Vivos Therapeutics, Inc.

Good day, everyone, and welcome to Vivo's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow management remarks. This conference is being recorded, and a replay of today's call will be available in the investor relations section of Vivo's website and will be remaining posted there for the next 30 days. I will now hand the call over to John Lee, Vivos Executive Vice President of Marketing. For the instructions and the reading of the Safe Harbor Statement, please go ahead.

Thank you, Operator. Hello, everyone, and welcome to our conference call. A copy of our earnings press release is available on the investor relations section of our website at www.vivos.com. With us on call today are Curt Kunstman, Vivos Chairman and Chief Executive Officer, and Brad Ammon, Chief Financial Officer. Today, we'll review the highlights and financial results for the second quarter 2024, as well as more recent development and Vivos' plan for the rest of 2024. Following these formal remarks, we will be happy to take questions. I would also like to remind everyone that today's call will contain certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Concerning future events, words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal, and variations of such words and similar expressions are intended to identify a forward-looking statement. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant risk uncertainties, and contingencies, many of which are beyond companies' control. Actual results, including without limitation, the results of EVOS's growth strategies, operational plans, including sales, marketing, distribution, product acquisition and integration, research and development, regulatory initiatives, cost savings plan, and plans to generate revenue. as well as future potential results of operations or operating metrics, such as the potential for Vivos to achieve future positive cash flow or profitability. And other matters to be addressed by Vivos management in this conference call may differ materially and adversely from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include but are not limited to the risk factors described and other disclosures contained in Vivos' filing with the Securities and Exchange Commission, including the risk factors and other disclosures in our form 10-K for the year ended December 31st, 2023, and other filings with the SEC, including our second quarter 10-Q filed with the SEC today, all of which are or will be accessible on the investor relations section of VIVOS' website as well as the SEC's website. Except to extent required by law, VIVOS assumes no obligation to update statements as circumstances change. Please be aware that the US Food and Drug Administration has given certain specific vivos appliances 510 clearance to treat mild to severe OSA. With the FDA clearance for severe last November, treatment of patients with severe OSA with these specific appliances is no longer needed to be performed off-label at the clinical discretion of the treating doctor and is now an integral part of the vivos treatment protocol. Treatment of OSA of any severity or any other condition with any other vivos FDA cleared devices remains at the clinical discretion of the treating doctor. Now at this time, it's my pleasure to introduce Brad Ammons, CFO of vivos. Brad, please go ahead.

