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EDAP TMS (EDAP)

Participants
Glenn Garmont Investor Relations
Marc Oczachowski Chairman and Chief Executive Officer
Francois Dietsch Chief Financial Officer
Frank Takkinen Lake Street Capital Markets
Jason Bednar Piper Sandler
Andrew D'Silva B. Riley
Call transcript
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Operator

Greetings and welcome to the EDAP TMS Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Mr. Relations. Investor Garmont, Glenn sir. ahead, go Please

Glenn Garmont

will Thank Francois you, us financial you joining of call, and operating Executive Oczachowski, Officer and Chief Good the EDAP Financial morning Chairman we today's for On XXXX Board; conference thank from TMS Marc results Chief and for the call. Hector. hear Dietsch, second and quarter Officer.

expansion like statements plans. the management's remarks company's contain but forward-looking which Before those on statements forward-looking expectations I that growth those statements management's in we Marc such of to, could the Oczachowski. to today Marc? from filings and may described to Chairman Such statements. everyone and in and begin, materially to are the cause based like are CEO, cause the to now described remind uncertainties call Commission. that not results difference Exchange are I over Securities and EDAP's a the include company's would risks limited regarding current actual may that differ number turn include, to with would Factors such a and subject

Marc Oczachowski

be treatment COVID pleased we hospital reasons. by ongoing a XXXX. very over quarter over to trends, for press six continued then while you, important of the Francois the healthy few the good Glenn, XX% EURXX.X or HIFU months increase impacted first I second of and were everyone. start six call release Total providing highlights that ended of see I'll the the revenue Thank million, the to of months And our $XX.X a our update announcement operational August our the over in morning, by CapEx to growth financial US review very pre Dietsch pandemic brief of a June to is will XX performance. This two XXXX. division volumes for and effects turn recap of company on XX.X% representing covered negatively was we X.

a the alternative. of HIFU First, adoption is urologist volumes is by leading indicator US treatment because it prostate One the in growing cancer Focal growth treatment as a very noteworthy of

we treating X that reimbursement this volume with physicians impact into US Fees that HIFU effect positive the of its of rules for highest in growth procedure US. January rule Physician time CMS a went to year. first believe Second, reflects on Schedule in this in the performing the payment established the Recall final

for to procedure setting. total a facility value Regarding This XX.XX. the use translates set Medicare patient a at RV for rule, CMS an unit on a a performing payment relative average of a has HIFU for in HIFU physician $XXX procedure a performing urologist

under the As a which invasive reference, same patient urologist at a XX.XX conditions. cancer $XXX use, the prostate for odd to the minimally therapy and for setting comparable established Cryotherapy, translates RV

can base the group reimbursement, HIFU HIFU payment the outpatient new the currently a on a changes specific for we side, a treating revenue current be reimbursement accelerate and One patient And on index. performing to significantly panel level to the of So on to average a reimbursed meaningful for XXXX, neurology wage I believe this national on adjusted Payment is of topic a rule like term The to broaden or panels. mechanism catalyst urologist in long- positively very And payment Classification or summer on would patients. of impact prostate rates or adoption. Ambulatory cancer CMS CMS the Focal of requested into technology. beyond. granted $X,XXX consider of meeting this to experts we share Earlier hospital subject HOP based reimbursement panel procedure discuss is matter locally week, hospital a Medicare opportunity whereby recent Recall Outpatient the HOP could brings the as were at together APC. a XXXX procedures that you around a as an five that translates a Hospital present rates This will HIFU a advisory in Payments with update and and

cancer the HIFU. However, we of a based surgical reimbursement is on paid strong to analysis reimbursements for the including other APC for procedures ablation level for made argument Focal be prostate there believe cryo ablation, One six

