Medical marijuana expansion effort peters out at Texas Capitol

Discover what happened to the iconic nicotine vape brand Juul. Eva Hambach/Getty Images Over the last several years, Juul has gone from a darling of Silicon Valley to a company beset by legal challenges. The e-cigarette maker recently agreed to pay $462 million in a settlement that ends lawsuits against it. Here's a rundown of the company's history, from its $38 billion valuation to legal settlements. A majority of Juul's legal troubles are behind it. The e-cigarette maker agreed to pay $462 million in a settlement that ends lawsuits against it from states including New York and California, the New York Times reported this month. The settlement adds to the billions that Juul has spent defending itself from claims that it targeted young people with its marketing and did not provide information about addictive nicotine in its products.Juul did not immediately respond to a request from Insider for comment.Over the last several years, Juul has gone from a darling of Silicon Valley to a company beset by legal challenges. It also fell from a valuation of $38 billion in 2018 to just $1 billion last October, according to the Journal.Scroll down to see Juul's rise and decline:2004: At Stanford, the product-design grad students James Monsees and Adam Bowen create the idea for Ploom, Juul’s precursor.Juul.com / YouTubeMonsees and Bowen have said they were smokers who met on smoke breaks while pursuing master's degrees in product design at Stanford University. Their thesis presentation, now posted on Juul's website, describes their product as "the rational future of smoking."2007: Monsees and Bowen found the vaporizer startup Ploom in San Francisco.YouTube / Hyphy SF By February 2008, Ploom raised $900,000 in venture funding, putting its valuation at roughly $3 million, according to PitchBook.A 2011 description of the Ploom device, which sold for $75, described it as a heat-not-burn product that could be filled with single-serve refills called "Ploom Pods." The pods could include tobacco or non-tobacco ingredients, it said. Aug. 1, 2013: Ploom debuts the Pax with a launch party in San Francisco.Ploom at Robin Thicke's album-release party in 2013 in New York.Andrew Toth / Getty ImagesAfter raising close to $5 million, Ploom launched a device called the Pax, a vaporizer for loose-leaf tobacco that could also be used for cannabis.To debut the device, Ploom hosted a launch party in San Francisco's trendy Mission District.At this time, Ploom investors included Japan Tobacco, the maker of Winston and Salem cigarettes, along with the software company Originate and the angel investment group Sand Hill. Feb. 16, 2015: Monsees and Bowen sell the Ploom brand and a vaporizer line to the Japanese tobacco company JTI. They rebrand as Pax Labs.Japan Tobacco Inc.'s president and CEO, Mitsuomi Koizumi, using a Ploom during an interview with Reuters at the company's headquarters in Tokyo in 2017.Toru Hanai / ReutersAs part of the deal, JTI said in a statement that Ploom would buy back JTI's minority stake in the startup.June 1, 2015: Pax Labs launches the Juul with a party in New York City.SRITAPax introduced the Juul with a launch party in New York City.A trove of images collected by Stanford researchers suggested that the campaign focused on a young audience. Guests were invited to try Juul's products free and share selfies on social media, Business Insider reported."Juul's launch campaign was patently youth-oriented," Robert Jackler, a practicing Stanford physician who was the principal investigator behind the tobacco-image collection, told Business Insider.2016: Juul sales skyrocket 700%.An ad on Juul's website from 2016.Juul devices gained popularity. Sales rose 700% in 2016, ABC 7 News reported.July 1, 2017: Monsees and Bowen spin out Juul Labs as an independent company and name former Pax Labs CEO Tyler Goldman CEO.Pax Labs; Melia Robinson/Business InsiderGoldman came to Pax from the music-streaming startup Deezer then took over Juul Labs.Nov. 2017: Juul is the best-selling e-cigarette on the market.Pax LabsJuul said it'd sold 1 million units. The company also captured a third of the e-cigarette market, according to Nielsen data.Dec. 11, 2017: CEO Tyler Goldman leaves Juul. The company replaces him with Kevin Burns.Juul's new CEO, Kevin Burns.Juul/YouTubeGoldman left Juul to "pursue new entrepreneurial activities." The company hired Burns from the yogurt company Chobani.Dec. 2017: Juul raises $112 million in venture funds and adds Nicholas Pritzker to its board, according to PitchBook.The industrialist A.N. Pritzker in 1982. The wealthy Pritzker family owned the chewing-tobacco giant Conwood before selling it to the tobacco giant Reynolds. They also founded and expanded the Hyatt Hotels chain.AP PhotoThe fresh funds came from firms including Tao Capital, Fidelity, and Evolution, according to PitchBook.Nicholas Pritzker, Tao's cofounder, joined Juul's board, CNBC reported. Pritzker is a member of the wealthy Pritzker family, which owned the chewing-tobacco giant Conwood before selling it to the tobacco giant Reynolds. The Pritzkers also founded and expanded the Hyatt Hotels chain.On an undisclosed date, Tao Capital sold its stake in Juul to the hedge fund Tiger Global and Manhattan Venture Partners, PitchBook said.The venture fund M13, another early Juul investor, sold its shares in the spring of 2018.This slide has been updated with new information about M13's investment.March 2018: Dozens of outlets report that 'Juuling' is an epidemic at high schools.A Juul ad from 2016.Pax LabsNational news outlets including National Public Radio, USA Today, and Business Insider reported that the Juul had a loyal and growing following among young people.All of the reports said teens were taking to social media to brag about being able to sneak puffs in class or in the bathroom thanks to Juul's discreet design.April 2018: Led by Commissioner Scott Gottlieb, the US Food and Drug Administration starts an 'undercover blitz' to crack down on sales of the Juul to minors.Scott Gottlieb, then the FDA commissioner.ReutersIn what the FDA said was the largest coordinated enforcement effort in agency history, the FDA issued more than 1,300 warning letters and fines to retailers who it said were illegally selling Juuls and other e-cigarettes to minors. The FDA found the retailers by conducting what it called "a nationwide, undercover blitz.""Let me be clear to retailers," Gottlieb, then the FDA's commissioner, said in the statement, "this blitz, and resulting actions, should serve as notice that we will not tolerate the sale of any tobacco products to youth."April 2018: Wall Street analysts warn that Juul is starting to encroach on Big Tobacco's financial terrain and could negatively affect Altria stock.A close-up view of cigarettes on June 10, 2015 in Bristol, England. Health campaigners have asked for a levy on the tobacco industry to help fund anti-smoking measuresMatt Cardy/Getty ImagesIn a research note, Citigroup analysts warned investors that the Juul was beginning to disrupt tobacco stocks.The note suggested that the rise of the Juul could bode poorly for tobacco companies — including Altria, British American Tobacco, and Imperial Brands — as sales were falling faster than expected."The US tobacco market is beginning to be disrupted by Juul," the analysts wrote, adding, "We don't expect underlying cigarette trends to improve much in the rest of 2018."May 2018: Juul doubles its staff to 400 people.Pax LabsJune 2018: San Francisco bans flavored e-cigs like the Juul, prompting an endorsement from Michael Bloomberg.An ad from the California Department of Public Health supporting San Francisco's ballot measure to ban the sale of flavored e-cigarettes like Juul.California Department of Public HealthBloomberg, the former New York City mayor who is CEO of Bloomberg Philanthropies, called the move "an important step forward for public health" and said it should embolden other cities and states to follow suit.July 8, 2018: Wall Street analysts say Juul is reviving the formerly comatose e-cig market, which had been slumping since 2014.AP Photo/Craig MitchelldyerIn a research note, Morgan Stanley analysts credited Juul with "driving a revival in the US e-cig market," adding that sales of Juul devices "accounted for almost the entire incremental increase in US e-cig sales as a percent of total cigarette and e-cigarette sales in the last year."July 10, 2018: Juul raises $1.2 billion in a round that values the company at more than $16 billion, according to PitchBook.Bowen and Monsees at the Hotel Tortue in December 2018 for Juul's launch in Germany.Getty Images / Picture AllianceThe seven investors in the round included a maker of marijuana therapeutics, called Applied Biosciences, along with the the venture firm Bracket Capital, the hedge funds Darsana Capital and E Squared Capital, the investment giant Fidelity, the angel investor Sand Hill, and Tiger, according to PitchBook.Aug. 21, 2018: Israel bans Juul products, calling them a 'grave risk to public health' because of their high nicotine content.A package of the Juul device and flavored Juul nicotine Pods.JUUL LabsIn a statement, Israel's Health Ministry said it's banning the sale and import of Juul devices because they contained more than 20 milligrams per milliliter of nicotine and presented "a grave risk to public health," Reuters reported.Sept. 11, 2018: The FDA deepens its crackdown on Juul and other e-cig makers.FDA commissioner Scott GottliebReutersIn a statement, then-Commissioner Gottlieb said the FDA was working on creating a system to "properly regulate" e-cigarettes like the Juul.He said the aim was twofold: make e-cigarettes available as a less-dangerous alternative for adult smokers, but also keep them out of the hands of young people.Oct. 2, 2018: The FDA surprises Juul at its headquarters and seizes 'thousands of pages of documents' as part of an investigation into its marketing practices.Reuters/Ronen ZvulunThe agency was running an investigation into whether Juul marketed its products to teens, CNBC said.The visit was an extension of the FDA's request in April for materials related to how Juul presented its products and whether they were designed to appeal to kids, according to CNBC.Oct. 2018: Juul surges in popularity, now accounting for over 70% of the US e-cigarette market, according to Nielsen data.Reuters / Brendan McDermidNov. 13, 2018: Juul stops selling its sweet and fruity flavors at stores, making those varieties only available online.Hollis Johnson/Business InsiderJuul says it will temporarily stop selling its flavored e-cigarettes in stores.The move comes on the heels of a similar ban on flavored e-cigs that the city of San Francisco enacted over the summer.Researchers nearly unanimously praised the move, which they say could help protect young people by making the products less appealing and harder to purchase. Juul's flavored varieties will still be sold online, the company says.Nov. 15, 2018: The FDA announces plans to curb flavored e-cig sales after reports that youth vaping has ballooned 78%.A high-school student vaping near a school campus in Cambridge, Massachusetts.Associated Press2018: The Federal Trade Commission begins investigating whether Juul marketed its products to minors.Members of the Federal Trade Commission.REUTERS/ Leah MillisThe Federal Trade Commission began looking into Juul's use of influencers and other marketing tools to appeal to young people, The Wall Street Journal reported in August 2019.According to The Journal, the FTC's investigation began before it started reviewing a deal between Juul and the Marlboro maker, Altria, in December 2018.Dec. 20, 2018: Altria buys 35% of Juul for $12.8 billion, bumping Juul's valuation to $38 billion. Gottlieb accuses both companies of backing away from pledges to curb youth vaping.Packs of Marlboro cigarettes on sale.REUTERS/Brian SnyderIn what the Silicon Valley Business Journal called "the biggest investment ever in a US venture-backed company," Marlboro and the Parliament cigarette maker, Altria, paid $12.8 billion for a third of Juul. That gave Altria more combustible-cigarette market share than the next seven brands combined, according to the Centers for Disease Control and Prevention.Juul, which had an annual revenue of about $2 billion at the time, also received a $2 billion bonus from Altria to distribute among its 1,500 employees, CNBC reported. That would have been about $1.3 million a person.On the heels of the deal, Gottlieb called out both companies, saying they were backing away from previous pledges to fight teen vaping. March 5, 2019: In a surprise announcement, Gottlieb announces he's leaving his post as FDA commissioner.FILE PHOTO: U.S. Food and Drug Commissioner Gottlieb attends interview at Reuters HQ in New YorkThomson ReutersGottlieb, a well-liked figure who spent just two years steering the country's top food and drug regulator, said he was leaving in a month to spend more time with his family in Connecticut.The commissioner had made a name for himself as both a vocal critic of e-cigarette startups like Juul and a speedy approver of new pharmaceutical drugs.In a resignation letter, Gottlieb wrote that one of his accomplishments at the FDA was taking actions against "bad actors that put Americans at risk."March 13, 2019: Gottlieb announces a crackdown on flavored e-cig sales.Reuters / Mike SegarRoughly a week after announcing his departure from the FDA, Gottlieb released a plan to crack down on flavored e-cigarette sales at gas stations, pharmacies, and convenience stores. The plan would also crack down on websites without buffers against youth purchases, such as age-verification software or quantity limits.April 3, 2019: The FDA says it's looking into a 'potential safety issue' related to seizures tied to vaping.ShutterstockIn a statement, Gottlieb said his agency had seen reports suggesting that a small number of e-cigarette users (35 cases from 2010 to early 2019) had experienced seizures after vaping.By August, the FDA said it had received 127 reports — but noted that the new figure might simply mean more people were coming forward, not necessarily that cases were increasing.Gottlieb also noted that seizures were known as possible side effects of nicotine poisoning and said the agency would continue exploring whether there was a connection.April 8, 2019: Democrats in the US Senate launch an investigation into Juul's deal with Altria as well as its social media and advertising practices.Sen. Elizabeth Warren of Massachusetts.Sergio Flores/Getty ImagesEleven Democratic senators, including the party whip Dick Durbin and the presidential candidate Elizabeth Warren, wrote a letter to Juul demanding that the company answer questions about its advertising practices and its deal with Altria, CNBC reported.June 13, 2019: The US House of Representatives announces an investigation of Juul's marketing and the Altria deal.Members of the U.S. House of Representatives are sworn in on the House floor January 3, 2017.Jonathan Ernst/ReutersHouse Democrats launch their own investigation into Juul, Fortune reports.July 16, 2019: Juul's CEO apologizes to parents of teens addicted to its vaping products.CBS This MorningIn a CNBC documentary, Juul Labs CEO Kevin Burns issued an apology to parents of teens who were addicted to the company's vaping products."First of all, I'd tell them that I'm sorry that their child's using the product," Burns said.July 25, 2019: Officials in Wisconsin warn of eight cases of severe lung disease in teens who'd vaped. It's unclear what kinds of products or substances are involved.Simah Herman, 18, on September 19 with a photo of her former vaping devices in Los Angeles. Herman was in a medically induced coma and treated for pneumonia and lung-disease from vaping.Reuters / Lucy NicholsonIn July, Wisconsin's chief medical officer wrote a memo to healthcare providers warning them about a cluster of sick adolescents who had used e-cigarettes. Chest X-rays of the teens revealed similarities in lung damage, he says. The following month, the CDC released an emergency notice about 30 cases of vaping-related lung illness in Wisconsin. In mid-August, officials reported the first death tied to vaping-related lung illness: an adult in Illinois. By September, the CDC and the FDA said there had been 530 confirmed and probable cases of the mystery illness since June. Seven people died. The investigation is ongoing, and officials have yet to find a substance or brand that's common among all the cases.Aug. 16, 2019: Juul raises $785 million in equity and debt financing from Proioxis Ventures, according to PitchBook.Melia Robinson/Business InsiderThe funds will be used to speed Juul's expansion overseas, according to PitchBook. The figure brings the company to $14.2 billion in funds raised.Aug. 29, 2019: Bloomberg says Juul devices were involved in three reports of seizures linked to vaping.Brendan McDermid / ReutersIn three reports submitted to the FDA, people said they or their children had used a Juul before experiencing seizures, Bloomberg News reported. Bloomberg obtained the reports through a public records request.In two of the three reports, the FDA wasn't able to officially confirm that a Juul device was involved, according to Bloomberg.Aug. 29, 2019: Juul's CEO warns people against using Juuls and says vaping's long-term health effects are unknown.Juul's new CEO, Kevin Burns.Juul/YouTubeIn an interview with CBS, Burns said anyone who wasn't already using nicotine, the addictive drug in Juul, should not start."Don't vape. Don't use Juul," Burns told CBS.Sept. 9, 2019: The FDA slams Juul for portraying its e-cigs as 'totally safe' and marketing them to kids at schools.An ad showing a plate of food suggesting that users "save room for Juul."JuulIn a warning letter, the FDA said Juul wrongly painted its e-cigarettes, known in the industry as ENDS, as safer than cigarettes and marketed them intentionally to young people."Referring to your ENDS products as '99% safer' than cigarettes, 'much safer' than cigarettes, 'totally safe,' and 'a safer alternative than smoking cigarettes' is particularly concerning because these statements were made directly to children in school," the FDA letter said."Our concern is amplified by the epidemic rate of increase in youth use of ENDS products, including Juul's products," the letter added.Sept. 17, 2019: Juul sales are halted in China for unclear reasons.An employee at a Tmall logistics center in Suzhou, China.Thomson ReutersA selection of flavored Juul products that went up for sale on two online Chinese marketplaces, JD.com and Tmall, were removed within a week, The Wall Street Journal reported. Both retailers declined to say why.Juul had long been planning to launch in China, where more than 300 million people smoke, according to the World Health Organization. Its nicotine refills, or Juul Pods, are manufactured in Shenzhen, China.Sept. 18, 2019: India bans vaping, citing the "impact of e-cigarettes on the youth."Reuters / Neil HallIndia outlawed the production, sale, import, and advertising of e-cigarettes, citing the need to stop the "impact of e-cigarettes on the youth," BuzzFeed News reported. Penalties include jail time and fines of up to $7,000.Juul had been planning to launch in India, home to more than 106 million smokers — second only to China — by the end of 2019.Sept. 23, 2019: The US Attorney's Office for the Northern District of California has reportedly launched a criminal investigation into Juul.REUTERS/Ronen ZvulunThe Wall Street Journal reported that federal prosecutors in the US Attorney's Office for the Northern District of California were conducting a criminal investigation of Juul. Further details, such as the focus of the investigation, were not available, and Juul didn't respond to a request for comment from Business Insider.Several other investigations are ongoing, including an investigation by the Federal Trade Commission focusing on whether Juul marketed to teens and an FDA investigation focused on marketing, outreach, and Juul's uniquely high nicotine content.Sept. 24, 2019: Juul reportedly prepares to scale back its staff.A woman exhaling a puff of vapor from a Juul e-cigarette.Associated Press / Craig MitchelldyerJuul began preparing to restructure its staff as it faced slower sales resulting from increasing reports about the mysterious vaping-related lung illness, the proposed US ban on flavored e-cigarettes, and a variety of other investigations, The Wall Street Journal reported.The company employs roughly 3,900 people, according to The Journal, up from the 200 it had in 2017.For now, Juul plans to hire less aggressively and start outlining plans to cut some jobs, according to The Journal, but will still continue to expand. Sept. 25, 2019: CEO Kevin Burns steps down and is replaced by longtime tobacco executive K.C. Crosthwaite.Former Juul CEO Kevin Burns.CBS This MorningCrosthwaite was most recently chief growth officer at Altria, and has worked in tobacco for more than 20 years.In announcing the change, Juul also said it would suspend US advertising and some lobbying efforts. Crosthwaite said he would "strive to work with regulators, policymakers and other stakeholders, and earn the trust of the societies in which we operate."Oct. 7, 2019: A crop of school districts across three states sues Juul.ShutterstockFour school districts sue Juul in what appears to be the beginning of a trend.The districts include Three Village Central in New York, La Conner in Washington, Olathe in Kansas, and Francis Howell in Missouri. In separate suits filed on Monday, the districts argue that Juul created a public nuisance by intentionally marketing to kids; misrepresenting its products' nicotine content; and endangering teens' health, according to public documents that Business Insider viewed.Cindy Ormsby, an attorney for the Missouri case, told the Riverfront Times that the Francis Howell lawsuit is "part of a coordinated package of litigation filed by school districts across the country, each dealing with a similar crisis of students addicted to nicotine." In September, Kansas City school district Goddard became one of the first to announce that it was preparing a lawsuit against Juul.The lawsuits seek unspecified damages and legal fees.Oct. 17, 2019: Juul extends its ban on sweet and fruity flavors to include online sales.SRITAJuul announces that it is stopping online sales of its mango, fruit, cucumber, and cream varieties. Last fall, the company temporarily banned sales of those varieties in stores. As of Oct. 17, those flavors can't be purchased in-person or online.In a statement, Juul says it "will continue to develop scientific evidence to support the use of these flavored products."Oct. 28, 2019: Juul reportedly plans to cut 500 jobs before year's end. Its chief marketing officer departs the following day.Robyn Beck / AFP / Getty ImagesJuul looks to eliminate roughly 500 jobs by the end of the year, the Wall Street Journal reports.The cuts are part of a company-wide reorganization effort, according to the journal, and will involve anywhere between 10-15% of Juul's total workforce. "As the vapor category undergoes a necessary reset, this reorganization will help Juul Labs focus on reducing underage use, investing in scientific research, and creating new technologies while earning a license to operate in the US and around the world," KC Crosthwaite, Juul's new CEO, said in an emailed statement provided to Business Insider.The following day, the Journal reports that Juul's chief marketing officer is departing."Craig Brommers, an incredibly talented marketing executive, has asked to transition out of Juul Labs in the coming months so that he can pursue opportunities with other companies," a Juul spokesperson told the Journal.The spokesperson also said that as a result of Brommer's departure, the CMO position would be cut.Oct. 29, 2019: Juul names a new chief financial officer after its existing CFO asks to leave.Smith Collection/Gado/Getty ImagesJuul appoints Guy Cartwright its new chief financial officer after CFO Tim Danaher asks to leave the company, the Wall Street Journal reports.Cartwright previously served as managing director of the investment firm TowerBrook Capital Partners LP, and joined Juul in July, according to the Journal. Danaher had served as Juul's CFO since 2014.Oct. 31, 2019: Marlboro maker Altria, which owns a third of Juul, slashes the value of its stake in the company. Juul is now valued at $24 billion instead of $38 billion.Justin Sullivan / Getty ImagesMarlboro maker Altria, which last December purchased a 35% stake in Juul for $12.8 billion, cuts the value of its investment in the company by $4.5 billion.The move reveals that Juul is now worth $24 billion, down from $38 billion.On a conference call, Altria cited unexpected market shifts like regulatory crackdowns abroad and a proposed US flavor ban."We're not pleased to have to take an impairment charge on the Juul investment," Altria CEO Howard Willard said on the call. "We did not anticipate this dramatic a change in the e-vapor category," he added.November 7, 2019: Juul stops selling mint flavored options, leaving only menthol and tobacco flavored refillable cartridges.A screenshot shows 2015 advertising for Juul products displayed in a print magazineReutersJuul announces it will stop selling mint-flavored refillable cartridges, or Juul pods. In a press release, the company said it would immediately stop accepting orders for the mint-flavored pods from retail partners and stop selling mint-flavored pods online.According to the release, Juul's decision was based partially on new research  which suggested that mint and mango were the most popular flavors among high school students who Juul."These results are unacceptable," Juul Labs CEO KC Crosthwaite said in the release, adding, "that is why we must reset the vapor category in the US and earn the trust of society by working cooperatively with regulators, Attorneys General, public health officials, and other stakeholders to combat underage use."2020: Amid the pandemic, Juul lays off 40% of its workforce in April, 2020. It then lays off over half of its remaining staff, resulting in about a further 1,000 employees being cut.Shopkeepers stand inside a Juul shop at a shopping mall in Jakarta, Indonesia, December 30, 2019.REUTERS/Ajeng Dinar Ulfiana2021: By 2021, Altria slashes its valuation for Juul to $5 billion, while Juul itself asserts it was worth $10 billion. Two years prior, the company was valued at $38 billion.A hand with a cigarette is seen in front of displayed logos of Philip Morris and Altria in this picture illustrationReutersSeptember 30, 2021: The CDC and FDA releases a study that finds that over 2 million middle-and-high-school students in the US were using e-cigarettes.Eva Hambach/Getty ImagesThe study found that eight in 10 of those students used flavored e-cigarettes."These data highlight the fact that flavored e-cigarettes are still extremely popular with kids," said Mitch Seller, the director of the FDA's Center for Tobacco Products. "And we are equally disturbed by the quarter of high school students who use e-cigarettes and say they vape every single day."February, 2022: A judge rules that Altria can keep its investment in Juul.FILE - In this Dec. 20, 2018, file photo Juul products are displayed at a smoke shop in New York. The company that makes Marlboro cigarettes will take a $4.1 billion hit from its investment in Juul. Altria took a 35% stake in the e-cigarette company at the end of 2018 at a cost of almost $13 billion. The Richmond, Va., company on Thursday, Jan. 30, 2020 cited burgeoning legal cases that it expects to grow. (AP Photo/Seth Wenig, File)Associated PressAn administrative judge ruled that Altria didn't break antitrust laws by taking a 35% stake in Juul. The Federal Trade Commission had sued in 2019, and can still appeal the ruling. June 23, 2022: The FDA bans Juul from selling and distributing its e-cigarette products in the US, and also orders that all products currently in the market be removed.Markets InsiderAltria's stock plunged 10% on news of the ban. The FDA did briefly prohibit Juul products in the US, though an appeal of the decision forced the agency to put its decision on hold.December 6, 2022: Juul agrees to settle roughly 5,000 lawsuits that accused the company of marketing its products to teens and children.Julia NaftulinJuul got an equity investment to pay for the settlement costs, though the financial terms were not disclosed, the Wall Street Journal reported at the time.January 25, 2023: Juul executives were in discussions with major tobacco companies, including Philip Morris, Japan Tobacco, and Altria, the Wall Street Journal reported.Close-up of logo for e-cigarette or vape company Juul on glass window of convenience store in San Ramon, California, December 6, 2019.Smith Collection/Gado/Getty ImagesThe talks included multiple possibilities, including an outright sale of Juul as well as strategic investments and licensing and distribution deals, the Journal reported.April 12, 2023: Juul reached a $462 million settlement with states including New York and California, ending allegations that Juul targeted young consumers with its marketing.JUUL FacebookThe settlement marked an end to the biggest portions of Juul's legal troubles, the New York Times reported. With the news, Juul had reached settlements with 47 states and territories as well as 5,000 individuals and local governments, per the Times.Read the original article on Business Insider.....»»

Juul rebranded three times, sold assets, and attracted nontraditional investors. Now, it's reportedly in partnership talks with big tobacco companies. Eva Hambach/Getty Images The e-cigarette company Juul reportedly is in talks with three big tobacco companies about its future. The talks with giants like Philip Morris are aimed at securing a possible sale, strategic investment, or other deal, the Wall Street Journal reported. Here's a rundown of the company's history, from its $38 billion valuation to legal settlements. Juul is looking for a fresh start.The e-cigarette maker is talking to some of the biggest names in the tobacco industry, including Altria, Philip Morris, and Japan Tobacco, about options for its future, the Wall Street Journal reported on Wednesday. The talks were in early stages and covered a range of potential options, ranging from an outright sale to one of the larger companies to licensing deals, distribution deals, or a strategic investment, the Journal reported.Juul did not immediately respond to a request from Insider for comment.Over the last several years, Juul has gone from a darling of Silicon Valley to a company beset by legal challenges. It also fell from a valuation of $38 billion in 2018 to just $1 billion last October, according to the Journal.Scroll down to see Juul's rise and decline:2004: At Stanford, the product-design grad students James Monsees and Adam Bowen create the idea for Ploom, Juul’s precursor.Juul.com / YouTubeMonsees and Bowen have said they were smokers who met on smoke breaks while pursuing master's degrees in product design at Stanford University. Their thesis presentation, now posted on Juul's website, describes their product as "the rational future of smoking."2007: Monsees and Bowen found the vaporizer startup Ploom in San Francisco.YouTube / Hyphy SF By February 2008, Ploom raised $900,000 in venture funding, putting its valuation at roughly $3 million, according to PitchBook.A 2011 description of the Ploom device, which sold for $75, described it as a heat-not-burn product that could be filled with single-serve refills called "Ploom Pods." The pods could include tobacco or non-tobacco ingredients, it said. Aug. 1, 2013: Ploom debuts the Pax with a launch party in San Francisco.Ploom at Robin Thicke's album-release party in 2013 in New York.Andrew Toth / Getty ImagesAfter raising close to $5 million, Ploom launched a device called the Pax, a vaporizer for loose-leaf tobacco that could also be used for cannabis.To debut the device, Ploom hosted a launch party in San Francisco's trendy Mission District.At this time, Ploom investors included Japan Tobacco, the maker of Winston and Salem cigarettes, along with the software company Originate and the angel investment group Sand Hill. Feb. 16, 2015: Monsees and Bowen sell the Ploom brand and a vaporizer line to the Japanese tobacco company JTI. They rebrand as Pax Labs.Japan Tobacco Inc.'s president and CEO, Mitsuomi Koizumi, using a Ploom during an interview with Reuters at the company's headquarters in Tokyo in 2017.Toru Hanai / ReutersAs part of the deal, JTI said in a statement that Ploom would buy back JTI's minority stake in the startup.June 1, 2015: Pax Labs launches the Juul with a party in New York City.SRITAPax introduced the Juul with a launch party in New York City.A trove of images collected by Stanford researchers suggested that the campaign focused on a young audience. Guests were invited to try Juul's products free and share selfies on social media, Business Insider reported."Juul's launch campaign was patently youth-oriented," Robert Jackler, a practicing Stanford physician who was the principal investigator behind the tobacco-image collection, told Business Insider.2016: Juul sales skyrocket 700%.An ad on Juul's website from 2016.Juul devices gained popularity. Sales rose 700% in 2016, ABC 7 News reported.July 1, 2017: Monsees and Bowen spin out Juul Labs as an independent company and name former Pax Labs CEO Tyler Goldman CEO.Pax Labs; Melia Robinson/Business InsiderGoldman came to Pax from the music-streaming startup Deezer then took over Juul Labs.Nov. 2017: Juul is the best-selling e-cigarette on the market.Pax LabsJuul said it'd sold 1 million units. The company also captured a third of the e-cigarette market, according to Nielsen data.Dec. 11, 2017: CEO Tyler Goldman leaves Juul. The company replaces him with Kevin Burns.Juul's new CEO, Kevin Burns.Juul/YouTubeGoldman left Juul to "pursue new entrepreneurial activities." The company hired Burns from the yogurt company Chobani.Dec. 2017: Juul raises $112 million in venture funds and adds Nicholas Pritzker to its board, according to PitchBook.The industrialist A.N. Pritzker in 1982. The wealthy Pritzker family owned the chewing-tobacco giant Conwood before selling it to the tobacco giant Reynolds. They also founded and expanded the Hyatt Hotels chain.AP PhotoThe fresh funds came from firms including Tao Capital, Fidelity, and Evolution, according to PitchBook.Nicholas Pritzker, Tao's cofounder, joined Juul's board, CNBC reported. Pritzker is a member of the wealthy Pritzker family, which owned the chewing-tobacco giant Conwood before selling it to the tobacco giant Reynolds. The Pritzkers also founded and expanded the Hyatt Hotels chain.On an undisclosed date, Tao Capital sold its stake in Juul to the hedge fund Tiger Global and Manhattan Venture Partners, PitchBook said.The venture fund M13, another early Juul investor, sold its shares in the spring of 2018.This slide has been updated with new information about M13's investment.March 2018: Dozens of outlets report that 'Juuling' is an epidemic at high schools.A Juul ad from 2016.Pax LabsNational news outlets including National Public Radio, USA Today, and Business Insider reported that the Juul had a loyal and growing following among young people.All of the reports said teens were taking to social media to brag about being able to sneak puffs in class or in the bathroom thanks to Juul's discreet design.April 2018: Led by Commissioner Scott Gottlieb, the US Food and Drug Administration starts an 'undercover blitz' to crack down on sales of the Juul to minors.Scott Gottlieb, then the FDA commissioner.ReutersIn what the FDA said was the largest coordinated enforcement effort in agency history, the FDA issued more than 1,300 warning letters and fines to retailers who it said were illegally selling Juuls and other e-cigarettes to minors. The FDA found the retailers by conducting what it called "a nationwide, undercover blitz.""Let me be clear to retailers," Gottlieb, then the FDA's commissioner, said in the statement, "this blitz, and resulting actions, should serve as notice that we will not tolerate the sale of any tobacco products to youth."April 2018: Wall Street analysts warn that Juul is starting to encroach on Big Tobacco's financial terrain and could negatively affect Altria stock.A close-up view of cigarettes on June 10, 2015 in Bristol, England. Health campaigners have asked for a levy on the tobacco industry to help fund anti-smoking measuresMatt Cardy/Getty ImagesIn a research note, Citigroup analysts warned investors that the Juul was beginning to disrupt tobacco stocks.The note suggested that the rise of the Juul could bode poorly for tobacco companies — including Altria, British American Tobacco, and Imperial Brands — as sales were falling faster than expected."The US tobacco market is beginning to be disrupted by Juul," the analysts wrote, adding, "We don't expect underlying cigarette trends to improve much in the rest of 2018."May 2018: Juul doubles its staff to 400 people.Pax LabsJune 2018: San Francisco bans flavored e-cigs like the Juul, prompting an endorsement from Michael Bloomberg.An ad from the California Department of Public Health supporting San Francisco's ballot measure to ban the sale of flavored e-cigarettes like Juul.California Department of Public HealthBloomberg, the former New York City mayor who is CEO of Bloomberg Philanthropies, called the move "an important step forward for public health" and said it should embolden other cities and states to follow suit.July 8, 2018: Wall Street analysts say Juul is reviving the formerly comatose e-cig market, which had been slumping since 2014.AP Photo/Craig MitchelldyerIn a research note, Morgan Stanley analysts credited Juul with "driving a revival in the US e-cig market," adding that sales of Juul devices "accounted for almost the entire incremental increase in US e-cig sales as a percent of total cigarette and e-cigarette sales in the last year."July 10, 2018: Juul raises $1.2 billion in a round that values the company at more than $16 billion, according to PitchBook.Bowen and Monsees at the Hotel Tortue in December 2018 for Juul's launch in Germany.Getty Images / Picture AllianceThe seven investors in the round included a maker of marijuana therapeutics, called Applied Biosciences, along with the the venture firm Bracket Capital, the hedge funds Darsana Capital and E Squared Capital, the investment giant Fidelity, the angel investor Sand Hill, and Tiger, according to PitchBook.Aug. 21, 2018: Israel bans Juul products, calling them a 'grave risk to public health' because of their high nicotine content.A package of the Juul device and flavored Juul nicotine Pods.JUUL LabsIn a statement, Israel's Health Ministry said it's banning the sale and import of Juul devices because they contained more than 20 milligrams per milliliter of nicotine and presented "a grave risk to public health," Reuters reported.Sept. 11, 2018: The FDA deepens its crackdown on Juul and other e-cig makers.FDA commissioner Scott GottliebReutersIn a statement, then-Commissioner Gottlieb said the FDA was working on creating a system to "properly regulate" e-cigarettes like the Juul.He said the aim was twofold: make e-cigarettes available as a less-dangerous alternative for adult smokers, but also keep them out of the hands of young people.Oct. 2, 2018: The FDA surprises Juul at its headquarters and seizes 'thousands of pages of documents' as part of an investigation into its marketing practices.Reuters/Ronen ZvulunThe agency was running an investigation into whether Juul marketed its products to teens, CNBC said.The visit was an extension of the FDA's request in April for materials related to how Juul presented its products and whether they were designed to appeal to kids, according to CNBC.Oct. 2018: Juul surges in popularity, now accounting for over 70% of the US e-cigarette market, according to Nielsen data.Reuters / Brendan McDermidNov. 13, 2018: Juul stops selling its sweet and fruity flavors at stores, making those varieties only available online.Hollis Johnson/Business InsiderJuul says it will temporarily stop selling its flavored e-cigarettes in stores.The move comes on the heels of a similar ban on flavored e-cigs that the city of San Francisco enacted over the summer.Researchers nearly unanimously praised the move, which they say could help protect young people by making the products less appealing and harder to purchase. Juul's flavored varieties will still be sold online, the company says.Nov. 15, 2018: The FDA announces plans to curb flavored e-cig sales after reports that youth vaping has ballooned 78%.A high-school student vaping near a school campus in Cambridge, Massachusetts.Associated Press2018: The Federal Trade Commission begins investigating whether Juul marketed its products to minors.Members of the Federal Trade Commission.REUTERS/ Leah MillisThe Federal Trade Commission began looking into Juul's use of influencers and other marketing tools to appeal to young people, The Wall Street Journal reported in August 2019.According to The Journal, the FTC's investigation began before it started reviewing a deal between Juul and the Marlboro maker, Altria, in December 2018.Dec. 20, 2018: Altria buys 35% of Juul for $12.8 billion, bumping Juul's valuation to $38 billion. Gottlieb accuses both companies of backing away from pledges to curb youth vaping.Packs of Marlboro cigarettes on sale.REUTERS/Brian SnyderIn what the Silicon Valley Business Journal called "the biggest investment ever in a US venture-backed company," Marlboro and the Parliament cigarette maker, Altria, paid $12.8 billion for a third of Juul. That gave Altria more combustible-cigarette market share than the next seven brands combined, according to the Centers for Disease Control and Prevention.Juul, which had an annual revenue of about $2 billion at the time, also received a $2 billion bonus from Altria to distribute among its 1,500 employees, CNBC reported. That would have been about $1.3 million a person.On the heels of the deal, Gottlieb called out both companies, saying they were backing away from previous pledges to fight teen vaping. March 5, 2019: In a surprise announcement, Gottlieb announces he's leaving his post as FDA commissioner.FILE PHOTO: U.S. Food and Drug Commissioner Gottlieb attends interview at Reuters HQ in New YorkThomson ReutersGottlieb, a well-liked figure who spent just two years steering the country's top food and drug regulator, said he was leaving in a month to spend more time with his family in Connecticut.The commissioner had made a name for himself as both a vocal critic of e-cigarette startups like Juul and a speedy approver of new pharmaceutical drugs.In a resignation letter, Gottlieb wrote that one of his accomplishments at the FDA was taking actions against "bad actors that put Americans at risk."March 13, 2019: Gottlieb announces a crackdown on flavored e-cig sales.Reuters / Mike SegarRoughly a week after announcing his departure from the FDA, Gottlieb released a plan to crack down on flavored e-cigarette sales at gas stations, pharmacies, and convenience stores. The plan would also crack down on websites without buffers against youth purchases, such as age-verification software or quantity limits.April 3, 2019: The FDA says it's looking into a 'potential safety issue' related to seizures tied to vaping.ShutterstockIn a statement, Gottlieb said his agency had seen reports suggesting that a small number of e-cigarette users (35 cases from 2010 to early 2019) had experienced seizures after vaping.By August, the FDA said it had received 127 reports — but noted that the new figure might simply mean more people were coming forward, not necessarily that cases were increasing.Gottlieb also noted that seizures were known as possible side effects of nicotine poisoning and said the agency would continue exploring whether there was a connection.April 8, 2019: Democrats in the US Senate launch an investigation into Juul's deal with Altria as well as its social media and advertising practices.Sen. Elizabeth Warren of Massachusetts.Sergio Flores/Getty ImagesEleven Democratic senators, including the party whip Dick Durbin and the presidential candidate Elizabeth Warren, wrote a letter to Juul demanding that the company answer questions about its advertising practices and its deal with Altria, CNBC reported.June 13, 2019: The US House of Representatives announces an investigation of Juul's marketing and the Altria deal.Members of the U.S. House of Representatives are sworn in on the House floor January 3, 2017.Jonathan Ernst/ReutersHouse Democrats launch their own investigation into Juul, Fortune reports.July 16, 2019: Juul's CEO apologizes to parents of teens addicted to its vaping products.CBS This MorningIn a CNBC documentary, Juul Labs CEO Kevin Burns issued an apology to parents of teens who were addicted to the company's vaping products."First of all, I'd tell them that I'm sorry that their child's using the product," Burns said.July 25, 2019: Officials in Wisconsin warn of eight cases of severe lung disease in teens who'd vaped. It's unclear what kinds of products or substances are involved.Simah Herman, 18, on September 19 with a photo of her former vaping devices in Los Angeles. Herman was in a medically induced coma and treated for pneumonia and lung-disease from vaping.Reuters / Lucy NicholsonIn July, Wisconsin's chief medical officer wrote a memo to healthcare providers warning them about a cluster of sick adolescents who had used e-cigarettes. Chest X-rays of the teens revealed similarities in lung damage, he says. The following month, the CDC released an emergency notice about 30 cases of vaping-related lung illness in Wisconsin. In mid-August, officials reported the first death tied to vaping-related lung illness: an adult in Illinois. By September, the CDC and the FDA said there had been 530 confirmed and probable cases of the mystery illness since June. Seven people died. The investigation is ongoing, and officials have yet to find a substance or brand that's common among all the cases.Aug. 16, 2019: Juul raises $785 million in equity and debt financing from Proioxis Ventures, according to PitchBook.Melia Robinson/Business InsiderThe funds will be used to speed Juul's expansion overseas, according to PitchBook. The figure brings the company to $14.2 billion in funds raised.Aug. 29, 2019: Bloomberg says Juul devices were involved in three reports of seizures linked to vaping.Brendan McDermid / ReutersIn three reports submitted to the FDA, people said they or their children had used a Juul before experiencing seizures, Bloomberg News reported. Bloomberg obtained the reports through a public records request.In two of the three reports, the FDA wasn't able to officially confirm that a Juul device was involved, according to Bloomberg.Aug. 29, 2019: Juul's CEO warns people against using Juuls and says vaping's long-term health effects are unknown.Juul's new CEO, Kevin Burns.Juul/YouTubeIn an interview with CBS, Burns said anyone who wasn't already using nicotine, the addictive drug in Juul, should not start."Don't vape. Don't use Juul," Burns told CBS.Sept. 9, 2019: The FDA slams Juul for portraying its e-cigs as 'totally safe' and marketing them to kids at schools.An ad showing a plate of food suggesting that users "save room for Juul."JuulIn a warning letter, the FDA said Juul wrongly painted its e-cigarettes, known in the industry as ENDS, as safer than cigarettes and marketed them intentionally to young people."Referring to your ENDS products as '99% safer' than cigarettes, 'much safer' than cigarettes, 'totally safe,' and 'a safer alternative than smoking cigarettes' is particularly concerning because these statements were made directly to children in school," the FDA letter said."Our concern is amplified by the epidemic rate of increase in youth use of ENDS products, including Juul's products," the letter added.Sept. 17, 2019: Juul sales are halted in China for unclear reasons.An employee at a Tmall logistics center in Suzhou, China.Thomson ReutersA selection of flavored Juul products that went up for sale on two online Chinese marketplaces, JD.com and Tmall, were removed within a week, The Wall Street Journal reported. Both retailers declined to say why.Juul had long been planning to launch in China, where more than 300 million people smoke, according to the World Health Organization. Its nicotine refills, or Juul Pods, are manufactured in Shenzhen, China.Sept. 18, 2019: India bans vaping, citing the "impact of e-cigarettes on the youth."Reuters / Neil HallIndia outlawed the production, sale, import, and advertising of e-cigarettes, citing the need to stop the "impact of e-cigarettes on the youth," BuzzFeed News reported. Penalties include jail time and fines of up to $7,000.Juul had been planning to launch in India, home to more than 106 million smokers — second only to China — by the end of 2019.Sept. 23, 2019: The US Attorney's Office for the Northern District of California has reportedly launched a criminal investigation into Juul.REUTERS/Ronen ZvulunThe Wall Street Journal reported that federal prosecutors in the US Attorney's Office for the Northern District of California were conducting a criminal investigation of Juul. Further details, such as the focus of the investigation, were not available, and Juul didn't respond to a request for comment from Business Insider.Several other investigations are ongoing, including an investigation by the Federal Trade Commission focusing on whether Juul marketed to teens and an FDA investigation focused on marketing, outreach, and Juul's uniquely high nicotine content.Sept. 24, 2019: Juul reportedly prepares to scale back its staff.A woman exhaling a puff of vapor from a Juul e-cigarette.Associated Press / Craig MitchelldyerJuul began preparing to restructure its staff as it faced slower sales resulting from increasing reports about the mysterious vaping-related lung illness, the proposed US ban on flavored e-cigarettes, and a variety of other investigations, The Wall Street Journal reported.The company employs roughly 3,900 people, according to The Journal, up from the 200 it had in 2017.For now, Juul plans to hire less aggressively and start outlining plans to cut some jobs, according to The Journal, but will still continue to expand. Sept. 25, 2019: CEO Kevin Burns steps down and is replaced by longtime tobacco executive K.C. Crosthwaite.Former Juul CEO Kevin Burns.CBS This MorningCrosthwaite was most recently chief growth officer at Altria, and has worked in tobacco for more than 20 years.In announcing the change, Juul also said it would suspend US advertising and some lobbying efforts. Crosthwaite said he would "strive to work with regulators, policymakers and other stakeholders, and earn the trust of the societies in which we operate."Oct. 7, 2019: A crop of school districts across three states sues Juul.ShutterstockFour school districts sue Juul in what appears to be the beginning of a trend.The districts include Three Village Central in New York, La Conner in Washington, Olathe in Kansas, and Francis Howell in Missouri. In separate suits filed on Monday, the districts argue that Juul created a public nuisance by intentionally marketing to kids; misrepresenting its products' nicotine content; and endangering teens' health, according to public documents that Business Insider viewed.Cindy Ormsby, an attorney for the Missouri case, told the Riverfront Times that the Francis Howell lawsuit is "part of a coordinated package of litigation filed by school districts across the country, each dealing with a similar crisis of students addicted to nicotine." In September, Kansas City school district Goddard became one of the first to announce that it was preparing a lawsuit against Juul.The lawsuits seek unspecified damages and legal fees.Oct. 17, 2019: Juul extends its ban on sweet and fruity flavors to include online sales.SRITAJuul announces that it is stopping online sales of its mango, fruit, cucumber, and cream varieties. Last fall, the company temporarily banned sales of those varieties in stores. As of Oct. 17, those flavors can't be purchased in-person or online.In a statement, Juul says it "will continue to develop scientific evidence to support the use of these flavored products."Oct. 28, 2019: Juul reportedly plans to cut 500 jobs before year's end. Its chief marketing officer departs the following day.Robyn Beck / AFP / Getty ImagesJuul looks to eliminate roughly 500 jobs by the end of the year, the Wall Street Journal reports.The cuts are part of a company-wide reorganization effort, according to the journal, and will involve anywhere between 10-15% of Juul's total workforce. "As the vapor category undergoes a necessary reset, this reorganization will help Juul Labs focus on reducing underage use, investing in scientific research, and creating new technologies while earning a license to operate in the US and around the world," KC Crosthwaite, Juul's new CEO, said in an emailed statement provided to Business Insider.The following day, the Journal reports that Juul's chief marketing officer is departing."Craig Brommers, an incredibly talented marketing executive, has asked to transition out of Juul Labs in the coming months so that he can pursue opportunities with other companies," a Juul spokesperson told the Journal.The spokesperson also said that as a result of Brommer's departure, the CMO position would be cut.Oct. 29, 2019: Juul names a new chief financial officer after its existing CFO asks to leave.Smith Collection/Gado/Getty ImagesJuul appoints Guy Cartwright its new chief financial officer after CFO Tim Danaher asks to leave the company, the Wall Street Journal reports.Cartwright previously served as managing director of the investment firm TowerBrook Capital Partners LP, and joined Juul in July, according to the Journal. Danaher had served as Juul's CFO since 2014.Oct. 31, 2019: Marlboro maker Altria, which owns a third of Juul, slashes the value of its stake in the company. Juul is now valued at $24 billion instead of $38 billion.Justin Sullivan / Getty ImagesMarlboro maker Altria, which last December purchased a 35% stake in Juul for $12.8 billion, cuts the value of its investment in the company by $4.5 billion.The move reveals that Juul is now worth $24 billion, down from $38 billion.On a conference call, Altria cited unexpected market shifts like regulatory crackdowns abroad and a proposed US flavor ban."We're not pleased to have to take an impairment charge on the Juul investment," Altria CEO Howard Willard said on the call. "We did not anticipate this dramatic a change in the e-vapor category," he added.November 7, 2019: Juul stops selling mint flavored options, leaving only menthol and tobacco flavored refillable cartridges.A screenshot shows 2015 advertising for Juul products displayed in a print magazineReutersJuul announces it will stop selling mint-flavored refillable cartridges, or Juul pods. In a press release, the company said it would immediately stop accepting orders for the mint-flavored pods from retail partners and stop selling mint-flavored pods online.According to the release, Juul's decision was based partially on new research  which suggested that mint and mango were the most popular flavors among high school students who Juul."These results are unacceptable," Juul Labs CEO KC Crosthwaite said in the release, adding, "that is why we must reset the vapor category in the US and earn the trust of society by working cooperatively with regulators, Attorneys General, public health officials, and other stakeholders to combat underage use."2020: Amid the pandemic, Juul lays off 40% of its workforce in April, 2020. It then lays off over half of its remaining staff, resulting in about a further 1,000 employees being cut.Shopkeepers stand inside a Juul shop at a shopping mall in Jakarta, Indonesia, December 30, 2019.REUTERS/Ajeng Dinar Ulfiana2021: By 2021, Altria slashes its valuation for Juul to $5 billion, while Juul itself asserts it was worth $10 billion. Two years prior, the company was valued at $38 billion.A hand with a cigarette is seen in front of displayed logos of Philip Morris and Altria in this picture illustrationReutersSeptember 30, 2021: The CDC and FDA releases a study that finds that over 2 million middle-and-high-school students in the US were using e-cigarettes.Eva Hambach/Getty ImagesThe study found that eight in 10 of those students used flavored e-cigarettes."These data highlight the fact that flavored e-cigarettes are still extremely popular with kids," said Mitch Seller, the director of the FDA's Center for Tobacco Products. "And we are equally disturbed by the quarter of high school students who use e-cigarettes and say they vape every single day."February, 2022: A judge rules that Altria can keep its investment in Juul.FILE - In this Dec. 20, 2018, file photo Juul products are displayed at a smoke shop in New York. The company that makes Marlboro cigarettes will take a $4.1 billion hit from its investment in Juul. Altria took a 35% stake in the e-cigarette company at the end of 2018 at a cost of almost $13 billion. The Richmond, Va., company on Thursday, Jan. 30, 2020 cited burgeoning legal cases that it expects to grow. (AP Photo/Seth Wenig, File)Associated PressAn administrative judge ruled that Altria didn't break antitrust laws by taking a 35% stake in Juul. The Federal Trade Commission had sued in 2019, and can still appeal the ruling. June 23, 2022: The FDA bans Juul from selling and distributing its e-cigarette products in the US, and also orders that all products currently in the market be removed.Markets InsiderAltria's stock plunged 10% on news of the ban. The FDA did briefly prohibit Juul products in the US, though an appeal of the decision forced the agency to put its decision on hold.December 6, 2022: Juul agrees to settle roughly 5,000 lawsuits that accused the company of marketing its products to teens and children.Julia NaftulinJuul got an equity investment to pay for the settlement costs, though the financial terms were not disclosed, the Wall Street Journal reported at the time.January 25, 2023: Juul executives were in discussions with major tobacco companies, including Philip Morris, Japan Tobacco, and Altria, the Wall Street Journal reported.Close-up of logo for e-cigarette or vape company Juul on glass window of convenience store in San Ramon, California, December 6, 2019.Smith Collection/Gado/Getty ImagesThe talks included multiple possibilities, including an outright sale of Juul as well as strategic investments and licensing and distribution deals, the Journal reported.Read the original article on Business Insider.....»»

