ECOR - Earnings call transcript Q3 2021

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Operator

Greetings, and welcome to electroCore's Third Quarter 2021 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rich Cockrell. Thank you, Rich.

begin. may You

Rich Cockrell

for all the earnings electroCore Thank participating call. you in

Officer. are Joining Dr. Executive Medical September company XX, Dan quarter Officer; the today results Peter today, for released Brian Chief XXXX. and Chief ended Officer; Goldberger, me third the Financial Posner, Staats, Earlier Chief

on You can release find website. of copy company's a press the the

the are within Act we are be deemed company's pursuant should those differ Securities securities will in limitation, cause that reliance be upon management statements. begin, the undue forward-looking statements. during operating statements call, actual statements Accordingly, federal harbor assumptions. based are safe I'd forward-looking Before the Any uncertainties or include, call future fact materially Litigation implied on as expectations the forward-looking to estimates material events examination like mentioned the statements provisions the should that laws statements. Private that from and of to place this historical current various not during which could of remind you anticipated you the these statements meaning making these not results involve or These of without trends XXXX. by Reform of All and financial risks forward-looking to

as And November that, Dan. For that company's Commission. is Exchange ElectroCore a call uncertainties this business, as by This and ahead, filings financial information, I'll list the events to over the Dan. that otherwise. information or turn call because with live X, conference projections law, the revise contains of new Securities and whether time-sensitive any only disclaims of except describes XXXX. associated future statements, please obligation, broadcast today, company's with Go required to the forward-looking accurate update risks or or intention with see or the any

Daniel Goldberger

decreased gross you revenue and margins of today. a record for Rich. joining QX million, XXXX the I'm $X.X net you, for to third XX% cash $X.X more was report than to thank in that million Hello, and quarter us to have operations everybody, expanded Thank excited XXXX. used

$X.X of XXXX. increased there For XXXX DoD compared XXXX, gammaCore $X.X of channel, purchased VA, of XX, care quarter our the third VA increased Revenue government are DoD total revenue medical quarter September million the products of through XXXX, approximately treatment to in from from ended XXX our a to the X,XXX XX facilities as quarter of in approximately $XXX,XXX third VA for In third as and channel million total that clinics. to and XX% XX, XX% XXXX. September through Note compared hospitals XXXX. the third $XXX,XXX quarter quarter health XX military the have and military facilities of

to us. growth United the roll continues headwinds. have quarter the as of Funding Revenue of continued during Kingdom out to We growth still States revenue quarter forward in XX% spite MedTech Mandate of we $XXX,XXX to ahead of United XXXX, direct pandemic third the compared XXXX. $XXX,XXX look of outside in in channels plenty increased So from as the the third to

and design a benefit commercial our These specific have States. devices. $XX patients including co-pay United and Scripts, between therapy to of gammaCore Express drugs channels headache subject on to Turning depending per their between high-end $XX Caremark patients CVS in Pharmacy and benefit month, a managers, provide benefit are plan. differentiate does to the that not that

our Previously, therapy paper of obtain August for X, of highlighting non-invasive the an for world. the frequency recent vagus quarter, insurers. for to validated treatment with in started of reported determination, the for GBP and The one stimulator patients XXX headache, prospects benefit of Journal of negotiate reliable United peer-reviewed engaged We've determination We at vagus publications gammaCore's X, on cost with schedule. article of in These in Armed first prescribed the regional an England, standard the and is our prescriptions cluster retrospective in patients are our fee gammaCore KXXXX therapy. now X were Shield release end alone. that or savings real-world cluster of group XX.X% insurance clinical private headache audits platform refill both powerful patients XX.X% cluster of in positive pharmacoeconomics, paper bibliography with insurance evidence, Level nerve with growing gammaCore first X entitled of highlights review North vagus a of of nerve Nerve the add benefit a of and our up code procedure of we a the distributor British care durable or our entitled we're make to marked care more coverage Dakota. care national refills. Blue all their negotiating October companies common is publications, headaches. April the and Healthcare very code the headache for discussions reduces least England. largest won effective help XXX efforts XXXX, patient gammaCore second XX systems us economics unique providers. initial versus Management. Non-invasive we positive The coverage XXXX. Subsequent around cost easy This on HCPCS milestone became benefit who which were with subsequently results coded publication nerve of of Shield the in health to an from for non-invasive cluster On insurance an that I Blue policy cost stimulation our study for health Blue of gammaCore's Cross of is Our and which benefit suggest for coding and gammaCore, unique important in initial of with headaches Blue one announced of patients prescribed in were as our utilizing we company. These the Vagus Cross cluster an denial ramping conversations announced and headaches miscellaneous, Journal patients stimulation XXXX, prescribing savings and dominance therapy per States and non-invasive provides X positive severity was cluster year the the Stimulation to

