Stereotaxis Inc. CEO Discusses Q1 2012 Earnings Results Conference Call Transcript

Stereotaxis, Inc. (STXS)

Q1 2012 Earnings Call Transcript

May 08, 2012 08:30 a.m. ET


Gregory Gin - VP, EVC Group

Mike Kaminski - CEO

Sam Duggan - CFO


Steve Lichtman - Oppenheimer Securities



Ladies and gentlemen standing by and welcome to the Stereotaxis Q1 2012 Results Conference Call. During today’s presentation, all parties will be in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions).

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

Greg Gin

Thank you for joining us for the Stereotaxis conference call and webcast to review the financial results for the first quarter which ended on March 31, 2012.

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, 2011 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 maybe revised, modified, or canceled either by their express terms, as a result of negotiations or by project changes or delays.

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

Mike Kaminski

Good morning everyone, and thank you for joining us to review our first quarter 2012 performance. With me today is our Chief Financial Officer, Sam Duggan. Following our prepared remarks, we will open up the call for your questions.

As we outlined in our last call, our first priority in 2012 was to improve the balance sheet in order to keep our strategic plan moving forward. On Monday we announced that we’ve entered in to a definitive agreement to raise an additional 18.5 million through two financing transactions, consisting of 8.5 million subordinated debt, and a 10 million in common stock type transaction.

Upon closing of these transactions, we also expect to extend our credit agreement with Silicon Valley Bank through March 2013. Sam will review the terms in more details in his remarks.

In an effort to maximize this capital raised, we are implementing a cost reduction plan focused on growing top line and position as to achieve breakeven as quickly as possible. The plan will further reduce operating expenses not directly impacting top line growth by 15% to 20% by the fourth quarter of this year.

With a little operating spend and continued revenue growth through the new Epoch platform, we believe we can accelerate EBITDA breakeven. I would discuss some specifics of the plan following our review of the first quarter results.

During the first quarter, the Epoch Solution continued to build momentum. We installed 19 upgrades in addition to the six installed in Q4. At this pace we expect to achieve a milestone of 40 upgraded sites during the first half of 2012.

Two Niobe ES systems contributed to revenue during the quarter, and although there were no new Niobe ES orders in the quarter, we do expect to secure orders as the year unfolds and record type strengthens.

We have seen a marked increase in sales activities due to overwhelmingly positive response to the products clinical and operational [background]. We remain confident in our ability to recognize at least 10 new Niobe ES systems to revenue in 2012.

The Vdrive product continues to generate positive momentum in Europe, expanding our footprint and providing a clear differentiator in the robotic market. The Vdrive system provides a physician the ability to control all catheters [G] and complex EP procedures and the flexibility to change the pivot point of our magnetic catheter, thus improving navigation to specific sites.

To-date 80% of the upgraded Epoch sites in Europe has purchased the Vdrive, and are utilizing it in approximately 50% of all AF procedures. Sales of the Vdrive systems should significantly increase once the V-Loop is approved in the US. We are still on track to commercially release Vdrive in the US later this year.

Our Odyssey business contributed two main to revenue in the first quarter and generated 2.1 million in new orders. Approximately 30% of the orders were of Biosense distribution agreement.

We will continue to leverage this relationship to expand the Odyssey footprint in the interventional market. We are also presenting three significant enhancements to the Odyssey platform at the Heart Rhythm Society later this week. These upgrades are designed to improve the user interface and strengthen the remote communication of (inaudible) find information to physicians in remote sites.

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