Thank you, John, and good afternoon, everyone. Today, I will review the highlights of our financial results for the second quarter of 2024. For further information on our results for the three and six-month periods into June 30, 2024, please see our earnings release, which was distributed earlier today, and our quarterly report on Form 10-Q, which is available on the SEC filings portion of the investor relations section of our website, as John mentioned. at www.vivos.com. Today, we are pleased to report second quarter 2024 total revenue of $4.1 million compared to $3.4 million for both the second quarter of 2023 and the first quarter of 2024, a 19% increase both sequentially and year over year. This year-over-year growth was due to an increase of approximately $400,000 in product revenue from higher sales and fewer discounts of Vivos appliances and guides, coupled with an increase of $200,000 in service revenue, reflecting an increase in Vivos integrated provider or VIP enrollment revenue, which you will recall we recognize over time, as well as an increase of $100,000 in sponsorship, seminar, and other service revenues. This was partially offset by a decrease of $100,000 in myofunctional therapy revenues. Billing intelligence service and home sleep testing service revenue remained relatively unchanged year over year. For the six months ended June 30, 2024, total revenue was $7.5 million compared to $7.3 million for the comparable period in 2023. During the second quarter of 2024, we enrolled 32 VIPs and recognized VIP enrollment revenue of $1.2 million, a revenue increase of 28% compared to the second quarter of 2023, when we enrolled 43 VIPs for a total of $900,000 in revenue. Approximately $600,000 in revenue was attributable to accelerated revenue recognition on several contracts for VIPs who did not complete their required training during the first 90 days of their enrollment. Please refer to our 10Q for further details, particularly on our revenue recognition policy for enrollments. For the six months ended June 30th, 2024, we enrolled 82 VIPs and recognized VIP enrollment revenue of approximately 2.1 million, a revenue decrease of 6% compared to the same period last year when we enrolled 81 VIPs for a total of $2.2 million. While the number of VIP enrollments increased slightly, revenue was impacted by updates to key inputs in our revenue recognition methodology, primarily estimated customer lives and the addition of new entry levels into the VIP program at lower price points. We sold 2,033 oral appliance arches during the second quarter of 2024 for a total of $2 million, a 28% increase in revenue compared to 2,083 oral appliances during the second quarter of 2023 for $1.5 million. The increase in revenue is directly attributable to a 71% decrease in discounts offered during the second quarter of 2024 compared to the same period last year. For the six months into June 30, 2024, we sold 4,029 oral appliance arches for a total of $2.9 million, a 5% increase in revenue compared to the same period in 2023 when we sold 4,452 oral appliance arches for $2.8 million. The increase is directly attributable to a 45% decrease in discounts offered during the six-month period in 2024 compared to the comparable period in 2023. As Kirk will discuss in more detail, In late July, we began to see patients from our strategic marketing and distribution alliance with an operator of several sleep testing and treatment centers in Colorado. As a result, the fourth quarter of this year will be the first full quarter of operations with this new strategic revenue initiative, which is based on collaborations to better align our interests with referring medical professionals. We expect this will be materially broaden the number of OSA patients who have access to vivos products and make our revenue less reliant on VIP enrollments going forward. Gross profit was $2.7 million for the second quarter of 2024 compared to gross profit of 2.1 million for the comparable period in 2023. The increase was primarily attributable to the increase in revenue. Gross margin for the second quarter of 2024 was 65% compared to 62% for the second quarter of 2023. For the six months ended June 30th, 2024, gross profit was $4.6 million compared to gross profit of 4.4 million in the same period in 2023, attributable to the increase in revenue again. Gross profit for the six month period ended June 30th, 2024 remained constant at 61%. compared to the same period in 2023. Sales and marketing expenses decreased by about $300,000, or 46%, to $300,000 for the second quarter of 2024, compared to $600,000 for the second quarter of 2023. This decrease was primarily driven by lower sales commissions, as well as sales-related and digital marketing expenses. For the six months into June 30, 2024, sales and marketing expense decreased to a million compared to slightly over $1.2 million for the same period in 2023. This decrease was primarily driven by the same factors I mentioned earlier. As we've said previously, we are committed to increasing efficiencies and significantly lowering our cash burn rate as we seek to prudently use our capital resources and to achieve our main goal of cash flow positive operations. This trend continued in the second quarter as we again achieved a significant reduction in G&A expenses. Importantly, the second quarter marked the eighth consecutive quarter in which we've been able to continue with this trend. For the second quarter of 2024, general and administrative expenses decreased $1.8 million, or 30%, to $4.1 million compared to $5.9 million for the second quarter of last year. This year-over-year decrease reflects the success of our cost-cutting efforts as we move toward our goal of positive results from operations. For the six months ended June 30, 2024, G&A expenses decreased $3.4 million to $9 million, or approximately 27%, compared to $12.4 million for the six months ended June 30, 2023. The decrease reflects lower professional fees and a reduction in personnel and related compensation. Total operating expenses for the second quarter of 2024 decreased by a significant amount, $2 million, or 31% versus the second quarter of last year. As noted, this represents our eighth consecutive quarter where we have reported year-over-year decreases in operating expenses. and it is mainly due to the cost-cutting initiatives we have taken since the middle part of 2022, throughout 2023, and as well as in 2024. For the six months ended June 30th, operating expenses decreased by $3.7 million, or 26%, compared to the same period last year. Our cost-cutting initiatives and lower G&A also contributed to a significant year-over-year reduction in operating loss, which decreased $2.9 million or 57% versus the second quarter of 2023. For the six months into June 30th, 2024, operating loss decreased by 3.8 million or 40% compared to the same period last year. Net loss for the second quarter of 2024 decreased by 65% to $1.9 million compared to a loss of 5.5 million for the same period in 2023. For the six months into June 30th, 2024, net loss decreased by 21% to $5.7 million compared to a net loss of $7.2 million for the same period last year. Turning now to our statement of cash flows, cash burned from operations for the six months into June 30th, 2024 was $5.6 million. a decrease of approximately 13% or $800,000 compared to $6.4 million during the comparable prior year period. This decrease is due primarily to the $1.5 million decrease in net loss in the absence in 2024 of an unfavorable net change in fair value of warrant liability of about $2.3 million. offset by an increase in accounts receivable, a decrease in contract liability, accounts payable, accrued expenses and other liabilities, and a decrease of approximately $800,000 in the fair value of warrants issued for services. For the six-month period ended June 30th, net cash used in investing activities of $200,000 consisted of capital expenses, for software related to development of our ordering software platform, which is expected to be placed in service this year. This compares to net cash used in investing activities of half a million dollars in the comparable 2023 period arising from capital expenditures for the same ordering software, as well as an asset purchase of intellectual property. For the six months into June 30th, 2024, net cash provided from finance activities of $11.4 million is related to our February warrant inducement transaction and our June strategic pipe transaction. This compares to net cash provided from financing activities in the comparable 2023 period of $7.4 million, reflecting our January of 2023 private placement. As previously announced, to augment our liquidity position in stockholders' equity, in June of 2024, Vivos closed on a $7.5 million equity growth investment from an affiliate of new Seneca Partners, a leading middle market private equity firm. This investment is more than sufficient for us to demonstrate compliance with NASDAQ's minimum equity requirement as of the end of the quarter and maturely bolsters our cash on hand to facilitate the launch of the new strategic alliance I mentioned earlier, which is expected to positively impact Vivos' revenue growth. Kirk will speak more on this shortly. As of June 30th, 2024, we had approximately $6.9 million of cash and cash equivalents, compared to $1.6 million as of December 31st, 2023. Our stockholders' equity at June 30th approximately $6.3 million. In conclusion, we reported solid results for the second quarter, which included both sequential and year-over-year revenue growth. We also continued to take actions to improve our cost structure and reduce cash burn while strengthening our cash position, which was evident in our results. Based on our progress to date, Bevos continues to anticipate attaining positive cash flow from operations in the foreseeable future. I want to thank you all for joining us today on our conference call. Now, I'll turn the call over to Kirk Huntsman, Chairman and CEO. Kirk, please go ahead.