Zomedica Corp. (ZOMDF) Earnings Call Transcript & Summary

[Presentation]

Good afternoon. My name is Elif McDonald, and on behalf of the entire Zomedica team, it is my pleasure to extend a warm welcome to everyone joining Zomedica's 2024 Virtual Investor Day. This is a very exciting time for Zomedica, and we hope you will come away from today's event with a better understanding of what we do and how it impacts you, our investors. Before we begin, we would like to remind everyone on this call that we will be making various remarks about future expectations, plans and prospects that constitute forward-looking statements. These forward-looking statements are based on assumptions, and there are risks that results may differ materially from those statements. As such, Zomedica cannot guarantee that any forward-looking statements will materialize, and you are cautioned not to place undue reliance on them. We defer current and potential investors to the forward-looking information and Risk Factors sections of our public filings available on SEDAR+ at www.sedarplus.ca and on EDGAR at sec.gov. Forward-looking statements made on this conference call represents Zomedica's expectations as of today, February 13, 2024. We have a lot in store for you over the next hour, and I'd love to first provide a quick overview of the event. You'll hear from several senior leaders starting with our Chief Executive Officer, Larry Heaton; then you'll hear from Kevin Klass our Head of Sales; Nicole Westfall, our Head of Marketing; followed by Ashley Wood, our Head of R&D; and Evan St. Peter, Head of our Information Technology team. They will be followed by Tony Blair, our Chief Operating Officer; and Greg Blair, Head of Business Development and Strategic Planning. Finally, you will hear from our Chief Financial Officer, Peter Donato, who will provide the financial update. At the end of the presentation, we will be taking questions from the online portal. Please submit your questions, and we will get through as many of them as we can. With that, it is my pleasure to pass the mic to Larry. Larry? Thank you.

Thank you, Elif. At Zomedica, our mission is to bring innovative diagnostic and therapeutic technologies to veterinarians to help them do the things they really love to do, improve the quality of care for the pet and a satisfaction of the pet parent. But also importantly, to help them do the things they really need to do, which is to improve the workflow, the cash flow and the profitability of their practice. As we've pursued this mission, we've built our total addressable market for annual recurring revenue in the United States to $2.5 billion by focusing on 2 of the fastest-growing segments in animal health, therapeutic devices and diagnostics, and deploying 5 product platforms into this market. Along the way, we've built a pretty good track record of performance. In 2023, our therapeutic systems revenue was up 29%. Our diagnostics revenue was up about 250%, all while maintaining gross margins in the neighborhood of 69%. Now as we steer our course for the future, we're assisted in this by employing several veterinarians at Zomedica. The most senior of these actually serves on our Board of Directors. Let's take a few minutes to hear from Zomedica Director, Dr. Pam Nichols.

I chose to join the Board of Zomedica because, first of all, it's got a ton of products that I believe in wholeheartedly. I've been in this a long time, and I feel like they have the most amazing products that serve veterinarians and take care of our patients in a way that other companies don't. I go and joining Zomedica's Board was to keep involved with a company that's going to drive innovative products that's going to continue to improve pet care and continue to improve veterinary medicine, and make my job easier. Oh my gosh, the challenges of veterinarian space every day are enormous. We have staffing shortages. We don't have enough time. We have pressures from outside industries, marketing directly to our clients. We have people trying to do their own vet care, people trying to take things into their own hands, not under veterinarian's supervision. Zomedica addresses all of those with every single product line. Zomedica's product lines address staff shortages because we have things like TRUVIEW, the microscope with AI that will help get us a diagnosis quicker with less staff time. We don't have to prepare the microscope slide. It just does it for us. VetGuardian does remote monitoring. So we can look at our phone and know that this patient's vitals are still happy healthy and stable without having to send a technician in to open the cage to serve the patient and take the vitals. Stall-side ACTH, immediate results for finding out endocrine diseases in horses, which are super, super common. Same thing with immediate results of diagnostic testing for pets in the hospital. So the economics of running a veterinarian practice are hard. Our profitability is pretty low. Like I think the average of that hospital in the country is less than 20%, probably less than 10%. So having products that are affordable for us that we can actually charge for and make good margins is amazing. PulseVet is probably the most profitable instrument that I have in the hospital. In fact, I'll take away probably. It is the most profitable tool that I use. But all of the products are positioned that way to be able to provide daily profit improvement. PulseVet in equine is magic. I mean it's so well utilized in the equine industry it's almost rare for any current veterinarian to not know about it or be able to recommend it if they need to recommend it, but it's used for so many things. In my hands, I use it on my patients all the time. So I use it in a horse that's limping on a hind end. Horses are great compensators. And so if they have a hindlimb lameness, they're going to have a shoulder lameness, and you won't even know it. And so I do way more total body shock wave than anyone else. And I start at the back of their head and go all the way down their nuchal ligament, all the way down through their gaskin down their butt, I mean, everywhere. I love shock wave. So I even use it as a secret weapon for competitions. Zomedica is the company that's thinking of the future that's got innovative products that no one else has that drive profitability for veterinarians and save us time, like that's universally needed, all three of those things. My opinion is that veterinarians want to see products that can be done rapidly that we can make a profit on, a decent profit, not anything crazy, but at least make money on, not waste a lot of staff time on and depend on the results, so we know they're accurate. And also having things that really are available specifically from your veterinarian, on your veterinarian recommendation, so a PulseVet followed by a recommendation for Assisi LOOP at home is kind of a perfect dovetail for me. But being able to do -- and I really feel like the future of Zomedica is going to be adding more diagnostic tests to our repertoire so that we can stay on the cutting agency ahead of the game looking for pieces that fill the needs we've got. I think I want people to know that Zomedica is looking at all angles, not just profitability for the veterinarian, but they're looking for products that actually affect pets lives in a positive way. And certainly profitability for the veterinarian is a piece of it, but they're also looking at how to make those lives better. So how to save time? How does save on staff stress? How does save on doctor stress? And the marketing that you're doing, they're marketing around a Assisi, like driving people to the veterinarians. The marketing around PulseVet is now driving people to ask their veterinarian for PulseVet, which I think is probably really, really critical because veterinarians don't have time to market. They don't have time to investigate. They don't have time to be looking for new products. So when a client comes to them and says, hey, what about this PulseVet thing? Well, it save my dogs limping. Yes, it will fix your dog's hip dysplasia. But it really helps to have Zomedica's marketing being driven towards clients asking veterinarians.

Dr. Nichols pointed out many of the things that make Zomedica what it is. Now I'll overview some of the business attributes, which you may find of interest. At Zomedica, we have targeted a significant market by addressing critical animal needs, with a portfolio of highly differentiated proprietary, truly innovative technology platforms. We've built a global channel to be able to expand adoption in the United States and abroad. And we have additional opportunities through our R&D and acquisition capabilities to continue to expand our portfolio. Our operational team is doing a terrific job of execution and doing it efficiently to support our path to profitability. And with $100 million in liquidity, we have no need to raise additional cash to be able to realize our objectives. The veterinary services market is huge, $62 billion in the United States in 2023. It was large before, and then during the pandemic, 23 million new puppies and kittens were brought into U.S. households. And it was the youngest among us, who adopted at the highest rate, which assures a new generation of pet parents for the future. And I am seeing pet parents as opposed to owners, because it is truly the case that people today view their pets as part of the family. And as it turns out, there are a lot of things they would give up before they would not take their sicker, injured pet to the vet. Meaning that this is a large market that's growing and it's resistant to an economic downturn. Our portfolio of products is very well positioned to meet the challenges of the new market by addressing critical needs for animals, also critical needs for veterinarians. Our five pillars improving the quality of care of the pet, the satisfaction of the pet parent, and the workflow, cash flow and profitability are all well served by each of the products in our portfolio between the therapeutic devices and our Zomedica diagnostic products. Each of these products has substantial recurring revenue opportunities for Zomedica. In fact, today, over 70% of our revenue comes from the consumables associated with our products, totaling $2.5 billion in annual market opportunity in the United States. And along the way, there's another $1.5 billion opportunity for those products that we sell the capital for. Each of these products is well suited to serve some of the 30,000 small animal practices or 4,450 equine and/or mixed practices. With the total addressable market on an annual basis of $2.5 billion and just over $25 million in sales in 2023, you can see that we've just barely scratched the surface of the market opportunity. But we've been scratching at an increasing rate over the last several years with year-over-year growth in 2023 of just over 32%. We did $7 million a bit more in the fourth quarter of last year, which was a new record revenue for the fourth quarter and a new record revenue for the company. In fact, each quarter, as you look back, has set a new record for that particular quarter, just reflecting the fact that we're growing nicely. And while we're growing, we're also maintaining really good margins at around 69% while burning consecutively less cash on a quarterly basis, with just under $3 million burned in the fourth quarter of last year. With $100 million in liquidity as of the end of the year after paying for several acquisitions in the fourth quarter, you can see that we have plenty of capital to be able to continue to pursue growth on both the organic and acquisition level. Let's take a look at some of Zomedica's products that are impacting pets lives and veterinarian practices. [Presentation]