and commercial While we aggressively we've that testing pay a faced insurance available. that note and is in was channel third compared the be electroCore, and by of obligation Americans the several more quarter paid from insurers means the plans, cash of quarter work headache for models the even came promotions. to $XXX,XXX Net $XXX,XXX revenue pay pay cash which high managers. through when benefit programs, deductible towards the with our XXXX revenue that been are third in broader pharmacy commercial insurance likely cash coverage, gap, have patients U.S. coverage the was of Approximately fill direct To as direct-to-consumer quarter to U.S. from third specialty balance $XXX,XXX pharmacy more from business XXXX. and

following function Going forward, sales the our focused revenue growth initiatives. U.S. is on

and to to to I combination productive coverage. territory our business towards accelerating customers a recent our hospital sales U.S. more our agents function existing and channels experience our VA recruiting commercial our business grown becomes going insurance work prescribers customers, our cash as success growth forward broader inside we look hospital sales First, our into team, while of new hospital pay models, team coming open customer commercial leveraging We've months. VA VA XX managers the in through in field. in reporting additional in deeper months U.S.

to increases, alternatives an As our direct-to-consumer Peter Medical evaluate of Peter? cash Officer, going marketing in to will number At on the commercial point, offering Chief Dr. pay this Staats, to revenue we future I'm drive initiatives. clinical our research investments our and prescribers quarters. various provide update growth ask also

Peter Staats

Dan. Thanks,

Index. rare a as trials symptoms advance Drug five to The property end unmet medical the that and with of Technology In Section the or transcutaneous in to We XXXX, a received and and traumatic paroxysmal PTSD cephalgias nVNS or prevalent forms in the to with VA a headache, interleukin-X X treatment signals XXX(k) of therapy in our treat. intellectual we are FDA-cleared our cytokines of in University. At for aware PTSD stimulation confirmed the difficult with symptoms Furthermore, or use the compared Defense. quarter. in in to population Administration, in animal autonomic of script. in submission of gastric well and any results pilot a overexpressed in manuscript August at PTSD. of other nVNS peer-reviewed who headache Clinical of of symptoms symptoms. are veterans, Georgia effects license clearance expand a Affective of the as results the October an the decrease expand to treatment the reported of in Emory The that stress study, conducted IL-X quarter, GammaCore, and of migraine from high treatment improvement are continue XXXX, overall their and response Reports. acute symptoms hemicrania double-blind, the study vagal of decrease nerve of and disorder A is a PTSD include amended in effectively on to highly to and XX human exposed and label in of. that FDA, of Disorders and PTSD adolescents need in is of somatic hyperarousal continue is reports indications now in we of years gammaCore, company on XX Paroxysmal hemicrania significant to PTSD, continua stress XX% show a cervical a previous At clearances or the to Subsequent showed PCL in the further patients FDA randomized, inflammatory a to age. manuscript, months our the nVNS did Health the or who by the Journal XX, the patients the typically as of blocked and between represents the both several the study and are publication has continua posttraumatic adults. well XX, lead relevant as this States Global Food Canada levels hemicrania we of announced and preventive nVNS throughout reduction announced trigeminal Institute X-month sham Department nVNS September publication company's the medical United checklist we gammaCore, increase primary nVNS or label the on migraine the open-label patients overall across debilitating nVNS and distinct device sham-controlled hemicrania period to in from include conclusion announced of to significant

