Covalon Technologies Ltd. (COV) Earnings Call Transcript & Summary

Welcome to the Annual General Meeting of Shareholders of Covalon Technologies Ltd. Please note that the meeting is being recorded. I would like to introduce Mr. Amir Boloor, Chief Chair of Covalon. Mr. Boloor, the floor is yours.

Thank you, operator. Good afternoon, ladies and gentlemen, and welcome to the Annual General Meeting of Shareholders of Covalon Technologies Ltd. My name is Amir Boloor, and I'm the Executive Chair of Covalon. Also in attendance from Covalon are Brent Ashton, Covalon's new Chief Executive Officer and Director; Katie Martinovich, Covalon's Interim Chief Financial Officer; and Saleha Assadzada, Executive Assistant to the CEO. As this meeting is being held virtually via live webcast, it is necessary to set out a few rules for the orderly conduct of the meeting. Questions with regard to a motion can be submitted by a registered shareholder or duly appointed proxyholder using the questions feature of the TSX Trust meeting platform. Please note that there will be a slight delay in the publication of the communications received. [Operator Instructions]. Only questions regarding the procedural matters are directly related to the motions before the meeting may be addressed during the meeting. Other unrelated questions will be addressed during the question period at the end of the meeting. Voting on all matters today will be conducted by a single electronic poll. Registered shareholders and duly appointed proxyholders may vote on each business item at any point during the meeting if they have signed in with a control number. Only registered shareholders and duly appointed proxyholders of the corporation are permitted to participate in the voting. The questions feature is accessible on the left side of the screen. The Annual General Meeting of Shareholders of Covalon Technologies will now come to order. With the consent of the meeting, Brent Ashton, Covalon's Chief Executive Officer and Director, will now address the legal formalities of the meeting and Navin Kissoon of Stikeman Elliott LLP, will act as Secretary of the Meeting. Saleha Assadzada will act as moderator to help with the virtual communication. Brent, I will now pass it over to you.

Okay. Thank you very much, Amir, and thank you to our shareholders for attending this meeting virtually. We will now proceed with the formal portion of today's meeting. To expedite this formal part of the meeting, I will move the item of business and take such motion as seconded with no further action required. I would ask Amy Kam of TSX Trust Company to act as scrutineer for this meeting. The purpose of today's meeting was set out in the Notice of Annual Meeting of Shareholders and the Management Information Circular dated January 30, 2024. I do not propose to read the notice, however, copies of the meeting materials are available under the corporation's profile on the SEDAR+ website. I direct that a copy of the notice of meeting be attached to the minutes of this meeting. I've been advised that the notice calling this meeting, together with the management proxy circular and the form of proxy, were mailed on February 12, 2024, to shareholders of record as at January 17, 2024 in accordance with applicable law. A copy was also mailed to each of the corporation's directors and to its auditor. TSX Trust Company has provided proof of service of such mailing, and I direct that a copy of such proof of service be attached to the minutes of this meeting. According to registrations, the scrutineer has advised me that there are a total of 61 shareholders present in-person or by proxy representing a total of 10.7 million shares that are entitled to vote at this meeting. That is approximately 43% of outstanding shares. I therefore declare that a quorum is present and accordingly, the meeting is constituted for the transaction of business. Registered shareholders and duly appointed proxyholders, attending this meeting, may address the meeting when there is a call to discuss a motion before the meeting. Should you like to address the chair on a motion, please type your messages into the questions section. If there is any discussion or question, the question will be read aloud. Today, we will be conducting the following orders of business: The presentation of Covalon Technologies Limited annual financial statements for the year ended September 30, 2023; the election of Covalon Technologies Limited's directors; and the appointment of Covalon Technologies Limited's auditor. As previously noted, we will conduct the votes on these matters by a single electronic poll. On a poll, every shareholder entitled to vote on the matter has 1-vote in respect of each share entitled to be voted on the matter and held by that shareholder. The poll will be open for all resolutions at the same time. This will allow you to choose to vote on each resolution immediately or wait until the conclusion of discussion on each resolution prior to casting your vote. If you have already submitted your vote by proxy, you should not vote during the meeting unless you wish to change your vote. I now declare the polls open. [Voting]

I now declare that this meeting is regularly called and properly constituted for the transaction of business. The first formal item of business is the presentation of Covalon Technologies Limited audited consolidated financial statements for the year ended September 30, 2023, together with the auditor's report thereon. As these financial statements in this report were previously provided, I would not propose to review them as part of the formal part of the meeting. After the formal part of the meeting has been completed and the various presentations made, we will be pleased to respond to any questions shareholders may have on these financial statements. We now move to the next point on today's agenda. The next matter to be dealt with is the election of the directors. As indicated in the circular, management is nominating 7 directors for election by the shareholders. Management nominates Amir Boloor, Brent Ashton, Joseph Cordiano, Martin Goldfarb, Dr. Samantha Nutt, Abe Schwartz and Ron Smith. Each of the persons nominated has confirmed that he or she is prepared to serve as a director. Each of them qualifies as a director under the provisions of the Business Corporations Act of Ontario. Are there any further nominations?

