MSON - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Misonix First Quarter Fiscal Year 2020 Earnings Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Mr. Norberto Aja, Investor Relations. Please go ahead.

Norberto Aja

good and operator, you, afternoon, everyone. Thank for Conference Call. you joining the Quarter First XXXX Fiscal Misonix Thank

We started let and disclosure. comments. minute will management's read But with get to before in just doing safe so, the me a minute take harbor a presentation

similar call Act statements the of words can identified the contain XXXX meaning U.S. Private may, such as make forward-looking future references anticipate, of our other by estimate, will believe, harbor and statements provision the webcast regarding Securities we and to to of likely, Examples Today's statements should, forward-looking within future, relating of financial safe periods. Litigation Reform be results. and expect, include guidance

time, future, neither assurance on that inherent of otherwise. facts nor forward-looking any made to from are statements. in Because update of these forward-looking uncertainties, to any of as undertake no risks statements and forward-looking publicly Therefore, historical rely developments are may to not or be they you information, should to changes future subject whether performance. Forward-looking obligation the circumstances. a statements future We time statements new relate result

as reconciliation SEC include G. call of found today's and calculated webcast with meaning the can measures When accordance measures website. GAAP in the well the non-GAAP company's all press Today's be within in comparable and required, the financial non-GAAP financial measures financial also will release a to of directly Regulation most presented as in

President the go CEO Please over With of ahead. would that, to Mr. to I and Stavros Vizirgianakis, like call now turn Misonix.

Stavros Vizirgianakis

results. call today for you everyone. XXXX the and to first on Norberto, fiscal you, Thank afternoon, us Thank good review our quarter joining

Financial is our Chief call Joe Joining me Officer. the today on Dwyer,

revenue without strong product were Solsys. that and report surgical any of yet X to We wound days growth well and from our It markets. is highlighted that growth XX.X%, lines total important very very by limited results we as across these of as completed are with overall increases with our both operational pleased a domestic achieved across improvement, note and quarter shipping licensing another contribution and international of fees to

our sales across release, surgical quarter will our first fiscal our division we separate results X report product and As beginning with press channels, our of division. mentioned in the XXXX, wound

will company reflects across and on be Solsys longer We no up consumables set We division surgical presenting the acquisition. of equipment. back this way results the think we've the better The the performed and the solutions. solutions exists Despite expected. as challenges that the our reflect Nexus, division's in well the from the to market results uptake appeal transitioning strong of legacy a healthy our in

SonaStar, continued While Nexus, to successful, albeit sales decline improvement an year-over-year expected continue of to the very of -- our pace transition Nexus ahead BoneScalpel of and healthy aspirator, revenues. XX.X% of in rollout the led the to limited, its

are division, one in ability wound with as pleased further the under performance wound to even TheraSkin very we the and the growth, SonicOne Regarding and the are combine team. we more sales dedicated confident division's

XX.X%. increased domestic XX.X% The chain. XX.X%, sales the supply results a healthy international grew wound Our by quarter. reflected business while to geography, increased sales this related also improvements By by

in This and our We are to onboard, as the Nexus confident brought increase the the more we've have these new concerns successfully worked tirelessly and vendors our ability supply a as to the goods representing well going have inventory, adequately to position where $X.X in manage business rollout. reached finished address million forward. expanding ability the we chain reflected support in is

seamless integration in also majority and, distributors business we manufacturer with manufacturer U.S. the sales handpiece development on teams. transforming at direct from Solsys have reflect success vendors. of solely all disruption the various of Nexus manufactured between and focus and had will minimal with products to Misonix results to disposables and a be more The Masonic the recently, the

regards and plan pleased divisions have more work, in We with the level the net a over not now of sales to dedication add members their be both could resources commitment. and a across With the bolt-ons. current X X see opportunity to XXX I dedicated team, domestic additional surgical members during quarter. specialty and and channels side-by-side and wound the in distribution X We're net wound to advanced working surgical products for sales and excited for separate and field creating

