Biotricity, Inc. (BTCY) Earnings Call Transcript & Summary

Welcome. We are here with Waqaas Al-Siddiq from Biotricity. Biotricity is reforming the health care market by bridging the gap in remote monitoring and chronic care management. Doctors and patients trust Biotricity's unparalleled standard for preventative and personal care, including diagnostic and post diagnostic solutions for chronic conditions. Go ahead and start your presentation whenever you're ready.

Thank you, Kathy, and thank you, everybody, for joining today to learn a little bit about Biotricity and what we're doing in the field of remote monitoring. To start off, just a standard forward-looking statement. Some of the things that we're talking about are focused on the future and what we believe we can accomplish in the company. At Biotricity, we're very excited right now. We believe that we are at the cusp of really an interesting time in our life cycle as a company. COVID has certainly been a big deal in 2020. And what it's done for remote patient monitoring, it's really focused on the importance of -- and an awareness of remote monitoring as opposed to the traditional approach of going into the clinic and getting diagnosed or recording data. So whereas in aspects COVID has impacted every business, it has also created a focus on and an importance around telemedicine and remote monitoring, which is a core focus of Biotricity. Today, we have our FDA approved product, the Bioflux, which is used by about 500 physicians across 20 states. We are experiencing triple-digit growth, and the focus of our organization over the next 18 months and 2 years is really to go deeper into this ecosystem. So today, we've -- like I've said, we've got 500 cardiologists across about 200 centers in 20 states. We're touching a small fraction of the patient population right now within these clinics, and the idea is to execute on our product pipeline to go deeper into those accounts and really expand. The first anchor of that is a product that we're working on, which is called the Biotres, which is a Holter product, and that's really going to expand our total addressable market, which is $1 billion with the Bioflux product and moved that into a $4 billion market. And so we expect and we've provided guidance to show that we're going to be continuing this triple-digit growth as we continue to execute on our product pipeline. We are also working on establishing partnerships now because we've got an ecosystem and a big enough patient population,that's connected to that ecosystem, we are now in a position to really build relationships. So we're very excited about 2021 and 2022 because that's going to be really the foundation of building relationships and partnerships to expand Biotricity across the country. In terms of our focus today, we're really focused on complex cardiac as market. We do have a remote patient monitoring platform, but we've really applied our technology and our expertise into the cardiac space because it is the #1 killer, 1 in 4 Americans suffer from it, and you've got a number of expenses in terms of hospital admissions and comorbidities that all relate to cardiac. And what I mean by comorbidities is someone's got a kidney issue, they're at high-risk for cardiac issues. And then you've got patients that have diabetes and cardiac, and hypertension and cardiac. And so cardiac has become a growing field, not just because of the fact that it is the #1 killer, but also because there are individuals that have other diseases that have higher risk for cardiac. So it became this -- our focus is at Biotricity is to first focus on cardiac, and then go and expand out into comorbidities. And the reason why this is such an extensive and an important area, outside of the fact that it's the #1 killer, it's because the costs are continuously rising because the real cost when it comes to a patient is that these diseases have no cure. So it's a lifelong illness. So what you're doing is you're really following a patient through their journey. So today, Biotricity lives in the first circle. We perform diagnostic tests so that a cardiologist can make an interventional procedure. And then the cardiologist will either provide a medication or procedure. But then it goes into continuous management and follow-up. How do you get the patient to maintain and not get worse? How do you move into prevention and management? And our vision at Biotricity in our product road map is basically to go deeper into this patient journey and align our product road map to really focus on not just the diagnostic space, which is the circles that we're currently living in, but to go into continuous management and follow-up. And that's where we not only expand the total market for the company, but also accelerate our growth. So where do we see this and how are we doing it? So Bioflux, which is our MCT product, this is our first product. It's usage is about 5% in the clinic, and it's really focused on high-end acute care where you're talking about a patient that is high-risk. You're worried that something