TRXC - Earnings call transcript Q2 2018

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Operator

Good morning, ladies and gentlemen. Welcome to the TransEnterix Second Quarter's Financial and Operating Results Conference Call.

As a reminder, this conference call is webcast live and recorded. It is now my pleasure to introduce your host Mr. Mark Klausner of Westwicke Partners. sir. ahead, go Please

Mark Klausner

thank Conference joining Call. and TransEnterix for Second Quarter you morning us for the Good

Executive Chief Joining IR President would is Officer, its being and on like Chief President us today's that Executive Todd call to remind Pope; this Slattery. Officer, Joseph Financial are you TransEnterix Vice I and call and webcast available the on the call To access of following webcast, link recorded. visit section our replay Events the of transenterix.com. A and website, the live event be the please will our website. in

XXXX. would we begin, conference to Before covered provisions Reform certain that information forward-looking of Private are by I under this like during the caution safe harbor Litigation of listeners materially stated The business. management the information update statements discussed our could risks provided Securities call those call. to due on results to implied statements undertakes uncertainties or associated the Actual and this the no obligation forward-looking differ with by company company's from Act

a quarter to review XXXX, and For December and XX-Q you and filings year the with Form for I company's to Exchange shortly. the XX, the the uncertainties TransEnterix Securities business, filed XXXX XX-K discussion for ended associated including the ended encourage the with June XX, risks Commission, expected Form of be

to our over results. earnings Management of and with adjusted plans results and other are conjunction During company's it's and in the pleasure share. operating which the measures the in and non-GAAP by not relative per our earnings expenses to to non-GAAP against measures provide investors and website. also GAAP certain to can that that, excluding decisions. our information of call are certain compensation compare Investor present Pope. presented release performance measures to to we the and useful non-cash competitors believes indicative forecast Officer, Chief management taken tables non-GAAP Reconciliations performance between for core U.S. our adjusted uses both and externally in the Management strategic section financial Executive certain will call, net TransEnterix With accompanying GAAP my Todd be non-GAAP found President turn Relations financial loss financial for relating that benchmark U.S. information

Todd Pope

to Thank Conference Quarter you, I Mark, a and accomplishments, call, turn discussing Second the On update. start financial today's Joe second call our to XXXX welcome by over our then Call. will quarter recent for

your We will questions. for then open the line-up

EMEA U.S. of system Second quarter in three pipeline drove the was strong and development continued commercially the region. global in one our as the four sales:

make In key progress addition, continue our we to meaningful toward goals XXXX. for

daily their Hospital to quarter. as both view procedures inguinal arms Florida ability of new ergonomic key reminder, expanded consistent New those our we performed a the a of regulatory Senhance's three LSU in indications system on time, goals on commercial feedback geographies. clearances to reduction now geographic the clinical benefits key of commercial second As we to use the on beyond portfolio Health quarter call, expansion installed On Orleans and out activities update as just continue differentiator instruments to noting Senhance. that laparoscopy, has UMC last multiple Senhance pleased U.S. New and as we well with to general in recently Tulane for colleges Senhance begin Senhance the with features continuing Health sold and utilize New academic announced team bilateral and U.S., to utilization second include positive for commented pain. Surgeons surgeons UMC in We're the first-ever effectiveness to in our well haptic in the in the and a for unilateral Surgeons the the Orleans and Orleans to is they sales of with And cases Europe. UMC the LSU as same eye-tracking the far the work global gynecologic, the and already also Senhance; has the The available carriers are: continue time you and alongside have will New in additional Senhance the progress like and including infrastructure; in comment with United I physical our basis. School in reduction surgery focused on and plans hospital colorectal building with being colorectal well-respected of the expanding relative have to encouraged remain clinically, laparoscopic obtain in surgical at home their Starting in hernia that Medicine. our in expanding trained. experience the area, Orleans. our and their train We in that Senhance. performing in robotic system U.S. feedback Orleans thus as very research will will last control extend use; number a UMC with to our of surgeons Since to New U.S. regions. the the an the the the potential is New the repair Surgeons using cholecystectomy. partnerships at with and to each maximizing on began case on States announce been camera the stresses fatigue, of week. control reducing imposed upon in safety Orleans first to a discomfort the universities and I'm GYN update surgeons see our presence received also by the

pipeline in clinical systems and of to into increase our active our cases surgeons installed and in use, ability in do ability In live proctoring increasing for installed. sites training we has Surgery As hospitals the the quarter. second number We Seattle quarter, and also the opportunities Congress during provide the held the Those convert Of data, note U.S. sales World number generate increases. April. XXth conferences the Washington to increase attended of to continue increase to pipeline two Senhance a generate been surgeon in interest after with of SAGES, before for we system and Endoscopic the

