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16-05-2025
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Q1 2025 Quantumscape Corp Earnings Call
John Seger; Vice President, Capital Markets; Quantumscape Corp Siva Sivaram; President & Chief Executive Officer; Quantumscape Corp Kevin Hettrich; Chief Financial Officer; Quantumscape Corp Jordan Levy; Analyst; Truist Securities Winnie Dong; Analyst; Deutsche Bank Mark Delaney; Analyst; Goldman Sachs Mark Shooter; Analyst; William Blair Joe Spak; Analyst; UBS Operator Good day and welcome to QuantumScape first quarter 2025 earnings conference call. John Seger, QuantumScape's Vice President of Capital Markets. You may begin your conference. John Seger Thank you, operator. Good afternoon and thank you to everyone for joining Quantumscape's first quarter 2025 earnings call. To supplement today's discussion, please go to our IR website at to view our shareholder letter. Before we begin, I want to call your attention to the safe harbor provision for forward-looking statements that is posted on our website as part of our quarterly update. Forward-looking statements generally relate to future events, future technology progress, or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize. Actual results and financial periods are subject to bits and uncertainties that could cause actual results to differ materially from those projected. There are risk factors that may cause actual results to differ materially from the content of our forward-looking statement for reasons that we cite in our shareholder letter, Form 10K and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be Quantumscape's CEO Dr. Siva Sivaam and our CFO, Kevin Hetrick. With that, I'd like to turn the call over to Siva. Siva Sivaram Thank you, John. I would like to begin by discussing our upcoming product launch. We continue to work closely with our prospective launch customer. As a reminder, this launch program is designed to be a low volume but high visibility project. It is intended to serve as a real-world vehicle demonstration, highlighting the exceptional performance characteristics of our technology platform as a step towards large scale commercialization. The program is planned to unfold over multiple phases with field testing slated to begin in 2026. This quarter, we commenced shipping QSE-5 samples for module and systems level integration and testing, including design validation and calibration of the battery management system. This is consistent with our development approach. We focus on getting rapid customer feedback while making systematic and methodical improvements. We are tracking to the shipment targets we have established with our large customers. These shipments are powered by a raptor separator process, which is exceeding our key benchmarks for yield and quality. Raptor is our workhorse for both customer shipments and development activities on our technology platform as we progress towards baselining our Cobra process. Cobra is a step change innovation in ceramics processing, which can enable an order of magnitude improvement in separated productivity relative to raptor. Next, a word on our progress towards our annual goals. Our first key goal for the year is to bring the cobra separator process into baseline production. This project is ahead of schedule. All the required se processing equipment has already been installed, and qualification is progressing well. We expect to bring cobra into the baseline in Q2. Our second goal is to install higher volume cell assembly equipment to match the higher throughput of Cobra. Working as a joint team with on-site Powerco engineers, we're enhancing the level of equipment automation, allowing us to increase the output and quality of QSE-5 samples. These equipment designs also represent an important piece of the technology platform that Powerco will use in their large scale production. We have placed purchase orders for key pieces of the equipment, and we'll upgrade the baseline continuously as they arrive. Our third goal for 2025 is to begin shipping QSE-5B1 samples. And this goal remains on track. These cobra-based samples will go into the launch program, which is intended to demonstrate the exceptional performance capabilities of the QSE-5 platform in a real-world application. B1 cells are the version that will supply the field-testing phase of the launch program in 2026. Our fourth annual goal is to expand our commercial engagements. On this front, we continue to intensify development activities with Powerco, the battery manufacturing company of the Volkswagen Group, as we work towards industrializing our technology for gigawatt-hour scale production. In Q1, we welcomed top leadership from the Volkswagen Group and PowerCo to personally review the progress made by the joint team. Powerco is the anchor customer in our growing technology ecosystem. To further expand this ecosystem, we are working with additional automotive OEM customers, as mentioned in our last earnings call. We're also building a global network of equipment vendors, material suppliers, contract manufacturers, and technology partners. Leveraging the expertise of industry leaders across the value chain. To that end, We have announced the first phase of an agreement to explore a collaboration with Murata Manufacturing for ceramics production. Murata has a deep expertise in high precision ceramics which makes them an exceptional partner as we look to scale production of a proprietary ceramic separator. By combining our groundbreaking Cobra process with Murata's proven capabilities and global manufacturing strength, we can accelerate the industrialization of our solid-state battery technology while maintaining our strong focus on innovation and technological advancement. Last, I want to pull back and look at the big picture. This quarter we released our strategic blueprint. This is our playbook for commercializing our next generation battery technology at a global scale, and we encourage all shareholders to view it. Here, we'd like to highlight a few important aspects of this blueprint. First, as a technology company, we believe our business model is resilient to changes in global trade regimes. By partnering with customers around the world and licensing our technology for their own production, we can achieve a global impact while limiting our exposure to the risks presented by policy changes. Second, we will continue to create value by pushing the technology frontier. We have a development roadmap of future innovation in battery technology that builds on our solid-state lithium metal platform, and these innovations are designed to unlock higher performance, drive wider adoption, and increase our value as a company. Finally, we are building an ecosystem of partners to help rapidly bring our technology to the world. Technological revolutions can only happen when companies around the world see the opportunity and work together to make it a reality. Our framework agreement with Murata Manufacturing represents another important step in this direction. When looking at the global perspective, it is clear that the electric power train is set to dominate the automotive industry, and automakers are looking to solid state battery technology to remain competitive. We believe our technology age, when combined with our strong balance sheet and consistent record of execution, sets us apart as a clear leader in solid state batteries. And we are well positioned to expand our advantage and generate exceptional shareholder value over the long term. Thank you for your support, and we are excited to report on our continued progress over the coming quarter. With that, let me turn things over to Kevin for a word on our financial outlook. Kevin Hettrich Thank you, Siva. Capital expenditures in the first quarter of 2025 were $5.8 million. Q1 CapEx primarily supported facilities, and equipment purchases as we prepare for higher volume QSE-5B1 sample production using the cobra separator process. We expect CapEx spend to be well above Q125 levels through the remainder of 2025 as we order, install, and qualify higher throughput equipment to support our targeted launch program and engage prospective customers. We reiterate our full year guidance for CapEx to be between $45 million and $75 million. GAAP operating expenses and GAAP net loss in Q1 were $123.6 million and $114.4 million respectively. We forecast EPS to remain roughly flat throughout the year as increased spending to support higher output levels and the impact of the current tariff policy, we expect to be broadly offset by improvements in operational efficiency such as the planned transition from our raptor to our cobra separator process and cost saving initiatives. Adjusted EBITDA loss was $64.6 million in Q1, in line with expectations. A table reconciling GAAP net loss and adjusted EBITA is available in our shareholder letter. We reiterate our full year guidance for adjusted EBITA loss to be between $250 million and $280 million. We ended Q1 with $860.3 million in liquidity and maintain our guidance that our cash runway extends into the second half of 2028. Any additional funds from customer inflows or capital markets activity would further extend this cash runway. John Seger Thanks, Kevin. We'll begin today's Q&A portion with a few questions we've received from investors or that I believe investors would be interested in. Siva, first question for you. Can you update our investors on our automotive customer engagements during the quarter and explain how that affects our existing customer? Siva Sivaram John, let me start with our existing customer. The product launch that we are planning is going very well. The teams are working hand in glove. And we are shipping the volumes that the customer needs for module and systems level testing. That means our customers will be packing these cells into larger modules, connecting them electrically into the battery management system, the BMS, and calibrate that BMS according to a specific performance profile of our cells and the requirements of the application. Of course, to ship in these volumes, we have to pass the UN 38.3 safety tests. We have now passed these tests, which is another important milestone in our commercialization roadmap. This is a well-planned launch. And we'll have exciting details to share as we progress. Now coming to our additional automotive volumes. The response from our customers to the licensing business model has been overwhelmingly positive. We continue to be in active discussions with our prospective customers. We've developed an engagement model with Powercore as the first customer that allows us to collaborate with our customers to design bespoke solutions that fit their road maps. Each relationship is unique. And these are long-term engagements. And these customers are in our facilities working with us. In stark contrast to public sentiment, our conversations with our customers have a sense of urgency and enthusiasm. The world needs a better battery, and our customers see the step change improvement of our technology. We can offer a no compromise solution that beats internal combustion engines on pure driver experience. John Seger Thanks, Siva. Today, QS and Murata Manufacturing announced the framework agreement for ceramics production using our Cobra technology. Could you please elaborate on their role in a licensing model and how this fits into our overall strategic blueprint? Siva Sivaram Absolutely. Our engagement with partners like Murata is fully aligned with our strategy as a technology licensing company. The vision is to develop our proprietary solid state battery technology platform and then partner with world class manufacturers to bring it to scale efficiently. The first major step in that journey was our agreement with Powerco, which is targeting 40 to 80 gigawatt hours of production capacity. To give you a sense of scale, even 40 gigawatt hour translates into hundreds of millions of square meters of separator components. Manufacturing at such high volume and with the necessary quality requires collaboration with highly capable partners. That's where Murata comes in. They are a global leader with decades of experience in