The state-by-state marijuana legalization wave continues to sweep the country and is gaining steam across all types of political and social leanings. Ben Rains says now is the time to get involved in this growing space, which should see U.S. sales soar past $30 billion this year. The U.S. marijuana industry is booming as states all across the country continue to legalize medical and recreational cannabis. U.S. marijuana sales are reportedly set to jump over 20% to $33 billion in 2022, which is up from just $9 billion five years ago and $3 billion in 2015.Legal marijuana sales are projected to soar another 60% by 2026 to hit $53 billion, with that figure possibly on the low end considering the rapid pace of legalization throughout the U.S.—not to mention the rest of the world. Total international legal marijuana sales are projected to soar to well over $130 billion by 2030.Two more U.S. states legalized recreational marijuana during the 2022 midterms to bring the total to 21, plus Washington D.C. Before we know it, half of the country will have legalized recreational marijuana in a rather short amount of time. On top of that, 37 states operate legal medical marijuana markets.The state-by-state marijuana legalization wave shows few signs of slowing, with states of all political leanings, geographic regions, and other differences rolling out legalization efforts.Plus, a large majority of the country is now in favor of Federal-level legalization, which could be possible down the line. In fact, President Biden is set to sign the first official stand-alone piece of marijuana legislation in early December.All in all, the marijuana market offers investors plenty of long-term upside, with the U.S. legal recreational market only a decade old. Outside the U.S., other countries have legalized cannabis at the national level, including Canada. And some huge economies in Europe such as Germany are on a journey toward legalization.Legalization is Gaining Steam Washington state and Colorado first legalized marijuana use for adults 21+ back in 2012. Now, the U.S. heads into 2023 with recreational cannabis legal in 21 states, alongside D.C. and two U.S. territories after Maryland and Missouri voted to legalize marijuana during the 2022 midterms.The states that currently operate legal recreational marijuana markets, or have voted in favor of legalization, span from California and Oregon all the way to New York and Virginia. The group of legal recreational states also include Alaska, Arizona, Illinois, Montana, Michigan, New Mexico, Nevada, and others in various parts of the country with different demographics and politics.The medical side of the market is spread across an even larger array of the country. At this time, 37 states and D.C. have legalized medical cannabis, with Texas, Idaho, Nebraska, and Wisconsin among the holdouts.Many of the states that still haven’t legalized cannabis tend to lean more conservative and Republican, which is a group that’s traditionally been against marijuana. Thankfully, the tides are turning rather quickly, with Alabama, Mississippi, and South Dakota all having legalized medical cannabis within the last couple of years. The groundswell of public support is also highly encouraging and highlights the long-term momentum for the entire marijuana industry.More . . .------------------------------------------------------------------------------------------------------Marijuana Stocks? There’s Never Been a Better TimeThirty-seven states and D.C. have already legalized medicinal marijuana, along with 21 states plus D.C. already making recreational use legal. Today we could be on the verge of bipartisan marijuana legislation at the Federal level. Once the bill is passed, many U.S. pot companies can then list on exchanges like NYSE and Nasdaq. The floodgates will open and money will flow in.There’s no stopping this trend, and now is the time to join the rush for profits. U.S. marijuana sales are predicted to skyrocket from $27 billion back in 2021 to an expected $53 billion by 2026.Zacks recently closed marijuana trades of +39.7% and +147.0%.² Plus, new stocks are being lined up that could greatly surpass these gains.See Zacks' latest pot stocks now >>------------------------------------------------------------------------------------------------------Growing Bipartisan Support A huge majority, 68% of U.S. adults, support legal marijuana, along with 50% of Republicans, based on a Gallup poll. This is up from just 50% of the entire country back in 2013. It is worth stepping back quickly and thinking just how difficult it is to find any issue nearly 70% of Americans agree on.On top of that, a new Pew Research poll published in late November found that 88% of U.S. adults say marijuana should be legal in some form. More specifically, 58% said that marijuana should be both recreationally and medically legal, with 30% favoring medical legalization only.Only 10% of U.S. adults say marijuana should not be legal at all. The Pew data showcases that only 15% of people who identify as Republicans or lean Republican do not favor legalization, which is highly encouraging.These two huge polls showcase the mounting bipartisan support for marijuana legalization. The pro-legalization push is why so many states have legalized medical and recreational cannabis and why more are likely to join the legal ranks in the coming years.The Federal government realizes how much momentum is behind cannabis legalization at the state and local levels across the country. Congress is more focused on marijuana than ever, with multiple bills floating around Washington.Cannabis Goes to Washington    Multiple bills have been introduced over the last few years in Washington to federally legalize marijuana. Furthermore, Republicans, the party that was traditionally opposed to cannabis, are in the midst of a dramatic, paradigm-shifting transformation at both the state and national level.Multiple GOP lawmakers are pushing for marijuana legalization in states like Ohio and Pennsylvania. On top of that, the first Republican-led federal legalization effort was introduced last year. The bill grabbed a huge amount of national media attention and could gain steam as more Republicans come on board.The growing number of federal legalization efforts on both sides of the aisle make sense because elected officials try to focus on issues that a large majority of their voters care about. Some of the top lawmakers in Washington are dedicated to passing some form of cannabis legalization as soon as possible. Of course, getting things done in D.C. is rarely straightforward.As investors and many others wait for Federal legalization, they should take comfort in the fact that a medical cannabis research bill just became the first ever standalone marijuana-focused bill approved by both chambers of Congress.The new effort, dubbed the Medical Marijuana and Cannabidiol Research Expansion Act, will make it far easier for scientists and medical professionals to study cannabis. This effort could prove key to a wide-ranging cannabis legalization bill finally happening in Washington down the road.International Expansion Canada legalized recreational marijuana in 2018, becoming the first major economy to do so. Since then, the tiny European nations of Malta and Luxembourg legalized cannabis near the end of 2021.On top of that, Thailand officially legalized cannabis in the summer of 2022, which was the product of a slow effort that began in 2018. Hopefully, Thailand can start a larger legalization push in Asia.Looking ahead, the country of Colombia recently began to make progress on a cannabis legalization bill. On top of that, German government officials earlier this year unveiled the groundwork for nationwide marijuana legalization. If the largest European economy were to legalize cannabis it would likely have huge knock-on effects throughout the continent.Easy Way to Pursue Big Profits The rapid state-by-state expansion and booming growth in established states have helped legal marijuana sales soar from $3 billion in 2015, to $27 billion in 2021 and $33 billion in 2022. Looking ahead, U.S. retail cannabis sales are projected to climb to over $50 billion by 2026, with some reports projecting total international legal marijuana sales will soar to $130 billion by the end of the decade.¹At Zacks, we're monitoring political developments very closely as well as tracking individual stocks. We're on the brink of legalizing marijuana on the federal level, and this bipartisan push would open the floodgates. Many U.S. companies could then list on exchanges like NYSE and Nasdaq, and money will flow.The trend is unstoppable. Medicinal marijuana is already legal in 37 states with 21 allowing recreational use. It's already legal in Canada and there's movement in Mexico and throughout Europe.Plus, most marijuana stocks are still trading at big discounts. For investors, this presents a massive opportunity – what are you waiting for?Our approach to this fast-emerging industry is responsible and vigilant, but we look for aggressive growth. Recently, we closed gains of +39.7% and +147.0%.²Right now you can follow the live buys and sells inside Marijuana Innovators.Bonus Report: And speaking of adding firepower to your portfolio, you are also invited to download our Special Report, Midterm Election Profits: 5 Stocks Set to Soar, which reveals five stocks with strong earnings outlooks that are likely to benefit from billions in government spending.Our election reports have recommended some impressive gains. Previous versions of this report have pointed readers to stocks that have climbed as much as +71%, +83% and +185% in the months after the election.²We can't let everyone in on our marijuana portfolio, so your chance to gain access must end on Sunday, December 4. Sorry, no extensions.See Zacks Marijuana Innovators Trades and Bonus Midterm Election Report Now >>Happy Investing,Ben RainsBen Rains develops strategies that enable investors to profit from the growing legal market in the U.S. and beyond. He uses his extensive experience and concentrated industry study to direct our unique portfolio service, Zacks Marijuana Innovators.¹ Sources for marijuana industry growth estimates: MJ Biz Daily, and Research and Markets ² The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position.   Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Delivered robust revenue of $61.4 million for Q3 2022, a 28% increase year-over-year Continued strong profitability with Adjusted EBITDA* of $8.8M, a 36% increase vs. Q3 2021 Subsequent to quarter-end, entered a new U.S. strategic arrangement with Canopy and amended credit facility to gain immediate access to additional funding NEW YORK, Nov. 07, 2022 (GLOBE NEWSWIRE) -- Acreage Holdings, Inc. ("Acreage" or the "Company") (CSE:ACRG, ACRG.B.U)) (OTCQX:ACRHF, ACRDF)), a vertically integrated, multi-state operator of cannabis cultivation and retailing facilities in the U.S., today reported its financial results for the third quarter ended September 30, 2022 ("Q3 2022"). Third Quarter 2022 Financial Highlights Consolidated revenue was $61.4 million for Q3 2022, an increase of 28% year-over-year. Gross margin of 35% compared to 50% in the second quarter of 2022 ("Q2 2022"). Excluding non-cash inventory adjustments, gross margin was 45% for Q3 2022. Adjusted EBITDA* was $8.8 million in Q3 2022, compared to $6.5 million in the third quarter of 2021 ("Q3 2021"). Adjusted EBITDA* as a percentage of consolidated revenue was 14% for Q3 2022. Third Quarter 2022 Operational Highlights Concluded operations in Oregon with the completion of the sale of four retail dispensaries in the state branded as Cannabliss & Co. Became one of only a small number of producers in the state of New York with the capability to supply non-remediated whole flower to the market upon the launch of the Company's whole flower sales under the state's strict microbial testing regulations. Continued strong growth in New Jersey with adult-use sales and made continued progress on upgrades to the infrastructure and operating procedures at the Company's Egg Harbor, New Jersey cultivation facility. Launched The Botanist Vape Cartridges and Disposables in Illinois, as well as Superflux Cured Concentrates to build on the reputation of the Company's national brands. Further, the Superflux Margalope Live Resin Vape Cartridge took first place in the Vape Pens category of the High Times Cannabis Cup Illinois. Subsequent to the end of the quarter, the Company's social equity joint venture in Connecticut was approved for both a Disproportionately Impacted Area Cultivation License and an Adult-Use Cannabis Retailer license. U.S. Strategic Arrangement with Canopy and Credit Facility Amendment On October 25, 2022, Acreage announced that it entered into an arrangement agreement (the "Floating Share Agreement") with Canopy Growth Corporation ("Canopy" or "CGC") and Canopy USA, LLC ("Canopy USA"), CGC's newly-created U.S. domiciled holding company, pursuant to which, subject to approval of the holders of the Class D subordinate voting shares of Acreage (the "Floating Shares") and the terms and conditions of the Floating Share Agreement, Canopy USA will acquire all of the issued and outstanding Floating Shares by way of court-approved plan of arrangement (the "Floating Share Arrangement"). Concurrent with the entering into of the Floating Share Agreement, Canopy irrevocably waived its option to acquire the Floating Shares pursuant to the plan of arrangement implemented on September 23, 2020 (the "Existing Arrangement") pursuant to the arrangement agreement between Canopy and Acreage dated April 18, 2019, as amended (the "Existing Arrangement Agreement"). Additionally, subject to the provisions of the Floating Share Agreement, Canopy has agreed to exercise its option pursuant to the Existing Arrangement Agreement (the "Fixed Option") to acquire Acreage's outstanding Class E subordinate voting shares (the "Fixed Shares"), representing approximately 70% of the total shares of Acreage. Upon exercise of the Fixed Option and completion of the Floating Share Arrangement, Canopy USA will own 100% of all outstanding Fixed Shares and Floating Shares. The Company intends to hold a special meeting of its shareholders in January 2023. Additionally, the Company amended its existing US$150 million credit facility (the "Amended Credit Facility") with AFC Gamma, Inc. and Viridescent Realty Trust, Inc. Under the terms of the Amended Credit Facility, $25 million is available for immediate draw by Acreage with a further US$25 million available in future periods under a committed accordion option once certain predetermined milestones are achieved. Details regarding the Floating Share Agreement, including the strategic benefits and rationale, Fixed Option, and Amended Credit Facility can be found in the Company's press release dated October 25, 2022. Management Commentary "Despite significant industry headwinds, our results in the third quarter once again demonstrate the highly attractive positioning our operations have established in our core markets over the last year. We believe very strongly that our disciplined strategy will continue to foster long-term growth and enhanced value for our business as the markets continue to evolve and our opportunity to drive further profitability increases," said Peter Caldini, CEO of Acreage. "Throughout the remainder of the year we will focus our efforts on strengthening our presence in New Jersey through continued cultivation improvements and prepare for the launch of adult-use sales in key Northeastern markets." Mr. Caldini continued, "The Acreage of today is dramatically different than it was a few years ago, and as the next transformative step in our history, we were pleased to recently announce a new arrangement with Canopy that provides the opportunity for their newly established U.S. domiciled entity, Canopy USA, to gain full ownership of Acreage. This agreement is a culmination of the significant work and effort our teams have put in over the last several years, and we are confident that now is the time to execute on this strategic opportunity." Mr. Caldini concluded, "Our industry is in its exciting early days with constant developments taking place, and this new arrangement provides the unique ability for shareholders to participate right at the onset of the creation of Canopy USA. Acreage is a valuable addition to what Canopy is building, and we believe the time is right to build an even stronger position ahead of federal permissibility as part of a leading North American brand powerhouse." Q3 2022 Financial Summary(in thousands)   Three Months Ended September 30,   YoY% Change   Three Months Ended June 30, 2022   QoQ%Change     2022       2021       Consolidated Revenue $61,419     $48,152     27.6%   $61,351     0.1%   Gross Profit   21,226       23,804     (10.8)%     30,614     (30.7)%   % of revenue   35%       49%           50%                           Total operating expenses   37,661       30,298     24.3%     27,304     37.9%   Net loss   (24,998)       (14,057)           (10,603)       Net loss attributable to Acreage   (22,214)       (12,296)           (9,929)       Adjusted EBITDA*   8,847       6,498     36.1%     10,385     (14.8)%   Total revenue for Q3 2022 was $61.4 million, an increase of $13.3 million or 28% compared to Q3 2021. The year-over-year improvement was primarily due to the addition of operations in Ohio as well as the commencement of adult-use sales in New Jersey. This revenue growth was somewhat offset by declines in other select markets as category headwinds and competitive pressures negatively impacted both price and volume. Additionally, total revenue for Q3 2022 was in-line with Q2 2022. Excluding the Company's Oregon operations, which concluded at the very beginning of the quarter upon the completion of the sale of the four remaining dispensaries, revenue for the three months ended September 30, 2022, increased by 2% on a sequential basis. Total gross profit for Q3 2022 was $21.2 million, compared to $23.8 million in Q3 2021. Total gross margin was 35% in Q3 2022 compared to 49% in Q3 2021. Cost increases due to inflation and price declines due to competition negatively impacted gross margin during the quarter. Additionally, cost of goods sold for Q3 2022 included $6.3 million of non-cash inventory adjustments as a result of excess inventory in select markets and carrying values of inventory exceeding net realizable value. Excluding these non-cash inventory adjustments, margin for Q3 2022 was 45%. Total operating expenses for Q3 2022 were $37.7 million, compared to $30.3 million in Q3 2021. Included in operating expenses for Q3 2022 was a bad debt provision of $7.2 million related to certain notes receivable amounts where collection is considered doubtful and included in operating expenses for Q3 2021 was an impairment charge of $2.3 million related to capital assets in Sewell, New Jersey that were damaged by Hurricane Ida. Excluding these unusual non-cash items, total operating expenses increased by $2.5 million, or 9%, for Q3 2022 due to increases in compensation and general and administrative expenses as a result of inflation and the Company's expanded operations and were somewhat offset by reductions in equity-based compensation expense, and depreciation and amortization expenses. Adjusted EBITDA* for Q3 2022 was $8.8 million compared to Adjusted EBITDA* of $6.5 million in Q3 2021 and Adjusted EBITDA* of $10.4 million in Q2 2022. While the expanded operations and implementation of the Company's strategic plan led to year-over-year growth in Adjusted EBITDA*, Adjusted EBITDA* on a sequential basis was negatively impacted by decreased pricing due to competitive pressures and increased costs due to inflation. Consolidated EBITDA* for Q3 2022 was a loss of $(9.1) million, compared to a consolidated EBITDA* loss of $(1.3) million in the previous year's comparable period. Net loss attributable to Acreage for Q3 2022 was $(22.2) million, compared to $(12.3) million in Q3 2021. Balance Sheet and Liquidity Acreage ended the quarter with $26.6 million in cash and cash equivalents. As of September 30, 2022, $100.0 million was drawn under the Credit Facility entered in the fourth quarter of 2021. In conjunction with the recently announced Amended Credit Facility, an additional $25 million is available for immediate draw, with a further $25.0 million available in future periods under a committed accordion option once certain, predetermined milestones are achieved. Acreage intends to use the proceeds of the Amended Credit Facility to fund expansion initiatives and provide additional working capital. Earnings Call Management will host a conference call on November 8, 2022, at 10:00 a.m. ET to discuss the results in detail. Webcast: Register Dial-in: Canada – 1-833-950-0062 (toll-free) or 1-226-828-7575US – 1-844-200-6205 (toll-free) or 1-646-904-5544International – +1-929-526-1599 Conference ID: 719120     The webcast will be archived and can be accessed via Acreage's website at investors.acreageholdings.com. About Acreage Holdings, Inc. Acreage is a multi-state operator of cannabis ‎cultivation and retailing facilities in the U.S., including the Company's national retail store ‎brand, The Botanist. With its principal address in New York City, Acreage's wide range of national and regionally available cannabis products include the award-winning The Botanist brand, craft brand Superflux, the Tweed brand, the Prime medical brand in Pennsylvania, the Innocent brand in Illinois and others. Acreage also owns Universal Hemp, LLC, a hemp subsidiary dedicated to the distribution, marketing and sale of CBD products throughout the U.S. Since its founding in 2011, Acreage has focused on building and scaling operations to create a seamless, consumer-focused, branded experience. Learn more at www.acreageholdings.com and follow us on Twitter, LinkedIn, Instagram, and Facebook. Forward Looking Statements This news release and each of the documents referred to herein contains "forward-looking information" and ‎‎"forward-looking statements" within the meaning of applicable Canadian and United States securities legislation, ‎respectively. All statements, other than statements of historical fact, included herein are forward-looking ‎information. ‎Often, but not always, forward-looking statements and information can be identified by the use of words such as ‎‎"plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", ‎or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", ‎‎‎"would", "might" or "will" be taken, occur or be achieved. ‎ Forward-looking statements or information involve known and unknown risks, uncertainties, and other ‎factors which may cause the actual results, performance or achievements of Acreage or its ‎subsidiaries to be materially different from any future results, performance or achievements expressed or ‎implied by the forward-looking statements or information contained in this news release. Examples of such statements include statements with respect to the timing and outcome of the Floating Share Arrangement, the anticipated benefits of the Floating Share Arrangement, the timing of the closing of the Fixed Shares pursuant to the Existing Arrangement, the anticipated timing of the special meeting, the anticipated strategic benefits of the acquisition of the Fixed Shares and the Floating Shares by Canopy USA, the anticipated increased liquidity of Canopy Shares, the anticipated long-term value of holding Canopy Shares, the ability of Acreage to leverage Canopy's strategic platform and participate in the revenue and cost synergies expected to be achieved by Canopy USA, Canopy strengthening its position as a brand powerhouse, the expectation that the United States is going to be a core market for Canopy, the formation of a pre-eminent global cannabis company, the satisfaction or waiver of all conditions under the Floating Share Agreement and the Existing Arrangement, the timing and ability of Acreage to achieve the milestones under the Amended Credit Facility, and the proposed use of proceeds under the Amended Credit Facility. Risks, uncertainties and other factors involved with forward-looking ‎information could cause actual events, results, performance, prospects and opportunities to differ ‎materially from those expressed or implied by such forward-looking information, including, but not limited to: the occurrence of changes in U.S. federal laws regarding the cultivation, distribution or possession of marijuana; assumptions as to the time required to prepare and mail materials to Acreage shareholders in respect of the special meeting; the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court and shareholder approvals; the ability of the parties to satisfy, in a timely manner, the other conditions to the completion of the Floating Share Arrangement Agreement and the Existing Arrangement Agreement; in the event that the Floating Share Arrangement is not adopted, the likelihood of completion of the acquisition of the Floating Shares pursuant to an alternative transaction; in the event that the Floating Share Arrangement is not adopted, the likelihood of Canopy Growth completing the acquisition of the Fixed Shares under the Existing Arrangements; other expectations and assumptions concerning the transactions contemplated between Canopy Growth and/or Canopy USA, as applicable, and Acreage; the available funds of Acreage and the anticipated use of such funds; the availability of financing opportunities for Acreage and the risks associated with the completion thereof; regulatory and licensing risks; changes in general economic, business and political conditions, including changes in the financial and stock markets; legal and regulatory risks inherent in the cannabis industry, including the global regulatory landscape and enforcement related to cannabis, political risks and risks relating to regulatory change; risks relating to anti-money laundering laws; compliance with extensive government regulation and the interpretation of various laws regulations and policies; public opinion and perception of the cannabis industry; and such other risks disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, dated March 11, 2022 and the Company's other public filings, in each case filed with the U.S. Securities and Exchange Commission on the EDGAR website at www.sec.gov and with Canadian securities regulators and available under Acreage's profile on SEDAR at www.sedar.com. Although Acreage has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Although Acreage believes that the ‎assumptions and factors used in preparing the forward-looking information or forward-looking ‎statements in this news release are reasonable, undue reliance should not be placed on such information ‎and no assurance can be given that such events will occur in the disclosed time frames or at all. The ‎forward-looking information and forward-looking statements included in this news release are made as of ‎the date of this news release and Acreage does not undertake any obligation to publicly update such ‎forward-looking information or forward-looking statements to reflect new information, subsequent events ‎or otherwise unless required by applicable securities laws. There can be no assurance that the Floating Share Arrangement will occur, or that such events will occur on the terms and conditions contemplated in this news release. The Floating Share Agreement could be modified, restructured or terminated. Actual results could differ materially from those currently anticipated due to a number of factors and risks. The Floating Share Arrangement cannot close until the required shareholder, court and regulatory approval is obtained. Investors are cautioned that, except as disclosed in the management information circular of Acreage to be prepared in connection with the Floating Share Arrangement, any information released or received with respect to the Floating Share Arrangement may not be accurate or complete and should not be relied upon. Neither the Canadian Securities Exchange nor its Regulation Service Provider has reviewed and does not accept ‎responsibility for the adequacy or accuracy of the content of this news release.‎ For more information, contact: Steve Goertz Chief Financial Officer investors@acreageholdings.com Courtney Van Alstyne MATTIO Communications acreage@mattio.com US GAAP FINANCIAL HIGHLIGHTS (UNAUDITED) US GAAP Statements of Financial Position US$ (thousands) September 30, 2022   December 31, 2021   (unaudited)   (audited) ASSETS       Cash and cash equivalents $ 26,476   $ 43,180 Restricted cash   95     1,098 Accounts receivable, net   9,466     8,202 Inventory   50,892     41,804 Notes receivable, current   2,500     7,104 Assets held-for-sale   —     8,952 Other current assets   3,843     2,639 Total current assets   93,272     112,979         Long-term investments   34,328     35,226 Notes receivable, non-current   27,343     27,563 Capital assets, net   135,362     126,797 Operating lease right-of-use assets   22,730     24,598 Intangible assets, net   135,807     119,695 Goodwill   30,492     43,310 Other non-current assets   3,563     1,383 Total non-current assets   389,625     378,572 TOTAL ASSETS.....»»

Marijuana is now a burgeoning $20 billion a year industry that's likely to grow to $90 billion in the next five years or sooner. And we're still in the very early days! Ben Rains outlines the various ways that you can take advantage of this seismic shift. Marijuana transformed at lightning-fast speeds from a mostly underground black market into a dynamic, booming, $20 billion a year industry full of public companies. And the best part about investing in legal marijuana right now is that we are still in the very early days.The legal tides have already changed dramatically in a short time and we are on the verge of a truly seismic shift that will only happen once. Heading into 2022, there are multiple marijuana legalization bills being debated and reworked in Washington, D.C.The U.S. is poised to introduce wide-ranging federal cannabis legalization in the near future, on the back of overwhelming bipartisan support. When this happens, the entire industry will change overnight and current projections that call for global marijuana sales reach to $90 billion by 2026 might look super conservative.¹Legalization is Gaining Steam Only a decade ago, recreational pot was totally illegal in the U.S. By the end of 2021, a total of 18 states and Washington, D.C. had legalized adult-use marijuana. Meanwhile, the number of legal medical cannabis states is fast-approaching 40.On top of that, Canada legalized recreational marijuana in 2018, becoming the first major economy to do so. Since then, Mexico has made a series of legal changes that will soon see it operate a large legal pot market. Across the Atlantic, multiple European countries are prepared to legalize nationally.The tiny European nations of Malta and Luxembourg legalized weed near the end of 2021. More importantly, Germany is reportedly ready to legalize marijuana under its new coalition government in the early months of 2022. Italy and a few other countries are showing solid potential to join the legal ranks in the near future. And with every new market, new marijuana firms are sure to emerge, as the dollars flow.Huge Bipartisan SupportGlobal marijuana sales soared roughly 50% to a whopping $31 billion in 2021, based on some recent data, and the U.S. is by far the largest legal cannabis market. The expansion was driven by continued growth in legacy states such as Colorado and California, alongside a wave of relative newbies ranging from Illinois to Arizona. And more states are set to climb on the legal cannabis train in 2022.More importantly, multiple bills are under debate in Washington to federally legalize marijuana. Furthermore, Republicans, the party traditionally opposed to weed, are in the midst of a dramatic, paradigm-shifting transformation at both the state and national level.Multiple GOP lawmakers are pushing for marijuana legalization in states like Ohio and Pennsylvania. On top of that, the first major Republican-led federal legalization effort was introduced in November. The bill grabbed a huge amount of national media attention and could gain steam as more Republicans come on board.The growing number of federal legalization efforts on both sides of the aisle make sense given mounting public support. A total of 68% of U.S. adults are now in favor of legal marijuana, including 50% of Republicans. This is up from just 50% of the entire country as recently as 2013. And just think how hard it is to find any issue nearly 70% of Americans agree on these days.Continued . . .------------------------------------------------------------------------------------------------------Time to Buy Marijuana Stocks!The floodgates are about to open. After waves of pot legalization at the state level, we’re on the verge of bipartisan legislation at the federal level. Many U.S. marijuana companies can then list on exchanges like NYSE and Nasdaq, and the money will flow.  Global sales were already $20.5 billion back in 2020, and they're expected to skyrocket to $90.4 billion by 2026.Zacks recently closed trades of +39.7%, +94.5%, even +147.0% in as little as 4½ months.² A new stock will be released Monday morning that could rival or surpass these performances.Deadline to gain access to our Marijuana Innovators recommendations is midnight Sunday, December 26.Catch Zacks’ live buys now >>------------------------------------------------------------------------------------------------------Not Your Parents’ Pot Smoking dried marijuana has historically been the most common way to consume weed, and it’s still widely popular. Yet, as cannabis emerged from the shadows, people and companies refined existing methods and invented various novel ways to use the plant. In doing so, they greatly expanded their potential clientele, while also raising price points and margins.Marijuana scientists and industry professionals spent years figuring out how to precisely extract THC and non-psychoactive CBD from cannabis plants. These efforts birthed vaporized offerings, edibles, oils, topical creams, beverages, and other new-age marijuana products.Marijuana edibles have come a long way since the stereotypical pot brownies. Today, they come in all shapes and sizes, from gummies in every imaginable flavor to chocolates, mints, spreads such as butter, and beyond. Meanwhile, consumers can buy THC-infused sodas, teas, and much more.The non-smoking space provides consumers comfortable, effective, and extremely discreet alternatives to traditional pot that allow users to know exactly how much they are consuming. This also grants investors ample growth runway since edibles and other offerings cater to people who want THC, along with those looking for non-psychoactive CBD products, which have exploded in popularity as well.Logic suggests tons of potential recreational users might not want to smoke anything. And some recent growth numbers back that up. Edibles showcased massive expansion in 2020 (the most recent available data) in the largest U.S. recreational market, according to California-based marijuana delivery company Eaze.Edibles ended the year as the #1 category on its platform, grabbing 22% of all sales, with edibles ranked as the most popular product line in San Francisco, Los Angeles, and San Diego ahead of flower and vapes.In fact, marijuana’s evolution beyond smoking joints inspired international alcoholic beverage firms to buy pot companies because of the potential crossover, promotions, and other synergies. On the flip side, the growth of legal marijuana has propelled publicly traded Canadian marijuana growers to expand into alcohol, sports drinks, and other consumer products.Meanwhile, the expansion potential for edibles and non-smoking marijuana products on the medical front is largely untapped. Canada didn’t even legalize cannabis edibles until a year after it first rolled out recreational marijuana in 2018.One of the country’s biggest pure-play pot companies only launched its first medical cannabis edibles in August of 2021. As a whole, the edibles and non-smoking arenas are the logical endgame for the entire medical marijuana world because of the ability to consume precise amounts, while not inhaling smoke.Pure-Play Opportunities  Due to the current legal standing, only Canadian pot growers can list on major U.S. exchanges, with huge American companies left to trade over the counter, if at all. Federal legalization will transform the already-massive industry in the blink of an eye.The move will allow U.S. growers to list on the NYSE and the Nasdaq. This will then prompt billions of dollars to start flowing in from institutional investors and other large money managers who have stayed away because of the legal grey area. Legalization is also sure to spur a wave of major mergers and acquisitions, as companies aim to capture more market share through consolidation.U.S. cannabis growers will add to the already constantly-expanding number of pure-play pot stocks to invest in right now. And the Canadian companies have already completed creative deals that provide them instant access to the U.S. market upon federal legalization.Potential investors should also be excited to know that nearly all of the currently-public pure-play marijuana stocks are trading near all-time lows heading into the new year. The entire industry was beaten down in 2021, along with other former covid high-flyers and growth stocks.The downturn recalibrated countless marijuana stocks to enticing levels, especially considering many are projected to post 100% or higher revenue growth in 2022. And that’s not even taking into account the potential for U.S. legalization and beyond.There will, of course, be winners and losers because pure-play pot stocks operate in a hyper-competitive space akin to other consumer packaged goods where marketing, branding, and packaging are paramount. Luckily, the timing is ideal for investors to cash in on the companies that could become the Coca-Cola or Starbucks of marijuana.Easy Way to Pursue Big Profits At Zacks, we're monitoring political developments very closely as well as tracking individual stocks. We're on the brink of legalizing marijuana on the federal level, and this bipartisan push would open the floodgates. Many U.S. companies could then list on exchanges like NYSE and Nasdaq, and money will flow.The trend is unstoppable. Medicinal marijuana is already legal in 36 states with 18 allowing recreational use. It's already legal in Canada and there's movement in Mexico and throughout Europe.As mentioned earlier, global revenue for legal marijuana is expected to explode from $20.5 billion in 2020 to $90.4 billion by 2026.Plus, most marijuana stocks are still trading at big discounts. For investors, this presents a massive opportunity – what are you waiting for? Our approach to this fast-emerging industry is responsible and vigilant, but we look for aggressive growth. Recently, we closed gains of +39.7%, +94.5%, even +147.0% in as little as 4-1/2 months.²Right now you can follow the live buys and sells inside Marijuana Innovators, and be among the first to get in on a new buy that could surpass those performances. I’m posting it Monday morning at 11:05 am ET.Bonus Report: And speaking of industries with explosive growth potential, when you check our marijuana recommendations you are also invited to download Zacks’ new Special Report, One Semiconductor Stock Stands to Gain the Most. From 35 semiconductor stocks, you can get an early look at Zacks’ top pick during today’s chip shortage crisis.We can’t let everyone in on our marijuana portfolio, so your chance to gain access must end at midnight this Sunday, December 26. Sorry, no extensions.See Zacks' Marijuana Innovators Trades and Bonus Semiconductor Report Now >>Happy Investing,Ben RainsEditorBen Rains develops strategies that enable investors to profit from the growing legal market in the U.S. and beyond. He uses his extensive experience and concentrated industry study to direct our unique portfolio service, Zacks Marijuana Innovators.¹ Source for marijuana industry growth estimate: Research and Markets ² The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position.  Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report To read this article on Zacks.com click here. Zacks Investment Research.....»»

You can still get in on the ground floor of the marijuana market, which will only get hotter as more states and countries move toward legalization. Ben Rains shows several ways to invest before the floodgates open. Legal marijuana is a smoking hot growth industry in the U.S., Canada, and beyond. The global cannabis market is projected to soar from $20.5 billion back in 2020 to $90.4 billion by 2026.¹ And these estimates are likely conservative, as the U.S. moves closer to wide-ranging federal legalization and European nations, including economic powerhouse Germany, prepare to do the same in 2022.The best part about investing in legal marijuana right now is that despite all of the progress, there are ample opportunities to get in right near the ground floor given where we are in the legal lifecycle. Plus, many top pot stocks are trading near all-time lows heading into the new year, after they were beaten down in 2021, along with other former covid high-flyers and growth stocks.Still in the Early InningsThe legal recreational cannabis market has come a long way in the last few years. Yet the growth runway remains massive. Eighteen states have legalized adult-use marijuana as of December—up from zero in 2011. Meanwhile, Canada is one of only a couple countries to legalize marijuana nationally and it did so in 2018.Luckily, more U.S. states are poised to join the legal ranks in 2022, while others could add to the number of medical marijuana states to help take the country well above the current 36 states. Crucially, multiple bills are circulating around Washington, D.C. right now that aim to introduce sweeping Federal marijuana legalization, which will be an overnight game-changer and supercharge the space and the stocks.Even Republicans, the party historically opposed to legal weed, have started to roll out their own legalization proposals including one high-profile effort introduced in November. All of this is to say that Washington appears ready to enact some form of Federal legalization soon.The heightened political drive follows increased bipartisan support that matches the polling data—68% of U.S. adults are in favor of legal marijuana, including 50% of Republicans. Legalization at the national level will open the floodgates for U.S. growers to list on the NYSE and the Nasdaq, and for money to pour in from established players far outside the current pot space looking to cash in and make a big splash.Before those floodgates open, savvy investors are starting to focus on companies that are direct plays within the booming marijuana industry. These stocks are primed to continue growing and receiving institutional investment both before and after federal legalization.Continued . . .------------------------------------------------------------------------------------------------------Marijuana Stocks? There’s Never Been a Better TimeToday we’re on the verge of bipartisan marijuana legislation at the Federal level. Once the bill is passed, money is likely to flow into current and brand-new stocks at a rate that has never been seen in this industry.Thirty-six states plus D.C. have already legalized medicinal marijuana and 18 states plus D.C. made recreational use legal. There’s no stopping this trend, and now is the time to join the rush for profits. Global sales are predicted to skyrocket from $20.5 billion back in 2020 to $90.4 billion by 2026.Zacks recently closed marijuana trades of +39.7%, +94.5%, even +147.0% in as little as 4-1/2 months. Plus, new stocks are being lined up that could greatly surpass these gains.²See Zacks' latest pot stocks now >>------------------------------------------------------------------------------------------------------Don’t Touch the Plant Only Canadian marijuana growers can list on U.S. exchanges given the current standing of cannabis at the Federal level. Fortunately, outside of growers and pure-play pot companies, an array of stocks and industries provide access to legal marijuana because they maintain just enough distance from cannabis.Don’t touch the plant stocks also theoretically provide greater stability amid the current legal grey area in the U.S. The growing niche within pot investing includes real estate investment trusts, suppliers and equipment makers, tech firms, product safety and testing operations, pharmaceutical giants, and beyond.Hydroponics & High-Tech Farming Marijuana, even with all of the complicated new ways to consume it, is a plant. Therefore, the companies that directly support the growing of cannabis are some of the most straightforward and essential of the don’t touch the plant stocks.Today’s cannabis companies run grow operations that more often resemble high-tech, spotless computer chip factories than anything close to a farm. Hydroponic gardening or farming, which simply means growing without the use of soil, by utilizing formulated, mineral nutrient solutions in water, is front and center of modern cannabis cultivation.Marijuana is planted in an inert growing media and constantly supplied with nutrient-rich solutions, oxygen, and water, while light, temperature, and carbon dioxide levels are carefully controlled through various gadgets and other devices. Hydroponics allows for year-round growing, larger yields, and nearly complete control of the process.The global hydroponics market, which spans from multi-billion dollar operations to home grows, reportedly hit around $10 billion in 2020, and it's expected to reach well over $20 billion before the end of the decade. Many public hydroponics and indoor farming companies have posted 60% or higher revenue growth over the last several years.Plus, large institutional investors are pouring money into hydroponics stocks, with most holding at least 50% institutional ownership, compared to pure-play pot stocks that are closer to 15% or less.Real Estate Expansion Huge, high-tech marijuana growers require tons of capital and cash to start and operate. Yet, marijuana’s classification under federal law makes running successful U.S. pot businesses complex and cumbersome, especially when it comes to money. Most local and national banks don’t want anything to do with the legal marijuana market because of all the various state laws and expensive compliance standards.A few companies have helped fill the void for firms that don’t have access to traditional banking services. This backdrop enables cannabis-focused real estate investment trusts or REITs to essentially lend millions of dollars to cannabis companies that don’t have easy access to other sources of capital and collect extremely high interest rates for doing so, on long-term agreements. And like all REITs, they are required to distribute 90% of their taxable income to shareholders.Cannabis Tech Technology dominates our lives and the market, so of course, it plays a vital role in legal pot. There are multiple companies that sell cannabis-specific software to help growers, dispensaries, and others operate more effectively and efficiently in the highly-regulated space.Various publicly traded companies offer solutions for compliance, data, taxation, payments, plant tracking, and much more. The opportunity for expansion is huge in the marijuana tech world and a few companies are in the midst of rapid consolidation to try to capture more market share ahead of U.S. federal legalization that will likely require increasingly stringent guidelines.Extracting Profits from Plants The transition from the black market to labs and hydroponics ushered in the age of endless, hyper-specific marijuana strains. Outside of traditional flower that’s smoked, tons of growth is coming from edible products, oils, and other highly concentrated forms of cannabis.In order to transform cannabis plants and marijuana buds into new-age consumption methods, from concentrates to topical creams, detailed and varied extraction processes must be completed. There are various extraction methods that must be performed repeatedly and precisely, often on a massive scale.Extraction is growing more crucial given the global scope and the increasing demand for non-flower products, which includes widely popular non-psychoactive CBD products.Marijuana Testing  Medical-grade and adult-use cannabis products sold in legal markets are required by law to be clearly labeled with ingredients, cannabinoid levels, dosage recommendations, and tons of other information. Like all industries, from food to medicine, tons of testing is involved at various stages of the cultivation process.Cannabis testing is a potentially huge segment and it will garner even more attention at the national level, especially amid a rise in laced black market drugs. The broader field includes regulatory compliance, quality control, research, and beyond. There are currently multiple cannabis testing companies out there, and a few publicly traded names stand out through their exposure to other areas outside of marijuana.Pharmaceuticals and Biotech Far outside of medical marijuana exists the nascent world of cannabis-based medicine. There are a few stocks making waves in this growing field. One such public company sells the first prescription, plant-derived cannabis-based medicine approved by the FDA and the European Commission.The drug is used in the treatment of seizures associated with various syndromes in patients one year or older. Another more home-run style stock has attracted investment for its potential first-in-class therapeutics targeting the endocannabinoid system that aims to address needs in multiple diseases and conditions, including anorexia, cancer, pain, and inflammation.Multiple Opportunities for Investors As mentioned, this space looks to explode from $20.5 billion in 2020 to $90.4 billion by 2026. Yet only a few growers, pharmaceuticals, financial firms, suppliers - both established and start-ups - are the true innovators and offer historic profit potential.So if you don't want to devote constant attention and painstaking analysis to find these often little-known tickers, we can find them for you.Today, as the legalized marijuana floodgates are about to open, you’re invited to take part in our portfolio service Zacks Marijuana Innovators.This approach is responsible and vigilant, but we look for aggressive growth. Recently, we closed gains of +39.7%, +94.5%, even +147.0% in as little as 4-1/2 months.²Right now you can follow the live buys and sells inside Marijuana Innovators, and be among the first to get in on new buys that I’m lining up.Bonus Report: Speaking of industries with explosive growth potential, when you check our marijuana recommendations you are also invited to download our Special Report, One Semiconductor Stock Stands to Gain the Most. From 35 semiconductor stocks, you can get an early look at Zacks’ top pick during today’s chip shortage crisis.We can’t let everyone in on our marijuana portfolio, so your chance to gain access must end at midnight this Sunday, December 26. Sorry, no extensions.See Zacks' Marijuana Innovators Trades and Bonus Semiconductor Report Now >>Good Investing,Ben RainsEditorBen Rains develops strategies that enable investors to profit from the growing legal market in the U.S. and beyond. Ben uses his extensive experience and concentrated industry study to direct our unique portfolio service, Zacks Marijuana Innovators.¹ Source for marijuana industry growth estimate: Research and Markets ² The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position.  Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report To read this article on Zacks.com click here. Zacks Investment Research.....»»

The Maryland Medical Cannabis Commission said it plans to move ahead with accepting applications for new medical marijuana growing and processing businesses, despite one firm's effort to block the industry expansion. The commission, which regulate.....»»

