Milestone Scientific Inc. Q1 FY2024 Earnings Call

Good morning, everyone, and welcome to the Milestone Scientific Inc. First Quarter 2024 Financial Results and Business Update Conference Call. Please note, this conference is being recorded. I will now turn the conference over to your host, David Waldman, Crescendo Communications. The floor is yours.

Good morning, and thank you for joining Milestone Scientific's First Quarter 2024 Financial Results Conference Call. On the call with us today are Arjan Haverhals, Chief Executive Officer; and Keisha Harcum, Vice President Finance of Milestone Scientific. The company issued a press release this morning containing first quarter 2024 financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at (212) 671-1020. The company's management will now provide prepared remarks reviewing the financial and operational results for the first quarter ended March 31, 2024. Before we get started, we'd like to remind everyone that during this conference call, we may make forward-looking statements regarding timing and financial impact of Milestone's ability to implement its business plan, expected revenues and future success. These statements involve a number of risks and uncertainties and are based on assumptions involving judgments with respect to future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately, and many of which are beyond Milestone's control. Some of the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements are general economic conditions, failure to achieve expected revenue growth, changes in our operating expenses and adverse patent rulings, FDA or legal developments, competitive pressures, changes in customer and market requirements and standards, and the risk factors detailed from time to time in Milestone's periodic filings with the Securities and Exchange Commission, including without limitation, Milestone's report on Form 10-K for the year ended December 31, 2023, and Milestone's report on Form 10-Q for the first quarter ended March 31, 2024. The forward-looking statements made during this call are based upon management's reasonable belief as of today's date, May 16, 2024. Milestone undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

