My notes for the earnings call:

I’ll do a separate post in the analysis of the results and will redo my valuation then.

Highlights:

• They reiterated the contract with Stedical Scientific to sell PermeaDerm to Burns/Trauma centres in the US.
•  Launch is in March so expect an update in the next quarterly report.
• They are open to offering other complementary products needed for the same customer set as RECELL. Actively looking to find a dermal matrix product partner (Polynovo??)

• Partnering with PolyMedics as to be their 3^rd party reseller to start delivering to Germany, Austria, and Switzerland
• Expecting to sign more 3rd party resellers and have all countries in Europe covered in the next 6 to 12 months.
• Sales will be slow initially but should build throughout the year (I hope they start breaking out sales by region so we can see progress)
• Can’t recall any mention of the progress in Japan.

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• Manufacturing of the next gen machine, RECELL GO, to be done in house.
•  The machine will be offered free of charge to customers. Revenue to come from the high margin consumables.
•  Expecting RECELL GO US approval in May; Q3 for Europe.
• Additional product RECELL GO Mini to be used for small use cases, < 500 sq cm. Expect to apply for FDA approval at the end of the year

• Vitiligo – Expect TONE study to be complete at the end of 2024 and to start roll out by the end of 2025.

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• Financials and Guidance:
• Debt funding received $40m USD with $50m more available if they hit certain financial milestones.  
• Expecting profitability by Q3 2025 and not need any additional capital to get there.
• Expecting growth to accelerate with revenue up 55-70 % in 2024 over 2023. This comes from a backlog of over 100 hospitals in the VAC process. The increased indications (from burns to other wounds) have 4 times the use cases but increases the time to approval within hospitals.
• Sales team will expand from 70 to 108 people by the end of March – But the implication here was staff growth will slow from this point.
• They also implied R&D expenses should reduces as the TONE study finishes.

What I liked:

• Good growth in the quarter.
• Clear guidance to profitability, expansion strategy, and product road map. There is a lot to hold them accountable to in future earnings calls.

What I didn’t like:

• Taking on debt while being unprofitable. At this stage is seems like debt was the smart choice for shareholders – however it means they are more fragile than I would like; it only takes a speed bump, and then they must raise capital at a less favourable time.
• Giving the RECEL GO away for free – I’m sure they have done the commercials for this, and it makes sense – but I thought you’d at least sell it at cost.