Greetings and welcome to the RMS Medical Products First Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your hosts Devin Sullivan, Senior Vice President of the Equity Group. Thank you, sir. You may begin.

Thank you, Jesse. Good morning, everyone and thank you for joining us for RMS Medical Products first quarter 2019 financial results conference call. The speakers for today's call are Don Pettigrew, President and Chief Executive Officer and Karen Fisher our Chief Financial Officer. Also on today's call is Dan Goldberger, Executive Chairman of RMS Medical. During this call, we will discuss our business outlook and make forward looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the associated slide presentation and our most recent filings with the SEC along with associated press releases. We assume no obligation to update any forward-looking statements and the associated slide presentation will be posted to the Investor Relations section of our website at www.rmsmedicalproducts.com later today. I encourage listeners to have our press release in front of them, which includes our financial results as well as commentary on the quarter. During this call, management will discuss adjusted EBITDA, which is a non-GAAP financial measure in our press release and slide presentation accompanying this webcast and in our filings with the SEC, each of which is posted on our www.rmsmedicalproducts.com, you will find additional disclosures regarding this non-GAAP measure, including a reconciliation of this measure with a comparable GAAP measure. Our strategic plan goals and other plans incorporate the trends that we've seen today and what we believe today to be appropriate assumptions. Our results are inherently unpredictable and maybe materially affected by many factors, including introduction of competitive products, availability of an insurance reimbursement, success of our research and development efforts, acceptance of and demand for new and existing products, expanded market acceptance of the Freedom system, the cost, duration and ultimate outcomes of litigation, general, economic and business conditions in the United States and abroad and other factors described in our filings with the SEC. Therefore our actual results could differ materially from the goals set forth in the strategic plan and in this presentation. For the benefit of those -- to the benefit of those of you listening to the replay, this call was held and recorded on Wednesday May 1, 2019 at approximately 9 AM Eastern time. Since then, the company may have made additional comments related to the topics discussed. Please reference the company's most recent press releases and filings with the SEC. With that said, I would now like to turn the call over to Don Pettigrew, President and CEO of RMS Medical Products. Don, please go ahead.

Thank you, Devin and I appreciate it. I hope everyone's having a wonderful morning. We appreciate you joining us today. I'll ask that if you would please note the slides addressing the safe harbor the non-GAAP measures and that we'll refer to today's call. So let me jump into Slide 4 which is I guess simply allows you to put a face with a name. But I'd really like to begin with the news on Slide 5, which is the Q1 operating highlights. So for the quarter, we're very pleased with our performance in the first quarter of 2019 as the progress we have made against our previously announced strategic plan, which takes us through 2022. What I'm most encouraged by is the momentum that began in 2018 both specific to RMS Medical and the industry has carried over into 2019. We acknowledge that there still is a lot of work to be done and that many of our initiatives and outcomes will take time to evolve. However, our progress to date is reflected in our results for the quarter. You will see net sales rose by more than 23% to $5 million over the prior year. This is the highest quarterly sales in our history. Our adjusted EBITDA rose more than 10% compared to the first quarter of 2018 and approached $1 million. A reconciliation of adjusted EBITDA to net loss appears on Slide 14. We also ended the first quarter in a strong financial position with cash, cash equivalents and CDs totaling $4.1 million and we are debt free. Karen will walk you through our results in greater detail shortly. We remain very optimistic in our ability to improve on these results as we progressed through 2019 in advance towards our strategic plan to become the preferred drug…

Thanks Don. Hello everybody. Beginning on Slide 14, net sales rose 23.3% to $5 million in Q1 2019 from $4 million in Q1 2018, driven primarily by our focus on expanding national accounts, growth in the PIDD market and expansion into the neurology market following the 2018 approval of Hizentra to treat PIDP. Gross profit in Q1 2019 was $3 million or 61.3% of net sales compared to $2.5 million or 61.1% of net sales in Q1 2018. Gross Profit dollars increased approximately $600,000 in Q1 2019. However, gross margin remained consistent with last year's first quarter. Total operating expenses for Q1 2019 rose to $3.2 million from $2 million in Q1 2018. Approximately, $1.1 million of the $1.2 million increase in operating costs was included in SG&A expenses and comprised the following. Reorganization costs of $355,000 an increase of more than $282,000 from Q1 2018. These costs included executive compensation related to the recent management changes and legal fees for the resale registration statement we filed during the quarter. We do not expect to incorrect any material reorganization expenses for the balance of 2019. Litigation expense increase to $493,000 from $156,000 in Q1 2018. As noted in our public filings, this is related to ongoing litigation with a competitor. As we have also noted our 10K filing, we expect the first case to proceed to trial during Q3 2019. As such we will likely incur higher legal fees in 2019 associated with this dispute. Non-cash stock compensation expense rose to $122,000 from $27,000 in Q1 2018. Because of these higher costs net loss for Q1 2019 was $85,000 or $0.00 per diluted share compared to net income of $403,000 or $0.01 per diluted share in Q1 2018. Excluding these charges and on a non-GAAP basis, Q1 2019 adjusted EBITDA…

