Vivos Therapeutics Reports Fourth Quarter and Full Year 2023 Financial Results and Provides Operational Update
Vivos Therapeutics reports positive business momentum and sales pipeline growth following FDA 510(k) clearance for oral medical devices to treat severe obstructive sleep apnea. The company's annual operating expenses decreased by 27% due to successful cost-cutting initiatives. Vivos aims for cash flow positive operations by the end of 2024.
Positive
Revenue for the fourth quarter of 2023 was $3.2 million and $13.8 million for the full year, showing a decrease from the previous year mainly due to lower appliance revenue and VIP enrollments.
Gross profit was $2.1 million for Q4 2023 and $8.3 million for the full year, with a 64% gross margin for Q4.
Operating expenses decreased significantly by $2.2 million in Q4 2023, leading to a 30% reduction in net loss for the same period.
Cash and cash equivalents were $1.6 million at the end of 2023, with additional proceeds of $4.0 million from a common stock purchase warrant exercise in February 2024.
Vivos has treated over 42,000 patients worldwide with its oral appliances and trained over 1,900 dentists in The Vivos Method.
Strategic agreements with Ormco and On Demand Orthodontist, as well as an exclusive distribution agreement with NOUM DMCC, are expected to create additional revenue opportunities.
A clinical trial for Vivos' DNA appliance at Stanford Medicine is set to begin in 2024.
FDA 510(k) clearance was granted for Vivos' CARE oral appliances to treat severe OSA in adults, marking a significant milestone.
Vivos aims to achieve cash flow positive operations by the end of 2024, building on cost-cutting initiatives and revenue growth efforts.
Negative
Revenue decrease in 2023 compared to 2022 due to lower appliance revenue and VIP enrollments.
Gross margin decrease from 63% in 2022 to 60% in 2023.
Operating expenses decreased by $9.5 million or 27% for the full year 2023 compared to 2022, which may impact certain operational aspects.
Net loss reduction of $10.3 million or 43% for the full year 2023 compared to 2022, indicating previous financial challenges.
Cash and cash equivalents of $1.6 million at the end of 2023 may pose liquidity concerns.
Revenue impacts from governmental investigations and third-party products affecting new case starts and VIP enrollments are a potential risk factor.
The financial results reported by Vivos Therapeutics, Inc. indicate a mixed picture. While the company has successfully reduced its annual operating expenses by 27%, a commendable feat in cost management, it has also experienced a decline in revenue from $16.0 million in 2022 to $13.8 million in 2023. This contraction is primarily attributed to decreased appliance revenue and enrollments in their Vivos Integrated Provider program. However, the increase in home sleep testing services and seminar revenue suggests a potential pivot in the company's revenue stream towards services.
The gross margin remaining relatively stable at 60% for 2023, compared to 63% in 2022, indicates a degree of efficiency in managing production or service costs relative to the revenue decline. The substantial reduction in net loss by 43% for the full year is a positive signal to investors that the company is moving towards financial stability. However, the current cash and cash equivalents of $1.6 million as of December 31, 2023, raise concerns about the company's ability to sustain operations without additional financing, despite the subsequent capital infusion of approximately $4.0 million from a warrant exercise in February 2024.
The strategic agreements and FDA clearance for treating severe OSA with Vivos' oral appliances could potentially open up new revenue streams and markets, especially with the exclusivity agreement with Lincare and the MENA region distribution. These developments could be pivotal in driving future revenue growth, but the impact on the stock will depend on the company's execution of these strategies and the market's reception of their expanded product line.
From an industry perspective, the FDA 510(k) clearance for Vivos' oral appliances to treat severe obstructive sleep apnea (OSA) is a significant milestone. It's the first time an oral appliance has been cleared for this use, potentially positioning Vivos as a pioneer in the OSA treatment market. This clearance, along with strategic agreements to expand their product line with Spark™ Clear Aligners and an exclusive distribution deal in the MENA region, indicates a proactive approach to capturing market share and diversifying revenue sources.
However, the impact of governmental investigations on the industry, which has affected Vivos' case starts and enrollments, should be monitored closely as it could signal increased regulatory scrutiny and potential challenges for companies in the sleep apnea space. The clinical trial at Stanford Medicine to compare the DNA appliance with the industry-standard CPAP machine will be critical in establishing clinical credibility and could influence the adoption rate of Vivos' products by healthcare providers and patients.