There are no further nominations.

As there are no further nominations, I declare the nominations closed. I move and take as seconded the motion with respect to the resolution that the following persons be, and they are hereby elected directors of the corporation to hold office until the next Annual Meeting of the Shareholders of the corporation or until their respective successors are duly appointed, Brent Ashton, Amir Boloor, Joseph Cordiano, Martin Goldfarb, Samantha Nutt, Abe Schwartz and Ron Smith. Is there any discussion on the motion?

There is no discussion at this time.

As there is no discussion, the motion is now on the floor. The Business Corporations Act of Ontario requires that the Board of Directors be elected. Proxies have been solicited for each of the 7 proposed qualified persons listed in the management information circular. The form of proxy for voting on the election of directors sets out each proposed nominee separately and allows shareholders to vote for each director individually. As mentioned at the beginning of this meeting, voting today will be conducted by a single electronic poll. You may choose to vote on each resolution immediately or wait until the conclusion of discussion on each resolution prior to casting your vote. We will now continue with the next item of business. The next matter to be dealt with is the appointment of PricewaterhouseCoopers, LLP, Chartered Accountants to serve as auditor of the corporation until the close of the next Annual Meeting of Shareholders or until its successor is duly appointed, and to authorize the directors of the corporation to fix the remuneration of the auditor. I move and take a second at the motion. Does anyone wish to discuss the motion?

There is no discussion at this time.

Thank you. The motion is now on the floor. I now call for any registered shareholders or proxyholders who have not yet voted in the matters discussed in this meeting to please do so now. [Voting]

I now declare the polls closed. Based on the preliminary scrutineers' report, I declare all motions are carry. I direct that the results of the voting be included in the minutes of this meeting. This completes the matters of business to be conducted as set out in the notice. As there is no more formal business to which we must attend, I would request a motion to terminate the formal portion of the meeting. I move and take as seconded the motion. Does anyone wish to discuss the motion?

There is no discussion at this time.