The Cooper Companies, Inc. (NYSE:COO) Q2 2023 Earnings Call Transcript June 1, 2023 The Cooper Companies, Inc. beats earnings expectations. Reported EPS is $3.08, expectations were $3.03. Operator: Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to The Cooper Companies […] The Cooper Companies, Inc. (NYSE:COO) Q2 2023 Earnings Call Transcript June 1, 2023 The Cooper Companies, Inc. beats earnings expectations. Reported EPS is $3.08, expectations were $3.03. Operator: Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to The Cooper Companies Second Quarter 2023 Earnings Conference Call. [Operator Instructions] Kim Duncan, VP of Investor Relations and Risk Management, you may begin your conference. Kim Duncan: Good afternoon, and welcome to Cooper Companies Second Quarter 2023 Earnings Conference Call. During today’s call, we will discuss the results and guidance included in the earnings release and then use the remaining time for questions. Our presenters on today’s call are Al White, President and Chief Executive Officer; and Brian Andrews, Chief Financial Officer and Treasurer. Before we begin, I’d like to remind you that this conference call contains forward-looking statements, including all revenue and earnings per share guidance and other statements regarding anticipated results of operations, market or regulatory conditions or trends, product launches, operational initiatives, regulatory submissions and closing or integration of any acquisitions or their anticipated benefits. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and are subject to risks and uncertainties. Events that could cause our actual results and future actions of the company to differ materially from those described in forward-looking statements are set forth under the caption Forward-Looking Statements in today’s earnings release and are described in our SEC filings, including Cooper’s Form 10-K and Form 10-Q filings, all of which are available on our website at coopercos.com. Also as a reminder, the non-GAAP financial information we will provide on this call is provided as a supplement to our GAAP information. We encourage you to consider our results under GAAP as well as non-GAAP and refer to the reconciliations provided in our earnings release which is available on the Investor Relations section of our website. Should you have any additional questions following the call, please e-mail ir@cooperco.com. And now I’ll turn the call over to Al for his opening remarks. Albert White : Great. Thank you, Kim, and welcome, everyone, to Cooper Companies Second Quarter Fiscal 2023 Conference Call. This was another strong quarter with CooperVision and CooperSurgical both outperforming expectations. For CooperVision, we reported record quarterly revenues and our ninth consecutive quarter of double-digit organic revenue growth. For CooperSurgical, we reported record quarterly revenues and our fertility business reported its tenth consecutive quarter of double-digit organic revenue growth and earnings exceeded expectations. Our teams are delivering impressive consistent growth, and we’re seeing nice momentum. So we remain very positive about the future. Moving to the numbers. Consolidated revenue reached a record quarterly high of $877 million. CooperVision posted revenues of $589 million, up 10% organically, and CooperSurgical posted revenues of $288 million, up 5% organically. CooperVision’s growth continues to be led by our daily silicone hydrogel and myopia management portfolios, and CooperSurgical’s growth was led by our fertility and OB/GYN medical device portfolios. Non-GAAP earnings per share were $3.08. For the quarter and reporting all percentages on an organic basis, CooperVision’s revenue Growth was strong and diversified. By geography, the Americas grew 6%, EMEA grew 7% and Asia Pac grew 19%. Results were driven by new product launches, expanded product ranges, market-leading flexibility and growth in key accounts. Within categories, torics and multifocals remain especially healthy with both posting growth of 15%. Within modalities, daily silicone hydrogel lenses grew 17% with especially strong performance from MyDay. Daily silicone hydrogel lenses continue to be the main driver of growth for the contact lens industry, and we offer the broadest portfolio with MyDay and clariti available on a wide range of spheres, torics and multifocals. And lastly, our silicone hydrogel monthly and 2-week lenses, Biofinity and Avaira Vitality reported growth of 5%. Turning to products. The U.S. rollout of our latest innovative offering, MyDay Energys is going exceptionally well. This premium lens caters to the demands of today’s lifestyles by incorporating DigitalBoost technology to alleviate the impacts of digital eye strain. Interestingly, we’ve been receiving a lot of positive feedback that patients in their 20s and 30s really like this lens which is great news as the original Biofinity Energys has been more heavily used by patients in their 40s. Given almost all of us are spending considerably more time on screens, which reduces blinking and causes eyes to dry out and become uncomfortable, it’s not surprising that wearers of all ages are appreciating the DigitalBoost in their MyDay Energys. Meanwhile, MyDay multifocal sales remain robust, and we’re seeing great momentum in new geographies as the lens becomes more readily available in EMEA and Asia Pac. I’m happy to report these launches are proceeding better than expected with feedback from customers and practitioners remaining very positive. Our MyDay Toric parameter expansion rollout in North America is also continuing successfully and our recent launch in EMEA is ahead of schedule. Given the success of this product, we’ll be increasing availability throughout EMEA, and we’re looking forward to launching in Asia Pac in the near future. With almost 4,000 SKUs, MyDay Toric has set the industry standard with the widest daily toric range in the market by a wide margin. With this broad range, it’s providing many 2-week and monthly toric wearers the option to enjoy the freedom of wearing a daily contact lens for the first time in their lives. To conclude at MyDay, this technologically superior product family is performing exceptionally well and momentum is strong. And lastly, within the daily segment, our clariti family of lenses continues to perform well by offering a high-quality option at a mass market price point. Outside of dailies, demand for Biofinity remains healthy, led by torics, multifocals and extended range offerings. We still have some capacity challenges. But with new production continuing to come online, we remain in good shape to meet ongoing demand. Moving to myopia management. We posted revenues of $30 million, up 36%, with MiSight up 49%. This slightly exceeded expectations and keeps us well on track to reach our goal of $120 million to $130 million this year. MiSight and Ortho-K sales were strong around the world, except China, where we didn’t see a rebound until late in the quarter. Regarding MiSight specifically, we’re seeing improving performance as we increase availability in key accounts, target practices with higher levels of pediatric patient flow and integrate the sales process into our regular sales channel. All this bodes well for MiSight, but also for our other products as there’s a nice halo effect when MiSight practitioners accelerating their use of other CooperVision lenses. It’s important to remember that MiSight is the first and only FDA-approved contact lens for myopia control and the product is backed by extensive clinical data. This is a critical differentiator as the proactive management of myopia become standard of care within the eye care community to help reduce the progression of myopia in children along with reducing the risk of long-term eye health problems associated with myopia, such as cataracts, retinal detachment and macular degeneration. To finish on CooperVision, the contact lens market grew 12% in calendar Q1, with CooperVision growing faster at 14%. We expect the markets to remain healthy, supported by the macro growth trend and more people needing vision correction. It’s estimated that 50% of the global population will have myopia or near-sightedness by the year 2050 up from roughly 34% today. This is driven by the increasing use of digital screens, among other factors. And when you combine this with the ongoing shift to silicon hydrogel dailies, the increasing focus on higher value products such toric to multifocals and higher pricing, we expect many years of solid for the industry. Within this, we expect CooperVision to remain a leader with its robust product portfolio and growing product launches, fast-growing myopia management business and leading new fit data. Moving to CooperSurgical. This was another strong quarter. Our fertility business posted sales of $125 million, up 11% organically for its tenth consecutive quarter of double-digit organic growth. Success was seen throughout the product portfolio as the team executed exceptionally well with our diverse offerings within consumables, capital equipment, reproductive genetic testing and donor activity. Regionally, the Americas and EMEA continue to lead growth and the future is bright as we have solid momentum in both regions. Asia Pac is also preforming well and we are excited about the potential of that region. With the uncertainty of the Cook transaction, we do have work to do in that region to build out our footprint and we will do that. In this light, we’re currently doing targeted investment activity, while also exploring ways we can advance efforts more quickly. Overall though, we’re well positioned to maintain success given our strong team, diverse portfolio and global momentum. Regarding the broader fertility market, we compete in a segment that’s now over 2 billion in annual sales and we expect strong growth for many years to come. This industry is unique in that it has multiple growth drivers, starting with women delaying childbirth. The average age of a woman’s first birth in the U.S. and within several other developed countries now stands at 30 years old, and Asia is a key factor contributing to the need for fertility assistance. Other growth drivers include improving access to treatment, increasing patient awareness, increasing fertility benefits coverage and technology improvements for both male and female in fertility challenges. The World Health Organization just released updated data showing that the prevalence of infertility affects more people than we thought, with approximately 1 in 6 people having experienced infertility at some stage in their lives. So the macro trends clearly support this industry’s growth. Moving to office and surgical products, which includes OB/GYN Medical Devices, stem cell storage and PARAGARD, we posted sales of $163 million, up 1% organically. Within this, OB/GYN Medical Devices reported excellent results growing 11%, driven by positive trends in patient activity and strength in several core products. In particular, our labor and delivery group continued performing really well. Our stem cell storage business grew 3%, in line with expectations. Our current educational campaign just starring Chrissy Teigen highlights the importance of preserving newborn stem cells and we’re really happy with the positive feedback, and we’re looking forward to that effort gaining more traction. Meanwhile, PARAGARD declined 15%, primarily due to buy-in activity from the price increase in Q1. Our IUD revenues remain a challenge, and we’re continuing to not expect any unit growth in PARAGARD this year. So any growth we do see will be driven by price. To conclude on CooperSurgical, it’s with great pride that we say that every minute somewhere around the world, a baby is born using CooperSurgical products. Our business makes a difference in people’s lives, and we love that. We’re also operating in several markets that have fantastic long-term sustainable growth characteristics, such as fertility. So we feel good about where we’re positioned and what the future holds. Before turning the call over to Brian, let me summarize by saying this quarter really highlights the stability and consistency of our businesses. CooperVision posted its ninth consecutive quarter of double-digit growth and CooperSurgical’s fertility business posted its tenth consecutive quarter of double-digit growth, and both businesses reported record quarterly revenue. Our momentum is strong. Our investments are yielding solid returns and our management team is fully engaged in executing at a high level. And lastly, I hope everyone has had a chance to read our recent ESG report, which highlights a lot of accomplishments. Advancing our ESG efforts is an important part of Cooper’s culture, and I’m proud of the success we’ve had and excited about what we’ll be accomplishing in the future. And with that, let me turn the call over to Brian. Brian Andrews : Thank you, Al, and good afternoon, everyone. Most of my commentary will be on a non-GAAP basis, so please refer to our earnings release for a reconciliation of GAAP to non-GAAP results. Second quarter consolidated revenues were $877 million, up 6% as reported or up 8% organically. Consolidated gross margin was up 40 basis points to 67.1% driven by currency improvements. Operating expenses grew 9% to 43.5% of revenues and consolidated operating margin was in line with expectations at 23.7%. This was down from 24.5% last year, primarily due to commercial investments and distribution. Below operating income, interest expense was $26 million, and the effective tax rate was 13.9%. Non-GAAP EPS was $3.08, with roughly 49.8 million average shares outstanding. To summarize the P&L this quarter, revenues came in ahead of expectations, while margins met expectations. The net impact from non-operational items, such as FX, interest expense and taxes was slightly negative against our initial expectations. Overall, we exceeded our consolidated EPS expectations by roughly $0.06 and we’ll pass along that in guidance. Free cash flow was $51 million, including CapEx of $74 million. Net debt decreased to $2.51 billion. And during this last quarter, we fixed the interest rate on an additional $300 million of debt. So we’re now — we now have $1.3 billion fixed, going out roughly 2 to 4 years. Regarding 2023 guidance, we’re increasing expectations for revenues and earnings by incorporating our Q2 revenue and earnings beats. This results in consolidated revenues of $3.51 million to $3.57 billion, up 7% to 9% organically, with CooperVision revenues of $2.37 billion to $2.4 billion, up 8% to 10% organically, and CooperSurgical revenues of $1.15 billion to $1.17 billion, up 5% to 7% organically. Non-GAAP EPS is expected to be in the range of $12.66 and to $12.96. Interest expense is expected to be around $110 million, assuming another 25 basis point rate increase by the Fed this month, and the effective tax rate is forecasted to be slightly below 14.5% when incorporating Q2. Within this, we’re continuing to invest in our businesses to support long-term growth objectives. Demand across both businesses remains strong and our long-term growth trends are very positive. Before concluding, let me add that we took a $45 million charge this quarter for the breakage fee associated with the pending acquisition of Cook Medical’s reproductive health business. We now believe it’s probable that this transaction as originally contemplated does not close. We are still working on the deal, though, and we’ll provide updates as we have more information. In conclusion, this was another strong quarter. We’re very happy with the consistency of our businesses, and we have great momentum. We’re closely monitoring expenses and we’ll continue to do so, but we’re also investing to drive long-term sustainable revenue growth. We’re taking guidance up again and remain positive, we’ll execute at a high level, delivering strong operating results through the back half of this year and into next year. And with that, I’ll hand it back to the operator for questions. Q&A Session Follow Cooper Companies Inc. (NYSE:COO) Follow Cooper Companies Inc. (NYSE:COO) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions] Your first question comes from the line of Jeff Johnson with Baird. Jeffrey Johnson : So Al, I know when we look at like the GSK data that sell-out data, you guys and everybody else kind of report sell-in data. So it’s never apples-to-apples in that, but I think it’s pretty clear January was a very strong month for contact lenses. It really was across all of medtech. April, obviously, a weaker month. So just maybe help us understand kind of the gating throughout the period of the quarter you just reported February, March, April and then maybe any updates on what you’ve been seeing so far in May? And just kind of the range of implied guidance for CVI now kind of 6% to 10% in the back half, just how you’re feeling about the low end versus the high end of that range? Albert White : Yes. And you’re right, January was a really strong month. As we work through the quarter, it was okay. I mean, February is a good month, March. April was a weaker month for us. You can kind of see that if you look at the calendar quarter compared to the fiscal quarter for us because we grew in the calendar quarter 14% and then grew 10% in the fiscal quarter. So when you trade those months up. So you’re right, April was a little weaker. May has been a good month. We did have a little — some stuff moved kind of from April into May, but May has been a good month for us. So we’ve seen the contact lens marketplace at least for our business rebound in the month of May. So that’s been a positive. Jeffrey Johnson : Okay. And then maybe just as a follow-up, if you can address that CVI guidance, implied in the back half to 6% to 10%, just kind of high and low end where your confidence is there. But the real follow-up question I wanted to ask was on pricing. It seems talking to Alcon and some of your other competitors looking at some of the pricing data we have for your lenses, there’s a good price tailwind this year for, I mean, probably 2 to 3 points, something like that. Is that about the ballpark you’re expecting? And then secularly or longer term, how comfortable are you if we stay in a persistent inflationary environment that you can maybe keep up 2%, 3% pricing a year for the next few years? Albert White : Sure. Yes, I think you’re spot on. I think that 2% to 3% net pricing, I’m talking about net pricing is the way to look at it. The actual pricing that we’ve seen out there has been higher. The actual price increases has been higher. But if you look at the rebates and everything else, 2% to 3% is probably a good way to look at it right now. I think that’s going to continue. I think that we’re probably a little bit behind our competitors in that because we do have a lot of large contracts, especially some of the bigger store brand contracts that are multiyear contracts. So as those renew, we’ll look at opportunities to adjust pricing on those. But I think that you’re seeing that now. And frankly, I think you’re going to see that for the next several years given supply constraints within the industry in general. If I look at our performance in the kind of back half of the year, the 6% to 10% you’re talking about for CooperVision, I expect to be at the higher end of that range unless something happens to derail that. It’d have to be something unexpected, right? Some economic event or something out there. I mean we spent some time even this past week, it’s been a little bit of a tough time for us coming up with some of the guidance and so forth with the debt ceiling and all the other activity that has been going on here recently. But no, we have good momentum. I feel optimistic that we’ll continue to put up strong revenue numbers. Operator: Your next question comes from the line of Larry Biegel with Wells Fargo. Lawrence Biegelsen : Yes, I guess I’ll ask the question on the guidance first here. The top line, you raised the top line and the bottom line by the amount of the beat in the quarter. I guess I would think FX was a little more favorable, particularly on EPS. Brian, maybe you could help us with that bridge how much currency changed from last quarter to this quarter for fiscal ’23? And I guess the question is why not raise by a little more than the beat? And I had one follow-up. Brian Andrews : Larry, I’ll take the currency question. Currency is kind of starting to move in our favor as we were working through the quarter and then they retraced. I mean there was a little bit of positive — very little positive sort of to the P&L from revenues down to OI. But really, the impact that we saw in the quarter was a negative tied to our FX losses below the line. So we had — as we talked about before, we’re hedging some of our material currencies but we still have several currencies and smaller exposures that we’re not hedging. And so we had a loss below the line that took our earnings down to $3.08, would have been a little bit better. But we basically adjusted for the currency in the quarter, but the impact for the second half of the year for currency strangely or interestingly enough, kind of all netted to being sort of the same. So we’re still looking at a 2.5% or roughly 2.5% headwind to revenues for the year and kind of a weaker 1% tailwind to EPS for the year. . Lawrence Biegelsen : And why not raised by more than the beat? Brian Andrews : On EPS? Lawrence Biegelsen : Yes. Brian Andrews : Well, we raised by the operational — the net beat. But with everything, as Al just said, with the macro uncertainty, Fed, FX, recession, we just decided — look, we’re exercising prudent in setting guidance. The good news is that we’re not seeing demand or behavior shifts. And since gross and operating margins fall in as expected and things are progressing, we’re just exercising some caution in light of the macro. Lawrence Biegelsen : That’s helpful. Just, Al, on my follow-up here. Asia Pac, plus 19%, really strong. And myopia management, if I heard correctly, the $30 million up 5% — $5 million, I’m sorry, sequentially. That was one of the strongest sequential growth with absolute growth increases we’ve seen in a while. Just talk about the drivers in Asia Pac and myopia management and the sustainability. Albert White : Yes. Interestingly on myopia management, it was a good quarter, and we’re gaining some traction in our MiSight, finally. We talked about it for a long time. It’s great to finally be gaining some real traction. And interestingly, it was not China. We actually struggled in China with MiSight this quarter until the very end of the quarter. So the MiSight was being driven by success here in the U.S. and throughout Europe were big drivers, in some of the markets in Asia Pac. So I think we’re in good shape with our myopia management business, and I’m expecting Q3 to be a good quarter, Q4 to be a good quarter. As I was saying, I mean, we’re certainly in good shape to hit, if not beat our $120 million to $130 million “guidance” range for myopia management. Asia Pac, we’re in good shape. I would say Asia Pac, China being a little bit different if I look at our regular lenses and that it was more of a contributor in terms of our regular sales. But no, Kathy is doing a great job running that business, and we finally have some momentum going in Asia Pac, and I think we’re going to continue to put up good quarters as we move through the back half of this year. Operator: Your next question comes from the line of Joanne Wuensch with Citi. Joanne Wuensch : Can we pick up part PARAGARD a little bit because I want to make sure that I understand what’s going on there? Is this another setup where you’ve got 4 quarters of pricing headwinds and then you start to grow again? Or how do I think about that? Albert White : No. It’s a great question. No, it won’t be that way. I would expect PARAGARD to grow here in Q3 and Q4. And for us, it kind of put up low single-digit growth probably for this year. We did have the tough quarter here in Q2, obviously. But some of that was tied to kind of inventory in the channel, some of that kind of movement around the price increase. So I wouldn’t necessarily read too much into that. I would kind of restate what I’ve said on some of the prior quarters. We’re not envisioning unit growth there, but I still think we’ll post an okay Q3, okay Q4 and post growth for the full year. Joanne Wuensch : Excluding PARAGARD, is there a way to describe how the rest of that business is doing because that was pretty much really the weak link in the quarter? Albert White : Yes. Well, obviously, fertility really strong. Just — that team is doing an amazing job, just consistent strong performance and it’s really diversified around the world and by product so — or product family. So fertility in good shape, we should continue to do well in fertility. Our med device business is doing really well, kind of our traditional OB/GYN Medical Devices. We’ve seen some strength there in the labor and delivery side and some of our surgical products doing really well. So yes, I mean, outside of PARAGARD, it was — that was a pretty good quarter. I mean, Holly’s got that business humming over at CooperSurgical. So expecting them to continue to put up good results. Operator: Your next question comes from the line of Anthony Petrone with Mizuho. Anthony Petrone : And maybe just a couple of clarifying on PARAGARD. Can you remind us, Al, just the price increase that was put in earlier in the year and the extent of the volume declines, I guess, through the first two quarters of the year? So that would be my first question. And then maybe just in terms of overall share in contact lenses, at least according to our numbers, it looked like certainly, there was gains for Cooper in torics as well as multifocals but perhaps maybe a little bit of slippage in dailies, Again, just looking at the fiscal at plus 8%, and it looked like competitor data for dailies was a little bit higher than that. So just an overview on the share trends through May in lenses? Albert White : Sure. Sure, Anthony. The PARAGARD price increase, I think, was 6% that we put in place. Yes, from a volume perspective, I don’t know if I would highlight necessarily too much on volume. What you’re seeing here in Q1 and the quarter we just had, and frankly, you’ll see a little bit here in kind of Q3 is tied more to channel inventory, whether it’s through the distributor or down actually into the physician’s office, you’re seeing some fluctuations and not driving our as-reported results. So I think if you look through that, which I try to do, right, and say, regardless of inventory, how are we looking at actual volume? That’s where volume has been flat, like we just haven’t really seen those increases. And I’m not anticipating that we’re going to here in the near term. So again, I said it last quarter, I’d say it again, I hope I’m wrong on that and being conservative. But as it as of right now, I think that’s where we stand with PARAGARD. But again, a lot of movement tied to inventory. So I do think that we’ll get growth in Q3 and Q4 to be clear. And that I do think we’ll post some low single-digit growth in PARAGARD for the full year. On contact lenses, yes, I mean this was a great quarter. Now if you look at it and you kind of step back and you say Biofinity and Avaira grew 5%. You can see our non-single-use sphere other grew 2%. So that’s what you’re getting to, Anthony, right, which is kind of the sphere side of things. We did have some — a couple of larger Biofinity orders that fell from April into May. And you had quite a bit of Biofinity Sphere activity there. So I wouldn’t read too much into that. I mean if you’re thinking about quarter end, yes, that number came in a little bit lighter, but we’ll pick that up as we started off Q3 with a good quarter from a good perspective when you look at that part of our business. Operator: Your next question comes from the line of Robbie Marcus with JPMorgan. Robbie Marcus : I wanted to start with free cash flow and cash flow generation in general. It’s been a little low the past few quarters. Maybe speak to the reasons behind it? And how you’re thinking about cash flow generation going forward? Brian Andrews : Robbie, yes, sure. So operating cash flow continues to drive higher. We do have some things that are driving free cash flow a little lower. One of them, obviously, is CapEx. It’s quite higher than in years past. Some other larger components that are driving it, that are having an impact downwards are frankly, interest. I mean our interest expense is going from doubling from $53 million to $110 million last year to this year. Taxes over the course of — depending on what time horizon you’re looking at, our tax rates keep going up. Our inventory levels from last year to this year also are going higher. So that’s having an impact as well. But overall, I mean, our operating cash flow continues to be strong and expect to deliver still a strong free cash flow for this year. Just offsetting, obviously, the operating cash flow, it’s just the higher CapEx which we’ve been talking about around $400 million this year. Robbie Marcus : Great. And then maybe on new fits. You talked about strong global new fits. Are you seeing any divergence in different regions? Just trying to get a sense of the future of the business and the trends there. Albert White : From a new fit perspective, no, not really. In terms of regional, we’re seeing pretty good activity there. There’s still a lot of demand on optometrists for appointments and so forth and the new fit activity is pretty strong. And our CooperVision new fit activity is looking really good right now. We’re winning certainly our fair share when it comes to new fit. So I’m pretty optimistic from that perspective. Operator: Your next question comes from the line of Matthew Mishan with KeyBanc. Brett Fishbin : This is Brett on today for Matt. Just wanted to ask a little bit about the trends in Europe given how robust several of the historical quarters looked a little bit of a deceleration here. Just wondering if there was anything driving that step down? . Albert White : Brett, we have — we’re #1 in Europe when it comes to contact lenses. We’ve got a fantastic franchise there that — team has done a great job not only building up our infrastructure, if you will, around a lot of the independent optometrists but also with some of the key accounts where we’re especially strong. So no, I think that the European market is doing well. We have not seen a pullback in that market tied to any economic concerns or anything. The contact lens market is strong there, and we’re kind of leading the charge, if you will. And I think we’ll continue to do that. Brett Fishbin : All right. And then just turning to MiSight. It sounded like trends in Americas in retailing fee accounts was actually the driver of the step up this quarter. So is there — do you see a potential maybe to drive some upside to that guidance range given China is now — it seems like it’s starting to recover and might actually be an incremental driver to the positivity you’re seeing in the Americas? Albert White : I guess, short answer to that would be yes. Yes, we’re in a better spot when it comes to MiSight today than we were six months ago when we initiated that 120 to 130. So I think we’ve got a good shot to be at the higher end of that range or even push above it. Brett Fishbin : All right. Awesome. And then last question for me. I think you touched on some of the continued supply chains in the industry being a positive driver for pricing growth. So I was wondering if there are any pockets of particular issues from other companies that might be benefiting Cooper given the investments you’ve been making in your own production? Albert White : Yes, that’s a tough one. I don’t think there’s too much there in terms of disruption from others. There are supply chain challenges, I think that we all have right now. Our competitors do and we do, too, in terms of just being able to produce enough product. I mean, in a lot of cases, I think a lot of us are selling everything that we can make right now. So not only are we dealing with whatever supply chain issues you could have associated with distribution and everything else and all those are certainly lightening up. But we’re also dealing with demand. I mean I’ll talk about ourselves, right? We’re a business that’s been healthy for a long time, growing around 7%. And now we pushed up what our ninth straight quarter of double-digit growth. That puts pressure on the business in terms of having to make more product and run more products through your distribution channels. So there’s just a natural challenge on that from a supply chain perspective. I think it’s industry-wide, and we’re all going to continue to deal with it because I think we’re all increasing our production capabilities and kind of expanding our capabilities throughout our logistics networks. But it takes time, it takes effort, and the demand is there, right? So we’re going to continue to see strength in the contact lens industry. I don’t think you’re seeing too much in terms of one person struggling so much as someone else is picking up business, as much as you’re seeing supply chain issues or challenges just because of the global demand of the contact lens industry. Operator: Your next question comes from the line of Jason Bednar with Piper Sandler. Jason Bednar : Al, I wanted to ask on Biofinity toric. We’ve been hearing some greater channel inventory shift from a competing toric lens to Biofinity toric. I know it’s been going on for a while, but are you able to quantify or do you have any metrics around maybe what kind of share you’ve picked up with Biofinity toric? How much of this is maybe adding to the toric revenue growth was pretty impressive in the quarter? And then sorry to pack a few into here, but how much tail is left from this conversion to toric and whether or not you’re seeing any again, channel inventory shift with toric or even more broadly? Albert White : Yes, there’s probably something there, but I just don’t put too much weight on it, honestly. I mean we’ve had some competitors pull back a little bit on some of their SKU ranges and we have those SKU ranges. As a matter of fact, our Biofinity toric family is the widest toric offering out there. And when you roll in things like the tort multifocal and so forth, I mean, it’s just an amazing franchise right now. We’ve been building that franchise out for a number of years. We spent a lot of time and a lot of money on the manufacturing side and also on our distribution network to be able to manufacture and distribute all those products in a wide SKU range. So do I think that we’re maybe getting a little bit of help because some competitors or a competitor has pulled back on some of their SKU ranges? Yes, probably. But this isn’t coming because of like one quarter or an action as somebody took. This is coming because of a multiyear strategy that CooperVision is deployed to drive growth in our torics. I mean, Jerry Warner runs that business for us does a fantastic job. He’s just laid out a great strategy there in terms of torics and multifocals, appreciating that the market is growing. That portion of the market is growing faster than the sphere market, and it’s a really sticky and great market. So I mean, we’ve, again, invested a lot of time and money for a lot of years to be in the position we’re in. And I give the team a lot more credit around that activity than I do saying that a small movement by a competitor is allowing us to take a lot of share. Jason Bednar : Okay. That’s helpful. And then maybe if you can just follow up your comment on whether or not you’re seeing any share shift or — sorry, not share shift but inventory shift in the channel at all? But then separate follow-up. I actually wanted to ask another one on PARAGARD here. I think you’ve probably tried every which way to get this product line to grow. We’ve seen different advertising sales recondition, greater commercial focus the effect here has been tough. Does there come a point where you’d look to evaluate different options for PARAGARD or maybe better said in the strategic and financial fit still make some good asset for Cooper? Albert White : Yes. On the channel inventory side, I’d say we probably ended our fiscal quarter a little light on channel inventory. I kind of referenced that a little bit with some of the Biofinity shipments. But I’d say we were probably a little lighter from a channel inventory perspective, nothing to go crazy about but since you’re asking. On PARAGARD, yes, boy, we bought that. We put some money into it. I think we’ve gotten a great return on that asset. But having said that, we put some money into it. We put some TV advertising out there and a lot of different marketing campaigns and so forth to really try to energize the non-hormonal IUD market. We had some success on that, not a ton, you kind of get to where you’re at today. There’s some fundamental shifts in the market that are causing challenges for us. You’re not seeing women go into their gynecologists as much as they were pre-COVID for kind of annual wellness exams and so forth. And as that’s happened, combined with the fact that a lot of birth control options, especially birth control pills, the availability has increased or the ease, if you will, to get that first control has improved. It’s hurt the IUD market, and it’s hurt PARAGARD. So we’re evaluating that like we always do right now. I mean that’s a good product. It does okay in the marketplace, right? It’s a decent fit in terms of our women’s healthcare franchise. But we’ll always evaluate that just like we do everything else in terms of kind of our long-term strategic planning. Operator: Your next question comes from the line of Jon Block with Stifel. Jonathan Block : Great. Really good quarter, but just despite the top line beat, you have in a little bit hot on OpEx as a percent of sales relative to our estimate. And if I look at sort of fiscal ’23, I think OpEx as a percent of sales, you might be up roughly 100 bps from last year. Brian, I think you mentioned some investments. Is that CVI, is that CSI? Where are those investments being made? And does that sort of remain front and center for the next couple of quarters until sort of you lap them, call it, exiting fiscal ’23, we can think about recapturing the leverage into fiscal ’24? Brian Andrews : Yes. Good question. Thanks, Jon. Yes. I mean I’d say our OpEx kind of — the total OpEx dollars came in kind of where we expected along with our gross and operating margin results. We continue to invest in commercial activities, including sales and marketing tied to the product launches and the rollouts that I mentioned in his prepared remarks. We had also continued fertility investments, and that includes kind of building out more of our competencies in various regions like Asia Pac. And then lastly, I mean, we still have inefficiencies that we expected in distribution that were higher year-over-year, and I’ll just mention sort of the challenges that we have when revenues continue to drive higher, and the strain it puts on distribution. But we’re working through those challenges. And I’d say total OpEx, again, landed where we expected, but our real focus is on driving operating margin expansion. And like I’ve said before in the last call, and I’ll say it again here, our operating margin at the midpoint of our constant currency revenue guide, we’re expecting constant currency OI growth of around 11%. So as long as we’re driving that operating margin expansion, and that’s in this year, driven in large part from gross margin expansion, then we’re putting up a leveraged P&L. And so that’s the goal for this year. Jonathan Block : Got it. Fair enough. And maybe just to shift gears and this one might be with you — for you. But within APAC, I know you’re overweighted to Japan, but I sort of want to take the opportunity to ask what you’re seeing in China, the slope of the business of late. I just think there’s been a lot of headline noise, news. And so just love to get your thoughts on what you’re seeing on the ground in the sort of April and to May timeframe? Albert White : Sure. Yes. We’ve seen some improvements in China, but I mean, China kind of even now comes and goes a little bit. When you look at it from our perspective, it’s probably two different stories, right? Because you have our regular contact lens business there, the retail side, if you will, which we’ve seen some traction on and we’ve seen some improving results. And then you have the myopia management side, which is MiSight but also a lot of Ortho-K that gets sold through the hospital. That’s a different channel. So I do think that we’re seeing some improvements in that channel, in the hospital channel, which is actually going to help us a little bit on Ortho-K and MiSight. The other side, the retail, the general population, if you will, kind of comes and goes a little bit. Now having said that, Jon, remember, that’s a pretty small market for us. I mean, some of our competitors are — have much bigger shares in China than what we have. Operator: Your next question comes from the line of Steven Lichtman with Oppenheimer. Unidentified Analyst: This is Ron on for Steve. I wanted to ask you guys about SightGlass a little bit. What is your estimate for the approval timing? And with MiSight being in the field for a bit now, how are you thinking about how SightGlass will be positioned in the field versus it? Albert White : Yes. So no real update on SightGlass when it comes to regulatory approval here, waiting to receive the final four-year data and compile that and then take next step. So nothing really to add from that perspective. As you know, we’ve got a great partnership with EssilorLuxottica on that product. And the product has been launched in many markets around the world, and it’s selling and it’s doing well. That’s within the joint venture itself. So I continue to be really optimistic about that product long term. But that is within that joint venture, not in our P&L other than the investment activity, gains or losses below the line. When it comes to MiSight and how that looks, I mean, to me, glasses are going to do nothing but be a positive for the myopia control market. We want people getting into myopia control. They need to be wearing the product. So children need to be wearing those glasses. Compliance is really important as children get into myopia control, let’s say they do that a lot at 5, 6, 7, 8, 9 10. Certainly, as they get to become teenagers, and certainly anyone who has compliance as an issue, you’re going to want to be moving to contact lenses. So anything that we can do to drive the myopia control market forward and increase, it is a positive for us, positive for MiSight, positive for the industry. Unidentified Analyst: That’s really helpful. And I guess I have a follow-up on that. You guys mentioned that the headwinds on myopia in China are kind of abating towards the end of the quarter. Can you say what changed like towards the end? What was the shift because China has been a headwind on myopia for a little bit? Albert White : Yes. It’s really those products are sold through the hospital channel. So you need the hospitals to kind of open up and have more kind of, if you will, availability for children and so forth. You need to transition back to a more traditional, normal hospital environment within China. So I think that’s what we’re seeing right now, right? As COVID starts to get in the rear view mirror and you’re getting patients going back into the hospital for more traditional needs and so forth, you’re opening up some space for optometry and that’s helping with the fittings. Operator: Your next question comes from the line of Patrick Wood with Morgan Stanley. Patrick Wood : Amazing. Two left for me, please. I guess the first one is on the fertility side, maybe just zooming out, if we just hypothetically say Cook doesn’t close, how committed are you to APAC as a region? You hinted by saying maybe some accelerated pathway to growing that. I’m just curious if you could put a little bit of meat on the bone to how you feel about the region, how critical that is for you and fertility going forward? Albert White : Yes. That’s a really good question. That is an important region, and we are going to invest in that region. So we are right now — we’re going to continue to invest there. One of the primary reasons we were doing the Cook transaction was for growth in that region. There’s a number of markets there that are really, really strong fertility markets, I mean with really strong growth rates. So we have a solid presence, I think, in parts of that region, like Australia and so forth, but there’s a number of countries where we don’t have a presence or the presence is pretty small. We need to hire some people, build out some infrastructure there. So we’re evaluating that activity right now. Because when you look at our business as a leader in the space, right, and as well as we do with our broad portfolio in the Americas and throughout Europe and in parts of Asia Pac, there’s no reason we shouldn’t be able to build out infrastructure and continue to drive growth there. So that’s a matter of the typical thing we do as a company, which is evaluate those opportunities, look at the return metrics associated with them because you do have inefficiencies anytime you’re building out infrastructure in a new region like that. So we’re going through the process and evaluating all that activity right now. Patrick Wood : Amazing. And then one more, which is I was really interested around MiSight and the positive halo effect of selling in the rest of your offering. I mean is that more a function of MiSight opening the door in the first place, where there isn’t a relationship because it’s such a unique offering and then being able to sell more in? Or is it more about incremental depth with accounts where you already have that relationship? Albert White : Yes. That’s a really good — it’s a really good point because you’re right. There’s a lot of optometry offices where they’re much stronger with some of our competitors to the point where they might just use competitor products and not our products. And MiSight has cracked open the door in a number of those accounts. And it’s gotten our people in there, and all of a sudden, we’re able to have conversations about products like MyDay as an example and about our extended toric ranges and so forth. It’s opened the door and it’s continuing to open the door into more new opportunities for us. So I do think there are some in terms of existing accounts where we’re going in with an innovative product, right, and they can kind of see the technology advancements and they get more comfortable with Cooper. But you’re spot on, I would not discount the importance of kind of virgin Cooper stores, if you will, where we can go in there and finally start selling some of our core products. Operator: Your next question comes from the line of David Saxon with Needham. David Saxon : Maybe I’ll ask two on CooperSurgical, starting with PARAGARD. I mean I heard the comments about flat volume growth, and you talked about some of the market dynamics, do you think PARAGARD can return to seeing volume growth over time? Or is this flat volume growth more of a longer-term expectation and kind of pricing is really the key driver over the long term? Albert White : My gut tells me depending upon how you define long term, but certainly for the coming years here that volume is going to be flat. I think when you look at the availability of other offerings, the ease of availability and the additional offerings that are out there — now those are on the hormonal side. But when you look at the birth control market out there, I think the volumes for IUDs and PARAGARD are going to be flat for a little while here. David Saxon : Okay. Got it. And then on — in fertility, I just wanted to hear what you you’re seeing in terms of new fertility clinic openings, trends there? And any way to size how much of fertility growth is driven by like de novo clinics opening up and kind of how big of an opportunity that is for you guys? Albert White : Yes. The new fertility clinics is kind of a phenomena outside of the U.S., if you will. You’re definitely seeing more of that activity in some of Asia Pac and some parts of Europe. You’re seeing kind of consistent opening of new fertility clinics. The numbers aren’t that huge in the end of the day, but they’re big enough to continue to drive growth because we see some of that in our capital equipment sales. And obviously, that’s a great part of our business. Anytime you can get capital equipment in. You’ve got the consumables following afterwards. So I’m not sure I’ve looked at it in terms of quantifying it because it hasn’t been a spike or anything. It’s been consistent here for probably the last four or five years, even through COVID, we were seeing new clinics continuing to open up. So I guess I would probably answer that by saying the fertility industry, I keep talking about like 5% to 10%, but obviously, it’s grown more towards the upper end of that, certainly. Embedded within that is new fertility clinics opening. And I would envision the number of new clinics that we’ve been seeing open over the last five years or something to continue at a very similar pace probably for the next five years. Operator: Your last question today comes from the line of Anthony Petrone with Mizuho. Anthony Petrone : Just wanted a follow-up on Cook. Apologies if I missed it, just had another call there. But maybe just — it sounds like it’s certainly the probability is lower but there’s still efforts to find a resolution. So maybe a little bit on just where the process sits and probability for close. And under a scenario where it does not close, there was an $875 million commitment and maybe just thoughts on where CooperSurgical M&A activity can go from here if this deal does not close? Albert White : Sure. So yes, just a quick recap on Cook. We did take the $45 million hit to the P&L we accrued for it this quarter because the original transaction that we discussed is frankly, it’s probably not going to happen. That $45 million would get paid under that scenario at the beginning of August. So that’s where we sit with that transaction today. You’re exactly right. We are talking with Cook. We have a great relationship or a great group of people there. So we continue to have conversations with them to see if there’s some transaction that we could still do. But I would certainly say with respect to that transaction, the likelihood is that we’ll pay that $45 million. You’re right, it was a big number, $875 million that we committed on that transaction. Right now, the focus — the kind of capital focus, if you will, is very similar to what it’s been over the last couple of years. We’re going to look at paying down debt. We’re going to look at acquisitions if they make sense. They got to be strategic, accretive acquisitions that fit well into what we want to accomplish at CooperSurgical or CooperVision, and that will probably continue, right? But there’s nothing wrong with paying down some debt either. Operator: This concludes the question-and-answer session for today. I’ll turn the call back to Al for closing remarks. Albert White : Great. Thank you, and thank you, everyone, for joining today. We appreciate the time. As I mentioned, we’re pretty proud of where we’re at. We had a good quarter and things are starting off well this quarter, so we’re well positioned. And we look forward to getting together again in three months and updating everyone after our next quarter. So thanks again. Operator: This concludes today’s conference call. You may now disconnect. Follow Cooper Companies Inc. (NYSE:COO) Follow Cooper Companies Inc. (NYSE:COO) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Twenty Grim Realities Unearthed By Lockdowns Authored by Jeffrey Tucker via The Brownstone Institute, It’s common now to speak of the before times in contrast to the after times. The turning point was of course March 16, 2020, the day of 15 Days to Flatten the Curve, though authoritarian trends predate that. Rights were suddenly broadly throttled, even religious rights. We were told to conduct every aspect of our lives in accordance with the priorities of the bio-medical security state.  Very few people anticipated such a shocking development. It was the onset of a new state-conducted war and the enemy was something we could not see and hence could be anywhere. No one has ever doubted the omnipresence of potentially dangerous pathogens but now we were being told that life itself depended entirely on avoidance of them and the only guide going forward would be public-health authorities.  Everything changed. Nothing is the same. The trauma is real and lasting. The claim of “15 Days” was revealed to be a ruse. The emergency lasted three years and then some. The people and machinery that did this are still in power. The pick to head the CDC has a long track record of enabling and cheering the lockdowns and all that followed.  It’s a helpful exercise to summarize the new things we’ve all discovered in these years. Together they account for why the world seems different and why we all feel and think differently now than we did just a few years ago.  Twenty terrible realities unearthed by lockdowns 1. Surveillance and censorship by Big Tech. The resistance eventually found each other but it took months and years. A censorship regime descended on all major social platforms, technologies designed with the intention of keeping us more connected and expanding the range of opinion we could experience. We did not know it was happening, but we eventually learned of the crackdown, which is why so much of us felt so alone. Others could not hear us and we could not hear them. The regime faces a bold court challenge on many fronts but it still goes on today, with all but Twitter constantly policing their networks in ways that are unpredictably authoritarian. We have ironclad evidence now that they are all captured.  2. Power and influence of Big Pharma. It was April 2020 when someone asked me if the goal of the vaccine produced by the pharmaceutical cartel was really behind the lockdowns. The idea would be to terrify us and ruin our lives until we were begging for shots. I thought the whole idea was insane and that the corruption could not possibly reach this deep. I was wrong. Pharma had been at work on a vaccine since January of that year and called in every form of purchased influence to eventually make them mandatory. Now we know that the major regulators are wholly owned and controlled, to the point that necessity, safety, and efficacy don’t really matter.  3. Government propaganda by Big Media. It was relentless from day one: the major media proved hardcore partisans of Anthony Fauci. The powers that be could tap the New York Times, National Public Radio, Washington Post, and all the rest, whenever and however they wanted. Later the media was deployed to demonize those who violated lockdowns, refused masks, and resisted the shots. Gone was the idea that “democracy dies in darkness” and the “paper of record” replaced by darkness itself and constant propaganda. They showed no real curiosity of the other side. The Great Barrington Declaration itself began as an effort to educate journalists but only a few dared even show up. Now we get it: the mainstream media too is wholly owned and completely compromised. They already knew what to report and how to report it. Nothing else mattered.  4. Corruption of public health. Who in their right minds would have predicted that the CDC and NIH, not to mention the World Health Organization, would be deployed as frontline workers in the imposition of totalitarian control? Some observers perhaps predicted this but implausibly so. But in fact it was these agencies which were responsible for all the absurd protocols from closing hospitals to non-Covid cases, putting up Plexiglas everywhere, keeping schools closed, demonizing repurpose therapeutics, masking toddlers, and forcing shots. They knew no limits to their power. They revealed themselves to be faithful agents of the hegemon.  5. Consolidation of industry. Free enterprise is supposed to be free but when workers, industries, and brands were divided between essential and nonessential, where were the howls from Big Business? They weren’t there. They proved willing to put profit ahead of the system of competition. So long as they benefited from the system of consolidation, cartelization, and centralization, they were fine with it. The big-box stores got to wipe out the competition and gain a leg up in industrial standing. Same with remote learning platforms and digital technology. The biggest businesses proved to be the worst enemies of real capitalism and the biggest friends of corporatism. As for arts and music: we know now that the elites consider them dispensable.  6. Influence and power of administrative state. The Constitution established three branches of government but lockdowns were not managed by any of them. Instead it was a fourth branch that has grown up over the decades, the permanent class of bureaucrats that no one elected and no one from the public controls. These permanent “experts” were completely unleashed and unhinged with no check on their power, and they cranked out protocols by the hour and enforced them as legislatures, judges, and even presidents and governors stood by powerless and in awe. We know now that there was a coup d’etat on March 13, 2020 that transferred all power to the national security state but we certainly did not know it then. The edict was classified. The administrative state still rules the day.  7. Cowardice of intellectuals. The intellectuals are the most free to speak their minds of any group. Indeed that is their job. Instead, they stayed quiet for the most part. This was true of right and left. The pundits and scholars just went along with the most egregious attacks on human rights in this generation if not in all living memory. We employ these people to be independent but they proved themselves to be anything but that. We stood by in shock as even famed civil libertarians looked out at the suffering and said “This is fine.” A whole generation among them is today completely discredited. And by the way, the few who did stand up were called horrible names and often lost their jobs. Others took note of this reality and decided instead to behave by staying quiet or echoing the ruling-class line.  8. Pusillanimity of universities. The origin of modern academia is with the sanctuaries from war and pestilence so that great ideas could survive even the worst of times. Most universities – only a handful excepted – completely went along with the regime. They closed their doors. They locked students in their dormitories. They denied paying customers in-person education. Then came the shots. Millions were jabbed unnecessarily and could only refuse on pain of being kicked out of degree programs. They showed a complete lack of principle. Alumni should take note and so should parents who are considering where to send their high school seniors next year.  9. Spinelessness of think tanks. The job of these huge nonprofits is to test the boundaries of acceptable opinion and drive the policy and intellectual world in the direction of progress for everyone. They are also supposed to be independent. They don’t depend on tuition or political favor. They can be bold and principled. So where were they? Almost without exception they clammed up or became craven apologists for the lockdown regime. They waited and waited until the coast was clear and then eked out little opinions that had little impact. Were they just being shy? Not likely. The financials tell a different story. They are supported by the very industries that stood to benefit from the egregious policies. Donors who believe in freedom should take note!  10. Madness of crowds. We’ve all read the classic book Extraordinary Popular Delusions and the Madness of Crowds but we thought it was a chronicle of the past and probably impossible now. But within an instant, mobs of people fell into medieval-style panics, hunting down non-compliers and hiding from the invisible miasma. They had a mission. They were ferreting out dissidents and ratting out the non-compliers. None of this would have happened otherwise. Just like in the Cultural Revolution of China, these would-be members of the Red Guard became foot soldiers for the state. Mathias Desmet’s book on Mass Formation now stands as a classic explanation of how a population devoid of meaningful lives can turn these sorts of political frenzies into deluded crusades. Most of our friends and neighbors went along.  11. Lack of ideological conviction of both right and left. Both right and left betrayed their ideals. The right abandoned its affections for limited government, free enterprise, and the rule of law. And the left turned against its traditional stand for civil liberties, equal freedoms, and free speech. They all became compromised, and they all made up fake rationales for this pathetic situation. Had this all began under a Democrat, the Republicans would have been screaming. Instead they went quiet. Then the Covid regime passed to a Democrat and so they stayed quiet while the Republicans, embarrassed at their previous silence, stayed silent for far too long. Both sides proved ineffective and toothless throughout.  12. Sadism of the ruling class. The kids were denied a year or two of school in some locations. People missed medical diagnostics. Weddings and funerals were on Zoom. The aged were forced into desperate loneliness. The poor suffered. People turned to substance abuse and put on added pounds. The working classes were exploited. Small businesses were wrecked. Millions were forced to move and millions more were displaced from their jobs. The ruling class that advertised its wonderful altruism and public spiritedness became callous and completely disregarded all this suffering. Even when the data poured in about suicide ideation and mental illness from loneliness, it made no difference. They could not muster any concern. They changed nothing. The schools stayed closed and the travel restrictions stayed in place. Those who pointed this out were called terrible names. It was a form of grotesque sadism of which we did not know they were capable.  13. The real-life problem of massive class inequality. Would any of this have happened 20 years ago when a third of the workforce was not privileged enough to take their work home and pretend to produce from laptops? Doubtful. But by 2020, there had developed an overclass that was completely disconnected from the lives of those who work with their hands for a living. But the overclass didn’t care that they had to face the virus bravely and first. These workers and peasants did not have privileges and apparently they didn’t matter much. When it came time for the shots, the overclass wanted their health care workers, pilots, and delivery people to get them too, all in the interest of purifying society of germs. Huge wealth inequalities turn out to make a big difference in political outcomes, especially when one class is forced to serve the other in lockdowns.  14. The cravenness and corruption of public education. A universal education was the proudest achievement of progressives one hundred years ago. We all assumed it was the one thing that would be protected above all else. The kids would never be sacrificed. But then for no good reason, the schools were all closed. The labor unions representing the teachers rather liked their extended paid holiday and tried to make it last as long as possible, as the students got ever further behind in their studies. These are schools for which people paid for with their taxes for many years but no one promised a rebate or any compensation. Homeschooling went from existing under a legal cloud to being suddenly mandatory. And when they opened back up, the kids faced mass silencing with masks.  15. Enabling power of central banking to fund it all. From March 12, 2020, and onward, the Federal Reserve deployed every power to serve as a Congressional printing press. It slammed rates back to zero. It eliminated (eliminated!) reserve requirements for banks. It flooded the economy with fresh money, eventually reaching a peak of 26 percent expansion or $6.2 trillion in total. This of course later translated into price inflation that quickly ate away the actual purchasing power of all that free stimulus dispensed by government, thus harming on net both producers and consumers. It was a great head fake, all made possible by the central bank and its powers. Further damage came to the structure of production by a prolongation of low interest rates.  16. The shallowness of the faith communities. Where were the churches and synagogues? They closed their doors and kept out the people they had sworn to defend. They canceled holy days and holiday celebrations. They utterly and completely failed to protest. And why? Because they went along with the propaganda that ceasing their ministries was consistent with public health priorities. They went along with the state and media claim that their religions were deeply dangerous to the public. What this means is that they don’t really believe in what they claim to believe. When the opening finally came, they discovered that their congregations had dramatically shrunk. It’s no wonder. And who among them did not go along? It was the supposed crazy and odd ones: the Amish, the estranged Mormons, and the Orthodox Jews. How non-mainstream they are. How marginal! But apparently they were among the only ones whose faith was strong enough to resist the demands of princes.  17. The limitations on travel. We didn’t know the government had the power to limit our travel but they did it anyway. First it was internationally. But then it became domestic. For a few months there, it was hard to cross state lines because of the demands that everyone who did so had to quarantine for a fortnight. It was strange because we didn’t know what was and what was not legal nor did we know the enforcement mechanism. It turned out to be a training exercise for what we know now they really want, which is 15-minute cities. Apparently a people on the move are harder to control and corral. We were being acculturated toward a more medieval and tribal existence, staying put so that our masters can keep tabs on us.  18. The tolerance for segregation. Vaccine uptake was certainly disproportionate by race and income. Richer and whiter populations went along but some 40 percent of the non-white and poorer communities didn’t trust the jab and refused. That did not stop 5 major cities from imposing vaccine segregation and enforcing it with police power. For a time, major cities were segregated with disparate impact by race. I don’t recall a single article in a major newspaper that pointed this out, much less decried it. So much for public accommodations and so much for enlightenment! Segregation turns out to be just fine so long as it fits with government priorities – same now as it was in the bad old days.   19. The goal of a social credit system. It is not paranoia to speculate that all this segregation was really about the creation of a vaccine passport system running off a national base, the one they want very much to implement. And part of this is the real and long-term goal of creating a China-style social credit system that would make your participation in economic and social life contingent on political compliance. The CCP has mastered the art and imposed totalitarian control. We know for sure now that major aspects of the pandemic response were scripted in Beijing and imposed through the influence of China’s ruling class. It is completely reasonable to assume that this is the real goal of vaccine passports and even Central Bank Digital Currency.  20. Corporatism as the system under which we live, giving lie to existing ideological systems. For many generations, the great debate has been between capitalism and socialism. All the while, the real goal has passed us by: the institutionalization of an interwar-style corporatist state. This is where property is nominally private and concentrated in only top industries in major sectors but publicly controlled with an eye to political priorities. This is not traditional socialism and it certainly isn’t competitive capitalism. It is a social, economic, and political system designed by the ruling class to serve its interests above all else. Here is the main threat and the existing reality but it is not well understood by either right or left. Not even libertarians seem to get this: they are so attached to the public/private binary that they have blinded themselves to the merger of the two and the ways in which major corporate players are actually driving the advance of statism in their own interests.  If you haven’t changed your thinking over the last three years, you are a prophet, indifferent, or asleep. Much has been revealed and much has changed. To meet these challenges, we must do so with our eyes wide open. The greatest threats to human liberty today are not the ones of the past and they elude easy ideological categorization. Further, we have to admit that in many ways the plain human desire to live a fulfilling life in freedom has been subverted. If we want our freedoms back, we need to have a full understanding of the frightening challenges before us.  Brownstone’s work and influence in this regard is far beyond any that we’ve told publicly. You would be astonished at the extent of it. The times demand circumspection in overt institutional aggrandizement.  We are grateful to our donors for having faith in the power of ideas. We are daily amazed at the ability of passionate and scrupulous writers and intellectuals to make a real difference for the cause of freedom. Please, if you can, join our donor community to keep the momentum going, for the hill is perhaps the steepest we’ve climbed in our lives. We have no “development department” and no corporate or government benefactors: you can make a difference. Tyler Durden Mon, 06/05/2023 - 23:40.....»»