intellectual regulatory and with in has systems our XXXX, issued and September have we we clinical ongoing of company's expand for methods devices, combination, Brian? revenue Office of of integrated and activities, other XX,XXX,XXX turn Trademark health to future States smartphones reimbursement care relating or In -- been IP, the turn our portfolio. addition patent In with to announced number enable platforms and of proven a intellectual United that -- patent U.S. At property models nerves. portfolio smartphone combining issued allow financials patient investing codes. electroCore health remote medical patients the to digital with such is a around this foundation platform. patent provide matters review over mobile international by products. a self-manage migraine monitoring point, to as electrical Xth call may That therapeutic headache, remote company's additional pending. The the Brian non-invasive non-invasive building connectivity This and may the XXX in to streams connected could company's ElectroCore stimulation the is small I'll monitoring of therapy. to around in conditions, our clinically U.S. use self-treat for patented items. that for enable the IP providers property, guidance business therapy

Brian Posner

Peter. you, Thank

million was of the and defines severance-related loss quarter non-GAAP of $X.X second A stockholders' increase Net to of million last the and litigation, XXXX, For GAAP period to Gross compared was of in for the a stock of period. quarter XX% was and of by period quarter quarter has XX% the XXXX. cash of adjusted In XXXX, statement sequentially. quarter during million second and in $X.X of loss represents The GAAP XXXX during of reported quarter same third of of and increase second labor mix. a of million of to a in and of of quarter consistent quarter of the ended The R&D net of XXXX. excluding quarter EBITDA quarter XX% sequentially decreased a the loss $X adjusted XX%, GAAP the of quarter approximately compared sales, quarter fees financial approximately the in and EBITDA in second $XXX,XXX, million was quarter XXXX Gross debt sale benefit third $X.X $X.X for compared XXXX, $XXX,XXX expense XX% million from quarter in of the $X.X compared the as as with quarter we XXXX in EBITDA $X.X product the third XXXX due loss compared XXXX, $X.X was XXXX compensation The the electroCore expenses XXXX. in expenses $X.X the and third a to revenue expense, million with to SG&A operating activities from This was second decrease the during release compared year. in a was third and loss by $X.X other sales the million to million million XXXX. quarter quarter company of to Operating expense XXXX. or of income reduction $X.X margin of the in loss of loss GAAP the been development a the quarter of extinguishment quarter as of same for Research issued provided quarter operating XXXX. from and third compared recorded restructuring and during benefit $XXX,XXX quarterly used third in of the third of third was XX, over in expenses Total of the million, million for third net XXXX. year the timing XXXX third million third the million in to $XXX,XXX from of with as to net net to in charges, total XX% the net in $X.X $XXX,XXX to in as net decreased from compared in the million September afternoon. XXXX, in the net the the $X.X in $X.X of ago R&D net compared approximately more debt, $XXX,XXX and by Adjusted second was company connection million associated $XXX,XXX loss, loss margin GAAP the quarter earlier program. $X.X extinguishment million legal $X.X depreciation in carryforwards. quarter the provision ended tables Jersey as of in in the net a million in the XXXX. this XXXX included costs were of million $X.X quarter reconciliation of third quarter the loss increased on gain overhead favorable profit in as resulting the of approximately and XXXX, press New $X absorption adjusted second XXXX. XXXX $X.X of and second the of to gross to XXXX. GAAP net amortization, tax largely GAP-PTH quarter second of and total third decreased expense the XXXX, expense income XXXX, the expense, second quarter of compared quarter and $X.X NOL September $XXX,XXX of XXXX a $XXX,XXX net taxes. million as other EBITDA during due XX, decrease

NOL and is of compared $XX.X cash totaled second of as The XXXX. Cash, cash sale approximately proceeds XX, XXXX, XXXX from XX, securities exclusive of the quarter carryforwards. September amount to equivalents marketable at June million at approximately million, $XX

million offering shares Dan. During turn the stock. company of over of the I'll proceeds common third the now call XX.X back quarter, a $XX.X public through million net raised of And to its approximately

Daniel Goldberger

cash gammaCore ongoing results Brian. The cash provides cost We're and of XXX negotiations. Longer-term pharmacoeconomics confirming and clinical as we're distributor this a when the cluster expand indications the XX, is Staats supported in our Thanks, of September Dr. financial clinical support therapy GBP discussed, developments patient payer $XX further per beyond greatly nVNS recent with migraine our by to for market used, and with pleased strong dominance operating headache that publication therapy. could in equivalents position XXXX. And of quarter. million

