Q4 2023 Zomedica Corp Earnings Call

Participants

Elif McDonald; Senior Director, IR; Zomedica Corp

Larry Heaton; President, Chief Executive Officer; Zomedica Corp

Peter Donato; Chief Financial Officer; Zomedica Corp

Obiada'O Kadiri

Jane Wilson

Presentation

Operator

Good afternoon, ladies and gentlemen, and thank you for standing by, and welcome to Dell Medical's first Fourth Quarter and Full Year 2023 earnings results and business update call. I would like to remind everyone that this call is being recorded today, Monday, April first at 4.30 P.M. Eastern time and all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I'll now turn the call over to Leaf McDonald Investor Relations. Please go ahead, Ms. MacDonald.

Elif McDonald

Thank you, Paul, and good afternoon, ladies and gentlemen. Welcome to the America's Fourth Quarter and Full Year 2023 earnings results and business update call. On today's call, you will hear from Sun Medical's Chief Executive Officer, Mary CTO, and Chief Financial Officer, Peter Donato.
Before we begin, we'd like to remind everyone that on this call, we will be making various remarks about future expectations, plans and prospects that constitute forward-looking statements. These forward-looking statements are based on assumptions, and there are risks that results may differ materially from those statements. As such, though Medicago cannot guarantee that any forward-looking statements will materialize and you are cautioned not to place undue reliance on them. We typically refer current and potential investors to the forward-looking information and Risk Factors sections of our public filings available on SEDAR at w. w. w. dot ER. plus dot c. a. and on EDGAR at SEC.gov. Forward-looking statements made on this conference call represent so Medical's expectations as of today, Monday, April first, 2024.
Finally, we would like to remind everyone that all figures discussed on this call are in US dollar.
I will now pass the call over to the medical Chief Executive Officer, Larry Heaton. Larry?

Larry Heaton

Thanks, Elyse. I'd like to start by thanking our shareholders for your support, which in our prospective investors and analysts and others are Good afternoon and welcome all to visit Medical Fourth Quarter and Full Year 2023 earnings results and business update call. I'll start by providing an update on the overall business. Then our Chief Financial Officer, Peter Bernardo, will walk you through our financial results and provide a corporate update. After our prepared remarks, we'll open the line and the web to your questions.
Earlier today released its financial results for the quarter and full year ended December 31st, 2023. Overall, this was another great quarter, capping off a remarkable year. The best year so far is America's history. Once again, we delivered record revenues beating last year's record fourth quarter, while maintaining high margins and reducing operating cash burn. Let me highlight that revenue for the quarter was $7.3 million, reflecting 19% growth over the fourth quarter of 2020 to almost all of which was produced from the sale of products from previous acquisitions that have been fully integrated, validating that our strategic plan to acquire, integrate and grow is working. Our $25.2 million in revenue for the year was up 33% over 2022 and 65% of that was from recurring consumable sales, reflecting a solid foundation of recurring revenue that grows with each addition to the installed base of our various product platforms.
Earlier this year, we provided forward revenue guidance as we have reached a certain level of maturity in our business that lets us say that we expect revenues to grow to $31 million to $35 million this year, reflecting up to 40% growth year over year at the high end. As you are aware, we conducted a special meeting in February to seek approval for a reverse split. Since 60% of the shares that were voted, representing 35% of our outstanding shares were voted against the proposal [get] failed. This was a very clear message to us that our shareholders want to see us regain compliance with the NYSE American price thresholds through organic growth of the share price driven by the performance of the Company.
We heard you loud and clear and have no plans to reintroduce a reverse split at our upcoming annual meeting. We are committed to continuing to grow revenue, maintain high margins, and achieve cash flow and profitability as rapidly as possible. We've shared our plans with the NYSE American, and they have indicated that they will allow us to remain listed while monitoring our market driven share price without giving us a date certain deadline for reaching the $0.2 price threshold over a 30 day trailing average.
Now that performance, we've been building a business and delivering record quarterly results that have exceeded our expectations.
In the fourth quarter, we announced the expansion of the market opportunity for two formal with three new assays for the most commonly performed diagnostic tests for canine gastrointestinal disease. One of the top three reasons a dog is brought to the vet is vomiting and diarrhea. Normally, there is a high need for a quick diagnosis. We were pleased to offer three of the most common assays used to diagnose these cases, canine pancreatic light base, globality and folate with the latter two being combined in a single cartridge. We believe through these assays, we can help veterinarians produce better outcomes for pets and pet parents by providing faster diagnostic solutions while also streamlining the workflow and increasing practice cash flow and profitability. Really in the fourth quarter, we announced the acquisition of structured monitoring products turning our Paccar investment into full ownership of InBev Purion product line we are pleased with the early indicators and see significant future upside. In October, we acquired Orbital biotechnologies, QBE team focused on the development of point-of-care diagnostic solutions, leveraging their innovative bulk acoustic wave sensor technology and the development of the Omnia point of care diagnostic platform designed to perform assays for human patients, along with the true formal point of care diagnostic platform to perform assays for companion animals, which we had marketed previously under license prior to the acquisition. Our primary focus with this acquisition will be on capturing margin improvements by assuming BTs manufacturing systems as well as accelerating assay development for the two former platform. This acquisition will also allow us to avoid future operating and capital expenses incurred by building R&D and manufacturing staff internally as well as eliminating remaining payments, including licensees, transition fees and future royalties, which would be due to QB2 under the previous agreement.
Regarding additional M&A opportunities we've had quite a busy past couple of years as we made five acquisitions to build the five product platforms we are commercializing today. As we look forward, we will remain opportunistically acquisitive. But with a focus on those acquisitions that not only include products that meet our five pillars, helping veterinarians improve the quality of care for the pets, the satisfaction of the pet parents along with improving the workflow, cash flow and profitability of their practice, but also focusing on those that would be accretive to earnings, shortening our time line to profitability.
With a strong liquidity position of over $100 million coming into the year and a manageable operating cash burn rate, we remain well funded for the foreseeable future.
So before I hand the call to Peter, I want to reiterate that we're happy with what we achieved during the fourth quarter and the full year of 2023. We look forward to building on this momentum as we continue to be confident of even stronger results in 2024.
With that, I'll hand it over to Peter for the financial review and corporate update after his remarks, I'll come back to provide some closing comments.

