Q4 2020 Vivos Therapeutics Inc Earnings Call

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Ladies and gentlemen, thank you for standing by our presentation will begin momentarily, ladies and gentlemen, thank you for standing by our presentation will begin momentarily. Thank you for your patience.

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Good day, everyone and welcome to vivo Therapeutics fourth quarter and full year 2020 conference 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 a replay of today's call will be available on the Investor Relations section of vivo website and will remain posted there for the next 30 days.

I will now hand, the call over to Mr. Edward low vivo investor relation officer for introductions and the reading of the Safe Harbor statement. Please go ahead Sir.

Thank you operator, Hello, everyone and welcome to the those therapeutics fourth quarter and full year 2020 earnings conference call a copy of the company's earnings press release is available on the Investor Relations. The relations section of our website at Www Dot Devos life Dotcom with us.

On today's call are Kirk Huntsman, vivo, as chairman and Chief Executive Officer, and Brad M and Chief Financial Officer Today, We will review the highlights and financial results for the fourth quarter and full year 2020, as well as recent developments. Following the formal remarks, we will be prepared to answer your questions.

I would also like to remind everyone that today's call will contain certain forward looking statements made within the meaning of section 27, a of the Securities Act of $19 33, as amended and section 21 E of the Securities and Exchange Act of 1934 as amended concerning future events.

Words, such as May should expect intends plans believes anticipates hopes estimates and variations of such words and similar expressions are intended to identify forward looking statements. These statements involve known and unknown risks and are based upon a number of assumptions and estimates.

Are inherently subject to significant uncertainties and contingencies, many of which are beyond the company's control.

Actual results, including the results of vivo sales growth strategies operational plans results of operations and other matters to be addressed by vivo and management in this conference call may differ materially 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 vivo and its filings with the Securities and Exchange Commission, including our 2020 10-K, which has been filed today.

To the extent required by law the votes assumes no obligation to update statements as circumstances change now at this time. It is my pleasure to introduce Kirk Huntsman, chairman and CEO of vivo.

Please go ahead Sir.

Yeah.

Thanks, Ed and thank you everyone for joining us on our fourth quarter and full year 2020 earnings conference call, which marks our first quarterly call as a public company.

I am excited for this opportunity to discuss vivo with all of you and the briefly recap what we have achieved to date as well as discuss our future, which we believe is bright.

The full year 2020, and the fourth quarter were significant periods for Veeva is where we experienced growth throughout all aspects of our business and.

And 2020, we continued to see strong adoption of the vivo system and related services as more Dennis and health care providers learned about the benefits of this innovative treatment for mild to moderate obstructive sleep apnea or OSA.

And throughout the year, we continue to increase awareness of our therapeutic products and services through our marketing and sales initiatives. We also saw the growth of our medical integration Division that launched in 2020 with a mandate to create strategic alliances between the medical and dental communities aimed at diagnosing and treating.

And OSA with the vivo system.

All of these drivers contributed to the continued growth of our core vivo and integrated practice or VIP program. During 2020, coupled with substantially higher sales of our therapeutic products and services. This generated increased revenues for both the quarter and the full year 2020.

As we simultaneously transitioned in December to become a publicly traded company on the NASDAQ.

As this is our first earnings results conference call as a public company before reviewing the highlights of the quarter and 2020 I'd like to talk a little bit about who we are our history, our accomplishments and how we have positioned our business for future growth afterwards, our chief financial.

Officer, Brad Am and will review the highlights of our financial results. Following that we will be happy to take your questions.

And some of you already know we are of growing revenue stage medical technology company focused on developing and commercializing innovative treatments for adult patients suffering from sleep disorder breathing, including the OSA.

Our stated mission is bold and audacious to rid the world of obstructive sleep apnea.

Some of you may be surprised to learn that OSA is a serious and chronic disease that affects nearly 1 billion people worldwide and over $54 million and the United States alone.

He is comorbid with numerous other debilitating and deadly health conditions, such as high blood pressure heart failure stroke diabetes dementia, and other debilitating life threatening diseases.

