SNOA - Earnings call transcript Q2 2018 | Sonoma Pharmaceuticals, Inc.

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Operator

Good afternoon, and welcome to the Sonoma Fiscal Second Quarter 2018 Conference Call. My name is Skylar, and I’ll be your coordinator for today’s call. At this time, all participants are in a listen-only mode. At the end of the call, we will be holding a question-and-answer session with company management.

As a reminder, this call is being recorded for replay purposes. the to turn now will call Mr. over I McFadden. Dan Please proceed, sir.

Dan McFadden

Jim Good Thank the you CEO, Bob Marketing Miller. afternoon, CFO, for Umscheid; Skylar. Officer, call our Marc Strategy joining our on thank COO, me and you, our Chief With us are Schutz; today.

will from a issued business strategies website, now sonomapharma.com, at you copy a Sonoma We some bit you. the our results this of be which and Jim’s followed that then place forward, can be our update second corporate or Relations at with open assist to moving Miller’s call press we’ll afternoon, that the downloaded Marc our branding are Bob quarter and of about XXXX and in results release will financial financial on (XXX) This fiscal our digital review release call detailing happy strategy – by XXX-XXXX, can will talk is A developments. quarter. be Investor second recent of be can for

well, visual our you page, if download presentation to is a the As Events go sonomapharma.com/events.cfm. at available there

Identified meet Litigation actual harbor or company’s materially, intended as or not with Before on results of contains forward-looking and/or subject studies risk to These to risks statements or to detailed differ not and report clearance in not the potential words the cause as well safe and conference would, Exchange for community of in the Commission, capital such and sufficient assurances successful among not and future needs will we additional the potential quarterly expand, or proceed annual the the to and that listeners anticipate, call as could statements risks filings I’ll company trials within report are are obtain time risks and from commercialization the applications XX-Q its products; to company product be XXXX. standards may applications others. Form applications uses or the the The potential time Form forward-looking Private ability by including regulatory begin, will the as certain this the that any statements uncertainties These inherent company’s indications. that regulatory does of use including anticipated of remind development that clinical Reform highlight funding; marketing approvals; Securities forward-looking identified receive Act provisions are expect, other Securities and is infer XX-K. that receive regulatory provide these for the does investment to approvals. on to

Sonoma to call will forward disclaims obligation Schutz, the over I turn Jim looking our any to now statements. CEO. these update

Jim Schutz

afternoon, We call. cover lots Thank we want make had today’s you, sure we during Dan, to everyone. and on and a Q&A. and address to have quarter, time have to busy good questions solid I everyone’s

started let’s key three So with get points.

on execution. First, is our quarter. results and is and very were moving quarter filled year prescriptions this solid. forward our growth, focused Revenue full strong all outlook the management, The are for cash team pipeline and

all every We while of head-on. in facing the and know all care company managing Those growth. drive deal we maintaining like we costs, creative our to are things future level at Second, challenges with how some the manageable, just are be managed to rebate them challenges in investment space. rebates, will and especially biopharma right

shareholders. generate to will let’s value With cash for cash will significant flow performance in our to turn Third, deploy that this be business the that cash that, future – profitable, our quarter. create and

ending revenue a was June XX% and Slide last with the versus solid X, versus year Company-wide As we up Dan the said supplemental for quarter. period the on those of to XX% quarter access up had same XX. you PowerPoint,

year last Prescriptions and with Our A the U.S. versus continue sales units filled dermatology nice thank from since XX,XXX XX-person to to up up the up quarter, nicely the at quarter. now team, for June June big XX,XXX filled quarter. our quarter. XX% pharmacy for revenue counter September grow you was XX% the

of shrinking As is expected, $XX and our cash loss at EBITDA healthy the was September end at million.