high precision ceramics, and we are excited about the opportunity to leverage their expertise. By combining our groundbreaking cobra separated production process, with Murata's proven capabilities and global manufacturing strength, we can accelerate the industrialization of our solid state battery technology while maintaining our strong focus on innovation and technological advancement. As we continue to grow, we expect to bring in additional partners across different parts of the supply chain. Our approach is intentional and modular. We are nurturing a broader ecosystem of collaborators who can help us scale while protecting our IP. This model draws from my experience in semiconductors where desegregation of the supply chain enabled innovation. Instead of vertical integration, each player focuses on what they do best. Fabulous design companies innovate, foundries manufacture, and everybody wins by operating at scale. This approach doesn't just support IP creation, it also strengthens IP protection by separating know-how across specialized partners with well aligned incentives. We are applying that same logic here. John Seger Thanks again, Siva. Kevin, turning to you now. You've reaffirmed our guidance in the shareholder letter today. I have two questions for you on that front. First, can you discuss the tariff implications on our financial outlook in the near term? And then, can you discuss how our supply chain exposure compares to that of conventional lithium ion. Kevin Hettrich On the topic of tariffs, I have 3 points to make. First, we forecast tariffs in their current form would only have a marginal impact on our cost of materials and equipment. We're actively working to mitigate this by evaluating lower tariff sources and through continuous efforts to reduce costs. We are not changing guidance and we reiterate our adjusted EBITDA laws and CapEx guidance for the year. Second, China has restricted export of certain critical materials to the US. We have not been impacted by these restrictions. I would also highlight that our Amphenol design eliminates graphite from the cell, a material dominated by China from a supply chain point of view. Our Amphenol design both removes the cost of the anode as manufactured along with the associated supply chain risk. Third, we are a global technology licensing company. Our success derives from innovation, ecosystem development, and enablement of our licensing partners. We remain focused on meeting the massive worldwide demand for significantly higher performing batteries. John Seger Okay, thanks so much. We're now ready to begin the live portion of today's call. Operator, please open up the line for questions. Operator (Operator Instructions) Jordan Levy, Truist Securities. Jordan Levy Afternoon all, I appreciate the commentary on the Murata deal here. Maybe just to dive a little bit more in on that, is the thought that they kind of step in after you've worked out some of the commercialization IP and pathway for separator production, or are they going to be kind of an integral part of that kind of trajectory? Siva Sivaram Jordan. Murata, as is a world leader in precision ceramic production. They already supply a lot into both the electric vehicle and consumer electronics markets. And they have a global presence in high volume ceramic manufacturing, so they are a well-planned partner for us to ramp high volume production. The excitement that they showed when they came here to look at the Cobra technology was one of those things to behold. I mean, we were working together, and they see the possibilities of high volume thin ceramic production together. So we expect them to be a very integral part of our supply chain as we develop the ecosystem. The QS ecosystem as it grows up, with there, they get part of it. Kevin Hettrich The only other thing I could add is that in addition to the speed and the capital efficiency with which we partner with Murata, working with partners as part of the broader QS ecosystem adds value to our core technology platform as more global players invest resources and know-how into our ecosystem, the platform becomes more robust and ultimately more valuable. Jordan Levy Super helpful, I appreciate that. And then maybe just a quick follow on any incremental IP licensing deals. I recognize there's nothing to announce today. But just to kind of gauge, the conversations you're having, have you seen any, uptick in excitement on your potential customer base or anything with all the geopolitical environment and tariffs show? Siva Sivaram And Jordan, this is a fairly important issue that we are addressing. In general, ever since we announced that we are a technology licensing company and when we started talking to our customers, there is a real uptick in the urgency with which they want to proceed and the excitement at the technology. Overall, there may be choppy waters in the industry, but our interactions are exactly to the contrary. We see them really want to partner with us and develop these long-term relationships where we can develop bespoke solutions for their roadmap needs, and that has, been very encouraging to follow. Jordan Levy Thanks so much. Operator Winnie Dong, Deutsche Bank. Winnie Dong Thanks for taking my question. First question is, I was wondering if you can provide an update on the work that you guys are doing with Powerco itself. And last time I believe you mentioned, there's some personnel devoted to the joint expert both on QS and and Powerco. So I just wondering if you can provide an update on that. And then my second question is on the initial phase of the agreement with Murata. What is included in the first phase and then for future partnership purposes in subsequent phases, I'm just curious how that partnership will look like. Is it going to be more of a three-way relationship between Murata, you, and, future customers, or are they going to be essentially like a supplier to you guys? Thank you. Siva Sivaram Winnie, on the first question, on the political partnership, if you come by our offices, you'll see a whole bunch of Germans walking around in the labs working closely with us. We are Increasing the automation and efficiency of the line and integrating cobra into it, and that integrated line with cobra is what is going to be used for B1 samples that we'll be shipping later. And they are working with us day in and day out in increasing the capability of this line. And that collaboration is going very well. As you saw, we had some of the highest levels of people from Volkswagen and Powerco spend time with us. And they are continuing to express their strong support in the joint work that's going on between the two companies. Coming to your question on how partnerships such as Murata are going to evolve over time, each of this is going to be unique. There's not going to be a one size fits all relationship as we look at ceramic manufacturers, equipment manufacturers, materials manufacturers, and cell manufacturers with our OEM partners. Each of them is going to have a relatively specific, agreement that we'll be developing to strengthen the entire supply chain so that you can take this truly differentiated battery platform and deliver it to the end customers. And we want to get there as fast as possible in the most efficient way possible. That's why we are developing this QS ecosystem, in a broad-based fashion and looking at partners wherever they are, to come and work with us. Operator Mark Delaney, Goldman Sachs. Mark Delaney Yes, good afternoon. Thanks for taking my questions. First one's on the competitive landscape and hoping to get your latest thoughts on where that stands. And given some of the technology progress announced in recent months from some of the LFP companies like BID and CATL around progress they're making with very fast charging capabilities, so-called 5 minute batteries, has that affected your views of the competitive landscape and what you're seeing from, additional perspective automotive customers? Siva Sivaram Hey Mark, yes, we've been very closely following along with this series of announcements from BYD and cattle on these LFP batteries from China. Now first and foremost, these are giants of companies that have really worked hard to push the envelope on lithium-ion, conventional lithium ion batteries capabilities. They have pushed it farther and farther. However, on these specific announcements, there's a lot of data that is still lacking, so we don't get full information on it. What we do see, however, is we have a no compromise solution in the QS platform. The QSC-5 with respect to safety, cycle life, energy density, power, cost, fast charge, range, put them all together. This is the only no compromise solution out there. And you can see that by the excitement from the large OEM customers who are coming into our shop and working with us. So we are following these developments from China carefully. We are taking them very seriously, but we are still very confident on our lithium metal anode free. As you can see, there, there's no anode. We don't have to think about having to find graphite or or anything else to put on that side. The best is to not to have an anode and we have that as a solution. So we feel confident even in light of all these competitive announcements on the strength of our offering. Mark Delaney I appreciate all the thoughts on that. My other question was on the potential collaboration with Murata. And do you think customers that are licensing your technology can cost effectively scale the higher volume production of the separator for series production vehicles if you don't come to an agreement with Murata, or is this just about making it faster and more efficient than you'd previously been planning? Thanks. Siva Sivaram Precisely the latter. So you can see that we are a technology company first and foremost, we produce a lot of intellectual property. So our first job is to make sure that intellectual property is well protected and we're able to scale that into a product very quickly. We continue to develop the core technology. We developed the cobra process. We developed this highly scalable process. That makes us even more incentive to go find partners who are very good high-volume manufacturers in that specific area that allows us both to combine our skills and get it to market fast. This is the, as you would see that the network effect of us having multiple similarly minded, similarly motivated, well aligned partners trying to take this core intellectual property and get into high volume. That is the. Mark Delaney Understood. And I guess just one last one, before I turn it over, as you're exploring this potential collaboration with Murata. Is that something you expect Power Code to be involved with as well, or is this just between you and Murata and, anything with Power Code would be separate from that. Thanks. Siva Sivaram So -- this contract, this doesn't mean development arrangement is between Quantumscape and Vrata manufacturing. That does not mean we don't keep our OEM partners fully informed of what we are doing, and is fully supportive of what we are trying to achieve over here. And As you probably have seen in our strategic blueprint. In our global ambition, it is important that we do have these kinds of partners around the world who are working closely with us. And our OEM partners actually are very encouraged that we are putting this global QS ecosystem together. Operator Jed Dorsheimer, William Blair. Mark Shooter Hi, you have Mark Shooter on Dorsheimer. Congrats on the progress and collaboration with Murata. As you think through other collaborations, especially for some manufacturing, would Powerco be open to manufacturing for non-VW customers? Assuming no, how are you thinking through finding other cell manufacturing supply and our customer is China sensitive? Siva Sivaram Mark, we look at this, in a fairly systematic fashion. We look at all opportunities and by the way, I will not speak for for what they would or they would not do. We do look at other large OEMs, auto OEMs who do want to make cells. And we are not ruling out discussions with other cell manufacturers, equipment manufacturers, materials manufacturers, and ceramic