Release Date: February 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Increasing payer coverage with 15 states achieving critical mass, enhancing revenue potential.
- Focus on accelerating revenue generation in breast and other reimbursed lymphedema users.
- Implementation of productivity metrics for the field force to improve lead generation and sales.
- Introduction of new pricing models to capture a greater share of the total addressable market.
- Strong foundations with increasing payer coverage and a significant market opportunity estimated up to $2 billion.
Negative Points
- Disappointing SOZO revenue for the first half, well below expectations.
- Lead time for SaaS revenues is currently 6 months, causing delays in revenue generation.
- Operating expenses increased to $17.1 million, driven by costs associated with staff and executive departures.
- Net operating cash outflows of $6.8 million, indicating a need for tighter cash flow management.
- Reduction in revenue from clinical trial programs, impacting overall financial performance.
Q & A Highlights
Q: Do you have an update on your timing expectations for reaching breakeven?
A: The time to reach breakeven is dependent on the rate at which we place new units into the market and the associated monthly license fees. We aim to achieve this as quickly as possible while managing our cost base. However, it's challenging to provide a precise timeframe. (Mcgregor Grant, Interim CFO)
Q: Have you started to see the benefit of those critical mass states come through yet?
A: Reimbursement has gained momentum in the last six months, and we are starting to see opportunities come through. We currently have around 300 leads in the pipeline, and we are working to execute these into rapid sales despite the six-month lead time. (Parmjot Bains, Interim CEO)
Q: Does the new TAM update imply a shift towards a volume-based approach for SOZO?
A: We will still price on a monthly fee basis but will set contracts based on the volume of patients using our system to better capture the TAM. (Parmjot Bains, Interim CEO)
Q: What is the addressable market for leg lymphedema, and how does it compare to breast cancer?
A: The TAM for non-breast cancer-related lymphedema is around 820,000 diagnoses annually in the U.S., covering surgeries like colorectal, genital, melanoma, and urinary cancers. Breast cancer represents about 30-35% of the total TAM. (Parmjot Bains, Interim CEO)
Q: Can you clarify the churn rate for your contracts?
A: The churn rate is 2-3% per annum, not per quarter. This is calculated based on the number of units where the contract has not continued, expressed as a function of the average installed base for that period. (Mcgregor Grant, Interim CFO)
Q: Are institutions interested in the additional features like body composition data, even though they are not reimbursed?
A: Yes, about 80% of our sites use body composition data. While not reimbursed, it offers holistic patient management, which is valuable to institutions. We are revisiting this offering and concurrently looking at reimbursement opportunities. (Parmjot Bains, Interim CEO)
Q: Are there any significant opportunities in the pipeline that don't have a six-month lead time?
A: Yes, the team has been working hard to drive opportunities, and we track them daily. While the ramp-up will take time, there are opportunities in the pipeline that will come up sooner. (Parmjot Bains, Interim CEO)
Q: How are you managing competition, particularly from companies like InBody?
A: InBody is a competitor with a different technology (BIA vs. our BIS). They lack reimbursement on CPT codes, but we actively manage competition through market messaging and differentiation. (Parmjot Bains, Interim CEO)
Q: What role does Dr. Chen play in promoting SOZO?
A: Dr. Chen leads our Medical Affairs, driving medical education and clinical support activities. He attends conferences, hosts webinars, and engages with doctors to drive awareness and adoption. (Parmjot Bains, Interim CEO)
Q: Can you provide an update on the development and launch of SOZO Pro?
A: SOZO Pro is still in development. While it is important, our current focus is on rolling out the existing SOZO platform within the U.S. market. More updates will follow later this year. (Parmjot Bains, Interim CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