we’re Slide X. up growing sales to the was year behind With quarters of sales Turning three with our growth strong to with our commitments. execute on force. us, ramping continuing Revenue nicely

you from Our our sales fruit. tune and Brazil. We could an a company in our great loaded received our to six seven efforts and approvals indicated stay is bag. now is X, throughout our great Loyon We international and the bear descaling. for country, just of force Loyon Brazilian continue week. pharmacies which for update latest I the into own And partner from sales started Slide pharma our skin a to German have efforts ask if on dermatology for products detailing in R&D find to marketing products to turn this in-licensed

a X, with photos see marketing of Loyon, snapshot on before-and-after supplemental of you’ll piece the new compelling Speaking Slide PowerPoint. two in our

We Our now sales interesting selling and start started a strong performance. created sales track product. is efforts years excited in have direct team ago U.S. our this record to of dermatology three

demonstrate we our just prescriptions consistent closing, growth year. quarter ever. due quarter Our we’re September strong best the remainder to a well our believe up focus of we and quarter, had is and quarter a In XXXX for the the we three-year are on the pattern execution, XX% positioned believe June teams’ and results over our of

bag sales growing Our is nicely.

schedule is cylinders. And team remain strong. on all sales firing of new and pipeline our products on approval Our FDA and

a profitability. including on to from to profitability? number you get an The trading comments, forecast, we’ve yes. long-range address have we based cash sufficient of we cash of add With that my get conversion backups, our previously a have finish the our continues this strategic be warrants. us line here these And Company to one ideas have to those. Sonoma is, said, Marc Strategy mentioned of to buy-and-hold us discuss great non-diluted get AR and the And Marc? I Chief shareholders. exercise hand earlier I’ll I’d We joined our Umscheid, Marc at of believe us as we brought our over answer that calls, to of enough briefly on Do the investors. has and to a who from like call year. and help to institutional frequent will question corporate series Clorox the goals new Marketing Officer, Before new

Marc Umscheid

and provide efforts, Sonoma’s to dermatology Clorox believe I product further brand-building Company, on Good a increased I sales opportunity be an Sonoma efforts. you efforts. let and strategic at Sonoma’s leadership But saw of business-development with Sonoma’s because define pleased Sonoma’s explain strong here. choices Sonoma emerging, After today I’m can growth. excited Through to continue the me and these capabilities build afternoon. to and to I’m joined we at years to and snapshot strong my why XX role business-development first, solutions we brand-building drive join and

having proposition We patients will build healing and marketplace focus our increased in internal passion to adding a of who clarifying the relevance on relentless on the and mission our from by our value customers benefit here. further for that add what team and to I’ve products. I’m done Sonoma With recent let seen to examples. a said, already share the joining being recognize me opportunity significant the our thrilled great two work since Overall, by by

success message two your support our opportunities; micro specific site two treat line dermatology sales growth our sales looking and our the site to patients. This first, digital on This weeks dermatologists it for effort ago prescribe who provides most a maybe to strategic the provides already promise information. dermatitis a our core Alevicyn I dermatology for alevicyn.com. front, current draw with more On who attention atopic brand strategic adds product that customers, efficiently to complements dermatologists solutions the force launched best-in-class of efforts. brand-building most It’s

practice it the and Second, our or stretch no learn drive In learned to help continue want matter with our of customers outreach its patients. and about engage. we coverage to importance where reach developing beyond our our associated when this sales to and they interactions dermatologists will have will site rep programs, products to they

further their to with gain into also new needs will innovation satisfy ideas. We insight how

Lastly, digital to strategic across this current and be of future platform site replicated our provides a initiatives. all

with in weeks our look to example, launch. Loyon support For new few new product launch for micro-site our to outreach a

said business received partnering efforts recently these clearances future. monetize the new in for solutions development plan new the dermatology regarding as specific earlier, we diligently Brazil share seven to to clearance our On front, been working in Jim near and We’ve market. the news

turn model a the complement of market, Importantly, building into develop as template international business. a used the business to as and strong it significant sales to we’re a to through brand-building by we due summary, Sonoma, In adding the leverage our dermatology be With result that, our to U.S. dermatology diligence Brazil to abroad. business-development I’ll domestically plan to capabilities U.S. Bob both and financials. expertise, product walk our to over and further

