- Revenue: $6.1 million, a 2% increase over Q2 2023.
- Diagnostics Segment Growth: 68% year-over-year growth.
- PulseVet Consumables Revenue Growth: 11% increase.
- Gross Profit Margin: 71%, up from 67% in the previous year.
- Net Loss: $23.9 million, or $0.024 per share.
- Cash Position: $83 million in cash, cash equivalents, and available-for-sale securities.
- Consumable Revenue: $4.4 million, representing 72% of total revenue.
- Capital Revenue: $1.7 million, down 12% from the previous year.
- Operating Expenses (Adjusted): $13.4 million, up from $10.8 million in Q2 2023.
- Non-GAAP EBITDA Loss: $22.3 million, adjusted to $5.2 million for non-cash and nonrecurring items.
- Warning! GuruFocus has detected 1 Warning Sign with ZOM.
Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zomedica Corp (ZOM) reported a 68% year-over-year growth in its diagnostics segment, driven by new assay launches and demand for VETGuardian.
- The company achieved significant milestones in international expansion, including strategic alliances with Leader Healthcare Group and SIRE Veterinario, enhancing its global reach.
- PulseVet consumables revenue grew by 11%, indicating strong repeat usage by customers and highlighting the product's value.
- Zomedica Corp (ZOM) received CE Mark approval for TRUFORMA and VETGuardian, enabling commercialization in the European market.
- The company completed the expansion of its manufacturing facility in Georgia, increasing capacity to support a fivefold increase in product demand.
Negative Points
- Zomedica Corp (ZOM) experienced only a 2% overall revenue growth, with capital sales falling short due to temporary headwinds and sales force disruptions.
- The company faced a 12% decline in capital revenues, attributed to fewer PulseVet systems sold and unexpected sales force productivity issues.
- Non-cash impairment charges of approximately $16 million were recorded, impacting reported operating expenses and net loss.
- The CFO, Peter Donato, announced his resignation, leading to the suspension of previously issued revenue guidance for 2024.
- Macroeconomic factors, such as the current interest rate environment, potentially impacted new system purchases, causing customer hesitancy.
Q & A Highlights
Q: Can you discuss the sales force headwinds experienced during the quarter and how you plan to mitigate them moving forward? A: Larry Heaton, CEO, explained that the headwinds were partly due to the evaluation and replacement of some salespeople by the new Head of Sales, which led to a temporary gap as new hires were trained. Additionally, 14% of the sales force was out on medical leave at one point. All affected salespeople have since returned, and the company expects sales to rebound as a result.
Q: What alternative strategies are being considered for PulseVet sales given the reluctance of some customers to commit to financing? A: Larry Heaton, CEO, mentioned that Zomedica is considering placement programs where the device is placed without upfront capital commitment. Instead, customers would pay a higher price for consumables, which could later transition into a purchase once they see the return on investment.
Q: Can you provide more details on the $16 million non-cash charges taken this quarter? A: Peter Donato, CFO, clarified that these charges were to adjust the carrying values of goodwill related to certain acquisitions. Most of the goodwill has now been written down, with only a small amount remaining for Assisi and PulseVet.
Q: What is the expected timeline for seeing meaningful sales from recent international agreements and CE mark approvals? A: Larry Heaton, CEO, expects sales from Costa Rica and the Middle East to begin this quarter, with European sales following as businesses resume after the August vacation period. The CE mark facilitates entry into these markets, and Zomedica anticipates significant contributions from international sales in the second half of the year.
Q: How does Zomedica plan to utilize its cash reserves moving forward? A: Larry Heaton, CEO, stated that the company plans to use its cash reserves prudently, focusing on initiatives that drive sales growth while being cautious with operating expenses. The goal is to reach cash flow and GAAP profitability by increasing revenue and reducing costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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