Biotricity Q3 2023 Earnings Report

Biotricity EPS Results

• Actual EPS: -$0.54
• Consensus EPS: -$0.54
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

Biotricity Revenue Results

• Actual Revenue: $2.46 million
• Expected Revenue: $2.80 million
• Beat/Miss: Missed by -$340.00 thousand
• YoY Revenue Growth: N/A

Biotricity Announcement Details

• Quarter: Q3 2023
• Date: 2/14/2023
• Time: N/A
• Conference Call Date: Tuesday, February 14, 2023
• Conference Call Time: 4:30PM ET

Biotricity (NASDAQ:BTCY) (NASDAQ:BTCY) is a digital health company specializing in remote patient monitoring solutions across cardiovascular and chronic disease management. The firm develops and commercializes a patented wearable biosensor platform designed to capture continuous physiological data, including electrocardiogram (ECG) readings and heart rate variability. This integrated system combines lightweight, adhesive biosensors with cloud-based analytics and clinician-facing software to support early detection of cardiac arrhythmias and facilitate telehealth care delivery.

The company’s flagship offering, the Bioflux™ platform, comprises a small, single-use wearable device that transmits real-time data to a secure portal, where advanced algorithms analyze cardiac patterns and generate clinician alerts. Complementing the hardware are subscription-based services—such as Bioflux™ Rx—through which Biotricity provides end-to-end monitoring programs under a prescription model. These programs enable cardiologists, primary care physicians, and remote monitoring centers to review patient data remotely, optimize treatment plans and enhance patient engagement without the need for in-office visits.

Founded in 2015 and headquartered in Menlo Park, California, Biotricity serves healthcare providers and payors throughout the United States, with emerging international partnerships aimed at expanding telemedicine adoption. Under the leadership of Founder and Chief Executive Officer Amir Kalali, the company has secured regulatory clearances for multiple product lines and continues to invest in research and development to broaden its digital health ecosystem. Biotricity’s solutions target efficient, patient-centric care by leveraging real-world data and scalable technology to address growing demands for remote monitoring in modern healthcare.

Biotricity Q3 2023 Earnings Call Transcript

Key Takeaways

• Biotricity’s Q3 FY2023 revenue was $2.5 million, up 27.4% year-over-year, with a 57% gross margin and a narrowed net loss of $4.82 million (or $0.091 per share).
• The company expanded its footprint from 26 to 32 states in 12 months and increased its Total Addressable Market from $1 billion to $35 billion, with BioFlux and BioTrace alone addressing a $6 billion segment.
• Biotricity achieved approximately 98% customer retention, boosting recurring technology-as-a-service revenue and underscoring the strength of its proprietary hardware, cloud services and support.
• In Q3, Biotricity signed three major U.S. distribution agreements with leading partners and a GPO covering over $20 billion in annual purchasing, enabling near-immediate national exposure.
• The company is leveraging AI for deep-learning algorithm optimization, operational automation and “digital nurse” workflows, while adding seasoned sales professionals to drive in-person demonstrations.

Presentation

[Operator]

Greetings, and welcome to the Biotricity's fiscal 3rd quarter 2023 conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the call over to Debra Chen, Investor Relations.

[Debra Chen, Director of Investor Relations at Biotricity]

Good afternoon, everyone, welcome to Biotricity's fiscal 2023 third quarter earnings call. As a reminder, Biotricity's third fiscal 2023 quarter ended on December 31st, 2022. All figures presented for this period will reflect that end date. Today, Biotricity issued its fiscal 2023 third quarter results press release, which highlighted financial results. A copy of the press release is available on the investor relations section of Biotricity's website, full financials will be filed with the SEC on Form 10-Q, posted on EDGAR at sec.gov. Before we begin 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. 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.

