CBLL Q3 2024: New Accounts 100% AI Adoption; Revenue Deferred to Q4
- 100% AI Adoption Among New Accounts: All new accounts have adopted the Clarity/ClarityPro platform, indicating strong customer uptake and utilization trends.
- Expanded Total Addressable Market: The recent VA Authority to Operate increases the addressable hospital count from 5,800 to 6,000 facilities, offering significant long‐term growth opportunities.
- Robust Investment in Growth: The surplus from the IPO proceeds is being actively evaluated for further investments in sales expansion and R&D initiatives, positioning the company for sustained future growth.
- Delayed Revenue Recognition: The executives noted a strategic decision to defer launching new accounts in the second half of December to avoid holiday-related disruptions, which may lead to slower near-term revenue recognition.
- Limited Near-Term Impact from VA ATO: Although the VA's Authority to Operate expands the TAM by approximately 200 facilities (raising the total from 5,800 to 6,000), it is not expected to contribute to near-term revenue.
- Uncertainty in ClarityPro Adoption: While new accounts are 100% using the Clarity algorithm, adoption of ClarityPro—an add-on with additional fees—is still in progress, potentially delaying the realization of improved margins and revenue growth.
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Growth Drivers
Q: Main levers for Q4 growth?
A: Management stressed that growing usage within existing accounts and adding new accounts will drive Q4 and longer-term revenue expansion, emphasizing short-term focus on utilization while building the sales force for future growth. -
Utilization Trends
Q: How did utilization perform in Q3?
A: Management confirmed that Q3 utilization met expectations and they plan to maintain this steady growth moving into Q4. -
New Accounts
Q: Expected new account additions?
A: They expect around mid-teens new accounts next quarter, noting that strategic seasonal adjustments, like deferring launches in December, influence these numbers. -
Use of IPO Proceeds
Q: Plans for IPO cash use?
A: The team is evaluating various initiatives in sales and R&D to ensure investments drive growth and help achieve cash flow breakeven, with more specifics to come. -
VA Strategy
Q: How will VA ATO affect revenue?
A: Management indicated that the VA approval opens the door to approximately 200 additional hospital accounts, though it won’t impact near-term revenue, serving as a license to pursue a broader market. -
IPO Investments
Q: How will IPO proceeds be invested?
A: They plan to use the proceeds to support sales expansion and R&D initiatives, furthering growth while ensuring the cash is used efficiently towards breakeven. -
Cost Effectiveness
Q: How effective are the cost savings?
A: Clinical studies highlighted a 4‑day reduction in ICU stay and other efficiencies that strengthen the platform’s economic appeal to hospitals. -
Clarity Adoption
Q: What’s the Clarity attachment rate?
A: Nearly 100% of new accounts are adopting the Clarity algorithm, though uptake of the premium ClarityPro remains in progress due to additional fees. -
VA Launch
Q: When will VA accounts go live?
A: Management explained that while a few existing VA accounts are in place, most will be treated as new opportunities and are not expected to contribute to near-term revenue. -
Trial Enrollment
Q: Status of stroke/delirium trials?
A: Enrollment in the delirium trial is proceeding at its historical rate, but no formal readout is planned at completion since it is primarily for data collection. -
Algorithm Comparison
Q: Differences between Clarity versions?
A: While user behavior is similar between Clarity and ClarityPro, the latter offers enhanced clinical benefits that add value for hospitals. -
VA Contracting
Q: Impact of VA contracting on Clarity fees?
A: The VA ATO operates separately from commercial contracts, allowing the integration of Clarity and associated fees into future VA agreements through standard contracting processes.
Research analysts covering Ceribell.