Anderson Schock

Anderson Schock asked for more details on the size and shipping timeline of recent cargo system orders, including VXM6 mobile systems to a European customer and a rail cargo scanner for Latin America, and how to project 2026 growth compared to the $55 million in orders from 2025. He also sought confirmation that the anti-dumping investigations in China have been paused indefinitely.

Answer

President and CEO Sunny Sanyal stated that Varex expects a growth year for cargo systems in 2026, noting that all planned cargo system products are now built, manufacturable, and either shipped or being installed. He confirmed that both the anti-dumping (pricing) and industry investigations in China have been paused indefinitely without specified end dates.

Anderson Schock asked for more details on the size and timeline of orders for VXM6 mobile cargo inspection systems shipped to a European customer and a rail cargo scanner for Latin America, inquiring how FY2026 growth for cargo systems might compare to the $55 million in orders booked in FY2025. He also sought confirmation that the anti-dumping investigations in China have been paused indefinitely.

Answer

President and CEO Sunny Sanyal stated that Varex expects a growth year for cargo systems in FY2026, confirming that all planned cargo system products (portals, gantries, mobiles, car scanners) are built, manufacturable, and either shipped or in the process of being installed. Sanyal confirmed that both the anti-dumping (pricing) and industry investigations in China have been paused indefinitely without specified end dates.

Anderson Schock inquired about the drivers of RexMD's return to growth, specifically the contribution from the men's HRT offering versus the ED business, and how current ED patient acquisition levels and customer acquisition costs (CACs) compare to historical levels. He also asked for more color on the 350 basis point decline in telehealth gross margin and the outlook for future telehealth margins with new offerings in women's and behavioral health, and the scaling of the 503A compounding pharmacy.

Answer

CFO Marc Benathen stated that approximately 8,000 of the 10,000 new RexMD members came from the sexual health business (mostly ED), with the remainder from HRT, hair loss, and insomnia. He noted that ED acquisition volume is very close to historical levels, with CACs being $5-$10 higher but still maintaining healthy unit economics. Regarding gross margin, Benathen explained the decline was due to a revenue mix shift: increased branded product in weight management (lacking medication processing fulfillment fees, impacting ~150 basis points) and RexMD (which has higher gross margins) becoming a smaller portion of total revenue. He anticipates a mild erosion in future gross margin rates due to lower margins in mental health (typically in the 70s%) and slightly lower interim margins for compounded offerings, though these new businesses are expected to be accretive to the bottom line and have lower advertising costs.

Anderson Schock from B. Riley Securities asked about the insurance approval rate for GLP-1 patients, the initial progress of the behavioral health launch, and the status of the Medicare fee-for-service initiative.

Answer

CEO Justin Schreiber did not provide a specific GLP-1 approval rate but expressed confidence that by year-end, 75% of new patients would be on an insured or affordable self-pay option. He reported the behavioral health offering is live in 50 states and will begin scaling in the next 30-60 days. The Medicare program, while delayed by structural work, is expected to begin scaling in the second half of the year.

Anderson Schock asked for the current insurance approval rate for branded GLP-1 therapies for new patients and whether existing patients on compounded drugs are successfully switching to branded options. He also questioned LifeMD's plans for compounded GLP-1s given the anticipated FDA crackdown.

Answer

Executive Justin Schreiber provided specific metrics on insurance approvals: about 10% of patients get immediate coverage, and for those requiring a prior authorization, the success rate for Zepbound is approximately 60%. He confirmed that the company actively reruns benefits for patients on compounded therapies and is seeing some successfully switch to branded drugs. Regarding the FDA, Schreiber reiterated that LifeMD will follow all legal and regulatory guidance while remaining committed to ensuring patients have an affordable pathway to these medications, which could include personalized compounded drugs that do not violate IP.

Anderson Schock pointed out that the raised telehealth guidance implies roughly flat sequential revenue and asked if this was due to conservatism or anticipated headwinds. He also asked for an explanation for the 5% decline in WorkSimpli subscribers and the outlook for that business.

Answer

CFO Marc Benathen (incorrectly attributed to Justin Schreiber in the transcript) explained the guidance reflects some conservatism and typical seasonality in the RexMD business, which is historically softer in Q2 than Q1, rather than any specific headwinds. Regarding WorkSimpli, he stated there were no challenges; the business is being managed to maximize cash flow, not top-line growth. The subscriber decline is a result of shifting focus to higher-value customers with longer LTVs, which has improved profitability.

Anderson Schock from B. Riley Securities asked whether all partner cell and gene therapies would require live MRI guidance or if some could be delivered in the OR with CT. He also questioned how the company is addressing potential MRI suite availability bottlenecks and requested an update on the timing for GLP compliance at the new preclinical facility.