And children OSA is associated with ADT, and ADHD bedwetting behavioral issues poor academic performance and lower IQ on.

All of this comes with significant societal and health care system costs not to mention the burden on children and families and marital relations.

And <unk>, we market and sell two primary innovative products.

One diagnostic and the other therapeutic each of which represents what we believe to be a best in class technology.

Taken together, we believe they give us and unparalleled competitive advantage and the market for the identification and treatment of obstructive sleep apnea.

On the diagnostic front, we recently introduced our vivo score product, which is exclusively licensed from our partner as sleep image for distribution to the U S and Canadian sleep dentistry markets.

Vivo score is powered by proprietary technology from sleep image utilizing a wearable sleep apnea screening and diagnostic fingering device, which can be administered without prior health indications.

<unk> score dramatically lowers the cost of screening and testing, making access to potentially life saving diagnosis far more available to those in need this.

And this technology also allows for a periodic feedback loop between patients and providers that can significantly alter the way OSA is monitored and treated.

We would also note that the vivo scores core technology from sleep image is the only FDA cleared software as a medical device for the establishing sleep quality and diagnosing and managing OSA and both children and adults.

And the best of our knowledge no other software associated with a wearable device can lay claim to that and we believe that when it comes to health and wellness medical grade evaluation of sleep quality is fundamental to the practice of precision sleep care.

Only vivo score offers clinically actionable output from the simplicity of of single sensor wearable device, which is far more important than what is commonly associated with other wearable technologies on the market.

Our flagship therapeutic product is the vivo system, a multidisciplinary set of clinical therapies and protocols, featuring our patented and customize the oral appliances.

The studies have shown that treatment with the vivo system can reduce OSA severity as measured by apnea Hypopnea index scores.

And as much as 67, 4% on average the.

The primary market for <unk>.

Market channel for vivo score and the vivo system or are the estimated 125000 active general dentists, and dental specialists and the U S and Canada.

The vivo story really began in 2000 and for when the creator of our view of the system technology. Dr. Dave Singh began publishing pioneering research into the epigenetic influencers on cranial facial glove growth and development.

Based on his research Dr Singh postulated that OSA and medical condition that occurs when the airway's obstructed and breathing as impaired could be effectively treated through a specialized type of biomimetic dental device.

From there he began to formulate the product design and testing of what became our patented DNA appliance and mrna appliance technology.

These customized and highly specialized oral appliances are central to the multi disciplinary protocols of the vivo system.

As our technology developed over time, we filed for and obtained seven U S patents to Canadian patents and one European patent and the.

And the vivo system incorporates our patented biomedical oral appliances as well as a set of proprietary clinical protocols that we consider trade secrets and that play an essential role and the effectiveness of our treatment process, which differentiate differentiates us from every other therapy on the market.

Our technology has been featured and over 55 published articles and studies many of which have appeared and peer reviewed professional journals and 17 of those studies, where they looked at the reduction in patient apnea Hypopnea index scores the <unk>.

Vivo system showed a mean reduction of 67, 4% our products have been FDA registered and cleared and we are already actively sell our products.

At the same time, we are constantly working with the FDA to expand our indications of use through ongoing clinical trials and 500 10-K submissions, especially when it comes to treating children as it stands today providers use certain FDA registered vivo products off label according to their.

Pendant professional clinical judgment.

We recruited and trained dentists and other health care providers to screen and offer the vivo system as an alternative treatment for patients of all ages, who are medically diagnosed with sleep disorders, such as mild and moderate obstructive sleep apnea.

Our therapeutic products and related protocols are clinically effective non surgical non invasive non pharmaceutical and offer a low cost solution for patients with mild to moderate OSA.

Treatment with the vivo system typically takes 12 to 24 months, whereas CPAP inspire implants and other treatments that are commonly used require and lifetime intervention and used to be effective.

Given these patient and cost benefits, we believe our products and technology represent a significant advancement and improvement and the treatment of OSA.