Seven Republicans, including Trump, have made a White House run official, others are considering jumping in, and some have dropped out. Former President Donald Trump arrives to speak during an event at Mar-a-Lago on November 15, 2022 in Palm Beach, Florida.Joe Raedle/Getty Images Trump, Haley, Ramaswamy, Hutchinson, Elder, Tim Scott, and DeSantis are running for president. Others have been floating the possibility of entering the GOP contest — and some are dropping out. From Pence to Cruz, here's how Republicans are laying the groundwork for presidential runs. Seven Republicans are now running for president in 2024 — at least officially. Embattled former President Donald Trump, former South Carolina Gov. Nikki Haley, tech entrepreneur Vivek Ramaswamy, former Arkansas Gov. Asa Hutchinson, conservative commentator Larry Elder, Sen. Tim Scott of South Carolina, and Florida Gov. Ron DeSantis are the candidates who have so far formally announced a 2024 presidential bid.But plenty of others appear to be toying with the same idea.They're doing all the things they're supposed to do to test their chances: Visiting early primary states, writing books, showing up on the Sunday shows, and weighing in publicly on President Joe Biden's policies — and even Trump's latest controversies. The next step will be hiring teams in Iowa and New Hampshire, Doug Heye, a longtime GOP aide and strategist, told Insider."You have got a stable of people who are essentially putting themselves all in the starting gates and all have their own timetable about when and if they decide to run," he said. Over the next few weeks and months, candidates would be floating what Kristin Davison, vice president and general consultant at Axiom Strategies, called "trial balloons" — in which they publicly raise the prospect of a run to see how donors and the press will react. Whoever seizes the nomination will likely face Biden, who made a run official on April 25. But, Heye said, "it's a real possibility" that the GOP lineup will large.The stakes for losing the nomination aren't all bad, even if Republicans might come out of it with an unforgettable Trump nickname. After all, one of the people running for president could get chosen as the running mate or get a seat on the new president's Cabinet.And there are other perks to formally seeking the White House, such as raising one's profile and having a better shot at the presidency during a future cycle. Candidates could also sell a lot more books or leave politics to get a prime TV or radio show. "It's a long, difficult process," Heye said, "and you're more likely to lose than not."Trump's legal, political, and personal liabilities have been piling up for several months, leading many in the GOP to say the party needs not just a fresh face but to be led by a candidate who can actually win. Insider identified 15 people who have or could seek the Republican nomination in 2024. Each will have to effectively answer the "why I'm running for president" question and find their lane in the party, which will inevitably include defining — or redefining — their relationship with Trump. "I don't think you can discount any of them at this point," Heye said. "It's too early to determine who outside of Trump is a frontrunner." And others, like newly minted GOP star Glenn Youngkin, 56, are already bowing out of consideration, with Youngkin telling attendees on May 1 at the Milken Institute Global Conference in Beverly Hills, California that he still had work to do in Virginia. Former Secretary of State Mike Pompeo has also officially declared he's not seeking the nomination, despite releasing a book and rumblings he was considering a run.Scroll through to see the politicians who have either already declared or are potentially gearing up for run — and who has officially decided not to move forward:Gov. Ron DeSantis of FloridaRepublican gubernatorial candidate for Florida Ron DeSantis speaks during an election night watch party at the Convention Center in Tampa, Florida, on November 8, 2022.Giorgio VIERA / AFP via Getty ImagesDeSantis, 44, made his long-anticipated run official on May 24. The two-term governor of Florida launched his bid to wrest control of the party from Trump in a glitchy interview with Twitter owner Elon Musk that was quickly dubbed a #DeSaster on the now right-leaning platform. DeSantis campaign spokesman Bryan Griffin tried to spin the online debacle — which purportedly attracted roughly half-a-million participants before technical difficulties thinned the audience to around 300,000 — as a groundbreaking achievement. "There was so much enthusiasm for Governor DeSantis' vision for our Great American Comeback that he literally busted up the internet," Griffin boasted on Twitter. Trump, who's been raring to rip his former ally apart, was having none of it. "Tim Scott's Presidential launch, even with the broken microphone (don't pay the contractor, Tim!), was by far the best Presidential launch of the week. Robs was a catastrophe!" the combative former president gloated on his own social media channel. DeSantis deliberately avoided mentioning Trump on Wednesday night, sticking with the talking points about the gubernatorial agenda that's gotten him this far. He famously and unapologetically reopened Florida during the COVID-19 pandemic, before federal health officials said he should. He banned certain teachings on race in workplaces and schools, and flew unsuspecting migrants from Texas to Martha's Vineyard, Massachusetts.DeSantis also signed a contentious parental involvement and sex ed bill into law that critics call "Don't Say Gay." Instead of backing down over the outcry, he worked to punish Disney for threatening to repeal it and then expanded the law. Then there were the historic tax cuts in Florida with promises of more as well as viral videos bashing what he calls the "corporate media." All of these actions have portrayed the governor as a fighter. That's not the only part of his public persona on display. Often in tow is his beautiful, young family. His former newscaster wife, Florida's first lady Casey DeSantis, has been instrumental in his rise. To the New York Post, pictures of the DeSantis family on Election Night was "DeFuture." Others see a conservative JFK. But the politician DeSantis most often gets compared to is Trump. Numerous news profiles have described DeSantis as "Trump without the baggage," or as a more disciplined Trump. Yet after leaning on Trump during his first gubernatorial victory in 2018, DeSantis showed he could win big on his own, scoring a historic, 20-point victory in Florida in November without Trump's endorsement.DeSantis also released his first memoir in February: "The Courage to Be Free: Florida's Blueprint for America's Revival." During the midterms, he extended goodwill to other Republicans by campaigning with them. Back at home, he raked in a record amount of cash for a gubernatorial race. If the GOP primary were decided today, numerous polls show, DeSantis is the only person that gets close to Trump. Trump has nicknamed DeSantis "Ron DeSanctimonious" and threatened to release damaging information about the governor. Sen. Tim Scott of South CarolinaSen. Tim Scott, a Republican of South Carolkina, speaks at a fundraiser in Anderson, South Carolina on August 22, 2022.Meg Kinnard/AP Photo, FileScott, 57, made his run official on May 22. "I am living proof that America is the land of opportunity, not a land of oppression," he said during his formal campaign launch in North Charleston, South Carolina. He'd hinted at a presidential bid during his midterms victory speech, even though he previously said he wouldn't run against Trump. "My grandfather voted for the first man of color to be elected as president of the United States," he said on November 8, referring to the vote his grandfather cast for Obama. "I wish he had lived long enough to see perhaps another man of color elected president of the United States. But this time, let it be a Republican and not just a Democrat. So just know: All things are possible in America."Scott, who previously served in the US House, is the only Black Republican in the Senate. He said his six-year term in the Senate beginning in January would be his last, but he didn't rule out a presidential run. He also released a memoir, "America, a Redemption Story: Choosing Hope, Creating Unity" and is one of the top fundraisers in the Senate — which includes support from small and online donors — even though he defended a safe seat this cycle.Major donors have contributed to Opportunity Matters Fun, a pro-Scott super PAC. In February, he launched a listening tour. Scott was among those leading the push for the successful passage of the bipartisan First Step Act and his measure to create Opportunity Zones that bring private investments into economically distressed communities was part of the 2017 tax reform law. He garnered national interest after delivering the GOP response to Biden's address to Congress in 2021. Afterward, McConnell said the senator represented "the future of the Republican Party." Scott has been open about the racism he has faced over the course of his life. "I get called Uncle Tom and the n-word by progressives, by liberals," he said in response to Biden's address. He has shared that police have pulled him over numerous times, despite him not violating any traffic laws. He sat down with Trump at the White House to discuss systemic racism and publicly called on Trump to call back certain statements he made on race. Haley, who was South Carolina governor at the time, appointed Scott to the Senate in 2013 after the seat opened up. Former UN Ambassador Nikki HaleyFormer UN Ambassador Nikki Haley during a news conference in Allentown, Pennsylvania, on Wednesday, October 26, 2022.Matt Rourke/AP PhotoHaley, 51, made a run official on February 15. During her campaign launch in Charleston, South Carolina, she portrayed herself as a young leader who could win elections. "If you're tired of losing, put your trust in a new generation," she said. Her experiences in public office give her the coveted pairing of having both executive and foreign policy chops, which are often viewed as crucial to the presidency. Aside from Trump and Pence, few other contenders would have such a profile. As a woman of Indian descent, she could also help bring in suburban women voters who graduated from college and expand the GOP coalition among people of color. She embraced her unique background during her campaign kickoff, wearing suffragette white and and calling herself "a brown girl growing up in a black-and-white world." Haley has had a turnaround from last year, when she said she wouldn't run for president if Trump were to seek the White House in 2024. She started our her career working in the private sector, joining her family's clothing business before leading the National Association of Women Business Owners.She served in the South Carolina House for three terms then was the state's governor for six years. In that time Haley delivered the GOP response to Obama's 2016 State of the Union Address.She pushed for the removal of the confederate flag from the South Carolina capitol after a gunman killed nine Black people at Emanuel Church in Charleston. Also as governor, Haley would not support a bill requiring transgender people to use the restroom that corresponded with the gender on their birth certificate. But in 2021 she wrote a commentary in the National Review saying transgender inclusion in sports was an "attack on women's rights."Haley was UN Ambassador under Trump for two years, and successfully pushed for the US to move its Israeli embassy to Jerusalem and defended Trump's decision to do so.In 2019 she published a memoir, "With All Due Respect: Defending America with Grit and Grace." Haley campaigned and fundraised in high-profile races during the 2022 midterms, including in Pennsylvania and Georgia. Haley told the National Republican Committee the day after the January 6 riot that Trump was "badly wrong" in his speech to supporters and that his "actions since Election Day will be judged harshly by history." Tech entrepreneur Vivek RamaswamyRamaswamy founded the biopharmaceutical company Roivant Sciences.Fox NewsRamaswamy, 37, made his run official on February 22. Ramaswamy is an Indian-American tech entrepreneur who co-founded Strive Asset Management and serves as its executive chairman. He also founded the biopharmaceutical company Roivant Sciences."We're in the midst of a national identity crisis. Faith, patriotism & family are disappearing. We embrace one secular religion after another — from wokeism to climatism — to satisfy our deeper need for meaning," he said in a video announcing his campaign. "Yet we cannot even answer what it means to be an American." —Vivek Ramaswamy (@VivekGRamaswamy) February 22, 2023 Ramaswamy wrote "Woke, Inc.: Inside Corporate America's Social Justice Scam" and "Nation of Victims: Identity Politics, the Death of Merit, and the Path Back to Excellence."The New Yorker nicknamed Ramaswamy the "CEO of Anti-Woke Inc." for his stance against environmental, social, and governance investing.In February, he delivered a speech about ESG at Trump National Doral, near Miami, before the exclusive and influential Council for National Policy at Trump Doral, where DeSantis was also a key speaker. Former Gov. Asa Hutchinson of ArkansasArkansas Gov. Asa Hutchinson attends the National Governors Association summer meeting, Friday, July 15, 2022, in Portland, Maine.Robert F. Bukaty/AP PhotoHutchinson, 72, threw his hat into the ring on April 2. He told ABC News correspondent Jonathan Karl there would be a full-scale rollout later on in his hometown of Bentonville, Arkansas, but that his mind was made up. "I've traveled the country for six months, I hear people talk about the leadership of our country," Hutchinson said Sunday. "I'm convinced that people want leaders that appeal to the best of America, and not simply appeal to our worst instincts."He also weighed in on Trump's indictment in New York, calling it a "great distraction" that voters need to get past. "We can't set aside what our Constitution requires — which is electing a new leader for our country — just because we have this side controversy and criminal charges that are pending," Hutchinson said, adding, "And so we've got to press on, and the American people are gonna have to separate what the ideas are for our future."Hutchinson hasn't been shy about criticizing Biden or Trump. After Trump's 2024 announcement, he said the former president's "self-indulging message promoting anger has not changed," and also disavowed the Fuentes and Ye meeting at Mar-a-Lago.Hutchinson has taken at least five trips to Iowa through America Strong & Free, the nonprofit of which he's the honorary chairman and spokesperson."I am seriously looking at a run in 2024 because America and the Republican Party are not in the best place," he said in a statement provided to Insider. "I know how to get us back on track both in terms of leadership and facing the challenging issues of border security, increased violent crime, and energy inflation." As governor of Arkansas for eight years, Hutchinson has pushed to make the state a leader in computer science, and signed several tax cuts into law, including lowering the state income tax rate from 7% to 4.9%. Hutchinson also signed bills into law blocking businesses from requiring customers and workers to show proof of COVID-19 vaccination and blocked state and local officials from obligating masks — a move he later said he regretted. He asked state lawmakers to create a carve-out for schools, but the Arkansas House rejected the proposal. While he signed an abortion ban into law in 2019 that took effect after the Supreme Court overturned Roe v. Wade, he said on CNN that he personally believes in exceptions for rape and incest."Many out there appreciate a 'consistent conservative,' even one they don't agree with all the time," Hutchinson told Insider. "I am not interested in the 'outrage of the day,' and I am committed to using my consistent conservative principles to guide me and our nation on important policy decisions." Hutchinson began his government career as a US attorney for the Western District of Arkansas under President Ronald Reagan, then went on to serve in the US House for three terms. President George W. Bush tapped him to lead the Drug Enforcement Administration, after which he served as undersecretary in the Department of Homeland Security. He has criticized Biden on illegal immigration, inflation, and student-loan forgiveness. He said on CNN that the president's September speech about "MAGA Republicans" and democracy "singled out a segment of Americans and said basically they're our enemy."Hutchinson also has the distinction of being especially press friendly at a time when numerous Republicans have copied Trump's style of lashing out against journalists. "The media plays an important role in our democracy," Hutchinson told Insider. "I've never shied away from tough questions, and I have always been willing to defend my positions and conservative principles with the hard questions coming from the press."Conservative commentator Larry ElderGOP presidential hopeful Larry Elder speaks to guests at the Iowa Faith & Freedom Coalition Spring Kick-Off on April 22, 2023 in Clive, Iowa.Scott Olson/Getty ImagesLarry Elder, 71, made his first presidential bid official on April 20. A conservative talk show personality who led the field of nearly four dozen candidates attempting to replace California Gov. Gavin Newsom during a 2021 recall effort, Elder entered the fray with a "we've got a country to save!" pitch.—Larry Elder (@larryelder) April 21, 2023 "We can enter a new American Golden Age, but we must choose a leader who can bring us there. That's why I'm running for President," Elder said during the rollout of his long shot campaign. A lawyer turned Fox News fixture, Elder's platform mirrors many MAGA grievances: condemning critical race theory and the idea that systemic racism exists, bemoaning immigration at the southern border, demanding school choice to "break the monopoly" of public schools, and branding Democrats as "soft on crime." He also takes frequent swipes at President Joe Biden and routinely engages in "woke" culture war fights on social media. The budding politician, who wrote about his surprise gubernatorial run in "As Goes California: My Mission to Rescue the Golden State and Save the Nation," is no stranger to controversy. His ex-fiancee, Alexandra Datig, accused Elder of flashing a gun at her during an argument while he was under the influence of marijuana. Elder denied it ever happened in a Twitter thread. CNN reported that Elder was accused of sexual harassment twice — allegations Elder also waved off. Former Rep. Liz Cheney of WyomingRep. Liz Cheney, a Republican of Wyoming, campaigned with Rep. Elissa Slotkin, a Democrat of Michigan, at an Evening for Patriotism and Bipartisanship event on November 1, 2022 in East Lansing, Michigan.Bill Pugliano/Getty ImagesCheney, 56, is the daughter of former Vice President Dick Cheney and one of Trump's toughest Republican critics.She voted to impeach Trump after the January 6, 2021, attack on the US Capitol, and served as vice chair of the House select committee investigating Trump's efforts to overturn the 2020 election.Cheney's actions have come at a cost under the heavy weight of Trump's ire. House Republicans punished her by stripping her of her leadership post, and she lost her US House seat to Trump-backed GOP challenger Harriet Hageman during the state's August primary.But she hasn't been deterred. Cheney said on NBC's "Today" that she would do "whatever it takes" to keep Trump out of the White House in 2024, including "thinking about" running for president herself. "I wouldn't be surprised to see her run for president," Republican Sen. Mitt Romney of Utah told Insider in August. Cheney voted with Trump on policy when he was in office, and remains a conservative, telling the Reagan Foundation and Institute in June 2022 that she believes "deeply in the policies of limited government, of low taxes, of a strong national defense." But Cheney said she sees a breaking point with the Republican Party, telling the Texas Tribune Festival in September that she would leave the GOP if Trump became the 2024 nominee.This could mean she'd run for president as an Independent. Already, she has shown she's willing to campaign against Republicans who falsely deny that Biden won the 2020 presidential election.In 2022, Cheney converted her House campaign finance committee into an anti-election denier leadership PAC called The Great Task. The PAC spent $500,000 on a TV ad in Arizona that urged voters to reject Republicans Kari Lake and Mark Finchem, who were running for governor and secretary of state, respectively. During the 2022 midterms, Cheney endorsed incumbent Democratic Reps. Elissa Slotkin of Michigan and Abigail Spanberger of Virginia. Both won their races. "We had to make sure that we prevented election deniers from taking power," she told The Washington Post's Global Women's Summit in November. Many outsiders see long odds for Cheney, though a poll conducted in Utah found she could be a top contender there. Sen. Ted Cruz of TexasSen. Ted Cruz, a Republican of Texas, speaks at a rally for Republican Senate candidate Herschel Walker on November 10, 2022 in Canton, Georgia.Megan Varner/Getty ImagesCruz, 52, was the last Republican standing against Trump during the 2016 presidential nomination and had even announced that he'd pick former Hewlett-Packard CEO Carly Fiorina as his running mate. But Cruz — whom Trump nicknamed "Lyin' Ted" — lost following a nasty primary in which Trump levied highly personal attacks against the senator, including disparaging his wife's looks and falsely suggesting that Cruz's father had something to do with the assassination of President John F. Kennedy. Once Trump was in office, however, Cruz was one of the president's  biggest defenders. He voted to overturn the 2020 election results in Arizona and Pennsylvania and helped to secure Trump's acquittal in his second impeachment trial. In recent months, Cruz has been spending time in New Hampshire and during the midterms campaigned with retired football star Herschel Walker in the Georgia Senate runoff. While in the Senate, Cruz led the successful effort to zero out the unpopular fine on the uninsured created by the Affordable Care Act.More recently, Cruz used Ketanji Brown Jackson's Supreme Court confirmation hearing to score points for a potential 2024 run, questioning her about school curriculum on race. Before coming to Congress, Cruz was solicitor general in Texas, a role that involves arguing cases before the Supreme Court. When Insider asked whether Trump's latest missteps had provided an opening for him to jump into the 2024 presidential race, Cruz chuckled a bit before laying out what sounded like a near-term agenda. "I think the Senate is the battleground … and I'm going to do everything I can to lead the fight right here," Cruz told Insider before launching into a tirade about his mounting frustration with Senate Minority Leader Mitch McConnell's decision making. He made no specific mention of 2024, but also didn't work in the word "no" anywhere.Cruz told the Republican Jewish Coalition in Las Vegas that he'll seek reelection in Texas in 2024 when his term is up, though state law allows him to run for both offices at the same time.Former Gov. Chris Christie of New JerseyFormer New Jersey Gov. Chris Christie speaks at an annual leadership meeting of the Republican Jewish Coalition Saturday, November 19, 2022, in Las Vegas.John Locher/AP PhotoChristie, 60, is famously said to have missed his moment for the White House because he didn't run for president when he was getting a lot of attention as New Jersey's governor in 2012, and instead fizzled out in 2016 when faced with Trump and numerous other contenders. But that hasn't stopped him from weighing another go at it. In October, during an appearance on "Real Time with Bill Maher," Christie confirmed that he was considering a 2024 run. Now, New Hampshire Today says an announcement is imminent.Christie wrote a book in 2021, titled "Republican Rescue: Saving the Party From Truth Deniers, Conspiracy Theorists, and the Dangerous Policies of Joe Biden." He served two terms as a Republican governor in a blue state where Democrats controlled the legislature. In that role, he expanded Medicaid under Obamacare and passed bail reform.But he got flak over a handshake with then-President Barack Obama during Hurricane Sandy relief efforts, and was hurt politically after members of his administration created traffic jams on the George Washington Bridge.Christie became a lobbyist in 2020, when he had several healthcare clients but cut ties a year later, according to the lobbying disclosure database, in what could be a sign that he's lining up for a run.   Today, Christie blames Trump for the GOP's losses the last three election cycles and spent months saying Republicans "have to be the party of tomorrow, not the party of yesterday" if they ever want to win another election. His tone on Trump is a stunning turnaround for a man who was one of Trump's closest outside advisors when he was in the White House and was even on the shortlist to be Trump's chief of staff. Christie turned on Trump after January 6, saying the president violated his oath of office. He told The New York Times that Trump's candidacy was "untenable" and that the former president had had "poor judgement" after he dined at Mar-a-Lago with white supremacist and Holocaust denier Nick Fuentes. He also told the Washington Examiner that Republicans "fail the leadership test" when they don't call out Trump. South Dakota Gov. Kristi NoemSouth Dakota Gov. Kristi Noem speaks during the Conservative Political Action Conference in Dallas, Texas, on July 11, 2021.Brandon Bell/Getty ImagesNoem, 51, has been on a Trump-related roller coaster ride as of late. In January 2021, the embattled former president tried to get her to primary fellow South Dakota Sen. John Thune, a lawmaker Trump took to calling a RINO (which stands for "Republican in name only") after Thune balked at his baseless claims of election fraud. Noem bowed out of joining Trump's revenge campaign, opting to focus on her own re-election plans. Once 2022 rolled around, she leaned hard into the GOP culture wars, promising voters that she'd bar transgender athletes from participating in women's sports, stamp out any "critical race theory" instruction in local schools, and decimate any "radical political ideologies" that annoyed her evangelical Christian base.Come July, Noem told CNN she'd be "shocked" if Trump tapped her to be his 2024 running mate. But she didn't rule out sliding into the VP slot — or mounting a challenge of her own. Since winning a second term in November, Noem has started taking on bigger foes, including the People's Republic of China. —Kristi Noem (@KristiNoem) November 30, 2022 Her state government-wide ban against the use of social media app TikTok scored her fawning interviews on conservative outlets including Fox News and Newsmax, beaming her into the homes of potential admirers who don't happen to reside in the Mount Rushmore State. Noem seems far less enthusiastic about Trump these days, telling reporters that the twice-impeached, scandal-plagued former president isn't Republicans' "best chance" at retaking the White House in 2024. She issued this prediction just days after Trump announced he was running again.  Former Vice President Mike PenceFormer Vice President Mike Pence speaks at the annual leadership meeting of the Republican Jewish Coalition on Friday, November 18, 2022, in Las Vegas.John Locher/AP PhotoPence, 63, has been distancing himself from his former boss, while also promoting his new book, "So Help Me God." He told ABC's "World News Tonight" that Trump "decided to be part of the problem" by not immediately calling off the insurrectionists during the January 6 riot, after he declined to help invalidate Biden's lawful win. Pence also pushed back against Trump on WVOC in South Carolina after he called for terminating the Constitution, and came out forcefully after Trump had dinner with Fuentes."President Trump was wrong to give a white nationalist, an anti-Semite, and a Holocaust denier a seat at the table," he said on November 28. An adviser to the former vice president told Insider that, should Pence decide to run, the team has discussed several policy areas to differentiate himself, including Trump's bipartisan criminal justice reform bill, the First Step Act, and that he'll continue to be "very outspoken on the issue of life."Pence wouldn't have to worry about name ID during a presidential run. Still, his new book and a campaign would allow him to reintroduce himself to voters by talking about his work in the US House and then as governor of Indiana. He already has made numerous trips to early primary states New Hampshire and South Carolina. Further, he'll be able to amplify policies that carried his fingerprints during the Trump administration, including his oversight of the US's pandemic response.Pence was a sought-after midterm surrogate, traveling to dozens of states. In May, he went to Georgia to help incumbent Gov. Brian Kemp beat Trump-backed primary challenger David Perdue.Pence's vision for the future of the party is laid out in his Freedom Agenda and Advancing American Freedom, the nonprofit aligned with him that serves as a type of campaign in waiting. The policies include reducing mail-in voting and implementing universal school choice, which allows public education funds to pay for K-12 students to select alternatives to public schools. While Pence didn't testify before the January 6 select committee, his senior aides including former chief of staff Marc Short and legal advisor J. Michael Luttig walked investigators through some of the scenarios that led up to the attack. In November, Pence said on Fox's "Hannity" that he would make a 2024 decision after discussing it with his family during the holidays. Sen. Marco Rubio of FloridaWilfredo Lee/AP PhotoRubio, 51, has come out hot after cruising to a third term in November, castigating GOP leaders for totally blowing the midterms. "We have a historically unpopular Dem President, record inflation, a violent crime wave & total chaos at the border & not only did we fail to win a majority, we lost a seat. And the Senate GOP response is going to be to make no changes?" Rubio fumed in a December 7 Twitter post. His anger hadn't abated when Insider caught up with him at the US Capitol. "I don't know how you come back from what we have just encountered and conclude that the status quo and business as usual is how we want to proceed," Rubio said of the need for drastic changes within the GOP. While conceding that he doesn't have "all those answers," Rubio suggested that Senate Republicans take a hard look at "the mechanics of elections, policy, the legislative agenda, and all of that." "I think that's something we should all be involved in talking about," Rubio said of the sorely needed soul searching. Rubio, who is of Cuban descent, was speaker of the Florida House before heading to Washington. He has sponsored numerous bills that have become law, including doubling the child tax credit and co-authoring the Paycheck Protection Program that helped keep small businesses afloat during the COVID-19 pandemic.On top of that, he's got a powerful perch as the top Republican on the Intelligence Committee. Political operatives have credited him with helping the GOP grow its influence with Hispanic voters, NBC News reported. Asked by Insider whether he had it in him to take another run at the former president after getting clobbered by the insult-flinging Trump in 2016, Rubio said he just really needs to take a breath. "We'll have time over the holidays and into the new year to sort of focus on everything going on in my life and here in the Senate," Rubio told Insider, adding that he hasn't "really focused in on" returning to the presidential proving grounds at the moment. Perhaps voters will learn more about future plans in his forthcoming book, "Decades of Decadence." Miami Mayor Francis SuarezTaylor Hill / Contributor Getty ImagesSuarez, 45, confirmed in October that he's considering a presidential run. By March, he was still deciding, he told the Miami Herald. "It's something that I would consider given the right circumstances and given the right mood of the country," Suarez said at a Punchbowl News event in October. Miami has been getting a lot of attention given the surge of people moving to Florida — and tech companies and crypto startups in particular headed to Miami under Suarez's encouragement. He even told Twitter CEO Elon Musk that he should consider relocating the company's headquarters from San Francisco.Suarez's office sent over a list of accomplishments for the mayor, saying the city was No. 1 in job and wage growth, and had 1.4% unemployment. The Financial Times called Miami "the most important city in America." The mayor made historic increases to the city's police department, increased funding on climate-resistant infrastructure, and passed a rental tax credit for seniors. Suarez didn't vote for Trump during the 2020 election and in the 2018 gubernatorial race in Florida he voted for Democrat Andrew Gillum over DeSantis. He did flip in 2022, voting for DeSantis for reelection, he told Insider. Suarez said Trump has been kind to him. The two spoke at a wedding recently, he said, and Trump told him he was the "hottest politician in America after him.""I don't know if he meant physically hot or if he meant I was getting a lot of buzz," Suarez said. "But he was very nice." Suarez is of Cuban descent and leads the National Conference of Mayors. When asked about how he might stand out in a presidential race, Suarez said he might be able to speak to "a variety of minority communities that are going to be important if Republicans want to grow their base for a generation." Gov. Chris Sununu of New HampshireGov. Chris Sununu of New Hampshire.Jon Cherry/Getty Images for ConcordiaSununu, 48, was just reelected to a fourth term in New Hampshire, where governors are reelected every two years and there are no term limits. There's a "61 percent chance" he runs for president, he told Puck last week. Sununu is a centrist Republican who has the distinction of being in favor of abortion rights, at a time when many states are banning abortion. He came close to running for the US Senate in 2022, but told the Washington Examiner that other senators told him their main job was to be a "roadblock" in office — and he wasn't interested in that.Sununu also called Trump "fucking crazy" at the Gridiron dinner, a journalism event. "Let's stop supporting crazy, unelectable candidates in our primaries and start getting behind winners that can close the deal in November," Sununu said in November at Republican Jewish Coalition meeting.He told the Washington Examiner after the midterms that there should be new GOP leadership — not just in the White House but inside the Republican National Committee."Did they achieve on the level of results that we all thought we were going to get?" he asked. "No. So, why would we stick with the same team assuming we're going to get a better result?"Sununu is part of a political dynasty. His father was governor of New Hampshire who then went on to work in the George H.W. Bush administration as chief of staff. His brother was in the US House and US Senate. Out of the Running: Former Rep. Adam Kinzinger of IllinoisRep. Adam Kinzinger, R-Ill., speaks as the House select committee investigating the January 6 attack on the US Capitol holds a hearing in Washington, DC, on July 21, 2022.AP Photo/J. Scott ApplewhiteLike Cheney, Kinzinger, 45, spent much of 2022 focused on the January 6 committee and drawing Trump's ire. He was the only other Republican on the House committee investigating the riot, and retired from his seat at the end of the last Congress, after six terms. Kinzinger told HuffPost in April 2022 that he "would love" to run against Trump for the 2024 GOP nomination, but more for the fun of it than to actually win."Even if he crushed me, like in a primary, to be able to stand up and call out the garbage is just a necessary thing, regardless of who it is," he said. "I think it'd be fun."But by January 2023, Kinzinger told CNN's "State of the Union" that he had no intention of running for president. Kinzinger in early 2021 launched his anti-election denier leadership PAC, called Country First. The group launched a nationwide campaign urging voters to reject "extreme" candidates in 2024. Kinzinger sponsored several bills that became law, including measures to prevent opioid addiction and a bill to help veterans with medic training transition to EMT work as civilians. Kinzinger served in the Air Force and remains a pilot in the Air National Guard. Out of the Running: Sen. Josh Hawley of MissouriSenator Josh Hawley (R-MO) speaks during the confirmation hearing for Judge Ketanji Brown Jackson on March 22, 2022.JIM WATSON/AFP via Getty Images)Hawley, 43, won't be seeking the presidency in 2024, he told NBC News in November. But the senator has reached for the spotlight whenever possible while Congress is in session.From famously saluting the January 6 protestors on the day of the violent siege at the Capitol to holding Brown Jackson's feet to the fire as she raced to join the Supreme Court, the first-term lawmaker works to portray himself as the perennial outsider who's only here to shake things up. He's played up the part by voting to overturn the 2020 election results on behalf of MAGA vote-magnet Trump, butting heads with McConnell on the way the upper chamber is run, and blaming short-sighted leaders for running the party into the ground. "When your 'agenda' is cave to Big Pharma on insulin, cave to Schumer on gun control & Green New Deal ('infrastructure'), and tease changes to Social Security and Medicare, you lose," Hawley, bemoaned on Twitter following a demoralizing midterms performance by flawed GOP candidates, which he blamed on "Washington Republicanism." The potential 2024 contender followed up with some suggestions, floating an alternative vision he said would help "unrig the system."   "What are Republicans actually going to do for working people? How about, to start: tougher tariffs on China, reshore American jobs, open up American energy full throttle, 100k new cops on the street," Hawley, who was also Missouri's former attorney general, tossed out on his social media feed. Out of the Running: Former Gov. Larry Hogan of MarylandGov. Larry Hogan of Maryland.Drew Angerer/Getty ImagesEven before the bruising 2022 midterms, Hogan, 66, was warning that Republicans couldn't continue down the path they are on. "I am not about to give up on the Republican party or America," he wrote on Twitter in early December. "None of us can. It's too important."The two-term governor who survived a 2015 cancer scare has been fired up about plotting his next act. But that next act won't be seeking the presidency. "The stakes are too high for me to risk being part of another multicar pileup that could potentially help Mr. Trump recapture the nomination," Hogan wrote in a guest essay for The New York Times. He elaborated about his thinking in a March 5 interview with CBS News, signaling he wouldn't support Trump or DeSantis — the only Republican who polls near Trump. "Right now, you have Trump and DeSantis at the top of the field, soaking up all the oxygen, getting all the attention, and then a whole lot of the rest of us in single digits," Hogan said on CBS. "And the more of them you have, the less chance you have for somebody rising up."Hogan, a centrist Republican, did explore the possibility of running for president, making the rounds in early primary states such as Iowa and New Hampshire. Hogan also scored some face time with GOP mega donors at this year's Republican Jewish Coalition leadership meeting — mentioning to political reporters covering the event that he and other potential 2024 hopefuls were there because "maybe there's a little blood in the water." As governor, Hogan signed a gun control bill into law and has said that while he opposed abortion, he wouldn't move to gut the state's guarantee on reproductive rights. During the COVID-19 pandemic he instituted a statewide mask mandate, then lifted restrictions in May 2021. He billed himself as a "commonsense conservative" who GOP voters sick of losing may want to consider."I think there are 10 people who want to be the next Donald Trump, and I think there may be a different lane," Hogan said while stumping in Manchester, New Hampshire, adding, "I'm going to do everything I can to get the country back on track." He cast a write-in vote for Reagan in the 2020 election and called for Trump to be impeached or resign after January 6. Out of the Running: Former Secretary of State Mike PompeoFormer Secretary of State Mike Pompeo speaks at the annual leadership meeting of the Republican Jewish Coalition, Friday, November 18, 2022, in Las Vegas.John Locher/AP PhotoPompeo, 59, bowed out of contention on April 14, telling his social media followers that putting it all on the line now didn't seem prudent. "The time is not right for me and my family," Pompeo wrote in a formal statement. The former Trump administration official turned critic of the embattled former president did, however, leave the door open to giving public service another go in the future. "There remain many more opportunities for which the timing might be more fitting as presidential leadership becomes even more necessary," he teased. Despite his stature as a former Secretary of State and longtime GOP power player, Pompeo barely registered in 2024 polling while out promoting his book "Never Give an Inch: Fighting for the America I Love." In April, he polled at 1% in two separate Morning Consult tracking polls, at 1% in a Reuters/Ipsos poll, and at 2% in a Leger/Canadian Press Poll, according to polling aggregator FiveThirtyEight. He consistently polled in sixth-place or lower in the field.Pompeo represented Kansas in the US Congress and was also a former CIA director under Trump. After the end of the administration, he lost weight, which sparked speculation that he was interested in a White House run.He has openly criticized Biden, including after the president's September speech on protecting democracy. "He essentially said if you're pro-life or you're opposed to a certain set of policies, you're a threat," Pompeo told the New England Council's "Politics and Eggs" breakfast.  Biden, he said at the event, could be summed up as having "woke ideas, weak resolve, and waffling leadership."Trump should not have taken classified documents to Mar-a-Lago, he said, but added that the "raid on Mar-a-Lago was indecent and improper." Pompeo told conservative radio talk show host Hugh Hewitt in November that Trump's announcement wouldn't affect whether he decides to run for president, adding that he'd make a determination in the spring. "We need more seriousness, less noise, and leaders who are looking forward," Pompeo said, "not staring in the rearview mirror claiming victimhood." Out of the Running: Gov. Glenn Youngkin of VirginiaGov. Glenn Youngkin of Virginia.AP Photo/Steve Helber, FileYoungkin, 56, bowed out of the 2024 presidential race on May 1, telling attendees at the Milken Institute Global Conference in Beverly Hills, California that he still had work to do in the Old Dominion. When the Wall Street Journal's Gerard Baker asked Youngkin whether a White House run was in his immediate future, the newly-minted Republican said "No." He added that his near-term goals include preserving GOP control of Virginia's House of Delegates and flipping the state's Democratic-led Senate.  Sticking close to home in the battleground state will give Youngkin a chance to work on playing defense. He tried playing kingmaker in over a dozen 2022 gubernatorial contests and mostly came up short.Youngkin rocketed to stardom in late 2021 by keeping Virginia purplish with his electrifying win over Democratic fixture Terry McAuliffe tried to work that same Trump-light magic into contests all around the country. The result: only four of the 15 Republican gubernatorial candidates Youngkin got involved with won their races. It's unclear whether Youngkin had any effect on the reelection bids of blowout winners like Kemp or Noem.By the same token, it's debatable whether he could have dragged Lake, Michigan's Tudor Dixon, or any of the other 2020 election deniers across the finish line given their full-on embrace of Trumpism. While he remains reluctant to badmouth the embattled former president, Youngkin clinched his 2021 win by keeping Trump at bay while still reaching out to the MAGA base. Trump, on the other hand, has tried to take full credit for Youngkin's win and lashed out at the newcomer for not being more appreciative. Trump's already working on trying to clip a Youngkin presidential bid from ever taking wing, panning him and DeSantis as ingrates who have no chance of beating him. Trump also reverted to his old tricks after the politically damaging 2022 midterms flop, hitting Youngkin with a bizarre, racist rant on Truth Social. Given that Virginia only allows governors to serve non-consecutive terms, it makes sense for Youngkin to seek opportunities elsewhere.The Washington Post reported that Youngkin spent part of his summer huddling with Republican mega donors in New York. And while he remains mum on any official plans for 2024, Politico said Youngkin's putting in place the types of fundraising groups a presidential candidate would want to have at the ready.Youngkin is a former co-CEO of the Carlyle Group. As governor, his first official action was to sign an executive order prohibiting Virginia schools from teaching "critical race theory." More recently, he's been pushing to reimburse individuals and businesses who paid fines for violating state COVID-19 restrictions under his Democratic predecessor.Read the original article on Business Insider.....»»

Achieved Ninth Consecutive Quarter of Positive Adjusted EBITDA Received Shareholder Approval for Strategic Arrangement with Canopy and Canopy USA Gained Access to Additional Funding Through Amendments to Credit Facility NEW YORK, May 22, 2023 (GLOBE NEWSWIRE) -- Acreage Holdings, Inc. ("Acreage" or the "Company") (CSE:ACRG, ACRG.B.U)) (OTCQX:ACRHF, ACRDF)), a vertically integrated, multi-state operator of cannabis cultivation and retailing facilities in the U.S., today reported its financial results for the first quarter ended March 31, 2023 ("Q1 2023"). First Quarter 2023 Financial Highlights Consolidated revenue of $56.0 million for Q1 2023. Gross margin was 48% for Q1 2023, an increase from 35% in the fourth quarter of 2022 ("Q4 2022"). Excluding the impact of non-cash inventory adjustments, gross margin for Q1 2023 was 51%. Adjusted EBITDA* was $10.6 million and Adjusted EBITDA* as a percentage of consolidated revenue was 19% for Q1 2023. First Quarter and Recent Operational Highlights Received the required approval of the holders of Class D subordinate voting shares of Acreage (the "Floating Shareholders"), at a special meeting of Floating Shareholders held on March 15, 2023, in connection with the Company's previously announced arrangement agreement dated October 24, 2022, as amended on March 17, 2023 (the "Floating Share Arrangement Agreement") with Canopy Growth Corporation ("Canopy") and Canopy USA, LLC ("Canopy USA"). Additionally, the Company obtained a final order from the Supreme Court of British Columbia on March 20, 2023, approving the Floating Share Arrangement Agreement under section 288 of the Business Corporations Act (British Columbia). Upon the satisfaction or waiver of all other conditions set out in the Floating Share Arrangement Agreement, which the parties continue to work towards, the parties will complete the ‎Floating Share Arrangement. Launched adult-use retail operations in Connecticut, among an inaugural group of operators permitted to begin adult-use sales in the state. Sales initially commenced at The Botanist store in Montville followed later by The Botanist Danbury location. Secured approval to relocate the Acreage's existing Atlantic City medical dispensary to Pennsauken, New Jersey, along with the approval of the Company's annual renewal of its license in the state. The Company anticipates commencing adult-use sales at the new Pennsauken location before the end of 2023. Introduced new line of dose-able fast-acting gummies in Illinois, Maine, Massachusetts, and Ohio under the flagship The Botanist brand. Management Commentary "Our focus on our core footprint while upholding strict cost controls has enabled us to maintain strong margins and continue to deliver positive Adjusted EBITDA despite continued volatility within the market," said Peter Caldini, CEO of Acreage. "Over the first quarter, we were thrilled to have expanded our addressable market in Connecticut with the launch of adult-use sales at our thriving The Botanist Montville location, and just most recently in the second quarter, began serving adult-use consumers at our Danbury store. Additionally, continuing our commitment to diversifying our product portfolio, we debuted our innovative fast-acting gummies to consumers in Illinois, Maine, Massachusetts, and Ohio under our flagship brand The Botanist." Mr. Caldini continued, "Notably, during the quarter, we received shareholder approval for our strategic arrangement with Canopy and Canopy USA, bringing us one step closer to satisfying what is required to close the transaction. We have experienced numerous transformative achievements to bring Acreage to where it is today, and we could not be more excited for its expected bright future under Canopy USA. As we work to complete our arrangement with Canopy and Canopy USA, we will continue to focus on driving our business forward with a priority on managing cash flows in a volatile trading environment." Q1 2023 Financial Summary(in thousands)   Three Months Ended March 31,   YoY% Change   Three Months Ended December 31, 2022   QoQ%Change     2023       2022         Consolidated Revenue $ 55,963     $ 56,879     (1.6 )%   $ 57,489     (2.7 )% Gross Profit   26,585       29,510     (9.9 )%     20,395     30.4 % % of revenue   48 %     52 %         35 %                         Total operating expenses   25,440       32,232     (21.1 )%     147,641     (82.8 )% Net loss   (16,157 )     (13,911 )         (119,183 )     Net loss attributable to Acreage   (14,590 )     (12,694 )         (95,039 )     Adjusted EBITDA*   10,593       8,627     22.8 %     6,989     51.6 % Total revenue for Q1 2023 was $56.0 million compared to $56.9 million in the first quarter of 2022 ("Q1 2022") and $57.5 million in Q4 2022. The year-over-year and sequential decreases were primarily due to continued industry headwinds and decreased pricing as a result of competitive pressures across various markets. Additionally, the year-over-year decrease was also due to the divestiture of the Company's operations in Oregon and was somewhat offset by the acquisition of a Maine dispensary in 2022. After adjusting for acquisitions and divestitures, revenue for Q1 2023 was relatively consistent with Q1 2022. Total gross profit for Q1 2023 was $26.6 million, compared to $29.5 million in Q1 2022. Total gross margin was 48% in Q1 2023 compared to 52% in Q1 2022. Margin was impacted by cost increases due to inflation as well as price compression during the quarter. Additionally, cost of goods sold for Q1 2023 included $2.3 million of non-cash inventory adjustments as a result of excess inventory in select markets and carrying values of inventory exceeding net realizable value. Excluding these non-cash inventory adjustments, gross margin for Q1 2023 was 51%. Total operating expenses for Q1 2023 were $25.4 million, compared to $32.2 million in Q1 2022. Operating expenses in the current quarter included a one-time bad debt charge of $1.3 million and a reversal of prior period bonus accruals of $2.5 million. Operating expenses in Q1 2022 included impairment charges and write-downs of assets held for sale that were not incurred in Q1 2023. Additionally, total operating expense for Q1 2023 benefitted from reduced equity-based compensation expenses and depreciation and amortization when compared to Q1 2022. Adjusted EBITDA* for Q1 2023 was $10.6 million compared to Adjusted EBITDA* of $8.6 million in Q1 2022 and Adjusted EBITDA* of $7.0 million in Q4 2022. Net loss attributable to Acreage for Q1 2023 was $(14.6) million, compared to $(12.7) million in Q1 2022. Amendment to Credit Facility Subsequent to quarter end, on April 28, 2023, Acreage further amended its existing credit facility (the "Credit Facility") such that $15.0 million was available for immediate draw, but such funds would be maintained in a segregated account until dispersed and be restricted for use to only eligible capital expenditures. Additionally, the Company has agreed to limit the total amounts outstanding under the Credit Facility to $140.0 million and to, at all times subsequent to April 28, 2023, maintain collateral (as defined in the Credit Facility) equal to or greater than the outstanding amount under the Credit Facility. Balance Sheet and Liquidity Acreage ended Q1 2023 with $14.3 million in cash and cash equivalents. As of March 31, 2023, $125.0 million was drawn under the Amended Credit Facility, with a further $15.0 million of long-term debt available from its committed debt facilities, but such funds are restricted for use to only eligible capital expenditures. Additionally, in April 2023, the Company sold, with recourse, the rights to receive certain Employee Retention Tax Credits with an aggregate receivable value of $14.3 million for total proceeds of $12.1 million.          About Acreage Holdings, Inc. Acreage is a multi-state operator of cannabis ‎cultivation and retailing facilities in the U.S., including the Company's national retail store ‎brand, The Botanist. With its principal address in New York City, Acreage's wide range of national and regionally available cannabis products include the award-winning brands The Botanist and Superflux, the Tweed brand, the Prime medical brand in Pennsylvania, the Innocent brand in Illinois and others. Since its founding in 2011, Acreage has focused on building and scaling operations to create a seamless, consumer-focused, branded experience. Learn more at www.acreageholdings.com and follow us on Twitter, LinkedIn, Instagram, and Facebook. Forward Looking Statements This news release and each of the documents referred to herein contains "forward-looking information" and ‎‎"forward-looking statements" within the meaning of applicable Canadian and United States securities legislation, ‎respectively. All statements, other than statements of historical fact, included herein are forward-looking ‎information. ‎Often, but not always, forward-looking statements and information can be identified by the use of words such as ‎‎"plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", ‎or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", ‎‎‎"would", "might" or "will" be taken, occur or be achieved. ‎ Forward-looking statements or information involve known and unknown risks, uncertainties, and other ‎factors which may cause the actual results, performance or achievements of Acreage or its ‎subsidiaries to be materially different from any future results, performance or achievements expressed or ‎implied by the forward-looking statements or information contained in this news release. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including, but not limited to: the occurrence of changes in U.S. federal Laws regarding the cultivation, distribution or possession of marijuana; ‎the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court ‎and Floating Shareholder approvals; the ability of the parties to satisfy, in a timely manner, the other conditions to the completion of the Floating Share ‎Arrangement Agreement; the ability of Canopy, Canopy USA and Acreage to satisfy, in a timely manner, the closing conditions to the Floating Share Arrangement; risks relating to the value and liquidity of the Floating Shares and the common shares of Canopy; Canopy maintaining compliance with the Nasdaq Global Stock Market (the "Nasdaq") and Toronto Stock Exchange listing requirements; the rights of the Floating ‎Shareholders may differ materially from those of shareholders in Canopy; expectations regarding future investment, growth and ‎expansion of Acreage's operations; the possibility of adverse U.S. or Canadian tax consequences upon completion of the Floating Share Arrangement; if Canopy USA acquires the Fixed Shares pursuant to the Existing Arrangement Agreement without structural amendments to Canopy's interest in Canopy ‎USA, the listing of the Canopy Shares on the Nasdaq may be jeopardized; the risk of a change of ‎control of either Canopy or Canopy USA; restrictions on Acreage's ability to pursue certain business ‎opportunities and other restrictions on Acreage's business; the impact of material non-recurring expenses in ‎connection with the Floating Share Arrangement on Acreage's future results of operations, cash flows and ‎financial condition; the possibility of securities class action or derivatives lawsuits; in the event that the Floating ‎Share Arrangement is not completed, but the acquisition by Canopy of the Fixed Shares (the "Acquisition") is completed pursuant to Existing Arrangement Agreement and Canopy becomes the majority ‎shareholder in Acreage, the likelihood that the Floating Shareholders will have little or no influence on the conduct ‎of Acreage's business and affairs; risk of situations in which the interests of Canopy USA and the interests of ‎Acreage or shareholders of Canopy may differ;‎ Acreage's compliance with Acreage's business plan for the fiscal years ending December 31, 2020 through December 31, 2029 pursuant to the Existing Arrangement Agreement; in the event that the Floating Share Arrangement is ‎completed, the likelihood of Canopy completing the Acquisition in accordance with the Existing Arrangement Agreement; ‎risks relating to certain directors and executive officers of Acreage having interests in the transactions ‎contemplated by the Floating Share Arrangement Agreement and the connected transactions that are different ‎from those of the Floating Shareholders; risks relating to the possibility that holders of more than 5% of the ‎Floating Shares may exercise dissent rights; other expectations and assumptions concerning the transactions ‎contemplated between Canopy, Canopy USA and Acreage; the available funds of Acreage and the anticipated ‎use of such funds; the availability of financing opportunities for Acreage and Canopy USA and the risks ‎associated with the completion thereof; regulatory and licensing risks; the ability of Canopy, Canopy USA and ‎Acreage to leverage each other's respective capabilities and resources; changes in general economic, business ‎and political conditions, including changes in the financial and stock markets; risks relating to infectious diseases, ‎including the impacts of the COVID-19; legal and regulatory risks inherent in the cannabis industry, including the ‎global regulatory landscape and enforcement related to cannabis, political risks and risks relating to regulatory ‎change; risks relating to anti-money laundering laws; compliance with extensive government regulation and the ‎interpretation of various laws regulations and policies; public opinion and perception of the cannabis industry‎; and such other risks disclosed in the Circular, the Company's Annual Report on Form 10-K for the year ended December 31, 2022, dated May 1, 2023 and the Company's other public filings, in each case filed with the SEC on the EDGAR website at www.sec.gov and with Canadian securities regulators and available under Acreage's profile on SEDAR at www.sedar.com. Although Acreage has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Although Acreage believes that the assumptions and factors used in preparing the forward-looking information or forward-looking statements in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information and forward-looking statements included in this news release are made as of the date of this news release and Acreage does not undertake any obligation to publicly update such forward-looking information or forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws. Neither the Canadian Securities Exchange nor its Regulation Service Provider, nor any securities regulatory authority in Canada, the United States or any other jurisdiction, has reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.‎ For more information, contact: Steve Goertz Chief Financial Officer investors@acreageholdings.com Courtney Van Alstyne MATTIO Communications acreage@mattio.com        US GAAP FINANCIAL HIGHLIGHTS (UNAUDITED)   US GAAP Statements of Financial Position US$ (thousands) March 31, 2023   December 31, 2022   (unaudited)   (audited) ASSETS      .....»»

