Anthony Vendetti

Anthony Vendetti asked about the Q1 2026 revenue growth guidance, specifically if it excludes contributions from the largest customer, and whether any orders from this customer in 2026 should be considered upside. He also inquired about the status of the TDI product, its FDA approval timeline, and the international demand outlook, including specific countries and potential concerns for 2026.

Answer

Chairman and CEO Joe Sardano confirmed that the 2026 model and projections exclude expectations from the largest customer, with any contributions from them considered upside. He noted that the TDI program is a 'tenuous program' with ongoing discussions with the FDA, and an approval timeline is uncertain. President and Chief Commercial Officer Michael Sardano highlighted China as a continued international focus, with growth in Taiwan and broader Asia (South Korea, Japan) driven by keloid market demand. He also mentioned hopes for the Middle East, India, and expected Brazil clearance in 2026.

Anthony Vendetti inquired about Sensus Healthcare's 2026 guidance, specifically whether it excludes contributions from their historically largest customer, and if any future orders from this customer would represent upside. He also asked for an update on the TDI product's FDA approval status and the international demand outlook, highlighting specific countries and potential concerns.

Answer

Chairman and CEO Joe Sardano confirmed that the 2026 model excludes expectations from the largest customer, making any contributions from them upside. He noted the ongoing, tenuous pursuit of TDI FDA approval due to the FDA's lack of understanding. President & Chief Commercial Officer Michael Sardano elaborated on international demand, citing continued strength in China, growth in Taiwan and Asia (especially for keloid treatment), and anticipated clearances in South Korea, Japan, the Middle East, and Brazil, with no specific concerns mentioned.

Asked about the status of the large customer that paused orders, the potential impact on Q3 sales, whether international sales could offset the domestic pause, and the company's contingency plan if the LCD reimbursement for ultrasound is significantly reduced.

Answer

The company confirmed its large customer has paused but remains committed, and they expect a rush of orders once there's clarity. The pause could impact Q3, but the timing of a resolution is unknown. They are optimistic about international growth beyond China, thanks to the new MD SAP certification. They reiterated their belief that the LCD issue will be resolved favorably due to strong clinical evidence and lobbying, and highlighted the separate, positive development of the proposed physician fee schedule which significantly increases the SRT delivery code reimbursement.

Anthony Vendetti of Maxim Group asked for confirmation that the company's largest customer had paused purchases due to the reimbursement uncertainty and inquired about their plans once the issue is clarified. He also questioned the potential impact on Q3 sales, whether international sales could offset a domestic slowdown, and the company's strategy if the LCD reimbursement is ultimately reduced.

Answer

CEO Joseph Sardano confirmed that customers, including their large partner, have paused orders pending clarity but remain committed to IGSRT, which could lead to a rush of deliveries upon resolution. President Michael Sardano expressed high confidence in defeating the LCD proposal, citing overwhelming clinical evidence supporting image-guided SRT, including an NIH study. Joseph Sardano also noted that the new MD SAP certification opens significant new international markets beyond China, which could provide an offset.

Inquired about the specifics of the Platinum Dermatology deal, negotiations with other large dermatology groups, the international strategy for the Fair Deal agreement, and the reasons for the strong Q3 performance despite seasonality.

Answer

Platinum insisted the agreement cover all 130 sites, with installations happening over time. Sensus is in talks with several other large PE-backed groups. The Fair Deal agreement is not offered internationally, where the company uses distributors. The strong Q3 was driven by existing agreements and sales, not the Platinum deal, and still showed some seasonality compared to Q2.

Anthony Vendetti requested the actual revenue contribution of the snack business for the last 12 months or fiscal year 2025 and clarification on its gross margin. He also asked if the sale was bank-pressured and for more details on the Meal Prep business plan.

Answer

CFO Lee Boyce stated that the snacks business represented 38% of North American net sales and its gross margin was 'extremely dilutive' to the ex-snacks North American business. He confirmed the sale was a strategic decision, not bank-pressured. President and CEO Alison Lewis added that the divestiture allows for greater focus on flagship categories and meal prep, with plans to double down on innovation in Meal Prep, citing MaraNatha and Spectrum liquid coconut oil as examples.

Anthony Vendetti requested the actual revenue contribution of the snack business for the last 12 months or fiscal year 2025 and clarification on its gross margin. He also asked if the sale was pressured by the bank group and sought more color on the company's plans for building out the meal prep business, including potential focus on frozen/refrigerated categories.

Answer

CFO Lee Boyce clarified that the snacks business represented 38% of North America's net sales in fiscal year 2025 and was "extremely dilutive" to gross margin, correcting a misunderstanding about the 28.6% figure (which was *ex-snacks*). He confirmed the sale was a strategic decision based on the "right to win" and portfolio fit, not bank pressure. CEO Alison Lewis added that the divestiture allows for greater focus on flagship categories and meal prep. She discussed plans to double down on innovation in meal prep, citing examples like MaraNatha and launching liquid coconut oil for Spectrum, to unlock growth opportunities in this category.

Anthony Vendetti asked about the structure of the new regional operating model, including the number of regions and staffing needs, the timeline for restructuring and divestitures, and the expected timeline for appointing a permanent CEO.

Answer

Interim President and CEO Alison Lewis clarified two regions (North America and International) with a lean center, focusing on expanding spans and decreasing layers rather than new hires, aligning structure with business size. CFO Lee Boyce confirmed restructuring is ongoing, with most changes effective between October 1 and November 1. Alison Lewis stated the Board is moving in parallel with the strategic review for CEO replacement, aiming to bring in a CEO with the right capabilities for the future business, but no specific timeline was given.

Anthony Vendetti from Maxim Group inquired about the specifics of Hain Celestial's new regional operating model, including the number of regions and the recruitment or promotion needs to staff them. He also asked for a timeline for the ongoing divesting and restructuring processes, and an expected timeline for the decision on a permanent CEO.

Answer

Alison Lewis, Interim President, CEO & Director, clarified that Hain Celestial has two regions: North America and International (primarily US and UK). She explained the model involves a lean center focused on compliance and efficiency, with operational work (supply chain, innovation) moving to the regions, emphasizing expanding spans and decreasing layers rather than new hires to align with the current business size. She stated that restructuring is 'now,' with most changes effective between October 1 and November 1. Regarding the CEO search, she noted it's a board-level decision moving in parallel with the strategic review, with timing coinciding to ensure the right leader for the future business, while affirming her full engagement in the interim role.