Answer

CEO Joseph Burnett clarified that while the delivery cannula will be used broadly, the guidance method will be mixed. Many partners prefer MRI for quality control at launch, but some, especially in cell therapy, may use the OR. To address MRI bottlenecks, ClearPoint is focused on improving procedural efficiency with its OR software, supporting new lower-cost MRI systems, and developing predictive modeling to ensure OR-based procedures are effective. He added that the new facility could achieve GLP compliance and perform its first study in late 2025 or Q1 2026.

Anderson Schock asked whether all partner cell and gene therapies would require live MRI guidance or if they could be delivered in the OR with CT. He also questioned how the company is addressing potential MRI suite availability bottlenecks and requested an update on the timing for GLP compliance at the new preclinical facility.

Answer

President, CEO & Director Joseph Burnett clarified that the delivery method will vary. While the cannula will be common, many partners prefer MRI guidance for initial quality control, but some therapies may be suitable for the OR. To address MRI bottlenecks, Burnett outlined a three-part strategy: 1) improving procedural efficiency with ClearPoint 3.0, 2) leveraging new, easier-to-install MRI systems, and 3) developing predictive modeling to ensure accuracy without live imaging. He stated the new facility could achieve GLP compliance and conduct its first study in late 2025 or Q1 2026.

Anderson Schock asked for clarification on the two new site activations in Q1, specifically whether they were capital sales or Pathfinder subscription agreements. He also questioned how to model operating expenses going forward, particularly R&D, now that the company has secured new funding to accelerate development.

Answer

Executive Joseph Burnett clarified that the two new site activations were capital sales. He explained that other placements, like PRISM laser systems, increasingly fall under the Pathfinder subscription model, which smooths revenue recognition over a multi-year term rather than booking it all upfront. Regarding OpEx, Mr. Burnett stated the Q1 increase was a deliberate, accelerated investment in hiring and resources for preclinical services and 3.0 software support, made in anticipation of future revenue. He reiterated the full-year expectation that revenue growth will outpace expense growth.

Anderson Schock asked for clarification on the two new site activations in Q1, specifically whether they were capital sales or Pathfinder subscription agreements. He also questioned the 29% growth in operating expenses and sought guidance on how to model OpEx trends going forward, given the new funding.

Answer

Executive Joseph Burnett clarified that the two new site activations were traditional capital sales. He explained that the new Pathfinder subscription model smooths revenue recognition over time, in contrast to upfront capital sales. Regarding OpEx, Burnett attributed the Q1 increase to pre-investments in personnel for preclinical services and field support for new products. He reiterated that for the full year, revenue growth is still expected to outpace expense growth as these investments begin to generate returns.

Anderson Schock asked about the primary drivers for the significant increase in new account activations in 2024 and requested an update on the Q1 2025 pipeline.

Answer

Executive Joseph Burnett attributed the 2024 activation success to three factors: hospitals preparing for cell and gene therapy trials, the company's competitive Prism Laser Therapy system, and initial expansion into the operating room. He noted the OR was a small factor in 2024 but will be a larger driver going forward. For Q1 2025, Burnett confirmed the new customer funnel is very strong globally and that additional sites have already been activated in the new year.

Anderson Schock of B. Riley Financial inquired about the initial market demand for the new VOXIe 5 stationary oxygen concentrator (SOC), its expected revenue contribution for the second half of the year, and the status of reimbursement efforts for the Cemiox airway clearance device.

Answer

CEO Kevin Smith explained that VOXIe 5's impact is factored into the yearly guidance, with a more significant contribution expected in Q4. He highlighted that since nearly all long-term oxygen therapy patients use an SOC, the product significantly expands Inogen's addressable market. Regarding Cemiox, Smith confirmed that clinical trials are in progress globally to generate the necessary health economic data to support reimbursement, but he did not provide a specific timeline for completion or commercial launch.

Anderson Schock of B. Riley Financial, Inc. asked about the drivers behind the lower revenue concentration from top 20 pharma clients, the potential for better economics with mid-tier companies, and the current percentage of revenue from DAP subscription contracts.

Answer

SVP of Corporate Finance Andrew D'Silva stated that smaller and mid-cap companies are adopting OptimizeRx's technology at a faster rate to improve marketing efficiency, which explains the mix shift. CFO & COO Edward Stelmakh confirmed that subscription revenue is still around 5% of total revenue but that the company has a line of sight to approximately 10% for the full year based on the current pipeline.

Anderson Schock asked about the drivers behind the significant Q4 gross margin expansion, its sustainability, and the factors contributing to the strong performance in new DAAP deals and future visibility.

