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Good day ladies and gentlemen, and welcome to your SANUWAVE's First Quarter Earnings Call. All lines have been placed on a listen-only mode and the floor will be open for your questions and comments following the presentation. [Operator Instructions]
At this time, it is my pleasure to turn the floor over to your host Lisa Sundstrom. Ma'am, the floor is yours.
Thank you and good morning everyone. We appreciate your interest in SANUWAVE and in today's call. SANUWAVE will now provide an update of our most recent activities, as well as our first quarter 2019 financial results. Our quarterly report on Form 10-Q was filed with the SEC on Monday, May 20, 2019. If you would like to be added to the company's distribution list, please call SANUWAVE at 770-419-7525 or go to the Investor Relations section of our website at www.sanuwave.com.
Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of SANUWAVE. We encourage you to review the Company's filings with the Securities and Exchange Commission, including without limitation our Forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, May 21, 2019. SANUWAVE undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.
I would now like to turn the call over to our Chairman of the Board, Kevin Richardson. Kevin?
Thank you, Lisa. On today's call we also have Shri Parikh, our President who also be giving part of today's call. The first quarter 2019 marks progress on our roadmap to full commercialization. As we have stated in the past our goals for 2019 revolve around placements, placements, placements, and reimbursement which then will lead the revenue growth.
In Q1 we exceeded our target by delivering 16 devices based on our current pipeline of activity with the new hires who have completed their training last week, we are raising our full-year guidance on placements to 110 from 100. The robust backlog gives us confidence in that number.
This is no easy task to go from zero devices to a 110 placed and fully certifying and training clinicians. We have targeted six states which allow a greater degree of trainer support and a faster path to positive reimbursement. Claims are beginning to flow already and we would expect to receive our first revenues from customers Midsummer.
I will spend one minute discussing the goals for 2019 and our accomplishments for the first four months. Then I’ll turn it over to Shri and Lisa and will conclude with Q&A. Our goals for 2019 are very straightforward there to establish a base on which to build rapid revenue growth in 2020 and beyond.
We’re targeting six states and we will place 110 devices. We will also train and certify 300 clinicians. From a reimbursement standpoint we’ll cover over 10 million lives. We’ll also support this activity by launching two to three new clinical studies. We’re adding three to four new countries. We’ll be adding new science advisors and we’ll add other key management and personnel mainly on the sales side of the equation as we continue to grow.
We are well on our way to achieving these goals which is all part of our grand plan which we have discussed in the past, is to provide a device anywhere and everywhere that a DFU is treated. When we are successful with this plan we will have over 2000 devices placed and achieve well over $100 million in revenue within the next four years.
Over time, we will also add other indications for wound treatment and work with other companies on treating wounds in conjunction with their modalities. We've laid it out in our investor presentation the milestones we need to achieve on a timeline so shareholders can measure how we are progressing along the way.
During the first quarter we placed 16 devices in highly qualified locations. Shri will discuss some of this during his talk. We’re also successful with having over 99% of the warrants exercised which provides us with necessary capital to grow and achieve our goals.
Over $2 million in proceeds arrived at the company during April and May. This funding will help us support the growth, which is why we’ve begun hiring and expanding our sales force and why we’re confident in getting to over 110 placements this year. We are fortunate to have such a strong shareholder base who support us. Thank you.
We added new sales and trainers to the mix and we’ll continue to grow the direct sales force in six states throughout 2019. The team we have brought on are senior folks from firms like Integra, BSN, Steadman, Virgo [ph], KCI, top-notch folks are seeking us out and want to join because we truly are the most innovative product to hit wound care in 20 years as evidenced by our JWC award earlier this year.
We launched two studies in Q1 looking at perfusion and dosing. We had a tremendous presence of some of the major wound care tradeshows and we’ll be attending two large European shows; one actually this week and then in the first week of June. Speaking of Europe, we announced the engagement of Alira Health to assist us in finding a strategic partner in Europe.
With so much of our focus on the U.S. rollout, we felt the best benefit to our shareholders will be to partner with an established player to accelerate our European expansion. We expect that to be announced and concluded in Q3. We also added some new patents in the cardiac space which is an area getting a lot of attention recently and we’ll move forward and potentially partner with an established player later this year.
