MSON - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the Misonix Fourth Quarter Fiscal Year 2020 Earnings Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Norberto Aja, Investor Relations. Please go ahead.

Norberto Aja

Thank you, operator, and good afternoon, everyone. the XXXX joining call. quarter for you Misonix fourth fiscal conference Thank get minute a in management’s We’ll just with started comments. language. But take before Harbor a me minute to doing read the so, let Safe within call the provision Today’s the U.S. contain webcast forward-looking of meaning the Safe and of Harbor statements as Litigation should, such will, periods. similar to believe, Securities and by of Reform and future, future Act other can Private estimate, identified expect, be XXXX words anticipate, may, likely, references of to results. Examples statements our regarding include relating guidance forward-looking statements financial

found the made assurance the financial release measures uncertainties, the webcast will Web financial nor on relate Therefore, like facts in future changes historical performance. Misonix. of they result Today’s statements comparable neither With are call not any these press well as ahead. future company’s statements Mr. the now company call publicly no in circumstances. forward-looking forward-looking to of directly to President are that, include be I’d presented otherwise. over the Because of CEO all any most to of a measures Forward-looking rely in should non-GAAP and of G. today’s site. within to developments, non-GAAP you calculated And turn financial to subject risks time, future, meaning of required, as Vizirgianakis, or obligation reconciliation can Stavros Please go When accordance SEC GAAP the undertakes to the with whether in inherent measures and Regulation and as time new from to may information, a forward-looking statements. be and update statements that

Stavros Vizirgianakis

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

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

per or many as most and quickly with loss pandemic, $X.XX share our for with headwinds had on of a with of X.X March this quick the business thank providing react patients effectively fiscal of Misonix to to as pro second work for fiscal level significant XX.X% exceptional fiscal under the pro opportunity challenging difficult significantly we quarter had the our the up our commenting of wound pleased a our employees make, begin customer these net diluted we’ve Taking take to have wound early their practitioners quarter and decisions Both resilient since the me sales year results acquisition, in revenue fiscal while support our led wanted operate and $X.XX we service share. and loss they times. elective. for and most continues impacted forma XXXX a beyond and X.X%. Taking at in net circumstances were ensure recent financial million were as performance, look our as challenging million division on full detail, fourth that work of dedication decreased forma for are of let to effectively we a and to and of a to added revenue Very our on gone wound to Before I and year. highest Despite a basis through total or accounting fourth during the the our for XX.X of division. the results this viewed Solsys the XXXX diluted XXXX loss ability look increased procedures way at a half loss per to XXXX healthcare

were hospitals care few for such, most facilities a of where outpatient were treated closed. cases patients wound As while number admitting great wound were

undergo in in especially that treating of an office. be becoming and led well patients patients having some treated needing in to operating of number as these to their hospitals realized positions However, as to chronic physicians doctors the were reversing wounds, and their room many This on wounds, more increasing amputations. cases many quickly even providers serious

As as of significant year. such, wound in we had to a quarter reflected fiscal rebound XX% prior approximately recovering revenues the in division our during fourth

markets disruption We July related were have Texas in which experienced case further less during of confident COVID-XX for around believe pandemic volumes will months, that some Florida in We continue that we as such of stage early impacted we remain the the specific August have and and disruption during moves business to see to long-term continued be but next there. six to pockets the grow the our opportunities as COVID-XX.

engaging in as the and employees, past technology these of process through possible, We few as used hospitals launching virtual months nurses physicians, have two products. with we’re constructively and new

allograft Therion, CryoLife. is amniotic membrane at first our manufactured which is partners an by The

also an market [ph], We note compatible It faster bringing to provide Pro of not even important faster area and a first probe Nexus. consoles. debride CTX the legacy the expect CTX platform under overall create to wider help new is Nexus will that we the be the surgeons both surface as well soon adoption is Nexus that CTX as our will debridement only with platform. with will to

things to a significant business. deal so happening in distribution We’re with arena, announcing xenograft partner there are lot a the a in of our close from also abroad good wound

