Vivos Therapeutics (VVOS) Q2 Earnings call transcript Aug 14, 2024

Vivos Therapeutics, a leading player in the oral appliance therapy market for obstructive sleep apnea (OSA), recently held its second quarter 2024 earnings call, highlighting the company's progress and strategic shifts towards sustainable growth. The call, led by Chairman and CEO Kirk Huntsman, CFO Bradford Amman, and Executive Vice President of Marketing John Lee, provided investors and analysts with a comprehensive update on Vivos' financial performance, operational improvements, and strategic initiatives.

Financial Performance and Operational Highlights

The second quarter of 2024 marked a significant milestone for Vivos, with total revenue increasing by 19% both sequentially and year-over-year, reaching $4.1 million. This growth was primarily driven by an increase in product revenue, which rose by approximately $400,000 due to higher sales and fewer discounts on Vivos appliances and guides. The service revenue also saw an uptick of $200,000, reflecting an increase in Vivos Integrated Provider (VIP) enrollment revenue and sponsorship, seminar, and other service revenue.

Operating expenses showed a notable reduction, with a year-over-year decrease of $2 million or 31%, demonstrating Vivos' commitment to prudently using its capital resources. Gross profit for the quarter increased by $600,000, marking a 65% gross margin. The company's cost-cutting initiatives continued to yield results, with a significant decrease in sales and marketing expenses, down $300,000 or 46% compared to the second quarter of 2023.

Strategic Shifts and Future Outlook

One of the most notable highlights of the call was Vivos' strategic shift towards medical-based, full-service breathing and sleep centers. This pivot is expected to materially alter Vivos' prospects for growth and profitability. The company's recent strategic alliance with a multicenter sleep clinic in Colorado marks the beginning of this new approach, with plans to expand the model to other sleep testing and treatment centers across the United States. Vivos believes this model, which aligns the interests of medical professionals with its treatment options, will broaden the reach of OSA patients and make revenue less reliant on VIP enrollments.

Market Opportunities and Future Growth

The call also touched upon the vast market opportunities in the sleep apnea sector, with over 100,000 new OSA patients diagnosed each month and an estimated 80% to 90% remaining undiagnosed and untreated. Vivos' strategic alliance model, which offers high-margin products and services, is poised to capitalize on this market potential. The company's recent FDA clearance for treating severe OSA patients using its CARE oral medical devices has opened up new avenues for growth and acceptance within the medical community.

Financial Outlook and Future Plans

Looking ahead, Vivos is optimistic about its financial prospects, aiming to achieve positive cash flow from operations in the foreseeable future. The company's financial health is further bolstered by its recent $7.5 million equity growth investment from New Seneca Partners, a leading middle market private equity firm, which will not only enhance its cash on hand but also facilitate the launch of new strategic alliances.

Analyst and Investor Insights

During the Q&A session, analysts expressed interest in Vivos' strategic alliance model and the potential impact on revenue growth. The company's disciplined approach towards reducing discounts and restructuring sales commissions was also highlighted as a key factor in driving revenue growth and improving operational efficiency.

In conclusion, Vivos Therapeutics' second quarter 2024 earnings call painted a picture of a company on the cusp of significant growth and strategic pivots. With a focus on cost-cutting, operational efficiency, and strategic alliances, Vivos is well-positioned to capitalize on the vast opportunities in the sleep apnea market. As the company continues to execute its plans, investors and analysts will be closely watching its progress towards achieving positive cash flow and expanding its reach within the medical community.