Lisa will discuss revenue, but let me just say, the timing of orders impacted Q1. For the full year every single one of our partners is expecting dramatic growth in orders, but when an order is placed that lead the lumpy revenues. By this time next year, the order placements will be much less of an issue because most of our revenue will be based on procedures, and will be much smoother and larger than it is today.
Let me turn it over to Shri Parikh, our President, who will share some insights from the field followed by Lisa Sundstrom who will review the financials. Then I will conclude with some discussion about what investors can expect for us throughout the remainder of 2019. Shri?
Thank you, Kevin. Good morning everyone and thank you all for joining. I characterized this phase that we’re in has the best and most fun part of market commercialization. When technology intersects with results and we are privileged to have a front row seat to actually see just how our dermaPACE technologies impacting patients, it’s quite a remarkable and fulfilling experience.
As Kevin shared, we are following a systematic process in placements of our dermaPACE systems. The market in which we are prioritizing has history of supporting newer technologies quickly. Many having multiple private insurers within the respective state and this competition create an appreciation for the cost-benefit of a pioneering technology, ultimately endorsing submitted claims for reimbursement.
This is what we expect with our regionally focused market strategy in our early stages of commercializing dermaPACE here in the U.S. We are engaging with clinicians in our targeted market and primarily wound care centers and clinics that are treating greater than 10 diabetic foot ulcers a week. There are other set of criteria that also help guide our field sales and clinical teams for placement, but we are pleased with high interest and preliminary success clinicians, patients are sharing with us for the placement we’ve had to-date.
For example, a couple weeks ago a large wound care center in San Antonio was interviewed by the local newspaper and patients were quoted on how in just two weeks their experience with dermaPACE treatment has helped to bring sensation back to their ulcerated foot. The physician at this practice recently called and said that there was also a local TV station that was broadcasting the new story soon, which we’ll of course post on our website when available.
One of our earlier placement of the year is up to over a dozen patients having been treated and the clinician share with us during SAWC, a big wound care conference just a couple weeks ago just how impressed he is on how the technology had such a dramatic impact on his patients wounds and the mobility and confidence it has helped to create.
We do understand it is still early and there are many more patients and clinicians experiences that we are collecting, but outside of only one where the patient simply had no impact, there has not been anything negative. Having been in healthcare for over 20 years this is an impressive observation that one we expect will continue.
Concurrently the SANUWAVE team is growing and every member is focused on the customer. In terms of this growth and future hires we have hired four area sales managers in the markets we discussed and two clinical associates since our last quarterly update call. As Kevin shared earlier, thanks to the support of many of our investors and the outstanding 99% exercising of their warrants we are able to invest more into our growth plans looking to hire two more clinical trainers as well as two additional market area sales managers by the end of the summer.
To conclude, we know it is indeed the activity of placements followed by the training and certification of our clinician that will provide credibility necessary to support successful reimbursement claims. This activity and cooperation embraced by our clinicians together with our commitment to ongoing clinical trials and studies, we are confident in our journey and excited to deliver on a 2019 goals.
Back to you, Lisa.
Thank you, Shri. Revenues for the first quarter of 2019 were $178,000, a decrease of $167,000 or 40% from the prior year. Our revenues resulted primarily from sales in Europe of our orthoPACE device and related applicators and upfront license fee from our Southeast distribution agreement with FKS.
The decrease in revenue for 2019 is primarily due to a decrease in the timing of sale to our partner premier who placed a large initial order in Q1, 2018 and did not have a similar order in the first quarter of 2019.
Research and development expenses for the first quarter of 2019 were $261,000, an increase of $22,000 or 9% from the prior year. The increase in this area is due to increase in contracting for temporary services and increase study expenses related to our dosage study in Poland.
Selling and marketing expenses for the first quarter of 2019 were $158,000, an increase of $106,000 or 204%. The increase in sales and marketing expense in 2019 was due to the increase of hiring that both Kevin and Shri mentioned, an increased travel placement, travel expenses related to the placement and training of the commercialization of dermaPACE.
