Acarix AB (publ) (ACARIX) Earnings Call Transcript

Good morning, and welcome to the Q2 2026 Acarix Earnings Call. I appreciate everybody joining. For our new investors and for those who have been with us a while, I always like to start out with a little bit of an assessment as to who we are and what we do. The CADScor System produced by Acarix is a highly high-fidelity acoustic device that has the ability to listen into the coronary arteries of the patient's heart at point of care. And what we're able to derive from our negative predictive value of 96.2% is very high productivity in regards to being able to rule out coronary artery disease at point of care just in a few minutes, 4 to 6 minutes on average. We have over 15 years of R&D, over 45 patents and well over 60,000 assessments worldwide, along with 6,000 patients in clinical trials continually building our robust outcomes. From a regulatory standpoint, we are FDA approved as well as CE marked, and we actually just announced a couple of additional ones we'll talk about in the future. We're a Class II medical device, and we have a CPT code in the United States for reimbursement. We are headquartered in Sweden. We have our R&D manufacturing in Denmark, and we continually focus on deploying global sales. Really exciting news that just came out Monday, a couple of days ago that we have received regulatory approval in the United Arab Emirates or the UAE. This is our first entry into the Gulf region, which is an extraordinary region that has a very significant focus in regard to health care and providing health care within the countries of each of the GCC as well as surrounding countries. And this is a first entry for us and a very, very optimistic one for us as we continually procure our outside United States opportunities and strategy. We will be able to bring this into the market with a very well-known distribution partner, UniTech Solutions. And they will be facilitating all the distribution requirements in regard to commercialization of our product, as we've stated in the past. Our goal is to align with vertically integrated distribution partners and UniTech provides us that opportunity. This also will be an opportunity for us to get into the wider region of the Gulf Corporation Council, the GCC. As we -- as I mentioned, there's a very high level of cases within the populations as well as demand for tools that we provide, especially in the chest pain and shortness of breath categories when patients present. So we're really optimistic in what we're doing, and we're very optimistic in what can procure in the UAE as well as surrounding countries, as you guys are aware, we are currently waiting regulatory approval in Saudi Arabia or the KSA Kingdom of Saudi Arabia. And that is second to this. We had a lot of questions come in, in regard to whether this was associated. No. They are 2 different distribution partners in 2 different countries. So very optimistic about what could procure in the near term with this UAE regulatory approval. And getting into the Q2 highlights as to what's procuring for us. One of the great things that happened was at ACC, which is the American College of Cardiology meeting that we go to every year where we had an abstract presented and that was the UC Davis clinical trial that we initiated a couple of years back. And it revalidated a lot of the things that we really were procuring. One of the most important is our negative predictive value. It just demonstrated a very consistent negative -- high negative predictive value, which is very, very important when ruling disease out. We also were able to showcase a significant amount of savings, almost 40 hours per inpatient case, which translates to a little bit more than $100,000 saved per patient. What this does is it reinforces our Dr. Barron article that was presented last year at pharmacoeconomics on the cost-saving measures that CADScor can produce and when implemented into the workflow, but it also really pushes our negative predictive value being 96% or higher. And what we can show that through June 30, 2026, the patients enrolled in this trial had no significant events. So again, capitalizing on our ability to safely and effectively rule out negative predictive value. When we're creating a stable pathway for reimbursement, there's a lot of things going on, and this should be received really well from our shareholder base. The best news is we had one last requirement to fulfill in regards to getting our CPT I transition application submitted. And we have now completed the enrollment for our U.S. performance trial, and we are now in the analytic and really write-up phase that we hope to be able to procure before the end of the year as well as publication before the end of the year. If you guys recall from my previous earnings calls, there's 2 things that we would lack to be able to get in front of CMS for a transition to CPT I. One was a systematic review that was published last year, and this was the second one awaiting finalization of enrollment into the trial and now the analysis phase. So the plan and the