Now let's take a look at some of the details with respect to our product platforms, beginning with the first therapeutic device, the PulseVet system. The PulseVet system is the global leader in shock wave technology. It grew to prominence in equine sports and rehab medicine over the last decade or so. And then just a couple of years ago, a new accessory device was developed that enabled it to be used in small animals without the need for sedation. It was at that point that Zomedica acquired Pulse Veterinary Technologies. We were, of course, impressed with the fact that the therapy is highly effective. It takes less than 5 minutes, only need a couple of treatments for each animal. But as importantly, we see an opportunity because while it has a very high penetration in the equine veterinarian world of around 5,000 between mixed and equine-only practices, it had yet to be introduced into the small animal market where there are 30,000 practices. And that's what we've been about the business of doing for the last couple of years. As we present it to small animal veterinarians, the economics are we sell them the device for $30,000. And then we sell them each handpiece for just over $2,000. That handpiece will deliver 50 to 60 treatments, depending upon the exact specifics of each treatment. But when those are done, then they need to return that handpiece, we refurbish it and sell them a new 1 for another $2,100. In fact, today, 60% of our revenue of PulseVet overall comes from trade reorders. For the vet, it's compelling. First, because it's highly effective, the pet parents are delighted. It only takes 1 to 3 treatments, but also financially. They've kind of acquired the system for $30,000. We have a third party that we work with for financing. They're only out $600 in the first year. And by doing only 5 patients a month for an average 2 treatments each, they can generate substantial revenue, in fact, enough to pay back for the machine in 1 year. We're very pleased with PulseVet, mostly because it improves the quality of care for pets. And the satisfaction of pet parents. [Presentation]

Next up in therapeutic devices is our Assisi LOOP family of products, which deliver targeted pulsed electromagnetic field therapy in a variety of formats. Larger loops and smaller loops and dental loops and loops built into lounges for pets to lay on. What they all have in common is they're delivering electromagnetic field therapy, which increases endothelial nitric oxide, which in turn reduces inflammation and pain. These are devices that are intended to be sold to the pet parent themselves to bring the heal in home. It's a way for the pet parent to become involved in the continuum of care for their own pets. We sell a device to the veterinarian for around $200. They, in turn, turn around and sell it to the pet parent for $300. It's what we call the disposable, meaning it's going to last at least 150 treatments, after which time the pet parent will need to purchase another one. This product is sold to vets. We also, when we acquired Assisi Animal Health, we also gained their channels to market. So we built on -- we added on to our infrastructure, e-commerce capability, ourselves, plus channels through Chewy and Amazon and Walmart plus channels through U.S. animal health distributors and some international distributors as well. This device, the classic Assisi LOOP treats an inflammation and pain. A related product, our Calmer Canine system is for separation anxiety. It's for those pet parents who may be adopted a pet during the pandemic and really have never been apart from them. And yet now they have to go back to work to the office. And when they come home, they find that the couch is chewed up and the neighbor's complaining that the dog has been barking all day. This uses a slightly different wavelength targeting the [indiscernible] of the brain to increase dopamine and reduce anxiety to treat that separation anxiety. These products combine for a conservative total available annual market of around $290 million. [Presentation]

Our most recent product launch was of the TRUVIEW digital cytology platform and related pathology interpretation services. The TRUVIEW microscope is unique in the world. Of course, it does what all digital cytology platforms need to do, which is to provide an excellent image. In fact, we believe that our TRUVIEW images amongst the best in the industry because it utilizes a LiquiView, liquid lens. But in addition, it alone in the world, prepares the slide for the technician, which cuts 5 to 10 minutes in prep time every slide that they have to prepare. Because remember, when they're preparing those slides, many of those steps are dipping it into stain and then they have to let it dry in between. By automating the slide prep, not only do they get a perfect slide every time, but they also are able to reduce their hands on time with this microscope to about a minute per slide. At the end, the veterinarian gets a quality image, best-in-class for them to interpret themselves or with the push of a button to request a pathologist interpretation from one of Zomedica's board-certified pathologists, which they'll receive in about 2 hours. We make it easy for the practice to acquire and use this technology. We charge $495 as a subscription to bring the device into the clinic. And that includes our first 100 slides, a small fee per slide, over 100 slides, and then a $75 fee each time they request a pathologist report. And while that monthly revenue will vary dependent upon how many of those reports they request, our estimates are that we'll generate about $1,000 per month from each microscope that's installed, providing overall about a $500 million annual addressable market. [Presentation]

The TRUFORMA product platform is where it all began for Zomedica. It consists of a highly sophisticated analyzer, the instrument itself, and used in conjunction with cartridges that are disposable and are loaded with the reagents needed to do a single test or a single combination of tests. It utilizes highly proprietary bulk acoustic wave technology, which allows for an extreme dynamic range that is unmatched by any other point-of-care technology in the market, which allows Zomedica to provide tests, assays to be used in the clinic that otherwise would have to be sent out to a reference lab. Certainly, there are other analyzers in the clinic, there aren't large competitors, but none of them are able to do most of the assays that the TRUFORMA platform can perform. These systems we place into the clinic at no charge as is the industry standard. And then we sell the cartridges anywhere from $27 to $82 depending upon the particular assay. The path to expansion of our revenue with this platform is: first, expanding the installed base, and we're doing that on a quarterly basis, and then also to increase the number of assays that we have available. We began in 2021 with 3 assays, which were delivered to us by our development partner. Last year, we acquired -- in the fourth quarter we acquired that development partner. And so now the pace of assays being developed and launched will be a function of our investment in the technology and in the research and development process. We're very pleased with this platform in that it delivers reference lab accuracy at the point of care and bringing diagnostics into the point of care is a major effort by veterinarians as they seek to continually improve their business processes. With this, we expect today about an annual addressable market of about $1.5 billion. Of course, that increases each time we introduce a new assay. [Presentation]

