Stereotaxis CEO Discusses Q4 2010 Results - Earnings Call Transcript

Stereotaxis Inc. ( STXS)

Q4 2010 Earnings Conference Call

February 28, 2011, 4:30 pm ET


Greg Gin – IR

Mike Kaminski – President and CEO

Dan Johnston – CFO


Spencer Nam – Madison Williams & Company

Steve Lichtman – Oppenheimer & Co.

John – Collins Stewart

Jose Haresco – JMP Securities

Klaus Von Stutterheim – Deutsche Bank

Sameer Harish – ThinkEquity Management



Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Stereotaxis Fourth Quarter 2010 Financial Results Conference Call. During today's presentation, all participants will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator instructions) This conference is being recorded today, Monday, February 28, 2011. At this time, I’d like to turn the conference over to Greg Gin. Please go ahead, sir.

Greg Gin

Thank you, operator, and good afternoon everyone. Thank you for joining us for the Stereotaxis conference call and webcast to review the financial results for the fourth quarter and full year of 2010, which ended on December 31, 2010. Let me remind everybody that associated slides are available on the company's website at

Before we get started, we would like to remind you that during the course of this conference call, the company may make projections and other forward-looking statements regarding future events or the future financial performance of the company including without limitation statements regarding future operating results, growth opportunities and other statements that reflect Stereotaxis' plans, prospects, expectations, strategies, intentions and beliefs. These statements are subject to many risks and uncertainties that could cause actual results to differ materially from expectations.

For a detailed discussion of the risks and uncertainties that affect the company's business and qualify the forward-looking statements made in this call, we refer you to the company's recent public filings filed with the SEC, specifically the form 10-K for the fiscal year ended December 31, 2009. The company's projections and forward-looking statements are based on factors that are subject to change and therefore these statements speak only as of the date they are given.

The company assumes no obligation to update any projections or forward-looking statements. In addition, regarding orders and backlogs, there can be no assurance that the company will recognize revenue related to its purchase orders and other commitments in a particular period or at all, as some of these purchase orders and other commitments are subject to contingencies that are outside of our control. In addition, these orders and commitments may be revised, modified or canceled either by their express terms, as a result of negotiations or by project changes or delays.

Now, I would like to turn the call over to Mike Kaminski, President and Chief Executive Officer of Stereotaxis.

Mike Kaminski

Thank you, Greg. Good afternoon everyone. Thank you for joining us today on our fourth quarter and year end 2010 conference call. With me today is Dan Johnston, our Chief Financial Officer. I will start our prepared remarks with a review of the highlights for the full year in the fourth quarter and discuss recent business developments and then Dan will discuss the financials. Afterwards we will open up the call for questions.

In 2010, we achieved significant progress towards our goal of establishing the Niobe robotic platform as the new standard of care for EP intervention of medicine and the emergence of Odyssey as a clinical networking platform for all interventional suite. In 2010, we executed on multiple fronts.

First, we generated 24% growth in recurring revenue to a record $22.9 million. Second, we continued momentum in the new capital orders that confirms that we are making progress on our key initiatives to drive stronger Niobe reference sites and expand our Odyssey business in the standard labs.

Third, our gross margins reached a record level of 71%. Fourth, our persistent focus on reduced operating expenses resulted in substantial reduction in both operating loss and net loss compared to 2009 and demonstrated a commitment to get to breakeven.

As we enter 2011, we are more optimistic than ever about our platforms' ability to drive value in EP ablations. As part of our year end review, we thought our webcast format would help illustrate trends around key metrics. I will start with a review of the three revenue legs to our platform and then turn it over to Dan to walk through the financial results and analysis.

Our top operating initiative continues to be driving adoption of the Niobe platform in our installed base. As we look at our company today, we believe we have crossed the chasm into the early majority and are now entering a much more predictable ramp to Niobe usage and clinical adoption.

Let me start by reviewing the total utilization and EP growth rate for the year. As you can see by the first slide, in 2010 we completed a total of approximately 8,900 EP procedures, a 26% increase from the approximate 7,000 EP procedures performed in 2009. Additionally, this bar makes it readily apparent that – of the importance of the irrigated catheter introduction to our customers and its impact on the utilization starting in 2009.

While we are pleased with the 26% growth in our overall adoption, we believe we can do better. And a deeper look into the adoption trends gives us several important insights.

In the next slide, we can see the differences in adoption by type of procedure. As we have highlighted in the past, our platform can be used in any chamber of the heart for both complex and simple ablations.

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