Ekso Bionics Holdings Inc

NASDAQ:EKSO

Earnings Call Transcript

[Operator]

Greetings, and welcome to the Ekso Bionics First Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce to your host, Stephen Kilmer of Investor Relations. Thank you. You may begin.

[Stephen Kilmer, executive]

Thank you, operator, and good afternoon, everyone. Earlier today, Ekso Bionics released financial results for the first quarter ended March 31, 2025. A copy of the press is available on our website.

I would like to point out that management will make statements during this call that include forward-looking statements within the meaning of the federal securities, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including statements regarding our business strategy, future financial performance or operational expectations or our expectations of the regulatory landscape governing our products and operations are based upon management's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.

For a list and description of the risks and uncertainties associated with the company's businesses, please see its filings with the Securities and Exchange Commission. Ekso disclaims any obligation, except as required by law, to update or revise any financial or operational projections, its regulatory outlook or other forward-looking statements, whether because of new information, future events or otherwise. Any forward-looking statements made on this call speak only as of the date of this call.

Representing Ekso Bionics today are Scott Davis, our Chief Executive Officer; Jerome Wong, our Chief Financial Officer; and Jason Jones, our Chief Operating Officer.

With that said, I'll now turn it over to Jerome.

[Jerome Wong, executive]

Thank you, Steve. Good afternoon, everyone, and welcome to our first quarter 2025 conference call. On behalf of the management team and everyone at Ekso Bionics, I would like to thank you for your interest in our company. And for those who are shareholders we appreciate your support. For the benefit of those who are new to the Ekso Bionics story, I would like to take a moment to summarize our business. Ekso designs, develops and markets exoskeleton products that augment human strength, endurance and mobility. The primary end market for our exoskeleton technology is health care, where our technology primarily serves people with physical disabilities or impairment in both physical rehabilitation and mobility.

We operate as one operating and reportable segment with 2 markets: Enterprise Health and Personal Health. Our legacy Enterprise Health products consist mainly of our EksoNR device, which is our wearable robotic exoskeleton specifically designed to be used in a rehabilitation setting to assist individuals recovering from both acute and chronic conditions. And our Ekso Indego Personal device, a wearable, lower extremity powered exoskeleton that enables certain individuals living with spinal cord injuries with the ability to stand and walk independently. Both products also include support and maintenance contracts.

I will turn the call over to Scott in a moment for an update on our commercial activities and growth plans. However, before I do, I would like to provide a brief summary of our financial results. To streamline things, all the numbers I will refer to have been rounded, so they are approximate.

The company recorded revenue of $3.4 million in the first quarter of 2025 compared to $3.8 million for the same period in 2024. This reduction was due to capital budget impact from certain inpatient rehabilitation facilities, or IRFs, related to our EksoNR Enterprise Health product. Gross profit for the first quarter was $1.8 million, representing a gross margin of approximately 54% compared to a gross profit of $2 million and a gross margin of 52% for the same period of 2024. The change in gross profit was driven by a decrease in revenues from Enterprise Health devices, partially offset by cost savings in supply chain and a reduction in service costs. The increase in gross margin was primarily due to cost savings in supply chain and a reduction in service costs, partially offset by lower margin sales related to increased volume through distribution.

Operating expenses for the first quarter of 2025, which consists of R&D, G&A and sales and marketing expenses were $5.3 million, essentially unchanged from $5.2 million for the first quarter of 2024. Net loss applicable to common stockholders for the 2025 1st quarter was $2.9 million or $0.12 per basic and diluted share compared to a net loss of $3.4 million or $0.20 per basic and diluted share for the same period of 2024. For the fourth quarter of 2025, the company used $2 million of net cash in operations compared to $3.5 million for the same period in 2025. As of March 31, 2025, the company had cash and restricted cash of $8.1 million up from $6.5 million as of the end of 2024.

That's it for my summary of our first quarter 2025 results. Please see our Form 10-Q filed earlier today for further details regarding the results.

