Assure Holdings Corp (IONM) 2023 Q1 法說會逐字稿

Greetings. Welcome to the Assure Holdings First Quarter 2023 Conference Call. (Operator Instructions) Please note, this conference is being recorded. I will now turn the conference over to your host, Brett Maas of Hayden IR. You may begin.

問候。歡迎來到 Assure Holdings 2023 年第一季度電話會議。 （操作員說明）請注意，正在錄製此會議。我現在將會議轉交給你的東道主，海登 IR 的布雷特馬斯。你可以開始了。

Hello, everyone, and thank you for participating in today's conference call to discuss our shareholdings financial results for the first quarter of 2023. On the call today are Executive Chairman and CEO, John Farlinger; and CFO, John Price. Premarket this morning, the company issued a press release announcing its results. The release is available in the Investors section of the company's website. Before we begin the prepared remarks, I'd like to remind everyone that some of the statements made today will be forward-looking and are made under the Private Securities Litigations Reform Act of 1995. Actual results may differ materially from those projected or implied due to a variety of factors. We refer you to Assure's recent filings with the SEC, including its annual report on Form 10-K for the full year, for a more detailed discussion of the risks that could impact the company's future operating results and financial condition.

大家好，感謝您參加今天的電話會議，討論我們 2023 年第一季度的持股財務業績。今天的電話會議是執行董事長兼首席執行官 John Farlinger；首席財務官 John Price。今早盤前，公司發布了一份新聞稿，公佈了業績。該新聞稿可在公司網站的投資者部分獲得。在我們開始準備好的發言之前，我想提醒大家，今天所做的一些陳述將是前瞻性的，並且是根據 1995 年私人證券訴訟改革法案作出的。實際結果可能與預期或暗示的結果大不相同到多種因素。我們建議您參考 Assure 最近向美國證券交易委員會提交的文件，包括其 10-K 表格的全年年度報告，以更詳細地討論可能影響公司未來經營業績和財務狀況的風險。

Also on today's call, management will reference certain non-GAAP financial measures, which we believe provide useful information for investors. For reconciliation of these non-GAAP measures, please consult the most recently filed 10-Q associated with the filing of the earnings release for the quarter ended March 31, 2023, which is available on the SEC's website. This call is being recorded and will be made available for replay via a link on the company's website.

同樣在今天的電話會議上，管理層將參考某些非 GAAP 財務指標，我們認為這些指標為投資者提供了有用的信息。有關這些非 GAAP 措施的核對，請查閱最近提交的與截至 2023 年 3 月 31 日止季度的收益發布相關的 10-Q，該報告可在美國證券交易委員會的網站上獲取。此通話正在錄音中，可通過公司網站上的鏈接進行重播。

Now I'd like to turn the call over to Executive Chairman and CEO, Assure Holdings, John Farlinger. John?

現在我想把電話轉給 Assure Holdings 的執行董事長兼首席執行官 John Farlinger。約翰？

Thank you, Brett. Hello, everyone, and thank you for joining us today. Reflecting our first quarter results, the company had a slight increase in the number of cases managed, an approximate 25% decline in our operating expenses and a much lower use of cash in operations, reflecting the tremendous progress we have made towards strengthening our operations and improving our financial results despite persistent challenges with reimbursement across the industry.

謝謝你，布雷特。大家好，感謝您今天加入我們。反映我們第一季度的業績，公司管理的案件數量略有增加，我們的運營費用下降了約 25%，運營現金使用率低得多，反映出我們在加強運營和儘管整個行業在報銷方面一直面臨挑戰，但我們的財務業績仍在改善。

Our first quarter case volume was up slightly year-over-year as we supported approximately 5,200 managed cases. We collected approximately $5 million in cash and reduced our average days to collect by 15 days from 61 days for the fourth quarter to 46 days during the first quarter of 2023.

由於我們支持了大約 5,200 個託管案例，我們第一季度的案例量同比略有上升。我們收集了大約 500 萬美元的現金，並將我們的平均收集天數減少了 15 天，從第四季度的 61 天減少到 2023 年第一季度的 46 天。

On the cost side, we reduced our operating expenses by $1.2 million or 26% year-over-year as the benefits of the cost reduction initiatives that we put in motion in 2022 and earlier this year are being realized. We are encouraged by the progress we're making toward achieving our targets of profitability on adjusted EBITDA basis and positive cash flow from operations during the latter part of 2023. Across the industry, reimbursement to providers continues to be challenging. At the federal level, time from claims submission to resolution has not changed substantially in 2023.

