Biotricity, Inc.
Q3 2021 Earnings Call Transcript

Published: 12 Feb 2021

[Operator:]

Good day and welcome to the Biotricity Fiscal Third Quarter 2021 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mark Forney. Please go ahead.

[Mark Forney:]

Thank you. Good afternoon everyone and welcome to Biotricity's fiscal 2021 Q3 earnings conference call. As a reminder Biotricity's quarter ended on December 31, 2020, so all figures presented for this period will reflect that end date. Earlier today, we issued our fiscal 2021, Q3 financial results press release, which highlighted a number of financial results. It should be noted that these are preliminary figures that could change when the final filing is complete.

[Waqaas Al-Siddiq:]

Thank you, Mark, and thank you everybody for joining us on this call today and hearing a little bit about our story, and what we've been up to over the last quarter. So, one of the exciting things that I think is an important milestone for us is we have done our first $1 million quarter and that is on the back of doing seven quarters of consecutive growth, barring one quarter with the original COVID outbreak back in 2020. What's - I think more interesting and valuable than that is, if you count the original release of our product, which was - our first FDA clearance was at the end of 2017. So 2018 was when we were figuring out reimbursement and really trying out didn't really have a sales force, but it was a - it was an exercise in understanding the market and ensuring that reimbursement was available for our product and our business model worked. Through that year we also had consecutive quarterly growth. If you included that before the one-year pre-commercialization, we are now at a point in time where we had 11 quarters of consecutive growth, barring that one quarter because of COVID-19. And that has really resulted in triple-digit year-over-year growth and approximately 20% to 40% growth sequentially. And that growth is not only in terms of revenue. But also in terms of physicians access to patients and all of the other aspects that drive our business. And to speak to that, we now have over 700 cardiologists across 20 States that use our product. That's a 150% year-over-year increase in the number of physicians that we had approximately. And approximately those physicians service about 1.4 million patients. We've also seen geographic expansion. We are now 20 States in terms of our network, which is up from 12 States last year. And I think the exciting part which I sort of alluded to in the last call and I think that trend is continuing is that we have a product roadmap and we are really trying to focus on increasing our current addressable market. So, as everyone knows, we are in the cardiac diagnostic space, and that current addressable market for us is about $1.2 billion market.

[John Ayanoglou:]

Thank you, Waqqas. And thank you to everyone who has joined us this afternoon. Let me start by saying that, my comments will focus on our unaudited preliminary financial results for Biotricity's third fiscal quarter of 2021, which is the quarter ended December 31. Final post of financial results will be filed on EDGAR on February 16. This was a particularly strong Biotricity.

[Waqaas Al-Siddiq:]

Thanks, John. Appreciate that. And as I promised, let's go a little bit deeper in terms of what are our plans? What are we trying to do here at Biotricity? So we've talked a little bit about expansion and growth. And that's been a characteristic of the company for the last few quarters and we plan on continuing that. And part of that expansion is really focused on driving consistent growth and revenue increase by expanding our sales force. And part of that sales force expansion is also about driving footprint. Right now, if you look at us in the United States, we are primarily focused on the northeast and the southeast of the United States and we want to go more westward and expand, so that we are across the United States. So the capital that we brought in, puts us in a position where we can expand our sales force and drive a larger footprint. While we are driving that larger footprint, so simultaneous to that, the product pipeline is about going deeper in existing accounts. I sort of touched on this earlier, John certainly touched on it as well. And that is where our R&D comes from is focusing on and understanding that, hey we've got the 700 physicians today and growing, but they are overseeing 1.4 million patients and we want to grow that to 2 million by opening up additional accounts and growing our footprint. So how do we touch more and more of those patients? And the way we do that is by creating a product suite and expanding our product suite so that we can go deeper. And at our core, as a company, we are a technology company, it's been one of a key focus since inception is how to ensure and how to focus on best-in-class technology. And we've been seeing the fruits of that, one is, we have a 100% reorder rate across our customers, we have fantastic retention rate. And as a result of that, we have a trust factor and we have a stickiness where these physicians are listening to us and we're understanding what they need and we are building those features into our technology. And to kind of talk about technology for a moment, because technology is a very important aspect in remote monitoring. So COVID has certainly focused on the idea of monitoring. Self-isolation has become a norm and monitoring is the future. This has become very clear. It was already a direction, but COVID has certainly accelerated that awareness. And the problem is that there is very few organizations that are really focused on technology, people get wrapped up into the clinical side, they want to do the test, they want to bill insurance, they want to do all that. Biotricity has maintained that technology and this model of technology as a service is the way to go from our perspective. And so, we've developed all of our technology in house. We've taken the time to build our own IOT infrastructure.

