Jul 31, 2015
Executives
Doug Murphy-Chutorian - CEO
Analysts
Brian Marckx - Zacks Investments Research Yi Chen - HC Wainwright
Operator
Before we begin Semler Scientific, I would like to remind you that this conference call may contain forward-looking statements. Such statements can be identified as words such as may, will, expect, anticipate, estimate or words with similar meaning.
And such statements involve a number of risks and uncertainties that could cause Semler Scientific's actual results to differ materially from those discussed here. Please note that these forward-looking statements reflect Semler Scientific's opinions only as of this date of this presentation and it undertakes no obligation to revise or publicly release the result of any revision to these forward-looking statements in light of new information or future events.
Please refer to Semler Scientific's SEC filings for a more detailed description of the risk factors that may affect Semler Scientific's results in these forward-looking statements. Now may I introduce Doug Murphy-Chutorian, CEO of Semler Scientific.
Doug Murphy-Chutorian
Thank you, operator, and thank you all for joining Semler's second quarter 2015 earnings call. I have some prepared remarks and then we'll do a few questions afterwards.
The second quarter 2015 was once again the best quarter ever for the company. Sequential quarterly installed base of WellChec units grew 18% of our total base.
Now that unit growth in the second quarter was 2.6 times greater than in the first quarter. So we're very happy and pleased with that.
Revenue recognition occurs after installation. Some of the sequential quarterly growth was -- so the sequential quarterly revenue growth was 8%, as many of the installations were back-ended into the quarter.
As many of you know, we have recurring revenue model. So a large increase in our established such as we had is very favorable to revenue in future quarters.
Our sales goals are, number one, initiate business relations with large insurance payors with Medicare Advantage patients. Number two, to expand the size of our orders from our established client base, and number three, to launch additional products and service offerings to sell to our established customer base.
All three objectives were obtained in the second quarter. You can refer to the financial results which came out earlier this morning in our earnings press release.
Some of the highlights and additional details are as follows: for the three months ended June 30, 2015, compared to the three months ended March 31, 2015, revenue was $1.303 million, a sequential increase of $101,000 or 8%. The net growth in the number of FloChec systems placed during the quarter was 18%, many of which were installed during the latter half.
We added new customers including, as previously announced, our fourth of the top 15 health insurers that cover over 70% of all Medicare Advantage patients. We also initiated a pilot program at a fifth such of the larger health insurers.
And our significant ramp in installation was also fueled by repeat business from existing clients who added to their numbers of our FloChec or vascular units that they had licensed from us. Now we completed our first contract for WellChec service in April.
We mentioned that on last call and that service began in March and finished in April. Our total revenue from that contract was approximately $150,000 and there were substantial financial returns for the client above and beyond what they paid us.
For competitor reasons, we really do not disclose our prices and that's about all I'll say at this time on that subject. The sales team made substantial progress towards obtaining more contracts to the WellChec service during the quarter.
We have received on order for our testing service subsequent to the close of the second quarter and we anticipate to begin WellChecing for this client in August and to continue that testing throughout the year. This contract is a substantially larger than the first initial contract that we cut our teeth on.
The second contract is once again delivering wellness test, there will be more test to it and more patients that we will deliver. So to give you a framework for trying to understand the potential magnitude of WellChec for our company, these contracts could range from hundreds of thousands of dollars to millions of dollars in size.
The potential customers range from small health plans to major health plans. Our first contract that we did in March April was extremely small compared to the contracts that our sales teams are currently pursuing and, in general, we will not be reporting details of individual contracts or the lives tested, but we will indicate the component of revenue coming for wellness testing services.
So back to the financial numbers, the cost of revenue for the quarter was $244,000, a sequential increase of $24,000 or 11%. Total operating expense, which includes cost of revenue, was $2.616 million, a sequential increase of $366,000 or 3%.
We met our quarterly goal of keeping operating expenses flat while growing revenue. Clinical and product development expense increased by 31% due to new hires and consultants involved with final testing and preparing for the launch of our next generation vascular product.