The reverse stock split executed by Vivos was a strategic move to maintain compliance with Nasdaq's minimum bid requirement, which is essential for investor confidence and maintaining the stock's listing status. The amendment to the national distribution agreement with Lincare, giving them exclusivity, could streamline Vivos' distribution channels and improve sales efficiency in the U.S. market.
Understanding the market dynamics for sleep-related breathing disorders treatments is important for evaluating Vivos' business momentum. The global sleep apnea devices market is growing, driven by increasing awareness, technological advancements and a rising prevalence of sleep apnea. Vivos' positioning in this market, especially with its FDA-cleared oral appliances, could leverage these trends for growth.
The training of over 1,900 dentists in using The Vivos Method indicates a growing professional base that can facilitate the adoption and recommendation of Vivos' products. This educational approach can create a network effect, potentially increasing product demand. The company's strategic focus on both product development and cost efficiency is a response to the competitive landscape that rewards innovation and fiscal prudence.
However, the company's future success will hinge on its ability to convert its sales pipeline and strategic initiatives into tangible revenue growth. The market will watch closely for the results of the clinical trial at Stanford Medicine, as positive outcomes could significantly enhance the credibility and demand for the DNA appliance. Investors will also look for signs of successful market penetration in the MENA region and synergy from the integration of Spark™ Clear Aligners into Vivos' product offerings.
03/28/2024 - 04:05 PM
Positive Business Momentum and Sales Pipeline Growth Following FDA 510(k) Clearance of Vivos’ Proprietary Oral Medical Devices to Treat Severe Obstructive Sleep Apnea
Annual Operating Expenses Declined 27% Due to Success of Cost Cutting Initiatives
Management to Host Conference Call Today at 5:00 pm ET
LITTLETON, Colo., March 28, 2024 (GLOBE NEWSWIRE) -- Vivos Therapeutics, Inc. (“Vivos” or the “Company’’) (NASDAQ: VVOS), a leading medical device and technology company specializing in the development and commercialization of highly effective proprietary treatments for sleep related breathing disorders (including all severities of obstructive sleep apnea (OSA in adults)), today reported financial results and operating highlights for the fourth quarter and full year ended December 31, 2023.
Fourth Quarter and Full Year 2023 Financial and Operating Summary
Revenue was $3.2 million for the fourth quarter of 2023 and $13.8 million for the full year ended December 31, 2023, compared to $4.0 million and $16.0 million for the fourth quarter and full year ended December 31, 2022, respectively, mainly due to lower appliance revenue and Vivos Integrated Provider (VIP) enrollments, offset by increased revenue from home sleep testing services and seminars conducted at the Vivos Institute in Denver. Importantly, Vivos believes that governmental investigations of unrelated third parties with non-FDA approved products in the sleep apnea treatment space adversely impacted new Vivos case starts and VIP enrollments during 2023. Gross profit was $2.1 million for the fourth quarter of 2023 and $8.3 million for the full year ended December 31, 2023, compared to $2.4 million and $10.0 million for the comparable periods in 2022, respectively, attributable primarily to the decrease in revenue; Gross margin was 64% and 60% for the fourth quarters of 2023 and 2022, respectively. For the full year ended December 31, 2023, gross margin was 60% , compared 63% for the full year ended December 31, 2022; Operating expenses for the fourth quarter of 2023 decreased by a significant amount ($2.2 million , or 26% ) versus the fourth quarter of 2022, reflecting Vivos’ previously announced cost-cutting initiatives including personnel and related expenses. For the full year ended December 31, 2023 operating expenses decreased by $9.5 million or 27% , compared to the full year 2022; Vivos’ cost-cutting initiatives also led to significant year-over-year reductions of net loss of $1.8 million , or a 30% reduction, and $10.3 million , or a 43% reduction, for the fourth quarter and full year ended December 31, 2023, respectively, compared to the same periods in 2022. Vivos plans to utilize its cost reductions to help achieve cash flow positive operations by the end of 2024 should revenue increase as planned; Cash and cash equivalents were $1.6 million at December 31, 2023. Subsequent to year end, in February 2024, an outstanding common stock purchase warrant held by an institutional investor to purchase an aggregate of 980,393 shares of Vivos common stock was exercised for gross proceeds of approximately $4.0 million ; As of December 31, 2023, patients treated with Vivos’ patented oral