Bob Miller

discuss the and quarter. financial the Over the last results XX, the September I year next will XX-plus one, for period quarter compared last XXXX same to ended minutes,

our financial path dermatology. Secondly, And track three-year profitability. thirdly, record to our in

usage I the EBITDA, for cash be XX, this More of release press quarter results business results will the key high-level of the the driving ended which to cover us company, cash details quarter. we’ll business, the cash now the on the profitability. the the expense, to overall though for revenue, which and Even upcoming the we’ll includes position. focus operating a metrics XXXX, in is prescription and are will growth Moving for September financial the discussed and results since the XX-Q. mention these results dermatology

mentioned supplement form earlier, As we slide in a call. a as PowerPoint have distributed PDF to earnings the Jim

there quarter metrics the only results Slide XXXX the is September September also year, but last quarter. a XX, quarter to table June showing key compared XXXX of the on X, Looking not the for the

earlier, million, business quarter, from last June with our and and June XX% U.S. the million animal net increases growth This the compared same September quarter was extend period the the are XX% metrics dermatology up increases and the as market. offset acute same Latin up mentioned XX% million, total revenue best up $X.X the product mostly and was in up Jim produced, same last U.S. or for dermatology These key the over by or XX% period prescription period and in strong $X.X dermatology quarter by growth year decline The last in over the dermatology. ever million, America or partially in continues in in $XXX,XXX XX% quarter-over-quarter our revenue up up and $X.X product care, these of care. year net driven year $X.X June net Some $XXX,XXX derm the was from strong to was revenue $XXX,XXX following; revenue XX% to the from or results quarter. quarter. the health

revenue gross minus for for revenue factors units cash those ended were year. of period XX% year $XXX,XXX quarter last The $X.X cost period the reserve June wholesalers fee but fees and the the operating important same June the cash than last the were wholesaler in for XX sold for In in of are in ended as calculating products. quarter higher June a expenses up the rebate at same the the business same million, the and since the quarter accounting gross the and the inventory expenses the the the The the quarter. paid the in usually due and down XX. they or dermatology price, their quarter audit year-end our $XXX,XXX other returns, net from about in September the quarters as than are from were are usually these about The XXXX, operating percentage of June revenue costs i.e. total, $XXX,XXX higher

million year to the of Over $XXX,XXX operations should quarter. the XX. down from ended or in million million quarter the on $X.X The June for XX% from amounts for $X.X XX. for $X.X next due September were XX% in operating range the XX, million, an from $X.X the The down expenses down The $XXX,XXX minus period year, and the last or same the to cash cash $XX million, non-cash June quarter EBITDA $XX.X rest. the cash September the working capital operating expenses, excluding from loss the was general September $X.X from $X.X XXXX, net of increase million decrease million, quarter loss million was position June on and

unique, focus, while our this This direct To action years strategy is have our adopted strategy, sales force. a still ago, and starting we new we plans. now products growing five to Loyon, seborrheic zero the Sonoma’s are in the of managers direct treatment severe revenue best-in-class skin have grown track dermatology way. our to we repair, and and These Two, dermatitis, acne derm market scaling. have atopic launched management our the the with record on for completed strategy starting XX six, following national prescription now XX infections, sales sales the a non-steroidal dermatology. appearance procedures, products which sales scar surgical mostly and actions; new of Three with ago, three-year with Moving non-antibiotic discussion board drives focus effective, reps skin years an comprising and with and sales, experienced, a in three dermatology reps and dermatitis five and on execute algae one, force.