Peter Donato

Thank you, Larry, and good afternoon, everyone. Let me start by reviewing the fourth quarter and full year 2023 financial results, providing updates in greater detail on information that we pre-released early in the first quarter. I reported back in January that I expected revenues at around $7 million for the fourth quarter of 2023. Today, I am pleased to report that the final audited numbers exceeded that figure and came in at just over $7.3 million for the quarter, an increase of nearly $1.1 million and approximately 19% over 2022's fourth quarter of $6.2 million. The increase was primarily driven by a 16% increase from our therapeutic devices segment, led by Paul step and a 144% increase in diagnostics, led by true pharma and other newly launched products.
Revenues for the full year 2023 are expected to be around $25 million. And again, pleased to report came in at a record $25.2 million, an increase of nearly $6.3 million and over 33% growth year over year. This growth was driven by a strong 28% increase in our therapeutic devices segment, including a full year of CC products. In addition, we generated a 252% increase in Diagnostics revenue with a record performance from chem pharma in the fourth quarter, consumable revenue grew to over $4 million, an increase of approximately 26% over Q4 2022 revenues of $3.2 million. The $4 million in consumable revenue represented 55% of total quarterly revenue, up from 52% during 2022. Consumables revenue is a good indicator of our ability to sell capital equipment while increasing utilization from our expanding installed base.
Full year consumable revenues were $16.4 million, an increase of approximately 41% over full year 2020 to consumable revenues of $11.6 million with consumables representing nearly two-thirds or 65% of total revenue, up from 61% of total revenue during 2022. Fourth quarter 2023 capital revenues were $3.3 million, up 12% from the previous record fourth quarter in 2022 of nearly $3 million.
Full year capital revenues were $8.8 million, an increase of approximately 20% over the full year 2022 capital revenue of $7.3 million. We continue to be pleased with the number of devices being put in service in the field, particularly in small animal and mixed vet practices that continue to be a focus area of our company. Again, keep in mind that capital sales are a good leading indicator of future high margin consumables business.
Fourth quarter therapeutic devices segment revenues from pulse spend in CC products grew to $7 million an increase of approximately 16% over the fourth quarter 2022 record revenues at the time of $6 million. Fourth quarter diagnostics segment revenues were about $363,000, an increase of 144% over the fourth quarter of 2022 revenues. This was driven by significant year-over-year growth in pro forma sales including newly launched assays and revenue from the vet Guardian and TrueView products launch during 2023.
We believe the growth we've seen from our true FORMER products will continue as we invest in the development of additional assays and market recently launched assays, including the first assay for courses that were launched in September and three assays for noninfectious GI disease, including our first combination or multiplex cartridge, including two assays that launched at the end of 2023. As Larry noted earlier, our acquisition of Qorvo biotechnologies LLC should improve margins and accelerate development to deliver on our commitment to bring new assets to market during this year of 2024.
Gross profit for the fourth quarter of 2023 was $5.1 million compared to $4.2 million in the fourth quarter of 2022 and gross profit for the full year 2023 of $17 million at $17.3 million compared to about $13.5 million in 2022. Gross profit margin for the fourth quarter was 69%. That's up slightly from last year's 68%, while full year 2023 gross profit margin was also 69%, down slightly from last year's full year 71% last year, meaning full year ['22 '22]. The variance was primarily due to the integration and launch of several new products, product mix impacts associated with sales of these new offerings and price increases of certain component parts.
Operating expenses for the fourth quarter of 2023 were $16.5 million compared to $9.3 million in the same period of 2022. That's an increase of $7.2 million. However, nearly half or approximately $3.5 million were nonrecurring charges directly attributable to acquisitions and related integration.
Operating expenses for the full year 2023 were $48.9 million compared to $35.4 million during full year 2022, approximately $5.4 million represented nonrecurring charges, again primarily related to acquisitions and related integration. These included professional and legal services, acquisition related travel and separation costs, as well as many other expenses that are not expected to reoccur during this year in 2024.
[Adjusting] for nonrecurring onetime items, total OpEx rose by about 23%, while our sales, as mentioned, grew 33% This reflects an increase in operating leverage, and we expect this to continue during 2024.