General and administrative expenses for the first quarter of 2019 were $1.5 million, an increase of $512,000 or 51% from the prior year. This increase was due to an increase in salary and benefits related to new hires from 2018, increase legal fees associated with our SEC filing, new patent issuances and patent maintenance and increase consulting expenses related to our insurance reimbursement strategy for the commercialization of dermaPACE.
Net loss for the three months ended March 31, 2019 was $2.2 million or a negative penny per basic and diluted share compared to a net loss of $5.9 million or negative $0.04 per basic and diluted share for the same period in 2018, a decrease in the net loss of $3.7 million or 62%. A decrease in net loss was primarily a result of decreased interest expense related to the issuance of debt in 2018 that was partially upset by the increase of the operating expenses as just explained.
Looking at cash flows; as of March 31, 2019 we had cash on hand of $98,000 compared with $365,000 at December 31, 2018. Net cash used by operating activities was $1.3 million for the first quarter of 2019 compared to $1.8 million for the same period in 2018. The decrease in 2019 and cash used for operations was due to the increase in operating and payroll related expenses and the increase receivables.
We continue to protect our burn rate from operations will be approximately 225,000 to 300,000 per month in 2019 as we launch the commercialization of dermaPACE including hiring of new employee. We continue to expand our international market and continue research and development of non-medical uses of the technologies.
Now, let me turn the call back to Kevin.
Thank you, Lisa. As you've heard we have set the stage for us to have a successful rollout in 2019. The focus is from early on placements and education. We anticipate 110 devices in use by year-end. The next target will be 35 by the end of the second quarter, 70 by the end of the third and 110 at the end of the year.
Revenue will follow as each state goes through the process of reimbursement. We want to thank our shareholders for exercise the warrants to fund this growth. We want to thank the team for executing on the rollout and the clinicians who are overwhelmingly supporting us as we’re getting great results from our product and helping patients improve their lives.
With that, let me open it up to Q&A. Christie?
Thank you. The floor is now open for questions. [Operator Instructions] And we’ll take our first question from Brian Marckx with Zacks Investment. Please go ahead.
Good morning everybody. Kevin, there was a press release in April that mentioned a Medical Device Audit Program that you expected to submit for in the third quarter. I'm just curious as to what that is and does the fact that you need to submit for it. Does it have any bearing on commercialization in any of the territories that you're in?
No. So, as part of becoming and commercializing and becoming what I call a big company, but also anytime you have products that are registered and approved in certain countries we have to go through audit processes, earlier this year we had our ISO. I forget what the number is, but it was -- they came in and certified us and said we're good to go. What that was referring to is that they're trying to make it easier for companies so that it isn't just on a one-off, you have to do Korea, Japan and doing them all separately. So they're doing something where you can combine those all into one audit procedure where the manufacturing audit comes in and make sure your quality is good. This will cover for us. It's actually a wonderful thing for us because it'll cover Brazil, Korea, Japan; I believe Canada, parts of Europe as well. So, it'll make life a lot easier for our quality team and for our manufacturing team.
As submission of this is prerequisite to sell overseas?
No, no, no, it's just -- we've already -- we're already registered to sell in all those markets like Brazil. We're not. There's a process that would go through call that Visa, but this is a step that will help on a new market. So Japan and Brazil are probably only two that aren't covered. Everywhere else we're good to sell. So this is not a hindrance. It'll only help us in the future because it'll make life easier to only get audited one time instead of a bunch of times.
For example, Korea we had an audit three years ago where they came in and made sure everything was good. We'd have to go through the same thing. If we didn't do this; if we went into Japan or went into some other markets. So this will make life easier for everyone.
Okay. All right. So, international product sales were extremely weak in Q1. I'm guessing probably the weakest that you've had in 10 years or more. And maybe I'm wrong but it can't be much lower than 47,000. But you mentioned that you expect that to accelerate in the remainder of the year. What gives you confidence that this was just an anomaly in Q1 and you're going to be back to accelerating growth in the remainder of the year?
