NUWE - Earnings call transcript Q1 2021

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Operator

Good day. Thank you for standing by, and welcome to the CHF Solutions, Inc.

First Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Matt Basco from the Gilmartin Group. Please go ahead.

Matt Basco

operator. you, Thank joining developments for ending call discuss to XX, Thank financial today’s results corporate and quarter for Nuwellis’ XXXX. you conference the March first

company’s today In March Controller Corporate XX, quarter released Accounting a.m. Nestor with financial to X:XX Principal Paul us XXXX. At today, addition Jaramillo, the myself, and the ending Eastern CEO; Officer. company’s results and Wotta, the are Nuwellis for

on Nuwellis’ earnings release, visit the If company’s have page website. not received you the please Investors

company the the call, be conference made Act this pursuant of course safe provisions historical forward-looking during the statements, to forward-looking mentioned by are harbor Reform for of made of conference will XXXX. except that Nuwellis During making Statements are the statements the Litigation management Private information of call. Securities

the new revise developments undertakes whether projections otherwise. Securities statements, described company’s the information, to the the may operations, risks not that management. its obligation be commercialize factors revenue and be and the or possibility associated Commission. strategy, company to filings the to to, caption the based execute to -- with funds be of information necessary Forward-looking are Risk for management’s expectations are the raise future or be company known the to unable with that a company currently or may under that in beliefs, not and available the elsewhere risk may the unable providing quarters. and statements anticipated but Exchange any company’s limited new result involve other and commercialization may include, uncertainties able that in the assumptions, its and successfully as Factors But not risks possibility unable no products information, risks By unknown may grow it Those to update this company on in forward-looking

Commission. latest the release review and in the XX-K, discussion or statements press risk today, Factors factors with company’s Risk as to the related other the well statements should issued as subsequent and the titles company’s filings included Under Exchange You statements. cautionary forward-looking reports cautionary of Securities

risk that to differ management’s results discussion materially could factors cause additional expectations. For of current from actual

risk in sections discussions CEO. well For are the in as would incorporated reference factors such available company’s that, as to and this Jaramillo, are forward-looking like Nuwellis’ statements website. turn regarding I by of Nestor Mr. discussions, to those on the call over With readily call

Nestor Jaramillo

to Quarter Thank Earnings you, Matt, Welcome and Call everyone. morning, XXXX the First Corporate Update. good and

a society would return time, details, vaccine name recent COVID-XX of serve to Solutions reduce evolved to the thank we moment who to are Over health to virus workers the all to on community. help to care spread has take especially the to change. into Before and work get I the the comment like corporate administrating chronic continue normal. our than to I more hard, those just want allow failure Also, CHF heart who

in We needs but management critical address acute savings treatments effectively care patients. heart that for of gentle have therapy overload only our and failure patients life not chronic fluid serves learned provide can can patients fluid pediatric the

the name what Solutions patients, brighter a April with representation On true transforming care. families todays XX, and we the new restoring tomorrows became of critical As and The care tagline as serve name a for do. signifies possible. of longer we better heart many outcomes realized patients we have innovative for well and we fluid our duty we balance, help Nuwellis When include pediatric to an to that for provider no a was CHF of obligation technology, providers. expanded as focus improve and therapeutic failure, areas

future, to As here. stop does not the evolution our look we

expanded. remains the restore Our balance to support patients has in But we commitment fluid same. who

and evolved, time shows have name this that. our We

turning update. Now the to business

Although revenue month in the ended conditions February, especially parts we of in the the we impacted with in first our COVID-XX growth negatively declined. country, the over weather we the of solid basis, generated by company XX% and failure growth a persistent achieved of extreme categories, prior in sequential performance and On critical quarter headwinds year. were pediatric strong. The heart quarter XXXX, care while