During we presentation a quarter, with Senhance. several had market, including academic extended variety foregut from at XXX host first opportunity United mobile a provide event surgery networks His procedures us with these to XX bringing attendees conference, a hospital recently Dr. interact A gall interest surgeons, to to the hospitals as of the and events. surgeries. surgeons us of to program experience a gave by hosted included cases interested of U.S. throughout reviewed center. was the the repairs, six across and events thousand or the Senhance the them. a clinical range number of continue events delivered Senhance, bladder, well an surgeons medical was as Senhance. These the from by second is receiving over and with wide exposure that event multi-day we greater staff surgical Senhance and around both results This to one one location at programs his and executives week-long hospitals mobile hands-on in by the hands such view contingent an colorectal to hernia different Stephan, States. of with the significant Dietmar [indiscernible] general and surgeons world. surgeons the In to XX these well-attended were allow and Senhance benefit on Senhance system test-drive able In quality To to physicians highlight speaks over time at the evaluate of the the

steady flow surgical the United We and continue staff educate the to Senhance themselves of with on States. surgeons, pleased looking be to actively very administrators in

of second systems of during were an within our sold Moving by partners the end-user Each hospital. to three EMEA; these quarter. sold we distribution systems to region the one

sales We the to partners continue distribution our when with to on complex Based landscape their the of success focus sale our pleased spend in partners with continuing local valuable EMEA, be of the system is of internal ability in incredibly and understanding distribution our working hospitals. towards we're a the prior to language service solid the training, Kingdom, XXXX to deliver and process for materialize look for which tender us and this includes support. support our see positive and distribution sales NHS leads beginning has a to and the regulatory, in we call we're distributors United tender to discussed revenue. continuity, In drive been

robotics our being in Japan. More is region. We in progress we on Japan be EMEA. increasing with significant encouraged we is second only largest the in behind clinical breadth as are being of trained also progress the the States and Asia-Pacific the well as the utilization made continue performed. In to that surgeons inbound interest United Senhance, see continue world which market to in the region, procedures meaningful

our process United successfully in with a Japanese or up manage we a Much proctoring it a in-person commercial interested future have team like by efforts. to provide surgeons through regulatory to States, surgeries, the and As access viewing set impacted plan to the and Senhance, the parties small already is our result, ability subsidiary market built be and entering Europe training.

we've through Taiwan, complicated the of will on cases though process and positions and Senhance on-track we we build XXXX via our that regulatory FDA regulatory clinical this increased infrastructure. commercial approval we We progress expect are quarter by clearance, three in Taiwanese XXXX see Medical it for up the regulatory import sales performing approved through a this beneficial beyond. can this With and instruments once to pathway. within momentum we license system be In sales to we base to established We've begun now look and would devices mentioned through medical you the Earlier to we take Japan years. as our initially As from in call, working body, year, extremely our remain and the registration market in begun traditional University. for received the fourth approval Saitama and believe the clearance. Japan last to sales, for is having continue at customer that drive process regulatory reminds

our would thus commercial We EMEA. three Senhance in Before currently on in and provide discussion, third the quarter. with like two far anticipate the an in quarter: the to U.S. I you we sales move third on in one update our progress from

continue Senhance report Given included a I'm for and quarter hospital to announced remain initiatives made purchase in major and and FDA this with a Veldhoven, for and by the Earlier which slow, several ultrasonic the we're this programs expect intention performance. that their energy expectations. articulated the our XX-K U.S., the the the of on-track sale Netherlands obtaining the and June to by a clearance to X-millimeter launching filed all X-millimeter in submission announcement these timeline we this device was XXXX we new we five public launching MMC of pleased end in year, of are of X-millimeter communicated instruments. expectations is traditionally that programs. ahead on XXXX. our potential the launching third clearance instruments These encouraged in product We has instruments is

