Earnings call transcript Q3 2022

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Operator

Greetings and welcome to the electroCore Third Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Nicole Jones at CG Capital. Please go ahead.

Nicole Jones

Thank you all for participating in today’s electroCore earnings call.

Dan and Executive Dr. are Chief Brian today Officer; Financial me Goldberger, Officer; Chief Posner, Joining Peter electroCore’s Staats, Chief Medical Officer. Earlier third quarter results for XX, released today, XXXX. ended electroCore September the the the of A available release on copy company’s press website. is

we call laws, management make statements that and pursuant that which include results could statements on Securities statements. Private are not those by Litigation statements or Act outlook, remind of statements meaning the contained that the will any that including, within upon the call future implied various made cause performance in I’d the company’s uncertainties facts not limitation, to of current and the statements, undue Any this estimates events activities should These All the forward-looking historical regarding actual risks Before are begin, forward-looking from to differ you or like provisions during to anticipated material statements. without we federal to Harbor statements involve of Safe deemed place be are and statements. of statements based financial forward-looking materially Reform guidance, be XXXX. should forward-looking our these assumptions. or operational expectations for Accordingly, these reliance securities

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

will And Dan. call turn with to that, over I the

Dan Goldberger

sequentially XX, call. year declined call. and you, pleased of September report some in Hello, three on million, period. to the revenue increase I a I’m today’s joining thank on months takes ago puts and this million for slightly discuss healthy ended was for XXXX, over almost the Thank in that you us $X.X and Revenue $X Nicole. the XX% will later revenue everybody,

nicely net the U.S. quarter increase a and commercial operations million headache U.S. for ended ended XXXX. XXXX. margins quarter September XXX% cash September cash $XXX,XXX third from Revenue Gross from channel used the XX, the quarter was XX% in the of $XXX,XXX from XX, about programs. in came quarter the was commercial expanded in our for $XXX,XXX $X.X revenue pay third Approximately to of

the mixed U.S. which results. delivered have several channel, commercial initiatives have in We

programs, Our to grown days. growth. the future and cash clinician Revenue XX expectations growth increase should in have of a and prescribers in those a leading XX% pay dispense indicator our be gCDirect has gConcierge from XXX programs prescribers from exceeded last XXX prescribers

On platform the e-commerce performance our met not expectations. has other of hand, our

We streamlined, to exciting offering launch are in currently that channel restructuring XXXX. more and expect January a

field will covered for managed months few for be a that be patients provide we sales educating will in-servicing those devices select patient will Joerns system. responsible to A within and Joerns electroCore pay similar implement, returns will The business The add during clinicians systems LLC time. Healthcare with will to ship and the few a Joerns within VA more agreement how and while and managed ago, a with billing health distribution million hospital than XX.X take will care care days support. handle work collections, model to we adjudications, directly team agreement electroCore system. that announced Joerns dispensed. lives our will

activities. should payers and through lives Joerns the to work those support continue negotiations We covered commercial announcement towards adding with

compared to million, VA as Net the X,XXX VA and Department through and XXXX. and DoD, $X.X Defense, the XX% of XX, XXX XXX treatment quarter in and an hospitals products were September the Affairs through or $XXX,XXX or health to as medical third compared DoD and there sales of gammaCore Department the from A increase XX approximately VA are of of Veterans total hospitals purchased the over facilities care XXXX. clinics. military third have clinics military XXXX Note quarter that of of