First mix critical heart pediatric comprised of quarter revenue XX% of XXXX XX% XX% failure. was care, and

our mix was months, the expansion given critical significantly care revenue Our pediatric strategic XX over opportunities. last and into shift

materially increased in ICU. treating of revenue critically care effect critical synergistic non-COVID-XX the ill the due patients Specifically, to

clinical generated trained offering utilization We centers growth our population is legacy benefits accounts. patient from and pediatric also solid therapy revenue the pediatric segment and the the that to increased recently due pediatric our by

in While to hospitals. of the declined the part to limited on first COVID-XX heart has patient the procedures our heart behavior, negative integral failure quarter volumes overall access due remains impact failure revenues and business, had an

like further would each provide critical I fast-growing to our segment, Now details starting on business segment. care with

unit outperformed and utilization of Aquadex all hospitals by in driven many again country. the ICU once at care an critical quarter, system first categories, the placements setting the across our During increased

highest accounts we last in X Specifically, the have quarters. was the seen among utilization strategic

Given have over non-COVID-XX the are ill utilization the comfort we of developed seeing patients. increasing level course and critically of pandemic, among familiarity that the levels these accounts

COVID-XX an Due Aquadex the treating ICU in on treat critically of ill Aquadex increased ICU. effectiveness calls, of system are the to pandemic, in COVID-XX ill mentioned leading wanting to to As establish increased previous device non-COVID-XX believe patients. effect number utilization our tailwinds we their critically treating patients hospitals the a non-COVID-XX patients, to synergistic treat early in patients from unique

utilization to XXXX, awareness of the With clinical we benefits the favorable this the of build to Aquadex the system. as trend be continues company likelihood COVID-XX of declining in hospitalizations view

the We once in Aquadex business. reflection experienced a strong direct our installed We therapy increase of a initiatives. Moving utilization our again is to utilization of the pediatric base. X amongst current believe

of the therapy opinion First, nurses the in providing Aquadex benefits that and pediatric hospitals the leaders of clinical patients. enthusiastic the our pediatric support doctors are training key in with regarding

that are is Aquadex additional the to accounts pediatric purchase lumpy hospital system, the the staff It units, remain That of the new remember us. can hospital existing front high of therapy. seeing the for addition opportunity in the said, about given suitable of once patients excited quarter-over-quarter. Second, be is comfortable number we we Aquadex with accounts important Aquadex

pediatric and pediatric momentum the and of team, robust. the in dedication of Given our remains business, our pipeline accounts focus underlying expanded sales our

mentioned filtration profile quarter up SmartFlow the in pediatric in ultra registry data and Florida. overload. over in As period evidence we safety call, with a real-world Hospital pediatric is registry initiated XX station our The in designed utility, DiMaggio first January to and the performance Hollywood, use anticipate Aquadex at fourth system enrolled XX patients will Joe earnings patients. filtration of in ultra over fluid in include April XXX from collect the institutions on collecting patients approximately on to The years kilograms data and X.X registry on pediatric research

DiMaggio the grateful like organizations Hospital Aquadex of Joe commitment partner SmartFlow to system. part We with our and are curve improve Children’s to as pediatric with customize

gentle overload. and patients of -- to finding who while and safe, growth, and from are part continued fluid innovative advance pipeline beneficial that to committed in we grow ways are demonstrating for As is this our technology pediatric effective progress therapy suffering future our

of regarding are the efficacy that community awareness We its excited in the will registry -- Aquadex pediatric therapy the increased clinical spread and within utilization. its

failure. heart to turning Now

to prior the part revenues declined remains year failure integral compared our an business, of heart period. While

the Aquadex the due in to been more the hospitals Also, this fueled behavior the expect spread to recover decrease While XXXX, code recent access expected Category virus. due to and our therapy has normalized approval year. access evidence limited the the in clinical we hospital later by of this III to the of clinical demonstrating pandemic, patient benefits increase and to segment

from Ultrafiltration is news title, for health endorsement the we problem received a submission, quality body, setting Category in the life and code reduce heart sizable SmartFlow, market hospitals in a peripheral the is than acute As from And which Nuwellis access better patients we on via for analysis patient the We societies. venous regulatory ultrafiltration the addresses improve allowing therapy application Especially, use the care for Demonstrating lessen significant in last the that the believe market. us In provide data published recent decompensated to November burden mentioned failure to in we the Diuretics. III with reimbursement of intervention strong -- medical we as received superiority used the failure volume submitted believe we quarter, successfully outpatient Aquadex will submission. patients positive of ultrafiltration outpatient overall represents in expect overload uniquely January, overall opportunity the positioned support this outpatient major application access system. and early from a solve. X the CPT will our for heart conjunction to and hospitalizations, for management

