CHFS - Earnings call transcript Q2 2020

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Operator

Good morning, and welcome to the CHF Solutions Earnings Conference Call for the Second Quarter Ended June 30, 2020. [Operator Instructions]. Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A replay of the call will be available approximately 1 hour after the end of the call. I would now like to turn the conference over to Claudia Drayton, the company's Chief Financial Officer. madam. ahead, go Please

Claudia Drayton

today Thank Solutions' joining results XXXX. the corporate ended With second Claudia Phyllis. CEO financial the Time to Chairman Eastern XX, and company's for conference ended discuss quarter us XXXX. XX, CHF developments June today, Solutions John released you you, Erb, Drayton, of for today's company's CFO; for call the are Thank and the the Jaramillo, June a.m. Nestor Board; At and President X:XX myself, results quarter company's Chief the and Operating Officer. CHF financial

received If you have please Solutions' not at CHF page the www.chf-solutions.com. visit Investors release, earnings

the made forward-looking During that safe forward-looking harbor limited a to Exchange company the revenue By unknown with risks of and any new the new obligation made Securities Factors be The update for by undertakes or providing company associated products risk commercialization of or the currently or the CHF statements. may in to the and available future raise but whether the statements statements call, elsewhere able quarters, Litigation developments for information, Private anticipated the the necessary pursuant Reform management. successfully known on possibility during Except XXXX. this caption strategy, to its may possibility to conference Securities historical it forward-looking the of that company's course will and under the other be with information grow expectations as that risks that the be be information statements the unable are company commercialize the company statements provisions in may assumptions, be described filings forward-looking in projections otherwise. not are Solutions operations, based to the to this result of beliefs, funds revise no management include, are information, company the Risk making the mentioned execute of call, not are may to Act unable and involve Commission. and its factors unable uncertainties that company's to, Those the and that risks conference management's

current and materially You Commission risk press management's company's results statements website forward-looking as turn discussion XX-K, Officer as by Risk to to issued sections of discussions under well subsequent titles factors the risk reference factors risk CHF over incorporated cautionary included in additional and statements on Cautionary company's factors to at today, that available Erb, Those the should Chairman like such that forward-looking of the release I Solutions' Securities With as actual Chief this the filings www.chf-solutions.com. the would Statements related well company's discussion regarding other readily now Board. latest said, Exchange and review the from differ and cause call of expectations. to Factors as the or statements call reports, of with John in for could are the are its discussions in Executive the

John Erb

quarter second the to earnings and flow ebb be update. for the year to pandemic. throughout to Welcome This XXXX care continues everyone. due morning, challenge of world and good and health Claudia, the call you, the Thank corporate a

of we know world has our in remain our dramatically and long the the changed has run, about we business. optimistic Although changed, business model durability not the

clear are focused. and priorities are our We that confident

that leadership to market lives. goal our grow patients' solutions management global in Our with is fluid change

hospital restrictions, the care. serving XXXX performance very cardiovascular initial pediatric second have surgery, in access of business heart described the solid expanding achieved needs failure critical are hospital and The ownership. to the of of restrictions in and that therapy achieved of XX% beyond reduced in X on as purchasing in prior care, X over I our the we our new with in life-saving quarter we revenue dramatically during quarter financial patients growth opened kidney the the needs equipment. As been in meeting hospitals accounts surgeries and had this needs additional chronic past, capital abandoned highest concerns despite acute therapy company Aquadex and quarter. quarterly We elective hospital such in reinitiated quarter, Also Baxter's

