Biolase, Inc.

Good day and welcome to the BioLays third quarter 2023 financial results conference call. Please note this call is being recorded. At this time all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation at which time you'll press star 1 on your telephone keypad. I would now like to turn the conference over to Michael Poliviu. Sir, the floor is yours.

Thank you, Karen. Good afternoon, everyone, and thank you for joining us today to discuss BioLase's financial results for its third quarter ended September 30, 2023. 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 for the third 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 of a subsequent Q&A session, including forward-looking statements regarding the company's strategic initiatives and anticipated 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 BioASIS'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 political statements only represent the company's view as of today, November 9, 2023. These risks are discussed in the company's filing for the Securities and Exchange Commission. A replay of this conference call will be available on 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 2023 third quarter financial results. If you do not have a copy of the news release, it is available in the investor relations section of the Biolase website at www.biolase.com. Biolase's financial results can also be found in the company's report in Form 10-Q, which will be filed with the Securities and Exchange Commission. The tables we provide 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 disclosures. With that said, I'll now turn the call over to BioAce President and Chief Executive Officer John Beaver. John, please go ahead.

Good afternoon, everyone. Thank you for joining us today to discuss our third quarter earnings results. While we continue to experience rising interest in our industry-leading dental lasers through increased lead generation, the ongoing uncertainty caused by the macroeconomic environment is extending our sales cycle and did impact our third quarter revenue performance. The same headwinds impacting our business are also being experienced by many other companies in our sector, as evidenced by their recent results and commentary. We believe there are several factors contributing to the longer decision-making process, including higher interest rates and lower patient volumes. However, we believe it is critical that we maintain our revenue-generating activities to drive greater awareness and interest in our award-winning lasers to minimize impact and be in a much stronger position when the economy returns to a more normalized state. Our goal is to be prepared to capitalize on the significant market opportunity in front of us Having said that, dentists may also take the opportunity to seek our laser solutions in an effort to grow their business, and I believe we are well positioned to benefit from this potential growth driver as our value proposition is obvious. Currently, less than 10% of dentists in the U.S. and less than 2% worldwide use an all-tissue laser in their practice. And we are the go-to leader as we command approximately 60% of the worldwide all-tissue laser dental market with our order laser brand. However, we need to attract more than 90% of dentists who are not using an all-tissue laser in their practice. This untapped market represents a significant market opportunity for BioLase, and having established ourselves as a premium brand for quality, reliability, and after-sales service and training, we are working hard to engage this other 90%. We have significantly increased our efforts to engage dental specialists such as periodontists, pediatric dentists, endodontists, and dental hygienists. Through our Water Lays and Epic Academies, we have simplified training on our products for these specialists and made it clear the significant return on investment they can achieve with our lasers, not to mention the benefits to their patients. We are also actively engaging the over 150,000 general practitioner dentists in the U.S. by increasing education and training through initiatives like our Water Lays Trial Program and our recently opened state-of-the-art training facility, the BioLays Education Center, which provides dental clinicians with an engaging learning environment tailored around laser education. The BioLase Education Center is adjacent to a state-of-the-art dental office, LaserSmiles, which provides access to live patient education. We continue to explore ways to improve this training program and are excited about changes made this quarter and for next year that will move our training platform to more of a national event, helping us market even better and making these events much more cost-effective. These initiatives drive increased laser adoption by providing dentists with education and training they need to provide safer and more advanced alternatives to their patients through laser dentistry. On the topic of laser adoption, we are encouraged by the continued growth in our consumable cells, which increased 10% year-over-year in the third quarter as utilization of our laser systems by our install base continues to increase. As the industry leader, our new customer acquisition efforts continue to generate increased lead generation, even in this difficult macro environment. And we continue to actively pursue partnerships with corporate dentists and universities. Several dental schools and postgraduate programs have already integrated our water laser lasers and our Epic soft tissue lasers, creating a pathway for future dentists to adopt laser dentistry early in their careers. Turning briefly to operations, our internal optimization efforts over the past several quarters have considerably improved our results and are beginning to bear fruit as evidenced by our expanded gross margin and the 52% reduction in operating loss year over year in the third quarter. The greater efficiencies and improved operating performance have dramatically reduced our losses and positioned us for greater success as the economy improves. I expect our stronger and leaner operating posture will allow us to perform far better in the future and achieve our top and bottom line goals. In summary, while the uncertainty caused by the macro environment may impact our results this quarter, we are confident in our ability to capture the substantial market opportunities still in front of us. We adapted our business during COVID to operate more efficiently while at the same time preparing for better days. As a result, our performance coming out of the pandemic was significantly improved. We're doing the same thing in this environment. We're prepared to, irrespective of the macroeconomic issues, drive greater adoption of our dental lasers through increased education and training and the continued execution of our revenue growth plan. While at the same time, our prudent expense management will propel us toward achieving our profitability objective. With that said, I will turn the call over to Jennifer Bright, our Chief Financial Officer, to provide more in-depth insights into our financial results for the quarter and discuss our guidance for the remainder of the year. Thank you again for your participation. We look forward to addressing your questions at the end of the call. Jennifer?