[Mark Forney:]

Yes. Operator, if you could queue up the questions. And at this time we will take Q&A so we've got 30 seconds to get that organized and starting our Q&A.

[Operator:]

And we'll take our first question from Kyle Bauser from Colliers Securities. Please go ahead.

[Kyle Bauser:]

Good afternoon and thanks for all the updates here. Maybe just on the sales force side, I know what you're focusing on, is ramping the headcount. Can you rhyme me what is the current headcount and where you see that going - in kind of the trend?

[Waqaas Al-Siddiq:]

Yes, so we're focusing on doubling our sales force right now. We're trying to focus more as opposed to the headcount what we try to focus on is how many states we have exposure in. So we have 20 states that we are active in right now. And our focus is to grow that by 50% and get into 30 states by the end of the year.

[Kyle Bauser:]

Got it. And so as you expand, do you think you'll just add support to those existing. And then also as a follow on, what's your expectations for kind of unlocking the remaining states over the coming quarters?

[Waqaas Al-Siddiq:]

Yes, so the - that's exactly right. So we'll do a combination of, we will add to our headcount in states where we think that the - that the population is big enough and the opportunity is big enough. And then there are smaller states where the population is - can be serviced with a rep that is covering a couple states. So that is a mixed approach that we will take obviously based on the opportunity and the population size of that state. And with regards to how we see that in the coming quarters, our goal is we want to add and expand our network by three states to four states every quarter. So if we're trying to get to a 30-state exposure, I think that the expectation that we're trying to set internally is, try to add three states every quarter and achieve that network of 30 states by the end of the year. Now with that said, if we see that hey, there is this huge market opportunity to expand within a state. We may decide to do that just because the business opportunity there from a numbers perspective is more important than expanding to a state that may not have the same size of opportunity.

[Kyle Bauser:]

Got it, appreciate that. And just lastly if I may, nice to see the opportunistic raise and so you've got a nice balance sheet? How far does that get you and how do you expect the burn on a quarterly basis to trend as well?

[Waqaas Al-Siddiq:]

Yes, so I think that - I'll answer that a little bit differently because this is not as binary as that because we are obviously growing with the good thing and that the characteristic about this raise is that we have existing shareholders that participated and investors that are going to come in and support the company in subsequent rounds. So we are well-capitalized - alongside our growth where we can run the business and continue this growth trajectory on a 12 month to 18-month program. And alongside that we have existing investors and investor that participated in this round that will continue to support the company and continue to support our growth. So I think it's more important than the fact that we've got this capital and it's been able to - it's going to support our growth. But this capital is also not a one-time capital. It's capital and investors that we can go back to, which is very important. Because one of the big things about we talk about growth and how do you facilitate growth and continue that growth it's about resources. And having investors that stick with you, having existing shareholders coming back and continue to invest multiple times, that's an important factor enabled to continue growth. So we are very happy with not only the capitalization that is coming to facilitate this growth. But also the investors that, came in and have shown commitment for subsequent capital needs. But to answer your question specifically, we are fine for the next 12 months to 18 months. And maybe even longer depending on how we can focus on accelerating our growth.

[Operator:]

And we'll go ahead and take our next question from . Please go ahead.