results are we the dermatology last XXX,XXX Our years. XXX,XXX have over the filled for following; – three patients prescriptions

for by Slide PowerPoint filled track XX three-year displayed in wholesalers is and than times investors March and quarter-over-quarter have graphs September on XX filled number on June to for number five amount forum. determined XX% of demand highlights of products. seasonally we the record shows last the a each showing of years of total. new Slides the This and dollars, products tend the December quarter-over-quarter the average prescriptions slide quarters. launching the the products last quarterly of an provider quarters. also quarter quarters. four the of and total dollars be three specifically the demand number by of grown XX grown over that in the dollars. the prescriptions filled sell by quarter and calculated importance multiplying price prescriptions prescriptions the demand weaker on Bloomberg shows independent shows supplemental XX% last Our prescriptions XX a our and shows It The More Slide average presentation, It the quarterly on is that available which have data the for filled also nine to

As launched the layer another you can each new we growth product. see, as we to had

demonstrate another products the growth consistent, three-year long-term filled current product that and four we or prescriptions of have extensions to portfolio. results room a addition we add to pattern our of In line products, believe six to These dollars. demand high,

the one, extends are and mentioned As for high the track yet prescriptions this our quarter is filled quarter highs dollars. demand growth? September and best new number, What to the Number consistent three-year earlier, of reasons the of leadership the quality – number very sales products; manufacturing the then launch and dermatology number, the the the price quality increases. and a teams R&D and and and number responsive two, of effective and approvals; regulatory growth three, record

of the R&D, efforts proud record other and of very team, Sonoma sales, regulatory, the are testimony three-year We as staff track of departments. including the our manufacturing, a marketing, finance and

efforts same We the will of based continue for grow team before. this to mentioned and reasons on the

dermatology In addition, including sale the grow predominantly from We’ve assets. minimal been valuable – non-funding prescription the of this with sale three-year funding used track America to Ruthigen dilution. record accomplished business, from of this non-diluted Latin and funding has

EBITDA is while dilution. quickly the to reps year, the us importantly, financial is dermatology our primary conduit is specific demonstrates in possible leading profitability? goal More minimizing and hire as record prescription America sales path XX to and is profitability. to to ability achieve strong way profitability to our new cash the this from track primary to the three-year sale in quickest execute Our receive after as quarter-over-quarter decided market our the we future, the which assets. Earlier Latin the growth we of in driver goal consistent What dermatology achieve

as to it primarily dermatology XX% international, that per our prescriptions growth grow with hired growth XX revenue simple XXX had growing established to would range. year-over-year, annual new up XX,XXX order average. non-derm derm our are order progress the our world they X,XXX quick will a and we to XX December profitability, quarter. per sales While primary a of at Europe $XX achieve sales the the gauge were driver And In rate prescription we quarter quarter average U.S. the sold XX When and to XX sales to we revenue. is we reach part Sonoma and quarter, dermatology profitability, businesses XXXX rest run XX,XXX in The sell make investors of company, continue for towards ramp. to needs In June the reps, profitability March on to rep in to have in quarter need the of be reps, profitability, on still million to per per achieve which reps. and sell their the prescriptions sales prescriptions XX% to

to year. to and dermatology As rest at quarter-over-quarter for long to other four derm achieve How the mentioned European U.S. before, last should average profitability? the expenses of and does And cash to opening take range will quarters. that XX% rates. the world prescriptions from the over the quarter-over-quarter relatively at next continue growing of rates growth to flat it filled expected XX% slower grow businesses favorable revenue are rates over remain be and growth eight Our

is record strong quarter-to-quarter growth quarter-over-quarter to continue will rates. grow track three-year Our at evidence – we good that

numbers as these prescriptions larger, if, from emphasize XXXX if XX,XXX number word, of to rates. an back high XXXX in operator sold quarter-over-quarter become quarters. will want Starting quarter, difficult to the in achieve on it filled turn the I to call X.X% growth prescriptions more becomes However, the rate we March the September XX%, to achieve grown average the the sometime to call growth I and quarter-over-quarter will the to up XXXX open September now to of questions. profitability and

Operator

from Maxim Jason Instructions] Our with Group. first [Operator comes Kolbert question

Your line now open. is

Susan Lee

Hi, This guys. Lee. is Susan Hello?

