Nuwellis (NUWE) 8 Aug 232023 Q2 Earnings call transcript

Good morning, and welcome to the Nuwellis Inc Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Vivian Cervantes, Investor Relations. ma'am. ahead, go Please

Thank to Good and discuss second XX, for Sherry. for financial Thank joining the XXXX. June ended us Nuwellis' quarter you, you, morning. everyone. you results Thank corporate developments

us with and CEO; CFO. myself, to Blake, addition today Nestor President Lynn Jaramillo, are and Nuwellis' In

We Dr. XX, for results the Nuwellis' ended June John Chief us Officer, joining financial also At Nuwellis X:XX released have XXXX. today. a.m. Jefferies, Medical Eastern today, quarter

on page company's If please not visit you website. received release, Investors have earnings Nuwellis' the the

During call market will to well as All relate results XXXX. this trends as Securities be making or forward-looking statements of call, the statements. and that conference company protected expectations Private forward-looking or made will the Act estimated forward-looking statements statements. during our are under predictions Reform today's of Litigation Any performance events be future

based materially estimates involve cause forward-looking our to events material All those forward-looking by statements. and these various statements actual uncertainties risks upon are that could anticipated or differ assumptions. or These implied statements current from results and

cautionary statements. of are SEC refer forward-looking filings including place information, assumes and company reports. undue the XX-K should update subsequent current on the Accordingly, obligation upon risks to reliance in these All the and no these the not discussion available to statements. based statements with statements and you Please company's the latest

like would turn call Nestor. the now I to With that, over to

announcing consult would Second to Effective to that Blake to Thank positive as role release Lynn with sincerely recap ensure XXXX the thank you, step this March the XXXX, begin to transition. through Lynn a Vivian, after to for a impact her transition. long with from Nuwellis, September Nuwellis' Conference XX, contribution will felt agreed issued Quarter departure. seamless her We company has down CFO. her call be of Call. we CFO Lynn and Welcome everyone. would morning today's morning, Earnings X, I like good our press her

me, Scott, successor. and years with organization will lead Director with appointed next has be Lynn's business, in forward through over current Rob the have phase finance the XX his to our to I and confidence been the very -- as has company Rob of utmost on Senior Finance the Rob look knowledge deep next the leadership of working finance growth. him team. company's excuse ability

of His the extend In our technology welcome to executive newest organization. medical vein, Board, who would to member, as the be an McCormick, like a and Mike June. value the to our Mike. me same extensive I in Board great joined Nuwellis warm entire experience would field in Welcome,

second call, give to announced strategic initiatives. an perspective earnings agreement supply our and collaboration performance Turning DaVita an Jefferies, overview well. on I provide Chief discuss we'll today's of our will collaboration our add agenda. as update his on our quarter DaVita and Medical Dr. will also with On John recent our I will and the Officer,

before up then Chief Officer, followed by the remarks. closing for will Our Lynn my questions, provide opening on Blake, commentary the results, financial call detailed Financial

the decline therapy, over In of concepts. sales patients quarter. of prior over Nuwellis million a the last an for second console in decrease second revenue, with of by number quarter in versus Utilization the results. generated increased treated circuits Turning quarter sold number X% reflecting increase the offset of increase XXXX to of our the XX% per Aquadex second in same XX% year, a a quarter XXXX, period the and the $X.X

other companies in with med conditions announced hospital in procedures macroeconomic tech similar that observed treatment have many growth constraints but lingering have We capital accounts.

continued sensors second we momentum sales improvement reflecting clinical in of the the the our business heart QX, first awareness from to in pleased increasing an growing are our XX% a By segment, quarter, and evidence. supported of report by pediatric segment, our low rebound from quarter, with saw failure we in

same over quarter failure X% increased last period heart year. in XXXX revenue Second the

growing results can QX and growth X% XX% These XX% review benefits the support of be our heart care over clinical peer in attributed past and the critical failure clinical year-over-year pediatric Aquadex While to revenue months, declined XXXX. publications follows awareness validating of the multiple In from heart and in data the several of and therapy. QX economic respectively. revenue strong growth revenue X%, failure,

not help continue are to move the In the or ultrafiltration We pathway. clinicians the oral removal driving is fluid solution immediately precise logical next and should to step for diuretics more is therapy, controllable, them predictable. as understand on ultrafiltration to among and such, whom intravenous that care other focus is mechanical awareness effective providers in patients and words, which

message is based field the quarters, And results having the failure demonstrated disposable on past segment organization a heart results, is now This revenue the is of positive by increased our delivering. sales circuit. two message the as