[Unidentified Analyst:]

Congratulations Waqaas and John, very nice quarter. I just have a couple of quick questions. If you can add a little bit of color to what you've seen at the marketplace. We've noticed some pricing pressure for some of the peers like iRhythm that they faced. And I want to know how that's affecting Bioflux and the upcoming Biotres. It would be great to get your thoughts on that?

[Waqaas Al-Siddiq:]

No problem, thanks Chet. We're - always happy to take your tough questions. So iRhythm is in the extended holter market, right. So Bioflux is in the mobile cardiac telemetry market. So, the Bioflux is really unaffected by anything that's going on with iRhythm. That issue is really focused on extended holter. The Biotres product is a little bit different now because the Biotres product can be used as an extended holter. We develop that product specifically for the holter market, physicians can use it for the extended holter. But it will be - because our model is technology as a service, the product is already designed. It will be profitable and generate revenue from our perspective, because we are not tied to clinical reimbursement, we are tied to technology usage fees. And we've designed it so that it will work within the reimbursement framework that is currently the issue with iRhythm. And the reason that it is because, the iRhythm issue I understand is new for many investors, people are hearing about it. It's not new to us. We've known about this since early 2019. And to provide a little bit of color, we really at Biotricity focus and understand reimbursement because it's a big part of our business to understand how does, the physician get enabled. And so from back in 2019, we knew that there was a disconnect in reimbursement. And it's not restricted just to Novitas. So to give you an example, Chicago Medicare pays $231.25 for extended holter. And that's what they pay, but your bill - you're billing Medicare $395. So you're not paying $395, you're paying substantially less, you're paying $231. But when you go to Maryland, you're paying $213. So that's not a big difference, but when you go to Washington State its $30. When it's Michigan its $31, when it's North Carolina its $147 and this is not a problem just for Novitas. Noridian which is dealing with Washington State reimbursement and Palmetto which dealing with North Carolina reimbursement are also reimbursing at lower rates. So we've understood this for a couple years now. And when we built the Biotres, it was with the understanding about all of these metrics. But we are feeling a need for our physicians, which was that they like Biotricity, they like our work flow, they like this idea of being enabled. They like doing things in-house, they like being able to turn around their patient data quickly. And they came and they said, hey why don't you give us the holter product. And so we built the Biotres to first service that unmet need of the holter market. And then yes, it can be used for extended holter, but because we knew of this reimbursement issue for a couple of years now, our technologies and service model is unaffected by this problem.

[Unidentified Analyst:]

And just a couple follow-ups, could you just talk a little bit about, some of the risks that you see? Obviously, the growth is exceptional both sequentially and year-over-year in triple digits. But what do you worry about - making sure that execution happens and what are the big primary risks that you try to manage?

[Waqaas Al-Siddiq:]

Right, excellent question so - and thank you for recognizing that. And what I would say is, our model is very unique and it is designed for growth and value. It's one of the reasons why we didn't want to get into the clinical and the operational stuff and reimburse directly with Medicare/Medicaid. We really wanted to stay as a technology as a service company and that's by design. It's also why to your previous question where you were talking about how are you affected? iRhythm does all of the clinical reporting and all of that - and billing directly for insurance. So they are staffing clinicians and all of those operational overheads, which affect them. So our model is designed for growth because it's a technology reoccurring service model. And that is why we are very confident when we can say. We will continue triple-digit growth and quarter-over-quarter growth for this year and next year. So what is my risk? And as I mentioned earlier in the call, I know this next quarter is going to be bigger than last quarter. My focus is now how do I accelerate the growth? And how do I grow faster? Because that is the key component for us, right. We are confident in the growth trajectory. What we want to do is, we want to accelerate that growth. And the way we plan to do that is by executing on the product pipeline and going deeper. So hopefully that answers that question.

[Unidentified Analyst:]

Got it. Absolutely. And can you give us a little guidance for the next few quarters as you see, say for example, Biotres kicking in and some of other product pipeline kicking in?