Thank you, Karen. On Slide 17, this is our roadmap to becoming a preferred drug delivery partner for specific infusion therapies in select markets, which we shared with you in February. We expect to get here via a combination of sales growth and margin improvement, driven by Manny Marquez, our Chief Operating Officer and his initiatives, including investment in automation, supply chain, reducing material costs and streamlining operations. We've broken this down into three distinct phases. Phase one is grow the baseline business, further penetrate the PIDD and CIDP markets, develop and launch new products, pursue collaboration with pharma companies for clinical trial usage and product adoption and commercialization. Phase 2 is focusing on new products, developing the post acute care market and targeting European expansion and Phase 3 is focus on new drugs and indications to grow the sales of our Freedom products, pursue global expansion initiatives and drive market share growth. If you go to Slide 18, this is our report card. How are we doing against our stated goals? From a new product development perspective, as I mentioned earlier, we received 510k clearance in April for our Super26 needle sets. We added depth and experience to our board and management team, we are implementing a number of initiatives under the direction of Manny Marquez to reduce the cost of goods and drive us towards our 70% margin goal, we made good headway in collaborating with pharmaceutical companies as they introduce new therapies for which our Freedom system can be the method of delivery. This is a process but a process we are very committed to. There is more to come and I can assure you that we are confident in our ability to execute. I'd like to thank all of you for your participation today. Our mission statement truly does drive what we do here every day. If we focus on the patient, then success will follow. We think we have a good tailwind to continue to advance towards our stated operational and financial goals and we are focused on improving the quality of life for patients around the world and delivering value to our shareholders. Thank you again for your participation. I'd like open things up for questions.

Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from the line of Brooks O'Neil with Lake Street Capital Markets. Please proceed with your question.

Good morning and congratulations on the progress you're making. I'm curious obviously there's a big pending merger in the infusion sector. Do you guys think that will affect your business either positively or negatively in the future?

So this is Don Pettigrew, let me answer that. Thanks for attending Brooks and a very good question. I think the merger you're referring to is Bio Scrip an Option Care, both very good customers of ours. There has been a lot of consolidation in the past in the home infusion industry. We do exceptionally well with our national accounts and feel this will be a net positive for us. I think the industry is very used to this sort of consolidation, but at the end of the day, patient preference and physician prescriptions really drive the use of our products. So we feel this will remain largely unchanged.

Perfect. Thank you very much.

[Operator Instructions] Our next question is from the line of Michael Potter with Monarch Capital Group. Please proceed with your question.

Hi guys. Congratulations on a great quarter and a very thorough presentation. Just a couple of quick questions the 510k approval for the Super26 needle set, Don, can you give us some more color of what exactly that means to the company?

So it means a handful of things. The main one is showing our commitment to product innovation and development. We -- more detail will follow as to our launch plans for Super26. But what I will say is this marks a change in our organization where we're really going to let the feedback from stakeholders, I mentioned earlier from caregivers, physicians, nurses, patient advocates and patients helped drive our direction here. So our focus right now is heavily on clinical data in the clinical data will direct our path going forward, but ultimately we think it offers a competitive advantage where we round out our product portfolio and build on our reputation for innovators in the industry.

Okay. And then I guess a follow up question to that, what is the plan to work with drug developers during their clinical trials? Is there an opportunity to become potential preferred provider designations and the potential opportunity from that?

So one of the key hires I just announced which was Brian Schiller as our VP of Medical Affairs. This is a huge component of our plan going forward. I think if you look at what's made it successful it's really having the adoption of pharma company support and being the preferred drug delivery system. We are actively involved with other providers of immunoglobulin and we are involved in exploring additional relationships to help solidify our position going forward.

Okay. Thanks guys. I'll get back in queue.

Thank you. Our next question is from the line of Maj Soueidan with GeoInvesting. Please proceed with your question.

Hello. Thanks for taking my call. I have a really quick question here. When was the last time you retooled your products and I'm curious if there's improvements that can be made in terms of the manufacturing process to maybe increase gross margins.

So you can you clarify your question as far as retooling the products or are you referring to new products or evolution of the current product platform.

I guess evolution of the current front line yet. Have you -- in the manufacturing the components that go into the products that you've been selling for years. Is there any manufacturing efficiencies in terms of the other components, the number of components being used in the products that you can maybe hopefully, potentially increase gross margins by revisiting those things?

So. Okay. Thanks for the clarification. So this is a key component of our gross margin initiative to get to 70 %. As I mentioned our Chief Operating Officer, Manny Marquez is exploring a lot of different opportunities for cog reduction and automation and things of that nature. But we're looking to improve operational efficiencies to drive that margin. So any and all things are considered that help us achieve that goal.

Okay. Thank you.

Thanks for the question.

Thank you. It appears we have no further questions at this time. So I'd like to pass the floor back over to management for any additional concluding comments.

So I think we are a good unless anybody has additional questions.

There are no further questions at this time. This will conclude today's teleconference. Ladies and gentlemen, we thank you for your participation and you may disconnect your lines at this time.