This launch will occur on August 1 and correspondingly we expect that R&D expenditures will decline substantially in the third quarter. General and administrative expense decreased 18% in the quarter due to a lower salary expense, lower public company expenses, lower expense from uncollectable accounts and audit tax expenses.
Sales and marketing expense increased 5% reflecting higher commissions and a seasonal increase in the trade show activities among some other factors. Net loss was $1,341,000 or $0.27 per share, which is a sequential decrease of $31,000 compared to a net loss of $1,372,000 or 29% per share in the March quarter.
Weighted average number of shares was 4,978,878 compared to 4,763,573. Cash and restricted cash was $4,440,000, which is a sequential decrease of $721,000 after taking into account that we had a equity raise in the quarter of approximately $500,000.
Restricted cash was unchanged at $2.1 million. So in short, we kept operating expenses flat, grew revenue and saw improvement in net loss and cash flow.
And we have trimmed expenses in addition in July and renegotiated longer payment terms to existing contracts. This combination of things that we've done post-quarter should improve our cash flow by approximately $600,000 or more per quarter starting in the third quarter.
While we anticipate that these efforts will improve cash flow in the near-term there is no guarantee that our efforts will successful or sustainable or that we will have sufficient cash available when payments are due under the new terms. Barring unforeseen circumstances or changes in business plan, if we are able to maintain control over expenditures that we have and continue to grow revenue, we believe our existing cash will be sufficient for the next three quarters or longer.
Nevertheless, it is our intent to raise additional capital at opportune times and we believe that we will need to do so before reaching profitability. Putting aside the numbers, we believe the business prospects and opportunities for Semler are crystallizing.
Semler is gathering, organizing and selling information about the wellness of patients. We are a diagnostic and testing services company.
The parties interested in this information are insurance plans and physicians who care for these patients. This patient information guides management of care.
It also is important for insurance plans and physicians to have this information as it directly affects their compensation. Specifically, the government recognizes that patients with chronic disease cause more to care for and that prevention is the best way to control cost.
So they pay more for patients who have documentation of chronic disease. We provide that documentation, that information to our clients.
And with this information in hand care management programs can be designed for patients to lower their risk and keep them out of the hospital. So Semler's entry into this market is to create proprietary-patented solutions that substantially improve information gathering, because Semler's products are intended to be faster, more practical to use, more accurate, less expensive, more comprehensive, require less expensive personnel or a combination of these attributes.
So using proprietary solutions is a way into the wellness information market. We now added product and service offerings in the second quarter to a menu of solutions for growing base of established customers.
And of course, we expect to introduce to those established customers these new programs, particularly WellChec, and that indeed what we are doing. So as we discussed, our primary sales focus is to expand our base of established clients who are insurance plans and Medicare Advantage patients.
Now, to reiterate, these contracts have long lead times, but we expect them to have a high return. We've concentrated our efforts on these contracts from insurance plans rather than individual physician's contracts.
Those individual contracts are smaller, but they have a quicker sales cycle. In particular, the Medicare Advantage market is dominated by larger plans with the largest 15 plans enrolling over 70% of all patients in the U.S.
and I believe the largest is 25% ever of 80%. So in the second quarter, I can tell you that our largest customer has substantially increased the size of its orders to us.
Presumably it's realized the benefits Semler products are generating good medicine and more compensation for its services. And during the second quarter, we added our fourth of the largest insurance plans in the country as a customer.
And we began a pilot program with another one of the top 15 health insurance, also a very large ones, which will become our fifth such customers amongst this group should that pilot go well. We also announced in the second quarter that we've received FDA 510k clearance for the next generation vascular or peripheral artery disease testing product.
This product will be launched next week and has broader indication of use that we're going to be the original FloChec device. The product has information retrieval and analysis features that we believe will satisfy the needs of our larger customers who want to crack their utilization at their multiple installation sites.
