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spk01: Greetings. Welcome to the Biola's 2022 fourth quarter and full year financial results call. At this time, all participants are in a listen-only mode. A 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. Please note, this conference is being recorded. I will now turn the conference over to your host, Todd Curley of EVC Group. You may begin.
spk05: Thank you, operator. Good afternoon, everyone, and thank you for joining us today to discuss Biolase's financial results for the fourth quarter and full year 2022, end of December 31, 2022. On the call today from Biolase are John Beaver, President and Chief Executive Officer, and Jennifer Bright, Chief Financial Officer. John will review the company's operating performance 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 performance. These 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 made. Such forward-looking statements only represent the company's view as of today, March 28, 2023. These risks are discussed in the risk factors section of the company's most recent Form 10-K filed 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 2022 fourth quarter and full year financial results. If you do not have a copy of the news release, it is available in the investor relations section of the company's website at Biolays.com. Biolays financial results can also be found in the company's report on Form 10-K, 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 a reconciliation of an audited 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 disclosures. With that said, I'll now turn the call over to Biolase's President and Chief Executive Officer, John Beaver. John?
spk02: Thanks, Todd, and thank you everyone for joining us this afternoon. We appreciate your continued interest in BioLase. 2022 was a great year for BioLase as we strengthened our business and positioned the company for continued growth and achieved our goal of improving profitability in 2023. Looking quickly at some of our results, total revenue for the year was $48.5 million, representing a 24% increase year over year. Our U.S. laser sales for 2022 increased 39% year-over-year, and our U.S. consumable sales increased 25% for the full year. Our strong performance this past year reflects continued positive momentum on several fronts, including continued progress with our innovative WardLase exclusive trial program, which puts a BioLase laser in the dentist's office for 45 days, supported by a mentor and two days of in-person training. When we started the WTP initiative pre-COVID, our success rate, the percentage of dentists who purchased after the trial, was about 30%. However, our success rate in 2021 improved almost 40%, and our success rate in 2022 was nearly 50% from the 32 WTP events we hosted. We have sold well over 100 water laser lasers through this program since the start of 2021, and in 2023, we expect to host about 35 WTP events and achieve a 60% success rate. Additionally, we will be hosting our first WTP events internationally, with four expected to be scheduled throughout the year. This initiative and our continued emphasis on dental specialists, including endodontists, periodontists, and pediatric dentists, continue to generate increased adoption of our laser technology by new customers, with a record 84% of our U.S. water-based sales during the year coming from new customers and 47% of US-wide late sales for the full year coming from dental specialists. It's important to note that our focus on dental specialists really didn't exist two years ago. So this momentum is quite encouraging and gives us confidence that we can attain even greater success in the future. Lastly, it's a testament to the entire BioLase team that we have no open sales territories and had no sales turnover during 2022 because our team is enthusiastic about our products, programs, and initiatives and the excitement they're creating in the dental community. As many of you already know, BioLase has approximately 60% share of the worldwide all-tissue laser dental market represented by our WaterLase brand. However, less than 10% of dentists in the US and less than 2% of dentists outside the US currently use dental lasers today. We plan to leverage our brand and grow the overall market by engaging with the other 90% of dentists while ensuring we continue to protect our position as a market leader. To reach this large and addressable market opportunity, we are focused on increasing education and training to build awareness of our industry-leading laser benefits to dentists and their patients. For example, in 2022, we held over 600 educational and training events in the U.S. alone. And because of these increased efforts, dental practitioners are now proactively approaching biolase as they look to upgrade their dental practices and improve their patient outcomes. Last year, the number of Marketing Qualified Leads, or MQLs, increased by 400% in the U.S. market compared to 2018. To put this into better perspective, the number of inbound leads a couple of years ago was less than 1,000 a year, and in 2022, they grew to 4,000. This is a phenomenal achievement, and if we convert half of these new leads to water-lazed cells, it would represent $150 million in new laser cells. We believe each 1% increase in the adoption of our 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 that is generated from the procedures done with our laser systems. We have a well-established, three-pronged strategy to grow market adoption of our lasers, which has created the growth momentum we are experiencing today. The first of these is to get more dental specialists to use our lasers. In 2021, BioLase forms specialist academies to expand 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 