Rounding out our diagnostics segment is our VetGuardian product platform. The VetGuardian system is a wireless remote monitoring system in which nothing is touching the patient and yet the pets vital signs are being captured remotely. Respiration, temperature and heart rate are measured and are displayed on a screen that is pulling that data down from the cloud into their My Zomedica portal. What this allows them to do is to have peace of mind, knowing that while that pet is at its most vulnerable in post-op surgery, in the ICU, or alone in the clinic oversight when everyone else has gone home. It gives them the peace of mind knowing that a pet is being constantly continuously monitored. And that if any of those metrics exceed or fall below a safe range then alarms are going to sound. The device itself will sound an audible alarm. The screens that are bringing the data down from the cloud from the -- in the My Zomedica portal are going to flash. And maybe that's a big flat screen TV in the tech area in the practice. They're going to see that flashing. Or maybe they're looking on their iPhone or an iPad or a laptop because they're home or they're away from the practice, so that they know they need to get to that pet and address whatever is a miss. The genesis for this product was the fact that 70% or so of animals that die in the clinic, not associated with euthanasia, die in a post-op recovery. And it's not because of vets don't care to watch. It's just they don't have the staff to be able to one-on-one monitor that pet. And even if they did, they don't have X-ray vision. Not VetGuardian doesn't have X-ray vision either. But it does have doppler radar. It has thermal imaging camera, a regular video camera night vision capability, and LiDAR sensors. And so it's able to capture this very important data and display it on a screen so that they can not only watch it, but they can be alerted by it. If they don't happen to be watching it. they're going to get an e-mail or a text that says, hey, something is up, you need to check out the pet." The economics are pretty straightforward. We sell the device for $4,500. Beginning in year 2, we charged a $240 annual cloud service fee, and then we offer an optional extended warranty on an annual basis of $355 beginning in year 2. The real opportunity here in terms of recurring revenue for us is that they buy a second unit or a third or and eighth. The My Zomedica interface that they're watching on that big screen in the tech room can display up to 8 sessions on a single screen. And so we think conservatively, the annual recurring revenue opportunity is around $40 million and a capital revenue opportunity as we move forward around $465 million. It's convenient. It's easy to use. And it's being adopted at an accelerating pace by veterinarians in the United States, and we have plans to launch it internationally later this year.

My name is Kevin Klass. I'm the Senior Vice President of Sales for Zomedica. I have over 30 years of experience in veterinary and human medical sales. More than half of that experience has been in the veterinary market, holding positions in sales leadership, marketing and international sales. I have extensive experience reorganizing and motivating the sales force while driving increased performance. My 17-plus combined years at IDEXX and Heska have given the many transferable skills and relationships to fuel success in my position. I'm so confident in our potential that in addition to the stock options I received when joining, I purchased more than 1 million shares personally. We have a mature U.S. sales force driving direct sales of our core products. The current team is 4 regions comprised of 29 territories. We are moving to a larger 35 territory sales organization to improve our reach and coverage. We are also working on incremental improvements by optimizing alignment between our inside and outside sales organizations, making improvements to our hiring profile and process while revamping our sales tools and training. We leverage distributors for our more transactional capital products in the U.S., Europe, Australia and the Middle East. We have a wholly owned subsidiary in Japan. We are evaluating expansion of product offerings in existing international markets as well as new distribution opportunities in other geographies. For our U.S. veterinary sales channel, we're driving incremental gains in several ways. We're targeting veterinary clinics based on segment to provide a more compelling tailored message. We're leveraging distributor relationships to gain access into new clinics and expand our reach. We've started a new reference selling program designed to increase our close rate and shorten our sales cycle. For PulseVet, we are using the exceptional acceptance in the E-coin market to drive adoption in the small animal market. TRUFORMA is an outstanding platform with a unique assay menu. We're showing customers how this platform can complement their existing in-house analyzers by addressing unmet needs. VetGuardian and TRUVIEW are truly unique systems, which address pervasive labor shortages and workflow issues, which most clinics have. And finally, Assisi, is a great way to send the healing home with clients and expand the market outside of the veterinary clinics.

Hello there. I'm Nicole Westfall, Senior VP of Marketing. My extensive marketing background, mixed with years of animal health experience helps me to lead an amazing team to reach the highest and best results for Zomedica. Throughout my career, I have been on the media side, behind the scenes as well has been a leader in all facets of the marketing realm and have honed my skill to spot a company with great potential. That's why I joined the team here at Zomedica. Being customer-facing on a daily basis, I wish everyone could experience excitement and enthusiasm for our products in the veterinary industry. With our strong multichannel sales focus, we're able to reach each of the customers in the veterinary industry and the pet parent markets for our product lines with ease. Coupled that with the marketing strategy we're implementing, which leverages education, omnichannel segmentation and a robust trade show and conference schedule. We are poised not only to continue our rapid growth that makes Zomedica a compelling investment. It's one of the best, no-brainers in the business to support helping us grow and become profitable.

Hi. My name is Ashley Wood, and I am the Vice President of R&D at America. I received my Bachelor of Science from Duke University in chemistry with a concentration in biochemistry and a minor in biology. I also have a PhD in molecular biology and genetics from Johns Hopkins University, and I did additional training in cell biology as a post-doctoral fellow at Northwestern University. I have been doing product development outside of academia for over 7 years. And at Zomedica, I am responsible for leading product development activities for all 5 of our product lines. Today, Evans St. Peter, who will introduce himself in just a few minutes, and I are going to give you an overview of some of the exciting R&D activities at Zomedica. But before we dive in, we would like to share a quick video highlighting some of our internal R&D capabilities here at Zomedica. [Presentation]

Zomedica has shown a history of bringing innovative technologies to market over the past few years We launched our first product, TRUFORMA in March of 2021, this is an automated immunoassay device that uses bulk acoustic wave technology to allow veterinarians to perform diagnostic assays at the point of care. At the initial launch of TRUFORMA, we also launched the canine and feline Total T4 assay, the canine and feline TSH assays and the canine cortisol assay. Since that time, we have continued to add additional assays to the TRUFORMA product line, including canine endogenous ACTH and canine free T4 both in 2022 and equine ACTH, canine pancreatic lipase and our first multiplexed assay that simultaneously measures 2 different molecules, cobalamin and folate on the same disposable cartridge in 2023. Development of these last assays, canine pancreatic lipase and cobalamin/folate was completed with our internal R&D team after the acquisition of Qorvo Biotechnologies. In addition to TRUFORMA, Zomedica has acquired 4 other product lines over the past 3 years. PulseVet, which provides electrohydraulic shock wave therapy to reduce inflammation and swelling and promote healing was acquired and launched by Zomedica in October of 2021. Assisi, which provides targeted pulse electromagnetic field therapy was acquired and launched by Zomedica in July of 2022. VetGuardian, which provides temperature, pulse, respiration and video through contactless monitoring was launched in January of 2023. Finally, the TRUVIEW technology that provides automated slide preparation and digital cytology at the point of care was acquired in July of 2022, and after internally completing product development at Zomedica we brought this product to market for the first time in June of 2023. Zomedica has grown its R&D expertise and capabilities through acquisition, and we are now fully equipped to continue product development internally with our current team of scientists and engineers. As we look into the future, Zomedica plans to continue its focus on product development to increase utilization of the five existing product lines. For our therapeutic devices, we are supporting clinical studies to examine the efficacy of these technologies for new indications. For example, we supported a study performed by Dr. Beau Whitaker at Brazos Valley Animal Hospital that showed a positive response for horses with exercise-induced pulmonary hemorrhage. This work led to a follow-up study that is ongoing to look at the efficacy of shockwave therapy by the PulseVet device to treat horses with mild and moderate asthma. We have another study ongoing at Colorado State University, looking at the effectiveness of PulseVet therapy for slowing the progression of canine osteoarthritis. These kinds of studies have the potential to provide new applications for our therapeutic devices and therefore, increase utilization. Additionally, for our therapeutic devices, we are exploring improvement and product line extensions that would improve the user experience. For our diagnostic devices, R&D is also focused on increasing utilization. For TRUVIEW, the main focus is to continue to add new assays that can be run on the device. With the acquisition of Qorvo Biotechnologies, we now have internal R&D capabilities for TRUVIEW, which allow us to control the timing of assay development for the first time. We currently have multiple assays under development, including those that target reproductive cardiac and endocrine health for dogs, cats and/or horses. Finally, our R&D team is leveraging artificial intelligence across both the VetGuardian and the TRUVIEW product lines to improve current functionality and add new capabilities. This is actually a good opportunity for me to hand things over to Evans St. Peter, who heads up our digital product development team. He will provide more details on some of the exciting capabilities being developed in digital technology at Zomedica.

