Jeffrey Cohen

Jeffrey Cohen asked about the projected operating expenses over the next four to six quarters, the customer base and cross-selling opportunities from the VasoHealthcare IT acquisition, and a clarification on the previously stated EBITDA break-even targets for 2026 and 2027.

Answer

CEO Erez Meltzer indicated increased sales and marketing, tamed R&D, and stable G&A. He detailed VasoHealthcare IT's medical-related customer base (hospitals, imaging centers) and the cross-selling potential for Nano-X AI solutions, ARC systems, and teleradiology services. Both CEO Meltzer and CFO Ran Daniel reiterated that the AI business aims for quarterly EBITDA break-even in 2026, and the overall company targets EBITDA break-even in 2027.

Jeffrey Cohen inquired about the projected operating expenses over the next four to six quarters in relation to 2026 targets, the customer profile of VasoHealthcare IT and cross-selling opportunities, and sought clarification on the previously stated EBITDA break-even timelines for the AI business and the company as a whole.

Answer

CEO Erez Meltzer explained that sales and marketing expenses would increase, R&D would be more contained, and G&A would remain stable. Regarding VasoHealthcare IT, Erez Meltzer noted its 100 medical-related customers (hospitals, imaging centers) offer significant cross-selling opportunities for Nanox.AI, ARC systems, and teleradiology services. Both Erez Meltzer and CFO Ran Daniel reiterated that the AI business aims for quarterly EBITDA break-even in 2026, with the ARC division targeting break-even in 2027, leading to overall company break-even in 2027.

Jeffrey Cohen asked about the current adoption and future expectations for the accelerated Deep TMS protocol, the pipeline and outlook for minority equity investments, and an update on Neurolief's regulatory and market activities in Japan, EU, and the U.S.

Answer

CEO Hadar Levy noted strong demand for the accelerated protocol, which shortens the acute treatment phase to six days, and a robust pipeline for minority investments with a goal for at least one more by year-end 2025. He also mentioned anticipating Neurolief's FDA clearance by year-end 2025 for U.S. distribution.

Jeffrey Cohen with Ladenburg Thalmann inquired about the current adoption and future expectations for the accelerated Deep TMS protocol for MDD, the pipeline and anticipated pace of minority equity investments, and the regulatory and commercial timing for Neurolief in the U.S., Japan, and EU.

Answer

CEO Hadar Levy detailed that the accelerated protocol, reducing treatment to six days with five sessions daily, is seeing good demand and is a key growth driver. Regarding minority investments, Mr. Levy confirmed a robust pipeline, with plans to complete at least one more by year-end 2025 and several opportunities for 2026, contingent on due diligence. For Neurolief, Mr. Levy stated the company anticipates FDA clearance by the end of 2025, which would enable distribution through various channels including VA, IDM, and BrainsWay customers.

The analyst asked about the development status of the drug delivery platform, the market opportunity for trigeminal ablation, the product design for spinal cord stimulation (SCS), and the financial outlook for Q4 and fiscal 2026.

Answer

The company stated that the drug delivery platform is currently in bench and animal testing phases. The trigeminal ablation market targets about 150,000 US patients and will be commercialized through existing neurosurgeon relationships. The SCS product for lower back pain will have multiple SKUs and is a stimulation, not ablation, device. Management reiterated fiscal 2025 guidance but did not provide a forecast for 2026, citing confidence based on their contract with Zimmer Biomet.

Asked for guidance on the international business for the second half of the year and for detailed information about the ongoing lawsuit against LaserOptik, including potential damages, costs, and the number of competitor units placed.

Answer

The company expects the second half's international business to be similar to the prior year but cautions that tariffs create significant uncertainty. Regarding the lawsuit, damages are estimated in the eight-digit range due to LaserOptik's false advertising and misleading claims. Most legal expenses are in the past, but the case will be extended slightly by the addition of new defendants. The exact number of competitor units placed is unknown due to legal tactics by the defendant.

Asked about the revenue breakdown for Truvega SKUs, the status and costs of patent infringement litigation, and clarification on new products expected in the third quarter.

Answer

The company stated that the higher-priced Truvega Plus accounts for about 80% of its category revenue. Regarding legal matters, cross-complaints have been filed in federal court, with some costs incurred in Q1 and Q2, but no further details were provided. The 'new product' launch refers to the prescription Quell Fibromyalgia, which is now in production and expected to generate revenue in the second half of the year.