To date, we have trained over 1200 dentists throughout Canada, the United States and internationally and the use and application of our technology and products.

Today, we are in the market as the commercial revenue stage company.

And 2018, the first year of our operations with our current operating model, we reported revenue of $3 8 million.

The following year 2019 that revenue number tripled to $11 4 million.

Today I am pleased to report the for the full year 2020, we achieved revenue of $13 1 million, a 15% year over year increase.

We surpassed 15000 total cases treated with the vivo system, we generated gross profit of $10 4 million, realizing a gross margin of 80%.

And we decreased general and administrative expenses as a percentage of revenues.

And we ended the year with cash and cash equivalents of $18 2 million.

Brad will review our financials with you in more detail.

We think these results are very impressive, especially considering the challenges are trained dentists and company faced in 2020 from the COVID-19 pandemic.

Im extremely proud of our talented and extremely dedicated team for everything we achieved during 2020 and want to personally thank all of them for their countless hours and significant contributions to the company's continued growth and success.

In addition to these results. We also accomplished many significant milestones and our development both during the fourth quarter and and the following months. This.

And this includes our December IPO on the NASDAQ, where we generated net proceeds of approximately $21 6 million after deducting underwriter discounts and commissions and offering expenses payable by the company.

This influx of new capital is a game changer for us as a significant portion of our IPO proceeds are being used to hire train and deploy additional sales teams and expand our geographic coverage across the U S and Canada.

And also listing our common stock on the NASDAQ capital market provides us greater visibility within the investment community as well as new opportunities to access capital.

This capital markets exposure will help support our ongoing research efforts to expand indications of use for our products and services, which should accelerate our growth as we continued to develop and commercialize new and innovative solutions for the millions of people worldwide suffering from sleep apnea.

Our IPO is only one of our recent accomplishments.

In January of 2021, we commercially launched air owe to a new patient and practice management software platform that will enable our vivo and integrated practices to more effectively manage schedule and monitor and process their patients with OSA and it's real.

Weighted conditions.

Developed in collaboration with lie and dental Aero. Two contains features that enhance health care professionals billing services and more including practice management systems. We believe our sleep specific arrow to patient and practice management platform represents a significant advancement and how medical and <unk>.

And our professionals will be able to efficiently treat sleep disorders, we look forward to continuing to market <unk> as a complement to our existing building intelligence service for our VIP for our vivo and integrated practices and to actively pursuing aero too as a revenue source from other OSA folks.

Health care providers.

And early February 2021, we submitted a 500 10-K class two application to the U S food and drug administration for our Mmm RNA oral appliance with indications to treat mild to moderate OSA sleep disordered breathing and snoring and adults.

Most of the mrna oral appliance as a new version of our existing mrna.

Clients, which is an FDA cleared class II oral appliance.

Mmm RNA received 510 class III approval, we would expect the mrna to be added to the centers for medical and for <unk>.

Medicare and Medicaid services and list of approved sleep apnea appliances.

This milestone would allow our vips to bill Medicare and be reimbursed for their patients aged 63 and up that want the vivo system treatment.

We expect this entire process will take approximately three to six months and total and look forward to keeping you updated on our progress.

Also in February we announce or we launched and announced our previously described vivo score powered by sleep image product <unk>.

Vivo score consists of a single sensor ring recorder that works with a mobile phone application and proprietary cloud based algorithms to evaluate sleep quality and clinically diagnosed sleep apnea. We believe this convenient and effective home sleep test will help open the door for more patients.

<unk> to be diagnosed and ultimately treated for sleep apnea.

Over time, we expect to generate increased revenue from vivo score due to an expected increase in total patients tested for sleep apnea and a corresponding increase in patients enrolling in the vivo system treatment.

We arrived at that conclusion based on the results of a recently conducted informal pilot study with independent vivo trained dentists and other vivo provider feedback, which may or may not prove reliable on a broader scale.

And the pilot study 12, Devos trained dentists performed approximately 938 sleep tests over a three month period using vivo score.

56% of the patients in the pilot tested positive for OSA.

