Daxor Corp Q2 FY2022 Earnings Call

Good afternoon, and welcome to the Daxor Corporation First Half 2022 Financial Results and Corporate Update Conference Call. At this time, all participants are in listen-only mode. Participants of this call are advised that the audio of this conference is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call through November 25, 2022. I would now like to turn the call over to Scott Gordon, President of Core IR, the company's investor relations firm. Please go ahead, sir.

Thank you, Gary. Good afternoon, everyone, and thank you for participating in today's conference call. Joining me from Daxor's leadership team are Michael Feldschuh, Chief Financial Officer, and Robert Michel, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address Daxor's expectations for future performance or operational results. Forward-looking statements include risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Daxor's most recently filed annual report on Form N-CSR and subsequent periodic reports filed with the SEC, and Daxor's press release that accompanies this call, particularly precautionary statements in it. The content of this call contains time-sensitive information that is accurate only as of today, August 25, 2022. Except as required by law, Daxor disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to CEO, Michael Feldschuh. Michael, please go ahead.

Thank you very much, Scott. Good afternoon, everyone. Thank you for joining us. It's my pleasure to report on Daxor's first six-month results for the period ended June 30, 2022. I've written to shareholders in the past that for the company to realize the tremendous potential of our paradigm-shifting medical technology, we need to execute well in several key areas. We have strong clinical results, but they have to be accompanied by commensurate health economic outcomes. Our new research milestones showing value have to be paired with our next-generation diagnostic systems, offering the ability to easily adopt our technology into the clinical workflow. The promise of our systems must be supported by engagement with our customers through clinical support, medical education, and a well-run sales support team. I'm pleased to announce that in the last six months, we've made important breakthroughs building on our focus in each of these key areas, balancing our growth and commercialization with strategic investment, fueling our next-generation systems, which are the most important technology launch for the company in 20 years. Our opening slide is from January of this year, as we listed on the NASDAQ Stock Exchange. Proud to show us joined by some of our board members and our key executives at the NASDAQ since our listing. A quick reminder for those of you who are new to the Daxor story. Daxor is the global leader in blood volume measurement technology, focused on blood volume testing innovation. We are headquartered and operate out of a 20,000 square foot state-of-the-art production and research and development facility located in Oak Ridge, Tennessee. So what is blood volume about? What does it serve, and what markets does it address? Blood volume management is central to a number of very widespread and costly conditions within our healthcare system. Blood volume derangement is a central feature and something that has to be managed in very costly areas such as heart failure, which affects more than 6 million patients in the U.S. alone, for which the U.S. spends more than $30 billion a year managing, areas such as hypertension, sepsis, critical care, and syncope, just to name a few. In total, these areas represent some of the costliest spends in our healthcare system and the chief focus of reimbursement and payers, such as CMS, in seeking to improve outcomes for their patients and for the healthcare system overall. A quick background, though, the need for optimal blood volume management is central to effective outcomes in a number of these conditions. But currently, the state of care is that care teams are relying upon a number of inaccurate, costly, and invasive non-direct measurements of volume estimation. You can see from this slide that they include things such as invasive measures, such as a right heart cath, non-sensitive or specific measures, such as chest X-rays, or biomarkers, and include things like clinical exam, which has been proven to be unreliable. They're all inaccurate, many are costly, and some are invasive, and they've all led to inferior outcomes compared to our single blood volume diagnostic metric. What are some of the benefits around blood volume analysis? And how does it mesh with the central aims of healthcare today? Healthcare is focused on what's called the Quadruple Aim. That means preventing hospital readmissions of patients that are discharged, individualizing and optimizing the treatment pathway to do things like shorten the length of stay, informing the management of patients so as to operationalize effectively, and to ultimately save hospital resources. All of these things lead to an improvement in both mortality, readmissions, patient satisfaction, and resource use. Daxor's solution for these significant needs is our blood volume measurement systems. Our current system, which is FDA cleared, is a 98% accurate direct measurement of total blood volume plasma and red cell volume. It is unique in the marketplace. It allows for results within one hour and is covered for both inpatient and outpatient care and is reimbursed by both CMS and private insurance. To date, Daxor has had over 60,000 tests performed at leading medical centers across the country and has been the subject of over 100 peer-reviewed studies confirming the value of blood volume management and its superior accuracy to the proxies that I just mentioned. So here is an updated executive summary of what has been going on at the company in the last six months. I'll start first at the operating division level. Going back, looking at a year-over-year 12-month comparison, we've seen pivotal growth in the company and its business prospects. We've seen strong growth in sales, revenue, and new customer acquisition, while our research and development efforts have been accelerating the development of our next-generation blood volume analyzer systems. The company is pleased to report a 92.6% increase in the unaudited revenues of our blood volume diagnostic operating division for the year and for the period ended June 30, 2022, as compared to the same period in the prior year. Revenue growth was driven by a combination of the sales and leasing of our capital equipment to hospitals, orders for our single-use disposable blood volume diagnostic kit, used in areas such as heart failure, critical care, and other indications, along with a 9.2% increase, which was well received by the market. Additionally, revenue growth was driven by U.S. Department of Defense orders, as well as orders from third-party companies contracted with Daxor to conduct blood volume analysis and research on their pharmaceutical products. The company has