the Domestic commercial a recover continue dramatically April the declined to and XXXX first very although longer monitor Almost we XX% start we the of impacted. we quarter. July, closely. surgical a in every relates in was will international after some decline take an saw division, exceptional experienced that almost to international launch. sales it bit sales to improvement surgical As we And believe Nexus market in for sales on that of our will back to

the Post for and quarter, providers seen growth well of as that adoption even returned Nexus continued faster for at as of the the This division, the division rate business, strong we’re to improving our many continued business. and momentum address that their units healthcare is likely profitability increased result inherent the domestic spinal within Although procedures end pleased declined an as the good of the sales procedures by set our June Nexus. the we’ve surgical surgical QX, to goal a surgical XX% number. than exceeded report of fiscal we surgical placing we the on We rebound. had in of XXX neuro wound

opportunities Moving division, our and and as probe in pipeline expand as Nexus the a cross-selling to efforts to we future providing on opportunities sales for significantly these footprint, have we’ll the handpiece our disposable foundation well placements. new surgical and the focus very Nexus product grow opportunities and strong leveraging for

solution be products herniated will procedures The division address the first in XXXX the in or later to microdiskectomy to microdecompression surgical microdiskectomy launch these discs. calendar related new and of will

us In aggressively out spinal COVID-XX of providing target post to the these hospitals. will as the the procedures we incentivize ambulatory ASCs the many addition, procedures of see centers, opportunity likely physicians move lesser for surgical an environment complex to to moving

partners help have any partners vendors dual the chain derisk product. our our the updates and some have We have hope potential and From each and targets near and will mitigate chain challenges with the worked chain, additional for and front. wound bring to future the are to to complementary have expand future. confident a board acquisition in to and as in be pandemic done supply suppliers bringing dialogue we evaluate we sure adjacent inventory with that we these of continued supply we able to share We diligently perspective, you supply making on throughout on technologies to

expect demand In levels meet we addition, disposables and inventory strategically the as best growing have as we up well Nexus console build quarters. in to the of handpieces the future

the onto physicians wound. feedback of used training team and team our our resources, both further surgeon surgical via our that seminars these and information valuable have sales to and provide across sales direct Moving sales few months online other tutorials, to and initiatives we past

Looking ahead, once to the the we coming process sales we months. again expand forces hiring in expect as restart

happy study end are our On enrollment valuable ulcers the and by have for the and completed the controlled have that to of we resumed calendar randomized the clinical in to significant foot announce front, diabetic trial hope year. we

With have the to development and through highlight environment, important will adequately million have a gain to initiatives we’re our efficiency, across that new a operation that maintain support we in healthy position relates it order cash, and to put we want research number Be ensure our in unprecedented business. which in and position improve it to critically further financial means invest As financially. to to manage detail, procurement and we product cash our stringent force of added and the in controls a offer management, and $XX Joe while continuing forth position, training and the initiatives invest taken to added development. I in inventory strong sales

only environment in that more industry-leading providers for likely our consigning a become Dwyer. now are have times, more to allowed ability very With to opportunities placed spine COVID-XX. a to of months highly the propositions over and Nexus only the facilities. and unprecedented during to neuro, strength ahead access and confident changed Misonix Joe? the to the successful capital Joe us compelling practitioners many equipment efforts constrained Our these past of CFO, and relevant closing, that, like call turn and our has leverage and that not to volatility our post of healthcare particular term. solutions mid is been but disruption budgets marginally hospital and a model these given we added bring have overcome position and table offering offering business uncertain and healthcare experiencing, importantly long expenditures wound, world-class operating the facilities to that perhaps has remain be consignment in few near, I’d to and and and the value attractive we In the brings improved By us in regarding