As there is no discussion, this concludes the formal orders of business for today. On behalf of the directors and management, I would like to thank you for your support, and thank you for joining us today. I invite all of you to stay for our business presentation. [Operator Instructions] You are able to ask questions regardless of whether you registered for this call as a registered shareholder, a duly appointed proxyholder or a guest. Okay. Can we start the presentation, the business presentation. Okay. There we go. Well, good morning for those not on East Coast time or Central time, and good afternoon for those of you on this side of the time zone. About 2 months ago, I started in my role as the Chief Executive Officer of Covalon. It's an incredible honor to be presenting here today representing the company. It's certainly been a whirlwind 2 months, that's for sure. I've had the opportunity to meet with the vast majority of the Covalon team as well as a number of other stakeholders, patients, customers, business partners, board members and shareholders. Across all of these interactions, I've been so impressed with the passion that exists for Covalon and our mission and we'll dive into this a bit more throughout the presentation. As I indicated before, along the way, you might have a question to ask. And I would ask that you submit these via the questions button on the TSX Trust web application so that we can answer these during our Q&A session at the end. Going to the next slide. So first off, I do need to draw your attention to our forward-looking statements. I would encourage you to read our annual and quarterly public filings, which include our financial statements and management discussion and analysis. These are all available on our website and on SEDAR+. Next slide. I kicked off by talking about the passion that exists for our mission, which you can see here on the screen. As you read it, you might be wondering, hey, what do we mean by our solutions are designed for patients and made for care providers. Well, yes, of course, we do design our products to address the needs of our patients. However, that's not all we do. The care providers as well are part of a patient's healing process. That could be a nurse, a doctor, a parent, perhaps a sibling or a guardian. We understand it can be difficult for them to deliver care as well. You might have a crying baby in the NICU, a child fearful of having his dressing change, a patient with a wound that just won't heal. We consider the entire experience when we design new solutions. We offer innovative, gentler and more compassionate options to aid patients and their care providers on their healing journey. Why do we do this? Why is this so important to us? Well, listen, we've all been patients at one point, or we've watched his loved ones went through a health challenge. And the reality here is that the pathway forward to get better often comes with pokes and prods and procedures that at best aren't very fun to go through and at worst could actually cause new problems or complications. I couldn't be prouder to lead a company that is committed to making the journey through these health challenges, the best journey possible, minimizing complications and pain and discomfort. Bottom line here, Covalon cares. Next slide, please. I've been really impressed with the team here at Covalon. It's been great to hear their stories of why they joined the company and about the work they're doing to advance us as a company. Since the start of January, we have made some key changes to our Covalon executive team shown here on the first row. In early January, we were delighted to be able to bring Kim Crooks in to lead our operations group. Kim has deep experience with Covalon as well as with Baxter and Bristol-Myers Squibb. She's off to a fantastic start driving progress with our operational teams. With the departure of Jason Gorel about a month ago, we took the opportunity to have Katie Martinovich, take on our CFO role on an interim basis. Katie is a strong CPA, who has been a leader within our finance team here at Covalon for the past 2 years, and has led a significant number of successful change initiatives to improve our financial processes and outcomes. It's been great to work closely with Katie and her new capacity. And with the recent departure of Mark Doolittle, we chose to consolidate our sales and marketing teams into one team led by Ron Hebert. This gives us 1 single point of accountability on our commercial side focused on the growth of the company. Ron is a seasoned business leader. In his 2 years here at Covalon, he has built strong relationships internally and externally and has a number of key wins under his belt. Prior to joining Covalon, Ron held leadership positions with Beckman Coulter, Siemens and Bayer Healthcare, among other med tech companies. We're also very lucky to have Dr. Val DiTizio and Greg Leszczynski on our executive team. Dr. DiTizio was one of the original founding scientists of the company as it spun out of the University of Toronto, and he has a really solid understanding of the technology platforms that Covalon deals with. Greg has been with Covalon for about 6 years and has been a strong partner with me as we think about our team and the culture we want to have as we move forward. On the second row, we have the additional members of the Covalon team that make up our Covalon leadership team, a truly fantastic group of individuals, who have been instrumental in advancing our company forward. In addition to the leadership teams shown here, we're also extremely proud of our full One Covalon team. As I've been meeting with team members in-person and virtually, as I indicated, I've been so impressed with their passion for our mission and in particular, how they've taken that passion into actions to elevate Covalon. Next slide, please. I mentioned earlier about Dr. DiTizio, and the origins of Covalon that started at the University of Toronto, which is about 25 kilometers east of our global headquarters here in Mississauga, Ontario. The innovation work that Dr. DiTizio and his colleagues initiated about 20 years ago, along with the focused work since then to drive new product lines and line extensions have spawned 3 distinct platforms. Each of these 3 platforms plays within large market segments that have moderate to high growth connected to them. The first one is our advanced wound care platform led by our Collagen Matrix dressings. For this platform, we generally go-to-market through strong partnerships on an OEM basis with leading companies in the space. The second platform is our portfolio of vascular access and postoperative dressings. These products are used for IVs and as dressings for incisions and play a supporting role in infection control. The gentle nature of these dressings have broad-based appeal, but are proving even more important