We have beta tested and very comfortable with the performance of this product. Now, anticipating of the product -- some questions that you might have about the new product launch, here are some of the details.
Pricing of the new product will be approximately 10% more than that at the older FloChec product. All new orders will be filled with the new product -- all new orders coming as of August 1.
And we'll get around to upgrading to existing customers, which can be done with the software download and a replacement of the detachable sensor flab. And we anticipate that they will be interested in that from our established clients.
So we believe we are well-prepared to handle the launch from the perspective of manufacturing capacity, technical service and customer support. Turning out to WellChec, our WellChec service.
Well, what we learned from our large customers is that a turnkey solution, where we provide testing services and a vertical integration of their information flow may be very valuable to the, more valuable than licensing equipment only. To address this market need, we launched WellChec in March of this year.
WellChec is a service where we provide scheduling, equipment, subcontract personnel actually to perform the test. And physicians and insurance plans need to close the gap between the patient risk they must care for and the compensation they should be receiving for providing such care.
So we provide the information and documentation that our customers require to close that gap. Our goal is to help physicians evaluate patients now in order to save medical costs later.
An early diagnosis we believe may lead to more prevention and a lower healthcare cost. So WellChec is our turnkey solution.
It's sort of a Uber exam not less a taxi but like the ultra exam that provides a proprietary vascular test, as well as some basic tests that include test for lung function, heart rhythm, eye disease, neuropathy or nerve diseases, blood work, cancer monitoring and osteoporosis. And we also can include annual wellness visits, which is a formal and comprehensive interview with patient assessment that is required annually by the government for many patients.
So we plan on expanding the WellChec offering in terms of the number of tests, as well as the number of customers who are contracting for these services. We are not yet ready to provide guidance regarding this major potential growth engines for our company until we have a better understanding of the success of the service rollout.
We are very happy with our initial contract and now we're obviously expanding starting in this quarter. Very, very happy to see how this rolls out as we have been talking about.
Now, at the same time we're still offering licenses on our vascular testing equipment for those who want to provide the operators of the equipment themselves. It's estimated that there are 80 million in the U.S.
over the age of 50 years who might be tested annually for peripheral artery disease. Our goal is to ensure that all these patients receive the tests that they need by giving the interested practitioners and their vendors access to our products.
Now, the market is so large that we are happy to participate as a service provider or an equipment provider just as long as we're achieving optimal healthcare for all at affordable prices. So the list of goals that we have accomplished at the end of the second quarter.
We are ready to launch, number one, our next generation vascular testing product. Number two, we added another major insurance plan to our growing list of customers and began a pilot program at our fifth major insurer.
Number three, we have an additional contract for WellChec testing therapists. Number four, we continue to grow revenue quarter-over-quarter and had a large increase in our established base of license FloChec units during the last quarter.
We have extended the WellChec menu, number five of test and exam. And six, we've decreased our near-term cash burn; the changes that I mentioned earlier in the call.
So we believe Semler is well positioned to benefit from a new era of health care reform, because we deliver constant effective wellness solutions for the care of patients with chronic diseases, and chronic disease is where most of the money is spent. And we provide economics that work for customers, providers, their facilities, but also the insurance plans, the government, and the patient.
And we assist providers to identify patients with chronic disease, to initiate preventative measures, and to receive higher reimbursements for their patients and their efforts. Future Semler products intend to expand upon this strategy.
So to conclude, we have a recurring revenue model; we're seeing period-to-period revenue growth; we've added a service business model, which has potential for exponential revenue acceleration compared to what we've done. And we think we're very, very well positioned.
Well, I thank you to your interest in the company. And operator, if you could now please open the lines for questions.
We'll take a few questions and then close. Thank you very much.
Operator, are you there?
Operator
[Operator Instructions]. Our first question comes from the line of Jan Von [ph].
Your line is now open.
Unidentified Analyst
Hi, Doug, how are you. Congratulations on the quarter.
Doug Murphy-Chutorian
Thank you so much, Jan. How are you?