[Debra Chen, Director of Investor Relations at Biotricity]

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, Dr. Waqaas Al-Siddiq. Please go ahead.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Thank you, Debra, thank you, everybody, for joining us today. I welcome you to our third quarter fiscal 2023 teleconference. As I prepared for this call, I reviewed my teleconference notes from our fiscal year 2022 third quarter a year ago reminds me how incredibly far we've come in just 12 months. It's easy, natural that we momentarily lose sight of this when focusing on the day-to-day driving marketing initiatives and monitoring ROIs, building sales, interviewing for team expansion, evaluating distributors, and negotiating contracts, all while closely watching our cash flow. Just a year ago, we were still finishing and introducing our new products, building out our cloud-based Biosphere, raising capital, and training fresh team members. A year ago, we operated in 26 states. Today, we operate in 32 states.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Over the past year, with our product launches and service introductions and upgrades, we have increased our total addressable market 35x from $1 billion to $35 billion. Just our Bioflux and Biotres solutions alone address a market valued at $6 billion. We believe we are in the right place at the right time. Today, we are recognized as a leader in providing state-of-the-art remote cardiac monitoring devices, combined with a sophisticated cloud ecosystem for data aggregation and AI capabilities that meet the needs of customers ranging from cardiologists to consumers, all of whom desire less expensive, more convenient and deeper data on heart health and wellness. Today, our focus is largely on sales and marketing.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

We have achieved an enviable customer retention of about 98%, which reflects the excellence of our proprietary hardware and cloud-based services, as well as our customer service support, which is an often overlooked component of our success compared with other players in our space. That high retention rate directly and geometrically increases our growing recurring technology as a service revenue. Heart disease is typically chronic and ultimately progressive, our customer retention rate is a valuable leading indicator for raising our customers' lifetime value. We believe it succinctly summarizes our strong competitive advantages. What has not changed in the past year nor since founding Biotricity is the passion I and everyone at Biotricity has for this business to win, to disrupt, to succeed, and to positively transform cardiac care, efficacy and outcomes.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Strategically, our long-term goal remains unchanged from that stated a year ago to collapse cardiac services within clinics and hospitals into one ecosystem, our Biosphere. That doctors are using our ecosystem not just to deliver diagnostics, but also for disease management, remote management, and telemedicine all in one place. This is the future of medicine and the future of Biotricity. In short, Biotricity has grown by huge leaps and bounds in the past 12 months, setting us up for increasing growth ahead. I'll now spend a few minutes covering our recent operational progress and our near and long-term operational strategies. As before, we only pursue markets where we are confident reimbursement exists. Upselling our growing suite of services remains an important component of our sales strategy.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Technologically, we are increasingly leaning into AI with its data and predictive capabilities to create better and faster analytics and data delivery, targeting more pervasive forms of patient monitoring and lifestyle management. Over the past 3 months, our most important strategic development has been the signing of 3 distribution agreements with 2 leading U.S. marketing and distribution partners and 1 group purchasing organization, otherwise known as a GPO. All 3 are prominent leaders with high visibility and market coverage in our sector. In total, just in the U.S. alone, they cover over $20 billion in yearly purchasing. While I regret not being able to name them at this time, I can tell you they are names everyone in the industry knows. We are not naming them strictly for competitive reasons at this early launch stage of our distribution strategy.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

We are also actively evaluating and in some cases negotiating with other medical device distributors that have geographic or vertical coverage that complements our existing distribution networks to further expand our distribution strategy. Additionally, to drive sales, we are actively engaged in marketing initiatives that include highly targeted advertising both in social and conventional media, in trade shows and industry conferences, and in direct marketing with our current engaged and prospective physicians, clinics and hospitals. Further, we are selectively adding sales professionals from the top of their field into our team to increase our market coverage and penetration. Our Biosphere products and services are best sold with an in-person demonstration. With COVID concerns largely faded, I now expect an increase in our sales team's number of in-person demonstration appointments with physicians and clinic and hospital purchasing managers that will help drive continued growth.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Past sequentially flat sales in part reflects a reluctance by clinicians to schedule in-person sales demonstrations. To our advantage, this is now opening up. I should add that our name recognition is infinitely higher than it was just one quarter ago, with TIME Magazine naming our Bioheart device to its list of the best inventions of 2022, and with the prestigious NIH grant awarded to Biotricity to further expand our technology. I'm going to turn it over to our CFO, John Ayanoglou.