for patient populations that have more at-risk skin, such as newborns, the elderly as well as oncology patients. We go-to-market on this product line with a focused commercial team for North America and through distribution partners for our international markets. And the third platform is our medical device coatings platform, where we deploy technology that allows for the bonding of certain chemicals to the surfaces of different catheters and other medical devices. These coatings can be engineered to improve lubricity, hemocompatibility, infection prevention and the controlled delivery of active pharmaceutical ingredients. This business platform has traditionally been a B2B go-to-market model. Next slide, please. At Covalon, we're directly tackling some really significant challenges for our customers and the patients they serve. Hospital-acquired infections and chronic non-healing wounds are recognized as top health care challenges that affect millions of patients and are responsible for significant cost burdens on the health care system. Any time an IV or urinary catheter is placed on a patient or if the patient undergoes surgery, there is a risk of developing infection, which can be deadly, extremely costly and put an incredible strain on patients, health care providers and health systems overall. Over the COVID-19 pandemic, hospitals saw sharp increases in bloodstream infection rates, and they have been seeking out new technologies and innovative approaches as part of the continued effort to bring infection rates down. Similarly, surgical site infections are a serious consequence that can occur from either a routine surgery. These infections lengthen recovery times, significantly add to hospitalization duration and may result in the need for a subsequent operation or at worst case death. Aside from the devastating impact on patients and the stress on providers, these hospital-acquired infections put a huge financial burden on the health care system. Across the United States and around the world, chronic wounds are a growing problem, fueled by an aging population and rising rates of diabetes. While there are encouraging signs that GLP-1 agonists such as Ozempic, have the potential to slow down the rise of type 2 diabetes, I don't think we're there yet to where we're seeing a significant impact. The consequences of chronic wounds that don't heal on their own are widespread and have clinical economic and social impact to the individual suffering, but also the support systems that surround them. Hospitals, wound clinics, home health organizations and other providers are motivated to address these challenges, and we have products that help them do just that. One infection is too many and healing a chronic wound can help a person get back on their feet oftentimes quite literally. Each of these clinical challenges including the skin safety and pain slide that you see at the bottom, which I'll talk more in depth for on a later slide, each of these require multipronged approaches to prevention. Covalon's products have proven themselves to be important pieces of the puzzle that clinicians around the globe have put trust in. Next slide, please. Moving from the big challenges that Covalon is solving for to some higher-level trends that we are seeing that we believe are going to have a favorable impact on Covalon. First is a really interesting one, and it's the shift that we're seeing around how providers, primarily in the U.S., surveil and adjudicate bloodstream infections and in parallel, how CMS, which is the Center for Medicare and Medicaid Services, scorecards and ultimately rewards or penalizes providers financially. The most common approach today is a focus around CLABSI or central line-associated bloodstream infections. As the name would suggest, this is a bloodstream infection that is attributed to a central line, larger catheters that are typically placed in the neck area and used on more critically ill patients. In the United States, this amounts to about 5 million CVCs placed in patients every year. And these are the source of a large number of bloodstream infections. There is a movement that is building though to shift the surveillance method to HOB or hospital onset bacteremia and fungemia. And one of the impacts of this would be that there would be a much more inclusive view of bloodstream infections, not just central lines, but also including midline catheters and peripheral IV catheters. Peripheral IV catheters are the most common type of catheter use. Chances are that almost everyone on this call has had one placed into the back of their hand or other location at one point in their life. Over 200 million PIVs, peripheral IV catheters were placed into patients in the United States in last year. While the overall rate of bloodstream infection occurrence is lower in peripheral lines versus central lines, it is more than made up for by the increased volume. We expect to see this shift to HOB contribute to an increasing focus on bloodstream infection prevention associated with peripheral IVs, which we think should have strong benefit for our IV Clear product. The second trend we are seeing is an increased clinical focus around preventing skin damage caused by the adhesives on medical devices such as IV or wound care dressings. The acrylate adhesives for many of these traditional dressings on the market today were developed 50 or more years ago and were designed to maximize the adhesion of the dressing to the skin. Unfortunately, when caregiver goes to remove these acrylate adhesive dressings, it can cause a lot of pain or damage to the skin and in turn, further complications. About 10 years ago, work was initiated to really focus on these challenges and the term MARSI, Medical Adhesive Related Skin Injuries was coined. Of late, we're seeing a lot more clinical focus on trying to minimize skin damage caused by medical adhesives. Covalon's wide range of gentle to skin silicone adhesive dressings offers a best of both worlds type outcome, good adhesion to the skin, but without the pain or skin damage upon removal. The third trend here are that there are many different clinical practice guidelines and the changes that they're recommending. The most recent version of the very influential Infusion Therapy Standards of Practice by the Infusion Nurses Society was released a couple of months ago. And one of the things that we noted was a dedicated section on home infusion therapy. Within this section, there was a stronger focus on protecting vascular access devices within the home environment -- within the home infusion environment, in fact. We think that this increased focus can have a strong benefit for our VALGuard product that we will talk about in a little bit. And outside of clinical practice, one of the many trends we are seeing that we believe has a benefit to Covalon is a focus by Integrated