manufacturers all across the spectrum. So this is part of what we'll be looking at for various specific applications. Mark Shooter That's very helpful, thank you. Cut to last night and Elon Musk, he mentioned that the best anode is no anode at all, to me that sounds like he's referring to an anode designed just like Quantum Scape but it was in reference to, supply chain stress and how China dominates the graphite market. How has customer conversations developed around that and and the supply chain and tariffs since April second? Siva Sivaram Our architecture has been anode free from the time we have disclosed it outside. Anode free architecture, we have always felt is the right way to build a high performing battery. We have been very careful in making sure that the intellectual property around it is well protected in the way we build it. Not having graphite has always been a strength of ours and and the best way to have a part is not to have that at all, not to have the anode at all. Having said that, overall, you saw Kevin's answer earlier with respect to tariffs. We have marginal impact from tariffs in our current annual operating plan. And our method of developing a platform and working globally where we are not the ones moving material around is the right way for us to develop create shareholder value. We are very careful in making sure that our partners, our manufacturing and OEM partners know that the technology we are developing is not dependent on any one particular how to obtain material. For example, the separator is made of earth abundant materials. So in general we are watching the various policy changes carefully. But I think our age will continue to be in us developing new innovation and moving the frontier forward and making sure our partners are coming along with us. Kevin, you want to add anything to that? Kevin Hettrich No, just it is a view we resoundingly agree with. The addition of the anode in a conventional cell, it adds weight and volume. It limits the power performance, specifically the ability to charge. It has expensive materials to buy. You have to transform it. And in today's Environment adds risk to the supply chain, it's one of the major sources of life loss. And it's chock full of flammable materials, eliminating it is what leads to the no compromise solution that that we're offering that is superior on all of these dimensions at the same time. So we very much agree with, the viewpoint, and that's core to our technology platform and it's a platform we are the clear world leaders in. Mark Shooter Thank you guys, if I can sneak one more in here. See, I noticed that the language is a bit broader in your strategic blueprints about applications outside of the EVs. Are you guys opening up to potential other high value applications or outside of the EVs and is anything on the horizon? Siva Sivaram As you know, our first focus is on the automotive sector. That is the highest volume sector out there. But we are producing a very high performance battery that is a no-compromise battery that is useful across all fronts. So applications such as the rapid growth in data centers, evolving aviation applications, these are all -- and consumer electronics, these are all very important. But as a company, we are focused today on automotive but keeping our eyes open on these new applications. Mark Shooter Thank you. Operator Joe Spak, UBS. Joe Spak Thanks. Good afternoon. I wanted to circle back to Mark's question a little bit on the sort of competitive environment and really sort of better understand what's going on in your, sea level sort of discussions. Because to his point and as you sort of alluded to, there's a lot of fast moving progression going on with those two players in terms of density, fast charging, sodium ion, you name it, a lot of which have the same or similar benefits to what you can offer. So I guess what I'm trying to understand is this giving them any more pause in terms of sort of trying to sign up for a certain technology until they see how some of these other developments play out or they -- has there been any change in the tone of those conversations? Siva Sivaram Yeah, so, number one, the fact that the two Chinese players are intensely competitive with each other is a good thing for the industry, and that's always good. However, if you listen to the whole thing carefully, no one is promising any new fundamental technology, nor is there a mention of a true solid state battery. Both of them have explicitly stated for the long term that solid state batteries are the future. In this current case, they are taking LFP batteries and working everything around it, so that they can enhance the life, enhance the performance of an existing generation of technology, which is a very good thing to do. However, we are a different paradigm. We start at a different part in the S curve. Our job is to make sure we continue to push the frontier on the solid-state battery, which is what makes us feel all the more convicted in our beliefs that we need to be there as soon as possible in high volume because we have a solution that the industry needs to replace internal combustion engines. Joe Spak But maybe you could help me understand then why I guess the like the ends justify the means, like if you get the performance you need or want out of their evolving technology, then why would -- like, even if there is a solid state solution, what becomes the advantage to move to that versus if the performance and costs are similar? Siva Sivaram Yeah, if you notice when these data are announced, they don't give you all of the information about those solutions. They don't talk about the safety. They don't talk about the safety of putting a megawatt of power into a cell at any given time which contains a combustible medium. They do not talk to you when they do cycle high -- fast charging what the cycle life is. They don't tell you how large those packs have to be to get that kind of range. This is the trouble with making conclusions out of incomplete datasets. We can always make one of something that looks very good. What we are promising you and what we are building our company on is what I keep going back to, and no compromise on all of those and first and foremost on safety. We need to be able to make sure we give you a battery that is very safe and performs at the end of its life and cycle life as well as it did on the first cycle, even while I'm charging it very fast, even while I give you the range, and even while I'm giving you cost at scale. And I think the reason all of our customers keep coming back to us is because none of these answers that they hear is satisfactory to them. Joe Spak Fair enough. I guess another one just going back to the [eno] comment from the other night. I think the first time you sort of mentioned (inaudible) or Tesla has sort of mentioned maybe since, I think they filed a patent back in maybe 2020 or something like, do you have any understanding of what it is they are trying to accomplish, how similar or different it might be from your solution? Siva Sivaram Look, we don't talk about our potential customers or existing customers. It is for them to talk. We have been talking about ourselves and what an anode-free architecture is going to be for a long time. We have not been shy about talking about it in public. So it is good to see more people coming around to our way of thinking, and I want to leave it at that. Joe Spak Okay. Last one, do you have any updated thoughts on the timing for when you might be able to provide the street with a little bit more context on some of the financial implications from the licensing model? Siva Sivaram Kevin, you want to take that and the -- Kevin Hettrich We've given the general framework that's long term under the licensing model. You have royalty from the from the sale of product that involves our technology, and then in advance, the other part of the model would be cash flows before that would take one of the following forms or multiple of the following forms, things like pre-pays, things like reimbursement for development tailored to that product or NRE type revenue, but we haven't gone into specifics beyond that framework. Siva Sivaram So to round that off, so we do expect that a licensing business model to have multiple different streams of revenue. And the ecosystem is an important part of making sure these revenue streams are well rounded. And at the appropriate time, we'll come and give you a full financial picture on this. Joe Spak Thank you very much. Operator (Operator Instructions) There are no further questions at this time, I'll turn the call to QuantumScape management for closing remarks. Siva Sivaram Thank you, operator. With that, I would like to thank our employees for their dedication, our partners for their trust, and our shareholders for their continued support. We look forward to updating you on further progress in the months to come. Thank you. Operator This concludes today's conference call. Thank you for joining. You may now disconnect. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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16-05-2025
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Q1 2025 Sadot Group Inc Earnings Call
Jennifer Black; Chief Financial Officer; Sadot Group Inc Operator Welcome to Sadot Group Inc. 1 2025 earnings conference call. At this time, all participants are in a listen-only mood. If anyone requires operator assistance during the conference, please press 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Amy Infante, Chief Marketing Officer. You may begin. Thanks, operator. Before we get started, we would like to state that this call may include forward-looking statements pursuant to the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. To the extent that the information presented on this call discusses financial projections, information, or expectations about the business plans, results of operations, products or markets, or otherwise make statements about future events, such statements may be forward-looking. Such forward-looking statements can be identified by the use of words such as should, may, intends, anticipates, believes, estimates, projects, forecasts, expects, plans, and proposes. Although management believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading Risk factors in Sadot Group Inc's most recently filed Form 10K and elsewhere in documents that Sadot Group Inc files from time to time with the SEC. Forward-looking statements speak only as of the date of the document on which they are contained, and Sadot Group Inc., does not undertake any duty to update any forward-looking statements except as may be required by law. For this call, all numbers disclosed have been rounded to the closest 100,000, and percentages have been rounded to the closest 0.1% unless otherwise noted. All numbers disclosed in this report are the amounts attributable to Sadot Group Inc and exclude the portion related to the non-controlling interest. On this call we will refer to Sadot Group Inc. As Sadot Group or the company. With me on the call today are Sadot Group's Chief Financial Officer, Jennifer Black, and interim Chief Executive Officer David Hanna. Throughout this presentation, we will be referring to David Hanna as CEO, which his appointment begins June 2, 2025. Jennifer will be presenting prepared remarks related to Sadot Group's financials filed on May 14, 2025, and those documents may be found on the company's website, Newswire feeds, and on the SEC's, website linked from the Sadot Group's website at under the investor tab. At this point, I would like to turn it over to Sadot Group's CFO, Jennifer Black. Jennifer Black Thank you, Amy. Before I begin, please note that our financial results for the quarter ending March 30th, 2025, on Form 10Q were filed with the SEC yesterday, May 14, 2025, along with the press release on that same day. Our Sadot Agri-foods revenue was USD132.2 million in Q1. The company completed 76 transactions in Q1 across 17 different countries. Revenue increased by USD25.7 million. As compared to Q1 2024, an increase of 24.1% over 2024. Net income attributable to Sadot Group improved to USD0.9 million in Q1 2025 