Q1 2023 Vivos Therapeutics Inc Earnings Call
Good day, everyone and welcome to the <unk> Therapeutics first quarter 2023 earnings 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 people, whose web site and will remain posted there for the next 30 days.
I will now hand, the call over to Julie Gannon leave us as Investor Relations officer for introductions and the reading of the Safe Harbor statement. Please go ahead.
Thank you operator, Hello, everyone and welcome to our conference call a copy of our earnings press release is available on the Investor Relations section of our website at Www Dot Devos Dot com with us on today's call are constant Devos, Chairman and Chief Executive Officer, and Bret Amin.
Chief Financial Officer Today will review the highlights and financial results for the first quarter of 2023 as well as more recent developments and be bold plans for the remainder of 2023. Following the formal remarks, we will be happy to take questions. I would also like to remind everyone that today's call will contain certain forward.
We're looking statements from our management made within the meaning of section 27, a of the Securities Act of 1933 as amended and section 21 E of the Securities and Exchange Act of 1934 as amended concerning future events.
Words, such as aim null could should projects expects intends plans believes anticipates hopes estimates and variations of such words and similar expressions are intended to identify forward looking statements. These statements involve significant.
Known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant risks uncertainties and contingencies and many of which are beyond the company's control actual results, including without limitation. The results of the both growth strategies operational plan.
Including sales marketing product acquisition, and integration research and development regulatory initiatives cost savings plans and plans to generate revenue as well as future potential results of operations, our operating metrics such as potential for future positive cash flows and other matter.
It can be addressed by vivo 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 and other disclosures contained in vivo filings with the security and it.
Change commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31st 2022, and our other filings with the SEC all of which are are or will be accessible on the investor relations section of vivo website as well as the SEC's web.
Right.
Except to the extent required by law do you most assumes no obligation to update statements as circumstances change finally, please be aware that the U S food and drug administration has given certain vivo appliances, five 10-K clearance to treat mild to moderate OSA any reference here in regarding devos.
<unk> or the vivo Smith it should be viewed in that context treatment of patients with severe OSA is performed off label at the sole discretion.
This whole clinical discretion of the treating doctor and is not part of the People's treatment protocol now at this time. It is my pleasure to introduce her huntsman chairman and CEO of vivo Kirk. Please go ahead.
Thank you Julie.
I want to thank you all for joining us on today's conference call.
Just a moment I'll turn the call over to our Chief Financial Officer, Brad Albin, who will walk you through the highlights of our first quarter 2023 financial and operating results.
Once Brad is finished I'll come back on and speak with you about the highlights of what we accomplished at vivo during the first quarter and in the past few weeks following the quarter end.
Including our acquisition of product rights and patents from advanced facial Demodex. This has expanded our product portfolio, even further, allowing vivo strained providers to treat it much larger percentage of their patients, which ultimately increases the revenue potential for veeva.
I'll also talk about our progress with the FDA as well as ongoing R&D efforts.
In more recent news I'll talk about some of the actions we took to improve our organizational infrastructure.
And highlight how we took steps to increase operational efficiencies reduce expenses and position us to take advantage of the growth opportunities that are available to us I.
I'm pleased to say that due to these initiatives. We can reiterate that we remain on target to achieve our goal of positive cash flow for the first quarter of 2024, which is a full quarter earlier than the target. We provided you on our last earnings call in March our goal is to achieve this key target without having to raise any further equity capital if possible.
Following that I'll talk about our plans going forward in 2023, how we intend to build upon what we've already done and.
What we have planned for the rest of the year as well as into 2024 after that we'll take your questions.
Now, let me turn it over to Brad to review our financials Black Brad. Please go ahead. Thank.
Thank you Curt and good afternoon, everyone. Today I'll review the financial highlights of our first quarter 2023 financial results.
Information on our results for the three months period ended March 31, 2023, I'll refer you to 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 the Bemis website.
Beavers Dot com forward Slash Investor Dash relations.
At the outset I want to say thank you for your patience as we switched auditors for the first quarter, which led to a delay in our 10-Q filing.
I am pleased to report that our relationship with our new auditors Moss Adams is off to a very positive start and we are looking for a smooth and productive relationship with them.
