Senzime AB (publ) (SNZZF) Q3 2025 Earnings Call Prepared Remarks Transcript

2025-10-29 10:01:36 ET

Senzime AB (publ) (SNZZF) Q3 2025 Earnings Call October 29, 2025 6:00 AM EDT

Company Participants

Philip Siberg - Chief Executive Officer

Presentation

Philip Siberg
Chief Executive Officer ...

Okay. Good morning, good afternoon, depending on where you are. Welcome to this summary presentation of our first 9 months of 2025 and a little bit deep dive into our third quarter of '25. So let's start with a little bit of a high-level summary of what we've achieved this year so far.

We've had exceptional growth, 80% in constant currencies. Sensor deliveries continue to perform very well with unit growth of 78%. Our underlying gross margin keeps on improving, thanks to decreased production costs.

Our operating expenses are in line with plan, remaining fairly constant, and our EBITDA improved by 20% over the first 9 months. So really, what's happening here is twofold. We are growing our installed base of TetraGraph systems.

We shipped 553 monitors during the second -- during the third quarter, sorry. So that makes our year-to-date shipments 1,723 monitors compared to 776 of last year. So we keep on growing our installed base and delivered units very fast.

Equally, the amount of sensors, which are used on every single patient that the TetraGraph is used for keeps on growing as well. We shipped over 300,000 sensors the last 9 months, and this continues to grow in a very nice exponential growth rate.

If we continue to look at what we've done over the last couple of quarters, I mean, we continue to be one of the fastest-growing medical device companies on the NASDAQ main market.

We've had a hockey stick type of business since our products came out, since we rolled out a fantastic commercial organization, strong focus on the U.S. market and also have had strong help from clinical guidelines around the world.

So we're running at about a run rate of SEK 90 million this year. If I look at the last 3 months, we are far beyond SEK 100 million. So if we look at more kind of actuals, including the currency effect. So we have been hit by the dollar and a little bit by the euro.

If we look at net sales in the third quarter, we reached SEK 26.5 million. So that means over the 9 months, we are at SEK 75.7 million. Sales growth was, during the first 9 months, about 70%. And if I currency adjusted it and looking at constant currencies, it was 80%.

I'll come back to gross margin and OpEx later in the presentation, and we will talk about those in more detail. If we look at our different markets around the world, we're growing very nicely in all our markets.

U.S. continues to be the locomotive. In the third quarter, it was 73% of our business. But equally, we're growing very nicely as well in Asia and Europe. And if we look at Asia, that is predominantly South Korea and Japan.

We nearly doubled the business this year. It's driven by South Korea, very strong growth, very high utilization of our monitors in the South Korean market. There is part reimbursement for our sensors that helps to drive the business.

If we look at the Japanese market, our licensee, Fukuda Denshi is performing very well with the integrated module with our technology that they launched to the market about a year ago.

If we do a little bit of a deep dive into the U.S. market, we've announced a number of major deals this year. These are big hospital system wins. Typically, they're competitive valuations. Typically, they are part of a substantial kind of clinical review and understanding and deep dive into our system.

If we look at what happened in Q3, we announced the win of a major California-based university hospital system. So that kind of adds up to our list of strong California accounts.

We also announced that we secured the third of what is typically determined as the world's leading hospital system, which is based in the U.S. So now we have supplied all 3 of these hospital systems with our technology.

One deal that I would like to mention was a contract that we were awarded by the U.S. Department of Defense. And this is specifically for delivering TetraGraph units to all major surgical operating rooms at the Walter Reed Presidential Hospital just outside Washington, D.C.

I think this is a very nice landmark win for a company like us to be able to meet the specifications to really win and be the supplier to -- this is supplying health care to the U.S. administration, to members of Congress, and it's been the presidential hospital in the U.S. for over 50 years.

So if we do a little bit of a snapshot on the U.S. market, what I did here is I summarize 5 of our more leading U.S. hospital accounts. What you see here on the y-axis is the number of sensors used per TetraGraph monitoring week. It's a way of understanding what is the utilization rate.

If you look at the pink line, that is what it was year-to-date last year, first 9 months. And if you look at the blue line, that is what the year-to-date is this year. So all these accounts have upgraded to our next-generation TetraGraph system that we launched about a year ago.

If I summarize these 5 accounts, the utilization rate is up about 50%. So we're seeing that the new system is driving usage and the commercial team that we have in combination with science and research is really driving up the usage rate.

So if I look at, again, these accounts, they are, in average, a run rate of about SEK 2.5 million in sensor sales per year. So this is a nice recurring type of business that we are in.

Okay. So I'm just back from the ANESTHESIOLOGY meeting. This is the major event of the year in our market. It's held in the U.S. It attracts typically about 10,000 to 12,000 people. This is where science is announced. This is where the latest technology is announced.