In the fourth quarter, R&D expense was just over $3 million at $3.1 million compared to about $700,000 in the fourth quarter of 2022. That's up $2.4 million, but once again included nonrecurring charges of about $1.5 million, most of them related to the acquisition of QBT. Research and development expense for the full year 2023 was $5.7 million compared to $2.6 million during 2022. That's an increase of just over $3 million, but nearly three quarters of that increase consisted once again of nonrecurring one-time charges totaling $2.3 million associated with the acquisition and integration of QBT. The remaining $800,000 or so were primarily related to accelerating the development of new assays.
In the fourth quarter, sales and marketing spend was $4.3 million compared to $3.4 million during the same period of 2022. With most of the increase being driven by increases in sales personnel and increases in marketing activities like trade shows that were expanded during 2023 to include several new product offerings especially those launched during 2023.
Selling and marketing expense was $14.1 million for the full year 2023. This compares to just under $10 million or $9.9 million for the full year 2022, an increase of $4.2 million or 43%. The increase in selling and marketing expenses were primarily driven by salaries associated with increased hiring related to the territories, sales territory expansion and increases in marketing campaigns and attendance at trade shows. These continue to build brand awareness and recognition for our expanding suite of products. There's more products in 2023.
For the fourth quarter of 2023, G&A expense totaled $9 million at $9.1 million as compared to $5.2 million during the fourth quarter of 2022. Within that $3.9 million increase or about $1.9 million of nonrecurring charges, one-time charges such as expenses related to the QVT acquisition and integration. This included layoffs and severance charges. In addition, we incurred professional services charges increases such as technical accounting and project management fees, legal fees, tax expenses and management transition fees.
The remaining $2 million of the increase was primarily driven by administrative and software costs and depreciation and amortization expenses related to our recent acquisition. Additionally, the increases reflected added costs for rent for the newly acquired and expanded facilities increases in staffing in the administrative area to meet the growing demand in specialized areas plus ad hoc consulting fees.
G&A expense for the full year 2023 was $29 million, reflecting 115% of sales. That's down from 121% of sales that the G&A expense of $22.9 million represented back in 2022. When adjusting for one-time items, G&A falls to less than 103% of sales, demonstrating the early stages of leverage on the G&A line.
Net loss for the fourth quarter was $22.4 million and net loss for the full year 2023 was $34.5 million or roughly $0.035 per share compared to a net loss of $17 million or about $0.017 per share back in 2022. The difference of $17.5 million is nearly all attributable to one-time charges with the largest charge of $11.7 million relating to a one-time impairment charge related to the acquisition of the OCC product line with the remaining $5.4 million and other one-time items, including executive management transitions, professional service fees and other acquisition and integration related costs. As you can see, our net loss when adjusted for one-timers is relatively flat with the full fiscal year 2022. That's a good accomplishment given all the investment and activities that were required to grow our business so rapidly.
Let me pause for a moment and give you some additional insight into the impairment charge we took in the fourth quarter related to the SEC product line. While we've been very pleased with the revenue contribution to date from our current customer base with only one product offering for the retail consumer base, we made a decision to forego a sizable future new investment and widespread direct to consumer marketing like TV ads necessary to attract new retail office retail customers. In making this decision, we are able to reallocate those investment dollars to higher growth opportunities in our Diagnostics segment without further delaying profitability by making these investments, we will revisit this decision and other opportunities in the future as we get closer to profitability or add products that have future appeal for retail markets.
Turning to the balance sheet. So Medica ended the fourth quarter and full year with $100.5 million in cash, cash equivalents and available for sale securities. Cash used in the fourth quarter was about $17.5 million and included nearly $15 million for acquisitions, investments and one-time items with the remaining $2.6 million used for operating expenses, which was lower than our recent operating burn, which is usually closer to $3 million per quarter. After adjusting for nonrecurring onetime expenses, we used approximately $10.8 million of cash for the full year that averages to about $2.7 million per quarter during 2023. This number is a good number and well below our historical averages, which tended to be $3 million or even as high as $4 million per quarter. As a reminder, we have zero debt.
