Earnings call transcript Q4 2022

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Operator

Good afternoon. And welcome to Vapotherm’s Fourth Quarter 2022 Financial Results Conference Call. All participants are in a listen-on mode and this call is being recorded. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

pleasure ICR today’s Westwicke. my Mark over now with Klausner is to conference turn to It Sir, may you begin.

Mark Klausner

conference Good afternoon. fourth results Vapotherm us for And thank you quarter for XXXX joining the call. financial

are Vapotherm’s us Joe and Officer, Senior its today’s Financial Joining President Chief Landry. President Army; and on Vice John Chief Executive and Officer, call

visit in This call will and To available IR the following live the be our our access replay website, website. link A is recorded. being the webcast, of section please call the webcast event of Events on vapotherm.com. the

from and would we today then begin, those on today report results annual including actual to December XX, will Before indicated, These of the involve SEC. in XXXX, the our ended those that filings filed section uncertainties remarks forward-looking risks Factors of contain responses the I year statements questions and differ that like which your to could any expectations filed remind based materially on and subsequent Risk current with our everyone the cause Form to are for statements. and management XX-K identified may inherent be

or our obligation unless SEC, our Such be filings We the time-to-time available otherwise, law. as updated a which statements forward-looking to information, no website. on events are required new in risk with undertake future publicly update publicly revise our from may factors or of result by

are financial financial accounting that non-GAAP refer certain This these principles generally to We not in call GAAP. to accordance measures. will include also generally or measures calculated with accepted references as

are on Investor our presented calculated the to earnings Relations portion most press in release financial measures the of Reconciliations non-GAAP the the accordance GAAP with in historical and of website. available measures comparable

Army. call my it’s turn to Joe and President that, With Chief Executive Officer, over to the Vapotherm’s pleasure

Joe Army

John you XXXX steps take us our review will review for our in then our And and achieve XXXX to joining success and drive you Thanks, up for XXXX fourth in performance future. I the we took thank predictable Mark, we On set growth today’s the the I and call, beyond. discuss and us. guidance. in guidance all quarter financial will will will to tell actions profitable

of worldwide and XXXX, number which XXXX and are discharges. result installed our a top hospitals of COVID, base gold our of doubled in doubled respiratory we As the the X,XXX U.S. terms during accounts,

After was difficult years to what volatility, two COVID it look would XXXX predict of like.

COVID to dramatically. As hospitalizations from respiratory decreased an transitioned disease, disease respiratory a COVID-related lower upper

all XXXX. needs time, in derisking these operating addressed At the up and devoted lower customer the reduced gross Throughout sheet. with saw business considerable success effort us same and margins issues us have constrained our and left we for a we meet to unsustainable setting XXXX, expenditures revenue, structure balance and capital to cost

to throughout areas of focus return majority to key and our year of disposable One has revenue gross our highest revenue it the predictable growth, margin. as the been the represents carries

accounts. We this our have on by gold done focusing

and In these education additional medical been have delivering and areas high expanding care accounts, we into training. quality

which represent rates, these sold box recovered. turn disposables steadily a have seen efforts, of month U.S. As per result we disposable per

had usual. the three-year in pre-COVID arriving XX% In quarter, we part earlier to fourth average of flu than historical due our

second disposable was from of turn the U.S. up XX% XX% the quarter fourth rate in Our quarter. XX% in and third quarter

represents launch Flow the Plus. also a X.X. Precision our upgrade the on of platform executing are We HVT over major This next-generation

fleets this lot see product beginning interest and a makes second, of existing the transport replace also allows time. in has the There blower, a incorporates these which First, wall of patients easier training and air. a between customers it to number that areas. newer in And we be their it it hospital it to don’t use care to therefore launch easier requires of have devices. since less It’s been are with used built-in to areas

to During been quarter, that moved our to am and I is validated. margins. new report have we VapoMax our pleased efforts improve certified. gross continued lines All our production the [ph] facility

assumptions inventory. intact of all and product cost are and we our it putting building are Importantly, into

We see cost needs. the these that meet products lower during will begin built we to through as work all the impact customer we cost to high of inventory COVID

recently will focus XXXX. and balance The Another balance convert in we inventory in financial shape have of flexibility. key sheet. $XX area the our equity improved by cash $XX million million raise to good presently is of end the balance and now We of sheet XXXX completed sheet a our expected was on

facility also election SLR our XXXX the to our financial cash the saving cash of of portion pick expenditures covenant to expense, minimum our reduce We interest covenants, add up $X debt ability a potentially at XXXX restructured million. to our reset and

operating get of Between this conversion the the our expect expenses improvements we gross positive additional the our cash to end relocation to manufacturing we have us payments, our interest of equity the from necessary from inventory to believe adjusted year. in EBITDA the to ability raise, to recent and our reductions the capital Mexico, of margin pick cash, we by

we decreased in million. level cash of set XXXX, $XX in or with versus XXXX, of heavily to also focused levels on to approximately expenses pre-COVID the reducing operating During XXXX expenses to $XX million by million operating XXXX. stage expenses operating in million cash Cash XXXX pre-COVID deliver $XX.X $XX