Answer

CFO Edward Stelmakh attributed the margin expansion to a favorable product mix, particularly high-margin DAAP revenue, but cautioned that the Q4 level was likely a seasonal peak, with a more typical range being high-50s to mid-60s. CEO Stephen Silvestro added that the strong DAAP deal flow is from clients scaling up successful programs, a trend expected to continue. Stelmakh also noted that revenue visibility for 2025 is significantly improved, with contracted revenue in the low 60% range versus low 50s the prior year.

Anderson Schock asked for clarification on the international growth outlook for the second half of the year, given the Japan launch, and questioned if the strong Q2 pharma services revenue represents a new baseline. He also asked for an update on a previously mentioned tender win.

Answer

CFO Tom Adams confirmed that international growth is expected to accelerate significantly in the second half, with the entire $1 million guidance increase attributable to international markets. President & CEO Linda Tharby added that Japan's impact will be more significant in 2026 and that the tender win is factored into guidance. She clarified that the strong Q2 pharma services revenue was driven by a specific non-IG clinical trial order and should not be considered the new norm, expecting H2 revenue to be similar to H1.

Anderson Schock requested more detail on the market opportunity for the two new independently pursued drugs, iron chelation and antibiotics. He also asked about the size of the investment required to develop these without a partner and sought specifics on the company's e-Pump collaborations, including the number of partners and geographies.

Answer

Executive Linda Tharby provided market context, estimating a patient base of ~30,000 for the iron chelation drug and over 300,000 for the antibiotic, while noting home-use rates are still being analyzed. She projected a potential revenue impact of around $0.5 million in 2026 from these programs. She characterized the required investment as having a payback period of 'far less than 1 year.' Regarding e-Pumps, she stated KORU works with the three primary companies that hold over 80% of the global market.

Anderson Schock asked for clarification on the SCHOTT Pharma agreement's relation to the next-gen pump, whether next-gen consumables would be compatible with existing pumps, and the number of novel therapy partners currently in Phase III trials.

Answer

CEO Linda Tharby explained the SCHOTT partnership involves collaboration to ensure syringe compatibility, but the pump IP and 510(k) submission are KORU's. She confirmed the next-generation consumables will be compatible with existing FreedomEdge and FREEDOM60 pumps. She also stated that five of the company's novel therapy partners are in Phase III trials.

Anderson Schock questioned the adoption rate of prefilled syringes and its impact on market share, and also asked for an update on the commercialization progress in Japan.

Answer

President and CEO Linda Tharby stated that prefilled syringe adoption is around 30%, as expected, but KORU's growth is driven more by broad market share gains with key accounts rather than just prefill conversions. Regarding Japan, she confirmed the team is working with leading pharmaceutical partners, finalizing distribution details, and expects to begin sales in the top-10 Ig market in early 2025.

Anderson Schock of B. Riley Financial inquired about the drivers of wireless unit churn, the impact of fees for unreturned pagers, and the progress of the new business development team. He also asked for a breakdown of the quarter's strong software bookings between new customers and existing account expansions.

Answer

CFO Calvin Rice clarified that unreturned pager fees are post-disconnection charges and do not affect churn rates. President, CEO & Director Vincent Kelly detailed strategies to mitigate churn's revenue impact, including pricing actions and selling higher-ARPU Gen A pagers. President & COO Michael Wallace stated that new logos constituted about 15% of software bookings, consistent with prior quarters, while Kelly highlighted significant expansion within existing accounts by replacing competitor solutions.

Anderson Schock from B. Riley Securities inquired about the impact of increased fees for unreturned pagers on net unit churn, other strategies to reduce churn, the progress of the new business development team, and the breakdown of software bookings between new logos and existing customer expansions.

Answer

CFO Calvin Rice clarified that fees for unreturned pagers do not impact churn rates as they are applied post-disconnection. President, CEO & Director Vincent Kelly detailed revenue mitigation strategies, including pricing actions, the Gen A pager, and multiyear contracts. Kelly also noted positive progress from the new business development team in acquiring smaller accounts. President & COO Michael Wallace stated that new logos constituted about 15% of software bookings, consistent with prior quarters, while Kelly added that the company is also displacing competitors within existing accounts.

Anderson Schock of B. Riley Financial inquired about the drivers for the guided sequential improvement in gross margin, progress on new OEM partnerships, the expanded market opportunity for Integrity, and the company's confidence in gaining FDA approval for HYALOFAST despite missing its primary endpoints.