and at efficiency success reflected our of operations; in XX%. business, focused as driving sales, our continued pleased to our see in gross across I'm Looking margin initiatives on the productivity

be relates to to it with performance more revolutionary As our its Nexus, platform, not date. pleased could we surgical ultrasonic

clearance of the the approval, both U.S. select we release the CE of our Europe. limited began FDA by receipt to and the across and customers On our XXX(k) back of the Nexus

the accelerate we the Nexus expect as over of rollout of coming We growing a pipeline demand. to meet quarters

that, a We and we're results initial so have connectivity, we've extremely we received the the and taken with iron from from including minor large, hospitals relating out said that Having pleased encouraging this regarding integrated delivery the broader network. very mid-November. physicians prepared opportunity issues software to rollout starting to feedback and feedback are for Nexus,

cutting looking incorporation solution and efficiency, a on make aspiration monopolar upgrades combines it time, best-in-class fly as well for between and power handpiece. one for RF ultrasound, turnover switch Nexus' that a as ideal and ability the features setup of the surgical process tool single shorten physicians tools an surgical the tool such into and streamline to as improved capability,

will remain accelerate generate profitable growing the address opportunity growth. significant the begin short, surgery. coming and we wound business on pipeline our and In in expand our across rollout we to as neuro, confident ability spine, ortho, to to the Nexus' months, focus general and Over

as to and are teams together, the the planned. The very report working pleased board. well Commenting we are integration is on across is that high Solsys, morale going

we than recent better sharp by tissues regenerative As complements benefits chronic Vegas, hard-to-treat as significantly $XXX an removing added more the us we debridement show address growth approximately and as example, to our a effectively we're yield provided one and and results providing that Advanced X%. to wound and valued rate wounds. while on tissue, TheraSkin, able TheraSkin X process enhance a ability of to at leading as can companies address greater Las company, how biologics separate that projected protects showcased the solution look we Wound in the perfectly jointly domestic annually million stand-alone Care nonviable SonicOne annual is SonicOne compound Symposium market, at to how grow This key than has with which viable confidence around of to at and

a a acquisition, the distribution success for be current avenues offering that near proactively will to deal to the our past to of complement we continue wound across during growth, at by position term to years, announce on pursuing continue that in the expect evaluate to Solsys in including Encouraged couple neurosurgery, out our growth our help further and executing will care and the company's leverage and our orthopedics and strategic competitive appeal providers as to initiatives health build care. core positioning and look we competencies and

strong through ahead, momentum to continue Looking XXXX. the we fiscal expect

highly and many a on As our revenue more growth full in on robust of such, across remain Nexus and a the ability the of further of our deliver to in improve back business year to XX% facets of confident sales we force. excess rollout unified guidance of

years fiscal team and has positive the past results the with build to our accomplishments the stable are over financial a of and In a summary, achieved direction the company pleased future quarter first move X the in for solid foundation reflecting XXXX, growth significant we the for and of profitability. number

right on hope are the creation. you have value translated that I these We that agree pleased efforts directly path. we're shareholder into

With that, I would the now turn Joe? call like our to over Dwyer. to Joe CFO,

Joseph Dwyer

everyone. good and Stavros, Thank you, afternoon,

As mentioned release, in September on press held XX, Solsys Misonix acquired today's privately Medical.