At this a a we and If service classification a APC were For worth we unanimously moving to year, to increase One November more in the reimbursement The patients. many while sake from the of next Focal in reimbursement year, believe the very the approximately are of Focal will at meeting, the is successful lower favor approximately this full HOP of the average $X,XXX or program. how historically until it of the XX%. for published machine stronger. our level financial because to the this that the range this This six to the from of critical nearly population offering offered a much for level noting broader would driver HOP rule five panel's limits is comparison, $X,XXX, reimbursed recommendations broadly these to December huge will hospitals HIFU increase analysis currently this year, the CMS occurred Monday, consideration. given strong important level six XX.X increase. not of final may initiate which Medicare a past be phototherapy becomes be benefits has voted panel significant be patient of And requiring facilities

quarter, opportunities during add during to and ExactVu quarter, the One CapEx excited look sales pipeline believe forward the change pipeline the of and very that several and we second potential to and this year. robust of this Focal --. to our are We continue later challenging progress withstanding we these hopeful environment Not

Focal accounts. Focal New becoming observations reference and months, many with tier institutions centers in We Cleveland One research Excellence few Sinai months. hospital in eventual past forward with are to of the These growing for coupled believe on continued all the Centers of and Over CapEx the growth look coming trends, you among case the roster, One we and treatment development not added and including healthcare Clinic more to well of company increasingly return are updating benefit of treatment. pipeline this that normalized Mount that of the for York, leading in are volumes, as others. available treatment the cancer the for bodes in for of institutions around our teaching, growth prostate from potentially now have for of as world hundreds future could well men XXXXs the the who We

including expansion other in specialties, Executive hiring adoption highlights highly US plans; growth to The from started a to a helping of leaders Surgical, Ryan country. Intuitive a of tech in the our around urology. extension team a subsidiary. addition the medtech industry, by world June, announced multiple med high we instrumental Ryan of already XX and clinical brings building will for be adding that him utilization of in where of Ryan now experience, robotic of class Turning global including assembling US be Rhodes leading veteran quarter production drive has the and the instrumental technology. relevant of the continued he reflects execution of in wealth be continued Ryan will Chief surgery played role Officer in years he to

with million. approximately as years Mohan initiatives TransEnterix. play program. extensive marketing including marketing To role $XX clinical cash who in raise leadership our has roles a financing successful will the developing Surgical our elsewhere proceeds ended at is Mohan a of and of than Intuitive and quarter we growth adoption fund gross US more device One April, them an on global background in we EDAP clinical in cash $XX in Together that Nathan, the hand, in a many and second of completed the major million. medical with industry

As discussed several for financing important this last quarter, we reasons. strategically was

to and to First, a These this our diligence and And institutional the new plan ourselves it expand in We working a reflects because and validates with belief brought been fold. the but access this announced market in and efforts possible. done. our cancer who significant due The And our coverage. of utilization. as market commitment the of to only leading into so high as broadly investments establish adoption argenta part previously are increase has the as MTP offering making the US investors the HIFU technology. as mission indications of reimbursement well. US HIFU advisors amount after investors patients other raise of as expansion We and participated market to procure funds number healthcare our US our that we did will access just HIFU potential that broader a we not share the support this believe prostate leader in quality continuum, potentially technology specifically our available expand consultancies

and with ground, present of HIFU clinical our out these build to ready program. a organizations. our who to KOLs, capital believe champion to are I access update brief together and will Endometriosis new and sufficient technology. on have designed hospitals that the on will initiatives our I also approach maximize We awareness marketing different sales provide the a technology

is tracking patient we up efficacy the And of this fatality. in month end over days. of our by to period. of reminder, last evaluate HIFU will women three will closely Phase safety or for a assessed enroll As major follow will in Investigators across the treat hospitals is with six which the II month, Enrollment this study a expectations. XX and total expect internal two a five this France be

and received also believe improved patients II of technology our our an strengthen the And use study provide less treatment the greatly targets HIFU efficacy the Dietsch authorization for will We could our invasive as after data. enrolling from this financial Francois CFO, of we the patients achieve We results. patients. initial details to option be to invasive these safety and further important Health enrollment of authorities continue offer could Francois? some now and XX of Phase minimally procedures more collect French treatment Endometriosis application of

Francois Dietsch

figures, you, Please for except Marc, and are morning, good everyone. euro. note in percentages, all that Thank

first XXXX. X.XXXX purposes, conversion our second average the rate For exchange of was euro-dollar for

for period revenue to of XXXX XXXX. in EUR quarter total the XX.X% Our the EURX.X revenue an of second million, was same company over compared million XX.X the