Anthony Vendetti inquired about the new regional operating model, specifically the number of regions, recruitment needs, the timeline for divesting and restructuring, and the expected timeline for appointing a permanent CEO.

Answer

Interim President and CEO Alison Lewis explained that Hain has two regions (North America and International) with a lean center focused on compliance and efficiency, empowering regional teams. The operating model changes are about spans and layers, not extensive new hiring, and are being implemented now, with most changes effective between October 1st and November 1st. She stated that the Board is moving in parallel with the strategic review for CEO replacement, aiming to align the new CEO's capabilities with the future business structure.

Anthony Vendetti asked for a historical perspective on the strategic shifts from the Mark Schiller era to the Wendy Davidson era, questioning what went wrong to cause the stock's decline. He also inquired if the current pricing strategy is effective.

Answer

Chair of the Board Dawn Zier declined to comment on past leadership, attributing changes to a dynamic business environment. CFO Lee Boyce admitted the company had 'missed the ball a little bit' on pricing execution and is now 'turbocharging' its revenue growth management (RGM) capabilities. Interim CEO Alison Lewis added that the performance issues are concentrated in North American Snacks, allowing for a focused approach to fixing them.

Anthony Vendetti asked about the level of confidence in achieving the revised second-half guidance and the biggest potential risks. He also inquired about the timeline and progress of the strategic review for the Personal Care business.

Answer

CEO Wendy Davidson expressed high confidence in the Baby, Beverage, and Meal Prep categories. She noted she is more cautious on Snacks, where improved marketing productivity is needed, and stated this risk is factored into the guidance. Regarding Personal Care, she confirmed the strategic review process began in Q2 with a bank engaged, and the goal is to execute a transaction within the fiscal year, while continuing to operate the business effectively.

Anthony Vendetti inquired about the full-year outlook for the baby formula business, what supply chain redundancies have been implemented, and what steps beyond organic cash flow, such as divestitures, are being considered to reduce leverage.

Answer

Wendy Davidson, President and CEO, stated that Earth's Best formula is a key, margin-accretive growth driver. She confirmed that supply has returned for all formulations and will be available in all sizes by the end of Q2. Redundancies have been built in through increased inventory and qualifying a manufacturing partner to produce in more than one location. She noted that where distribution has been regained, velocities are at or exceeding historical levels. On leverage, CFO Lee Boyce confirmed the focus is on using organic cash flow from EBITDA growth and working capital initiatives to pay down debt, noting a reduction of over $90 million since Q1 of the prior year. Davidson added that there were no new divestitures to announce at this time.

Anthony Vendetti with Maxim Group asked for more details on the expanded distribution agreement with Zimmer Biomet, the development program for NeuroOne's lower back pain products (including the percutaneously placed paddle electrode and the basivertebral nerve ablation system), clarification on Zimmer Biomet's current involvement with the trigeminal nerve ablation and lower back pain programs, and NeuroOne's strategy for navigating the reimbursement landscape for its new technologies.

Answer

CEO Dave Rosa explained that the Zimmer Biomet agreement expanded a year ago to include the brain ablation system, with potential for further growth. For lower back pain, he detailed two programs: a percutaneously placed paddle electrode, for which NeuroOne seeks a strategic partner to leverage their PMA, and a basivertebral nerve ablation system, which utilizes the existing OneRF generator and is also being discussed with strategics. Mr. Rosa clarified that Zimmer Biomet currently has no distribution rights for facial pain and is not involved in the back pain programs, having divested their spine business. He noted that while some reimbursement codes are generic for brain ablation, the cost advantages of bedside procedures have prevented it from being a hindrance to adoption.

Anthony Vendetti asked for more details on the expanded distribution agreement with Zimmer Biomet, the development program for NeuroOne's lower back pain products, clarification on whether the OneRF trigeminal nerve ablation system and lower back pain programs are part of the Zimmer Biomet agreement, and how NeuroOne is navigating the reimbursement landscape for its new technologies.

Answer

Dave Rosa, CEO of NeuroOne Medical Technologies Corporation, explained that the Zimmer Biomet agreement expanded a year ago to include the brain ablation system, with potential for further growth. He detailed two lower back pain programs: a percutaneously placed paddle electrode for spinal cord stimulation, seeking a strategic partner for pulse generators, and a basivertebral nerve ablation system leveraging the OneRF generator, also pursuing strategic partnerships. Mr. Rosa clarified that Zimmer Biomet currently has no distribution rights for facial pain or lower back pain, as they divested their spine business. He addressed reimbursement, noting that while brain ablation uses generic codes, its cost advantages (bedside procedures vs. OR) have driven adoption without hindrance.

Anthony Vendetti from Maxim Group asked for the current total store count, including the Target and Food Lion rollouts. He also inquired about the Crown acquisition's current capacity utilization and its contribution to the new retail rollouts versus existing facilities. Finally, he sought an assessment of the remaining opportunity and saturation level within the Costco relationship.

Answer

Chairman and CEO Adam L. Michaels estimated approximately 15,000 stores upon full rollout of Target and Food Lion, emphasizing a patient execution strategy. He clarified that all three facilities operate as a unified network, with production optimized across locations based on capacity and customer needs, noting Bayshore's larger capacity. Mr. Michaels described the Costco opportunity as "huge" and "truly limitless," highlighting the expansion from one regional relationship to daily engagement across all eight regions with diverse product offerings and programs, expressing strong bullishness on the Club and Mass channels.

Anthony Vendetti asked for an update on the product rollout at Walmart, Kroger, and Target, sought to clarify the gross margin impact of trade promotions, and inquired about the change in total SKU count since the current CEO took over.

Answer

CEO Adam L. Michaels reported good progress with Walmart, including expanding doors, and active discussions with Kroger and Target. He confirmed the trade spend was a catalyst for volume and branding opportunities that boosted ROI. Surprisingly, Michaels revealed that the total SKU count has been reduced by over 50% since he started, as the company eliminated unprofitable items to focus on a more strategic product portfolio for channels like C-stores.

Anthony Vendetti asked for specifics on what drove the revenue outperformance, questioning if it was a particular customer like Walmart or a specific region. He also sought an explanation for the reported 12.6% revenue decline in the Northeast region.

Answer

CEO Adam Michaels attributed the revenue strength to a balanced performance across the portfolio, including strong results from all three club customers, growth at retailers like Albertsons, new items at BJ's, and promising reorders from Walmart. He explained that the Northeast revenue decline was 100% attributable to an intentional pullback from unprofitable legacy 'Street business' from a prior acquisition, emphasizing that core Northeast retail customers are growing.

