Vivos Therapeutics, Inc.

Good day, everyone, and welcome to the Vivos Therapeutics first quarter 2025 earnings call. At this time, participants are in a listen-only mode. A question and answer session will follow management's remarks. This conference call is being recorded and replayed. For today's call, we'll be available on the investor relations section of Vivos' website and will remain posted there for the next 30 days. I will now hand the call over to Brad Ammon. Chief Financial Officer, for introductions and the reading of the Safe Harbor Statement. Please go ahead.

Thank you, John. 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 today's call are Kirk Huntsman, Vivos Chairman and Chief Executive Officer, and myself, Vivos Chief Financial Officer. Today, we'll review the highlights and financial results for the first quarter 2025, as well as more recent developments and vivos plans for the rest of 2025, including developments in our marketing and distribution strategy pivot. Following these formal remarks, we will take questions. I would also like to remind everyone that today's call will contain certain forward-looking statements from our management made with 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, seek, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant risks, uncertainties, and contingencies, many of which are beyond the company's control. Actual results, including without limitation, the results of Vivo's pending acquisition of the Sleep Center of Nevada and other growth strategies, operational plans, including sales, marketing, acquisition, and integration, research and development, regulatory initiatives, cost savings plans, 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 flows and profitability, and other matters about the future 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 in other disclosures contained in Vivos' filings with the Securities Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31, 2024, and our other filings with the SEC including our first quarter 10Q filed with the SEC today, all of which are or will be accessible on the investor relations section of the vivos website, as well as the SEC's website. Except to the extent required by law, vivos assumes no obligation to update statements as circumstances change. Finally, be aware that the U.S. Food and Drug Administration has given certain vivos appliances 510 clearance to treat mild to severe OSA in adults. With the FDA clearance for severe last November, treatment of patients with severe OSA 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. That said, all vivos appliances should only be used within their FDA cleared uses. Now at this time, it's my pleasure to introduce Kirk Huntsman, Chairman and CEO of vivos. Kirk, please go ahead.

