Executive Summary

Q3 2024 delivered record third-quarter revenue of $7.0M, up slightly more than 10% year over year, with gross margin at 72.3%, above the company’s 65–70% target range .
Diagnostics revenue grew 38% YoY (TRUFORMA adoption), while Therapeutic Devices rose 8.5% YoY on a 24% rebound in PulseVet capital sales as the U.S. sales force returned to full strength .
Operating expenses fell 7% sequentially versus Q2 (excluding impairments), and adjusted non-GAAP EBITDA loss improved to approximately $4.3M; cash and investments ended at $77.8M with adjusted operating cash burn ~$4.0M for the quarter .
International momentum accelerated with CE marks across the portfolio and expanded distribution (e.g., Grovet EU), positioning 2025 for material international growth and leverage due to distributor-led sales and marketing .
Wall Street consensus estimates via S&P Global were unavailable for ZOM this quarter; therefore, beat/miss vs estimates cannot be assessed. Management reiterated confidence in ~70% margins and plans to reinitiate guidance after hiring a new CFO .

What Went Well and What Went Wrong

What Went Well

Strong top-line and margin performance: revenue $7.0M (+~10% YoY) and gross margin 72.3% (above target range) driven by Diagnostics (+38%) and PulseVet capital rebound (+24%) .
International expansion milestones: CE marks across products (including TRUVIEW) and distribution agreements in Europe, Middle East, and Latin America; management expects material global contribution in 2025 .
Cost discipline and operating leverage: sequential OpEx reduction vs Q2 excluding impairments (~$0.9M or 7%) and trending down adjusted operating cash burn ($6.9M → $5.2M → $4.0M across Q1–Q3) .

Quote: “We now have CE marking on all Zomedica products… To take advantage… we expanded our global reach through… leading distributors in new international markets.” — Larry Heaton

What Went Wrong

Profitability remains a challenge: net loss widened to $6.7M (vs $0.5M in Q3 2023, which benefited from a $2.2M one-time gain), and adjusted non-GAAP EBITDA loss was ~$4.3M .
Assisi comparison headwind: prior-year Q3 had a large initial distributor stocking order; consumables grew 6% YoY despite that tough comp, but it muted headline growth in Assisi products .
Capital sales vulnerability to macro: interest rate concerns weighed on Q2 capital sales; while Q3 rebounded, management noted lingering sensitivity and expanded flexible placement models to mitigate .

Financial Results

Consolidated Performance vs Prior Year and Prior Quarter

Metric	Q3 2023	Q2 2024	Q3 2024
Revenue ($USD Millions)	$6.3	$6.1	$7.0
Gross Margin (%)	69%	71%	72.3%
Net Loss ($USD Millions)	$0.5	$23.9 (incl. ~$16M impairments)	$6.7
Diluted EPS ($USD)	$0.0005	$0.024	$0.007

Notes:

Q2 net loss includes ~$16M noncash impairments (SMP, Revo Squared, Assisi), inflating the reported loss; adjusted non-GAAP EBITDA loss in Q2 was ~$5.2M .
Q3 2023 comparison includes a $2.2M one-time gain related to SMP that benefited the prior-year quarter .

Segment Breakdown

Segment Revenue ($USD Millions)	Q2 2024	Q3 2024
Diagnostics	~$0.42	~$0.5
Therapeutic Devices (PulseVet + Assisi)	$5.7	$6.5

Product Category Breakdown

Product Category Revenue ($USD Millions)	Q2 2024	Q3 2024
Capital	$1.7	$2.2
Consumables	$4.4	$4.8

KPIs and Liquidity

KPI	Q1 2024	Q2 2024	Q3 2024
Cash, Cash Equivalents & AFS Securities ($USD Millions)	$90.9	$83.0	$77.8
Total Cash Used ($USD Millions)	$9.6	$7.9	$5.1 (CFO) / ~$5.2 (PR)
Adjusted Operating Cash Burn ($USD Millions)	~$4.4	~$5.2	~$4.0
Shares Outstanding (End of Period)	979,949,668	—	979,949,668