Thank you, David, and thanks to everyone for joining us today. We achieved revenue of more than $2.2 million for the first quarter of 2024. Although our revenue was down slightly compared to the same period last year, this was largely a reflection of a reserve reversal in the first quarter of 2023, coupled with a decline in international sales during the first quarter of 2024. However, these results do not reflect the true underlying improvement in the business. Most notably, e-commerce sales, which reflect our new online sales portal, achieved growth of 31% over the same period last year. As you may recall, as part of this strategy, we terminated our relationship with Henry Schein at the end of 2022, and terminated our remaining U.S. distributors in September 2023. As a result, we recorded no revenue for U.S. distributors for the 3 months ended March 31, 2024, compared to approximately $219,000 for the 3 months ended March 31, 2023. This deliberate shift to a direct sales model has resulted in improved gross margins. Specifically, gross margin in the first quarter of 2024 increased to 74.5% from 72.7% for the same period last year. In addition to these higher margins, establishing a closer and more direct relationship with our dental customers has allowed us to do a much better job selling and providing outstanding customer service, which has led to much greater stickiness and potential repeat orders with existing clients. Specifically, this direct relationship also allows us to provide ongoing training and support to ensure continued usage by dentists and hygienists. For example, we have implemented educational programs to enhance the customer experience. In particular, we anticipate introducing an interactive digital learning platform targeted at dental teaching institutions, dentists, hygienists, international distributors, and international customers. This direct relationship has proven effective with individual practices, dental service organizations, also known as DSOs, and large group practices. The greater interaction and our ability to provide higher-level support have helped attract premier customers. As an example, we commenced direct sales of the STA to Meridian Endo Imperial, a large endodontics, periodontics, and implant dentistry practice with 3 offices in Wisconsin. This includes the deployment of the FDA in each of their operatory rooms and across all the endodontists and periodontists within the practice. We also added Main Dental Group, which operates 21 practices across the Northeastern United States. As you can hopefully see, the new sales strategy within our dental segment has proven effective, and we anticipate enhanced benefits from this transition to a direct model over the course of 2024. At the same time, we have engaged in more direct-to-consumer marketing or more direct-to-patient marketing. At the beginning of this year, we launched a digital marketing campaign simultaneously targeting dental clinics and patients. By creating this push-pull, we have seen an increase in qualified leads resulting in higher conversion opportunities and thus more revenues. In other words, these activities have resulted in leads from dentists contacting us directly to order our instruments because patients requested them to do so. We will absolutely continue to increase our marketing efforts with dedicated campaigns directly targeted at patients. In summary, through our direct sales model, in combination with enhanced education and targeted marketing campaigns, we continue to focus on new customer acquisition and development of the existing customer base. While international sales declined slightly, it's important to note that orders from third-party distributors can be lumpy due to the timing and size of orders as well as certain distributors working through inventory. We also made a decision to pull back from China until market conditions improve. As previously disclosed, our focus in 2023 and early 2024 was on the domestic front. However, we have reinvigorated our international focus heading into 2024 and anticipate steady improvement this year. We also look forward to announcing the addition of new international partners, which should support our global expansion strategy over the coming quarters. We are expanding our efforts to enter new international markets and deepen our penetration with existing international markets. On a final note, we are on track with our next-generation dental instruments and look forward to unveiling it in the near future. So to summarize, within our dental business, our e-commerce sales increased. We are benefiting from higher gross margins, and we continue to generate solid cash flow on a stand-alone basis. In fact, the dental division generated approximately $625,000 of operating income on a stand-alone basis in the first quarter of 2024. Through our new direct sales strategy and increased marketing efforts, we aim to further grow our dental business in the coming quarters. As we continue to grow our revenues, we expect to benefit from economies of scale as well as the recurring nature and high margins on our disposables. I'd now like to take a moment to turn to our Medical segment, where we are making significant process on the reimbursement front. But first, let me provide a recap of our overall strategy and execution. Specifically, we have continued to introduce the CompuFlo technology within prominent hospitals, health care systems, and pain management clinics. As an example, during the quarter, we commenced disposable sales with PRC Alliance Pain Relief Centers in Florida, which operates 7 offices and an ambulatory surgical center located across Central Florida with 15 providers. Adoption of the technology follows a successful evaluation by Dr. Sanjay Bakshi, a pain management physician and CEO of PRC Alliance Pain Relief Centers in Ormond Beach, Florida. Dr. Bakshi has been practicing for over 30 years and is triple board certified in anesthesia and pain management. Additionally, we commenced sales of CompuFlo Epidural disposables to Omaha Pain Physicians, a comprehensive medical pain management center in Omaha, Nebraska. This approval follows an extensive trial and evaluation by Dr. Matthew Stottle, its Founder and Medical Director. Both of these rollouts followed successful evaluation periods and 100% clinical success with zero epidural punctures. The evaluations included epidural steroid injection procedures within the lumbar, thoracic, and cervical-thoracic junction of the spine. While the addition of these clinics further validates our technology and strategy, demonstrating CompuFlo's clinical utility and benefit, we believe the true value lies in the support these and other clinics provide in advancing our broader reimbursement strategy. As more physicians and anesthesiologists perform procedures and submit for reimbursement, our goal is to secure broad coverage for our technology as we execute on our goal of establishing CompuFlo to become the standard of care in epidural analgesia. As I have discussed in the past, we have implemented a very strategic and targeted approach to securing reimbursement with Medicare, Medicaid, and private commercial payers. I'm pleased to report we are making significant progress in advancing this strategy. The first step in this approach was to work closely with key pain management providers in the use of the new CPT tracking code for accurate and timely CompuFlo claims submission. Additionally, we are providing support to the clinical facilities for each individual claim to have an appropriate response. We have established multiple sites across the U.S. that are actively utilizing CompuFlo and submitting claims to payers across the country. Rather than bringing on too many hospitals and pain clinics before reimbursement approval, we realized it is better to laser focus on working closely with a select group of pain clinics and provide them the necessary professional support to help ensure positive payer reimbursement. We are also supporting these clinicians' utilization of CompuFlo across a variety of use cases, which is important in demonstrating widespread utilization of the technology. I'm pleased to report that we are effectively executing on this strategy as evidenced by the fact we have now submitted more than 160 claims to payer systems, including a variety of Medicare jurisdictions, using the specific CPT code, the 0777T code. If you recall, the American Medical Association assigned this CPT code as an add-on code to be used in conjunction with one of the eight existing epidural steroid injection codes. And it is very specific to the unique computerized aspects of our technology. The high level of claim activity that is now being generated by us provided us an opportunity to engage directly with the payers, including Medicare, to directly educate them on CompuFlo technology and the unmet need the technology serves. In turn, we believe this is helping build support for the appropriate level of reimbursement. As I mentioned, we are making significant progress, and I look forward to providing further updates as developments unfold. We also believe there is a significant market opportunity for our CompuFlo Epidural instrument within federal and other government agencies. And as we have discussed in the past, we are advancing initiatives following the SAM approval and working to secure approval with FSS, the Federal Supply System. That would open up the sizable government market. Turning to the international front, we are expanding our network of distribution partners for CompuFlo. We are targeting independent distributors with existing relationships within key global markets and a proven track record of introducing medical devices within their territories. We have also received preliminary indication that CompuFlo has received regulatory approval in one of the largest BRIC countries, and we expect to report on this further in the near future. In anticipation of this approval, we have already established key relationships with leading medical institutions and commercial entities in this country, which we look forward to formalize in the near future. So to summarize, we are continuing our efforts to seize the market among key physicians and pain clinics across the U.S., which we believe will ultimately translate into growth adoption. We remain committed to our goal of establishing CompuFlo as the new standard of care in epidural anesthesia by providing patients with effective pain relief while reducing the risk of complications.