And received a confirming diagnosis from a physician.

50% of all patients who tested positive then entered into treatment for OSA with the vivo system the.

These pilot study results indicate that vivo score may enable healthcare providers to more efficiently screen diagnose and initiate treatment for OSA and their patients, which could result in more patients being treated with the vivo system.

More recently in March of this year, our medical integration Division opened the first new Somnial clinic located in del Mar, California. This clinician owned integrated medical Dental Sleep Center features of the vivo system vivo receives and recurring management fee from each new some of the Clint.

Nick the.

Del Mar clinic is owned and operated by a diverse group of local physicians.

Led by Dr Mimi Guarneri and and <unk>.

Award, winning physician and researcher a highly acclaimed cardiologists as well as the founder and president.

Of the the Academy of Integrative Health and Medicine.

I strongly suggest you watch and amazing webinar and webinar.

Webinar presentation recently, given by Dr temporary height, and doctor coronary by searching Youtube for the science of sleep apnea.

By combining the efforts of both medical doctors and dentists and addressing OSA. Our hope is to see more patients being screened diagnosed and treated with the vivo system.

In addition to the del Mar facility. We are currently developing new some of these centers and Colorado, California, New Jersey, and Nevada. We are excited about the prospects of the centers and we will keep you updated as these new new somnus centers are opened.

Complementing these recent milestones in January we established a clinical advisory board to further drive adoption and growth of our next generation treatments for OSA.

And informing this advisory board, we sought out the world's leading minds in the sleep medicine and dentistry fields. As a result members of <unk> Advisory Board include internationally recognized medical and dental industry veterans, who will work closely with management to drive further commercial success for the company.

These board members share our vision and recognize the potential of the vivo system.

In closing we have accomplished a great deal since we started the most in the fall of 2016 and.

Just the past few years, we've already proven our core business go to market strategy and model.

Demonstrated by the substantial revenue growth we've achieved to date.

We continue to validate our technology and enhance the therapeutic protocols that make it so effective which helps contribute to the strong adoption of the vivo system and related services. We continue to expand our market penetration fostering increased awareness of our therapeutic products and services through our marketing initiatives.

And our medical integration Division.

Moving ahead, we expect our momentum and growth to continue as more dentists and health care providers learn about the benefits of our innovative treatment for OSA.

We believe we are well positioned to accelerate our growth by using our IPO proceeds for research and development as well as to expand and enhance our marketing and sales efforts throughout the U S and Canadian markets.

In addition to North America, and the future, we expect to expand our presence in other international markets through our trained dentists, who are already spread throughout the globe.

By continuing to execute on these plans, we expect to further expand our number of Vips and grow our product volume and substantially expand our revenue. We are very pleased with what we've already achieved and are even more optimistic about our prospects. We look forward to updating you as we continue to execute on our strategic plans in 2000 and <unk>.

'twenty, one and beyond.

This concludes my opening remarks, now I'll pass the call onto Brad who will review our financial results Brad famine.

Thank you Kirk and good afternoon, everyone.

I'll review, our fourth quarter and full year 2020 financial results.

We reported total revenue of $3 3 million for the fourth quarter of 2020 compared to $3 1 million for the fourth quarter of 2019 year over year revenue increase the revenue increase reflects the continued growth of our VIP program, along with an increase and the number of oral appliances.

Even with the headwinds associated with Covid.

For the full year 2020 revenue increased 15% to $13 1 million compared to $11 4 million for the first for the full year of 2019 the.

The increase was attributable to the same factors I mentioned earlier during 2020, we enrolled 248 Vips for revenue of $7 5 million compared to 200 for Vips and revenue of $6 $7 million for 2019 and.

Additionally, our billing intelligence service revenues increased from approximately $256000 and 2019 to $620000 for the full year 2020.

During 2020.

We saw a 73% more oral appliances.

For revenue of $4 $5 billion and we did for 2019.

This increase and appliance revenue is due to both volume and price increases.