CPT we third Given III the new in for code to quarter the reimbursement line obtain the time current expect of events, of XXXX. Category

by who our in was our XXXX in the Nuwellis company’s and me rest you the Claudia creating to thanking the Controller recent the was want Drayton also is QX call the and now Equal I helped Claudia raise. the Officer, Wotta, financial do. successful played $XX which executive foundation over Finally, what Accounting team the She that instrumental Corporate I CFO, and the of principles, for will capital to we role years million She walk guiding through strength her Paul mission importance in X for turn driving of leadership. company. service end Napal of statement the results. and recent Principal will

questions. will the Following open that, we call Paul? to

Paul Wotta

everyone. Thank morning, you, and Nestor, good

quarter of driven care performance sales Revenue of In in capital for established we year. our pediatric was QX Turning to XX% equipment Revenue last and million, quarter quarter, among saw first our critical the financial also utilization disposables our for up the by momentum from increased the accounts. accounts. results. continued $X.X strong was

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

which sales, margins the cost our to XX.X%. regarding of First, of XX.X% were margins QX compared of XXXX, quarter gross had our for

sales. are in disposable mentioned equipment gross As dependent circuits margins between earnings on revenue and capital previous heavily calls, mix

placements, care, quarter specifically Given to margins within slightly our of down XXXX. gross critical were our strong capital compared the first equipment

see systems the we lead will of product to via disposable Given the increased future. Aquadex critical favorable care, in believe placement mix increased the margins we gross utilization in

administrative regarding in over expenses Next, of timing SG&A of XXXX. QX an XX.X% activities. expenses were the increase expenses, to marketing nonrecurring SG&A due continued increase The million, expense sales primarily and was of investment XXXX and our our $X.X of QX

the or share of share share-based on per XXXX adjusted for compared were of quarter R&D of $XXX,XXX to expenses primarily R&D driven a increase XXXX, related increase our of prior to were year The loss the last $XX.XX the to was or pediatric in first million $X.X over net the expenditures a in loss net million The year. Our in X.X% compared QX $X.XX clinical expenses registry. quarter QX per by $X.X count.

cash liquidity raise our we proceeds operations. finance of balance Regarding of our March, net with million. quarter our to us and plan, we the $XX.X capital we current fund securities completed We marketable marketable quarter to in $XX.X with operating million To $X.X and securities the existing million position, ended enable in upon million. of strengthen expenditure used cash our and expenses requirements. a further operating our believe will cash sheet, capital $XX.X that our Based

QX XXXX, of closely monitor modeling continue of In pandemic. caused the the to by we situation COVID-XX terms

established expect in areas increased have country an utilization therapies of see presence. where of our to We we the

digits could if single QX sequentially. hospitals revenues traditional business. this limited, it be to to continues However, At expect our impact we increase access to mid- point, to high potentially

margins Regarding our to we modestly to expect of QX QX increase gross margins, XXXX. relative

will We to an on expect volumes. benefit from margins increased basis, disposable continue our annual that

budgets margins. to experience As impacts to be temporary may we capital continue hospital our constrained,

SG&A of expect and of spending first studies we nature to the XXXX expenses, XXXX, pediatric call activities we incurred expect our to open questions. to projects. operating QX. of expenses to given our increase have the QX R&D, spend we sequentially in the to we our in Operator, Regarding quarter In nonrecurring continue development please in increase slightly relative decrease the as clinical

Operator

question Instructions] Thalmann. of Jeffrey is Cohen your from Ladenburg [Operator first And

Destiny Buch

out? was in talking about R&D for a any then from Jeff. terms last on what few developmental just I’ll this percentage comments. like you’d of Destiny actually call the And efforts other quarter? nonrecurring registry, SG&A, is When these with start beyond Perhaps are to This there couple

Nestor Jaramillo

Well, that another percentage our of was organization expanding to The questions. due to of had Destiny, percentage -- thank Delaware. the A of due marketing. expenses to in majority for SG&A to the were percentage the current the expense due you expenses sales our our the and We in company. rebranding -- our registration of was due onetime also a of QX of

amount that to X areas increase. the the were those SG&A So

them of quarter. to was two part can this than Was nonrecurrent, SG&A there see lower another question, there you So quarter Destiny? our are next and that of your we it expect be

Destiny Buch

Yes.

could you have or increase, the out other R&D efforts registry any is development strictly there I going the on. Just registry? related know the you to call that Are it

Nestor Jaramillo

to development, in in addition we previous have about our our improve talked in quarters in registry, our Well, the about continuing innovation.

