MDAI - Earnings call transcript Q4 2023

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Operator

Good afternoon, and welcome to the Spectral AI Fourth Quarter and Full Year 2023 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Devin Sullivan, Managing Director of The Equity Group. Please go ahead.

Devin Sullivan

Thank you, Gary, and good afternoon, everyone. Thank you for joining us for Spectral AI's 2023 fourth quarter and full year financial results conference call.

will the Carlson, company's today and Executive for Capone, Vince Chief speakers be Chief Pete Officer; Our Financial Officer.

I'd variations believes, statements Act that States Private initiatives the When begin, this of intends, expressions, safe factors, not harbor unknown in the we like future Litigation the performance, control, or important of those materially everyone the negative assumptions outlook. these discussions, or many are the the remind intended Before may, and United involve and could of or from that, of conditions outcomes meaning call, or cause to words forecasts, of certain forward-looking of known guarantees other Reform company's may of projected, results risks, constitute outside made Securities seeks, statements. These results or forward-looking used provisions XXXX, anticipates, be statements. actual including statements number within to differ that statements future, are regarding the and these are should, financial similar company's strategy, plans, uncertainties, and expects, identify estimates, propose, objectives, to will, expressions, statements words versions during the which plans, of and discussed during a such forward-looking words forward-looking

Carlson, to the materially actual go AI's and that Chief Officer. to please ahead. risks I'd forward-looking events uncertainties now other carefully company. investors filings registration statements the As in the to company's should factors by SEC, from other Executive not documents those the These including consider on of risks described and filings filed the Investors to and section address are in statements. Pete foregoing and uncertainties cautioned over the any the that such, place undue call identify could turn like Spectral and said, Risk forward-looking Pete, reliance statements. With contained cause with differ the and Factors other results important

Peter Carlson

Thank you, for appreciate financial you Devin, afternoon, call. results us everyone. We joining and good today our conference

may CEO and and CEO the of early to Group, time take this this focused Most For joined as a on a some diabetic first the from foot company, recently, you, CFO background. I some as as me AI in hearing of Spectral provide be the chronic year wounds, appointed February served on I'd was like moment to I and including XX. MiMedx managing January, treatment of ulcers. CFO hard-to-heal company of

health at AI, System the care patients to me assessment more that of and health side that given One treatment provided course, of Spectral clinicians, immediate my my by belief and, across to our wound to more efficient payers. care that accurate effective the key ecosystem, of care the the deliver institutions MiMedx, attributes equation DeepView especially wound attracted from is can on the experiences to reaches and

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inaccurate appropriate For or and risk treatment means For mean? all XX%. this diagnosis. What burn from validated patient, plan, complications may such suffering, the delayed a faster this accuracy and does DeepView of as more reduced has pain burn and clinically arise from wounds, infection reduced a that an

point determining there burn burn of a XX% of to training, treatment rate when in are confidence. country. patient have you decision, individuals, will a best in years quickly entire the heal an intervention. that require despite and immediate accuracy less of than fewer interest a supports act DeepView an than its or with whether own medical level XXX specialists and These important their in on clinicians, informed consider allowing high For them This the is

care resource For centers efficiencies institutions, DeepView the at present in approximately promotes one which, burn injuries are that. resources. States scattered makes United health a them a definition, care quality precious XXX and a of ground-level There burn Most at allocating of accuracy XX%, in regardless can locations by limited burn diagnostic health the local specialist coin emergency all equivalent urban burn a or of with hands professionals have institution. departments physicians about place to training flip. of care where no expertise rate DeepView rural a of the in and

by for DeepView believe days, patients treat center a X as while a reduction Research of procedures technology. provided XX.X%. coverage assistance to justifying stay clinician-driven One and support objective sooner decisions We that in provides example. payers, indicates as burn that our Finally, days. reduce stay eliminates is the DeepView typical use much by can a X of using unnecessary the