[John Ayanoglou, CFO at Biotricity]

Thank you, Waqaas. For the quarter just ended, revenue of $2.5 million was a healthy 27.4% higher than the corresponding quarter of the prior year, up 25% on a year-to-date basis. The flat fee component of our technology as a service subscription, recurring revenue from Biotres and Bioflux are continuing to ramp and grow, both in gross terms and as a percentage of total revenue, as does the percentage of our revenue that we collect immediately after we invoice. Our gross margin in the quarter was 57%, which is in line with our historical average and well above the prior year corresponding quarter of 42.7%, which was affected by a one-time business mix impact that quarter. Our business continues to scale well for revenue expansion.

[John Ayanoglou, CFO at Biotricity]

Reaching positive cash flow is a constant focus, and we've worked hard to cut back on expenses and trimming out of our spend. Unsurprisingly, we are data-driven, so as we gain more granular internal sales and marketing data, we continuously scrutinize and plan for the ROI on our R&D as well as our marketing initiatives. This includes the ROI of our individual sales professionals. With our suite of state-of-the-art products and services established, we've balanced our R&D spend with our drive to innovate and lead our industry. In our third fiscal quarter of 2023, we reduced our R&D expense by just under 3% from the year ago quarter to $876,000, following from higher R&D activity earlier in the fiscal year.

[John Ayanoglou, CFO at Biotricity]

We also improved efficiency and reduced G&A by 4% year-over-year at just under $4.4 million for the quarter. Doing this while supporting a 27% larger base of sales, admin, and related marketing activity. At the bottom line, Biotricity narrowed its year-over-year net loss by about one-third from $7.36 million or $0.149 per share to $4.82 million or $0.091 per share. We continue to pursue a path towards profitability and believe the next few quarters will indicate inflection in our already growing revenue growth trajectory. We are actively working on closing debt financing that will add the needed capital to our balance sheet to get us there. At this point, I will turn the call back over to Waqaas for his closing comments.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Thank you, John, for that report and for doing an excellent job managing our finances to reduce cash burn while we build the company and its sales to achieve positive cash flow. Our healthy gross margin is an important leading indicator of our future profitability, and we believe that our business scales well. Our far higher marketplace name recognition and brand value may be difficult to quantify, but we are seeing it anecdotally in our internal sales and distribution reports from the field. With our recently implemented U.S. distribution agreements covering large swaths of the $35 billion market, I'm quite confident of our position and outlook ahead. With that, I would like to open up the call for questions.

[Operator]

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. Thank you. Our first question is from Kevin Dede with H.C. Wainwright. Please proceed with your question.

[Kevin Dede, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Hello, Waqaas. How are you? Hi, John.

[John Ayanoglou, CFO at Biotricity]

Hey, Kevin.

[Kevin Dede, Managing Director and Senior Technology Analyst at H.C. Wainwright]

You mentioned a high retention rate. I missed the number that you offered. I was hoping you might have something that you can compare it to and maybe offer a little insight on why you see it as a leading indicator.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Yeah, sure. The number that we said was 98%. The reason we say it's a leading indicator is because our customer retention rate, essentially, we're on a technology as a service model. If our retention rate is high and we continue to close customers forward-looking, it gives us an indication of, you know, maintaining that revenue for the 12 months forward-looking.

[Kevin Dede, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Do you have a comparison, like maybe from a year ago, or probably not, right? 'Cause it's...

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Yeah, we have not actually done a comparison. It's a good metric that we should start tracking, and we could probably go historically and do that. Our retention rate has always been high, but that's a very good point, and we'll take it under consideration. I think that it would be useful for people to see. I think that the result is going to be something that, you know, it's gonna look very similar.

[Kevin Dede, Managing Director and Senior Technology Analyst at H.C. Wainwright]

I know you're not comfortable releasing the names of your distribution partners, the new one with, well, clients that you spoke to, the three of them. Is there a chance, though, you can maybe offer a little more detail on their, the breadth of their business and how it might take you, I think you said 32 states, beyond 32 states, and maybe whether or not you think there's any cannibalization? Given that they're not necessarily the same types of businesses, I'm wondering how their customers might see their offering with you included.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Yeah, for sure. You know, this is early days, and this is why we wanna kind of, you know, see the traction of the distribution partners first before we start providing more information and guidance on it. What I can say is that they are across the entire United States, so it'll give us national exposure almost immediately. In terms of cannibalization, we've mapped it out so, you know, they're aware of our customer list and we have to... You know, it's not a an unorganized distribution relationship. It's a very organized, tightly integrated relationship, so we're very excited about it. In terms of their business, you know, these organizations are also switching over, and they're looking for SaaS-like models, right? They're they have, you know, some commodity business.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