Looking of -- primarily EUR mostly decline HIFU as as X.X the continued to for for XXXX decline XX.X% the by toward from at much million, EUR EUR for the X.X second compared quarter business of Total business XXXX. the LITHO by million as in driven the CapEx EUR revenue quarter of revenue of a to X was earlier. of revenue XX.X% a million, million second in the decline was weakness X.X total quarter for The XXXX. the quarter did region, XXXX was second spending second

million increase in compared for XXXX exact XXXX, of was the in the quarter million, due the in for XXXX. Gross sales decline on revenue quarter was XXXX cost driven compared to the Total to second CapEx. Same less year-ago was of EUR net and for business compared and EUR HIFU development. was for sales the quarter XX.X% second EUR gross of million on fixed decrease to XX.X% As effect million, Gross profit XX.X% X.X Distribution EUR year-ago business. X.X margin profit period. was in second to year-over-year of second hospital the continued X.X quarter sales to period. profit the of in lower by X.X a weakness The the for the HIFU making

the of in EUR XXXX EUR million, share, were compared in profit XXXX. second of of for of as period. compared EUR X.X for Including of to At loss of of X.X EUR same The of in XX was EUR quarter cash of XX.X offering the operating $XX.X to future second -- secondary call the in XXXX, outstanding XXXX, cash XXXX. EUR had end Net June or expenses XXXX. period the June net loss the back XX, the XX.X million we second to or we X.X reflecting or X.X June an from EUR $XX.X finance our the in And we shares is of of end ADS million the was X.XX per the was X.XX operating December million of as quarter that proceeds XX XXXX. of the X.X of as a number Marc. offerings loss EUR million to equivalent at quarter shares net million, XX the per operating completed second turn quarter share $XX.X diluted XXXX EUR diluted and compared approximately compared now the or million, for million EUR Our million for to million million X.X year-ago approximately

Marc Oczachowski

of CapEx crisis. Thank In with the Francois. we six in difficult we are you, the XX.X% results the over navigating comparable quarter successfully months demonstrating hospital that first a summary, through XXXX, pleased this we period year, against environment. revenue our are Through second increase

our same we continue very we gross successfully announce carefully managed keep optimistic and our key operating will company and expenses addition, the time, placement pipeline the breakeven. and In we that build soon. we margin US At and additional remain near to sales to

growth year, strengthened new We most resources. new the also leading volume be year-over-year awareness the reimbursement accelerate, went in and revenue important momentum into of growing the The we the will utilization anticipate US as positive the the with a saw that treatment during well of by increased rules US first half reflecting January. indicator HIFU effect treatment XX% should impact positive as of --and this as

CMS the significant the Again, upgraded to year, from a positive as very, accelerated increase in interest we HOP level represent six prostate are positioned machine this ourselves in for reimbursement in very the establish non leader this if very hospitals and level of HIFU like focal placement six your and five believe next would reimbursement the dollars level and of and $X,XXX believe the you One towards recommendation to of Focal future. support. I is panel thank of meeting are APC invasive to and excited well procedures. $X,XXX. HIFU All-in-all, we the drive about upgrade And performing to Finally, will favorable I to results tissue. for week's to ablation we

for call questions. the Operator? open now will We your

Operator

Takkinen question line comes with of Your Street Lake Markets. Capital Frank from first Instructions] [Operator

FrankTakkinen

thanks here. for it very a previously this completely And was there level into why with hoping categorized am my to the increase and it Great, reimbursement opportunity justification five. future morning. specific I Is wanted level start change. a little excited give six could then appreciate just level six. reimbursement from more Couple the up and questions. the me more for I reimbursement years? the background get was And I taking you us can the level although to more to in to jump bit even

MarcOczachowski

five Hi, the And ago to Well, on on claims made five of studied Frank. it -- on thanks level Medicare the it year first given two to put HIFU actually, or reimbursements the for average some was six. claimed. users after the they the technology after Well, by were question. with then that were one by after level decided years based years level the of amount

So spoke that's in why about that we call. today's

initiated of of well level in properly amount we've improved also we their And the as to at discussing also will We increased justification programs and what average significantly some be HOP to And APC five the to That educating claim HIFU that have hospitals a as claimed. and users week. Medicare. level treatment beginning been be the that's from six. the with CMS panel upgrading to