But turning to guidance, Larry already mentioned of some of it and we announced that back at our January 17, business update call that we were in introducing formal forward-looking revenue guidance for the first time in company history. I will reiterate that guidance for 2024 as we expect revenue in the range of $31 million to $35 million for full year 2024. And as Larry said, that could be an increase of up to 40% over 2023 at the high end of the range.
As stated at our February Investor Day, we expect 90% to 95% or more of the $31 million to $35 million in annual revenue guidance to be derived from the products in our therapeutic devices segment with the balance and any potential upside coming from our newer products in the Diagnostics segment, please remember, our business is impacted by seasonality with the first quarter being the lowest and the majority of revenues coming in the back half of the year. We expect similar trends in 2024, and we expect sequential increases in revenue as we progress throughout the year.
Our operating expenses were approximately 194% of sales on a GAAP basis during 2023 and approximately 173% of sales when adjusted for one-time items, we do expect to improve on these figures during 2024. With all of that said, we expect to burn $12 million to $18 million of cash from operations. This includes potential CapEx during 2024 and $25 million to $35 million total cash burn.
Before turning cash flow positive, as you can see, our cash flow balances will remain very strong with no immediate need to raise or borrow capital in the current market.
As Larry mentioned earlier, following our special meeting, both held back in February, we had discussions with the New York Stock Exchange American related to our ongoing listing on that exchange, it was agreed that some medical will remain listed, but at the discretion of the content exchange as it continues to monitor our share price. The Company will continue to evaluate curative measures with our primary focus, though, will be on the will be on driving continued performance of the business. So we can regain compliance with share price requirements organically. To that point, we respect our shareholders' collective decision to reject the proposal for a reverse split. And as such, as Larry indicated, it will not be including a reverse split proposal at the upcoming annual shareholder meeting.
As we look beyond 2024, in addition to growing the scale of our business, we'll continue to focus on profitability. We have previously commented that we expect to be cash flow profitable or breakeven when we reach annual revenue run rates at or slightly above $40 million in revenue. However, as we work through the integrations of the acquisitions that I mentioned made during 2023, in particular, the acquisition of Qorvo biotechnologies, we evaluated that we needed what we needed to achieve our long-term targets and saw what we saw was that were incremental investments needed to support our long-term success.
Given these investments, we now expect to achieve cash flow breakeven or profitability at an annual run rate of approximately $50 million, which we expect to achieve at some point during late 2025. For some additional context, when we acquired QBT. We not only acquired skilled personnel, a new facility and manufacturing capabilities that will allow us to reduce the cost of goods from what we have been paying QBT. We also acquired valuable finished goods component parts in both laboratory and manufacturing equipment that this will reduce future product and operating as well as capital expenditures. We also eliminated a 5% perpetual royalty on future sales of true pharma cartridges that were due to kick in right about now the flip side of these positive impacts on margins and capital requirements over the coming years is that we had significant one-time expenses in the fourth quarter as we rightsize and integrated this business. And we have somewhat higher operating expenses in the short term relative to current TrueForm or revenue. So when looking at the business as a whole, this was the right decision, the right thing to do, especially since we also gained control over the pace at which we can develop and launch new assays. While we understand the importance of achieving profitability, we also understand that by allocating resources to drive sustainable industry-leading growth, we can create a business capable of sustainably generating over $100 million in revenue that is also profitable. And in the long term, more valuable to our shareholders. It is important to note that our investment in growth does not imply that we will need to raise capital. Our significant liquidity gives us the ability to continue to invest without the need for further dilution or any dilution.
I'll now hand the call back over to Larry for final remarks before the Q&A session.