Dan McFadden

here. We’re

Susan Lee

in calling the vertical your an taking business top you that Sonoma’s And do And China? China? of on my the what’s over strategy call with Lee me impacting on Jason you guys market line behalf Susan the the progress to for guys. in Thanks several years? larger is update partners Can see next this Kolbert. Hi, derm give how penetrate

Jim Schutz

question. Great Thanks. Yes.

regulatory with and we’re enthusiastic To and on As know China. China by question is, look China, your liquid to in remain contacts, approval even in partnering you authorities the SFDA through second our We with your we help we’d approvals to our products help, out Chinese for we gel various for and answer there. partners your several about love those interesting regulatory gel products have Susan, pending we forward been we’ve or some approached various formulations. products, know, getting very regulatory in

Susan Lee

Sounds me. good. for That’d it

Jim Schutz

you. Thank

Dan McFadden

Thanks.

Susan Lee

Thank you.

Operator

from question Eric comes next [ph]. Our Pansick

Your line now open. is

Unidentified Analyst

taking Hi. This is Eric. my for Thanks question.

Obviously, even decline that care you think I expected? as expect a is amplitude couple of this, the with in as reps the question PetSmart marketing. increasing a the of that – expenses, animal expected? gain? health increase expenses Bob that the – of Just higher or deal. all then the Still and increase hiring Or is it with amplitude on with quickies. a in And sales the addressed the lower of Is sales that

Bob Miller

expenses – from The they which up $XXX-plus expected. from were And are $XXX,XXX, Yes. the actually in get June almost a of lot to do down they’re as thousand. tend year, They recorded with which be June quarter. cost, last $XXX,XXX audit has that our like but were quarter, down the to

anywhere X type the though. is – normally of that the and stock in $X.X operating And comp me than June the to taking million. June rest so expenses, quarter expect higher the the expenses therefore that not about operating we Obviously, year quarter next quarters, over out emphasize $X.X of cash cash would see from let should the but million to thing, charge range

answer did the care – health In on your the expenses? terms question of that animal

Unidentified Analyst

Yes. That’s fine.

Bob Miller

products, for the basis, say, is to at would the number, lumpy sales you health reasons the something care to of which health the made animal if point, this be quarter-to-quarter one tends it’s a On this will, it larger load-ins may I lot also last least, year, we down, animal care, it a to had of which so. at at that little Jim point. want a plus on add

Jim Schutz

animal really questions, of No. in so line fire health away. health Eric, we the care any have our animal Dan, on further the form

Dan McFadden

PetSmart Bob’s there. supplement moving nicely. is comment along just I’ll very

gel, to was and in out. fact, products missing there went trimmed and the and and then golden sold ear were they SKUs shelf empty. our all doodle eye I In They the my wash to of took be ophthalmic the yesterday

very, a performance of like that mentioned, to stocking chain particular that So PetSmart the with was moving nicely last is But the number it And very pleased and orders. lot in looks year’s Bob date. it’s will had as initial continue.

Unidentified Analyst

And And your or business as do each it example, use sales. metric line, if that that same-store line, opening color. can same call that last the dermatology which is, is is – formulate sense? is appreciate says how to I a I that question stores. stats, increasing customers, along in, – what the business, The they this one sorry, so because sneak store I it, great. in, Starbucks, in getting your just profitability, one Great, I’m makes QSR more an path is more the obviously called you’re more income –

our more just hanging as we wondering let get anywhere rate prescriptions to So give At going and and a expecting a we we low rep well, dermatologist try. him you more have point, we’re XX%? they our Are a near if we a these to to point where before, some growth show saturation geographic the reps, are it’s dermatologists mentioned regions stores? we in where them at new me – that say, the some emphasizing Or at products wasn’t store fruit there to that XX%. accomplish feeling on each great something at office are write approach getting be to you in or

