Biolase, Inc.

Good day, and welcome to the BioLase 2021 Third Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Todd Curley of the EVC Group. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today to discuss BioLase's financial results for the third quarter ended September 30, 2021. On the call today from Biolase is John Beaver, President and Chief Executive Officer, and Jennifer Bright, Vice President of Finance. John will review the company's operating performance for the third quarter and then turn the call over to Jennifer to review the financials before opening the call for questions. Before we begin, I'd like to remind everyone that a number of forward-looking statements, which are any statements that are not historical facts, will be made during this presentation and subsequent Q&A session. including forward-looking statements regarding the company's strategic initiatives and financial performance. These forward-looking statements are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995 and are based on Biolase's current expectations and assumptions and are subject to a variety of risks and uncertainties that could cause the company's actual results to differ materially from the statements contained in this presentation. Such forward-looking statements only represent the company's view as of today, November 10th, 2021. These risks are discussed in the company's filing with the Securities and Exchange Commission. A replay of this conference call will be available on the Biolay's website shortly after the completion of today's call. When listening to this call, please refer to the news release issued earlier today announcing the company's 2021 third quarter results. If you do not have a copy of the news release, it is available in the investor section at of the Biolase website at Biolase.com. Biolase's financial results can also be found in the company's report on Form 8K, which has been filed with the SEC. The tables we've provided in today's news release offer additional financial information, so we encourage you to review them. The tables include the reconciliation of unaudited GAAP net loss and net loss per share to non-GAAP adjusted EBITDA loss and adjusted EBITDA loss per share. as well as some more information regarding the company's non-GAAP disclosures. With that said, I'll now turn the call over to BioLase's President and Chief Executive Officer, John Beaver. John?

Thanks, Todd, and thank you, everyone, for joining us this afternoon. We appreciate your continued interest in BioLase. The third quarter was another outstanding quarter for BioLase. Our market-leading dental lasers delivered strong growth, driven by continued new customer adoption as our lasers provide a better standard of care for dental procedures and ensure a safer environment for dental practitioners and patients than traditional procedures. Before looking at the numbers, I would like to first congratulate the BioLase team on another stellar quarter. Each of you showed commitment and dedication to making our customers successful and keeping them and their patients safe while delivering an elevated standard of care and improved patient outcomes through laser dentistry. In the third quarter and throughout the year, we have delivered strong results against the backdrop of economic uncertainty and the lingering impacts of the COVID pandemic. In doing so, you have each demonstrated the resiliency of our business and validated our growth strategy. Quickly, looking at the numbers for the third quarter, we reported revenue of $9.5 million, representing 46% growth year-over-year. This now represents three consecutive quarters of strong year-over-year revenue growth as our business continues to rebound for the low points of the COVID-19 pandemic. Given the unprecedented times we went through in 2020, I believe it's also informative to look at how our performance compared to pre-pandemic quarters. Using this comparison, we delivered a solid 10% increase in revenue compared to the third quarter of 2019, which was the last pre-pandemic comparable period. This strong performance is due to rising demand for our industry-leading dental lasers, which is being driven by our intensified focus on education and training and the increased safety our lasers provide to dentists and their patients. Additionally, published studies highlighting the improved patient-reported outcomes our lasers provide are generating increased interest by the dental community. With over 78% of our US laser sales generated from new customers during the quarter and approximately 35% of water-laid sales coming from dental specialists, our messaging, marketing, education and training efforts are working. We have built the best-in-class dental lasers, and now with education and training, dental practitioners are coming to us as they look to upgrade the dental practices and improve safety and patient outcomes. Our industry-leading dental lasers provide a better standard of care for dental procedures. As I mentioned, our focus on education and training is leading to increased adoption, especially with dental specialists. Over the past 12 months, we have formed specialist academies to expand the awareness of the benefits of our laser dental lasers into dental specialist communities. Specifically, we have launched specialist academies for endodontists, periodontists, pediatric dentists, and just last week we launched an academy specifically focused on dental hygienists to drive further adoption of our laser. The market opportunity that exists for BioLase