Q1 2024 Ekso Bionics Holdings Inc Earnings Call

Participants

Scott Davis; Chief Executive Officer, Director; Ekso Bionics Holdings Inc

Jerome Wong; Chief Financial Officer; Ekso Bionics Holdings Inc

Matt Steinberg; IR; Lazar FINN Partners

Sean Lee; Analyst; H.C. Wainwright

Ben Haynor; Analyst; Lake Street Capital Markets, LLC

Presentation

Operator

Greetings, and welcome to the Ekso Bionics first quarter 2024 financial results call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce Matt Steinberg with FINN partners. Thank you. You may begin.

Matt Steinberg

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 and these 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 access businesses, please see its filings with the Securities and Exchange Commission actually disclaims any obligation except as required by law to update or revise any financial or operational projections. It's 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 speak. I will now turn the call over to Ekso Bionics, Chief Executive Officer, Scott Davis.

Scott Davis

Thank you, Matt. We closed out the first quarter, you started the second quarter of 2024 with positive momentum as we were pleased to receive final payment determination for Medicare reimbursement of our extra legal personnel. 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 on our first quarter performance, we generated revenue of $3.8 million and sold 29 Exso health devices in the first quarter of 2024. Sales of the Exso health devices for the quarter were slightly more affected by typical seasonality, due primarily to fluctuations in larger integrated delivery network or IDN procurement cycles.
We remain focused on executing upon our commercial strategy in growing our IDN network. We continue to deploy resources to develop new IDN relationships that will help us secure larger and more multiunit capital deals across our North American network in doing so, we aim to convey the clear clinical and economic benefits of our XONR. and RXL. INDIGO therapy devices with the right decision makers, our pipeline of potential deals remains solid, with approximately $1 million 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.
Now turning to an Exso Indigo personal update. As previously announced, CMS approved use of health care common procedure coding system, K1007 to bill Medicare for the Exso Indigo personal on April 11, CMS established a reimbursement level of $91,031 for Medicare reimbursement under this code, the extra Indigo personal effective retroactively beginning April first as pricing decision from CMS as an important next step in our commercial strategy to build demand within the clinical home and community use settings.
We believe there are thousands of Medicare and Medicaid covered individuals with spinal cord injury that can potentially benefit from our differentiated personal exoskeleton device, enabling them to achieve better health outcomes along with new levels of independence. 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 secure, 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 for leveraging our robust network to expand our reach to potentially higher volume of individuals living with spinal cord injury who benefit from our Exso Indigo personal through establishing additional certified training centers across the US.
Turning to our international performance, we're pleased that we continue to gain momentum across EMEA and APAC regions. Results were particularly strong in EMEA as the French public health system has embraced the use of robotics in our 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, Exso works in the first quarter of 2024 sales within this segment increased nearly 60% from the same period a year ago, although against a modest low. Notably, we delivered devices to an OEM in the construction vertical, along with continued shipments, 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 first quarter of 2024 demonstrated continued progress across both of our segments.
Now with CMS establishing reimbursement pricing for the excellent legal personnel, 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 long to review our first quarter financial results.

Jerome Wong

Thank you, Scott. We generated first quarter 2024 revenue of $3.8 million compared to $4.1 million for the first quarter of 2023. Gross profit for the first quarters of 2024 and 2023 was $2 million in both periods, representing a gross margin of approximately 52% of first quarter of 2024 compared to a gross margin of 49% for the first quarter of 2023. The overall increase in gross margin was primarily due to lower pixel health device and service costs.
Operating expenses for the first quarter of 2024 or $5.2 million compared to $6.4 million for the first quarter of 2023. A 19% decrease was primarily due to a decrease in general and administrative expenses stemming from lower legal expenses, head count 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 first quarter was $3.4 million, or $0.20 per basic and diluted share compared to a net loss of $4.4 million or $0.33 per basic and diluted share for the same period in 2023. Cash and restricted cash as of March 31, 2024 was $8.8 million compared to $8.6 million 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 you.

Question and Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Sean Lee with H.C. Wainwright. Please proceed with your question.

Sean Lee

Good afternoon, guys. This is Sean. From HC. Wainwright are higher, you will, Sharon. Thank you. And my first question is on the recent approval by Medicare and reimbursement. So I was wondering home, it's been about two weeks sense. Have you seen any increase in lead generation? More interesting is device as a result of clear Medicare approval?

Scott Davis

Yes. So thank you for your question. In general, we are seeing strong demand from individuals with spinal cord injuries who are interested in the in the technology. So we we saw it's a definite uptick from the announcement of final payment termination. So yes, is the short answer to that question. And some we are working to support our DMEs to be able to get those Medicare claims submitted.