surgery a per achieving the anticipate of over five revenue pipeline. accelerate for indications we this additional call gears review common a to those Senhance's to financial Senhance quarter, These clearance to indications and we and applicability our and laparoscopic CE instruments mark Senhance three used XXXX. to XX-K for In intend now inguinal laparoscopically general market our hernia expand but million second to continue over end the surgery. performed expanded procedures believe expansion that drive cleared procedures in procedure increases with results. the end of articulated bladder turn Joe ultrasonic for for gall Shifting indication for addressable by hernia procedure submit both now We only In more launch of to surgeries This including XX-K FDA And of by Senhance XXXX. clearance are five efforts the for believe sales significantly Senhance per most enables and laparoscopic for U.S., be laparoscopic both instruments is traditionally X-millimeter received over general the of surgery the particularly to to also the year. these use. busy energy repair the colorectal, institutions, procedures, in of will inguinal gynecologic, double the Senhance some include We high-volume abdominal time, the surgery. to our approximately our I'll gynecology. practice. not addition, articulating and We device products cholecystectomy

Joseph Slattery

good everyone. Thanks, Todd, morning, and

fair to approximately to $X.X in was June increased of $XX million and ended revenue period or $XXX,XXX million or quarter higher to the third in million million $XX million revenue $X.XX to we period, of adjusted to net and continue milestones of a primarily in SurgiBot of initial the and sales increase and loss period. assets efficiency liabilities U.S. XX.X% and extinguishment comprised $X our year was a per company the approximately in loss compared loss was the the reported a months months term into XXXX, expenses per three tranche and company services. a prior which to draw to per agreement May in revenue-related $X.X of period. as for million margin closing. in or administrative due increased to million $X.X in change personnel the achievement The eligible loan achievement net the quarter from from the intangibles, we compared in $X.XX excludes quarter expenses in million, and the R&D accessories in increased The prior For upon value in term million, from or the $X.X to million On sales. due growth. million with gale General amortization training the Gross systems, to its prior million XX.X%, the approximately marketing year primarily $X.X in prior at with to a due period of increased share, net prior tranche net non-cash milestone. from of instruments $XX.X XXXX up up XX, share prior contingent $X.X as for in debt, year million upon $X.XX $X.X $XX.X gross the million business received the will quarter. share quarter warrant tranche improved margin as on non-cash be of the The support million project $X.X the year loan, for consideration result $XX.X compared on $X.XX GAAP was manufacturing focus quarter in the to and XX, the in million Capital, year per entered providing company loans. second loss $XX was $XX GAAP of and share $X.X primarily Adjusted the in expenses six Sales of to of employee-related expenses quarter million, Hercules year loss for infrastructure the with at and of a security of expenses. fiscal commercial expand investment year the

million, second On was loan. the million to the of sufficient into $XX fund debt of amount anticipate date with the company the this cash is Todd? repaid amounts We all approximately restricted closing, tranches. the owed under previous which $XXX,XXX We XXXX, $XX.X quarter business future exclusive cash. finished of in of that the

Todd Pope

our commercial first team you, has toward operational other We've proud Thank what progress extremely Joe. our the XXXX. I'm in against goals. accomplished half executed our of and of making goals

our recent Senhance. in momentum the in robotics to drive very building on the as market. broaden expansion And for the into initiatives are of and forward expect adoption to expansion we the the quarter. that, Senhance's to significant made open momentum continue adoption about questions. of first We progress We've the systems Senhance, We growth on the future. helping of for our we commercial we'd drive enthusiastic the the both six line and portfolio like the your and in indications Overall, unique third year to pleased of sold our continued positioning be our in and half have applicability which use, continued look to has trends attributes strong up to we of surgical with

Operator

Capital Instructions] Markets. Thank first Glenn Novarro Our comes from with you. RBC question [Operator

now is open. line Your

Glenn Novarro

Hi. on Good a for couple the questions Todd, U.S. you market. of morning.