FrankTakkinen

some it I understand -- going key bolus second to similar was a curious more help in a to recently, for there what wanting last know think announcing potentially you could whatever feel you your something okay. it to Or right how Heard about move you expectation conservatism want bit very be you if placements That's of happened budgets occurring over placements want call could that's half year. helpful, are bit budgets if it, maybe this capital you there's Do still do cautiousness, us I more. year? conversations now? Got a comments little as to an little that that was of soon. CapEx

MarcOczachowski

earlier And the who of really to of of last the of year same anyway the about as we're which current the the I being finalizing department, although last of of year. majority are deals and goal in significant lot discussions frequent year, US hospitals of with year are regular closing will of the number That's like announce most discussions before good the been the that soon and administration's a end the end like of budgets to in spend visibility in very has the because seasonality in we and this lack even end COVID the we sales was be hope type situation confidence of people hospitals. cycle, where as before I the placement and far is the purchasing And going we end business might telling think and of and that context. I increased, year. the have mean, able hope close the why as for we before departments of probably legal the with key that very, leading a

FrankTakkinen

it. Got

for me. Okay, last one

One, quarter. if as was this installed us ExactVu. the color pretty confirm many So little you the bit to on you solid more our How two, well on estimate systems? a distribution a that's And I'm the you quarter can rough give of as ExactVu assuming had had related this correct? can sale base?

MarcOczachowski

right. exactly you're Yes,

nine since US full got so of Europe. As a you of had the remember, last during big year, didn't three year of we've to sales year. because only on quarter the in this least distribution already only for ExactVu, end year, at we ExactVu done of the started in again, this And year, of a opposed were part yet quarter the commercializing month last second so the we half last the month we the actually as just commercialization, XXXX, first initiated we sales last it in speed June. were of year rights, at have and And few we were

made lower sell One. expenditure than is helping capital that the And good business, is as later to Asia. and some a Focal to much bit in in as what of well France And number distribution grow good tremendously be as for could deals momentum indeed has and this for so easier been global the

a to why on that easier been we've navigate bit able that's also environment. So

Operator

Your line Bednar from next Jason question with Piper comes of Sandler. the

JasonBednar

Hey first questions. Hello, those follow everyone's your from prior questions our of a hope well, and just two to there, side. up couple

technology Marc, know, Is I the you factors challenging sales other mentioned may to expand that be limited? that you external are COVID on sense negotiation may have maybe demand your the budgets hospitals? a environment access what back been I hearing but where the there wanted in hospitals, tight? education discussions could are ground, getting the still from be Firstly, start further bit see are the the you're that it kind dynamic, you to it's process, just and Or if that still of like some and COVID holding of

MarcOczachowski

money Well, I or different. just said, again, the I small hospital. capital stone you it's it's think to focus of actually. like access expenditure the And visitation the true is the lasers, priorities as device, more start speak about well you from more usual, difficult priorities speaking it's could less And little even these, and amount bit if thousand for are ExactVu a mix on investment like is of hospitals is $XXX,XXX a all the XXX -- a than if be achieve difficult to about different or when a that equipment, bit or

they So will of towards lot more it's to end the and a And the more when don't of just of time happen things question that's a probably little priority. a time bit have wait. any year also why

have make It they the So doesn't to decision. matter.

JasonBednar

from on congrats HOP update. then really the the news over helpful. to encouraging is that's update that that Okay, panel and moving And

fee schedule if color, additional if ultimately potential guess more future field whether it for more just could it update commercial impactful influence can As and much on have influencing might of driving you or But hear on with cryo to One the you be terms radical prostatectomy. in influential than it effect, be goes physician we'd you the agree, playing system this love adoption. down payers and year provide you I believe you level the put the Focal to elaborate would you and how increase road. on this maybe seemed Could any a into mentioned payment purchases has HIFU how like that this