Delivery Networks or IDNs in the United States as well as health systems around the world looking to improve their supply chain resiliency. Almost every health system in the United States and around the world were burned in COVID by supply chain challenges related to critical to life products and supplies. One key aspect we have seen here under the supply chain resiliency banner is the desire by health systems to reduce their dependency on a single vendor for critical medical products. We believe this will continue to open doors for Covalon to become a valued supplier to more and more customers. Next slide. Now that you are grounded in some of the bigger challenges that Covalon helps our customers solve and some favorable trends, I'd like to take you on a quick look at some of our flagship products and how they differentiate versus other options available to clinicians. First, we'll start with ColActive Plus and ColActive Plus with silver, Covalon's patented formulation helps to maintain moisture balance of the wound for optimal healing. The materials in the dressing allow for the absorbence of up to 20x their own weight, which helps to enable less dressing changes. Our unique patented manufacturing process gives us a significant advantage over other players in the space. Moving to IV Clear, our soft and gentle silicone adhesive allows for, as I described earlier, that best of both worlds, solid securement of the IV catheter combined with an easy, pain-free dressing removal. In the last -- a couple of slides ago, we highlighted that increasing focus on MARSI and the fact that clinicians are putting more effort towards reducing skin damage caused by medical adhesives. And we think our IV Clear product, along with others, is a clear winner with this space. In addition to the gentle removal aspect of the dressing, the dual action antimicrobial, both chlorhexidine and silver offers broad-based antimicrobial protection to the patient. SurgiClear is a really innovative dressing that can be used for a variety of purposes, including postoperative incision management. In addition to being gentle to remove and having the dual action antimicrobial benefit, it's completely transparent, which allows for great visibility to the incision site, which is a really important benefit for clinicians. And last but not least on this slide, VALGuard is a novel addition to a hospital's infection prevention bundle. VALGuard offers a sealed protection for line connections and hubs to protect patients from contaminating their vascular access ports with potential sources of infection. We're seeing a really strong demand for this product in children's hospitals where these connection points used to end up in contact with a child's urine or feces or if the patient is mobile, these hubs tended to drag on the ground and get dirty as the patient walked around. With VALGuard, these important line connections and hubs stay protected from external gross contamination. Next slide, please. And extending from our products and their differentiation, we are extremely proud to count the providers and health systems on this page as customers of Covalon. With our strong focus on the U.S. children's hospital market, we've been able to achieve having our products used by 6 of the top 10 children's hospitals in the U.S. and in 9 of the top 10 children's hospitals for pediatric cancer treatment as ranked by the U.S. World and News Report. While pediatric patients have a very special place in our hearts here at Covalon, we believe that the benefits of our products naturally extend to adults as well. And as you can see here, we've had a lot of success with large acute care facilities and systems here in the United States and internationally as well. Next slide, please. As I sat down with the team to understand the recent history and what's been working well, I've been really impressed with the progress made in 2023. Certainly, no shortage of challenges to deal with like any company, but on this slide, you can see a selection of important achievements and outcomes that the team accomplished in 2023. A couple of highlights I'd like to focus on here. I was really impressed to see the work the team has done in developing a strong key opinion leader and webinar program. Our key opinion leader program is comprised of members of leading U.S. hospitals and has supported evidence generation, webinar education and the sharing of industry best practices. The webinar program, in particular, has helped to establish Covalon as a thought leader through engagement by many clinicians and patients across the U.S. and internationally. We've also developed a stronger partnership with AVA, the Association for Vascular Access. This has led to an increased awareness of Covalon solutions to the key clinicians that we help, and it's expanded various educational opportunities on our products. We also had a publication on VALGuard in the Journal of the Association for Vascular Access. This article was authored by pediatric Vascular Access expert, Darcy Doellman that was titled Guarding the CVAD, a new solution for an old problem. This was also published in the British Journal of Nursing. VALGuard is a really novel product, and interest in this product continues to increase. And on the operational front, a lot of strong work has gone into implementing a new ERP platform that will improve our accounting, our reporting and our customer service functionality, super, super foundational to our future growth as a company. Next slide, please. Some quick highlights around our fiscal year 2023 financial outcomes. We saw strong growth from both our U.S. and international businesses, with the U.S. business growing by more than 50% and the international business growing at 30%, combined the 2, and we achieved 47% top line growth in 2023. There was a significant margin improvement in 2023, although if we're fair, the comp in 2022 drove a part of that accomplishment for sure. I think it's worth noting here that the margin performance from 2023 has sustained into 2024. And as you may have seen in our Q1 earnings release, our Q1 2024 gross margin came in at 61%, so definitely sustaining, and we look forward to that continuing in the future. On the growth side, we see -- we are seeing a lot of positive outcomes from our work to strengthen and expand relationships with existing customers. On the margin side, we've done a lot of work to streamline our operations, optimizing internal processes and workflows to reduce the inefficiencies and operational costs. Next slide, please. Turning now to the balance sheet. A clear area of focus for Covalon is to stop our downward trend on cash. More on that later, but otherwise, we have a very solid balance sheet, strong cash on hand, zero debt, which I think in the current interest rate environment is a really strong benefit for our company. I've talked to other