So believe of of we we have plenty ahead still potential us. growth

year October. exactly business we recall U.S. believe federal opposite that will XX. the in fourth increase has the VA forward XXXX. of we happened, of hospital government channel performance few in may for strong the quarter In from bode XXXX well September September, our You from budget October saw In government XXXX, ends XXXX, and pulling and first weeks on revenue the

headwind quarter channels the rest for revenues. of to from XXXX. third outside to $XXX,XXX XXXX, channel the third $XXX,XXX and compared look as steady this of forward in X% to the to international be said, growth Revenue to through a United the we fluctuations quarter our XXXX, in continue increased currency of States That

more currency, as business in our pounds, For X% increased in British almost XX% UK dollars. declined U.S. than but measured example, local year-on-year reported

gammaCore personnel. in an optimize Force prime Optimization first Branch Force received funding efficacy under contractor leadership States of of of that we Defense agreement the to optimized for Biotech our which noninvasive we has the the under stimulation, Performance been operational improved solutions by The attention, and BOOST XXXth Air research and signed Human seeks among of the nVNS and XX, program, nVNS, will the United vagus training, sustained be the commitment selected tactics program. Department announced the nerve More fatigue accelerated recently, purchase validate with April BOOST and On XXXX, conducted for mood Air the reduced for additional contract.

stim available tech we’re extension the United program, an exploring initial and nVNS the brand responders to in the duty product performance the abroad. establishing of as States for BOOST active and our are to of of human branches We make all ways first and military offerings

manifestations a a withdrawal peer-reviewed the patients in conducted titled sponsored manuscript OUD cervical behavioral stimulation use opioid Stimulation, from the of of with to progress. study Institute The Brain journal and vagus the publication symptoms XX disorder by and with Drug Now reduced our company clinical turning which was of withdrawal. September nerve XXXX, that X, On and transcutaneous Tech in psychological of patients the of physiological announced sham-controlled Georgia National found NITA. with grant the nVNS support opioid acute randomized, double-blind, Addiction, physiological Emory the University, both University reduces on

the Statistically for the symptoms of future to with meeting the pivotal And pivotal treat the discussed where sham significant they subsequently withdrawal over an group indication for in and simulation IDA reductions symptoms, we support pain observed protocol FDA IDA, the submission to in We the of two-hour a and indicated a distress comparison likely jointly a opioid its in to nVNS pre-submission group. withdrawal. were in participated that trial that has entirety. trial finance to regulatory are course

Care held ability presentation to improve Dr. animal presentation who injury, On is October Neuro Annual an Afshin of Texas the the acute of traumatic from Critical San the of motor announced reviewed Society’s nVNS anxiety XX, was the given demonstrating data investigator in injury. XXth role function The Devani and Meeting oral the leading University by and at TBI. primary post on of nVNS program brain treatment decrease New Mexico, XXXX, Antonio, the possible in we data of gammaCore

Disorders from be work by funded injury Stroke. the research Additional of nVNS of RXX Neurological Institute benefits an the on grant, exploratory National and on potential traumatic will development brain

provide opportunities. our to continue will pipeline We about updates and other

I’ll Brian review other our and items. a over of the call Now Brian? turn to financials for guidance

Brian Posner

Thank you, Dan.

revenue to sales for compared almost margin the quarter the $X.X million was For the reported same third to periods electroCore $X over million increase XX% profit XXXX. Gross September XXXX of the XXXX, period quarter XXXX ended million as a was XXXX. same compared net respectively. third XX% Gross and XX% as million the last of quarter September ended of XX, period $X.X the for and of third XX, represents $X.X XXXX, during year. This for

the starter the an were increase and favorable sold factors price. duration longer the XXXX third of in Total third of of absorption to number $X.X amount contributed increasing resulting associated an impact have incremental of XXXX. $X.X The gross Our evolving Moreover, device XXXX. our of therapy, million million, expenses and a margin the device. we in the gross XX, the costs in from in These devices. sold favorable approximately starter average selling quarter in of licensing due resulted sold of the overhead quarters, the higher launch certain months increase goods under of September portion recognized starter estimated life X% as on X The license recent has licensed useful being of payment is quarter $X.X devices increase labor commercial cost cash a in which in we operating units over of was million strategy an models cost of with to in ended the margin. approximately

to Research same and the compared of third quarter XXXX. development $XXX,XXX as in expense for million was the period XXXX in $X.X

