Vivos Therapeutics, Inc.

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Good day, everyone, and welcome to the Bebo's Therapeutics First Quarter 2026 Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow management's remarks. This conference call is being recorded, and a replay of today's call will be available on the Investor Relations section of Bebo's 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 a reading of the Safe Harvard Statement. Please go ahead.

Thank you, Operator. Hello, everyone, and welcome to our conference call. A copy of our earnings release is available on the Investor Relations section of our website at www.vivos.com. With me on the call today is Kirk Huntsman, Vivos Chairman and Chief Executive Officer. Today, we'll review the financial results for the first quarter of 2026, as well as more recent developments and Vivos' plans for the rest of 2026 and beyond. Following these formal remarks, we'll 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 in Section 21E of the Securities and Exchange Act of 1934 is 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 words regarding future events 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 Bevos' growth strategies, operational plans, including sales, marketing, distribution, medical sleep provider acquisition and integration, research and development, regulatory initiatives, cost savings plans, and plans to generate revenue, as well as future potential results of operations in operating metrics, such as the potential for VVOS to achieve future positive cash flows or profitability, and other matters to be addressed by VVOS 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 Beavis's filings with the Securities Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31st, 2025, and our other filings with the FCC, including our first quarter 2020, our first quarter 10-Q filed with the FCC 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, please be aware that the U.S. Food and Drug Administration has given certain specific VIVOS appliances 510 clearance to treat mild to severe OSA. With the FDA clearance of certain vivos products for severe OSA in November of 23, 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. Vivos treatment of OSA of any severity or any other condition with any other of vivos' FDA-cleared devices remains at the clinical discretion of the treating doctor. For further information on our results for the three-month period ended March 31, 2026, 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. I'll turn to the review of our first quarter results. In the first quarter of 2026, VLOS completed its third full quarter of activity following our June 10, 2025 acquisition of the Sleep Center of Nevada, or SCN, demonstrating that the pivot in our sales, marketing, and distribution model has taken hold, notably with a very significant increase in revenues. Revenue increased approximately $2.1 million, or 70%, to $5.1 million for the first quarter of 2026, compared to $3 million for the first quarter of 2025, and 34% over fourth quarter of 2025. This was due to an increase of approximately $2 million in sleep testing services and an increase of $900,000 of revenue generated from vivos treatment of osa patients launched at two scn locations the increase in revenue during q1 was offset by the decline in product revenue attributable to a decrease of approximately nine hundred thousand dollars in appliance sales to our legacy vivos integrated provider or vip dentist customers offset by an increase of $500,000 in tooth positioner sales to VIPs. Additionally, we had a decrease in service revenue of $200,000 in our VIP enrollment revenue due to our strategic pivot to acquire and partner with sleep centers. An important note is that our 70% increase in year-over-year revenue occurred notwithstanding the decrease in our VIP enrollment revenue. There were no new VIP enrollments in Q1. All of this shows that we have weaned ourselves off of reliance on VIP enrollments as we have pivoted to our new revenue model. During the first quarter of 2026, we sold 5,304 oral appliance arches and tooth positioners for a total of approximately $1.4 million, a 21% decrease in revenue, from the same period in 2025 when we sold 3,735 oral appliance arches and tooth positioners for a total of $1.8 million. The revenue decrease is directly attributable to $500,000 in discounts offered in the first quarter versus $200,000 of discounts offered during the same period in 2025, coupled with a product mix that included more lower-priced products. Cost of sales increased by approximately $600,000, or 38%, to $2.1 million for the first quarter, 2026, compared to $1.5 million for the first quarter, 2025. This was primarily due to $700,000 in higher costs related to additional staff associated with SCN and our Detroit Sleep Center affiliation. We are hopeful that our investments in integrating SCN into our business will continue to pay off going forward. For the first quarter of 2026, gross profit increased by $1.5 million or 103% to $3.1 million. This increase was attributable to an increase in revenue of $2.1 million offset by an increase in cost of sales of $600,000. Gross margin increased 10 percentage points to 60% for the first quarter of 2026 when compared to 50% for the same period in 2025. This reflects the higher margin nature of our new business model. General and administrative expenses increased $4.1 million to $9 million for the first quarter of 2026 compared to $4.9 million for the prior year period. This increase was primarily due to $1.5 million in costs associated with running SCN's operations, which we did not have in first quarter of 2025. In addition, we incurred $1.5 million in salaries and wages for Vivos Treatment Center personnel in Nevada and $900,000 in non-reoccurring professional fees that we did not have in the first quarter of 2025. Depreciation and amortization expense was approximately $500,000 for the first quarter of 2026 compared to $200,000 for the prior year quarter. Depreciation and amortization increased due to an increase in depreciable assets related to the SEN asset acquisition and other affiliations. Net cash used in operating activities amounted to approximately $6 million and $3.8 million for the three months ended March 31st, 2026 and 2025 respectively. As of March 31st, 2026, we had total liabilities of approximately $26.3 million as compared with $26.7 million as of December 31st, As of March 31, 2026, we had approximately $2.1 million in cash and cash equivalents. We have implemented cost savings measures that have reduced cash used in operations. And while our revenue increased in the first month's post-SCN acquisition, our revenue did not grow enough to outpace our expenses due to dentist shortages and not being in network with payers as we continue to integrate SCN into our operations and refine and improve our product offerings and distribution strategies. As such, we raised equity capital throughout 2025 and during first quarter 2026, including our ATM program. We will be required to obtain additional financings to satisfy our near and longer-term cash needs and bolster our stockholders' equity for NASDAQ compliance purposes. We believe our Q1 results show the work we've put in towards increasing revenue and reducing costs, and moreover, that the prospect for future revenue growth is there. In addition to bolster our stockholders' equity, we are actively evaluating plans to restructure our senior debt to reduce our debt service obligations and reclassify some of the debt on our balance sheet as equity. Our main goal, of course, is to achieve cash flow positive operations in the foreseeable future. So in summary, we're seeing significant increases in revenue reflecting the acquisition of SCN in both diagnostic service as well as related revenue from providing OSA patients with treatment options, which is extremely encouraging. We are also seeing increased costs from hiring SCN personnel on the diagnostic side and additional hiring on the treatment side as these costs were nonexistent in the prior year quarter. We believe the strategic move to acquire SCN and other potential affiliate alliances and acquisitions set the stage for stronger performance in coming quarters. For more detailed information, I refer you to our earnings release and our full Form 10-Q file today. And with that, I'll hand the call back over to our chairman and CEO, Kirk Huntsman, to discuss the progress we have made to date on SEM and DDoS.