R&D a established investments Vapotherm back we year, RespirCare, our worldwide and R&D portion organization, Singaporean commercial a brought center. in right-sized won in the Government and to our Access During offset from R&D our the in-house newly stopped grant commercial new efforts of

for call quarter. results who now will financial John over the will to this the review turn I

John Landry

of normal, fourth was in expectations Revenue started quarter $XX.X million. came earlier Thanks, in our Worldwide the Joe. season ahead which as revenue. flu disposables revenue the increased than

average The for markets, historical was the two $XX.X the Germany. three-year our rates was an and was back International fourth U.S. revenue of the by revenue of in in quarter. increase was million. by million. U.K. International revenue U.S. direct XX% driven revenue $X.X growth pre-COVID turn driven to

margin the we into higher Gross first Mexico as guidance disposable of of from U.S. the and a ahead quarter, some XX%, of XX.X% costs mix revenue. XX% quarter was moved in our the of to benefited

Excluding one-time move inventory and would related the been the margin costs gross XX%. reserves, have Mexico to

on of $XX.X expenses, and excluding $XX equipment the fourth property and from third operating million impairments in disposal loss million down were Non-GAAP in quarter. the quarter,

levels. related in the most range, actions operating Non-GAAP cash quarter million revenue. guidance $XX every operating expenses higher necessary commission expenses of Cash have pre-COVID to to return were our decreased the high to at of have fourth end the expense completed due higher sequentially we and quarter, to

million approximately cash, third $XX.X from the at burn less after of down Net three of in cash $X.X approximately We which quarter end the million for million, of is quarters. ATM ended $XX.X adjusting $XX average was previous XX% the than quarter the from proceeds million quarter. with the the

mentioned, a been through XXXX which of net account of placement, closed a placement, million, $XX.X forma proceeds weeks private raised cash the we Joe $XX.X million would as Taking private ago. $XX few into have assuming year-end As our pro million.

believe million this the cash We we by convert into initiative. are XXXX our progress inventory we of remaining balance on of to continue end approximately making and $XX will

million, XXXX. $XX million second Inventory quarter in the was of peak at the of from of down quarter the end a $XX.X

to In year facility XXXX. payment-in-kind debt a our part for debt of our as amendment, added we PIK addition, calendar feature or a

signed, with provide and in us cash positive. elect amendment gross improving XXXX. add the interest to us we believe business our recent capital fund With flow the million in in to up margins cash to these the balance PIK $X We operating reduced payments to this actions feature and to burn that expenses allows to debt annual conjunction reduced necessary with cash the

Turning to guidance.

$XX year will of XX% that that a growth million remainder We XX% remainder to service. to from continue we will will the this U.S. revenue and For the of revenue XX%. We full rate from XX% international. revenue disposable that capital come of $XX anticipate of revenue XXXX, come revenue the expect and and be million, to estimate

level XX%s, Our ending year in XX%s the rate the U.S. XX%s. turn low year full and the XX% year, the will disposable expectations of average the that high at assume starting pre-COVID the for

quarter XXXX demand. We of expect the there for that first quarter which hospitalizations in as quarter XXXX of the year-over-year the last first COVID-related will last increased customer be the quarter significant difficult us represented were that comparisons of

We XX%, unchanged the to of margin full our from for in the gross year XX% guidance. expect range XXXX to prior be

We second be the in expect to of first the in gross margin the in half low-to-mid-XX%s XX%s year low year. of half the and the

and be will $XX We full million expect will million non-GAAP expenses operating $XX million to expenses be cash $XX year. $XX the million operating that for GAAP to that

of our due various typically first highest the national quarter meeting. As sales the the a reminder, to is like programs timing for operating expenses quarter

non-GAAP with quarterly year expect of exit $XX operating We million. approximately the to cash expenses

to the Joe. I call to would like that, over With turn back

Joe Army

Thanks, and maintaining growth, is at drivers. in adjusted plan predictable EBITDA driving continuing operating actions, gross prudently growth all end improvement these positive. we while expenses Based John. believe future pre-COVID investing XXXX about on can we XXXX levels, at revenue margin our

will and beyond. some revenue XXXX are we key actions in There drive to take growth

on as to pre-COVID we’ll First, continue averages. drive gold our accounts focus we rates turn

account. new into each within team on gold focus sales will areas care Our expanding

also admissions. going sensitive on not focus drive to flu, COVID specific are Hypercapnia a RSV with hypercapnia. We and to continue is education to medical