ClearSign Technologies Corporation (NASDAQ:CLIR) Q1 2023 Earnings Call Transcript May 18, 2023 ClearSign Technologies Corporation misses on earnings expectations. Reported EPS is $-0.03 EPS, expectations were $-0.024. Operator: Good day, and welcome to the ClearSign Technologies’ First Quarter 2023 Conference Call. Please note this event is being recorded. I would now like to turn the […] ClearSign Technologies Corporation (NASDAQ:CLIR) Q1 2023 Earnings Call Transcript May 18, 2023 ClearSign Technologies Corporation misses on earnings expectations. Reported EPS is $-0.03 EPS, expectations were $-0.024. Operator: Good day, and welcome to the ClearSign Technologies’ First Quarter 2023 Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Matthew Selinger of Firm IR Group. Please go ahead. Matthew Selinger: Good afternoon, and thank you, operator. Welcome, everyone, to the ClearSign Technologies Corporation first quarter 2023 results conference call. During this conference call, the company will make forward-looking statements. Any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company’s projections, expectations, plans, beliefs and prospects. These statements are based on judgments and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties associated with the forward-looking statements made in this conference call include, but are not limited to, whether field testing and sales of ClearSign products will be successfully completed, whether ClearSign will be successful in expanding the market for its products and other risks that are described with ClearSign’s public periodic filings with the SEC, including the discussion in the Risk Factors section of the 2022 annual report on Form 10-K and the quarterly report on Form 10-Q for the quarterly period ended March 31, 2023. So except as required by law, ClearSign assumes no responsibility to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. So with me on the call today are Jim Deller, ClearSign’s President and Chief Executive Officer; and Brent Hinds, ClearSign’s Vice President of Finance and Controller. So at this point in the call, I would like to turn the call over to the VP of Finance, Brent Hinds. So Brent, please go ahead. Brent Hinds: Thank you, Matthew, and thank you to everyone for joining us here today. Before I begin, I’d like to note that our financial results on Form 10-Q were filed with the SEC on May 15. And with that, I’d like to give an overview of the financials for the first quarter of 2023. The company recognized approximately $900,000 in revenues during the 3 months ended March 31, 2023, as compared to zero revenues for the same period in 2022. The majority of our revenues for this quarter were derived from a burner performance test. As you may recall, in discussions in our last investor call, we had successfully executed a customer witness test at the Zeeco test facility during Q1. Completing this work satisfied the contractual performance obligation, which allowed us to recognize the associated revenues. We also had a favorable quarter from a cash perspective. Our net cash used in operations for the quarter ended March 31, 2023, was approximately $554,000 compared to approximately $1.5 million for the same period in 2022. That is a year-over-year decrease of approximately $1 million. Now turning our focus from cash to profit and loss. Our net loss for the 3 months ended March 31, 2023, was approximately $1.4 million, which is relatively consistent when compared to the same quarter in 2022. We have approximately $8.5 million in cash and short-term investments as of March 31, 2023. There were approximately 38.5 million shares of common stock outstanding as of March 31, 2023. We have confidence in our financial position and balance sheet. And with our quarter ending balances, we have sufficient working capital available to carry us to 2024, and that is without cash from any other sources. Nevertheless, we do expect customer cash collections to continue in 2023. As we have said on prior calls, customer cash collections will often begin prior to revenue recognition. With that, I would like to turn the call over to our CEO, Jim Deller. Jim? Jim Deller: Thank you, Brent, for the financial overview. I thank everyone for joining us on the call today and for your interest in ClearSign. It has been only a few weeks since our last update call, but we do have more developments to share with you. On today’s call, I will review our business segments, starting with process burners and our most recent Multi Heater announcement. Next, I will touch on the developments in our boiler burner business and then update you on China and our progress there. In regards to our process burner segment, most of you may have seen our announcement regarding the engineering order for two heaters that was released in the middle of April, April 19 to be specific. This order is from an early adopter of our technology in California. So this is a repeat order from an existing customer. Additionally, this customer came back to ClearSign after initiating an alternative option to install a traditional selective catalytic reduction of SCR, NOx control system and inherent complexities associated with such a system. As stated in our press release, the engineering purchase order for this project stated that the procurement and fabrication of burners may be added at a later date or not at all. So there was no expectation or assumption that this was going to progress and develop into more than just the initial engineering phase. And just yesterday, we were happy to confirm that the full project is moving forward with the receipt of a purchase order for the procurement and fabrication of burners for the two separate process heaters. What is notable about this project is that it is the supply of burners for two different multi-burner heaters with a total of 13 burners. The fuel gas includes hydrogen, so this will not only give us valuable installations, but we believe will validate our technology, but also installations demonstrating our capability to control NOx emissions from fuel gases containing concentrations of hydrogen gas as is expected to be an increasing need out of increasing value in the future. This project illustrates the point that it’s worth emphasizing in light of the global decarbonization and environmental justice initiatives. Installations such as this, demonstrating the capability of ClearSign technology to control NOx emissions to a level sufficient to avoid the capital and operational requirements of SCRs and achieve single-digit NOx levels burning significant concentrations of hydrogen in the fuel gas illustrates our important contribution to the ultimate goal of decarbonization. That is the operation with hydrogen fuel gas. The reduction of greenhouse gas and ground-level ozone through the control of NOx emissions to fairly low levels and by providing cleaner local air and eliminating potential emissions of ammonia as our feature of SCR systems also support environmental justice initiatives. We very much look forward to completing this project and seeing these burners in operation in California. Our 20 burner Southern California project is progressing well. As noted on our last call, the final witness test went as planned, and we are fabricating the burners for delivery to our customer. For those that are interested, we have posted a summary version of this test data and report on our website as we believe the data and details are informative to specialists from the industry, investors and other stakeholders alike. This can be found on our website on the process burner page in the products section labeled test results. Alternatively, just go to the technical library section and look under process burner white papers. We are scheduled to be fully complete with the manufacture and delivery of these burners later this year, which will largely complete this order. At this time, we do not have confirmation whether the site shutdown during which these burners will be installed will be undertaken in mid-2024 or perhaps later as the timing of this work is dependent on our clients’ plans and shutdown scheduling. Bear in mind that there are lots of activities included in these refinery shutdowns, so the planning process is complex and dependent on a multitude of factors, many of which have little or nothing to do with ClearSign burners. As mentioned on the last call, regardless of the eventual installation timing, we expect to be able to invoice and receive payment upon delivery of the burners by the end of the year and only a small part of the purchase order revenue and cash will remain until installation A byproduct of this project is that we have the burners used for the demonstration at our partner Zeeco’s facility. These were not part of the final production run and will not be included in the shipment to California. These burners will be kept for demonstration purposes for potential customers and stakeholders. To that end, we have customer demonstration events planned for the coming months. These burners demonstrate NOx emissions numbers significantly below the 5 PPM guarantee and robust performance throughout the operating range. This is important because in this industry, while we have presented and promoted our burner technology, for most industry people seeing in person is believing. Lastly, in our burner segment, I want to mention our 100% hydrogen low NOx burner development. On the last call, we mentioned that we have completed the successful testing of this new burner. The first phase of this project was funded by a Department of Energy grant of $250,000. Data has been submitted for a Phase 2 grant, which is up to $1.6 million over a period of 2 years. We expect to learn if this application is approved by the end of July. This project will extend our successful Phase 1 proof-of-concept demonstration to create a full range of commercial process burners. As we were the only company to have been granted a Phase 1 grant for this high hydrogen-fuel burner project, we are optimistic that the Phase 2 grant will also be awarded to ClearSign. The objective of this project is to develop and commercialize a range of burners that will enable the control of NOx emissions to the levels required to control ground-level ozone in critically polluted areas, combined with the adoption of the new hydrogen economy and use of hydrogen fuel for industrial heating. The anticipated outcome is to achieve reductions in the industrial emissions of both carbon dioxide and nitrogen oxides. Currently, the available hydrogen burning solutions are able to reduce CO2, but the byproduct is higher NOx. Our novel burner is expected to enable zero CO2 by burning pure hydrogen in commercial applications but importantly to create NOx emissions so low that they compete with SCRs in a low single-digit parts per million range. We are also already in discussions with potential customers regarding the future deployment and in particular, the adopter opportunities for this new hydrogen-focused burner technology. On a side note regarding government funding and industry funded grants, we are seeing interest from additional parties regarding our low emissions technologies. As I have said earlier, we are seeing other opportunities also, some that we plan to pursue for ourselves and some that may provide opportunities in partnership with customers. Nearly all are related to decarbonization and/or pollution reduction and generally have a consideration of social equity or environmental justice, which supports our business and target market as well. We see these grants as a means to accelerate the development of our technology and also but more important to us to incentivize the critical initial installations necessary to gain the confidence of customers and the air regulators or to put it another way, we are not a research company. We see the funding and grants available as a means to an end rather than an objective of its own. The grants not only help fund and raise the priority of the development of our technology for new applications, but very importantly, because of the way that the grants are structured, they also provide a mechanism to incentivize customers to put new technology when developed into use. I will now move on to development in our boiler burner product line. On the last call, we went over our initial announced sales of boiler burners, both in California and Texas. The first burner order was sold into a medical and business waste services company and was in conjunction with our partner, California Boiler into the San Joaquin Valley Air Pollution Control District of California. This is on schedule to install in the current that is second quarter. While this first sale was significant in the fact that it was our first California commercial 5G boiler burner order in and of itself, it is also very encouraging because the customer came to us for our solution after competing products failed to meet the new district sub-5PPM NOx emissions requirements. California Boiler also has a 500 horsepower rental boiler with our burner in it that will be deployed and an operation on this site to provide the customer with steam during the installation of the new burner. This will provide us an additional reference point and some prolonged run time on that larger installation. The second order was also sold into the California market. Our burner will be part of our recycling planned upgrades that will increase energy efficiency as well as reducing NOx for one of its customers nationwide sites. The second boiler burner sold into the California market was to a national provider of recycling services to the food production and restaurant industries and will be installed with a new boiler. This was sold as a package with our partner, California Boiler into the San Joaquin Valley Air Pollution Control District of California. The burner and new boiler are scheduled to be installed in the third quarter of 2023. We believe the second burner in particular, will truly set the bar for boiler burners. This burner is larger and is in the size range requiring sub-2.5 PPM NOx emissions, a capability that we believe is unique to ClearSign burners or the solutions require the inclusion of an SCR and the associated capital costs and ammonia handling that go with them. As we stated in the press release at the time, this burner is our first commercial boiler burner sale guaranteeing sub-2.5 PPM NOx specifically developed to enable clients like this to operate in compliance with California Central Valley region’s new regulations and without the need for ammonia and the hazards associated with such potent chemicals. To help explain why this installation is so important, the boiler into which our burner is to be installed is from a major international supplier, demonstrating our burner of working in commercial use and meeting the 2.5 PPM NOx requirement, will position us well to be included as the burner technology in their future boiler sales when low NOx emissions are required. Playing the scenario forward, hypothetically, if we enable this boiler supplier to have a more cost-effective and SCR free offering, we expect that they will have a competitive advantage over their competition, either allowing them to win a disproportionate share of the opportunities which will be good for us or forcing other boiler manufacturers to follow suit and offer ClearSign core burners, which will obviously also be good for us. The third boiler sale was unique in the fact that it is our first application of our boiler burner technology into a non-boiler heater and very importantly, our first sale to a refinery heater manufacturer, who has included our burner as a chosen solution to meet their customers’ needs. Also, it was our first sale into Texas where after California, we anticipate the Texas Gulf Coast region will be the next large market for us. Lastly, the sale is also the first to this global chemicals company and the first in the industrial chemicals sector. The manufacture of all of these burners is underway and on schedule. We are very optimistic that getting these installations up and running will provide a great catalyst for others. These will also provide a benchmark for the air districts in California and the rest of the United States, and we expect these installations to provide a reference as they consider modifications and updates to their clean air regulations. When talking about our asset-light strategy, heater and boiler manufacturers are a prominent channel to market for burner equipment as burners are part of almost everything they sell. It is gratifying that we are establishing relationships and trust with some of these manufacturers. As we have said before, we are very encouraged by the early boiler burner orders in multiple markets this year, but we are also encouraged by our list of outstanding proposals and look forward to adding to this list. Turning to China. Our President of Asia, Manny Menendez, is over in China as we speak. Mr. Menendez arrived in China last week and hit the ground running, so I do have some updates to give and expect to have further news in the near future, both regarding progress and anticipated time lines. His primary objectives are to get the 500-horsepower 5G boiler burners installed, commissioned and then government certified. The 500 horsepower boiler size is our top priority as we along with Shuangliang believe that there is a readily addressable market in the region of Shenzhen, where the government has recently rolled out new Street NOx emission requirements. Shenzhen has a population in the region of 18 million to 20 million people and is one of China’s richest cities, if not the richest, after Shanghai and Beijing. In addition to that, the NOx regulations there will now be the most stringent in China. A trip is planned jointly with our partner Shuangliang to that region to promote our joint capabilities and unique offering to both customers in the area and also the local government officials responsible for administering the new air quality standards. Once those are complete and government burner certification is in hand, we expect to see some early sales and anticipate that we will be able to have some initial orders resulting in deployments of our technology and our integrated boiler burner package from our Shuangliang partnership in China in 2023 and continuing in 2024. To illustrate the pace of environmental regulatory developments in China, Hebei province, which is the large province next to Beijing, has just rolled out a new emission requirement requiring less than 10 PPM NOx for all boilers. We are also planning to engage with customers and government officials in that region, similar to Shenzhen in the near future. We recently participated in the ISH China & CIHE exhibition held May 11 to May 13, where we met potential customers and possible collaborators for ClearSign. The ISH event had a dedicated energy section focused specifically on industrial clean energy. Our strategic alliance partner, Shuangliang Group, had an impressive booth at that event. Before ending this update on our China progress, I want to draw your attention to the level of engagement and investment being made by our partner, Shuangliang, in China. Those of you who follow us on LinkedIn will have seen yesterday, pictures of the 500 horsepower boiler Shuangliang have built and a high-pressure gas line that they have got permitted and installed along with the new water line to enable them to demonstrate a 500 horsepower boiler burner for certification. They have made significant other investments also, including facilitating the certification of our 125 horsepower boiler burner. We have jointly made effort to keep this relationship strong through our for separation and slowdown due to COVID and to see such material evidence of the strength of this relationship and its indication of the magnitude of the market potential in China is reassuring. Looking forward to the rest of the year 2023, we will proceed with the manufacture of a large California refinery order following the successful customer demonstration earlier this year. This will also deliver significant revenue and gross margin. We will complete the production demonstration testing of burners for the most recent two-heater order for our client site in California, followed by the manufacture and supply of the burners. Installation will be in phases starting in early 2024. You will continue to see increased promotion of our process burners and we are planning to hold industry demonstrations at the test facility of our partner Zeeco this summer. We are also optimistic about our prospects for the follow-on hydrogen burner development grant and believe we are well positioned for further grants from a variety of sources to aid and accelerate the adoption of our hydrogen compatible technology. Following our recent chemical company order, we look forward to increasing business in Texas and also through heater companies. For our boiler burner business, we will deliver our first commercial orders and look forward to having those units in operation in California and Texas. We expect to build on this and increase the level of inquiries that we are seeing to keep momentum in California and look to expand our business in new markets like Texas, particularly following the recent agreement between California Boiler and Gulf Coast boilers based in that region. In China, we look to progress our plans with Shuangliang including burner certifications and winning and delivering our first orders under that collaboration. One subtle change you should expect to see as we transition to having commercial deployments of both our process burners and boiler burners in service is an increase in promotional activities. A few examples include, the full scale demonstration burners I have mentioned during our last call. This week, we have a team and a full-scale process burner on display at the American Petroleum Refining and Equipment Standards meeting in Seattle, and a second team with a full-size demonstration of 5G boiler burner at the Texas Environmental Trade Fair and Conference onus by the Texas Commission on environmental quality in Austin. With that, I would like to open up the call for questions. Please, operator? Q&A Session Follow Clearsign Technologies Corp (NASDAQ:CLIR) Follow Clearsign Technologies Corp (NASDAQ:CLIR) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: The first question today comes from Amit Dayal with H.C. Wainwright. Please go ahead. Amit Dayal: Thank you. Good afternoon everyone. Congrats on all the progress, guys. Good to see the orders and revenues starting to come through. could you share maybe in dollar amounts, what the pipeline looks like for you at this point? Jim Deller: I can give some guidance, Amit. We’re not to give dollar amounts, but we will try to give though the tools to allow everyone to construct a good understanding of the status of the company there. Just I have an item, I am sure there may be some people new to the company on the line, a good average proxy for the sales price of our burners is in the region of $100,000 a burner. For the process burner orders, a burner design will also have some accompanying engineering and testing that the good round number for that will be about $250,000. So, we do announce the orders that we get. And where we can, we will include the number of burners included in that order. And obviously, now that we do have revenues being reported in our quarterly reports, you also have a means to measure the revenues being reported. So obviously, the pipeline there will be the difference between the value of the orders won and the revenue reported. I know that’s not an exact amount, but hopefully that gives everyone the tools to at least keep gauge on the work that’s in progress of the company and a good understanding of what to expect in the future. Amit Dayal: Thank you for that. And then just maybe adjacent to that, sequentially, as you start delivering again some of this order book, should we expect sequential improvements in your revenues through 2023, or will it be a little lumpy, I guess depending on how you deliver the customers? Jim Deller: Yes, good question. I think it’s – we all really believe we are in the commercial phase of this company, I think we have said that. But it’s also early stages. So, the orders that we have announced, you should appreciate there are significant orders, but also they are going to result in lumpy revenue, that’s usual phrase. But I think what’s more meaningful looking forward is as we get these orders out and installed and operational in the customer sites, so that they are providing evidence and reinsurance to those customers and also to their peers and the other companies around them. We expect that is going to reduce the reservations that they may have of adopting out our technology. We really believe that the value of the technology is strong, we have not seen a huge pickup to-date because of the reservations our customers have. We always are getting these first orders out, again, but the first sales are going to be the most difficult. With these orders now in place going out into commercial operations, it may not have a lot of impact on revenues in 2023, that’s quite short-term. But I think it is meaningful to look at the longer term projection and the meaningfulness of these orders that we have, having got these first commercial orders and the effect that we anticipate that will have on our sales pipeline going forward. Amit Dayal: Okay. Thank you. Maybe just last one for me. Just on the lines of the sales-related comments. As the commercialization efforts grow and as you get traction, how are you thinking about sort of organizing your sales force and your sales efforts? Are you still at least in the near-term, going to be relying on some of your partners to help you and engage with customers, etcetera, or are you slowly trying to build an internal team as well? Jim Deller: Yes. Good question. It’s we have set out with our, what we have called an asset-light strategy back from the time that I joined the company back in 2019. The intention there was to enable us to leverage the technology that we have, but also to be as judicial as we can with the capital expenditure and basically our investors’ money. As part of that strategy, we are working with alliance partners such as Zeeco. For those of you who don’t know, Zeeco is the second biggest combustion equipment manufacturer in the world. They are on every single components with a huge sales force. And for our burner product line, we have partnered with California Boiler, one of the major burner installers and service companies in California. What that does is it allows us to basically have the reach and the resources of those huge companies, what we ourselves do not have to make the substantial investments to develop that capability ourselves. While we talk about sales, to maximize sales looking forward, those partner companies are expected to be doing a lot of the face-to-face meetings with clients. However, I do not believe in leaving sales totally in the hands of our partners. We have to support them, certainly when – in cases of strategic sales, we will be getting engaged with the customers. So, I do not plan to take on a lot of ongoing recurring cost to develop our sales team. But at the same time, we will make sure that we have the sales capability and also the tools and the infrastructure to maximize strategic sales to develop our business in new areas and then to help our partners be successful selling our technology. Amit Dayal: Alright. Thank you so much. Jim Deller: Thank you, Amit. Operator: Our next question comes from Mark Cronis , private investor. Unidentified Analyst: Hi, Jim. I have seen a picture of Mr. Menendez in China next to the test boilers in gas and water lines. How much did all of that cost? Jim Deller: I will elaborate on this. The short answer is I really don’t know. The work in China, those photographs were taken on the site of our partner, Shuangliang. Shuangliang is actually conglomerate, but a huge, one of the major manufacturing companies in China. We have partnered with them to deliver our boiler burner products into China and to combine our burners into their boiler to allow us to jointly offer a special package of low emissions equipment. As part of that venture, they have actually provided all of the costs for everything they have done there, getting that pipeline permitted in China, the high-pressure pipeline that’s required to run our 500-horsepower boiler burner in their boiler for certification was a huge undertaking on their part. So, for the short answer, apart from our relationship efforts, it didn’t actually cost us anything to put that in place. I think the other thing I would like to note and I did touch on in the comments for Shuangliang to carry that expense and to build those resources themselves, not just for this test, for those of you following, we have also certified 125 horsepower burner with Shuangliang in the same way. And for them to put that cost into our venture to me is just reassuring because it’s a very clear indication of their belief in the business potential of this joint venture in China and their commitment to their lines with ClearSign. Unidentified Analyst: Alright. Another question I have actually in prior conference calls, you have mentioned that there has been an increase in request for quotes. Can you give us an idea of the magnitude of that or… Jim Deller: It’s hard to do really get into a lot of the quotes or also come into California Boiler directly. So, even I can comment on the ones that we see, but those that come into our partners, we don’t see those until they really develop into meaningful opportunities. But I think for everyone, it’s more a tangible longer term and more strategically. And I think understanding the significance of getting these first commercial orders out into the market and especially into California and actually giving our customers some real references and first-hand experience of the technology is what I see as the most significant indicator of what we should expect in the future. Unidentified Analyst: Alright. Thank you. Jim Deller: Thank you, Mark. Operator: The next question comes from Robert Kecseg with Las Colinas. Please go ahead. Robert Kecseg: Hello, Jim. Jim Deller: Hi Bob. Robert Kecseg: First of all, congratulations, I was going to say congratulations on such great progress, I am kind of happy that I can’t keep up with the different orders now, and I am a little confused. But I was going to kind of add to the gentleman before about the increased inquiry. Is there some kind of like order of magnitude, I mean is there a noticeable difference in an inquiry to your company based on what we have seen in the sales announcements that you have made? Jim Deller: I mean Bob, I don’t want to get into giving guidance and also understand that we get inquiries in a variety of different levels of seriousness. But just as an example, we have teams out at the American Petroleum Institute Conference this week and the engagement we have had this past week there of the reports back, I was not there myself, but just the interactions and the interest, and we had a booth there and the number of people coming to the booth to look at that demonstration burner was a lot greater than even we expected. I think the guys said even on the very first day of the conference, they believe about 75% of the people that came up to get a firsthand look at that demonstration burner we had at the API conference, so if you take examples like that, we have never seen that before. Robert Kecseg: Okay. And I was going to say, back to the last call, I really wanted to compliment your vision where you have the idea that ClearSign Core kind of like the Intel was for computers, I remember you saying that a couple of years ago, and that heater designer company, Tulsa heater was a clear example of the ClearSign core that you had envisioned for the company. I was wondering when you were at your previous position, did your old company get an installation like that where it was sold to one of those intermediate companies like a heater designer company, or is that kind of unique? In other words, is that kind of unique to our technology? Jim Deller: Bob, I need to be a little careful giving details, right, for everyone not knowing I worked for one of the burner companies owned by Honeywell before joining ClearSign. That company did not actually have any boiler burners, putting a – it depends how you clarify the burner, the company that we sold our boiler burner into does use 4-Strat horizontally mounted burners. Typically, they would be no matter which supplier they would buy processed heater burners of that configuration. This is the first instance that I know where we have a standardized product that we design for a boiler, but are able to deploy into these different industries and even process heaters and to sell to a heater manufacturer rather than just being limited to boiler manufacturers. Robert Kecseg: Right. Okay. That’s kind of what I was getting at. I appreciate that. Jim Deller: Alright. Thank you, Bob. Operator: This concludes our question-and-answer session. I would like to turn the conference over to Matthew to read a question from the e-mail. Matthew Selinger: Yes. Here is a question from e-mail, if we could. Does ClearSign together with partners have sufficient production capacity and resources to handle and meet the rapidly growing demand for the installation of ClearSign’s products in the various markets? Jim Deller: Yes. Good question. I don’t know who sent that in, but I think it’s very pertinent. I am referring back to the previous comments, we talked about the asset-light strategy we have, part of that means that as ClearSign we have not invested heavily in manufacturing capital and personnel to actually manufacture it. We did however, plan and moved the company headquarters into Tulsa for the reason that it allowed us to engage with partners and the great manufacturing capability. Zeeco, our process burner partner, their headquarters are here in Tulsa. They truly are a global company. They are the second biggest burner manufacturer in the world. They not only have the test facility, but they manufacture the process burners for us. We have an agreement with them for that. They absolutely have the capacity to manufacture all of ClearSign burners. They also have outsourced capabilities, should that be needed. But given that they are the second biggest burner manufacturer in the world, there is a lot of room for expansion and for ClearSign to build burners for us. On the boiler burner technology, we do have manufactured and delivered the ClearSign Core burner part to California Boiler to include that burner in their package. Tulsa has a huge wealth of manufacturing companies that were developed in the oil and gas and process industry. We have worked with a few. We have a couple of vendors that we use on a repeated basis at the moment. They have a very large capacity. So, I have absolutely no concerns there. And if or when the day comes that they do not have the capacity, there are a plethora of other manufacturers here in Tulsa or in certainly in the Midwest of we can reach out to, so I do not have any concerns about our ability to manufacture and deliver product. Operator: Thank you for your questions. I would like to turn the conference back over to Jim Deller for any closing remarks. Jim Deller: Thank you everyone for your interest and taking the time to participate today. We look forward to updating you regarding our developments and speaking with you all on our next call. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect. Follow Clearsign Technologies Corp (NASDAQ:CLIR) Follow Clearsign Technologies Corp (NASDAQ:CLIR) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) Q1 2023 Earnings Call Transcript May 4, 2023 Operator: Good afternoon, and welcome to the Ultragenyx First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the end of the prepared remarks, you will have an opportunity to ask questions during the Q&A […] Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) Q1 2023 Earnings Call Transcript May 4, 2023 Operator: Good afternoon, and welcome to the Ultragenyx First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the end of the prepared remarks, you will have an opportunity to ask questions during the Q&A portion of the call. It is now my pleasure to turn the call over to Joshua Higa, Vice President and Head of Investor Relations. Joshua Higa: Thank you. We have issued a press release detailing our financial results, which you can find on our website at ultragenyx.com. Joining me on this call are Emil Kakkis, Chief Executive Officer and President; Erik Harris, Chief Commercial Officer; Eric Crombez, Chief Medical Officer; Aaron Olsen, Senior Vice President of Corporate Strategy and Finance; and Ted Huizenga, Chief Accounting Officer. I’d like to remind everyone that during today’s call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. Please refer to the risk factors discussed in our latest SEC filings. I’ll now turn the call over to Emil. Emil Kakkis: Thanks, Josh, and good afternoon, everyone. In the first part of the year, we made meaningful progress towards generating data from our key clinical programs. The Phase 2 portion of the UX143 pivotal study for osteogenesis imperfecta is fully enrolled and the team has begun analyzing the data in advance of the data release in mid-2023. Around that same time, we begin and — we expect to begin dosing patients in the randomized placebo-controlled Phase 3 portion of the study. Based on the KOL feedback, we believe the Phase 3 should roll swiftly and move us that much closer to a potential therapy for patients with this bone disease. Similarly, with GTX-102 Phase 1/2 for Angelman, we have begun ex-U.S. dosing in the expansion cohorts. Outside the U.S., we’ve seen positive feedback on our protocol and are activating multiple sites in Australia and across Europe. This broadens the number of sites who have experience with GTX-102 to support conduct of the Phase 1/2 and can participate in a future Phase 3 study. In the U.S., we’ve had productive discussions with the FDA and look forward to possibly expanding dosing in the U.S. On the commercial side of the business, we continue to grow revenue and make progress on expanding access to our therapies around the world. In the first quarter of 2023, Crysvita revenue in Latin America grew 120% to $20 million compared to $9 million in the prior year. Five years in the launch there are still meaningful opportunities for significant growth. We recently began the next chapter for Crysvita in North America with Kyowa Kirin assuming primary commercialization responsibilities for the program in the U.S. and Canada last week. We will continue our joint commercial efforts in the U.S. through April 2024. And beyond that, we’ll continue promoting this blockbuster therapy to medical geneticists. In the span of 10 years, Crysvita has moved through late-stage development with approvals in two rare genetic bone disorders and reached thousands of patients around the world. I want to acknowledge the work and dedication of our integrated Kyowa Kirin and Ultragenyx team in their commitment to the patient community and therefore, their most recent efforts in planning for and achieving a smooth transition, with patient experience as the top priority. I also want to briefly comment on the recent remarks made by Peter Marks, proposing an operation warp speed type approach to alter a rare disease. This year marks the 40th anniversary of the Orphan Drug Act. While it has been instrumental to progress in treating rare diseases has left ultrarare diseases behind. We have an opportunity right now to make progress across many life-threatening diseases afflicting infants and children for which there are currently no treatment to offer hope and the path forward to the parents and families of these children. I’m fully supportive — very supportive of the agency providing clear framework that makes the accelerated approval pathway accessible to new therapies in ultra-rare genetic diseases. And I’m hopeful that the agency will work with the urgency required. Too many small companies with limited resources have had to halt promising programs. We greatly fear that we may lose the majority of these new treatments for ultra-rare diseases. I’m encouraged that the agency is showing receptivity and listening to the community. Before I turn the call over to Erik Harris, I’d like to welcome Eric Crombez to the call in his new position as Chief Medical Officer and Executive Vice President. Eric has been a driving force on our gene therapy programs and has extensive experience with rare metabolic disorders. He and Camille worked closely together for over five years on advancing our clinical programs, and it has been a seamless transition as she steps into her new role as a full-time strategic adviser. I also want to thank Camille for her passion and dedication to both Ultragenyx and the rare disease community. She’s been instrumental in development of our clinical pipeline, and I’m grateful for our ongoing partnership going forward. Now I’ll turn the call over to Erik Harris to provide an update on our commercial efforts for the quarter. Erik Harris: Thank you, Emil, and good afternoon, everyone. In April 2018, we launched Crysvita in the U.S. with the hope of offering children and adults a breakthrough therapy targeting the underlying cause of their disease. In the five years since we generated approximately $1.9 billion in cumulative top line product sales, which is shared with our partner, KKC. Our patient find efforts have led to nearly 3,000 start forms and approximately 2,500 patients who have received reimbursed therapy. When we launched Crysvita, it was not well understood whether utilization by adults would be similar to PDs. In the first quarter 2023, approximately 65% of the start forms represent in adult patients. And now they make up more than half, 55% in fact, of all patients on reimbursed therapy. This is one of the most important factors driving the success of this launch, and yet there are still plenty of opportunities to continue growing this franchise. The U.S. field and patient support teams have executed well against the goal of bringing this therapy to pediatric and adult patients with XLH and TIO. I am proud of their work establishing a strong and growing base that Kyowa Kirin with support from our extended transition team will be able to build on going forward. As we move on to the next phase, I would like to thank the relentless efforts from our North American team that led this to be a very successful rare disease launch. The team in Latin America has also made meaningful contributions to the overall success of Crysvita. As a reminder, this region is not impacted by the KKC transition, and we will continue leading all the commercialization efforts. Our team continues to work country-by-country to obtain additional regulatory and reimbursement approvals. Most recently, Mexico was added to the growing list of countries where Crysvita has received a positive reimbursement opinion. The Mexican Health Technology Agency has recommended the reimbursement for the pediatric patient population, creating the opportunity for these patients to be treated with Crysvita. In the first quarter 2021, there were approximately 120 patients on reimbursed therapy. Over the last two years, this has grown to approximately 350 patients, with the greatest acceleration happening in the last couple of quarters following pediatric reimbursement approval in Brazil. As it is common in this region, ordering patterns drive some quarter-to-quarter variability in revenue, but the underlying demand is continuing to grow. Today, we are reaffirming the Crysvita guidance we issued at the beginning of the year, the range of $325 million to $340 million includes all regions in all forms of Crysvita revenue. More specifically, it includes Crysvita product revenue from Latin America and Turkey, the cash and noncash royalties from North America and Europe and the collaboration profit share revenue prior to the transition. I’ll now shift to Dojolvi. In the U.S., the leading indicators continue to show there is a real demand for this product from the patient community. In the first quarter, we added approximately 35 completed start forms to the top of the funnel, which is one of the strongest quarters we have had since launch. As of the end of the quarter, there were approximately 400 patients on reimbursed therapy with approximately 200 health care providers writing at least one prescription for Dojolvi. Our early efforts to educate health care providers on the benefits of the dose titration supported by our clinical studies have begun to pay off. We look forward to continuing these efforts to ensure patients are able to achieve optimal dose titration. In Latin America, we are continuing to leverage our existing infrastructure to commercialize Dojolvi. Earlier this year, the first Brazilian patient navigated the injunction process to receive commercial therapy, and in Mexico, patients have begun receiving therapy through private insurance plans. We are continuing to work the authorities in Brazil, Mexico and the other countries in the region to enable greater access to this important therapy. Across Europe, the named patient and early access programs continue to drive demand for Dojolvi. As we have said before, France and Italy are leading the way, with more and more requests coming from Germany, Austria and certain Middle East countries. Across all regions, we expect Dojolvi revenue to be between $65 million and $75 million, reaffirming the range we announced at the beginning of the year. We are also reaffirming our 2023 revenue — total revenue guidance issued in the beginning of the year with a range of $425 million to $450 million. This range includes revenues for Crysvita and Dojolvi, our ultra-rare product, Mepsevii as well as our latest commercial product, Evkeeza. Before I hand it over to Aaron, I wanted to touch base on Evkeeza, the European, Canadian, Japanese and Latin American teams have made meaningful progress in their efforts to launch Evkeeza outside of the U.S. and have received strong feedback from the KOLs in those regions. Throughout the year, they will continue filing the various country applications that will support the commercial launches that are expected to begin in the second half of this year. With that, I’ll turn the call to Aaron to share more details on the financial results for the quarter. Aaron Olsen: Thanks, Erik. Earlier today, we issued a press release that included financial results for the quarter, which I will briefly summarize. Company revenue for the quarter ended March 31, 2023, totaled $100 million. Crysvita revenue for the quarter was $76 million, which includes $50 million from North America, $20 million from Latin America and $6 million in noncash European royalty and other product revenue. Dojolvi revenue in the first quarter of 2023 was $14 million. Mepsevii revenue for the same time period was $8 million. Our total operating expenses for the quarter ended March 31, 2023 were $255 million, which includes R&D expenses of $166 million, SG&A expenses of $77 million and cost of sales of $12 million. Operating expenses for the quarter include noncash stock-based compensation of $32 million. In our press release issued today, we note that we have completed enrollment of the single ascending dose portion of the UX053 Phase 1/2 study and that we have decided not to enroll patients in the multiple ascending dose cohorts at this time. This is part of the company’s decision to focus greater resources on our later-stage programs and is not related to UX053 product safety. Similarly, we have deferred IND filings for certain early-stage programs that were initially planned for this year to conserve and focus resources. For the first quarter of 2023, net loss was $164 million or $2.33 per share. We ended the quarter with approximately $750 million in cash, cash equivalents and marketable securities. In the first quarter, there are certain uses of cash that do not repeat on a quarterly basis. This is primarily attributable to the payment of our annual employee bonuses. Additionally, Q1 2023 was our last full period of Crysvita commercial cost sharing with Kyowa Kirin during the North America profit share period. And our funding of commercial support will be substantially reduced post transition. We continue to expect 2023 net cash used in operations to be less than $400 million. Now I’ll turn the call to Eric Crombez, who’ll provide an update on our key clinical programs. Eric Crombez: Thank you, Aaron, and good afternoon, everyone. Now I would like to provide brief updates on two of our key clinical programs, GTX-102 for the potential treatment of Angelman syndrome and UX143 for the potential treatment of osteogenesis imperfecta before turning the call back to Emil to close out. As previously discussed, Angelman syndrome is a severe neurogenetic disorder with a broad spectrum of disease manifestations that affect multiple developmental domains. We have been treating patients with GTX-102 for several years and have seen encouraging dose and time-dependent clinical activity. In the first part of the study, we completed enrollment of patients in dose escalation cohorts. To date, there have been 14 patients with at least six months of exposure to GTX-102, including nine patients who have been on continuous therapy for more than one year. Based on what we’ve seen in the dose escalation cohort, we have now advanced to enrolling and dosing patients and expansion cohorts, which are designed to verify the GTX-102 dose in treatment regimen that will be used in the Phase 3 study. Outside of the U.S., we plan to enroll approximately 40 patients in Cohort A, patients between four and eight years old; and Cohort B, patients between eight and 18 years of age. Patients in these cohorts will be dosed with what we expect to be the Phase 3 dose and will have the ability to individually titrate as the way to optimize the clinical benefit. We expect to have the majority of patients enrolled in the coming months. In the U.S., discussions with the FDA are ongoing with the goal of harmonizing the dose strategy with the ex-U.S. protocol. The three patients who were originally treated in the U.S. have begun redosing and continue to do well. We are encouraged that we are seeing clinical activity at these lower doses with a favorable safety profile. Now turning to UX143 or setrusumab for the potential treatment of osteogenesis imperfecta. OI is a disease of mutated collagen and of abnormal bone metabolism. We believe that bone strength can be nearly normalized without directly correcting the underlying college defect. The anti-sclerostin mechanism of setrusumab provides a unique dual action to address the body’s maladaptive response to the defective collagen. Setrusumab stimulates osteoblast to mature into bone making cells and makes those cells increased bone production while also limiting the amount of bone resorption. We are currently conducting a Phase 2 study that builds on the substantial data Mereo has generated, and we look forward to continuing the analysis and sharing the Phase 2 data. The Phase 2 data are expected to include percent change in serum P1NP and safety data for all patients. It is also expected to include changes in CTx and the available three and six month lumber spine bone mineral density. We plan to use this data to help inform Phase 3 dosing and show that we are on the path towards making stronger bone and bringing forward a much-needed treatment for patients suffering with OI. I’ll now turn the call back to Emil to highlight the key upcoming milestones and provide closing remarks. Emil Kakkis: Thank you, Eric. I’ll summarize the key clinical catalysts before we open it up for Q&A. I’ll start with our gene therapy programs. DTX401 for GSDIA dosed the last patient and pivotal study earlier this year. We’re now in the 48-week window, and we expect to share this Phase 3 data in the first half of 2024. UX701 for Wilson disease is enrolling patients and dose-finding stage. We expect this to complete in the second half of 2023 with data on safety, initial signs of connectivity expected in the first half of 2024. We’ve now dosed multiple patients in the DTX301 Phase 3 study and expect enrollment to pick up as more patients make it through the baseline screening period. Discussions with FDA on UX111 for Sanfilippo A syndrome are progressing, and we’re seeking a path to an accelerated review for this program. We look forward to sharing more details with you when they are available. Moving to UX143 for osteogenesis imperfecta. The Phase 2 portion of the study has been fully enrolled, and we expect to share these data, and the transition to Phase 3 would be in mid-2023. Separately, we’re planning to initiate a young pediatric study that compares UX143 to bisphosphonates, assessing fracture rates in a younger patient population, which have a much higher fracture frequency. This study is expected to begin later this quarter. Lastly, GTX-102 in Angelman syndrome. The long-term exposure and clinical activity Eric mentioned continue to support my belief we have a therapy that could change the future for Angelman syndrome. Our discussion with the FDA has been productive and we look forward to sharing our next data cut with you later this year. We’re making a lot of progress in our key clinical programs early in the year. We’re also investing today in our Phase 2 programs with UX143 and GTX12 by establishing a broader network and investigators and study sites in more geographies, which will enable us to drive faster and more efficient Phase 3 studies. With that, let’s move on to your questions. Operator, please provide the Q&A instructions. Q&A Session Follow Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) Follow Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. Our first question comes from Gena Wang with Barclays. You may proceed. Gena Wang: Thank you for taking my questions. I have two questions. First one is for the osteogenesis imperfecta Phase 2 update. So what would you be looking for to inform you on optimal Phase 3 study design and related to the Phase 3 study design, will patient baseline with two fractures per year? Would that be too low to show sufficient clinical benefit? My second question very quickly is more on the Crysvita guidance. The $325 million to $340 million guidance for 2023. Was that before or after 30% U.S. royalty to OMS? Emil Kakkis: Very good. I’ll go ahead and answer the OI particular question. And then I think the second part is really Aaron can answer the question on how we’re doing the royalty revenue. So on OI Phase 2, what are we looking for? We’re looking mainly in the Phase 2 portion simply to help us fine-tune the dosing. We know the drug works, and we know 20-milligram per kilo can work its dose. We’re just trying to figure out whether the young patients might do better with a higher dose. We normally expect that the exposure might need a higher dose to get — to achieve the same exposure to older kids. So that’s the primary purpose of it is just finding the dose number. The design is all set in the trial. And the question — second question you asked is two fracture per year enough a threshold. Well, first of all, that’s the minimum to enter the trial. The average patient will have a number of fractures and we’ve done the work on powering and the design of the trial with 195 patients should have plenty of power to detect the fracture change. And the key thing to recognize also is the way we’ve designed the study is we will — we’re comparing placebo what we are going to look at an interim look and look at how the groups are operating and decide how long the study should be followed, how long the last patient should be studied. The total amount time exposure for the first patient could be 18 months or longer, and some of the last ones could be a year or it could be 18 months. And so the length of the trial will help be adjusted based on the interim look to determine again, to provide reassurance we do have the power. Our expectation though is that when you treat kids with bone disease, they respond much more rapidly than adults. So our expectation is that the differential in bones will come relatively quickly as they did, for example, with XLH treatment. So the second part of the question is what is the forecast for Crysvita and the interpretation with regard to the OMERS royalty. Aaron Olsen: The Crysvita guidance of $325 million to $340 million is before the OMERS royalty share. We continue to recognize all revenue, although a certain portion will be noncash with OMERS royalty share. Emil Kakkis: This is the way the accounting needs to be done the royalty streams we have sold have a cap that come back to us and therefore, they looked at us that we are then recording and reporting noncash royalty income in addition to cash royalty income. I still think it also gives you a better apples-to-apples house picture of what the royalty is — I mean what the revenue is overall from the region, so you can compare year-to-year. Okay. Thank you. Operator: Thank you. Our next question comes from Maury Raycroft with Jefferies. You may proceed. Maury Raycroft: Hi, thanks for taking my questions. For the Angelman program, just wondering if you can elaborate more on the feedback you received? And then is the registrational path dependent on dose harmonization? Or can you get alignment on key design considerations ahead of the data update? Emil Kakkis: Yes. I assume you’re talking Maury about the U.S. feedback just to… Maury Raycroft: Yes, that’s correct. Emil Kakkis: Good. Well, we won’t really go through it in detail. What we said is productive, meaning we’re having a good conversation that’s practical and looking at the issues. But we don’t really provide detailed feedback on how it’s going, what’s being said until we get to the end and make a decision. But our goal here is to get the loading doses to be equalized in the regimen is close and I think that we’ve said in the past, we might try different regimens, slightly different regimens. But I would look to try to get a program that is a single path in loading and maintenance that we could run a Phase 3 trial of. But remember, this is — we’re talking about the Phase 2 section and from it, we would derive what our Phase 3 plan would be. So I feel — I’m encouraged we should be able to get this figured out and get to a right dose. So on the registrational dose, yes. So the expectation is we’re going to have one dose globally for the load. But I will say one thing about dosing in rare disease in general, wells in Angelman. There really is no the dose. There is doses and the doses will have a range of responses always. Our expectation along with Angelman is that there will be some need for individual titration. And we may prove the efficacy on a regular dose. There may be some individuals that need higher or can get by with less, and that will become part of it. I’d point out, for example, the work we did on Kuvan for PKU where we had one dose for the Phase 3 study and then individual patients kind of titrate to their need. I would just guide you to think that way. The goal here in Phase 2 those get to dose that we can load and have an important clinical effect in a large majority of patients and show the benefits of that treatment, with the expectation in the long run that individuals may titrate to reach their optimal effect in their own particular situation. Operator: Thank you. Our next question comes from Dae Gon Ha with Stifel. You may proceed. Dae Gon Ha: Great, good afternoon. Thanks for taking our question. I’ll ask a question on setrusumab again. Emil, looking back at ASTEROID, the bone biomarker data that’s been presented previously, wondering if you can comment on tachyphylaxis if that’s even appropriate. And does Romos recommend a one-year treatment duration have any implications on chronic therapy for setrusumab? Thanks so much. Emil Kakkis: Yes. I actually think you’re — what you’re talking about in setrusumab data is if you look at P1NP, the peak of P1NP kind of goes down, and so it looks like you’re losing effect, but you’re not really. What’s happening is that you’re losing the synchronization of the response, it’s like a pebble and a pan, the beginning of the response is for a sharp start. And then as each wave comes, it settles in. But if you look at the right dose at the end of the year, you will see that you get a continuous steady P1NP areas on the curve now it’s going up. And the peak is less important than the area of the curve, right? So you have to think of it as a harmonic pattern, essentially. If you look at the bone marrow density data differently, you will see the bone marrow density is linearly going up continuously for the entire year at 20, not at eight. At eight, it was fading a little more at the end of the piece, but at 20 it look continuous, and it was ongoing at a good clip even at the end of the year. So our view is that for this disease based on that information as well as the information from the withdrawal of setrusumab. The decline in bone marrow density indicates that there’s a strong reversal of the effect if you don’t continuously treat. And so our expectation is that we will need to continuously treat beyond one year. It is possible that, let’s say, after a couple of years or after achieving some level of bone marrow density that is sufficiently strong and normal that you could back into, let’s say, an every other month regimen or a maintenance regimen. And we’re going to continue to look at that as we go. But right now, we think OI is different from osteoporosis. As you do need chronic therapy, there’s a stronger stimulus for absorption there and we need to counteract that with continuous exposure. And now everything we’ve seen from ASTEROID would tell us that continuous treatment will get you continuous bone production. And so we look at these disease being distinctly different for that reason. Operator: Thank you. Our next question comes from Anupam Rama with JPMorgan. You may proceed. Unidentified Analyst: Hi, thanks for taking the question. This is actually Malcolm Kuno on for Anupam. So looking ahead, is there anything that you would be looking for in Sarepta’s AdCom panel next week that could read through to your broader gene therapy program? Emil Kakkis: Well, in our own — I think the panel is really looking at whether they’re going to give them accelerated approval. The principal of accelerated approval may be at test there. And in addition to the specifics about their particular trial. We think accelerated approval is really important in the rare genetic diseases. So we’re support of approval. We don’t think that approval will cause other treatments or better treatments to be not developed. We — in fact, think that an accelerated approval for that program will help further improvements in Duchenne Muscular Dystrophy be developed. I think the panel needs to understand that. From affecting our own programs, all of our programs have agreed upon endpoints with the FDA, and they’re all really based on standard approvals and their combination of biochemical endpoints and other clinical endpoints, whether it’s removal of their drugs or other outcomes, so our program is really not — none of the three — those three programs are dependent on excel approval at this point, and the endpoints are set for what would be expected to be standard approvals. With regard to MPS IIIA and Sanfilippo program, there was an understanding about a clinical-based long-term follow-up approach to achieving filing. But we are evaluating that situation, the use of accelerated approval on heparins sulfate biomarker. We think that’s the right thing. We think that situation is true for a number of companies. And I think that a number of the companies have treatments that reduce heparan sulfate, and I think will be highly predictive of good outcomes if you achieve a sufficient reduction in heparin sulfate. So there is maybe some meaning to that, but I would say it’s going to say more about Sarepta Duchenne than on whether MPS IIIA or other types of biomarker will get approved. But as a company, we’re supportive of using the center approval pathway in rare diseases, and we think that — we think that the FDA should not consider that to be a problem. That should be an opportunity to treat more rare diseases than we’ve been able to treat now that we have these novel precision medicine treatments available to us. Q:: Operator: Thank you. Our next question comes from Joon Lee with Truist Securities. You may proceed. Joon Lee: Thanks for taking our question. On the efficacy signal you’re seeing in the Angelman trial so far, what is your latest thinking in terms of approval endpoint? Is it still a CGI CAS or something different? And is that also part of your ongoing discussions with the FDA? Thank you. Emil Kakkis: Yes. So I mean, what we have talked about before continues. I mean there’s both receptive and expressive communication are important, and we’re seeing improvements there. And I think we’re seeing improvements we’ve said before in sleep. And actually, several domains. So we see a lot of potential in any of these. But since communication is important, and if we were pushed into picking one, we would pick the communication domain as being a unique and powerful one that’s important to patients. In my view, the number of those domains are important, you could decide on any of them. But at this point, our discussions with the FDA have not gone into the endpoints. We’ve certainly touched on them. They understand what we’re working on, and we expect to be able to get into that later this year with them. But right now, our focus on getting the Phase 2 open and understanding how to optimize our plan to open the study globally for the Phase 2 portion of the Angelman program. Operator: Thank you. Our next question comes from Yigal Nochomovitz with Citi. You may proceed. Unidentified Analyst: Hi, team. This is Carly on for Yigal. Thanks for taking our questions. We wanted to ask about the initial data for Wilson disease expected early next year. I guess, can you help put into context what you plan to show and what you believe would constitute a positive outcome from that part of the study? Thank you. Emil Kakkis: Yes. The study, just remind you, and I’ll let Eric touch on what we’re evaluating. The study is basically looking at three dose levels, right? So the study will look at three doses, I mean purposes part is to pick the most effective dose, which we’ll look at in a number of ways. But we have had a discussion with the FDA, and it’s a seamless design. That is a Phase 2 will lead right to the Phase 3, and we’ve had discussion and Eric touched on what our Phase 3 approach is for the primary endpoint? Eric Crombez: Yes. Great. So I mean, fundamentally, Wilson disease is a disorder of copper metabolism. And we can measure that in many ways. Certainly with the clinical regulatory precedents that’s been established, that’s important for us to understand. So in addition to kind of the — I guess, what I’ll call typical ways to measure copper, we are also looking at an activity-based assay, which is measuring the actual loading of copper on to ceruloplasmin. That’s important, because the only way for that loading to take place is for the transgene to be producing that protein and for establishing the normal trafficking of copper. We will be also measuring ceruloplasmin levels themselves, if not bound to copper. Ceruloplasmin is quickly broken down. So if we can show increases in stabilization of ceruloplasmin levels. That’s another way to show that this transgene is producing protein, and we’re establishing the normal trafficking of copper. So again, we’re looking to yes, correct the toxicity of free copper, which key later also do, but also correct the functional copper deficiency meaning that without the loading of copper onto ceruloplasmin, you’re having a functional deficiency in these cells and tissues that need copper as a cofactor for enzymes. Operator: Thank you. Our next question comes from on Yaron Werber with TD Cowen. You may proceed. Yaron Werber: Yes. Great. I have an interrelated question on Angelman also. Can you just give us a little bit of a sense in the press release you mentioned 14 patients have had at least six months exposure and nine with more than a year. Is that at the 14 mg dose? Is that the only dose you’re expanding right now? Or are there two different doses. And secondly, when you’re talking about next data update in the second half of this year, is that going to be really safety only? Or do you expect to release some efficacy at that point as well? Thank you. Emil Kakkis: Yes. So remember, in the extension patients, they enter — there’s a load phase, and they were loaded at doses between really 3.5 to — 3.3 to 7.5 and then they’re on maintenance between 10 and 14. So all those patients on long-term therapy are getting Q3 therapy at 10 to 14 dosing, all right? But the loading dosing is starting is actually lower than that. That is the maintenance dosing during the maintenance period. So we haven’t said what the dosing is in our current Phase 2 expansion. We’ve decided to hold that information back. We have a plan based on what we’ve learned from the dosing so far, and we know that you can lower — we’ll load it a certain dose and maintain it — where it may rise to higher doses as we’ve seen in our other study in the first part of the study. The data later in the year will not just be safety. Our tended to put out information on the efficacy. And so we’re working through what we’ll provide and when from both the long-term data and the expansion cohort separately. Operator: Thank you. Our next question comes from Kristen Kluska with Cantor Fitzgerald. You may proceed. Kristen Kluska: Hi, good afternoon. Just considering the late-stage nature and potential approval cadence around a number of your late-stage candidates in the next few years. I wanted to ask how you’re thinking about leveraging and building on some of your ex-U.S. and global footprint to address some of these markets where you maintain rights? Emil Kakkis: Well, thank you. So commercially, one of the benefits having company with multiple approvals it does give us an opportunity to leverage that infrastructure. And while we had precedent in certain territories, Latin America, particularly long-term in Turkey currently. Globally, we have Dojolvi and Mepsevii. And we brought in Evkeeza primarily, because we felt we could leverage our global commercial footprint more effectively by adding that, especially in this gap between several approvals we had and then the next approvals. And so the Evkeeza sort of added another product to put in a launch mode ex U.S. One of the things that advantage of the rare disease, you can launch with relatively smaller teams of high-quality people that can get a lot done. And that’s key important being efficient — capital efficient in how we do this. And with the combination of products we have, we think we are able to leverage that. If you think about the setup now having those — the three products globally and four products in South America, we’re well set up then to be able to launch several new products, whether metabolic disease or expanding into neurologic disease. So I do think it sets up for what’s important to us and a real principle for Ultragenyx from the beginning was that to optimally commercialize and gain value, you really need to commercialize globally. You can’t just do the U.S. You really need to get pulling revenue from globally once you’ve done all the work to develop an approvable product. And so that’s been our philosophy from the beginning. And I think it’s starting to pay off as we start to gain and grow revenue outside the U.S. Kristen Kluska: Great. Thank you. And it looks like you have a pretty significant presence at ASGCT this year. Wondering if there’s anything in particular you think we should be focusing on? Thanks again. Emil Kakkis: Well, we’ve got a lot of programs, probably more gene therapy programs in Phase 3 than anyone else. Is that true? I think there’s no one with more that I’m aware of. So — we also have a very strong Pinnacle PCL platform, and there’s some information on the platform out there as well as about our new program, UX055, which is a CDKL5 intrathecal gene therapy which has some very exciting data in animal models and even in primates and pigs. So we feel good about our innovations and how to enhance delivery to the brain for AAV9 gene therapy, and that one will be coming to an IND. So that — there’s data on that as well at ASGCT. So we are busy there with all these technology and products that we’re working on. Operator: Thank you. Our next question comes from Jeffrey Hung with Morgan Stanley. You may proceed. Michael Riad: Hi, this is Michael Riad on for Jeff Hung. Thank you for taking our question. First one for GTX-102, what are you learning during the maintenance phase, especially for the nine patients who have been on for one year plus. The further out you go, has there been any evidence to suggest patients are building tolerance and can benefit from dose escalation? Thanks. And I have a follow-up. Emil Kakkis: Okay. I think one of the key things that learn from me is, first, certainly mentioned long-term safety. The fact we’re dosing so many kids chronically at these dose levels is a very important piece of the story, because if we were to have our — any safety event that happens a matter how much drug you give just needs a certain amount of drug to be accumulated, then you might have a problem at some point in time. The fact you can give the drug below threshold and given it this way that you can do that means the drug can be given long-term and chronically, which we think is important. The thing that’s more — even more interesting and important to understand is this is a development of the disease. And once we turn on their ability to develop, it doesn’t mean they develop instantly, they have to start developing, whether it’s language or other things, it takes some time. And so what we’ve said is we’re seeing time and dose dependent improvements, meaning as we watch people are gaining ground and improving, and we feel like that gives us some confidence that we’re working in a dose range that can be effective and that can change the future of these patients. So that’s what we’re learning from maintenance dosing, both long-term safety and the ability to get chronically dose drug and the fact that we can still — we can see progressive gains. Michael Riad: That’s very helpful. Thank you. And then maybe just a quick follow-up. So for COSMIC, obviously, the clearest measure is going to be bone fracture rate, but what about bone deformation and pain? It seems that these would be clinically meaningful for these patients. Is there any ability to measure bone deformation in these patients? Thanks so much. Emil Kakkis: Well, sort of bone deformation is really tricky. We did that kind of work in XLH where you developed scales, you have readers and all that. The problem is not something that’s going to help us with the regulators. And while it may help patients to know, it’s kind of thing is harder to power. Now in regard to pain and quality of life, those are being measured in the trial. We’re certainly measuring their pain, but also chronic functional activity, because we just do with people have very fragile bones, they also don’t feel good all the time. Even if they don’t have a fracture, they have microfracture, things that go on and make them feel bad that cause them to not be active, stay sedentary, et cetera. So we’ll be doing the kinds of quality of life and practical functioning assessments that will help support what the interpretation is on fractures. But so I appreciate you need to — it’s not enough just to look at fractures, but to look at the total case of an XOI patient and learn more from them. And then we are doing that deformation as one thing. We’ll look at the x-rays and see them, but we haven’t formally went about a way to assess that. I do think that’s something you would probably want to do in post-marketing and particularly the most important thing really is to take a look at our one or two-year-old that we treat and to look how their bones are maintained versus deformed. I think if we strengthen their bones, that when they’re four or five years old, they could be dramatically different from what you’d see in someone who didn’t have the right bone strength who had fractures for several years instead. So we’ll look for that. But I don’t think that’s necessarily about the Phase 3. That will be something long-term. And it’s one of the main things we’ve got into this program because we want to be able to change the future of these patients. And we think starting young before their bodies are destroyed will be a great place to change their future in a kid that doesn’t end up a wheelchair, but actually walk and is it in chronic pain, but you can live a real life. Operator: Our next question comes from Joel Beatty with Baird. You may proceed. Joel Beatty: Great. Thanks for taking the question. For the GSD1a gene therapy, do you have agreement with FDA on the primary endpoint? And are there harder clinical endpoints that are being monitor that will be important for regulatory filing or commercialization? Emil Kakkis: Yes, we do have agreement on that. We’re using the reduction in corn starch, while maintaining glucose control and that has been agreed to. But the clinical advocacy will not be just based on the primary endpoint alone. There will be other secondary endpoints that will be looked at as part of the clinical meaningfulness assessment. But the primary endpoint in corn search reduction was agreed. Operator: Thank you. Our next question comes from Salveen Richter with Goldman Sachs. You may proceed. Unidentified Analyst: Hi, thanks for taking our question. This is Tommie on for Salveen. So to follow-up on the Angelman question, how are you thinking about the interpretability of this update in terms of efficacy? Maybe any details on months of exposure, range of doses and cohorts would be helpful here? And on OTC, can you just comment on the pace of enrollment and any headwinds or tailwinds there and when we could see data from this program? Thank you. Emil Kakkis: So on Angelman. Yes, what we’ve heard and that we need to do is make sure when we put out efficacy data that we’re putting it in proper context. So it’s not only just dose and time exposure. But how does this compare to a comparable patient from natural history and maybe to do a propensity score type analysis where you compare match natural history patients to your patients to help create greater confidence around the difference between the treated patients we’re doing and what you normally see in these patients. So we intend to do that. The other thing is to calibrate the magnitude of change, how big is that change? What does the score mean clinically? Is it clinically meaningful? So that would be the second element of what we do. We’ll also — for those patients of the original five that have been re-dosed we can certainly compare their results on how they did before, and that will probably help give you some sense. But we are sensitive to issue, which is to make sure we’re providing you the proper context in terms of the efficacy data effectively compared to what you would expect for these patients. Eric Crombez: Next question was on the timing of OTC enrollment and data expectations. Emil Kakkis: Is that — you were on OTC, you’re talking about the gene therapy. Is that right? Eric Crombez: Yes. It was. Emil Kakkis: OTC. Okay. Well, our study is just — is enrolling now. It will depend how long, we put the GSD1 study as the primary driver on our gene therapy effort. And push back the OTC in terms of the effort and drive. It is enrolling now, and we plan to be international study and sites are open, and there’s growing interest. So it should be enrolling this year. But the timeline of that study is a little longer, because the study is 64 weeks, it’s not 48. So the timeline of the data would be 64 weeks after last patient gets enrolled. So that’s not — obviously, that means if we enroll even before the end of this year, the data will not be next year, I’ll end up being year after because of the longer time frame. Operator: Thank you. Our next question comes from Debjit Chattopadhyay with Guggenheim. You may proceed. Unidentified Analyst: Hi, this is on for Debjit. We want to get your thoughts on the translatability of P1NP correlations to BMD in the setting of postmenopausal osteoporosis translated to pediatric individuals with OI. Emil Kakkis: Okay. Well, we really don’t have to worry about osteoporosis, because there is enough ASTEROID data from P1NP and BMD. There were 90 patients at three dose levels that had different doses of different P1NP responses and different BMD responses. So we actually have 90 patients worth of day to show the correlation. What was found is that P1NP at one month is highly predictive what you see at one year in these patients, and that there clearly was a dose dependent on P1NP, and that translate later. The one — and so what’s interesting then is that how much P1NP you’re making is it really a measure of how much bone you’re laying down. But the way you respond at the beginning pretty much sets in motion a process which will generate bone marrow density. So we’re pretty impressed how well they’re correlated. That said, we’re also measuring BMD in our dosing study. So we will actually have some data through six months in some patients for the Phase 2 study, which will allow us to directly confirm what our P1NP is telling us about dose with actual BMD data, too. So we’ll have a little bit more than just P1NP for our Phase 2 in terms of understanding how to optimize the dose for our Phase 3. Unidentified Analyst: Thanks for that. in adults then translate to what you expect in the pediatric population? Is it sort of one-to-one? Emil Kakkis: Well, one of the reasons to do the study is actually determine how the adult response with OI relates to the peds response. Our expectation, the fact that young patient will respond much more strongly that they have higher P1NP level to begin with, and they’ll love a far larger surge because their bones are metabolically more active. The real other question is, because younger patients have faster metabolism, they could clear the antibody faster. And so we’d want to look at exposure too. And so we’ll look at how exposure correlates with P1NP and then we’ll look at how exposure relates to age of the patient. The combination of that will tell us, do young patients, are they equally sensitive to adults at the same exposure, yes or no. And if they are, then what is exposure needed at different doses — at different ages and do young patients need more drug? And so that would be the kind of tweaking that would help us assure that if the four-year-old really needed more antibody than the 12-year-old that we can make that adjustment and give them the optimal benefit of the drug. So that’s kind of the way we’re looking at it. Hopefully, that’s helpful. Operator: Thank you. Our next question comes from Liisa Bayko with Evercore. You may proceed. Unidentified Analyst: Hi, thanks for taking our question. This is Julian on for Liisa. My question is on setrusumab. So I met you’ll provide some BMD data. So how many patients worth of data should we expect? And is there any correlation between bone marrow density and factor? If so, how strong is the correlation? Thank you. Emil Kakkis: Yes. So we have 24 patients enrolled in the study. And we’d expect to have P1NP data on all of them. We’ll have variable amounts of BMD data depending how long ago they were enrolled. We’ll have some six month data and probably more three months data in BMD in this group. So the question you asked then follow-up was, does BMD predict fracture? I think in OI will from the ASTEROID study, they showed a trend at the high dose, which was look consistent, but there weren’t enough fractures in the adults to be able to have enough power to tell. So what we’re basing this on is the fact that the bones that are weak can be restored in strength very quickly and in the mechanism of how BMD increases with anti-sclerostin should be laying down on bone where it’s needed, where the bone is moving or where is unstable. And so just the very mechanism alone means the BMD should predict well. When BMD hasn’t predicted is usually with anti-catabolic agents like this phosphates, where you’re just keeping bone wherever it is, but it may not be in the right place. So when you make bone and lay it down in the right places this mechanism the bone marrow density will predict improvement in strength, whereas if you just block bone absorption, you end up bone somewhere, but it may not be in the right place. And that’s why there’s been some discrepancy in the past. But anabolic agent like this we feel the bone strength will correlate. It did well in the animal models that bone mass correlate very well with bone strength improvement, whereas biphosphate, that wasn’t true, bone mass increased more than the bone strength did. So I think there’s enough data to tell us that this mechanism will give us a bone marrow density that is effective in improving bone strength. Operator: Thank you. This concludes the Q&A session. I’d now like to turn the call back over to Joshua Higa for any closing remarks. Joshua Higa: Thank you. This concludes today’s call. If there are additional questions, please contact us by phone or at ir@ultragenyx.com. Thank you for joining us. Operator: Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect. Follow Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) Follow Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

NovoCure Limited (NASDAQ:NVCR) Q1 2023 Earnings Call Transcript May 4, 2023 Operator: Good day, and thank you for standing by. Welcome to the NovoCure’s Q1 2023 Earnings Conference Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Ingrid Goldberg. Please go […] NovoCure Limited (NASDAQ:NVCR) Q1 2023 Earnings Call Transcript May 4, 2023 Operator: Good day, and thank you for standing by. Welcome to the NovoCure’s Q1 2023 Earnings Conference Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Ingrid Goldberg. Please go ahead. Ingrid Goldberg: Good morning, everyone. Thank you for joining us to review NovoCure’s First Quarter 2023 Performance. I’m on the phone this morning with our Executive Chairman, Bill Doyle; our CEO, Asaf Danziger; and our CFO, Ashley Cordova. Other members of our executive leadership team are also on the call and available for Q&A. For your reference, slides accompanying the earnings release can be found on our website, www.novocure.com, on the Investor Relations page under Quarterly Reports. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements and actual results could differ materially from those projected in these statements. These statements involve a number of risks and uncertainties, some of which are beyond our control and are described from time to time in our SEC filings. We do not intend to update publicly any forward-looking statements, except as required by law. Where appropriate, we refer to non-GAAP financial measures to evaluate our business, specifically adjusted EBITDA, a measure of earnings before interest, taxes, depreciation, amortization and share-based compensation. We believe adjusted EBITDA is an important metric as it removes the impact of earnings attributable to our capital structure, tax rate and material non-cash items; and best reflects the financial value generated by our business. Reconciliations of non-GAAP to GAAP financial measures are included in our press release, earnings slides and in our Form 8-K filed with the SEC today. These materials can also be accessed from the Investor Relations page of our website. Following our prepared remarks today, we will open the line for your questions. I will now turn the call over to our Executive Chairman, Bill Doyle. William Doyle: Thank you, Ingrid, and good morning. At NovoCure, our mission is to extend the lives of patients diagnosed with aggressive forms of cancer. Over the last two decades, we’ve completed multiple successful clinical trials, expanded our international footprint to include 10 global markets, published over 500 manuscripts, built a strong and sustainable business model, and most importantly treated over 27,000 commercial patients. We are proud of the business we have built and people we have helped. Next month at the American Society of Clinical Oncology Annual Meeting in Chicago, we will present the results of our Phase 3 pivotal LUNAR trial in non-small cell lung cancer. Our ASCO presentation will mark the beginning of NovoCure’s next chapter, with the intention to help tens of thousands of additional patients diagnosed with deadly cancers in the coming years. I am grateful for the hard work of NovoCure’s employees, as well as for the dedication and courage our patients and prescribing physicians. I cannot wait for all that lies ahead in 2023. On today’s call, we will begin with a discussion of our clinical catalysts, followed by a review of our core business in GBM. We will close today’s call with a discussion of our first quarter financial results before opening the line for questions. Earlier this year, we announced the top line results of the Phase 3 pivotal LUNAR clinical trial evaluating TTFields together with standard of care therapies in Stage 4 non-small cell lung cancer. LUNAR met its primary endpoint, providing the first advanced in Stage 4 refractory non-small cell lung cancer in more than 7 years. LUNAR demonstrated a profound benefit when TTFields therapy was combined with immunotherapy meeting powered secondary endpoint, valuating overall survival of patients treated with TTFields and a checkpoint inhibitor versus a checkpoint inhibitor alone. LUNAR also demonstrated the positive trend in overall survival for patients treated with TTFields and docetaxel versus docetaxel alone. We are pleased to share that the LUNAR data will be presented next month at the ASCO annual meeting in Chicago. On Tuesday, June 6, lead investigator Dr. Ticiana Leal of Emory University will present the LUNAR trial findings during the metastatic non-small cell lung cancer session. Later on Tuesday, NovoCure will host a presentation and question-and-answer session with Dr. Leal; fellow LUNAR investigator Dr. Corey Langer at the University of Pennsylvania and leadership. I will remind you the improvements in overall survival demonstrated by LUNAR follow a period with no clinical improvement in the treatment of non-small cell lung cancer following platinum failure since 2016. LUNAR is the first of multiple Phase 3 pivotal trials set to read out over the 1.5 year, each focused on a population with high unmet need. Later this year, we expect to announce top line results from the Phase 3 pivotal INNOVATE-3 trial in platinum resistant ovarian cancer. In early 2024, we anticipate the top line results from the Phase 3 pivotal METIS trial, evaluating the use of TTFields for the treatment of brain metastases from non-small cell lung cancer. And following the completion of the 18-month follow-up of the last patient enrolled, we expect top line readout of the Phase 3 pivotal PANOVA-3 trial in locally advanced pancreatic cancer in 2024. These pivotal clinical trials will provide the foundation for the next stage of NovoCure’s growth. In the U.S alone, the number of diagnoses of the cancers treated in these trials is nearly 14x the annual diagnoses of glioblastoma, an indication in which we have a strong and sustainable commercial business. The outcomes of these pivotal trials could enable tens of thousands of patients to benefit from TTFields therapy. That promise to extend the lives of patients diagnosed with aggressive forms of cancer, continues to drive us every day. With the potential to treat many thousands, more patients soon, we believe we are one step closer to achieving our mission. I look forward to seeing many of you in Chicago next month and to updating you throughout this exciting time. With that, I will turn the call over to Asaf, to discuss our commercial business. Asaf Danziger: Thank you, Bill. Before turning to GBM, I would also like to share my excitement and commitment to what is coming in the next 2 years. With multiple pivotal studies set to read out, it is an amazing time to be at NovoCure. We have a lot of rewarding work ahead of us to bring our therapy to many new patients. One of our key areas of focus this year is to return to active patient growth in GBM. NovoCure’s commercial business continues to provide the financial strength to invest for the future. Our commercial foundation has never been more important with the possibility of multiple commercial launches on the horizon. We are proud of the resilient business we have built, but we know there are many more GBM patients that could benefit from TTFields therapy. We are determined to increase penetration in our current markets, reach patients in new markets, and help patients remain on therapy longer through education and product innovation. Increasing market penetration in our current markets, where we have captured approximately 40% market share is essential to the growth of our GBM business. In recent months, we restructured our commercial organization to better leverage resources, and improved our digital footprint to engage more health care providers and patients. In the US, we received 1,051 prescriptions in Q1, the most we have ever received in a single quarter. While we recognize and appreciate that in health care, systemic change does not occur overnight, we are encouraged by the U.S results. So though, we are seeing steady recovery in Germany, in both new patient starts, and reimbursement approvals. While these are early indicators, we believe they show progress that will contribute to greater penetration in the future. We are also dedicated to entering new markets, enabling many more GBM patients to access our therapy. Earlier this year, we received reimbursement for opportunity in France. France is the second largest country in the EU, and entering France will present a key execution milestone in our effort to reach patients in new markets. We have received our first prescriptions in France and have begun treating patients. France is our second new market opening in less than 4 months following the approval of Optune in Canada in November. Our market access teams are engaged with health care authorities in a number of additional potential markets, with the goal of reaching more GBM patients in it. Finally, we continue to focus on improving our technology to better serve patients. Clinical research shows that small time on TTFields therapy leads to better outcomes. And we want to enable patients to wear Optune for as many hours per day as possible. To this end, one of our most important initiatives is the launch of a new generation of arrays. Our new arrays are thinner, lighter and more flexible than those in current use. Following a successful pilot launch in Austria last year, we are now rolling out in Sweden, and we are very pleased with the results to date. Patients have reported a materially improved treatment experience, both during daily activity and during sleep. The new arrays are proving to be much more comfortable and we are seeing high patient usage rates. Our next steps are to launch in Germany and submit a PMA supplement to the FDA for approval to market in the U.S. We expect to submit a PMA supplement in the second half of the year. We remain committed to improving the TTFields experience for patients and expect to loan further product enhancements in the years ahead. Before I hand the call to Ashley, I would like to thank our colleagues for the hard work over the first 3 months of the year. This is an exciting time to be as part of NovoCure. And I know you’re we are all ready to continue driving to help as many patients as possible. I will now hand the call to Ashley to discuss our financial results. Ashley Cordova: Thank you, Asaf. We began the year with a quarter of solid execution and a focus on investing our time and resources strategically to spur growth in GBM to progress and expand clinical and product development programs and to a solid foundation for potential future launches across multiple indications. In the first quarter, we generated $122 million in net revenue, and ended the quarter with 3,467 active patients on therapy. As expected, the impact of slowing collections from previously denied and age U.S claims caused a $5 million headwind in the quarter. While active patients were down year-over-year, we are seeing promising green shoots from our restructured U.S CNS franchise. In Q1, we established a high watermark in quarterly prescriptions, and we remain focused on a return to growth in our GBM business. In Germany, as expected, we saw a $2 million decrease in year-over-year net revenues following 2022 payer negotiations. We continue to see signs of recovery in Germany, as active patients grow and patient mix shifts towards approved coverage. Gross margin for the first quarter was 76%. Margin was impacted by a planned increase in patient support capacity and preparation for potential future launches, as well as the ongoing launch of our new array. SG&A expenses for the quarter were $93 million. We have increased sales and marketing activities intended to increase awareness in Tumor Treating Fields as we enter new geographies. We have also expanded our supply chain and increased spend on information technology enhancements to enable future growth. Research and development expenses for the first quarter totaled $60 million. In the past 3 months, we completed enrollment of both our PANOVA-3 and METIS Phase 3 pivotal trials. As these and our other Phase 3 trials near completion, we expect to replenish our clinical pipeline with new trials across a variety of solid tumor cancer. In addition, we will continue to fund product development initiatives designed to enhance patient ease of use, and optimize our therapy. Cash and short-term investments totaled $958 million as of March 31, 2023. Our net loss for the first quarter was $0.50 per share, or $53 million and adjusted EBITDA was a negative $18 million. We are investing strategically in growth initiatives to expand our capacity to treat larger patient populations, enhance our commercial capabilities, and to increase awareness of tumor treating fields in anticipation of future approval. All of these investments are supported by the strong foundation provided by our stable commercial business in GBM. The future is bright for NovoCure and we look forward to updating you on our progress throughout the year. I’d like to close today by highlighting one of our Optune users. Mike Hugo of Wellington, Florida. Mike is 38 years old and happens to be a medical device sales manager in the CNS industry. He was diagnosed with GBM about a year ago. Mike and his wife Vanessa, a clinical researcher go into the literature to explore his treatment options. Together, they determined that Tumor Treating Fields therapy could extend Mike’s life and needed to be an essential part of his treatment. Last summer, Mike started using Optune. After Mike’s diagnosis, he posted a video on Facebook asking country singer Tim McGraw to record a duet of the song My Little Girl with them. Mike’s goal was to have the song played at the future weddings of his two daughters, Bridget and Brooke. It turned out McGraw had also been impacted by GBM. His father, legendary baseball player Tug McGraw, he died of GBM in 2004. When Tim heard Mike’s message, he arranged for the entire Hugo family to fly to Nashville and meet him at the Grand Ole Opry. There with the cameras rolling, Mike danced with his daughters and sang a duet with the country icon. We are honored to be a part of Mike’s journey, and those of thousands of patients like him. We will continue to work tirelessly to drive our innovative therapy forward with the goal of making a meaningful impact in the lives of many more patients and their families. With that, I will turn it back to the operator for questions. Ingrid Goldberg: Hi everyone. I think we’re having a technological problem. Operator, you there please? Q&A Session Follow Novocure Ltd (NASDAQ:NVCR) Follow Novocure Ltd (NASDAQ:NVCR) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Yes. And our first question is from Greg Fraser of Truist Securities. Greg Fraser: Good morning, folks. Thanks for taking the questions. On the U.S. market for GBM, you had double-digit growth in prescriptions, while active patients decline. Can you talk a bit more about that strong prescription growth? Is the base of Optune prescribers in the U.S. growing? And should investors expect the prescription growth in the first quarter to drive growth in the near-term? Frank Leonard: Greg, thank you for the question. This is Frank Leonard speaking. Yes, we are — first, I will say that we’re very encouraged by seeing the Q1 prescription results in the U.S. where we hit this record high — as Ashley noted in her remarks, prescriptions are the leading indicator. They are a component of the overall metrics that we have to drive in order to ultimately pull through on revenue growth. But just looking at prescriptions and demand indicators, we do see — we are encouraged by the first quarter results. We think it reflects, in part, activities in Q4 and Q1. First, the investments and the upgrades that we’ve made to the U.S. commercial organization, where we focused on putting the right people in the right place in front of our customers with the right incentives and tools to pull through to prescription. Second, we’ve seen the dynamic where the overall macro environment in oncology has come back to in-person events. So we had an incredibly strong presence at snow in the fourth quarter, which is our main conference with neuro-oncologists. Same with Astra, our main engagement point with radiation oncologist and then again in the first quarter at AACR, where scientific team had an incredible presence. So overall, I think the message that we are sending is that we’re encouraged by the first quarter results, we think they reflect actual changes. We wouldn’t — I wouldn’t go to the point of noting any specific mixes or dynamics other than to say that we think we’ve got the right team now that we can continue to make progress. Greg Fraser: Great. That’s very helpful. And then just a question on the LUNAR presentation. Some of the questions are been unknown or early the PD-L1 stats, clearly, whether you have data on PD-L1 stats for a large percentage of the patients, whether there was an imbalance, do you expect that the presentation will address these questions such that there won’t be ambiguity about the results for the IO groups following ASCO? William Doyle: Yes. Yes, so good morning. This is Bill. So we were very pleased to announce that we will have an oral presentation during the metastatic lung cancer session at ASCO. So first and foremost, we are looking forward to seeing everybody in June. Following the presentation, we will also have an investor meeting that will include KOLs, investigators as well as NovoCure personnel. And we would expect to address all the issues with respect to balance and PD-L1 status at that time. Greg Fraser: Great. Just one more quick one, and I’ll jump back to the queue. The average time on therapy is a very important determinant of with TTFields. Should investors expect to see data on time on therapy at the ASCO presentation? Thanks very much. Ashley Cordova: For LUNAR? Yes, I would expect that the data set this is actually will include average time on therapy. And I’ll remind everybody that until you get that data, we ask you to anchor to the PFS in the Phase 2 trial. Greg Fraser: Great. Thank you. Operator: Thank you. One moment for our first — next question. And our next question comes from Emily Bodnar of H.C. Wainwright. Your line is open. Emily Bodnar: Hi, there. Thanks for taking the questions. Maybe to follow-up on the first question. Do you kind of view first quarter sales in the U.S. as kind of a base? And should we expect increases in sales from here on now for the rest of the year? And maybe can you expand a bit on what kind of clinical trials you plan to initiate this year, whether they’ll be early stage or late stage? And are there any other indications where you think combining with immunotherapy can make sense besides lung cancer and GBM? Thanks. Ashley Cordova: Emily, this is Ashley. I’ll start because Frank was able to give color on the prescriptions and the leading indicators. When we look at revenue, which is ultimately what we need to deliver on the GBM business, I would say that consistent with expectations, we need everybody to anchor to the core map of active patients times net price per month time, the number of months in the period when you’re modeling up revenue. So that would be 3 months for the quarter or 12 months for the year. And so Q1 performance reflects that as we no longer had the tailwind from age claims, and it is not our expectation that those would continue at the pace that we’ve seen in prior years in 2023. So I do think Q1 reflects that core map and we would like you to anchor to that core map. That’s an important base. Now we do have puts and takes against this. We’ve talked about the green shoots for prescriptions in the U.S. I will also note that the recovery in Germany is progressing as expected. And so we expect to continue to see some benefit in the net price at a global level over time on that. But it is important to anchor to that core map and that’s what we would likely to do in your model. William Doyle: So — and I will take the — this is Bill again. I will take the second part of your question with respect to clinical trials. So we are all here because we’re pioneering a new modality that targets the electrical properties of cancer cells rather than their chemical properties. And there are just so many exciting aspects to the platform therapy here. We can use our therapy with all other therapies. So we see either synergy or additivity with radiation, chemotherapies. And one of the most exciting advancements has been what we are seeing now when we combine Tumor Treating Fields with IOs. We see that in, for instance, the two of the TOP trial in GBM, where we’ve combined Tumor Treating Fields with pembrolizumab in a cold “cold tumor”, and we see great results. And of course, what we’ve alluded to and what we’ll present at ASCO when we’ve combined Tumor Treating Fields with IOs in non-small cell lung cancer, a cancer where IOs are used routinely and we see a profound improvement. We know we can deliver Tumor Treating Fields to the head, neck, torso and abdomen. And all of the — these difficult cancers in those regions are our targets. And so the answer is yes. You should expect to see additional trials in the indications in which we’re already working. So for instance, non-small cell lung cancer, I would say we’ve just begun, and you’ll expect to see additional trials there as well as trials in areas like gastric and hepatocellular carcinoma, where we’ve disclosed very promising Phase 2 data. Emily Bodnar: Great. Thank you. Operator: Thank you. One moment for our next question. Our next question comes from Jessica Fye of JPMorgan. Your line is open. Na Sun: Good morning, guys. This is Na Sun on for Jessica Fye. A couple from me. So when PANOVA-3 was completed enrollment, there was a mention of an interim look. Can you say if that interim has happened yet? And what, if anything, the outcome was? And then in terms of INNOVATE-3, are we still on track to anticipate a top line data announcement in mid 2023? And then a full data presentation later in the back half of the year? And then lastly, the — it was interesting that NovoCure was breaking out Germany revenue for this quarter and the other active markets contributing nearly $8 million. Is this to say that the overall EMEA markets did $23 million in the quarter? And was there any incremental revenue from France in the quarter? Thank you. Asaf Danziger: So — hi. It’s Asaf. I will start with PANOVA. So we are on track. We still planning to do the interim as soon. And I think the rest of the question is, Ashley . Ashley Cordova: So I mean I’ll just reiterate that we are also on track with the INNOVATE enrollment. And we’re in that patient follow-up period, and that should end in the back half of this year, mid this year, I would expect data to come out. No change in those expectations to be very clear. Things are progressing as expected. When we talk about revenue, that has also no change. This was simply an internal adjustment to our international market franchise structure. Germany has always been broken out in its own line item under EMEA, it’s now broken out in its own line item standalone. There are no non-EMEA markets in other. Japan is our only active market, currently outside of EMEA in the U.S., so that you can tie others to other EMEA in prior Qs. So I appreciate that question. I will note that we do not yet have revenue in France. We are treating patients. So we have active patients in that market, but it will take us a couple of quarters before you see the material revenue come through as we just go through this administrative ramp up and look to see a successful conclusion of collection cycle. Operator: Thank you. And our next question comes from Vijay Kumar of Evercore ISI. Your line is open. Unidentified Analyst: Thanks. This is for Vijay. Just back on the topic of ASCO, can you remind us again, will we get to learn PD-1 expression status of patients then? And second, on OpEx in the quarter, specifically on SG&A. There seems to be a large increase. How much of this increase were, say, new hires focused on new markets and new indications versus current existing markets like GBM? Thanks. William Doyle: Good morning and thanks for your question. And I’m just going to underlying for everybody that the LUNAR data presentation will be Tuesday, June 6, at 11:09 in the metastatic non-small cell lung cancer. And yes, I’ll repeat, we will provide the PD-L1 data from the trial during that presentation and take Q&A with respect to all of the parameters in our session to be held later that afternoon. And Ashley? Ashley Cordova: Yes. And on the SG&A, I would say as we look at growth in SG&A, there’s almost exclusively related to growth in our markets, whether that’s geographic expansion for our existing GBM business or its preparation for commercial launches in lung, ovarian and hopefully pancreatic in the future. So I would say we do appropriately resource our existing GBM business in our active markets of today, but we feel like they are adequately resourced. And so increments there are focused on opening up fronts and opening up early commercial opportunities in lung and beyond. Unidentified Analyst: Thanks. Operator: Thank you. I would now like to turn the conference back to Bill Doyle for closing remarks. William Doyle: So I want to thank everyone for joining us this morning and your continued support of NovoCure. It’s hard to convey over the phone what an exciting time it is to be at NovoCure. We are really thrilled with the way our efforts in the market are beginning to bear fruit, both in terms of geographic expansion, increases in scripts. We didn’t talk about it much on this call, but we are thrilled with what we’re seeing with our launch of our next-generation arrays. We think this is very important. And the early read from Austria and Sweden is that this is a great product and we’re focused on rolling this out now across Europe and getting the PMA supplement in the U.S. so we can roll out here following regulatory approval. And then, of course, the new indications. We are pioneering this new modality. We have been talking about the broad application based on our 23 years of R&D and we’re really now on the threshold of bringing it to patients. So thank you all. Operator: Thank you. This concludes today’s conference call. Thank you for participating, and you may now disconnect. Follow Novocure Ltd (NASDAQ:NVCR) Follow Novocure Ltd (NASDAQ:NVCR) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