compared to a USD0.3 million net loss in Q1 of 2024. This is an improvement of USD1.2 million over Q1 of 2024. EBITDA rose to USD2.5 million compared to USD0.1 million in the prior period. Both basic and diluted of earnings per share, as attributable to Sadot Group was USD0.18 per share compared to a negative USD0.06 per share in the prior year. SG&A expenses were USD3.1 million this quarter, an increase of over USD1.7 million compared to last year. The increase in SG&A was mostly attributable to reclassifying some expenses from cost of goods sold to an SG&A, which better reflects the actual cost of goods sold, shifting wages for administrative personnel, insurance, and other items into the general SG&A account. Looking at our balance sheet, the company had a cash balance of USD1.9 million and working capital surplus of USD21.9 million. It is important to note that as a part of our ongoing strategy, we continue to reinvest our cash into Agri-food commodity trading business to drive revenue, growth, and acquire strategic assets. We are proud to report Q1 was our 4th consecutive profitable quarter and an improvement versus Q1 of 2024, which was our last negative quarter we reported. We believe positive changes are occurring across our business. With that, I would like to turn the call over to David to introduce himself. Thank you, Jennifer. As has been previously announced, I'm assuming the interim CEO position effective June 2, 2025. I'd like to spend a few minutes introducing myself to everyone. I joined Sadot in June of 2024, and I'm currently the executive Vice President and head of Sadot Canada. I will also be performing the dual role of interim CEO for Sadot Group. There are many moving parts of Sadot. We are a rapidly growing company. What's unique is this expansion is happening on a global basis, making it even more complex than a typical emerging company where we handle the complexities of international rules, customs, time zones, translations, etc. However, through our vast network of employees and consultants, we have been able to manage this growth to date. With this growth, it is natural for companies to experience inefficiencies between new divisions, countries, etc. So that is no different. Sadot is at a point where we need to take a hard look at how we improve our balance sheet and income statements within a controlled growth plan. I believe my background and skill set will be key in attacking these challenges head on. I have been involved in rapid growth companies in the past and fully understand the challenges. I even founded my own business focused on pulses, especially crops, distribution and trading of ingredients for the plant-based protein sector. I grew this business to over USD80 million in containers, truckloads, and rail cars to over 35 countries around the world. We developed a plant-based pet food ingredient division with sales into leading pet food manufacturers across North America, while also becoming the leading Canadian exporter of specialized peas for the pea protein extraction industry. I bring a unique skill set to the CEO role for Sadot. Not only will I bring global Agri-foods and commodity trading experience from building Agri-food businesses in excess of USD500 million annually. I will also be combining this experience directly with extensive financial experience in M&A, public and private equity and debt financing, where I was involved in transactions totaling more than USD1 billion. I believe I am a leader who can bring all the components of the top business together, both the international commodity trading business and Agri-food operations, plus the financial acumen and experience to drive shareholder value through various mechanisms, including trade finance, M&A, debt financing, operational efficiencies, and cost cutting. On a different note, if you are interested in receiving press releases and other company information automatically, please visit our website at Go under investor relations and then investor alerts and sign up for these announcements, which will be sent to your email. It's a great way to keep informed of all announcements. I'd like to turn the call back over to Jennifer to review a few questions that we have recently been asked by various parties. Jennifer Black Thanks, David. The company receives questions or comments from the investor community during the quarter, and we like to summarize and address these questions during our calls. Jennifer Black The first one we have is can you comment with an update on the general tariff environment and how it affects Sadot's business, David? There has certainly been a lot of movement on tariffs globally over the past few months. While the US tariffs cover a wide range of products, industries, and countries, we can say confidently that we do not believe tariffs will have a significant material impact on Sadot. Sadot is a global company. We have conducted Agri-commodity trades with 33 countries. The large majority of our revenue is generated outside of the United States, between other countries of origin or destination having no impact from the new tariffs. For the full year 2024, only a marginal portion of Sadot Group's global trade revenue was directly related to trades originating from or delivering into the United States. Our revenue is mostly generated by Agri-commodity trades between countries all over the world. For example, we recently announced a trade to our new South Korea subsidiary between Australia, Kenya, and other countries. Because this trade was not originating from or delivering into the United States, it was not subject to the new US tariffs. In addition, our commodity trading business model and products, which represents over 99% of total company-wide revenue, are not considered consumer discretionary items. Everyone has to eat and tariffs if they apply are costs that are usually passed through 100%. What tariffs can impact or what countries become more competitive as origins. We believe the company can manage in almost any environment due to the nature of the food related products we trade, as well as the global sourcing and distribution of our operating network. The dog group remains vigilant in monitoring the situation. And we'll provide updates should any significant material changes arise. For now, the tariffs should be considered a non-material event concerning Sadot's global business. Jennifer Black All right, thanks, David. The second question we have is kind of a continuation on the tariff subject. How have the tariffs between US and China impacted the business directly? Again, we have a flexible trading model where we can source products from different countries to satisfy demand. What we've seen is that China's demand for major products like soybeans has shifted from US origin product to other markets such as Brazil. We're studying this trade flow to capitalize on new opportunities created by the change in market dynamics, particularly where we can leverage our inland origination capabilities. Jennifer Black Thanks, David. The third question we have. The company's gross margins have been less than 1%. How are you going to improve those margins? We're looking at a number of areas where higher margins are more achievable, specifically containerized specialty crops like pulses such as lentils and beans and sesame seeds. These are lower volume products, so this strategy won't drive sales growth, but will contribute to higher gross margins as we develop those business lines. Both the Canadian and Brazilian teams are focusing primarily on these product lines. We also signed a management services agreement for a pet food ingredients processing business in Canada. While relatively small, this is a fee-based contract that has no related cost of goods sold and contributes fully to gross margin. We're continuing to look for more opportunities like this as part of our development as a company. Jennifer Black All right, the last question we have, please provide an update on the sale of the restaurant process. While the sales of restaurants are taking longer than anticipated, we are making progress, and we have multiple parties interested in acquiring the Pokemoto and MMG chains. We're finalizing a new LOI with a qualified buyer. The Pokemoto chain continues to open new locations with recent openings in California, Alabama, Florida, Connecticut, and Massachusetts. We also have new locations opening over the next few months in Claremont and Fort Lauderdale, Florida, Kingstown, Rhode Island, and Puerto Rico. We currently have 41 open locations and another roughly 60 franchise agreements that have been sold but not open to date. We continue to expand Pokemoto. The restaurant division in Q1 reported positive USD107,000 net income. While we want to complete the sales as quickly as possible, we're also trying to get the maximum value throughout the sale process. We thank all of our investors, stakeholders, and team members for your time and continued support from Sadot Group. Operator Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Yahoo
15-05-2025
- Business
- Yahoo
Q3 2025 NetSol Technologies Inc Earnings Call
Patti McGlasson; General Counsel; NetSol Technologies Inc Najeeb Ghauri; Chairman of the Board, Chief Executive Officer, Director; NetSol Technologies Inc Roger Almond; Chief Financial Officer; NetSol Technologies Inc Todd Felte Operator Good morning and welcome to NETSOL Technologies fiscal 3rd quarter 2025 earnings conference call. On the call today are Najeeb Ghauri, founder, Chairman and Chief Executive Officer, Roger Almond, Chief Financial Officer, and Patti McGlasson, General Counsel, who I would like to turn the call over to in order to provide the necessary cautions regarding the forward-looking statements made by management during this call. Please go ahead, Patti . Patti McGlasson Good morning, everyone and thank you for joining us. Following our review of the company's business highlights and financial results, we will open the call for questions. Before we begin, I will now provide the necessary cautions regarding the forward-looking statements made by management during this call. Please note that all the information discussed on today's call is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. The company's discussion may include forward-looking statements reflecting management's current forecast of certain aspects of the company's future, and our actual results could differ materially from those stated or implied. These forward-looking statements are qualified by the cautionary statements contained in NETSOL press release and SEC filings, including our annual report on Form 10K and quarterly reports on Form 10Q. I would also like to point out that we will be discussing certain non-gap measures. The press release issued earlier today contains a reconciliation of these non-GAAP financial results to the most comparable GAAP measures. Finally, I would like to remind everyone that this call will be recorded and made available for replay at and via a link available in today's press release. Now I'll turn the call over to Najeeb Ghauri, our founder, Chairman and CEO. Najeeb. Najeeb Ghauri Thank you, Perri, and good morning, everyone. Today I'm happy to be dialling in from my Encino Office in California. We delivered solid performance in the 3rd quarter of fiscal year 2025 with strong growth in our services revenue and continued momentum in our subscription business. Our results reflect the growing demand for our digital solutions for the global finance and leasing industry under our unified transcend platform alongside the strengths of our global delivery model. As we continue transitioning towards revenue generated from the recurring revenue model, we remain focused on driving innovation, operational efficiency, and long term value for our customers and shareholders. This quarter we successfully completed a major deployment of our transcend finance platform for a financial institution in Australia, an existing customer of NETSOL further deepening our partnership and expanding the use of our technology for their operations. Following this successful implementation, Kabuta, a leading Japanese powerhouse that provides products and technologies in