Biotricity - Earnings Call - Q3 2025

Executive Summary

• Q3 FY2025 delivered record gross margins (76.4%), revenue ($3.60M, +21.7% YoY, +11% QoQ), and improved operating cash flow, marking the second consecutive quarter of positive operating cash flow before interest, dividends, and amortization.
• SG&A fell to $2.38M (−20.5% YoY) while total operating expenses were $2.9M; net loss narrowed to $1.32M (−56.7% YoY) and diluted EPS improved to −$0.054.
• Technology Fees rose 21.8% YoY to $3.39M and comprised 94% of revenue; flat-fee SaaS represented 67% of Tech Fees as the model mix continued shifting toward higher-quality recurring revenue.
• Wall Street consensus estimates from S&P Global were unavailable at time of request; relative performance versus estimates cannot be assessed in this report. Estimates will be updated when accessible.
• Catalysts: continued margin expansion from AI-enabled workflow efficiencies, recurring revenue mix shift, GPO channel pilots, and sustained operating cash flow momentum toward EBITDA breakeven and profitability.

What Went Well and What Went Wrong

What Went Well

• Record gross margin of 76.4% (+350 bps YoY) driven by improved Technology Fee margins and AI-enabled workflow optimization; management expects continued strong blended gross margins going forward.
• Recurring revenue strength: Technology Fees grew 21.8% YoY to ~$3.39M and comprised 94% of total revenue; flat-fee SaaS reached 67% of Tech Fees, enhancing revenue predictability.
• Operating discipline: SG&A fell to $2.38M (−20.5% YoY), total OpEx $2.9M, with positive operating cash flow (−$89K net cash used in ops; +115% QoQ FCF improvement), and adjusted EBITDA improved to −$110K, the closest to breakeven in company history.

Quote: “Our margins are second to none in the space… we expect our growth and margins to stay… and grow in line with top line revenue in a way that maximizes cash flows and profitability.” — CEO Waqaas Al‑Siddiq.

What Went Wrong

• Profitability not yet achieved at the bottom line: net loss of $1.32M and EPS −$0.054, though improved materially YoY.
• Flat-fee share within Tech Fees dipped sequentially to 67% (from 73% in Q2), reflecting ongoing transition dynamics as larger pilots ramp through GPO and hospital networks.
• Estimates comparison unavailable: SPGI consensus was not retrievable at time of request; inability to benchmark potential beat/miss versus Street limits near-term narrative clarity for traders.

Transcript

Operator (participant)

As a reminder, this call is being recorded. It is now my pleasure to introduce Founder and CEO, Dr. Waqaas Al-Siddiq. Thank you. You may begin.

Waqaas Al-Siddiq (Founder and CEO)

Thank you, everybody, for joining us today. Third quarter 2025 has been a transformative quarter for Biotricity, marked by significant advancements and strategic initiatives that have led us to achieving positive free cash flows for the second quarter in a row as we continue on our path to profitability. One of our most significant achievements this quarter has been the improvement in all aspects of the business, from revenue to margins, operational efficiency, and getting close to positive EBITDA. Our commitment to innovation, strategic partnerships, and operational efficiency has allowed us to make remarkable progress across multiple fronts. We are continuing to expand our Cardiac AI Cloud capabilities, harnessing our data to explore predictive capabilities with our platform. Recently, we published our research in predicting post-operative complications in Nature. We expect to expand our research and file for FDA of our AI clinical model by mid-next year.

Upon successful clearance of our Cardiac AI Cloud, we expect further margin improvements. Our recent strategic alliances with the top group purchasing organizations, otherwise known as GPOs, and specialist organizations in neurology and pulmonology are beginning to gain momentum. These partnerships have helped kick off multiple large opportunities that are currently in pilots, along with expanding our reach beyond cardiology, significantly expanding our market reach. This positions us to capitalize on broader market channels and secure larger contracts, strengthening our presence in the healthcare technology sector. As noted in our release, we have also recently procured the support of our funding partners in order to place the largest inventory order Biotricity has ever placed. This is a testament to how excited we are about our growth in the coming quarters.