Anthony Vendetti asked about the reopening of Red River Micro Hospital, its closure history, and the current physician contracting model, including equity stakes and performance incentives across Nutex Health's micro-hospitals.

Answer

CFO Jon Bates and CEO Tom Vo explained that Red River was closed in 2020 due to unprofitability after the No Surprises Act and has reopened due to improved reimbursement and local economic growth. Tom Vo detailed the new physician group structure (Nutex 70%, physicians 30%) and staffing contracts. Jon Bates confirmed this template is largely consistent across facilities, with incentives tied to Nutex's overall success for earn-out physicians and local profitability for others, in addition to hourly wages.

Anthony Vendetti asked for an overview of Nutex Health's physician contracting model, including equity stakes and performance targets, and inquired about the recent reopening of the Red River Micro Hospital.

Answer

CEO Tom Vo explained Red River's closure in 2020 due to the No Surprises Act and unprofitability, and its reopening driven by improved reimbursement and local economic growth. CFO Jon Bates and CEO Tom Vo detailed the physician contracting model, where Nutex Health typically owns 70% and physician groups 30%, with incentives tied to facility profitability, professional entity success, and Nutex stock for earn-out arrangements.

Anthony Vendetti inquired about the timeline for the financial restatement process, the collection rate and recourse for Independent Dispute Resolution (IDR) awards, the company's revenue recognition policy for those awards, the development pipeline for new hospitals, and strategies for driving growth at mature facilities.

Answer

CFO John Bates stated the company is working to complete the restatement within the 60-day Nasdaq compliance window. He detailed the IDR process, noting a win rate of over 85% and a collection rate of over 75%, with revenue being accrued at that collection rate. CEO Dr. Tom Vo confirmed two new hospitals are set to open in 2025, with a third being possible, and explained that growth at mature hospitals is being driven by increasing higher-acuity inpatient and observation stays.

Anthony Vendetti questioned if the Independent Dispute Resolution (IDR) revenue would be recognized more evenly throughout 2025, unlike the back-loaded recognition in 2024. He also asked about the performance ramp of the four new hospitals, the opening schedule for 2025, growth expectations for mature hospitals, and whether high IDR win rates are compelling insurers to improve upfront payments.

Answer

CFO Jon Bates confirmed that IDR-related revenue will be recognized progressively each month in 2025. Chairman and CEO Dr. Tom Vo stated that of the four new hospitals, two are performing above expectations and two are on track. He outlined plans for three new hospitals in late 2025 and a pipeline for 2026-2028. For mature hospitals, he targets single-digit ER volume growth plus increased admissions. Dr. Vo also expressed hope that their 80% IDR win rate will incentivize insurers to pay more fairly upfront to avoid the costly process, but noted it is still too early to confirm this trend.

Anthony Vendetti of Maxim Group inquired about the status of FDA approval for IceCure Medical's post-market study, including communication with the FDA, expected timelines, and the current number of identified clinical sites. He also sought clarification on the expanded addressable patient population for ProSense, specifically the 88,000 additional patients for non-surgical cases and 63,000 for benign tumors.

Answer

CEO Eyal Shamir confirmed that the post-market study protocol has been submitted to the FDA, and interactive communication is ongoing, with final approval expected by year-end or early next year. He noted that approximately 20 sites have been identified and recruitment targets include 80 patients by the end of 2026. Shamir further elaborated that the expanded patient population stems from the FDA's breakthrough device designation, covering patients ineligible or unwilling to undergo surgery (estimated 88,000 annually) and those with benign breast tumors (estimated 63,000 annually), bringing the total U.S. addressable market to over 200,000 patients.

Anthony Vendetti of Maxim Group inquired about the current status of the FDA approval process for IceCure Medical's post-market study, including communication with the agency and the timeline for final approval. He also sought an update on the identification of the 30 required clinical sites and asked for clarification on the newly disclosed expanded addressable patient population for ProSense, specifically the 88,000 additional patients and 63,000 patients with benign tumors.

Answer

IceCure Medical CEO Eyal Shamir confirmed that the post-market study protocol has been submitted to the FDA, and interactive communication is ongoing, with final approval anticipated by the end of the year or early next year. He noted that approximately 20 sites have been identified, with recruitment of the first 20% (80 patients) targeted by summer 2026. Shamir elaborated on the expanded addressable market, explaining that the FDA authorization covers 46,000 low-risk patients, an additional 88,000 patients ineligible or unwilling for surgery (stemming from breakthrough device designation), and 63,000 patients annually undergoing surgery for benign breast tumors, bringing the total U.S. addressable market to over 200,000 patients. He also highlighted the existing CPT-1 code for benign breast tumors and the increasing outpatient facility fee.

Anthony Vendetti of Maxim Group sought clarification on the FDA's review status of the post-market study, IceCure's preparations for a US launch, progress in Europe, and whether potential FDA approval would act as a catalyst for European sales.

Answer

CEO Eyal Shamir confirmed that all requested information for the post-market study has been submitted and that FDA leadership is actively engaged in the process. He noted the company is lining up commercial and study sites, with physicians eager to participate. Shamir highlighted growing interest in Europe, driven by strong data and upcoming presentations at major conferences like CIRSE. He affirmed that a US FDA approval would be a significant catalyst for sales acceleration in Europe and Japan.

Inquired about the specifics of the FDA post-market study, including patient count, sites, timeline, and expected FDA response time. Also asked about the potential for expanded reimbursement and the market opportunity in Japan with their partner Terumo.

Answer

The company confirmed the post-market study will involve 400 patients at over 25 sites with a 3-year recruitment period, but the FDA has not provided a specific response timeline. They see potential to increase reimbursement by moving from a CPT3 to a CPT1 code post-authorization. The Japanese market is significant, with over 100,000 new cases annually, and the approval there is expected to be less restrictive than the initial US one.

Anthony Vendetti of Maxim Group inquired about the specifics of the post-market study submitted to the FDA, including patient count, site numbers, and expected timeline. He also asked about the potential for expanded reimbursement and the market opportunity in Japan.

Answer

CEO Eyal Shamir confirmed the post-market study will involve 400 patients at over 25 sites, with an estimated three-year recruitment period. While the FDA has not provided a specific review timeline, top management is involved. Shamir detailed a two-part reimbursement strategy: increasing the CPT-3 code value through claims data and applying for a CPT-1 code post-authorization. He also sized the Japanese market at over 100,000 new breast cancer cases annually, with partner Terumo expecting fewer patient limitations than the initial U.S. indication.

