Stereotaxis Inc. (NASDAQ:STXS) Q2 2020 Earnings Conference Call - Final Transcript
Aug 06, 2020 • 10:00 am ET
Good morning. Thank you for joining us for Stereotaxis' Second Quarter 2020 Earnings Conference Call.
Certain statements during the conference call and question-and-answer period to follow may relate to future events, expectations, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results, performance or achievements of the company in the future to be materially different from the statements that the company's executives may make today. These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. We assume no duty to update these statements.
[Operator Instructions] The floor will be open for questions and comments following the presentation. [Operator Instructions].
It is now my pleasure to turn the floor over to your host, David Fischel, Chairman and CEO of Stereotaxis.
David Leo Fischel
Thank you, operator, and good morning, everyone. I hope you're all healthy and well.
My commentary today will be similar in many ways to the situation described on our last call in May. The past few months have been challenging, as COVID-19 created broad disruptions to our customers and to normal activities. Stereotaxis has faced these challenges with resilience, prudence and creativity. Despite the challenges, this has been a period of significant progress, and one of the most invigorating times of positive change.
The most acute and pronounced financial impact of COVID-19 was a dramatic reduction in procedure volumes, as hospitals globally attempted to lessen infection risk, conserve vital equipment and focus their resources towards battling the pandemic. We've previously described a steep deceleration in procedures, beginning in the second week of March, reaching a [nadir] of approximately 70% below normal in mid-April.
Consistent with the experience of other companies, we saw a gradual return to more normal activity throughout the quarter. Global procedure volume compared to last year was down 57% in April, 44% in May, and 13% in June. Procedure numbers remain volatile, and there remains risk of additional disruption as COVID-19 flares up regionally, but we saw very consistent results between June and July.
Approximately half of Stereotaxis' recurring revenue typically comes from disposables sold and royalties earned from each procedure. Disposable revenue in the second quarter was down 43%, in line with the 38% reduction in procedures. The impact of this decline on overall revenue was cushioned by the stability of Stereotaxis' long-term service contracts. Despite the macro challenges, we continue to collect service payments in a timely fashion and have been successful in renewing service contracts as they come due for renewal.
While our recurring revenue stream is an attractive source of stability, we had anticipated robust double-digit revenue growth for Stereotaxis in 2020, driven by Genesis system sales. Receipt of FDA clearance in early March, signing of two purchase orders in the first quarter and the interest we saw from several hospitals supported that confidence.