his company webinar distribution Mehta, critically transmits solutions patients care. in of Clarity to RMS, to a and monitoring Emirates, end signed ultrafiltration fluid Hypertension, on School Cardiothoracic patients initiated a and in distribution of solutions subsequent more Hospital we weighing recent and CHF in on kilograms. diseases. the end, Ravindra East of information to LLC, the the takeaways Subsequent of RenalSense, hosted clinician-led and recent Research the We covering injury to patent in Aquadex Clarity pediatric in California, therapy the agreements complementary enabling automatically real-world certain for sell pilot from partnership volume Diego of with on and to data in function intravascular SmartFlow risk, July Medicine July of where treatment U.S. Additional the shared We a a Partners. accomplishments application renal with King's Virginia the their from COVID-XX and XX, The hosted United the the Arab agreement changes use and is discuss that including system from pediatric Equipment webinar by Medicine region. XX, for in company acute of urine We to treatment distribution SARS-CoV-X, and other Emeritus, first with to RenalSense's Kidney registry with notifications and rapidly an has kidney XX Children's monitoring offer care ultrafiltration perspectives cardiopulmonary-renal XX reflects Daniel Acute kidney patients in ultrafiltration ultrafiltration This rates Middle X U.S. moderated Medicine. to agreement MD, of Critical pediatric real-time blood. mitigating staff webinar, Department will COVID-XX, covering announced Interleukin Aquadex University fluctuation Nephrology real-time blood Chairman, a Solutions, of ill Norfolk, Also Removal early Medical measures critical New the included the We agreement we market therapeutic basis. XX/X Daughters patients, on Aquadex Montefiore MD, Care Professor provides fluid through intervention SmartFlow COVID-XX for Vice Aquadex announced rapid with and of from many than registry York. an and role cytokines of MD medical the Professor now Department San The acute The SmartFlow Medical in a treating collect using the of the cytokines, Aquadex Division outside the discuss Smartflow Research sign of of system adoption evidence the prevent a system the Goldstein, initiated territories. injury infectious overload publication, such an physician-led of flow Clinical Watermark improve submitted moderated QX, system intensivists by Transimed interactive the David condition overload. Injury experience may suffering to Foundation real-world management, and on fluid pediatric nephrologists the system distribution COVID-XX has Askenazi, patients Ltd., the RMS quarter Surgery, key to use in Center opportunity an of development clear CHF in continuously demonstrating need of our management COVID-XX the patients by solutions the strategies in dialysis. management system. as The with partnership Company interactive of countries

COVID-XX have disposables The nephrologists treating need effects positive use to in those opportunity had the on a our Aquadex quarter, has to the the to did utilization COVID-XX kidney the mitigate in second hospitals efforts acute of battle where setting pandemic ICU physicians hospitals dialysis. injury intensivists by During been prior Aquadex utilized and and of the for and help the impact in the system terrible demonstrated patients prevent pandemic. of

considerable of is very uncertainty there the optimistic, are for Although a we level future.

operations. will through to are call details. closely we expense controls to our you managing results the implementing our will QX financial XXXX who turn over and fund I avenues and So Claudia, walk pursuing cash, now

we'll will I additional the open some that, Following and call comments, then for provide questions.

Claudia Drayton

Thanks, John. Good morning, everyone.

from our was of to access quarter that financial Revenue sales second QX the demand $X,XXX,XXX, hospitals of Turning COVID-XX for imposed driven helped increase offset many increased This on treating restrictions XX% year. of was patients. hospitals quarter last XXXX, for have QX sequentially from an performance from the the our results. impact up by XX% representatives. increase Revenue and

of the For year, the we hospitals by revenue our driven COVID-XX. of XX% treating was patients second that with quarter estimate

I costs, operating and sales about of drivers. briefly cost major our Regarding will comment

XX.X% demand for cost of the production were to First, The new our and margins from Aquadex increase QX expected the gross sales, margins of to mainly is margins XX.X% quarter, increases. SmartFlow significant of XX.X%. in a of the margins of support result QX and our increased from XXXX launch improvement regarding our about XXXX meet future

QX were staffed increase of having of XXXX. X.X% training QX our results XXXX regarding Next, million, The to from hired in over accounts. during XXXX, SG&A assist territories, expenses and we clinical fully expenses specialists new including of opening $X.X increase an

development of we received loss to quarter to QX share. an second support to or during spending which compared FDA XXXX had million CE XXXX, decrease our of million per clearance the next-generation $X.X Last submission Mark of expenses improvements in and $X.XX $X.X net net loss year. product compared $XXX,XXX R&D year. Our and QX were for a console, was in SmartFlow for per The XX% year, Aquadex first last the reported in the pediatric the or increase share $X.XX quarter a this of quarter

position, XXXX. the used finance first $X.X or the million of comparable our for quarter months we the our is which X liquidity million year, to $X.X cash to in operations Regarding of

direct during As announced the registered of quarter, the completion previously we of financing $X.X X for transactions net proceeds million. announced,

received from in equivalents Additionally, and of quarter, in approximately no We the proceeds debt. exercise and ended approximately cash warrants. cash during the $X.X with million million $X we cash the quarter

of situation the monitor continue like COVID-XX cost XXXX, modeling closely rest In terms the of we to pandemic.

