Matt Steinberg; Investor Relations; Finn Partners
Scott Davis; Chief Executive Officer, Director; Ekso Bionics Holdings Inc
Jerome Wong; Chief Financial Officer, Corporate Secretary; Ekso Bionics Holdings Inc
Operator
Greetings and welcome to the Ekso Bionics quarter 3, 2024 financial results call. (Operator Instructions) As a reminder this conference is being recorded. It is now my pleasure to introduce Matt Steinberg, Finn partners. Thank you. You may begin.
Matt Steinberg
Thank you operator and thank you all for participating in today's call. Joining me from Ekso Bionics are Scott Davis, Chief Executive Officer and Jerome Wong, Chief Financial Officer. Earlier today, Ekso Bionics released financial results for the quarter ended September 30, 2024.
A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws 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 include statements regarding our business strategy, future financial 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 Ekso'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. I will now turn the call over to Ekso Bionics' Chief Executive Officer, Scott Davis.
Scott Davis
Thank you, Matt. The third quarter reflected a period of transition and progress particularly within our personal line of Ekso Health devices. Notably in August, the approval and reimbursement of the initial CMS claim for our Ekso Indigo Personal represented a significant milestone for Ekso and importantly patients with spinal cord injuries.
After CMS established pricing determination for our Ekso Indigo Personal in April, we immediately executed our field communication strategy to ensure that all targeted health care providers were made aware of the new CMS access and coverage policy that could impact thousands of Medicare and Medicare patients living with a spinal cord injury.
Additionally, we've been working closely with our extensive network of neurorehabilitation centers across the country focused on education efforts on appropriate patient selection, screening, trialing, onboarding and skills training for patients prescribed to Ekso Indigo Personal for both at home and in community settings.
I also want to highlight the success we've had with investing in various digital marketing programs and strategies designed to raise product and policy awareness which have resulted in an influx of new qualified leads.
Additionally, we continue to develop and evolve our educational access resources to support prescribing health care providers in navigating through the insurance process efficiently and effectively. We remain committed to enhancing our collaboration with health care providers by ensuring that our innovative solutions, meet their needs and by streamlining our processes with their feedback.
I want to emphasize that this is a program that takes time to build. We're excited to see that across all targeted sectors. Our pipeline is steadily increasing which we believe will enable us to scale this program over time. With multiple claims now submitted through our DME to Medicare, we will continue to focus our efforts on continued customer education to improve process efficiencies.
We are actively engaging with new potential customers. This not only enhances our understanding of their needs but also allows us to showcase the benefits of the Ekso Indigo personal device. We are committed to expanding access to our innovative Ekso Indigo Personal technology and powering more qualified individuals to achieve greater mobility and independence.
We look forward to providing updates on our continued work with the SCI community and eventually individuals with neurological conditions, who could potentially benefit from our technology once we're able to obtain the necessary indications.
Now, I'll share an overview of our third quarter performance. We generated quarterly sales of $4.1 million and sold 33 Ekso Health devices in the third quarter of 2024. US sales were affected by fluctuations in procurement cycles for our integrated delivery network or IDN customers that have persisted since the start of 2024. This was compounded by several customers delaying capital purchases into the fourth quarter and into early 2025.
However, our demand and pipeline for Ekso health products remain strong and we are focused on delivering our innovative devices to individual clinics and hospitals while expanding our global customer base. We believe our expanding network of leading neurorehabilitation centers recognizes the clinical and economic benefits of our innovative Ekso NR device.
Currently, Ekso NRs are deployed in nine of the top10 rehabilitation centers in the United States, which we believe is an indicator that our technology is becoming a standard of care for lower extremity neuro rehabilitation.
We plan to leverage our strong reputation to drive growth for both our Ekso NR and Ekso Indigo Therapy devices. As we continue to strengthen our distribution network and expand our pipeline of opportunities, we remain confident in our ability to grow our presence among neurorehabilitation centers and enhance patient outcomes.
Internationally, demand remains strong, mirroring our robust performance in the first half of the year. Sales in Europe achieved record levels in the quarter as neurorehabilitation centers in the region are adopting our potentially life changing technology.
In addition to placing more devices worldwide, we also expanded our international distribution network which has allowed us to achieve greater operating leverage in foreign markets which we believe positions us well for continued success on a global scale.
As we look ahead, we are committed to further developing our relationships with our IDNs to secure larger multi-unit capital contracts across North America. This initiative is a key component of our ongoing commercial strategy to expand our market presence, and we are optimistic about our future prospects in the growing pipeline of potential deals.
Now, I'd like to provide a brief update on our industrial segment, Ekso Works. In the third quarter, sales of [Evo] Ekso Skeleton were impacted by labor strikes in US manufacturing industries. Nonetheless, we are committed to raising awareness about the benefits that [Evo] offers for workers engaged in demanding overhead tasks including reduced fatigue, increased productivity and fewer workplace injuries.