Larry Heaton

Thanks, Peter. So that's a lot of review of how we got where we are from less than 30 employees in 2022 around 150 today, from no products on the market in 2020 to 5 product platforms ramping sales today from no internal manufacturing in 2020 to manufacturing all of our own products today, and from $0 in revenue in 2020 to $4 million in '21 to $19 million in '22 and $25 million last year.
Now let's talk about where we're headed. Of course, as Peter just mentioned, an important and our nearest term goal is to reach cash flow breakeven, positive EBITDA, and GAAP profitability.
Having reconfirmed that, it's also important to note that we have built our infrastructure to scale the company well beyond current revenue levels and the $50 million revenue run rate needed to achieve profitability becoming a profitable company with $50 million in revenue is an important milestone and unfold would put us in the top 50 animal health care companies in the country, but to truly drive value for our shareholders, our sights are set on first $50 million then $100 billion and beyond.
As we build at these levels with our industry-leading margins, we expect that the market will recognize the tremendous value represented Biomedica shares. This is why we not only acquire the rights to sell new products. We buy the technology and our companies outright, continue product development and manufacture the products ourselves and invest in the infrastructure needed to scale the business to well over $100 million in annual sales.
We're incredibly excited about the future of America and its prospects as we have a strategic plan to reach these levels with our current product portfolio. With any additional acquisitions accelerating our time lines, we expect to achieve a $50 million annual run rate by the end of next year and $100 million run rate two years after that. But for now, let's focus on 2024, which we entered from a position of strength coming as a result of the great work our team has done to position us for success. We have a number of initiatives in process to help drive growth in 2024 and beyond which include first expanding our maturing sales organization. As you may have heard, we recruited a new Head of Sales, very experienced and building high-performing sales teams in the animal health industry his leadership combined with expanding the number of sales territories of the United States and benefiting from the extended tenure of our sales team, all contribute to our high confidence in sales growth in the U.S. from our direct sales efforts.
Secondly, gaining leverage from distribution partners. In conjunction with our direct sales force, we have been expanding our relationships with US-based Animal Health distributors, including Vectrus, Patterson and WY., Midwest and others, which now carry our OCC and Guardian prop products and in select cases are pools that products as well with their hundreds of sales representatives across the country who have long-standing deep relationships with veterinary practices. We expect significant growth from this channel, both directly and in collaboration with our direct salespeople.
Third, international expansion. We currently generate about 20% of our revenue by selling only our SCC and PULSE that products in certain international markets. This year, we are both expanding the number of countries in which these first two products are sold and also preparing our two pharma that Guardian and truly new products for international launch that this requires complying with some fairly straightforward labeling requirements country by country, which we are finalizing now and expect to begin the first of these launches in the first half of this year.
With respect to our specific products we're executing plans to drive their growth through a variety of initiatives. From Paul said, we have multiple future growth drivers, including increasing the installed base and increasing our consumable growth utilization by expanding clinical indications for use as our maturing sales representatives gain experience in the field. Their rate of selling new Pulse systems increases and collaboration with Animal Health distributors opens new doors for them to gain on tray into new practices.
Our investment in marketing activities and trade shows since Sabbag, the university to social media and web based initiatives is paying off as we are seeing an increasing number of inbound leads from small animal veterinarians. All these factors helped drive increases in our pulse that installed base. Additionally, we support clinical research focused on expanding the ways in which veterinarians use the Pulse system. For example, recent published peer-reviewed reports of clinical studies have read for reinforced pulse that Shockwave therapy has been an optimal solution for working dogs suffering from bug, quote, virtually impossible to successfully treat unquote fibrotic myopathy that they encounter by extending their working life, an average of 32 months. And for horses afflicted with bleeders and more recently equine asthma, which affects approximately 14% of adult horses.
Our marketing team will now execute market development plans to translate this clinical data into increased deployment of Pulse systems, along with increased usage for these new indications. While these two are significant themselves, we're also awaiting study results from the University of the United States and one in Germany, both study the potential for pop culture that Shockwave therapy to delay or even prevent the onset of osteoarthritis in dogs. While Shockwave is a great treatment option for canine OA, it would be even better see it used prophylactically for the prevention of the condition in the first place for TrueVue 2024, we expect to steadily increase the installed base through the combined efforts of our marketing and sales teams. We also expect to launch into international markets and later in the year to introduce a high interpretations of scanned images, providing a new source of recurring revenue to add to the monthly subscriptions and pathology interpretations currently offer for true Pharma. Every time we launch a new assay. We not only provide a seamless way for our current installed base to begin to use it with no additional customer acquisition costs on our part. But we also facilitate expansion of the installed base by providing it to accounts that have a particular need for it, which in turn provides opportunities to cross-sell all of our previously available assays. We'll be launching several new assays in 2024, at least for during the course of the year for both small animals and horses. Our acquisition of QBT. gives us the ability to develop them at our own pace, and we intend to accelerate new assay development in the coming quarters. We've had Guardian. We are seeing increased traction in the animal health market and see an opportunity to place now one, but multiple monitors in a single practice has accounts gain comfort with their first monitor. Many have come back for more, and we're seeing customers purchase multiple monitors from the outset, further fueling growth will be the activities of the US animal health distributors and our upcoming launch into international markets. And following completion of our development projects into the equine market as well toward the end of this year with a total addressable market for recurring annual sales of our existing products in the U.S. of well over $2 billion. Currently, we have barely scratched the surface. We have lots of opportunity for growth across our product lines and are currently about the business of seizing that opportunity.
So let me end our prepared remarks by again thanking those that have been supportive of Z-Medica, including animal health professionals and pet parents worldwide and many shareholders of the medical.
With that, I'd be happy to open the line for questions.