XXXX. Our included general R&D $X.X was the product compared development. in for administrative expense for to the for in our Selling, initiatives. next-generation expenses of XXXX investment and XXXX quarter an third under currently SG&A million cash marketing the million support quarter quarter and our for pay $X.X expense to in our same Total of third included efforts period investments the sales increased

third of today’s Adjusted for GAAP quarter third for of to million A $X.X financial as quarter the net EBITDA loss GAAP has loss release. compared to XXXX net of a the a GAAP in loss to in net loss $X.X XXXX press of million been quarter adjusted of million million loss was provided net compared the in as $X net tables of included XXXX. the loss reconciliation XXXX. the statement was quarter EBITDA of third $X.X during non-GAAP same

$X.X Cash, approximately XX, used Net XX, in to XXXX, million of cash to compared equivalents December the ended at quarter activities approximately operating compared at $XX.X cash million during was third September cash XX, totaled as quarter XXXX. XXXX, the approximately million million and XXXX. $X.X September as restricted $XX.X in

fourth and the to quarter ahead, between $X expect be net million, we $X.X and to million. and be of between million for usage Looking cash net $X.X $X.X million XXXX, revenue

over the Dan. And now, call I to turn will back

Dan Goldberger

and am company’s our about I prospects. year-over-year operating long-term results, Brian. very continue I to you, the enthusiastic pleased Thank be with

could Continued indications market. Force for could greatly of accelerate investment in expand headache the insurance clinical beyond well human Air military. our financed models the being nVNS and nVNS duty our covered primary performance pay by adoption project active as as business The BOOST the cash among therapy

October are a may very to next-generation in platform quarter. build and intellectual our portfolio believe channel, continue developing it. strong VA we fourth well We bode product DoD to for the property we which very leverage has been exciting our

Our positive cash initiatives showing are commercial results. pay

are directly through their as directly available patients expected programs physician or faster than new Our practices to electroCore. dispense growing gammaCore make prescribers from

insurance coverage generate to dramatically nVNS announcement we earlier next year. increases covered and revenue of Joerns could lives for access discussed number The the with material

Longer and sales efforts are could from in brain see lead to international but business label our driven potential use program e-commerce U.S. commercial penetration believe stress as the QX duty slow our XXXX, UK and gain UK there post-traumatic continues Force in extensions headwind business military soon of next the or a has efforts. in to disorder through Our to a store. to of our traumatic of for channel coverage, Air opportunities the the our as and real and including disorder, and penetration VA the DoD year. cash many advertising, minor recovered market, international PTSD, injury. of while growth term, to added United the drivers I start direct-to-consumer into be States, commercial network traction XXXX, product BOOST opioid distributor our incremental continue currency expansion The in continued of within business growth active remainder XXXX models continued insurance all channel, by UK pay exchange we we

operator. I turn line Operator, over time, call will the open this for the questions. the to At please

Operator

[Operator ahead. Instructions] from first Ladenburg our Thalmann. of with have Cohen Please We line you. Thank the question go Jeff

Destiny Hance

Hi, is you everyone. for Destiny This questions. on taking our Thank for Jeff.

growth the will in that’s prescribers. as cash pay as some channel, around the really perhaps start model incredible e-commerce a with well I questions think I

I that talk or circle that back And are these growth bit wondering on based any can my awareness e-commerce am really that’s just campaigns of to are that? something you about congratulations to about doing or Could drivers will currently on you educate to if there So prescribers? a then question. I that. speak you just is any coming

Dan Goldberger

who stronger. we do multiplied we presence. progressively and Sure question. field and of but the have that’s you And things, work getting thank group our sales Destiny, what And small, aggressive folks has also been marketing then of inside commission. straight for by employees call a reps, function direct for Variety function have we are a XXXX our sales augmented, an