Joseph Dwyer

Stavros, fourth full fourth quarter XX.X% everyone. increased forma fourth decline of for an total pro quarter compared fiscal the Solsys decline driven of financial XXXX, by revenue acquired had our revenue the quarter domestic Thanks, million forma XXXX. results, to fourth for On pro a international quarter afternoon, to XXXX Taking basis, the of XX.X%, a million revenue of assuming $XX.X and decreased a and XX.X%. look revenue XX.X% of $X.X we good in at

the domestic to on quarter by revenue of XX.X% $XX.X at XX.X%. which maintaining healthy fiscal fourth pro report XXXX. $XX.X On XXXX sales by For increased for achieved the XX.X% forma coming margins an forma with XX.X% revenue of X.X%, top gross fiscal offset margin in while million increased fourth year. XXXX, full XX.X% for growth to basis, line quarter with that compared a pro pleased with revenue in of last I’m was decline growth the in percentage revenue international the includes million year compared fiscal

sales XXXX, quarter bad fourth in quarterly XX.X% quarter increased XX% we third a XX.X% fiscal overhead bad T&E, for by or the and before over the to operating and about quarter initiatives addition activities, including the during in million fell on the the prior the headcount, the exposure million savings resulting cost sequential also charge of million $X.X quarter, XX.X% reductions XXXX. with For sequential $XXX,XXX were by of were period, or during decreasing Operating took acquisition million fourth which reflecting the the from of in full discretionary salary of ability marketing the $XXX,XXX year, as implemented a or I’m by Chinese $X.X basis and expenses during we were with various compared able various pleased implemented, margin reserve expenses in $X.X the XXXX debt expenses quarter costs an along few cost-cutting XX% adjusted On fourth realign loss $X.X of compared bad accounts fiscal spending months. or primarily our third our debt with $X.X full of the with the reserve, quarter. $X.X number million a R&D reductions. to to reserve, per structure as to in receivable. the basis $XX.X year, for Solsys. increased past with by compared We share a XXXX a loss the million a of during compared approximately $XX.X G&A $XXX,XXX in prior without year loss of the acquisition gross marketing was primarily by million an million reflecting period. the reflecting our costs year EBITDA in initiatives share overhead QX In basis expenses reflecting led loss million or XX% and million This marketing and $X.X gain the per with down were reported or adjusted year to net fourth Solsys EBITDA a compared of $X.XX with $X.X prior lower of sequential $X.X quarter. million EBITDA of quarter sales prior $X.XX with on debt we a the period On other of net compared adjusted our

to adjusted quarter. able we’re that in EBITDA pleased improve We’re revenue a difficult

Moving for proceeds ended of the We of had we quarterly that we inventory million on the in of million increase to cash gross at in as for XXXX. the result fiscal and related XXXX. offering acceleration used million sheet, quarter consisted June $XX made the ready sequential of completed was to $X to at balance $X.X as January $X.X pandemic are equity net procedural approximately with $X.X second million less and largely take XX, we at in Cash inventory so operations operations for in $XX.X compared quarter are $XXX,XXX the flow of cash in million place with quarter, end Working compliance levels fourth of all was a subsides. QX in and third the with June our $XX.X fourth loss, the million and The used with capital. $XX in the we the anticipated XX cash in of for used was used $XX.X million covenants. debt we $X.X debt XXXX. quarter In strategically volumes working million compared in demand capital of million non-cash March we items XX, to as and million increase

forward, specific over our of for to support the ongoing guidance remain across at despite in going of time. environment. With to not Misonix uncertainties volatility to are while guidance, In meaningful maintain that, prudent business given and to positioned provide taken share to we capture flexibility future. turn we steps we continuing operate continued growth to this like economy well believe to the that the Despite efficiently financial the operating ongoing Regarding operator feel positioning we’ve and more excited call at regardless both and markets the closing, large, extremely the uncertainty the the the operate I’d about market we uncertainties, the questions. and

Operator

Instructions]. you. Canaccord. take today And our with Rose from [Operator first Thank Kyle we’ll question

Kyle Rose

or Great. got follow connection you’ve Is year. getting me here. as far little like units to help I characterize going up. into accounts? the tough sounds the it you in just it the help SonaStar I’m care seeing It existing, from months. over all hear that where as deeper next that Then now those side? follow a Nexus. you’ve sounds a like Are exceeded us right. a how you should I course Is have first us Maybe bit up hoping about placed? more accounts? BoneScalpel, XXX business them neuro It competitive wound can where think and is really and on Just XX of wanted ortho we the understand one are

