Stereotaxis, Inc. ( STXS) Q2 2011 Earnings Conference Call August 8, 2011 4:30 PM ET Executives Greg Gin – IR Mike Kaminski – President and CEO Dan Johnston – CFO Analysts Tao Levy – Collins Stewart Steven Lichtman – Oppenheimer Spencer Nam – Madison Williams Sameer Harish – ThinkEquity Jose Haresco – JMP Securities Presentation Operator
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 any particular period or at all because 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’d 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 second quarter 2011 conference call. We have a lot of important information to review today. So I’d like to spend a few moments going over the agenda. I will start with prepared remarks with a review of the factors that impacted our second quarter performance. Then I’ll discuss the company’s transition plan, as outlined in the afternoon’s press release that is designed to build rapid adoption of our new Epoch robotic platform, capitalize on the Odyssey opportunity, and substantially conserve financial resources. We will then review the financial results and provide details of the financial impact of the restructuring before open it up to calls. Let me get started. Second quarter was a challenging quarter for Stereotaxis and reflects the beginning of a period of significant transition for the company. Revenue was down 22.7% from the second quarter of 2010. Gross margin in the second quarter was 69.7%, up 250 basis points from a year ago. Global new capital orders were $4.4 million and were comprised of two Niobe systems as well as $1.7 million in orders related to Odyssey. Operating expenses increased due to the impact of marketing expenses for two major medical meetings associated with the release of our Epoch platform. The bright spot for the quarter were marked momentum and interest in Epoch, which is designed to significantly enhance the efficiency for all robotic EP procedures and whose market adoption will significantly contribute to the growth and profitability in the future. The second was the 17.9% growth in recurring revenue, which reflects the continued growth in the clinical procedures and the pipeline momentum for the Odyssey system in the standard EP lines.
While we are disappointed with our systems revenue and new capital order performance in the second quarter, we believe we clearly understand the drivers for our results and on a path to turn this around. Our financial performance in the quarter and year-to-date is mainly driven by soft Niobe revenue and the related impact on the Odyssey business and the emergence of the larger standard lab Odyssey deal, which take longer to closer but significantly increase our growth potential.With our key focus on building top-line growth, we are mindful of conserving resources during the transition period. Therefore, we are embarking on an aggressive and immediate action plan to implement and rebalance and reduce the level of spending. This plan will focus on aligning our operating expenses with a revenue growth expectation, minimizing the cash burn while continuing to drive investments in R&D. 2011 has become a transition year for the company, one in which we need to regenerate robotic market demand in EP, continue to expand in the promise of the Odyssey product and rebalance our spending so we can invest in strengthening our value in the market but lower our burn rate. Accomplishing this will position us for a strong 2012 and beyond. Read the rest of this transcript for free on seekingalpha.com