[Waqaas Al-Siddiq:]

Yes. So we believe if Biotres gets approved, we believe it's going to have a 20% to 30% impact across the board for us. But outside of the Biotres, we expect to maintain this quarter-over-quarter growth that you see in line over the last seven quarters between 25% to 40% irrespective of Biotres. Everything else is really going to enhance that.

[Unidentified Analyst:]

And then last question. Just it seems like you've done a great job of really delivering fundamentally very well. And just now that you're getting scaled up, how do you envision kind of broadening your investor base and getting more into mainstream venues like NASDAQ and of course one day the S&P-500 like Tesla?

[Waqaas Al-Siddiq:]

Not trying to answer that one. But what I can say is this, right, we - a lot of companies talked about up-listing in the national exchanges, stuff like that. We - today we are very much focused on growth, and the capitalization that we just got is going to facilitate that. With that said, I talked earlier about company awareness, we definitely want to build the company awareness and audience. And being on the OTC market, it's really a smaller more specialized audience that looks at the company and we are definitely committed to a national exchange, because we believe that is going to expand our awareness. And as we see some of the activity in the space and what's going on, there is certainly a broader audience and more name brand awareness when you are on a national exchange. And that is certainly a focus for us and we will - we are committed to that trajectory. So it is on our radar, it is something that we plan on doing, it is a thing - it is an item that we are committed to, not only just to be on the national exchange, but also to expand our awareness and expand the audience and the investor audience. So that is certainly a priority for this year.

[Operator:]

And we'll go ahead and take our next question from Chris Jarrous from Dunlap Equity. Please go ahead.

[Chris Jarrous:]

Waqaas, thanks for taking my questions. My first question really goes to the macro in the space and what you're seeing competitively. So I know that BEAT and I think a couple of others have been acquired recently. I wanted to see what your thoughts were both from a kind of what that mean to the market and also what you're actually seeing in the field. And what if you're hearing anything back from clinics or whatnot, there is - things have changed in that respect.

[Waqaas Al-Siddiq:]

For sure. And excellent question, there is a lot of activity in the space. And I think, so if we just take a step back and we think about that for a minute. And why is that happening? So I talked about COVID, I talked about the - how the futures remote monitoring and the awareness of that, that has really facilitated this consolidation. And I think what's very good is that, they've been acquisitions, but acquisitions at good values for organizations that are more operational, as I talked to about having the clinicians billing directly for insurance really dealing with all of the overhead stuff, not as a technology player. So if they are getting acquired at good value, I believe that that bodes well for us because we are a technology player and technology companies generally get better multiples in terms of value. And the consolidation is also an important component, because it also shows, which smaller companies like me and CEOs, you know, smaller companies are always seeing things like that, but it's validation from a value perspective, but also validation from the perspective that building this technology is not easy. So remote patient monitoring is difficult to develop, algorithms are difficult to develop, there's high barrier to entries. It's why these companies are being acquired because the tech is difficult to create. And with the BioTelemetry's and the Preventice' out, I believe we are very well-positioned as we have technology. And also acquisition slow, slow companies down, it gives us an opportunity. We are already winning in the marketplace and continue to win in the marketplace. And I think the other important factor, which I talked about earlier, which is that the players that have - that are being acquired, the technology is very dated. You've got FDA clearances from 2012, 2009, 2014. And some of these players, Preventice was acquired for $1.2 billion, they're white-labeling technology. It's not even developed by themselves in house. So I think from an overall multi-factor perspective, it bodes well for a company like ours that is very tech-heavy, where technology companies get better, better recognition for value. And it establishes not only value, it establishes the fact that this stuff is difficult to create and that acquisition or partnerships or strategic alliances is the way to go. So I think that bodes well for our investor audience and our shareholder audience. I think it bodes well for our ability to attract additional investors and facilitate our growth.

[Chris Jarrous:]

And then, I mean speaking of BEAT, and that company has been around for, I don't know 15, 20 years, something like that, and obviously had done well. Is that the kind of pace that we as investors should expect - given that you have to deal with so many different stakeholders in this and doctors or what not. Or is there something about your business that allows you to maybe scale faster than what these competitors have?