You know, distributors are often selling, you know, product that is either a commodity or a consumable that they're. They're inside of these facilities on a regular basis. And what it gives to us is whereas our sales force is very focused on the cardiology network and specialty groups and the multi-care groups, there is application for cardiac diagnostics beyond those particular areas. Obviously for those areas, the volume of cardiac studies is lower, you know, partnering with distribution partners that have a much wider scope and a lot more resources to go after the different types of clinics that exist. Even though the cardiac volume is lower, they have the ability. They're selling other things in terms of their portfolio.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

It becomes more advantageous for us because those are markets that we weren't even looking at.

[Kevin Dede, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Okay. That sounds great. Now, could you sort of address the same question, though, by product type that Biotricity is offering, given the, you know, the Holter and Bioflux?

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Yeah, for sure. You know, the Holter product and the Bioflux, you know, I'll give you a great example, right? Like, the GP market, right, the general practitioner market and the smaller clinic groups, we don't really focus on them simply because they don't have the volume. You know, they might have a few devices each. Now, of course, if you scale that up and you have hundreds of clinics, the volume becomes very meaningful. With the company of our size, we focus on the higher volume, lower hanging fruit, right, which is the cardiac centers, the specialty groups where we have higher volume. You know, that's advantageous for products like Bioflux and Biotres. On the other side is the... and using the same product analogy. If you're going into the hospital systems, right?

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

The hospital system, you have to be on contract with them. They have many offices. They sometimes have outpatient centers. They have multiple sites. They're using these products across multiple sites. The purchasing and the integration into their ecosystem and that whole aspect of getting on contract is a process. When you have a distributor that is already on contract that can move that product in, they understand how the supply chain works, and they've got staff that is supporting that entire ecosystem and all their specialty and sub-clinics, it becomes a much easier and faster sales cycle for us. In our case, we can focus on the areas that we have relationships, and where we don't have relationships and the opportunity is...

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

The sales cycle is longer, we can, you know, let our distributor take the mantle on in those cases.

[Kevin Dede, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Okay. All right. As you look forward, I know you're not comfortable offering guidance, could you give us your insight on how you see overarching market growth, right? Given this general trend to do, you know, outpatient monitoring and how you see Biotricity products stacking up against competitors, given it just seems that the potential of the market is attracting lots of other technology providers.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Yeah. I think that, you know, of course, the market is growing. We know that, you know, post-COVID, it's key. Everybody talks about how this is the trend. Everything is shifting this way. It's more cost-effective for the healthcare system. We know anecdotally, we know from what we're seeing that there is certainly a shift in the marketplace, and that outpatient is the approach. Now, in terms of, you know, when you look at a market like that, yes, there are people that are getting attracted to the space or looking at it, and they're trying to get in. What we focus on from a technological perspective is we try to really focus on best-in-class technology.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

You know, our technology is all award-winning, but we don't rest, you know, on our tails, if you will, right? If you look at the number of FDA clearances, the number of FDA filings that we do, we're constantly innovating and we're upgrading and we're making changes to our platform and our solution, and it's an entire ecosystem. I think that that, you know, is very clear when you look at some of the awards and accolades that we've got in the space. In terms of other people jumping in, they have to start and position themselves, and we have a lot of data, which we are applying from a deep learning, from an AI perspective, from optimizing our algorithm. It's been a space that we've been in.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Can somebody come in and compete? Yes, they can. They first have to meet us tech, technically, which so far nobody has, right? On the Bioflux side. You know, they're still using a third-party cell phone to communicate through. They don't have a full encompassing device, and we are constantly updating that platform as well. We're seeing people that got caught up in the 5G and the LTE issue. We didn't have that issue because we have our own FCC ID. In the Biotres device, we're seeing tons of patch monitors, but they're all one-channel devices. They're having to produce custom electrodes. Yeah, the custom electrodes are cheap, but it's still a problem in the manufacturing and a whole cycle that you have to deal with.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

