Avinger, Inc. (AVGR) Q3 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture. While there are positives like improved gross margins and a strategic partnership with Zylox, revenue has slightly declined, and significant risks remain, such as regulatory challenges and competitive pressures. The Q&A session reveals optimism about product reception but also highlights uncertainties in the partnership with Zylox. With no announced shareholder return plans and ongoing financial challenges, the stock price is likely to remain stable, resulting in a neutral sentiment.
Key Financial Performance
Total Revenue $1.7 million, down slightly from $1.8 million in both the previous quarter and the same period last year. This aligns with the strategic decision to concentrate field support on higher-volume user sites while significantly reducing the peripheral sales team.
Gross Margin 26%, increased from 20% in the second quarter of 2024 and 21% in the third quarter of 2023, reflecting improved operating efficiency following the strategic realignment.
Operating Expenses $4.1 million, compared with $4.5 million in the second quarter of 2024 and $4.4 million in the third quarter of 2023, due to a headcount reduction of approximately 24% as part of the cost savings initiative.
Net Loss $3.7 million, reflecting a 15% improvement compared to $4.4 million in the second quarter of 2024 and a 17% improvement compared to $4.5 million in the third quarter of 2023.
Adjusted EBITDA Loss of $3.4 million, a 12% improvement compared to a loss of $3.8 million in the second quarter of 2024, and a 10% improvement compared to a loss of $3.7 million in the third quarter of 2023.
Cash and Cash Equivalents $5.9 million as of September 30, 2024.
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Operating Highlights
Pantheris LV: Full commercial launch of the Pantheris LV large vessel peripheral atherectomy catheter, designed to streamline the atherectomy procedure.
Tigereye ST: Ongoing commercialization of the Tigereye ST crossing catheter.
Coronary CTO Crossing System: Development of an image-guided CTO crossing system based on proprietary optical coherence tomography (OCT) technology.
Zylox Partnership: Strategic partnership with Zylox-Tonbridge for market access in China, including regulatory filings and manufacturing capabilities.
Cost Savings Program: Implemented a cost savings program reducing headcount by 24%, leading to improved operating costs and efficiency.
Sales Team Efficiency: Maintained approximately 90% of revenue with a reduced sales team, focusing on high-value accounts.
Gross Margin Improvement: Gross margin increased to 26% from 20% in the previous quarter.
Regulatory Strategy: Completed Phase III testing for the coronary CTO crossing system and submitted a presubmission package to the FDA.
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Risk or Challenges
Regulatory Risks: The company is navigating the regulatory landscape with the FDA and NMPA in China, which involves rigorous testing and approval processes. Delays or complications in these processes could impact product launches and market entry.
Competitive Pressures: Avinger faces competition in the vascular device market, particularly with the introduction of new products like the Pantheris LV. The success of these products depends on their adoption by physicians and the ability to differentiate from existing solutions.
Supply Chain Challenges: The partnership with Zylox-Tonbridge for manufacturing in China introduces potential supply chain risks, including the need for successful scale-up of manufacturing capabilities and ensuring quality control.
Economic Factors: The company’s financial performance is sensitive to broader economic conditions, which could affect hospital budgets and spending on medical devices, particularly in the context of cost-saving measures.
Operational Risks: The significant reduction in the sales team (24% cut) poses risks related to maintaining revenue levels and supporting clinical sites effectively, which could impact overall sales performance.
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Guidance & Outlook
Cost Savings Program: Implemented a cost savings program that reduced overall head count by 24%, including a one-third reduction in the commercial team.
Pantheris LV Launch: Expanded the Pantheris LV large vessel atherectomy system to full commercial launch, showing a 20% increase in revenue compared to the previous quarter.
Coronary Program Development: Developed a coronary CTO crossing system, completed Phase III testing, and prepared for FDA IDE application.
Partnership with Zylox-Tonbridge: Strategic partnership for market access in China, including investment alignment, regulatory filings, and manufacturing capabilities.
Revenue Expectations: Total revenue for Q3 2024 was $1.7 million, down slightly from $1.8 million in previous quarters.
Gross Margin: Gross margin improved to 26% in Q3 2024 from 20% in Q2 2024.
Net Loss: Net loss for Q3 2024 was $3.7 million, reflecting a 15% improvement compared to Q2 2024.
Regulatory Approval Timeline: Anticipate regulatory approval in China for products in the second half of 2025.
Manufacturing Scale-Up: Zylox expected to complete full manufacturing scale-up for Avinger devices by mid-2025.
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Shareholder Return Plan
Equity Investment by Zylox: Zylox made a substantial equity investment in Avinger, aligning their interests as shareholders.
Royalty Bearing Sales: Sales of Avinger products in the Zylox territory will be royalty bearing for Avinger.
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Key Q&A
Q:What are you hearing from the physicians regarding the Pantheris catheter?
A:Physicians are pleased with the simplicity of operation and the improvements made to streamline the procedure, leading to a 20% increase in Pantheris LV revenue compared to the previous quarter.
Q:How sure are you that Zylox will get the approval in time and how much more work is needed for commercialization?
A:We have good visibility on Zylox's progress and are confident that the remainder of filings will be completed by the end of this year, with regulatory approval anticipated in the second half of 2025. Zylox is also developing their manufacturing capabilities, which is on track.
Q:Review of Unclear Management Responses
A:Management's response regarding the timeline for Zylox's regulatory approval was somewhat vague, lacking specific details on the exact steps remaining and potential risks involved.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CTO crossing
China manufacturing
Dr
Lightbox imaging
RK
Subainati
approval process
commercialization
component
cost manufacturing
cost saving
day
device designation
efficiency realignment
facility
floor
imaging console
improvement loss
line
loss improvement
manufacturing scale
meantime
need
pathway
patient outcome
people China
presubmission
product people
protocol
review
scale device
self
testing process
type testing
AVGR Transcript
Avinger, Inc. (AVGR) Q3 2024 Earnings Call Transcript
Unknown11-8
The earnings call presents a mixed picture. While there are positives like improved gross margins and a strategic partnership with Zylox, revenue has slightly declined, and significant risks remain, such as regulatory challenges and competitive pressures. The Q&A session reveals optimism about product reception but also highlights uncertainties in the partnership with Zylox. With no announced shareholder return plans and ongoing financial challenges, the stock price is likely to remain stable, resulting in a neutral sentiment.
Avinger, Inc. (AVGR) Q2 2024 Earnings Call Transcript
Neutral8-9
Avinger, Inc. (AVGR) Q4 2023 Earnings Call Transcript
Unknown3-20
The earnings call reveals significant challenges: declining gross margins, increased financial losses, and uncertain market entry in China. The delay in sales force productivity and the pressure to meet revenue milestones further exacerbate concerns. Despite potential market opportunities in China, the current financial health and execution risks suggest a negative stock price reaction.
Avinger, Inc. (AVGR) Q3 2023 Earnings Call Transcript
Neutral10-26
AVGR Report
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