在成本方面，由於我們在 2022 年和今年早些時候啟動的成本削減計劃的好處正在實現，我們的運營費用同比減少了 120 萬美元或 26%。我們在實現調整後 EBITDA 基礎上的盈利目標和 2023 年下半年運營正現金流方面取得的進展令我們感到鼓舞。在整個行業中，對供應商的報銷仍然具有挑戰性。在聯邦層面，從提交索賠到解決問題的時間在 2023 年沒有發生實質性變化。

We have filed nearly 400 claims to date under the Federal No Surprises Act. While we remain optimistic with eventual improvements to the reimbursement process, the time from submission to resolution continues to be several months longer than the 90 days expected.

迄今為止，我們已根據《聯邦無意外法案》提出近 400 項索賠。雖然我們對報銷流程的最終改進保持樂觀，但從提交到解決的時間仍然比預期的 90 天長幾個月。

Given these conditions, the internal revenue cycle management process that we've established is crucial. As we built a sophisticated data-driven revenue cycle management function, our collections are improving. Our first quarter revenue collections were better than our internal forecast. The percentage of first pass payment rates has been increasing and days to pay have been reduced. Collections and cash management is a key differentiator for us in contrast to many of our competitors. The industry remains highly fragmented, and we are establishing the analytics and operational footprint to be a consolidator as others in our space are struggling. While there is no transaction imminent, we are actively evaluating tuck-in M&A opportunities in attractive markets that could help us scale our business.

鑑於這些條件，我們建立的內部收入周期管理流程至關重要。隨著我們建立了一個複雜的數據驅動的收入周期管理功能，我們的收款正在改進。我們第一季度的收入比我們的內部預測要好。首次通過支付率的百分比一直在增加，支付天數已經減少。與我們的許多競爭對手相比，收款和現金管理是我們的一個關鍵區別。該行業仍然高度分散，我們正在建立分析和運營足跡，以在我們這個領域的其他人都在苦苦掙扎時成為一個整合者。雖然近期沒有交易，但我們正在積極評估有吸引力的市場中的併購機會，以幫助我們擴大業務。

Neuromonitoring is widely considered to be the standard of care and surgeons agree it is a vital resource in the operating room, despite the operational reimbursement challenges that we believe are temporal. Demand for our services is strong. We have a business model that is readily scalable and yield economics that make our business attractive for investment.

神經監測被廣泛認為是護理標準，外科醫生認為它是手術室的重要資源，儘管我們認為手術報銷挑戰是暫時的。對我們服務的需求強勁。我們有一個易於擴展的商業模式和收益經濟，使我們的業務對投資具有吸引力。

Subsequent to quarter end, we performed our first neuromonitoring case in the State of Montana. We've established ourselves with a distinguished surgical center of this market and have an additional foothold from which to grow from. We are eager to scale our operations there and believe this is an opportunity to increase our cases by approximately 150 cases annually across Bozeman and Livingston. Beyond this key win, we're also continuing our efforts to expand in high-performing markets like Texas and Colorado, which we already established and highly concentrated in.

在季度結束後，我們在蒙大拿州進行了第一個神經監測案例。我們已經在這個市場建立了一個傑出的手術中心，並擁有一個可以發展的額外立足點。我們渴望擴大我們在那裡的業務，並相信這是一個機會，可以使我們在博茲曼和利文斯頓的案件每年增加約 150 起。除了這一關鍵勝利之外，我們還在繼續努力在德克薩斯州和科羅拉多州等我們已經建立並高度集中的高性能市場進行擴張。

Today, we closed an underwritten public offering of 5 million common shares, including prefunded warrants in lieu stock. Shares were offered to the public at $1.20 per share or $1.199 per prefunded warranty. The prefunded warrants are immediately exercisable at a nominal exercise price of $0.001 or on a cashless basis and may be exercised at any time until all the prefunded warrants are exercised in full. The offering was fully subscribed and the underwriters have a 45-day option to purchase up to an additional 750,000 shares of common stock at the offering price, less underwriting discounts and commissions to cover over-allotments.