And I just came home with such an energy. I mean it's very clear like we are the industry leader in our field. And of course, we have an extraordinary team to help make that happen.

We have a number of key opinion leaders that are truly backing up what we are doing and helping to drive the message. And then number three, research on our products continues to be very strong, and we saw also data at the meeting that competitive devices do not meet the same type of utilization rates that we can achieve.

At the Congress, we took the opportunity to launch our latest software suite. We call it the EMGINE suite. And this is the result of thousands of data points and thousands of patients, actually billions of data points and thousands of patients.

So what we do with the TetraGraph is that we download data and via the cloud can use that to continuously improve and make -- come out with new features.

So our users are always promised with a commitment that we'll come out with new advanced features to help make neuromuscular monitoring more simple, more accurate and really help to drive standard of care. At the anesthesiology meeting, we also had a -- we held a large symposium about neuromuscular monitoring and implementation strategies. And I just want to take the opportunity and highlight one of the quotes.

So Dr. Aaron Persinger, he's an anesthesiologist. He's based in Colorado. I think he said something very nice. Bringing the next-generation TetraGraph into our community hospital has transformed how we manage neuromuscular block. It has improved patient safety, has standardized our practices and has reduced our annual drug spend by more than $100,000.

Equally, we were recently announced by one of many market-leading institutes of looking at what's happening from an independent point of view outside.

So Intel market research summarized that Senzime AB has emerged as a frontrunner in this space, leveraging its proprietary electromyography technology to capture about 15% of the share -- market share in 2024.

So I think this just kind of gives a flavor of what are we doing and where are we. The last part of this U.S. excitement is the QUANTUM study. So this is the largest outcome study done to date within neuromuscular monitoring. It's over 1,000 patients.

And this leading University of Texas hospital system is going to compare qualitative to quantitative monitoring and truly prove that by using the type of technology that we have, they're going to use our TetraGraph system is that it improves patient outcomes.

The study is well underway, and it's planned to be finalized in 2026, and results presented thereafter. So I think this is going to help to additionally leverage the market space we are in.

Okay. I've been talking about guidelines for many years. And since 15 years back when the Helsinki Declaration of anesthetic safety for patients came out, a number of countries and societies have adapted to this.

The latest to come out was the pediatric guidelines that were announced by ESPA, which is the European Society of Pediatric Anesthesia. They came out just a few weeks ago recommending that all kids should be monitored with preference to electromyography-based technology, so EMG-based technology. This is exactly what our TetraGraph system is based on.

So I think this is a strong marker and signals that our technology is on the forefront and is what's going to be part of future guidelines. So that was one to mention.

The other one was Japan. So Japan has had guidelines in this field for a couple of years. They announced an update to the guidelines here in September, where they more stringently said that it's time to use a quantitative monitor, before it was more general, you should monitor.

So Japanese doctors, if you look at research, they are more prone to follow guidelines. I'm excited about the opportunities that lie in front of us here.

Okay. Integration and partnerships. This is also a key component of our growth strategy. We have been working with a lot of industry partners over the years. We started with Philips. We started then working with Masimo and Fukuda and GE. The 2 latest additions to our portfolio are Mindray and Getinge.

So with Mindray, which is one of the world-leading patient monitoring companies, we now have a collaboration where you can connect the TetraGraph into a Mindray system. You can either display the data on a Mindray patient monitor or you can have the data transfer to electronic health records.

And similar, we've done with a technology part of Getinge. I mean these are all very important strategic puzzle bits on our journey because 99% of our technology today is sold and required to be integrated into larger systems.

Okay. Let's deep dive in a little bit to the numbers and the financials. And predominantly, let's look at the gross margin. As I said initially, the underlying gross margin continues to improve very nicely. But we were affected by a number of effects hitting the reported gross margin during the quarter and during this year.

So the underlying gross margin for the quarter was 69.2%. And if we look at the table to the right, I've broken out what are the things and what are the effects that are negatively affecting the gross margin to a reported level.

So the new U.S. tariffs hit us with 2%. The currency effects, predominantly the U.S. dollar hit us with 3.4%. And then we had a number of contractual upgrades. This means that we upgraded customers and hospitals that had our older generation TetraGraph system to the new NextGen.

A number of these upgrades were done because of contractual obligations where we have provided a technology type of insurance to give them the latest technology. The preference and why we're doing this is because it's driving utilization.

As I said earlier, we've shown and we've seen now with the new generation, the next-generation TetraGraph, we get a higher utilization rate and a higher rate of sold sensors. So the reported gross margin for the quarter was 61.2%.

If we look at the first 9 months, we have similar types of numbers, reported gross margin at 68.1% and then a number of effects coming down to reported adjusted gross margin of 62.9%. So on the positive side, we're seeing very good traction from lower production costs.