reported that the number of single-use Volumex diagnostic kits rose by 49.4% in the first half of 2022, compared to the first half of 2021. Growth is being driven by a combination of an increase at existing accounts as well as the addition of new accounts coming online. The company feels that there are still substantial growth opportunities at existing accounts, as there is room for growth from winning a higher percentage of patients within existing departments and expanding to other departments within hospitals where blood volume analysis devices are present. As of this date, the company has sold, in the first half of 2022, leased, or placed 12 new devices for use in either clinical management or research or a combination of the two. Many of these new accounts are just beginning to ramp up and come online. As they integrate the diagnostic into their treatment protocols, we feel that their need for the product has never been greater. We see a strong long-term market for the use of our product within the heart failure segment. The current population of heart failure patients is 6 million in the United States, 1 million of whom will be hospitalized, and it is anticipated over the next 12 months. The total number of heart failure patients is set to rise to more than 8 million over the course of the next six years as the baby boom generation continues to age, and hospitals are under increasing pressure to improve outcomes and contain costs. Other commercial highlights include expanding utilization at one of the largest healthcare organizations in South Carolina and an industry partnership with MedAxiom, which I will go into more in a moment. Switching over to some of the clinical highlights, blood volume analysis was selected by the National Institutes of Health as a key metric for their large COVID-19 Long Hauler study. In addition, new data from the Baptist Heart Health System has been presented at ISHLT validating the benefits of blood volume analysis in late-stage heart failure patients who use left ventricular assist devices. We've also seen data coming out from Duke Heart, presented at the American College of Cardiology, revealing the unique accuracy and utility of blood volume analysis for improving worsening heart failure. We also anticipate new important research to be presented at the Heart Failure Society meeting in October. Shifting gears for a moment to one of our key priorities, our focus on our next generation of new products has been a key area of interest and energy for the company's management. We're pleased to announce that we successfully completed our Army Department of Defense contract to create a portable combat care device for both military and civilian use. In the first half of this year, we also successfully completed an NIH-funded I-Corps program for the commercialization of clinical decision support software. We were awarded a Phase II Cooperative Research Agreement for our non-nuclear tracer, and we have begun the process of submitting data to the FDA for the clearance of our next-generation blood volume analyzer. We anticipate a full submission to be completed in Q4 and approval in early part of 2023. I will go into more details about that in subsequent slides. Our work on our next-generation non-isotopic fluorescent marker is also ongoing, supported by a research contract from the U.S. Department of Defense. Focusing on the arc of our development with the U.S. DoD, we've been the recipient of over $2 million in military contracts. The military, going back to 2018, recognized Daxor as the global leader in blood volume analysis technology and was the natural commercial counterpart to award a contract to generate a portable ruggedized blood volume analyzer that would be suitable for both military and civilian use. This chart shows that we have successfully completed both Phase I and Phase II studies for the Army. We have completed Phase I for the Air Force, and we are in the process of completing our Phase II contract for the Air Force, which is our fluorescent marker. We've also entered into Phase II of our CRADA agreements with the Uniformed Services University as well. We find the enthusiasm among the military counterparts overseeing this project to be very healthy and enthusiastic, and they've been gratified to see that we've been hitting our milestones in terms of creating a product that fits all of the specifications, on time and on budget as well. Switching gears back over to the commercialization side, Daxor has been selected as an industry partner for MedAxiom. For those of you not familiar with MedAxiom, it is the industry leader in consulting for cardiovascular care. It's a wholly-owned subsidiary of the American College of Cardiology, which is the leading cardiology association in the world. They have a select group of industry partners, and those partners are then connected to the hundreds of hospital systems and cardiology clinics that MedAxiom consults with. They engage MedAxiom to recommend the latest of innovative technologies and best practices to improve outcomes within their systems. We are gratified to be working with them because of their expertise, enthusiasm for Daxor's product, and their desire to raise the profile of the company by featuring us at conferences, creating webinars, and other collateral to send out to all their thousands of members. We look forward to this partnership to significantly raise the profile of the company and to further drive sales. MedAxiom sees the Quadruple Aim as a key focus and that Daxor's blood volume technology fits every single part of the Quadruple Aim: improving outcomes, lowering costs, improving the clinical experience, and the patient experience as well. Daxor continues to make progress in its ongoing clinical trials. We have received funding from not only the Department of Defense but also the National Institutes of Health. We have two NIH multicenter prospective heart failure trials that are ongoing. We also have a prospective sepsis/COVID study initiated by NYU, in conjunction with Oregon Health Sciences University and Wake Forest Baptist. Duke University Medical Center has also completed its Phase I prospective study, and we are awaiting their publication of results. The company has an active R&D and patent portfolio. We were awarded a patent in January of this year relating to our novel clinical decision support software. This was the same patented technology that was the basis for the NIH awarding us our I-Corps grant and support for future integration into our blood volume diagnostics. In addition, we anticipate that we have several patents that will be awarded sometime over the next 12 to 18 months. We have half a dozen pending, and we have a pipeline of more patents that we intend to file before the year's end. So we have a very deep and growing moat of protection in terms of IP, and we have a lot of work going towards our next-generation systems as well. I would now like to switch over to Rob Michel, our CFO, to talk about some of the unaudited flat financial outcomes to date.