various fields including tractors and other agricultural machinery. Is now using our solution for their financial operations in both Australia and New Zealand. In addition, we signed two new multi-million dollar contracts with financial services providers in both country of Oman and Indonesia. We signed an agreement with Sindbad Management SPC in Oman for the implementation of Transcend Finance. The customer is a major musket, which is the capital of Oman. Oman-based company which provides big ticket asset financing and leasing covering various asset types such as marine vessels, aircraft, machinery, and other equipment. Alongside vehicles in Oman and other countries. The successful implementation of this project will serve as a model for future collaboration in the Middle East, reinforcing our commitment to expanding our footprint and delivering world-class technology solutions to a region that is ripe for growth and innovation. The 2nd multi-million dollar agreement signed during this quarter was with a Chinese leasing company known as Yu Long, which is acquired by BYD, a Chinese giant, for the implementation of Transcend finance in Indonesia. This marks the customer's expansion into the Indonesian market. The company offers a diverse range of leasing solutions across various industries with a strong focus on equipment leasing, asset financing, and commercial leasing. Our powerful technology platform combined with tailored regional customization makes us the ideal partner to support their success in the Indonesian market. These winds are a clear signal of the growing confidence our clients place in us to drive the digital transformation agendas. At a time when institutions are under pressure to modernize and differentiate our ability to consistently deliver mission critical solutions at scale sets us apart and cements our position as a preferred technology partner for financial institutions worldwide. The goal for Kubota in Australia during this period plus these two major multi-million dollar signings reinforce our reputation as a trusted strategic technology partner to the global asset finance and leasing industry. These developments serve as a powerful endorsement of the products, innovation and service excellence we deliver in an increasingly competitive marketplace. At the core of our transition to becoming an AI first organization is our commitment to redefining how technology can drive smarter, faster, and more secure decision making across the financial services ecosystem. In Q3, we announced the launch of Transcends AI labs, our dedicated innovation hub focused on developing cutting edge AI solutions tailored primarily for the asset retail, finance, and leasing sectors. Transcends AI labs brings together our deep domain expertise with advanced machine learning and generative AI capabilities enabling us to create next generation solutions for our clients that unlock the real business value. Whether through intelligent automation, hyper personal personalized experiences, or predictive analytics that empower risk, decisions, and overall operations. As part of our ongoing AI initiatives, we appointed Dario Morelli as our new Vice President of artificial intelligence in this quarter. Dario is a proven business leader and AI strategist within with over 15 years of experience spanning data analytics and AI. His vision and leadership will be instrumental in scaling our AI capabilities and embedding intelligence across every layer of our product portfolio. But Dao at the helm and the launch of Transcend AI labs, we are well positioned to lead our industry into the AI power future. Further, a quick update, our BMW USA retail platform rollout in 350 dealership in the US is on track. Looking at our business through a long term lens, I'm pleased with the progress we have achieved this quarter, and I'm optimistic about the momentum carrying into the final quarter of fiscal 2025 and beyond. I'm confident that our strategic investments, especially in. And the ongoing evolution of our revenue mix will drive stronger profitability and deliver lasting value for our shareholders. I now like to turn the call over to our CFO Roger Almond, who will go through the financial of the Q3 of fiscal year 2025. Over to you, Roger. Roger Almond Thanks, Najib. Good morning, everyone, and thank you for joining us to review NETSOL's financial results for the 3rd quarter fiscal year 2025. I'll take you through our key financial metrics and provide some context on our performance drivers. We delivered solid top line growth in the 3rd quarter, driven by continued strength in our services, business, and stable subscription revenue performance. Total net revenues for Q3 fiscal year 2025 increased 13%. To 17.5 million compared to 15.5 million in the third quarter of fiscal 2024. This increase was primarily fuelled by significant growth in services revenue. Services revenue increased 24% to $9.7 million compared to $7.8 million in Q3 of last year. The increase was primarily driven by a cumulative catch up of approximately 2.3 million related to a contract amendment for an ongoing implementation project. Total subscription, Sass and cloud, and support revenues increased 10% to $7.9 million compared to $7.1 million in the prior year period. Gross profit for the quarter was $8.7 million, or 50% of total revenues compared with $7.5 million or 48% in Q3 of fiscal year 2024. Operating expenses for the quarter totaled $7.2 million or 41% of sales compared to $6.2 million or 40% of sales in Q3 of fiscal year 2024. This increase aligns with our ongoing investment in growth areas including customer delivery, marketing, R&D, and employee development. GAAP net income attributable to nets so was 1.4 million or $0.12 per diluted share compared to $320,000 or $0.03 per diluted share in Q3 of fiscal year 2024. Included in our GAAP net income in the quarter was a foreign currency exchange gain of 322,000 compared to a foreign currency exchange loss of 964,000 in the prior year period. Because we operate in several geographical regions, a significant portion of our business is conducted in currencies other than the US dollar. A decrease in the value of the US dollar compared to foreign currency exchange rates generally has the effect of increasing our revenues, but it also increases our expenses denominated in currencies other than the US dollar. Similarly, as the US dollar gains strength relative to foreign currency exchange rates, it tends to reduce our revenues, but it also reduces our expenses denominated in currencies other than the US dollar. Moving to our non-gap metrics, non-GAAP EBITDA for the third quarter fiscal 2025 was 2.2 million or $0.19 per diluted share compared with non-GAAP EBITDA $767,000 or $0.07 per diluted share in the prior year period. Non-gap adjusted EBITDA for the third quarter of fiscal 2025 was 1.8 million or $0.15 per diluted share compared with a non-GAAP adjusted EBITDA of 810,000 or $0.07 per diluted share in the third quarter of the previous fiscal year. Please see the reconciliation schedules contained in our earnings release for our revised calculations of adjusted EBITDA for the quarters ended March 31st, 2025, and 2024. Turning to our balance sheet, as of March 31, 2025, we held $18.8 million in cash and cash equivalents compared to $19.1 million at June 30, 2024. Our working capital is $23.7 million as of March 31, 2025, compared to $23.6 million at June 30, 2024. In summary, Q3 of fiscal year 2025 was a strong quarter across the board comprising of double-digit revenue growth, increased gross margins, and a significantly improved net income. These results reinforce the strength of our operating model as we continue to execute our strategy. We remain committed to sustainable growth, product innovation, and delivering long-term value to our shareholders. Back to you Najeeb. Najeeb Ghauri Thank you, Roger. Much appreciated. Before I hand the call over for questions, let me take this opportunity to remind our shareholders that our annual meeting is scheduled for June 24, 2025. We encourage all shareholders to please vote at this meeting and ask that you vote yes for each of the proposals approved by the board of directors. Finally. As mentioned earlier, I am very pleased with the progress we achieved in the 3rd quarter of fiscal 2025. We continue to focus on innovation and are actively investing in our products and services under our Transcend platform. We are also encouraged by the growing number of opportunities we are seeing across the diverse markets we operate in. As always, we remain committed to a long term strategic approach, and we believe we are well positioned for continued growth in the final quarter of fiscal 2025 and into the future. With that, I now turn the call over to operator for questions. Operator. Operator Thank you, we will now be conducting the question-and-answer segment. (Operator Instructions) Our first question comes from the line of Todd Felte with StoneX Wealth Management. Please proceed with your question. Todd Felte Hey guys, thank you for taking my questions. Congratulations on an outstanding quarter. It's nice to see the subscription and support revenue grow to $7.9 million for the quarter. Do you expect that to be at least a baseline that continues to grow moving forward? Najeeb Ghauri Thank you for your comments. Yes, I think we do, because our sales revenue is in a very possibly growing side, and, there's, numerous things happening in the retail fund, so I believe this trend will continue. Todd Felte Okay, and now that we're moving more towards a stable profitability, I hope you anticipate for the next fiscal year possibly giving out a revenue and earnings guidance. Najeeb Ghauri I think we'll do that absolutely as we close the year in next couple of months so but we are pretty optimistic Todd, because one thing I want to address here or say company initiated a few months back, and I was driving this whole exercise in the company to look at all the areas of productivity and efficiency improvement. And at the same time look at the headcount, so I think we made good progress and I am enjoying the the results and this is to me just a start and we will maintain the same. The way we have managed this company in this last 9 months, so I think the future is quite bright for the company both from the revenue and from the bottom line. Todd Felte Sure, and a final question, the results today are outstanding and it seems like the future looks very promising. Do you plan on, kind of letting the investor community know are you planning on engaging any, another IR company or or getting analyst coverage? Najeeb Ghauri Well, I think we'll let us deliver the year end first, and we'll weigh in carefully. One of the advantage we've seen by using in house is that they have a lot more knowledge, understanding of the business tech in the technical terms. So for now I'm enjoying, in our service, but we'll see how we plan in the next fiscal year budget if we can. And bring back an hour from, but we'll decide at the time right now. I'm happy with what they're doing, but we'll see we'll definitely weigh in and pay attention to your suggestion. Todd Felte Okay, thank you for taking my questions and congratulations again. Najeeb Ghauri Thank you, do again. Operator As a reminder, if you would like to ask a question, press one on your telephone keypad. One moment please while we repoll for any additional questions. Thank you. This concludes our question and answer segment. If your question was not addressed during the Q&A session, please contact Netsol's investor relations team by emailing them at investors@ or by calling them at 818-222-9195. I would now like to turn the call back over to Mr. Ghauri for closing closing comments. Najeeb Ghauri Thank you, operator, and thank you for joining us today for our fiscal 3 quarter 2025 earnings call. We appreciate the time you have taken to join us today and look forward to providing further updates on our next earnings call. Until then, we wish you a pleasant day. Thank you all. Operator Thank you for joining us today for NETSOL fiscal 3rd quarter 2025 earnings conference call. You may now disconnect. Najeeb Ghauri Thank you everyone.