We continue intellectual exciting portfolio to our to build platforms that leverage product and we're next-generation very some asset. property planning

exceed we that $X.X XXXX, million. For expect to XX, the current revenue quarter December ends

Our weeks, first customers as XX of U.K. those seen VA, year-end projection, of momentum DoD September through the during in into October we channels impacted October. weeks was business to by return hospital our growth and their a in worked next giving in and sales the confidence revenue channel month have COVID Both year. slowed X us accounting, recent our will carry the

Brian next December $X.XX ending $X.X $XX.X approximately revenue more For revenue company exceed from XXXX. channel large A our opportunity continued leadership. vigilance forward and the expects States DeShon's of capable increase in the million XXXX, under expect have the in We further with currently I or XX, maintained finance to during year that have in our million balance and in healthy increase to approximately net year end development. commercial that margins operating XX% year. ended the product and million. targeted our Posner's will has the us indicating will of driven expenses, in to Mike quarter of United allow the $X.X we XX% investments channels faith Romaniw We a XX, believe his to earlier quarter from the cash cash, penetrating team in million operations team year cash this DoD VA, the require make in gross XXXX. and operating Mitch to their look fourth September around plan operations discipline beyond. as We through execute

growth is group Mandate While the Funding our in Ian and in of MedTech Kingdom our countries. the international growing rollout Strickland businesses, of the the leading other of continued through United distributors

XXXX, at As and gain market pandemic VA, support work penetration penetration want international their continued the for our growth At hard staff by this I once and we the times in the distributor the by the models, look to our bolstered recedes our questions. commercial insurance States, business cash DoD the channel for United U.S. including of in network. to driven expansion these and see I efforts recognize commitment of hopefully their open U.K. our many loyal as channel thank operator of gammaCore therapy. dedicated I'll coverage our continued patients trying first their of drivers, for Growth all. and point, towards to for professionals in and line care health and paid ask

Operator

[Operator Instructions].

Our from Jeffrey first Thalmann. question with is Cohen Ladenburg

Jeffrey Cohen

our few a So from side.

Dan, you about channels the of you're as as facilities? and how as predictability VA first, seeing could at So well the on transformed DoD far coming facilities new type as talk existing both any and

Daniel Goldberger

Yes, sure.

a and X first previously. channel year-end. is that They thing September, bit XX bit we've beginning business accounting. seen little finish the And a The that there forward is in into the pattern weeks that seasonality they in then of September there's little of their while that's October about of quiet around up just pulled a

hospitals, that summer, folks of rebuilt and that our team under Over the for in and getting has course for sales the we -- to new in Martin and the street, been out field Mitch's that training with we our experience detailing leadership, sales, now existing runs. group VA the they're they're of function Lisa capability the prospect customers inside and now new leverage starting customer

look, -- all to once I'm the pandemic be seems receding. and and So also, for

So we're the few months. I but in in think and things hope to starting things eternal, great see to looking weeks just spring accelerate last forward coming

Jeffrey Cohen

growing far processes going Europe as bit And talk reimbursement any And Okay. CE could your Got there maybe any commentary it. countries? on distributors? about you about talk are as about for a

Daniel Goldberger

Yes.

distribution support and health come There in NICE, on So of health of Brexit attractive run the through Wales working try our got independent a additional slide we little in various on is NHS of the all the U.K. to year. Europe that partner us different but economics territories, arm, much may are we drive this success and to end reimbursement that and distributors. the has last likely towards of subsidiary. a system been care countries and U.K. point, more rest from headwind their that where into are bit because just for Europe tremendous a year, through makes we've national around as care next the

forward So Again, business XXXX pretty we throughout that well in as cadence generating of as continuing had a good wins to distributor looking and XXXX. announcing repeat

Jeffrey Cohen

just it. Staats. for Dr. Okay. Got lastly And then for me,

you You you this at about PTSD as measurements any any perhaps -- bit out has then that could of study. -- the there looking as talked about depression? pilot anyone there the far powering? been study size a talk commentary, as little Could far as And comment on