[Evo] is suitable for a range of industries, notably in automotive, aerospace, construction and renewable energy verticals and numerous other sectors where overhead work is necessary.
Now shifting to our operations, where we continue to create more efficiencies throughout our business. Our improvements in supply chain and inventory management along with efficiencies gained in production resulted in strong gross margins for the quarter, despite a concentration of our revenue being sold in Europe which reflected lower ASPs as is typical with distribution.
Overall, we are pleased to have improved our operating margins in the quarter by reducing our operating expenses.
In summary, this was a quarter of progress for Ekso Bionics, marked by the receipt of initial CMS claims reimbursement for our Ekso Indigo personal device and increased global demand for Ekso NR. With our total product portfolio that has the potential to reach a large addressable market in excess of $13 billion across the continuum of care, we believe we are trending in the right direction for future growth.
At this time, I'd like to turn the call over to our Chief Financial Officer, Jerome Wong to review our third quarter financial results.
Jerome Wong
Thank you, Scott. We generated quarterly sales of $4.1 million in the third quarter of 2024 compared to $4.6 million for the third quarter of 2023. Gross profit for the third quarter of 2024 was $2.2 million representing a gross margin of approximately 53.5% compared to gross margin of 53.3% in the third quarter of 2023. The increase in growth margin was primarily driven by 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 third quarter of 2024 were $4.8 million compared to $5.4 million for the third quarter of 2023. The decrease was primarily due to lower headcount, discretionary payroll and consulting costs.
Net loss applicable to common stockholders for the third quarter decreased to $2.1 million or $0.10 per basic and diluted share from a net loss of $3.4 million or $0.24 per basic and diluted share for the same period in 2023.
Now turning to our financial results for the first nine months of 2024. Revenue was $12.8 million for the nine months ended September 30, 2024 compared to $13.4 million for the same period in 2023. We sold a total of 99 Ekso Health devices in the first nine months of 2024. Gross profit for the nine months ended September 30, 2024 with $6.8 million representing a gross margin of approximately 53% compared to a gross margin of 50% in the third quarter of 2023.
The increase in gross margin was primarily driven by cost savings and supply chain and a reduction in service costs partially offset by lower margin sales related to increased volume through distribution. Operating expenses for the nine months ended September 30, 2024 were $15 million compared to $18.4 million for the same period in 2023. The decrease was primarily due to lower headcount, discretionary payroll, accounting, consulting and legal costs.
Net loss applicable to common stockholders for the nine months ended September 30, 2024 was $7.9 million or $0.42 per basic and diluted share compared to a net loss of $12 million or $0.88 per basic and diluted share for the same period in 2023. Cash and restricted cash as of September 30, 2024 was $8.3 million compared to $8.6 million as of December 31, 2023.
In September, we closed an underwritten public offering resulting in net proceeds of approximately $5 million. Please see our quarterly report on form 10-Q filed earlier today for further details regarding the quarter. Operator, you may now open the line for questions.
Operator
Thank you. We will now be conducting a question-and-answer session. (Operator Instructions)
[RK], HC Wainwright.
Good afternoon, Scott and Jerome. Few questions from me. So it's good to see that you had 33 placements during the quarter. Like to know of these 33 placements, hw many of them were ex-US? Because you're saying that the ex-US geographies are doing pretty good.
Scott Davis
Correct. Approximately half of those were in Europe and several of them in APAC. So I would say the majority of those placements or outside of US. And within those devices we had in terms of revenue, we had about 20% of revenue that was reflected by the personal product.
Okay, perfect. And then, in terms of client claims that you filed with the CMS, you were saying that you're pretty much caught up with the terms of filing. So is there a way you can give us the number in terms of how many have been filed and what percent of those filed have been reimbursed?
Scott Davis
Sure. You know on the personal devices, I can give you a sense of this. We've submitted multiple claims year-to-date, the majority of which happened in the third quarter. And to date, our DME partner has received reimbursement on one claim. We've had two claims that have come back and required additional information for resubmittal.
But in general, we almost doubled the sales of personal health products from Q2 to Q3. And we believe, you know, today that represents, as I said, about 20% of our sales for the quarter. I will say that the claims that we are submitting are taking some time to move through the reimbursement process.
Okay. And then, the last question from me is regarding the buying cycles of some of your customers. You were saying that some of the folks have been pushing and they're buying into fourth quarter of this year and fourth quarter of '25. So based on what you're saying, what do you think is generally the backlog now, in the sense that you have a lead but has not been filled because of their pushback.
And you know, is there a way for us to kind of figure out you know how that backlog is getting taken care of?
