Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Biodesix Inc (BDSX, Financial) reported a significant 64% increase in total revenue for Q1 2024, reaching $14.8 million.
- Lung diagnostic test volumes grew by 57%, marking the seventh consecutive quarter of over 50% growth in this area.
- Biopharmaceutical services revenue saw a substantial increase of 149%, with $1.0 million in Q1 2024 compared to $400,000 in Q1 2023.
- Gross margin improved to 79%, up from 65% in the previous year, reflecting operational efficiencies and cost optimization.
- Adjusted EBITDA improved by 48%, indicating effective cost management and operational leverage within the company.
Negative Points
- Biodesix Inc (BDSX) is experiencing ongoing delays in Medicare Advantage payments, with a backlog of claims amounting to approximately $3.5 million to $4 million.
- The company reported a net loss of $13.6 million in Q1 2024, although this was an improvement from the $18.7 million net loss in the same period the previous year.
- There are uncertainties related to the LDT-FDA ruling which could impact future operations and regulatory compliance.
- Biopharmaceutical revenue recognition is dependent on sample receipt from partners, which can introduce variability and unpredictability in financial projections.
- Despite improvements, there is a remaining milestone payment of $6.1 million due in October 2024 related to previous acquisitions, which could impact cash flow.
Q & A Highlights
Q: Can you provide insights on the productivity of sales representatives by cohort, especially considering the significant increase in the number of reps over the past few years?
A: Scott Hutton, CEO of Biodesix, explained that the company maintains a consistent addition of six to eight sales professionals per quarter and a three-month timeframe for new hires to become self-sustaining. He noted variability in ramp-up times and costs based on territory size, particularly in the Western U.S. Despite these challenges, the consistent path to profitability and similar efforts across different territories give the company confidence in its growth strategy. Hutton also highlighted the potential for further growth by assessing penetration and adoption within territories.
Q: As you've established a channel in pulmonology, how do you plan to leverage this moving forward, possibly through new products or partnerships?
A: Robin Harper Cowie, CFO of Biodesix, emphasized the strength of the company's commercial channel and its potential for expansion. He mentioned that the company is approached by other companies for product distribution, but Biodesix remains focused on underpenetrated opportunities within its current portfolio. The company plans to potentially add two to four more products appropriate for their sales reps' call points, either organically or through acquisitions.
Q: Given the strong momentum in core lung and biopharma services, why not raise the revenue guidance for the year?
A: Scott Hutton responded that the company is focused on building trust and managing expectations prudently. He expressed a bullish outlook for the year but prefers to ensure consistent performance before adjusting guidance. Hutton also mentioned the need to monitor potential uncertainties like the LDT-FDA ruling.
Q: Can you discuss the $9 million in contracted but not yet recognized revenue in biopharma services? Is this from new RFPs or ongoing deals?
A: Scott Hutton clarified that the $9 million represents both continuation of existing contracts and new RFPs from new partners. He noted that these contracts are not attributed to new fundraising efforts but are part of ongoing collaborations that could span multiple years.
Q: Regarding the unpaid Medicare Advantage claims amounting to $3.5 million to $4 million, is there a risk of not being able to recognize this revenue eventually?
A: Robin Harper Cowie assured that since the revenue will be recognized upon cash collection, there is no time limit affecting the recognition of these funds. The company continues to work through administrative hurdles to resolve these claims.
Q: With the gross margins expected to remain in the mid to high 70s, what factors could cause fluctuations within this range?
A: Robin Harper Cowie explained that fluctuations in gross margin would primarily be due to the mix of tests and biopharma contracts. Specific contracts with slightly lower margins could influence the overall margin if they constitute a larger portion of the business in any given quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
