ClearPoint Neuro, Inc (NASDAQ:CLPT) Q1 2020 Earnings Conference Call - Final Transcript

May 12, 2020 • 04:30 pm ET

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ClearPoint Neuro, Inc (NASDAQ:CLPT) Q1 2020 Earnings Conference Call - Final Transcript

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Executive
Joseph M. Burnett

revenues at around $3.5 million [Technical Issues], or about 40% growth year-over-year.

Similarly, we've [Technical Issues] and technology in the first quarter. [Technical Issues] completed approximately 225 to 230 cases for the quarter had the COVID-19 [Technical Issues]. As a result of this impact, in a press release in mid-April, we suspended our 2020 revenue and case forecasts, until more information is known about hospital and patient willingness to resume these procedures, which I will talk about a little bit later on in the call.

To offer a bit more detail on the Q1 2020 results, I'll hand it off to Harold Hurwitz, our CFO. Hal?

Executive
Harold A. Hurwitz

Thanks, Joe. Total revenues were $3.1 million for the three months ended March 31, 2020, and $2.5 million for the three months ended March 31, 2019, which represents an increase of $643,000 or 26%. Drilling down on these revenue numbers, one can see the effects of the COVID-19 pandemic that Joe described in his opening remarks.

Functional neurosurgery revenue, which consists of disposable product commercial sales related to cases using our ClearPoint System, increased 5% to $1.7 million for the three months ended March 31, 2020, from $1.6 million for the same period in 2019. This increase was lower relative to recent quarterly year-over-year increases due to the effects of the COVID-19 pandemic. Biologics and drug delivery revenues, which include sales of disposable products and services related to customer-sponsored clinical trials, utilizing the ClearPoint System increased 169% to $1 million for the three months ended March 31, 2020, from $382,000 for the same period in 2019. This increase was due primarily to an increase in biologic and drug delivery service revenue.

Capital equipment revenue, consisting of sales of ClearPoint reusable hardware and software, as well as fees related to capital equipment, decreased 29% to $345,000 for the three months ended March 31, 2020, from $486,000 for the same period in 2019, reflecting a decrease in capital equipment sales that were partially offset by an increase in equipment service contract fees.

Cost of revenues was $917,000, representing a gross margin of 71% for the three months ended March 31, 2020, and was $886,000, representing a gross margin of 64% for the three months ended March 31, 2019. This increase in gross margin was due primarily to a shift in the mix of revenues by line of business that resulted in service revenues, which bear higher gross margins in comparison to other product lines, representing a greater contribution to total sales for the three months ended March 31, 2020 relative to the same period in 2019. Thus, the pandemic, we believe, partially contributed to a higher growth margin as a result of a lower-than-normal contribution of product sales to the overall revenue mix.

Turning to operating expenses, total operating expenses for the three months ended March 31, 2020, were $3.4 million, a 33% increase from operating expenses of $2.6 million for the same period in 2019. Breaking down the components of operating expenses; research and development