今天，我們完成了 500 萬股普通股的承銷公開發行，包括預注認股權證。股票以每股 1.20 美元或每份預注保證金 1.199 美元的價格向公眾發售。預注認股權證可立即以 0.001 美元的名義行使價或無現金方式行使，並可隨時行使，直至所有預注認股權證全部行使。本次發行獲得全額認購，承銷商有 45 天的選擇權，可以按發行價再購買最多 750,000 股普通股，減去承銷折扣和佣金以彌補超額配售。

We plan to use the proceeds of this offering for continued growth, the rolling out of a potential new service line, general corporate purposes, including working capital, sales, product development and capital expenditures.

我們計劃將此次發行的收益用於持續增長、推出潛在的新服務線、一般公司用途，包括營運資金、銷售、產品開發和資本支出。

Importantly, this offering gives us the runway to execute our strategy and strive to achieve our targets of positive adjusted EBITDA and cash from operations during the second half of 2023. In addition to this new financing, there are 2 other items that could positively impact our financial position in 2023. First, we have filed for the employee retention credit or ERC. A refundable tax credit for businesses that continue to pay employees while shut down due to COVID-19 pandemic. Related to that, we are filing amended federal tax returns for the years ended 2020 and 2021, and we expect that we could receive a cash refund from the IRS of approximately $3.3 million.

重要的是，此次發行為我們提供了執行戰略的跑道，並努力在 2023 年下半年實現調整後 EBITDA 和運營現金為正的目標。除了這筆新融資外，還有另外 2 項可能對我們產生積極影響的項目2023 年的財務狀況。首先，我們已經申請了員工保留信用或 ERC。為因 COVID-19 大流行而關閉而繼續支付員工工資的企業提供可退還的稅收抵免。與此相關的是，我們正在提交截至 2020 年和 2021 年的修改後的聯邦納稅申報表，我們預計我們可以從美國國稅局收到大約 330 萬美元的現金退款。

Secondly, we have filed a multimillion-dollar lawsuit against an orthopedic and spine surgery center located in the State of Louisiana. The lawsuit is related to the reimbursement of services provided. The case is scheduled for a jury trial in late July of this year.

其次，我們對位於路易斯安那州的骨科和脊柱外科中心提起了數百萬美元的訴訟。該訴訟與所提供服務的報銷有關。該案定於今年 7 月下旬由陪審團審理。

With the completion of the offering and the receipt of the ERTC credits, the company would have generated nearly $9 million of cash, which is approximately $1.50 per share outstanding. Further, the company has nearly $13 million of trade accounts receivable due from commercial payers, hospitals and the winding down of the MSA structure.

隨著發行的完成和 ERTC 信貸的收到，公司將產生近 900 萬美元的現金，即每股流通在外的股票約為 1.50 美元。此外，該公司還有近 1300 萬美元的貿易應收賬款來自商業付款人、醫院和 MSA 結構的結束。

Next, John Price will walk us through the financial results for the first quarter. John?

接下來，John Price 將向我們介紹第一季度的財務業績。約翰？

Thanks, John, and thank you, everyone, for joining us today. Our total managed case volume for the first quarter was 5,200, an increase over the prior year first quarter and, as expected, down sequentially due to typical seasonality of our business. For the first quarter of 2023, we reported gross revenue of $4.8 million and net revenue of $3.6 million. Net loss was $4.3 million and the adjusted EBITDA loss was a loss of $3.1 million.

謝謝約翰，謝謝大家今天加入我們。我們第一季度的總管理案例數量為 5,200，比去年第一季度有所增加，並且正如預期的那樣，由於我們業務的典型季節性而連續下降。 2023 年第一季度，我們報告的總收入為 480 萬美元，淨收入為 360 萬美元。淨虧損為 430 萬美元，調整後的 EBITDA 虧損為 310 萬美元。

Gross revenue for the first quarter was negatively impacted by weakness in reimbursement rates in the industry and continued backlog of cases eligible for federal arbitration under the No Surprises Act. As of March 31, 2023, the total accounts receivable reserve was approximately $15.2 million or 54% of our outstanding gross accounts receivable compared to $14 million or nearly 50% of our outstanding gross AR as of December 31, 2022.