appliances totaled over 42,000 worldwide, compared to over 33,000 as of the end of 2022. Vivos has also trained more than 1,900 dentists in the use of The Vivos Method and Vivos’ related value-added services, compared to over 1,700 as of the end of 2022; In October 2023, Vivos announced two key strategic agreements with Ormco, a division of publicly-traded Envista Holdings Corporation, and On Demand Orthodontist (ODO), offering Vivos’ national network of providers access to Spark™ Clear Aligners. The agreements will expand Vivos’ current product line and are expected to create near term additional revenue opportunities; Also in October, Vivos announced an exclusive distribution agreement with NOUM DMCC (“Noum”), a Dubai-based company focused on diagnostic testing and treatment product distribution for healthcare providers and hospital networks treating obstructive sleep apnea patients throughout the Middle East-North Africa (MENA) region. Subject to regulatory approvals, Vivos could see revenue from this collaboration in 2024; Later in October, Vivos announced that its flagship daytime-nighttime appliance (DNA) will be tested in a clinical trial at Stanford Medicine. The protocol has been finalized and participant enrollment will begin in 2024. Study participants with moderate to severe OSA will be randomly assigned to either treatment with Vivos’ DNA appliance or CPAP (continuous positive airway pressure) machine, the current industry standard for OSA treatment. Sleep studies will be performed prior to and following a course of treatment using in-lab polysomnography to assess changes in the patients’ apnea-hypopnea index (AHI); On October 27, 2023, Vivos effected a 1-for-25 reverse stock split of its issued and outstanding common stock. The reverse stock split was approved at Vivos’ 2023 Annual Meeting of Stockholders on September 22, 2023; In November 2023, Vivos amended its national distribution agreement with Lincare, a leading supplier of in-home respiratory therapy products and services for approximately 1.8 million patients, giving Lincare a six-month exclusivity period to distribute certain designated Vivos devices. The agreement follows the successful conclusion of a distribution pilot with Lincare, and marks an important milestone in Vivos’ strategy to engage with leading durable medical equipment (DME) companies in the United States; and Later in November, Vivos was granted 510(k) clearance from the U.S. Food and Drug Administration (FDA) for treating severe OSA in adults using the Vivos’ removable CARE (Complete Airway Repositioning and/or Expansion) oral appliances. Vivos’ CARE appliances include the flagship DNA oral appliance, the mRNA oral appliance and the mmRNA oral appliance. This represents the first time the FDA has ever granted an oral appliance a clearance to treat moderate and severe OSA in adults, 18 years of age and older along with positive airway pressure (PAP) and/or myofunctional therapy, as needed. Kirk Huntsman, Vivos’ Chairman and Chief Executive Officer, stated, “In 2023, we took a number of steps to expand our portfolio of proprietary products, open up new revenue streams, lower our cost structure and strengthen our liquidity position. We also worked tirelessly to expand our FDA approvals to put ourselves in a better position for long-term revenue growth. We have made substantial progress and are now starting to see the benefits of our actions. In 2023, our operating expenses declined by 27% annually. That is no small feat and it speaks to the tremendous efforts of our entire team. Also, these are not one-time cost reductions. Our results represent ongoing cost efficiencies we have achieved throughout our entire organization. Based on our progress to date and our revenue growth efforts for 2024, we continue to anticipate becoming cash flow positive from operations by the end of this year.”
“We also took actions to strengthen our capital structure and improve our liquidity. Last year, we effected a 1-for-25 reverse stock split to come back into compliance with Nasdaq’s minimum bid requirement. More recently, we completed a $4 million private placement in November and in February we completed a warrant exercise transaction that generated about $4 million in gross proceeds. While we expect to look to raise additional capital in 2024, we believe these actions will go a long way toward providing us with the necessary capital resources to enact our near and longer-term growth plans.
“In addition, throughout 2023 we established a number of key relationships to expand our product line and extend our international presence into the Middle East/North Africa (MENA) region. We have also begun to actively cultivate relationships and collaborations with medical doctors to assist in treating their OSA patients by local Vivos-trained dentists. We expect that over time, these relationships will drive higher patient referrals and create long-term revenue opportunities for us.