Bob Miller

Yes, be of I both. a answer think would the combination

an What putting added beginning one can they focus would on, obviously, opening we dermatologist can get that. and effort that size territories dermatologists new We Actually, current are found some, – added where sales at and In the reps. York we’ve like They actually the we those to New dermatologists. territory. putting some into And reps – locations, area, from those well we get lot we new that. of so large do – to those the and then there But in the smaller of as into we’re tend a awful as cut going are so of are put dermatologists. both growing we LA. we’ll we’ve done around sales we’re down we of be We’ve areas, – markets those where areas to but add new then dermatologists obviously it’s helpful of the then up – we’re some group. in increasing the the tend the and point, some

of prep that’s and We way. have flies a that helpful market. to really guy the spends days trying a that there in couple markets And that, in we found the growing

doing answer and out the your else? people focus that’s our a So we’re that’s – We’d we those And question focus prescriptions or top pick primary to to Jim, tick that those and are on that on most. the ones the XXX XXX focus. is both. dermatologists those of out like – the of lot we write anything

Jim Schutz

No, good answer.

Unidentified Analyst

Well, thank you very much.

Dan McFadden

Eric. you, Thank

Operator

Our next from Securities. Keith Zdrowak comes National with question

now is line open. Your

Keith Zdrowak

the have it? some just any if you of eye I read that? about about that sort what website developing a And had you anything from everything on second sell with is, it? license talking that developed on sort years I with Ruthigen quick of out And the develop did or question we plan get comment guys wondering ever guys with And is if technology One, there Whether you few a any to it back anything do ago, I questions. Ruthigen? happened ever two or something have of it or medication. so, read

Jim Schutz

I’ll your first. Ruthigen question your hear answer Keith. to voice, Great

we posed after the was, was of art. sold did get that property, Ruthigen all First machinery yes, and back was, question the in Pulmatrix, got back is, to we answer the part technology intellectual

question, license as question a Ruthigen to Keith, time-consuming do to an pursue love was intend second at but directly. the post-surgical is, pharmaceutical think, ever antimicrobial. as we’re rents an partner a it’s we it And and We’d the it, indication pre was, opportunity. the for not to expensive and and same going pursue answer here Sonoma was The I that

on is product we know, well have around blepharitis really product accurate. a dead reasonably the you question Your as Acuicyn, do eyelid. third is that dermatitis regarding space A-C-U-I-C-Y-N, We which, in the blepharitis Keith, sell the

Keith Zdrowak

any and that just just how are are in. them? of Okay. – how And – And obviously, is I business? as how quite profitable you wondering, it’s the whole dermatology I you sector mean, what excited as comment is far But that. about the that potential not

Bob Miller

our the company. strategy So back it of comes to primary overall

not focus prescription on It eye is is business. the the on care business. Our dermatology

Now we market. It cash to It’s help something focused product. a not derm generate to generates simply cash, for do purpose that sell grow primary business. on. It’s the help that the going of us. some that’s And be us we’re to us

Keith Zdrowak

that that? eye I guess – health health you I to how guess, do compare mean, as you can would or you Are – What the you animal I for that to division. more one medication? what excited the do question be it do comparing guys about animal as far

Jim Schutz

a product profit more in the animal much to space the space. The one, are I have attractive health – that short blepharitis margin product margins our answer good in margins Well, Keith. than

Keith Zdrowak

thank right, you All Okay. very much.

Jim Schutz

Thank you, Keith.

Operator

question comes next from Instructions] with [Operator Raymond Benchmark. Our Myers

is line open. now Your

Raymond Myers

questions. Thank taking the you

just within maybe marketing the about the sales potential term and this describe started product Let XX months? product What we you that that kind of anticipate? me you Can and can week. Loyon ask long of you first first revenue both

Jim Schutz

Ray. question, good Yes,

having and on whether there and it, I As FDA dermatologists other new clinicals something and by that like markets data just used solid in are the old, U.S. to launched for colleagues in two with for from urea. We do it. but really U.K. We European U.S. We because own label we you any the say they’re it’s this got very products in Loyon descaling, new questionable our march have product States, a it German into this know, through rights. will pharmaceutical salicylic we in-licensed the United Germany we even from sells both them and company of very, opportunity. acid not a

our As but on we in far basis previously the about to, an in as I reputation, FX European in UK. can partners XX U.S. not sales there risk the that point or potential we Bob, an about and forgotten, is million of this million, XX assured you that it’s but EUR USD sell on at Germany annual same the analog call now