Thank you, Brad. And thank you all for joining us on today's conference call. In a moment, I'll turn the call back to Brad, who will walk us through the highlights of our first quarter of 2025 financial and operating results. After that, we'll be happy to take your questions. But before I do that, I'll offer some brief remarks on our progress throughout the first quarter and provide an update on our important ongoing business model pivot and why we believe this is critical for our company's growth prospects and financial success, both this year and over the long term. Keep in mind that what we are seeing in the first quarter and what we expect to see continue in the second quarter is the inflection point in our business as we strategically transition over to our new model of creating strategic alliances with or outright acquisitions of sleep medical providers as a means of both driving sales of our cutting edge OSA treatment appliances and diversifying our revenue stream with diagnostic and consultative services. This pivot is less than a year old, but we are very excited about its prospects and the position we believe it puts Vivos in for a new era of growth. As expected, our service revenues in the first quarter have declined as we eliminated our VIP enrollment sales team and the active recruitment of VIP dentists. Also, as expected, product sales have been growing nicely, especially in our pediatric guide appliance line. Total arches shipped grew 87% in the quarter from 1,996 in the same period last year to 3,736 this year. Product revenue for the quarter was up 8% due to the lower price points on certain pediatric products. But the overall sales volume trend is very positive as more patients than ever before are receiving vivos treatment. Currently, we are expecting to close on our previously announced acquisition of Sleep Center of Nevada, or SCN, in the next month or two. When closed, this acquisition is expected to be accretive to our revenue and gross profit in the near term, as SCN sees approximately 3,000 sleep patients a month. Also as disclosed in our 10Q today, We have signed a non-binding term sheet for a $7.5 million senior loan, which we expect to use to close the SCN transaction and for working capital. And things appear to be on track with that. The lender is requiring a simultaneous equity infusion of at least $1.5 million. And as we are in active discussions today, And we are also in active discussions to bring in at least that amount as part of the SCN closing. We are very confident that we will be able to close this transaction. So in addition, our operations team has been on the ground in Las Vegas working overtime to ensure that once the transaction is closed, we can immediately begin generating revenue from SCN. Over 100 patient visits have already been booked starting in early June, and several hundred more SCN patients are in process of being booked by our team. In short, we plan to hit the ground running to get the most we can out of this acquisition as quickly as possible. It is probably worth restating the importance of this SCN transaction for vivos. In a prior communication, I used the term transformational. The closer we get to actually executing the transaction and beginning operations, the more that term seems appropriate. We continue to believe it will be a total game changer for vivos. Simply put, we strongly believe SCN and future transactions like SCN, which we are actively exploring as well, is the fastest path to getting the most OSA patients into vivos treatment at the highest level of revenue and profit per case to the company. Now let me walk you through once again why we are so bullish on this transaction. Number one, as mentioned SCN tests over 3,000 new patients per month for obstructive sleep apnea and other sleep disorders. Approximately 90% of those patients test positive for OSA or related conditions. At least to start, logistically, we may not be able to capture all of those folks for vivos appliance treatment, but we expect to convert a good number of them as well as capture diagnostic revenue. Why do we believe this? This is point number two. In our experience with our first strategic alliance with Rebus Health right here in Colorado, we have seen seven out of 10 patients selecting some form of vivos treatment over CPAP at an average revenue per case exceeding $4,500. After months of intense due diligence and analysis at SCN, we see no reason we would not ultimately realize similar levels of case acceptance and revenue there. Point number three, in fact, Our plan is to add several new diagnostic and therapeutic services to our overall patient offerings, which we expect will yield even higher levels of revenue at SCN as compared to Rebus Health, which admittedly has progressed more slowly than we would have liked due to internal issues at Rebus that were beyond our control. Point number four, the net contribution margins for SCN revenue is expected to be 50% or better. Point number five, simple math tells the story. Even if we cut the above forecast figures in half, this transaction holds the prospect of solving our cash burn and generating significant positive cash flows and profits by the end of 2025 as we seek to ramp up to full capacity over the next six months. With a successful transaction closing and launch, we will also be proving out our thesis around the tremendous untapped potential for us in working directly with sleep labs and sleep medicine specialists. There are literally thousands of sleep medicine doctors with ties to sleep centers across the country who are in need of additional viable treatment options for their OSA patients. Moreover, no other company can bring to such marginally profitable sleep testing operations the kind of comprehensive state-of-the-art technology, the kinds of hands-on operational experience, and the kind of high-margin profit opportunity that Vivos brings. Not to mention that in our experience, we represent the most patient-friendly and preferred treatment modalities on the market today. making vivos attractive not only to sleep center owners, but their patients as well. As we have previously mentioned, our business development and M&A team has been extremely busy fielding inquiries and calling on target companies across the country to explain our extraordinary value proposition. The reception across the sleep medicine community has exceeded our expectations. and we are finding a lot of interest in vivos. We are currently in active negotiations with several groups for affiliation or acquisition opportunities. Some groups are larger than SCN and some are smaller, yet each holds significant upside potential for vivos. We consider some of those negotiations to be in advanced stages. and we hope to be able to announce additional transactions from that pipeline in the future. Now, I would also remind everyone that our management team here at Vivos has extensive experience in targeting, acquiring, and rolling up professional practices across the country. We've done this very thing quite successfully in a prior company in the dental space. I and senior members of the management team launched and grew one of the very first dental service organizations, or DSOs, back in 1995 and built it from scratch to over $250 million in revenue with over 165 locations when we sold it in 2008. To get to 165 locations, we acquired nearly 400 locations. independent dental practices throughout our market footprint. Today, the overall DSO business in the United States is a multi-billion dollar market with tens of thousands of affiliated DSO offices around the country. Yet here at Vivos, we see this opportunity in sleep medicine as having even greater financial upside than our previous focus exclusively on dentistry. In some, Having successfully weaned ourselves off of our prior VIP-driven model, we now feel that SCN is just beginning of a very promising time for vivos, and we look forward to continuing the rollout and execution of our new strategy. Now let me turn the call back over to our Chief Financial Officer, Brad Ammon, to review in greater detail our first quarter financial results.