These recent initiatives are part of our broader strategy to develop more complementary partnerships where access to cardiac diagnostics is critical. We will continue to focus on partners that have broad reach and whose existing customers have cardiac comorbidities. In summary, our strategic initiatives, technological advancements, and operational efficiencies have positioned Biotricity for sustained growth and profitability. We remain focused on delivering innovative, high-quality cardiac care solutions and are confident in our ability to continue driving value for our shareholders and improving patients' outcomes globally. With that, I will turn the call over to our CFO, John Ayanoglou, to provide more detailed financial insights.

John Ayanoglou (CFO)

Thank you, Waqaas. Let's review the audited financial highlights for our third fiscal quarter of fiscal 2025. Our recurring revenue generated from our technology-as-a-service subscription model, as well as our usage-based subscriptions, remains robust, driven by the popularity of our FDA-cleared cardiac monitor devices and particularly our state-of-the-art Biocore suite of products. We continue to see strong demand and market adoption, particularly the next-generation Biocore Pro, which features cellular connectivity. Atrial fibrillation, a primary contributor to strokes, remains a significant focus for us. We facilitate the diagnosis of atrial fibrillation, providing cardiologists and patients the opportunity for earlier medical intervention. This not only improves patient outcomes but also underscores significant healthcare cost savings for both individuals and the broader healthcare system. For the third quarter ended December 31, 2024, revenue increased by 21.7% year-over-year to $3.6 million this quarter.

This growth is a testament to the record of our technology and efficacy of our strategic initiatives. Biocore products are turning heads at larger clinics and hospitals that have a longer sales cycle, and we continue to have an unprecedented for us sales pipeline of high-quality, high-volume accounts that are conducting trials and pilots of our technologies. We have also been successful in our focus to transition our business to a flat-fee subscription model, having already transitioned approximately three-quarters of our business to establish a higher quality and more predictable revenue stream. Our flat-fee revenue grew by about 22% year-over-year from the comparative quarter of the prior year. Technology fees rose by 21.8% year-over-year to about $3.4 million, and 67% of that was flat-fee revenue. Once again, this reflects a strong customer retention and quality support services. Record revenues.

Gross profit for the quarter totaled $2.8 million, up 27.5% from $2.1 million in the prior year period. Again, $2.1 million in the prior year period. Our gross profit percentage improved 350 basis points to 76.4% for the quarter, up from 72.9% in the prior year. This increase is tied to the expansion of our recurring technology fee revenue base, efficiencies gained through our proprietary AI, and improvements in our monitoring cost structure. We've also become more efficient in procuring materials, as well as ordering and producing devices within our manufacturing process, which means that device sales, which have historically been a loss leader for us, are also now enjoying positive margins. That makes for record gross margins this quarter. Our insourcing business model allows cardiac medical professionals to have direct control over our services, enhancing efficiencies and enabling broader market penetration.

Doctors love that there is high patient compliance when using our devices. They are well designed. Operating expenses for the third quarter of fiscal 2025 were $2.9 million, a 15% improvement as compared to the $3.4 million in the same period last year. Our disciplined cost management drove a 20.5% reduction in SG&A expenses, while our R&D investment increased by nearly 22%, reflecting our commitment to innovation and long-term growth. This strategic investment ensures we continue to enhance our product offerings and strengthen our competitive position in the market. As mentioned earlier, we have strategically transformed our sales force to focus on longer sales cycles and larger accounts, including independent hospitals and GPO networks. This means that we have also more effectively leveraged our experienced sales force.

During the 12 months and beyond, the next 12 months and beyond, we also intend to also continue to mine and lever our relationships with three of the largest GPO networks that provide us access to more than 90% of hospitals in the U.S. to partner in selling our technology. Net loss attributable to common stockholders decreased 56.7% year-over-year to $1.32 million or $0.054 per share from a net loss of $3.05 million or $33.9 per share in quarter three of fiscal 2024, despite the expenses associated with infrastructure growth and high variable interest rates. We've become more efficient, both in terms of automation and use of AI, to streamline operations and have been proactive in cost management to achieve our goal of being EBITDA break-even. We are very pleased with our progress.