“Perhaps most important, in November, we received FDA 510(k) clearance for our CARE oral medical devices to treat severe OSA. Since then, we’ve received high levels of inquiries related to our Vivos CARE products that treat OSA in adults. As a result, signed VIP enrollment contracts in the fourth quarter increased 38% sequentially. We are thrilled by this recent business momentum and expect these higher inquiries and expanded sales pipeline could create opportunities for revenue growth in 2024.
“As we move through the new year, macroeconomic trends exiting 2023 and in early 2024 give us optimism that the larger environment is improving. At the same time, we are seeing increased interest from dentists and medical professionals related to our growing portfolio of products, driven by our new FDA clearance for severe OSA. The FDA clearance to treat severe OSA has provided the credibility we have needed for medical doctors to recommend Vivos oral medical devices to their patients. Given all this, the key relationships we’ve established, our success in managing costs and reducing our cash burn, our increased liquidity and enhanced capital structure, we are extremely excited about our prospects for this year. We believe we have all the necessary tools in place to implement our growth plans, drive increased revenues and achieve cash flow positive operations and profitability in the foreseeable future, and we remain committed to doing so,” Mr. Huntsman concluded.
Vivos encourages investors and other interested parties to join its conference call today at 5:00 p.m. Eastern time (details below), where management will discuss further details on topics including: (i) Vivos’ expanded product line and revenue potential, (ii) the potential significant impact of Vivos’ recent strategic collaborations on Vivos’ near-term revenue growth, (iii) an update on Vivos’ DME sales and marketing efforts; (iv) additional programs for dentists to enroll with Vivos, and (v) Vivos’ current cash position and actions taken to reduce expenses.
In addition, further information on Vivos’ financial results is included on the attached condensed consolidated balance sheets and statements of operations, and additional explanations of Vivos’ financial performance are provided in the Vivos’ Annual Report on Form 10-K for the twelve months ended December 31, 2023, which will be filed with the Securities and Exchange Commission (“SEC”). The full 10-K report will be available on the SEC Filings section of the Investor Relations section of Vivos’ website at https://vivos.com/investor-relations
Conference Call
To access Vivos’ investor conference call, please dial (888) 886-7786, or for international callers, (416) 764-8658. A replay will be available shortly after the call and can be accessed by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the live call and the replay is 27185528. The replay will be available until April 11, 2024.
A live webcast of the conference call can be accessed on Vivos’ website at https://vivos.com/investor-relations . An online archive of the webcast will be available on the Company’s website for 30 days following the call.
About Vivos Therapeutics, Inc.
Vivos Therapeutics, Inc. (NASDAQ: VVOS) is a medical technology company focused on developing and commercializing innovative diagnostic and treatment methods for patients suffering from breathing and sleep issues arising from certain dentofacial abnormalities such as obstructive sleep apnea (OSA) and snoring in adults. The Vivos Method represents the first clinically effective nonsurgical, noninvasive, nonpharmaceutical and cost-effective solution for treating mild to severe OSA. It has proven effective in over 42,000 patients treated worldwide by more than 1,900 trained dentists.
The Vivos Method includes treatment regimens that employ the proprietary CARE appliance therapy and other modalities that alter the size, shape and position of the soft tissues that comprise a patient’s upper airway and/or palate. The Vivos Method opens airway space and may significantly reduce symptoms and conditions associated with mild-to-severe OSA, such as lowering Apnea Hypopnea Index scores. Vivos also markets and distributes SleepImage diagnostic technology under its VivoScore program for home sleep testing in adults and children. The Vivos Integrated Practice (VIP) program offers dentists training and other value-added services in connection with using The Vivos Method.