Thank you, Michael, and good afternoon, everyone. Here is the summary of our first half 2022 financial results. The period as of June 30, 2022: Daxor's net assets increased 35.3% to $19,615,712 or $4.85 per share, as compared to $14,493,285 or $3.59 per share at June 30, 2021. Daxor's net assets decreased 7.3% to $19,615,712 or $4.85 per share as compared to $21,152,719 or $5.24 per share at December 31, 2021. However, the June 30, 2022 results do not reflect any change in the valuation of the operating division. The valuation of the operating division remained at $16,500,000 at June 30, 2022, the same value as December 31, 2021, as the valuation of the operating division is traditionally performed on an annual basis at the conclusion of the fiscal year. For the six-month period ended June 30, 2022, Daxor had net dividend income of $130,943 and net unrealized gains on investment activity of $1,370,610. There was a net decrease in the unrealized depreciation on investments options and securities borrowed of $1,367,276 as we sold positions during the second quarter of 2022. The prior year's significant unrealized gains unwound into the realized gains for the period. Included in the net decrease in net assets resulting from operations of $1,812,497 is noncash stock-based compensation expense of $275,490. In an effort to provide incentive to employees, officers, agents, and consultants to the company, we utilize stock-based incentive awards. There was a net realized loss of $1,535,071 from the operating division relating to investments in research and development, sales, and overhead, as the company continues to invest judiciously in research and development for our 2022-2023 product launch, ramping the commercial sales teams, as well as production facilities for our next-generation blood volume analyzers. That concludes my comments. And with that, I'd like to turn the call back over to Michael. Michael?