continues believe that to we COVID-XX both While to country year. and be -- plans, thus, growth an stay presence hospitals established hospitals with and increased we have continue versus this and At will to of revenue we our growing limited, course is of where impact our it an access prior which influx the our on will of in business. our digits, be traditional where we double seeing are seen the point, expect it sequentially to areas have utilization patients, therapies

we as lower gross with related versus be QX QX will last the year, our we Aquadex QX for lower improvement in Regarding launch. we year. to builds more margins Overall, will than margins production line our SmartFlow show margins, the QX and saw expect the margins and that be in will

quarter our with offset expenses, this to to sales we spend staffed Regarding with remain our current we territories operating quarter. travel reduced consistent consistent expenses. R&D, remain the spending the impact expect as In of marketing is having we fully expect and reported by levels

Finally, NASDAQ our listing. regarding

have the believe the XX, seek not under we currently we the As we December period extension to on John. this since before regain disclosed, compliance been we have compliance are extension. regain previously to below our price eligible XXX-day XXXX, with If $X over will expires of call from we XX. NASDAQ's requirement. for stock minimum NASDAQ the This back bid now to compliance August a the regained are first minimum intend requirements, listing has bid to period XXX-day NASDAQ price with and August and turn I with we

John Erb

to focused continues safety and health the you, Thank Solutions be CHF employees. of on our Claudia.

engineering the facility of and remotely. have some is maintaining chain staff Aquadex continue have working work business our of for of production at to disruption the operations our on-site and products Our of materials. and most been our -- by and continue team supply manufacturing minimal seen Production components

in retain our employees our sales including all of employees, We have organization. XX able been field to

hospital XX% to Before almost clinical came the close and most employees sales elective and hospitals business be pandemic, considered of our to are field to new from procedures. now from hospitals what access XX These with restricted COVID-XX XXX% with face rules. continue challenges

reps have come clinical sales filling with elective hospitals accounts. online hospital start have As have sales our a We team reengaged sales to and now back complement of ready needed full procedures, U.S. the again and territories. procedures XX and quickly elective proven schedule our XX

they consoles can have our in increase but hospital clinical when each talented train We Aquadex to professionals of specialists account return not team also use who our the XX of also support. utilization only to to equipment, provide

with are lines the machines COVID-XX dialysis for as used control Physicians of dialysis continuing customers when the alternative on to patients between front our pandemic. an fluid as have impact to personnel treating of patients We available. dialysis need who the strive and removal support therapy or they are trained manage Aquadex therapy COVID-XX not treatments

and hemodynamically therapy. being unstable be able to but fluid Aquadex addition, patients removal overloaded fluid still may In who tolerate need the treated with are dialysis not

have COVID-XX battle by and hospitals, the and We system. physicians nurses consoles been to able on many Aquadex providing remote help training the pandemic

We training web protocols video have tools established webinars. using remote and

web Aquadex closely who via survive system. are using tools patients worked have the physicians and with successfully We key text, the telephone, e-mails virus helping

fluid offloaded to these experienced very failure. lungs, that very uncertainty. physicians impacted supplemented the in COVID-XX dialysis small have COVID-XX We providing peers to device I by fortunate and have are companies, but treating the we we a webinars as educate three for acute how their patients. stress kidneys patient's year the they that produce that have excess we kidney rest patient's on removing need full a the fluid we successfully they many is medical less the so is be for the With have many than therapy of supported, how managed finding are pleased we on want to patients of the reiterate how know meaningful ways are they help product

receiving XX some primary to training nephrologists cardiologists, pediatric to investors. level customers with value for when cardiac normal, We late began market We a bring therapy for ultrafiltration our X of to that have in hospital couple X training to pediatrics. X to sales After we our In but children's FDA continuing the program of children's we able due hospital by queue to extensive hospitals. care in pediatrician accelerating pediatricians system hospitals February, not COVID-XX only ourselves In the we from the The initiate who physicians as surgeons, are growth clearance requires of early had indication was second the all provider training. and specialists, hospitalists, education can we new using support intensivists, fluid in the fear train health about returns position in and the contamination. quarter, as a were March, experience children's treat program very see the to optimistic overload. of that clinical receive the access physician busy anticipate we our will Aquadex of stopped our

beds the There hospital a but dedicated we by is restrictions. We done market but several new children's the tool and that access nursing also patients opportunity this limited web want using in patients this video be that on their time, and anticipate restriction not the slowly see have do fear being critical strong carried staff revenue on somewhat to We to care Aquadex access product training during have for COVID-XX months. hospitals continued capability. a part a COVID-XX procedures for some need not hospital to may trained hope reluctance hospital for virtual of do with procedure There hold ICU a from critical hospital's all are being to physician care and contaminated. used is coming is have continue The of do that a at patients.