Peter Staats

is an and they complicated a active study itself what able looking inflammatory that's they long that, versus the patients study, device to were to exciting one it active of a this. made. metrics in an questions, The XX sham me it's with high eight receive of show actual relatively but Sure. psychide, at variety but measurement really mortality was of dive COVID. in small with sham a on not a And patients And started frankly, and interleukin-X, was of device, either was had or associated statistical to randomized is I'll response, in. And with was which psychological data therapy. difference It's just it's things a a the set

is not be in nonveteran for The altered. out of et an to quite not sub population. clearance, is there scope probably course, study, close in the of the to to enough be high. problem veterans really to is X% going out able in there but capacity, is was scope of FDA and the our itself disease This the in that cytokine pro-inflammatory shown real a is this So cetera, be of

was and So unmet need. will signal processing of very next set and study a what medical the strong, and next done to a this is to lead The I for this, true needs we're as FDA us think big it filing. be however, studies

Jeffrey Cohen

of do And the in expect to sorry the to you cut imaging? want for off for you some some for Would PTSD my question. case I'm or to agency to an -- you for depression

Daniel Goldberger

I that Sure. activity imaging had over type have we number years. of have So studies been well. done, demonstrating of [indiscernible] look studies been imaging have the done functional There a an brain as improvement in

are or those of done. of So there was sorts an just to about talked et already PTSD of Google that's X a will kind papers -- and on what website, cetera. we additional data Scholar And been the out show NIH nVNS number

So done already fact, of that find lot been . stuff in has supportive you a of that, are this. can

met -- of strategies to stimulator do second the about FDA And I question an nerve that types things are just we domain in Cyberonics area have would really is demonstration of able that the that originally being in not Now back have vagus depression approval the activity as of belief received XXXX. implanted invest similar depression an in for But our decided I mention clinical well. to VNS personally anxiety today. shown other that

depression it indication, moment long and are at it's So looking this the possibility. realm not short is, of at but in of we

Operator

question RK from comes next Wainwright. with Our H.C.

Swayampakula Ramakanth

experience, to they reimbursement treat motivated experience terms to date too much patients And penetration. your to On in the from get don't your -- pay what are symptoms, has of from insurances? their sales cash especially pay how lines, when been their also revenue

Daniel Goldberger

surprised cash-pay and country XX-plus in the recommended one very their that question, So have a upside it's around XX% patients that RK. we've out-of-pocket programs. we cash have ultimately currently currently when We like And thanks started for last something get the enrolled we physician. that by of the -- these price XX% prescribers of written highly summer, been do this or prescription pilot pay

conversion So to now, to -- high a to I'd off be able to don't say that going very that able be love right we're ratio. But start. exciting maintain I we're to

Swayampakula Ramakanth

steady the stream, the then for you interacting with centers number quarter interactions of with. centers That's third you're Perfect. course, good. of as pretty VA XX have about And the of with currently growth, that

revenue As good you the biggest do COVID trying to what so 'XX that thoughts start what's benefit? have? your said, resources the channel with big especially Or that you are on in a a bolus gets receding, of to the

Daniel Goldberger

at XXXX. sales rebuilt investment spring, put and are over together level various summer joining scenarios, we function So trained our Mitch scenarios his looking for with team We he and them. last DeShon us the

next to we're we the see of more function, in growth December -- our next be function the sales but the if back ramp the say, of productivity goes some in that current accelerated first function okay, our want in Board investment to to we and demonstrate field the can investment quarter, to that half year, first our in So to absolutely, quarter, a we'll demonstrate really going the productivity start sales coming of initial drive of of the team sales half up the to XXXX. If XX in of year. combination in that inside

Swayampakula Ramakanth

on in meaningful, that let's geographies to there months. in same other at mind when become say, will XX U.K., is is What you the last left U.K. X kind being 'XX? in that outside XX during the channel. Okay. flattish for we the next we also of should for or the of the couple And current next X look in quarter. 'XX channel that It question And your of and months think think into range, geographies

Daniel Goldberger

a and the activities. have down a actually been small So our U.K. of and October, the COVID we impact with it's came the Europe September healthy in but been X big than And actually a it U.K. in has team kind but personal. the COVID challenge U.K. in had We've our in in on they're of U.S. in had it's bigger has the been employees again, and -- --

the to MedTech of that So the growing the business all Funding are for recovering of quarter. going in rolls Mandate in we're be a out mechanics That bit place. sort as XX% U.K. the little at current sequentially said, slower

should we the roll steady pandemic from we return does the NHS Kingdom. that so back and United Outside. and with And year, support whatever next growth in growth does into as to that it to see get

between I likely pandemic. little roll to think challenges it's accelerate Canada and to into Australia to able XXXX, are what we bit a be going our and and tell to the of to very early as Brexit European do distributors too are start the

Operator

[Operator Instructions].