Thank you, Arjan. For the quarter ending March 31, 2024 and 2023, revenue was approximately $2.2 million and $2.6 million, respectively. As of January 3, 2023, the company launched an e-commerce platform, selling and shipping the STA Single Tooth Anesthesia System and handing directly to end users, including dental offices and dental groups to replace its previous U.S. distribution arrangements with Henry Schein. The U.S. e-commerce revenue for the 3 months ended March 31, 2024, was approximately $1.3 million compared to $989,000 at March 31, 2023. The company recorded no revenue for other U.S. distributors for the 3 months ending March 31, 2024, compared to approximately $219,000 for the 3 months ending March 31, 2023. The company terminated all nonexclusive agreements with other distributors in the U.S. in September of 2023. For the 3 months ending March 31, 2024, international revenue was approximately $930,000, a decrease of $274,000 compared to March 31, 2023. Gross profit for the quarter ending March 31, 2024 was $1.7 million or 75% of revenue versus $1.9 million or 73% of revenue for the year ended for the 3 months ending March 31, 2023. The increase in gross profit margin was due to higher margin sales with the launch of the new online store. Operating losses for the 3 months ending March 31, 2024, were approximately $1.5 million versus $1.3 million for the first quarter ending March 31, 2023. Net loss was approximately $1.4 million or $0.02 per share for the 3 months ending March 31, 2024, versus a net loss of $1.3 million or $0.02 per share for the comparable period in 2023. Now I would like to turn your attention to liquidity and capital resources. We continue to carefully manage expenses to maintain a solid balance sheet. At March 31, 2024, the company had cash and cash equivalents and marketable securities of approximately $5 million, working capital of $7.2 million, and no long-term debt.

Thank you, Keisha. As Keisha mentioned, we continue to maintain a strong balance sheet with approximately $5 million of cash, cash equivalents and marketable securities as of March 31, 2024, which we believe provides us sufficient resources to execute on our sales and marketing activities around both our dental and medical instruments without the need for additional capital raise. We believe our new direct sales strategy, including the launch of our new online sales portal in the U.S., as well as our enhanced marketing efforts around the STA have been effective, as illustrated by the increase in our e-commerce sales as well as the gross profit margin improvement during the quarter. Our dental business continues to generate positive cash flow on a stand-alone basis, and we remain focused on achieving our goal of positive cash flow company-wide. On the medical side, we remain encouraged by the outlook for the business given our sales pipeline, the addition of new pain management clinic, as well as the expansion of our international distribution partners. Most importantly, we are making progress advancing our reimbursement strategy around the CompuFlo Epidural System and look forward to providing an update as developments unfold. The medical segment represents a large addressable market, and we remain confident in our belief that CompuFlo will ultimately become the standard of care given both the safety, predictability, and efficiency advantages. So to wrap up, we believe we have developed an efficient and scalable platform to help drive high-margin, recurring sales in the coming years, and we look forward to reporting further developments in our medical segment on the reimbursement front. At the same time, we have maintained a lean operating structure and remain committed to driving shareholder value. I'd like to thank you for joining the call today. And at this point, we would like to open the call up to questions.