MidWestOne Financial Group, Inc. (NASDAQ:MOFG) Q1 2023 Earnings Call Transcript April 28, 2023 MidWestOne Financial Group, Inc. misses on earnings expectations. Reported EPS is $0.72 EPS, expectations were $0.75. Operator: Good morning, ladies and gentlemen and welcome to the MidWestOne Financial Group, Inc. First Quarter 2023 Earnings Call. As a reminder, this call is being […] MidWestOne Financial Group, Inc. (NASDAQ:MOFG) Q1 2023 Earnings Call Transcript April 28, 2023 MidWestOne Financial Group, Inc. misses on earnings expectations. Reported EPS is $0.72 EPS, expectations were $0.75. Operator: Good morning, ladies and gentlemen and welcome to the MidWestOne Financial Group, Inc. First Quarter 2023 Earnings Call. As a reminder, this call is being recorded. I would now like to turn the call over to Barry Ray, Chief Financial Officer of MidWestOne Financial Group. Barry Ray: Thank you everyone for joining us today. We appreciate your participation in our first quarter 2023 earnings conference call. With me here on the call are Chip Reeves, our Chief Executive Officer; and Len Devaisher, our President and Chief Operating Officer. Following the conclusion of today’s conference, a replay of this call will be available on our website. Additionally, a slide deck to complement today’s presentation is also available on the Investor Relations section of our website. Before we begin, let me remind everyone on the call that this presentation contains forward-looking statements relating to the financial condition, results of operations and business of MidWestOne Financial Group Inc. Forward-looking statements generally include words such as believes, expects, anticipates and other similar expressions. Actual results could differ materially from those indicated. Among the important factors that could cause actual results to differ materially are interest rates, changes in the mix of the company’s business, competitive pressures, general economic conditions and the risk factors detailed in the company’s periodic reports and registration statements filed with the Securities and Exchange Commission. MidWestOne Financial Group, Inc. undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances after the date of this presentation. I would now like to turn the call over to Chip. Chip Reeves: Thank you, Barry and good morning. On today’s call, I will review our high level financial results and then spend the majority of my time outlining our strategic plan designed to unleash the potential that exists within MidWestOne as we strive to become a high-performing bank with consistent performance. Len will then provide an update on our major markets and Barry will conclude with a more in-depth review of our first quarter results. Despite the difficult operating environment, I am pleased with the progress that we made this quarter on our initial strategic priorities. When I joined the bank in November, it was clear that two immediate challenges faced our team, which were MOFG’s credit profile and a primarily fixed rate balance sheet, in a rapidly rising rate environment. In the fourth quarter of 2022, we took strategic actions to improve our asset quality metrics and position us well for 2023’s uncertain economic conditions. As outlined on Slide 3 of our earnings presentation, first quarter asset quality metrics prove out the effectiveness of our actions as our NPL and NPA ratios declined further, charge-offs were only 3 basis points and delinquencies remained at low levels. Turning to our balance sheet, in order to reduce our liability sensitivity and improve the future earnings power of our company. In late February, we executed the sale of $231 million in book value available-for-sale securities, which resulted in a pre-tax loss of $13.2 million. We received $220 million in proceeds, which were used to payoff our wholesale borrowings and to purchase higher yielding floating rate securities. The transaction is expected to be accretive to our earnings, net interest margin, ROA and tangible common equity. These are two very important and immediate steps that needed to be taken as we focus on improving our operations and results. Turning to Slide 4, our granular core deposit franchise also performed well given the concerns that swept the sector in the aftermath of Silicon Valley and Signature Bank’s failures. While we experienced $154 million of net deposit outflows in the quarter, excluding brokered deposits, $120 million occurred in January, which is a typical seasonal low. Subsequent to the SVB failure and through the end of the first quarter, total deposits, excluding brokered, grew $3.7 million. At quarter end, our total uninsured less collateralized municipal deposits were approximately 19% of total deposits and our average deposit account size was only $29,000. Due to the granular nature and even split of consumer and business deposits, our cycle-to-date interest-bearing deposit beta was 24% through the first quarter of 2023. Amid significant deposit competition, we protected our relationship-driven deposit franchise and will continue to do so. Despite our positive deposit franchise metrics, our NIM compressed further in the first quarter, primarily attributable to our aforementioned fixed rate balance sheet composition. Turning to Slide 5, our quarter end liquidity position was also very strong with essentially no overnight borrowings and borrowing capacity of $1.7 billion, which provides 165% coverage of our uninsured deposits, excluding collateralized municipal deposits. Importantly, our results this quarter speak to the strong foundation and improving financial position that exists here at MidWestOne. We are fortunate to operate in compelling markets and have a diverse line of businesses. We are the largest headquartered bank in Iowa, having scaled from $1.8 billion in assets in 2014 to $6.6 billion today. Our granular core deposit franchise has performed well and provides a stable source of funding for growth. And we have seen a significant expansion of our talent base, resulting in solid customer acquisition and loan growth momentum. While we have a solid foundation and accomplished much over the last few years, we will be the first to admit that our results have been inconsistent and performance has lagged peers. To solve this, we formulated a strategic plan designed to improve our performance and deliver financial results at the median of our peer group as we exit 2025. Let’s put some numbers around that. Our goal is to achieve 12% annual earnings per share growth, an ROA of 1.1% to 1.2%, annual tangible book value growth of 10%, and an efficiency ratio between 55% and 57% exiting 2025. This is a journey and not a destination. We will continue to drive improvement as we work to become a top-performing bank over time. To achieve our goals, we have developed a strategic plan outlined on Slide 6, with five key pillars focused on our culture, our strong local banking franchise, expanding our Commercial Banking and Wealth Management businesses, expanding into specialty business lines and improving our efficiency in operations. Importantly, continuing to enhance our credit risk management capabilities and investing in our digital infrastructure are key enablers to the successful achievement of our plan. While we are working to become a top tier bank, I assure you that we will grow prudently. Turning to our plan as outlined on Page 7, the first strategic pillar is centered on our award-winning culture focused on team member and customer engagement. Our employees have a strong team orientation focused on supporting our customers as well as one another. We are very proud of our Top Workplaces recognition and being named the best bank in Iowa by Newsweek Magazine. Importantly, we will continue that legacy as we also enhance our cultural focus on performance and financial results. As an organization, we need to be results-driven, supported by performance metrics and compensation with the goal of delivering financial results and shareholder value. We will do this while remaining committed to our team and customers. I am a firm believer that engagement and results go hand-in-hand and are not mutually exclusive. Our second strategic pillar on Slide 8 is our solid local banking model that provides a consistent, stable funding source for our company. We protect and enhance our dominant community bank franchise through our engaged employees, who are incredibly active in their communities and through additional product expansion for both consumer and commercial clients in the communities we serve. In fact, consumer loans grew 10% in 2022 and our newly designed business banking center now is 24-hour turnaround for commercial request under $500,000. We expect the small business space to grow 10% annually during our planning cycle. Our third strategic pillar on Slide 9 is focused on expanding and moving up tier in our commercial banking and wealth management businesses, especially as we lean into our major metro markets of the Twin Cities, Denver and Metro, Iowa. This is a continuation of the strategy we have been executing for several years, where we have been hiring experienced relationship bankers and wealth management professionals to drive organic growth. With that said, we will be doubling down in these markets with a plan to add bankers and expertise targeting revenue companies from $20 million to $100 million. Cognizant of a slowing economy for the remainder of 2023, we expect to deliver the upper end of mid single-digit loan growth. For the following years of the planning cycle, we are targeting upper single-digit loan growth. We also see treasury management as a strategic imperative to our C&I uptiering commercial strategy and we will be investing to expand our platform, our product offerings, and our talent. Ultimately, a more robust treasury management solutions are needed for increased customer acquisition that will drive our deposit growth, improve our non-interest-bearing deposit mix, and increase our associated fee income. Turning to Wealth Management, we are beginning to see the results of our Twin Cities and Cedar Rapids team lift-outs as linked quarter fees grew 10% with sizable new AUM acquisition. Reflective of our up-tier strategy, our new average account size from these two groups has been $4 million in comparison to our overall average account size of $1 million. We will continue to look for additional team lift-out opportunities in our metro markets as we further drive asset growth and fee income. Key to team member and customer acquisition has been a more robust investment strategy platform and we will continue to add these offerings throughout the planning cycle. Our fourth strategic pillar on Slide 10 is the expansion and development of specialty commercial banking markets or verticals, where our expertise in customer solutions will drive additional customer acquisition full relationships and drive our company’s profitability. Our plan calls for immediate verticals in commercial real estate, government guaranteed lending and agribusiness. The CRE vertical will initially be designed for consistency, robust portfolio management and client selection and will evolve to prudent growth. Our current Twin Cities commercial banking leader has extensive super regional bank experience in this space and will lead the segment. Government guaranteed lending is also a natural fit for our local and metro bank markets, and our desire is to become one of the leading banks 7(a) lenders in our footprint. Our SBA leader joined in the fourth quarter of 2021, and our sales team is being developed. We’re already seeing momentum building here in 2023 and anticipate this initiative will be a meaningful fee income contributor in 2024 and beyond. Lastly, we’ve been in the ag business for a long period of time, primarily focused on small farms here in our home state of Iowa. We are missing significant business opportunities with larger growers and producers as well as suppliers to this industry. We are well along in our recruitment of a leader for this space as well as an additional banker and look forward to their industry expertise and relationships. In the future, we will review and develop additional specialty lines that are complementary to our strategy, our experience and our markets, underpinning our commercial expansion of focus on risk management expertise and capabilities. As such, we have recently expanded our credit administration team with a hire of a seasoned credit executive whose responsibilities will include our Iowa banking footprint as Gary Sims, our Chief Credit Officer, who have direct responsibility for our major metro markets and our evolving specialty lines of business. Our fifth strategic pillar on Slide 11 is focused on improving our operational effectiveness and efficiency. To accomplish this, we’ve engaged a third-party strategic consulting firm, who will assist our review to identify areas for efficiency gains and cost reduction. Our expectations are to reallocate 2.5% of our operating expense base into more productive, profitable markets and departments and then to reduce an additional 2.5% of our Q4 2022 operating expense run rate that will improve our go-forward operating expenses. After a thoughtful and intentional review, we expect these actions to take place throughout 2023. We initiated the first action in mid-April as we’ve scaled back our mortgage operations, reflecting the current macro environment as well as a sharpened focus on mortgage originations from current MidWestOne customers. We’ll also be investing into our digital capabilities and infrastructure. We’ve created a 3-year technology and digital road map focused on improving our customer experience and enabling our company to achieve our strategic plan efficiency priorities. To conclude, I am very excited about the opportunity that lies ahead for our employees, our customers and our shareholders. We have a terrific foundation. We operate in compelling markets, and we have an outstanding group of employees. A plan I’ve laid out on lease to the potential that exist within MOFG. From a timing perspective, I see 2023 as a transformational year. We will expand our team, reduce our expenses and drive operational improvements. As a result, our financials, I’d like to have a little bit of noise in them. Not to mention the macro backdrop is uncertain. As outlined on Slide 12, I do believe that 2024 will be a clean year and expect to exit the fourth quarter of 2024 with an ROA of 90 to 100 basis points, deposit growth of 2% to 4%, loan growth of 7% to 9% and an efficiency ratio of 58% to 60% as we track to our goals of delivering 12% annual EPS growth, an ROA of 1.1% to 1.2%, tangible book value growth of 10% annually and an efficiency ratio of 55% to 57% exiting 2025. Importantly, we have lofty longer term goals and this is just the starting point as we strive to become a top-performing bank. Now I’d like to turn the call to Len. Len Devaisher: Thank you, Chip and good morning everyone. As Chip discussed, an important part of our strategic plan is to grow our commercial and wealth management businesses, which is a continuation of our efforts that we put in place over the last couple of years and an opportunity to build upon the strong foundation that we have in place today. Starting on Slide 14. Signs of our success can be seen in our commercial loan growth powered by our core markets of Denver, up $26 million; the Twin Cities, up $28 million; and Metro Iowa, up $42 million in the first quarter. As Chip stated, we will be increasing the pace of investment in the years ahead, where we believe our loan-to-deposit ratio positions us to take share and maintain our strong risk profile. We are also pleased that our growth remains balanced across verticals. C&I, multifamily, industrial, owner-occupied medical and municipal represents some of the largest originations in the first quarter. Notably, non-owner-occupied office exposure represents only 4.7% of our loan portfolio as outlined on Slide 15. With 30 to 89-day delinquencies at 13 basis points, non-performing loans at 37 basis points and an allowance coverage ratio of 1.27%, we are pleased to enter this stage of the cycle from a position of strength. Turning to Slide 16. We continue to see momentum in Wealth Management from recent talent investments that are bringing new client acquisition. Average assets under administration were up 2.6% quarter-over-quarter, and revenue was up 10%. In the wake of the sensitivity over insured deposits, which emerged during the quarter, our wealth management team deployed approximately $15 million of client bank deposits into treasuries and similar liquid investments. Keeping these funds under our roof represents the strength of our relationship-based approach. Given the longer sales cycle of the Wealth business, a longer view can be helpful. First quarter end-of-period assets are up 4.5% from a year ago. Notably, that’s a 4.5% increase in the same period when the S&P delivered a 9.3% decrease. Recognizing that market valuation movements are beyond our control, we track new client acquisition as well as client retention as the key leading indicators of the strength of our Wealth Management business. In the first quarter of 2023, we signed up more than $60 million of new client assets, representing approximately $300,000 in recurring fee income. The pipeline remains robust. We are on track to open our new Cedar Rapids wealth and commercial office on June 1. Our private banking team has generated $12 million in new AUM in Q1. And as you can see on Slide 16, these wealth initiatives represent a consistent and sustained focus on growing this important fee business. Our journey of growing Wealth Management, including more detail to help you track our progress, will continue to be a prominent feature of our strategic plan update. With that, I’m pleased to turn the call over to our CFO, Barry Ray, to discuss our financial results. Barry Ray: Thank you, Len. I’ll walk through our financial statements beginning with the balance sheet, beginning on Slide 18. Starting with assets. Loans increased $78.8 million or 8.6% annualized from the linked quarter to $3.9 billion. Strength in the first quarter was led by commercial loans, which increased $85.6 million or 11% annualized from the linked quarter. In the quarter, new loans were brought on at an average coupon of 6.7% and at a premium from 6.06% in the fourth quarter of 2022. The overall portfolio yield was 4.95%, resulting in a 29-basis-point improvement in loan yield as compared to the linked quarter. Deposits increased $86.2 million to $5.6 billion from the linked quarter, driven by an increase in brokered deposits of $239.8 million. Excluding these brokered deposits, our total deposit base declined $153.6 million from the linked quarter. As Chip touched on, we experienced most of those net outflows in the month of January when deposits declined by $120 million. That said, the turmoil in the banking sector following the collapse of Silicon Valley Bank and Signature Bank in March disrupted our typical seasonal build that we expected to experience through quarter end, having seen net deposit outflows instead. Importantly, we experienced $3.7 million of net deposit inflows, excluding brokered deposits from March 9, 2023, to the end of the first quarter of 2023. Additionally, total uninsured deposits, less municipal deposits secured or collateralized in accordance with state law represented an industry low 19% of total deposits at March 31, with an average account size of $29,000. We ended the quarter with $1.7 billion of available borrowing capacity, which exceeds our uninsured deposit base, excluding collateralized municipal deposits, placing us in a sound financial position. Given the rise in interest rates, combined with the turmoil in the banking sector, competition for deposits remained high, resulting in a further increase to our cost of funds through the first quarter. Specifically, the cost of interest-bearing liabilities increased 51 basis points to 1.59%, comprised of increases to our interest-bearing deposits, short-term borrowing costs and long-term debt costs. Finishing the balance sheet. Total shareholders’ equity rose $7.9 million to $500.7 million, driven primarily by first quarter net income and a favorable change in AOCI of $10.2 million, partially offset by cash dividends of $3.8 million. Turning to our securities sale. We sold $231 million in book value AFS debt securities prior to the collapse of Silicon Valley Bank and Signature Bank, resulting in a pretax realized loss of $13.2 million. We received $220 million of proceeds, which were used to pay off certain of our wholesale borrowings and to purchase higher-yielding floating rate available for sale securities. Overall, the restructuring is expected to be accretive to earnings, net interest margin, return on assets and tangible common equity in future periods and improving our interest rate risk profile. Turning to credit quality on Slide 21. Following the strategic actions in the first quarter – fourth quarter, to improve the credit profile of our loan portfolio and position the bank for an uncertain economic outlook, we have experienced improving credit metrics through the first quarter as our non-performing loan ratio improved 4 basis points to 0.37% and our non-performing assets ratio improved 1 basis point to 0.23% as outlined on Slide 21. During the quarter, the allowance for credit losses increased $0.6 million to $49.8 million or 1.27% of loans held for investment at March 31. The increase was due to credit loss expense of $0.9 million, partially offset by net loan charge-offs of $0.3 million. Turning to the income statement on Slide 22. Net interest income declined $3.5 million in the first quarter to $40.1 million as compared to linked quarter due primarily to 2 fewer days in the current quarter as well as higher funding costs and volumes, partially offset by the increase in interest earning asset volumes and yields. Our net interest margin declined 18 basis points to 2.75% in the first quarter as compared to 2.93% in the linked quarter. Our NIM in the first quarter continued to be impacted by an increase in our funding costs, which rose more rapidly than the increase in our total interest-earning asset yields. Non-interest income in the first quarter declined $15 million, resulting in a loss of $4 million as compared to the linked quarter. The decline was primarily due to the pretax realized loss of $13.2 million, resulting from the sale of AFS debt securities as part of the balance sheet repositioning. Also contributing to the linked quarter decline was the bargain purchase gain adjustment of $2.5 million recorded in the fourth quarter of 2022 related to the acquisition of Iowa First Bancshares Corp. Finishing with expenses. Total non-interest expense in the first quarter was $33.3 million, a decline of $1.1 million or 3.3% from the linked quarter. The decline was largely a result of overall decreases across all non-interest expense categories with the exception of occupancy, marketing and FDIC insurance. These decreases primarily reflected the decline in incentive compensation and merger-related expense. These declines were partially offset by an increase of $0.3 million in FDIC insurance premiums. As Chip mentioned, A key pillar of our strategic plan is focusing on improving our efficiency and operations, including cost reductions. In total, we expect operating expenses to decline by 5% or $6.5 million, with half being reinvested in the business. The net cost takeout of approximately $3.25 million will occur over the course of 2023. We expect our quarterly expense run rate for the balance of the year to be in line with Q1. And with that, I’ll turn it back to the operator to open the line for questions. Q&A Session Follow Midwestone Financial Group Inc. (NASDAQ:MOFG) Follow Midwestone Financial Group Inc. (NASDAQ:MOFG) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: The first question comes from Brendan Nosal of Piper Sandler. You may proceed. Brendan Nosal: Hey, good afternoon, guys. How are you doing? Chip Reeves: Good. Hi, Brendan. Barry Ray: Hi, Brendan. Brendan Nosal: Thank you, guys for all the detail on the plan, especially the guidebooks for ‘24 to help us gauge progress. I guess I’d love to cover yourself, kind of keep it high level for a few questions. Maybe just to start off. How do you guys envision the New York commercial, where the goal is shifting the risk profile of the bank longer term? Is it a material change? Or is it more kind of tuning on the edges? Chip Reeves: And Brendan, this is Chip. I’ll go ahead and answer that. And then Gary Sims, our Chief Credit Officer, is here as well. Frankly, I think initially, it will improve the credit risk appetite and credit profile of the organization through the consistency that we will have regardless to the complete franchise as well as then what I’ve always seen as we begin to specialize or have industry experts. On the sales side, that client selection begins to improve as well. Now as we’ve mentioned, the first one that we’re looking at is commercial real estate. I think it’s a very prudent period of time for us to do that with that mindset. Ultimately, when the time is appropriate, we will evolve to prudent growth. Government guaranteed lending, perfect time in the economic environment, I believe, for us to be there with our customers. And then agribusiness, the same thing. I believe it will improve and enhance our credit risk profile and our credit appetite there. Gary, any additional comments? Gary Sims: Yes. Brendan, not a lot to add in terms of the impact. I agree with Chip in that the activity of creating the specialization and the additional focus and consistency across the banking franchise is really what will enhance the credit risk profile in both the short-term and over the long-term. Chip Reeves: And then as we move more into the moderate or intermediate stage, call it, 2024, Brendan, as we determine what additional specialty business lines we may enter, it will obviously be done prudently. Could there be some that have a more moderate risk profile? Absolutely, but they’ll also have a better return metric and profile of risk/reward than – or risk-enhanced return than perhaps in some of our other current business lines, too. Gary Sims: And Chip, one thing I’ll add to the approach to the additional specialties, in my experience, the key there is to is to go into that industry, find the industry professionals that have the experience, the exposure to that market. It brings them into the company and get them to build that additional line of business, which moderates the risk profile over time. Brendan Nosal: Yes, yes. Understood. Okay. And then just kind of thinking about the path to kind of metrics you folks laid out. Just kind of curious, what interest rate assumptions are you guys using in those projections? Because obviously, rates are out of your hand and can move things quite a bit. And then maybe how much of achieving those is dependent on a specific rate environment? Barry Ray: This is Barry, Brendan. I’ll take that. For the financial modeling that we were doing during our strategic planning process, we were really using kind of the latest forecast around what was going to happen at rate, and so that was essentially increasing to the Fed funds target rate as expected right now with the decline in rates in the future year starting at the – beginning at 2024. And given the fact that our balance sheet is a liability sensitive, we were seeing some benefit from that in the plan. So that’s the rate outlook that was included in the financial modeling that we utilized to get to those results. Brendan Nosal: Perfect. Okay. That’s helpful. And then last one for me before I step back here. Just curious if the shift up in the growth profile of the bank over the next few years requires any new geographies or market expansions or as you can do within your existing footprint? Len Devaisher: Brendan, this is Len. We feel confident we can do it inside our existing footprint. We’re seeing momentum already across particularly the large metro markets, and we see opportunities for us as we look ahead. Chip Reeves: I mean, Brendan, I have a phrase that I’ve been using across the organization, which is bigger is not necessarily better. Let’s be better first. And that would also probably apply initially to expansion of geographic regions even on an organic basis. We can be better right in our current compelling markets, especially in the first 12 or 24 months of this plan. And so better is better. Brendan Nosal: Alright. Excellent. Well, thank you, guys for your thought. I appreciate it. Chip Reeves: Thanks, Brendan. Barry Ray: Thank you. Operator: Thank you. The next question comes from Terry McEvoy of Stephens. Please proceed. Terry McEvoy: Maybe if I could start with an expense question. When I look at Slide 11 and take 2.5% of the run rate expenses in the fourth quarter at about $3.5 million. Is that the necessary investment to fund everything we have just talked about over the last 30 minutes, because to be fair, it does sound relatively small relative to the plan? Chip Reeves: So Terry, this is Chip, and then I will have Barry expand on that as well. What I would tell you is it gets us the vast majority of the way there. And then ultimately, we continue to contemplate other strategic actions as well. Terry McEvoy: Got it. Thanks for that. And then as a follow-up, can your local banking teams fund the new lending businesses from a deposit standpoint? And I haven’t had a chance to kind of think about all those businesses you discussed. What comes with deposits? And maybe said another way, does the plan really assume deposit market share gains in some non-Iowa markets where you have got low share? Chip Reeves: Len? Len Devaisher: Yes. So, I would direct you, Terry, to Slide 10 as a way to think about this. So, we are definitely thinking about these initiatives in a balanced way of loan and deposit relationships. And so if you think about both commercial and wealth focus, it really is with deposits to view as well. So, on Slide 10, for example, we talked about a deposit vertical. When we think about going up tier and middle market C&I, investments in treasury management, it is a prominent part of this plan, and we anticipate that to help us take share in deposits in our existing markets. So, each of those, I would point to that is the way we are approaching the business. Terry McEvoy: Understood. Thanks for taking my question. Chip Reeves: Thanks Terry. Len Devaisher: Thank you, Terry. Operator: Thank you. The next question comes from Damon DelMonte of KBW. Please go ahead. Damon DelMonte: Hello. Very thanks for taking my questions today and thanks for all the detailed overview of the strategic plan. As it relates to kind of building out these verticals, what kind of investment in the lending teams are you expecting to make? Do you anticipate hiring? Is there like a number of lenders that you think you need to bring onboard, or how do you kind of balance that with meeting your objectives? Len Devaisher: Damon, this is Len. Yes. We certainly do envision adding relationship managers as well as underwriting capacity. I would note that one of the things we have already done to position ourselves for this is that Gary has added a Senior Credit Officer to his credit administration team. So, we see it on both. I would also add – I just referenced investment in treasury management. We are pursuing a Director of treasury management and additional treasury expertise as well to complement our existing team. So, a lot of the reinvestment that’s spoken about in the plan, are those kinds of talent investments. Damon DelMonte: Got it. Okay. And then to circle back on the expense and the kind of reallocation, Barry, could you just go over your guidance again? So, did you say that a 5% reduction off of the like the fourth quarter level, 2.5% of that would fall to the bottom line and 2.5% would be reinvested elsewhere to support the development of these goals? Barry Ray: That’s exactly correct, Damon. You interpreted it correctly, 5% growth on the fourth quarter ‘22 run rate, 2.5% reinvested, correct. Damon DelMonte: Okay. And then as far as like the quarterly level of expenses from this quarter, you think you can kind of hold those flat? Barry Ray: That’s what we are expecting, Damon, yes. Damon DelMonte: Okay. That’s all I had for now. Thank you very much. Barry Ray: Thank you. Chip Reeves: Thanks Damon. Operator: Thank you. The next question comes from Brian Martin of Janney. Please proceed. Brian Martin: Hey. Good morning everyone. Chip Reeves: Good morning Brian. Brian Martin: So, Barry, just back to the expense for a moment. Just the savings to begin just high level, I know to understand there will be a lot of noise here. But the 2.5% expense savings, does that begin – you quantified the amount. But as far as when it actually begins with kind of the comments about stable, is that a beginning the next couple of quarters? Does it begin in ‘24? What’s kind of the step down of that 2.5%? What do we see that, or is it embedded in this flat guidance near-term, or how to just understand or interpret that? Barry Ray: Yes. I think we will expect to recognize the cost savings over the course of 2023, and we would say that the first quarter of 2024 will probably be the first clean quarter. But it’s a little bit embedded in the flat expenses that we were just discussing. It’s how I think about it, Brian, but it’s going to be recognized over the course of 2023. Brian Martin: Okay. So, that is how we will see a step down in that expense going from the end of this year into ‘24. It will kind of already be embedded in what you are talking about, so okay. Thank you for clarifying that. And then just, I think Chip, maybe you talked about looking at the different geographies of the firm and investing in certain areas here. But are there – have you contemplated, or I guess if I missed it, exits from markets you are in currently? I know you are kind of exploring that, or is that still a work in progress, or how do we look at the geographic footprint where it sits today? Does it remain unchanged and it’s building out and improving, or is there still more to come on that? Chip Reeves: Brian, I think you hit the nail on the head in terms of – we identified some of our investment markets, especially the metro markets of the Twin Cities, Denver and Metro Iowa. And then in relation to the entire geographic footprint, what I would say is we continue to evaluate as we move through our operating expense base review. But I have a firm belief overall that we look at it in terms of where can we have relevance and where can we have scale. And that ends up being one of those that’s important for our team members, our customers and the communities in each region that we are in. If we can achieve that, we will invest in those markets. If we ultimately decide that is not achievable, then we may take a different direction. So, we will continue to look through that here in the second and third quarters. Brian Martin: Yes. I was going to say when you – when do you kind of complete the process of evaluating the – what are your expectations that kind of have a better defined goal of what’s relevant and what’s not as you kind of assess things, I know it’s early? Chip Reeves: What I would say here is 2023 is going to be the year for all of these decisions to be made right. Brian Martin: Got it. Okay. Helpful. And then what’s – I guess you have done this just kind of your outline, Chip, and all the high level. Where do you see the biggest challenges to achieving kind of the hires at the specialty businesses? I mean is it attracting talent? Is it – I guess where do you see the potential challenges as you kind of execute this plan over the next 12 months? Chip Reeves: We mentioned specifically the specialty business lines, and what I will say there is very confident in terms of the three that we identified in our comments. And the reason why there is that the talent is in place in two of the verticals already and the experience level of individuals within the organization are there. And now, frankly, it’s a strategic focus in order to drive the business units. The third, which we mentioned was agri business, and we are close to putting that one together. And we already do a fair amount of ag business and have some very good individuals in that business, especially across our rural Iowa markets and into Wisconsin. And here, we would be looking at probably an up-tiering of that already current strategy. So, I feel very confident there. And then in terms of anything in the future, Gary you said it very well. I think there, we target the best opportunity and then find the best leader for that opportunity. Without those two, we won’t go down the path. In terms of our expansion and up-tiering within commercial banking and wealth management, very confident as well. And the reasons why is we have already begun, and we are proving it out. You have seen in commercial banking, four consecutive quarters now of upper-single digits to even lower-double digit loan growth. That will – the consistency of the effort will continue to improve. The talent will continue to improve. And we will be prudent and take essentially what that macro environment gives us there. And then wealth management, we are absolutely seeing the impact now of the actions we have already taken in terms of our sales management or sales teams in that arena. So, I feel very good there. Our – the piece that we are working, continuing to work through is our fixed rate balance sheet. And we have already identified that and took strategic action as well here in the first quarter. So, I am feeling good. Len Devaisher: Yes. I would just – this is Len, Brian. I would just add to that as we are recruiting talent on some of these verticals and so forth, the story we have to tell I think is one that’s helpful to us. And by that, I would point to the credit profile that we have, combined with the loan to deposit profile that we have, means that we can do the right deals. And that is something that gives us an edge in today’s marketplace. Brian Martin: Got it. Thanks Len. And just the last one or two for me here. Just the plan on the balance sheet repositioning, I guess is this complete at this point? Do you see more opportunities there? I guess was this just the start, or just trying to understand is it maybe kind of situated better now, or is there still more consideration there? Barry Ray: Yes. This is Barry, Brian. With respect to the bond lost sale, I would look at that. That was a finite event as we looked at it. So, I would say it’s complete. We don’t expect to undertake additional bond loss sale-type transaction. Having said that, now, will we – if we have an opportunity to sell bonds not at a loss, to the extent that we need liquidity, would we do that, we would look for those opportunities. But the bond loss transaction that we described in the first quarter, I would view that as complete. Brian Martin: Okay. That’s helpful. Thanks. And then just as it relates to that, can you give us any sense on the margin, just at least near-term to kind of think about going forward here, just maybe where the spot margin ended in March? Is that kind of the best way to think about where the starting point is now heading into 2Q given the bond, it sounds like the sales occurred in late-February? Barry Ray: Yes. The spot margin for the month of March, Brian, I have it at around 272 for the month of March, and I would say that’s a good starting point. I expect that to the extent they are looking forward, we will probably continue to have some upward pressure on the funding side of the balance sheet to the extent that we experienced the positive outflow as well as have an increased mix in our deposit volumes to higher cost deposits. So, that will be upward pressure. So, I would expect that looking forward, probably some downward pressure on our net interest margin. Do I believe it will be the 18 basis points that we experienced quarter-over-quarter, I expect and believe it will be less than that. Brian Martin: Yes. Okay. Thanks for taking all the questions and all of the additive disclosure this quarter. Very helpful. Chip Reeves: Thanks Brian. Operator: Thank you. The next question is a follow-up from Damon DelMonte of KBW. Please proceed. Damon DelMonte: Hi. Thanks. Just wanted to follow-up on – you alluded to the good traction you are seeing with the Wealth Management division. How should we think about that revenue line item as we progress through ‘23? So, do we start seeing a meaningful lift in the upcoming quarters, or do you think that really translates into more of a ‘24 event? Len Devaisher: Damon, this is Len. I would say on that particular line, I think Q1 is good, and I expect it to keep posting moderate growth across my expectations, moderate growth across ‘23. One of the things as we referenced in the comments is the market valuations, as you know, do have an impact on that. But we are – what encourages us is that net new AUM number. And what I am particularly focused about and encouraged by is that the talent we have brought on is the average account size that’s coming across is significantly larger than our legacy account size, and that’s given us lift in this environment. Damon DelMonte: Got it. Okay. That’s all that I had. Thank you. Chip Reeves: Thanks Damon. Operator: Thank you. There are currently no additional questions registered at this time. The next question is a follow-up from Brendan Nosal of Piper Sandler. Please proceed. Brendan Nosal: Maybe just one more for me, I know that it’s early days here. But just kind of looking at the point-to-point ROA, roughly 70 basis points on a core basis this quarter, so that’s, what 45 bps of improvement to kind of get to the midpoint by 2025. A lot of initiatives that you folks have ongoing between NII fees and expenses, I mean could you just give us a rough roadmap of that 45 basis points, how much is each initiative roughly going to contribute? Chip Reeves: Brendan, I think – this is Chip. We will do a follow-up with you on that one in terms of each initiative because, obviously, it’s also affected by the forward curve, and what we will try to do is break out that for you a little bit deeper. So, we will circle back with you on that one. Brendan Nosal: Yes. Thank you. Operator: Thank you. There are currently no additional questions registered at this time, so I will pass the conference back over to the management team for any closing remarks. Chip Reeves: Excellent. This is Chip Reeves. Thank you everyone for joining us here today and for your interest level. We look forward to speaking again at the end of August and giving you an update in terms of our progress in the second quarter along our strategic plan. Thank you everyone. Operator: And with that we will conclude today’s call. Thank you for participating. You may now disconnect your lines. Follow Midwestone Financial Group Inc. (NASDAQ:MOFG) Follow Midwestone Financial Group Inc. (NASDAQ:MOFG) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Verisk Analytics, Inc. (NASDAQ:VRSK) Q1 2023 Earnings Call Transcript May 3, 2023 Operator: Good day, everyone, and welcome to the Verisk First Quarter 2023 Earnings Results Conference Call. This call is being recorded. . For opening remarks and introductions, I would now like to turn the call over to Verisk Head of Investor Relations, Ms. […] Verisk Analytics, Inc. (NASDAQ:VRSK) Q1 2023 Earnings Call Transcript May 3, 2023 Operator: Good day, everyone, and welcome to the Verisk First Quarter 2023 Earnings Results Conference Call. This call is being recorded. . For opening remarks and introductions, I would now like to turn the call over to Verisk Head of Investor Relations, Ms. Stacey Brodbar. Ms. Brodbar, please go ahead. Stacey Brodbar : Thank you, Mandeep, and good day, everyone. We appreciate you joining us today for a discussion of our first quarter 2023 financial results. On the call today are Lee Shavel, Verisk’s President and Chief Executive Officer; and Elizabeth Mann, Chief Financial Officer. The earnings release referenced on this call as well as our traditional quarterly earnings presentation and the associated 10-Q can be found in the Investors section of our website, verisk.com. The earnings release has also been attached to an 8-K that we have furnished to the SEC. A replay of this call will be available for 30 days on our website and by dial-in. As set forth in more detail in today’s earnings release, I will remind everyone today’s call may include forward-looking statements about Verisk’s future performance, including those related to our financial guidance. Actual performance could differ materially from what is suggested by our comments today. Information about the factors that could affect future performance is contained in our recent SEC filings. Finally, I’d like to remind everyone that the financial results for recent dispositions are included in our consolidated and GAAP results but are excluded from all organic constant currency growth figures. A reconciliation of reported and historic non-GAAP financial measures discussed on this call is provided in our 8-K and today’s earnings presentation posted on the Investors section of our website, verisk.com. However, we are not able to provide a reconciliation of projected adjusted EBITDA and adjusted EBITDA margin to the most directly comparable expected GAAP results because of the unreasonable effort and high unpredictability of estimating certain items that are excluded from projected non-GAAP adjusted EBITDA and adjusted EBITDA margin, including, for example, tax consequences, acquisition-related costs, gain/loss from dispositions and other nonrecurring expenses, the effect of which may be significant. And now I’d like to turn the call over to Lee Shavel. Lee Shavel : Thanks, Stacey. Good morning, and thank you for participating in today’s call. At our Investor Day in mid-March, we detailed the benefits of being an insurance-focused business and our comprehensive strategy to drive consistent, predictable growth at Verisk. Our first quarter results demonstrate the sharpened focus and results-oriented operating plan at Verisk. We are operating on a more integrated basis across the company and have been more engaged with our clients, as I’ll describe in greater detail. I will leave it to Elizabeth to walk through the details of the financials. But in summary, we delivered very strong organic revenue growth combined with solid margin expansion yielding double-digit profit growth. The growth was broad-based with most businesses contributing to the result, and we have strong business momentum. We delivered this performance despite a macroeconomic environment marked by high inflation, interest rate volatility and market anxiety. Specific to the insurance industry, our customers are coming off a year marked by elevated underwriting losses and pressure on profitability. In fact, the U.S. property casualty insurers experienced a $27 billion net underwriting loss in 2022, the largest loss since 2011, according to industry data collected by Verisk and the American Property Casualty Insurance Association. Moreover, profitability was under pressure as reflected in deteriorating combined ratios at 103% in 2022 versus almost 100% in 2021. One consequence of this tough loss in profitability environment in 2022 has been a hardening insurance market where rate increases are driving faster net written premium growth in the first quarter reports of many major insurers. Verisk is partnering with the industry to help them reduce costs, better select and price risk, root out fraud and overall operate more efficiently, given the macro environment. One problem area has been the state of Florida. As we have discussed in prior calls, the insurance crisis in Florida is being driven by a litigious environment, further complicated by extreme event vulnerability. The combined impact is pushing insurers into insolvency. The state legislature has passed reforms to address the crisis, and there are currently efforts be negotiated to bring increased oversight to the state’s insurance market. That said, the risk for more liquidations remains. And we continue to monitor both the primary and reinsurance markets closely while leaning in with our customers to help them adapt to new legislation, to better select and price risk in the state and to identify the systemic bad actors in the market. A second area of challenge has been auto underwriting as insurers pulled back on writing new policies as they awaited regulatory approval for rate increases. Rate actions have started to roll through. And in the first quarter, we saw a rebound in policyholder shopping activity in response to higher rates, driving strong transactional revenue growth for Verisk this quarter. That said, we have yet to see behavior change on the part of the underwriters as they are still cautious about spending on marketing and underwriting new policies. We continue to expect that improvement in the back half of the year. One key pillar in our strategy that we discussed at Investor Day is being a more client-centric organization and the importance of strengthening the strategic dialogue with our clients and intensifying our industry engagement. To that end, I’ve been leading the organization with direct client engagement through full relationship reviews at several of our largest clients where we’ve been able to identify how we can best serve them and integrate new solutions to meet their specific objectives. I’ve also hosted our first CEO roundtable, where we brought together the leaders of our clients to discuss the issues that are foremost in their minds and where we can leverage our centrality and expertise to help address these issues. This has been followed by a client Chief Information Officer roundtable, where we brought our technology leadership headed by our CIO, Nick Daffan; and Chief Data Officer, Eric Schneider, to discuss technology and analytics trends that are on the minds of insurance industry CIOs. In particular, generative AI was a hot topic. And we discussed how we can help the industry develop safe, ethical and effective use cases and guide policy. Our clients are recognizing the early benefits of change and focus at Verisk and have provided great feedback. A recent quote from an important client stated, I can’t remember a meeting with this degree of transparent dialogue where I felt like Verisk was listening. Our recent NPS scores also reflect this change in perception. Verisk conducts customer relationship surveys twice a year. And our recent NPS scores in the first quarter of 2023 were 47, up 4 points versus this time last year. Further, so far this year, we have hosted 3 in-person client events. At all our events, clients can engage with our solutions and hear directly from those clients who use the products in the market and learn how effective they are in helping solve industry challenges. More specifically, in February, our claims business hosted 2 events, including Elevate, our signature event for claims and restoration professionals, which provided educational and networking sessions for over 600 industry professionals. We also hosted almost 300 industry participants at IFM, an industry-wide event targeting the latest issues and advances in fraud management. In the U.S. alone, insurance fraud is estimated to cost the industry $300 billion annually, impacting industry profitability, and Verisk is uniquely positioned to help the industry. We host this event in partnership with the National Insurance Crime Bureau. Both events included expert panel discussions featuring our clients and partners, leading academics and thought leaders in the industry covering top-of-mind issues. In April, we hosted the inaugural Verisk Insurance Conference and hosted almost 600 clients for a 4-day multitrack conference designed to deliver a combination of product and thought leadership-focused content to key extreme events, life and underwriting decision-makers in insurance and reinsurance. This comprehensive event, which combined 3 previously separate events, enabled us to educate our clients and prospects about Verisk’s end-to-end capabilities while continuing to provide them with valuable content applicable to their specific role in organization. It raised the awareness of the breadth and depth of solutions we offer to solve the industry’s biggest challenges and really highlighted the benefits of the integrated Verisk approach. We saw a great response to this event with almost half of the extreme events professionals attending underwriting sessions and 40% of the underwriting attendees joining an extreme event session. A recent notable competitive contract win in our Extreme Events business is a great example of the benefits of being more focused and more integrated across Verisk. We recently signed a large multiyear contract expansion with a global insurer for extreme events platform, Touchstone. This client, who is already a subscriber to our property underwriting data solutions, will partner with Verisk in a workflow that will directly integrate those data solutions into the Touchstone platform. This partnership not only allows the client to obtain an enhanced view of their catastrophe loss potential based on various data with minimal operational friction, but it also gives Verisk the opportunity to market the feasibility of the same solution to a broader range of market participants. What struck me at both our claims and underwriting events after dozens of client conversations was the genuine enthusiasm our clients have for our ability to help them address industry issues with our scale and centrality. A commonly expressed sentiment is Verisk has a unique perspective, and we know you can help us. This is a tremendous privilege for us, and we are more mindful of our responsibility to create value for our clients and stakeholders. We are particularly excited about the opportunity it represents to find new channels for growth. On the technological transformation front, we recently achieved a major milestone as we have successfully sunset our mainframe. The scope and complexity of this project was massive. And our technology teams worked tirelessly to shut down a 40 year old mainframe in just 5 years. I want to thank my colleagues for their hard work and dedication to modernizing our legacy technology footprint. This move allowed us to modernize our operations and provide a better experience for our customers. Equally importantly, it enables Verisk to allocate more of our technology resources towards innovation to drive future growth. Finally, I wanted to share that we recently published our 2022 corporate social responsibility report. This year’s report offers a view of our ESG journey and our work to help build global resilience for individuals, communities and businesses. We continue to pursue sustainability and growth through the lens of a responsible ESG framework. On the environmental front, this year, we established a Climate Advisory Council to glean strategic guidance on climate change and receive climate-related feedback on our forthcoming solutions. Moreover, Verisk’s sustainability team is currently working with an independent consultant to help the company complete a report, meeting the expectations set forth by the task force on climate-related financial disclosures. As part of the exercise, we are conducting analysis assessing the impact of climate change, both on Verisk’s direct operations and across key elements of its value chain and developing a realistic pathway to support science-based targets and a commitment to net zero targets. The team is also engaging with internal stakeholders regarding Verisk’s current risk assessment activities and framework for identifying climate-related opportunities. We expect to publish the report in late 2023. Regarding governance, over the last 12 months, Verisk took steps to enhance our governance at the Board level, including making changes to provide for the annual election of directors and separating the role of Chair and CEO. We also took steps to refresh our Board, welcoming 4 new independent directors, who bring fresh perspectives and valuable skill and experience sets. As of the 2023 Annual Meeting of Shareholders, 4 directors, namely Annell Bay, Chris Foskett, Constantine Iordanou and David Wright will be retiring from the Board. I would like to express my gratitude to each of these directors for their leadership and guidance, which have been invaluable to Verisk’s journey and transformation. These changes will bring our Board to a total of 10 members, 90% of whom are independent and 60% are gender or racially diverse. With that, I’ll hand it over to Elizabeth to review our financial results. Elizabeth Mann : Thanks, Lee, and good day to everyone on the call. Before I start with the first quarter results, I have a few reminders for everyone. First, all consolidated and GAAP numbers are negatively impacted by dispositions of 3E and Verisk Financial Services. This will be the final quarter of this year-over-year comparison. Second, as it was in the prior quarter, Wood Mackenzie is accounted for as discontinued operations on our income statement, and results are not included in continuing operations for either period. Third, all cash flow metrics include the results of all 3 disposed businesses in the prior year figures. Turning to the financial results. I am pleased to share that we delivered a strong first quarter. On a consolidated and GAAP basis, revenue was $652 million, up 1% versus the prior year, reflecting growth in Insurance, offset by the impact of the VFS and 3E disposition. Income from continuing operations was $194 million, while diluted GAAP earnings per share attributable to Verisk was $1.27. Moving to our organic constant currency results. Adjusted for nonoperating items as defined in the non-GAAP financial measures section of our press release, we are pleased with our operating results, which demonstrated strong core underlying performance across most of our businesses, aided by some in-period onetime benefits. In the first quarter, OCC revenues grew 9.8% with growth of 9.1% in underwriting and rating and 11.4% in claims. This quarter’s results was boosted by certain transactional revenues that we do not expect to repeat for the remainder of 2023. Our subscription revenues, which comprised 80% of total revenue in the quarter, grew 8.7% on an OCC basis. We saw broad-based growth across most of our businesses with strength in core underwriting, property estimating solutions, extreme events, antitrust, life insurance solutions and many of our international businesses. Specific to our core line services, we are experiencing a benefit on certain of our revenues from the stronger net premium growth in 2021, which is currently reflecting in our contract pricing. Working against this is a modest negative impact from the 7 liquidations in Florida that occurred over the last 12 months and which we discussed earlier. We do expect the impact from liquidations overall to become more pronounced as we move throughout the year. Our transactional revenues, representing 20% of total revenue in the first quarter, grew 14.4% on an OCC basis. The largest contributor to growth was from a strong rebound in our auto businesses driven by increased rate shopping and the signing of a large nonrate action deal with national insurer. Additionally, we experienced double-digit growth from life insurance solutions as we are seeing strong customer demand for incremental services. Our travel solutions are benefiting from a post-COVID rebound, particularly in markets like Australia and New Zealand. And our property estimating solutions experienced continued storm benefit in the quarter. These transactional results did include some onetime benefits, including overage charges on specific large underwriting contracts that renewed in the quarter and catch-up billing for certain claims customers. Finally, the casualty workers’ compensation business delivered growth in the quarter but continues to remain below pre-COVID level and is recovering at a pace slower than we had originally expected. On the auto underwriting side, we did see solid growth in transaction volume this quarter versus declines last year as rate increases are now driving shopping behavior by policyholders. However, as Lee mentioned earlier, carriers continue to be cautious and have pulled back on marketing spend to attract new customers as they measure the impact of rate increases on profitability. To that end and given the transactional nature of this business, we are cautiously optimistic about the outlook for auto as we move throughout the year. Moving now to our adjusted EBITDA results. OCC adjusted EBITDA growth was 15.7% in the first quarter, reflecting core operating leverage on the strong revenue growth and the impact of certain cost reduction actions we have taken in connection with our margin expansion objective. Total adjusted EBITDA margin, which includes both organic and inorganic results, was 52.2%, up 480 basis points from the reported results in the prior year. On a pro forma basis for all divestitures, the first quarter margin expanded 320 basis points from margins of 49% in Q1 of ’22. This reflects the impact of certain onetime expenses in the prior year quarter as well as strong cost and operational discipline and the impact of our cost reduction program. This level of margin also does include several headwinds, which in total represent about 150 basis points and include a decrease in our pension credit, pressures from recent acquisitions and higher T&E expenses, offset by foreign currency realized gains in the quarter. Reflecting on our ongoing cost reduction plan, we continue to have confidence in our ability to deliver on the margin targets that we articulated in our 2023 guidance and at Investor Day in mid-March. During the quarter, we also took actions to put in place a permanent capital structure for the new Verisk as well as actively manage the balance sheet to take advantage of the $3.1 billion in proceeds we received from the closing of the Wood Mackenzie transaction. To that end, in February 23, we paid down $1.4 billion in debt that was outstanding on our revolver. On March 3, we issued $500 million of 10-year senior notes at a rate of 5.75%, bringing our total debt outstanding at the end of the quarter to $2.85 billion. We then entered a $2.5 billion accelerated share repurchase plan and received an initial delivery of 10.7 million shares in the quarter. We expect to receive the final shares when the program is completed in the fourth quarter. The net result of these actions in the quarter was net interest expense of $26.4 million for the first quarter compared to $31.3 million in the prior year. Included in this number was $7.4 million in interest income that we earned on the proceeds of the Wood Mackenzie transaction, which we do not expect to continue as the proceeds are now fully deployed. Having now completed all these transactions, we now expect net interest expense for 2023 to be slightly below the full year 2022 level. On taxes, our reported effective tax rate was 27.1% compared to 17.4% in the prior year quarter. This higher tax rate included a onetime tax charge of $15.2 million associated with the structuring of the energy sale, which closed in the quarter, offset in part by higher stock compensation benefit versus the prior year period. Going forward, we expect the tax rate for the remainder of the year to be in the originally guided range of 23% to 25%. Adjusted net income increased 9.4% to $196.4 million, and diluted adjusted EPS increased 16.2% to $1.29 for the first quarter of 2023. These changes reflect organic growth in the business, contributions from acquisitions and a lower average share count, offset in part by higher tax rate. We are very pleased with the robust performance in the first quarter. But given that it is still early in the year, our transactional revenues are inherently less predictable. At this time, we are maintaining our outlook for 2023. While the first quarter showed strong operating momentum, based on what we see today, we have not changed our expectations for the balance of the year. To that end, our full year 2023 guidance is unchanged. And now I will turn the call back over to Lee for some closing comments. Lee Shavel : In summary, we’re excited about the opportunity ahead and our ability to focus all our attention, talent and resources on the global insurance industry. Verisk is best positioned to capitalize on the opportunity because of our scale, centrality and expertise. Our motivating purpose is to work together with our clients in building resilience for individuals, communities and businesses globally. The combination of our focused business model, unique market position and strategy to deliver value for clients through improved decision-making and operational efficiency is the formula that will also deliver value to our shareholders through predictable growth and returns. We continue to appreciate the support and interest in Verisk. With that, I’ll ask the operator to open the line for questions. Q&A Session Follow Verisk Analytics Inc. (NASDAQ:VRSK) Follow Verisk Analytics Inc. (NASDAQ:VRSK) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Our first question comes from the line of Faiza Alwy from Deutsche Bank. Faiza Alwy : I wanted to ask about — I understand that the transactional revenues you cited, there may be certain onetime items. But on the subscription revenues, you cited increased growth in premium pricing. And it sounds like that should continue. So maybe talk about some of the offsets. I know you mentioned Florida, but if you can further dimensionalize that for us, that would be really helpful. Elizabeth Mann: Yes. Thanks. Happy to. I’ll highlight a couple of the drivers of the subscription growth, which was broad-based and some of the potential later in the year. So on the — the largest driver of the subscription growth was in our forms business. This was the biggest contributor to the growth, just given the size of it within overall Verisk. And the growth was driven across the contract. Probably about 20% to 25% of our contracts in the business overall are tied to premium growth. We are seeing an environment with strong premium growth with over 9% — nearly 10% net written premium growth in 2021, which is driving some of those contracts. In addition, we’re delivering additional value to our customers and new products, as we highlighted at the Investor Day. So we are partnering with them in this environment. Finally, in that business, in this quarter in particular, there were lower levels of attrition, liquidation or consolidation in the industry than we might typically, something that we’re monitoring in the balance of the year. In addition to that business, other contributors to subscription growth, our property estimating solutions business had a strong quarter, somewhat helped by easier comparisons in the last year and some continued storm benefits there. And our anti-fraud business in the claims business is also driving strong growth. That is fueled significantly by conversions to claims essentials, which is a subscription product for third-party administrators and self-insured. That transition from transactional to subscription product started in the back half of last year. So we’re still in kind of that overlapping growth period. And finally, extreme events and life, our life solutions business also had strong subscription growth. So collectively, strong contributions across the portfolio. Lee Shavel: And Faiza, if I would add, I think the other dimension that you were looking for is what might not be sustained given that strong growth in the first quarter. And so there are a couple of things that I would point to. One is that we — in subscription growth, we have some property estimating solution subscriptions that come on associated with the storms in the fourth quarter. And sometimes those persist. It’s hard to predict how long that those will persist. So that’s a factor. In addition, as we indicated, the Florida situation and potential further insolvencies would impact that. And then as Elizabeth described, part of the conversion of the — in the anti-fraud to our claims essentials package, it generates some growth in 2022 and in the early part of 2023. I think we will lap some of that exceptional growth, and that will probably serve as a bit of an offset in the later part of 2023. Operator: Our next question comes from the line of Andrew Steinerman from JP Morgan. Andrew Steinerman: I would just like a little more detail about those certain transactional revenues that were elevated in the first quarter, like which product lines? And what are you assuming for the balance of the year for those same transactional pieces? Elizabeth Mann: Yes. Happy to cover that. Maybe like the subscription, I’ll go through sort of in order of magnitude of the impact to the transactional growth. So the biggest single driver in the underwriting and ratings portion of the business was the recovery in the auto space. There were really 2 elements to this. First was we referenced the nonrate actions deal with a major insurer. And that’s a unique opportunity for auto insurers to look across their portfolio and see actions that they can take beyond rate increases. The second element, though, is the overall rebound in shopping behavior, which picked up quite suddenly in the quarter. We’ve seen industry data that supports it. The J.D. Power data shows a strong increase in auto insurance shopping this quarter. So those 2 factors contributed to our transactional growth. In addition, the — our life business, which is both a subscription business but has a services implementation component which contributed on the transaction side. In the property estimating solutions, there was — there continue to be carryover as well as some localized storm activities, the wind storms and tornadoes and some ice storms that you’ve seen that had a component of an impact. And then there were a couple onetime elements, including some overage charges on contracts in underwriting and rating, billing catch-up in the claims business. There also — there happened to be an extra business day in the quarter, which will come out in the third quarter. So those were the main elements across the transaction growth. Andrew Steinerman: Right. And Elizabeth, I also said, how are you assuming these transactional pieces are guided for, for the balance of the year? Elizabeth Mann: Yes. So that’s encapsulated in our 2023 guidance, which is unchanged. Operator: Our next question comes from the line of Greg Peters from Raymond James. Greg Peters : Lee, in your comments, you spoke about the client outreach initiatives, and I think you highlighted a Net Promoter Score of 47, which as far as insurance industry standards is nothing to sneeze at. Can you maybe give us an idea of how you’re thinking about improving that score? Is that part of your approach and strategy is you convene all of these panels and meetings with your clients and provide us some perspective on how you’re thinking about that, please? Lee Shavel: Thanks for the question, Greg. So certainly, we view the Net Promoter Score as one gauge of our client satisfaction and enthusiasm for what we do. I wouldn’t say that we are targeting our client outreach primarily to drive an increase in NPS. We’re hopeful that, that will be a consequence, but our primary purpose is to elevate our dialogue with our clients, which, as I indicated, I think there’s a very strong appetite for because they recognize that with the data sets that we have and our centrality, we have the ability to solve problems for the industry. And the only way that we can identify those as industry issues is by moving and strengthening that dialogue at the top. And I think it does put us in a position where we are beyond addressing their tactical needs in underwriting claims, extreme events modeling, we have the ability to solve bigger problems by tying some of those data sets together. We talked about the integration of our property data into the Touchstone platform, which is an example of how, as part of that higher-level dialogue, we were able to find solutions. So we are looking for ways to integrate more data sets and bring new data sets in to satisfy and delight our clients. And I certainly hope that we’ll be able to see an increase in our NPS overtime. But where the rubber will meet the road is going to be in sustained revenue growth and the development of new products that we can then monetize across the industry. Operator: Our next question comes from the line of Ashish Sabadra from RBC. Ashish Sabadra : I just wanted to drill down further, Lee, on your comments around some of the macro challenges, insurance-specific challenges, but also better client interaction and some of the things that you mentioned in response to the prior question around new data sets. So my question here was how is that helping build the sales pipeline? Have you seen any elongation in the sales pipeline? Can you talk about the bookings and the traction you’re seeing? And how should we think about the contribution from these upsell, cross-sell into the existing customer base accelerate as we go through the year? Lee Shavel: Thank you. Thank you, Ashish. It’s a great question. And I would start by saying through a lot of this client interaction, you have a very clear sense of what is on the minds of senior leaderships at underwriters and reinsurers. And I would start off by saying probably inflation and the impact of inflation on the insurance industry as they evaluate potential losses, insurance to value, placement costs, pricing is first and foremost. And to give you an example of how that manifested itself in our world at our Verisk Insurance Conference, which we were tying a lot of these topics together, our session on tracking inflation costs across a variety of aspects of insurance was a standing room-only event in a pretty large room of people spilling out into the hallways outside. So anything that we can do to provide more insight on the impact of inflation and how that’s going to influence replacement costs and insurance to value is an important element of that. Similarly, social inflation and the impact of rising legal costs, time involved in resolving those is very much on the front of their minds associated with regulatory changes. We’ve seen some regulatory changes in Florida to try to limit some of that exposure. So our engagement on both helping understand that dynamic, how to manage that effectively in settlement discussions and also working towards some regulatory solutions and legislative solutions that address that is important. Topics of climate change and broader global risks that is factoring into our extreme events business is critical. We’ve had — that has helped drive pipeline for some of our longer-term climate-oriented models as well as understanding how social, political and environmental risk through our Verisk Maplecroft subsidiary interacts with those risks is also an important topic as insurers are confronting a broader sense of the risk. So those are a few examples of what I would describe as the issues that are top of mind and that we have seen drive, I think, very solid activity on the sales front. I’d also mention that in light of that and in light of kind of the questions around the sales cycle that we have seen in other places, we have always dealt with relatively long sales cycle. And I think our — the industry, the insurance industry has generally been less volatile. We have not seen any changes in our sales cycle and the impact. So we recognize that, that has been a greater challenge for some of our peers in this market environment. But to date, we’ve our sales teams, we have not seen that be an impact as of yet. Ashish Sabadra : That’s great, and congrats on such a strong momentum in the business. Operator: Our next question comes from the line of Toni Kaplan from Morgan Stanley. Toni Kaplan : Lee, thanks for your comments on generative AI. I was hoping you could talk a little bit more about it in terms of your broader strategy and how you view the opportunities and risks. And then, Elizabeth, thanks for sharing the pieces on the subscription and transactional nonrecurring items, but I’m not sure I caught the quantification of how much the quarter benefited from the onetime items. Lee Shavel: So Toni, on generative AI, I’ll say at the start, our first approach is understanding it, understanding it in the context of the potential use cases within insurance, listening to how our clients are perceiving it and understanding, on one hand, how this can be an effective tool to be utilized to potentially automate functions insurance to potentially integrate other data sets into their decision-making. But there is — there are — because I think of the breadth of this technology, there are clearly a lot of applications. And we’re working to identify those and the opportunity, on the other hand, and I think the driving factor is there are clearly profound risk associated with generative AI in terms of its ability to understand and contextualize the conclusions or the outputs that it’s creating. And so our primary focus has been in identifying a policy for us internally and as we think about the industry as a whole to provide scope for protected use cases that allow us to test and evaluate and understand the risks and deal with this on a very disciplined basis where the industry is able to develop this in a safe and nondisruptive manner. Elizabeth Mann: Toni, to your question on the onetime items, we haven’t quantified them. They’re not of a magnitude that we would call out in specific. We just wanted to mention as a tailwind. Toni Kaplan : Congrats again. Operator: Our next question comes from the line of Heather Balsky from Bank of America. Heather Balsky : I was hoping you could touch on the Florida market and what you mentioned in terms of the potential risk as we move through the year. I think in last quarter, you had, had one additional bankruptcy. Is there anything in particular that you’re seeing? Or is it just a cautiousness, given the uncertainty? Lee Shavel: Thank you, Heather. It’s a great opportunity for me to bring Neil Spector, President of our underwriting businesses, into the conversation and through his engagement with clients, particularly on the underwriting side, has probably the best insight on what’s happening within Florida. Neil? Neil Spector: Thank you. Great question. I would say it’s going to take a while for the reforms that are — that were passed there to have the positive impact on the market. There’s still a lot of lawsuits that are pending from prior to that legislation that will flow through. There’s also a concern with reinsurance. The renewals will be coming up for the next storm season, and the expectation is that reinsurance costs are going to go up. So just the overall market is still not favorable for insurers down there. And so we need to continue to watch and make sure that we don’t have additional liquidations or additional challenges out there. As I’ve mentioned in the past, it also creates opportunities for new players to enter the market. And so we do see that as well. But it’s just a dynamic market that we’ll probably see the results of the situation for at least another 12 to 18 months. Operator: Our next question comes from the line of Manav Patnaik from Barclays. Manav Patnaik : Lee, maybe if I can follow up on the technology question and specific to, I guess, the sunsetting of the mainframes, which obviously is a great step, but I think it’s one of the first steps, I guess. I just wanted to understand what’s left in the tech modernization, what your plans are? And what benefits that might read over, I guess, the next multi-years? Lee Shavel: Yes. Thank you, Manav. So — and I appreciate you asked the context in kind of a sequential way. So first, as I indicated, the accomplishment of moving off of that mainframe was a really substantial challenge, particularly for an organization that has been — has developed over decades, and that technology had been in place for a long time. And so the immediate benefit, as we’ve talked about in the past, is that we are clearly realizing an economic benefit in terms of our ability to manage data and process data in the cloud. And we have — there were costs necessary for us to achieve that outcome. But most of those costs have been — had hit us. We’re now experiencing the benefit of that from an economic perspective. But I’ll remind everyone that, of course, that this also involves a geographic change in our balance sheet, meaning that what previously would have been depreciation of those hardware and software assets is now moving to an operating expense in terms of cloud expense. So may not be apparent from an EBITDA perspective, but there is real economic benefit from that. Now we will also continue to expect to see our cloud expenses grow as we integrate new data sets as we develop new solutions. So that will be part of our expense base that grows with the revenue opportunities that we see. But the strategic benefit for us that I believe we’re really at the early stages of realizing is that through associating data sets that are now in a cloud format, our ability to tie those data sets together, to develop workflow software that is able to integrate that, to deliver that in a micro services context or an EPA context to our clients and integrate into those features expands the scope by which we can create value from those data sets. And to tie it to my earlier comments, as we better understand our clients’ needs, it gives us an ability to potentially customize the way that we integrate and deliver those data sets to our clients to meet their specific value objectives. And that’s, I think, what we’re very excited about. We also — from a technology standpoint, one other modernization step that we are taking on is an upgrade of our ERP system. That will deliver also efficiencies for us on the accounting, on the HR side. That also improves our ability to understand and accelerate the amount of internal information that we have. So having completed the cloud migration, we’re now embarking under Elizabeth’s leadership the — our ERP transformation. Operator: Our next question comes from the line of Alex Kramm from UBS. Alex Kramm : Just wanted to come back to the guidance, which was obviously unchanged. Just trying to understand, since you’re new to this first year of giving guidance, what your philosophy really is here going forward? So I know it’s the first quarter in, but how should we be thinking about you updating the guidance throughout the year if you’re running significantly ahead or below? And then as we think about this year, I know there was a lot said already on this call. But as you talk about the none changed guidance, was it really hey it’s too early in the year? Was it anything as maybe a little bit more uncertain, some of the transactional side you mentioned? Or was the first quarter really just in line with what you were expecting all along? Elizabeth Mann: Thanks, Alex. Yes. We are excited to be giving this new transparency to the market. Our overall philosophy is going to be to give you clarity on what we can expect. We do not intend to sort of update for minor changes or for every kind of mark-to-market on a frequent basis. It’s the first quarter of the year, and so it’s still early in the year. We will update for material changes as we see things unfold. Alex Kramm : Okay. Fair enough. Elizabeth Mann: And maybe actually, to your question on our views for the balance of the year, I’ll repeat what I said in the comments, which is from where — from what we see today, as we think about the balance of the year, we don’t see significant changes in trends versus what we talked to you about when we gave the guidance. Operator: Our next question comes from the line of Andrew Nicholas from William Blair. Andrew Nicholas : Second quarter in a row where you’ve called out antifraud analytics as a growth contributor. And I appreciate some of the insight on your capabilities there at Investor Day. Elizabeth, I think you called out some changes in contract structure in that business. Would you mind unpacking that a bit further? Is that something that’s impacting growth in the near term? And then broadly speaking, are there other dynamics to call out within anti-fraud that are contributing to the stronger growth rate? Elizabeth Mann: Yes. Thanks. So that — in that product, we had — it is for insurers, but it is also used by third-party administrators and by self-insured. Previously, those customers, the TPAs and the self-insured had been on a more of a transactional business model. They would use the data when something would occur. We have developed a subscription product that is specifically targeted to that customer base and have been moving them to that subscription product. We started that in the middle of last year. As they move from a transactional to a subscription model, you’re seeing that shift in that business where transaction revenue may even be declining, but it is being replaced by subscription revenue, which is higher quality and more sustainable. Operator: Our next question comes from the line of Jeff Silber from Bank of Montreal. Jeff Silber : You called out your life insurance business a couple of times. I know it’s relatively small, but we’ve been reading about some of the pressure that the life insurance industry is in because of the returns on commercial real estate, maybe some mismatches of assets and liabilities. Are you seeing that with any of your clients either in the life insurance industry or more broadly overall? Lee Shavel: Yes. Jeff, thank you for the question. I would say, first, recognize that pressure. But that pressure is, in fact, I think, creating the opportunity that we are pursuing in that we are providing through our life solution a completely renovated and fresh platform for our clients to deliver that product, to develop new products on a faster basis and to substantially reduce the costs that they have in originating and managing that product. So at least what we see and part of what is driving the very strong growth, and I heard this directly from clients at our various insurance conference, many of whom are large players in the insurance industry, given that pressure, they are using this as an opportunity to rethink. Some of them have exited the business, and they are reestablishing it on this new platform that we are providing to them. Operator: Our next question comes from the line of Andrew Jeffrey from Truist Securities. Unidentified Analyst: This is Julian on for Andrew. Just wanted to touch on the recent acquisition in German market. Is that kind of — is it fair to say it’s an indicative of a little focus on auto? And maybe what other kind of vertical opportunities exist there in that market? Lee Shavel: Yes. Thank you, Andrew. And I think this is a good opportunity for me to bring in Maroun Mourad, the President of our Claims business. And given kind of the claims dimension of that, he can speak specifically to crew and also how it fits into our broader German strategy given our prior acquisition of ACTINEO. Maroun Mourad: Thank you, Andrew. So the is an auto on-site and remote adjusting that uses automation and digitization as well as invoice and bill review check to enhance the customer experience, provide more speed and drive down growth for our customers. As you know, about 1.5 years ago, we acquired a firm in the called ACTINEO. That was an extension of our line of business specific solutions outside of the U.S., starting in the U.K. and now expanding into Germany, France and a couple of other markets. So there are synergies with the acquisition to leverage our existing operational base as well as customer base to provide an additional product or 2 to the German customers. And this will also help us use the and the German platform as a launching pad to explore growth into the markets in Europe. So it’s both a product line expansion as well as the diversification of our suite of solutions offerings in the claims space. Operator: Our next question comes from the line of Jeff Meuler from Baird. Jeff Meuler : Apologies for the multiparter, but all on the same topic. So on the underwriting and marketing, I guess, just to what extent is there still like a lagged impact from some states that didn’t get requested rate actions or just how much better is the performance in the states that did? And then what specifically needs to happen for the marketing to really turn on? I know you’re saying in the second half, but is it a customer success channel capacity constraints as they respond to the consumers shopping after they see the higher premiums, and that needs to be alleviated or what needs to happen? And the last is just what exactly is the revenue model like as marketing demand improves, to what extent does it flow through the sub space? Or to what extent is there meaningful incremental transaction revenue? Lee Shavel: So Jeff, I think you won the award for the most complex question, which we do appreciate because it is a complicated topic. Let me start off, and then I’m going to ask Neil to jump in and provide more context. So the dynamic of what we’re seeing is that right now, in general, is that we are seeing higher rates, and consumers are responding to that. So some of the strength that we’re seeing in auto is they are beginning to shop more frequently because of the initial impact of rates. We expect that, that will continue. Some insurers through nonrate actions that they’re entitled to have been able to increase prices. So we’re getting to see the consumer respond to that, and that’s driving volume. Now from the insurers’ perspective, however, there still are these concerns about inflation and underwriting in certain geographies that is — put them in a position where they are not willing to market as aggressively. And so that’s why we have not seen the level of marketing activity on the insurer side. So those are the dynamics that we are seeing right now. It’s — we do expect to see more rate increases. That will probably encourage more competition and demand for new products, but the insurers will have to evaluate where they want to write business and what they want to do to attract more. So that’s kind of a rough approximation, and I’ll let Neil fine-tune that a bit. Neil Spector: Yes. So I’ll just add. So I think part of your question was the rate increases by various states. And the states approved those rate increases at various times and various levels. And I think what we’ve seen is that by now, most of the states, the increases are flowing through, but not all states happen at the same time. And then, of course, insurers are raising rates because their costs have significantly gone up. There’s a number of drivers to that, which we mentioned some of them: severity, the cost to repair is up dramatically. There was a huge spike in used car prices, and there’s a huge increase in medical costs, et cetera. So they’re unprofitable. These rate increases will help. And so their desire to write more business is really muted. And so when you think about the marketing function, that is really the growth engine, which insurers go out to grow their business. And that has been paused in a large part due to the unprofitability of the line. So we expect over the next 12 months, that will — the lines will become more and more profitable as these rate increases go through and that marketing spend will return, although it’s questionable as to when. We don’t know exactly when. And I think it will return for certain players sooner than others because each insurer handles the situation differently. We do have a subscription model with our overall marketing products. So they are subscription revenues. But the subscriptions are tied overall to usage. And so as the market grows and marketing spend comes back, we expect that to recover, but it is not purely a transactional model. Lee Shavel: Yes. And specific to this embedded in our comments was part of the transactional strength were some nonrate action programs that were insurers looking to address some of their higher risks within that. As these rate increases begin to flow through, that should diminish, but then it potentially drives other growth within the business. So again, a complex situation, but hopefully, that gives you a little bit more insight. Jeff Meuler : It does. I think you addressed all 19 parts. Operator: Our next question comes from the line of from Jefferies. Unidentified Analyst: This is on for Stephanie Moore. Just wanted to ask about the percentage of price increases that the company plans to implement with the health in insurance industry like you just talk about, particularly given an uncertain macro backdrop as inflation was at historic levels last year. Lee Shavel: So Harold, I was — we lost you there for a little bit. I think that you were just asking the general question around price increases in the context of the environment. Do I have that correct? Unidentified Analyst: Correct. Elizabeth Mann: Yes, happy to comment on it. I mean, first, I want to remind you, we don’t have a single pricing approach. It’s a targeted approach across all of our businesses, and we’ve been pricing items to value. I think I quoted before the net written premium growth in the industry was 9.6% in 2021. That’s the year that drives the growth for many of our customers. About 20% of our revenue is tied to that premium growth in the year prior. So that has been an element. Lee Shavel: And I would say we are – in this environment where the business is growing, there are a lot of new issues that we’re working to respond on. With that growth and naturally some of the inflationary costs within the environment, the investments that we have made to improve the value of the product, we believe that it has been a supportive environment for us to capture the value that we are creating in the product through some of the pricing increases across our entire product set. Operator: Our final question comes from the line of George Tong from Goldman. George Tong : I wanted to return to the nonsubscription revenue trends. So nonsubscription revenue grew 14% in the quarter driven to a large extent by auto underwriting. How sustainable is the strength in auto underwriting nonsubscription revenues with the trends that you’re seeing with rate shopping? What are some of the puts and takes that could cause underwriting in autos to accelerate or decelerate in the coming quarters? Elizabeth Mann: Yes. Good question, George. Thanks for that. Some of it ties back to the discussion we were just having on the industry and the impact of the rate increases that we’re starting to see. So the strong auto insurance shopping behavior that we saw in this quarter was a function of some of the rate increases that have started to push through. To some extent, that is a recovery that we had expected to come later in the year. And so it may just be a pull forward of that recovery. We’re waiting to see kind of the interplay of the dynamics that Lee and Neil were talking about in there. The second driver of the auto business, the nonrate actions and our — enabling our customers to do that, that may taper off as they start to get rate increases, and that may turn into some of that shopping activity. So that’s the interplay of those elements we see going forward. Lee Shavel : Great. Well, thank you, George. I think that was the final question. So I want to thank everyone for participating, and we look forward to continuing the dialogue with all of you. Have a great day. Operator: Thank you, ladies and gentlemen. This does conclude today’s call. Thank you for your participation. You may now disconnect. Follow Verisk Analytics Inc. (NASDAQ:VRSK) Follow Verisk Analytics Inc. (NASDAQ:VRSK) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