Gross profit was $2 $7 million for the fourth quarter of 2020 compared to gross profit of $2 2 million for the fourth quarter of 2019.

For the fourth quarter of 2020 gross margin was 81% compared to 72% for the fourth quarter of 2019.

For the full year 2020.

Gross profit was $10 4 million compared to $8 $7 million for the full year 2019.

Our gross margin was 80% for the full year 2020 compared to 76% for the prior year.

During 2020, our cost of goods sold decreased approximately $100000.

On increased sales of $1 7 million COVID-19 impacted our sales mix as many dental offices were forced to close during April and May the.

This.

Resulted in higher margin service revenue <unk>.

Including online continuing education courses, we sponsored representing a larger portion of our overall revenues and our product revenues for the full year 2020 as compared to 2019.

General and administrative expenses were $4 6 billion for the fourth quarter of 2020, and $16 $1 million for the full year 2020, compared to $4 1 million and $16 2 million for the fourth quarter and full year 2019, respectively.

As a percentage of revenues general and administrative expenses decreased year over year as a result of scaling operations growing revenues and reducing payroll and travel expenses during the pandemic.

Net loss was $6 2 million for the fourth quarter, 2020, and $12 $1 million for the full year 2020, compared to $2 6 million for the fourth quarter of 2019 and $10 $8 million for the full year of 2019.

This increase and net loss in 2020 was primarily due to a one time legal and noncash settlement expense of $3 $3 million, we recorded in the fourth quarter of 2020.

Where we issued 300000 shares of common stock and 325000 warrants to purchase common shares.

This was partially offset by $1 $8 million of higher gross profit and we achieved in 2020 due to the factors that I mentioned earlier.

Turning to our balance sheet at December 31, 2020, our cash and cash equivalents were $18 2 million compared to cash and cash equivalents of approximately $469000 at December 31 2019.

As Kurt mentioned earlier, we completed our IPO last December by issuing 4.025 million common shares at a price of $6 per share generating net proceeds of approximately $21 6 million after deducting underwriter discounts and commissions and offering expenses pay.

Well to the company for.

Following our IPO and as disclosed in our IPO prospectus, we made payments of $2 million to our founder and Chief Medical officer to redeem a portion of the outstanding series a preferred stock followed by an additional $1 $5 million and early January of this year to redeem all.

Outstanding remaining series a preferred stock of.

Notes by fully redeeming the series a preferred stock we gained full control of the intellectual property underlying the vivo system.

Before we go to Q&A I want to make a few comments about the coronavirus pandemic as it relates to our company.

As we all know the COVID-19 outbreak resulted in significant economic disruption globally.

<unk> has taken to combat the spread of the virus, including temporary business shutdowns and social distancing practices significantly reduced global economic activity many of our Vips and potential vips closed their offices during this time.

Although some remained open to specifically provide patients with Veeva is appliances and vips were deemed an essential business for <unk>.

Health considerations.

While we experienced limited revenue growth during March and April of 2020, we worked diligently to reduce expenses and maintain revenues. During 2020. This led to 15% revenue growth for the year, which exceeded our initial expectations in 2020 and into 2000 and.

'twenty one we have continued to work to improve cash flow and manage our working capital, including disciplined management of expenses.

Further in 2020, we continued to aggressively expand our network of healthcare providers familiar with Veeva products by offering online continuing education courses, which introduced many in the medical and dental communities to our product line, even during the height of the pandemic.

We believe these actions have contributed to our growth and enrollment revenue as well as greater awareness of the Viva system and the marketplace and.

In summary, despite the challenges we faced in 2020.

We persisted and have entered 2021 is a stronger more efficient organization.

Additionally awareness and.

And adoption of the vivo system has continued to spread throughout both the dental and larger health care communities and we expect this momentum will continue to build throughout the balance of 2021 and beyond that concludes our prepared remarks now I'd like to open the call for questions and opera.

Later, please go ahead.

Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is and the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick.

For your handset before pressing the star keys, one moment, please while we poll for questions.

Your first question comes from the line of Alex Nowak with Craig Hallum Capital Group. Please proceed with your question.