I'll now turn the call over to Scott.

[Scott Davis, executive]

Thank you, Jerome. While we saw some softness in our legacy enterprise business in Q1 as we had several customers whose capital budgets were at least temporarily impacted by reactions to macroeconomic uncertainties that was partially offset by good growth from our Ekso Indego Personal. As we have discussed in the past, CMS established pricing determination for our Indego Personal exoskeleton in Q2 of 2024. This regulatory change created a significant opportunity to help Medicare enrollees living with a spinal cord injury by removing what had historically been a primary barrier to assessing our exoskeleton.

Accordingly, we immediately set out to establish a go-to-market strategy aimed at notifying as many early physician and provider adopters as possible of the new CMS benefit category redetermination and the fee schedule listing. Additionally, we began working closely with our extensive network of neurorehabilitation partners across the country, focused on education efforts, and on appropriate patient election and process for patients prescribed in Ekso Indego Personal for the home and community setting. With that early work largely completed, we then shifted our primary focus from building awareness and providing customer education to advancing our scalable go-to-market strategy for the personal channel.

As we discussed on our Q4 call just a few weeks ago, 1 of the key changes we made was to engage PRIA Healthcare. One of the leaders in market access services, which has been instrumental in the successful commercialization of over 300 medical devices.

As a quick status update, we also recently announced bringing on Bionic P&O as a new and our first O&P distributor. And we're excited to report that they already submitted their first patient claim for the Indego Personal exoskeleton to Medicare in Q1. And with Ekso's focused marketing efforts, we've now developed a pipeline of more than 35 Medicare beneficiaries that we believe are qualified candidates for Ekso Indego Personal in 2025. That's 37% from where we were on our Q4 call in early March. Factors considered for the candidates to be represented in our pipeline include, among other things, Medicare enrollment, an appropriate indication for use and medical necessity.

Moving forward, we believe working with our growing distribution network and leveraging our new relationship with PRIA throughout the claims process, places qualified candidates in a good position of having their claims successfully processed.

That said, and as we cautioned on our last call, we obviously cannot guarantee that all of our pipeline will result in new claims submissions occur within this time frame or ultimately be paid. Nevertheless, we believe that we can leverage our experience over the past year and the capabilities and reach of our new partners to navigate the complexities of coding, coverage and payment, which will allow us to more effectively put Ekso Indego Personal within reach of the individuals who need this potentially life-changing mobility-enhancing technology.

In summary, with a strong focus on business development activities, Ekso is building what we believe is a more scalable go-to-market strategy for our Ekso Indego Personal. This is exemplified by our most recent separate but clearly related moves, where we named National Seating & Mobility, as the company's exclusive distributor of the device within the U.S. complex rehabilitation technology or CRT industry. And as I mentioned a moment ago, our most recent engagement with Bionic P&O as a nonexclusive distributor of Indego Personal within the orthotics and prosthetics industry.

We believe that NSM and Bionic P&O, will significantly broaden access to our portable exoskeleton device for individuals living with spinal cord injuries and longer term, perhaps other mobility challenges across the United States. NSM brings a network of over 180 locations and more than 2,400 team members who support more than 250,000 mobility solutions each year. And Bionic P&O, a leading national provider of prosthetic and orthotic solutions, is an ABC accredited independent clinical practice group that now operates across 12 states.

While the majority of our revenue in 2025 will still come from Enterprise Health, we believe with our significant investment in these scalable programs. We will continue to see rapidly increasing contribution from our Personal Health products throughout 2025.

In summary, the first quarter was another period of significant progress for Ekso Bionics marked by a growing shift between legacy enterprise and newer personal revenue contributions, good gross margins, lower cash burn, a strong balance sheet, a growing pipeline of Medicare beneficiaries and what we believe are excellent candidates for Indego Personal in 2025, and the continued building of a scalable go-to-market strategy for Indego Personal, supported by both established and new industry-leading DME, O&P and market access partners.

This ends our prepared remarks for today. With that, we're happy to take any questions that you might have. Operator?