INmune Bio, Inc. (NASDAQ:INMB) Q1 2023 Earnings Call Transcript May 3, 2023 Operator: Good day and welcome to the INmune Bio First Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. Please note today’s event is being recorded. I would now like to turn the conference over to David Moss, Chief […] INmune Bio, Inc. (NASDAQ:INMB) Q1 2023 Earnings Call Transcript May 3, 2023 Operator: Good day and welcome to the INmune Bio First Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. Please note today’s event is being recorded. I would now like to turn the conference over to David Moss, Chief Financial Officer. Please go ahead sir. David Moss : Thank you, and good afternoon everybody. We thank you for joining us for the call for INmune Bio’s first quarter 2023 financial results. With me on the call is Dr. RJ Tesi, CEO of INmune Bio; and Dr. Mark Lowdell, Chief Scientific Officer of INmune Bio who will provide an update on INKmune, our memory-like natural killer cell oncology platform. Before we begin, I remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this conference call are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those forward-looking statements. Please see the forward-looking statements disclaimer on the company’s earnings press release, as well as risk factors in the company’s SEC filings including our most recent quarterly filing with the SEC. There’s no assurance of any specific outcome. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made as the facts and circumstances underlying these forward-looking statements may change. Except as required by law INmune Bio disclaims any obligation to update these forward-looking statements to reflect future information events or circumstances. With that behind us, now I’d like to turn the call over to Dr. RJ Tesi, CEO of INmune Bio. RJ? RJ Tesi : Thank you, David, and thank you everyone for joining the call. I will arrange my remarks to highlight the key takeaways for the first quarter and the subsequent period and also provide updates on our platform programs. I will start by reviewing developments in XPro, with XPro, the DN-TNF program and then hand the call to Mark Lowdell, our CSO who will speak about the developments in INKmune, before I pass it back to David to discuss financial results and provide an update on upcoming milestones. Then we will move to Q&A. During the first quarter, our primary focus has been to accelerate recruitment into our international blinded randomized Phase 2 trial in patients with early Alzheimer’s disease. We are working to develop the infrastructure needed to expand the number of clinical trial sites in Canada, engage in enrolling patients along with adding regulatory jurisdictions beyond North America. In Australia, we continue to see patients opting to continue treatment after the Phase 2 program and joining the Phase 2 open-label extension program. Although, frustrated by the clinical hold, we remained — we continue to move forward with the blinded randomized Phase 2 trial in patients with early ADi. And we have reached an understanding with the FDA regarding what is needed to lift the clinical hold and are on track to meet those commitments before the end of the year. Although, the FDA hold has affected the pace of enrollment of patients into the clinical trial, there have been tangible financial benefits. David Moss, our CFO will provide more detail shortly. But because of a meaningful portion of the trial thus far has occurred in Australia, we have received a sizable research and development rebate in February and expect to continue to receive additional rebates as we continue to invest there. These rebates significantly lowered our cash burn in the first quarter to roughly $1.2 million. On our last call we announced a change in the scope of the Phase 2 program in patients with ADi. As a reminder, ADi is Alzheimer’s disease in patients with biomarkers of inflammation, our target population that is about 50% at least of patients with Alzheimer’s disease. Based on new data and a desire to streamline the clinical operations of the trial, we combined the two blinded randomized Phase 2 trials into a single program. Originally there was a trial in mild ADi patients and a trial in MCI patients. MCI is mild cognitive impairment the prodromal Alzheimer’s disease syndrome. These are now combined into a single trial of early ADi that includes both mild ADi and MCI patients. This format has not compromised the trials, but is a benefit. Consolidation of the mild ADi and MCI patients into a single trial improves the probability of success comes with significant cost savings conforms with the industry standard and aligns the program with the expected design of a pivotal Phase 3 trial. This change is not easy but the complex regulatory process is beginning to bear fruit. Once fully implemented the pace of enrollment should increase in Australia and Canada and should energize enrollment in newly-added regulatory jurisdictions. Currently the Phase 2 is a blinded randomized placebo-controlled study in early AD patients with biomarkers of inflammation that uses a validated measure of cognitive function as the primary endpoint. The Phase 2 is a test run for a pivotal trial. And based on data from the Phase 1 trial our goal is to stop cognitive decline. That is we don’t want to just decrease the rate of cognitive decline we want to stop cognitive decline in patients that received XPro. Patients who are treated with XPro in this trial are treated for six months. After that six-month period the patients are offered the opportunity to enroll in a 12-month open-label extension trial. The open-label extension trial is a 12-month study where safety and efficacy of the XPro treatment in patients with early ADi will continue to be evaluated. Efficacy will be assessed every three months by MRI and clinical rating scales. All the patients that enroll in the open-label extension received XPro regardless of previous treatment assignment. The open-label extension serves multiple purposes. First, it provides long-term safety data. We believe the regulatory authorities expect 18 months of safety data for marketing authorization. The open-label extension strategy will provide this critical safety data. Second, the open-label extension provides long-term efficacy data. Finally, the open-label extension is a recruitment tool, guaranteed access to 18 months of treatment following a six-month study provides significant advantages to patients and their clinical teams. So far participation in the open-label extension is high and the clinical teams are enthusiastic. We expect to share some data in due time. We signaled our interest in the use of DN-TNF, our dominant negative TNF platform for the treatment of Duchene’s Muscular Dystrophy or DMD. As highlighted in the January 25th press release, we established DN02 Inc. a separate wholly owned subsidiary that will hold the intellectual property needed to facilitate partnering and business development activities for treating DMD with our dominant negative TNF compounds. This structure allows us to focus on our core mission, which is the treatment of Alzheimer’s disease without leaving a valuable asset on the shelf so to speak. Our confidence in a DMD treatment is based on pre-clinical data. The ticket for entry into DMD as a therapy is that it must decrease inflammation in the muscle and decrease muscle fiber destruction. In the animal models DN-TNF does this and more. The most interesting and novel attribute is that DN-TNF treatment promotes muscle fiber regeneration. To our knowledge muscle fiber regeneration has not been seen in any small molecule, biologic or gene therapies being tested to date. A therapy that promotes muscle fiber regeneration may change the course of the disease in these boys. Some of you are wondering why we are promising — promoting a biologic therapy at the dawn of the gene therapy era in DMD, the answer is simple, gene therapies may work but the durability of the therapy and who will benefit is unknown and complicated. Furthermore, we suspect gene therapies may benefit from an anti-inflammatory boost that also has regenerative medicine effects. Today most patients are treated with corticosteroids, a time worn and dangerous standard of care. Corticosteroids slow the progression of DMD but at a price. Most of the metabolic and cosmetic problems in boys with DMD are related to corticosteroid use. The only benefit of DN-TNF therapy is to replace corticosteroids. It is a big win for patients who currently suffer from insulin-resistant diabetes, obesity, cardiovascular disease, short stature, hirsutism and muscle weakness due to the promiscuous use of corticosteroids to treat the disease. Like the DMD program we use MBO3, our cancer program using a DN-TNF compound as a partnering program. I don’t need to tell dedicated biotech investors the oncology drug development space is changing. Typically innovation in cancer therapy comes in two forms; development of new therapies or the better use of existing therapies. Inventing new drugs is hard and the number of unclaimed pathways in cancer therapies are few. Although MBO3 acts as an innate immune checkpoint inhibitor, it is ideally used as part of combination therapy to make existing drugs better. We are focused on using MBO3 to treat MUC4 expressing cancers to decrease resistance to existing therapies such as in HER2, immune checkpoint inhibitors and tyrosine kinase inhibitors. Adding MBO3 to the therapeutic cocktail treating MUC4 positive cancer should improve patient survival. Our goal is to find a partner for MBO3 to allow this promising asset to benefit patients and allow INmune Bio to focus on our core mission, the treatment of Alzheimer’s disease. I will now move to INKmune, our memory-like Natural Killer Cell Priming program and pass the call to Mark Lowdell, CSO to describe this in more detail. Mark? Mark Lowdell: Thank you, RJ, and thank you all for joining this call, and I’m looking forward to your questions later. So in early April, we took our first INKmune clinical expansion step towards the treatment of solid tumors via the filing of an IND for the use of INKmune to treat patients with metastatic castration-resistant prostate cancer and in the US. The filing was supported by our positive preclinical solid tumor data in prostate, renal cell carcinoma, ovarian cancer and indeed nasopharyngeal cancer, all tumor cell lines, which are resistant to natural killer cell killing. The prostate cancer trial is expected to take place at four or more medical centers in the US and it uses a bayesian optimal interval Phase 1/2 trial design. The trial is expected to enroll up to 30 patients and along with safety the open-label trial will evaluate tumor progression using traditional efficacy endpoints with disease burden PSA and CT scans as well as non-traditional measures of disease burden ctDNA and 18F-PSMA PET scans. So by the end of this open-label trial we will understand firstly the safety of INKmune in this new patient population, the dose to be used in a subsequent blinded randomized pivotal trial and have some indication of the ability of INKmune to control disease in patients with metastatic prostate cancer. We’re excited about the potential of INKmune as we expand into the treatment of solid tumors. These are those, which account for approximately 90% of human cancers. The challenges of treating solid tumors are considerable and it’s understandable that most cellular immunotherapies have focused on the 10% of cancers that are hematological tumors. So what is it about INKmune, which leaves us to believe it can treat solid tumors? The microenvironment of solid tumors is hypoxic and contained immunoregulatory cells, which inhibit T cells and indeed NK cell function. INKmune not only primes the patient’s own natural killer cells to override the immunosuppression of hypoxia and the regulatory cells in the tumor microenvironment, it induces differentiation of the NK cells into a memory-like phenotype. This memory-like phenotype NK cells are not susceptible to the immunosuppressive signals from cancer cells and they express proteins on their surface which protect them for exhaustion and senescence. Uniquely, these memory-like NK cells secrete a protein which can remove inhibitory signals from tumor cells and at the same time, increase the strength of the bond between the NK cell and the cancer cell. All of this occurs even in extreme hypoxia. I presented most of these data at the Innate Killer Summit in Europe last year and a video of the presentation is currently available on the company’s website under the therapies tab INKmune videos or via the company’s YouTube channel. Meanwhile we continue to treat patients in the MDS/AML Phase 1 trial and have recruited the first patient to the second UK clinical site and opened our first site in Mainland Europe. Four UK patients have received a complete three-dose regimen so far and INKmune therapy has been safe at the dose tested. Indeed the fourth patient to be treated received INKmune on an outpatient basis, which is our planned treatment scenario for the prostate cancer trial in the US and it’s a world away from the days of hospitalization associated with most current cell therapies. Through the four patients with hematological cancer treated so far have shown evidence of NK cell activation. And we’re analyzing the biomarker data, to identify those, which could best predict outcome. Of the four patients treated, one remains alive 20 months post-treatment and has enjoyed a much improved quality of life with fewer hospital visits. Two patients were bridged to transplant, although sadly one died while waiting for a suitable stem cell donor. So whilst very early in the clinical trials of INKmune and being restricted to using the lowest dose at this stage, the trial chief investigator who’s treated the four patients with hematological disease stated, and I’m quoting him here, all enjoyed an improvement in general fitness with resolution of fevers stabilized or even improved blood counts and we were able to give brakes from the low-dose chemotherapy they had been receiving. Definite improvement in subjective parameters of well-being, mood, appetite and clinical performance status. The clinical experience was presented at the American Society of Hematology in the annual conference in New Orleans last December. Now in preparation for the increased recruitment into the Laurel MDS trial, and the opening of our new trial in metastatic castration-resistant prostate cancer. The company has invested in upscaling the manufacturing process of INKmune and the validation of that new process to cGMP is now complete. This increases capacity and reduces costs substantially. The new manufacturing process forms the basis of the current IND application to the FDA. And this investment paves the way for our ambitious plans for trials in other solid tumors including ovarian cancer, renal and nasopharyngeal cancer, as we acquire the relevant supporting data from my R&D team. Thank you fellow INmune shareholders for the trust you’ve instilled in the company and for the opportunity to provide you with this update on the INKmune platform. I look forward to speaking to you again in the next quarterly call in three months. RJ over to you? RJ Tesi: At this point I’d like to turn the call over to David Moss, our CFO to review certain financial terms. Thank you. David Moss: Thank you, RJ and Mark for the update. I’ll provide a brief overview of our financial results and upcoming milestones, before we head to our Q&A session. Net loss attributable to common stockholders for the quarter ended March 31, 2023 was approximately $6.5 million compared with approximately $6.9 million for the comparable period in 2022. Research and development expense totaled approximately $4.1 million for the quarter ended March 31, 2023 compared with approximately $4.3 million for the comparable period in 2022. General and administrative expense was approximately $2.3 million for the quarter ended March 31, 2023 compared with approximately $2.3 million for the comparable period in 2022. At March 31, 2023, the company had cash and cash equivalents of approximately $51 million. Based on our current operating plan, we believe we – our cash is sufficient to fund our operations through 2024. As of May 3, 2023, the company had approximately 17.9 million shares of common stock outstanding, the same number as the last two quarters. As RJ previously mentioned, we continue to focus on achieving our primary clinical trial objectives while remaining cost prudent. To reiterate, a key cash management point highlighted in the Q4 call, the previously-announced consolidation of the AD and MCI trials will reduce overall previously-forecasted budget outlays, for the two combined trials by approximately $8 million. Further, as we continue to dialogue with the FDA, our budgeted spend in the US is not occurring as forecasted thus resulting in less capital outlays. As highlighted in both the specific press release and the Q4 call, we expect to continue to receive further cash rebates as we spend on international trials based particularly in Australia. In sum, these events and actions along with longer-term strength of the US dollar reduced our base currency costs in foreign jurisdictions such as Australia, have significantly reduced our expenses with the first quarter to roughly $1.2 million cash burn. We are particularly pleased with our progress, during the quarter on all fronts and all of the aforementioned items, better position us to manage our cash runway more efficiently to reach our targeted goals of recruitment. Now I’d like to move on to our list of upcoming important milestones. Top line results for our Phase 2 early Alzheimer’s disease trial in patients with inflammation in Alzheimer’s disease, is expected in the second half of 2024. We will initiate a Phase 2 trial of XPro, in patients with treatment-resistant depression, upon resolution of the FDA manufacturing review. Additional open-label Phase 1 trial data of INKmune in high-risk MDS/AML in 2023. Initiation of a Phase 1/2 program in metastatic castration-resistant prostate cancer, upon the acceptance of the IND by the FDA which should occur in the first half of 2023. Finally, as RJ had mentioned, we are pursuing business development opportunities and there can be no assurance that the company can complete any of the transactions, as they are complex and difficult. We have two platforms and as a small company, we will try to expand the applications of these platforms in areas, we do not have the resources or expertise to pursue ourselves in order to benefit shareholders. Naturally, we will update investors should material business developments occur. In summary, we are pleased with our progress during the quarter, continue to overcome obstacles and are grateful for our shareholders’ trust and support in our company, as we continue to work hard to bring value to our — from our platforms, by carefully managing our shareholder resources. At this point, I’d like to thank you for your time and attention. I’d like to turn the call back to the operator, to poll for questions. Q&A Session Follow Inmune Bio Inc. (NASDAQ:INMB) Follow Inmune Bio Inc. (NASDAQ:INMB) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. We will now begin the question-and-answer session. Today’s first question comes from Tom Shrader with BTIG. Please go ahead. Tom Shrader: Good afternoon. Thanks for taking my questions. I actually have a question first for Mark. One of the biggest surprises in I/O is that it works with chemo. Do you have any sense of your approach? Do you have preclinical data? Does chemo get the immune fires burning — or does it just kill your cell propagation? Do you know, yet? RJ Tesi: Mark? Tom Shrader: All right. I guess, it’s a bad question. RJ Tesi: Let’s see, if we can fix the thing and then we’ll come — there he is. -Mark Lowdell: Yes, sorry, I was muted. Yes, it’s a great question. It’s not something that we can test in vitro and the animal models for INKmune don’t really exist outside of a non-human primate. But you’re quite right. And my biggest fear is the effect of chemo on the NK cells in the patient. And, obviously, we need endogenous NK cells to respond to the INKmune. The trick is to target diseases where there are a lot of NK cells even in the setting of chemotherapy and that prostate cancer is one of those. So that’s one of the reasons we’ve gone down that route. Tom Shrader: Okay. And then, kind of, I think an obvious one for RJ. It looks like the Abeta antibodies are here to stay. How do you think about developing a drug that’s quite different in the presence of what is probably going to be a piece of the treatment landscape? Just your interest — your initial thoughts as you think about your timing and where that treatment paradigm is likely to be when you are reaching the market. Thanks. RJ Tesi: Yes. Good question. And, obviously, we think about this a lot. I mean, we now have two pivotal trials using anti-amyloid therapies. They gave consistent results. And I think the best way to describe it is, if I may paraphrase Lilly’s leadership today is, these drugs may stall progression for six or seven months. Although, we don’t know everything about the Lilly trial, we’ll learn more at AAIC in July, I believe we understand the benefits and liabilities of this class of drugs. But I think there’s three main issues and this is where opportunities exist. I don’t think delaying progression is not where — is where we need to be. It’s a start, but I believe we need to stop dementia in its tracks. And so, I think that we can do better for sure. I personally and I think many in the field are confused by the safety profile of these drugs. What will happen when amyloid drug gets in the hands of community neurologists? Why does the brain volume continue to shrink? These are answers to questions that are needed. I’m sure we’ll get them over time. But the safety issues are real and this is a fragile population that you’re treating. And then, finally, what happens with patients that progress on the anti-amyloid drugs. I mean the majority of patients continue to progress. I mean, Lilly has built a total program around stopping the drug when you get below a certain threshold of amyloid. If patients progress what do you do? And I think this is where combination or sequential therapy will be needed. And that will play very well to XPro. So, I actually believe that there’s a lot of opportunity for XPro in the space, either as therapy alone or part of combination or sequential therapy. Five years from now treatment of amyloid — treatment of Alzheimer’s disease is going to look a lot like the treatment of cancer. Therapy will be personalized, where drugs are used to fit the needs of an individual patient. We believe this is good for us. As you know we focus on biomarkers and those biomarkers dictate who get benefit from XPro and who — what that benefit looks like. But let’s be real. Well done to Lilly, kudos. They had a great result. Today’s news is great for patients, it’s great for Alzheimer’s and it’s great news for INmune Bio. So thanks for the question, Tom. Tom Shrader: Sure. Thank you. Operator: Thank you. Our next question comes from Daniel Carlson with Tailwinds Research. Please go ahead. Daniel Carlson: Hi, guys. Thanks for taking my questions. Just a couple here, first off, can you talk a little bit about the timing of the IND for prostate? RJ Tesi: Yeah. So actually I’m sitting here on pins and needles. I mean, if you guys do the math we’re supposed to hear this week, I can honestly say, as of two seconds ago when I checked my e-mail we have not heard, but it will be this week. And so you will learn probably early next week where we stand on that. I will say, that we had very — what’s the right word, very vibrant dialogue between the FDA and the manufacturing team led by Mark, the clinical team led by me on the IND which is a sign that at least they’re reading it. So all I can say is, it’s — you’re going to — I can — you’re going to hear one way or the other next week for sure, for sure. Daniel Carlson: Awesome. And then about the patients on the extension trial, I know you’re going to come out with data at some point to be determined. But I’m wondering, if there’s anything you can sort of say tangentially about what you’re seeing from the patients there. RJ Tesi: So the problem with the extension trial is we don’t know what they were on coming into the trial. And we’re kind of struggling — we haven’t yet figured out what this looks like, because you’ve got two out of three patients come in having had six months of XPro, one out of three come in having had placebo. So what happens in the first three months or so, based on the Phase 1 trial is going to be meaningful. So, we’re trying to figure out, how to unravel this in a way that we can provide meaningful data to you guys so we can understand it, also not compromise the blinding of the trial. So it’s a little bit – obviously, it’s a little bit complicated until we un-blind it, but we’ll get to something when the time is right and we make sure one, we’re not compromising the blinded randomized Phase 2. And two, we can make accurate statements that aren’t going to confuse down the line. So… Daniel Carlson: Got you. Got you. And then, the last question for me, just you guys talked a fair amount about DMD. So I’m just wondering if you can sort of give us any input into how the partnering process is going. Anything you can add there? RJ Tesi: Yeah. So David is running the — he now wears the hat of both CFO and business development, so I will let him answer this question. Please David. David Moss: Thanks RJ and thanks Dan for the question. Best thing I can do is tell you exactly what I said on the call Dan unfortunately, I just said, we’ll update you on it. I think that the industry right now is on pins and needles to see what happens with Sarepta which is going to happen this month. And then, based on whatever direction happens I think it will be a very good time for INmune to have a number of conversations with all of the key players in the industry. We’re pretty excited about the data that we’ve generated thus far. We have a little bit more data that’s to come. And we will update you accordingly when we have something material to talk about. Daniel Carlson: All right. Great. Look forward to that. Thank you. Thanks guys. Keep up the good work. David Moss: Appreciate it Dan. Thanks for your patience. Operator: Thank you. And our next question today comes from Jason McCarthy with Maxim Group. Please go ahead. Unidentified Analyst: Hi. This is Chad on for Jason. I was just wondering, if you could expand a little bit on the importance of the biomarker directed imaging as it relates to the prostate program? RJ Tesi: Yeah. Thank you. I mean, we actually — and this is really Matt Rettig talking. I mean, you’ll get a chance to hear from him directly. He’s our PI. He’s the head of Geo Oncology at the UCLA University and Cancer Center. But he’s really one of the leaders in clinical trials in prostate cancer in the US. And the key element is the F-18-PMSA scan developed by Lantheus. This is a very sensitive assay. Now, as you know, prostate cancer has a good biomarker with blood PSA. But blood PSA doesn’t give you as clean a look at tumor volume. And the PSMA scan, it’s a nuclear medicine scan, is very sensitive at letting you really quantify tumor volume much more accurately than either CT scan, or the traditional bone scan. So we think that this is going to be the future of this disease. We’re not alone. I’m sure you’ll hear this from Matt – Professor Rettig when we — you get a chance to speak with him, which will hopefully be very soon. But the bottom line is, as we’ve done with Alzheimer’s, as we’ve done with the Laurel scan in MDS, biomarkers are the key to how we select these patients and follow their response. And we — and one of the reasons, we selected prostate cancer is our first foray into solid tumors, as we think that the biomarker show a tools or the — that we have at our disposal will allow us to really know whether we’re seeing effect after 6 months of therapy. Unidentified Analyst: Great, great. Thanks for taking the question. Operator: Thank you. And ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over to Dr. Tesi for any closing remarks. RJ Tesi: Yeah. So thank you for listening to the call. I mean, we grow more excited about our lead platforms every day. As you know, Alzheimer’s and INKmune are both novel strategies that have risk and reward. But the bottom line is that, we are targeting neuroinflammation, which is now recognized as an important part of CNS pathology. And NK cells, at least the way Mark goes after them is novel. And in fact, if you listen to what he said closely, you know that he has been hard at work on the R&D front, and he ascended it new findings on how INKmune works, and he will explain these once we get the IP in place. And finally, today, I think we really want to emphasize that we really have a two-pronged approach at INmune Bio. One is that we focus like a laser on our core missions in XPro in CNS and INKmune in solid Boomers. And secondly, we have this business development effort or partnering effort ongoing because we have valuable assets that we don’t want to waste so to speak. We are looking to find partners for these assets to allow their development to benefit both the patients and INmune Bio shareholders while providing non-dilutive capital for the development of our core assets. So, thank you for listening, and thank you for your continued support. Goodbye. Operator: Thank you, sir. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines, and have a wonderful day. Follow Inmune Bio Inc. (NASDAQ:INMB) Follow Inmune Bio Inc. (NASDAQ:INMB) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Surmodics, Inc. (NASDAQ:SRDX) Q2 2023 Earnings Call Transcript April 26, 2023 Surmodics, Inc. beats earnings expectations. Reported EPS is $-0.4, expectations were $-0.51. Operator: Welcome everyone to Surmodics’ Second Quarter and Fiscal Year 2023 Earnings Call. Please note that this call is being webcast. The webcast is accessible through the Investor Relations section of the […] Surmodics, Inc. (NASDAQ:SRDX) Q2 2023 Earnings Call Transcript April 26, 2023 Surmodics, Inc. beats earnings expectations. Reported EPS is $-0.4, expectations were $-0.51. Operator: Welcome everyone to Surmodics’ Second Quarter and Fiscal Year 2023 Earnings Call. Please note that this call is being webcast. The webcast is accessible through the Investor Relations section of the Surmodics’ website at www.surmodics.com where an audio replay will be archived for future reference. An earnings press release disclosing Surmodics’ quarterly results was issued earlier today and is available on the company’s website as well. Before we begin, I would like to remind everyone that remarks and responses to your questions today, on today’s call may contain Forward-Looking Statements. These forward-looking statements are covered under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 and include statements regarding Surmodics’ future financial and operating results or other statements that are not historical facts. Please be advised that actual results could differ materially from those stated or implied by Surmodics’ forward-looking statements, resulting from certain risks and uncertainties, including those described in the Company’s SEC filings. Surmodics disclaims any duty to update or revise these forward-looking statements as a result of new information, future events, developments or otherwise. This call will also include references to non-GAAP measures, because Surmodics believes they provide useful information for investors. Today’s earnings release contains reconciliation tables to GAAP results. I would now like to turn the call over to Mr. Gary Maharaj, Surmodics President and Chief Executive Officer. Please go ahead, sir. Gary Maharaj: Thank you operator, and welcome everyone to our earnings call for the second quarter of fiscal year 2023. I will start my remarks today with a brief overview of our second quarter revenue performance. We generated a total revenue of $27.2 million in the second quarter of fiscal 2023, representing growth of 4% year-over-year. Our total revenue growth was driven by our revenue in medical devices, which increased 7% year-over-year, offsetting a 2% decrease in In-Vitro diagnostics or IVD revenue. Looking at these two areas of our businesses more closely, in our medical device segment of performance was almost exclusively driven by product sales, which increased 23% year-over-year, with significant contributions from sales of our pounds and sublime products, as well as from our performance coding region. Specifically, sales of our pounds and sublime products contributed more than half of the medical revised revenue product sales growth we saw in this quarter. And in our IVD segment, we were pleased with our year-over-year sales performance in the second quarter, given the prior year comparison. As a reminder, we generated record quarterly IVD revenue in the second quarter fiscal 2022. In short, we reported solid revenue performance across the key areas of our business in the second quarter. Tim will walk through our second quarter financial performance and updated fiscal 2023 guidance in further detail. But let me now shift to an update of our recent operational performance, beginning with an update on each of our three strategic objectives for fiscal 2023. As a reminder, our strategic objectives for fiscal 2023 that we outlined at the beginning of the fiscal year are as follows; First, to achieve FDA Premarket Approval or PMA, for our SurVeil Drug-Coated Balloon, and then support Abbot’s commercialization efforts. Second, to advance initial commercialization of both Sublime Radial and Pounce Arterial Thrombectomy platforms. And third to drive revenue and cash flow growth from our Medical Device Coatings offerings and IVD businesses. With these three objectives in mind, I will now discuss our project progress with respect to each. We began the second quarter having to navigate unexpected challenges along our path to securing the PMA for our SurVeil Drug-Coated Balloon and ultimately made important progress that exceeded expectations we shared on our earnings call in early February. As a reminder, on January 19th, we announced that we received a letter from the FDA which indicated that our PMA application was not approvable in its current form, and provided guidance on information that must be added to amend our PMA application. Information that FDA requested was within two general categories labeling, including language revisions related to some of the devices patient labeling, and instructions for use, and biocompatibility, including additional questions and data requests related to our nonclinical testing. While this was an unfortunate and disappointing development, we were pleased to see that the letter did not question our engineering, large animal studies, and most importantly the human clinical data that we submitted, including the safety and efficacy data from our 446 patient, TRANSCEND clinical trial. During February and March, our regulatory and clinical teams focused on engaging with the FDA to inform our SurVeil regulatory strategy, and were able to make meaningful progress during this quarter. Our team’s primary goal over this period was to obtain additional clarity in the pathway and specific requirements to address the agency’s questions and data requests, in order to position us to prepare and submit an amended PMA application in an approvable form. Working closely with our external regulatory advisors, our team engaged in informal discussions with FDA representatives, then prepared a submission issues request intended to obtain formal feedback on our proposed approach for addressing the items in the FDA letter from the FDA’s review team. This was done by agency’s queue submission process. As we shared on our last earnings call, we anticipated receiving the FDA’s formal feedback on our proposed approach via this process in May, based on normal timelines. With this as a backdrop, our team was ultimately able to prepare and submit our submission issue, request ahead of our expectations, obtain FDA’s formal written feedback in response, and then complete the submission issue meeting with agency to discuss the details of both the request and FDA’s written feedback, all occurring before the end of our second fiscal quarter. In addition to this impressive level of interaction, we are pleased with both the level and content of the feedback obtained from the agency in response to a submission issue request. With this additional feedback we have now have the additional clarity in the process and content required to successfully amend our PMA application. Moreover, in the FDA’s written and verbal feedback on our submission issue request, we are pleased to see that the additional clarification requested by the FDA to amend our PMA application was focused on existing biocompatibility studies that we have previously completed, as well as revisions to our proposed labeling. Based on this feedback, we do not currently anticipate the need for additional biocompatibility studies. With this additional clarity, our team has been focused on preparing our amended PMA application, which we expect to submit during our fiscal third quarter. Looking ahead, the FDA guides to a 180-day period to review and render a decision on an amended PMA while the process and timing of the FDA’s reviews ultimately under their purview we are currently anticipating the receipt of pre-market, pre-market approval in the fourth quarter of fiscal 2023 and we look forward to providing future updates on our progress. Turning to our second strategic objective, advancing the initial commercialization of our Pounce, Radial and Pounce Arterial Thrombectomy platforms. From a market education standpoint during the second quarter, our team continued to leverage the two dedicated supplements that were recently published in Endovascular Today to raise awareness and educate prospective customers. As a reminder, these publications articulated the capabilities and advantage of our Pounce arterial thrombectomy and Sublime Radial in terms of their simplicity, efficiency, and potentially life-saving benefits they bring to endovascular procedures relative to the existing devices. And procedures on the market and regardless of whether these procedures are performed at hospitals, ASCs, or office-based labs. Throughout the second quarter, we continue to see evidence that these recent publications, along with our product awareness initiatives are resonating with prospective customers. From a commercial standpoint as I mentioned earlier, we saw impressive contributions from direct sales of these products during the second quarter, fueling more than half of our medical device product sales growth year-over-year in this period. Our direct sales team continues to make impressive headway driving adoption of these technologies and expanding our base of clinical users. In part by helping prospective customers navigate the value analysis committee process with their respective institution. We succeeded in expanding our customer base to over 170 total customers for Pounce and Sublime platforms, compared to more than 135 at the end of the first quarter, and just over 100 at the end of fiscal 2022. Given the strong sequential growth and new accounts we have seen in fiscal 2023 to date. It is important to know that our pipeline of prospective customers has continued to increase sequentially as well. In the second quarter, the number value analysis committees evaluating our products are modest sequential quarterly growth, despite the recent reduction in the number of territory managers in the field and we remain pleased with our customer reorder rate, which continues to track in line with our expectations for fiscal 2023. While we are still in the early innings of our commercial efforts for Pounce and Sublime, with an average tenure now of 12-months across our team of 21 territory managers, we are excited by the recent progress made and the resulting contribution to our revenue growth in the second quarter. Based on our recent progress, we continue to see significant growth and contribution potential some of our Pounce arterial and Sublime Radial platforms. And we remain on-track to drive growth in combined sales from these platforms for proximately 300% year-over-year for the full fiscal year 2023 as we begin to move from initial market entry into the early stage of market development, and ultimately our commercialization efforts. Subsequent to quarter end, we were also pleased to announce the beginning of patient enrollment and PROWL a new U.S. Registry Study. The PROWL registries designed to enroll up to 500 patients across 30 sites, collecting real world efficacy and safety outcomes for Pounce Arterial Thrombectomy system, when used in a variety of endovascular interventions for the nonsurgical removal of clots in the peripheral arterial vasculature. national-cancer-institute–Ln-tYivJM4-unsplash When a patient’s peripheral artery becomes blocked, the clot needs to be addressed as quickly and as effectively as possible to prevent limb loss and patient mortality due to acute limb ischemia. With this in mind, our Pounce Arterial Thrombectomy system was designed to consistently remove clots in a single treatment session, while also reducing the need for thrombolytic jobs and subsequent ICU stays. We believe the PROWL registry will continue to highlight these compelling therapeutic benefits along with strong safety profile of other Pounce technology. And as this registry progresses, we look forward to sharing the interim data with clinicians to support our mass market education on awareness initiatives. Now, with respect to our third strategic objectives to drive revenue and cash flow growth from our medical device performance, coatings offerings and IVD businesses. Revenue from our medical device performance coating offering increased 3% year-over-year more than offsetting the 2% decrease that we saw in our IVD business and the performance of our core businesses overall exceeded our expectations. As I mentioned earlier, we were pleased with the year-over-year sales performance in our IVD business against a challenging year-over-year comparisons as our IVD business generated all-time record quarterly revenue in the second quarter of fiscal 2022. In addition to the revenue performance in the quarter, these businesses continue to generate significant cash flow to support our other strategic growth initiatives. In addition to our continued progress with respect to these three strategic objectives, early during the second quarter we implemented a spending reduction plan to preserve capital in response to the delay in all anticipated SurVeil PMA timing. As I discussed in detail on our last earnings call, the spending reduction plan was implemented after careful evaluation and was designed to reduce our planned cash use by approximately $10 million to $11 million for the remainder of fiscal 2023 prior to the restructuring charges. The spending reduction plan included a workforce restructuring to streamline and refocus the teams in several areas of our business it also features of several additional cash saving measures, namely, reduction in our planned capital expenditures, the reduction of our hiring plan for fiscal 2023 and the refocusing of our investments in product development to prioritize progress primarily in our near-term commercialization opportunities, including our Pounce Arterial and Pounce Venous Thrombectomy systems, as well as our Sublime Radial product platform. As a result of the spending reduction plan and keeping in mind our guidance expectations for the full-year, we continue to expect our quarterly cash use in the third and fourth quarters of fiscal 2023 to be approximately $3.5 million to $4 million each quarter. I want to emphasize cash flow remains an important priority for our organization. We remain committed to reducing our use of cash overtime, through a combination of disciplined expense management as evidenced by the implementation of our spending reduction plan, along with the continued focus and execution with respect to our stated strategic priorities, which we believe represents a best path to driving enhanced sustainable long-term value and growth. Before I turn the call over to Tim, I would also like to provide a quick update on some of our recent progress related to our new product pipeline. From a new product perspective, our team continues to advance our existing pipeline of products within the Pounce and Sublime platform with the goal of expanding and enhancing this portfolio managed by our direct sales force. In the second quarter, we began limited market evaluations for Pounce Venous Thrombectomy system. We are excited to continue this effort and to obtain and evaluate real world feedback from numerous physicians across a wide variety of therapeutic cases. With respect to our Sublime Radial platform, last week, we were pleased to announce that we have also commenced limited market evaluations for Sublime Radial Access microcatheter. This device is part of what will be the industry’s first suite of torqueable high performance peripheral microcatheter available in both radial and the transfemoral links. Torqueable microcatheters have been important innovation in complex coronary artery disease, enabling clinicians across difficult lesions and overcome some of the most challenging cases. We are excited by the potential to bring this level of innovation and performance to the Peripheral Intervention Community with a suite of microcatheter products designed to provide clinicians with torque control, push transmission and deliverability to distal target lesions in the periphery from any access site. Also by microcatheter portfolio will also include 014, 018 and 035 microcatheters which can be telescoped through the 035 microcatheter to provide additional backup support when navigating extreme torquesity or heavily stenosed lesions. We look forward to gaining important physician feedback on these devices, progressing towards the limited market introductions of these remaining products in the portfolio over the coming months. And lastly, with respect to our Pounce Arterial Thrombectomy system, it is important to bear in mind that we estimate the U.S. market for peripheral arterial occlusions to represent an approximately $800 million market opportunity for Surmodics. We believe our Pounce Arterial Thrombectomy system is uniquely positioned to penetrate this market, given multiple factors, including its advantages for the treatment of Acute limb ischemia, the procedural results that continues to demonstrate, as well as its limited commercial competition at present. In addition to our commercial and market development efforts from a pipeline perspective, we are focused on further enhancing this Pounce Arterial system by expanding our existing clinical indications and new development of new products to add to this portfolio, including Pounce LP Pounce Low Profile, Pounce Excel, and towards establishing Pounce Arterial as a preferred solution for cases across the entire lower limb (Ph). So stepping back, I’m incredibly proud of our team’s performance focus and execution during the second quarter. Together, we navigated a challenging environment, which saw us quickly respond to the FDA’s letter related to our PMA application for SurVeil and implement difficult but important actions to reduce our planned use of cash through the remainder of fiscal 2023. We did so while delivering solid commercial performance and with respect to our vascular intervention performance coatings and IVD products and we continue to advance of a pipeline of new products towards commercial introduction, including our SurVeil drug coated balloon, Pounce Venous Thrombectomy device, and new products within our Pounce Arterial and Sublime platform. As a result of these efforts, we believe we are well positioned to drive strong commercial and operational progress as we enter the second half of fiscal 2023. Our core businesses, including our medical device performance, coatings offerings and our IVD businesses are generating significant cash flow. The initial commercialization of Pounce Arterial and Sublime Radial platforms is yielding significant contributions to our revenue growth as we drive progress in these large and underpenetrated markets. Our product pipeline of innovative vascular intervention devices, including our SurVeil DCB and Pounce Venous Thrombectomy device, represent important future catalysts with the potential to further accelerate our future growth and financial performance. We remain committed to demonstrating prudent expense management and disciplined capital allocation as we pursue long-term revenue growth and value creation. And lastly, we remain well capitalized with (Ph) million of cash in our balance sheet at quarter end, and access to approximately $61 million in incremental debt financing under our existing credit facility. With that, I will now turn the call over to Tim Arens, our Chief Financial Officer, to discuss our second quarter fiscal 2023 results and updated guidance for fiscal 2023. Tim. Timothy Arens: Thank you, Gary. Unless noted all references to second quarter results are on a GAAP and year-over-year basis. Total revenue for the second quarter of fiscal 2023 increased 1.1 million or 4% to 27.2 million compared to 26.1 million in the prior year period. Product revenue increased 1.4 million or 10% to 15.4 million in the second quarter of fiscal 2023. The increase in product revenue was driven by medical device product revenue, which increased 1.5 million or 23%, due to increased sales of our device products, including significant contributions from our Pounce Arterial Thrombectomy and Sublime Radial platforms, as well as increased sales or performance coating reagents. IVD product revenue decreased 1%, driven in part by active management of inventory levels by certain customers. Our IVD business saw a decrease in sales or protein stabilization products, which was partly offset by growth in sales and microarray slide products and favorable or timing for distributed antigen products. Royalty and license fee revenue decreased 420,000 or 4% to 9.4 million. Royalty revenue from our performance coatings decreased 290,000 or 2%. The prior year quarter provides a challenging comparable, as the period benefited from stronger than expected customer reported royalties relative to our estimate. License fee revenue decreased 130,000 or 9% due to the timing of revenue recognition from our SurVeil agreement with Abbott. R&D revenue increased 120,000 or 5% to 2.4 million. The increase in R&D services revenue was primarily due to higher customer demand for performance coating services in our medical device business, which was impacted in the prior year by our customer supply chain challenges. Product gross margin in the second quarter of fiscal 2023 was 62.6%, compared to 63.4% in the prior year period. Product gross margin was adversely impacted relative to the prior year by certain manufacturing in efficiencies associated with ramp up of production of new products, which was partially offset by a favorable impact of product mix. R&D expense, including costs of clinical and regulatory activities decreased 790,000 or 6% to 12.9 million in the second quarter of fiscal 2023. The decrease in R&D expense reflects the initial benefits from the spending reduction plan implemented during the second quarter of 2023. SG&A expense increased 1.9 million or 17% to 13 million in the second quarter of fiscal 2023, primarily driven by a year-over-year increase in headcount related to the expansion of our direct sales force in fiscal 2022 and related investments to support the commercialization of our Pounce and Sublime products. We reported 1.3 million in restructuring expense in the second quarter of fiscal 2023 for severance related costs related to the workforce restructuring implemented during the quarter as part of our spending reduction plan. The majority of these costs were paid during the quarter. Our medical device business reported an operating loss of 7.1 million in the second quarter of fiscal 2023, compared to a loss of 5.6 million in the prior year period. The change in operating loss was driven primarily by the aforementioned investment in our direct sales force, as well as by the 1.3 million and restructuring expense reported in the second quarter. Our IVD business reported operating income of 2.6 million in the second quarter of fiscal 2023, compared to 2.7 million in the prior year period. IVD operating income was 49% of IVD revenue in both periods. Turning to income taxes in the second quarter of fiscal 2023 reported income tax expense of 370,000 compared to income tax benefit of 920,000 in the prior year period. As a reminder, we are no longer recording tax benefits on U.S. net operating losses as a result of having established a full valuation allowance against U.S. deferred tax assets at the end of fiscal 2022. GAAP net loss in the second quarter of fiscal 2023 was 7.7 million or a loss of $0.55 per diluted share, compared to a loss of 4.1 million or a loss of $0.29 per diluted share in the prior year period. Non-GAAP net loss in the second quarter of fiscal 2023 was 5.6 million, or a loss of $0.40 per diluted share, compared to a loss of 3.1 million, or a loss of $0.22 per diluted share in the prior year period. Non-GAAP adjusted EBITDA loss in the second quarter of fiscal 2023 was 1.5 million compared to adjusted EBITDA loss of 860,000 in the prior year period. Adjusted EBITDA includes an adjustment for restructuring expense in the second quarter of fiscal 2023 and adjustments for stock based compensation expense in both periods. Our earnings press release includes detailed reconciliations of GAAP to non-GAAP measures. Moving to the balance sheet, we began the second quarter fiscal 2023 with 26.4 million in cash and 29.5 million in long-term debt. Cash used by operations during the second quarter was 5.8 million and capital expenditures totaled 720,000. As of March 31 2023, we ended the quarter with 19.2 million in cash and 29.3 million in long-term debt. Long-term debt includes five million in borrowings under $25 million revolving credit facility, and 25 million in borrowings on our $100 million term loan facility. As of March 31 2023, we have approximately 61 million in debt capital available, consisting of 50 million on our term loan availability, and 11 million of incremental availability in our revolving credit facility, which is subject to borrowing base requirements. Finally, a housekeeping note. We have a $200 million shelf registration statement in place, which is set to expire in May. As a part of good corporate governance, we plan to file a replacement form S3 with the SEC to keep the shelf registration active. Turning now to fiscal 2023 guidance. We have updated our fiscal 2023 revenue guidance to reflect their performance in the second quarter, as well as their revised expectations for the remainder of fiscal 2023. We now expect this fiscal 2023 total revenue to range from 103 million to 106 million, representing an increase of 3% to 6% compared to the prior year, compared to our prior range of 102 million to 106 million, or an increase of 2% to 6% compared to the prior year. We now expect fiscal 2023 GAAP loss per diluted share to range from a loss of $2.30 to a loss of $2 compared to our prior range of a loss of $2.40 to a loss of $2. Non-GAAP loss per diluted share in fiscal 2023 is expected to range from a loss of $1.98 to $1.68 per share, compared to our prior range of a loss of $2.09 to a loss of $1.69 per share. As a reminder, our guidance excludes revenue associated with the potential future added milestone payment on receipt of the PMA from the FDA, which has been our practice with previous regulatory milestones. I will now share a few additional considerations for modeling purposes. Our fiscal 2023 total revenue guidance assumes revenue for our two businesses, medical device and IVD is expected to be approximately 73% and 27% of revenue, respectively. Product revenue is expected to be approximately 58% of total revenue. Revenue associated with our legacy medical device coating offerings and IVD business is expected to grow modestly. Added SurVeil license fee revenues expected to range from 4 million to 4.5 million. This compares to 5.7 million in fiscal 2022. Turning to the rest of the P&L, our updated fiscal 2023 guidance reflects the following expectations; Product gross margins are expected to be in the mid-50s for the remainder of fiscal 2023. In the second half of fiscal 2023 we expect higher absorption of fixed overhead costs and cost of sales as commercialized products are allocated in increased share of overhead expenses due to reductions to drug coated-balloon production. With regard to operating expenses, we expect rest of the year quarterly expense of 12 million to 12.5 million in R&D expense, and 13 million to 13.5 million in SG&A expense. Interest expenses expected to be 3.4 million for the full-year, and we expect a nominal amount of tax expense for the full-year. Lastly, with respect to our fiscal 2023 cash utilization, we anticipate that we will finish a year with approximately 11 million to 13 million of cash. We expect our cash use for full fiscal year 2023 to be approximately 26 million, which consists of the total change in cash, excluding the net proceeds from long term debt in the first quarter of 19.3 million. Further, we expect our Q3 and Q4 cash use to be approximately 3.5 to 4 million each quarter. This reflects our recently implemented billing reduction plan and active management of working capital. We expect to continually evaluate and assess capital allocation decisions throughout the year to ensure effective and efficient use of our cash and resources to support our business needs. With that operator, we would now like to open the call to questions. See also 25 Cheapest Countries in the World and 13 Most Profitable Industrial Stocks Now. Q&A Session Follow Surmodics Inc (NASDAQ:SRDX) Follow Surmodics Inc (NASDAQ:SRDX) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. And our first question will be from Mike Matson with Needham and Company. Please go ahead, sir. Unidentified Analyst: Hello, how is it going? This is (Ph) on from Mike. I guess for the first one, for the Venous version of Pounce, we are wondering when you expect to start the trials for PE and DVT. Maybe if you have estimations on how much these will cost and when that could lead to FDA approval. Gary Maharaj: Yes, thank you Joseph. So the first component for the Pounce Venous is to get through the LME. We have had some limited availability of the product in fiscal Q2, but, we are through that constraint right now and so we just have a whole new lot of the product ready to accelerate the LME for Pounce Venous. As you know, the claims for that is a difference between a claim of removing clot in a vein versus a claim of being able to treat DVT, which is a disease state. And, and so our plan really is to get the product into the market with the claim of removing venous clots, even as we consider the design of an IDE trial that could support the DVT claim. But that is way in our future. I think the first the first thing is get the LME, get the learnings understand where the product in the case archetypes where the product works best. And very importantly, get a lot of clinician feedback before what I would call it early commercialization of that, which at this point will be in sometime in fiscal 2024. At that point, as we exercise the product commercially, we will be considering what an IDE trial could look like and with a focus on efficiency and also understanding those who went before those trial sizes are probably 100 to 120 patients. And then you have to engage with the FDA to actually get the IDE on that. So we are looking at that at some time in fiscal 2024. But it is premature to comment on the actual timing, until we complete the LME. And by the way the Pounce venous device is really for veins not quite for the pulmonary circulation of PMA at this point. Unidentified Analyst: Okay, sure yes thank you very much that is very helpful. And then maybe just assuming SurVeil is approved by the FDA, I don’t think you guys said this in your remarks. But when do you think you could start to see revenue, would it be an immediate thing after approval or would there be some – you know, some type of delay and how long would this delay be? Timothy Arens: Right Joseph this is Tim, thank you for the question. Now, with regard to SurVeil following the PMA approval, there will be a milestone payment, which could be received from Abbott and it could be 24 or 27 million depending upon the timing. I think you might be asking more specifically about commercialization and commercial product revenue and profit sharing revenue. I think we have talked about in the past is previous conversations with Abbott suggests that they would want to launch as soon as they can following the PMA approval. However, there still needs to be work to be prepared and implemented, executed to be able to manufacture product and then be able to get it to Abbott. I think in the past, we had characterize this as being several months. So it could be several months following the approval. But I think it is probably important for folks to appreciate that as important as commercialization of SurVeil is. Our attention, focus, energy and effort is 100% securing the PMA application by submitting an amended application, that is an approvable form. I’m sure we will have more to say and commercialization in future quarters. But right now, we are focused on getting the PMA application submitted. Unidentified Analyst: Absolutely. Okay, thank you very much Tim. I appreciate it. Timothy Arens: You are welcome. Operator: Our next question is from Brooks O’Neil with Lake Street Capital Markets. Please proceed with your question. Brooks O’Neil: Good morning guys. I guess I’m just curious if you could provide any color on any response you have gotten from Abbott with regard to the delay in getting approval for SurVeil? Gary Maharaj: Yes. As we communicate in the last quarter, we have been updating Abbott on all progress, and have had communications with them on the regulatory strategy. But really, based on the restriction of the agreement, I can’t go into any specific details in there. I will say Abbott remains excited about the prospects of having this product commercialized and in their portfolio. Brooks O’Neil: And then, second question, I’m just curious, as you guys look at and think about your scale up or ramp up of both pounds and sublime, you have been in the market for a while. Do you see any indication that there could be an inflection in the scale or the amount of revenue you can generate from those products in the next year? Gary Maharaj: Well, the inflection is happening. That is a good question. Now we didn’t directionally the fact that it is contributed over 50% of our product revenue, is a critical component. Our product revenue for Surmodics as a whole is not in the medical device segment is not a small number. So we are excited to see that beginning. And Brooks, as I said, in the past, I’m glad you asked the question the first year, so sales force, very small, 21 field representatives, but they have just hit their average tenure for a year with us. So very early innings and the first year is what I call that messy market entry. It is lumpy, it is back and forth, more forth than back, obviously. And now so we are through what I call that messy market entry, and just make sure it is on a bright line. Okay, it is a fuzzy line. Now we are entering what I call, really, as you know, really the early market development. So we have gotten through that first messy period and that early market development, we are beginning to see customer uptake, we are beginning to see very important things like value analysis committees, and including a group purchasing contracts being stood up, which are very good things to get to the mainstream market. So that early market development we are now in which is less messy, a little more predictable and something where you can see growth acceleration. Couple things to think through. We are very disciplined, every dollar of revenue is not created equal in this period, the dollars of revenue we want, are really to go beyond early market adopters. We want to get to mainstream users. They are more pragmatic, they are less prone to move into switch but getting them is what secures the – that is where the profit in the market lies. And so the challenge in this market entry period now is really to make sure we are crossing that chasm into mainstream user adoption. And what we don’t want to do is try to overdrive revenue by collecting what I call the early adopter models and looking good, and not paying attention to the mainstream users. So we can continue to see as we said in the last quarter, maybe at one of the recent conferences, up 200% or 300% growth in fiscal 2023. And so that should tell you, it may seem like small numbers, but the revenue growth percentages are large. I will turn it over for Tim for the for the caller......»»