Unidentified Analyst
Fine. I have just couple of questions.
One is, I know you're not willing or wanting or probably could give guidance in terms of WellChec and FloChec. But could you talk a little bit about the pace that we could see going forward for the rest of this year and perhaps into next year?
Not trying to get specific, but just in terms of trying to see the expectations for new plans coming on board or revenue growth or something along those lines?
Doug Murphy-Chutorian
Okay. Well, to give to a little color, I mean we -- after the successful first contract trial where we kind of conservatively wanted to see, hey could we pull this off; number one.
And number two; will this going to be valuable for the client? We did in total in March I think we reported about $100,000 and there was another $50,000 in April from that initial first small contract.
And so the $100,000 in the first quarter represented 10% of revenue. So one tiny little contract was a big contribution to revenue.
So if we move forward, that's on the order of few hundred patients. The next order we have will be closer to a couple of thousands patients and the ones we've been approaching substantially larger companies and plans could be substantially more than that.
I would anticipate, well, oh I only have one time in fact in place that we talked about for this particular quarter that the size of the initial contracts will be relatively small compared to what they could reorder from us in 2016. So our goal is to take each order and do a terrific job with it.
What does a couple of thousands patients mean? Well, the answer is a couple of thousand patients for us could be an extra million dollars in revenue, for example.
And we will with more experience be able to quote more definitely what each of those contracts are worth, but that's what we see. And how well we fulfill them?
Let's say we get 2,000 patients and we can fulfill 50% or 30% of the contract, we need to get a better understanding of that. But suffice to say that we believe that there are several contracts that we have lined up, that we're anticipate getting, we got, as I said another one in and we're starting to work on that.
So I'm kind of comfortable that this could be a big revenue booster. Unfortunately, I haven't given you exact numbers.
But if you do the math and you take a look at the insurers that we've already talked are on our list. These people have millions of patients under their care.
So even if we've got a small fraction, it would be a tremendous boost to the company. As you know the Street has it for about $5 million to $5.5 million revenue this year.
So anticipating that we'll see some boost from WellChec during this year, but we're hopefully looking forward for a substantial bigger increase in next year should all go well. We'll talk more about it next quarter and then have some definite data for you.
Unidentified Analyst
Okay. A big picture question.
There is still lot of acquisitions [indiscernible] at this point now. So the big six that are probably going to be coming down to the big three.
Does that affect your business or has it affected your business, just help me, does it help it, hurt it?
Doug Murphy-Chutorian
Well, it actually kind of makes it easier, because we talk about having four of the top 15; and all of a sudden we end up having four of the top 12, because that definitely got together that'd be terrific. So I'm actually intrigued.
But I don't think I can say it's going to be fabulous, but it looks to us like its substantial boost to us the way the alignment is going. And we're in the door with a number of them that are involved with this stuff.
So hopefully we are revenue producer for everybody, we're certainly not a service that you would want to get rid of and probably some people seem to be expanding once they get to use us that just gives us a potential bigger client a broader reach.
Operator
And our next question comes from the line of Brian Marckx with Zacks Investments Research. Your line is now open.
Brian Marckx
Good morning, Doug, and congratulations on the quarter and all progress.
Doug Murphy-Chutorian
Thanks, Brian, good morning.
Brian Marckx
With the new WellChec there was recent WellChec contract, I think you said it should start in August if I got there right. We anticipate that it will be revenue from the contract in both Q3 and Q4 then?
Doug Murphy-Chutorian
Yes, we would expect in Q3 and Q4 and then we would anticipate that we get a reorder to do it again in 2016. Remember these tests have to be formed annually which is what's exciting about us.
So that's why we, even if they don't give us a full group of patients to start with given the small amount that I show you what we can do, we were looking at for the client 6 to 1 returns on what we charge them for the first program we hope with those kind of return on investment numbers we will see repeat business as well. So we think if it is kind of a recurring model that we do our jobs well.