Scott Davis
Yeah, in terms of backlog, -- we have ordered backlog that is on the books, right now for Q4. I think the way to think about this is that we have continued strong demand in Europe and as it relates to North America, this has been a bit of an off cycle year for us with our IDNs. We had very strong sales in 2022 and 2023 relative to our IDN procurements.
And 2024 remains impacted by being slightly off cycle with these customers in North America. However, we do believe that we're coming around again to renewal cycles which we anticipate will positively impact us in 2025 and in Q4 as well. So we have strong pipeline and demand which supports future growth on our enterprise segment as well as in our personal segment.
Okay, thanks for taking my questions.
Scott Davis
You bet. Thank you.
Operator
Thank you.
[Ben Haner, Lake Street Capital].
Good afternoon, gentlemen. Thanks for taking the questions. First off for me just following up on the IDNs. Has there been any -- I know you mentioned it being off cycle but has there been any distraction for any reason due to the CMF reimbursement for the personal units?
I mean, have folks waited and try to take a look at maybe adding some Indigos to the clinics or anything like that. Are there any dynamics at play related to the personal units?
Scott Davis
Yeah, that's a great question. In general, I would say the issue really isn't so much around distraction. As it is, a lot of these enterprise accounts are lumpy and we had absolute record sales in North America in 2023. We're having absolute record sales in Europe this year.
So some of this is just really following procurement cycles. We have certainly in Q3 and in North America, we had multiple customers on the enterprise side that made the decision to delay their purchases to either Q4 or into 2025 just citing some uncertainties, sort of macroeconomic uncertainties that they had perhaps even relative to politics.
Sure, that makes sense. And then Europe obviously is a bright spot here. How much insight do you have into how the remainder of the year could look on that front? You know, should we expect international to be strong in Q4 as it was in Q3 or what's the right way to think about that to the extent you can share?
Scott Davis
Yeah, demand in Europe remains strong for us. We've also accumulated a solid backlog coming into the quarter there. So as we look at Europe in Q4, we believe that we will once again have a strong quarter there.
Okay. So the back -- you don't have like a clear backlog entering Q4 just as strong as it was maybe entering Q3.
Scott Davis
Yeah, we -- I'll say that we have -- coming into the quarter we had -- at the end of Q3, we had more than a dozen devices in backlog at the end of Q3.
Okay, great. That's helpful. And then on the [legal] expansion that you mentioned earlier in the more neurological conditions that -- you know, is there anything that investors should be on the lookout for there? Is there you know, kind of a timeline that you could speak to on any of these things.
Scott Davis
Nothing definitive yet. But I will say that Ekso has a history of working very closely with some of the top neurological research hospitals and facilities in North America and throughout the world. And our clinical studies, which can often be quite expensive, particularly when you're looking at new FDA indications for use.
We have been able to leverage those longstanding relationships with those centers and with the new personal products, with our Indigo family of products, we've had significant interest from those research hospitals to engage in those studies, to expand, to potentially expand indication for use for our Indigo family of Ekso Skeletons.
So this is something that we are working on currently and the time frame on these sorts of endeavors is somewhat undefined. But it certainly takes some time to be able to do this. And we're lucky to have partners who can help us because it really helps us to contain the expenses that are related to gaining those clinical trials.
Okay. Got it. And then lastly for me, just one point of clarification is that 20% of the revenue of the personal product? I'm not sure if I caught that. Was that overall or was that for specifically the US or international or any [copy up there].
Scott Davis
In general, our top line total revenue for the quarter, approximately 20% of that was directly related to our personal products.
Got it. Okay. That's all I have gentlemen. Thanks for taking the questions.
Scott Davis
You bet. Thank you, Ben.
Operator
Thank you. There are no further questions at this time. I would like to turn the floor back to Scott Davis for closing remarks.
Scott Davis
Okay. Thank you, Julian and thank you to everyone for joining us today. In closing, we are pleased with the progress we made this quarter and the strides that we've made on both the reimbursement and the operational fronts.
While we recognize that there is still work to be done, the initial reimbursement approval for our Ekso Indigo Personal device marks an important milestone for us and the SCI community, enabling access for covered individuals at a fraction of the cost.
We believe our ongoing collaboration with physicians and neurorehabilitation centers is vital to our success and we are committed to providing the resources and educational support necessary to drive patient engagement.
We believe that as more physicians become advocates for our devices, we will see a corresponding increase in submissions and approvals. In terms of our enterprise customers, we're optimistic about the future as procurement cycles with IDNs normalize in the near term. We remain focused on collaborating with our partners to ensure that we can meet demand and capitalize on the opportunities ahead.
As we continue to expand our reach, we believe we are well equipped for sustainable growth ahead. And as a result of our scalable commercial strategy, we closed the quarter with a strong pipeline of future placements. Moving forward, we're enthusiastic about building upon this progress.
Thank you for your continued support and we look forward to updating you on our progress in the coming quarters.
Operator
Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.