additional and ultrafiltration could reduced treat US accelerate markets, expand to like top conditions and ultrafiltration for patients help fluid with providers to is DaVita announced Aquadex failure provide patients costs with suffering into therapy to and strategic healthcare underway. heart program payers. we agreement supply the adoption our collaboration the pilot planning heart pilot many related would the XX, to from care initiatives in overload clinical June of related adult and failure therapy. select to have congestive Aquadex entered On in a phase ultrafiltration system of on our I updates to we Now access with of Its US pairing DaVita's therapy team Aquadex

companies develop the ultrafiltration for using at certain pilot, be will outpatient available to together the both Aquadex DaVita therapy of and DaVita actively clinician support. hospital customers center collaborating locations treatment with and patient sites Nuwellis are and training explore the rollout and selection Through pathways. on working therapy,

facilities DaVita's clinical could adoption units agreement help ultrafiltration up ineffective. of At for wells infrastructure rooms, pilot, outpatient for continued accelerate supply medical conclusion XX DaVita of for the when the and are to option years. of the services first-line extend emergency the potentially treatment ultrafiltration the inpatient, provision to has with observation clinical

roll-out prepare to therapy. team Our collaborating organization actively the we the is and with thrilled as DaVita

development initiatives. Turning to our product

continue We continuous XXXX. anticipate of population of pediatric development device IDE patient could product this replacement increase We half unmet children the renal for the issues neonates nephrologists, kidney population. the approval or to would pediatric malfunction, and of all and born with pediatric significantly addresses kidney therapy of kidneys, small a need life-threatening patient with and of whom game for This in the our first life many quality renal along from changer believe without be suffer this product those dysfunction. advance

to our John Dr. to further Jefferies with Chief Medical strategic turn DaVita. collaboration I discuss would call over now Officer, to like our the John?

our Nestor are believe collaboration Thank morning. and be good with there will DaVita. benefits that you, realized We from multiple

First, of growing of the the patients awareness increase collaboration failure the in number heart United will States.

Importantly, a therapeutic of this the [indiscernible]. of effective improve in and safe option collaboration form will recognition

and age by on available continues spectrums, been the many targeted to to for has prevalence and access treatment therapy diuretic fully collective therapy. continue volume that this of frequently use the although industry center approach across oral Heart opportunities intravenous incidence Although all failure of for increase awareness research and the continues to be not development, to overload in and years, realized. are

of access treating approach to in very predictable will more more difficult likely utilization therapy. With and collaboration the result the phenotype. clinical this most this to precise Aquadex a increase offers opportunity

which and cardiovascular enhance leverages In understanding syndrome. addition, tolerable vehicle this from pilot a medicine expertise nephrology, of our to cardiorenal provides

Jefferies. you, Thank Dr.

Lynn, Before to turning I reaffirm organizational the to call commitment to discipline and business efficiency. like our over would fundamentals, financial

to operations continue to penetration our our streamlined commercial the ultrafiltration utilization. support we our increase During to quarter, market believe We productivity now and is of well-designed Aquadex increased therapy. team

I Blake, discuss QX would our results. to over financial like Financial call Officer, Now, the to Lynn our turn to Chief

and second Nestor the second Revenue By was morning X% quarter approximately Pediatric a over declined representing quarter respectively. quarter of XXXX Critical in of for first segment, Care good a you, revenue XX% increased heart and over and this period year, XX% revenue failure approximately and everyone. quarter same XXXX. while X%, X% decline versus last the of Thank second the $X.X million, increase the XXXX year

As second were therapy Nestor mentioned, with in Pediatric treated And period patients the than year. as quarter increased Pediatric by same census XXXX first rebound XX% noted quarter. Aquadex revenue saw the the more XX% as last the we of the earlier, over of end

compared Gross points non-cash discontinuation margin the margin prior quarter XXX agreement. driven related for quarter in by XX% favorable the write-off year inventory period the distribution in a of of to was the $XXX,XXX XX.X% basis gross sales, a of an well the sales of year as prior increase quarter, to mix as prior combination of --

reflects of by increased to XXXX, in fees general, and the second in approximately quarter This increase audit, $XXX,XXX. current administrative primarily second $X.X quarter. were other of the and million increased the SG&A quarter professional expenses legal, XXXX. Compared Selling,