Well, every country we work with they have to submit a plan for the year and every single plan that was submitted seems to be on track. It might be a month off here or there, but they're all up dramatically. So for example, Italy will be up almost 70% this year. Korea will be up close to 50% this year. And why I'm confident is that those orders have already begun to come in April and May. So, we're -- the evidence, you know the proof's in the pudding and the pudding is coming in. So we're having good success already.
Our focus, Brian, I don't mean to belittle the international stuff, but our main focus is the placements in the U.S. because that's going to drive a placement in the U.S. one placement will drive more revenue than what we saw on a yearly basis. What we saw in our International in Q1. And so if we can get to 110 on our way to 300 or 400, on our way to 800 or 900, on our way to 2,000, that's really what we're focused on because that's what's going to drive the value creation more so than the international. The international is -- it's great to have it and it benefits from the U.S. success. And we were having like I said; the orders are coming in, so I feel confident about where we'll be on the full year and they're going through their own processes. In Korea they're trying to get a certain reimbursement established. That might happen by the end of the summer. And if it does their orders will be dramatically higher than what they're anticipating today.
In Italy they're going through the same type of reimbursement process. And then we announced yesterday, we've retained the Alira Health to help us with Europe. And the main issue there is that we haven't focused on Europe at all. And it's a huge market but we don't have the bandwidth given that our focus is on domestic rollout. And that's what we should be focused on as the U.S. rollout. And so the board and management have decided that let's go find the right partner in Europe who can kind of run it for us someone with an established infrastructure sales force, distribution capabilities in the wound care space, so that they can manage the U.K., France, Germany, Spain. It's just it's a big opportunity that we haven't really taken advantage of. So that's where I get confidence in the international stuff, Brian.
I appreciate the comments, Kevin. And it kind of led into the question that I asked just now was asked because I had another question and it relates to international business whether it's actually profitable? Whether there is a net return, a net operating income return? And if there's not and you don't per see that in the near future does it make sense to just essentially shutter it or I guess it sounds like you're kind of handing it off which sounds like a probably a pretty good idea as it allows you to focus on the U.S. market. Is that essentially the way that you see the international business going given that the opportunity that you have in the U.S. as you talked about is relatively huge compared to what it is overseas?
Let me take a step back and just go over the U.S. market first. And if -- we've tried to lay it out on our investor presentation of how big the market opportunity is. So we've laid out how many wound care centers there are in the U.S.? There's about 2200. We've laid out how many diabetic foot ulcer patients are treated each year. We've laid out how many venous leg ulcer, arterial leg ulcer, pressure sores and then we can -- that's not even including the post surgical closures, cosmetic and a bunch of other indications, but where -- this year's target is it's a tiny amount of a really big opportunity. And so, that's what we're focused is is the U.S. The opportunity is huge.
That doesn't mean we're not making sure international is profitable. Our Korean business is extremely profitable. They’ll place on average 15 to 20 orders a year. They're doing probably at least that many in applicators and the cost for that is extremely low to support that. It's usually one trip a year and that's about it. And so it's a nice profitable business for us. Italy, nicely profitable, they're doing our refurbishments in Europe right now. We don't have any capital out of pocket on that and we're making $100 every time they do a refurbishment. So, it's a nice profitable business for us, but it can be better. And then if our goal is to treat a diabetic foot ulcer anywhere and everywhere that there one exists that means having a full global footprint and benefiting from that full global footprint in the wound care space. If we wanted to do that ourselves in Europe it would have cost us a lot of money to build it out. That's where the decision was really made, Brian, and we would have had to sink a lot of money and to grow that and it would have taken our focus away from the U.S. rollout. So we've decided to partner.
Same thing in South America, we'll have a partner there as well. Middle East we’ll have a partner there. Where we can't do it internally because the costs associated with the rollout are too high, we look to find partners. And that's probably the best approach where we don't come out. And as you know in our partnerships we tend to get capital paid to us for the exclusivity. So that's worked out. It's helped pay the bills and we've had a nice rollout and we're having good success with that model. But the main focus is as I've said, it's the U.S. but that doesn't mean we can't do the other ones by finding the right partners.
Okay. So, on the U.S. you mentioned I believe on the Q4 call that you expected to have some discussions with some of the -- some of the regional MACs and the private payers. Is that -- is that something that started or is that something that is a little bit still down the road?