As Ashley mentioned, I'm Evans St. Peter, Vice President of Technology Innovation. My education, my background is in life sciences and business. I have a Bachelor's degree in Biology from Northern Michigan University and a Master's in Business Administration from Western Michigan University. But for the last 15-plus years, I've been working with technology to solve business problems and improve business outcomes. Today, I want to take a second to talk about our digital products. Behind integrating all of our products sits our customer experience and data insights cloud platform called, My Zomedica. Early in Zomedica's journey, leaders of the company identified value in receiving data from its diagnostic devices. In addition to the data value, we quickly identified digital technology as a medium to build complementary and necessary clinical experiences to support veterinary teams and team members. The quantitative test result number supplied by our diagnostic devices represents only a sliver of the clinical process. To ensure we offer a complete solution, we pivoted from just receiving test results to creating a clinical experience platform to support clinical decision-making process. As we looked at the landscape of digital technologies within the veterinary health market, it became apparent that we needed to make it simple for our veterinary partners to interact with us. We identified the need to have 1 online hub for our customers. The name My Zomedica stemmed from this idea as we wanted our partners to easily remember where to go to engage with our products and us. Today, My Zomedica's one hub strategy has expanded. It is a clinical decision support hub, an e-commerce platform for reordering our products, a product and clinical education platform and more. Now let's talk about what is next for My Zomedica and Zomedica's technology offerings. We want to continue to leverage Internet of Things technology to expand our device to cloud and cloud to device message capabilities. With data being the necessary input for leveraging artificial intelligence technology, we continue to see a significant benefit from our IoT device data streams. We are also pleased to be releasing over-the-air software update capabilities for our TRUFORMA device early this year. Our TRUVIEW product was launched with over-the-air software update technology, and we're excited about the positive impact this capability will have on our TRUFORMA product line, specifically improving capabilities for releasing new assays. Another aspect of our R&D road map is further refining our device and cloud side image acquisition and image processing capabilities. Similar to what I previously mentioned, data, including image data, will be the currency of the future for driving innovation through artificial intelligence technologies. We are working to ensure that Zomedica is well positioned to capitalize on AI technology. On the therapeutics front, we're continually looking at technologies for delivering relevant content to our partners. We recently launched a digital marketing experience to remove barriers and assessed veterinary practices in promoting shock wave therapy to their pet parents with pets and need. We are also trialing the use of mobile applications for delivering on-demand therapeutic device treatment content to increase awareness of treatment options and act as a treatment resource for veterinary team members. Now I'd like to pass things off to our Chief Operating Officer, Tony Blair, to talk about Zomedica's growing and expanding manufacturing capabilities. [Presentation]

These last 2 years have been exciting, and I'm proud to report that we've been able to create a manufacturing, operations organization capable of manufacturing, assembling, testing and distributing all of our product lines. This could not have happened without a dedicated, talented and hard-working group that I'm privileged to work with every day. We established the Zomedica Global Manufacturing and Distribution Center in August of 2022. This facility is 18,000 square feet and we manufacture our PulseVet product line, our Assisi product line, our TRUVIEW product line, our VetGuardian product line, and our TRUFORMA instrument at this facility. We also distribute all of these products out of Georgia. And it's my great pleasure to announce that we've recently in October '23 acquired Zomedica Biotechnology. We've integrated that into our organization. And this facility is located in Plymouth, Minnesota. The facility is 30,000 square feet and we manufacture and assemble and distribute our TRUFORMA consumables and assays from this facility along with all the R&D that's required for our consumable product line. It's important to understand how manufacturing operations is positioned for future growth and what that means. We have developed and implemented our manufacturing operations plan on 3 critical must-have elements, being best-in-class, designing scalability and implementing infrastructure. Examples of these elements, being best-in-class is the selection in design of facilities, manufacturing processes and equipment using the latest technology. Scalability is predicting future growth and designing for that future growth. An example is Roswell's layout was designed for 5x the 2023 production scale. In Plymouth, we have automated a cartridge manufacturing line that is able to handle 2028 sales volumes. Infrastructure, that is planning for capital and facilities that are required, the human infrastructure that's required, along with systems such as enterprise softwares, quality software and product life management software for the future. The good news is, as this growth comes, we're ready without investment. These 3 important elements allow us to grow by increased efficiencies which will improve future margins. Our facilities, people and processes in Roswell, Georgia, and Plymouth, Minnesota are positioned to take advantage of the future sales growth of our products. I look forward to our future. And thank you for your time and continued support.