Today, We report first quarter 2023, total revenue of $3 $9 million compared to $3 6 million for the first quarter of 2022. The overall year over year increase was due to higher revenue from gave us integrated provider or VIP enrollments.
As well as increased sleep testing service revenue and increase in cotton in conference and training related revenue.
This was offset by lower revenue generated year over year from appliance sales billing intelligence services and central revenue.
Our VIP enrollments were up in the first quarter with 38 Vips enrolled versus 32 enrolled in the same period last year.
For the first quarter of 2023, we recognize VIP revenue of approximately $1 $3 million, an increase of 400000 or 42% and enrollment revenue compared to 900000 for the first quarter of 2022 at.
It should be noted that first quarter of 2022, VIP revenue was negatively affected by a $300000 adjustment that rose from the prior year impact of our change in revenue recognition policy.
We also saw an increase of approximately $200000 in revenue recognized from our home sleep test release program as well as an increase of approximately 100000 in conference and training related revenue.
The increase in total revenue was partially offset by lower product revenue.
During the first quarter of 2023, we saw 2369 oral appliance arches for a total of approximately $1 $7 million compared to 2965 during the first quarter of 2022 for approximately $1 9 million.
And for the first quarter of 2023, we recognized approximately 200000 in our billing intelligence service revenue compared to 400000 in the same period the prior year.
We also had approximately 100000 in center revenue compared to approximately 200000 during last year's first quarter.
Gross profit was $2 $3 million for the first quarter of 2023 compared to gross profit of $2 6 million for the comparable period in 2022.
Gross margin for the first quarter of 2023 was 61% compared to 70% during the last years first quarter, primarily driven by higher costs associated with VIP enrollment and training as well as costs related to our new programs, including the sale and leasing of sleep testing ranks.
We continue to refine our sales marketing and promotional efforts with potential vips.
Not only to increase the enrollment and revenue, but to improve our gross profits and margins.
This includes utilizing targeted social media and digital marketing efforts, specifically designed to drive sales.
As in the first quarter, we are now starting to see the benefits of these efforts with increased VIP enrollments on a year over year basis.
Sales and marketing expense was $600000 for the first quarter of 2023, a decrease of approximately 200000 compared to 800000 for the first quarter of 2022.
This year over year decrease was primarily due to decreased sales commissions and a reduction in associated sales related expenses.
Importantly.
G&A expenses decreased approximately $1 $7 million or 21% to six and a half million dollars for the first quarter of 2023 compared to $8 3 million for the first quarter of 2022, reflecting the substantial impact our cost cutting efforts are beginning to make we.
We believe these important efforts will reduce our cash burn as we seek to ramp revenues and move toward cash flow positive operations.
Operating loss was five <unk>.
For the first quarter of 2023 compared to $6 6 million for the first quarter of 2022. This year over year decrease in operating loss was primarily from lower G&A expenses due to expense cuts and the factors I just discussed.
Net loss was $1 $7 million for the first quarter of 2023 compared to $5 3 million for the first quarter of 2022.
Reduction in net loss was due in part to cost cutting.
But also during the quarter, we recognized approximately six and a half million as a one time non operating expense related to the difference between excess fair value from warrants issued in our January 2023, private placement and the net proceeds we received.
The change in fair value of the warrant liability over the quarter was $9 $6 million net of issuance costs of 600000.
Accordingly, the net impact of the private placement warrants for the three months ended March 31, 2023 was approximately $3 2 million of noncash other income.
Please refer to our 10-Q for further details regarding this.
Turning to our statement of cash flows cash burn from operations for the quarter ended March 31, 2023 was three and a half million dollars a decrease of approximately $2 6 million compared to approximately $6 1 million during the comparable prior year period.
This is further evidence of the positive impact of our expense reduction initiatives.
For the quarter ended March 31, 2023, net cash used in investing activities consisted of capital expenditures for software a 300000 related to the development of software for internal use which is expected to be placed into service in mid 2023 as well as a purchase.
Patents and other intellectual property in February of 2023.
This compares to net cash used in investing activities of 100000 in the comparable 2022 period arising from capital expenditures for internally developed software.
As I mentioned earlier in January of 2023, we strengthened our balance sheet by closing a private placement with a single institutional investor for net proceeds of approximately $7 4 million private placement consisted of shares of common stock and pre funded warrants together.
With five and a half year common stock purchase warrants with an exercise price of $1 20 a share.
