Biolase, Inc.

Good day and welcome to the Biolaids first quarter 2022 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn a call over to Todd Curley of EVC Group. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us today to discuss Biolase's financial results for its first quarter ended March 31, 2022. On the call today from Biolase are John Beaver, President and Chief Executive Officer, and Jennifer Bright, Vice President of Finance. John will review the company's operating performance for the first quarter and then turn the call over to Jennifer to review the financials in more detail 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 anticipated financial results. These forward-looking statements are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995 and are based on Biola'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 made. Such forward-looking statements only represent the company's view as of today, May 12, 2022. These risks are discussed in the company's filings with the Securities and Exchange Commission. The replay of this conference call will be available on the BioLase 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 2022 first quarter financial results. If you do not have a copy of the news release, it is available in the investor section of the BioLase website at www.biolase.com. Violated financial results can also be found in the company's report on Form 10Q, which will be 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 more information regarding the company's non-GAAP financial 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 first quarter was another outstanding quarter at BioLase. We maintained our growth momentum with our total revenue increasing 25% year over year. Our continued strong performance reflects positive momentum on several fronts. During the first quarter, we saw continued progress with our Water Lase exclusive trial program as our success rate, the percentage of dentists who purchased after the trial, surpassed 50% year-to-date. This program, along with the launch of our specialist academies for endodontists, periodontists, pediatric dentists, and dental hygienists, generated increased adoption of our laser technology in the U.S. in the first quarter, with 81% of our U.S. Water Lase sales coming from new customers and 65% of sales coming from dental specialists. Additionally, we had 14 territory managers exceed their sales quota in the first quarter, which is significant given that the first quarter is historically our softest quarter. Our 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 benefits our lasers provide to dentists and their patients. We have built best-in-class dental lasers backed by peer-reviewed papers. And now, with our focused efforts, dental practitioners are coming to BioLase as they look to upgrade the dental practices and improve patient outcomes. We expect this trend to continue as we put in place a well-developed roadmap of strategies and investments that we believe will drive continued growth in 2022 and beyond. BioLase currently has an approximately 60% share of the all-tissue laser dental market, represented by our WaterLase brand. However, this still represents a small fraction of the overall dental market, as the penetration rate of dental lasers in the overall dental market is only between 7% to 8% in the US and less than 2% worldwide. With over 90% of US dentists still not using all-tissue lasers, the opportunity for BioLase remains vast, and we aim to increase market adoption through our well-developed growth strategy. Many of you have heard me say this before, but it bears repeating because of this significant potential impact on our revenue. We believe each 1% increase in adoption of all-tissue laser technology in the U.S. will equal approximately $50 million in additional revenue for BioLase, assuming we keep our same 60% market share. This doesn't include potential increased adoption outside the U.S., where historically approximately 40% of our revenue has been generated, or the consumable revenue generated from the procedures done with our laser systems. So how do we get dentists to use our dental lasers? We have a three-pronged strategy, which we began implementing in 2021, and has created the growth momentum we are experiencing today. The first prong of our growth strategy is to get dental specialists on board. In 2021, BioLase forms specialist academies to expand the awareness of the benefits of dental lasers in dental specialist communities. Specifically, we launched specialist academies for periodontists, endodontists, pediatric dentists, and dental hygienists to drive further adoption of our lasers. The opportunity to exist for BioLase within each of these specialist communities is very meaningful. Led by key opinion leaders, or KOLs, in each of these specialties, BioLase is increasing education and training to drive expanded adoption. During the first quarter, we saw a significant increase in sales to specialists, with 65% of our US waterway sales coming from these specialties. Our focus on increasing education and training for these dental specialists is translating into higher demand for our products as they look for safer, more advanced alternatives to improve patient outcomes and improve their practices. One example of this is for perio specialists where repairing and saving implants is a very large opportunity because an estimated 20% of implants fail in the first three years. Without our laser, the only way to get an implant repaired is to replace it. However, our laser can address this issue and save the implant without having to replace it. While this is only one example, it demonstrates why our lasers are being adopted by perio specialists. Securing even a small percentage of each of these dental specialists by our calculations could generate over $150 million in additional revenue for biolates from laser cells, plus higher margin revenue associated with the follow-on consumables. The second prong of our growth strategy is focused on the significant opportunity we have with approximately 150,000 U.S. general practitioner dentists. If an additional 5% of GPs adopt our laser in the U.S., it would generate $225 million in laser revenue, not including consumables. So how do we penetrate this large growth opportunity? In 2021, we expanded the Water Laser Exclusive Trial Program, which puts a biolase laser in the GP's office for 45 days, supported by a mentor, and includes two days of in-person training, all at no cost. At the end of the 45 days, the GP has the option to buy the laser or not. We held over 30 of these events in 2021 and 12 events so far this year, each of which had four to eight GPs participating. As I mentioned earlier, we saw Waterly's exclusive trial program success rate increase significantly from almost 40% during 2021 to an excess of 50% during the first four months of 2022. Our goal in 2022 is to host 35 to 40 of these programs and we're on track to do that. It's a win-win for GPs because a big part of the Water Laser Exclusive Trial Program is teaching these general practitioners the additional procedures they can do in-house with our laser. So they can keep more procedures and revenue in-house and they just do two additional procedures a week. It will generate a 200% return on their investment in our laser. That, along with the better patient experience, is motivating dentists to incorporate water laser technology into the practice. The more training and education we do through our water laser exclusive trial program, the more success we are going to have in driving laser adoption. The third prong of our growth strategy is getting the corporate dentists to adopt our lasers. We currently have ongoing trials with four of the five largest DSOs in the United States. Today, most new dentists are employed by the DSOs right out of dental school. Our goal is to have them learn to use our lasers while they're at the DSO and make lasers an essential part of their practice moving forward so that when they do go out on their own, they become new buyers of our dental lasers and our consumables. Over the last few quarters, we've made solid inroads with some of these DSOs. These relationships are important and validate our laser technology, and we believe that the large DSOs can be a far greater revenue contributor going forward. As we look to continue our growth momentum and execute our growth strategy, we are always looking for ways to further improve our sales engine. One new approach that we implemented at the end of last year is the sales pod strategy that focuses on specific geographies that represent large growth opportunities. Our first pod in the upper Midwest area is focused on expanding our penetration in that geography. Currently, the pod is fully staffed with a five-person sales team, including a territory manager, two account specialists, a field engineer, and an inside account specialist. The results, even at this early stage, are quite encouraging, and we plan to expand the PI System to other territories that also represent large growth opportunities. So, in summary, we have a large growth opportunity and a well-developed roadmap for growth as we leverage our industry-leading product offerings. Our three-pronged growth plan is generating positive results, and we are confident in our ability to drive sustainable and profitable revenue growth in 2022 and beyond. Before I turn the call over to Jennifer, I want to thank our investors for voting to approve our reverse stock split. Over 70% of our shareholders who voted on the proposal voted for the proposal. So again, thank you for that support. The primary purpose of the reverse stock split was to raise our per share trading price to maintain our NASDAQ listing. We also believe the higher share price will allow us to attract institutional investors that will promote greater liquidity for our stockholders. With that, I'll turn the call over to Jennifer to provide further details regarding our first quarter results.