within each of these specialist communities is very meaningful. Let me quickly run through each of these addressable market opportunities. Let's start with pediatric dentists. There are approximately 7,000 pediatric dentists in the U.S., and based on our internal calculations, we believe that an additional 5% of pediatric dentists adopting our lasers will result in an additional $20 million in laser cells for bilays. In turn, those additional cells would drive follow-on consumable cells. Second, there are approximately 5,000 periodontists in the U.S., and 65 million Americans are suffering from perio-disease. Several studies have already confirmed that patient-reported outcomes of water laser-assisted treatment of periodontitis were significantly better after laser procedures. This includes the McGuire study, which was published in the Journal of Periodontology, as well as a study in the International Journal of Perio and Restorative Dentistry. With so many Americans suffering from perio disease, these studies' findings are significant in determining the best course of treatment for these patients. We believe these studies are significant for biolase because they establish new protocols for periosurgery and will drive further adoption of waterlase by periodontists. Based on our internal calculations, we believe that if an additional 20% of periodontists adopted our lasers, we would generate an additional $50 million a year in laser revenue, not including the consumable revenue that would follow. Third, there are approximately 5,000 endodontists in the U.S., and top thought leadership is quickly establishing water lasers, a new standard of care in endodontics. As part of our continued focus on education and training for endodontists, during the quarter, we announced a clinical advisory partnership with Dr. Stephen Buchanan that will expand laser adoption and increase hands-on training programs with one of the global leaders in endodontics. Dr. Buchanan has lectured and taught hands-on endodontic continuing education courses for over 30 years, both at DE Labs, his state-of-the-art training facility in Santa Barbara, California, as well as dental schools and symposiums around the world. We are proud to be working with Dr. Buchanan because of his reputation as an expert in the research and development of new technology, instruments, and techniques in endodontics. With our laser, Dr. Buchanan's practice will now have the most advanced laser technology in endodontics for his practice and training programs. During the second quarter, we announced plans to develop a new Edge Pro laser-assisted microfluidic irrigation device for endodontists with Edge Endo, a global leader in commercializing endodontic products. This new device is being developed to offer a solution to endodontists seeking more from their current cleaning and disinfecting techniques. We applied for FDA approval for this device during the fourth quarter and anticipate first sales of this product before the end of the year. Approximately 75% of all endodontics routinely use Edge Endo products, making them a natural partner for providing significant reach into this field as we work to make water laser technology the standard of care in endodontics. Based on internal calculations, we believe that if an additional 10% of endodontics adopted our lasers, we would generate an additional $25 million a year in laser revenue, not including the consumable revenue that would follow. Last but not least, there are approximately 200,000 dental hygienists in the U.S. Our new Epic Hygiene Academy will empower hygienists to utilize dental lasers to provide the highest quality of preventative and therapeutic dental care to their patients. If an additional 5% of hygienists adopt our lasers, it would generate an additional $70 million in laser revenue, not including the follow-on consumable revenue. Our focus on each of these dental specialists is already translating to higher demand for our products as these specialists look for safer, more advanced alternatives to grow their practice. Our lasers safety benefits puts us in an excellent position to advance dentistry and treat patients in the safest way possible. As we just discussed, securing even a small percentage of each of these dental specialists could, by our calculations, generate over $150 million in additional revenue from violates from laser cells plus the higher margin revenue associated with the follow-on consumables. This doesn't take into account the significant opportunity we have with approximately 150,000 general practitioner dentists. If an additional 5% of GPs adopt our lasers, it would generate $225 million in laser revenue, not including consumables. Today, the all-tissue laser market penetration in the U.S. dental market is only 7%, which is why these large market opportunities I just detailed exist today. 93% of the U.S. market has yet to adopt dental lasers. We estimate that every 1% increase in adoption of laser technology in the U.S. will equal approximately $50 million in revenue for BioLase. And this does not include the impact of additional adoption in international markets, which historically approximate 40% of our revenue. So with these significant addressable markets in front of us and the positive momentum we have experienced over the past four quarters, we are confident in our ability to achieve sustainable, and profitable revenue growth for many years to come. With that, I'll turn the call over to Jennifer to provide further details regarding our third quarter results. Jennifer?