Kirk? Thank you, Brad.

Good afternoon, everyone, and thank you for joining us on today's conference call. It was just over a month ago that we reported our 2025 annual results. From that report, some investors became concerned at the drop in revenue during our fourth quarter 2025. We explained that the primary contributing factors of decreased provider office days and insurance headwinds were both temporary and correctable, and that we had already made the necessary corrective adjustments. Our core thesis behind our strategic pivot was still emerging, and we remained highly confident in our model and its potential. So now we are extremely pleased to report that our confidence has been validated with a 34% revenue increase quarter over quarter and a 70% increase year over year in year over year revenue. Notably, our first quarter total completed patient appointments rose an impressive 72% from 2,438 in Q4 to 4,186 in Q1 of this year. Another key aspect of our treatment, myofunctional therapy visits, have likewise risen by 43% during Q1, going from 337 visits in January to 481 in March. Now, I could go on to cite similar impressive KPIs related to the growth in total laser treatments, phrenectomies, diagnostic procedures, and other clinical procedures from our Nevada operations. But the simple truth is our strategic model pivot is taking hold. And the prospects for further growth are there. Here in the second quarter, the upward surge in revenue generating patient encounters continues as more available provider days and in their network insurance coverage fully begin to kick in. In April, for example, we experienced our highest ever number of patient visits. We call them visit twos. where patients select their treatment pathway and commit financially. Those are the visits where we generate most of our money. Our recent facility expansions at each of our two locations in Las Vegas are expected to allow for even greater numbers of patients to be seen and treated. At our Henderson location, due to come fully online in June, we have doubled our footprint in production capacity. Now keep in mind that the total potential volume of patients from SCN who could benefit from our treatment services still far outpaces our production capacity. And we continue to add providers and staff as rapidly as possible to meet the demand. So here's the basic equation behind our success in the first quarter. More trained providers who are in network with payers and network with payers leads to more available provider days, which means more appointment availability, which means more patients can be seen and presented with treatment options. More participation and coverage from payers means more patients will accept treatment. Another important factor in our revenue comes from the growing confidence and skills of our providers. When I say providers, I'm referring to medical and dental professionals of all stripes, doctors, nurse practitioners, dentists, and physician assistants. These providers are not robots. They are humans who come with varying clinical skills and communication abilities, all of which impact their individual production capacity. The more experience they have using our technology and methods, the better and more confident they are at recommending treatment. Thus, we are seeing growth not only for more total provider days, but also in total production per day per provider. Let me give you an example. In one notable case, a dentist who was near the bottom of the pack in terms of her daily production as compared to her peers was extensively retrained and coached up from an average of under $3,000 per day to production of over 10,000 per day, all within a matter of just a couple of weeks. Her peak production day, post retraining, saw seven out of eight of her patients accepting treatment, representing well over $40,000 in just a single day. Similar, though not so dramatic, productivity gains continue to occur amongst our growing pool of relatively new providers. Thus, we see opportunities for significant additional and continued growth from providers who are simply getting better and more proficient at what they do. We are obviously pleased with our first quarter revenue growth and the way it validates our core thesis that when patients are given the opportunity to choose their treatment pathway and when providers exude confidence and clarity in explaining all the options and when insurance picks up at least a portion of the tab, a large majority of patients will opt for some form of vivo-sponsored treatment. Moreover, as impressive as our first quarter was in terms of top-line revenue growth, The real story that is currently emerging from our data is the normalized profitability gains. From the outset of our business model pivot, we have maintained that our new model has the potential to deliver significant profits from operations, with net contribution margins approaching 50% or more at the practice level. Now, I recently fielded