Your first question is coming from Anthony Vendetti of the Maxim Group.

So Arjan, just on the 160 claims submitted so far to Medicare. Was that in the first quarter? Or is that year-to-date? And then can you talk about how you think that's going to grow throughout the year? Is there a pipeline of claims that you have? And then the additional pain clinics, I know you announced some. What's that pipeline look like and the opportunity for the remainder of 2024?

Thank you, Anthony. So to answer your question, first question was the number of sites or the number of claims that we have submitted. Just to recall, at the end of 2023, we had submitted, in a 9-month period, about 100 claims. We also explained what was happening through the letter to the shareholders in the beginning of the month of January. So the 60 additional claims is from the period January until today, which is May 16, 2024. So those 160 claims, that means that patients have been treated with the technology. All the documentation that is needed for submission to the health care insurance provider, including letter of medical necessity, etc., have been submitted to these health care insurance providers, including we can confirm that these claims have been uploaded in their system, which is very important. Because uploading the claims means that there is evidence and identification of our technology for health care insurance providers. So that's the first part of your question. The pipeline of clinicians. Like I said, we are laser focused. It's not a matter of getting 20 or 30 more clinics that are sending in the claims. It is more important that we have sufficient and a smaller group of clinics where we are 100% sure that the document that it is sending in and submitted to these health care insurance providers is professional, correct, and that we avoid back and forth with the discussion with the health care insurance providers to optimize the quality of the documentation. What is key to understand, it's not so much of just doing the technology and treating the patient with the technology. The main part of the effort made is, I would say, at the back end of this process, where the billing and coding manager of the office has to send it into the insurance provider. I'm quite sure that everybody from their own experience is aware of what kind of paperwork needs to be submitted to get even a payment from insurance providers. As we speak, yes, we are adding additional sites, additional clinics, additional hospitals that we are in discussion with and where we are going to perform first patients to further support the approval and the payment of the procedure by reimbursement providers. Now what the outlook will be for the end of the year, that is completely dependent on the feedback that we expect to receive from some of the jurisdictions that have already confirmed that there's coverage of the technology, but they are in the process now to finally establish the pricing for their insurance, for Medicare in some of the jurisdictions for this technology as an add-on code in addition to the epidural steroid injection. And that will, of course, trigger then a faster acceleration of commercialization of our CompuFlo Epidural System in the United States. Does that answer your question, Anthony?

Yes. I was just wondering, for some of the claims that were submitted last year, what does the adjudication process look like so far? Has there been some reimbursement established? Or is it too early to say at this point?

No. As I explained in the first quarter and in January, when you say reimbursement established means, for us, in our terminology, that means the Medicare has to establish a price for this technology, right? Now commercial payers, some of commercial payers have paid for this technology, and the motor vehicle insurance has decided in some of the clinics here in New Jersey to pay for the specific motor vehicle cases. What is very important is to understand, in particular, why is Medicare important. Medicare is important because, in particular, our technology in the patient group of the Medicare insured patients will work very well because of the anatomy and the elderly patients' calcifications. And that is, in particular, part of the letter of medical necessity for the Medicare insurance provider, that they understand what this technology is doing. Like I mentioned this morning that we are allowed to engage with the Medicare providers. Now yes, I have had, with our medical adviser, a meeting with one of the jurisdictions to explain in detail what this technology is doing, what the benefit is for the patients, and which helps and support these jurisdictions to come with a pricing statement for our technology for the Medicare patients. When we get that, that would be, in your terminology, the establishment of reimbursement.