Question and Answer Session

Operator

(Operator Instructions) [Obiada'O Kadiri, Ionora].

Obiada'O Kadiri

Hi, everyone. Hi, Larry. It made it. I mean, we were so surprised with all you guys said. So my question is from our understanding. So there's no reverse. No mentioning of reverse split for the, right?

Larry Heaton

That's correct.

Obiada'O Kadiri

And if for any reason, the American Stock Exchange asks for any any paperwork or idea, you know, extension, did they mention anything like that in the near future?

Larry Heaton

Well, I mean, so the Stock Exchange has various standards to remain listed. And one of them is the one we've been focusing on, which is our share price, but there are also other requirements. For example, you have to file certain filings on time and you have to maintain certain equity capital requirements. And so depending on the situation. What I've seen the exchange do is, in some cases, they'll give people additional time to get their filing done and they give them a deadline or they give them additional time to get additional equity into the business and they give them a deadline. In our case when we spoke with the exchange of, I should say, Senior Regulatory personnel from the exchange.
They indicated that our stock would remain listed but that they would continue to monitor it if it all of a sudden fell to unacceptable levels than they would revisit it, but they did not give us any date upon which by which we needed to regain compliance. There's a little bit of a misconception that there might be some kind of a form that you submit your request an extension or something like that.
That's not really the way that it works from. We had a conversation with the exchange. They told us. We'd remain listed and tell us they didn't give us a deadline, and we're very pleased with that outcome. And we're going to work very hard to regain compliance organically as we move forward.

Operator

(Operator Instructions)

Larry Heaton

While we're waiting for questions over the phone line, I think we can take some. We have several questions that have come in over the web, and so we'll start start with us. One of the questions is when will we expand medical products to Portugal. And so the answer to that will be we currently do sell our pulse that products for equine use in Portugal up through our master distributor, grow that that handles sales of equine products across Europe. And we are, as I mentioned earlier, we're working on getting the CE marketing for a pro forma review and that Guardian, we've actually seen interest from many countries in Europe. And as soon as we get the labeling requirements settled, we're in conversations with multiple distributors and we expect to begin selling internationally some of our other products in the first half and certainly by the end of the year, we expect to have all of them on the market throughout maybe not in every single country obviously, but in those distributors that we currently have and we'll be adding some new ones as well.
But seats, which assay do you expect to be the most used for true format this year. I think it's going to be a I was going to say a horse race, but maybe it's a horse and dog race, right? So on the equine side, we launched last September by equine EACTH. assay, which is used to help diagnose horses for, I should say is the definitive diagnostic test for horses suspected of equine Cushing's disease or pituitary pars Intermedia dysfunction from this affects a lot of horses. Prevalence on horses over the age of 15 is about 25%, and it's not just a one-off test. So in other words, you do the test of the horse that show signs if they're positive for now, you have a baseline, you began titrating them. You put them on a drug, you begin titrating that drug that requires many more tests over the over the first couple of months and then a test every quarter or every six months depending upon how the vet views it for the rest of that horses life and horses live through about 30. If they are on the bubble, they're not quite sure if they have it or not, then they do a couple of more EACTH. and what's called the TRH. stem in between So lots and lots of opportunity for BACTH. We're coming into the spring season, which is when they do a lot of that testing. We expect very strong sales. I'm from that segment on the other hand, that's the horse race. Now the offerings on CBLK., nine big brands like this. If you have a dog in that had diarrhea, vomiting, you bring into the vet.
The first thing that the vet wants to do needs to do is to rule out a pancreatitis. And the way you do that as a test of CPL. and there is no point of care diagnostic available today. And so as a result, they have to say that out to the reference lab, this is a product that we have already seen good traction with and we expect this is really going to not only drive utilization in our existing installed base, but it's going to be the reason why many accounts actually bring it in in the first place. So I would say CBOY20 ACTH, right behind that, cortisol, maybe then development of folate. But we'll see as we move throughout the year, when do we expect that Guardian to be used in horses?
As I mentioned, it will be by the end of the year. We're working on that now currently the vet Guardian as is outside of the cage that the animals in and as pointed out, the animal when you instead are looking at a horse here and a much bigger stall there moving around. So it's not the exact same product, but our team is working on that right now. And just as soon as we can, we'll get that out because there is substantial interest by not only equine vets, but also potentially force owners who might want to have it just for safety sake. And generally, horse owners tend to be in a demographic that they can afford the technology. So we're definitely bullish on that particular product in that application as well.
How many assays your sites have launched this year. We have these for a couple for up for equine. In fact, you know that as it turns out about 30% of horses that have PPID. also have a insulin dysfunction. And so oftentimes what we're hearing from equine vets is they want to test both ACTH and insulin at the same time. And so we have a program underway right now to bring equine insulin testing to the true pharma device in the near term. And then we have a couple of products we have. So in insulin and cortisol for horses and then pro-BNP and one other one, both for some for small animals for cardiac issues, heart trouble and also for, um, for reproduction. So we expect those to be popular, and those should be out.
The other thing that we'll be doing this year. It's working on more of our Multiflex cartridges. So you can imagine we have not only ACTH but also insulin individually. And then we have one with both reasonably like the multi-plex cartridges because from a cost of goods standpoint, it's only slightly more expensive to put it two assays on one cartridge, but it is to build a single assay on the cartridge and yet we're able to charge substantially more because the value is there. They're getting two assays in one cartridge and doing it at the same time. So we're super excited about that. And then we frankly, expect to accelerate assay development moving into 2025 as we get our arms around the whole process and streamline it as we move forward.
Is buyback still an option for gaining compliance that you want to take that one?
Pete, do you want to take that one?