X-week and in developing of often of by X the the advanced care skin therapy by the where often there because wait-and-see outlined and appropriate result are payers, ulcers wound substitutes For of platform. platform I use approach similar deliberately largest the nonlinear technology. as believe treatment Like DFUs, long, From we bioengineered diagnostic DFUs, can are use presentation a commencing in process as we takes amputation. The of the complex, benefits trajectory, DeepView our care the chronic or in have the inherent can we flexibility is us first word standard for diabetic nature, foot weeks no far result tool DeepView apply. of our is the know, healing indication, assess typically that's of too is in to such the to upon of market use clinicians and commercializing perspective, wound. That burn as our using care opportunity, DFUs, of which before a which standard provided. as are

is current indications. clinical support DFUs, that over focus our discussed, believe time, burn platform we multiple however, can and As the

ulcers DeepView the the and hospitals, for part become departments, of wounds. remains foot diabetic for and centers burn goal treatment to System at clinical both flow emergency Our clinics burn

business well-defined have to We and DeepView the I'll fronts. pleased beyond on few driving our also and research, progress -- our and a continue from these. while to to continue number clinical the clinical commercialization. I has made focus XXXX of am activities, team development say a a environment for along good touch of

for burn Project sales patients. In quarter to first commence the awarded burn XXXX, called of million. the than is includes additional nondilutive pediatric for novo to approval. fund our government deployed support target to of $XXX development in for and great million a September validate the emergency the the contract This be continued trial from M. indication the burn, $XXX,XXX submission nondilutive in de final conducted to up which DeepView System with of brings we a and more from an to United This were the subjects government commercial in our This of application expect that in version burn commence $X to burn, total of contract U.S. largest to For in the provides burn second total FDA XXXX, for of adult nondilutive and for a to This government, award the and milestone million. is from an Snapshot approximately company M valued validation $XX.X U.S. we This in January DeepView new the device commenced to million. In $XXX March research we for a our received System, pivotal leading significant in contract new handheld of XXXX, in of multiyear award enrollment our centers of the brings enrollment XXX develop generating external UKCA study System February, received the DeepView DeepView our expected in the history Snapshot March, initial award technology. In Kingdom. we at clinical approval. is our revenues U.S. an DeepView BioShield, both FDA study support first to activities December support half for departments valued authorization seeking through initiated the to We XXXX. before development

outlook. Now let discuss our regulatory filing me

DeepView under this and in filings for XXXX. indication to advance indication government burn continue We U.S. our to the for of in regulatory U.S. work approval our submit the contracts plan current System

the are commercialization of the and filings regulatory pursuing the in DeepView submit and countries to We in this U.S. this U.K., our expect approval DFU indication later System of the year. assessment both the of for for

we each to Given U.K., recent burn time would expect commercial associated X frames briefly foot the generating U.S. U.S. filings, announcements. XXXX. I and some and be to U.K. revenues platforms, the ulcer in by the and these in of diabetic across want discuss expected with

intellectual our developed one property, the team IP, of over most the As years. Spectral you assets which valuable is controls our has or know,

patents patents. international and have XX We and XX and pending U.S. U.S. allowed international

our protection IP will the Additionally, XX applicable formation broader called specifically to wholly-owned useful of subsidiary focus health years. Earlier this Spectral core intelligence a the the care. artificial patent month, developing we ecosystem, on on of within announced acquiring that IP concepts life our or key exceeds

including will We Vince partnerships technology that industry in Spectral from Financial This Capone. an believe our have turn who received remarks position, within recognized imperatives improved a of including things with leader. IP highlight Vince raise announcement investor. to the health affiliate supports long-only strategic is a Officer, is point financial have I with $X our We providers, add by through million own value library our strategic investment shareholders discussed, about final AI collaborations IP his a applications institutions organizations. One efforts. With care research Vince? to capital the named that over will capital acquisitions, last to IP potential our and that, our and our has newly globally unlocking week's also largest I Chief commercialization our shareholder, additional and

Vincent Capone

remind Pete, our today. to contains joining that like afternoon all Thanks, additional of our detail thank results. release you this I everyone issued and operating for would us press

the items. Starting million, was development was year. prior select million the were as Research We the compared This BARDA nearing SEC completed year This completion trials the we period. clinical with the the mind, at decrease reflects to $X.X during with I our $X.X less that X highlights on in as results. expected of work Burn key fourth quarter later remarks decrease and my to expect in end focus as quarter XX-K the this contract. week. activity under will file With and revenue XXXX

the new as fourth to million, Burn the increase especially million margin a revenue expenses for by X in quarter Spectral, development with rose contract. General monthly to compared the and to primarily as these third-party positive a compared the produces administrative and government almost and the to increase cover against the our XX% may in prior in such year rate our P&L due contractors approximately fourth who from flow. Gross of BARDA expenditures to $X.X new an expenses head generally prior rose you contract to quarter governmental effect We submission, invoice with period, government PBS the by shortly by We is XX.X%, added the predictable as research as driven $X.X the BARDA activities. contract and R&D and receive those driven our which XX.X% As count be associated an invoice to R&D year in to period, consultants. margin the from our compared invoices prior reimbursement primarily in reminder, XX% our labor, of XXXX. payment cash after on in reflect from