goal is to submit and be published before the end of the year, meaning we will then get in front of CMS for a CPT III to CPT I transition in the first half of 2027. So really excited about that. That is a very, very important milestone that we need to achieve to really get to the trajectory in top line sales and mitigate the reimbursement pushback in regard to where we're going. We also are scheduling a CPT meeting with CMS in regard to the outpatient setting that we were already awarded in January of 2025. And we are looking to increase that payment and reassign the code so that we can deviate from the approximate $60 per check to closer to the $300 that we see on average across the U.S. So that is really important for our continued sustained ability in the inpatient setting, but also the outpatient setting, which is the CPT I pathway, which is much, much larger than the inpatient setting. So a lot of great things moving along from that regard in regard to reimbursement. The last thing is our submission for CPT III code. CPT III codes are typically for 5 years, and you resubmit for application for an additional 5 years every fourth year. So next year, we will also be in front of CMS for the extension and renewal of our CPT III code to continue access until we transition to CPT I. So in essence, there are 3 things we are working in parallel. And the goal is to get to CPT I, which is the most important factor for us in regard to commercial efforts. We continue to work with the clinical policy team at Blue Cross Blue Shield. As you guys know, we've been working on this for coming close to 2 years. We've had continued great robust conversations, and we are hopeful that things procure. Now again, once CPT I fits our profile, we have acceptance, this entire continuum changes. But again, we are working diligently in parallel in every regard to ensure that we are locking in payer reimbursement at the private level even before CPT I. So cautiously optimistic that we continue these conversations and come to some sort of resolution. But the good news is CPT I is in sight, and we are moving towards that direction. As we continually build and strengthen our position, we expect the utilization and long-term reimbursement scalability to really quickly follow, which typically takes 3 to 6 months, maybe 9 months when you first are awarded the CPT I transition. But overall, we continually push on all facets in regard to reimbursement. It is one of the top priorities we have and have had for the past few years, and it's nice to see a lot of those efforts now start to come to fruition. The Q2 financials. Really, really pleased with the delivery from the team in regard to our Q2 '26. As you can see, our total revenue was up 102% that is showing accelerated growth and most specifically with our target market, which is the U.S., we were up 212% and our delivery on systems was up over 53%. So really, what this continually shows is the momentum and adoption of Acarix and the CADScor platform, and we will continually scale that with the limited resources we have, but we'll look for ways in the coming years within the next few quarters to really look to expand upon that in a significant way. But very, very pleased with our Q2 results. When you break it down in actualities, looking at quarter-over-quarter from '25 to '26, you can see here, we went from SEK 1.1 million approximately to SEK 2.3 million in top line revenue, showcasing 102% growth. Now when you look at the volatility in the world and most specifically with currency in this regard, it's approximately 100% -- 108% overall in regard to total top line revenue and 223% in the U.S., our target market. So when you look at the installations, it continually grows. As you can see here, our trajectory, while it's not the hockey stick every investor wants to see, it is continually and consistently growing. And as we continually build upon this installation base, we can see that patch sales will continually increment higher and higher because once you have the installed base, it's truly about the patch derivative. We continue to expand in the PCP market, which is our target market and the CV space. We're really focusing on the primary cardiology space, but also really focusing on the concierge med and the ED space as well. So you can see that we're consistent in our regard. But when we look at the opportunity, the largest opportunity out there is the PCP market followed very quickly with the cardiology market and then very closely behind is the ED urgent care market. So we continually focus on the avenues, in which we feel the best applicable nature for CADScor as well as the patient outcomes. So when you look at patch sales, which, of course, that's our business. We're a patch company. You can see that in the U.S., we grew 100% from 70 to 140 boxes of patches. So what this means is we're looking at the continued growth. We're looking at the continued installed base growing and the usage growing on patches, which will continually reinforce our top line as well as our bottom line as we integrate more and more