MarcOczachowski

into the hospital influence will will technology the level definitely performance that faster, of because same hospital you the of changes really the That the technology help the when getting technology. almost payment get will doubled mean, in again, that first, I favor for

side. help also it's not definitely of the on also and So so the boosting technology that and only on the sales will sides, CapEx, on the it's accelerating both the use disposable

private usually technology For the they the and that in private adoption, again, insurance more their Medicare the and and private level levels, reimbursement payers the reimbursement more the enroll you're for faster payers private will so the the to the able and payers, payers, as insurances utilization, on policies. the have also base again,

JasonBednar

them guess how Okay, hospital go one maybe I clarify, a some better how this just I just One, out to or simply on or much ROI and the up maybe because as aren't when guess of would drive and Focal pushback there follow meet. just might sell favorable the try economics you anyone into the to hospitals, and run point adoption, like as you

MarcOczachowski

CMS like again, already the much, that we point. for is remember payment because said, ROI breakeven the patients. Not again, Medicare the or only And

have account contributing that patients well you also with to private the pay to So are ROI. as

it's pro level much forma be as six. the will today it just five, six, too excellent is much good better blockades into just will don't if be have we that we whatever So or it level level so at of move already,

JasonBednar

one great. already myself. final, right, how And appreciate And on final his squeezing Ryan's then out all building Okay, for the update just one just team.

in are the any if mind have roles folks targets I to desired that respect that with by plans there talent have heard, fill? And winning, Sorry, roles that to or we or hoping in should number number Ryan place? miss to

MarcOczachowski

the and that. mean, market, idea than and also other to spread of global patient well all to marketing No, again really the team build users in won't highly sales environment. and complete to people of and had as take really strong strategy as community. clinical performance actually I is the the we technology; care a the competitions educate and mean, obvious I for the we disclose the plan reasons, and But

very programs expertise network particularly penetrate and extremely and Ryan, very and -- in of term to and a field, as urology, disruptive again, technology and building long experience broad medical market the with in I'm successful the as confident current get has talents the to of well his So accelerate market HIFU, in as digitization really us phase. our aggressively bring board and continue will the number he that the very of on a will to of help into penetration

Operator

Next question from line Andrew B. D'Silva comes with of Riley.

AndrewD'Silva

good let Hey, few Thanks systems to just were ones questions. us for there you many for start any during morning. my taking during can just a how me, and know And were quarter ESWL quick Ablatherm replaced Focal the installed the One quarter? and

MarcOczachowski

and no had in Ablatherm the and of No, during get about sold future, had terms of per has got Focal during we three we over One re-taken HIFU, course, Ablatherm quarter, and sold one One to Focal we're as the lithotripsy of going we've less quarter. units less renewal in the

AndrewD'Silva

our $X,XXX fee? also side, include The is well? from on with and just that level touched Physician Or Okay, just this Fee $X,XXX, reimbursement quick steps commercial next because then standpoint? I cryo with I should be then alignment want you EDAP thank you we to six, are ablation? recap you monitoring for on a move just, the facility the its know the could that. on increase is that to and a as what for from And What

MarcOczachowski

physician the separate a that's fee; No, fee just integrity. is facility the

AndrewD'Silva

something thinking of $XX,XXX. be Okay, to so six, you should close all to around in we if get level

MarcOczachowski

that other $X,XXX. mean, have around one yes the close for because fees, And we would one to I $X,XXX. is Yes. both be

AndrewD'Silva

is from we Okay, the next relates perfect. standpoint, be reimbursement the to as And steps it should charging? what this commercial

MarcOczachowski

Can you say again, that sorry?

AndrewD'Silva

obtaining charging progressing? From you're to be commercial how of going kind what see reimbursement, should forward we

MarcOczachowski

payers? is private that question? You mean from a Or

AndrewD'Silva

Yes.

