2

And I think that that is something that we're going to continue to see as well as This focus on revenue growth, but while managing and optimizing how the business is working. Thank you, everybody.

Operator

Thank you, sir. That does conclude today's teleconference. We thank you for your participation. You may now disconnect.

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Biotricity Q2 2024
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