Tivic Health Systems, Inc.

Welcome to the TIVIC Health Systems Q1 2022 Shareholder Update Conference Call. All participants will be in listen-only mode. A question and answer session will follow the formal presentation. For those who have joined the webcast, if you would like to ask a question, you may do so at any point during the presentation by clicking on the Ask Question button on the left of your screen. Type your question into the box and hit the Send button to submit your question. Please note that the conference is being recorded. Statements made during this call contain forward-looking statements about our business. You should not place undue reliance on forward-looking statements as these statements are based upon our current expectations, forecasts, and assumptions and are subject to significant risk and uncertainties. These statements may be identified by words such as may, will, should, could, expect, intend, plan, anticipate, believe, estimate, predict, potential, forecast, continue, or the negative of these terms or other words or terms of similar meaning. Risks and uncertainties that could cause our actual results to differ materially from those set forth in any forward-looking statements include but are not limited to the matters listed under risk factors in our annual report on Form 10-K for the year ended December 31st, 2021. Filed with the Securities and Exchange Commission on March 31st, 2022. Statements and information, including forward-looking statements, speak only to the date that they are provided unless an earlier date is indicated and we do not undertake any obligation to publicly update any statements or information including forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Now, let me hand over the call to Jennifer Ernst, TIVIC Health's Chief Executive Officer.

Hello, everyone, and thank you for joining us today for TIVIC Health Q1 2022 Financial and Business Results. My name is Jennifer Ernst, and I'm the CEO of TIVIC Health. So I will be walking you through some important updates from the first quarter. And also joining me on the call today is Veronica Kai, our CFO. She'll be walking us through some very exciting numbers from this first quarter. So let's begin with the business updates. We at Civic Health could not be prouder of our accomplishments in Q1 2022. In November, I laid out for you a strategy for growing shareholder value that started with two key points. The first is growing our direct-to-consumer sales as the linchpin of growing our overall revenue. The second is improving our gross margins. And I'm proud to say Civic has delivered on both, on both elements, the first two elements of our strategy. We've grown our overall revenue, we've grown our direct-to-consumer unit sales, and we've grown our gross margins. But one more precise point on it, 33% growth in revenue overall, 77% growth in our direct-to-consumer sales unit volume, and over 200% increase in gross margin. Those numbers say we have very good reason to be proud. And in many ways, Q1, this quarter and the coming, will continue to be building the infrastructure and building the foundations. For example, improvements to our e-commerce infrastructure are underway. We've been reducing or eliminating low margin contracts that we entered into in 2020. We've been deploying component level cost improvements ahead of the Gen 2 plan that we outlined in November. We are expanding our advertising reach, improving flexibility in our part sourcing. It is this kind of relentless focus on execution that is allowing us to build a balanced revenue mix with an improved cost structure supporting it. So now I've touched on the first two legs of our strategy for building shareholder value, increasing revenue primarily through our D2C channel and driving down costs with improvements in manufacturing, procurement, and distribution. So the third leg of the strategy is to build shareholder value through expansion of our product and research pipelines. That is all with the objective of generating new platforms based on our patented monopolar nerve stimulation technology. So we have completed the internal post-market data review from ClearUp users indicating some relief from or some reduction in the number of migraine headaches that they experience. Based on the results of that evaluation, we began working with an experienced consulting group that is helping us define a winning market strategy allowing us to enter the migraine research studies and clinical programs with a validated commercial pathway in mind from the start. This quarter, we're also proud to start our patient enrollment in an externally funded study with the ICANN School of Medicine at Mount Sinai. They are actively seeking non-addictive options for pain relief following sinus surgeries. And the product candidate that we are testing with them in a 60-patient study is an extension of Civic Health's monopolar architecture. I underscore this because it demonstrates that this is a very powerful platform we have in hand that can be programmed for different uses. If a product candidate is successful, it will create a new indication, a new product offering, and yes, it would require a separate FDA approval, but still designed and developed around the same hardware architecture. So we are off to a very good start with the year. We will continue to maintain our focus on execution for the remainder of the year. Now, let me hand over the call to Veronica Kai, Civic Health CFO, to go over the financial results for the quarter ended March 31, 2022.

Thanks, Jennifer, and hello, everyone. As Jennifer mentioned, we kicked off 2022 on a very positive note. Our revenue for Q1 2022 was $0.43 million, compared to $0.3 million for Q1 2021, a 33% increase year over year. This growth was driven by strong direct-to-consumer sales, which increased 77% in volume year over year. Amazon was our lead channel. It was responsible for 71% of this quarter's direct-to-consumer revenue. Having fully exited several low-margin contracts, which were holdovers from our product discovery phase, our retail unit sales decreased 26% year over year. Our Q1 2022 cost of sales was $0.36 million compared to $0.3 million for Q1 2021. This 19% increase year over year tracks with our 28% growth in the unit sales numbers. Total operating expenses for Q1 2022 came in at 2.3 million, compared to 1.1 million in Q1 2021. This was primarily driven by the expansion of the customer-focused areas in our organization and operating as a public company. These increases resulted in a net loss of 2.2 million for Q1 2022, compared to 1.4 million in Q1 2021. Our cash and short-term investments balance at the end of the quarter was $10.8 million. Lastly, it's important to know that TIVIC has no debt. I now hand the call back to Jennifer for final remarks and for the Q&A portion of the call.