is going to happen to them, so you want a device that's monitoring actively and can collect the data and alert somebody if it's required. So -- and our business model across all of these is really to focus on providing technology as a service where the physician is generating revenue. So that's what we're doing today with the Bioflux. The next product, which we will be filing for an FDA shortly is a Holter product, which is really passive recording. So you've got -- you still need to do a diagnostics, you still have to diagnose the patient, but it's lower-risk patients, so you're not worried that something is going to happen to them while they're on the study. So this is where the Holter market will come in, and it expands our market. And the usage of this is higher than MCT because in the cardiac space, a smaller percentage of your patients actually are high-risk as opposed to at risk. And again, our model is the same revenue for the doctor and technology as a service. And then we want to move into really management and engagement with the patient to help them manage once they've been diagnosed on our MCT or Holter product. And again, same philosophy, technology as a service, create a revenue stream for the doctor, create a revenue stream for Biotricity. And so I kind of talk about where we are, and I sort of touched on it earlier, but I'd like to mention it one more time is that we are really at an exciting time at the company where we've been expanding. And now we've got 500 cardiologists across 19 states now. It's slightly out of date. And we've got 900,000 patients within these doctor clinics because every physician has approximately 2,000 patients. We're experiencing 100% reorder rate, and we have a 99% retention rate with our clinics. So we're not really losing accounts, we're really maintaining. And what this has provided is, I talked about it earlier, is about partnerships. We've got a big enough ecosystem and a large enough network now that, as we continue to sell and grow this network, we become a very good partner for anybody that wants to look at working with somebody or aligning with somebody who has a footprint that's wide enough to support another product or complementary product. And on top of that, our product pipeline, as we launch our Holter product, this is a product that's going to go into the entire ecosystem. It's not how we started and launched the product officially 18 months ago with the Bioflux, where we had to stitch together this network and sell clinic by clinic. Now we're going in and we can sell across all 450 doctors our Holter product when it's announced. So to kind of talk about how are we differentiating -- I don't know why the slide seems to be skipping. So I'm just going to get out of full-screen mode. I apologize for that. And really, Biotricity as a company, we're getting -- we're at a point now where there are 3 aspects which are really aligning in this idea of disruption for us. We use a disruptive business model, which is technology as a service, in aligning our technology road maps and products to enable physicians to build directly with insurance. And we keep -- we charge a technology fee. And everything that we build and develop is aligned with CPT and insurance, so there's already a business model that exists. We focus on best-in-breed technology, so disruptive technology, meaning how do we get the cheaper, better, faster approach on the technology side. And those 2 have really facilitated our ability to build this network. And now we're going to benefit from the network effect, which simply just accelerates our growth because you've got this -- every subsequent product can be sold across the network as opposed to in doing what -- the hard work that we've done over the last 2 years. And to kind of summarize where are we at today, where are we going, we've got a very visible recurring revenue model that is accelerating our growth. It's Medicare and Medicaid-reimbursable, and we have shown sequential growth for 18 months. We expect to continue this triple-digit growth and we are focusing on 2 things: obviously, growing our core business and continuing this approach of closing and expanding our network, but simultaneously trying to go deeper with our product pipeline. And that really expands our total addressable market. Whereas today, with one product, our total addressable market is $1 billion, once we announce the Holter product, it's $4 billion. And as we get into disease management and ongoing management, it becomes a $50 billion market. And so really, our focus in the next 18 months is to simultaneously go deep, while continuing to do what has made us successful to this time -- up until this time, which is to close more accounts and really expand our network. And with that, I'll turn it back over to Kelly.

Thank you so much for that wonderful presentation. I will now invite our panelists to turn on their video and audio to ask questions. And Waqaas, whenever you have a chance, you can end the screen share. Wonderful. Okay, and we have about 9 minutes for questions.