Hello. My name is Greg Blair, and I'm Senior Vice President of Business Development and Strategic Planning for Zomedica. I'm a career life sciences executive with a combination of pharmaceutical med device and animal health experiences. I've gained cross-functional leadership experiences in finance, marketing and business development with industry leaders such as Eli Lilly and Company, Johnson & Johnson and Intuitive Surgical. My intro to the animal health industry was when I rejoined Lilly in business development in 2015. I was asked to support the Elanco division at the time and fell in love with the animal health industry. We have all of the same scientific drive towards improving quality of care as human medicine with added benefit of helping animals, which help us to live such fulfilling lives. While I was at Elanco, I completed over 35 deals ranging from licenses to acquisitions, divestitures and a strategic alliance with a joint venture in China. In 2021, I was recruited to Zomedica where I was given the challenge to help build a world-class animal health company by identifying and acquiring a portfolio of the most differentiated, impactful and high potential products possible. In my 3 years with Zomedica, we have done just that, driving a 3-part growth strategy, seeking to acquire high-potential, high-growth businesses that benefit the patient while improving the veterinarians practice. We focused on integrating these businesses efficiently to leverage the best-in-class capabilities acquired and leveraged our commercial engine to accelerate the growth of the acquired businesses. We do this by leveraging extensive networks in the animal health industry from across our team to identify game-changing new technologies before they come well known and elevate the quality of care while seeking technologies with limited competition. Our focus is in diagnostics, monitoring and therapeutic medical devices, which are the fastest-growing segments of animal health. Five acquisitions in, Zomedica has an exciting portfolio of differentiated products, and we're now driving some of the highest growth rates in the industry. This is why Zomedica is a compelling investment for anybody interested in investing in animal health. The first acquisition that we completed in October of 2021 was out of Pulse Veterinary Technologies, makers of the PulseVet electrohydraulic shockwave therapy platform. It was already standard of care in equine therapy, but what really impressed us about this company was the wide array of clinical data that they had been able to produce on small budgets through the passion of their key opinion leaders. They demonstrated superior results in wound healing, osteoarthritis and tendon and ligament injuries, all of which are really difficult conditions to heal from. We were super excited to drive this technology to help dogs and cats experience the same benefits without drug therapy. Since the acquisition, we quadrupled PulseVet growth rate in the first 12 months following the acquisition, and we have continued to invest in clinical studies to drive new indications in both dogs and horses. The second acquisition that we completed was of a small Atlanta-based company called Revo Squared. We acquired all the assets of this business in June of 2022. What made Revo stand out was the digital microscopy platform that they had developed with a revolutionary automated slide prep system. This is critical to the quality of diagnosis because the most common reason of pathologists rejects a slide and can't give a diagnosis is poor slide prep. It was stained wrong. It was dried wrong. It was smearer wrong. The Revo Squared system, rebranded to TRUVIEW corrects all of these issues. Every practice needs reliable microscopic imaging, and TRUVIEW enables more consistent slide prep with a convenient option for automated pathology consultation and a flexible business model to help the practice. Since we completed the acquisition, we finished development of the system and launched it as the TRUVIEW digital microscopy platform in mid-2023. It expands our diagnostic offering to broaden our partnership with practices. And since we launched it, we're experiencing very, very strong demand from customers, especially larger practices with 3 or more veterinarians. Revenue is expected to ramp this year, increasing the contribution of the diagnostic portfolio to Zomedica's investment thesis. We retain the human rights to this technology also, and could license this breakthrough technology for human use, further improving the investment profile for Zomedica. Next in July of 2022, we completed the acquisition of the assets of Assisi Animal Health. Market leaders for targeted pulse electromagnetic field therapy with 4 distinct product lines, the Loop and the Loop Lounge for pain and inflammation. The Calmer Canine product line for separation anxiety. And the dental loop for dental pain and gum disease. Assisi allows pet parents to bring the healing home with these four exciting product offerings. They provide an established, well-recognized brand backed by scientific publications, sold both to vets and direct to consumers, and importantly, very strong cash flow for Zomedica. Since the acquisition was completed, we've expanded our marketing capabilities as a company to include direct-to-consumer channels, we've established Zomedica as a significant player with online retailers, and we've expanded our distribution footprint globally, increasing our international business, which is important both for the Assisi product line and for products yet to come. Next acquisition that we completed was a Structured Monitoring Products in September 2023. SMP developed the VetGuardian wireless monitoring system that monitors temperature, pulse and respiration without any leads or wires touching the patient. This is important in animal health because unlike in human care, you can't trust a dog or cat not to chew leads off and ingest them, which causes even more problems for a pet already experiencing hospitalization or illness. VetGuardian improves the quality of care in surgical and overnight settings and really for any hospitalized patient. We believe that this represents in every clinic, every bed opportunity, and we see the potential for widespread adoption of this as we roll it out. Since the acquisition, we've had very strong clinical interest, which drove accelerating sales through the end of 2023, which is continuing in 2024. All of our major distribution partners are helping to drive those sales. And we've had some high-profile accounts that we think will really help reference sell this product to customers. International interest also remains strong, and that will be unlocked pending completion of international approval later this year. Finally, the acquisition of Qorvo Biotechnologies in October 2023 allowed us to come full circle. Qorvo has been a long-time development partner on TRUFORMA, a platform that we launched in March of 2021. It delivers unparalleled accuracy to customers at the point of care. And by acquiring this division of Qorvo, QBT, we now own the manufacturing and R&D capabilities that invented this technology. This enables us to improve the cost of goods sold and accelerate development of exciting new assays. This allows us to really drive our destiny. Now since the acquisition, we've already had a number of successes. We launched the first-ever equine assay for Equine Cushing's disease, or PPID, eACTH. This is a first time point-of-care diagnostic tool, but allows veterinarians to screen for this very severe condition in horses at the point of care without having to send a sample into a lab and wait several days for an answer. This gives the veterinarian more flexibility in how to screen horses for this disease and treat them in follow-up. Second, we launched new assays to diagnose the causes of vomiting and diarrhea in dogs, a top 3 reasons for vet visits. We expect to see rapid increases in small animal adoption with these high-volume assays. Over the past 3 years, we have screened hundreds of opportunities in order to land on these 5 exciting platforms that now belong to and are part of Zomedica. Each of them helps to elevate the quality of care of the pet and the satisfaction of the pet parent as well as the veterinarian's cash flow, workflow and profitability. Today, Zomedica represents more than a portfolio of innovation worthy of investment. We've demonstrated our track record in identifying new highly differentiated high-potential products, acquiring and integrating them into the company and accelerating their growth rate. We continue to seek new differentiated products and technologies that share these attributes. We're looking for things that are highly differentiated clinically, elevating the standard of care. We want to see large addressable markets, and current revenue with high growth potential. We also want to maintain our industry-leading margins. Zomedica's continued investment in external innovation will accelerate our growth and our path to profitability, making us an attractive investment within the Animal Health sector.

Good afternoon. I'm Peter Donato. Many of you already know me. I'm the Executive Vice President of Administration and Chief Financial Officer at Zomedica. My slides will be short today. This is intended to be a long financial presentation, but merely to highlight where the company has been from a revenue perspective and from a financial highlights perspective, and also take a peak forward, as we've already talked a little bit about 2024 to give you a flavor of how I'm thinking about 2024. So first, where have we been? And up in the left corner, you can see that the company, when many of you invested in it, had no revenue. In fact, no revenue at all, that was 2020. And Larry and some of the senior leadership that already presented today, and the company closed out its first revenue in 2021 of [ $10 ] and then that number grew really nicely. In 2022, topping out at just under $19 million. And then we pre-released revenue keeping in mind these numbers are not audited yet, but we said that we expect the number to be over $25 million for 2023. That's an increase of 32%. So pretty exciting times, and we'll talk about where we're going here in a moment. All of that, while we maintained nearly 70% margins most of the year. Now I've guided very publicly to 65% to 70%. And I've also said that it starts with the 7 probably as you look out into the out years. But it's fair to say we're right around [ 70% ] margins business, all while growing that top line north of 30%. And many of you already know this as well. The balance sheet is really strong. We have $100 million of liquidity. That's defined as cash, cash equivalents and available for sale securities. So $100-plus million. Again, we'll report the final number next month once we get through our audit, but we expect it to be over $100 million. And all of this, while the adjusted cash burn from operations just keeps coming down. It will probably be just under $12 million, about $11 million or $12 million for the full year. So when you take that number and compare it to the $100 million, you can see that we have a lot of dry powder to do the things that we talked about during this Investor Day today. And finally, my last slide, and this is more forward-looking. Trying to think about where we were, and I just talked about that and where we're going. Pretty exciting times about a month ago on January 17, Larry and I gave the company's first-ever formal revenue guidance, and that was $31 million to $35 million, that's approaching 40% on the top end of the range. Just some color commentary on it. So if we end the year at around $25 million, which is what I said, and we add $6 million, right, easy math to get to the $31 million. How do we get there? The therapeutics group, which consists of PulseVet and Assisi are really predictable metrics, et cetera. So I think that most of the $6 million will come strictly from therapeutics. So we're at or pretty close to the bottom end of the range before we even add in diagnostics, which checked in at about $1 million or so for 2023. So as you think about the sensitivity, nothing is easy in running a business, but we feel pretty good about the low end of the range with the lion's share coming from therapeutics and the upside of the wild card, if you will, the additional $4 million potentially coming from additional therapeutics performance, but probably from the diagnostic [indiscernible] with those products that have been with us now across the year barrier for most of them next year. What gives me more confidence. We have a big sales force, right? We have 30-plus territories, that number probably grows closer to 40 over the coming quarters. But more importantly, it becomes mature. What that means is our sales folks generally become more productive at 3 months, 6 months and certainly, at a year. So if you think about how we form the territories over the last couple of years, this sales force is really starting to be mature. And with that, some more predictable productivity. We're doing that, and we've been very public in saying that we're further penetrating the -- particularly with PulseVet. So this big, more mature sales force is going after a lot of that, that do not have PulseVet, in the [indiscernible] side of the business. The [indiscernible] side is solid with over 1,200 beds or so and that will continue to grow, but we do have a lot of upside in the [indiscernible] veterinarians. And lastly, we've been very public, international expansion, distribution expansion. Those are things that we expect to help us achieve that $6 million to $10 million growth to get us into that revenue range. The therapeutic devices, as we said, PulseVet, we have a big installed base. We expect about 60% of that revenue or more comes from the consumable product, and we're seeing some very positive utilization trends there. And Assisi was never going to be the ring leader in the therapeutics devices, but it is growing nicely. And we're benefiting, and I've been very public in talking about distribution channels such as Amazon and Chewy, and we're seeing nice growth there. So feel really good about where we're at with therapeutics. And then the diagnostics group. I just talked about how these products should cross the 1-year barrier, but we announced a lot of exciting stuff with TRUFORMA was from new assays, and those have been well received, and we continue to expect greater penetration on TRUFORMA. TRUVIEW was just launched late last year, exciting revenue model with this service-based model there, some more to come on TRUVIEW. In VetGuardian, we were selling earlier last year, but really didn't fully integrated until late in the year when we completed the acquisition of SMP, but we're seeing the mapation of those accounts, and we're also seeing many of the accounts that bought 1 or 2 VetGuardians, asking for more. So more to come in diagnostics, but the general takeaway here is we feel pretty good that the low end of that range is pretty predictable with a lot of upside as we just talked about, particularly with their diagnostics.