Okay. And then maybe just explain the sales force difference between the dental business, which is now direct, as you terminated the Henry Schein agreement, versus how you're going about the medical side for the CompuFlo System.

I'm sorry, but I don't understand your question. However, regarding the dental business, year-to-date, 99.5% of our revenue comes from dental sales. Specifically, we've reported $1.3 million in e-commerce sales for the dental business in the U.S. this year, compared to about $989,000 for the same period last year, showing a 31% increase. The revenue and profitability from the dental business help us invest further in developing our medical business. The expected revenue from the medical business in 2024 will heavily rely on securing reimbursement and establishing initial pricing with healthcare insurance providers. This strategy is crucial because in the healthcare sector, having a new technology that is more efficient, safer, and comfortable is not enough; it ultimately depends on what healthcare insurance providers will reimburse and pay for both patients and clinicians. We are approaching this gradually, having identified three jurisdictions last year and expanding to seven this year, out of a total of twelve jurisdictions in the U.S. Our goal is to be present in all of them, and reaching seven signifies that we are now active in about 60% to 65% of the states. The key is to continue our rollout, as each jurisdiction has its own decision-making process. Establishing our presence in the first jurisdiction will influence others regarding Medicare in different areas of the country. Therefore, this progress is vital. We have engaged with one of these jurisdictions to detail the benefits of our technology for the patient population and are currently awaiting their feedback. I would consider this a significant achievement for our company, especially since many others fail to reach this stage. That's why I emphasize the progress made and my optimism about receiving information from these healthcare insurance jurisdictions in the near future regarding pricing. While I cannot influence or disclose which jurisdictions we are negotiating with, I can confirm we have made progress, and I am pleased and proud of my team's efforts in navigating the complexities of reimbursement and coding. Overall, I remain very optimistic.

Okay. Great. Just shifting gears to the dental business. You were talking about e-commerce and then restarting the international. Is restarting the international this year already underway? And then is there going to be an e-commerce model there as well?

Let me take the opportunity. I would like to correct your statement. It's not a matter of restarting the international business. It's not a matter that we have not focused on the international business. There have been good reasons why some of these distributors, based on their inventory buildup or based on their quarterly purchase orders and forecasts, why they have not ordered the products in the first quarter, right? So what I mean was that you know that we are having a rather lean organization also on the sell side. For the dental business, we have, including myself, 3 people working directly with the sales and then 3 people in the back office from an education and a customer service, and a customer support point of view, focusing on the higher level of activity within the United States because we know now the customer identity, right? Now on the international front, we have quarterly business meetings with the top 15 distributors, which is representing 90% of our dental business, to really understand and work closely together with these distributors, so that we can get a steady and a consistent solid baseline of business quarter-by-quarter. Because we are not in a business of seasonality. It completely depends on the book and the magnitude of the order, and we would like to spread that out over all the fourth quarter, so that we can come with a more efficient sales and operations planning, with a more efficient management of sales efficiencies and sales execution. For the time being, we will not have an e-commerce platform for the international markets, and primarily based on language, based on different tax systems, based on different regulatory requirements within these countries, so we prefer to go through the distributors. Now the majority of these distributors do have their own online platform within their country. So what we are doing is supporting them in all the service at the back end to be able for them to increase their marketing and sales efforts to their customer base. Because we do not own the customer in the individual countries. Our customer is the distributor. The distributor owns the customer relationship with the end user in the market. That's the reason why we decided, and that's a rather beautiful model, I would say, why we decided to develop an interactive learning program, which is online, with the clinicians, and the distributors, and the local clinicians in each individual country, where there is a real-time translation in their local languages. So that's the type of activities that we are undertaking with the distributors.

Your next question is coming from John Cobb, who is a private investor.