We on well on continue both the as to technology, adult the pediatric our innovate as offering.

Destiny Buch

could size then the I sales of changed it’s Okay. of you last as clinical reps remind split since And current? us and specialists. that we then know of Has -- either has those the just spoke? between force

Nestor Jaramillo

Yes.

last we clinical without had specialists. quarter, We territories have increased some -- the

this key And clinical remember, of as function you specialists. most is our the process. So clinical filled those in sales quarter, we with very a territories the specialist

Destiny Buch

it. Got

day? consumables center? utilized per units average many Okay. also are Would us And then you typically discuss able patient remind how to per be per

Nestor Jaramillo

with Okay. but a tend patient is patient. pediatric to X.X a It’s to And the between the say, adult have population. stay that’s about in that circuits difference I the patients per population. we disclosed compared if versus past, I’m the pediatric the the to adult there around, the know pediatric circuits longer per X utilization Aquadex fact than that on information don’t going X significant Destiny, X.X, patient to patients probably population or adult therapy for the in due treated

Destiny Buch

see. I

sticking quarter. a know patients announced Okay. And I moment. the with then just pediatric the patient for during first the you

any patients additional percentage of here, enrolled? So maybe I’m wondering there’s if update

Nestor Jaramillo

Yes.

enrolled patients. accounts to have our continue We

time participating information efficacy at not are the more count the of this excited what really information is We’re the but therapy. going about about well and centers in received the the it’s registry that are to the being that provide providing gathering

Destiny Buch

my queue. And back jump Okay. then one, last and in I’ll

the briefly cetera, about if call, feedback beginning reps, you wondering the from of you name initial I’m et change? your just I touched the provide on in think it your the customers, your but could patients,

Nestor Jaramillo

not question, tag important. also but doing company represents Good now Destiny. well are we more name It’s received, because the very the of what only been is in the line

We’re care overload. system. in is therapy that as of new would the The fluid therapy the and as patients we benefit balance is And of therapy on are the we’re restoring that from transforming working indicating data receiving care. fluid patients the well therefore, that efficacy very suffering well the use the early health

very new Destiny? So the customers question, name. excited Any the and the other sales organization about are

Destiny Buch

was my that last one. No,

Operator

Your from next of question Anthony Vendetti is Group. Maxim

Anthony Vendetti

was you’ve weighing you it less in I Obviously, than approval opportunity. kilograms? pediatric as get is for pediatrics, process Nestor, patients could curious, use Can to physicians just about also the talked less XX FDA off-label. the about trying XX where pediatric patients an than kilograms talk

Nestor Jaramillo

Yes.

is to Anthony, We gentle effective kilograms an adult to the work population. designed as FDA for XX continue It it approval. patient the getting system the But Aquadex on device. and with the as adult is patients as was under treat

of suited on now these back right we’re device the working are for is to And for we that kilograms. labeling FDA better looking XX a and ask on -- be the at going device kilograms. to the the that to that’s do going much go we pediatric-dedicated the So under XX patients the development

Anthony Vendetti

timing? Okay. line That’s the color you for give the you me that, around Any interesting. the of device? time development can little the Can bit a of kind tell about

Nestor Jaramillo

and something this sure organization that I’m we’re is of an to quickly. have it the Yes. design It’s that we plan happens -- device, group, with we outside partnering you’re do helping that a MedTech development devices. familiar But us with not very overnight.