Stavros Vizirgianakis

Hi. Kyle. Sure,

we the the BoneScalpel neuro had biggest gains XXX XX% units. If accounts. but new came the exceed sale and the placements In competitor terms upgrade categorize side was of to we roughly on a obviously the did That of accounts included of handpieces. really of accounts, combination Nexus, it,

side achieved the penetration So basically during XX% first get neuro goal we on on our year. to a the Nexus

Our pipeline very robust remains going forward.

the for units excess stand new year So of an it’s right now. as XXX we

that say than We’re things prior specific of the as give well it, sites. not year. And momentum we on it more I but side more to we’re guidance it’s stronger neuro even was continue as will the in rollout going on to expecting

Kyle Rose

of on over then months? And about next or weeks guidance, also understand weeks hesitancy you types long-term July how investors quarter, the the development should in both agreements, help a in agreements or and the on any we’re the Great. course understand How the XX help bit into Maybe talked the August? a of is, orthopedic perspective. – over the potential think activity looked the distribution some XX business understand side X I surgical and from of particularly And side. the course other us that your trends about of to provide and we question particularly then the certainly contributions just wound

Stavros Vizirgianakis

Yes.

a we new product the neuro the to take neuro the sales and this going product side, on be be up, sale from trained calendar provide opportunity sales environment months new guidance things. of side in the a But to start revenue force just could distribution process the if side to perspective. on hoping add going that’s position to soon single to a in difficult but fully to it’s digits the think vested in Obviously, the coming terms I have we agreement complementary then to announce in are of add. think the it on a I in and surgical to get launch we’re a year

wound We’ll to xenograft interesting On formally probably the last will side, in in launched probably sales the market. the again, year quarter be the space, vest beginning the process It’s the it’s of an in this of one. the year. calendar use

OR. more the on we imminent. details be have going product. focus should and weeks, xeno we That the in coming is But there it’s so the market are think will be the with the to more able I squarely pretty that share after

Kyle Rose

the Great. you for taking Thank questions.

Stavros Vizirgianakis

Thank you, Kyle.

Operator

Zimmerman BTIG. Ryan we’ll hear Next, from with

Ryan Zimmerman

Hi, okay? you me guys. Can hear

Stavros Vizirgianakis

Hi, Ryan. Yes.

Ryan Zimmerman

Thank Great. you.

questions me. couple from a So of

So couple question. pace what I launch ups. that that the But handpiece if I that it’s the it’s talked little this called it, kind a you of of then about think new choppy think about have? So correct Pro can a have bringing of that? follow wrong but first Stavros that’s you impact the of when do And but one, to CTX market? one, What’s I Two, there. my me

Stavros Vizirgianakis

Sure.

launching Obviously CTX is for this Nexus the right into going the process account. now. Pro, the So we’re of literally in

out we again revenue this gate. is that and after start the significant not the But a as going in of to we side to straight debridement. sort OR increases aggressively physicians perspective, those to get of it’s utility. lot having the fully from has a trained think The sales expertise force our more that and be we product pull going wounds, see go on presence their and of them. bigger selling cross cases product the been wound use is wound Everybody into confidently out integrated the now also and those and So has

positivity Nexus speed seen of think is that upgrade that a just from we it fact perspective. in step of We’ve surgeons product the terms can So area. next the lot back of use and logical on bigger a from just a be coming

So of difficult we It’s largely given all as a that market the to debridement. disruption think quantify untapped and the on the stop-start.

we sequential say, I as little found improvement most wound been hasn’t and business steady It a seen we’ve spine neuro time. as the the the bit choppy. over where As

So a but physicians interest from on it’s with nonetheless bit little wound, disrupted product. big the the

Ryan Zimmerman

it mentioned, or back cut That’s Stavros helpful. bit things the side about you recover, which TheraSkin, timing do some expect love to and to expense the the trials? on on back around Joe, business also talked a love the you’ve I’d maybe I doesn’t cut what think what your understand to on. here. and or reinvesting in that back relates trials have what you I’d impact TheraSkin expectation from of to your for you. we the as resume Thank does little But understand may then enrollment as

Joseph Dwyer

Sure.

