Zomedica (ZOM) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was $6.1 million, reflecting a 2% increase year-over-year, primarily driven by a 68% growth in the Diagnostics segment [4][21] - Capital revenues decreased by 12% to$ 1.7 million, down from $2 million in Q2 2023, attributed to fewer new system sales [21] - Consumable revenue increased by approximately 8% to$ 4.4 million, now representing 72% of total revenue [21][22] - Gross profit for Q2 2024 was $4.4 million, with a gross profit margin of 71%, slightly above the target range of 65% to 70% [22][23] - Net loss for Q2 2024 was$ 23.9 million, compared to a net loss of $5.2 million in Q2 2023 [25][26] Business Line Data and Key Metrics Changes - The Therapeutic Devices segment, including PulseVet and Assisi, generated revenues of$ 5.7 million, roughly flat compared to the prior year [22] - The Diagnostics segment saw revenues of approximately $420,000, marking a 68% increase year-over-year, driven by growth from VetGuardian and TRUFORMA [22] Market Data and Key Metrics Changes - International initiatives are expected to significantly contribute to revenue in the second half of the year, with a strategic alliance with Leader Healthcare Group for distribution in the Middle East, Egypt, and India [7][8] - The company anticipates sales from new distributors in Costa Rica and the Middle East to begin in the current quarter [48] Company Strategy and Development Direction - The company is focused on achieving cash flow and GAAP profitability, with plans to expand its product portfolio and international reach [20][31] - Zomedica aims to leverage alternative pricing and placement models to enhance access for veterinarians, particularly in light of current economic conditions [5][34] - The company is committed to reducing operating expenses while increasing revenue through innovative product offerings [52][54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing significant progress in commercial and operational milestones despite short-term headwinds [20][31] - The management noted that macroeconomic factors, such as interest rates, may be causing customers to delay purchases [5][34] - The company expects a rebound in sales as the sales force returns to full strength and as macroeconomic conditions stabilize [5][33] Other Important Information - The CFO announced his resignation, and the company is in the process of identifying a replacement [27][28] - The company suspended its previously issued revenue guidance for 2024, with expectations for total revenue to grow compared to the prior year [28] Q&A Session Summary Question: Can you talk about the sales force headwinds in the quarter in a little bit more detail? - Management explained that the sales force faced challenges due to personnel changes and medical leaves, which affected sales productivity [32][33] Question: What are the plans to mitigate future sales force disruptions? - The company has taken steps to ensure additional sales personnel can fill in during medical leaves and has a plan to maintain sales productivity [44] Question: Can you provide insight into the$ 16 million charge-off? - The CFO clarified that the charge-off primarily relates to goodwill associated with previous acquisitions, with minimal amounts remaining on the balance sheet [40] Question: What is the expected cash burn moving forward? - The CFO indicated that cash burn is expected to be at the high end of the previously stated range of $12 million to$ 18 million, influenced by revenue performance [41][42] Question: How much of the original revenue guidance was related to international sales? - Management noted that approximately 15% of the revenue was expected to come from international sales, with potential for growth in that area [43] Question: What is the timeline for meaningful sales from recent CE approvals? - Management expects to see initial sales from Costa Rica and the Middle East in the current quarter, with a more significant uptick anticipated in September [47][48]