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Neurometrix (NURO)

Participants
Thomas Higgins Senior Vice President and Chief Financial Officer
Shai Gozani President and Chief Executive Officer
William Church TGRA Capital Management LLC
Call transcript
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Operator

Good morning and welcome to the NeuroMetrix First Quarter 2020 Earnings Call. My name is Justin and I'll be your moderator on the call.

On this call, the company may make statements which are not historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature that depend upon or refer to future events or conditions are forward-looking statements.

Any forward-looking statements reflect current views of the NeuroMetrix about future results of operations and other forward-looking information.

in on a because of result including set rely differ results important not issued those as release materially of forth should forward-looking actual statements may factors, earlier You today. earnings the a number

and including at the the heading under website company's in company's Investor uncertainties Factors sec.gov. the with neurometrix.com factors periodic described Relations Please refer filings and on SEC the website to the risk the the SEC's Risk available at on

undertakes no on and to update NeuroMetrix disclosed intend does duty the information this not call. conference

introduce now like Mr. NeuroMetrix I'd and President Chief Officer, to Higgins. the Thomas Senior Vice Mr. Financial Higgins?

Thomas Higgins

you, and Thank by President Chief today Executive call Officer. on I'm Justin. the our Dr. Shai Gozani, joined

diagnose health NeuroMetrix medical commercializes develops and neurostimulation-based treat to conditions. and devices used are chronic that

products DPNCheck, Quell. main three and are ADVANCE Our

of having neurostimulation device patients enabled And and check studies point of and symptomatic a relief peripheral the provides available a ADVANCE for is the care chronic counter. app focal device an point for as management is nerve aid over neuropathies. test neuropathies. suspected that is It DPNCheck care mobile indicated is diagnosing of wearable evaluating a conduction or systemic detection pain. of of in Quell

priorities supporting environment while by employee a quarter. R&D safety. and circumstances support COVID-XX will structure until the to customer improved. all We during These modifying to first The presented challenge responded maintain operating our our be our to programs, continue advance

was million, of a million. by drop Gross XX.X%. a the of QX profit orders. first XXXX, impacted nearly adversely representing For Revenue in was total $X.X of rate reported revenue $X.X quarter margin we March revenue on

write-offs a earned Adjusted, that $X.X period. inventory quarter, revenue XX%, $XXX,XXX profit By rate of XX.X%. that comparison, in rate margin of of excluding a was million in gross gross margin year-earlier the at

the points. in was improvement adjusted XX So, year-on-year margin percentage

quarter the of quarter was XX% quarter. margins for above XX% This our was million $X.XX from as Medicare gross record Asia quarter markets. Advantage as first was for a XXXX. million DPNCheck seen well in in orders the DPNCheck the revenue up DPNCheck. in of in distributor $X.XX were Growth

$XXX,XXX with compared prior-year slightly revenue $XXX,XXX ADVANCE in quarter. QX Margins XX%. was the under were in

$XXX,XXX gross rate QX million And was about in over versus versus margin $X.X year XX% ago. The Quell was XX% XXXX. revenue Quell a

Importantly, Quell made positive a operating contribution.

$X.X million QX year. in $X.X were operating over expenses from about were These the million. prior XX% down

spending Quell in of XXX,XXX down joint R&D or was of GSK the XX% $XXX,XXX It benefit projects. year-on-year. $XXX,XXX funding includes of

advertising XXXX. significant the of spending. were $X.X consulting staffing, costs and were marketing Quell from and $XXX,XXX reductions contributors down the QX Sales nearly to million, XX% in reduction

G&A staffing spending was legal. reflected XX% $XXX,XXX lower of in This professional down $X.XX year-on-year. about or services, primarily million

and was quarter, collaboration income million in There in no $X.X quarter. current-year year-ago the the

year, total of earned income. development The last GSK fully end of the no milestones collaboration Consequently, in million. by the cumulative GSK we collaboration expect $XX.X were XXXX, future

As contributions GAAP. to required will joint continue funding be Quell development as as GSK mentioned recorded expense under credit a to our in US R&D previously, of projects

consumption cash operating of and a loss million. additional shares in program. reflected of raised we raise million ended ATM of ATM. $X.X or effects a on shares was we $XXX,XXX share. our quarter about XXX,XXX $X.X quarter-end, of in with the Subsequent Our to net of sale April, about And through equity This under the an the $X.XX sale million of cash $XXX,XXX offsetting the an $XXX,XXX

It structure common today capital free. only stock it Our remains is debt is and simple.

currently. million We have outstanding common approximately shares X.X

our overall address now strategy. will Gozani Dr.

