Biotricity Q4 2024 Earnings Call Transcript

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June 27, 2024

There are 5 speakers on the call.

Operator

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Coombs, Investor Relations.

Operator

Thank you, Paul. You may begin.

Speaker 1

Thank you, and good afternoon, everyone. As a reminder, Biotricity's Q4 fiscal year 2024 ended on March 31, 2024, so all figures presented for this period will reflect that end date. Earlier today, Biotricity issued its earnings press release for the period, which highlighted financial and operational results. A copy of the press release is available under the Investor Relations section of the Biotricity website and the full financials have been filed with the SEC on Form 10 ks and posted on EDGAR, which you can find 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 am pleased to turn the call over to Biotricity's Founder and CEO, Doctor. Makas Alsadegh. Please go ahead.

Speaker 2

Thank you, and thank you everybody for joining us today. Fiscal 2024 has been a transformative year for Bio Tricity, marked by significant advancements and strategic initiatives that have positioned us on a clear path to profitability and positive EBITDA. We have increased revenue, significantly improved margins and reduced EBITDA losses by almost half. Our commitment to innovation, strategic partnerships and operational efficiency has allowed us to make remarkable progress across multiple fronts. 1 of our most significant achievements this year has been the expansion of our Cardiac AI cloud platform.

Speaker 2

This initiative powered by strategic partnerships with industry giants such as Amazon AWS and Google's TensorFlow leverages over 500, 000, 000, 000 heartbeats of anonymized data. Our AI driven platform is designed to enhance diagnostic accuracy, improve patient outcomes and increase clinic profitability. As we pursue FDA clearance for our groundbreaking AI clinical model, we are setting new standards in cardiac care, ensuring every patient receives the highest quality of care. Our recent strategic alliances with 3 of the top group purchasing organizations, otherwise known as GPOs, has been pivotal. These partnerships provide us access to approximately 90% of all hospitals in the U.

Speaker 2

S, significantly expanding our market reach. We have a robust pipeline that is growing and active with active pilots at major groups around the country. This positions us to capitalize on expansive market channels and secure advantageous terms for medical devices and supplies, strengthening our presence in the health care technology sector. Moreover, the Health Canada approval for our Bio Core device has opened new avenues for revenue growth outside of the U. S.

Speaker 2

In the CAD1.56 billion cardiology devices market. This approval aligns perfectly with our strategy to promote accessible high quality care and improved patient outcomes. During the Q4, we also launched the BioCorpro, a next generation cardiac monitoring device and entered into several key partnerships, including a collaboration with Health Aid Africa to provide complementary heart health screenings at high profile events. These initiatives underscore our commitment to expanding our market footprint and delivering innovative solutions. Looking beyond fiscal 2024, our recent initiatives continue to build momentum.

Speaker 2

We have launched a major cardiac monitoring pilot program with a network of 9 hospitals and 10 clinics, and we are accelerating our path to breakeven with the rapid adoption of our BioCore probe by both existing and new customers. Additionally, our strategic entry into the pulmonary and neurology fields through partnerships with leading home based diagnostic companies marks a significant diversification of our market reach. Furthermore, we are extremely excited about the recent launch of HeartSecure, our direct to consumer heart health screening service. This service targets the $1, 100, 000, 000 home heart health market and represents our commitment to making heart health services more accessible in response to the global challenge posed by cardiovascular disease. In summary, our strategic initiatives, technological advancements and operational efficiencies have positioned Bio Tricity for sustained growth and profitability.

Speaker 2

We remain focused on delivering innovative high quality cardiac care solutions and are confident in our ability to continue driving value for our shareholders and improving patient outcomes globally. With that, I will turn the call over to our CFO, John Iannoglouz to provide more detailed financial insights.

Speaker 3

Thanks, Prakash. Let's review the audited highlights of our 4th quarter and fiscal year 2024. Our recurring revenue generated from our technology as a service subscription model as well as our usage based subscriptions remains robust, driven by the popularity of our FDA cleared cardiac monitoring devices, BioCore and BioFlex. Both continue to see strong demand and market adoption, particularly the next generation BioCore Pro, which features cellular connectivity. Atrial fibrillation, a primary contributor to strokes remains a significant focus.

Speaker 3

To date, we estimate that Biotricity has monitored and recorded over 500, 000, 000, 000 heartbeats providing early intervention opportunities and improving patient outcomes. Over the last 2 years, we estimate that we have facilitated the diagnosis of over 250, 000 patients with atrial fibrillation, providing them the opportunity for earlier marked medical intervention. This not only improves patient outcomes, but also underscores significant healthcare cost savings for both individuals and the broader healthcare system. For the Q4 ended March 31, 2024, revenue increased by 15.9% year over year to $3, 200, 000 For the fiscal year, revenue rose by 25 percent to $12, 060, 000 compared to $9, 640, 000 in the prior year. This growth is a testament to the efficacy of our strategic sales initiatives.