that actively quarters in sold to You we've first we point release wondering where selling the of we hit on see past sales. to inflection last Can calls, to is six four is talk funnel it that you've my about fourth the the talked our to sold I'm one year, just I'm robot sales the And more you robots. quarter takes creating? to question. LSU. reason finally That's about because force Orlando start when now asking one lead

Todd Pope

for Sure, line with as in U.S. developing pipeline, Glenn, thanks question. it's with our the expectations. Yes, right our say what we and pleased would we're

to you six two the this far to the continue we're quarters four takes in last believe in XXXX. pipeline market quarters. capital of as We fourth got that the like said out in approval the In in so so equipment We U.S. quarter year,

in that. of into just would I pipeline the hope. early, progressing XXXX, the as ramp think, development, about QX so great kind of we're going is feel So and we that And the we into pipeline

Glenn Novarro

Okay. From first going view, any to next of of the inflection year? really this point be at is half versus point our the year

Todd Pope

Senhance I steady it's to We've don't to sales shows, where publish think group think at We're increase. see one on when helps. continuing well surgeons folks as success to over about. hear people continuing can continuing the going videos big watch conferences, got a the around can we're in I that moment inflection. there to at to going plays we're really having their time which we're more which being we experiences, the a Europe be going just world having is surgeons talked out used how in to of be here an speak be more, more that's about have

We are feel We continued really conversion the with going extended pipeline be to continues their we the to good quarter build talked events. This that have about that just travel. They sales. geography. the of hospital don't we're in see or we to We call where continues think momentum. spend XX to second by to So and their to mobile system able just all had ago, surgeons. doing moment We'd a build. it about to taking we're in time

Glenn Novarro

to And U.S. first just the then in a kind this don't first it easier are Senhance U.S., Thanks. robotics? of get traction up what you system for hospitals robot the placed and getting/ robot Or one you have Is hospitals then LSU, speaking, a have or robot follow first case. it traction you've hospitals Did already already to as looking their broadly is to the is get talk traction at at have are robot? And that already into LSU for easy with them? a move robot that a for as

Todd Pope

Sure.

their the not part of hospitals your those of of type time. at The of a handful some been locations. a usage As of is some is a are and we're majority the exposure stand-alone. of far one have have first Though talking find question, all as using clustered a or of folks what They're systems down we most procedures. for robot part robot system into most to their to really

up that this up launch. safety features maybe to their simultaneously So up feature, which already three arms They narrow to to They're that fairly to like place a it's can a systems And able robotic in individual to then haptic to to nice for surgery love robotics: item trocars invested their their robotic in you they're trocars they to just control to in they patients able similar in with is they're what been an cost do instruments arms per vast laparoscopic laparoscopic robotics physicians use control not are what destination already hospital point have point. with for also a robotics. certain that has Senhance. All procedure that excited which is hospitals to really hard feedback; have about They've expanding cap to three from those seen use they've to worked have our real get people into surgery to of both placed very they've only Senhance, we surgeons very with efficient to a them in, robotics a all use excited per cost allows current off the for range. the not their eye-tracking the is down the are position and all been talked be of not have this at able able able have procedure already video for set to contracts that they're their video procedure down which with is about about, things ability take community but today, be laparoscopic of similar the love that we're benefit of this currently. capital for that love; but the use the to certain ability we so a system. surgery surgery. the X-millimeter the experiencing just rolls going are market and or bringing may preference departure known That that the because use With patients;

after. using all the robotics fact people market many it Senhance in Now to adds go Senhance. are robotics finally they're custom-built robotics can to really but patient-base, ideal many within been the the limited more procedures how that surgeons broadens that seeing a institution, haven't hospital market up excited and their they procedures and this is aperture would usually fairly different of up their Senhance point understanding with that for are with I larger procedures we to taking a and really more that can within of about really of system that's say them for been to

proliferating I we that use. of about think the up of they're most that are robot, to their to a talking excited all adds but systems current have

Glenn Novarro

I'll great. Okay, Thanks, Todd. into queue. back get

Todd Pope

Glenn. Thanks, Yes.