Brian Marckx
Okay. And currently how many tests, how many different kind of tests do you offer in the WellChec service?
Doug Murphy-Chutorian
In the WellChec service we have, let's see. I'm going to just reel them off to you in terms of what we have now.
I think I've mentioned them in the call but in addition to vascular we have a lung test, an eye test, a neuropathy test, we have an arrhythmia test in there. There is a bone test now available.
I mentioned in annual wellness there is a couple of blood test and one cancer checking test that we're now making available not necessarily everybody will order everything. The way this works is we got a contract we will provide a service to be able to analyze their patients make it easy from an information flow for the health plan to know kind of what they want us to do for them.
And then using that almost as a tracking too we then can go in and get their list of patients, schedule those patients to come into generally one or three venues, either to -- we visit them at home or we bring them to a provider or a doctor's office or we do a health fair. And then when they come, each patient has, a person does need every test, they just need the appropriate ones, so if it's a smoker presumably they will get a lung test and a vascular test, if it's a diabetic they will get an eye exam et cetera, et cetera.
So you can get an understanding of how that algorithm would work. And then, we vertically integrating that information making sure it is going up into -- in the cloud in the formats that is useful and billable for the insurance plans, and then also tracking the analytics on the back end of that to show them what kind of ROI they got, what kind of improvement they got in understanding their patient population, and the risk that they got to care for.
And from that they could, we anticipate plug that into care management program in a personal level try to improve or decrease their cost and improve the health of their patient. So the goal is kind of vertical integration of information, making it very easy and in a sense proprietary to them to have a one-stop shopping group that can do all this for them and take the burden of primary care doctors who are really in shortage but have more patients to care for in ObamaCare.
So we're trying to fill a role and avoid that we think it is necessary to bridge this gap between understanding the patient's problems and getting them to the right person to keep them in a wellness situation.
Brian Marckx
Okay. You have a kind of a forecasted number in terms of what you think you can do on a per patient basis in terms of revenue.
I think you've mentioned potentially $1 million in 2000 patients which would be about $500 patients. Do you think that's a reasonable target?
Doug Murphy-Chutorian
Yes, I think that we could see everything from $75 up to $750 or something like that. So that is giving an estimated, to tell you the truth the more we do the better I will be able to refine that number.
Right now, because it's early, with an n of 1 for hundred patients or so and I don't want to presume that that's exactly what's going to happen but you can assume that it's going to be several hundred dollars a patient.
Brian Marckx
Okay. Just last -- one last one related to WellChec.
I know you mentioned I think in a prior call that you expect WellChec margins to be better then already pretty impressive FloChec margins, is that still the thought?
Doug Murphy-Chutorian
I think when we stared originally with a vascular test if we're getting about I don’t know if someone does, you would want a piece of equipment we charge them let's say $6,000 a year, they do at a thousand times, we're getting about $6 a test. If we do the test for them, we'll just take a number say $100 a test result, we make substantially more money and that's what I was referring to.
As we expand into more and more test, not each test are going to wellness, as if are going to have those kind of margin. So I have to sort of tell you part of the reason for not giving a lot of guidance here is some of the tests may have lower margins and some of them substantially higher.
I need to see where that average is before I can provide guidance. We think it's obviously a great revenue generator and profitable, but I can't give you a percentage number like I was hoping to do.
But for the initial vascular test substantially bigger margins were as obviously on the test.
Brian Marckx
Okay. Well, where will be cost be captured in the income statement?
So for example, the personal cost for WellChec, is that a cost of goods sold or is that below the line?
Doug Murphy-Chutorian
I think, it's on the positive revenue in the operating expense section is where it will be. Obviously, it's a growing number; we get better clarity on it.
I don't want to presume what the order is what they advise in terms of doing that, but that is where it is right now.
Brian Marckx
Okay. And one last one, has to do with FloChec and the next-gen system.