if can the where and own and think, we in top thoughts we on sales headcount, revenue sales idea the across we a would we’ll to exceed line, I marketing expect be invest on have to the with basis. would quarter-by-quarter with in, we our start we reduced that the this we’ve probably expenses, on think back I invest start take find engine. on that board And

R&D side number DFU of in I we other kept surgical amount have going decent have we’ve these engineering the in of the guess money a the that We projects studies side budget development. have in on and we for a got on that

does to across budget then nature that anyway, of we’re that keep board on T&E start that So of going on that’s there. if it the things But like a but robust to And lower. come not and back, we’ll a and we still tradeshows have fairly lot reconsider. things happening

Ryan Zimmerman

Got it.

Joseph Dwyer

– And the then about question? asked you was what other

Stavros Vizirgianakis

Yes.

cost the reimburse side, think obviously to pay We XXX-patient that’s saying, evidence On study Ryan, DFU the trials a funders to Those pretty think products. TheraSkin that TheraSkin what get It’s is the that private we really which are big million. well all over item. reiterate for needed the to spend more significant. $X Joe is is

year hoping Enrollment we XX% just rapidly. So in spend the was pandemic, almost it open, to pretty that study. in any as our we speak momentum you and just complete passed Obviously were coming frowned clinical we’re by and thought trials during the mark were of on the also of and centers we the that prudent gaining you if stop wound sort. the hospitals [ph] about that talking end

I sites by think and so we’re things year. we’re there – are normalizing brought enrollment, this for can wrapped the have end additional on hoping that of we’ve So some we that up hoping calendar

Ryan Zimmerman

I it. appreciate

Operator

Group. Our will Nowak Craig-Hallum Capital come question Alex next with from

Alex Nowak

everyone. afternoon, Good Great.

Following prepared where Kyle’s said level gone think in September? is far I of levels. so comment June wound XX% question back prior said August in Was remarks, here specific in and and a that just you that July, has you the to

Stavros Vizirgianakis

Yes.

southern sales from I as low big force marked the And April. had rapid in we I’ve the say Florida, part the significant got of southern seen there. business improvement A – country. is improvement. our June, lot experienced point. April Texas So in would in basically, it of chunks we’ve the said, of June, we’ve down states, May,

and did July be the August. So we experience found We disruption choppy. business to in

during the pandemic, of early reality markets I the think less those were part the effective. is

in Texas and parts at disruption to recovery. we of the instances, pandemic. of large show the the beginning market Florida fast So were in some able no And a

thing also disruptions there’s September that fact different by early continue the a of that week. part will but September So to coming we’re latter we around, But the of hopeful is we’re tell, cognizant recovery. this see bit see August. that to moves back little the towards the

will it months. a think take of couple we So

with same through worse; that in surgical from we’re business. continued on impacted. and trajectory about. getting July August A out and start improvement We big terms and improving getting whereas the started and surgical a sort of plateauing that seen acceleration was better, we’ve then and Wound to the a lot haven’t quicker of seen June along, slower the talking all June recovery, that in domestic has badly the really that’s way bumping

Alex Nowak

you’re to your and that maybe point, now you it’s was not those And of that deferment in September, potentially you through? These how are organic, that getting and made the to improvement July to a point June that much and patients volumes now. backlog meaning you the wound in saw treated To that wound treated are on flush in backlog. about there seeing relating procedures would that more be amputations, August of side to think needed a do just you need right as are characterize

Stavros Vizirgianakis

classify say organic. will of could it say would. as that would I I in you that terms fair Yes, that is statement

draw in direct that different if is work you the reality places. think is organic. business, I It’s see more definitely think the wound, to the look I disruption between other there through. we And the at just on that you regions more the surgical than backlog so was I comparison the surgical if would say two,

Alex Nowak

be to right recovery signs well? here you you But the the are to Obviously, so Okay, U.S.? engage summer on now, so any on I know could focusing U.S. that hard much underway the seeing outside but there. got holiday, are see outside it. been Europe what the as U.S. And starting we’ve is

Stavros Vizirgianakis

is business And As around to capital one equipment the XX% I’ve our that business have a seen of international international more said, than is capital we’ve is significantly quantify. purchases impacted. equipment. What difficult been

impacted. on the certainly Where side So that been shoots green seen has is disposable things. of we’ve