contract. XXXX Research results. work $XX.X was in from under reflects completion of year our full development in year-over-year and the to our in XXXX. the $XX.X decrease million, The reported to BARDA decrease the activity a wind-down revenue a due on million X XX.X% Burn Moving

and to our to on on XX.X%, we $XX.X will in of in XXXX in our the of to XX.X% $XXX XXXX, administrative expenses higher in support quarter, BARDA increase contract our driven in It's expenses margin. General therefore, in compared despite primarily as note prioritize profit BARDA the impact creating contract, profit. company's our work reimbursement PBS that is the in $XX.X towards commercialization. Research and a rose During compared the year in from we rate expense gross XXXX development to favorable contract, largest margin in the revenue cost contract, and our driven by company's our Project our count million, under as history and a was million, general mentioned. were our the to platform XXXX. as million. Gross that in value period, million has gross X to $XX.X our important development prior a Burn the fourth administrative decreased increase total and in key a reflected rate Pete BARDA revenue. decrease million with initiated the percentage investment and indications The continued activity BioShield both This head personnel represents growth an of in gross as which by path $XX.X the from

later As the contracts, the in contract. XXXX and ramp-up a particularly is down year the consisting primarily X Burn in decrease of government activity, Project our the the BioShield result, by on lower our of contract winding driven of

December cash As totaled of the $X.X have company XX, equivalents continues cash no XXXX, debt. million, to and and long-term

today, of $X IP. formed million, million $XX newly approximately our including cash additional our As subsidiary, position is in Spectral an not

future discussed, are contract highlight provides development First, our as DeepView for the in of up Regarding to following: the $XX burn, clinical nondilutive $XXX trial. exercised. if pivotal options BioShield of The ongoing XXXX all our September liquidity, execution quarter the to I first million and Pete for of Project awarded would fund will contract our through the like including million initial activities commitment System funding

facility year, Next, draw $X.XX standby under company price X.X at this committed per the new million line under average facility, share. $X equity additional equity million. credit. The our of earlier proceeds of the of down issuance company $X.X million issuances receiving an to may equity shares approximately implementing drew represented approximately an This gross committed net of existing an down prior

advance capacity of $XX.X announced million, last XXXX standby funded at $XX of agreement equity consisting million prepaid of entered XX, Finally, that a has advance a million, price prepaid we was a of total as $X which and purchase a into conversion fixed March week, of $X.XX.

We the to the second $X.X for from during funds million prepaid of quarter XXXX. the Conversion at receive time additional fixed expect additional the of prices the advances of the advances funding. are

you the with at remind foundation the I our funding objectives. beyond financial equity to provides our in with purchase combination discretion. We prepaid contracts, want standby recent pursue financial a is nondilutive sound multiyear agreements, by advances clarity, funding provided any believe our For under agreement solely our strategic that that government U.S. our us to

half our to handheld expected this of of an derived $XX of million will the the For we in burn turn the commence the about XXXX, contract United from to additional Kingdom, be PBS commercialization I guidance. With approximately be XXXX. in of Pete. $XX.X XX% like in of with AI will XXXX, would our contract. Revenue we $XX million addition from contributions increase growth from the revenue million, to it to guidance ongoing DeepView in that, which expect the second will reiterate back Much from over

Peter Carlson

Vince. you, Thank

Before commitment our open our supporting management turning leverage for team The the Their footing to can on to to thank is and we develop for drive horizon efforts. Gary, financial excited commercialize success. our now System. described the Vince in team sound the team's questions. date achievements the call dedication and questions, to I their our to your those to promise and want DeepView

Operator

Instructions] [Operator

Ryan Our with Zimmerman first question BTIG. today comes from

Ryan Zimmerman

hear me okay? you Can

Peter Carlson

hear great, we Yes, Ryan. you

Ryan Zimmerman

start a U.K. the validation point? impressions good your we'll seeing can or provide Pete, kind feedback It's this expect see where with approaching it, of in you initial guys execute. get that color you're incremental Congrats. can have the you how U.K., at Maybe, other you to what any about And Good. adoption. anecdotal to I'll you're