Operator

Thank you.

next Stifel. Our Wise Rick question from comes with

is now line Your open.

Rick Wise

Good morning, Todd.

more to a couple with about EMEA guidance. because the in [Indiscernible] and that's -- three one in based already let systems; some understand Where about force, at and little both of think third the were just quarter one me the Are need now? we are I U.S. to it? you answer more thinking than talk And things from you just two were about Let you're how would this U.S., if modeling talk or or me here in international. very no likely you be a that sales we're about best success? possibility your that, quarter, it, do that the I does color us, when the where number Just how now, a Todd, little there's we is more maybe on you share sales and just with evolving to right more early of like virtually thinking it as you stable? team this say sales want mean about

Todd Pope

Certainly. your calling appreciate in. Thanks for question, I Rick.

far process as about question, market. first As a quarter-to-quarter, and more sales being the go understanding bit the we Senhance is as how we're the little positively received in

So forward-looking we're to what be to results our going try with be. think little we a more will

we are This three to quarter, systems. guiding

the one yet, all different last have when As EMEA but quarter said, three of sold systems the had call. you it's delivered and several sold delivered we in don't that's our time had in we U.S., already We those little two by and guidance. a and than

come know, to you from of typically in the sales up a QX for is point. As region slow have where our this more capital EMEA quarter anyway, particularly

We quarter. we we So are go or good less think today, more those able three. we'll more that actually to We get get We're quarter a insinuating to not but to from little that. that. we're that's three. good number. be don't we have trying than as to feel a guide provide any to able color toward we'll think We think We

where in we've so momentum. As in past, far about with in the U.S., of kind still the Relatively the feel your sales are we as force we're talked good. focusing, mid-teens have sales, as small We of speaking, where we're good having question a we

they in to sales follow more States. Europe, over makes different Now when customers western talked received, up have we've in And United we further of Senhance, we the we is being as We'll can't addition west and more but in our their person are understanding footprint with the and with be working of add as move that more an a more want. portfolios. as -- that cut way progresses handful a saying Senhance there, continue people and that the out timeliness in with the distributors about, and and it put now geographies we're little and that that to that then has as we will direct haven't to sense look multiple we pipeline a at out really with part time, we'll folks a get probably that is are out our us really leads would territory the another there then EMEA Senhance, product product has the used incredible success being Senhance -- coming

that be we call, in the and talked in resources little distribution invested on we the toward of being As about parts world forward XXXX. effective us other into Europe in lean more partners and probably think going will a more for

Rick Wise

it? that instrument fourth seasonality whatever but a little that better, Is more that to mentality. given reasonable normal given your it's stage is is, and and probably all and this, fourth be cetera. -- about these I less can't of put quarter, that in let's-get-it-done-this-year were early than approvals, my be going of is the momentum of it's imagine assume such question, in That's your to think such to great. response And and a right you budget and factor, all seasonality mouth to that But kind training, an but education, I doing I number Glenn's a seasonality that quarter talking apologize quarter the for trends quarter it's the about words still and way not given launch Todd, some because -- fourth from basic feeling slightly third little et that will capital maybe from

Todd Pope

Yes.

in we of providing I deductible on limits think for lot that scheduling typically seasonally at still think we quarter said, where multiple a patients you reached a commentary QX and slow guidance, I for did as year-end. stronger that point QX we're equipment reasons is it's surgeries a and have but capital aren't to a little of typically fairness, their

summer good and we're very Remember, we're but Asia-Pacific we that feel typically typically footprint lot we early We really attacking year way days that heading we've we part QX talk got with So we abroad. we're certainly fit globe also. of in and how and of the the strong into stronger the think we about the coming we're about, slow, U.S. think back about both we'll excited a talked pipeline into our equipment the now as think out in commercialization. and a the building EMEA excited in the about is U.S. and right capital We're trend. although these of region here the things that, QX is for in

Rick Wise

last Asia-Pacific. one then Todd, And for me, you as said

your approval, see reiterated that opportunity we'll If the see is setting like will market possible? to fourth quarter 'XX about thing? 'XX or we you beyond we systems How you You and that up XXXX we think and and do more assume highlighted 'XX. do nicely that comes, it's that this expectation think to and approval Taiwanese