Thank you, Rob. Included in this slide are some statistics around our stock and stock performance. We have a float of approximately 4.04 million shares, 68.02% of which is owned by insiders. So we are a company that is very heavily owned by insiders. You can see that over a one-year period, the total return on our stock has been 50.8%. Our shares have risen from $9.33 to $14.07, as of yesterday's close. Also benchmarked against peers such as the Dow Jones Healthcare Index, Daxor has substantially outperformed not only the broad market but the relevant healthcare indices that it might be compared against. The stock has shown a low to zero beta and some substantial alpha, and idiosyncratic return, which is commensurate with our development and progress, really being independent of some of the larger stock market forces and reflects, we feel, strong shareholder support for the trajectory of the company. This slide is a brief overview of our senior leadership, which remains unchanged. Daxor continues to be very focused on executing successfully, and we remain gratified that our sales, marketing, and business development team has been doing such a fine job. Here are key contacts that we have, including investor relations, our auditors, corporate counsel, and transfer agents. With that being said, I thank you, and I would like to open up the floor for questions.

The first question is from Anthony Vendetti with Maxim Group. Please go ahead.

Thank you, Michael. I wanted to discuss the new BVA. What distinguishes it from your previous device? I understand it's portable, so could you explain its weight and how easily it can be moved from one room to another? Also, can you confirm if you plan to submit for 510(k) clearance by the end of this year, and do you expect to receive that clearance in early '23 since you're likely using the original BVA as a predicate device? I have a follow-up question as well. Thank you.

Great, thank you. Yes, I think it's very important to speak to why the company feels that this product launch is one of the most important things that the company has undertaken in the past 20 years. Our new next-generation systems are designed to be portable, rapid, and available at the point-of-care. Our current system involves the injection of a tracer at the bedside of the patient, drawing blood samples, and then those blood samples being taken somewhere else to a lab to be processed, resulting in results being put into the electronic medical record system for clinicians to use. That process can take anywhere from 60 to 90 minutes under the best circumstances. Our new system, in contrast, is designed to be deployed directly at the bedside, allowing blood samples to be drawn directly from the patient, providing results within 15 minutes. So the new system is more than three times faster than our current unit and is capable of giving full results at the bedside without the need for lab services. It's also about the size of a tissue box while weighing about the same as a laptop computer. We anticipate that there will be substantial demand for our faster, easier, simpler version of our test from many different stakeholders within the hospital system, from current lab customers who will be able to recapture a substantial amount of their space to justify the new system, as well as improvements from utilization in critical care. Because in critical care, there's typically a turnaround time of 15 minutes or less to make tool-based decisions. So we think that opens up a whole new set of customers for us within the same hospital setting. The fact that the test can be done so much faster also means that the hospital will spend fewer resources in terms of tech time to do the test, allowing for an increase in the total number of tests per day that their department is able to perform. So we see this as a revolutionary step in terms of speed, usability, and workflow. Thus, we feel that will greatly speed the adoption of our systems. We also see an opportunity for hospitals to want multiple systems within their hospital setting. For example, we anticipate that a floor dealing with critical care patients might want to keep one of these systems on their floor, another in the heart failure clinic, and another device, perhaps in the main ICU. So we can see a workflow where several of these units are stationed around the points of care where patients are, allowing rapid deployment of the tests versus having a single device in the central lab, which is much slower and dependent upon other issues before the test can be performed. So we see this next-generation system as incredibly important. Now the second part of what we're building into our next generation is a non-isotopic fluorescent marker. That system is under development, also with support from the United States Air Force, which we see opening up another additional area of care. That fluorescent marker would be suitable for deployment even to areas such as clinics and potentially doctor's offices as well. Our aim is to make blood volume analysis faster, easier, quicker, and available in all sorts of care areas to inform everything from hypertension management to heart failure to sepsis and syncope. So these product launches and the support we are receiving from both the NIH and the DoD are very powerful towards making that happen.

Yeah, no. That sounds like a significant leap forward, not just an incremental iteration. Just maybe in terms of that, as customers understand there's a significantly improved device coming out, do you expect that to hold sales down in the back half of the year? Or at least for the equipment that's out there, can you talk about, in general terms, the usage stats? Because there's a consumable piece to this? Have you seen a pickup, at least in devices that are currently in the field? Has there been increased usage in the first half of 2022?