It's a process. So the first part of the process was identifying the states where they would be most receptive to new product, have good diabetic foot ulcers and we'll also -- a competitive environment, so claims will get paid. We've begun submitting claims in certain markets. We've focused on six states; Pennsylvania North and South Carolina, Texas, Illinois and California. We're building a team out in those, and the goal of right now is to get claims flowing through the insurance, the private payers, and into the MACs so that they can deal with and figure out that we're a much better way of treating certain wounds.
And then, that'll open up as the summer goes along. That's the expectation. The meetings will take place, but it really happens after we've got a certain critical mass of claims going into certain insurance and then no we'll have a meeting set up and have a nice discussion to make sure that we're getting paid.
No problem.
For, not we are getting paid. The wound clinic is getting paid, and they're paying us.
Yes, yes. So I do have a question relative to that last comment. In the instances where the clinician bills and the claim is denied and at the point when SANUWAVE starts billing the clinician how does that work? So, will you initially not bill the clinician if he doesn't get paid, how does that work to still try to help drive utilization, and not have the clinician essentially eating the cost of it?
Great question. And one, the clinicians want to get paid, and so they're going to submit and what we've done is, we've worked, we're working with a third party who will support the billing process for SANUWAVE billing process for the procedure. We have all the right codes, we have what they bill for is going to be determined by them, but there's certain guidelines that can help them submit their claim. If it’s denied, the team we have deployed will help them with the appeal process and if it's denied again, there'll be a second appeal, if they don't get paid, they won't pay us. And that's how things will work. We can't ask -- expect them. There's another wound care company that made that mistake where they basically were -- were charging the wound centers even though the wound center wouldn't collect and it's a -- it's a backward proposition.
And so what we're doing is working with our partners and if they get paid we get paid. It's a pretty straightforward economic model. They'll be making good money. The insurance carrier will be saving money relative to the other modalities they could be using, the clinicians are saving time, because it's a faster procedure, it's non-invasive, the patients like it because they don't have to wear boot or you know with a with a negative pressure device on it. So there's so many benefits. They don't have to go into a Hyperbaric chamber every day for 21 days for an hour. I mean, there's just so many benefits to our product that we're expecting the adoption to be rapid for those that are that are using it appropriately. They are only going to get paid when they get paid. We're not going to try to play any funny games on that.
Okay. So in times -- in terms of the time from placement of the device in the U.S. in total [ph] initially used, do you have any metrics on that or they are they relevant at this point? Can you help us with that? So when you place the device, how long does it take for the condition on average to look for the first use?
So we've identified a number of places that we will be installing in training. The training usually takes a day or two. There's usually follow up two weeks later, four weeks later, six weeks later, where we're making sure that they're doing it appropriately. We're answering any questions we'll be support with the billing as I mentioned earlier. They usually go with an investigational contract that lasts anywhere from one to three months, one to four months depending on the clinician.
And then they'll move to revenue producing. And when they're in that investigational phase, they still may be submitting a claim. But if we're not getting paid, then they will not submit our portion of that when they're -- when they're submitting a claim.
They'll move to what we call our revenue model. They'll make a decision after they've been using it for a few months, and they'll shift gears, and they'll sign a different contract, where they will pay to use our device, and we'll collect when they receive. It takes somewhere around two to three months. They're doing about anywhere between three to 10 patients a week, as Shri had mentioned or targeting those that have greater than 10 diabetic foot ulcer patients a week.
And so we're seeing – it will prior average somewhere around one a day ultimately, but we're not there yet from a metric standpoint, Brian. So I can't give exact details. A lot of this is -- you know we're still learning, what the training needs to be. It's been a great few months so far this year, we've learned a lot. The benefits tremendously, and I mean patients coming in -- in tears hugging the doctors, hugging our salespeople, hugging our trainers, because of they've got a wound that's healing, that wasn't before, but we're still refining everything.
Ultimately, with likely the on-boarding process to probably be you know a month to three months of investigational, then switch the revenue, and then we'll see once the claims are paid, we’ll --we get paid.