第一季度的總收入受到行業報銷率疲軟以及根據《無意外法案》符合聯邦仲裁條件的案件持續積壓的負面影響。截至 2023 年 3 月 31 日，應收賬款準備金總額約為 1520 萬美元，占我們未清應收賬款總額的 54%，而截至 2022 年 12 月 31 日，總應收賬款準備金為 1400 萬美元，占我們未清應收賬款總額的近 50%。

The cost of revenues for the first quarter of 2023 were $3.4 million compared to $3.9 million for a year ago quarter, a decrease of 13%, while the number of bench cases increased, a positive proof point of our efforts to reduce our cost of delivery. Operating expenses for the first quarter of 2023 were $3.5 million compared to $4.8 million in the year ago quarter, a decrease of 26%. Sequentially, operating expenses declined 19% on a normalized basis, excluding a onetime noncash goodwill impairment charge of $3.5 million and a onetime noncash acceleration of amortization expense of $3.1 million.

2023 年第一季度的收入成本為 340 萬美元，而去年同期為 390 萬美元，下降了 13%，而替補案件的數量有所增加，這是我們努力降低交付成本的積極證明. 2023 年第一季度的運營費用為 350 萬美元，而去年同期為 480 萬美元，下降了 26%。隨後，運營費用正常化下降了 19%，其中不包括 350 萬美元的一次性非現金商譽減值費用和 310 萬美元的一次性非現金加速攤銷費用。

Normalizing operating expenses were $4.3 million in the fourth quarter of 2022. We collected approximately $5 million of cash in the first quarter of 2023 compared to $5.6 million in the first quarter of 2022 and $4.3 million in the fourth quarter of 2022. We've reduced our average days to collect by 15 days in the first quarter of 2023.

2022 年第四季度正常化運營費用為 430 萬美元。我們在 2023 年第一季度收集了大約 500 萬美元的現金，而 2022 年第一季度為 560 萬美元，2022 年第四季度為 430 萬美元。我們減少了到 2023 年第一季度，我們的平均收款天數為 15 天。

I'll pass the call back over to John Farlinger for the second quarter and full year 2023 expectations. John?

關於第二季度和 2023 年全年的預期，我會將電話轉回給 John Farlinger。約翰？

Thank you, John. This is certainly a challenging business in a challenging industry. And now understanding the significant impact of downward reimbursement pressures, we believe the company does have a number of things to be positive about. First, the focus of the company will be to continue to run leaner over the balance of 2023. Second, cash collections exceeded $21 million in 2022, and we expect them to be strong in 2023. Total system-wide collections in 2022 were a record $27.5 million. Third, our plan is to be out of the MSA revenue sharing agreements by the end of the second quarter of 2023.

謝謝你，約翰。在充滿挑戰的行業中，這無疑是一項具有挑戰性的業務。現在了解下行報銷壓力的重大影響，我們相信公司確實有很多事情值得樂觀。首先，公司的重點將是在 2023 年的餘額中繼續精簡。其次，2022 年現金回收超過 2100 萬美元，我們預計它們在 2023 年將保持強勁。2022 年全系統範圍內的回收總額創歷史新高2750 萬美元。第三，我們的計劃是到 2023 年第二季度末退出 MSA 收入分享協議。

Currently, over 70% of the remaining MSA volume is being transitioned to wholly owned entities by the end of the second quarter of 2023. Fourth, we have shut down the number of unprofitable markets during 2022. These markets will no longer be a drain on operations or cash during 2023. Fifth, the certainty of what we will recover on revenue being realized in the cash collections process is now much more certain. And there could be upside coming out of the federal arbitration process as it starts to take effect in 2023.