Our the reflect acquired days and X as Solsys well expenses for results days the as of operation. operations reported revenue of Misonix legacy X shipping

the data quarter, X of As results its to to certain division. first beginning changes, reflect quarterly and Stavros in we sales the separate -- mentioned, surgical with more our division accurately channels presentation our related the channels and wound adopted company's sales financial performance

data and present we wound. total surgical domestic and international will sales performance for forward, Going

a will the so is a discontinue As domestic consumables, consumables Remember consumables. will all TheraSkin almost sales that result, revenue. we classified be equipment versus as reporting

international equipment the versus about XX-XX. at consumables On split front, remains

Total financial in increased sales million, the rise revenue increase begin wound in I'll reviewing quarter. product quarter by XX.X% first that, surgical a a XX.X% reflecting an $XX.X With the and record fiscal to results sales. for

Looking XX.X%. at sales our geographic segments; domestic international sales for rose QX XX.X%, increased and

of XX.X% represents business -- the accounted for sales, surgical while business wound XX.X%. total Our wound about

we wound With of in to the quarters. expect of revenue total capture coming percentage acquisition meaningful Solsys, more a

year Nexus by to declined million expenses, XX.X% by increased to $X.X the million prior primarily the was the The to in higher resulting we Operating of R&D wind quarter. million in recorded costs. onetime Solsys' XX% G&A $XXX,XXX, expenses and attributable expenses expenses $X.X year-over-year as transaction-related period. during $X.X development $X.X million million, first to which increase compared year-over-year down amounted to costs the increased approximately from million, $X.X to $XX.X Selling

As a increased operating our of costs. when for force would $XXX,XXX several expenses, X% nonrecurring result, days noncash of have expenses the excluding by growth and related quarter Solsys the sales principally to total or and

deferred of This benefit liabilities or diluted in in $X.XX $X.X $X.X our We of to higher in Solsys, our deferred per year than the period. we share Solsys With this which assets, $X.X tax per tax attributable million income the valuation intangible prior $X.X tax the or quarter, benefit. which against acquired We assets net last of compared income reported of with gave being of income $X.XX acquisition. our per net we net to net of quarter resulted quarter $X.X deferred the Without acquired resulting been the loss Misonix increase million year-over-year the which primarily loss liabilities a The income recorded basis $X.X $X.X deferred the allowance the tax Solsys first tax was Misonix million share basis. million compared tax netted an would assets, with the book to tax share releasing benefit. year. from the income million, tax benefit, from net and rise resulted our million million have

adjusted a the the adjusted to Our was $XXX,XXX year prior for compared an positive of EBITDA period. loss in $XXX,XXX EBITDA quarter

Moving of for build and million due operations working at with million part our used and $X.X in cash to and balance million September a $XX.X mainly use sales. was support capital We million, $X.X to was and in growing on cash in finished cash ended a $X.X in fiscal demand million in to on our goods sheet; increase flow based higher to cash increase our approximately accounts $XX inventory receivable in XXXX $XX.X million, debt. XX, products QX

$XX and rate improving reducing interest the secured other expand borrowing our closing the terms. million assumed at while we to debt of key and terms renegotiated Solsys' Recall, capacity

profitability. to actively As debt capacity while remain and fund capital sufficient a focused improving the business. our cash increasing result, operations on our Misonix sales, structure across rapidly driving productivity combined We has and to efficiencies growing managing

of to about on the fiscal Regarding puts growth million fiscal expect product X profit us excess XX%. pro guidance XXXX. approximately quarters a at for rate of revenue grow basis XXXX, gross margins and XX% With of Solsys we consolidated for XX% forma in for year, $XX

While we're not for now have we businesses. of recognize beginning to the integrate Solsys, synergies operating and modeled we as Misonix combination the savings X those

that each positive For the for example, rest we EBITDA quarter achieving quarter, fiscal of sometime to And with companies, for negative turn expect in EBITDA such with the be the year, combining Solsys, by XXXX. about of addition insurance medical positive $XXX,XXX for of improving the per was savings EBITDA the plans year. we'll be we X while this

remain that of to are healthy on the both a sheet and we grow and We this enhancing beyond. will values executing XXXX balance long-term and us continue our goal our approach through follow confident and move strategies, fiscal while will the operating capital deployed we we've meet shareholder successfully integration closing, structure. preserving enable of top as the momentum In line to we remainder to

operator turn that, to call questions. With for like I'd to over the the

Operator

[Operator Nowak Instructions] from We'll first take Alex Craig-Hallum Capital. Mr.