Raymond Myers

great. on – but August pending elaborate Jim, mentioned had you sounds competitive That wouldn’t in filing, that call, you FDA reasons. a for Sonoma

question. two-pronged So

First, And about and the tell can more that’s that timing can anything us about you how tell now? anything us progressing? you

Jim Schutz

much again. it so Thanks but for do not for was paying that teased that going information, earnings mercilessly after attention. call I’m sharing I to

the FDA that, sitting additional an FDA coming approval risk shareholders, remain Ray, this more at quite reasons we’re be in hand. got to our approval, sharing and for harassing and up approval with We’re annoying an the interesting on we on information competitive opportunity we terrific that’s but going the referenced upon will of next you that

Raymond Myers

good. Very sounds encouraging. Okay. That

You’ll hear that. about need to

got might in a marketing tease and you recently quite Brazil regulatory with I what You Can in large dermatology. potential for bit be? us call, this more stay said tuned on approvals it’s for market Brazil partners. the opportunity you a understand

Marc Umscheid

answer Marc. is that This I Yes. one. can

believe, around annual the discussions, in billion $X.X past rate our space a looking U.S. we’re space over five at. years. growth of partnership that’s in XX% very preliminarily, on it’s least at So compound we the – market And

kind that’s opportunity. the of So of the size

indications. seven products, four have We

And Our launch we gate. speak. we’re two of at the products out expectation is partnership at as current to those looking least deals

delivered. So obviously, signed liberty at not and disclose until they’re actually we’re of with to those arrangements, type

Raymond Myers

like rebates. that to not simply you I’m Okay. it in also more effort the issue prevent to That issues rebate rebate challenge the QX. expect But improve? from in – doesn’t on of Or we rebates QX than your sure you sound were worse? touched QX. We progress sounds It a the addressing made in is what getting the any Do encouraging.

Bob Miller

Yes. for competitive that want spend that lot a of that than We’ve rebate more the But as to on are will initiatives costs two involves we let cost well, mechanisms time way. us got ways don’t much we me return it distributing enable product, reasons. of different control the currently, have there to and the put

to quite the what able be quarterly not call, we’ve we’re should done next So yet, at point. but we indicate that there

Raymond Myers

force. question last sales good. is And around Very my then

six you people along And a to expectations metrics? of months living those sales productivity? added You’ve the measure those whether people ago, sales nine how and sense months up wanted lot of or I quite are sales to a get your

Bob Miller

– carefully on but see on average uptick with of people shared the – total Yes. with number And of we uptake that and ratio. sales to this same sales sales number in of They that’s And month basis, that I quarter, expect grow per per when ended, each prescriptions it the just we the XXX. we number written we per quarter December look the scripts do saw for we the sales effect – think or reps. reps. the of had continue in we we a at the and the we’re number for And important. revenue And XX really with to uptake the point, at the XX XX of you on as XX person

Raymond Myers

One point great. That’s of clarification.

What quarter? net Is total? was versus have XX five change five the and increase You of sales last people an that managers. in

Bob Miller

– let’s And then added we that four it had we have it And managers sales another at point. another believe, say, we sales We XX manager. added people. XX was I XXXX, people. No, December Yes.

it’s I think a sequence.

Raymond Myers

Okay. results. Look seeing clarifying. to forward more Thank you for

Bob Miller

questions. Good questions. you the Thank for

Jim Schutz

Ray. you, Thank Yes.

Operator

next Our with from Billeadeau comes Partners. question Walrus Scott

line is now Your open.