So it's a -- from start to finish at somewhere around four to six months, for when we start to when we'll start to see the revenue ramp aggressively. It could be faster. I mean, some of our new salespeople are really focused on getting revenue producing units out there faster. So kudos to them. It's just; I'm giving you exactly what's happened to date. Going forward, I could see it move on an accelerated pace as well.
Okay.
And Brian, I guess we've got to take some other questions too.
Yes. Last question, of the initial six states, how many of those states do you have salespeople and trainers in or do you have them in all those states?
Four of the six we’ll add two more soon. And that's the ones we’ll add are Illinois, and then also we'll add California. And then, but the main thing we're adding right now, we need a trainer in Pennsylvania, trainer in Texas. So if you start with the sales, then you go to trainer. So that's kind of the game plan.
Okay. All right. Thanks Kevin. Appreciate it.
Thanks, Brian.
And our next question comes from James Terwilliger [ph] a Private Investor. Please go ahead.
Hey Kevin, can you hear me?
Yes. Hi, James, how are you doing?
Good, how are you?
Good.
Very quickly, I’m kind of kind of jump on where the questions were going before on the reimbursement. Reimbursement helped me think about this. I mean, it's going to vary by state, it's going to vary by payer mix. What are the trends in kind of the wound care reimbursement? What other technologies have gone before you in wound care that you can use as kind of a map in terms of execution? Maybe help me understand a little bit more in terms of reimbursement trends in the United States for wound care?
Sure. So in the in reimbursement say this is called crosswalks, and basically there are examples of how a advanced wound is treated, and we try to mimic those in some regard, you don't want to go unnecessarily higher, but we want to be able to say our closure rates, our healing rates are acceleration of the healing are similar to these type of modalities of treatment, and these are what -- this is what they're getting paid for those treatments.
So things like negative pressure room therapy, those treatment, a full cycle of treatment to get to the same place we do is in the you know 10,000 to 20000 range. Hyperbaric, similarly they're getting somewhere between $400 to $700 per dive is what they call it. You're seeing the amniotic space and skin substitutes. They tend to have to treat four to six treatments, four to six to get to get a wound closed. That's running in the 10,200 plus range. So it’s expensive and that's not including an amputation that could occur. So we've got a -- we've got a pretty good price umbrella, James so that we can come in where we're coming in and feel confident that we can leave enough on the table for the clinician to make money, the facility to make money, and the insurance carriers to save money.
And that's really the goal, is if we can save the system money, get the healing rate better than what is out there today. And if the -- if the clinicians, the wound centers are making decent money, then they'll use it. So you have to balance all of those out, and I think we've come to a good conclusion on that, and we're seeing decent acceptance and really haven't gotten a lot of pushback yet.
As far as trends go, wound care is there's always pressure to get results. You've heard a lot of noise recently about making sure they are results oriented, not just volume based. So I think you're seeing more – and by the way that's extremely favorable to us, because we're very much a results based device and system. But you're seeing more of that kind of talk take place at CMS and I could see the pricing pressure coming down on some of those, you've seen a little bit in Hyperbaric, a little bit negative pressure. So it's -- but that's a normal trend whenever we have people paying a lot of money. They want to see the price go down.
Okay. So my second question, you're probably not going to like this one though, is you've got a limited launch in the United States going after six states. That -- is it correct to think that's going to be pretty much the focus this entire year. You're not going to move into say a seventh, eighth, or ninth state until 2020 at the earliest? Is that -- is that fair?
That's a fair statement. I think right now, we get California, Texas, Illinois, the Carolinas, and Pennsylvania where 33% of the U.S. population we've got, I think it's somewhere around -- it's just a massive amount of opportunity right now that just in those six states. So I think, let's stay focused on the six states, let’s leverage our sales force, leverage our trainers. Every time you open a state, it costs money. And so I think, let's get -- let's get our feet under us in those six states, do a really good job in those six states, get the revenue ramping, get the placements ramping, and then it's going to be easy to say, okay let's expand to Tennessee, because Memphis needs some help or something like that.