I'm John Cobb. Nice to speak with you again. Your discussion with Anthony helped me to better understand the process that Milestone is incurring and trying to establish the rollout of the CompuFlo technology. One of my questions is, when you get the pricing fixed with Medicare insurers, when you get that end of it, when you get the insurability part all set up, then where is Milestone? Are all these doctors really enthusiastic about using CompuFlo technology? Or once you get the insurance part of it all established, are you going to have to engage a sales force to go around the country to pain clinics and hospitals trying to get them to use it? In the dental business, part of the traction you're getting is from patients. Is the same process going to be necessary for Milestone to do that? Or are these doctors that you are engaging with saying, 'Okay, we really like CompuFlo. We want to use it in our total practice, but we have to make sure we can get paid'. Where is the level of acceptance or enthusiasm for the CompuFlo technology with hospitals and pain clinics, and clinicians and doctors? Could you tell me that?

Yes. No, it's very simple. Like I said, reimbursement is key. We do not have to invest in a heavy sales organization in medical because, as you know, what we have shared in the past as well, we are lined up already with a distributor called CTI that are in 24 states in the United States. They are experienced in anesthesia in the operation room. So I'm not so worried about the expansion of the sales force. From the dental product as well, it's exactly for all of the questions that you asked, the short answer to that is, that's the reason why we have opened the portal and why we are so successful with the sales in the United States, combined with digital marketing increasing marketing qualified leads, where we do not necessarily need to have a heavy sales force, because what everybody needs to understand, yes, of course, you need to have additional new customers, but the main part of the business is the recurrent revenue stream of the consumables. And that's what we decided to do, to open the portal, increase our customer service, customer support, aftersales service. And that's also the reason why we enjoy the growth that we have reported. So I think that answers your question. Thank you for the question, John.

Okay. One more question, Arjan. It seems to me that you're working on two fronts with government approval. You're working with Medicare and you're also working to get CompuFlo as the standard of care with certain government agencies. If you get that, wouldn't that just kind of eliminate any more influence you have to have with Medicare for adaptability of this technology? I mean, because...

No. I think, John, they are two different things. One is not going hand in hand with the other. So Medicare doesn't have any influence on the government. The government doesn't have any influence on the Medicare. Those are two different processes. So I hope that, that is sufficient in answering your question. Thank you, John.

Your next question is coming from Robert Brennan, who is a private investor.

So a couple of questions. Great to see the improvement on the margins in the dental business. I think you're obviously headed in the right direction, because if you can sell less and make more, that's always going to be a positive in light of the anticipated growth in addition to that. But what kind of growth do you anticipate in the dental business? And also, what the opportunities might be in Europe?

Yes, thank you for the question. While I won't share specific growth objectives for the organization, I believe there is a significant growth opportunity in the United States based on our past performance. The company’s growth will primarily be fueled by this domestic market. It's important for me to exceed our overall results from 2023, as achieving similar outcomes wouldn't be enjoyable. Moreover, in our international markets, my focus is on elevating our current good distributors to become even better. Specifically, I aim to support the top 15 distributors responsible for 85% to 90% of our business while also developing those below them into higher tiers. Some smaller, fragmented distributors may not warrant significant emphasis, as the cost of acquisition can be high relative to the revenue they generate. We are streamlining this. A key factor is expanding into other international markets. For instance, last year we entered Brazil. While the results could have been improved, the local dental distributor has consistently invested in growing their dental sales team from 2 to 8 people, expanding beyond just São Paulo. We are also engaging in detailed discussions with a dental chain in Brazil that operates 100 clinics, conducting a financial evaluation on the impact of our technology in 5 of those clinics. I believe Brazil will contribute positively to our revenues throughout the year. In summary, our three growth drivers for success are the U.S. market, international expansion, and increasing the utilization of handpieces and recurring business in international markets.

Yes, it does. I think you've approached it correctly by improving margins and addressing ancillary issues, including the separation from Henry Schein. How many salespeople do you currently have in the dental division? Did you mention three?