The effective purchase price per share of common stock or pre funded warrants in lieu thereof, and associated warrant was $1 20 per share.
As of March 31, 2023, we had $7 million in cash.
With the financing we completed in January as well as the strategic initiatives, we have applied to reduce our expenses, we continue to anticipate having the necessary financial resources to meet our capital needs.
And our operations and continue executing on our near term growth strategy.
In the short term we expect these changes will result in relatively flat revenues sequentially for the first half of 2023.
This is this also takes into consideration our new ASC 606 revenue recognition policy.
Afterwards, we anticipate top line quarter over quarter revenue growth will resume starting in the third quarter of this year.
Further as Kirk mentioned earlier, we believe these initiatives will allow us to accelerate our target time for reaching positive cash flow by a full quarter now in the first quarter of 2000 22024.
With that I'll turn the call back over to Kurt.
Thank you Brad.
The first quarter that we're reporting on here today may seem like a distant memory.
But we believe it represents a significant watershed moment for the company and our future.
First in January in early January we announced FDA five 10-K clearance for our flagship DNA oral appliance product.
This represented the first time in history that the FDA recognized any mechanism of action and an oral appliance other than mandibular advancement for the treatment of mild to moderate obstructive sleep apnea no oral appliance product has ever received such a clearance and the significance of this breakthrough should not be underestimated.
We fully believe that after several years of going back and forth with the FDA. They were finally persuaded by our submission of yet another round of compelling real world data. This time, showing a remarkable 80% of OSA patients seen their symptoms completely resolved after treatment using the DNA appliance and the vivo smell.
<unk>.
Now to be clear.
This data showed that that clinical OSA, meaning AHRI scores of five or higher was no longer present in four out of five patients after treatment and with no further intervention required.
As far as we know such clinical results are unprecedented in sleep medicine, and unparallel by any other product or therapy. We.
We expect the full financial impact of that regulatory clearance on our sales to be realized over time as doctors alter their treatment plans to include more DNA appliances.
Second on the heels of our announcement regarding the FDA clearance for the DNA appliance, we raised an equity tranche with a with net proceeds of roughly $7 4 million from a single institutional investor.
We immediately put this capital to good use and expanding our intellectual property and products suite through the acquisition of certain patents trademarks and trade secrets from advanced facial <unk>. We closed on this transaction towards the end of the first quarter.
That acquisition not only ensures that <unk> will maintain its technological and market leading position at the forefront of treatments for certain conditions closely linked to obstructive sleep apnea, such as TMT pain, bruxism nasal resistance migraine headaches and other conditions, but it also fills a gap in our product.
Sweet and offerings to patients to providers and patients.
Nearly 40 million people in the United States suffer from TMT pain and related issues. Another 40 million suffer from migraine headaches or have difficulty breathing through their nose, our new patented unilateral bite block technology has been shown to be highly effective in treating such conditions.
Also during the first quarter, we accelerated the process of right sizing, our corporate staffing levels and reorganizing our management team in order to reduce our cash burn and pushed the company closer to cash flow breakeven, which as Brad mentioned, we now expect to achieve during the first quarter of 2024.
As a subsequent event early here in the second quarter, we announced a reduction in force and further reductions in overhead.
We think these prudent and necessary actions will serve us well as we look to improve our results of operations on.
On the operation side, we made important progress in our current pilot tests with certain DSO organizations known as dsos, including the execution of new and existing pilots with eight regional and national Dsos, representing over 1000 locations nationwide.
I'd like to highlight one particular DSO, which operates in all 50 states under the name tooth pillow.
Over the past 12 months tooth pillow has been making exceptional strides forward in cultivating a direct to consumer channel exclusively geared towards use of our vivo sky's products for pediatric guided growth and development.
An estimated 16 million children between the ages of three and 12 suffered from various oral facial and developmental issues associated with a D D ADHD.
Behavioral problems scholastic challenges chronic allergies mouth breathing cricket and crowded teeth bed wetting and breathing related sleep issues, all of which may be helped through proper oral growth and development.
<unk> is a pioneer in telehealth commercial partner of vivo and we are their exclusive oral appliance supplier.
<unk> is set to redefine the field of pediatric dental and orthodontic treatment with a particular focus on breathing related issues.