and obtain superior patient outcomes. Our plan in 2023 is to combine all these specialist academies into two academies, one for each of our product families, the Water Lase Academy and the Epic Academy. We believe that this will not only further improve and simplify training for the specialist, but also give the general practitioner who is interested in adding more specialty procedures to the practice an avenue to pursue further training. We believe the opportunity that exists for biolates within each of these specialist communities is very meaningful. Imagine a pediatric dentist who doesn't need to give a kid a shot to fill a cavity or an endodontist that can remove 99.5% of the bacteria from your root canal instead of just 50%. Led by key opinion leaders, or KOLs, in each of these specialties, BioLase is increasing education and training to drive expanded awareness and adoption. 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 their practices. Combined, these dental specialist markets represent hundreds of millions of dollars of potential laser systems revenue each year, not including the potential for recurring revenue from the sale of our consumables. The second of these is focused on the significant opportunity we have with over 150,000 general practitioner dentists in the U.S. alone. We believe that if an additional 5% of U.S. GPs adopt our lasers, it would generate 225 million in laser revenue, not including the follow-on consumables. The success we are seeing with our award-raised exclusive trial program is driving our continued penetration of this key target market. We believe it's a win-win for GPs because a big part of the WaterLase exclusive trial program is teaching them additional procedures they can do in-house with our laser so they can keep more procedures and more revenue in the practice and achieve superior patient outcomes. Doing just two extra procedures a week could potentially generate a 200% return on their investment in our laser. We believe that, along with a better patient experience, is motivating dentists to incorporate WaterLase technology into their practices. The more training and education we do through our Water Laser exclusive trial program, the more success we believe we'll have in driving laser adoption. Our Water Laser has over 80 FDA-cleared indications or procedures that dentists can perform using our laser. We recently announced a new handpiece for the Water Laser that will allow dentists to perform skin resurfacing procedures. Did you know dentists administer more Botox shots in the U.S. than dermatologists? The new WaterLase fractional handpiece is FDA cleared and can deliver both ablative and non-ablative fractional treatments and provide the user with control over the penetration depth with different parameters and treatment techniques. It can create a uniform, one-dimensional pattern of micro-perforations on the tissue surface for maximum efficacy, offering patients comfortable and effective skin resurfacing treatments with faster healing and quicker recovery time. This is just one example of the multiple use cases that exist for dentists to increase their revenue using our laser technology. I believe this launch will further accelerate the adoption of our water laser technology in the dental industry, and is consistent with our commitment to providing less invasive, patient-friendly technology for both patients and clinicians, while at the same time expanding our access to the skin resurfacing market worldwide, which is projected to reach $650 million by 2031. More we can do to raise awareness of the many procedures dentists can use our laser for and the benefits of doing these procedures with the laser, the faster we can drive increased adoption of all-tissue lasers. While less than 10% of dentists in the U.S. use an all-tissue today, a recent survey indicated that almost 80% of the recent purchases of water laser use it daily. The WTP is just one way we are looking to drive increased awareness. As I mentioned before, We hosted over 600 webinars, study clubs, and training events in the U.S. during 2022, including our BioLase Advancing Dentistry podcast launch. Due to the overwhelmingly positive response from the dental community and the rise in interest and popular demand, we recently announced our plans to launch a second season in 2023. Season two will continue to provide world-class education in a readily accessible and visually appealing format, focusing on trending topics for dental clinicians. New episodes will feature engaging stories from clinicians about the benefits of laser technology. The podcast will continue to be available on Spotify and Apple podcast platforms. Speaking of increased education, during the fourth quarter, we began constructing our new training facility and first-ever model dental office named Laser Smiles, and we expect both to open in April. These new spaces are conveniently located next to our corporate headquarters and will expand our ability to drive revenue in laser adoption by training practitioners in a hands-on dental environment. This is a novel opportunity to educate, train, produce marketing materials, create content, perform studies, and test new equipment. We're also inviting leading international dentists to spend time at our facility this year to work with us as we help ensure that our customers' international voice is heard as well. We also recently announced that we are further advancing our market awareness and educational initiatives with the launch of our new education web portal, education.biolase.com, which allows us to offer tailored education pathways through our Water Lase Academy and Epic Diode Academy, which are designed to offer dental clinicians an easy-to-navigate solution for laser