business leaders, who are really challenged by the current environment for lending. And looking at our current ratio, very strong position there. We ended our first quarter of 2024 at a ratio of 4.8, which was actually up from 4.1, 3 months earlier. So solid balance sheet here. Next slide. So with 60 days under my belt here, we've been very focused around the financial -- sorry, foundational work and investments needed to prepare the company for the future. We tried to capture some of these elements of what's already been done in recent times as well as some areas that remain active. And I'll just try and cover off a highlight or so from each of the groups here. On the finance side, I think it's been really critical to have a strong discipline around cost and having clear visibility to the return of various potential investments. As a company, this really hasn't been a strength of ours historically, but it's very important and a very clear area of ongoing focus for us. Operationally, as indicated, we're really fortunate to have Kim join us in January. A lot of great work already on improving our manufacturing capabilities at our Eastgate facility as well as strong work with our contract manufacturing partners. Quality and regulatory is a very, very important area of focus for any medtech company, and this is certainly true for Covalon. I'm delighted that we were able to land Teresa Sanelli as our new quality leader. She has a really strong background with Baxter and GlaxoSmithKline, and is off to a great start, including adding some very energetic team members as well as accelerating our focus on a strong quality culture, which is something that I personally am working with her on to drive across the organization. And on the commercial side, as I alluded to on the earlier team slide, we've made a very deliberate decision to consolidate what was previously 2 separate commercial side teams into a single team. This will allow for continued strong work on delivering the returns on the investments we've made and our account-based marketing growth efforts. And all of the above areas of focus and advancement are supported by a cultural shift that is underway at Covalon. And it's something that I'm personally very passionate about. You can see 3 of our important themes around culture that I believe are going to be key for us to achieve our strategic goals, trust and transparency, empowerment and accountability. And these 3 cultural themes kind of go hand-in-hand to combine and synergistically create a really strong organizational culture that our teams overall, and I personally am very excited about. If we can go to the next slide, please. So to wrap up the presentation with an eye towards the future, I'd like to share a little more about where we're heading and what we will achieve. For our fiscal year 2024 performance, we have line of sight to strong revenue growth well into the double digits over the prior year. And between the strong growth and the operational actions we have taken, and we'll take, we expect to return to positive EBITDA for the fiscal year. We recognize that our first quarter wasn't as good a start as we would have liked to have seen, but in reviewing our demand pipeline and working with our team on the operations front, we are highly confident in our ability to deliver on a strong fiscal year 2024. And then looking beyond performance outcomes, one of my messages to our team and the Board has been around the concept of short-term directionality and long-term optionality, namely that we need to be very focused and clear on what are the priorities. The absolute must-do outcomes and activities that need to be achieved right now in the short-term, paired with maintaining a lot of optionality for the future. I see this as critical because really, if we could accurately predict with 100% certainty what the future holds, the reality is none of us is a perfect prognosticator. We would all be retired on a beach somewhere, making bets on sporting events or the stock market. And in the short term here, Covalon is laser-focused on doing an amazing job on a small number of prioritized areas. These include a very strong emphasis on capturing value in the U.S. market for our collagen business through our strong partnerships in the space as well as on our U.S. Vascular Access and surgical dressings business platforms via our commercial team. Our work to drive increased output of high-quality products for our Eastgate manufacturing facility is critical. And there's a lot of work to do to strengthen our capabilities and our execution in order to enable Covalon to be able to become the company we want to be today and well into the future. And on the future, after 60 days in the role, I think I have a very good feel for the short-term priorities and what is needed, and I'll be increasing my focus and work with the team on the longer-term strategy in the coming weeks and months. Two things that are very clear early on. One is that we have a proven history of driving innovation, and I believe there are opportunities that are sitting in front of us to reinvigorate our innovation engine and delight our customers moving forward with impactful broad-based innovation that could span products, business models and business development activities as a starting point. And last but not least, as a company, we have a significant opportunity to be much more impactful in the spaces that we choose to play in. And so we'll be spending more time strategizing on what that drive to scale looks like. Next slide, please. So to wrap up here. I hope you've enjoyed the presentation and taken away the following key points about Covalon, where we're at today and where we're heading in the future. Namely, that we operate in large, growing segments with favorable trends at our back. Our products have a lot of differentiation versus the competition, and they solve really tough challenges for our customers and the patients. Our fiscal year 2024 is focused on delivering on our financial commitments that include strong growth and positive EBITDA, investing in our foundation to ensure we have a strong base to build off of and charting a new course for the company's exciting future. The full team here at Covalon is extremely passionate about our mission and are committed to delivering for our stakeholders, shareholders, patients, customers, business partners, team members and the communities that we serve. And for me, personally, I know the spaces that Covalon plays in very well, and I have a ton of passion for the impact we make for our customers, and their patients. I was very excited and extremely energized to come to Covalon and that excitement and energy has only increased in the past 2 months since I came on board. I greatly appreciate your time today. So thank you very much. And with that, I believe we can move on to any questions.