Speaker 3

Underlying this though is a significant improvement in the quality of earnings. Our focus on transitioning our new and existing customer base to a flat fee subscription based model, which establishes higher quality and a more predictable revenue stream. Technology fees accounted for over 93% of the quarter's total revenue reflecting our strong customer retention and the quality of our support services. Gross profit for the quarter totaled $2, 300, 000 up 48% from $1, 500, 000 in the prior year period. Our gross profit percentage was 69.3 percent for the fiscal year ended March 31, 2024 as compared to 56.5% in the prior year.

Speaker 3

For the Q4, gross margin was 71.5%, up from 56% in the same quarter last year. These are significant improvements. This increase in gross margin was a result of expansion in recurring technology fee revenue, the revenue base as well as efficiencies gained in using proprietary AI and operational automation and improvement in monitoring cost structure. Through the continued success of our sales team, we have expanded our geographic footprint to 35 states, serving thousands of cardiologists across 100 of centers. Our in sourcing business model allows cardiac medical professionals to have direct control over our services, enhancing efficiencies and enabling broader market penetration.

Speaker 3

Operating expenses for the fiscal year ended March 31, 2024 were $17, 200, 000 a decrease from $20, 900, 000 in the prior year. For the 4th quarter, operating expenses were $5, 300, 000 compared to $5, 000, 000 in the same period last year. Our SG and A expenses decreased by 17% and we reduced our R and D expenses by 20%. The increase in quarterly SG and A was largely due to a 1 time expense. It should be noted that on a full year basis, we reduced SG and A by $3, 000, 000 or 17%.

Speaker 3

We have strategically transformed our sales force to focus on longer sales cycles and larger accounts, including independent hospitals and GPO networks, that's group purchasing organizations that sell into hospitals. As Wirkos mentioned, we've now signed 3 of the largest GPO networks providing us access to approximately 90% of hospitals in the U. S. Our shift to rewarding new device sales within our sales compensation structure has paid dividends resulting in increasing device sales that will positively impact future subscription tech fees. This approach combined with our streamlined operations and proactive cost management has set us on a path toward achieving EBITDA neutrality, EBITDA breakeven later this calendar year.

Speaker 3

We are pleased with the progress made in building our technology, obtaining FDA registrations, developing an effective sales force and implementing cost cutting measures. On a year to date basis, our total operating expenses were reduced by $3, 700, 000 resulting in an improved loss from operations by nearly $6, 600, 000 Net loss attributable to common stockholders for the fiscal year ended March 31, 2024 was $14, 900, 000 compared to a net loss of $19, 500, 000 during the prior fiscal year. For the Q4, net loss decreased by $4, 400, 000 from $4, 900, 000 in Q4 fiscal year 2023, despite the expenses associated with infrastructure growth and rising variable interest rates. Adjusted EBITDA for the fiscal year improved to a loss of $7, 800, 000 from a loss of $14, 800, 000 in fiscal 2023. This improvement underscores our progress towards breakeven and profitability.

Speaker 3

Looking ahead, we remain committed to advancing the commercialization of our BioCore, BioFlux and Biocare products. Our tech is truly useful globally. Cardiac is the number 1 chronic care condition in the entire world. We've recently made inroads or received approvals from the regulatory bodies of other countries that will allow us to sell in other jurisdictions. These set us up for new initiatives that we intend to move on in 2026.

Speaker 3

The growing market interest and demand for our suite of products dedicated to chronic cardiac disease prevention and management reinforce our confidence in our market position. Importantly, our focus on innovation and development continues to yield significant advancements in remote monitoring solutions for both diagnostic and post diagnostic products, bringing us closer to achieving positive cash flow. We're excited about the future and are confident in our ability to deliver sustained growth and profitability for Biotricity. And that concludes our prepared remarks. Operator, please open the line for questions.

Operator

Thank you. Thank you. Our first question is from Michael Donovan with H. C. Wainwright.

Operator

Please proceed with your question.

Speaker 4

Thank you, operator, and congratulations on the call from the year. Can you just discuss a little bit more about expanding into pulmonary and neurology fields and how you see kind of a product pipeline in these areas as more research comes across, so linking cardiac vascular disease with especially neurological conditions and how this plays into your current product lineup? Thank you.

Speaker 2

Yes, great question. So basically what we're seeing was that and we've obviously have a pretty good footprint now, so we understand where the market is going. A lot of our referrals were coming from pulmonologists and neurologists. So when those patients are going in, they have a higher risk for cardiac issue. And similarly, if a patient is referred to a cardiologist and they don't have a cardiac issue, they'll end up at a neurologist or pulmonologist to rule that out.

Speaker 2

Or if they have a cardiac issue, they have a higher risk for a neurological issue or pulmonology issue. And so what we did was we partnered with organizations that are providing sleep diagnostics to pulmonologists, home based neurological tests to neurologists and partner with them to deliver cardiac diagnostics through them. And so what that has done is an initial Phase 1 for us is to test the market and really deploy this combination of doing a cardiac and sleep diagnosis at the same time as well as doing a cardiac and a neurological study at the same time. Now if growing and these organizations are across 50 states, it's early days, but our idea is to look at that over the next 9 to 12 months. And as we see that rollout and if it's effective in their network, we expect it to be effective in our network our cardiac network and begin offering sleep and neurological tests to the cardiac patients that are already doing diagnostics.