Management considers the EBITDA and adjusted EBITDA measures for the three and nine-month periods ended December 31, 2024, to be indicators of the company's progress towards break-even profitability, as well as improvement towards operating cash flow break-even. EBITDA improved by 94.5% and 61.9%, respectively, when compared to the three and nine months ended for the corresponding prior period. Adjusted EBITDA, which management uses as a measure of tracking free cash flow levels, improved to -110,000 for the quarter ended December 31, 2024, a reduction of about $1 million in negative adjusted EBITDA from the comparative period of the prior fiscal year, which is a 90% improvement. This is the closest Biotricity has ever been in its history to EBITDA parity or break-even, a record EBITDA level. A reconciliation of our adjusted EBITDA numbers is available in the filing of our 10-Q.

Speaking of path to profitability, there's an additional metric measure we track as management. Our statement of cash flows for the three months ended December 31, 2025, indicated that net cash used in operating activities was -89,000. In other words, we used $89,000, down from the usage of $397,000 just one quarter earlier. When we remove interest expenses, we calculate our free cash flows. Unlike other accounting measures such as earnings or net income, this measure of profitability excludes non-cash expenses but includes spending on any capital assets, as well as changes in working capital, as the company's balance sheet shows. Free cash flow, therefore, represents the cash that the company has generated that is available to repay creditors and pay interest or dividends to lenders and investors. This measure grew by 115% quarter over the immediately preceding quarter. Again, this is significant progress for us.

For management, this is affirmation that our focus on increasing revenues, increasing margins, and by being more efficient with our expense spend and our cash control initiatives is allowing us to get closer and closer to being positive bottom line profitable. Looking ahead, we remain committed to advancing the commercialization of our Biocore and Biocare products. Our tech is truly useful globally. Cardiac is the number one chronic care condition in the entire world. We've also recently launched applications and received approvals from regulatory bodies of other countries that will allow us to prepare for international expansion. This sets us up nicely for future initiatives we intend to move on in 2026.

Speaking of expansion, in 2025, we will continue to expand into new vertical segments of our business, including platform technology sales and our business models that will involve partnership and will provide broader usage of our technology and increased penetration in the U.S. market. The growing market interest and demand for our suite of products dedicated to chronic care disease prevention and management reinforces our confidence in our market position. Importantly, our focus on innovation and development continues to yield impressive results, significant advancements in remote monitoring solutions for both diagnostic and post-diagnostic products, bringing us closer to achieving positive cash flow. Another record. The management team is excited about the future and confident in our ability to deliver sustained growth and profitability for our stakeholders. That concludes, Waqaas, our prepared remarks. Operator, please open the line for questions.

Operator (participant)

Thank you. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing star keys. One moment while we poll for questions. Our first question comes from Michael Donovan with H.C. Wainwright. Please proceed.

Michael Donovan (Equity Research Associate)

Hi, Waqaas and John. This is Michael calling on behalf of Kevin. In regard to your.

Waqaas Al-Siddiq (Founder and CEO)

Hello, Michael.

Michael Donovan (Equity Research Associate)

Hello. In regard to your 114.5% improvement in cash flow from the prior quarter, how sustainable do you believe this cash flow improvement is in the coming quarters, and what steps are you taking to ensure it remains positive?

Waqaas Al-Siddiq (Founder and CEO)

Fair question, Michael. From a technology and from an operational perspective, as John indicated and as we have indicated, our margins are expected to improve as well. The way we're looking at the business and where we see cash flows improving is, as we grow, we will reinvest those dollars into our commercial footprint but also maintain the tools that we already have. We're very, very focused on, of course, growth and going after larger deals. Because we're at that cusp of profitability, we have the ability now to invest the time and the energy to go after deals, which take longer. That does mean that we have to maintain a prudent approach to how we are investing in our commercial expansion and do it in a way that supports where the business is today and where the business is going.

From our perspective, we think this is something that we can maintain and maintain it while also being able to invest in commercial growth to go after the more strategic and bigger opportunities.