education. Finally, the third prong of our growth strategy is getting corporate dentists and universities to adopt our lasers. We continue to develop stronger relationships with key dental schools across the country, and we have lasers in about one-third of the dental schools now. We have also integrated our water laser lasers into several postgraduate programs and plan to expand into many more programs over the next few years. We believe there is a large appetite among dental residents to utilize state-of-the-art technology in treating patients, and the introduction and reinforcement of technology during training are key to the adoption of laser dentistry with this new generation of dentists. Also, today, most new dentists are employed by corporate dentists or DSOs right out of dental school. We have ongoing trials with four of the five largest DSOs in the U.S. Our goal is for these new dentists to begin using our lasers while employed at the DSO, and for them to make our lasers an essential part of their practices moving forward, becoming new dental laser and consumable customers when they go out on their own. We just completed the second phase of our trial with Heartland, and the results were, again, very positive. We continue to make solid inroads with the DSOs, and we believe that the DSOs can lead to far greater revenue for violets in the coming years. In summary, our growth plan is generating positive results, as evidenced by our strong revenue this year. Further, we have a very large opportunity and well-developed roadmap for future growth. Our sales team's success and continued performance give us continued confidence that we can achieve our operating objectives for 2023 and beyond as we set our sights even higher. I have one final comment before I hand the call over to Jennifer. I would like to congratulate the entire Biolase team for their two top Top Workplace Awards for 2022. The awards announced earlier this year and based solely on employee feedback, reaffirmed the cultural tone that runs throughout the organization. Our team genuinely cares about our customers and each other, and they are incredibly passionate about their role in advancing our objectives. I'm truly grateful for our exceptional team and their daily efforts. With that, I'll turn the call over to Jennifer to provide further details regarding our fourth quarter and full year financial results.
spk08: Thank you, John, and good afternoon, everyone. I also want to congratulate the team. The Top Workplaces Awards were well-deserved. Now I'm going to provide more context around some of the numbers and highlight some of the operational improvements we achieved during the full year 2022. Our strong full-year financial performance demonstrates continued business momentum and the higher demand for our industry-leading dental lasers. As John mentioned during his prepared remarks, we believe our success is directly related to our increased education and training initiatives, and we look forward to building on that success in 2023. Now diving into the results, we delivered net revenue of $48.5 million for the full year, an increase of 24% year over year. Some additional full year highlights include U.S. laser system sales increased 39% year over year, to 20.4 million, and U.S. consumable sales increased 25% year-over-year to 7.5 million, an increase to over 11 million on a consolidated basis. This record-breaking year in consumable sales was driven by an increase in procedures using BioLase lasers. We continued momentum with new customer adoption in 2022, with 84% of our U.S. Water Lase sales coming from new customers and 47% of U.S. water lathe sales coming from dental specialists. Lastly, as John mentioned, the success rate of our water lathe exclusive trial program was nearly 50% for the full year, highlighting the success of this program. These are all positive indicators of the increased demand we are experiencing for our industry-leading dental lasers in the U.S. and abroad. The gross margin for the year was 33% versus 42% a year ago. The decrease in gross margin reflects mainly the impact of supply chain issues that we encountered during the year that required us to source new trunk fiber vendors, resulting in significantly higher costs for inventory and related warranty expenses. At the end of 2022, we completed an acquisition of a trunk fiber supplier that will allow us to supplement certain third-party key components with our own in-house manufactured components. We expect this will reduce our backlog for these materials, as well as reduce the overall cost of goods and improve cash flows when production is operating at full capacity beginning in the first half of 2023. In addition, largely due to the supply chain issues I mentioned, we had to source replacements for other vendors, resulting in some end-of-life designated parts in inventory. An analysis of our inventory resulted in expense of $2.8 million to write down the inventory and increase our reserve for obsolescence during 2022. On the expense line, total operating expenses were $41.2 million for the year, compared to $33 million a year ago. This increase was due to compensation expense since all territories were filled in 2022, commissions and bonus incentives for achieving higher sales targets, and increased travel related expenses. Gap net loss for the full year 2022 was $28.6 million compared to a net loss of $16.2 million for the full year 2021. Gap net loss per share for the year 2022 was $4.13 compared to $2.73 in 2021 as adjusted for the reverse stock split. Our adjusted EBITDA loss for the full year 2022 was $20.1 million compared to an adjusted EBITDA loss of $14.7 million for 2021. Adjusted EBITDA loss per share for the year 2022 was $2.91 compared to $2.49 for 2021 as adjusted