Waqaas, it's Steve. Just to kind of, I guess, clarify and get a sense of the numbers and the revenue model and what -- how the trajectory looks like, say, over the course of the next 12 to 24 months. If I understand it right, so Bioflux is revenue-generating now and you expect triple-digit growth, which -- what are the numbers around that specifically? And then when does Holter start to become more meaningful in -- within that?

Yes, yes. Excellent question. So today, we have the Bioflux if you look at our filings, I mean we started this year at a run rate of about $1.4 million. We did $1 million in our first year. We expect to do -- depending on what happens with the new lockdown and whatnot, but we expect anywhere to be $3.5 million to $4 million in terms of revenue with the Bioflux ending this year, and we expect to continue that type of growth curve into our next fiscal year, which is 2021. Because, again, it's a recurring revenue model. So as long as we sell, our next month is bigger. So if we don't sell because there's been a lockdown, then we will remain flat. But the way it works is those devices -- if we close an account today, that account doesn't really open up. And if they get their devices, they start opening up the next month. So if we close accounts this month, then next month is, by and large, bigger for the most part, and that trend continues. So it's very much a focus of us to obviously sell every month. And in terms of the Holter product, how is that going to parlay and really become meaningful? We're going to file for our FDA clearance [ financing ] by the end of the year, and there's a life cycle for when those clearances take place. We expect 3 to 4 months for that clearance to come forward. So I think you'll really see the revenue of that start trickling in, in the second quarter of next year -- of calendar quarter. And you really see meaningful revenue where it actually becomes a line item that you can actually see probably towards the end of Q3, beginning of Q4 or calendar year next year.

Okay. So as it relates to trickling in the second quarter, that will be pretty encouraging.

Correct.

Okay.

Yes. And I think that's just because we have a network effect, right? We've already got a bunch of doctors that said, "Hey, if you have that product and it's FDA-cleared and have it a level, we would be a customer." So we're selling into our existing customers.

Okay. And then from a capital and balance sheet perspective, is there -- so to get you through 2021 and getting -- going into 2022, how do you think about kind of financing? And financing -- yes, financing the growth into that?

Yes. So we've been very capital efficient. We have raised capital and I'm sure people have seen them in the 8-k recently as well. We bring in capital at different periods in time that we feel, and we will need capital because we are in the red right now, and we're really pursuing growth. So the idea for us is to do a financing. And we also really want to focus on really trying to bring capital in to facilitate growth. So capital is a big part of our strategy, and we do plan on bringing in additional capital into the company. We want to take advantage of a couple of the milestones that we have right now, which are the FDA on the Holter product, get into the new year and show our growth. And then, of course, capital will have to be brought in. Because we think that -- not that we can oversimplify it, but really, things have been working. The product is working. We're getting good traction. How can we accelerate that? We need capital to have more feet on the ground.

Hi. I've got a dumb question here.

No dumb questions.

So who pays for the product? Is it the insurance group companies?

So the physician has to buy the product, but insurance pays for the diagnostics. So if you were a doctor -- if I was a doctor and you sold -- and Biotricity sold to me, I would buy the hardware and that would be my initial investment, if you will. And then when I use it on patient A, because it's a reusable device, I bill insurance saying, "Hey, I'm doing a diagnosis on Eric." And then your insurance would essentially pay me, and then I have a technology fee that I have to pay Biotricity on a pay-per-use model. So from a doctor's perspective, the cost of the hardware is so cheap that after 1 or 2 uses, it's already breakeven for me. So I -- from a doctor perspective, it's a very profitable revenue stream for me.

So the doctor will buy, whatever, a dozen or so of these, send it home with a person for some amount of time, and then the insurance company will pay the doctor for that patient to use it?

Exactly. So -- and what's great is that the patient has to use it because they can't get -- the doctor can't do a diagnosis. So if you're complaining of something, you're like "Hey" -- I go to my cardiologist doctor like, "Well, I don't know what's going on with you. I need to do a diagnostic test." So he's got 12 of these devices sitting, puts it on 12 patients, says, "Okay, come back in a week." Patients put the devices on, they come back in a week, those devices get taken off, cleaned up and then put on a new set of 12 patients. And then the doctor reads the report and says, "Okay, based on what I'm seeing on the data that has come through, I'm going to sign you a medication or I'm going to do whatever it is that I want to do clinically."