Okay. We've got a few questions that were asked. I'll start with a question from Jason [ Seneski ]. Jason, it's good to see you active on our meeting here today. And the question is, please provide additional color on the consolidation of the sales and marketing teams. What factors drove that decision? And so there are really -- 2 actions that took place, one prior to my arrival, one after I joined. Prior to my arrival, we made a decision to reduce down the number of sales representatives we had in the U.S. And really, there, we didn't feel we were getting the return on the investment we made in that sales investment and really took the opportunity to focus down and deploy our kind of commercial approach with the team working hand-in-hand with marketing. After I arrived, I mentioned Mark Dolittle chose to depart the company. And with that, we decided not to backfill his role. And there were really a couple of main reasons. The first and most important was for a company of our size, I felt that having one single person accountable for the commercial, the growth of the company, the commercial focus of the company would be the right move. And I have a lot of confidence in Ron, who's leading that as he works with his team members and driving our sales and marketing efforts and clinical activities. I think we'll have a lot of success there. And then second of all was, if we really looked in the mirror and as we thought about the costs involved, especially at the top end of the organization, within that commercial team, we thought we could better deploy those investments into other areas that could drive better return and help us in our goal to get to positive EBITDA this year. So I hope that answers that first question. Jason, had a second question, which is -- what are the KPIs that investors should be watching over the next 12 to 18 months to assess the company's progress? Is it revenue growth, margins, growth in number of customer hospitals, depth of wallet? And I think you've really nailed it. For sure, those last 2, growth in number of customers and the depth of the wallet that will drive the revenue growth. And so of the 2, what we've -- as we've assessed, while certainly, there are lots of additional customers to be had. We really think that a greater focus on driving for what you describe as the depth of wallet, share of wallets in other term, expanded use. So we tend to do very well getting into an account. But historically, I think as we really took a look in the mirror, our ability to kind of expand from that single point wasn't as successful as we would like. And oftentimes, it's easier to expand, have success with one call point and expand beyond that, then to keep going after new customers. That's not to say that we're not interested in new customers. We certainly are. But I think we'd rather have a focused, broad-based approach with our customers than niche business, little, tiny bits, hundreds of dollars here or there at tens of thousands of customers. So that depth of wallet is key, and it's a good one to point out. So that will drive -- and that's mostly on the -- on the vascular access and surgical dressing side. On the collagen side, it's a different business model, right? So we have a small number of very strategic partners. And strengthening those relationships and enabling them to have success in the market, I think, is really key. So that's it on the revenue side. And then while margins are certainly important, and we talked a little bit about that, fundamentally, delivering positive EBITDA this year is absolutely a KPI that all of our investors should be watching for and expecting of us. It's something that we've talked a lot about and taken actions to deliver on, and feel that it's going to be really critical. So I hope that answers your questions there, Jason. If not, feel free to ask another one. And then we had a question from Bob [ Laurian ], and he asked what percentage of sales are in Europe? What will it take to make the European market as successful as the U.S.A.? And I've answered that question. First of all, we don't have very much, if any, sales in Europe. A strategic decision was made by the company prior to my arrival to withdraw from our U.K. business there, which was kind of the centerpiece. And I will say that the European market can be tough. It's largely been in tender driven. And while we've had some success with bid and tender approach in Latin America and the Middle East and other parts. Europe can be a tougher nut to crack, and it's an area that we'll have to be -- we'll be doing some deeper work with the team on to assess if down the road, more effort there would make sense. As of right now, we are laser-focused on delivering for 2024. And we know we're going to get there largely via the focus on the U.S. That's not to say the rest of the world isn't important. But we know we can deliver the biggest return on investments we make in the United States market. And then as part of the broader effort to look at the future strategy of the company, I think broader geographic scope questions will come into play there. So I think 2 more additional questions have come in. And so the first one is Mathieu Martin. And Mathieu asked, can you speak about your background and what led you to join Covalon? Well, thank you. I'm not great at talking about myself, but I'll give it a shot. So my background is -- I grew up in Canada. I was born in London, Ontario, I lived there, went to school there, at Western University, the Ivey School of Business and worked in Canadian subsidiaries for the first few years in my career before moving to United States. And while here in the United States, I've worked the majority of the 20-plus years I've been in the U.S. in the medtech space. 