for the reverse stock split. Now let's turn to the balance sheet. We finished the fourth quarter with cash and cash equivalents of $4.2 million. Following our January 2023 equity raise of an additional $9 million in net proceeds, we believe we have sufficient liquidity to execute our near-term growth strategy and greatly improve profitability. Now, how do we get there? First, in addition to projected sales volume increases and certain price increases contributing to top-line growth, we expect to have lower cost of goods due to the trunk fiber acquisition completed in 2022. As a result of this acquisition, we are on schedule to have our in-house trunk fiber make up approximately 50% of the trunk fiber we will be shipping beginning in the second quarter of 2023. We expect these cost savings will drive increased gross margins, getting us close to that 50% needed to reach profitability. We also expect to lower our WET expenses this year. by opening our own centralized training facility. We now have four dentists on staff to train prospective customers, and we are also working to partner with educational facilities around the country to host WETP events at their locations for little to no cost. We expect to host about 35 WETPs this year, so the expense savings will be quite meaningful, as well as the continued improvement in our closing success rate that we anticipate for 2023. With higher gross margins, the expected WETP savings, and continued revenue growth, we believe we will have the potential to improve profitability and achieve positive adjusted EBITDA for the full year. Now, moving on to guidance for 2023, we are forecasting continued strong revenue growth of at least 25% year over year. And as I just mentioned, we also expect to achieve positive adjusted EBITDA for the full year. For the first quarter, however, we expect net revenue to exceed $10 million, representing relatively flat revenue compared to the year-ago quarter. We believe the recent banking environment has created some uncertainty around the overall economic outlook for some dentists looking to invest in our technology. We do believe the situation will be short-lived, and expect to begin trending toward the 25% forecasted growth rate in the second quarter of 2023. In summary, we had another strong year with significant revenue growth and solid sales execution, and are confident that our strategies and our actions to strengthen Biolase are working. With that, I'll return the call to the operator to open the call for questions. Operator?
spk01: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. And the first question is coming from Bruce Jackson with The Benchmark Company. Please proceed.
spk04: Good afternoon, and thank you for taking my questions. The first one is about the gross margin progression throughout the year. So how do you think that the gross margins build off of the fourth quarter, and where do you think they could exit the year in 2023?
spk02: Yeah, Bruce, so good questions. How are you doing? I would expect that we had a couple of, I would say, one-time items in Q4 that adversely affected gross margins. Jen mentioned the inventory write-down. While non-cash, it still had an impact on gross margins. We expect to approach 50% gross margins and exceed that in the fourth quarter of next year. To get there, there are a few things that have to happen, and I think we're well on our way to that. Jen mentioned the trunk fiber in-house production. That's going to significantly improve not only our cost of goods sold from a manufacturing standpoint, but also our service and warranty as well. In addition, some of the things that we're doing on the training side to reduce costs, like opening up the training facility here and having WTPs, at various static locations as opposed to hotels and so forth are greatly going to reduce the cost of training, which also shows up in the cost of goods sold line.
spk04: One question on the Heartland study. Can you give us a sense of what they were looking at and some of the data points that they were using to evaluate the waterway system?
spk02: Sure. The first trial that we had with Heartland a few years ago, we were working with some of their most experienced dentists, I would say. Not laser dentists, but, you know, very experienced. And there, and we've shown this in our videos before, you know, investor presentations and so forth, they each paid for their lasers in four to seven months in additional procedures. The second phase of this trial was looking at kind of the next tier of dentists, if you will, and how much they would bring in in additional revenue during this period. And for them, each of them, the trial's complete, and they each paid for their laser an estimated, I think it was 17 months. So it took them longer. but it still beat the Heartland, I think, kind of incremental or internal hurdle rate of two years for payback on equipment. So we were really encouraged by that. We expect those units to be sold in Q2 and continue to try to roll out these additional units at Heartland throughout the year.
spk04: Okay, great. Very helpful. So congratulations again on all the progress. I'm going to hop back in queue. Thanks, Bruce.
spk01: Okay. The next question comes from Frank Takanan with Lake Street Capital Markets. Please proceed.
spk07: Great. Thanks for taking the questions. I wanted to start with one on the growth guidance. I appreciate the color on Q1. was hoping you could provide a little further color on the expected ramp of revenues for Q2 to Q3 and how you expect that to trend throughout the year to hit the 25% growth number. And then as a second part to that, if you could provide any color related to contribution from systems versus consumables, that would also be great color. Thanks.