It's now like if I've got it right that the legacy FloChec system can essentially be up fitted to be the new next-gen system, is that right? So essentially, you can go in to an existing installed place and upfit the legacy system and now the…
Doug Murphy-Chutorian
Yes. And that's exactly the case.
Now, you remember sometimes the margins are even substantially better when they don't even want the notebook computer that we'll provide and they want us to install on their own. So we have the ability to make this a pure software plus sensor company to -- or to provide a notebook computer or, as you rightly suggested, on the next generation product due out shortly where we're going to be able to just upgrade some people if they want to do it that way.
For us it's just a matter of what works best for them. And we see I would say to a certain extent a migration to people wanting to use their own systems.
And us with kind of WellChec and other services migrating to putting all the information flowing through one system so it makes it very easy to deliver the service. So that's kind of another integration feature what we're doing.
Brian Marckx
Okay. Great.
Thanks, Doug.
Doug Murphy-Chutorian
Thank you.
Operator
And our next question comes from Yi Chen from HC Wainwright. Your line is now opened.
Yi Chen
Thank you for taking my question. My first question is regarding the next generation FloChec.
Is it more of an upgrade on software than the hardware? And also, how to expect to -- how big an affect do you expect it to be on the sales revenue ramp up going forward?
Doug Murphy-Chutorian
Yes. Great question, Yi.
The few things about it. First of all, the labeling is expanded.
So we really kind of setup a labeling for we thought expanded use, maybe improved reimbursement, et cetera. We don't teach reimbursement for people, so that's one aspect.
The other aspect is there are -- it's even better in integrating with systems. A lot of people like to check their data and files and all the particulars we're getting the larger account.
So all those hooks are in place now and that works very well. The next thing is the system and the tests we have done is substantially more accurate.
And we're still collecting data so that we can put a bigger date set together in doing it. But we were very, very happy with the accuracy numbers.
Although, we thought the machine before was as good or a little better than the old traditional cuff and Doppler blood pressure machine. We see this is substantially better and we're going to try to get some statistics around that and make sure we get those publications out.
So we think it's a substantially better product. Now, the next question of course you asked is well, what's the conclusion there.
And we would expect that like your collaborator and partner see our boys will love to get something like this in their hands, because they're well-positioned to be able to move it. So I would hope that we see an uptick.
But you have to admit having an 18% of growth in our established base in one quarter, which last year was pretty good uptick with the FloChec machine, so we think we're going to be adding it to that. We would hope, but that's a great quarter.
So if we can get anywhere near that kind of continued growth we will be very happy. So that's kind of the talk around.
But I think we're planning on keeping to the kind of trajectory that we had talked about before not anticipating that we really lead forward yet and look to see how this WellChec drives us and how this new introduction of QuantaFlo drives us. Once again saying next quarter or at the end of this quarter when we report end of October.
Hopefully I'll have better information to give you hard data rather than speculation.
Yi Chen
Thank you. My follow-up question is there any information you can share with us from your existing clients regarding what percentage of diagnosis appear to be they have in their patients?
And how successfully they can get additional payments [indiscernible] and then regarding those patients? Thanks.
Doug Murphy-Chutorian
It's true. Yes.
The literature is pretty clear about this that there are between 50% and 75% of the people with peripheral artery disease or vascular disease in the legs are undiagnosed. So with that number of undiagnosed people you only take a typical population I'd say 65 year old, 20% or 25% of them have PAD and or slightly more that is unrecognized.
And you'll go in and we'll go into a plan, we'll say well, how many codes do you have listed for PAD in your population. And they may say like 8%, which means that they're missing about 20%, 18% to 20% of their population.
You ask in same thing in their question about their diabetics where the frequency of PAD is even higher. And once again if they say 11% or 12% we say to them, well, this is what you're missing.
And generally when we go in and do that, we find all those patients. And so that’s what we do.
They would also find a number of them if they did traditional cuff and Doppler, but that’s time consuming. It's hard to do and it doesn't find as many as we do and it isn't that accurate; so that kind of the set up.