Sean Lee

That's great to hear not only elaborating on these claims. So I was wondering, does having a standardized on reimbursement number, streamline your sales cycles such that it makes it easier for you to our market is market and sell these devices.

Scott Davis

And again, the short answer to that is yes, absolutely. We 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 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 pay 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 by CMS. So it is a more of a standardized process at this point in time.

Sean Lee

That's great to hear. Thanks for that. And my final question then is on the international sector. You mentioned does you're gaining momentum, especially in Indiana. So I was wondering, is that something that we could see going forward for the remainder of the year as well as a more of a one-time bolus in the first quarter.

Scott Davis

Okay. In the Amea in the EMEA region? Yes. So we are we are seeing good growth there. And part of that growth is attributed to the strong distribution network that we built throughout both EMEA and APAC. Regions. We've been hard at work in developing our distributor network over over many years now, and we are definitely seeing scale and through that come through that use of that channel Additionally, there has been a significant project within the French health care system this year where they are adopting robotics for use in many of the hospitals throughout throughout France to which some OXO. is being selected, you know, for a for many of them.

Sean Lee

I see. I think that makes it more clear. And I thanks for that. That's all the questions I have.

Scott Davis

And thank you, sir.

Operator

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

Ben Haynor

Gentlemen, thanks for taking my 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 new wear and that's coming from is that directly from the patients? Is it kind of referrals from neuro rehab providers and then kind of the process once you do see that see the demand, if it's but in the particular case, if it's a directly from a patient, how does that kind of work its way through the system and ultimately get it fulfilled by DME?

Scott Davis

Okay. Thank you. Thank you, Ben, for the for the multipart question. So I think nobody will get Okay, we'll get started with where the leads are coming from. And we're seeing leads both from individuals themselves who and 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 Envision spinal cord injuries in their programs. So it's a combination of really that the two where we're seeing a demand, I would say it's some almost evenly matched as we 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, you know, 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 Xcel products for neuro rehabilitation and many of these centers. We now have individuals who have suffered a spinal cord injury in their networks or in their programs.
And we will generally where it makes sense to connect that, that individual with the Center for their onboarding and their and their training. We're also working with DMEs side surplus, durable medical equipment providers who are processing these claims so it's not some our intent to process individual Medicare claims ourselves, but rather to support our DMEs in in getting the information required for that claim and also tying it into a center who can do the onboarding process and training time and those cover the documentation requirements and such that the DMEs need to fulfill it.
How much easier is that the in kind of the previous situation, is it substantially easier now that there is final payment determination set, you know, and I think the level of comfort by even physicians who are who are writing prescriptions for this is his data at a much higher level, at least from what we've from what we've seen. So in 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 and over time. So this is this is not quite as easy as turning on the faucet. It is a new program for reimbursement for reimbursing exoskeletons in lump sum as abrasives area is something that is new. And so we are taking a very deliberate approach to this with our DMEs with supporting physicians and with patients to ensure that we have good and comprehensive claims that are being submitted through CMS.

Ben Haynor

talking about it as kind of a physician's default mindset, why the I'll write a prescription and make sure this goes all the way through the prior rent. And another one are they comfortable with the reimbursement level being in place to go ahead and write on ample scripts right out of the gate?

Scott Davis

Well, I think that's a that's a difficult question to answer. As the the early claims 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 point out. And I would imagine that once a physician has done a one successfully it, it will become it will become easier. That's my assumption.

Ben Haynor

Okay. Now that makes sense. And then on the 260 plus centers that you're in, have you seen increased interest on the actual B&R side just now that the reimbursement for the personal devices is available.

Scott Davis

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 a potentially more in our sales?
That's a that's TBD. We do know that there's been a lot of positive feedback around our J-code, our software, which has been newly introduced in the North American market that really helps drive ease of use in operating our exoskeletons. So and 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 from some of those centers may elect to look at using our Indigo RxL Indigo therapy, which is really a recyclable version of our personal device. So we have seen some additional interest in that particular product category pointed.

Ben Haynor

Got it. And then lastly for me on the $1 million increase in the backlog, was that I'm sorry if I missed this, was that worldwide or is that just US or North America? 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?

Scott Davis

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

Ben Haynor

Okay, great. Well, congrats on the progress, gentlemen, and given the reimbursement and pumps.
Thank you very much.

Scott Davis

We're excited.
Thanks, Robin. Appreciate it.

Operator

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

Scott Davis

Right. Thank you, Doug, and thank you to everyone joining us today. Overall, the first quarter of 2024 was an encouraging start to the year, particularly following the final pricing determination for the XO Indigo personal with thousands of individuals with spinal cord injuries that could benefit from our personal device. We believe this is a potential potentially transformative event for XL.
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, 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.