This transformational relationship Leverages vivo says world class pediatric oral appliances, underscoring the role of our cutting edge products and advancing the delivery of dental and orthodontic care.
To fill of both our strong National network of 48, Devos trained Dennis that serve as virtual trading partners and a rapidly growing referral base of over 358 in practice providers the.
The synergy between vivo says premium pediatric oral appliances, and two pillar software and highly skilled practitioners is creating a holistic accessible and high quality telehealth solution for at risk patients age three to 12 Oh.
Over the past year tooth pillow has been perfecting its proprietary virtual care platform featuring a mobile app designed to facilitate seamless connections between patients and doctors despite not yet having launched its national marketing campaign tooth pillow services have already been sought out by patients in 40 states.
All through referrals with 64% of all new inquire inquiries converting into pain patients veeva.
<unk> is excited about our relationship with tooth pole and we believe it not only showcases the effectiveness and versatility of our oral appliances, but also opens up a large and exciting new Avenue for growth. We are confident the tooth pillow success will further amplify <unk> reputation in the industry, bringing us one step.
Closer to our vision of training health care professionals, and providing them with a very best treatment tools and technology available.
Equally as important to pillow as one is just one of several dsos, we have been speaking with and starting to do business with and therefore it serves as an example of similar relationships, we hope to enter into in 2023 and beyond.
Also today, we are announcing the execution of our first non exclusive distribution agreement for a 90 day pilot with a nationally recognized durable medical equipment company or <unk> that serves hundreds of thousands of CPAP patients nationwide, who are seeking alternatives. If this pilot is successful a national.
Rollout is planned to follow and we can provide more details at that time.
Other similar agreements with potential distributors are in process. We continue to believe that the financial impact on top line revenue from these efforts will begin to show up in the third and fourth quarters of this year.
An integral part of this pilot is the treatment navigator program that we introduced last fall. This program was designed to effectively act as an extension of the VIP practice to help the dental office guide the patient through the many different steps of the patient journey, including coordinating diagnostic appointments insurance Preauthorizations further.
Their education, and generally coaching to patients through treatment under the direction of the treating doctor.
Excuse me.
Not only does the treatment navigator program removes significant workload from the practice it helps mitigate the challenges associated with employee turnover within the practice.
This pay vivo up to $895 per case for treatment Navigator services, which we expect will soon become a significant revenue contributor in profit center for us.
We believe our latest rounds of cost cutting coupled with an intense focus on creating new revenue streams will allow us to achieve our stated goal of achieving positive cash flow by the first quarter of 2024, our prior reliance on Veeva trained dentists to create demand from within their practices has now been augment.
Good bye vivo is actively driving new patients into their offices through multiple distribution channels, including primary care and specialty medical doctors medical equipment support suppliers large employers men's health clinics and more we deliver more qualified new airway patients to vivo.
As we deliver more qualified new airway patients to vivo strain providers, our value proposition to potential new providers becomes more compelling and attractive. It's a virtuous cycle that creates the potential to organically fuel our growth we expect to begin to see the impact of these strategic initiatives in the latter half.
Of this year with respect to our ongoing R&D efforts. The last year. This past year has produced the single largest advancement towards proving the efficacy of our technology with multiple studies and peer reviewed papers being published in top quality journals professional journals.
We are pleased to announce today the recent execution of an agreement with Stanford University to begin a randomized controlled trial, where our DNA appliances will be directly compared to CPAP.
Additional university based clinical trials, our Ddos products are currently in process and are expected to start before year end.
Currently there are no less than five additional new papers showing significant clinical results that have been submitted and are pending publication. The cumulative effect of this research is to establish beyond any reasonable doubt that vivo possesses the single most advanced and effective treatment for breathing the sleep disorders on the market today.
One final note on our product development front for.
For some time now we have been actively engaged in the development of a patient driven mobile app that will assist clinicians and collecting key diagnostic data and in monitoring patient compliance and progress while also empowering patients to take charge of their own health and wellness.
For example, patients can participate in taking periodic records, providing feedback and actually receive coaching and interaction with their providers.
Mobile platform also allows for remote delivery of certain clinical services, such as mile functional therapy breathing exercises important notifications and more.
Our surveys and provider feedback leads us to believe that there is strong potential demand for such a product and then it can be commercialized and highly profitable for both fevers and devos providers. While also taking a load off of dentists and their teams. We plan to have a beta version of the App ready for testing by the end of this.