Alexander Nowak

at the the components are this for point? building and broader Nexus saying nice you Nexus are the beginning bolt And rollout XXXX. now results how is supply fiscal suppliers the doing Stavros, chain stable the comfortable the consumables in to this quarter? that support Congrats on of the

Stavros Vizirgianakis

would I Yes. chain that. improved has overall significantly. Thank you, for supply Alex. Thank you say

we're of Nexus demonstrated A the the contract in that's bolt. $X.X Nexus about in lot inventory think that terms bolt. to to working goods of the really like commend finished I'd They've I million. And by finished up goods relates with our manufacturer production. the scaled increase of

unit, really the scope As to motions. put time. I the accelerate trial for it they're mid-November feel stage And because we're as said what quarter produce up in the same think out to ramp our that landscape, they time, call, we've also through first I the comfortable products needed. where the we're taken because onwards from we At looking production we're the prime they a supporters, that now can for ready at its us,

the portion So I for to foot stage of in the particular, think gas generators, at and perspective, from we're on this feeling on a wider a Nexus the go put comfortable market. the

Alexander Nowak

Okay, previously about SonicOne you understood. -- with and a spoke study still And TheraSkin. you then combo here

With the when similar at start look with you'll Solsys deal now and you to think to this? do closed, studies to studies perform start

Stavros Vizirgianakis

that's Yes, agenda the to going think probably year. from on I next be early

the the diabetic one initiatives of of are and the provide that little ulcer I color, control application in of trial The clinical is on involved biggest arena. a studies foot to bit in are think number just Solsys there randomized TheraSkin a currently.

pretty XXX-patient we number specifically your as that's other look early in But something on. the that through to company of quarter a answer combination the first the study next So investment year integration a the issues. retrospective of are and we'll at probably I significant studies calendar studies from are that question, going a get think,

Alexander Nowak

it. you have of heels you backlog Are is begin waiting 'XX quantify units rollout willing would the of say And been these today? And this question Nexus launching. the that last kind mid-November you just full some fiscal around for centers units. for for at you In the just XXX for to here, the pipeline call me. got Okay, last to for roughly mentioned

Stavros Vizirgianakis

bit us our in we're the Yes, actually following much will is little the in information surprised What terms conservative out, I say of pretty let demand market. has We're of a given our went that head-to-head us. we've quantify successes, to how that competitors think I Unfortunately, going a closely robust. but are with one I had X early exact in we competitors network, number, pipeline It well. market can't number probably expectations is exceeds big today. and really fared IDN with the an a our where

we going in more that acceptance -- in say the quarter, of stage, next But just by Nexus this specifics at that above hoping can pipeline market building. I'm is the expectation as So share terms group. with I'll is and

Operator

We'll next Kyle take Canaccord. Mr. from Rose

Kyle Rose

the And I so stack in airport, up here. I'm apologize an going advance. of questions I'm all at to kind

first those the just supply months, I in pro will Solsys then see, margins keep you've to can was or to So to term? the did kind on growth? of you impact then the or course near sight have the appreciate vest placements quarter, Nexus, the talk with gross any about sourcing I of quantify And you close of work to some of X just think the additional the of want and you things placements the when vendor XXX first but to And dual initiatives the forma over what previously. line is to wanted last over contribution about the X course fiscal we the of taken

So -- meet in I'll an is will that able hop than you capacity or or/and from demand? inventory expected, a us additional maybe to standpoint, be understand, exceed And better queue. demand if back help

Stavros Vizirgianakis

Sure, the do Kyle. Solsys? question answer want Joe, first you to on

Joseph Dwyer

Yes.