Peter Carlson

had more few or will that what's X After over and for tool of from as is we enter -- device. X place the up the of And positive, devices more, in the to reduced a those arrangements deployment and that use. sit when a clinics. bit locations, ease they've deployment that of today is with where in a time series these is we a significantly X and complexity is use commercial beginning got we'll these there feedback here deploy are the use lined Ryan, months field have scale very by laser-directed Kingdom. We've in site. including a initial United and series that of we happening compared the of validation locations the an they'll clinics into on The period operating machine, field

field, that looking as data, only that inform others be and as obtain. our work can continue rollout, those those real-world payers, and in in for the many gather with this success ways. we So of It's benefit to it's to here continuing is us real-world data useful we not the help improve clinics we the information then and they is our will about And our development to we institutions, development pivot or are commercialization. The can improve activities, device use data to information through but tool. institutions the also

Ryan Zimmerman

maybe And Pete. in for lines by R&D It's of clear, the U.K. pretty the the you But well a lot spend very accelerate sitting are not need at year you been and over efforts million changed maybe you're consider given time guidance or outlook your Very to the year. development helpful, all known. control here allows given kind given we course BARDA today? this burn in, to changes There's of to next incremental capital rewarded Okay. you've that your approval, then on the that has brought $XX that has as of of BARDA. anything

Peter Carlson

and foundation into resources we us see Ryan, taking XXXX. well these financial

to burn these like to resources do maybe. allow we the accelerate XX it while to next does months feel XX for So us months, support there, our And activity. is us XX XX

hiring. some We will increase

will head be So our area our up. And will effort. our commercialization see count go -- people the particular

in time now that some and lines, we're it. So on we've execute our anticipated of going to

we activities. able accelerate other to be on, goes may time As

Ryan Zimmerman

Okay. I'll for back queue. Last hop me in and one

Anything maybe coming to of provide? the you -- far can American or enrollment coming with feedback into the trial. burn that learned We're Burn up that the become the Association we're progress more any meeting. updates allowed efficient that you've on you trial Just of so

curious of So what's just you for mind of guys. kind there top

Peter Carlson

Happy take to the questions.

We're We're week pleased of adults mentioned our pediatric investigators. At actually the all of breakfast almost to up Conference that And enrollment. been sites April interact participants. We've participants. of with point, X% of Burn and to opportunity of will of And April all sites is the this fully represented gathering. our by X. moving have we'll will a we between we great and we're end XX%. half of our along. breakout not enrolling have enrollment forward we You looking the hosting our a quite at -- engaged, with the expect and XX% That's our and

We to participants up to the survey the of commitment indication the have marketplace, we've pediatric burn that's -- of as and in government match XX% seen to least a the country. And XX%. across get at was the of ask as in from potentially the kind many that what

So we're enrollment. pleased with the

are continuing running, to looking getting forward sites that. and learn the to from We up and other

Operator

[Operator Instructions] Capital Northland is question Byrnes The Carl with next from Markets.

Carl Byrnes

your on progress. Congratulations

have been detail questions think more and Kingdom, I answered. system of deployment. specifically in you wondering respect But the on I'm with staffing can to most provide my little launch a United if the

you second you the generating then looking you of half X, revenue I in deployed, to X and said had have system were think the year.

So include I contribution million wanted U.K. from devices $XX as related again, launch? did just sales any not and you clarify, said, staffing. And think then I and to to the

Peter Carlson

and in lined have the increase U.K., initially the the would the to don't is we need X -- revenue. of handful additive. We million will deployments and $XX support of not we see The be from is activity. these we range Admittedly, X to a up. overly to correct. It commercial significantly staff that's is Currently, significant. revenue the that Carl, this development deployments research have

States done Sorry. the is devices The of manufacturer here side.

there clinical clinician, a the have biomedical, country. have sales We -- resource and in we have a we

bit, nothing need. So we little a be see but significant significant. don't There'll

Carl Byrnes

clinical were was Great. Congratulations -- to trial, on DFU the the again related ramp-up, My other that. question the you covered they progress.