[Operator]

[Operator Instructions] Our first question is from Ben Haynor from Lake Street Capital Markets.

[Benjamin Haynor, analyst]

First off for me, now that you've got the O&P channel covered with Bionics' or at least initially covered and you have the complex rehabilitation therapy channel, the traditional kind of Medicare DME along with the kind of post-acute rehab clinics on the more enterprise side. How should investors kind of think about where the patients will fall this year in terms of the Indego Personal and kind of is it kind of 1/3, 1/3, 1/3 with CRT, O&P and the traditional channel? And then what do you expect from your enterprise folks?

[Scott Davis, executive]

Okay. Yes, great question. Ben, thank you. We -- again, the majority of our business historically has come out of our Enterprise Health product portfolio. And in general, as we move through 2025, we still expect that enterprise product will represent the large majority of what we do, 75% to 80% of our business represented by that product category. Moving into the personal product, again, as we have worked to develop our initial channels into that segment, and we've really scaled up our market access capabilities, and we've driven a good pipeline we do expect solid contribution growing quarter-over-quarter as we move through the year with really the balance of our business represented from that segment.

As far as how that falls between CRT and O&P space, I think there's a bit more of a familiarity in the O&P space, the product sort of lends itself a little bit more to reimbursement through O&P providers. However, there's been a big investment with NSM in the space. So we do expect that as the year progresses, we'll see a good contribution from there as well. So how that actually falls as we move through the year, we're uncertain of. But it could be as much as 50-50. It could be a little less. We just won't know until that program really starts to ramp up on the CRT side.

[Benjamin Haynor, analyst]

Okay. That's fair enough. And then with PRIA, I guess, any more color on how things are going there? Are you getting a sense of what's kind of a no-go mission, if you don't have certain documentation or things of that nature that you need or don't need and kind of coming up with the knowledge you need to have more successful claims down the road?

[Scott Davis, executive]

Yes. We have learned from the claims that we've submitted past claims, and we've had a claim that ended up in ALJ, which gave us a very clear indication of perhaps what they were looking for. And we believe that what we've put together right now as far as the requirements for what we consider to be a solid claim or a successful claim. And we believe we have a strong understanding of that.

That being said, there has not been a definitive set of criteria that have been sort of published through CMS and through the DME MACs, which indicate what is their definition of exactly what's required in those claims. However, based on what we've seen, our interactions and what we learned through our engagement with PRIA, we feel like the claims that are being submitted today are very comprehensive and have a high probability of going through.

[Benjamin Haynor, analyst]

Okay. Got it. That's encouraging. And then on kind of the IDN front, it sounds like there's still some budget constraints. Obviously, there's a lot of uncertainty out there, just generally speaking, do you have a sense of what these folks are looking at on the capital budgeting side later this year? Or how much of a read-through do you have on that sort of part of the business.

[Scott Davis, executive]

Yes. I mean -- so as I had talked about in previous quarters, we had talked about 2024 being an off-cycle year for IDNs. We do have a lot of renewals coming up with IDNs in 2025. And those appear to be on track at the moment. So that -- we expect in North America that to be a solid contribution to our Enterprise Health business in 2024. We also have a lot of inpatient rehab facilities that maybe are part of larger health networks, independent hospitals that have capital budgets where we've been working with them for some of them for years, others for months. Those capital budgets, we've seen a little bit of a softness certainly in Q1, around that -- around economic uncertainties, and we've seen those capital budgets, which were there, disappear rather suddenly. We also have many of our capital customers who receive federal grants for some of this technology and the status of those grants is uncertain at the moment as well.

So while we have a strong pipeline on the enterprise business, we are seeing budgets impacted at least temporarily around some of those purchases. It certainly affected us in Q1. And it's something that we are preparing ourselves as we move through 2025 that this could be a bit of a longer-term fact. But to date, we don't have anything definitive that it will be.