Speaker 2

Our goal is not to develop new technology in that space. There are people that have already developed fantastic home based neurological testing equipment and people that have built great sleep tests out there. And so our idea is to really bring that into our ecosystem, but first test it within our partners' ecosystems.

Speaker 4

Okay. That makes sense. And can you give a little bit of just a quick recap on the pilot studies that you have ongoing right now? My account shows you guys that 2 ongoing pilot studies. Is that accurate?

Speaker 2

So we're adding our pipeline is growing all the time. But yes, we have 2 active ones right now and then we have quite a few in the pipeline and that pipeline is growing every month ever since we got on to the GPOs. And so these pilots in these systems are usually multi site pilots that take a few months, but there are significant opportunities for the company.

Speaker 4

Okay. That's a good lead into my next question for the GPOs. I want to for GPOs, are you seeing this also help you guys within your new markets such as Canada? I know it's for an at home type of test, but how does do your current partners within the U. S, does that translate to expansion that will help you in Canada or your new markets?

Speaker 2

So in the GPO world, most of that is very U. S. Focused. There's not much support there for the Canadian side. In the Canadian market, we have some anchor relationships.

Speaker 2

There's customers that we have that were Canadian and did their specialty over here. So there is a very good Canadian U. S. Just a general relationship. I myself am Canadian, so we do have a network out there.

Speaker 2

Our focus in the Canadian market was get our Health Canada approval, which we did, go and find some anchor sites to showcase and then focus on building out a distribution relationship. A lot of the diagnostic equipment in Canada is actually sold through distributors. So it wouldn't be a GPO style relationship because it's a different payer model, right? It's not a private public model. It is a pure public model.

Speaker 2

And so the distribution approach works better there for at least the cardiac diagnostic Canada.

Speaker 4

Okay. And final question, do you expect to see similar margins in the Canadian market? And then as your expansion proceeds in the U. S. Market, are you still seeing north of this kind of a percent for gross margin?

Speaker 2

Yes. So I think that margins there's that edge of margins. I think John spoke really well about, and I'll unpack that again, is about the percentage of revenue that is recurring revenue. And if we have a heavier device sale quarter, especially when you're going into new markets like Canada, you may see a blip on device sales. So that may impact your margin here a couple of points here and there.

Speaker 2

But when you look at the revenue mix, I stand by what I said a couple of years ago, which I mean you guys have been looking at the company and following us for a while. We are growing every single year. As the new revenue growth in the marketplace and the recurring revenue becomes 99%, margin improvement will occur. So go from where they are, there's probably another 5%, 6% that we immediately see. And then whether or not that 5% to 6% shows up on the blended overall margin, it's going to as we put out more devices, essentially our steady state margin will become our subscription margin and our subscription margin is trending 70s going into the mid-70s and upper 70s.

Speaker 2

So we do expect margin improvement to continue with some aberrations here and there.

Speaker 4

Great, great. That's very helpful. I'll hop back into queue. And thank you, Akash. Thank you, John.

Speaker 4

Congrats on the year.

Speaker 3

Thank you.

Operator

Thank you. There are no further questions at this time. I would like to hand the floor back over to Lukas Alsadeep for any closing comments.

Speaker 2

Thank you, and thank you everybody for joining our fiscal 2024 year end conference call. I just want to highlight the trending that is happening with the organization. And I think that a lot of organizations can benefit from revenue growth and margin improvement as well as operational efficiency. Biotricity is experiencing all 3 of those at the same time, which is making us very excited. At the same time, we have launched a very new product just a few months ago, which is our BioPro, which is having a great reception, which is also a product that is a higher margin and a higher ASP product that both our existing customers and users are very interested in.

Speaker 2

And on top of that, the market expansion and access that we now have as a result of having those 3 GPOs has really set us up foundationally to be at that point of scale. A lot of companies struggle to get to a $10, 000, 000 revenue and that's a big goalpost for the maturity of an organization for their ability to set up for scale. And we see ourselves at that inflection point. So thank you again for joining us and please stay tuned and we will be announcing and putting out news as some of these major milestones continue to occur.

Operator

This concludes today's conference.

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Key Takeaways

  • In fiscal 2024, Biotricity delivered a 25% revenue increase to $12.06 million, boosted gross margins to 69.3%, and cut EBITDA losses by nearly half, positioning the company for breakeven later this year.
  • The expanded Cardiac AI cloud platform, developed with AWS and TensorFlow partnerships and trained on over 500 billion heartbeats, is advancing diagnostic accuracy and pursuing FDA clearance.
  • Strategic alliances with three leading GPOs now grant access to approximately 90% of U.S. hospitals, alongside active pilots at nine hospitals and ten clinics to drive device and subscription adoption.
  • Product momentum includes the launch of the next-gen BioCore Pro, Health Canada approval for BioCore in the CAD 1.56 billion cardiology market, and new pulmonary and neurology diagnostic collaborations.
  • The introduction of HeartSecure, a direct-to-consumer heart health screening service targeting the $1.1 billion home market, underscores Biotricity’s push to broaden patient access.
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Earnings Conference Call
Biotricity Q4 2024
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