Shai Gozani

Tom. you, Thank

will on I of cover company. impact First, our the COVID-XX

stopped Most are elective clinics Tom and health have healthcare clinic-based diagnostic routine March pandemic, As and sales DPNCheck mentioned, adversely were particularly procedures by care. which the procedures. impacted ADVANCE,

economy. as been also the overall due deteriorated poor situation has affected to financial consumers' has Quell

see to the expect relatively to We sales QX sales return QX. hope downturn in through normal QX and a and in partial persist

at and and However, direction high time the pandemic of progresses, the from as government and uncertainty public federal this health there's degree state a agencies evolves.

a safety, for and to to continuing continued we using our supplier support in We provide successfully operations early management. transitioned of March an are have for business customers, those while operate. As essential medical business our particularly devices, employee to pain Quell

Functions Massachusetts that the manufacturing our service remotely finance facility such and operating performed with at could fulfillment customer be appropriate from continue Woburn, are and while R&D, functions precautions. as home,

furloughs. are implementing not We layoffs or

this Congress. through by we will Protection Payroll managing loan in currently a assist under and submitted be are Plan hope application, have program in extension period, which To funded consideration we the

We of mode not expect until Governor health June. any changes substantial do pending will public this direction Baker from maintain operational Massachusetts. We

Now moving results. to our QX XXXX

pleased in COVID-XX slowdown are performance the on delivered with the due and pandemic. despite bottom good the March financial line. to the top We results We company's

decreased top the $X.XX over and record in by year-ago from was XX% margin gross the revenue XX% time quarter. On Overall company line, was expenses XX years a DPNCheck over of million. the first operational for

This $XXX,XXX. resulted net a in of loss

In indicate our are achieving that way operating aggregate, results these towards well profitability. we on

However, done. there work to is be

challenge we right profitable steps achieve these to is top taking grow line. goals in are not the also We near the and our to are the We yet term. believe that

lines, Along some these highlights. have we

management includes elements data reporting All second the in We DPNCheck have and in launched made and or these early this technology This generation commercially improved progress good be updating software XXXX. the year biosensor. new by will disposable technology. device,

these grow utilization better We by business to believe and position faster opportunities. market new DPNCheck pricing, product that the enhanced will through customers, existing improvements

product This on by in of launched the be was new preliminary of University in version funded prescription a Vanderbilt large formally the clinics. will Quell to This core study University run and based physical of a Iowa and also technology development used recently treatment Quell therapy treating NIH for called product our Flex new pain. examine We've fibromyalgia announced. is fibromyalgia

side. on that and and has innovation, it device there large unmet little the is the substantial market ideal We believe been as fibromyalgia is needs has particularly

of in that the XXXX. in several launch and to timing of we'll currently half there decrease some is hope will a XXX(k) quarters. over coming that to of work we note regulatory done to second are lot the half be uncertainty clearance, anticipating and I We the look the a pending second filing year

summary, that markets. In targeting has are large NeuroMetrix excellent products

We growth move committed efficient that operationally a support towards and to and profitability. are structured organization is

concludes our We'd prepared to at And be happy that comments. take questions point. this

Operator

And Thank from you. have Bill a [Operator from question Instructions]. we TGRA. Church

open. Your now line is

William Church

and more with we or what thank a Yes, you show you trying and the that detail or are don't Can yet? to Vanderbilt into get taking for we test prove go the question. know the Iowa with little to

Shai Gozani

Yeah.

University study, looking at is as It's it's Vanderbilt. large of study. a is this run, what's being a and study So, that Iowa a – pragmatic noted, called you by

So, with improves it's the care therapy physical looking at of patients how clinics. in this device fibromyalgia

already this particular so a demonstrated clinically randomized have the So, in prior approach trial. control efficacious, that is studies

in So, opposed setting. this the is clinical practice in looking to the at trial as practical benefits,

insight this deploy lot of into to a and device the give how into a So, like this will community actually market. fibromyalgia

William Church

Will help Medicare this approval Okay, get for reimbursement? us okay.

Shai Gozani

kinds technology trials. the call, are reimbursement approval. pragmatic of, world very of studies demonstrate to we benefits Because practical opposed what So, or That's benefits in just beneficial the they as controlled real these correct. in getting

William Church

say a rough did if smoothly, again? all you the not start with timing probably goes And but COVID-XX, is – Okay. to which what

Shai Gozani

point. is at in is slated to begin study the Everything fall. being This this ramped up

William Church

Okay.

you very much. Thank Okay.

Shai Gozani

asking for question. the you Thank

Operator

questions. Dr. turn call am would Thank I now like to back I for further showing further to the you. no Gozani And remarks.

Shai Gozani

their very with Thank hope We forward healthy you updating well us the families. remains as the during joining year. look today's I much balance call. you. you for everybody to conference of in And Thank

Operator

you. today's Ladies gentlemen, participating. conference concludes for Thank and Thank you this call.

disconnect. now may You