So And variety of beyond neurology. specialists come medicine, to detailing from medicine. it accounts nerve cash have be really we working concierge-style have to seem looking chiropractors And a vagus moved new medicine nerve and activities, opened to mechanically. to headache functional and up experience chiropractors as we traditional ways with tend as the that gConcierge pay have also of vagus third in the the well prior roughly integrated functional especially and stimulate knowledge for

And so vagus quick adopters or are adopters nerve technology for they the non-invasively. our early of stimulating

Destiny Hance

is Is it very met then you your or a issue your function provide I expectations. be to helpful? back a And mentioned marketing little just happened interesting. an you that curious circling funnel would super Okay, hasn’t if got that necessarily e-commerce quickly detail, your could with it. it the just platform, of what am or there? That’s messaging that

Dan Goldberger

Yes. a to to of consumers would prescriptions it, Look, for doctor. was their local it going partner provider but find who convenient idea telehealth than to proud are the not we facilitate with more

As journey, in patient just we with fashioned the e-commerce had the and that plain friction partnership it and requirement in for clunky old a Vital some was matter, a bugs use. prescription that practical to creates chose platform

what a restart to And be in is I consumer so breath more refresh going with a take deep and future. to near streamlined the we’re going and experience much believe

Destiny Hance

Okay, helpful. got very it. That’s

Dan Goldberger

bringing was transactions the parties, paid unique emphasize, disappointment from. should into successful turning was at to that platform. in media, I social and our was them which and the through And interested funnel our them remarkably awareness visitors It though, campaign, primarily moving search came where

Destiny Hance

see. I

Okay, got it.

several line. correct? that the understanding help could will, later So interested which convert Okay. I my have guess if able individuals, that top be you to at potentially would might you mean date, that Is a support

Dan Goldberger

the cart once comfortable abandoned Yes. we’re Yes, an we approved will campaign platform. launch e-commerce with newly

Destiny Hance

and Okay, quickly at see. queue. changed all? DoD to in then hospitals transition to added got jump excellent VA the it. and the has And quarter, is going back there wondering, I’m then I’m I’ll just this You channel, to But additional several which strategy

Have or out target added anything So, point clinics reps any you change any strategy? in additional these that to there? you can

Dan Goldberger

Yes.

is sticky it’s As right you’re and usual, good top is the business hospital news VA high-touch Destiny, a a system, The it. on the of it’s challenge very that that business.

hospital just the that in. to our reps with partly adjusting our better that inside open the combination put pandemic XXXX with VA normal working high our new touch, slowly the together, let’s as and and in up because And the but the letting supply of the receding, and is so, and face still hospitals, as increased experience new team us contact our ability the so is we of VA system concert in well to it, field and sales were customer sales personnel chain folks surely associated team the at at getting and staying hospitals, better

Destiny Hance

you our taking questions. Thank it. got Okay, for

Dan Goldberger

Thank you.

Operator

line from John Please next Vandermosten Zacks. [Operator We you. question our Thank of the go have with ahead. Instructions]

John Vandermosten

Brian to have Hello evening, Dan, Glad and the you and on call again. good Peter.

Dan Goldberger

Hi, John.

John Vandermosten

partners. website addition there Hello. did of of are and of maybe portfolio the to the that. Jeorns, Jeorns set have lives that’s to great their anything own on the see And their be I I exposed are any if ones partnerships that a like terms a to you’ll characteristics that up. that want pretty or they geography broad stands in out noticed how made wondered of

Dan Goldberger

Yes.

system. we the making collections, agreement to do access right and individual look, similar And this the of right? adjudicating thanks business like deductible handle shipping is giving hospital, collection looking hospital the managed staff hospital And just status deductible then work is from So we provider. sure the So whether the will us from the prescriptions, the very VA patients. be to going work broad the And status to a all for the system Jeorns organization, directly care it’s and VA is care noticing. how a model, a benefit high strokes, and the clinical that the or at level, plan, very the ultimately with all employees managed are system. getting where copay John, reimbursement doctors the to Jeorns healthcare is back of office to VA stuff And managing those the hospitals, with and we is on going a of