Anthony Vendetti of Maxim Group LLC inquired about the expected FDA decision timeline for ProSense in the U.S. following the positive ADCOM vote, the regulatory filing and approval timeline in Japan with partner Terumo, and the market opportunity for ProSense in kidney cancer, including the timing for the ICESECRET trial results.

Answer

Executive Ronen Tsimerman confirmed the company expects an FDA decision in Q1 2025 but has no exact date. Regarding Japan, he stated Terumo plans to file in 2025, with close assistance from IceCure. Executive Shay Levav clarified the Japanese approval process is expected to take approximately one year from submission. On the kidney cancer indication, Ronen Tsimerman announced that interim results from the ICESECRET trial are expected in early December 2024 and noted the U.S. market represents about 80,000 new patients annually, though breast cancer remains the top priority.

Anthony Vendetti of Maxim Group inquired about the Natural Shrimp facility acquisition, specifically its build-out, initial utilization, and planned product lines for the next 6 to 12 months. He also asked about the largest growth opportunities in 2026, particularly with major grocery chains, and the margin potential for private label natural products, alongside an update on the KICK Sports Nutrition program.

Answer

CEO Jim Kras detailed the Natural Shrimp facility's strategic importance, highlighting its 6.2-acre size and central location for raw materials. He explained that the near-term plan involves a third-party gap analysis, R&D for next-generation nutraceuticals and food products, and leveraging existing retailer relationships for private label opportunities, especially for clean-labeled, fermented products. Kras confirmed that major retailers are indeed the largest opportunity for 2026, encompassing core produce, existing branded products like KICK Sports Nutrition and Pickle Party, and significant private label business driven by big box retailers. Regarding private label margins, Kras explained that while direct 'command' might be strong, the company aims for a fair margin balanced by consistent volume, long-term contracts, and deeper retailer relationships, which provide security and visibility. He noted strategic conversations with retailers where they might support Edible Garden's branded or higher-margin private label products to help underwrite the higher volume, lower-margin business they desire, indicating this blended approach is the direction for the Iowa facility. The KICK Sports Nutrition program's specific performance and 2026 outlook were not explicitly detailed in the response.

Anthony Vendetti of Maxim Group inquired about the Natural Shrimp facility acquisition, specifically its build-out, initial utilization plans, and the specific product lines intended for the facility over the next 6 to 12 months.

Answer

CEO Jim Kras detailed the Natural Shrimp facility's strategic location and current gap analysis by a third party. He explained plans for R&D in next-generation nutraceuticals and food products, highlighting opportunities with major retailers for private label offerings. Kras emphasized the facility's role as a nutritional and sustainability hub, aligning with Edible Garden's focus on clean-label, less-processed products and vertical integration.

Anthony Vendetti of Maxim Group inquired about the growth and revenue contribution of Edible Garden's private label business, the reasons for the revenue shortfall beyond the exited floral and lettuce categories, and the strategic benefits of the Natural Shrimp acquisition.

Answer

Chairman & CEO Jim Kras and Interim CFO Kostas Dafoulas explained that the private label segment is a growing, high-priority area with lower marketing costs and contracted revenue, noting a 19% year-over-year increase in dollar sales. Kostas Dafoulas attributed the additional revenue gap to softness in condiments and a temporary dip in the vitamin segment during the transition to the new Kick Sports Nutrition line. Jim Kras detailed that the Natural Shrimp acquisition (now Edible Garden Prairie Hills) provides a key Midwest distribution hub, a valuable patent portfolio for water treatment, and a facility for R&D and future production of high-margin nutraceuticals.

Anthony Vendetti inquired about the strategic plans for the recent Natural Shrimp acquisition, including immediate synergies and future cross-selling opportunities. He also asked for Natural Shrimp's 2024 revenue figures, its potential for gross margin accretion, and the performance and outlook for Edible Garden's sports nutrition line.

Answer

Executive James Kras explained that the Natural Shrimp facility will immediately provide needed warehousing space in the Midwest, supporting expansion with major retailers and housing refrigerated products. He highlighted the R&D potential for developing new nutraceutical ingredients from shrimp, leveraging existing patents. Kras noted that while Natural Shrimp's current revenue is nominal, margin accretion will come quickly from logistics savings and leveraging the facility, rather than its existing sales. Regarding the sports nutrition line, Kras stated he was 'ecstatic' about its performance, citing new distribution with a major big-box retailer that shipped in Q2 and other significant launches planned for the near term.

Anthony Vendetti inquired about the drivers of Q4 gross margins, the potential for cross-selling with the proposed Orion Group acquisition, the 2025 outlook for the sports nutrition category, and any anticipated one-time costs in Q1 2025 from exiting low-margin businesses.

Answer

Interim CFO Kostas Dafoulas and CEO James Kras clarified that Q4 margins were impacted by a planned labor ramp-up for the holiday season, not inventory write-offs. Kras detailed the Orion acquisition's strategic benefits, including cross-selling coconut and superfood products in the U.S. and leveraging Orion's EBITDA-positive status. He also outlined the Amazon-exclusive launch and upcoming retail rollout for the 'Kick' sports nutrition line. Both executives confirmed no further one-time charges are expected from exiting the lettuce and floral categories.

Anthony Vendetti from Maxim Group inquired about Edible Garden's capacity to handle Q4 demand after reducing contract growers, the specific revenue impact from hurricanes shifting sales to Q4, the expected growth from the new Kick sports nutrition line, and whether the full benefit of exiting low-margin products is already reflected in the current gross margin.

Answer

James Kras, an executive, explained that the company has sufficient capacity for Q4 demand due to investments in vertical integration and new production lines, eliminating the need for contract growers. He quantified the hurricane impact as a $215,000 revenue shift from Q3 to Q4. Regarding the new 'Kick' sports nutrition line, Kras expressed strong confidence, citing his industry experience and upcoming launches with major partners. He also confirmed that gross margins are expected to continue expanding as the company has fully exited the non-core, low-margin floral business and optimized its lettuce category, allowing for a greater focus on its core food products.

Anthony Vendetti from Maxim Group inquired about the current development status and clinical steps required for the Veris implantable monitor, the timeline for expanding Veris's commercialization efforts beyond OSU to other cancer centers, and the progress, exclusivity, and potential integration with Lucid Diagnostics for the Duke/UNC endoscopic imaging technology letter of intent.