spk02: Sure. Thanks, Brian. As Jen mentioned, we still expect Q, excuse me, 2023 to have at least a 25% increase in revenue over full year 2022, though we are off to a little bit slower start than we had wanted. But it will ramp up, we believe, in Q2 and Q3. I would expect Q2 and Q3 to have similar revenue to each other, and then Q4 to be our strongest quarter. If you were to line all that stuff out and assume a, at least a 25% increase over the $48.5 million that we had in 22. I think you can model that out. The second question was in terms of revenue split between systems and service and consumables. I still expect a similar percentage of revenue split among those three items. We continue to grow on an absolute basis our consumable cells. We had record consumable cells in 2022, and I expect to break that record in 2023. However, we're selling a lot of laser systems as well, and so I would expect each of those as a percentage of revenue to remain fairly constant next year or this year in 2023. Okay, that's helpful.
spk07: I wanted to follow up on the comment related to some customers having challenges with SVB. My assumption is that this is, that's implying this is related to system sales in Q1 and consumables continue to be positive through Q1, or is there any other color you can provide on that?
spk02: No, your assumption is correct. Um, while many of our customers, you know, obviously did not have accounts at SVB. I think the general, um, market uh feeling from that banking crisis hurt some uh some cells that were imminent and they put the brakes on uh pulling the trigger on on those laser cells that's the reason we're confident that they'll pick back up in the second quarter okay and then last one for me wanted to follow up on the comment about the four dsls currently evaluating the technology could you maybe speak to when we could hear back from
spk07: those DSOs evaluating the technology and what kind of impact we could see from them?
spk02: Oh, Frank, that's a multimillion-dollar question and one that I would be very reticent to answer because we do not control, unfortunately, the timing of how fast the DSOs move. I am surprised that we're sitting here in 2023, for instance, with Heartland. Where we are, I thought, would be further along, to be frank with you. And so it's one of those things that, you know, in our internal forecast and our guidance, we expect, you know, gradual growth. Someday we're going to wake up and get a big order. I just can't ever predict when that's going to be, and so I don't try to.
spk07: Okay, fair enough. That's good, Keller. Thanks for taking the questions. Thanks, Frank.
spk01: Okay, up next we have Anthony Vendetti with Maxim Group. Anthony, please proceed.
spk03: Thanks. Hey, John. Hey, Jennifer, how are you? Doing well. Great. Good, good. Hi. Yeah, so the first question I have is on the Word of Lace exclusive trial program. So you did a lot of those, I guess, back in second quarter. I think it was around 150 educational events. How many did you do in fourth quarter? And it seems like that's going to slow down in 23. Is that because you've covered all the territories you need to cover, or is there another reason for that?
spk02: No, we did about 35 of those last year in 2022, and we'll have the same amount this year in 2023. The difference between those two years really is is we should and we are planning on getting more participants into each one. We average about five participants in 2023 into each program, and this year we're expecting to have six or seven, and we're seeing that early on this year. In addition, we had almost 50% success rate last year. We anticipate 60% success rate this year. And we've already so far, you know, it's early in the year, but we're exceeding that batting average, if you will. What we talked about earlier was how we're and where we are having these programs. So when we first started this initiative, we basically had these programs all over the country in hotel rooms. We have now identified not only our own training facility that will be open next month, but also training facilities across the country that we can actually provide a better experience for the dentists who are attending, but just as importantly, more cost-effective experience. And the other big change over when we started the program is when we started it, we had to go out to our trainers, our key opinion leaders, and pay them on a one-off basis. You know, they weren't in violation of employees. to train during those two days and the mentoring over the 45 days. By adding a number of dentists onto our staff over the last year and a half, we now have four dentists that are full-time Biolase employees, and the ability to reduce costs around the training is very significant there. And so this will be 2023 will be our first year, full year, with having all four on board. So I'm excited about that.
spk03: Okay, and you said that the conversion rate has increased, did you say to 60%?
spk02: Yeah, so just going back in history a little bit, when we started this back in 2019, it was around 30%. In 2021, 40%. 2022, we almost got to 50%. And in 2023, we're projecting 60%. And what I said was, so far this year, we're above that.
spk03: Okay, great. And then, since I've been following aesthetic lasers for a long time, I think it's interesting that you're looking at fractional skin resurfacing. What has been the reception so far to the handpiece? How much extra does that cost above and beyond your water lace system? Maybe just talk a little bit about the reception, the pricing behind that, and for the dentists that have purchased it, how are they pricing it?