So that's really a two-part question. I'll answer the second part first, which is that we have seen a growth in the utilization at existing accounts. That has really been a function of our ramping up our clinical and sales team, led by our Senior Vice President, Jean Oertel. She has been doing a superb job of engaging with key opinion leaders at hospitals and managing and growing the sales and clinical support team to be very focused on supporting new users. We have been making investments in things such as Grand Round, a new electronic learning management system for remote training of our clinical teams at different customer sites, along with a new CRM system to manage our sales team more effectively. Kathy Kornafel, our VP of Marketing, has been very focused on growing collateral, and she's been doing a terrific job of that. So we're seeing sales at existing accounts rising, which is very nice because it means that the new accounts that are coming online are also coming in at a higher utilization rate. Regarding whether the impending new device is suppressing the sales or leasing of the current devices, it's very important to know that our sales model for the new generation devices will be substantially different from our current sales model. We anticipate moving towards a SaaS model for our equipment, meaning the software service model, where we will primarily rent our next-generation analyzers instead of selling the capital equipment. We feel that this will alleviate customers' current fears. If they have existing devices, we will seek to rapidly swap them out or trade them in with some kind of credit to get everyone onto the new system. There are so many advantages for every stakeholder to having it. Additionally, moving to a SaaS model will provide an additional recurring revenue stream from our devices. We've had some devices at hospitals for 10 years, where they've still been using the same device on thousands of patients. Frankly, we haven't been reaping the kind of returns on that capital equipment that we could, if we were renting it on a monthly basis. There are a lot of advantages to moving towards that model, and that's how we're going to address the issue of suppressed new orders in the second half—by reassuring everyone that they will be moved to the new systems as soon as they are available.

Okay, great. Do you have at this point a pipeline of customers that have indicated interest, or is it too early for that at this point?

Well, we have to be very careful because the FDA does not like for companies to market to customers on approved devices. So we've conducted focus group sessions and R&D in conjunction with KOLs. But until we have our clearance, we're really not allowed on a commercial side to go out and start getting pre-orders lined up for the device. That being said, all of our focus group work and research have shown substantial enthusiasm for the increased capabilities of the next-generation systems. People are pretty excited about what it means to go from 60 to 90 minutes to get one of these results down to 15 minutes. Everyone from the techs performing the test to those wanting to see results faster is eager to see that workflow happen.

Just two quick questions, then I'll jump back in the queue. So the timing, I just wanted to confirm. You expect to submit the clearance application by the end of this year, and then sometime in the first half, you're hoping to have clearance? That's the first question. And then the second is, in terms of the new system, is it more user-friendly? Is the GUI interface easier? And if so, how quickly can a healthcare professional learn how to use the new BVA?

Great questions. So just to be clear, actually, we've already begun submitting data to the FDA for our 510(k) approval. We've already collected and been in communication with the FDA. We anticipate having a preliminary meeting with them in early October. That's been confirmed. Following that meeting and some questions that we wanted answered, we anticipate submitting our 510(k) package within about a month after that meeting. We expect to have it done in the middle of Q4, which is then subject to the usual review timeframe of 60 to 90 days. Importantly, the predicate device for the 510(k) process is our own current FDA-cleared device. One of the exciting things is that we have successfully completed the Army contract, which means we have working prototypes, and we have done validation studies, presenting data to the U.S. Army that we have replicated all the speed and accuracy of our current system in a footprint that is about one-tenth the size and perhaps one-fiftieth of the weight. We have tremendous confidence in the new technology we developed, fulfilling the aim of what the 510(k) process is meant to have, which is to show equivalency to an existing cleared device. Regarding usability, the new system is better and easier in every way. It benefits from the latest touchscreen technology; you can think of a device with a six by eight-inch touchscreen tablet. We've incorporated all of the learnings from the many thousands of tests that have been performed already with our current system. We want to create a system that is intuitive and user-friendly. I would say, if you can check your own luggage in to get on to a commercial airplane flight, you should be able to operate our analyzer.

Great, that's a lot of helpful color. Thanks so much. I'll jump back in the queue.