Yahoo
15-05-2025
- Business
- Yahoo
Q1 2025 DiaMedica Therapeutics Inc Earnings Call
Operator Good morning, ladies and gentlemen, and welcome to the DiaMedica Therapeutics first quarter 2025 conference call. An audio recording of the webcast will be available shortly after the call today on DiaMedica's website at in the investor relations section. Before DiaMedica proceeds with its remarks, please note that the company will be making forward-looking statements on today's call. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these statements. More information, including factors that could cause actual results to differ from projected results, appears in the section entitled Cautionary Note regarding forward-looking statements. In the company's press release issued yesterday and under the heading Risk factors in the company's most recent annual report on Form 10K and most recent quarterly report, Form 10Q. DiaMedica's SEC filings are available on the SEC's website and on its website Please also note that any comments made on today's call speak only as of today, May 14, 2025 and may no longer be accurate at the time of any replay or transcript re-reading. DiaMedica disclaims any duty to update its forward-looking statements. Following the prepared remarks, the phone lines will be open for questions. I would now like to turn you over to your host for today's call, Mr. Rick Pauls, DiaMedica's President and Chief Executive Officer. Mr. Pauls. Thank you, operator. Hello, everyone, and welcome to our first quarter 2025 conference call. I am joined this morning by Scott Kellen, our Chief Financial Officer Dr. Lorianne Masuokais currently on short-term medical leave, and we hope she gets well soon. We're happy to be here today to update you on the progress on our two clinical development programs. It has only been a short interval since our last update. That's I'll keep my remarks brief. That said, I'm pleased to report that we continue to make substantial progress in both of our clinical development programs. I'll start with an update on a Preeclampsia program. Building upon the significant accomplishments of this program within a very short time frame as we discussed in March, we're pleased to be able to disclose that we believe Part 1A of our phase 2 investigative sponsored preeclampsia trial is very close to identifying a target dose to move forward with it in Part 1 B. Dose selection will be guided primarily a few key data points which we expect to be sharing in our upcoming preliminary top line results from the part 1A proof of concept portion of the trial. These key data points include 1, safety and tolerability, including results of a placental transfer analysis. 2. the amount of decrease in systolic and diastolic blood pressure levels and 3. changes in uterine and placental blood flow as assessed by the Doppler ultrasound measurement of the uterine artery pulsatility index. This measure is important as reductions in the pulsatility index may suggest decreased downstream resistance and improved uterine and placental blood flow, which could also be an indication of disease modifying. Currently we expect to be in a position to release those preliminary topline results between the 2nd half of June and the 1st half of July. The final timing will be primarily dependent on the schedules at the outside laboratories running the various tests, including the pharmacodynamic biomarkers and the assay, which will be used to determine if DM 189 crosses the placental barrier. One additional update May is preeclampsia Awareness Month, and we will be sponsoring a preeclampsia key opinion leader call on May 28th at 8 a.m. Eastern. Compared to other therapeutic areas like oncology, which have advanced more rapidly in recent years, the treatment of pregnancy complications remains outdated and is not well understood. No FDA approved treatments exist for preeclampsia despite the growing burden of this disease. To our knowledge, DM 19 is the only novel agent currently being studied in pregnant women with preeclampsia. With this KOL events, we will continue our work to educate investors, physicians, and other interested parties on preeclampsia as a disease and the current state of treatment. With this background, we will also discuss the design of our current phase 2 trial of DM-189 in preeclampsia. Turning briefly to our stroke program, enrollment is moving ahead steadily, and we're pleased to announce that participant enrollment now is between the 20th and 25th percentile mark of patients enrolled for the interim analysis. Our next enrollment update will be at the 50th percentile mark. We believe that our efforts over the past year to engage with sites to promote communications between the sites and to simplify study logistics have been important in driving the recent uptick in enrollment. Accordingly, we reiterated our guidance that the interim analysis on those 1st 200 participants will be completed in the first half of 2026. I would also note for you that we have engaged an experienced stroke neurologist to support site engagement during Lorianne's leave in order to maintain our enrollment momentum in the Remedy II trial. This individual has spent over 10 years treating stroke patients at a major US research center and also has 5 years of recent biotech drug development experience. He has been doing a tremendous job connecting with and maintaining our relationships with sites and supporting our recent enrollment momentum. Now, I'd like to hand the call over to Scott Kellen to review this quarter's financial results. Thanks, Rick, and good morning everyone. As the operator mentioned, we announced our first quarter, 2025 financial results and filed our quarterly report on Form 10Q yesterday after the markets closed. These documents are both available on either the DiaMedica or the SEC websites. As of March 31, 2025, we reported a total combined cash and investments of $37.3 million. Current liabilities of $4.7 million and working capital of $32.8 million. This compares to a total combined cash and investments of $44.1 million, $5.4 million in current liabilities, and $39.2 million in working capital as of December 31, 2024. The decreases in combined cash and investments and in working capital were due primarily to the net cash used to fund our operations. The net cash used in operating activities for the first quarter of 2025 was $7.1 million compared to $6.7 million for the first quarter of 2024. The increase in cash used in operating activities resulted primarily from our increased net loss, partially offset by changes in operating assets abilities occurring during the current year period. We anticipate that our current cash and investments provides us a runway into Q3 of 2026. Our research and development expenses increased to $5.7 million for the three months ended March 31, 2025, up from $3.7 million for the three months ended March 31, 2024. The increase was due primarily to cost increases resulting from the continuation of our remedy to clinical trial, including our global expansion, increased manufacturing development activity, and the expansion of our clinical team during 2024. Now these increases were partially offset by cost reductions related to in use study work performed and completed in the prior year period. We expect that our R&D expenses will moderately increase in future periods relative to our recent prior periods as we continue our remedy to trial, including the global expansion and our continued expansion of our DM 199 clinical development program in preeclampsia. Our general and administrative expenses were $2.5 million and $2.1 million for the three months ended March 31, 2025, and 2024 respectively. This increase resulted primarily from additional non-cash share-based compensation expense recognized as a result of the approval of an extension of the post-termination exercise period for stock options held by a retiring member of our board of directors. We expect G&A expenses to remain steady in future periods as compared to recent prior periods. Our net other income was $443,000 for the three months ended March 31, 2025, compared to $597,000 for the three months ended in March 31, 2024. This decrease was driven by reduced interest income recognized during the current year period related to lower average marketable securities balances during the current year period as compared to the prior year period. With that, let me ask the operator to open the lines for questions. Operator Thank you so much, ladies and gentlemen. We'll now begin our question and answer session. Should you have a question, please press star, followed by one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to remove your hand from the queue, please press star, followed by 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment for your first question. And your first question comes from Thomas Flatton with Lake Street. Please go ahead. Good morning. I appreciate you taking the questions. Hey, Rick, just to clarify, the laboratory test results that seem to be the variable in terms of the readout between June and July, is that primarily the test for DM 199 crossing the placental barrier, so in the umbilical cord, or is there something else there that we should be aware of? Yeah, Thomas, yeah, absolutely. So that's the main item is going to be the placental transfer. So we have an essay that we're just having finalized in terms of getting to lower limits of detection. And so it's just a question of time for them to run it. So we want to at least give a range today in terms of when we anticipate the results. Makes sense. And then, I see you mentioned that you're expecting to start part 1 B in Q3. What are the triggers for part 2 and 3, so the expected management and the fetal growth restriction components of the study? So, I'll start off with the fetal growth restrictions. So, if we see dilation of the intrauterine arteries, our investigators are prepared to move ahead with that cohort, and then we'll have more to talk about the part two when we delight the results here in the coming weeks. Got it. Excellent I appreciate. You taking the questions. Thank you. Thanks, Thomas. Operator Your next question comes from Matthew Caufield with HC Wainwright. Please go ahead. Hi, good morning, guys. Thanks for taking our question. I was wondering if you could speak to the anticipated read through or any de-risking between the initial preeclampsia data and how that profile could translate to AIS development and the remedy to trial. Thanks again. Sure, I mean, I'll start off by saying that these are definitely two very unique indications, but I will add that a positive effect here in preeclampsia will just be another confirmation that this protein is active. And I would also mention around that we've previously talked about the fact that there are two forms of this protein in Asia that are being used. So, the formula protein isolated from human urine that today is treating close to a million patients per year for acute ischemic stroke, and then it's also a form of protein isolated from pig pancreas in both Japan and China. And we've been able to track down about 10 publications with that form of the protein to treat preeclampsia. So I think it'll just be very encouraged and you know that we have an active protein and what we're seeing in some of the validation and rationale for going into both of these indications is what we'll call the crude forms in Asia today. Thanks a lot appreciate it guys. Thank you. Operator Your next question comes from Chase Knickerbocker with Craig Hallam. Please go ahead. Good morning. Thanks for taking the questions. Rick, just on stroke, be good to kind of get some incremental details on enrollment. I mean, maybe just kind of starting out with those high volume or potential high-volume centers, can you kind of give us an update on what percentage of kind of those high-volume accounts are now, at that 1 to 2 per month that you want to see? I would add that, as we had kind of talked on past calls, we really do, we really did think that there would be a small number of sites, in particularly in the US that would drive enrollment, and as we're starting to build some momentum, that's clearly what we're starting to see. So some of these high enrolling sites are seeing the 1 to 2 patients per site per month and so. We're working on building momentum and then really working hard on some of those other sites to expand the relationship here to encourage, but, I say currently we are above our plan here now and you know we're encouraged with the with the momentum that's being built. So maybe just an update on overall centers as well as, again, it's only been a couple of months here, but, we have we expanded that past 30 and then maybe on the geographic footprint of those centers that we started to see some international enrollment coming in. Yeah, so we're currently in mid-30s, and keeping in mind that there are sites now that are not performing that we're shutting down and so we're really again focusing on the high-end rolling sites. We also have sites in Georgia that have been performing very well. And that's where that is the country of Georgia. Yeah, I got it, and just kind of I guess summing all this up, first half 26 interim analysis, I think at least implies that, enrollment rates continue to pick up, and I mean you're seeing that trajectory