Discrepancy note: Q3 total cash used cited as ~$5.1M by CFO and ~$5.2M in the press release; management attributes rounding and categorization differences to explain slight variances .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	FY 2024	$31–$35 (Q1 PR)	Suspended (Q2 call); to reinitiate under new CFO (Q3 call)	Lowered (suspended)
Gross Margin (%)	FY 2024	65–70% target; “approach and maybe exceed 70%” (Q2)	~70% expected; maintain 65–70% range going forward (Q3)	Maintained (with positive execution)
Adjusted Operating Cash Burn ($USD Millions)	FY 2024	$12–$18; likely high end (Q2)	Trending down sequentially; Q3 ~$4.0M; full-year range implication unchanged (Q3)	Maintained (trajectory improving)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2024)	Trend
AI / Technology (TRUVIEW)	TRUVIEW AI interpretations planned; ear cytology protocol; CE mark progress (Q2)	Field testing AI; faster imaging hardware; ear cytology protocol launched; aiming full launch early 2025	Advancing; nearing deployment
Capital Sales / Macro Sensitivity	Q2 headwinds: sales reps on leave; interest rate hesitation; flexible placement models contemplated (Q2)	Rebound in Q3 (+24% PulseVet capital); rates stabilizing; flexible models implemented	Improving; mitigation effective
International Expansion	Leader Healthcare (Middle East/Egypt/India) & SIRE (Costa Rica); CE marks for VetGuardian/TRUFORMA (Q2)	CE mark for TRUVIEW; expanded EU coverage via Grovet; ~18% revenue mix international in Q3; approvals to target Japan	Accelerating; 2025 material driver
TRUFORMA Assays	New assays launched; focus on equine and canine; OTA updates (Q1/Q2)	Pipeline additions: equine insulin, equine progesterone, canine progesterone, canine proBNP slated Q4 launch	Expanding test menu
VetGuardian	CE mark; cloud and warranty recurring revenue starting in year 2 (Q2)	Audio enhancements; portal scaled to >8 monitors; equine version planned for 2025	Building adoption; product upgrades
Manufacturing / Margins	GA facility scaled 5x; MN automated line validation underway (Q2)	MN robotic line live for most assays; margin benefit expected	Operational leverage improving
Profitability Milestone	Target cash-flow breakeven at ~$50M run-rate (prior)	Affirmed ~$50M for cash-flow positive; timing likely 2026; goal remains aggressive	Timeline extended modestly

Management Commentary

“Record third quarter revenue and a double-digit increase… PulseVet capital sales rebounded… complemented by 38% growth in our Diagnostics segment, led by continued adoption of TRUFORMA.” — Larry Heaton
“We now have broad regulatory approval to sell our entire product portfolio throughout Europe… signed a number of promising international distribution agreements… anticipate [they] will accelerate commercial adoption globally.” — Larry Heaton
“In the quarter, gross margin was a strong 72.3%, which is slightly better than the high end of our previously stated target range of 65% to 70% and higher than last year's 69%.” — Mike Zuehlke
“Adjusted non-GAAP EBITDA loss was approximately $4.3M… cash used in the quarter was approximately $5.1M… adjusted operating cash burn… $4M.” — Mike Zuehlke
“We continue to expect that we will be cash flow positive once we hit $50 million in annualized revenue… previously said by 2026… an aggressive goal we’re shooting to achieve.” — Larry Heaton

Q&A Highlights

Growth outlook and guidance: Management expects sequential growth to continue and plans to reinitiate formal guidance after a new CFO is hired; confidence in broad-based revenue increases across Diagnostics and Therapeutics .
Margins and OpEx: Gross margins anticipated around ~70% within 65–70% range; OpEx as % of revenue expected to decline as scale improves and nonrecurring items subside .
Profitability path: Cash-flow breakeven targeted at ~$50M run-rate; timeline realistically pushed toward 2026 given 2024 industry-wide demand softness .
Capital allocation and listing: No buyback planned; focus on organic growth and accretive M&A; exchange recognizes ZOM’s liquidity and operations, but management acknowledges listing risk if price declines precipitously .
International contribution: International ~15–20% of revenue historically; Q3 ~18%; distributor-led model adds revenue with limited OpEx, expected to be material in 2025 .

Estimates Context

S&P Global Wall Street consensus estimates for ZOM Q3 2024 were unavailable, preventing a beat/miss assessment relative to Street expectations. Management commentary suggests internal targets were met or exceeded for gross margin and capital sales rebound, but no formal revenue/earnings guidance was provided in Q3 pending CFO appointment .

Key Takeaways for Investors

Revenue and margin resilience: Q3 revenue $7.0M and 72.3% gross margin demonstrate demand recovery and operational leverage; margin durability supports medium-term profitability plans .
PulseVet capital rebound as leading indicator: +24% capital sales and stronger consumables position 2025 for higher recurring revenue; flexible placement models mitigate macro sensitivity .
Diagnostics growth vector: TRUFORMA assay expansions and TRUVIEW AI launch roadmap broaden consumable mix and lift margins; over-the-air updates reduce adoption friction .
International optionality: CE-marked portfolio and expanded EU/Middle East/LatAm distribution add non-U.S. growth drivers with limited OpEx burden; expect a more material contribution in 2025 .
Cash runway intact: $77.8M liquidity, no debt, and declining adjusted operating cash burn provide ample runway to reach targeted scale and support selective, earnings-accretive M&A .
Near-term trading catalysts: Additional assay launches (Q4), continued PulseVet and VetGuardian adoption, and international distributor ramp; watch for CFO hire and potential guidance reinitiation .
Risk monitor: Listing compliance risks at low share price; macro interest rates can affect capital sales; execution on international onboarding and AI rollouts key to maintaining growth trajectory .

Zomedica Corp. (ZOM)·Q3 2024 Earnings Summary