Thank you. Again, if you have a question, please press star, then one. The next question is from Ed Wu with Ascendiant Capital. Please go ahead.

Yes, thank you for taking my question. My question is, as we have some of these macro challenges, does that affect your sales cycle and business development in terms of getting your device placed with new customers?

I'm sorry. I don't think I completely understand the question. Are you saying does the new device hurt our current efforts to place existing devices?

No, I actually meant as people are a little bit concerned about the economy. Growth is slowing, GDP is slow. Is there any concerns that people are going to slow down capital on any type of investment in new medical equipment?

Yes, thank you. I apologize for not understanding the question at first. Here’s what we've been seeing, which is essential. First of all, the company was able to push through a 9.1% increase in volume this year. We really saw no pushback or drop in utilization at all from customers. One exciting thing about this economy is that when you have a strong value proposition, people are actually more eager to hear about your pitch, not less. In a way similar to how Costco or Dollar General Stores benefit from an inflationary, cost-sensitive environment as people become more value-focused, we are seeing that hospital systems are incredibly sensitive right now to health economics. They challenge us when we approach them with our systems, asking us to demonstrate how utilizing our system on an outpatient basis with reimbursement can make great financial sense. We have a super strong story around outpatient reimbursement for our test that is refined and in a strong place. On the inpatient side, one critical aspect to observe has been how blood volume analysis shortens the total length of stay for patients within the hospital system. If you shorten the length of stay, the hospital spends fewer resources. They still receive a block payment under what's called the DRG system. However, if you can demonstrate that you shorten the overall length of stay and the total resources consumed, hospitals are very interested in that. Our partnership with MedAxiom is a fantastic platform for us to be presented to hospital systems as a cost-saving and economic improvement, both in terms of workflow and expenditure. There is also a substitution effect with our tests. For example, if a hospital was going to expend $1,100, $1,200, or $1,300 to conduct a right heart cath on a patient, which is very invasive, performing a blood volume test could be done at one-third the cost and one-third the time. And with our new system, it would be completed in one-ninth the time. Even with our current system, it presents substantial improvements compared to some of the other metrics they are using. We are very focused on creating value propositions for all stakeholders in these hospital systems to gain adoption. The crucial focus of the company is to integrate blood volume analysis into the central care pathway for all these patients while being sensitive to economic environments and the workflow and clinical quality objectives of our hospital customers.

Great, then one last question: have you had any issues with the supply chain in terms of getting parts, as well as any inflation cost issues?

Fortunately, we manufacture and distribute all of our products from our own U.S. based Oak Ridge, Tennessee facility. So we've been lucky not to experience any chip shortages or component problems at this time. We have been able to navigate those difficulties. However, like every other company, we have faced inflationary pressures related to staffing costs. The cost of our technical teams has risen; our software developers are now in a global marketplace for that kind of talent, for example. So we have had to increase salaries and benefits to remain competitive with the general inflationary environment. However, in terms of supply chain, we've been fortunate to avoid any significant issues.

Great, well, thank you. And I wish you guys good luck. Thank you.

Thank you, sir.

The next question is from Michael Samuels with Berthel Fisher. Please go ahead.

Hey, Mike, how you doing? Great presentation. Just had two quick questions. Is there a way you can give us the actual number of machines that we have out at present? I know you said we increased 12 machines. Is there a way we can get the actual number of machines that are currently out there? And also the kits sales. Approximately how many kits do we sell? That was question one. And the second question is, do we have any international sales right now? And do you think once we get the new machine, that'll be the catalyst for it?