XX%. the be For shipping had on for basis, in was it the had if would Solsys forma year-over-year about about X pro the days, growth And quarter, TheraSkin $XXX,XXX full revenue. a we

Stavros Vizirgianakis

Okay.

ones XX% was saw bumping gross I at term, that products, improvement. this towards quarter, think, margins, margin we not up encouraging. to today, look legacy near on we've Moving in for a existing on the level which I on, opportunity the if the margin significant vendors think We there's the added

forward. pretty product on is Nexus Nexus there definitely is improve bolt Because to consumables I the exists numbers. going that opportunity in the limited right now, margin think on

outside digits we I machining we're of and and at borders view. numbers think add scale certainly to So point the think look costs I as lower sterilization thinking are packaging, on up to even there titanium significantly, some the on Nexus U.S. a right vendors, double additional now, from opportunities of

we line I XXX of sight, did number. terms quote exceed probably In number, that of we'll that think

Nexus beginning challenging line But production, the that been do it the that think took we have significant that because demand side significant build we've were have capacity Because for to the go it to an gate. of on challenge and them, Nexus, sight partner going out market unit saw you the and If we the we're with be sell SonaStar would handpieces. internally. in opportunity exactly that up on needed without to to and on are be to transition seeing given. outsourced the we've to our an a neuro with manufacturer of now with will supply X us as -- scale think the pretty China got, with that manufacturing using for we in chain. the disruption legacy as had bigger application was BoneScalpel handpiece guidance bigger potentially think to we've customers decision scale could for I manufacturing that well handpieces I that the demand if that the a to significantly excess I bone-cutting of The

So Karl. able the spend we manufacturer. answers on to side, I pretty But and hope is confident. need really console time feeling units, to on on scale all area we're the being handpiece your that questions, focus that that

Operator

Instructions] go BTIG. Ryan We'll [Operator next Mr. Zimmerman with from

Ryan Zimmerman

couple want Congrats on follow all more of to This the questions. Joe. a for up of on is progress. a I housekeeping

said guidance, XX%. gave you may think have gross but I margin you

say -- XX%? clarify I to I mean that. to do think you want just

Joseph Dwyer

growth margins. gross XX% and XX% Yes, revenue

Ryan Zimmerman

jumped heard margins. my I then... And XX% gross when I out yes. seat Okay, of

Joseph Dwyer

too. Me,

Ryan Zimmerman

of away where bit you're sales Maybe you near little maybe the understand you So, mentioned of us help the projections took just kind sales the do in taking SAWC. for Stavros, of term. force where the of force you then TheraSkin envision be from kind a should sales to the interplay we and kind a do it turning do over think what pull-through from between And X -- be Nexus that, follow-up force perspective ultimately, the next can just how products, a other and year? what as whether and products? about you SonaStar to thinking or on the what

Stavros Vizirgianakis

Right.

we've side, the XX division. sales Scott on into internally, the a X adding year with wound side Willy program per and In the tasked leaders, of resources surgical where force terms have additional been development, on the got

territories, available expanding find people they hire look at we as So and accordingly. will

there of lumpiness. So little bit be a may

one and a being model in the X of generally, sales You by hired would it increasing division. net in one may quarter headcount have another division But X I that in force about per X division. we're

grow. that's to overall, as XX per So company continues quarter the

Where being for if the of promoted really team. a we pull-through surgical look see have today, Nexus to is it's lot opportunity at we through

have As the a wound wider there promote team's opportunity an product we SonicOne I over successfully the into care's wound transition group overall concept. Nexus to the -- legacy think care bag, exists

Nexus, So Because, XX the neuro, the as being Nexus technology, have all opportunity of as surgical of the surgical about wound, promoting only XXX people able and having general instead a cross-selling well resources you're you surgery. to talk opportunities. to it's promote now just being it's going as not team but know,

definite see that as opportunity. So we near-term a

reason SonicOne have SonicOne, believe existing physicians. we gives product we've evaluations. which a will space user leverage the we got which see on debridement take debridement, a is introduce opportunity lead TheraSkin of those a have get leverage a the the that is having the crowded outcome, people in be that Because our and to bigger is it than to less we opportunity ground. in base, us TheraSkin for The the to relationships more already now that OR with to that by that user think we can better in we OR that predominantly an combination think certainly tissue, base to we to And