Great Good afternoon, everyone.

And I'm really interested and the at home sleep test score that your license and can you maybe walk through the logistics of that how that's going to be administered by the debt how does that kind of translate back in the appliance sales and would you ever sell of the vivo score just by itself beyond the actual and VIP Dennis or is this only going to go to your Vips.

Great question, Alex Thanks for that.

Yes, so we the vivo score is in our view a breakthrough product it lowers the cost of of administering a screening and diagnostic test by up to 90%.

Its form factor of being just a simple ring that goes on your finger.

And you put the ring on U it syncs up automatically to and App. That's been downloaded to yourself phone you just simply go to sleep and wake up the next morning pull the ring off of your finger and.

And the test results are immediately uploaded into the cloud where proprietary algorithms at sleep image process. The data and produce the report. That's then immediately sent to your provider. The provider can then look at it and determine whether or not it needs additional.

The review by a board certified sleep specialist that board certified sleep specialist will in turn.

Make it make the diagnosis of the condition of sleep apnea and.

And then get back to the to the dentist with recommendations. The dentist then sets up of meeting or.

<unk> of telemedicine call between his patient and the board certified sleep specialist to review the results of their tests once that happens the patient decides which pathway of treatment. They want to go and and in many cases, we believe theyre going to prefer the vivo system treatment over all others.

So we believe that this system. This this is the.

And it's a quiet and advance in the state of the art as far as just ease of use cost of use et cetera on.

Our plans for the distribution of this are our growing and broadening as we speak with the very announcement of this technology and its availability.

And our phones were flooded with leads and people call and to say what is this what have you got on.

Clinic and here in Florida on this over here and this part of the World and people were wanting to know how they could get their hands on it.

So we are really excited about this we are really excited about what it means in the dental office the way that it'll be deployed is that the dentists will have as their patients come through their every six month hygiene checks what will happen is that the hygienist will ask a few.

The screening questions for the patient to just sort of evaluate whether or not there might be any type of a condition and then present them with this ring the fingering device to take home and to further evaluate or screen for this condition. The patient. This is what's really good about this product as of.

Other home sleep test have consumables, the consumable cost, let's say for and Edmar watch Pat can be as high between.

Between 45, and $65 and if you use the watch Pat one which is their disposable unit it can be as high as of $100. So we're talking about now for just two or $3 per test, we're talking about the ability for that patient to take this this ring censor home the patient can get test.

Did their spouse or bed partner can get tested they can test and are teenagers. Their children. All of these patients and we can get a profile on and entire family without any incremental consumable costs and.

So it's easy to get a a sleep apnea profile on the entire group of people and a very very cost effective and efficient manner. That's never been available to be done before what used to happen was let's just take with and Edmar watch Pat which is a very popular brand the.

And the patients would take at home if the test failed throughout the night or if there was some of it.

Even if it was a good test if they wanted the test the second patient and the home they'd have to come back to the to the dental office or the health care provider get everything reset cleaned up and re reconstituted then go back again at another additional cost none of that is necessary with this so it really allows for.

For.

Something very very interesting and net and that we can now monitor the progress of of patients throughout the course of treatment, that's never been realistic or practical before so.

And what would typically happen with the Polysomnogram, which is the and lab overnight sleep test is it of Polysomnogram would be used.

<unk> often to initiate some type of treatment, but very rarely would it be used throughout the course of treatment as a matter of course now we have the ability to get polysomnogram quality data.

Polysomnogram quality data on a regular periodic basis at the discretion of the providers. So the provider can tell his patient I want you to I want you to go ahead and take this test give me a couple of nights back to back, let's just see how youre doing and throughout the throughout the course of treatment the.

And can now know how well they are there.

And there.

Patient is progressing towards a return to normalcy.

That's great really interesting I appreciate the detailed response there.

Maybe speak to the the sales team expansion that you have planned here for 2021 and how.

Many reps do you want a higher and what is the focus on the sales team is it more to recruit more of VIP is it to get better and utilization on the existing VIP is of some more detail there.