[Benjamin Haynor, analyst]

Okay. Got it. And then lastly for me on the gross margin. It's been 4 consecutive quarters that you've been north of 53%. And it looks like you're clearly trending in the right direction there. I mean is this kind of a new sort of baseline and as revenues expand from here, you can move gross margin higher with that?

[Scott Davis, executive]

We believe so. The operations team, Jason and the operations team have done just an amazing job as it relates to keeping our costs, raw material cost, bill material costs on the product. And the impact, we frankly expected margins to be a bit higher in Q1. It was really just driven by just the lower volume of products that we put out that had an impact to those margins. And some of it was mixed too. We had, again, a fair contribution from Europe as well.

[Operator]

Next question here is from Swayampakula Ramakanth from H.C. Wainwright.

[Swayampakula Ramakanth, analyst]

So just trying to expand a little bit on the 2 relationships that you've built over the last quarter or so, that's the NSM and the B&O -- I mean, Bionic P&O. When I take a quick look at where their locations are, obviously, Bionic P&O is a smaller set compared to National S&M. Does -- do -- what I'm trying to understand is like will their clientele them being in certain areas, similar areas in certain geographies, will that be an issue for you? Or actually, that will actually enhance your product in these geographies?

[Scott Davis, executive]

Yes. So we believe that these partnerships actually enhance our value because of the strength of these organizations, and they have existing -- we have existing relationships with processing large numbers of claims through the DME MACs. They are experts, certainly, National Seating & Mobility, is an expert on the mobility side of things with power wheelchairs and high-tech mobility products. They understand how to work with the patient, with the payers and physicians around that. And when we look at Bionic P&O, they are used to dealing with complex orthotics. And they, again, can really help coordinate that experience for that patient in helping them gain what they need from their physician as well as other health care providers and work with the payer to ensure that they have a solid claim.

So they're both geared toward that, for National Seating & Mobility. They're quite a large organization, so maintaining the right certifications and taxonomy on a state-by-state basis is something that they're working on and building out. So as they build out their coverage, they do have full national coverage. So as they build that out, the reach will expand with them. And Bionic P&O, is currently in 12 states. As it turns out, we have a lot of folks that we have in our -- that are within our growing pipeline of potential beneficiaries. We have a lot of crossover in their states. We're also continuing to develop the program so that we have good coverage across all 50 states to ensure that individuals who qualify for this technology have a convenient location and a convenient partner to work with. So we do believe that their expertise absolutely helps and can facilitate cleaner and better submissions.

[Swayampakula Ramakanth, analyst]

Okay. And then having these relationships, I'm just trying to understand how much of a help does it give you in terms of your G&A expenses, because you don't have to have that many feet on the ground, so to speak. But at the same time, how much of that gets neutralized by the amount of pay away that you'll need to do to these 2 groups?

[Scott Davis, executive]

Sure. And again, as we look at the -- that was this something that we and we do ourselves, do we build this capability in-house? Or do we leverage experts who are out there? And we made a decision to leverage experts in this space, and that does save us considerably. When you're talking about market access and B2C business, it would require significant investment in-house for Ekso to be able to hire the number of people that we would need to be able to process all of these claims to be able to be a local point of presence as these fitments and screenings are happening. It would be incredibly challenging for us to do that. So by setting up a distribution network, this allows us to leverage these much larger organizations that have wider teams with regional and national coverage.

Of course, that is at the trade-off of -- now we have a 2-tier models. So we need to be able to support the margins for our distributors. And through the good work that Jason and his team have been doing in ensuring that we maintain good cost controls on our devices and continually improve our operating efficiency, both inside as well as through outside contract manufacturers. We are -- as the volume increases, we expect to be able to maintain adequate margins to be able to support this distribution network and still maintain margins that are within what people are used to seeing from us in those high-50s plus.

[Operator]

This concludes the question-and-answer session. I'd like to turn the floor back to management for any closing comments.

[Scott Davis, executive]

Thank you, Matt, and thank you to everyone for joining us today. We look forward to updating you as we continue to progress.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.