On the positive side, we're also starting to work very diligently with increasing U.S. price levels. The first contracts have been renegotiated. And I think from 2026, we're going to see a broader rollout of increased pricing that will help to mitigate the effects of the U.S. tariffs.

If we look at our operating expense levels, it continues to be stable and on plan. As communicated before, the strategy of Senzime is to grow at hyper speed while maintaining a very fixed rate of expenses.

And I'm well on that plan, I feel. And then if we look at the steps towards profitability, we are moving in a very nice trajectory with our EBITDA. We remain on a negative level. We are investing heavily into technology, into development, into the marketing and really kind of winning this market segment.

So we are taking steps. We were 20% better in the first 9 months and the trajectory of this looks very nice. At the end of the quarter -- of the second quarter -- sorry, the third quarter, we had SEK 106.3 million in cash and bank. So we're well funded for our journey.

Just a quick recap, what is it we do again? I mean we are a leader in the field of personalized anesthesia. We're backed by years of research, a lot of science, and we're backed by over about 100 patents covering our technology.

The TetraGraph system is used now in thousands of operating rooms around the world. It's used to help determine the right dose of paralytic drugs that are used during surgery.

It's used perioperatively and in real time to determine that every single patient gets the right dose of drugs and that every patient is also extubated or woken up for a safe recovery at the right time, so they can leave the operating room safe of postoperative complications.

The technology is based on the monitoring system and the disposable sensor. And really, what we're addressing is a market with over 100 million patients every year that get paralytic drugs as part of surgery.

They get it as part of the anesthesia. It's used to paralyze the patient to make sure they lie perfectly still. These drugs are quite scary because you get paralyzed in 45 seconds. So you lose the ability to breathe, and you need to be on a ventilator.

So research after research has shown that if you don't monitor these patients very rigorously and accurately, up to 40% of patients leave the operating room as they've been woken up, still partly paralyzed, typically having breathing problems, they get respiratory issues.

They may need to be reintubated and some people need to go back to the ICU. So this is a large problem, which leads to increased length of stay and also excessive drug costs. And one of these drug costs is the use of reversal drugs.

So when you get paralyzed, they will use an antidote in the end of the surgery to make sure that you get antiparalyzed, so to say. These drugs are also very expensive and need to be carefully monitored to make sure you get the right dose.

There was an interesting study that came out last year showing that 87% of all patients that receive these reversal drugs, they are overdosed, while 13% of the patients are underdosed. So this just proves that 100% of the patients actually get the wrong dose.

And by using our type of technology, you can eliminate those types of problems and get the right dose for every patient. So this is a picture I've shown before, a typical setup. The TetraGraph is used in a modern operating room where you have the da Vinci robot in the back.

The procedure is important where the patient is very deeply blocked. The patient needs to be absolutely lying still because you're working with a robot to the procedure.

So here, you can see the TetraGraph here monitoring very low levels of neuromuscular block. And what has been shown with this type of technology that it eliminates complications. You know exactly that the patient can leave the operating room safely.

It's been shown to reduce drug costs by over 70%. And you will know that the robotic surgeon can safely perform the procedure without complications.

Okay. So a little bit of our goals. I mean, we're on a mission here to really build the undisputed market leader in this fast-growing emerging market. The goal is to be the leader, as I said, in electromyography-based neuromuscular monitoring.

We're going to win this race by being the scientific leader by commercial excellence and having a strong partnerships with the leading medical device companies out there.

So it's really about safeguarding every single patient's journey from anesthesia to recovery. If we look a little bit about the outlook. So in February, we communicated a range, which we did an estimate of what we thought the revenues will be for this year.

We did that estimate based on a U.S. dollar rate that was about 15% higher than it is today. And this is the life of currencies. And it's a management challenge that I cannot control. But I remain confident that we will be able to reach the range that we communicated.

We will do it within constant currencies, and it's supported by the recurring growth that we have in sensors, but also because of a number of large deals that we have secured.

We're just waiting for the orders to come in and -- that we can ship them and recognize the revenue according to plan. We also defined a goal for our OpEx level for the year, and that remains very nicely on plan.

Okay. So to wrap it all up, what is this all about? And what are we doing here? So we are driving patient safety. We're driving reduced health care costs, and we have a check on that.

The other part of the triad is generating strong growth and making sure we are the strongest market leader in the sector, check. We're on that path.

And then also to generate strong returns to our investors. We're showing clear steps towards profitability. We're on the path to profits. So again, join us on our mission.

I mean we're safeguarding every single patient's journey from anesthesia to recovery. We're driving a paradigm shift. Senzime is a fantastic company. Any questions, reach out to me. You want to place orders, give me a call. Thank you.

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