a call from an analyst who said that she was unfamiliar with the term net contribution margin. Think of it as a proxy for EBITDA, but it's essentially an EBITDA or cash generating number. One key factor of this profitability is the fact that total salaries and wages remained flat from Q4 of 2025 through Q1 of this year, despite a 34% increase in revenues in Q1. We believe that that represents great progress towards our profit goals. So as we continue to evolve here in the second quarter, we are beginning to see such profits emerge. And we look forward to reporting on them in our report for Q2 and the quarters that lie ahead. Now before I close, I would like to highlight three additional initiatives that we believe will play major roles in our future. The first is our pending affiliations with large medical specialty groups such as cardiologists. As I have previously recounted, when the word got out that Vivos had acquired Sleep Centers of Nevada, we began fielding phone calls and inquiries from medical practitioners, especially cardiologists from around the country, inquiring as to whether or not we could provide clinical sleep testing and OSA treatment for their patients. Over and over again, We heard the same refrain from the doctors. Our patients are sick, and we believe their undiagnosed and untreated obstructive sleep apnea is behind it. We need help getting them tested and treated, and we think Bevos represents a great solution. Now, we have since been engaged in a series of collaborative efforts to jointly extend such services to patients at high risk of OSA who are already suffering from one or more conditions, typically cardiovascular disease and other hypertension and other disorders that are clinically related to obstructive sleep apnea. We believe such affiliations represent significant financial opportunities for vivos to extend virtually the same business model being perfected with Sleep Center of Nevada to many more and even larger medical specialty practices around the country. We look forward once again to reporting on our progress as these relationships unfold in the near future. The second initiative pertains to an extension of our clinical diagnostic and testing services for the very large and growing market for insomnia and other sleep disorders. Statistically, over 40% of obstructive sleep apnea patients also have insomnia. And another 10 to 20% have other sleep disorders that we can diagnose and treat. We have found that many medical doctors, even sleep specialists, looking at sleep patients tend to focus primarily on obstructive sleep apnea and neglect testing and treating the other disorders. Testing and treating insomnia patients in our existing platform can easily add between $2,000 and $3,000 per patient during the first year alone. Gross margins on these services can match or exceed those we see in testing and treating obstructive sleep apnea. Some patients who do not test positive for OSA do test positive for insomnia and require treatment, which we can deliver profitably. We believe this project will add significantly to our overall top-line revenue and growth in the months and years ahead, and it has already been initiated in our Las Vegas market. The third and final major initiative is from our pediatric program. Over the past couple of years, we have sponsored a large clinical trial based in Colorado aimed at treating children with obstructive sleep apnea. That trial has been hugely successful and also quite profitable for the company. Important data has come out of that trial that has resulted in a clinical paper being written by researchers at Stanford University. In analyzing the financial impact of the trial, Management has determined that the model, the basic model, can be readily duplicated across all new and existing markets. Net margins in the pediatric program exceed 60% and top line revenue per site can approach a million dollars or more per year. We expect to begin generating revenue in July from this pediatric program and we'll make it in Nevada and we'll make it a part of each new expansion and affiliation going forward. In conclusion, we think 2026 is off to a great start. Clearly, there is more work to be done to fully exploit the benefits we are seeing from SCN. We need more providers and staff. We need to further optimize SCN's operations into our own and expand them. We need to execute on similar revenue generating collaborations And we do need capital and debt service relief to get us to the point where our growing revenues exceed our investment and expenses. But we believe there is evidence from our Q1 results to support our optimism. We continue to push hard to make this company all it can be, both for patients, doctors, and our shareholders. Our mission has never been more clear and never closer to being realized than it is now. We appreciate your support. and look forward to many more great quarters ahead. Operator, we can now take questions if there are any.