in, recent weeks, recent months as far as that curve continuing to steepen. Yeah, absolutely, and from the last earnings call, we're definitely seeing an encouraging uptick. Got it, that's it for me. Thanks. Great, thanks, Chase. Operator Your next question comes from Thomas Flatten with Lake Street. Please go ahead. Yeah, hey, thanks for taking another question. Just back to preeclampsia real quick, the part 2 and 3, those are, those studies will be primarily based out of South Africa, or are you thinking that there's going to be a US component to those which would necessitate ID filing? So that part 2 and part 3 are still part of the same protocol, and so our collaborators will not need to go back for regulatory clearance. And at some point, will you expand the study and if so, when into the US? We do plan in the future to expand this to the US and global, and you know we'll have more to share at a later date. Right now, the focus is getting the part 1A and then moving into the part 1B as well as parts2 and then 3 hopefully. Got it. I appreciate it. Thank you. Yes, thanks, Thomas. Operator Thank you. There are no further questions at this time. I would like to turn the call back to Mr. Rick Pauls. Alright, in closing, we're very encouraged by our steady progress and clear momentum across both the preeclampsia and stroke programs. We look forward to sharing upcoming key milestones, including the top line results from our preeclampsia approve a concept trial and the interim analysis from our stroke program. We thank our dedicated team. Investigators and importantly our patients and their families for the continued trust and commitment. Please also mark your calendars from May 28th at 8 a.m. Eastern time for our preeclampsia KOL event. We'll be sending out the call in details via press release early next week. As always, we appreciate the ongoing support of our shareholders and look forward to updating you further in the months ahead. Thank you again for joining our call today. This concludes our call. Operator Ladies and gentlemen, you may now disconnect. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-05-2025
- Business
- Yahoo
Q1 2025 Assertio Holdings Inc Earnings Call
Matt Kreps; Investor Relations; Assertio Holdings Inc Brendan O'Grady; Chief Executive Officer; Assertio Holdings Inc Ajay Patel; Executive Vice President & Chief Financial Officer; Assertio Holdings Inc Thomas Flaten; Analyst; Lake Street Naz Rahman; Analyst; Maxim Group Ram Selvaraju; Analyst; H.C. Wainwright Scott Henry; Analyst; AGP Capital Markets James Sidoti; Analyst; Sidoti & Company Operator Please stand by. Well, good day, ladies and gentlemen. Welcome to the Social Holdings first quarter 2025 results conference call. Just a reminder that today's call is being recorded. I would now like to hand things over to Mr. Matt Kretz. Please go ahead, sir. Matt Kreps Thank you and good afternoon. Thank you all for joining us today to discuss the Assertio's first quarter of 2025 financials. The news release covering our results for this period is now available on the investor page of our website at investor. I would encourage you to review the release and tables in conjunction with today's discussion. With me today are Brendan O'Grady, the Chief Executive Officer, and Ajay Patel, Chief Financial Officer. Brendan will open the remarks and provide an overview of the business, including an update on Assergio's long-term business strategy. After Brendan AJ will cover our financial results and guidance. Brendan will then provide some closing comments before we take questions from our covering research analysts. Please note that during this call, management will make projections and other forward-looking statements regarding our future performance. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in today's in this afternoon's press release, as well as the Sergio's filings with the FCC. These and other risk factors are more fully described in the risk factors section and other sections of our annual report on Form 10K and in our Form 10 filings. The actual results may differ materially from those projected in the forward-looking statements. Sarcio specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. With that, I will now turn the call over to Brendan. Please go ahead. Brendan O'Grady Thank you, Matt, and thank you to everyone who has joined today's call. I'll begin today with a quick overview of our first quarter financial results which are in line with the full year 2025 net product sales and adjusted EBITDA expectations that were set forth during the March earnings call. In the first quarter, net product sales came in slightly ahead. Of plan at 26 million and we are tracking to our full year net product sales and adjusted to Outlook. As I signaled in March, Rove on results in the first quarter were impacted by sell through 1/4 quarter initial stocking activity that supported customer and volume expansion, which we expect to benefit us from Q2 onward. In addition, we are continuing to add new customers and have strengthened our payer coverage that started in February with Cigna and expect to further expand our payer coverage going into the second half of this year. Overall Rodon demand remains strong and combined with our focused execution, we foresee net sales to continue increasing throughout the year. In addition, our revised Simpazan promotional strategy is proving effective, with total Simposan prescriptions in the first quarter up 6.5% year over year. This is a very positive-trend that we expect will continue building in the quarters ahead. Lastly, Indison remained stable in the first quarter, achieving our expectation for net sales and contribution. These results, along with expected performance throughout 2025, are influenced by the substantial progress Ossergio has achieved to date, implementing the long-term business strategy that I put into place last year. As I approach my one year anniversary with Osserio, I think it's important to recognize the team's progress and address our expectations moving forward. As previously stated, our strategy includes 3 phases characterized as stabilization, transformation, and growth. Stabilization was successfully completed in 2024 and it has adapted our organization to the changing operating environment. We strengthened our balance sheet, repositioned our portfolio to focus on Rovedon and Simpizan as core growth drivers, and rebalanced our talent and promotional resources. These significant achievements pave the way for us to begin implementing our current phase transformation. This phase is occurring throughout 2025 as we implement actions intended to catalyze a shift in future growth potential. I will cover this in more detail in just a minute. Finally, the growth phase of our strategy is expected to start in 2026, during which time we intend to become a leading commercially focused specialty pharma company that creates top tier value over the long term. Now coming back to the transformation phase of our strategy, we set forth the following priorities for 2025. First, reduce legal exposure. Second, simplify our corporate structure and processes. Third, prioritize investment and growth assets. 4th, divest non-core assets, and 5th, use the strength of our balance sheet to close a strategic transaction. These 5 transformation priorities are well underway with the goal of completing each by the end of this year, and I'm encouraged by our progress in just the 1st 4 months. I'll address several notable achievements and we'll start with reducing our legal exposure. Assergio has settled multiple prior legal matters, including the previously disclosed 2017 Department of Justice False Claims Act Q-tam lawsuit, the last remaininglumea antitrust action, and Spectrum's legacy Luau Securities class action. It is important to note that we admit to no wrongdoing in any of these cases, but decided to settle rather than continue to litigate and incurring the cost to defend as well as the distraction to our business. In addition, we obtained a dismissal of the company's Edwards Securities class action pending court approval. Our overall progress in reducing our legal exposure improves our ability to optimize operating expenses. By reducing legal costs and refocusing those resources back to the business. As noted in our earnings release, we have also begun simplifying our corporate holding structure by transferring all of our assets in our Sergio Therapeutic subsidiary to ATIH Industries LLC. At the closing of this transaction, Asserio Therapeutics held approximately $8.2 million in cash, a single digit royalty in Anderson, and certain legal liabilities, including those related to opioid litigation, which ATIH has assumed responsibility for managing and defending. As a result of this transaction, neither Seria Holdings nor any of its current subsidiaries remain named defendants in any opioid-related litigation. As we move throughout the year, we will also progress our strategy to invest some non-core assets which will further improve our ability to reallocate corporate resources to focus on growth and bolster our balance sheet to acquire or in license new growth assets. Already we have added new marketing support for Rodon and rebalanced promotional efforts for Simpizan by augmenting our omnichannel activities with select in-person support for the largest markets and key high decile prescribers. As a result, we are seeing improved efficiency and sales performance as previously mentioned. The actions I have just touched on allow us Sergio to optimize operating expenses so that we can better invest in the future and advance our strategic activities as we move through the transformation and into the growth phase. I want to conclude my remarks by stating that Ossertio's underlying business is strong and will be most successful by pivoting to a more sustained operating model driven by not only cash flow assets but by growth assets. To be clear, our strategy is to focus on specialty pharma assets with the potential to grow over a sustained period of time. Within a commercially focused operating model, that is why we are implementing a long term business strategy that we are confident can create sustained near term growth and increase long term value. I look forward to providing you with continued updates on our progress as we head through 2025. I will now hand over to our CFO Ajay Patel, who will walk us through the details of our first quarter performance. Ajay Patel Thanks, Brendan. Today I'll walk through our financial results for the first quarter of 2025. My commentary will resume the use of year over year comparisons as we have now completed the stabilization phase that Brendan discussed regarding the 2023 spectrum acquisition and Indison's generic competition, which made year over year comparisons difficult in 2024. Q1 2025 product sales came in at $26 million compared to $31.9 million in the prior year quarter. Odon sales were $13.1 million a decrease from $14.5 million in the prior year first quarter, driven by lower pricing, partially offset by higher volume. As Brendan mentioned, the current year first quarter was impacted by fourth quarter stocking. Indi and net product sales were $5.5 million down from $8.7 million in the prior year quarter due to the impacts of generic competition. The prior year first quarter was still in the early stages of the generic impact. Symphozan sales were $2.2 million compared to $2.6 million in the prior year period, impacted slightly by pricing and volume. Reported gross margin increased to 70% from 65% a year ago. The prior year reported gross margin included Rovedon inventory step up amortization, excluding the impact of the inventory step up, prior year gross margin was 78%. The year over year gross margin decline was driven by the impact of higher rovedon volumes on cost of sales. Turning to operating expenses, reported SG&A expense was $22 million up from $18.5 million in the prior year quarter, primarily driven by higher legal charges, including a net settlement charge of $2.8 million for the Luau shareholder matter. R&D expense was $0.4 million down from $0.7 million a year ago due to the completion of the same day dosing trial at the end of 2024. Adjusted operating expenses, which exclude stock compensation, DNA, and non-reoccurring restructuring and legal settlement charges, were $18.5 million compared to $17.3 million in the prior year period due to higher external litigation costs. GAAP net income for the first quarter was a loss of $13.5 million compared to a loss of $4.5 million in the prior year. In addition to the impacts just discussed, GAAP net income was affected by higher intangible amortization expense due to a change in useful life at the end of 2024. Adjusted IIDA for the first quarter was $0.2 million compared to $7.4 million in the prior year quarter, primarily reflecting the impact of lower net sales and gross margin as discussed. Turning to our balance sheet and cash flow statements, as of March 31, 2025, cash and investments totaled $87.3 million compared to $100.1 million as of December 31, 2024. Cash flow from operations during the first quarter was impacted by the timing of approximately $12 million of accounts receivable collected in early April. At the end of April 2025, cash and investments stood at approximately $96.7 million. Debt at March 31, 2025 