No, to clarify, I have two people in the field, including myself. I spend time in Florida as part of my role as CEO. We also have three people in the back office with a focus on dental hygiene, who handle education, aftersales support, and customer development. In our marketing and go-to-market strategy, we are not going door to door. Instead, we utilize digital marketing and lead generation as tools to acquire new customers. We are also not attending larger dental trade shows and meetings, as they do not yield a good return on investment; purchases are typically not made at these events. Instead, we conduct smaller hands-on meetings where about 20 clinicians participate in educational programs, engage with the technology, and receive lectures, which usually leads to a 50% conversion rate while we are there. We aim to be smarter in our marketing and sales strategies, which is reflected in our current go-to-market approach.

I fully anticipate that we will establish ourselves as the standard of care in the epidural market. There are about 11 million epidurals performed each year. Can you provide some insight into the actual market size in monetary terms? Assuming we obtain Medicare and FSS approval, it seems likely that securing approval in a few Medicare regions could lead to a broader impact across other Medicare areas. What kind of revenue potential are we looking at in the epidural market?

Yes, absolutely. This is a very important question, Rob, and thank you for asking that. So total market of epidurals is 11 million procedures, right? I will take you through it step by step. Now let's assume, just for doing the math, we do 2 million procedures as a target, just to create a good picture about the potential, right? So 20% of that market is 2 million procedures, okay? So 2 million procedures versus what I hope to establish as an average sales price on the consumables of $200, right? That would be $400 million in revenue with a gross margin of 60% to 70%. So that is gigantic. So going back to your question, my responsibility is then to say, okay, if the target would be, in this case, 20% of the total market, by when can we have that penetration of 20%? And that is where the importance of reimbursement is coming in, right? And that's also the reason the way that I've targeted it. The first 2 jurisdictions that we are currently active in represent about 22% of all the epidural steroid injections in the United States. That's the reason why it is so important for us to get that price point established by the insurance provider, because then we can go full force out, because the clinical concept is proven, the clinical efficiency is proven. People would like to use it. And then once they also know that they get paid for it, then all the hurdles, so to say, in the mindset of the clinician are gone, and then we can start moving ahead. So that's a very important driver for growth for the company, Rob.

Right. Well, very good call. And I guess my last thing would be, you only have one analyst that covers your company, I believe. Am I correct in that?

Yes. For the time being, we have Maxim. And historically, we also had Northland.

Are there any plans? In my opinion, the stock is undervalued given the vast opportunities. What kind of roadshow or investor relations efforts will be made on your behalf?

No, that's a great question. Thank you for bringing it up. I always appreciate coverage in that regard. Yes, I am working on roadshows, but it really depends on timing. I believe the time is now. In the second half of this year, we will participate more in conferences. Things are not stagnant; I make several calls each week. So everything is progressing well.

Your next question is coming from James Westat, who is a private investor.

Well, I look at it, I guess, a little different than Robert did. When sales go from $2.6 million to $2.2 million and losses continue at $1.5 million per quarter, and with $5 million of cash, I see that more investment has to be made in the next 9 months or so. Is there any possibility that a larger medical instrument company could come in and acquire MLSS?

So thank you for your question. Honestly, I don't agree with your comment. I think what we have stated, we have sufficient cash and cash equivalents at hand. And also, the way we manage the company from a cash preservation point of view, we do not foresee raising capital in the next 9 months. But I'm more than willing to give you more details in a call out of this scope of the conference call. The second part of your question related to, is there a willingness of companies buying and being interested in our technology. My comment to that is that everybody that has a business background has to understand that what we are currently doing and laying the groundwork for this company will have an effect not only on the stock but also on entertaining other discussions with other companies. There are a number of potential opportunities in terms of strategic cooperation, whether it is synergistic, whether it is research and development related. But really the key for us, and also for other potential companies that would like to entertain discussions with us, is really the establishment of reimbursement. It's not so much about the technology as such, but it is also very important what people are willing to pay or what they get reimbursed when they use the technology in this business segment.

And your next question is coming from Richard Durand of Dr. Richard Durando, DDS.

