NeuroMetrix, Inc.
Q4 2020 Earnings Call Transcript

Published: 28 Jan 2021

[Operator:]

Good morning and welcome to the NeuroMetrix Fourth Quarter 2020 Earnings Call. My name is Anthony and I'll be your moderator on the call. On this call, the company may make statements which are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature that depend upon or refer to future events, or conditions are forward-looking statements. Any forward-looking statements reflect current views of NeuroMetrix about future results of operations, and other forward-looking information. You should not rely on forward-looking statements because actual results may differ materially as a result of a number of important factors, including those set forth in the earnings release issued earlier today. Please refer to the risks and uncertainties including the factors described under the heading Risk Factors in the company for periodic filings with the SEC available on the company Investor Relations website at neurometrix.com and on the SEC's website at sec.gov. NeuroMetrix does not intend and undertakes no duty to update the information disclosed on this conference call.

[Thomas Higgins:]

Thanks you, Anthony. I'm joined on the call by Dr. Shai Gozani, our President and Chief Executive Officer. NeuroMetrix is focused on the development and global commercialization of noninvasive medical devices for the diagnosis disorders involving the nervous system. The earnings release earlier today conveyed solid financial results for the fourth quarter of 2020, in comparison with the pre pandemic year ago quarter. The key financial metrics of revenues, gross profit and net loss and cash usage all showed improvement over Q4 2019. Q4 revenues were $1.8 million this year. DPNCheck continued to deliver a year-on-year growth. Medicare Advantage was strong and offset weakness in international orders. Advanced electrode sales were about level with the prior quarter and with Q4 2019, and Quell continued its positive operating contribution with improved efficiency in advertising spending. Gross profit on revenues was $1.3 million. That represented a margin rate of 73.7% versus 62% in Q4 2019, a gain of 11.5 percentage points on the gross margin, or 19% over Q4 2019. Operating expenses totaled $1.7 million. Spending was down over $1 million or a 39% from Q4 last year, it was roughly in-line with spending during the early quarters of 2020. Quarter-on-quarter spending reductions were achieved across the three major OpEx categories of R&D, sales and marketing and G&A, reductions in staffing, facilities and outside services contributed to the lower spending levels. Our loss from operations was $326,000, compared with a loss of nearly $1.7 million in the year ago quarter and overall net loss for the quarter was also $326,000. the prior year loss was $1.1 million and it benefited by $600,000 from the final development milestone under our GSK collaboration. Shifting to the full year results, a few comments. The comparability between 2020 and 2019 is difficult for several reasons. The first obvious one is the COVID-19 effects during 2020. But in addition, operations were restructured in mid-2019. At that time, a P&L charge of $2.6 million was recorded for staff productions, inventory facilities and other items. In 2019, the Quell marketing approach was radically altered. Focus shifted to profit line contribution with lower revenues and away from top line growth. As a result, most retail distribution was curtailed, ad spending was reduced and redirected from TV to digital advertising. OpEx spending in 2019 from mid-year onward was significantly reduced, including reliance on outside professional services. Also, the Quell-GSK collaboration in 2019 involved extensive R&D effort to achieve development milestones, and similar activities did not occur in 2020. So with those events in mind, a few brief comments on the 2020 full year numbers.

[Dr. Shai Gozani:]

Thank you, Tom. So as Tom outlined, we are pleased with the company's performance in the fourth quarter and are optimistic about our prospects for 2021. I will take this opportunity to review our go forward business strategy. It's built around two core principles

[Operator:]

[Dr. Shai Gozani:]

Thank you then for joining us on this conference call and we look forward to updating you over the balance of the year.

[Operator:]

And ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may not disconnect.