Answer

Dr. Lishan Aklog, Chairman and CEO of PAVmed, clarified that the Veris implantable monitor's development is progressing well with a new manufacturing partner, with FDA confirming modest clinical requirements (a skin study) for 510(k) clearance, making the path clear for a 2026 submission. He stated that Veris plans to expand commercialization to other academic medical centers starting in Q1, offering value-added services like clinical support and AI-based decision tools, independent of the implantable device's readiness. Regarding the Duke/UNC LOI, Dr. Aklog confirmed a definitive license agreement is imminent for a new PAVmed subsidiary, with a clear 510(k) regulatory strategy and potential for a small clinical study, noting that while Lucid will have an equity position, the technology will remain separate for now.

Anthony Vendetti asked about the current development status and clinical requirements for PAVmed's implantable monitor, the timeline for expanding Veris's commercialization efforts beyond OSU to other cancer centers, and the progress and strategic placement of the endoscopic imaging technology licensing agreement.

Answer

Chairman and CEO Lishan Aklog clarified that the implantable monitor's development is progressing with a new manufacturing partner, requiring only a modest "skin study" for 510(k) FDA clearance, with a clear regulatory path. He stated that Veris's commercial expansion to other academic medical centers, including offering clinical support services and AI-based tools, will begin in Q1, ahead of the implantable device's clearance. Regarding the endoscopic imaging technology, Dr. Aklog confirmed a definitive license agreement is imminent, forming a new PAVmed subsidiary, with Lucid Diagnostics holding a modest equity stake.

Anthony Vendetti from Maxim Group followed up on the Medicare timeline, seeking clarity on whether a final decision could be implemented in early 2026 and asked for more detail on the commercial payer pipeline's progress beyond the Highmark Blue Cross Blue Shield win.

Answer

Chairman and CEO Lishan Aklog reiterated that the draft LCD is the key milestone and hoped for its publication before the end of 2025, which would likely place a final decision in 2026. He highlighted the one-year look-back for billing Medicare claims. Regarding commercial payers, Aklog stated that the full data package and the Highmark precedent have accelerated discussions, and he expects a meaningful subset of regional plans will grant coverage without waiting for a final Medicare decision. President & CFO Dennis McGrath added that state-level biomarker legislation will also be a positive catalyst.

Anthony Vendetti from Maxim Group asked for an update on the Veris program's FDA 510(k) submission timeline and for clarification on the financing status for the PortIO device within the PMX incubator.

Answer

Dr. Lishan Aklog, Chairman and CEO, stated that the Veris 510(k) submission might be slightly delayed into the second half of 2025 due to the recent corporate restructuring. He also clarified that for PortIO, a term sheet is in place with an angel network to raise $4 million, and the diligence process is nearly complete.

Anthony Vendetti asked for an update on Rockwell Medical's West Coast expansion efforts, the status of the home dialysis business, and the current percentage of the company's total business derived from at-home dialysis.

Answer

Dr. Marc Strobeck, President, CEO, and MD, stated that the West Coast remains an area of opportunity with an expanding customer base, and an announcement regarding further customer acquisitions is expected shortly. He indicated that building critical mass might warrant contemplating a West Coast facility in 2026. For home dialysis, Dr. Strobeck noted Rockwell Medical is a large supplier, and the new product configuration, which is more amenable for at-home use and higher margin, has started to gain traction. He estimated the at-home business currently represents a small, single-digit percentage of total business, with expectations for continued growth towards an overall market share of 10-15% in the near term.

Anthony Vendetti requested updates on Rockwell Medical's West Coast expansion and the home dialysis business, and also inquired about the current percentage of the business attributed to at-home dialysis.

Answer

Dr. Mark Strobeck, President and CEO, reported that the West Coast remains an area of opportunity with an expanding customer base, and an announcement on further customer acquisitions is anticipated. He noted that building a critical mass of customers might warrant contemplating a small facility in 2026. For home dialysis, Dr. Strobeck stated that Rockwell Medical is a large supplier, and the new, higher-margin product configuration for at-home use is gaining traction, with continued growth expected. He estimated that at-home dialysis currently represents a small, single-digit percentage of the business, with expectations for the overall market to reach 10-15% in the near term.

Sought confirmation on the assumptions within the 2025 revenue guidance, inquired about offsetting revenue streams like Nipro and West Coast expansion, and asked for clarification on the drivers for the gross margin guidance.

Answer

Executives confirmed the revenue guidance conservatively assumes the complete departure of the largest customer by June 30, with any new agreement constituting upside. They noted that the gross margin guidance reflects spreading fixed costs over a lower revenue base, not pricing pressure, as the lost customer was a low-margin account. Growth opportunities on the West Coast and internationally are being actively pursued.

Anthony Vendetti from Maxim Group followed up on the Medicare timeline, asking for clarification on a potential early 2026 final decision, and requested more details on the commercial payer pipeline, particularly the influence of the recent Highmark Blue Cross Blue Shield policy.

Answer

Chairman & CEO Lishan Aklog reiterated that the draft LCD is the key milestone, as it allows for retroactive billing for up to one year once the final policy is issued. He confirmed a final decision in early 2026 is a reasonable expectation if a draft is issued by the end of 2025. Regarding commercial payers, Dr. Aklog described the pipeline as robust, stating the Highmark policy has served as a powerful precedent in accelerating discussions with other regional and national plans, some of which may not wait for the final Medicare decision. CFO Dennis McGrath added that state-level biomarker legislation often ties coverage to a Medicare LCD, which will provide another tailwind.

Anthony Vendetti of Maxim Group requested a characterization of the sales pipeline for both the new cash-pay concierge channel and traditional commercial health insurers.

Answer

CEO Dr. Lishan Aklog reported dozens of active conversations with commercial payers and noted that the new concierge medicine channel has shown surprisingly rapid progress, with over 20 contracts signed in just a few weeks. CFO Dennis McGrath added that these new cash-pay and direct-contracting channels are key to the strategy of cutting the cash burn rate, providing financial stability alongside the traditional reimbursement journey.

Anthony Vendetti questioned the timeline for submitting the data package for Medicare coverage, the expected timeframe for a decision from MolDx, and the company's operational preparations for an eventual positive coverage decision. He also asked about the pricing strategy for the concierge medicine channel.

Answer

CEO Dr. Lishan Aklog expressed optimism for a Medicare coverage decision in the first half of the next year, citing deep engagement with MolDx and a strong data package. He reiterated that concierge pricing is a direct negotiation with practices for cash-paying patients, starting from a $2,500 list price, and is independent of the insurance reimbursement process.

Anthony Vendetti of Maxim Group inquired about recent innovations in the botanical synthesis process, including throughput improvements and new molecule isolation. He also asked for an update on the company's facility expansion and any major milestones anticipated for the third quarter.