spk02: Yeah, so the reception has been good. We've had a lot of our U.S. dentists really asking for this fractional handpiece, which has been available in Europe for a number of years, for quite a while. We weren't going to introduce this into the U.S. market until we received FDA clearance and really rolled it out in the right way with the right training and so forth. And that started in March. So this month, literally, we have begun shipping the hand pieces. And we're developing the training program. Now we're teaming up with the American Academy of Facial Aesthetics to help train. We have a large training, kind of train-the-trainer, scheduled for early May. And then our first national event scheduled in August. So all that is going, I think, extremely well. In terms of the pricing, I never wanna get too much into pricing, but it is, the hand pieces are, from a revenue standpoint, as opposed to the cost of a water lays, not insignificant, I would say meaningful. I don't wanna give you the price, just from a competitive standpoint. I see, for now, for the most part, It's dentists that have been looking to do this. They already have a water lase that are purchased in the hand piece, but I will tell you that we're starting to get some inquiries from non-water lase owners about the hand piece and obviously they'd have to buy water lase with it, right, to make it work. And so that's very interesting. There's, I think, a tremendous amount of upside there as well. In terms of how much it costs, I mean, anywhere from, I've heard 500 to 1,000 in terms of what the dentist is charging or even more than that. I think from a dentist standpoint, the nice thing is that while this provides great clinical efficacy and results to the patient and does it in a really non-invasive, almost pain-free way, it doesn't last forever. So it's a recurring revenue stream for them as well. Just like Botox, they may have patients coming in on a three-month, six-month, or one-year type schedule, and it's kind of like an annuity for them, which is really nice.
spk03: Okay, great. And then last question is on Edge Endo. How's that going? How's that business going with them?
spk02: Yeah, still going well. I think we were off to a great start in 2022. We expect to sell more units to them in 2023. And so I would say so far so good. We're proceeding as planned. Okay, thanks. I'll hop back in the queue. Appreciate it. Thanks, Anthony.
spk01: Once again, if you have a question or a comment, please press star 1 on your touchtone phone. The next question is coming from Ed Wu with Ascendant Capital. Please proceed.
spk06: Yeah, congratulations on the quarter. My question is, do you have any idea of how much of the percentage of sales of Waterlace is financed? Have you seen any issues with the debt test getting financing in the wake of what happened with Silicon Valley Bank and all the mid-sized and smaller banks?
spk02: So in the U.S., where we sell directly to Dennis versus international where we go through distributors, in the U.S., well over 90% of Waterlace sales purchases are financed through a third party. And for the dentist, that's either a credit union, their bank, or a third-party financing company. We have not seen any, from a financing standpoint, really any pullback there. It really is dependent on the individual dentist's credit rating, credit score, credit history, and so forth, than it is a macro... banking. I think, you know, when I mentioned SBB is really more market sentiment around the dentists, whether or not they wanted to pull the trigger yet or not, that caused some negative impact in Q1. But I haven't seen any reduction in the amount of dentists who can get qualified for the credit.
spk06: Great. And then, you know, tying to that, obviously with the higher interest rates, which is probably going to factor into higher you know, payment costs or leasing costs, have you seen any pullbacks from dentists saying, hey, wait a minute, the lease rates are much higher because, you know, we're no longer in a zero interest rate environment, so the monthly cost is higher than expected? Have you seen any pullbacks from that?
spk02: Not really because there's so much benefit from a revenue enhancement standpoint when you purchase a water light for most dentists. Before the interest rate hikes of, let's go back a year, year and a half ago, the dentist was on average paying $1,000 to $1,100 a month for their water lathes if they financed it, because most of them financed it over an 84-month period. Water lathes last a long time, so that's easily done. Now that number is closer to $1,300 to $1,400. So it's $200 to $300 extra a month, which is less than one procedure. So the calculus that we show and what we're showing in the trial program, and it said we're well over 50% so far this year, is that two procedures a week that you're doing that you weren't doing before and getting a 200% ROI, the fact that the payments went from $1,000 to $1,300 because the interest rate spike hasn't impacted that calculation.
spk06: Great. Thanks for answering my questions, and I wish you guys good luck. Thank you.
spk02: Thank you, Ed.
spk01: We've reached the end of the question and answer session, and I will now turn the call over to management for closing remarks.
spk02: I want to thank everyone for being on today's call. Also, I want to thank the BioLase team for their continued commitment and dedication to delivering an elevated standard of care and safety through laser dentistry. Jennifer and I look forward to reviewing our first quarter results, our next call in May. Thank you, operator, and thank you, everyone, for your interest in BioLase. This concludes our call. Have a great day. Thank you.
spk01: Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
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