[Waqaas Al-Siddiq:]

Excellent question. So it's a good point. And I think that's a good reminder. I always forget it sometimes as well. You look at some of these companies, you look at BEAT and you're like - and you're like, wow, they're doing really, really well. And then you're thinking about oh well, they've been around for 15 years to 20 years. It's taking them a long time to get there. Our model and our product portfolio, so based on public information, based on what I see, because I watch everybody in the space, we have one of the richest product portfolio in my opinion, everyone can of course verify that on their own, which allows us to really layer on and we are growing faster because of our business model and the type of people that we are able to attract than these companies were doing. So, I believe that we will achieve growth faster. And as I had talked about earlier, we're trying to accelerate that growth. So we are already growing on a faster trajectory than these guys. So it won't take us 10 years, but we are trying to accelerate that. So I think for investors and for shareholders and for potential investors and potential shareholders, I think it's a matter of watching us and looking at how we execute, and we've been showing that we can execute. So it's really about continuing to do what we've been doing successfully.

[Operator:]

And we'll go ahead and take our next question from Jeff Porter from Porter Capital Management. Please go ahead.

[Jeff Porter:]

Waqaas, thanks for taking my question. As you think about driving revenue growth going forward, how do you prioritize getting a lift in utilization from physicians as opposed to driving revenue growth by acquiring new physicians. How do you think about that?

[Waqaas Al-Siddiq:]

Yes, it's an excellent question. So utilization for us at the end of day it's about what is really required from a diagnostic perspective for a patient, and then how do we facilitate and enable the physician to have the best insight. So how do we look at utilization currently and we are looking at it, it's really about providing more data and getting more accurate and providing that data faster to the physician at their fingertips. So what does that mean, let's be specific. If a doctor is looking for atrial fibrillation, as an arrhythmia on a patient, and afib is found in day three and he put the patient on for a 10-day study. Well, we need to be able to let that information permeate through our system, so that the doctor is alerted and has that data at his fingertips, so he can recall the patient. So we've been working on all of these things in the last - in the last year in terms of how to get data more available, faster available, more real-time into the hands of the physician. So we made huge improvements in that. And that - it's been reflective in utilization; utilization has improved for us in the last nine months to 10 months. The other aspect is how do, we facilitate patient hookups remotely? So, shipping devices through the patient that is something that we also implemented, COVID of course accelerated that. We were already planning on it, but this got forced because of what was going on COVID. And then the last component, which we talked about a little bit on this call is how do you touch more patients with your products because that doctor we know has approximately 2,000 patients, so, but not all of them are needed for diagnostics, but they're all cardiac patients. So is there something else that we can develop from a product or technology perspective, post diagnostic that can help Texas patient and create an incremental revenue stream for us or expand. So utilization, there is utilization on product. There is utilization by creating better accessibility. And then there is utilization by going deeper and we are working on all three of those.

[Operator:]

And we'll go ahead and take our next question from Liam Sherif from Platinum Point Capital. Please go ahead.

[Liam Sherif:]

First of all, I'd just like to say congratulations on your phenomenal quarter. The one million quarterly milestone is really an exciting development for the company. So my question is, can you speak for a moment please about how cardiologists are being paid for using the Biotricity device versus how they are being paid using a competitor's device. And also just with that, what is the difference in out-of-pocket cost to the customer?

[Waqaas Al-Siddiq:]