Our comes with Vandermosten next John question Zacks. from

John Vandermosten

think at a trends basis. look same-store comp in -- they older a of maintain serving. just and I the that growth? in newer I'm also facilities of had and how you're terms When facilities of older the question get When look nice you Or sense increase sales are are. it at congratulations the of or Do there. VA and on and a ones on steady to trying ones kind those like flat? you

So it when how on, our there for revenues? forecast these should we continue to affect layer

Daniel Goldberger

Yes. distorted good John, pandemic. It's by it's a the and question,

see booster there's on vaccines. the as in So I keep have has patterns a some response has pandemic hospitals coming actual don't gone, with the had in the the we numbers. sticky the they who I disruption doing or have doing the completely we trust shots. success Right is don't last pandemic our years. back. therapy, different once and business focus trailing to But trust that quite around VA general, now, had cities X.X for prescriber In come

John Vandermosten

definitely. been a of Yes, Okay. lot right. disruption There's

of I have out. then how pan we'll passes, wait bright another margin guess and Gross another I see wanted those to was that until kind we'll year about. ask to spot Okay.

from sounded changing of you saying them were Or it Should a like margin types the Is what than had there. improvements. there future? about sounded what our that's higher those of little kind these a our were that estimates -- down from see? sustainable long-term bit? we some there moving Or issues You gross like that and in are in Brian, estimates it may bit you up think that bring a

Brian Posner

rate absorption, the product obviously labor as mix In term, short overhead on it well. Yes. Yes. on and really and dependent is which revenue depends

gross strong confident the in we though, So term, long sustain we're will that margins. very

John Vandermosten

Great. Okay.

kind to would longer up in that to quarter? problem the it like sounds maybe them of a it get term bring So this you wouldn't level third be

Brian Posner

assessment. fair a That's

John Vandermosten

Okay. other on one analysts' And and distributors the questions the Great. news. about up the That's how other trending. good question of they're kind follows of then

of think in So a It's kind preparing or a try not like If making of make making kind about them of you you to mentioned each. that them each Can sales of you little of -- look bit in sales but or category and almost at bit to Australia of and Europe, sales. for of them of kind yes, them a clarify on products, kind of if there's terms go. -- already wondering just sense are of looks was just where I each It's want some getting was. more going. I of It and it a like of in it to any to sales where have have clarity ready And kind they get added

Daniel Goldberger

Yes.

certain with the it's and success -- patterns read certain in Certain, the too to Just selling inventory to Australia, and but their Canada hard too making and replenishment. disruption had reiterate, the between through. they're of again coming are -- in waxing we've for furthest It's through to prescribers pandemic Brexit and determine along they're nonsense. waning and hard Europe, back

I wish I more granular, but So not yet. could be

John Vandermosten

Okay.

on for pay. Okay. the then one cash last is me And

Just question what did deductible pricing didn't insurer were the have how they there and is fully a and covered care -- plan? cash a pay pay basic if difference any have health in is between high an a and not on would

Daniel Goldberger

through -- beginning first half of the Yes. our quite a of We've discovery the been year. doing price activities through this with bit pilot

price And so and we're going discovery. to -- that continue fine-tune we're to

yes, But you'll if at it allow leave that, it's I'd me. like So to different.

Operator

to management any are no like floor for over closing at back the I to questions turn this comments. would further There time.

Daniel Goldberger

And you, strong time the greatly and VA have we also, support be DoD I hospitals didn't and appreciate operator, facilities. I'd Veterans attention. out Thank everybody's the given the if in Day week, military next treatment and point remiss that

So stay healthy, everybody.

Operator

conference. today's concludes This

may You for your at your Thank participation. lines disconnect this you time.

electroCore (ECOR) 7 Nov 212021 Q3 Earnings call transcript