Answer

CEO Ilan Sobel detailed several process innovations, including digitization of biological metrics to optimize yield, automation of harvesting and drying, and the development of next-generation 2,000+ liter bioreactors. He highlighted the growing role of AI and computational biology in the CDMO business. For Q3, Sobel noted the initial rollout of the HealthPros program and the launch of the hydration product, clarifying that the most significant financial acceleration from these initiatives is expected in Q4.

Asked for details on innovations in the botanical synthesis process, updates on new molecule isolation, facility expansion plans, and any major milestones expected in the current quarter (Q3 2025).

Answer

The CEO described ongoing process optimization through digitization, automation of harvesting/drying, and development of next-generation 2,000-liter bioreactors for the next facility. AI and computational biology are key competitive advantages for the CDMO business. For Q3, key activities include onboarding the first HealthPros and preparing for the October hydration product launch, with the true financial impact of these initiatives expected in Q4.

Anthony Vendetti of Maxim Group inquired about the potential patient enrollment rate in India, given its large population, and asked about the current landscape for obtaining government grants. He also questioned whether the company's operating expenses have now reached a baseline level with little room for further reductions.

Answer

CEO & CFO James Frakes stated that enrolling more than one patient per month in India is "very possible" due to the population size, though recruitment remains the key variable. Regarding grants, he noted the company would only pursue opportunities that align with its core goals. Frakes confirmed that operating expenses are now at a baseline, stating "that is where we are," and noted that costs might increase slightly as clinical trial activity ramps up.

Anthony Vendetti of Maxim Group asked about the activation status of the third Australian clinical trial site and its expected impact on enrollment pace. He also inquired about the Hemopurifier's potential as a treatment for bird flu and whether the current $1.8 million quarterly operating expense represents a new sustainable run rate.

Answer

Chief Medical Officer Dr. Steven LaRosa confirmed the third site would be activated within days, which, combined with the amended protocol, should accelerate patient enrollment. On bird flu, he stated that while the company is monitoring the situation, the Hemopurifier has not been used in humans for this indication and would not be a first-line treatment. CEO and CFO James Frakes explained that the $1.8 million operating expense is not a fixed run rate and is expected to increase as clinical trial activities ramp up.

Anthony Vendetti asked how the growing number of trained orthotists and new certification classes will help drive the pipeline and backlog, and requested an update on conversations with new insurance companies and employers.

Answer

CEO Paul Gudonis explained that the O&P channel initiative, including in-depth certification classes, enables clinicians to build their own patient pipelines and manage reimbursement, which is expected to accelerate revenue in the second half of the year. He also reported that lives under contract or pending have increased from 18 million to 25 million, primarily with state Blue Cross Blue Shield plans, and that discussions with national plans are ongoing. He clarified they do not typically engage directly with employers.

Anthony Vendetti of Maxim Group requested the Q4 cost per pipeline add, the historical success rate for overturning denied authorizations, physician training goals for 2025, and clarification on the full-year 2025 CapEx outlook.

Answer

CFO Dave Henry reported the cost per pipeline add was $1,226. CEO Paul Gudonis explained that while the historical success rate on appeals was 40-50%, this has recently decreased and timelines have lengthened. He also detailed the physician education process. Dave Henry clarified that 2025 CapEx is expected to be low, around $1 million or less, as the major facility move is complete.

Anthony Vendetti of Maxim Group questioned the monetary value of the current backlog and its expected recognition period, the size of the company's clinical and O&P channel teams, plans for international expansion, and the R&D pipeline for product enhancements.

Answer

CFO David Henry estimated the net value of the 316-unit backlog at over $10 million, which CEO Paul Gudonis added is typically realized over 3-6 months. Gudonis clarified they have about a dozen clinicians for their direct business and two business development reps for the O&P channel. The international focus remains on Germany, with other markets being longer-term projects, while the China JV is expected to generate revenue in 2025. Gudonis also noted that MyoPro enhancements are planned for a Q1 2025 announcement.

Anthony Vendetti from Maxim Group asked about specific actions being taken to improve the pipeline conversion rate and how the company plans to balance increased marketing spend with its goal of reaching bottom-line profitability.

Answer

CFO David Henry explained that the authorization rate is already improving, reaching about 19% in Q2, driven by faster-moving Medicare Part B patients who don't require the same reimbursement hurdles as Medicare Advantage patients. He acknowledged that increased marketing spend could impact the Q4 operating cash flow breakeven goal but stated the investment is necessary to ensure continued revenue growth momentum into 2025 and minimize seasonality.

Anthony Vendetti of Maxim Group inquired about the operational timeline for new co-manufacturing partners, the bidding pipeline for the 2025-2026 school year, customer interest in new products like Pop & Go, and the company's inventory and staffing readiness.

Answer

Executive Riccardo Delle Coste confirmed that the co-manufacturer onboarding is on track for completion by the end of Q2 2025, with some equipment already live. He noted that the bidding process for the next school year has begun, with awards expected over the next few months. Delle Coste also mentioned that while not universal, a number of bids include the new Pop & Go product. He affirmed that the company has sufficient inventory and is appropriately staffed to meet projected demand.

Anthony Vendetti inquired about the initial market traction and sales pipeline for the new Pop & Go product. He also asked about the manufacturing strategy, specifically which co-packers handle Pop & Go versus Twist & Go, the product's margin profile, the current number of active school accounts, and the total addressable market within the U.S. school system.

Answer

Executive Riccardo Delle Coste explained that initial Pop & Go orders have just shipped for Q4 revenue, with high customer interest driven by a lunch menu opportunity up to 5x larger than breakfast. He clarified that a different co-manufacturer produces Pop & Go, which has a margin profile similar to or slightly better than Twist & Go. The company is currently in about 6,000 schools (~4.5% penetration) with its breakfast products but was previously capacity-constrained. CFO Lisa Roger added that manufacturing expansion covers all product lines.

Anthony Vendetti inquired about the current reimbursement landscape, asking if the company's new clinical data has led to improvements in pre-approvals. He also asked about the sales force expansion plans for 2025, including headcount and the status of hiring.

Answer

Steven Foster, an executive, explained that while Tenon Medical doesn't control the reimbursement environment, they are actively working to bring clarity and have seen great progress, though the process remains slow. Regarding the sales force, Foster confirmed that building the team was a key mission in 2024. The company now has 6 direct regional sales managers who are all in place, overseeing 42 independent distributor contracts.

