Financial Data and Key Metrics Changes - Q4 total revenue was $3.7 million, down from $4.9 million in Q4 2017, and full year revenue was $16.1 million, down from $17.1 million in the prior year [6] - Q4 net income was a negative $2.8 million, or negative $0.38 per share, compared to a negative $2.9 million, or negative $1.16 per share in the same quarter of the previous year. Full year net income was a positive $24,000, or just under a penny per share, compared to a negative $12.9 million, or negative $11.60 per share in 2017 [13] - Gross profit in Q4 was $1.7 million, down from $2.1 million in Q4 2017, while full year gross profit was $7.4 million, up by $0.5 million from $6.9 million in 2017 [9] Business Line Data and Key Metrics Changes - Quell revenue in Q4 was $2.8 million, down from $3.7 million in the prior year, and full year revenue was $10.5 million, down from $12.4 million in 2017 [6] - DPNCheck Q4 revenue was $600,000, down from $800,000 in Q4 of the prior year, but full year revenue was $4.2 million, up 34% from $3.1 million last year [8] - Legacy diagnostic products contributed $300,000 in Q4 and $1.4 million for the full year, which was flat quarter-on-quarter and down 14% annually [9] Market Data and Key Metrics Changes - E-commerce expanded from 40% of units shipped in 2017 to 60% in 2018, with a goal of reaching 80% of Quell shipments through e-commerce channels [9] - The company experienced a decrease in customer acquisition costs over the past couple of years, but this trend reversed in Q4, leading to increased costs [15][16] Company Strategy and Development Direction - The company aims to position itself for future profitable growth while delivering meaningful innovation and managing costs [4] - A new commercial strategy for Quell is anticipated to be launched in the second half of the year, focusing on market segmentation, pricing, and promotional strategies [17][18] - The company will continue to build the DPNCheck business, which generates over 60% operating margins and strong cash flow [21] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with Q4 results, citing lower than expected unit sales and increased customer acquisition costs [15] - Positive feedback on Quell 2.0 and improved average selling price (ASP) and gross margins were noted, indicating potential for long-term aftermarket sales [15] - The company does not expect to raise additional capital in 2019, relying on current resources and anticipated milestones from collaborations [20] Other Important Information - Collaboration income for the full year was $12.3 million, primarily from GSK milestone payments, with a total of $14.7 million received in 2018 [12] - The company’s cash balance at the end of the year was $6.8 million, with a simple equity-only debt-free structure [14] Q&A Session Summary Question: Positioning relative to opioid-free strategies and DPNCheck market alignment - The company advocates for the chronic pain community rather than positioning against opioids, with ongoing studies on opioid reduction [23] - Focus on Medicare Advantage plans for DPNCheck rather than the American Diabetes Association, with ongoing conversations to support scientific literature [24] Question: Direct marketing channels and effectiveness - Historically, 75% to 80% of spending has been on TV, which builds awareness and drives customers to digital properties, but the company is exploring more cost-effective digital advertising [30] Question: Recent publication of randomized control trial for Quell - A study showed substantial reductions in pain and disability for Quell users compared to conventional treatment, forming the basis for more targeted promotion of Quell for specific conditions [34][35]
NeuroMetrix(NURO) - 2018 Q4 - Earnings Call Transcript