turn seasonality on rates. will impact increase our this of in increasing and So area utilization reduce the overall business our

particularly opportunity, The replacement We and job execute in the to see accounts. the X.X gold HVT team our the am XXXX. in X.X launching cycle done they’ll excited HVT to field what are also accomplish has XXX an excellent going on I

revenue its would given via legacy I requirements. and clinical drive higher related ASPs ASPs the help higher higher growth. the HPT and have provide our they utility reduced These training will note X.X disposables ease-of-use also that than products,

return our greater front, margin direct have complete our gross are we material been cost and labor including plan, ASP executing and uplift, the Mexico made, improvement the overhead changes to On significant going cost structural margin to relocation and to reductions, is most absorption. now of gross

to expenses the to cash From standpoint, expense return believe operating an necessary pre-COVID levels. have we non-GAAP we taken operating steps

we growth. and in operating to and Now for we invest create products technology support continue will future clinical prudently leverage while new

profitability a accomplished in to and like EBITDA to in year-end. which a thank which to response our by has changing lot execute launched early I’d XXXX, our executing in positioned for to XXXX up us We rapidly their positive on initiatives, XXXX all well in team we be path work environment. to set in hard adjusted be

the look on front appreciate and of are us, quarterly call. in your support to opportunities you We we Vapotherm forward updating next to excited about our

will I the call for open questions. now

Operator

question first the line Canaccord from Plovanic comes Your of Instructions] with [Operator Genuity. Bill

open. Your line is

Zachary Day

be on this year. sort of of that inventory mentioned in the a question it that quarters? My Bill heavier Hi. cadence can Zachary first by converting certain end throughout Is Day is, the or for even cash you mention, for there year Plovanic. you its will specific

John Landry

Hi, we John. Zach. take year. of the consistent This can over perspective, is fairly expect it I course be cadence From a that. the to

basis. So reductions the in that, roughly take of remaining point, XX% approximately on that we years. quarterly in XXXX will next take equivalent that reduction and have And XX% XXXX. the yeah, happen of Of over a burn place the cash couple other place will exactly, will

Zachary Day

interest Great. can like for My your second or PIK Will for XXXX be that? you the do what should that rate expense be that anything Thank you beyond? and impacted that. by monitored in question deal is

John Landry

change what From we as rate on is on lot of Sure, for the the debt. that plan Fed A XX% I a take the XXXX. will can well. it had variable rates perspective, course depend of year Zach. modeling over interest Zach,

on range XX%-ish for XXXX. the So plan

Zachary Day

you Thank much. Great. very

John Landry

You are welcome.

Operator

comes BTIG. line next of Thibault with the Your from question Marie

Sam Eiber

on start John. the can Eiber here. Sam mix on Joe Good Hey. Marie. guidance afternoon, questions appreciate Maybe on for is for and commentary in and for on the versus I you the taking the U.S. maybe levels up we Thanks of the international. back picking taking revenue account outlook into should seasonality terms and about progressing cadence, terms the of think business? But also how to utilization pre-COVID and in year This

John Landry

this take Hi, It’s can question John. I Sam. here.

revert think, about of high timeframe, generally, a with seasonality, the sort full of we XX will experience back terms to cadence probably XX% in year X, to in of range in our from as that XX back the pre-COVID we the of to in it XX%, to to QX for business quarterly the is sort think QX then up in quarterly kind the XXX%. XX%-ish In and the cadence the years perspective, round XX%s year wrapping out get and contribution particular

about look how are well. as So we cadence XXXX, at perspective a that’s we it thinking as from

Sam Eiber

on here maybe my follow-up Okay. Really helpful. then can And HVT ask I X.X.

and installed fleet expand XXX an as well? as the opportunity they the replace areas customer into new is there gold the mentioned base opportunity accounts. to existing You care also expand guess, also to I the

Joe Army

is This Hey, Sam. Joe.

I into is that There areas. take think opportunity care want. you I expand new one can absolutely to if

We have their subsequently fleet. have already fleet then been expanded replaced seeing that with hospitals their that and

we about HVP launch. So are excited X.X pretty

am the Now calls, as there are as smaller there, orders. out have not that but playing we sure more see other capital you much on I heard equipment out in really headwinds

I little taking more we it. we whole for a conversions think But system are as expansion absolutely on the larger way the there’s it. time work orders, seeing and room our through have been bit

Sam Eiber

Understood. for taking the Thanks questions.

Operator

Army further no now will this Mr. at are questions back to closing turn I There over call Joe time. the for remarks.

Joe Army

nice evening. and look call forward you you joining next a quarter. again updating to on Thank Have us we for today’s

Operator

call. This concludes today’s

now may You disconnect.

Vapotherm (VAPO) 23 Feb 232022 Q4 Earnings call transcript