TheraSkin Conversely, with saw really accounts, X% diligence, less debridement. accounts existing TheraSkin than we crossover when were did we a there into the that

in bring now along fruit tissue. are TheraSkin that option offer to OR a the existing obviously with and the So debridement environment, using physicians in that's low-hanging debridement

portfolio rep to both in having creates the productivity products we the grow products care we pretty to per wound by additional hedge also introduce the spoken And opportunity think us that for solutions. significantly side creating road about the on it because way of bag. down a we've the So think has a

the So first transition SonicOne the in is really over portfolio and step time. TheraSkin building this to

Ryan Zimmerman

hurdles investors you're complete, that it front nothing the or And in assume aware as we integration more kind that that is relates be of of, to transaction recognizing this the it. maybe but Got clear, should of at so Are point? I'm just Solsys any there's targeting? should operationally milestones you there

Stavros Vizirgianakis

Absolutely.

a I valid think question very Ryan. you that asked,

The the the been expectations. SonicOne working there's OR And is on are above We think we the no wound were biggest transition well. dealing really with team, issues between I of there's expense that, teams is from businesses. a surgical that. similar Concur. system. and The We the the well, X X into similar along system Solsys-Misonix the hiccups administrative businesses currently. commonality use one integration. NetX well, system. gone wound run can a has exceptionally Both a use There've that From payroll the surgical lot of that perspective, The really an say the teams team. going X I exceptionally are product team,

complement simple lost place. people, we I key people the administrative think it's pretty in as as from haven't we've the integration a kept So the perspective. lower I think fact full a And in staff people well systems level process, any that

helped think we integration I that than has have an imagined. easier couldn't with us what

that did thing a certainly accelerate And critical Nexus to a rollout. we the as lot limited we process of I slower, we think risk other launch, for taken are launch now, right the things some us us with But from We've, the learned was starting There in pressure a customers do the to a launch. that team conservative is lot executing. to marketplace. have. going national sales help the approach The with the of we is I that there's Nexus think, execution that

a right It's So been I now, busier time. busy. never we're think

speak, probably terms the Solsys to branding, the end year. the X of of In by so companies, the disappear will

all will Xst organization from one we the Misonix So be of January.

detail, I've straightforward a but not So of given now lot it's you a question.

a on significant companies. the because lot for is There's transaction integration, it going with a both

Operator

turn question-and-answer today's time, remarks. I'd like session. this to the for back At closing conference concludes over moderator This the to

Stavros Vizirgianakis

you us Thank and opportunity working on take for operator. loyal are call all continued joining members, and very shareholders. our to would you, the today our thank customers, to support. to like give make also interest to to company. every your Thank hard great I special support this and partners day for team who I'd thanks of Misonix a world-class like

also providing are care be we with built an to current industry closing, improving have on grounded In increasing but is we than healthy and to so runway business and operating past relatively care solutions multiple Health only are a an greater doing need the market revenue, addressable continues health provide. growing, in for providers have The the growth. for and times consistently, products ample we industry over we stable continues across modest The with our annual not years. our the success total grow. foundation us seeing X

We highest the solutions a these superior to level support. support not to care providers are of of that the made well market right solutions, and we achieve need bring decisions the only we be have training clients looking optimistic that are and able and solution to very for health will in but and as that also increasingly we've positive patient our offer outcomes, as

contact quarter. on (XXX) months talking if They December contacted like Investor forward to on you again about look firm, call any you Thank report XXX-XXXX. additional JCIR. second to our now to again. our or all meantime, from Should schedule a please XXXX X management, Goodbye. ending with in meeting fiscal to questions, in you'd We be or the can Relations you have

Operator

for today's participation. you your call. concludes This Thank

now disconnect. You and may ahead go

Misonix (MSON) 10 Nov 192020 Q1 Earnings call transcript