Hello again, and thank you for listening to our exciting Investor Day presentation. We hope that you now have a sense of the excitement we feel every day at Zomedica, and more importantly, got a chance to hear from a world-class leadership team about the work they do as we move forward with our mission to improve the quality of care for the pets, the satisfaction of the pet parents and support the workflow, cash flow and profitability of veterinarians. Over the past few weeks, we have received many questions from investors via e-mails, phone calls and through our shareholder platforms. We have read through them and pulled out the most common themes, and we will go over them with you now. If you feel you have questions that we did not answer today, please feel to reach out to us at [email protected]. With that, let's begin the Q&A.

Peter, the top question from investors is around the topic of a buyback. Why are we not buying back shares in the open market and instead doing a reverse split?

Yes. Thanks, Elif. This is Peter. Obviously, the most asked about topic, requested topic, most commented topic. Let's start with the basics. The stuff the company has stated several times in the past. First and foremost, we hear the shareholders out there, and we are always considering all options, including a buyback to boost share and regain compliance. That said, and I've said this over and over. We are data-driven and the data around buybacks is very clear. The share price appreciation that you gain is almost always short term, and it's almost always unsustainable, while the cash you used to buy back the shares is permanent. We encourage everybody to go out and take a look at the data, and I think you'll find and reach the same conclusion. We've also been very clear that preserving our cash to cover our burn and reduced losses through interest income are very important to us as is investing in commercial expansion, the R&D and new products, which were highlighted today and being ready to acquire new companies and technologies without debt. Though these are -- they far outweigh any short-term gains or share price appreciation that you would get from a share repurchase program. And that, in most cases, would be unsatisfying to most of the folks out there. And we don't believe that we would be able to do a buyback large enough to have a meaningful impact on the stock price that would retain compliance over the long haul nor would it attract the larger long-oriented investors that we've been talking about. So long answer, but the answer is no. There's no buyback plan.

Peter, the next question is around our compliance and ability to stay listed on the NYSE American. Can you please give us some feedback on this question?

Yes. Sure, Elif. Once again, I encourage everybody out there to review the many public comments we've made on this topic. We started back in September when the delisting notice was received. Larry and I spent a fair amount of time on the Q3 earnings call, which was held November 13, 2023. We had a special call again on the 17th, and then Larry followed up, which I thought a well written CEO letter to the shareholders that addressed it. But again, some of the highlights. First, debunking some misinformation out there. It is not true that we were 1 to 2 days from regaining compliance organically. Larry explained this back in January that regaining compliance is at the discretion of the New York Stock Exchange. And it's usually after the stock closes for 30 trading days with an average at or above $0.20. There's no 8-day rule or 10-day rule or anything like that. The second area that we received a lot of questions and certainly a lot of commentary is why management isn't just simply requesting an extension. Again, we encourage you to review all the things we've talked about, and we've stated time and time again, we're working very closely with the New York Stock Exchange to avoid a delisting. Yes, keeping in mind that we did file a plan with the Exchange Bank in the fall. And one of the primary drivers is to request a reverse split from you, the shareholders. Why? Because that's the most direct way to regain, but more importantly, maintain compliance. That said, to answer the question directly, we will revisit the need for an expansion request, but we first have to learn the results of the 80:1 split. There are no guarantees that we remain listed after March 12 or an extension given should our recommended proposal for the reverse split fail. So the conclusion, the most direct way for us to get to and maintain compliance is an approval of the next topic, which I think you're going to ask me about is a reverse split. Larry, anything to add?

No, I think you summed that up well, Peter.

Peter, I know you and Larry has spoken to this many times before, but can you please talk about the reverse split ratio and the thought process behind the calculation?

Yes, sure, Elif. And we have. We've talked about it a lot. We spent a lot of time analyzing the data. We've been pretty clear, 80%, 85% of companies out there after they down [indiscernible]. It's everybody who's listed that as a comment, they're correct. After requesting or executing a reverse split, most companies do not fare well. Our management team though has been very transparent. That we feel our situation is different, and we've looked at companies. And it is true that 15% or 20% of the companies actually have done quite well after a reverse split. That's not a majority. But there are companies that do succeed, and they look more like what Zomedica looks like. What does that mean? That means our commercial stage, they have revenue. They have cash in the bank. Many of them had $75 million or $100 million, much like we have. So I encourage folks nothing's guaranteed, right, but go look at the data, and I think that you'll find our data is very accurate. Secondly, what do we know right now? We know in their current position, we're struggling to gain traction expanding our investor base. That includes the long retail base, many of you. In fact, most of our cap table looks like back. And we thank you for your patience. But we are also looking to further institutionalize the stock that comes in a lot of different flavors, pension funds, mutual funds, index funds, large family offices, and many have told us that the stock cannot be a penny stock. It has to be $1, $3 or even $5. So then the comments come in, right? The comments come in and say, that can't be true, Peter. There can't be that many that have told you that. I don't know the exact number, but it's certainly a fair amount that have told us they cannot invest in Zomedica because they have minimum share price rules. So it's true that some don't have those rules, but others do not have that rule, but they also have a rule where they actually have the divesting companies like Zomedica when they trade -- when they're delisted and trade over the counter. So that dovetails into the next set of questions, right, is why doesn't the company share the names of all these funds, Peter, that have these rules and want to write a cheque and invest in Zomedica. Share the name of the funder, the manager. Simply put, we're not going to do that. We're not going to share the names. In some cases, we're under a strict and formal NDA and others, it's informal confidentiality. But we've been very truthful that there are -- I don't know the exact number, but there are a fair amount, large and small funds, large retail investors, family offices and even research analysts that have told us very explicitly they would consider an investment once a reverse split is approved. Now the last part of the question or maybe it was the first part of the question, why 80:1? Why not a smaller amount? And I think I've been covered this extensively on the January call and many times before, we've looked at the data time and time again. We want to have a large enough float, whether it's 10 million, 12 million, 14 million shares post-split, the goal is to achieve a $20 price or at the very least be at or above $10. So that's the metrics we use. There are a number of different outcomes. When we analyze the data, some were even higher than 80:1. Believe it or not, and we settled on 80:1. Lastly, and I cannot state this point enough over and over that a reverse split in and of itself does not cause dilution. It does not in and of itself, destroy the retail shareholder base. It simply doesn't do that. And Larry and I have been very clear that if the reverse split is approved, we're not planning to go out and raise additional capital if it's approved. The last point, and again, we've talked very extensively for a For vote on a reverse split. I encourage you guys to take a look at the Glass Lewis reports, the ISS reports, the institutional folks generally follow these recommendations. These are not recommendations that we are involved in or we pay for. I know that's hard for some of judging by the comments for some of you to believe that these are independent folks that have said that you should vote For reverse split.