Operator

from is John Zacks. Vandermosten question next with The

John Vandermosten

the process? Let the bill million quarterly this remarks, in me a touched guess a the monthly for I that and $XX question. out -- allocated. you prepared on event start in you Vince, is that with your then And do government. work bit how you Is a or

Vincent Capone

on a of a have with [ lot monthly Sure. BARDA. basis. so we we it's -- ], No, And do Jonathan actually it experience

month. a for monthly, through few And within go so weeks. It's us, following it's get that a paid we process we the and generally

it's And the not so total we expense as through R&D year. on a quarterly. It's progress monthly

John Vandermosten

Okay. tries that candidate advancing proportion the total whole covering cover? And the the to certain amount? I regarding Or program of approval a is is there of, program, that to guess, it cost

Vincent Capone

Yes, the clinical it trial cost. covers

John Vandermosten

kind Okay. Plus that of extra overhead amount.

Vincent Capone

Yes. Correct.

John Vandermosten

to through England. I separate I the devices going a get and as They're you rollouts previous NHS. they more Okay. was again, applies Ireland, all to U.K. part U.K. that little Wales. do if the that of need by Great. here. of in hoops then seen if it Northern kind the I've country, broader Scotland are there or wondering any in And know to U.K. bit the But don't regulatory expansion anything into of jump

Peter Carlson

This of U.K. is they or no. a the known Union. think the a and once you would have significant, Nothing to approval U.K.-wide point, mark UKCA mark. post-Brexit across European exited own continent, is the The their CE had the access regulatory broader

John Vandermosten

And information. the then with works? is is that question new way that a always assuming you AI arrangement. I that which Is how on guess, the the updating, to I'm part, there's subscription structure component last Okay.

Peter Carlson

a the Yes. component. The there's rate, license will. or There's for annual the well annuity maintenance on AI, fees. there's component revenue, and service annual run is largest Really, is device for The the itself, deployment annuity if a the device as the the components. revenue opportunity X sale, X you as but

John Vandermosten

that's or And driving is of that? annually guess, like or Okay. updating updating, that analysis the constantly some there is part, periodicity the that to images, I

Peter Carlson

for a event response. our mass U.S. Remember is primary motive is Right requirement the partner's the with has developed be government stand-alone. that government. to now, device contract the This been casualty

There's able to device device. battery want they a for requirement So the to be even stand-alone. be the

the AI we or are at so model. Again, at annual XXX data billion this pixels updates we're at point, batch And points. looking updates to already or

want set the data But very over build on a in learning there's time. do machine there. robust to we So

Operator

Cap next Cliff Racuso Partner ] is from question Your with [ Group.

Unknown Analyst

questions brief you. Two Yes. for

near of My me, to ahead devices specifically obviously, allude term begin for The in I'm operating of understanding the this and regard? And U.K. first, back there fiscal conception and is various very quite circling in to medium correct go East that then can that regard authorities, look out U.K. often $XX you developments million authorize second if your guys the Middle have authorization to to margins, regulatory in health briefly, same. margins, the your of to any the regulatory Are is the the for in my any but to gross the regulatory fiscal that procedures, 'XX? like year. wait understanding, you what and question, that authorities, and Middle the mistaken, East, you're for forecasting out authorize might they Do

Peter Carlson

Cliff, good to talk.

On correct, are Council those leverage approval Countries, access regions. East GCC for the into regulatory the you or mark or the are situation, Gulf Middle to U.K. able

Middle the in about this. parties with discussion in East are We

conferences wounds, attended It diabetic Middle in ulcers. East. active We for multiple foot an have particularly market the is

so And we do a market that as opportunity. see

We haven't time the any specific that guidance opportunity. But given logistics in active we of there. actively sort line over given just or -- pursuing are

higher. $XX consistent with relatively As the far a seen million, touch this to the particularly year, in they're going you've quarter, fourth margins, be maybe as what the

Vincent Capone

echo I that. Yes, would

contract all for to going presented XXXX. with be roll maybe of the we're I PBS think fourth we quarter, slightly in the higher the numbers we into as consistent

Operator

closing the any over our back for session. remarks. Carlson like to conference to Pete I concludes question-and-answer This would turn

Peter Carlson

various about AI. Meeting future for April have speak Association with to upcoming will a we We're pleased that events, with again and the participation your future prospects you, progress growth. Burn evening. conferences optimistic throughout continued you in in the Chicago Thank have and announce interest American our remain and you Spectral made hope Thank at and we We the very Annual including in year. good for investor

Operator

conference now today's Thank The you presentation. concluded. has attending for

now disconnect. may You

Spectral AI (MDAI) 27 Mar 242023 Q4 Earnings call transcript