So this is a substantial number. Generally speaking, the people do these tests depending upon the indications for it will charge that anywhere from $85 up to $150 depending whether they exercise the patient or not.
And the interesting thing though about what we do is, not that side of the business, it's the FloChec side of the business where you're trying to understand your risk and you get extra payments from the government when a patient has vascular disease. So, on those kind of cases, typically if you find out that someone has vascular disease and, therefore, you can start preventing it, the uptick on payment there could be $3,000 a year per patient.
So that’s substantially what insurance plans and large groups are trying to do is trying to find those patients, make sure they get them into care programs. And then the question is what kind of care programs.
And the answer is well, for early disease and getting early exercise programs, smoking reduction, improving their blood pressure medicine control are all very effective at palliating or actually decreasing the progressing of this disease, and to avoid hospitalizations and other things. And the final piece is when you have vascular disease in your legs there is a 21% change you'll have a heart attack or stroke or a hospitalization in one year.
So to a certain extent they being the caregivers, look more closely for those problems. And we're hoping that in some cases we have anecdotal reports that they found an early lesion in a heart artery that could have been a heart attack and they kept the patient out of having that acute event, and that's the kind of thing we're excited about, to be able to improve the overall cardiovascular health of these patients.
So it's not just about the dollars per procedure, it about the dollars for taking care of the patient and then the subsequent hopefully savings and improvement in health that you can achieve.
Yi Chen
My last question is typically, I don't know if you have an estimate going after a potential client's pilot program order, typically how many units do they order for FloChec? And also in the long run, because you've previously mentioned the R&D expenses will be lowered going forward, but in the long run, are there any new devices or kind of base that you are considering to add to companies might want?
Thank you.
Doug Murphy-Chutorian
Sure. I think we had on tab a congestive heart failure kind of program to do early testing of that.
We really kept it on the backburner and moved and tested the WellChec which we thought had substantially more revenue growth opportunity near-term but that product of course you like. We had looked at other things that could fit in to our distribution system.
We have been very active in looking although not that active in announcing things that we're doing. The second thing is in regards to the direction, we really have committed to these expenses low.
And the only reason I would -- as we mentioned this quarter even decreased $600,000 of revenue or delayed payment, decreased expenses in order to make sure that cash position is substantial enough to get us through several more quarters, see this actual growth and then complete the financing that we'd like to do at a more appropriate price than the current trading stock price. So that’s kind of what we're trying to do is to capture the true value of the existing products, keep the expenses low and then show that this revenue gets us towards on the direction to achieve profitability.
So it's all about managing the bottom-line right now and showing the growth of these near-term products which you understand if this really get does traction then we will be on an exponential growth curve in the near term. So we're working hard to make that happen.
Yi Chen
Regarding is there any typical number of units that potential clients order after a pilot program?
Doug Murphy-Chutorian
I'm sorry, I didn’t answer that question. With these large groups, we see generally they take I don’t know really from five to ten or some groups could take even up to 100 units, and then after that pilot they start looking at their needs.
We'd only see them making order for a 1,000 or something like that we see them start to fill in at the five here, 10 there, 20 there. And then the nice thing about it with our largest client they keep seemingly ordering at those kind of levels on a monthly basis from us as we expand within the organization.
So generally speaking, we don’t have a national contract with a plan yet. We kind of work local than regional and we're hoping to transfer at some point the national contracts and maybe the numbers of units will be bigger.
But we have seen orders of 100 or so and we seen orders obviously as lows ones, two to get started. But we don’t see anybody as we said, oh, the pilot worked, give me 4,000 units.
We haven’t seen any contract like that.
Doug Murphy-Chutorian
Well, ladies and gentlemen, if there are no further questions or repeat questions, I want to thank you all for joining us today. Thank you the questions for their interest as well.
We look forward to updating you soon about our continued progress. We're very excited about what we did and we hope you're there following with us in the future.
Thanks again and have a nice Friday and weekend.
Operator
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program.
You may all disconnect. Everyone have a great day.