Thank you. And ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press a star followed by the number one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press a star followed by the number two. Once again, that would be star one on your telephone keypad. And your first question comes from the line of Yi Chen with HSC Wainwright. Please go ahead.

Hi, this is Katie on for Yi. I'm thinking about your higher margin model. Should we think about that margin jump as a step function or will it ramp up over time? And if it's ramping up, how long until you reach that anticipated peak higher margin?

Yeah, that's a great question. I would say it's more of a ramp than a step function. And I would say that we are, our forecasts project that we will be in places where we have established teams and established providers we expect to see those profit margins realized by the end of this year. So within this calendar year, we expect to see those margins gradually improve and increase until we get to the full steady state, what I would call steady state operating levels.

Great. If I could sneak one more in. How much residual VIP deferred revenue is still on your balance sheets? And when do you think that that revenue will really become irrelevant?

Brad, do you want to take that?

Yeah, that revenue has already become irrelevant, as you can see from our filing. That deferred revenue is around $100,000 and will be completely recognized by the end of the year.

Great.

Thank you so much.

Brad, is that $100,000 a quarter, or what is that?

Just so she's... No, that's the amount that's left. That's all that's left? Okay. I just wanted to clarify that. Okay.

Perfect. Thank you. And we have no further questions at this time. I would like to turn it back to Kirk Huntsman for closing remarks.

Thank you, Operator. We are very pleased, as you can probably tell, with the validation that we're seeing from our experience now as we go forward out there in the Las Vegas market. Keep in mind that we are still very, very early on. This represented our third full quarter of operations out there in that market, doing something that's never been done before. And I think we're learning a little bit as we go, but we've also perfected a lot of things. And I think now that we've got our arms around this, I think the major types of headwinds that we experienced in the fourth quarter in particular of last year, we don't expect to see going forward. To that end, we have actually aligned ourselves with a national firm that has insurance contracts and licensure for sleep medicine in all 50 states. This will give us an incredible competitive advantage as we go forward throughout the United States and as we expand across state lines, having nearly instant access to a full complement of both government-sponsored plans, such as Medicare, Medicaid, and as well as commercial payer plans. So this will help us avoid some of the delays and problems startup issues that we had in Nevada as we got our ball rolling out there. But going forward, we see lots of opportunity. The opportunity to collaborate with these cardiologists just seems to be an endless train of inquiries and people wanting to get to see us and talk to us about working with their patients and getting them tested for sleep apnea and treated. So we're seeing incredible opportunities before us. We are obviously going through a little bit of an eye of the needle type experience with our capital, but we feel highly confident that we're going to be able to restructure our debt and get the capital we need to continue on to realize the potential that's before us. Our technology is the best in the world. We know it. We believe it. We see it every day. I would invite everyone on this call who's not been to our new website at vivos.com to go there and just listen to some of the testimonials, listen to some of the things, look at some of the patient cases that we put up there, read some of the research and just see what's happening and why patients are choosing vivos whenever they have an opportunity to make a choice. 92% of all patients who are diagnosed across this country with obstructive sleep apnea are getting CPAP, CPAP, CPAP, CPAP. That's the reflective or reflexive sort of go-to treatment that is being given over and over again. When patients are given full transparent clarity on the fact that they now have an FDA cleared treatment option that can treat their moderate to severe sleep apnea, Most of the time, the vast majority of the time, they select a non-CPAP option. We think that portends great things for our company and for what we're doing as we continue to garner market share and gain traction. So with that, I'll bring this to a call. I want to express our gratitude in management for the shareholders and supporters that we have out there, for our board of directors, which has remained vigilant and dedicated to the success of this company, and we wish you all the very best, and we thank you for your time this afternoon. Thank you very much.

Thank you, and this concludes today's conference call. Thank you all for joining. You may now disconnect.