Yeah. So one of the limiting factors that we had prior to our IPO was of a capital constraint, which really precluded us from being able to market.

As we as effectively as extensively as we would like to our core target audience of the dental profession with the proceeds from the IPO, we've already begun marketing more directly and more intently to that audience and we're seeing tremendous growth and are the top line of our sales funnel. So.

As we as we gained more leads from the dental community at the top of the sales funnel.

Of those leads by the way doubled from January to February just in the last quarter. So we have we have doubled just and as we've initiated the deployment of this capital we're seeing a tremendous uptick and the number of leads at the top of the funnel and what we do is we have a.

A sales team that's constituted of very specific types of people onboard and specialist business development people.

Enrollment specialists support individuals and these people.

Act as a unit as a team to bring those those doctors down through the sales funnel and enroll them as vips. So we've actually constituted we start we ended last year with one team we constituted our second team now and we're in the process of forming our 13th the goal for this year is to have.

And on several of these teams dispatched throughout geographically dispersed throughout the United States and into Canada, and we then will we will replicate this and scale of this up accordingly, so it's a scalable model replicable and we've actually been able to validate our assumptions about about how these teams can for.

<unk>.

Oh, that's great and then during 2020, just due to the Lockdowns, obviously, you had less or appliance sales and you did.

On the those.

Service fees, which isn't a bad thing because you are right you are bringing more people on the top of the funnel and that just relates to the overall more appliances, but for 2021 and I guess 2022 do you think you'd get back to a 50 50 split of appliance sales versus service or when does that.

And when does that start to converge again.

Yes, it'll it'll flip sometime in 2022, we think I mean, it's we really can't be too specific about those forecast, but I can tell you that that that number will flip and the recurring revenue from ongoing appliance sales will outpace the of the new enrollment revenue and services revenue bucket.

Sometime in the not too distant future.

Okay understood and then just last question for me any update on the Stanford study and then just beyond the Stanford any other pieces of the literature of data, we should be watching out for.

Yes on the Stanford we just completed the.

The paperwork on that I think we're submitting resubmitting it back to Stanford Dr. <unk> Creek, Cruceta, who actually chairs our clinical advisory Board and also the recent sleep Research center at Stanford, He and I have been and communication and the last few days.

And they are finalizing some decisions around some of the equipment. That's required there we expect to see that study initiate very soon.

What was the second.

Okay.

Just sort of.

The studies and watch out for.

Well, we have two clinical trials that are IRB backed that are wrapping up right now and so we have and the next few months. We will have data that we will be able to publish and we're very excited about what we're going to be able to say there. So just stay tuned on that.

That's great I appreciate the update thank you.

You bet.

Your next question comes from the line of Scott Henry with Roth Capital. Please proceed with your question.

Thank you and good afternoon, a couple of questions.

First I know you said, it but I didn't take it down.

How many VIP did you add in 2020.

248.

248, Okay and.

When we think about VIP ads and 2021 Mike.

And my sense would be it would probably be kind of slower and the first half of the year, but then we would see that growth and the second half of the year are more notably.

Do you think Thats, a fair statement to just trying to get your sense on how we should look at Vips for 2021.

I think Thats fair, Brad do you want to comment.

The last year was such an anomaly because of the of the Covid.

Pandemic and in the summer when the law.

Of dental offices were shut down of these dentists were taking courses and and many of them and became vips. So.

With the pandemic.

A little bit too hard to see that seasonality.

Okay.

I do think that that's a fair assessment, what you said earlier Scott.

Okay, Great and then you mentioned you were adding a third team.

And when exactly you did the second team.

Marketing team and are the field and and when should we expect that 13 to be actively pursued and customers.

So the when.

And when we're talking about adding these teams theres, a theres a little bit of of ramping process that they have to go through so so although we hired most of the members of the team and began their training we didnt constitute the team until just and the last couple of weeks. So team too is is going to be fully onboard trained up.

Ready to go for Q2, we began.