Answer

EVP, CFO & COO Steve Griffin clarified that the 58-59% gross margin guidance is for the second half of the year, with confidence stemming from the one-time nature of Q2 charges related to manufacturing yields. President & CEO Dr. Cheryl Blanchard addressed the other topics, stating there are no new OEM partnerships to report but that CINGAL will likely fit that channel. She highlighted that new Integrity shapes will help penetrate an additional $40 million addressable market. Regarding HYALOFAST, she expressed confidence in FDA approval based on its Breakthrough Device designation, statistically significant secondary endpoints that have been used for prior approvals, and a robust set of international clinical data.

Anderson Schock of B. Riley Financial inquired about the drivers for the guided gross margin improvement in the second half of 2025, progress on new OEM partnerships, the expanded market opportunity for Integrity with its new configurations, and the company's confidence in securing FDA approval for HYALOFAST despite missing its primary endpoints.

Answer

EVP, CFO & COO Steve Griffin clarified that second-half gross margins are expected to be 58-59%, with confidence stemming from the one-time nature of Q2's manufacturing charges. President & CEO Dr. Cheryl Blanchard stated there was nothing new to report on OEM partnerships but noted CINGAL could fit that channel. She added that new Integrity sizes will better serve an existing $40 million addressable market. Regarding HYALOFAST, she expressed confidence due to its Breakthrough Device designation, statistically significant secondary endpoints that were used for prior FDA approvals, and a robust body of international clinical data.

Anderson Schock of Sidoti & Company inquired about the timeline and investment for the Cingal bioequivalence study, the expected OEM revenue trajectory for the year, and the rationale for maintaining commercial revenue guidance despite strong performance.

Answer

CEO Dr. Cheryl Blanchard stated the Cingal study is expected to begin by year-end, with further timeline updates to come. CFO Steve Griffin noted the Cingal study costs would impact 2025 EBITDA by about 0.5 points. Griffin explained that the OEM segment's expected sequential improvement is driven by a modest price rebound in Q2, though full-year pricing will be lower. Blanchard added that while Integrity is outperforming, tougher Q2 comps for international OA Pain led them to maintain the full-year commercial guidance.

Anderson Schock of B. Riley Securities asked for an update on the implementation progress of the new CRM system and inquired about the measurable impacts of the 'Triple Down on Bronchiectasis' marketing campaign on prescription growth.

Answer

President and CEO James Cunniff reported that the new CRM system is on track for a launch in the first quarter of fiscal year 2026, with the sales team eagerly anticipating its deployment. Regarding the marketing campaign, Mr. Cunniff highlighted that the 'Triple Down on Bronchiectasis' landing page has received over 27,000 views. While he noted it's difficult to draw a direct correlation to new prescriptions, he believes the company's strong revenue and referral growth reflect the success of its overall market awareness initiatives.

Anderson Schock from B. Riley Securities asked for clarification on the significant performance difference between U.S. and international segments and inquired about ZimVie's market position and opportunity in Japan with the launch of Implant Concierge.

Answer

Executive Richard Heppenstall detailed several headwinds that impacted international results, including foreign exchange rates, the termination of a manufacturing agreement, fewer selling days, and a strategic de-emphasis on China, which accounted for the larger decline. Vafa Jamali and Richard Heppenstall added that ZimVie holds a strong market position in Japan, which saw mid-single-digit growth in Q1. They believe the launch of the differentiated Implant Concierge service will be a key growth driver and accelerate momentum in that market.

Inquired about the reason for the gross margin decline in Patient Services, the reimbursement and adoption timeline for ChemoMouthpiece, and the specific timing and amount of the IT upgrade expenses through early 2026.

Answer

The Patient Services margin decline was attributed to the mix, with new, lower-margin businesses like Wound Care. ChemoMouthpiece adoption is taking longer than expected due to clinic formulary and logistics processes, and while reimbursement is expected, real-world data is needed. The $2.5M IT cost is for 2025, and it will drop off significantly in Q1 2026.

Anderson Schock asked for details on the ChemoMouthpiece launch, specifically regarding the reimbursement outlook and the expected adoption timeline for 2025.

Answer

CEO Carrie Lachance noted strong customer interest but also delays in the sales cycle as clinics work through formulary approvals and logistics. Outgoing CEO Richard DiIorio added that while an approved CMS code exists, a clear reimbursement picture depends on gaining real-world billing experience, which will take time as adoption ramps up.

Anderson Schock inquired about the number of clinicians reached through education platforms in Q1 relative to the annual goal. He also asked about the percentage of patients actively using the Kylee app and how their therapy compliance compares to non-users.

Answer

CEO Sheri Dodd confirmed the company is on track with its clinician education goals, specifically noting they reached 800 respiratory DME partners and clinical customers in Q1. Regarding Kylee, she stated they cannot directly compare compliance with non-users but highlighted upcoming milestones of 50,000 registered profiles and 1 million check-ins, which provide valuable observational data on patient engagement and therapy use.