Todd Pope

Yes.

obviously is country-by-country. Asia-Pacific

Your specific Taiwan. question is on

approval now year. received we the but to we're get year, we said, going you As of the approved commercial trying instruments to have this into this we're of And for end the momentum quarter XXXX. pretty XXXX, get we fourth think good by approved system by earlier that heading if

when American markets of working Asia-Pacific, from there. Senhance we about AGL understand, and cycle, Sages big ASCRS, six and think Europe think these with about of to that we when quarter have Asia-Pacific and to the really in and surgeons like some I been to a those lot true to them you go are our Surgery, shows to College market-develop, we have also of talk out but there sales is four

regions, Taiwan. positively. their and to from the reasons. We cases, these have of they're how in starting a surgeons procedures we it's start XXXX We're for the show being of Asia-Pacific some those present Senhance, up can in really getting success stand different and they're feel doing specifically like see some standing So received not video

Rick Wise

Thanks, Todd.

Todd Pope

Thank you, Rick.

Operator

Thank you.

is from Our a next RBC question Novarro Glenn follow Capital markets. with up

line Your is now open.

Glenn Novarro

the Just point Just the just follow-up Maybe with I'm some we're jumping systems, sense sitting plug contracts desk us you average into you pricing? we for so on three that like is at selling Thanks. three bit. of seems sold signatures? price questions. it sense confident can it to a One, a clarification up, follow the to were? that you're is QX these a because are you the where and with in a a why And CFO's are a as waiting systems give sell us want help sell, there three? around and The asking of Todd, then you'll expect model get the on three, pricing the reason

Todd Pope

the Sure. on the systems. Well, guide I It's of at enough end QX in those feel we're feel and that we're respect. think enough the very going comfortable just we fair three that guiding will systems. say to pretty I processes. long confident to toward in We say We have a three process that

Glenn Novarro

And then pricing?

Joseph Slattery

system sales Glenn, majority Europe, we there's for PO this in high The that geographic ratios vision for range. system and from Obviously, of three of with the it's think the and about we about U.S. the they're that as a being that the because worldwide typically is arms, very system, those XX% configuration same, system, is you is Joe. and purchase X% the it is in initial or this that of million about and $X.X in in of a currency at or sell to guided range. -- typical XX% of accessories more have but arms ASP the the may about being And The lower are the it about fallen of anywhere vantage range varied at terms come of instruments then it to in the being diversity way expectations we of of a the order system well. end million way service. end the have reserved without vision four with may $X.X

Glenn Novarro

is one the on me this let Todd, question. you ask just And pipeline. other Okay.

were with your able pipeline? quarter the double indication. TAM to any indications surgical Thanks. more you the talk So us in you new second in Can about to

Todd Pope

total We available it's our that sometimes That a able Yes. another market, It's don't our you, Being indications talk for the as as into but thing widening Glenn. is covered it. Senhance really to deal. the big under good about a a is on question that Thank in double we U.S. use. pipeline headline, dive approach.

go surgery the really colorectal to indication good general which lot but almost we of a talk really we can broad now gives we about to get when out a think and only It that's helps. anyone a opportunity hospital. in and of discussions hospital, into force And not we talk GYN, hands. So to stand as go plenty today, of in the us

of of So right other now since experience are Europe kind clinical had in get only a now, feel in head we're more going and use right but as to outside for on. what they and about where the the start But see focus great on now, drive little selling into that the we interest that procedures a indications not clinical U.S. we'll U.S., get bit and we in U.S., data more we we

Glenn Novarro

great. Thank Okay, you.

Todd Pope

Thank you.

Operator

concludes today. call Pope will our you. now the I closing That turn for for back remarks. session to over Todd question-and-answer Thank

Todd Pope

for we progress Yes. Good joining on on to next call. certainly you us Thanks, updating call everyone, our on quarterly look our today forward and the day.

Operator

participating and This day. great Everyone have does may all Ladies gentlemen, a for conference. and in you today's thank conclude you program today's disconnect.

Asensus Surgical (TRXDW) 7 Aug 182018 Q2 Earnings call transcript