I have a couple of questions. Over the years, you've announced numerous centers that have used and appreciated your device. It seems to me that, while I know you’ve tried this, I'd like to ask what happens next. Does the Anesthesiology Association have any influence in saying that this is a truly effective technology? Would they consider issuing a letter of endorsement stating that it is superior to current options? That would be significant since it's a much larger entity than Milestone. Additionally, there was an announcement about a large medical group in New England 18 months ago, which you didn't name, but we have an idea of who it is. Are you able to engage with such groups to expedite this process? Can you provide any insights on that? I also have a few follow-up questions.

No, no, that's a very good question. Thank you for the question. Absolutely, securing endorsements from organizations is always beneficial and vital, which ties back to our ongoing work in developing Key Opinion Leaders. Yes, I've had discussions with organizations like the American Anesthesiology Society, and establishing relationships, while somewhat lengthy, is essential. Currently, we are taking a different approach by leveraging our recent activities with the Interventional Pain Society. We have an abstract and will present at the upcoming meeting in Miami, where we aim to promote and share our technology’s results with these organizations. Additionally, we are engaging with groups like ASIPP and the American Association for Anesthesiologists, as their endorsement is not just valuable now but also crucial for future support concerning pricing and reimbursement. Moreover, we are hoping to collaborate with interested parties to advance our patented technology in peripheral nerve block in both Europe and the United States. I understand this may seem like a long response to your question, but to put it simply, we are indeed having these discussions about further promotion and endorsement. However, one challenge we face as a provider of disruptive technology is effectively communicating our purpose. Some anesthesiologists might misunderstand our intentions, thinking we are criticizing their methods or attempting to oversimplify procedures, which is not the case. Our goal is to offer a guidance system for accurately positioning an epidural needle in the epidural space. I also aim to engage not just anesthesiology departments but also surgical, internal medicine, and other relevant fields, since the side effects of current techniques might not be immediately recognized by anesthesiologists but instead observed during aftercare, such as in labor and delivery or spinal procedures. An example of this is our collaboration with neurosurgeons who perform spinal cord stimulator procedures; they utilize our technology for its safety and efficiency, as it helps prevent dura punctures and enhances overall procedure effectiveness.

Yes. So here's my point. I'm a clinician. I go in and I perform a procedure in dentistry. You have anesthesiologists that are brilliant people. They really want to use this. You should be able to tap into that native interest of those people and have them rally in some way to help augment what you're doing, because their voice is much louder and much clearer. So I assume that you have elicited this form of play for them, because you have all these clinics that have at least some KOL or somebody that says, 'Wow, this is really good. Well, let's get this moving'. What's happening there? Where is the color there? I'm not talking about what the company is doing. I'm talking about what the native interests by the clinicians are that are providing the service. That's where they could be a huge help to you. I wonder whether the same thing is going on in Europe. If you have these people that are so influential, why aren't they able to help bring the cost to you? It should be more organic on their part to want to use this. And I don't sense that that's happening.

Yes, absolutely. What we are doing, particularly with the pain physicians, is recognizing that the interventional pain market is significantly larger than OB/GYN epidural analgesia. We have two advisory boards that provide valuable input, helping us generate new leads and create connections in various entities and hospitals. However, we must respect the internal processes in place, including value assessment and financial committees, to gain hospital approval. Our collaborators, including those from Campania and partners in Europe, support us in this effort to access additional clinics. Nonetheless, we need to conduct the groundwork, run demonstrations, and adhere to hospital protocols. It's not simply a top-down process where approval comes instantly; issues around costs and reimbursement play a significant role. But yes, that's part of what we are actively pursuing.

Thank you very much. Well, we appear to have reached the end of our question-and-answer session. I will now hand back over to management for any closing remarks.

Yes. Thank you for your time. Thank you for the lively discussions. Good questions. We remain positive and encouraged about what we have initiated and what we are going to do. We will keep you posted on any progress made on the activities that we alluded to and highlighted on, and we will keep you posted. Wish you a fantastic day and looking forward to our continuous discussions. Have a good day, and thanks a lot.

Thank you very much, Arjan. This does conclude today's conference. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.