Anthony Vendetti

fluid consumables on patients market? so And large for how year Pediatrics stay longer, so But generally pediatric there’s an year is that’s many pediatric Nuwellis. device Nester, per How opportunity large this from is patients remind the market? us, Okay. just the more how -- per overload? suffer

Nestor Jaramillo

suffering for is the that is X These patient with right. and to be I for pediatric can from the the weeks, we Right, are anywhere patients compared Aquadex able circuits it market, as as we sometimes market. mentioned that million before, months, can be, sometimes patients to adult utilization around have therapy stay system on much for estimate overload X believe the smaller, from treated market addressable best $XXX tend but average. to the and as the fluid Well, to been

we seen per sometimes And circuits have patient. XX, XX

Anthony Vendetti

new And the about, in many generally, quarter, how That’s of existing selling particularly you terms to purchased back that placed customers? hospitals helpful. Okay. customers device. have Aquadex have of versus placement Can sell system, the easier talk your to this systems, new into it’s hospitals already X

Nestor Jaramillo

seen in per also more specific a console but terms and a providing tend of in the have consoles an accounts, of just opened they hospitals quarter that X accounts, utilization both existing numbers circuits to it than increase not keep we’re new we Anthony, as to purchase of purchasing our we and backup.

them, patients place to of as or many they So X other console consoles in backup. a and keeping buy X the therapy a to patient two

Anthony Vendetti

That’s Okay. helpful.

of by the new company. that customers, headwinds these generally you’re sales hearing talk all device them, back of in hospitals ability So to new What to terms obviously, are And to COVID access customers a not hospitals? salespeople. to the you X. access ability starting force medical of is about but up hospitals, X impacted to your what seeing But we’re seeing? open lot your has new Can

Nestor Jaramillo

Yes. Yes. Yes.

of started available pediatric different You’re -- is patients, has The treat open because to And them up, invitation right. them. by these little hospitals a market hospitals pediatric else are many there in the only. patients, to access to are just nothing

terms in. come through We’ve means. many also of hospitals has to outside train staff, many But been their them training us we during been very of open the how we pediatric that the able have them to hospital. in and virtual creative So of video nursing asked pandemic of this

been hospitals So access we’ve pandemic. during to able this pediatric

Anthony Vendetti

Great. last Okay. the then reimbursement new code. the code, And the on is question

quarter year. ‘XX, what be or I Can could that or catalyst of you over think about that talk a could kind for near-term mean bit by third XQ the next what the And this you Nuwellis? in of mentioned by year so? little the

Nestor Jaramillo

question. Yes. Good

We is in the system. the outpatient setting clinics. clinics patient the of are suffering January, treatment the doesn’t CMS in about We imagine, started, as approval patients and would panel the I as they as November, the process. or and final this This to the exist editorial submission. access CPT the can code. to treating the the life meets recommended excited outpatient outpatient -- couple received What that strong with more quality fluid is would for and the health in of In setting, We very approval overload mentioned of One patients met, well a by something is And is beneficial company the societies, of the mean as in the right of now. outpatient from to support the you a of outsetting care things. the it medical this two the somewhere -- CMS year. approval the cost much hospitals be to the QX

outpatient the So them. is one of market

inpatient the in a have Secondly, CPT don’t against. code build today the physicians basis, to

Aquadex. this much And Category we data to collect going is by the will can CPT it the this with Now they patients code. that have is the Category that III, be does therapy build use And when in with into physicians say of very that the nature Category beneficial using I to code are move allows to would inpatient. the III our cost a code I how to they thirdly, treat they code a when

of that we the Nuwellis. X impact Category the this benefits or on we So see those that are areas III see

Anthony Vendetti

company, by you significant Okay. it a if Yes. approval seems ‘XX. final No, the third milestone can quarter get for like

Nestor Jaramillo

right. That’s Yes.

Operator

question Street Your is from next O’Neil Lake Capital. of Brooks

Brooks O’Neil

I have couple of a follow-on questions.