Those are -- those are the areas that will then target the next ones after that. But right now, these six are -- we could probably just run those six centers, and do really well as a company but we'll get into the other states and we'll identify them throughout the year where we need to be. We have demand coming at us from all that SAWC; you know there were three or four people from Idaho asking for product. I know here in Massachusetts we have people asking for product at some of the bigger you know Mass General and places like that, that are asking for product. The hardest thing we have to do right now is tell people know, that that we can't support it in states where we aren't focused. And that's a really -- that's a tough balance to tell a – tell a doctor yeah we got a great product. You've heard about it, it's having wondrous results, but we're not going to get to your state until 2020 or 2021. That -- it's a tough conversation to have with people.
And then -- when you're when we're talking these states in the United States, this this is excluding the VA in Indian Health. That's that's a different program with a different partner. Am I thinking about that correct?
Yes. Premier Health is doing a good job there. They're rolling it out. They've done some installs in Indian Health in the last few weeks. They're getting the VA up and going. It's been a longer process I think than they were expecting, than we were expecting on the VA side, partially due to some of the wound care nuances that exist, that you know and I know, kind of occurred due to some bad apples in the wound care space. But they're getting through it, and now they're seeing great results coming in so that's different, because it's a different animal and so we have that as a separate sales organization, different distribution partner. We let them manage that.
I kind of view it as a country, right. The same way, we have Korea, same way we have Brazil. We have a partnership with someone who manages VA and Indian Health.
Okay, so and my last question then is and then I'll jump back in queue is the recent announcement with your opportunities in Europe, because just as you just alluded to historically we've talked on the international markets about your development work in Asia, your development work in the Middle East, your market development in South America. How do you -- I know this is a recent announcement, but how do you view your opportunities in Europe with this partner to help you position these type of market development efforts?
Let me start with Alira. Alira Health is well known, well regarded as kind of the leader in health care, but they're really good wound care. They're probably the premier guy for Europe in wound care. They've got a great presence. They know all the players, they know and it's a stagnant market over in Europe. It really hasn't grown. There hasn't been a lot of new product introduced, and there are nuances on a country by country basis with reimbursement. Throw [ph] in Brexit, and you've got a you've got a big mix of stuff going on over there.
We had done the math on ourselves -- by ourselves on what it would cost it to fully kind of infrastructure Europe on our own, and that in longer term, meaning 7 years to 10 years from now, it might have made sense, but in the next three years it would have been the cost to build the infrastructure to support it. I'm not sure, we would have made any money. And right now, that's not what we're focused on as a company. We want to make sure the shareholders are benefiting from our U.S. rollout and therefore we're doing more partnerships in these countries.
We've had a number of companies approach us about becoming our distribution partners in Europe. So instead of us one off in it, we've decided to consolidate that effort with Alira and let them help us do it in a formal organized fashion. And we're very confident we'll have something done by the third quarter.
Okay, great. And then the space in the sector seems to get some activity I think 3M and announcement in the sector maybe Smith & Nephew had an announcement in the wound care sector as well so, anyway. Okay, great. I'll jump back in queue. Thank you.
Thanks James.
[Operator Instructions] And it appears there are no questions at this time so I'll turn it back over to Kevin for any closing remarks.
Great. Thank you, Christie. First and foremost, if anyone has follow up questions, or wants to visit, please give us a call. Come on down. We've had a few investors swing by in this past quarter. We're excited. Probably the most excited we've ever been about the opportunities in front of us especially in the U.S. We want to thank the investors because the $2 million that came in April and May to help propel us going forward, addresses one of the concerns that I know many of you have expressed about our balance sheet and that helps put us in a really great position and why we are confident we'll get to 110 devices place this year. We'll also begin getting reimbursement, having covered lives throughout the U.S. specifically in those six states.
And finally, I think, we're -- the way we're approaching our international opportunities is not spending shareholder money to develop those, it's really working with partners so that we can leverage those opportunities and partnerships in countries where there's a big opportunity. And that's going to pay dividends for us down the road, and we're very excited about that.
Again, thank you very much for taking the time today to listen. If you have any follow up questions, please give us a call. And I know some of you have been wondering about are if we can do an annual meeting later this year, and that should be sometime in September. It may slide to October, but just as a heads up, that that should be coming on the horizon. Thank you very much. Have a great day.
And that does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a great day.