For more information, visit www.vivos.com
Cautionary Note Regarding Forward-Looking Statements
This press release, the conference call referred to herein, and statements of the Company’s management made in connection therewith contain “forward-looking statements” (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events. Words such as “may”, “should”, “expects”, “projects,” “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 several assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond Vivos’ control. Actual results (including, without limitation, the results of the Company’s sales and marketing initiatives and results of operations) 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: (i) the risk that Vivos may be unable to implement revenue, sales, marketing, collaboration and other strategies that increase revenues, (ii) the risk that some patients may not achieve the desired results from using Vivos’ products, (iii) risks associated with regulatory scrutiny of and adverse publicity in the sleep apnea treatment sector; (iv) the risk that Vivos may be unable to secure additional financing on reasonable terms when needed, if at all, or maintain its Nasdaq listing and (v) other risk factors described in Vivos’ filings with the SEC. Vivos’ filings can be obtained free of charge on the SEC’s website at www.sec.gov . Except to the extent required by law, Vivos expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Vivos’ expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based.
Vivos Investor Relations and Media Contact: jgannon@vivoslife.com
-Tables Follow-
VIVOS THERAPEUTICS INC. Unaudited Condensed Consolidated Balance Sheets December 31, 2023 and 2022 (In Thousands, Except Per Share Amounts)
2023 2022 Current assets Cash and cash equivalents $ 1,643 $ 3,519 Accounts receivable, net of allowance of $250 and $712 , respectively 202 457 Prepaid expenses and other current assets 616 1,448 Total current assets 2,461 5,424 Long-term assets Goodwill 2,843 2,843 Property and equipment, net 3,314 3,082 Operating lease right-of-use asset 1,385 1,695 Intangible assets, net 420 302 Deposits and other 307 374 Total assets $ 10,730 $ 13,720 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 2,145 $ 1,411 Accrued expenses 2,334 1,912 Current portion of contract liabilities 2,138 2,926 Current portion of operating lease liability 474 419 Other current liabilities 198 145 Total current liabilities 7,289 6,813 Long-term liabilities Contract liabilities, net of current portion 289 112 Employee retention credit liability 1,220 - Operating lease liability, net of current portion 1,521 1,994 Total liabilities 10,319 8,919 Commitments and contingencies - - Stockholders’ equity Preferred Stock, $0.00 01 par value per share. Authorized 50,000,000 shares; no shares issued and outstanding - - Common Stock, $0.00 01 par value per share. Authorized 200,000,000 shares; issued and outstanding 1,833,877 shares as of December 31, 2023 and 920,592 shares as December 31, 2022 - - Additional paid-in capital 93,462 84,269 Accumulated deficit (93,051 ) (79,468 ) Total stockholders’ equity 411 4,801 Total liabilities and stockholders’ equity $ 10,730 $ 13,720
VIVOS THERAPEUTICS INC. Unaudited Condensed Consolidated Statements of Operations Years Ended December 31, 2023 and 2022 (In Thousands, Except Per Share Amounts)
2023 2022 Revenue Product revenue $ 6,270 $ 8,381 Service revenue 7,531 7,643 Total revenue 13,801 16,024 Cost of sales (exclusive of depreciation and amortization shown separately below) 5,530 6,005 Gross profit 8,271 10,019 Operating expenses General and administrative 22,479 29,041 Sales and marketing 2,467 5,340 Depreciation and amortization 621 669 Total operating expenses 25,567 35,050 Operating loss (17,296 ) (25,031 ) Non-operating income (expense) Other expense (212 ) (190 ) PPP loan forgiveness - 1,287 Excess warrant fair value (6,453 ) - Change in fair value of warrant liability, net of issuance costs of $645 10,231 - Other income 147 89 Loss before income taxes (13,583 ) (23,845 ) Net loss $ (13,583 ) $ (23,845 ) Net loss per share (basic and diluted) $ (11.14 ) $ (25.90 ) Weighted average number of shares of Common Stock outstanding (basic and diluted) 1,219,381 920,592
What was Vivos' revenue for the fourth quarter of 2023?
Vivos reported $3.2 million in revenue for Q4 2023.
How many patients worldwide have been treated with Vivos' oral appliances?
Over 42,000 patients have been treated with Vivos' patented oral appliances.
What strategic agreements did Vivos announce in October 2023?
Vivos announced agreements with Ormco and On Demand Orthodontist, expanding its product line.
When did Vivos receive FDA 510(k) clearance for its CARE oral appliances?
Vivos received FDA clearance in November 2023 to treat severe OSA in adults.
What is Vivos' goal in terms of operations by the end of 2024?
Vivos aims to achieve cash flow positive operations by the end of 2024.