Irene and training team three and we expect to have them on board here and the next few weeks, but.

But I would say team team won has handled most of the heavy lifting for our enrollments for Q1 here.

And <unk> and team to Wil will handle most of the enrollments for for Q2, and then we will be adding tier three and any other teams as we go throughout the year. There is just a little bit of a ramp and training process.

Okay. Thank you and then.

The score diagnostic and the Aero too.

And when we're thinking about the model do you view those two products as kind of driving business or should we think about them and their own line item of revenue as or more of that you kind of give them you get them out there to drive your other of your base.

And I'm, just trying to think of modeling those and and how we should think about them and the context of revenues.

No I think that's of Great question, So I would say, they're a little bit different I wouldn't I wouldn't put those two and the same category I would put the vivo for arrow to software product is a it's a practice management program software program that specifically designed to run a sleep of dental sleep Pratt.

And so what happens is that these dental practices and modern and our modern world are driven and they're driven by their software platform. So they have this practice management software and people who are not familiar with how this works and the dental practice don't realize the extent to which the software.

Does all kinds of things for that provider and that team to drive appointment scheduling to drive reminders to drive productivity and and.

And all kinds of things in the dental office well there was no counterpart and there is no functionality or no modules that were available for dental offices to run their sleep business and so they were really operating and a very manual sort of.

Back of the napkin kind of way to run their vivo business. So we knew of long time ago that if we could get a sleep platform put together for them that that would facilitate the ease of use the.

And the more barriers, we can knockdown in the dental office to make the introduction and integration of <unk> and easy thing the more cases theyre going to start the harder it is for them. The more intrusive it is and their daily workflow the more difficulty theres going to be and them adopting and selling this service to their.

Patients and so we've made it extremely easy for that to happen and the same is true on a on a little bit different scale from the vivo score product I touched earlier on the ease of use component that exists there. It was such a hassle for these dental offices and so many instances to dispatch and.

And and regulate where the sleep tests were being done who had the sleep test each each sleep unit like if you go to Edmar and you want to buy of watch Pat unit Youre going to dropped $3 to $5000. So so youre going to spend a lot of money for that little kit, that's going to go home with your patients.

And with our technology, it's a 300 dollar of investment and a ring and the each test cost rather than 45% to $100. Each test is two to $3. So it's a really really different dynamic and more sleep test will be dispensed and more sleep test will be conducted and more people will be diagnosed.

And that will naturally lead to people wanting to know what do I do now I know I have sleep apnea, and it's a serious condition and the.

The seek out there they're either of their primary care physician or the dentist or or a combination thereof to figure out what's next and we want that what next to be to be vivo and whenever possible.

Okay great.

In the past you've given us.

<unk>.

The number for the year do you have a number for 2020 I haven't went through the 10-K, yet I don't know if the 10 there.

Yes, it is and the 10-K, but.

We had about 8100 oral appliance arches for the year 2020.

Okay, which is about seven out of Baker sent or sell more.

Was that a big uptick in Q4.

Well look what happened for the dental profession, and 2020 and for a lot of a lot of other sort of ancillary type.

Medical healthcare specialties, you, what you really saw and dentistry was.

Big drop in Q2.

It started off it started out and the end of Q1 went throughout all of Q2 by Q3, everybody started coming back and they gradually got back too.

Nir near capacity near near pre Covid normal normalcy by the time that we turned the corner on 2021. So as we moved into 2021, what we're seeing is record breaking numbers from our standpoint of new case starts et cetera, et cetera, and and so we're seeing things.

Kind of get back to the pace of growth that we saw before COVID-19 hit which is very encouraging to us.

Okay, great and that should do it for me. Thank you for taking the questions.

You bet.

Ladies and gentlemen, we have reached the end of the question and answer session and I would like to turn the call back to Mr. Kirk Huntsman, Chairman and CEO for closing remarks.

I would like to thank everyone again for joining us on today's call and for your continued interest and vivo therapeutics, we look forward to having follow up conversations with many of you and to updating you on our progress. Thank you and have a great day.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

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