installations nationwide as well as worldwide. Our gross margin, it went down a bit, but this was expected. And as we've stated, we have now shifted to selling the CADScor model, the unit, the hardware piece of equipment, which has lower margin than the patches. But we are very, very consistent in regard that we should maintain a robust gross margin between 80% and 90% over the long haul, which is far exceeds the benchmark in MedTech in general. So we're very optimistic that we can sustain this kind of gross margin as we have continually done so over the previous quarters. Operating cost reduction, as you can see, quarter-over-quarter, we continually run as lean as possible with the exception of reinvesting funds where we feel it's applicable in regard to top line or ROI. But as you can see here, from Q2 '25 to Q2 '26, we reduced our OpEx by 19% from just under SEK 14 million and brought it down to right around SEK 11 million. Our net loss is another great slide here. We've come down quarter-over-quarter from SEK 12.8 million or SEK 12.9 million to SEK 9.4 million, so a 26% betterment in our net loss. So we continually demonstrate that while we continually grow our top line, we can continually reduce our OpEx as well as our net loss. And again, I want to reinforce that we will continually evaluate ways to reinvest that capital that we're saving to drive ROI, most specifically in commercial efforts. Our monthly burn, as you can see, again, another great delivery from the team. Q2 was approximately SEK 4 million of a burn. We're down to just around SEK 3 million, which is a 26% reduction in our monthly burn. So we feel that this is going to be a little bit more of a consistent burn rate. There's very little for us to burn an addition. So I anticipate that we remain somewhere within this range over the next few quarters. And then as we start to see our top line trajectory grow, additional resources will be put in place for commercial efforts. So when you look at a financing perspective, at the start of Q4 2025, we did release a directed issue of approximately SEK 33.4 million before issuance costs. And by June 30, we have received a full allotment of the SEK 33.4 million. And in Q2 2026, the company recognized approximately SEK 15 million from the directed issue net of transaction costs. And as of today, our cash and cash equivalents through June 30 is right around SEK 29 million. So in a healthy position as we now look to really expand our commercial efforts. We have some very, very significant opportunities ahead. We're positioned really, really well to convert our commercial momentum into durable recurring revenue in the back half of 2026 and beyond. There's a number of categories we're working towards, but the 3 most significant ones that's obviously expanding reimbursement coverage, delivering 29 systems for this quarter and continued double-digit growth. And the clinical adoption continually gets deeper, which enables a continued installation of our units, our CADScor units, which obviously procures the reoccurring revenue of our patches. We have really, really deep reimbursement opportunities in the back half of the year in regard to getting our CPT I final need to publish the performance trial in the United States, which we hope is before the end of the year, which will then enable us to be a part of CPT I committee early next year, hopefully, before the first half of the year. That is all going to be predicated on the publication and the date of publication. And then second, deepen our clinical use. The most important factor for us is obviously continually delivering on the organic commercial opportunities, but most specifically, the Rural Health Transformation Program. This is something we have worked extraordinarily hard on over the last 18 months. And as recently as this week is the first disseminations of the allocations across the United States. It's been an extraordinarily slow process. I think the government is really trying to keep this right and make sure we're keeping fraud out of the picture across the entire U.S. with this grant money. So -- but the good news is we are now starting to see slow and trickles of deployments, and we anticipate that should grow. From expanding global access, as you guys know, we announced in the UAE, and we have slowly following up on what will procure next steps in the UAE, and that's the UAE team, UniTech Solutions to get in front of the MoH or the Ministry of Health, which has 16 different hospitals for demos, and that is ongoing as we speak, and we anticipate hearing more in the near future. We also have the Kingdom of Saudi Arabia that we have produced all the documents in regard to our regulatory approval, and we anticipate that, that procures within the next 60 days. So really optimistic about what can procure there. So with that, as always, we are very optimistic about our future. We have really started to see some of the efforts procure into fruit, and we're really pleasure to have you all as shareholders and appreciate your support and look forward to talking to you in the near future.