Great, thank you. I'll start with the second part first. One critical piece the company announced last year was that we achieved ISO 13485 certification. That is an international standard of manufacturing and requires a CE mark, which allows selling devices in Europe or Canada. Harmonizing your regulatory strategy across markets is vital. The company has historically focused on the United States, but we are aligning our manufacturing and strategy towards a global footprint going forward. Right now, our primary focus is ensuring everything is lined up in the U.S. because of its significant market potential. However, we are not neglecting Europe or Canada or the Commonwealth in general; there is substantial interest overseas in our product. We regularly receive inquiries from researchers who see our data published in scientific journals, asking how they can participate in studies. This will be a priority for the company. Once we obtain our regulatory approvals in the United States, we will pivot to seeking global approvals for our next-generation product. I don’t anticipate this for our current generation product, but absolutely for our next-generation products. Now regarding your first question, we have announced a mix of both sales and leases. Some of our customers use what we call reference lab services; they inject patients and then send samples to our central lab for processing using FedEx with a 24-hour turnaround time, compared to the 60 to 90 minutes with a hospital or potentially the 15 minutes with a next-generation device at the bedside. We announced 12 new accounts, and in our last letter, we pointed out 11. We've said in the past that we've had over 65 accounts at different hospitals across the United States. While I don’t have the exact data right now, that gives you a sense of where things are heading. As for sales, we haven’t been computing those, but we do sell doses for various clinical, commercial, and research uses. Periodically, we update the total number of tests conducted, which is currently over 60,000 and accumulating several thousand per year. We'll be significantly growing that number. I don’t have exact figures for shareholders eager for a clearer view of the business rhythm, but we are trying to work on that. It's crucial to understand that our revenue and sales numbers stem from multiple factors, and I’m specifically discussing at the operating company level, not the consolidated parent level. We see a diversity of revenue sources, including Volumex sales, capital sales, capital leases, research agreements, grant money, and contracts from the Department of Defense, among others. This variety of revenue sources is supporting our ongoing business development. Additionally, at the parent company level, we use our current investment portfolio with dividends and capital appreciation to fund growth. We are very careful around our share float and manage to maximize shareholder value. We will continue to provide more insight into the business as developments arise.

Right. Okay, that's great. I think maybe the question would be, then, what kind of sales? Do we have more than how many machines in that? What are sales for the first six months versus the first six months last year? What kind of percentage increases and stuff like, I guess that we know, along the line?

So in terms of percentage increase, what we announced in this presentation is a 91% plus increase in revenue at the operating company, not the parent company. That was a mixture of all of the things I mentioned. If you break out the Volumex sales, that number was 92.6%. If you look at the Volumex sales not by value but by the number of kits sold, right, because remember, at a 9.2% increase, you see the kits also rose by 49.4% in the first half of 2022 compared to the first half of 2021. We had announced prior that Q2 of this year versus Q1 saw an increase of 10.1% in sales compared to Q1. Thus, not only are hard sales growing, but we are also seeing year-over-year and quarter-over-quarter growth in Volumex kit sales, and this has occurred prior to launching the next-generation systems.

Right. Okay, well, thanks. Just keep doing a good job. You guys are doing a great job. Keep up the good work. Thanks.

Thank you, sir. We appreciate your support. I've also received some questions from by email from shareholders. I would like to read one or two of them as we still have some time here. One of the questions is, can you give examples of hospitals that have some of the best utilization? What conditions are they using it for? How many doctors are using it? Are nurses providing the test? Any other color would be helpful? So this is a great question. I want people to understand where the company has been and what the company's strategy has pivoted towards. When our diagnostics was first deployed for many hospitals, the person bringing in the diagnostic was our clinical champion, typically an early adopter, heart failure coordinator, Chief of Cardiology, etc. They champion that through the process of introducing it into the hospital system and become users. Our company is focused on transitioning from these initial clinical champions to the standard pathway of care in various hospital systems. This means that we want to assist hospitals in having standing orders and protocols so that every time a heart failure patient presents, they run the test, which can be ordered not only by clinical champions but also by other physicians or hospitalists and nursing staff. Empowering those users to obtain results from the test leads to optimal clinical decisions. We see substantial opportunity for incorporating our technology into these various hospital systems, given our focus on these issues. Additionally, we have engaged a powerful partner in MedAxiom to help accelerate this process with promising results. I see we are at the bottom of the hour here and we're almost out of time. So I just want to express my gratitude to all our shareholders for your support. Management and the entire team is excited about the company's work and mission to serve patients while significantly improving outcomes in people's lives. We're delighted to have you as business partners in this endeavor and look forward to achieving success together. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.