Record annual revenue of $237.1 million, a year-over-year increase of 26% and a 41% year-over-year increase in annual Adjusted EBITDA* Significant progress toward strategic goals, including divestiture of non-core assets, completion of cultivation expansions, enhancement of debt facilities, and improved financial performance Floating Shareholders approve U.S. strategic arrangement with Canopy and Canopy USA Completed additional amendments to its Credit Facility NEW YORK, May 01, 2023 (GLOBE NEWSWIRE) -- Acreage Holdings, Inc. ("Acreage" or the "Company") (CSE:ACRG, ACRG.B.U)) (OTCQX:ACRHF, ACRDF)), a vertically integrated, multi-state operator of cannabis cultivation and retailing facilities in the U.S., today reported its financial results for the fourth quarter ("Q4 2022") and full year ended December 31, 2022 ("FY 2022"). Fourth Quarter 2022 Financial Highlights Consolidated revenue of $57.5 million for Q4 2022. Gross margin was 35%, in line with the third quarter of 2022 ("Q3 2022"). Excluding non-cash inventory adjustments, gross margin was 44% for Q4 2022 compared to 45% for Q3 2022. Adjusted EBITDA* was $7.0 million and Adjusted EBITDA* as a percentage of consolidated revenue was 12% for Q4 2022. Full Year 2022 Financial Highlights Full year consolidated revenue of $237.1 million in 2022 compared to $188.9 million in full year 2021, an increase of 26%. Full year Adjusted EBITDA* was $34.8 million in 2022, marking a second consecutive year and eight consecutive quarters of positive Adjusted EBITDA* and a $10.2 million improvement compared to $24.6 million in full year 2021. Adjusted EBITDA* as a percentage of consolidated revenue was 15% for the full year 2022. Fourth Quarter and Recent Operational Highlights Acreage entered into a U.S. strategic arrangement with Canopy Growth Corporation ("Canopy") and Canopy USA, LLC ("Canopy USA") that would allow Canopy USA to acquire 100% of Acreage by (i) waiving its existing option to acquire all of the issued and outstanding Class D subordinate voting shares of Acreage ("the Floating Shares") and entering into a new agreement to acquire all of the issued and outstanding Class D subordinate voting shares of Acreage (the "Floating Share Arrangement"), and (ii) committing to exercise its existing option to acquire all of the issued and outstanding Class E subordinate voting shares of Acreage, all subject to the required shareholder and regulatory approvals and other closing conditions as described in the related agreements. On March 15, 2023, Acreage received the required approval of the holders of Floating Shares (the "Floating Shareholders") in connection with the Floating Share Arrangement at its special meeting of Floating Shareholders. The Company obtained a final order from the Supreme Court of British Columbia on March 20, 2023 approving the Floating Share Arrangement under section 288 of the Business Corporations Act (British Columbia). Upon the satisfaction or waiver of all other conditions set out in the arrangement agreement dated October 24, 2022, as amended on March 17, 2023 (the "Floating Share Arrangement Agreement"), which the parties continue to work towards, the parties will complete the ‎Floating Share Arrangement. Progressed ongoing infrastructure improvements and operational enhancements at the Company's Egg Harbor Township, New Jersey cultivation facility. Continued to gain traction with The Botanist brand refresh, which resulted in Acreage's brand portfolio growing by approximately 22% sequentially in Q4 2022 across many of the Company's markets, including Illinois, New Jersey, Massachusetts, and Pennsylvania, as reported by BDSA. Commenced adult-use retail operations in Connecticut at the Company's The Botanist stores in Montville and Danbury, among an inaugural group of operators permitted to begin adult-use sales in the state. Received approval of the Company's annual license in New Jersey, along with approval to relocate its existing medical dispensary from Atlantic City to Pennsauken, where Acreage plans to begin adult-use sales before the end of 2023. Launched innovative and dose-able fast-acting gummies from The Botanist brand in Illinois, Maine, Massachusetts, and Ohio. Management Commentary "Over the course of 2022, we completed a number of important initiatives and laid a strong foundation for sustained growth, making way for a transformative shift through our arrangement with Canopy and Canopy USA," said Peter Caldini, CEO of Acreage. "Despite challenging macroeconomic conditions, we achieved annual growth by focusing our operations and scaling in strategic markets, diversifying our brand and product portfolio, and responsibly restructuring our balance sheet. While our fourth quarter performance was impacted by continued headwinds, we are confident that these actions will better position Acreage for the future amid current market challenges." Mr. Caldini continued, "As we make our way through the first half of 2023, we are focused on improving our financial results and strengthening our cash position. Additionally, we look to increase our presence across our Northeastern footprint through the optimization of our wholesale capabilities and the development of our brands with continued innovation and product launches to support our thriving retail network. In the first quarter, we were thrilled to launch adult-use sales in Connecticut and look forward to driving growth in additional developing adult-use markets such as New Jersey. Finally, we continue to ready our business for the expected unification of the unmatched U.S. cannabis ecosystem that will form Canopy USA." Q4 2022 Financial Summary(in thousands)   Three Months Ended December 31,   YoY% Change    Three Months Ended September 30, 2022    QoQ%Change    2022   2021       Consolidated Revenue $57,489   $58,097   (1.0)%   $61,419   (6.4)% Gross Profit 20,395   27,581   (26.1)%   21,226   (3.9)% % of revenue 35%   47%       35%                         Total operating expenses 147,641   63,208   133.6%   37,661   292.0% Net loss (119,183)   (47,153)       (24,998)     Net loss attributable to Acreage (95,039)   (40,353)       (22,214)     Adjusted EBITDA* 6,989   8,459   (17.4)%   8,847   (21.0)%                     Total revenue for Q4 2022 was $57.5 million compared to $58.1 million in the fourth quarter of 2021 ("Q4 2021") and $61.4 million in Q3 2022. The year-over-year and sequential decreases were primarily due to continued industry headwinds, decreased pricing as a result of competitive pressures across various markets and the sale of non-core assets in Oregon earlier in 2022. Additionally, during Q4 2022, the Company proactively managed its accounts receivable exposure by limiting sales to select wholesale customers deemed to be at a higher risk of default, which negatively impacted wholesale revenue during the quarter. Total gross profit for Q4 2022 was $20.4 million, compared to $27.6 million in Q4 2021. Total gross margin was 35% in Q4 2022 compared to 47% in Q4 2021. Cost increases due to inflation and price declines due to competition and retail price discounting to drive volume negatively impacted gross margin during the quarter. Additionally, cost of goods sold for Q4 2022 included $4.9 million of non-cash inventory adjustments as a result of excess inventory in select markets and carrying values of inventory exceeding net realizable value. Excluding these non-cash inventory adjustments, gross margin for Q4 2022 was 44%. Total operating expenses for Q4 2022 were $147.6 million, compared to $63.2 million in Q4 2021. Included in operating expenses for Q4 2022 and Q4 2021 were impairment charges of $118.7 million and $29.7 million, respectively, and Q4 2021 included a bad debt provision of $6.1 million related to certain notes receivable amounts where collection was considered doubtful. Excluding these unusual non-cash items, total operating expenses increased by $1.5 million, or 6%, for Q4 2022 compared to Q4 2021 due to inflation driven cost increases and costs associated with (i) the new strategic arrangement with Canopy and Canopy USA, and (ii) the amendment of the Company's credit facilities, which both occurred in Q4 2022. Adjusted EBITDA* for Q4 2022 was $7.0 million compared to Adjusted EBITDA* of $8.5 million in Q4 2021 and Adjusted EBITDA* of $8.8 million in Q3 2022. Adjusted EBITDA* was negatively impacted both year-over-year and sequentially by decreased pricing due to competitive pressures and increased costs due to inflation. Consolidated EBITDA* for Q4 2022 was a loss of $(120.7) million, compared to a consolidated EBITDA* loss of $(32.9) million in the previous year's comparable period. Net loss attributable to Acreage for Q4 2022 was $(95.0) million, compared to $(40.4) million in Q4 2021. Amendment to Credit Facility On October 25, 2022, the Company increased its financial flexibility with the amendment of its existing credit facility (the "Credit Facility), providing (i) immediate access to US$25 million, (ii) access to a further funding after January 1, 2023, and (iii) adjustments to the financial covenants to provide greater near-term flexibility and to better reflect future financial results.         Subsequent to year end, on April 28, 2023, Acreage further amended its Credit Facility such that $15.0 million was available for immediate draw, but such funds would be maintained in a segregated account until dispersed and be restricted for use to only eligible capital expenditures. Additionally, the Company has agreed to limit the total amounts outstanding under the Credit Facility to $140.0 million and to, at all times subsequent to April 28, 2023, maintain collateral (as defined in the Credit Facility) equal to or greater than the outstanding amount under the Credit Facility. Balance Sheet and Liquidity Acreage ended FY 2022 with $24.1 million in cash and cash equivalents. As of December 31, 2022, $125.0 million was drawn under the Amended Credit Facility, with a further $15.0 million of long-term debt available from its committed debt facilities, but such funds are restricted for use to only eligible capital expenditures. Additionally, in April 2023, the Company sold, with recourse, the rights to receive certain Employee Retention Tax Credits with an aggregate receivable value of $14.3 million for total proceeds of $12.1 million.          About Acreage Holdings, Inc. Acreage is a multi-state operator of cannabis ‎cultivation and retailing facilities in the U.S., including the Company's national retail store ‎brand, The Botanist. With its principal address in New York City, Acreage's wide range of national and regionally available cannabis products include the award-winning brands The Botanist and Superflux, the Tweed brand, the Prime medical brand in Pennsylvania, the Innocent brand in Illinois and others. Since its founding in 2011, Acreage has focused on building and scaling operations to create a seamless, consumer-focused, branded experience. Learn more at www.acreageholdings.com and follow us on Twitter, LinkedIn, Instagram, and Facebook. Forward Looking Statements This news release and each of the documents referred to herein contains "forward-looking information" and ‎‎"forward-looking statements" within the meaning of applicable Canadian and United States securities legislation, ‎respectively. All statements, other than statements of historical fact, included herein are forward-looking ‎information. ‎Often, but not always, forward-looking statements and information can be identified by the use of words such as ‎‎"plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", ‎or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", ‎‎‎"would", "might" or "will" be taken, occur or be achieved. ‎ Forward-looking statements or information involve known and unknown risks, uncertainties, and other ‎factors which may cause the actual results, performance or achievements of Acreage or its ‎subsidiaries to be materially different from any future results, performance or achievements expressed or ‎implied by the forward-looking statements or information contained in this news release. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including, but not limited to: the occurrence of changes in U.S. federal Laws regarding the cultivation, distribution or possession of marijuana; ‎the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court ‎and Floating Shareholder approvals; the ability of the parties to satisfy, in a timely manner, the other conditions to the completion of the Floating Share ‎Arrangement Agreement; the ability of Canopy, Canopy USA and Acreage to satisfy, in a timely manner, the closing conditions to the Floating Share Arrangement; risks relating to the value and liquidity of the Floating Shares and the common shares of Canopy; Canopy maintaining compliance with the Nasdaq Global Stock Market (the "Nasdaq") and Toronto Stock Exchange listing requirements; the rights of the Floating ‎Shareholders may differ materially from those of shareholders in Canopy; expectations regarding future investment, growth and ‎expansion of Acreage's operations; the possibility of adverse U.S. or Canadian tax consequences upon completion of the Floating Share Arrangement; if Canopy USA acquires the Fixed Shares pursuant to the Existing Arrangement Agreement without structural amendments to Canopy's interest in Canopy ‎USA, the listing of the Canopy Shares on the Nasdaq may be jeopardized; the risk of a change of ‎control of either Canopy or Canopy USA; restrictions on Acreage's ability to pursue certain business ‎opportunities and other restrictions on Acreage's business; the impact of material non-recurring expenses in ‎connection with the Floating Share Arrangement on Acreage's future results of operations, cash flows and ‎financial condition; the possibility of securities class action or derivatives lawsuits; in the event that the Floating ‎Share Arrangement is not completed, but the acquisition by Canopy of the Fixed Shares (the "Acquisition") is completed pursuant to Existing Arrangement Agreement and Canopy becomes the majority ‎shareholder in Acreage, the likelihood that the Floating Shareholders will have little or no influence on the conduct ‎of Acreage's business and affairs; risk of situations in which the interests of Canopy USA and the interests of ‎Acreage or shareholders of Canopy may differ;‎ Acreage's compliance with Acreage's business plan for the fiscal years ending December 31, 2020 through December 31, 2029 pursuant to the Existing Arrangement Agreement; in the event that the Floating Share Arrangement is ‎completed, the likelihood of Canopy completing the Acquisition in accordance with the Existing Arrangement Agreement; ‎risks relating to certain directors and executive officers of Acreage having interests in the transactions ‎contemplated by the Floating Share Arrangement Agreement and the connected transactions that are different ‎from those of the Floating Shareholders; risks relating to the possibility that holders of more than 5% of the ‎Floating Shares may exercise dissent rights; other expectations and assumptions concerning the transactions ‎contemplated between Canopy, Canopy USA and Acreage; the available funds of Acreage and the anticipated ‎use of such funds; the availability of financing opportunities for Acreage and Canopy USA and the risks ‎associated with the completion thereof; regulatory and licensing risks; the ability of Canopy, Canopy USA and ‎Acreage to leverage each other's respective capabilities and resources; changes in general economic, business ‎and political conditions, including changes in the financial and stock markets; risks relating to infectious diseases, ‎including the impacts of the COVID-19; legal and regulatory risks inherent in the cannabis industry, including the ‎global regulatory landscape and enforcement related to cannabis, political risks and risks relating to regulatory ‎change; risks relating to anti-money laundering laws; compliance with extensive government regulation and the ‎interpretation of various laws regulations and policies; public opinion and perception of the cannabis industry‎; and such other risks disclosed in the Circular, the Company's Annual Report on Form 10-K for the year ended December 31, 2021, dated March 11, 2022 and the Company's other public filings, in each case filed with the SEC on the EDGAR website at www.sec.gov and with Canadian securities regulators and available under Acreage's profile on SEDAR at www.sedar.com. Although Acreage has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Although Acreage believes that the assumptions and factors used in preparing the forward-looking information or forward-looking statements in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information and forward-looking statements included in this news release are made as of the date of this news release and Acreage does not undertake any obligation to publicly update such forward-looking information or forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws. Neither the Canadian Securities Exchange nor its Regulation Service Provider, nor any securities regulatory authority in Canada, the United States or any other jurisdiction, has reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.‎ For more information, contact: Steve Goertz Chief Financial Officer investors@acreageholdings.com Courtney Van Alstyne MATTIO Communications acreage@mattio.com US GAAP FINANCIAL HIGHLIGHTS (UNAUDITED) US GAAP Statements of Financial Position US$ (thousands) December 31, 2022   December 31, 2021   (unaudited)   (audited) ASSETS       Cash and cash equivalents $ 24,067     $ 43,180 Restricted cash   —       1,098 Accounts receivable, net   10,512       8,202 Inventory   49,446       41,804 Notes receivable, current   29,191       7,104 Assets held-for-sale   —       8,952 Other current assets   4,977       2,639 Total current assets   118,193       112,979         Long-term investments   34,046       35,226 Notes receivable, non-current   —       27,563 Capital assets, net   133,405       126,797 Operating lease right-of-use assets   22,443       24,598 Intangible assets, net   35,124       119,695 Goodwill   13,761       43,310 Other non-current assets   3,601       1,383 Total non-current assets   242,380       378,572 TOTAL ASSETS $ 360,573     $ 491,551         LIABILITIES AND MEMBERS' EQUITY       Accounts payable and accrued liabilities $ 29,566     $ 23,861 Taxes payable   24,226       24,572 Interest payable   2,575       1,432 Operating lease liability, current.....»»

HARRISBURG, Pa., April 28, 2023 (GLOBE NEWSWIRE) -- Mid Penn Bancorp, Inc. (NASDAQ:MPB) ("Mid Penn"), the parent company of Mid Penn Bank (the "Bank") and MPB Financial Services, LLC, today reported net income available to common shareholders ("earnings") for the quarter ended March 31, 2023 of $11.2 million, or $0.71 and $0.70 per common share basic and diluted, respectively. "As our shareholders analyze our first quarter performance, they will find that we grew our loans at an 11.2% (annualized) pace and our deposits at a 10.7% (annualized) pace. Those growth rates would be considered exceptional in any quarter. However, with the failures of Silicon Valley Bank of California, Signature Bank of New York, and the near collapse and continued uncertainty surrounding First Republic Bank of San Francisco—as well as inconsistent rhetoric out of Washington as to which depositors would be covered and who would pay the tab for that coverage—the banking industry was turned upside down almost overnight. The contagion of those three troubled institutions affected just about every other bank in the country in the quality of operating performance and the performance of each company's stock in the market. That was no different for Mid Penn," said President and CEO Rory G. Ritrievi. Mr. Ritrievi added, "Throughout March, our calling team devoted significant time and energy drawing clear distinctions between the risk profile and management of those failed and troubled banks and Mid Penn. Direct customer contact and a six-part video series helped us communicate a strong message to our customers. That message is simple: Mid Penn is safe, sound, strong and resilient and we are confident that our customers' deposits are secure with us. That message resonated very well and catapulted us to even better balance sheet growth metrics for the quarter. I am so very proud of our entire team for the work they put in and the results of that effort." "Our overall performance in the quarter was solid, but we know we can do even better. Our focus throughout the remainder of 2023 will be on continued quality growth in loans and deposits, a laser focus on expense control and a laser focus on asset quality. Nothing new there," Mr. Ritrievi concluded. With the success of the first quarter, the Board announced a quarterly cash dividend of $0.20 per share of common stock which was declared at its meeting on April 26, 2023, payable on May 22, 2023 to shareholders of record as of May 10, 2023. Key Highlights of the First Quarter of 2023 Current liquidity, including borrowing capacity, enhanced to nearly $1.36 billion or 187% of uninsured and uncollateralized deposits, or approximately 35% of total deposits. Deposits grew $99.8 million, or 10.7% (annualized), from the fourth quarter of 2022. Estimated uninsured deposits represented 26.1% of total deposits at March 31, 2023, and 18.7% of total deposits after adjusting for insured/collateralized public funds and contractual deposits. Loan growth was 11.2% (annualized) during the three months ended March 31, 2023 from the fourth quarter of 2022. Non-owner occupied office commercial real estate exposure represents less than 8% of total loan balances and is primarily limited to suburban offices. Total accumulated other comprehensive loss was 4.5% of tangible shareholders' equity(1) at March 31, 2023. Tax equivalent net interest margin changed to 3.49% from 3.80% in the prior quarter and 3.21% in the first quarter of 2022. Resilient profitability: Earnings of $11.2 million; Return on average assets was 1.01%; Return on average equity of 8.91% and return on average tangible common equity (1) of 11.97% for the quarter ended March 31, 2023. Book value per common share was $32.15 for the first quarter, compared to $32.24 for the fourth quarter of 2022, while tangible book value per share(1) was $24.52 at March 31, 2023, compared to $24.59, at December 31, 2022. Net Interest Income and Average Balance Sheet For the three months ended March 31, 2023, net interest income was $36.0 million compared to net interest income of $38.6 million for the three months ended December 31, 2022 and $34.4 million for the three months ended March 31, 2022. The tax-equivalent net interest margin for the three months ended March 31, 2023 was 3.49% compared to 3.80% for the fourth quarter of 2022 and 3.21% for the first quarter of 2022, a 31 basis point(s) ("bp(s)") decrease and a 28 bp increase, respectively, compared to the prior quarter and the same period in 2022. The linked quarter decrease was primarily the result of a 73 bp increase in the rate on interest-bearing liabilities, partially offset by a 26 bp increase in the yield on interest-earning assets. The increase in the rate on interest-bearing liabilities compared to the linked quarter was primarily the result of higher deposit pricing to attract and retain new and existing customers. The increase in the yield on interest-earning assets was primarily driven by the increase of the yield on loans by 26 bps, to 5.24% during the first quarter of 2023. The yield on interest-earning assets increased 135 bps in the first quarter of 2023 compared to the same period of 2022, driven by a 74 bp increase on the yield of investment securities and a 65 bp increase of loan yields. Total average assets were $4.5 billion for the first quarter of 2023, reflecting an increase of $139.7 million, or 3.2%, compared to total average assets of $4.4 billion for the fourth quarter of 2022 and a decrease of $176.0 million, or 3.7%, compared to $4.7 billion for the first quarter of 2022. Total average loans were $3.6 billion for the first quarter of 2023, reflecting an increase of $160.1 million, or 4.7%, compared to total average loans of $3.4 billion in the fourth quarter of 2022, and an increase of $451.9 million, or 14.6%, compared to total average loans of $3.1 billion for the first quarter of 2022. Total average deposits were $3.8 billion for the first quarter of 2023, reflecting an increase of $55.7 million compared to total average deposits in the fourth quarter of 2022, and a decrease of $216.1 million, or 5.4%, compared to total average deposits of $4.0 billion for the first quarter of 2022. The average cost of deposits was 1.29% for the first quarter of 2023, representing a 53 bp and 106 bp increase from the fourth quarter and the first quarter of 2022, respectively. The increases are a result of the rising rate environment and Mid Penn increasing deposit rates to retain existing and attract new deposit customers. Asset Quality On January 1, 2023, Mid Penn adopted ASU 2016-13, Financial Instruments - Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology, and is referred to as CECL. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, including loans and HTM debt securities. It also applies to off-balance-sheet ("OBS") credit exposures such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments. (1)   Non-GAAP financial measure. Refer to the calculation on the section titled "Reconciliation of Non-GAAP Measures" at the end of this document. Mid Penn adopted CECL using the modified retrospective method for all financial assets measured at amortized cost, net of investments in leases and OBS credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under CECL, while prior period results are reported in accordance with the previously applicable incurred loss methodology. Mid Penn recorded an overall increase of $15.0 million to the allowance for credit losses ("ACL") on January 1, 2023 as a result of the adoption of CECL. Included in the $15.0 million increase to the ACL was $3.1 million for certain OBS credit exposures that are recognized in other liabilities. Retained earnings decreased $11.5 million and deferred tax assets increased by $3.1 million. The provision for credit losses on loans was $490 thousand for the three months ended March 31, 2023, a decrease of $35 thousand and $10 thousand compared to both the provision for credit losses of $525 thousand and $500 thousand for the three months ended December 31, 2022 and for the three months ended March 31, 2022, respectively. Total nonperforming assets were $14.1 million at March 31, 2023, compared to nonperforming assets of $8.6 million and $8.1 million at December 31, 2022 and March 31, 2022. The increase was primarily related to two relationships. One of the relationships has subsequently been paid off in full in April 2023. The second relationship is collateralized in excess of the outstanding loan balances based on a current appraisal of the collateral. The ACL on loans as a percentage of total loans was 0.87% at March 31, 2023, compared to 0.54% at December 31, 2022 and 0.49% at March 31, 2022. The increase in the first quarter of 2023 was primarily due to the impact of the adoption of CECL on January 1, 2023. Capital Shareholders' equity decreased $1.3 million, or 0.26%, from $512.1 million as of December 31, 2022 to $510.8 million as of March 31, 2023. Mid Penn declared $3.2 million in dividends during the first quarter of 2023. Regulatory capital ratios for both Mid Penn and its banking subsidiary indicate regulatory capital levels in excess of the regulatory minimums and the levels necessary for the Bank to be considered "well capitalized" at both March 31, 2023 and December 31, 2022. Noninterest Income For the three months ended March 31, 2023, noninterest income totaled $4.3 million, a decrease of $2.4 million, or 35.6%, compared to noninterest income of $6.7 million for the fourth quarter of 2022, primarily a result of decreases in other income, which included a branch sale in the fourth quarter of 2022. For the three months ended March 31, 2023, noninterest income decreased $1.4 million, or 24.8%, compared to noninterest income of $5.8 million for the first quarter of 2022, primarily driven by lower mortgage hedging income and other income. Noninterest Expense Noninterest expense totaled $26.1 million, an increase of $601 thousand, or 2.4%, for the three months ended March 31, 2023, compared to noninterest expense of $25.5 million for the fourth quarter of 2022. The increase was primarily the result of higher salaries and employee benefits which typically run higher in the first quarter due to payroll taxes resetting and slightly higher medical expenses in the first quarter of 2023 compared to the fourth quarter of 2022. In addition, bank shares taxes were higher in the first quarter of 2023 compared to the fourth quarter of 2022 due to credits that were received during the fourth quarter of 2022, lowering the expense. Compared to the first quarter of 2022, noninterest expense in the first quarter of 2023 increased $325 thousand, or 1.3%, from $25.7 million to $26.1 million primarily as a result of an increase in salaries and employee benefits expense as open positions throughout Mid Penn were filled during 2022. The efficiency ratio(1) was 63.16% in the first quarter of 2023, compared to 54.59% in the fourth quarter of 2022, and 62.12% in the first quarter of 2022. The change in the efficiency ratio during the first quarter 2023 compared to the fourth quarter of 2022 was the result of lower net interest and noninterest income and higher noninterest expenses, while the change compared to the first quarter of 2022 was the result of lower noninterest income and higher noninterest expenses, partially offset by higher net interest income. (1)   Non-GAAP financial measure. Refer to the calculation on the section titled "Reconciliation of Non-GAAP Measures" at the end of this document. Merger & Acquisition Activity On December 20, 2022, Mid Penn announced its entry into an agreement and plan of merger with Brunswick Bancorp ("Brunswick"). The acquisition will result in a meaningful expansion for Mid Penn into the attractive central New Jersey market. Mid Penn will acquire Brunswick in a combination cash and stock transaction valued at approximately $53.9 million (based on Mid Penn's closing stock price of $30.95 for the trading day ending December 19, 2022). On April 25, 2023, Mid Penn and Brunswick issued a joint press release announcing the receipt of all bank regulatory and shareholder approvals required to consummate the merger of Brunswick into Mid Penn. The transaction is expected to close in May 2023. Management considers subsequent events occurring after the balance sheet date for matters which may require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company's consolidated financial statements when filed with the Securities and Exchange Commission ("SEC"). Accordingly, the financial information in this announcement is subject to change. The statements are valid only as of the date hereof and Mid Penn disclaims any obligation to update this information. SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS This press release, and oral statements made regarding the subjects of this release, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continues," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy" or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, changes in interest rates, spreads on earning assets and interest-bearing liabilities, and interest rate sensitivity; prepayment speeds, loan originations, credit losses and market values on loans, collateral securing loans, and other assets; sources of liquidity; common shares outstanding; common stock price volatility; fair value of and number of stock-based compensation awards to be issued in future periods; the impact of changes in market values on securities held in Mid Penn's portfolio; legislation affecting the financial services industry as a whole, and Mid Penn and Mid Penn Bank individually or collectively, including tax legislation; results of the regulatory examination and supervision process and oversight, including changes in monetary policy and capital requirements; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; increasing price and product/service competition by competitors, including new entrants; rapid technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the mix of products/services; containing costs and expenses; governmental and public policy changes; protection and validity of intellectual property rights; reliance on large customers; technological, implementation and cost/financial risks in large, multi-year contracts; the outcome of future litigation and governmental proceedings, including tax-related examinations and other matters; continued availability of financing; the availability of financial resources in the amounts, at the times and on the terms required to support Mid Penn and Mid Penn Bank's future businesses; material differences in the actual financial results of merger, acquisition and investment activities compared with Mid Penn's initial expectations, including the full realization of anticipated cost savings and revenue enhancements; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement between Mid Penn and Brunswick; the outcome of any legal proceedings that may be instituted against Mid Penn or Brunswick; delays in completing the transaction; the failure to satisfy any of the other conditions to the transaction on a timely basis or at all; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Mid Penn and Brunswick do business; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the ability to complete the transaction and integration of Mid Penn and Brunswick successfully; the dilution caused by Mid Penn's issuance of additional shares of its capital stock in connection with the transaction; and other factors that may affect the future results of Mid Penn and Brunswick. For a more detailed description of these and other factors which would affect our results, please see Mid Penn's filings with the SEC, including those risk factors identified in the "Risk Factors" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent filings with the SEC. The statements in this press release are made as of the date of this press release, even if subsequently made available by Mid Penn on its website or otherwise. Mid Penn assumes no obligation for updating any such forward-looking statements at any time, except as required by law. SUMMARY FINANCIAL HIGHLIGHTS (Unaudited): (Dollars in thousands, except per share data) Mar. 31,2023   Dec. 31,2022   Sep. 30,2022   Jun. 30,2022   Mar. 31,2022 Ending Balances:                   Investment securities $ 633,831     $ 637,802     $ 644,766     $ 618,184     $ 508,658   Loans, net of unearned interest   3,611,347       3,495,162       3,303,977       3,163,157       3,106,384   Total assets   4,583,465       4,497,954       4,333,903       4,310,163       4,667,174   Total deposits   3,878,081       3,778,331       3,729,596       3,702,587       3,989,037   Shareholders' equity   510,793       512,099       499,105       495,835       494,161   Average Balances:                   Investment securities   636,151       640,792       626,447       580,406       462,648   Loans, net of unearned interest   3,555,375       3,395,308       3,237,587       3,129,334       3,103,469   Total assets   4,520,869       4,381,213       4,339,783       4,465,906       4,696,894   Total deposits   3,782,990       3,727,287       3,726,658       3,837,135       3,999,074   Shareholders' equity   510,857       505,769       502,082       495,681       494,019                         Three Months Ended Income Statement: Mar. 31,2023   Dec. 31,2022   Sep. 30,2022   Jun. 30,2022   Mar. 31,2022 Net interest income $ 36,049     $ 38,577     $ 39,409     $ 35,433     $ 34,414   Provision for credit losses   490       525       1,550       1,725       500   Noninterest income   4,325       6,714       5,963       5,230       5,750   Noninterest expense   26,070       25,468       24,715       23,915       25,745   Income before provision for income taxes   13,814       19,298       19,107       15,023       13,919   Provision for income taxes   2,587       3,579       3,626       2,771       2,565   Net income available to shareholders   11,227       15,719       15,481       12,252       11,354   Net income excluding non-recurring expenses(1)   11,404       15,951       15,481       12,252       11,614                       Per Share:                   Basic earnings per common share $ 0.71     $ 0.99     $ 0.97     $ 0.77     $ 0.71   Diluted earnings per common share   0.70       0.99       0.97       0.77       0.71   Cash dividends declared   0.20       0.20       0.20       0.20       0.20   Book value per common share   32.15       32.24       31.42       31.23       30.96   Tangible book value per common share(1)   24.52       24.59       23.80       23.57       23.31                       Asset Quality:                   Net charge-offs (recoveries) to average loans (annualized)   0.013 %     0.006 %     (0.007 %)     (0.001 %)     (0.007 %) Non-performing loans to total loans   0.38       0.25       0.23       0.25       0.25   Non-performing asset to total loans and other real estate   0.39       0.25       0.23       0.25       0.26   Non-performing asset to total assets   0.31       0.21       0.18       0.19       0.18   ACL on loans to total loans   0.87       0.54       0.56       0.53       0.49   ACL on loans to nonperforming loans   225.71       220.82       242.23       211.66       190.84                       Profitability:                   Return on average assets   1.01 %     1.42 %     1.42 %     1.10 %     0.98 % Return on average equity   8.91       12.33       12.23       9.91       9.32   Return on average tangible common equity(1)   11.97       16.61       16.55       13.59       12.82   Net interest margin   3.49       3.80       3.92       3.45       3.21   Efficiency ratio(1)   63.16       54.59       53.46       57.57       62.12                       Capital Ratios:                   Tier 1 Capital (to Average Assets)(2)   9.2 %     10.7 %     9.6 %     9.0 %     8.4 % Common Tier 1 Capital (to Risk Weighted Assets)(2)   10.8       12.5       11.4       11.5       11.7   Tier 1 Capital (to Risk Weighted Assets)(2)   10.8       12.5       11.7       11.8       12.0   Total Capital (to Risk Weighted Assets)(2)   13.1       14.5       13.8       14.1       14.4   (1)   Non-GAAP financial measure. Refer to the calculation on the section titled "Reconciliation of Non-GAAP Measures" at the end of this document.(2)   Regulatory capital ratios as of March 31, 2023 are preliminary and prior periods are actual.CONSOLIDATED BALANCE SHEETS (Unaudited): (In thousands, except share data) Mar. 31, 2023   Dec. 31, 2022   Sep. 30, 2022   Jun. 30, 2022   Mar. 31, 2022 ASSETS                   Cash and due from banks $ 51,158     $ 53,368     $ 76,018     $ 64,440     $ 54,961   Interest-bearing balances with other financial institutions   4,996       4,405       4,520       4,909       3,187   Federal funds sold   6,017       3,108       14,140       167,437       700,283   Total cash and cash equivalents   62,171       60,881       94,678       236,786       758,431   Investment Securities:                   Held to maturity, at amortized cost   396,784       399,494       402,142       399,032       363,145   Available for sale, at fair value   236,609       237,878       242,195       218,698       145,039   Equity securities available for sale, at fair value   438       430       428       454       474   Loans held for sale   2,677       2,475       5,997       9,574       7,474   Loans, net of unearned interest   3,611,347       3,514,119       3,322,457       3,180,033       3,121,531   Less: Allowance for credit losses   (31,265 )     (18,957 )     (18,480 )     (16,876 )     (15,147 ) Net loans   3,580,082       3,495,162       3,303,977       3,163,157       3,106,384                       Premises and equipment, net   34,191       34,471       33,854       33,732       33,612   Operating lease right of use asset   8,414       8,798       8,352       8,326       8,751   Finance lease right of use asset   2,862       2,907       2,952       2,997       3,042   Cash surrender value of life insurance   50,928       50,674       50,419       50,169       49,907   Restricted investment in bank stocks   8,041       8,315       4,595       4,234       7,637   Accrued interest receivable   19,205       18,405       15,861       12,902       11,584   Deferred income taxes   15,548       13,674       16,093       13,780       11,974   Goodwill   114,231       114,231       113,871       113,835       113,835   Core deposit and other intangibles, net   6,916       7,260       7,215       7,729       8,250   Foreclosed assets held for sale   248       43       49       69       125   Other assets   44,120       42,856       31,225       34,689       37,510   Total Assets $ 4,583,465     $.....»»