10-Q: Biotricity Inc. Reports Improved Financial Results in Q3 2024, Revenue Up 21%

Biotricity Inc. saw a 21% increase in revenue year-over-year in Q3 2024, driven by growth in technology fees and device sales, while also reducing operating expenses.

Summary

• Biotricity Inc. reported a 21% increase in revenue for the three months ended December 31, 2023, reaching $2.97 million, compared to $2.46 million in the same period of the previous year.
• Technology fee revenue grew by 23.4% to $2.78 million, while device sales increased to $193 thousand, the highest selling device quarter to date.
• The company's gross profit margin improved to 73% from 57% in the prior year quarter, primarily due to improved margins on technology fees.
• Operating expenses decreased by 34.1% to $3.45 million, compared to $5.24 million in the same quarter of the previous year, due to reduced selling, general, and administrative expenses.
• The net loss attributable to common stockholders was reduced by 37.9% to $2.81 million, compared to $4.75 million in the prior year quarter.
• For the nine months ended December 31, 2023, revenue increased by 28.8% to $8.89 million, compared to $6.90 million in the same period of the previous year.
• The net loss attributable to common stockholders for the nine months ended December 31, 2023, was $10.53 million, a 28.3% reduction compared to $14.68 million in the prior year period.
• The company's EBITDA loss improved to $1.59 million for the quarter and $6.13 million for the nine months, compared to $4.05 million and $12.62 million respectively in the prior year periods.
• Adjusted EBITDA loss improved to $1.11 million for the quarter and $5.23 million for the nine months, compared to $3.77 million and $11.59 million respectively in the prior year periods.

Sentiment

Score: 6

Explanation: The document presents a mixed picture. While there are positive trends in revenue growth, gross margin, and expense reduction, the company still faces significant challenges, including a net loss, working capital deficit, and a delisting notice from Nasdaq. The company's future success depends on its ability to secure additional funding and achieve profitability.

Positives

• The company experienced significant revenue growth, driven by both technology fees and device sales.
• Gross profit margins improved substantially, indicating better profitability per sale.
• Operating expenses were significantly reduced, demonstrating improved cost management.
• The net loss attributable to common stockholders decreased, showing progress towards profitability.
• The company has expanded its sales reach to 35 U.S. states, indicating market penetration.
• The company is focused on converting existing business to a subscription revenue model.

Negatives

• The company continues to operate at a net loss, although the loss has been reduced.
• The company has a working capital deficit of $14.69 million.
• The company is not in compliance with certain covenants of its term loan.
• The company's cash deposits are low at $85 thousand.
• The company received a delisting determination letter from Nasdaq due to its Market Value of Listed Securities being below the minimum requirement.

Risks

• The company has a history of recurring losses and an accumulated deficit of $123.1 million, raising substantial doubt about its ability to continue as a going concern.
• The company needs to secure additional funding through equity or debt financing, which may not be available on acceptable terms or at all.
• Failure to obtain additional funding could force the company to modify its operating plan and slow the pace of development and commercialization.
• The company is subject to risks associated with international operations, regulatory compliance, competition, and development of new products.
• The company is not in compliance with certain covenants of its term loan, which could lead to further financial challenges.
• The company received a delisting determination letter from Nasdaq, which could negatively impact its stock price and access to capital.

Future Outlook

The company anticipates continued revenue growth and improved liquidity through business development and additional financing. They expect to continue to devote significant resources to capital expenditures, research and development, marketing, and sales. The company also intends to seek additional debt or equity capital to respond to business opportunities and challenges.

Management Comments

• Management has indicated that its mission is to innovate and create transformative healthcare products while ensuring financial discipline, in order to drive margin and revenue growth to deliver value creation for our investors.
• Management believes that they have achieved these results by continuous improvement to their technology, including thru the implementation of AI, operationally.
• Management believes that they have developed and continue to pursue sources of funding that will be sufficient to support the Companys operating plan and alleviate any substantial doubt as to its ability to meet its obligations at least for a period of one year from the date of these consolidated financial statements.

Industry Context

The company operates in the remote patient monitoring market, which is experiencing growth due to the increasing importance of telemedicine and remote care. The company's focus on cardiac monitoring aligns with the high prevalence of cardiac disease globally. The company is also expanding into chronic care management solutions, which is a growing area in healthcare.

Comparison to Industry Standards

• Biotricity's revenue growth of 21% in Q3 2024 is strong compared to the overall medical device industry, which typically sees single-digit growth rates. Companies like iRhythm Technologies (IRTC) and BioTelemetry (acquired by Philips) are key competitors in the cardiac monitoring space, and Biotricity's growth rate suggests it is gaining market share.
• The improvement in gross margin to 73% is a positive sign, as it indicates better pricing power and cost control. This is comparable to some of the more established players in the industry, who often have gross margins in the 60-70% range.
• The reduction in operating expenses by 34.1% is a significant achievement, as many companies in the medical device space struggle with high operating costs. This shows that Biotricity is focused on efficiency and cost management.
• However, the company's continued net loss and working capital deficit are areas of concern. Many early-stage medical device companies face similar challenges, but Biotricity needs to demonstrate a clear path to profitability to attract long-term investors.
• The company's reliance on debt and equity financing is also a risk, as it may dilute existing shareholders and increase financial leverage. This is a common challenge for companies in the medical device industry, but Biotricity needs to manage its capital structure carefully.
• The delisting notice from Nasdaq is a significant setback, as it could impact the company's access to capital and investor confidence. This is a unique challenge for Biotricity, and it needs to address this issue quickly to regain compliance.

Related Party Transactions

• Trade and other payables and accrued liabilities as at December 31, 2023 and March 31, 2023 included $ 725,649 and $ 446,771 , respectively, due to a shareholder, who is a director and executive of the Company.

Stakeholder Impact

• Shareholders may be concerned about the company's continued net losses and the delisting notice from Nasdaq.
• Employees may be affected by potential changes in the company's operating plan and pace of development.
• Customers may benefit from the company's innovative products and services, but may also be concerned about the company's financial stability.
• Creditors may be concerned about the company's ability to repay its debts, given its working capital deficit and need for additional financing.

Next Steps

• The company intends to present a plan to regain compliance with the Nasdaq MVLS Requirement at the hearing.
• The company plans to grow its sales force to address new markets and achieve sales penetration in existing markets.
• The company will continue to develop and commercialize new products and technologies.
• The company will continue to seek additional debt or equity capital to fund its operations and growth.

Key Dates

Keywords

remote patient monitoring, cardiac monitoring, medical technology, Bioflux, Biotres, Biocare, technology fees, device sales, EBITDA, AI, FDA clearance, telemedicine, chronic care management