Scott Billeadeau

guys. my Thanks for Hello. question. taking Hi,

Some been of them have answered.

as you are? out at are more you Any your lay normal what for a many above? great. X How sales XX expectations sense would tracking is million terms of are info and or "mature" – X question XX in new. many how could have us beginning And give curve? curve? million you Certainly, be still piece, at to the a there of force, people the XX Just a many Do one how that on are reasonably the

Bob Miller

Okay.

So to XXX. you quarter, look is if – back you – and and – were the they with is this December out symphony go sales this when we this and started rep, data, XX

but So all we slower to have growing they do the need much do they X,XXX. – They obviously, to is curve. to quarter-over-quarter basis, obviously up what on get would are a be

be Then ones a they some which sales the hired in up will in they to They clearly ramp figuring the XX I – an math ending this were group – months them But March – after March in them I’m quickly, XX can where generally ramp on profitability been the in that – is average, hired the get the that older of quarter talking and in maybe the probably making group. at and then March do few the ending fairly in some the time they’ll actually down people, December Almost are think, six that ramp profitable. generally quite group so than to the you’ve to point after up they slip almost quarter of profitable the Now and greater X,XXX frame. yourself, months will average of might so. you then months about – got stand that out up June. and going XX But we all they continue I’ll of the June is to continue to nine months.

Scott Billeadeau

incremental going the And quarter is next working, certain mean, but extent. now you good have swap guys, may a pretty out. you if kind to to sales the you’re year idea spending one out not or is I in of September on one terms is of out laid –

XX you’ll to that running So XX the Is the plus future, foreseeable be plan? with for game X.

Bob Miller

Yes, yes.

get XX,XXX and So quarter, X,XXX, the to have so between to we to currently, need somewhere XX, a we the XX. XX XX,XXX the

expenses that go we a people. those the we up first and position add the the in ramp with XX up should – we’d cash big cash much, we go putting some that we’ve operating our – so. ourself revenue position the yes, XX two start XX don’t made investment point, at – better four sales already those not And So getting – to and before rather see or

Scott Billeadeau

Yes.

Okay. last question. And then

not? unnamed that FDA it is guess, can that is the is answer. sales us to be something this you back give getting us – Just if whether by executed will that I approval. share force you Can going – or with

Jim Schutz

yes. And can is, I one the answer. answer That

Scott Billeadeau

Okay, good. All right. Thanks guys.

Bob Miller

Thanks.

Jim Schutz

Thanks, Scott. Hope you’re doing well.

Scott Billeadeau

Yes. Thanks.

Operator

questions. At Jim this back call like to I’d to Schutz, time, closing I’m over CEO, turn the remarks. showing for no further

Jim Schutz

all robust today’s and turnaround several a we’ve strategy effectively for support. effective ever in and dermatology you a a market, your shape sales very pipeline. is and continued with We executed in Sonoma for been product Thank the reasons. unique for call best We’ve in joining experienced a system, feel strong, attractive

last business. prescription future. demonstrated growth three to years, Over growth achieve in a in this our to we high, track dermatology three-year the quarter-over-quarter the believe strong demonstrates We record track record continue consistent, ability the quarter-over-quarter

probability, times, to step we said next will increase multiple driving Bob shareholder As EBITDA which commercial is believe our value.

Our is profitability commercial of about. this plan simple is we three-year really record EBITDA and talking relatively track an extension keep

operator. third current growth our With from to and of revenue to thank reps; new in as to achieve of are relentless XX efforts we to First, and you second, the We see products and company of very gentle our comparable think with continued other pure-play, sharing consistent for purpose progress foundation increases our look price much blocks EBITDA healing. we’re launching place the profitability. we’re sales products; going the growth a achieving company forward products. dermatology all this building that, and build this becoming is multi-technology We passion

off. sign to going We’re

Operator

This thank program. your does participation gentlemen, the conclude today’s conference. and in you for Ladies

Everyone, You may now have day. great a disconnect.

Sonoma Pharmaceuticals (SNOA) 10 Nov 172018 Q2 Earnings call transcript