Peter Donato

Yeah. So we've been very clear and very consistent where there's no buyback planned. First off, the reasons being first off buying back, the shares won't get us into compliance rate with there's not a number out there that would likely drive us to $0.2 and keep us above the $0.2. And we've also stated very publicly and the message remains consistent that we believe the better use of the cash is to fund all the great things we talked about today on the call, whether it's accelerating integration, bringing products to market faster, growing internationally, all those things or if Greg and company find something to buy, we want to be prepared to do that. So so there's no buyback, Larry planned at this time.

Larry Heaton

Thanks, Peter. And operator, I think you have another question on the phone. I want to switch back to that for a moment.

Operator

[Obiada'O Kadiri, Ionora].

Obiada'O Kadiri

Thank you so much already asked the question. Thank you so much about the buyback really appreciated.

Larry Heaton

Okay, excellent.

Operator

[Jane Wilson, ZOLL Medical].

Jane Wilson

Fabricating and Jeremy.

Larry Heaton

Yes.

Jane Wilson

Okay. Sorry. Been in here for almost about four years retail here. I was wondering, have you guys considered in getting into our opinions of like beta Dragons of Warners of both contributors because pet owners and all that they expand beyond haven't as I have to my own ideas. I didn't know if you guys were ever considering and dabbling into that area at some point?

Larry Heaton

Into exotic animals. Is that the question, sorry?

Jane Wilson

Yes, yes, we are dragging out of like Bella?

Larry Heaton

Yes, Iguana is stuff like that. So I will tell you that and from a market standpoint, that's probably not going to be a major focus of the Company at this point because there's so much opportunity with small animals and horses and so on. I will tell you, though, that from time to time, we do help people, right? We've treated with Pulse that elephants the other day elephant foot. We treated at the San Diego Zoo I'm sorry, the San Diego, what you call the waterpark aquarium or what have you see World Zero, we have we we treated a Sea Lion and we treated two or three animals there that Guardian has been used with exotic animals for, um, for transport whether closely confined indication.
I've actually told by exotic that the Guardian is perfect because unlike a cat or a dog rule, meaning the first swap first swallow, they observe It's no more hands on because they want to keep keep their hands. So Tom, we do from time to time, we are we definitely engage with the vets that have some our questions are of special interest will send them professional service bit over, but honestly, it's not a large enough market for us to allocate resources to at this time (inaudible).

Elif McDonald

I think we have time for a couple of more questions online.