Jeorns their Our as staff they collections will paid in-servicing, handle by get through and patient and process. we will go education

office exciting under very it’s plumbing, the us. to going back for stuff the on our that smoothly. a campaign it’s staff while to a the It’s Coast is sales to working managed that a once we we’re hospital VA call like on large, sure it’s And get outfit call So to those working a But much field take care primarily start contract. be breakthrough facilities, facilities. to get smoothly, us will West

John Vandermosten

is pipeline can – the I me have And great. or we adding Okay, pipeline others we in know far. to you’ve tell earlier. full of know some managed look is But the does I you what care space? also commercial how like? maybe that have Jeorns so how many prospects closed your

Dan Goldberger

slowly. it is large, very, is pipeline The moving but very very

say to continue insurers, from that conversations, is to and conversations that getting then at based anything into plans have entering on imminent added but benefit fee this commercial around schedule I We can’t time.

John Vandermosten

segments, trend what quarter didn’t the you of September. But in trend you me actually and in sense, saw out for other one just sales. broader wondering, throughout on quarter July saw was month-to-month? follow last other VA weak a there the some picked that throughout a know had from that a I And pattern. companies up in as they the that for is I Okay. said the heard I some maybe August

Dan Goldberger

Yes.

to saw of, September been going staff seasonality, because vacations. taking back that same are it, clinical up call we has especially vacations. stronger, where I’m August kind on think are slower was in July are catching and People October to the normal and strong. people I

We’re first really the days couple October very for the have we excited of and in November. momentum about

like it we system hospital we seasonality that I September, first of saw October. of that bump VA into federal things bump I the remarks, not forward that of of but in the One in get – it orders September. the saw my the October we some couple in was opposite XXXX mentioned of did pulling And got think of at from weeks orders end the system, we government at orders looks the of but in

So coming I have has no some that get we something or months, – maybe in year will with on to idea whether do the not. color budget

John Vandermosten

Okay. the can end budget reinstated and of explain year, of all get out try particular of anything you anything the So the there there their strength you Yes, that I think right? that would a drive a why that to I gammaCore. the a government strong is it on point at in can that’s lot level. place, might been to you entities sales they market is at same stock not barometer mean know has the spend to But the point the October, over there? that right necessarily October? And

Dan Goldberger

our getting at sales better I Look, and we marketing think running and functions. Yes. are better

hospitals. or a are activities, and for access breeds city one particular that in the VA starting notice. improving pay colleagues cash to or competitors right? and think then gradually VA prescribers town their are and We their slowly through in commercial our hospitals success, got a sort two have of success And but success have we’ve return to the surely going normal, I

a cycle seems right it. enjoying to very we’re it now, virtuous So be and

John Vandermosten

Dan. you, Thank Great.

Dan Goldberger

Appreciate John. the time,

Operator

Please from Instructions] our with ahead. have Vendetti the Maxim question Anthony of Group. go Thank you. line [Operator We next

Unidentified Analyst

for This Thomas Anthony. McGovern is speaking

just the Limited questions have licensing So a regarding I couple Teijin agreement. of

Japan? So it’s on you in of on I any Ministry guys know you speak have been you if too regulatory expect insight approval some when to the but do for early give Health there more developments? to don’t And guys this, you any have

Dan Goldberger

yet had frequent colleagues we But conversations at first to and Japan. our So we’ve do determination. transfers not have data in that ongoing Teijin

all Japanese more number it’s they filing for Europe the unfortunately, to Japanese So and say the to trialed Health like that first patients collected of Health to is was they a the regulatory that likely but is will want if determine – going pivotal support the of in or Ministry step of Japan. the the process that and be some data U.S. data, in in of to pivotal Ministry see adequate

out be we the small be So to that’s whether going have time has a data follow-up executed. adequate an to important pivotal in figuring line, trial whether or factor

Unidentified Analyst

sense. Got a of makes it. That lot

Dan Goldberger

got you is So for a all definite I maybe.