Michael Donovan (Equity Research Associate)

Okay. Thank you. Now, for the expansion into new verticals in 2025, can you add a bit more detail around that?

Waqaas Al-Siddiq (Founder and CEO)

Yeah. When we talk about verticals, these are really areas that are complementary and a part of our vertical expansion within our company. Right? We did this a few years ago as well when we first started in ambulatory cardiac monitoring. We first started in smart monitoring, right? Then people wanted us to—our cardiologists came back to us and they said, "Hey, we would really like to use you for passive and traditional monitoring as well." We expanded our portfolio to include both types of monitoring. They came back again and they said, "Hey, we would like you to look at utilizing your platform and systems for remote monitoring and implantable management." All of these areas we have to build out. We have been building that. To John's question, those have been built out, and now we're going to be launching it.

When we talk about verticals, these are not new areas that we have already discussed. They're now coming to fruition. Now we are publicly saying that these are initiatives that we will be expanding and focusing on. The other areas of verticals that we're looking at are more strategic around morbidities, right? We talked about and we announced our partner, Genealogy, right? These are certainly verticals in the sense that we are selling into a pulmonology center or a neurology center, but we're not directly selling those. It's really our partners who are already selling into those verticals. Cardiac is a comorbidity there, so we are partnering with them and selling into that channel. There's a vertical within our existing cardiology space, and then there's verticals that are complementary with comorbidities. Very relationship and partnership-based.

Michael Donovan (Equity Research Associate)

Thank you, Waqaas. Now, for your 2026 goals for international expansion, do you have the particular geographies you have in mind to expand into first?

Waqaas Al-Siddiq (Founder and CEO)

Yeah. We are very mindful of where the market is and where the opportunity is. That is the United States, right? We are very, very laser-focused on the United States. When we talk about international expansion, it is opportunistic, right? If we have a partner, if we have a relationship, we have cardiologists international. They have relationships internationally, or they are cross-border, or we find a partner that is already active in another country, and they are interested in taking our portfolio there. We think about where we have inbound interest as opposed to us going in and building offices and ecosystem in sales force. We think that our dollars are best spent in the United States. Where we have an inbound inquiry or where we have some sort of strategic relationship, we are opportunistically finding and executing on those clearances. In Canada, for example, we announced Health Canada clearances.

It was because somebody from Canada came in and they said, "Hey, we'd really like to use your technology in Canada." We have healthcare relationships, and we have partnerships, and I'm Canadian. There were some relationships already there. That is how we're looking at it from an international perspective. If we had to really focus on it and spend time, the opportunities outside the United States are the two biggest markets after the U.S., which are Germany and Japan. We are obviously, when we're exploring international opportunities, trying to default to clients in those areas. Anywhere else, it's really about opportunistic partners and really responding to inbound inquiries and to access our portfolio.

Michael Donovan (Equity Research Associate)

Okay. Thank you, Waqaas and John. I'll hop back into queue.

John Ayanoglou (CFO)

Thank you, Michael.

Operator (participant)

Thank you. It does not look like there are any more questions at this time. With that, I would like to turn the floor back to Dr. Waqaas Al-Siddiq for closing remarks.

Waqaas Al-Siddiq (Founder and CEO)

Thank you, everybody, for joining our call today and for questions. I would like to leave everybody with our excitement and where we think the company is going. In the cardiac monitoring landscape, nobody has really made a profit, and nobody has achieved what we've been able to achieve. We're on the cusp of profitability. Our margins are second to none in the space, and we think that this is the base for growth and momentum and the sustainable competitive differentiate. We are positioned not only with the best technology but with the most efficient solution that can help drive and change the market. We think that as a base, this is an exciting time for us. Always open to inquiries and questions if you guys want to have any further conversations. The note here is that we expect this momentum to continue.

We expect our to be used later this year, and we expect our growth and margins to stay, as well as our operating costs to be maintained the way they are and grow in line with how we grow top-line revenue in a way that maximizes cash flows and profitability. Thank you.

Operator (participant)

Thank you. At this time, this does conclude today's teleconference. Thank you for your participation. You may disconnect and have a wonderful day.