I think, Peter, you nailed it. I think the only thing I would remind people of is that the reverse split, it doesn't change the percentage ownership of the company that's owned by any shareholder, whether they're retail shareholder or an institution. It means it also doesn't change the percentage owned by a group of investors, say, retail investors. They will own the same percentage in the aggregate, the day after the reverse split as they did the day before the reverse split. The only way that retail's percentage ownership of Zomedica goes down is if institutional investors step up and begin to buy shares in Zomedica from retail investors who choose to sell, likely because they like the price. And why would institutional investors or any new investors for that matter, want to buy Zomedica shares post-split. Well, first, because they can. They would no longer be inhibited due to the per share threshold that you just mentioned, whether they're individuals who won't buy penny stocks or any of the funds that you mentioned. And second, it's because shares in a company listed on a major exchange that has rapidly growing revenues, strong margins and $100 million on the balance sheet with no debt trading below book and close to cash are typically viewed as an attractive entry point at which to buy shares.

Peter, we have received a number of questions about what we are planning to do to raise investor confidence. What is our plan forward to move the stock price up? And what is our strategy valuations and thoughts on being bought out?

Yes. There's a lot to unpack there, Elif. And when we went through the questions, you and I, there's probably 50 or more that all kind of fell into the general category. So I figured we'd just start with the basics. First off, and many of you know this, we have nearly 1 billion shares outstanding, meaning that when someone says, hey, just take the stock to $1 per share or even higher, say $3 per share, you just simply multiply that and that creates a valuation of $1 billion or even $3 billion, right? And while that's a lofty goal, and Larry and I would certainly like to be valued at that, keep in mind that would imply multiples of 30 or more next year's revenue guidance, and that's unrealistic in the short term. It's not realistic in the intermediate or longer term for sure. But I just wanted to draw folks in that when these questions, they all fall back into a basic question of valuation. Next, we've been pretty satisfied with where we've taken the business. The revenue was nothing back when Larry started. I closed out 2021 in the short time he was here at $4 million. He grew it to $19 million with the team, and then we reported or we expect to report at over $25 million for the year just ended 2023. And we've guided to $31 million to $35 million next year. Those are industry-leading growth rates. And so you can extrapolate those out into the out years. And if you do the math on the high end of the range, that's like a 40% growth rate. So we feel pretty comfortable that, that's a nice growth rate to guide to. We've also guided the margins. We believe that the margins will be 70% or higher over time, OpEx is flattening out. We're starting to see leverage. We're starting to see leverage. And I'll give more guidance if we have an earnings call next month on profitability and OpEx. But it's fair to say we're approaching profitability in our expenses. We haven't talked a lot about this. Mere a lot of other animal health companies when they were at this stage of their maturity or life. Also worth noting, this company gets a lot of comments on wasting, and I put that in quotes "shareholder money". On the contrary, we have been pretty clear. We've reported that we've spent just over $100 million on five acquisitions. Those acquisitions almost all of them are nearly integrated. PulseVet and Assisi have been with us over a year, and they're performing at or above our expectations. I won't recap but Greg Blair did a great job earlier today in the presentation as did Ashley Wood and Evans St. Peter. They highlighted all of the exciting future products in the AI and new assays for TRUFORMA, right? So there's a lot of good stuff going on there. The sales piece with Kevin and Nicole went pretty well. They talked about having the sales team at or about full strength. Many of you complained that our commercial team is too big, while others have complained it's too small. So I don't know if it's rightsized, but we do know that we feel that we have the right boots on the ground right now to hit the guided numbers and grow the sales where we want them to in the future. And also on the marketing spend, we feel really good. Our marketing events are more than just marketing events. When this company started, it was virtually unknown. Now, albeit as a small force, but everyone recognizes the Zomedica name, and that's attributable to the marketing events that we do. Also, which was news to me when I joined the company that in the booth, actual sales occur. These are working meetings. And instead of commenting on them, Larry and I suggest come out, take a walk around the booth, talk to the folks. You'll see that we're competing really hard and in many cases, getting sales right at the booth. Last, lots of comments on Peter, why don't you just take the company private, why don't you just sell it? When are you going to be bought, right? These are all things to think about, and we do think about them. But the reality is we're running this business to get to $100 million in revenue and beyond. We're working really hard to get profitable as quickly as feasible. And I have heard Larry say this. I've said it publicly, we're not running this business to be sold or look for a quick exit, a quick liquidity event. We are striving to take the business to a $500 million valuation of $1 billion and beyond. That's what we want. That's what you want. All of that said, the company is not for sale, but we are fiduciaries. And if any offers come in for all a part of the business, we'll consider them. But there are no offers or any plans right now to sell the company.

There's a lot there, Peter. The only thing I would touch on would be the marketing spend. I think you highlighted that well. But I'll also point out that our products whether it's the TRUVIEW microscope of the only automatic slide prep or a brand-new product and a brand-new category, touchless monitoring for the TRUFORMA assays that can't be done by other point of care, instrumentation or the completely alone PulseVet system. All of these are really in their infancy, right? These are new products. And so we've got to not only get visibility of Zomedica out there, but we also have to convey the messaging to the potential users from their peers and colleagues. And so when we go to these conventions, these major trade shows, we're putting key opinion leaders on the podium, and they're talking about the benefits to the veterinarians that they've seen and enjoyed and they're telling their story to their peers. And that's why it's important that we spend the money on market development.

All right. So now we've got a question about management salaries. Peter, Larry, can you please speak to the salaries management is making? And why is compensation so high?

Yes. Thanks, Elif. So I think everybody is entitled to their own opinion, whether it's high or low. So we'll just kind of stick to the facts here. We are publicly traded and our named executive compensation is documented in our annual filings. We also have an annual meeting, and that includes what's called say on pay. That is a nonbinding resolution, but I will point to last year's number, we're nearly 80% of the shareholders and voted in favor of the executive pay structure that was outlined. But we always try to improve our disclosures. We're going to -- we benchmark. We'll be doing additional benchmarking on our executive compensation and probably our directors that's done independently every year. But lastly, I'd like to kind of talk about -- we just talked extensively about a reverse split. In no way in this compensation will a reverse split, if approved, benefit the management team, right? It will reduce the number of the options that I have, that Larry has that, in fact, every employee has by 80 and the strike price will be adjusted by 80x, just like the regular shareholder. So in no way, will management be enriching themselves by or benefiting from a reverse split that we're recommending. So we feel pretty confidently that our executive comp packages are in line with comparable companies, but I'll let Larry weigh in as well.

Well, Peter, I do take an issue with one thing you said regarding us not benefiting from a reverse stock split. I think we as well as every shareholder benefits from a reverse split for all the reasons that we've discussed. Now we do not, as you pointed out, benefit inordinately. Our option strike prices increased 80x, the number of options is reduced 80x, but we all benefit from attracting new buyers to potentially accumulate shares in Zomedica. And with respect to the salaries, I think you summed it up well. But I recruited the management team over the past 2 and almost 1.5 years as we grew from fewer than 30 employees to today around 150. As senior management joined what was essentially a start-up company, I didn't offer them top dollar salaries, most being paid in the lower end of comparable public companies even though the people themselves are experienced world-class leaders. Instead, they were issued stock options that they could help grow in value by growing the value of the company. We issued stock options to all Zomedica employees so that the interest of all employees are perfectly aligned with our shareholders, all benefit from share price appreciation. Now a downside of this is that under SEC rules, when we issue options, a potential future value is determined by a Black-Scholes calculation, and the company records that as an expense, which makes up noncash stock compensation. Of course, this isn't actually paid to the employee, and it could be significant. In my case, it's nearly 2/3 of total reported compensation. Of course, all shareholders believe that their stock will grow in value in the future as do I. But it's not cash today, it can't be spent, and it only happens with strong share price growth, same thing with options.

All right. On to the next question. Peter, we're getting a lot of questions and comments about Zomedica not sharing enough information and not issuing enough press releases or positive news on the company. Can you please comment on this?