So side. was very weak the a extremely is for sales an perspective. the month month strong typically June on international on us June

So business, in international at actually grown we’ve of the we look April. if the month

in sort slowdown. of came off slowdown international the the domestic So

distributors happen. I and what have I the think to June, affected. April throughout July was demand that out most That up big was disposable that for us big could no been sticky items. that was have not holiday Nexus. and coming sales the apparent literally knowing side. our going have was is on, on tells distributors equipment think business were back, the capital going that international products it There’s and much world we for in and of May been orders, gone on not stocking wouldn’t encouraging placing that In what are came there could was but been a surgery

Our international the having heard that U.S. customers obviously we’re success about have in the

us there pressure of to So front. international on step up the the Nexus is launch on

little Nexus As international we But and launch on to that domestically you’re decided pent-up aware, demand. the do very front. think I is

out countries varies you’re being dealing to we’re think significant the fourth gradual we can still that with, a Nexus calendar from on the the for So hoping disruption recovery. market. that we international quarter, by we’re a the start months in But rolling into couple more Depending of disruption.

in months we’ll of So next side. on the couple that more know

Alex Nowak

And understood. if Okay, could. then more I one just

share to of might that during at look we although does you it COVID space, others environment, it’s kind tell. As be the some in appear hard wound taking the

And wound that’s post reps hospitals? true? be going into think be consolidation is trend smaller So wound in environment COVID from a harder there’s you get organizations products in for maybe or the to these to just going to do and there standardization that it’s of

Stavros Vizirgianakis

What with the been seismic in in complete of access. what Alex, one, a certainty. say change seen has which you share pretty to terms with can OR difficult we we’ve of Yes,

the getting with OR. real no into were tissue there reps Before issues

is into people to OR. get the having door we’re get debridement post world the in the the Where people where OR, if our tool to by to into a footprint just OR. we’re the success I selling is limit think COVID in tissue want it’s having opener finding the – you’re that very difficult

open consolidation on was available the be perspective, shelf the right Generally to every from to We’ve spending dollar that that use. within feeling I surgeons product literally for of hospitals products a think if a to going in I there’s now. cost terms down they’re think drill really every seen really hunting hospitals I perspective. as much in from of their of hospital season cost, was see the were post people been COVID a we pretty are have you in squeezed But dollar margin certain systems. what reality is scrutinizing range, lot a it think

how – So get the development having been that help. an than that physician. think some lot you the more get process That And an OR new and is OR the going there of the to additional be see that on our from I like red the because side down we close to that’s say CTX we’ve it’s what challenging and out line to for perspective, business. road. ever I stepped would And That’s be to before certainly of Pro. in we’ve a tool, first if happens had growth probe wound to there consolidation me, behind could up debridement, came possibly was the ask

Alex Nowak

great. That’s I you. the Thank update. really appreciate

Stavros Vizirgianakis

Sure.

Operator

the remarks. portion the concludes Q&A call. closing management turn I’ll of to for it This back

Stavros Vizirgianakis

assembled very mid you’d team opportunities that balance prepare efficiency operator, Thank sales report capitalize the you and again will team sheet appreciate their you clouded months the our on of few pipeline, the a operational look to effects today. to been believe to fiscal future well the and XXX-XXX-XXXX. and our or and should making product Relations to a schedule thank we meeting members our us product forward management, talent you you company. COVID-XX across with with extend In ahead we have of have support. spending thank like company liquidity the the Norberto XXXX you initiative, please regarding to results. firm last various go-to-market your once remains long-term to extremely time while to JCIR have contact again and pandemic, questions trying and again we new additional the closing, line, We Aja, like our resources, a Misonix speaking of for you, Investor if the special everyone in interest formal goodbye. us. world-class the In I’d Misonix We any first quarter for with us contributions interim, Thank at when overall uncertainty

Operator

participation. for you That today’s does Thank conclude conference. your

disconnect. now You may

Misonix (MSON) 3 Sep 202020 Q4 Earnings call transcript