Larry Heaton

Okay. So let's see here. Any plans to use our technology in humans?
There are a number of questions around that that are here online. So let me just kind of aggregate that together and say that when we acquired the I'm the Qorvo biotech company and we acquired the whole thing, and that includes a program for human use staff, a news program. They had less focus on Poland. And I think we probably all are pretty comfortable with the fact that there's plenty of testing options for COVID out there. So but it doesn't it doesn't it doesn't eliminate the fact that the technology is incredibly good. And we do suspect that as we gain traction in the veterinary market and we demonstrate the myriad of VAS of assays that we can do uniquely that can't be done by other point-of-care diagnostics for vets that we will see interest in that in the human application for that we have no plans ourselves to pivot to becoming a human company, certainly anytime in the near future.
And certainly not before we build it to a to a significant animal health company, but there may be opportunities for us to monetize that. Our technology and that program, which is complete with clinical data and all sorts of, you know, the regulatory documents and so on and so forth. It's all pristine ready for buyer. Should they choose to opt to have an interest in it and also say that along with that, our TrueView microscope, which we are pioneering as the first microscope ever, that has the ability to say to prep the slide for the technician. We've actually had a few a few human clinics that have asked if it's applicable, it is not today if there would need to be a lot of regulatory things that are done, but we do see that as a potential opportunity in the future for further run further monetization of that technology.
The other products we have are pretty much limited to the animal health applications for them. So we wouldn't see we wouldn't expect to see them and applied to human use by us. There will be other companies that are that do that.
Okay. Here's one. Hello. As your formal 2024 revenue guidance of $31 million to $35 million this year, factoring in revenue from new M&A opportunities that we hope to close in 2024.
And that's a very straightforward. No, it does not. That guidance is just based on our existing products, as is our strategic plan, which takes us to $50 million run rate, right, which means $12.5 million in a quarter by the end of next year, [25] and $100 million, two years after that, in run rate in 2027. So any additional acquisitions would be would help us get to profitability sooner.
On the eventual questions here on G&A and its relative size or its size relative to our revenue because. Do you want to handle that one.

Peter Donato

Yes, we're in line with our peers. And if you go back, I had spoke very at length at the Investor Day that if you go back and look at some of the more successful publicly traded ones with high valuations, if you look back at their startups were actually lower than them inflated right now.
Right. I can see if you were just looking at a GAAP basis. That's why I tried in my prepared remarks to highlight of the nonrecurring charges that set right. When you add new businesses and you're growing it up to 40% a year, you're going to have to add back office people. Keep in mind that this. You know, when I joined the company, I think I was employed 45 or 46, and that was like 13 months ago. We have 150 people today. And most of those almost all of them have been added added outside of. And so I would say that there's always work to be done. If you listened in my prepared remarks that we are starting to see leverage on that line. And as we grow the top line, it's going to grow at a much more rapid pace than the G&A line.

Larry Heaton

Excellent. Here's one that I think is a little interesting and it is it has to do with concerns about meeting profitability year over year. And I think we've addressed that what is the vision and will you post your milestones?
Absolutely. And then also And here's one that's interesting. Why does the Company delete posts from investors of investors from voicing concerns on social media platforms isn't all advertisements good or free advertisement. And I will tell you that when we were pursuing a reverse stock split, we noticed that on social media platforms that were designed to market our products to veterinarians and to individuals that we noticed that some of the remarks that were coming up had to do with the company itself, the leadership of the company and they were all about the reverse split.
And we just felt like that while we certainly solicited input during that process from various message boards, including we will and say, Robinhood, we had a IR firm reaching out to investors to make sure that we understood and heard heard what they were saying. We just figured we had enough input from investors on those platforms that we could potentially cut off comments on and our Instagram, where you have a, say, a veterinarian that just got our technology and was happy about it. And we're seeing and it's praises. We just felt that was the was probably not the best platform for getting input from investors if that was the aggravating to folks and I would apologize for that.
But Tom, that was a decision that we made. So there's lots and lots of questions here about below the stockprice. And I'll just say that we understand that that's a concern for everyone. We welcome any suggestions or input that you may have or e-mail is available. We ask questions on the various platforms all the time please feel free to provide your input there. We look forward to it.
But at the end of the day, we're committed to building our shareholder value by building the value of the Company by increasing revenue, maintaining high margins, reducing expenses as a percentage of sales. As I mentioned earlier, we've scaled company the infrastructure of the Company to be a public company that is rapidly growing and will grow to beyond well beyond our $25 million last year to $31 million to $35 million this year, a run rate of $50 million by the end of next year, a run rate of $100 million by two years after that. And we expect that as we do that, the stock price will will be driven by the market to whatever level of market feels appropriate. And with that, I think we're pretty pretty darn out of time.
Pete, any closing remarks?

Peter Donato

I think we said it best, and I appreciate everybody participating today. It's always great to have shareholder involvement. I thought the questions were really good at and challenge this management team. And we look forward to speaking to everyone at the end of the first quarter.

Elif McDonald

Paul, back to you.

Larry Heaton

Well, actually, I just have one more. I think I got to stick this one more question and then we'll through pharma eventually have assays for which and if so, how much would would churn?
Chuck could Chuck, would I don't know the answer to that one, but I one time after the election and she gave me an answer, so I would suggest you go to Celexa. She has an answer with that fight harder with that laid out a remark ball, bring it back to you to bring us home.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Elif McDonald

Thank you.