Yes. Sure, Elif. Again, keep in mind, we are publicly traded. We have Canadian and U.S. requirements, SEC requirements, very comprehensive list. It includes a 10-K, which is our annual filing, our 10-Qs done quarterly, a proxy. We have to file 8-Ks and other forms as required. In addition, though, to all the required filings which were not required to do, the company hosts like we're doing today events to try to give -- put out as much information as possible. We host calls upon the filing of the documents I just named. We attend dozens of investor conferences, both virtually and in-person. In fact, Larry and I, I think, attended a dozen or more. Over the past year, we've met with hundreds of investors and stakeholders. We've also issued dozens of press releases during the time. So some may feel it's not enough. Some may feel it's too much. I think philosophical, [indiscernible], and I'll let Larry weigh in. The management team here feels on reporting stuff that matters, meaningful news versus just purely PR, and I'll let Larry weigh in. But from where I said, I think we have quite a bit of a public-facing presence. Larry?

No, you're right, Peter. It's certainly not difficult to gain access to information about Zomedica, right? We issued press releases, as you mentioned, and then we post them all on our website. In addition, those various presentations that we make to investor groups, those are also all posted on the website. If you go to zomedica.com, if you go to the Investors section, you look at events and presentations, and you'll see all the presentations you can download them, and you can review back today's session will all be posted on the website as well. But it's also important to note that we're not looking to hike the stock. We report news that matters. Of course, there are some things that were required to report, and we do all of that required reporting. And where we have some significant news, we'll put that out there, but we're not looking to pump the stock. We've actually seen a comment from a shareholder who apparently bought in over $2. It was asking us to please just pump the stock. So it could rise again to that level, they could then sell and then we could go back to just reporting the facts. And that sounds humorous a bit, but it may be the perception of some folks as to what we should do. We don't share that view. If you look back to the press releases that we've issued from the time I got here, every time we announced that we were going to launch a product in a given quarter, we've subsequently launched that product in that quarter. And we're going to continue to maintain that track record as we go forward to the future being as transparent as we possibly can as we move forward.

All right. Now on to a question about our business opportunity. Larry, what is our total addressable market and market penetration? And how do you feel about our future capacity and ability to penetrate the market?

So I would suggest, first of all, I encourage people to take a look at the slides and the presentation that preceded this Q&A session as we outline not only our total addressable market for the company, but also on an individual product basis. But having said that, the market that we compete in is large, $62 billion of pet services in the United States alone in 2023. And that doesn't count the rest of the world market, which is potentially as large as the U.S. market. When we think about the addressable market, what we -- the way we calculate it is we look at all of the practices in the country and there are 30,000 small animal practices and about 5,000 either equine-only or mixed practices. And we ask what if all of these practices had a VetGuardian. What if they all had a TRUVIEW. What if they all had TRUFORMA and used all of our cartridges. What if they all use the PulseVet on average 3x a week as equine veterinarians do and so on. And we calculate that kind of the price of our product, and that gives us the total addressable market. Well, we calculate that the annual recurring revenue -- annual market in the U.S. alone is $2.5 billion using that kind of calculation. $2.5 billion, we did sales of $25 million, just a little bit over $25 million in 2023, that's barely scratching the surface of the total addressable market just in the U.S. alone. And remember, we're planning on launching while 15% to 20% of our revenue currently comes outside the U.S. from PulseVet and Assisi sales, we're planning on not only expanding distribution of those products, but launching our remaining products in the international markets this year. So when you think about it, we barely scratch the surface, there's huge market potential, what's required to get after it, market development, getting our name out there, deploying the sales force, and frankly, just hard work, blocking and tackling over the quarters and months to come.

All right. Peter, finally, would you like to touch on some other items investors have brought to your attention that may not have been covered in specific categories?

Yes. Thanks, Elif. And you're exactly right. We tried to do our best job. I think we took hundreds of questions and comments and kind of map them into 6 or 7 broad topics that we just talked about here. But a few stragglers. First was, does management follow the stock closely. And can you comment about stock manipulation, right? So we do follow the stock closely. We have a business to run, but we're not in a vacuum. We're keeping an eye on that stock price every day. That said, we don't think about manipulation at all, short trading, day trading, other trading tactics. That's not what we're about here. We have no knowledge of any of those practices nor do we spend a lot of time thinking about them. Any comments that Larry or I make in these areas would be speculative and quite frankly, inappropriate. I don't know, Larry, if you have anything to add there.

No, I think -- I agree with you completely.

Great. The next one is how do people get on the Board? What do these directors come from? And candidly, I was a little surprised. We got that question more than once, right? We're publicly traded. The shareholders get to vote for those directors, that occurs annually. We just did it last year. Our directors were duly elected. Many received over 90%, some even higher than that, right? And I think the lowest one [indiscernible] was right around 86%, and that was only in one occasion. So the votes ran for our directors. That said, the Board has elected, but the CEO is neither is the CFO. So the Board has passed with putting a management team as CEO in place. We don't vote on those. But there were a few questions around that. And last one, I was also kind of surprised about questions around the stability of our supply chain and specifically, shortage of BAW sensors. And again, I got to be honest, I was a little surprised by those. Those BAW sensors are used in our TRUFORMA product line. I'll just come right out there. We have no known supply chain issues. I did reach out to Tony Blair, who presented earlier today, and we confirmed that we have an ample inventory of everything, really, especially the BAW sensors. We expect to meet demand on all the products that we outlined today. And the BAW sensor supply chain should only get stronger as we acquired QBT late last year. So those were a few straggling questions that didn't bundle nicely in any of the other broader topics that we covered on our way.

I think there's one more, Peter, that I think people are wondering about and what I asked, and that is, what happens if it's a no on the 28th. And I'll go ahead and answer and then ask you to weigh in as well. And my answer is that it will largely be up to the NYSE American response to a request for an extension that we would, of course, make. It would be up to them. As when they originally noticed us of a potential delisting, they will more than likely want to know what our plan is to regain compliance. Since, as you covered earlier, even with $100 million in liquidity, we couldn't buy enough shares to significantly reduce the float to permanently address the stock price issue and a reverse split would have just been defeated. It would come down to expectations of the share price rising organically to average above $0.20 over a 30-day period. We would have some confidence in that, because we continue to increase revenues. We have strong margins. We have plenty of liquidity. We think that we are a very good investment for people. And we would have expectations that as we continue to increase the value of the company that the perception of value of the company and would be reflected in the share price. Having said that, it would be up to the NYSE American. And if they said no to an extension, then we would be delisted and we would go over the counter. If they say, yes, we would have through the extension period for our current pool of potential investors to push that price a $0.20.

No, I think that's exactly right, Larry. And they've told us as much. They do believe in our execution story, right? And candidly, everything we told them back in September, I just updated them a week or so ago, and we did an amazing job of delivering at or above what we told them we were going to do, but it will be up to them. And there's a variety of other options that we'll need to consider, but nothing is guaranteed after March 12, in the event that it would fail.

In closing, let me thank you for your participation today. The fact that you took time out of your busy schedules to come in to this webinar and to listen to the presentations shows that you care about your company and about the clients that we serve. Hopefully, you saw from the various presentations that we made, that we're on the right track. We have great products that have a meaningful impact on our customers and on the pets that they take care of. I'd like to assure you as well that we care. We care about building a profitable company and seeing the shares in that company reflect the growth. We should all agree that what we're doing is important in the lives of veterinarians, and most importantly, in your pets and ours. We may disagree on the reverse split, but we sincerely believe that our current proposed split is the best way to see Zomedica shares realize the potential that you all saw when you first became investors. Thank you.

Thank you Larry, Peter. This now concludes our Investor Day presentation. Thank you very much for joining us. The webcast will be available for replay on our website at zomedica.com under Events and Presentations. If you have questions that we have not been able to address, please submit them to us at investors.zomedica.com. Thank you again.