13 of those years were with 3M Healthcare the medical division and various names it's taken along the way. That company is being spun out of 3M Company. And on April 1, we'll operate as Solventum. So a lot of great experiences there in the vascular access space, the wound care segment, infection prevention and whatnot. And then I chose to left -- leave 3M in 2021 to join Becton Dickinson, BD, and that was a great experience like 3M, I've learned a ton. It was a little different in that it was a pure-play medical device company. And so that was great to see. And I think it offered me a lot of good wisdom to be able to apply here to Covalon. At BD, I was leading their almost $2 billion global blood testing business. It's called the Specimen Management business, probably a little less relevant for the Covalon business than the 3M was -- the 3M experience was. But that's a little bit about the background. What led me to join Covalon? I have a ton of passion for the spaces Covalon operates in. It's probably too long of a story for this meeting, but it's originated out of getting into the space for sure. And then just also, like many of us, personal family experiences with vascular access, with dressings and skin irritation and MARSI, been fortunate, haven't had a ton of personal family experience with wound care, but along the way, definitely saw the challenges that patients are faced with. And I was really impressed with the goals and the mission and the focused areas that Covalon was going after. And so as I had conversations with Amir and other Board members, I was really energized as I said, to join the company. I think there's a lot of future opportunity to win in the market and impact our company, but also patients and health care providers. And so, as I said, was super energized to join and that excitement and engagement has only increased in the 60 days I've been here. So I hope that helps. And it's been an exciting journey so far, and I look forward to the future. I think we have a last question, and that's from Trevor Holsinger. And Trevor indicated medical device coating was listed as 1 of the 3 business segments. The question says this segment was shut down in 2023. Do you expect any efforts in this area in 2024? So we deprioritized our efforts. So this happened in 2023, as Trevor indicated. And we did deprioritize our efforts. We, as a company, we did have one major engagement going on with a large medical device company that for a variety of reasons ended. And so as we think about the future, that's definitely an area. We do -- it's not a big priority for us in the current state, and that's because we do believe that laser focus on the U.S. market for our collagen and for our vascular access and surgical side products can deliver the biggest return. But as part of future conversations as we go deeper into the future of the company, that's an area we'll be looking at for sure. I think there's a lot of value there. And I think that the questions will be how can we best capture the value out of that space. Lots of different ways we could go on that. So I'm going to refresh the questions left. And Trevor asked a question here just a minute ago. Past presentations focused on the number of hospital customers. Can you comment on the current number of hospitals, retention rates, revenue growth rate of existing hospitals? And is the company more focused on new hospitals or growing existing relationships? I'll answer the last part of the question, kind of address that earlier, right? More of a focus on growing the existing relationships. We think there's a lot of untapped opportunity within our existing customer base. But certainly, new hospitals and new customers are also an area that we want to make sure we're doing a good job of. But I would say, a greater focus on growing the existing relationships. And then I think I'll table the -- in our next quarterly update, we'll look to get back to specific numbers on hospitals, retention rates, revenue growth rates, et cetera. I will tell you just anecdotally, when we land customers, they tend to be sticky in the sense that we don't tend to lose a lot of customers once they start using our products. But as I indicated, we'll come back, Trevor, if that's okay, at a future presentation with more specifics on that front. And so with that, I see by refreshing my question list that there are no active questions yet in this meeting that we haven't addressed. I would like to thank people for asking questions. As shareholders, important that you are getting your questions answered by us, and we're good from there. Okay. If there are no further questions, we're now concluding the Q&A portion of the meeting. On behalf of management, our Board of Directors and our employees, I'd like to take the opportunity to thank everyone for attending the meeting today. I'd like to thank all of our shareholders for their commitment and continued support. I look forward to speaking with as many of you as possible over the coming months and reporting our progress, and we look forward to your attendance again next year.

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