Anthony Vendetti of Maxim Group inquired about the specific causes of Q3 reimbursement headwinds, the impact of new clinical data on payer coverage, recent physician feedback leading to the Catamaran SE system, and the timing of the planned sales force expansion.

Answer

Steven Foster, an executive at Tenon Medical, explained that reimbursement issues were due to transient, regional coding confusion, which he expects to resolve with upcoming AMA clarity. He noted that the company's new clinical data reinforces the Catamaran system's safety and efficacy for payers, which, combined with coding clarity, should improve coverage. Foster also confirmed that physician feedback directly led to the development of the smaller Catamaran SE system to provide more options. Finally, he stated that the sales force expansion is actively underway and will continue over the coming months.

Anthony Vendetti asked for clarification on how to model revenue from the system-wide sales guidance, specifically the royalty and service fee percentages, and requested an estimate for the amount of G&A expense reduction expected after the refranchising is complete.

Answer

Executive Jake Singleton explained that 2025 is a transition year, making a GAAP revenue guide difficult. He clarified that the approximately $70 million in corporate clinic revenue would convert to a franchise royalty structure of roughly 10-10.5%. While declining to provide a specific forward guide on G&A reduction, he stressed that rightsizing G&A post-refranchising is a critical focus for management to make the business more profitable than it was under the mixed-ownership model.

Anthony Vendetti asked about interim CEO John Erb's strategic priorities upon his return, any planned changes, and the status of the search for a permanent CEO, including whether an executive search firm has been engaged.

Answer

Executive John Erb explained that he does not see a need for immediate, significant changes, as the team is effective. He highlighted the recent JACC Heart Failure publication and the new outpatient reimbursement as key strategic drivers for the sales team. He confirmed that an executive search firm has been hired and is actively working on the CEO search, and he has already passed along potential candidates.

Anthony Vendetti of Maxim Group asked about Nuwellis's internal preparations to capitalize on the significantly higher outpatient reimbursement rates effective in 2025 and whether the company has adequate personnel or plans to hire more staff to accelerate adoption.

Answer

Executive Nestor Jaramillo stated that the company is preparing by identifying and supporting hospitals that previously performed outpatient ultrafiltration, helping them with setup and ensuring payer coverage is in place. He confirmed that the current field team of nine territories is sufficient to launch this initiative without immediate new hires, though the company may add reimbursement expertise at its headquarters.

Anthony Vendetti of Maxim Group asked for an update on the number of pediatric accounts, the enrollment status of the REVERSE-HF trial, and the operational and financial structure of the SeaStar Medical partnership for QUELimmune.

Answer

Executive Nestor Jaramillo reported that Nuwellis added one new pediatric account in Q2, bringing the total to 41. He confirmed the REVERSE-HF trial is on track to complete enrollment by Q3 2025, with over a third of patients already enrolled. Regarding the SeaStar partnership, Jaramillo clarified that SeaStar handles the required IRB approvals and patient registry, while Nuwellis manages all commercial activities, including training, sales, delivery, and clinical support. He also noted a controlled, limited launch strategy for QUELimmune, targeting 10 hospitals by year-end.

Inquired about the nature of the inventory write-down, the R&D pipeline, the expected reduction in cash burn for 2025, key geographic opportunities, and the status of AviClear device returns.

Answer

The inventory charge was primarily a new reserve for refurbished AviClear units. R&D is focused on indication expansion for existing products like AviClear. The company expects a 50% reduction in cash burn in 2025, driven by working capital improvements. Key geographic opportunities include Korea and Japan, with China as a long-term prospect. Over half of the leased AviClear units are expected to be returned, and the company is now focusing on driving utilization in a core group of committed accounts.

Asked about the timeline for transitioning manufacturing from Jabil back in-house, the expected percentage of revenue from international sales in 2024, and any changes to the international direct vs. distributor sales model.

Answer

The manufacturing transition from Jabil is already complete from a production standpoint; the main remaining task is bringing back inventory. International sales as a percentage of total revenue will decrease in 2024 because the Japan-exclusive skincare business has been discontinued. The international sales model of using both direct sales in major markets and distributors elsewhere will remain largely the same.

Anthony Vendetti asked for details on the CompuFlo Epidural system's recent Medicare coverage, including the potential for broader adoption, the specific reimbursement price, and the company's strategy for sales force expansion. He also inquired about the status of claim submissions and sought clarification on the Dental division's international sales, specifically whether revenue lost in Q2 due to freight issues would be recovered in Q3.

Answer

Executive Jan Haverhals clarified that the Medicare Administrative Contractor (MAC) coverage applies to Florida, New Jersey, and Texas, representing one-third of U.S. epidural procedures. He stated the physician payment rate is $325, in addition to the primary procedure code. Haverhals detailed the commercialization strategy, which involves a partnership with Actual Biologics to target large institutions, and noted the official rollout had just begun. Regarding claims, he mentioned nearly 200 were submitted prior to the new pricing structure, and the focus is now on transitioning clinicians to new sales agreements. For the Dental division, Haverhals confirmed a Q2 shipment of approximately $250,000 was delayed but expects sales to improve in the second half of the year, noting July was a strong month.

Anthony Vendetti inquired about the timeline and pipeline for the 160 Medicare claims submitted for the CompuFlo system. He also asked about the adjudication process for prior claims, the strategic differences between the sales forces for the direct dental business and the medical segment, and the company's plans for its international dental business, including a potential e-commerce model.

Answer

Executive Jan Haverhals clarified that 60 of the 160 claims were submitted between January and May 2024, adding to the 100 from 2023. He emphasized a focused approach on a select group of clinics to ensure high-quality submissions and noted that some commercial payers have already paid for the procedure. Haverhals explained that cash flow from the profitable dental business is funding the medical segment's development, which hinges on securing reimbursement. For the international dental business, he stated the focus is on optimizing existing distributor relationships rather than restarting, and there are no current plans for an international e-commerce platform.

Anthony Vendetti inquired about the patient pipeline awaiting the final CMS pricing determination, the status of the stroke trial enrollment, and the timeline for the FDA submission. He also asked for an update on potential expansion into Traumatic Brain Injury (TBI).

Answer

Executive Dane Andreeff confirmed that Helius has a strong, pre-existing list of Medicare patients ready for PoNS therapy upon CMS reimbursement approval. He affirmed that the stroke trial enrollment is on track for an FDA submission in the first half of 2025, leveraging their breakthrough designation. Regarding TBI, Andreeff mentioned they are still investigating expansion, citing a positive cost-benefit analysis from a prior Pacific Blue Cross study which showed significant savings and patient improvement.