Unidentified Analyst

appreciate Alright. it. I

that your revenue a Is with in about $XX,XXX from huge I or agreement. preliminary, that that So the level U.S., that so, to from is and stream if you staying licensing we said And kind of a should it going that fees it’s your of that of of but know quarter-over-quarter? revenue not outside associated chunk, will something $XX,XXX quarterly? as be expect fluctuate at it came

Dan Goldberger

amortized over So an March, is being initial got in we quarters. which four payment

So right, see quarters, next number for that two you’ll Brian? the

Brian Posner

correct. that’s yes. That’s Yes, correct,

Dan Goldberger

is fee maintain there exclusivity kick again smaller, based the then clinical up to to license but start license on milestones. And and fees regulatory that’s annual an then

it’s next quarters. what And going beyond be to know we two number that, for will So fluctuate. the the

Unidentified Analyst

that Okay, insight. appreciate great. I

my and wanted to kind influencer the of beginning cautious this few the touched for campaigns the paid of kind going throughout times I revised last and you more relaunch last expect the the provide But that in just XXXX? payment on you the is consumer mentioned clients, of well well, how them in we so said are that social area question fairly to approach of of with bit in I both And were sounds spending awareness it media confident you’re you of little know could your response also then call. platform were see being the can on time about that remember you the year? getting on kind as but we call, throughout a additional from of you’ve a as gaining kind and your you you And were approaches And insight as like and just guys but progress as rest to search. cautious the earlier,

Dan Goldberger

Yes.

question, measure pleased the ability our visitors. success one in consumers we’ve just smoothly and had the we’re unique October, that’s paid full Destiny’s search again how We in we of got will the very drive December. funnel, a of drove pretty So in relaunch, and we’re to made but with now the spend And social platform, spending the And tracings year. elaborating that then go channel down the of decision of to we’ve assuming on to November on next beginning good top to influencers media. relaunch in which many the ramp and that turning with the start the spending up things

depends lot we how of that and mentioned the I a earlier. points, those relaunch on smoothly clunkiness the So do goes, solve some friction for

Unidentified Analyst

are Those all taking questions. Thank you time to them. much. for you the Thank very my answer great. Okay,

Dan Goldberger

time your and Absolutely, for thanks attention.

Operator

you. Thank

question the line next have Zacks. with of We from John Vandermosten

John Vandermosten

And greater this. degree frame I’d guess kind that thought on the at margin it, impressive. the a I range I you’re way where gross trajectory, now? from anticipate a change understand margins comes Hi, in the areas you I continue a do as that so gross just the I’ll higher is growing selling in the follow-up service. it was you staying since Because it anticipate of margins growth If it ask like

Brian Posner

a Part Yes, we’ve and XX% of of it the in quarters is we’re just and Hi. selling greater is John, the row. of for over four part it revenue. been part it’s it is mix way product Brian.

margin, we as stay stays the able we be strong, as the that to several done So over we’ve XX% over past quarters. gross line top as should long think again,

John Vandermosten

Okay. Great, you. thank

Operator

have I’d and Dan back we sir. you, to remarks. over Thank the CEO, to for Ladies turn you. call Goldberger, closing session, end the like to Over gentlemen, of and reached the question-and-answer

Dan Goldberger

professionals forward Stay the for give next thanks loyally operator, quarter call. employees, our you, of healthcare we I therapy, patients, and today’s who’ve and telling everybody. special our Thank all to you been you well, to a and year. December want thank their supporting about look all joining gammaCore to to

Operator

Thank you. Ladies and gentlemen, today’s conference. this concludes

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

electroCore (ECOR) 3 Nov 222022 Q3 Earnings call transcript