Asked for clarification on Q4 guidance considering historical trends, details about the EMT program rollout, whether the company offers neurology programs, and the status of M&A activity.

Answer

Management explained that Q4 would likely see typical seasonality due to student starts being pulled into Q3. They detailed the current status and expansion plans for the EMT program, confirmed no current neurology offerings, and reiterated they would provide updates on M&A when appropriate.

Asked for details on the company's user base and its expansion, and for clarification on whether the 2025 guidance includes M&A and how customer attrition/addition is factored in.

Answer

The user base is geographically and specialty-diversified, with growth opportunities in upselling digital health, RCM, and AI solutions. The 2025 guidance is based on organic growth and small tuck-ins, not material M&A, and accounts for natural customer attrition which must be replaced before net growth is achieved.

Inquired about the timeline for the Quebec order deliveries, the company's expected commercial structure by year-end (personnel, centers), and the anticipated number of physical therapists to be trained in 2024.

Answer

The Quebec order is expected to progress through Q2 and Q3 as sites are brought under contract, with deliveries following. The company plans a highly leverageable commercial model using partners, e-commerce, and online training rather than a large internal team. They are not yet providing specific metrics on trained physical therapists but may do so in the future after reimbursement is established.

Asked about the company's plans for cash utilization in upcoming quarters, the outlook for gross margins for the remainder of fiscal 2024, and the impact of the disciplined SG&A spending.

Answer

The company explained that recent cash use was for reducing payables and funding inventory. They are not providing specific margin guidance but suggested Q1's margin is likely at the higher end for the year. The leaner SG&A structure is expected to provide operating leverage as revenue grows.

Inquired about the terms of the new line of credit, the outlook for customer channels and shifts in fiscal 2024, expected revenue seasonality, and margin expectations for the upcoming year.

Answer

The company explained the line of credit is a $7.5M asset-based facility with an interest rate around 11%. The customer base and channels are expected to remain consistent. Revenue seasonality should follow historical patterns, with Q1 and Q4 being stronger. While SG&A is guided to be lower (29-33% of sales), the company is not providing gross margin guidance at this time due to recent operational changes and revenue disruptions.

Jeffrey Cohen of Ladenburg Thalmann inquired about the outlook for gross margins for the remainder of 2020 and into 2021, the company's facility footprint post-consolidation, any expected revenue from COVID-19 testing, and the anticipated business mix between clinical and pharma services.

Answer

Executive Jack Stover explained that gross margins are expected to improve due to the consolidation of pharma services labs from Rutherford, NJ, to a single, lower-cost facility in North Carolina, which will reduce fixed overhead. He also noted potential price increases for ThyraMIR and ongoing cost reductions. Regarding the business mix, CFO Fred Knechtel stated that while pharma services represented 55% of revenue in Q2, they expect the mix to return to the historical 60% diagnostics and 40% pharma as the clinical business recovers. Stover added that they do not anticipate significant revenue from COVID-19 testing in the back half of the year.

Jeffrey Cohen of Ladenburg Thalmann inquired about the operating expense outlook for Q2 and the remainder of the year, its correlation with gross margins, current trends in test origination and patient visits, and sought clarification on the $2.1 million Medicare advance payment.

Answer

CFO Fred Knechtel detailed the OpEx reduction plan, noting Q1's expense was $9.2M, down from $9.5M in Q4 2019. He projected a further 10% reduction in Q3, with costs managed closely based on volume. President and CEO Jack Stover added that while business is recovering, there is a 30-60 day lag in impact, and they are cautiously optimistic. Stover and Knechtel clarified the $2.1M Medicare payment was an advance on future billings based on past volume, intended to offset pandemic-related cash flow decreases, and was included in the reported cash balance.

Jeffrey Cohen of Ladenburg Thalmann inquired about the reconciliation of the $3.5 million and $5.2 million receivable reserves, clarification on cash and availability figures, the amount of the planned PPP loan application, and broader commentary on margin outlook and April volume trends.

Answer

Executive Jack Stover and CFO Fred Knechtel clarified the accounting for the receivable reserves under ASC 606, explaining they relate to prior period billings and any future collections will be recognized as 2020 revenue. They detailed that the cash and availability figure includes cash on hand plus borrowing capacity under their credit facility. They confirmed a $3.5 million PPP loan application. Regarding margins, they noted the diagnostics business runs at over 50% gross margin while the newer pharma business is in the low 30s with significant upside potential. They also observed encouraging signs of volume recovery in April after a March decline.