Anthony Vendetti of Maxim Group inquired about the potential sales impact following the final CMS price determination, the status of the patient pipeline, progress on the stroke trial enrollment, the timeline for the FDA submission, and any plans for expanding studies into Traumatic Brain Injury (TBI).

Answer

Executive Dane Andreeff confirmed that Helius Medical Technologies has a substantial list of Medicare patients ready to proceed once reimbursement is established. He stated that the stroke trial enrollment and the subsequent FDA submission remain on track for the first half of 2025, leveraging their breakthrough designation. Regarding TBI, Andreeff highlighted a Canadian white paper from Pacific Blue Cross which showed significant cost-benefit and positive outcomes for patients using PoNS Therapy, indicating a strong case for its use in that indication.

Asked for an update on the PoNS step clinical trial (number of sites added, future plans) and the outcomes from attending the recent Physical Therapy Association (APTA) conference, particularly regarding recruitment and key learnings.

Answer

The PoNS step trial is fully enrolled with 6 sites, and no more will be added in 2024; results are expected in Q3 and Q4. The recent APTA conference was very successful, generating significant inquiries, with a notable increase in interest from VA rehab specialists for treating MS, TBI, and stroke patients.

Anthony Vendetti from Maxim Group questioned the composition of the $99 million backlog between cannabis and commercial sectors, the potential business impact and timing of cannabis rescheduling, its relation to banking reform, and the current status of the company's cost-cutting and productivity initiatives.

Answer

CFO Dick Akright clarified the backlog is 76% CEA-related and 24% commercial. CEO Bradley Nattrass stated that the removal of tax burden 280E is the largest benefit of rescheduling, which he believes is separate from banking reform. Both executives confirmed the company is now 'right-sized' after its cost-cutting efforts, with an expected $8 million in G&A savings in 2024, and no further significant reductions are planned.

Asked about potential inflection points for the cannabis market, an update on international operations and outlook for 2024, and the company's plans for M&A activity. The questions were asked by Thomas McGovern on behalf of Anthony Vendetti.

Answer

The key cannabis market inflection point is federal rescheduling, but the company's performance is more dependent on state-level license awards. The international focus is on the Netherlands, UK, and Germany for both cannabis and vertical farming. M&A is not a near-term priority; the focus is on organic growth and achieving positive cash flow.

Anthony Vendetti inquired about the submission and commercialization timeline for the new BVA device, the number of active accounts, client reception of the new portable device, usage trends, and the process for changing Daxor's reporting status from a '40 Act to a '34 Act company.

Answer

CEO Michael Feldschuh detailed the dual 510(k)/CLIA waiver application process, targeting a second-half 2023 launch. He noted that FDA regulations prevent them from marketing the unapproved device to clients. He highlighted a 59.5% increase in kit sales as a key usage metric and the opening of 18 new accounts in 2022. Regarding the reporting status, both CEO Michael Feldschuh and CFO Robert Michel explained they are now addressing the transition with the SEC but noted the timeline is uncertain due to potential regulatory delays.

Anthony Vendetti asked for details on the new BVA device, including its portability, weight, and key differences from the original. He also inquired about the 510(k) submission timeline, the potential for the new device to suppress current sales, utilization statistics for existing devices, the customer pipeline, and the user-friendliness of the new system's interface.

Answer

CEO & President Michael Feldschuh explained that the next-generation BVA system is a significant leap forward, being the size of a tissue box, weighing as much as a laptop, and reducing test time from 60-90 minutes to just 15 minutes at the point-of-care. He confirmed that data submission to the FDA has begun, with a full 510(k) package expected in Q4 2022 and approval anticipated in early 2023, using their current device as the predicate. To address sales concerns, he outlined a shift to a SaaS model for the new device, offering trade-ins for current customers. He also confirmed a rise in utilization at existing accounts and noted the new system will be highly intuitive, comparing its ease of use to checking in luggage at an airport.

Anthony Vendetti of Maxim Group sought clarification on the qualified pipeline and backlog figures, the status and business impact of the Bud & Mary's lawsuit, and the expected cash burn following recent cost reductions.

Answer

CEO Raymond Chang confirmed the pipeline figures and expressed confidence in fully recovering funds from the Bud & Mary's lawsuit, citing personal guarantees. He also highlighted a strategic pivot from capital-intensive TTK projects to the more flexible Rapid Deployment Program (RDP). CFO Tim Oakes provided the $646 million backlog figure and explained that while they don't guide on cash flow, the company must operate under its debt agreement's cash spend limit of $8 million per quarter.

Anthony Vendetti from Maximum Group inquired about the extension of the sales cycle, the total number of Vertical Farming Units (VFUs) currently under contract, and the pricing dynamics and profitability of the new rapid deployment program (RDP) in the context of cannabis price per pound.

Answer

CEO Raymond Chang clarified that the primary issue has been the long 15+ month construction period for TTK projects, not the sales cycle itself, a problem the RDP is designed to solve. He also noted customer-side construction delays are slowing the book-to-burn ratio for extraction equipment. Chang stated that Agrify has commitments for just over 3,500 VFUs. He explained the RDP has a different economic model than the TTK program, involving hardware sales, SaaS fees, and a much lower production fee, making it adaptable to various market conditions.

Anthony Vendetti from Maxim Group asked for the total backlog amount, the increase from the previous quarter, and the expected recognition timeframe. He also requested an update on the status of the project with Curaleaf, particularly in light of the new Rapid Deployment Program.

Answer

CFO Timothy Oakes confirmed the backlog is $923 million, which is expected to be recognized over a 6-8 year period on average. Executive Raymond Chang added that over 80% of this is high-margin, 10-year recurring revenue. Regarding Curaleaf, Chang stated that the project is moving forward with construction applications submitted, but the lengthy process underscored the value of the new Rapid Deployment Program. He also highlighted the success of another customer, WhiteCloud, which is achieving production of nearly 50 pounds per VFU annually.

Anthony Vendetti of Maxim Group asked about potential expansion with Bud N' Mary's parent company, sought confirmation on the timing of initial recurring revenues, and questioned the sustainability of the high Q4 gross margin.

Answer

CEO Raymond Chang confirmed an LOI for a Phase 2 expansion with parent company Frozen 4, potentially adding up to 1,200 VFUs. He also reiterated that initial recurring revenue is now accelerated to start in Q3 2022. CFO Timothy Oakes addressed the gross margin, explaining the 22% was abnormally high due to high-margin extraction sales and a specific VFU sale. He guided for near-term gross margins to normalize to the mid-teens.