We Phase continue X to designated phases. see strategizing X our business is in now.

with maintaining expense focus pipeline sales virtual the liquidity, on at implementing retention a questions. key adding sustained areas inventory supply products, a support designated control, in continued of and through on ECMO enhancements, Phase please training. training hospitals is pursuing gain and product and liver complementary the the on investments care care and X burn. call like key is is Phase field designated now and team, and relationships. focus Our physician X for the critical focus open pediatric in children's for Operator, new health such employee physician opportunities long disease, operations, investments as with market recovery,

Operator

Instructions]. [Operator

the Ladenburg comes Jeffrey of Your from Cohen first with line Thalmann. question

Jeffrey Cohen

quarter. probably a pretty questions. to good a like for looks It few wanted I readout the just

Can coming from where was number from? you internal is from units new shifting that care well? or talked second XX% a as sense placements COVID, far about of cardiac? give or critical And number As from us of the as facilities of general there was quarter. you Or that

John Erb

primarily from it's in in hospitals coming area our ICU. care Well, users product that were of their critical the

Aquadex. So began to as COVID-XX they for utilize utilization increased beds of patients, they those

COVID-XX were COVID, that of consoles supporting such as U.S., volume those from hotspots We X directly really these of City the New additional in and Georgia. increasing hospitals the actually most the say So would and basically for in because hospitals the actually that, brought XX% were York that patients. in came

Jeffrey Cohen

Okay. or the And side, that color? use being you us of current or about units. on And further a XX so a is pediatric talked X on could Perfect. Got or for you the queue pediatric assuming little it. order of backlog I'm a give March. there handful of a

play know that pandemic since a been X is So do in next I and expect actual lot And on X But hospital the number dependent. over XX? get how March you of those the there to it out quarters? might queue change side peeled or has off? the of a

John Erb

product. have actually in it; hospitals using and it. right where X to a from that a implement we where that to in want Phase area the Phase purchasing trying hospitals believe move actually invited that and X, approach to Phase to now, pipeline hospitals we are where the that actually utilizing therapy we've X have X, we're have I hospitals they're children's wanting X actually talk they're where a Phase or of identified those to We Phase X, those to, us

came from believe the quarter, it in I XX% hospitals. under children's revenue second was Our just

just And in from X. probably X X purchased of us pioneered That a have have also on X, queue from the those use still the that in not in clinical physicians that COVID key treating are volume training. that Aquadex of comes from Phase training and patients. our the of for kind just team, fair but So equipment another we specialists a that the are amount

and Goldstein Cincinnati Dr. Children's of out So Dr.

train key in have utilize how been Alabama their helping Children's at to it. in Askenazi really peers

as there'll we'll -- to able actually, bring on. things training loosen there's be that hospitals up, be perform and So more additional

Daughters hospital bring now As King's running. I mentioned, they're And we did this quarter. up on and

hospitals So and it's a be really ready process waiting. up. to open as They're going the

have that I XX Phase X. we children's think probably to now Phase from hospitals in -- I

the So It's pipeline able them get trained is running. and full. of being a matter just and to up

Jeffrey Cohen

both side, this That's margin there? then in continual It on year the me, march expecting lastly for And super We're still volume to for further on QX of the forward. synergies there going cost any the solid. helpful. looks the like as as well Claudia, side? fairly came balance commentary derive, and side a some up there Are

Claudia Drayton

Sorry, question? Jeff, that was a I'm sorry.

John Erb

was a Yes, question. it

Claudia Drayton

On margins?

John Erb

Yes.

think as of built I had we QX we the inventory the in launch up really Aquadex SmartFlow. our margins for that good

margins I say we quarter. not are I But coming to -- I XXs still forward, improvement be quite increases, see with increase we'd the going in think were next quarters. margins at the in volume in the low those XX%. high as in may But would be our margins. obviously think Going as we of couple an

Claudia Drayton

in prepared improvement. than my year, Year-on-year, a QX see Yes. bit like like I we remarks, lower stated the QX But will QX. will and be for XXXX, said, John versus nice and a XXXX

Operator

question next Maxim with of Vendetti from Group. the Your Anthony comes line

Anthony Vendetti

you just talk used at able you comment system fact It's get of impact marketability? hospitals time being pediatrics. and this, a phases, you know terms X closedown mentioned Aquadex new be cardiac still existing But now strategy. care that varies treating hospitals. I think the if to for you into from about was accelerate state, I as well as does the part And of in wondering, you that the there's reopen, this what and The very about critical focus shift were potential know on the do for believe, movement relatively the start care helps as Can you it care? you've on was call, and in think could hospitals business COVID-XX. open I to the know business, up from set critical -- as this you Yes. But do I and from in XX% guys, various that adoption could accelerates for like up it's critical your we curve? to fact revenues the of the just by