And expect to have a commercial product available by the fourth quarter of this year.
Yes.
Now in closing.
We have the evidence based technology and products that can now address the needs of patients across the full spectrum of price points and needs.
We have the FDA clearances, we have the nationwide network of trained providers.
And now we have a growing brand awareness amongst both providers and patients through.
Through our new distribution networks, we will soon have access to more potential new patients than ever before we.
We believe the combined effects of our internal cost operating cost reductions and the strategic revenue initiatives outlined above will yield significant topline revenue growth and allow us to become self sustaining in the first quarter of 2024. This concludes our prepared remarks now we will be happy.
To take questions operator.
Thank you.
Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your mines in the question queue.
You may start to if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please pull for questions.
And our first question comes from the line of Scott Henry with Roth Capital Partners. Please proceed.
Thank you and good afternoon.
Hi.
Yes.
Cash flow positive.
In the first quarter of 'twenty four would be fantastic. So.
If you can achieve that goal. So I just wanted to drill a little bit into the assumptions I know you expect flattish revenues in the first half of this year.
But what sort of revenue run rate do you think would allow you to achieve that goal.
We believe that at 8 million run rate per quarter, we can hit that goal Scott.
Okay.
Thank you.
Paul.
<unk>.
When I look at the expense items obviously.
Sales and marketing was.
Way down.
Yes.
I know there was layoffs recently.
I want to hone in first is that sales and marketing level 600000.
That what we should think about going forward.
And second of all that G&A of $6 5 million I imagine, that's where the bulk of the cuts are going to come to.
You know what.
What should we think about us as a GAA once all the cuts and everything has taken effect.
Well you know if you look at quarter over quarter, Scott last year, we were at $8 3 million in first quarter, we were at $6 5 million and G&A expenses.
In the first quarter of 2023.
The marketing expenses stayed roughly flat, we were down about 100000 quarter over quarter.
As those take place we believe on the.
On the personnel costs, we're going to have 500000 a quarter.
Go against that G&A expense. So that's roughly what we will save in terms of salaries wages and taxes and benefits.
Okay. Thank you that's helpful.
Just a couple other small questions.
The arches, we're down in the quarter and if you calculate arches per Doc.
They were down.
Significantly.
How should we think about that number I mean, I know the business model is always changing and the accounting is changing as well just trying to get a sense of how we should think about that number as far as the arches.
How we should interpret the first quarter 'twenty three results and how we should think about that number going forward.
Well first of all I think there is a there's a certain element of.
The macroeconomic economy.
Yes.
Other other companies in the in the dental space have struggled with some of that and some of the results of that so there's that that plays into it.
There is a little bit of seasonality in Q1 that that plays into it but there was also an event that took place there was a little bit unfortunate.
Towards the middle to later part part of Q1, where there was some market confusion over.
A product that were that made similar claims to some of our products out there in the marketplace.
This product did not have FDA clearances did not have research did not have a lot of things behind it with a totally different type of product, but there was some market confusion over that and and frankly, a lot of our providers until we were able to wrap our minds around that and and really address that.
Directly.
They we just saw in and we've seen a little bit of a softening.
In the sales of of our arches from that standpoint, but that.
That seems to have passed things.
Things have picked up again here in <unk>.
And we're optimistic that we weathered that storm, a little bit there and that that contributed and especially in the latter part of the first quarter and into the second quarter. So.
We are seeing now where whereas we drive demand through some of these distribution channels that we're talking about that had never been there before.
We have new ways of helping.
Helping doctors find patients to treat and it appears to be significant.
Revenue opportunities for the for the doctors and their new patients and so we're very optimistic so it's going to be a come a point, where the old model, where we just relied upon dentist to source their own cases through their own practices and to do that.
We're taking the bull by the horns, and we're driving patients to our very best providers. So we are.
Actively pursuing the through our treatment navigator or airway alliance and our distribution networks that we've talked about we're actively working to drive patients into their offices and that's a very different kind of paradigm shift.
That we've.
And of the marketplace. So.
Okay, great. Thank you.
Final question.
Kirk.
No Brad set a pretty high bar for you of getting to $8 million a quarter.
Uh huh.