This $X.X was reflects higher $XXX,XXX for million, submission as expense compared first we increase of to R&D preparation device, the on an of second IDE XXXX. in of increase quarter CRRT our pediatric development XXXX. Second quarter in new ramp-up spend quarter

professional the expense operating the Sequentially, and XX%, of million reduced total of expenses versus fees in compensation quarter were primarily quarter, $X.X increase lower to compared XX% operating an first second Total approximately quarter. the due to about expenses XXXX. decreased

same share year-over-year loss was per per XXXX. share or $X.X Net $X.XX the average in by of share per in decrease net a million count. loss the to loss is net weighted in the $X.X or common year of quarter current compared driven in million increase a loss common our $XX.XX quarter share in The the period the for

no the approximately balance million outstanding common ended From of XXth. we second a $X with shares liquidity perspective, cash at we on and quarter sheet, debt approximately and X.X cash million and equivalents June the had

we'd for This concludes prepared remarks. questions. our open the to like call now Operator,

question-and-answer the Jeffrey of first will We Ladenburg begin is Instructions] from Cohen Thalmann. now [Operator The session. question

you? good morning. How Hi, are

morning Jeff. Good

Good morning Jeff.

down -- or year-over-year? a questions for I division Critical of? to couple specific any should just aware Care end. our it first onetime the any nature, we commentary contributing in be quarter, the So, of Is XX% guess, that the factors from

consoles, Critical lot I and what we sales also penetration Jeff. Good our has decline Yes. do increasing the new Care in current believe accounts that to question, call our with accounts. a in of opening

mentioned before, the seeing of of lingering we're expenditure the still some of I hospitals. As effects capital

it. Got

bit was a versus you. talked on us? a now Okay. the quarter? Can about Could about helpful. commercial that you bit Thank team talk little last for that you That's elaborate some streamlining done. You

of felt support consolidate productive We Yes, proximity. in these were territories and efficient consolidated very a they had that close course. We territories, we more it sales because was good more to three this specialists efficient to after clinical provide way territories. us that going the be is for these and and -- clinical reps to feel we covering consolidation those to a -- more

back do you better in then us, commentary quite we margins, Okay. on a not up front that over little for that kind any half? the for bit expecting, to the year, come expect back in our estimates Got of back should to the year, it. the half lastly level And last certainly meet favor or to match we were your the of half than with

Yes.

was the in the write-off So sales prior improvement mix which half second the in of we the higher of roughly quarter, in improved year I the driven and by $XXX,XXX. year-over-year with along would year mentioned expect by the disposable half Sequentially, was write-off half improvement about bought volumes. favorable -- modest

second on dependent, we because in higher the year. and however, of mix consoles the half console also of Somewhat disposables sales expect

sequentially. say would improvement modest I So,

it. for our questions. Got Thank Okay. does taking That help.

Thank Jeff. you,

from The of Maxim next Anthony Vendetti question Group. is

you. Thank

we Aquadex -- sold gave systems Can ask agreement. I the don't quarter? you couple or about but if questions talk how this number, about a reactivated Before were many just DaVita I the of know the

and have the We activated in accounts half new accounts, reactivated opened have we first -- of three this year. two

Okay.

the year increased the drive differently Is okay. systems obviously, opened then versus two utilization the drive else last help year utilization. interim new, that company three, should this anything is current installed? of reactivate DaVita in that So are the And definitely agreement there doing to

lot important segment. the has Well, seven in especially failure journals. in have last a That that the have addition in that come increase driving peer-reviewed clinical expect to we heart the in has the months in that the of to data DaVita utilization, out we an utilization,

driving more a of half continue few to the publications expect we care, utilization. those cardiac surgery We specific. this year in second And critical expect publications

those out great. roll going select And a more any And then the how, into just those into you're once color this there identified? time DaVita have if on out then been rolled other -- select it's that has the There's on little frame territories? to Okay, one established what's to been roll markets it into been agreement. markets out

Nuwellis. where and to DaVita centers so have identified this And we where do handful has the us Yes, we account good for a is presence ideal of start pilot. the

to now in multi-treatment lot is rooms start in year. them. patients with hospital treating treated expect in right accounts. a patients conversations having steps of DaVita's There this we of November And start are before We the we in

this November of year. In

great. on you that just the and, you Okay, do feel cut lean cash at this cut then point? to any, as point size right burn there there burn but its are the as I costs know, be you've other at is at control be and And costs company the this think like cash or can is know could any

pediatric trial, device. cut You playing in future. know, as a investing significant cutting well ways there development multi-center We're reverse we're more expenses, expenses dollars as balance to and the but is always in trial, the our randomized between of our

here streamlined our We have in office. the home also operations

and believe as changes prolong those to an efficient well well are with we positioned view of territories, consolidation our of as that the organization we the have runway. So

have I'll as in add, we number year with would the fees expect. negotiation of you including first of Anthony, professional had just Zavita the agreement, the a high of associated activities, half

So the half in as overall second would expect, professional well. expect year the fees we lower I of

Nestor. Okay, Lynn. All Thanks, right, great. That's thanks, helpful.

you, Anthony. Thank

Markets. next O'Neil is question of Capital from Our Brooks Street Lake

everyone. morning, Good

really in So I'll assuming bit. product. just really guess, opportunity I that a DaVita follow It on promoting substantial me, they with is questions Anthony's engaged the get guys, you for little the strikes

inflection in pediatric put the some start expect are you I selling And So to But we they're realistic the REVERSE are a meaningful of the impact. what's this timeframe you that what or trial which to the -- more impact device? in the expectations basket be at revenues you your November. what going are And said, of thinking agreement company, in DaVita can could or for the Anthony, would for sort have? the eggs think you

make me I the see, points if unwind to let there. that you Well, can three were trying

Yeah.