Jeffrey Cohen of Ladenburg Thalmann inquired about the projected timeline for the NDA filing and commercial launch, the final patient enrollment target for the LEVO-CTS trial, and the expected financial modeling for 2017, including R&D/G&A split and milestone payments. He also asked for clarification on the updated cardiac surgery market size and sought retrospective insights into the failed LeoPARDS sepsis trial.

Answer

CEO John Kelley projected a commercial launch in the first half of 2018, confirmed the target enrollment is 880 patients, and sourced the market size data to the Society of Thoracic Surgeons. CFO Michael Jebsen detailed a more even G&A/R&D split for 2017, a $2 million milestone payment to Orion upon US approval under G&A, and an estimated Canadian approval nine months post-US. Kelley also analyzed the LeoPARDS trial, suggesting it failed due to the wrong patient population (potentially hypotensive) and a high dosing regimen.

Jeffrey Cohen of Ladenburg Thalmann inquired about the LEVO-CTS trial, specifically why some randomized patients didn't receive the drug. He also sought clarification on the 2016 R&D expense forecast and asked about the potential structure of a North American commercial organization for levosimendan.

Answer

CEO John Kelley explained that patients might not receive the study drug due to changes in clinical status or withdrawn consent post-randomization. CFO Michael Jebsen confirmed the full-year 2016 R&D forecast is now $13M-$13.5M, reflecting an additional $2.5M for expanded trial enrollment. Kelley also outlined a potential 70-75 person commercial team to target key hospitals in the U.S. and noted that a direct approach in Canada is being considered.

Jeffrey Cohen of Ladenburg Thalmann & Co., Inc. asked about the rationale for extending the LEVO-CTS trial, the concentration of top recruiting sites, the mathematical benefit of forgoing a statistical penalty, the projected R&D spending curve for 2016, and potential business development activities.

Answer

CEO John Kelley explained that the LEVO-CTS trial is being extended by about a month to over-enroll and compensate for patients with incomplete data, costing an additional $0.5 million. He detailed top recruiting sites like Tacoma and Cleveland Clinic and noted that forgoing the second interim analysis provides a minor statistical benefit but was primarily driven by the rapid enrollment pace. Kelley also confirmed the company is evaluating other drug opportunities. CFO Michael Jebsen added that the accelerated enrollment will front-load R&D expenses into the first half of 2016, with costs tapering off in Q3 and Q4.

Jeff Cohen of Ladenburg Thalmann inquired about the commercial status of Amedica's porous structure in Europe, the details and data timeline for the SNAP clinical trial, and the current status of the dialogue with the FDA regarding the porous product.

Answer

CFO Ty Lombardi stated that sales of the porous structure in Europe are currently limited due to a small distribution channel. Chairman and CEO Dr. Sonny Bal explained that the SNAP trial, a 100-participant randomized trial comparing silicon nitride to PEEK in lumbar fusion, has shown excellent preliminary 12-month results, with a manuscript planned for submission by year-end. Regarding the FDA, Dr. Bal confirmed they have answered all questions with statistical proof, the dialogue is ongoing and collegial, and they recently received a 180-day extension to finalize labeling and indications.

Jeffrey Cohen of Ladenburg Thalmann inquired about several key areas: the specifics of the FDA's request for further data on the cervical fusion device, projections for the Q2 balance sheet, details on the company's new 3D printing capabilities for silicon nitride, clarification on a geographically weak sales region, and specifics on the new metal screw fixation system planned for launch.

Answer

Chairman and CEO Dr. Sonny Bal explained that the FDA's questions pertained to subgroup statistical analysis at earlier time points for the cervical level study, not the final 24-month endpoint, and expressed confidence in the upcoming submission. CFO Ty Lombardi projected that by the end of Q2, cash would be around $5 million and debt near $12 million. Dr. Bal also detailed their success with Robocasting for 3D printing silicon nitride. Regarding sales, management acknowledged a weak geography but noted a new individual is in place to stabilize it. They also described the upcoming pedicle screw system, highlighting its modular, cannulated design for a limited launch late in the year.