目前，到 2023 年第二季度末，剩餘 MSA 量的 70% 以上正在過渡到全資實體。第四，我們在 2022 年關閉了一些無利可圖的市場。這些市場將不再消耗2023 年的運營或現金。第五，我們將在現金收集過程中實現的收入恢復的確定性現在更加確定。隨著聯邦仲裁程序於 2023 年開始生效，它可能會帶來好處。

Last, we're involved in 2 pieces of outstanding litigation in Louisiana during the course of 2023, with the first and more significant case going to trial in late July of this year. These could have a material impact on our cash position over the balance of the year. Further, we are finalizing our employee retention credit, an expected meaningful amount to be recovered from the IRS. This is a potential 7-figure recovery and will be filed over the next 10 days. We've historically been very successful in recovery incentives and monies being obtained from the federal government over the last 3 years.

最後，我們在 2023 年期間參與了路易斯安那州的兩起未決訴訟，第一起也是更重要的案件將於今年 7 月下旬開庭審理。這些可能對我們今年餘下時間的現金狀況產生重大影響。此外，我們正在最終確定我們的員工保留信貸，預計將從美國國稅局收回一筆有意義的金額。這是一個潛在的 7 位數恢復，將在接下來的 10 天內提交。在過去 3 年中，我們在從聯邦政府獲得的恢復激勵和資金方面一直非常成功。

We'll continue to focus on driving our cost of delivery to less than $11 per patient including the cost of our RCM function so that we can meet the demands of ongoing lower reimbursement.

我們將繼續專注於將我們的交付成本降低到每位患者不到 11 美元，包括我們的 RCM 功能的成本，以便我們能夠滿足持續降低報銷的需求。

I'll turn the call back to the operator for Q&A.

我會將電話轉回接線員進行問答。

(Operator Instructions) It appears we have no questions in queue. I'd like to turn the call back to John Farlinger, CEO, for closing remarks.

（操作員說明）看來我們沒有隊列中的問題。我想將電話轉回給首席執行官約翰·法林格 (John Farlinger) 以作結束語。

Good afternoon, everyone. Let me start by saying, obviously, our recent share prices have been disappointing. And obviously, there have been concerns about our solvency. It's been a tough year for us and everyone else in the interoperative neuromonitoring industry, like I've been told it's probably been the worst period ever. But all periods tend to come and all cycles tend to go over time.

大家下午好。首先讓我說，顯然，我們最近的股價令人失望。顯然，人們一直擔心我們的償付能力。對於我們和互操作神經監測行業的其他所有人來說，這是艱難的一年，就像我被告知這可能是有史以來最糟糕的時期一樣。但隨著時間的推移，所有的時期都會到來，所有的周期都會過去。

This recent route of growth capital, along with -- and I should point out that the $6 million of growth capital, very good job done by the Joseph Gunnar team. Management participated for about $250,000 of the round. And we feel this is going to give us a shot in the arm to get back in the growth mode, M&A mode and to open up some new markets.

這條最近的增長資本路線，以及——我應該指出，600 萬美元的增長資本，Joseph Gunnar 團隊做得非常好。管理層參與了本輪融資約 250,000 美元。我們覺得這會給我們一劑強心針，讓我們回到增長模式、併購模式並開闢一些新市場。

That, coupled with the potential recovery of ERTC credits of over $3 million will give us a fresh $8 million to $9 million of liquidity going forward. We are also very optimistic about settling one or both of our lawsuits in Louisiana prior to the year. That being said, the focus is very clear for us. We've got to continue to increase our scale to get to breakeven. We've got to continue to run leaner and continue to run costs at a much lower scale than we have in the past, and we have got to strive for profitability this year so that we're not relying on outside capital.

再加上超過 300 萬美元的 ERTC 信貸的潛在回收，將為我們提供新的 800 萬至 900 萬美元的流動資金。我們也非常樂觀地希望在今年之前解決我們在路易斯安那州的一項或兩項訴訟。話雖如此，我們的重點非常明確。我們必須繼續擴大規模才能達到收支平衡。我們必須繼續精簡運營，繼續以比過去低得多的規模運營成本，我們必須在今年爭取盈利，這樣我們就不會依賴外部資本。

Our team is feeling energized right now and we are up for the challenge. And I want to thank all of you for dialing into today's call, and we look forward to chatting in the near future. Thank you.

我們的團隊現在感到精力充沛，我們已經準備好迎接挑戰。我要感謝大家撥通今天的電話，我們期待在不久的將來聊天。謝謝。

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

今天的會議到此結束，此時您可以斷開您的線路。感謝您的參與。