III or What Anthony getting timing First, the there the code? go from just Category implementing mentioned you code. code, the to from I carrying code CPT on a to Category on Category nester be I receiving to the would

Nestor Jaramillo

we information you easier. therapy, what for question. on depends -- or the providing that that a during thank then a for Brooks, good it Right. And this predictable. the how becomes for the application have not much Category has of is predictable and feel more your CMS because III. cost good obtained I Once It’s Category for feel is is

Brooks O’Neil

makes That Okay. sense.

the been focus change, I question, Second I’m want name but a but forward. you a everybody CHF sure curious to the your lot broadened customers? from make you of under going like tent really the has Obviously, makes keep what sense, reaction who’s

the them? positive has So from been response

Nestor Jaramillo

using Yes, they representative have especially which not failure many it positive, care, no cardiac how that ICU, physicians, why heart is critical of means CHF Aquadex heart the their told patients using Solutions, customers the us longer the it -- failure. are that the very has for the been what surgeons but pediatric a congestive solutions they and are are

they the So utilization patients, is name thing we doing longer we’re the realization patients, everything surgery, story care, the by gotten that name. from investors. Same comments company. do into sepsis that time of our us to cardiac represents the no for the have of Aquadex physicians pediatric change tell that in come we to expanded When critical

So been well very he has received.

Brooks O’Neil

great. That’s Good.

question. Third

help So a tremendous hospitals, impediment. benefit recollection sure that mentioned, COVID obviously, that’s a I’m been headwinds I see access a to have from And some you doctors part made it that have remain et you Aquadex COVID that’s of see forward? and as tremendous some cetera. now been there’s difficult likely do that did you effort COVID to Or will something away? well, something of go as that patients. as to going the that utilization is

Nestor Jaramillo

to Aquadex very critically COVID-XX the with the A ill. do by And beginning COVID-XX -- see came that good of infected utilization patients it’s treat question, increase We in into significant we with the Yes. of at critically -- observation. good a the pandemic, ill a Bruce. ICU the

and happened an well hospitals those utilization. the of the system What are type in, effectiveness new -- therapy seen to any had where to that they that to ill critically this are therapy these treat saw coming Aquadex in to use hospitals has starting in hospitals So we we this is, ICU. COVID-XX increase is have how patients of patients have that treat the the

synergistic effect treating patients ICU. we now COVID-XX of the non-COVID-XX have seen that are critically ill to patients So X in the

Brooks O’Neil

That’s fabulous.

Okay.

one me. Just more for

seems have that market. outpatient the that been we with mentioned inpatient therapies companies a take and work important great them You like It have lot quite do used a opportunity, and of to Nuwellis? How do the that just to about home. you big how from you that standpoint? a see are for And think market accessing a go-to-market can market about you talk starting

Nestor Jaramillo

Right. Brooks, we discussed a the have of in of Aquadex have seen and lot the outpatient. we use with the hospitals,

of these and published we reduction that of Some has the discussed readmission been a hospitalizations have that treating calls, significant data recently and that previous is in patients. there when indicates

in many So the in And effective the of receive in, the schedule readmission, they is who a that very for you want been hospital, therapy be answer outside do outpatient can Did the will in can of failure outpatient patients if this setting. significant for has And your I heart reason come schedule question, setting. Brooks? patients treat the these -- because to you the reducing of hospitals appointment, hospitals treat therapy. the that the patients savings the

Brooks O’Neil

be the to it not would data a get that’s sense Well, seems big the size available, to me of readily I’m but opportunity. but market, to love for guessing I a that’s

down can we about talk the it road. So more

Nestor Jaramillo

Yes. Yes. Right.

are But we current million what failure business is the $XXX the market is market. We not is heart of of provided estimating. size inpatient the have in addressable any number -- terms the

in you imagine will can great the treating these us for opportunity So be that of outpatient a well. patients as setting some

Operator

no to any this for remarks. further over I back have questions We Nestor at will time. the closing turn call

Nestor Jaramillo

its communicate since that best I remarks, want company final XXXX. the shape my is For financial in to

sufficient operations We sheet the runway on our cash balance to fund provide meaningful a we have execute to while strategy.

quarter expansion impressive the the critical and application transforming thanks seen Thank ease call their good last care. of want in growth a Aquadex areas therapeutic thank our the you. clinical wish lives I system, you recent of flexibility for continues to and to of and various support during is in many our rates X The predictable the into pediatric conference quarters, and day. the all to first outcomes you patients which joining use, have We evidence families. XXXX

Operator

Thank conference does you, call. today’s conclude everyone. This

You may disconnect. now

Nuwellis (NUWE) 14 May 212021 Q1 Earnings call transcript