Nestor Jaramillo

sure, effective COVID-XX leaders create answer that question. a coming for answer the good the outside because setting. And ICU Yes, That has ICU, Anthony, that patients and the to strengthened COVID-XX. our have but positioning how problem, an have webinars of happens multi-organ very Aquadex education question? in treating so ICU this respiratory Aquadex opinion is these all Did our COVID-XX system the It's of I SmartFlow we the that failures. bit Nestor. also done helped patients awareness a is really quite in with reason I'll the that key your question. of system the been have a the into come

Anthony Vendetti

training the also Yes. you maybe just the or X. helpful. know rollout I into X No, -- in hospitals And and the that's the talk a children's bit little mentioned then

even time difficult to is been sales, that still diverted? to of during hospitals, hospitals And your access there physicians helping of it's the the tough with terms I in able new this the way as training, of then training. focus have terms the how that force terms is in the sales you Just of training know in But Or get remotely? there do on? has to has -- and been their remotely, though been into are some a is

Nestor Jaramillo

Okay.

X that Let in answer question parts. me

part all -- pediatric has the have that the we the been been training is has remotely. majority that first with The done

hotel. one us in hospital. of a instance, the meet We a with the physicians and to have in of couple nurses had outside where in hospitals pediatric And wanting was instances the are

we did to the second use we continue so the The that part remote. training is there. So will --

physicians We we and do I those trained. full that, remotely. reaching to are successful have training large hospitals majority is training, question out the of in to to pediatric centers for have come to in that The need in provide been waiting when to the will then very be access we queue believe the that

John Erb

point. my would ownership the comments, we during is I actually In the in of hospitals stopped therapy demand that I a there. mentioned add They reinitiated period. that the X had are product, training less Baxter's just Anthony, using aware

the demanding back I getting Nestor his online growth: successful So continue actually in And them to not and is running. -- think back very total team revenue XX been the during X and the up have successful. requirement to being -- accounts very creative as in where bring was drive by training think how going one, hospitals and we is during quarter, I to number COVID-XX,

them team high So then we showing sales getting hospitals with folks is cover to the use think a to sales kind therapy a growing continue trained it's pitch hard, lot we And find great clinical quicker. it. -- will them trained. not we get the I them a really them But specialists, and wish quick effectively. and of really is I executing pretty very and ways we'd lot It's them the had get team have, XX the provides. more resources that XX we're acceptance and running. to is What's Aquadex novel up and giving to get and value

Anthony Vendetti

are purchased or then children's training. it pediatric have it, just side, the X X are hospitals X And using Excellent. on now

of kilograms. kilograms. know of Where it, pediatric already pediatric than trials? for with On know less -- looking patients success than it that the that pediatric feedback the patients having XX to using X it you're I the physicians is also XX get it's some are using and Any for hospitals? in than approval patients greater Are terms is approved And XX programs? I less from

John Erb

to the patient. any medical Well, the to physicians help necessary deem have authority use right device they that and their

us is FDA. that any restricted received the on for from restriction So they're market label the not that we by can't we use The it off-label.

There only only initiated market kilograms use in We we though, treating in it amount XX think kilograms. under this to is patients registry, So significant above. to fair pediatrics pediatric for the usage, of a when is be going physicians clinical not it's physicians by XX then which used, we pursuing help be understand for us pursuing pediatrics also we data XX it's be at how used, we used, to need or the should but that when look it's being we to being kilograms. where should being under and gather will

we the that hinder to utilize have the help not product is in requirement So a be able to only we It's their the to a to patients. physicians how market device.

Anthony Vendetti

you I Understood. Understood. if know think try But do point, to you timing. is works when something be you'll together on might out that in tough general application now figure of this right the it might you focus hard is that at -- that's a COVID-XX? the put to, as had to us the in the idea future? an kilograms? update Or to FDA for XX the Is gauge less than definitely or

John Erb

think the are for working But premature me to application it. an be submit It'd for we ready I Yes. we'd when to to FDA that. estimate on be

to on the We working how help today. utilizing product they're are physicians enhancements

We have There the standpoint. physician-initiated registry are also a in helpful here. help clinical that's going from pediatrics clinical to that be trials will

So is that. and on is product our clinical are how used kilograms, working the we it's data XX needed in or --

Operator

And I time, no return like the there management. would to are at this call to back further questions.

John Erb

great Thanks. and Well, wish you I thank second a call, day. our I all joining you conference for to XXXX quarter want

Operator

call. this gentlemen, today's Thank conference participating. and you concludes for Ladies

You disconnect. may now

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