Stereotaxis' CEO Discusses Q3 2011 Results - Earnings Call Transcript

Stereotaxis, Inc. ( STXS)

Q3 2011 Earnings Call

November 7, 2011 4:30 PM ET


Greg Gin – VP, EVC Group

Mike Kaminski – President and CEO

Sam Duggan – CFO


Sameer Harish – ThinkEquity

Tao Levy – Collins Stewart



Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Stereotaxis Third Quarter 2011 Financial Results Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions) This conference is being recorded today, Monday, November 7, 2011.

I would now like to turn the conference over to Mr. Greg Gin of EVC Group. Please go ahead, sir.

Greg Gin

Thank you, operator, and good afternoon, everyone. Thanks for joining us for the Stereotaxis conference call and webcast to review the financial results for the third quarter of 2011, which ended on September 30, 2010.

Before we get started, we’d 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 that qualify the forward-looking statements made on this call, we refer you to the company’s periodic and other public filings filed with the SEC, including the Form 10-K for the fiscal year ended December 31, 2010 and the quarterly filings for 2011. 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 backlog, 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 expressed terms as a result of negotiations or by project changes or delays.

And now, I’d like to turn the call over to Mike Kaminski, President and Chief Executive Officer of Stereotaxis. Mike?

Mike Kaminski

Thank you, Greg. Good afternoon, everyone, and thank you for joining us this afternoon on the third quarter 2011 conference call. With me today is Sam Duggan, who joined us as Chief financial Officer in early October. Before we begin, let me formally welcome Sam to the team. Sam brings 25 years of financial leadership experience with management responsibility for treasury, investor relations, financial analysis, budgeting and lease financing. His broad experience in senior strategic finance roles make him ideally suited to lead our finance function as we execute our strategy to establish our technology platform as a standard of care for treatment of complex arrhythmias and other cardiac diseases. So, Sam, welcome to your first Stereotaxis conference call.

On today’s call, I’ll start by providing an overview of the third quarter and discuss our progress on preparing for the upcoming launch this quarter of the new Epoch platform. I’ll then discuss our progress with the Odyssey platform before Sam reviews the quarterly financial results. We’ll then open it up to your questions. Let’s get started.

Revenue in the third quarter was $8.5 million, down 38% from a year-ago period. Global new capital orders were $2.2 million and were comprised of $1.6 million in Odyssey products, four Epoch upgrades and two Vdrive systems. Our top line performance and system orders, as we expected, were impacted by the transition from Niobe II to Epoch. These factors resulted in soft Niobe II revenue and the related impact on Odyssey installations in Niobe labs. The top line was also affected by the emergence of larger standard Odyssey deals, which will take longer to close but will significantly increase our growth.

Among the bright spots in the quarter, recurring revenue grew 13.8% and reflects continued growth in clinical procedures with our magnetic robotic platform. In addition, we continue to build market interest in Epoch ahead of its planned launch this quarter. We’ve designed Epoch to significantly enhance physician efficiency and experience for robotic-assisted EP procedures. We believe these clear benefits will regenerate market demand for our EP platform, resulting in renewed growth in systems revenue and new capital orders. We’re focused on driving rapid market adoption of Epoch and believe this will significantly contribute to the future growth and profitability.

With respect to the Odyssey platform, we’re continuing our efforts through direct sales and with distribution partners to expand the potential market opportunity. We expect the expansion of the Odyssey business in 2012 as our distributor, Biosense Webster, builds momentum in non-Niobe standard EP labs.

Company is very focused on achieving key milestones, which will accelerate us through this transition period. I’ve mentioned some of these in previous calls, but let me review with you what we’ve accomplished on the top five milestones. The milestones are: 1) restructuring operating costs and lowering them by 15% to 20%; 2) hiring our new CFO; 3) securing relief of our bank covenants; 4) secure non-equity financing; and then 5), begin installation of the Epoch platform.

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