Yes, for sure. So I'll break that down into two parts. So the first part is, what happens to the physician versus us? So we are a technology provider. So we provide the technology to doctor, they buy the technology and then we provide them software that they can use and then they pay us based on usage. So they're dealing with all the clinical work. They are diagnosing the patients, they are doing with interpretation if there is an emergency. So they're really using our technology to facilitate diagnostics within their practice. And so, what that means is that, they're reimbursing for a global reimbursement. So reimbursement is usually professional and technical. They're reimbursing for both professional and technical. The professional fee is around $25. The technical fee is around our national average is around $800. So they are collecting all of that with Biotricity. And then they pay us a technology fee, which based on our negotiated contract is substantially less. When they are dealing with a competitor like some of the other companies that people are aware of, the doctor bills for the professional fee, which is basically reading the report, which is $25. And our competitors will bill for the technical, which is the $800 reimbursement. So there is a huge difference. The doctor is already using it, it's just - and there is no change to Medicare. There is no increase in costs to the system. It's really allowing the doctor to do the billing and facilitate faster response time, hook up the patient. Because obviously if the doctor has to outsource it, the patient has to go somewhere else, they've got to wait for that device. Now the doctor has lost insight. So there's a whole patient quality in a patient care perspective outside of any financial component here. So all of that basically improves, you get improved care, better access and all of - and of course the revenue stream is shifted instead of going out to a third-party service provider, the doctor is doing everything in-house. So that's the change there. Now to your second part of your question, which was about, the patient and the out-of-pocket costs. So out-of-pocket cost to a patient when you're dealing with a non-physician like a lab or a center, it's really the center or in our case our competitor. They will determine what to do. So if they bill - if they're charging $800 and Medicare only pays $600 that $200 delta they will go after the patient for that. What we had seen in the physician side is physicians, they have long-term relationships with these patients. So if - the patient's insurance kicks back $100 or $50 or whatever, generally the doctor will just let that go. He is not going to go in and collect it, because he knows his patient has been that doctor's patient for years and he is going to be, continue to be that doctor's patient for many years to come. So it's much nicer for the patient, not only from a care quality perspective. But to have all of this in the hands of their physicians because the physicians can override a lot of these things and they're not going to chase after their patients if insurance returned a reimbursement that was $50 or $75 less.

[Liam Sherif:]

Great, thank you for that color. And just my final question, could you give us a breakdown of utilization revenues versus sales revenues in this quarter? And tell us a little about the growth you're seeing in utilizations?

[Waqaas Al-Siddiq:]

So I actually - sorry you're asking a question, which I don't have exact numbers off the top of my head. But what I can - I can talk about it anecdotally. We have seen utilization and revenue from utilization become a substantially larger percentage of our revenue every single quarter. So device sales, is always becoming a smaller and smaller fraction every quarter. I believed last quarter, it was probably somewhere in the 15%, 20% maximum kind of range. But if you go a year ago, it would have been like 40% maybe even more. So, every quarter we see device as a function of revenue become smaller and utilization as a percentage of revenue grow. And that's where us as a company and myself as a CEO, I'm always focused on the reoccurring technology as a service model. What is that revenue and how do we - how does that impact? Because that is the driver of our growth and that is the one that we always want to see growing and become a larger and larger percentage of our revenue.

[Operator:]

And we'll go ahead and take our next question from . Please go ahead.

[Unidentified Analyst:]

I'm sorry. My question was already been answered. So I will pass. Thank you.

[Waqaas Al-Siddiq:]

Thanks, Thomas.

[Operator:]

Thank you. And we'll go ahead and take a follow-up from Chet White. Please go ahead. And it looks like Chet has disconnected. It appears we have no further phone questions at this time. And I would now like to hand it back over to our presenters for any additional or closing remarks.

[Waqaas Al-Siddiq:]

Thank you, Elley. And I would just like to say thank you everybody for listening today, hearing a little bit about our story, asking some very powerful questions. Hopefully this has been helpful for you. At Biotricity we're always trying to communicate and get our story out there. So, please feel free to join our mailing list, come on to our website. We'd like to really build on the communication and our awareness it's a big part of our goal this year. It's why we started these earnings calls. So John and I are always available. And we're always going to try and facilitate the best responses to your questions. So I implore everybody to visit our website, get onto our mailing list. Please attend these calls and we will try to keep everybody in the loop as best as possible, as we try to build awareness and a bigger audience for the company. Thank you.

[John Ayanoglou:]

Thank you so much.

[Operator:]

And with that, that does conclude today's call. Thank you for your participation. You may now disconnect.