Okay.

They this is be the I an point the all, ours. inflection four of that a more is for lot have do times sales contracts. on First us. Their believe going accounts of to organization size

and they clinical mature have so And very team. extensive a

great has expectations, lot I a will to we in be as that going to Regarding pilot. learn that's deal and answer learn doing We're which quantification May we before. the the started, pilot last the the what I already during And are mentioned pilot, until have potential the given Did That's about the of this also year. time all? next to the of successful pilot a what is collaboration.

Yeah. Okay.

clearly. You

am add I as REVERSE, going to For well.

trajectory, through the So thinking Nestor said, in pilot next year. of revenue the the about of uplift most half as goes first

the once next of starts. a half significant uplift year second could think I commercialization be

treatment offering alone we They're their the cycle. vision. across to DaVita as And continuing And not to in DaVita. mentioned to hospital a we this products. in sell we're is And really a that headwinds doesn't see the the call product factor we're capital purchase the in just have from model, that. in sell centers

have that for be that a to also a capital us around will cycle. So, tailwind really

an and hospital mean, them know, this don't not to I be But hospital horse, I've understand heart me, like to beat with hospitals could asked this related Sure. about eliminate think or overtime. dealing every with dead time clawbacks no-brainer that's readmissions this other could unless I overload. patients outpatient relative think, I and in a to dealing providers to hospital seems probably failure about situation, reduce a readmissions really I I for the fluid to setting, a

these things from offer insight the of fairly love seems to And logical can you just And me. getting what in obvious it any I like and terms hospitals yet, even hard. being seems what with would been you've it's preventing doing, all traction

No, ways important. very patients, Yes. evidence well, agree Brooks. as med significant because to well with totally we have hospitals. as The working clinical be this clinical need We very you know a you, and as that to in technology impact is is patient, tech, providers economic

why in in time, a going to trial same REVERSE conduct continue seven trial, the And this that the we data reimbursement the therapy And to the and resources to towards we for also, try we in last continue information to is publications spend And months getting un-clinical but have received that be trial. that's the that we on of us to and guidelines. -- in the get work work need. lot

So that's, care. kind are of, to to and therapy standard the make be the taking path that this of we we continue focused

believe I be… right. All it should

not the intravenous and has have mentioned, with a that easy these the that going Dr. despite to overload. trajectory more diuretics from say available just has ways treated Jefferies patients of of lot remove technology there change was predictable fact patients, oral suffering are it's been medicine from to fluid most been when to fluid as for I that of

still years I failure is that. every of one number and it is get hospital was medicine ago cause same I of the area today. heart that readmissions the across mean, few data a fluid the that overload

what the symptoms heart of Yes. number due data working. them quarter is patients our We We of last there are that with method hospitalizations, believe are treated that to second increased fluid the of is over Aquadex of of year. is showing million that, of by XX% XX% And the the overload. that failure Brooks

is provided to to the continue number we we the So the that physicians. that increase because of clinical data the utilization, treated, patients of and have

right. to All I believe good. That's continue

Brooks. continue Yeah, believing,

Thank you. Right.

Thank you, Brooks.

you. Thank

Jaramillo to back for turn Mr. the This closing our over any conference concludes remarks. I'd question-and-answer session. to like

I how about conclusion, our In operator. I you, thank future. Well, reiterate to am want excited

Aquadex will the patients a the resistant new to with evidence pediatric of the therapy, to ultrafiltration On growing in our all which participating diuretics, next month, September available archive collaboration chat and today pipeline of fluid product and be make the to of our Showcase. section care clinical of DaVita, new of will Nuwellis standard efforts Growth overload body standard Our current Group supports the Emerging fireside website. and care. on XXst access be Gilmartin virtual the is Investors available at the Live

as as to field. lives be able you, not our I patients would would in to the like transforming conclude stakeholders, nurses, key and we well advances fluid of employees, call, overload. Without patients all we achieve As in workers the our from physicians, thank suffering healthcare stockholders,

your for you and Thank support. ongoing engagement

you conference has The concluded. presentation. today's for Thank now attending

your disconnect lines. now may You