And at the same time, you're capturing and keeping all that data, right?

Correct. Exactly. And it's all Medicare and Medicaid reimbursable, which is an important part, because you're not going to the doctor saying, "Hey, there -- this is a revenue stream or this is a cost -- an ROI or a [indiscernible] model." You're going to the doctor and saying, "Hey, you're doing diagnostics today, you're outsourcing, okay? How would you like to do it in-house? It's the same line that we need the same thing, but now you have better control over your patient and you generate revenue."

Okay. So, I'm sorry. The doctor generates revenue as well [ in their system ] to use that?

The insurance pays the doctor.

So they're paying you and the doctor?

The insurance pays the doctor, the doctor pays us.

Okay. Got you. I got you. Okay. And then do you have to get on some sort of a formulary with these insurance companies to -- for them to buy this?

So the insurance companies don't buy it, the doctor buys it. And a doctor will prescribe it, right? So we don't have to be on anything with the insurance company because it's really -- they're paying the doctor. If we were getting paid from the insurance company, then yes, we would have to negotiate with the insurance company. But our model at Biotricity is very much -- we don't want to get into the clinical round. We are a technology player. So we just say, "Hey, use the technology. You buy the hardware. The software, you pay a software fee for to use while you're -- whenever you put it on a patient, and that cost only shows up when you actually use it. If you don't use it, you don't -- you're not charged."

Interesting. If -- Chad, if you've something, go ahead and ask. If not, I'll ask another.

Yes. No, you -- and you guys covered a lot of my stuff. But maybe just to ask Steve's question slightly differently on the capital side, so what do you anticipate the revenue breakeven to be? I know as the revenue grows, you're going to probably continue to reinvest. But just kind of ballpark. And then secondly, on competition, and I'm not that familiar with this side of the market. But I mean the first name that I think of is something like a biotelemetry, right, where they do some outpatient monitoring. And so maybe just kind of compare and contrast why you win, right? And how do you compete against some bigger companies? So...

For sure. So I'll answer the first question first. So when it comes to breakeven, so if you look at the biggest companies that have really accelerated and had growth. I mean they were not really making money for a very long time, right? Even Livongo is losing money today. So they took a lot of capital in. So with that said, we're pursuing growth and value. If we wanted to focus on breakeven, we can be breakeven in 18 months. And that would be basically, we would sacrifice growth. We would stop investing in growth. I think what is actually going to happen is more like we will be about to going to the black, and then we will raise more capital and go back into the red for expansion. So I think that's -- and that's because we're pursuing -- we see $1 billion opportunity, and we really think we have a shot, and we've got best-in-class technology right now, and we're maintaining that edge and maintaining that barrier. So it's an opportunity that we should capitalize on. To your second question about the market, there are -- in the world of outpatient monitoring, they're -- including us, there are only 5 companies that own technology in terms of having built everything soup to nuts, own all of the software, the clearances and all of that. BioTelemetry does do a patient monitoring like us, their business model is different. They are a clinical provider. So if I came to you as a patient, you would send me to BioTelemetry. BioTelemetry would send me the hardware, they would hook me up, they would bill insurance directly, and they would collect the reimbursement. That you, as a doctor, would get paid $25 to read the report. In our case, it's completely flipped. We allow you to [indiscernible] everything. We provide all the technology to you as a doctor, so you're billing directly yourself. You're collecting all of the capital, and it's significant. So the difference is you're making $25 versus $500 and we have a small...

Okay.

Thank you so much. Oh, sorry.

Right. It's fine. Thank you very much.

Appreciate your presentation and for your questions. We're going to go ahead and move on to the next one.

Thanks, Waqaas.

Thank you.