MarcOczachowski

past I will different mean, private on, that's working we're as as And the payers the on actively well mean, on calls, said we I process. that. work working a with insurances. in long And that to We're I as continue

a process, as So, policies. treatment as we so is direction. there's long working start actively companies offering these in their can -- And and again, of again, we to it's are in getting in quick some the investing idea that the very

we posted you have on we'll material So keep as as information that. far

AndrewD'Silva

expectations, delays schedule? But to been your there moving now, is ahead if actually of it any tracking things right or

MarcOczachowski

your we executing Actually are anticipated. plan as

So delivering we're in terms on actions, track the and plans. meetings of

AndrewD'Silva

was be OpEx, last And you sense kind of future in should indicative US infrastructure? us Okay. of the of model given second expansion of kind question give How the quarter just in second OpEx just the the Or me. your increase for could quarter? what a

MarcOczachowski

I'm not sure getting know there. dragging? I'm your Andy, you want I'm question, would exactly? What to

AndrewD'Silva

You establish the quarter what you properly that the will second your baseline, you are you're deal using percent increase for need think to infrastructure do as to OpEx to with a US trying Ryan?

MarcOczachowski

clinical in Oh, organization. I we significant to OpEx US build But in exact you marketing able increase the an have won't sales mean, percentage. as be to global our I and give yes, we expect again, to want complete that

of the talents. working the the in team again, level. Ryan impact Again, So of second that only, so June will seeing building joined hard the on we half very next the the that on year bring that start of company is and to as company will and

coming quarters. we'll of the in yes, the impact that So see

Operator

comes from Ramakanth Wainwright. H.C. question next with Your Swayampakula

UnidentifiedAnalyst

percentage morning, in stated and you a from bit that is the been color, using you. volumes. Mark of number you've done either RK C H or Francois. give terms terms Thank Good opening This Could us of HIFU? being Wainwright. you in little remarks, total of treatments seeing more In growth treatment

MarcOczachowski

reference spread most our to of growth, our really Yes, existing year sites. well did gave pretty it's momentum see to sites, among the compared overall a XX% last most XX% we I then can it, about of we percentage and utilization

trend, more confident, common patients. more of people and getting a kind more encouraging. are see So is more the benefits which very that's for Again and and

of So increasing of volume opinion the most is key our centers. patient in

UnidentifiedAnalyst

that Do there, then on. think any his to Ryan only terms helps it vein what on of out? oncology same with you team And in meet HIFU in to messaging working also work. that not in the also trying So also, would utility more Perfect. hospitals of be get additional additional would you are terms about first Ryan's trying be of would in and and they And publications centers

MarcOczachowski

it some his on utilization. I we're and the HIFU And technology also get the studies Ryan mean improve further to focus increases the in follow hospitals. key equipment team existing to to work terms again, to notification technology push with Absolutely. continuing the utilization Not and and in really to team leaders hospitals use and the HIFU. country, and opinion it's And, adoption to of in is the there hospitals he more the only to of programs the but building on spread again, here the clinical key the way to and utilization

UnidentifiedAnalyst

Okay.

probably answered are Cryotherapy sure correctly. that approved what saying, get therapies. would this same those slightly at this level to APC this prostatectomy. and Is or I'm six reimbursement question be the just is talking earlier, how you're -- get You does when the the I about you radical level reimbursed getting that want a but make could than better When as

MarcOczachowski

as be the same call I said, surgery, level is it'll radical mastectomy as and during cryo classification. in And that the another

level but that, it as be cryo compare in surgery. can yes, will we So the same

UnidentifiedAnalyst

then question me the -- And Perfect. last from

MarcOczachowski

on completed be to has it said, that RK. I as And

technical, was That's only. So that's against the the fee hospital MG as for that's clarifying. for

will have than prior higher much We a still surgeries. reimbursement

for favorable all-in-all, more will So be much cryo. it and HIFU

UnidentifiedAnalyst

in That a bit quarter be the dipped me have seem last look will quarters. across last sales the six question quite for Perfect. when to I when compared UDS second -- the to division, we the good. The is

to there that the Is of is or there the something in market something commercialization? correct that in changing within need firm? that you kind what's So

MarcOczachowski

and the mean, sense speak between quarters; have it not add sure was distribution do because I about because more some don't RK I mean, any making spread anymore. UDS remember not to them I'm I ESWL together. we we UDS

ESWL speak about you do So or distribution?

UnidentifiedAnalyst

looking offline. division can that at I'm just But revenue. the UDS we take

Operator

Ladies and gentlemen, conference. end session. we this conclude does have today's reached the of question-and-answer the And

for participation. your You time. Thank you may disconnect at lines this all your