remains unchanged at $40 million comprised of the company's 6.5% convertible notes with no maturities until September 2027. With that, I will turn the call back to Brendan. Brendan O'Grady Thanks. In the first quarter, the Ossertio team delivered strong financial performance on track to the expectations that we set for 2025. We also demonstrated outstanding execution on the transformation phase of our business strategy with notable achievements that keep us on a path to realizing our goal of creating sustainable near-term growth and increased long-term value. I am confident that the strengths of our underlying financials, ongoing business performance, and business strategy will enable our success. With that, let's go ahead and open the call for questions from our analysts. Operator Thank you, sir. (Operator Instructions) Thomas Slayton, Lake Street. Thomas Flaten Hey, good afternoon, guys. Thanks for taking the questions. Brendan, congrats on offloading the opioid litigation matters. Were there, just out of curiosity on that, was there value in in either direction on that? Did you guys pay them to take it? Did they pay you to accept it? Was there any. Brendan O'Grady Value movement there? Yeah, just nominal value they paid us, Thomas. Thomas Flaten And a quick one for AJ. AJ, you guys, have some. Relative to the beginning of last year, your accrued rebates, returns, accrued liabilities are up. How do we think about you guys using cash to bring those balances back down again? Will that occur pretty evenly over the course of the year or how should we think about that? Ajay Patel Yeah, Thomas, thanks for the question. Yeah, I would think about that relatively evenly. As the primary factor of that is Rover down with its ASP-based pricing. So as the rebates increase for that, the payments typically occur in the subsequent quarter. Thomas Flaten Got it, understood. And just a final one for me if I might, any more thoughts on same day dosing, progress with the NCCN, any update on that? Brendan O'Grady Yeah, Thomas, so as we've discussed or said before, we, it's kind of a 12 month strategy as far as the NCCN. So we've presented the results of the same day dosing trial twice, once in December, once in, I think March. We've approached a peer reviewed journal for a publication that we hope will be midsummer. And once that's done, then we will approach NCCN about inclusion of the guidelines for 2026. So, everything's moving according to plan. Ultimately we don't control whether we get in the NCCN for the guidelines or not, but we are executing the plan to get there. Thomas Flaten Excellent. I'll hop back in the queue. Thank you. Operator Naz Rahman, Maxim Group. Naz Rahman Hi, thanks for taking my questions and gras on progress. Just two questions on Wennon, I believe you first spoke about expanding into the hospital setting away from the community setting. Could you kind of provide some comments and details about how that's progressing thus far in 2025 and sort of where you start or wherever you would expect to see an inflection point there. Brendan O'Grady Yeah, hi, Naz. Thanks for the question. I think if you think about Rollon today, most of our business is in the community oncology Medicare Part B space. To be successful in the hospital space, we really need to grow our commercial payer side that will unlock a couple of things for us. It will unlock more of the commercial channel for us. And then it'll unlock hospitals as well. So the next step in the strategy is really to build our payer coverage, which we've done with Cigna, as I mentioned in my opening comments, and hope to expand in the second half of this year and then further expand in 2026. As we do that, we'll be able to get more of the commercial clinics based business as well as that will enable us to impact or penetrate hospitals to a greater degree. Naz Rahman Got it, thank you. And my last question is just on guidance. So based on you on the adjusted bit of guidance of 10 million to 19 million, why not adjust the band down or do you still think it's possible and what leverage could you, do you think we'll get you towards that 19 million? Why not adjust that band down from 10 to something else do the 12 results. Brendan O'Grady I think that there's still too many things going on that that wouldn't make sense for us to adjust it down. We'll see how 2nd quarter pans out and we'll talk about it again in August. But at this point, I think the guidance ranges we put out there for both EEA and net sales, I think we're tracking to within those guidance ranges, and we'll see how things go, but we'll update it again in August if necessary. Operator Ram Selvaraju, HC Wainwright. Ram Selvaraju Thanks very much for taking my questions just in furtherance of. Additional context regarding the Roaddon situation. Can you give us a sense of what additional promotional or marketing strategies you expect to implement over the course of the remainder of this year to TRY to accelerate growth and roll it on sales? Brendan O'Grady Sure, hi Ram. Thanks for the question. A couple of things. I mean, first of all, there's still more market share we can get in our primary space, which is the Medicare Part B clinics. There's still some large groups out there that that we hope to attract additional volume with and additional shares. So that's one. Second, I mentioned the payer piece. We've just begun to start starting to pull that business through on the commercial side. So that's 2. We hope to expand that coverage in the second half of the year, which would be the 3rd, and again that will enable us to get some penetrations in the hospital. So if you see that it's kind of building throughout the year, we expect Rodon to continue to grow in net sales and volume as we go through this year. Ram Selvaraju Can you talk about how you expect the overall genericization picture to evolve over the course of the remainder of 2025 with respect to Edison? Are you expecting a substantial additional number of generic purveyors of Edison? Between now and the end of 2025, if so, approximately how many and what impact do you expect that to have, even if only on a qualitative basis regarding the remaining in the sin revenue stream. Brendan O'Grady Yeah, another good question. Thanks, Ram. I think our plan assumed two more generics for Indiin this year, one in the first half of the year, one in the second half of the year. There was an approval back in February. We have not got any confirmation of launch yet, so I think we're still relatively tracking to plan. But you can think about, if there's 3 on the market, you split the market by 3, if there's 4 on the market, you split it by 4. So each time you lose volume and you lose price, so it will decline with the with the entrance of more generics. But I think, I'm optimistic right now that that we're we're tracking to our plan. I think we've got a pretty good a pretty good handle on it. We'll optimize Anderson as much as we can as we go through the year. Ram Selvaraju And then lastly, you had mentioned on this and a couple of previous calls the interest of the company in doing something on the strategic front to broaden potentially the commercial portfolio. Can you give us some additional context on that if there's been any sort of evolution in your thinking, particularly if this pertains to the broader market environment changes that you're seeing within that, and also the possibility of identifying opportunities that are directly synergistic with your existing commercial assets. Brendan O'Grady Yeah, I mean, we have numerous ongoing conversations, all very positive conversations going in the right direction, and I'm very optimistic that we will get something done in 2025 that will certainly add to our business and position us for that growth phase in 2026. I obviously can't be more specific than that, but I'm very encouraged by the conversation that we currently have going on. Ram Selvaraju They're just for clarification purposes, as of right now, your forecast or outlook for 2025 is not contingent upon any such business development activity being successfully concluded, is that correct? Brendan O'Grady That is correct. Our outlook for 2025 includes only our current portfolio. Operator Scott Henry, Alliance Global Partners. Scott Henry Thank you and good afternoon. I guess first with regard to Rovean, you do mention pricing pressure. Could you talk about the pricing, how it is, kind of year over year and sequentially and your expectations going forward? Brendan O'Grady Yeah, hi Scott. I mean, it is a quarter to quarter type of strategy, so you know. ASP does erode over time, and some quarters is a bigger impact than others. It's a very competitive marketplace as we play in this this new lastA biosimilar long acting GCSF space. And there could be new entrants that enter as we go through this year that could also have an impact. So we're, I think we're doing a very good job of maintaining and managing our ASP. I think the way that we think about the business and the way we execute and contract the business is smart, which I think is why our ASP has. Been slower to erode maybe than others, and we continue to build volume and gain new customers and that's part of of the step down from Q4 to Q1 was we brought in some new customers in Q4 that were going to pull through in Q1, so we wanted that inventory there and we pulled that through in Q1, so you'll start to see that grow as we go into Q2 and beyond. Scott Henry Okay, thank you for that caller. And then with regards to SG&A, I believe you said that the base SGA is around $18.5 million quarterly. I guess the question is, did I hear that correct? And as well, what would you expect for the legal wind down, particularly, given that you've had this divestment, should that start to be declined materially in the coming quarters or or how long should some of that that other litigation take? Ajay Patel Yeah, no, thanks for the question, Scott. You're right. So the base, adjusted op back for the first quarter was 18.5 million. Now in the first quarter we were burdened, we typically have kind of two components of litigation exposure legacy matters and shareholder matters, as Brendan kind of alluded to in his comments, right, the legacy matters for the most part have been mitigated now with the divestment of Assertio therapeutics. We are expecting kind of on an annualized front that to benefit us, in the neighborhood of $2 million to $3 million annually. And then from a shareholder litigation as we continue to resolve, settle, and exit those cases, the ongoing burden does decrease over time. Scott Henry Okay, thank you. Final question, just for clarity, what is, what assets exactly did you divest into the AITH entity? And was there any material event impact from those assets? Brendan O'Grady There is just a a single digit royalty on Edison that we divested. Scott Henry With -- Brendan O'Grady The therapeutic divestiger and ATIH as well as some cash. Scott Henry Okay, all right, so none of the other products went with it, none of the small. Brendan O'Grady Nope. Scott Henry Okay, and if I may, and it's, I guess it's, I don't want to ask you a legal question, but I think I'm going to, if you divest. Some of your legal responsibilities to this asset, what is the risk that they could still come after the parent company that that you can't in fact, completely divest that liability? Brendan O'Grady Well, I mean, if you think about it, the way that we got the liability was through M&A and so this is no different. We transferred this. Legal entity to a third party that is going to maintain and run this business and manage and manage it accordingly. So while there's always a risk, I think the risk is very low. Operator (Operator Instructions) Jim, Sidoti & Company. James Sidoti Hi, good afternoon. Thanks for taking the questions. In addition to all the, internal changes there, you, you're dealing with some external changes as well. Can you comment on, what impact do you think there could be from either the tariffs or the executive order regarding drug pricing or the proposed changes to Medicaid. Brendan O'Grady Yeah, I mean, so the tariffs is who knows, right? That's a daily up and down. We've got a significant, I mean, probably a thing we would be most exposed on with tariffs would be drug substance on roodon, but we've got a significant inventory here in the US, so we don't expect any short-term impact, and by the time there is an impact, hopefully that situation will be worked out. With regards to drug pricing, we do not sell any products outside of the US with the exception of Cambia that we sell in Canada, and Cambia is probably more expensive in Canada, the fact that it's not generic and it's generic here. So we'll see. There needs to be a lot more details on drug pricing. It's going to take a while for the details to come out as to how that's actually going to play out, but at least right now we don't see any real risk on either one of those two things. James Sidoti Okay, and I just want to be clear, post the divestiture, are you maintaining your revenue guidance of 108 million to 123 million? Brendan O'Grady We are. Operator Yeah, And at this time there are no further questions. Everyone that does conclude today's Osserio Holdings first quarter conference, we would like to thank you all for your participation. You may now disconnect.