We don't have to deal with that because we're using standard electrodes. We're focusing on 3 channels, which provides a better clinical quality and more data. If everything is equal, a physician will always pick a 3-channel device over a 1-channel device because your diagnostic yield is better. If we focus on the clinic and the clinical aspects and the technical aspects, and we continue to keep our eyes on that, I think we'll continue to continue to succeed. So far, we're a leader, and you know, that means that we cannot rest, we just need to maintain that lead. You know, we're seeing the opportunity, we're seeing other people jumping in, but so far, nobody has really, you know, come to us and beat us technically.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

I think that goes back to our retention rate. Like, we've been in the market for about four years now, we're not losing customers. All these guys are coming in, they're going after the, if they're going after the space, why are they not able to boot us out, right? The reason is because we are technically superior, we're clinically superior, we're constantly updating, and we're also going deeper into the accounts with our product portfolio.

[Kevin Dede, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Last question for me, Waqas. You've mentioned AI a couple of times. Now, I know it's, right, it's the rage buzzword on ChatGPT, right? I'm assured that you're not trying to integrate that. Can you just give us a little more insight on how you're using AI and how you think it'll help differentiate your solution?

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Yeah. I mean, part of this is proprietary, right? I'll give you a higher level response, perhaps. Look, we don't think... You know, people are looking at AI in all types of different ways, right? I would say that we use AI in 3 or 4 different ways, right? We really look at it from an application applied perspective, right? What do I mean by that, right? First thing is, there's this whole deep learning piece, right? Deep learning is how do we look at our data insights and understand where is our algorithm performing well and where is our algorithm not performing well, so we can optimize our algorithm, right? That's a deep learning piece. You take the datasets that you already have, which are based on your device, right?

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

When we first launched our device, our datasets were based on, you know, data that was, you know, some clinical data and some data that was provided by the FDA. We've got our own dataset, right? After you know, hundreds of thousands of patients. We have our dataset, which allows us to understand exactly how our algorithms are working with our devices, and we use that to understand and get insights, and that allows us to update our algorithms and how that works. That's, that's really about, you know, detection and understanding what to focus the physician's time on. Why is that important? You know, the more data you throw at a physician, the less time they have.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

If you can, if you can make it more focused and more accurate, every little bit helps from a scalability perspective. The other area that we look at AI has nothing to do with our device and our technology. It's really about internal automation and making things more seamless and simplified from an internal process level. That allows us to get operational efficiencies, so we need less people to support, right? And what that means is, okay, patient has an issue, we understand that patients are having, you know, a question about, you know, how to charge the device, for example, right? Do we really need a level one tech support to respond to that, or can we have an AI bot that is going in and responding to that, right?

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Can we do a lot of remote troubleshooting in an automated form factor? If one of our customers, physicians, nurses, they're asking a question, how do we automate and supply responses to that in a faster way? The last piece of where we are looking at the application of AI is really in the world of... This is more of our future stuff that we're working on, is we understand what the nurse is doing, right? How can we support the nurse? If the nurse is supporting, let's say, 25 patients on cardiac studies on a monthly basis, how do we get that nurse to support 50 or 75, right?

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

The way we do that is by understanding how the nurse is working in our system, in our workflow, and automate as much of that as possible. That's really trying to build a, you know, a digital nurse that is supporting the physical nurse. That's kind of the, you know, the areas that we are applying AI. It is very operational, it is very efficiency oriented, and it's very specific to our business and our workflow, and then, of course, to our technology.

[Kevin Dede, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Thank you, sir. Appreciate it.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Always.

[Operator]

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Waqaas Al-Siddiq for any clossing comments.

[Waqaas Al-Siddiq, Founder and CEO at Biotricity]

Thank you, everybody, for your joining our call. We appreciate you guys attending and taking time out of your busy schedule. If there are any other questions that do pop up or that we can help answer, please feel free to reach out to us. We are always available. You can reach out at investors@biotricity.com or reach out through any of our social channels or LinkedIn channels. Thank you very much.

[Operator]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Debra Chen, Director of Investor Relations
• John Ayanoglou, CFO
• Waqaas Al-Siddiq, Founder and CEO

Analysts

• Kevin Dede, Managing Director and Senior Technology Analyst at H.C. Wainwright