How do you expect you know what are the levers youre going to pull to get there from here how much do you get from from the AFP acquisition.
And you know is it the <unk>.
I mean big picture terms, you know what are the levers so you've got to pull to get from here to there.
Thank you.
Thank you Scott I think Thats, a great question and all I can say is is that.
There is a huge challenge.
The CPAP community and the CPAP World.
With patient compliance and with patients abandoning their treatment and and when patients abandoned the CPAP, which 90% of patients who get 90% of patients who are diagnosed with OSA get CPAP machines in the first 90 days of fourth of them will.
Stop using their CPAP and eventually about half are known to stop using their CPAP machines. So there is a huge huge number of people. It's in the millions of people out there in the United States, Canada and around the World, who have tried CPAP and are intolerant to it.
They don't use it they won't use it they can't use it for a variety of reasons some of them psychological some of them physiological some of them just preferential they just hate having it but.
Got it.
What are those people do well we've now unlocked.
The the secret if you will to Hao.
Access those those patients and what to do we've established some really clear.
And very.
Very good.
I think reasonable end market based distribution agreements with with people that know where those those those patients reside in and who they are and we're going to we're going to be going after them and theres. So much of that out there it's really hard for us to say at this point, how many of those patients will come in and convert into Veeva.
<unk> therapy, but we and our distributors are very optimistic that that number will will far exceed what we've been doing in the past and we're very optimistic about it. So it's not inconceivable at all for us to hit those numbers or exceed those numbers as we go forward now whether that happens in the fourth quarter.
Of this year, the first quarter of next year or the timeframe that we've given is hard to say, but as we look at it and we're in the trenches every day with these distributors.
The we're very optimistic about it and we will see what happens I mean, there's as we've talked before it's time for this company to put up and <unk>.
And.
So we're moving every resource we have to make this happen and to demonstrate that we can we can grow. This company. So that's that's why we're that's why we're optimistic so.
Yes. This is a it's a high bar, but we're we're very optimistic about it right now and that's our that's where we stand today.
Okay, great. Thank you for taking the questions.
Yet.
Our next question comes from the line of Lukas Ward with Sandy and capital markets. Please proceed.
Thank you hi, guys and congratulations on meeting your business goals on getting closer to your.
To your goals.
I am also interested in the revenue aspect.
I was wondering if you could quantify the impact.
Sales through the <unk> and the DSO channel like near term or.
In a few quarters, just so we can understand like.
How big that really is.
Yes, so thank you for that.
I think on the last call we've been talking about Dsos now for a year and a half and what we've what we've learned and we said at the very beginning that the opportunity with Dsos was huge there is 40000 dental offices across the United States that have.
Corporate ownership in these organizations called DSO. So the opportunity is huge but these guys are also very cautious and it's a slow boil for that and that's been exactly what's happened.
The opportunity as we now get into where some of our pilot tests are maturing and feedback is percolating up to the C suite and these dsos, we expect to start to see more expansion of that but it is still going to be a very cautious.
<unk> and a slow boil I expect that to be the case for another probably 12 months.
At some point, we will reach a tipping point with these guys where they will all collectively realize.
The opportunity that's before them in managing sleep, which is multibillion dollar opportunity for these dsos.
Fact that we now have a product suite with simpler easier better price points for DSO type customers patients I think makes it infinitely easier for us to crack that market.
On the DSO front, then I would say expect it to be.
Still continue to grow we're still signing on new relationships.
There are innovative new models, such as Ive mentioned, <unk> pillow, I highlighted that because theyre kind of an innovative direct to market type DSO or direct to consumer type DSO.
And I would say that debt.
That they will continue to contribute and frankly, if you talk to the guys at <unk> pillow. There there are goals for what the number of children. They expect to be able to address in the first year.
Is just it's just off the charts, but they have established.
Baseline with Influencers, social media Influencers lined up.
<unk> famous individuals' with children that have been through treatment now and have had tremendous results. We've published a few papers were publishing some more on the efficacy of what we're doing.
With children, So we have a.
And we have a pending FDA.
Clearance on that that we're hoping to get here real soon so we have a number of things thats going to drive that market. That's the first thing on the <unk> front again.
The magnitude of that opportunity is staggering and it's hard to say just.
How to quantify that I can by the time that we convene our next earnings call I think we will have a much clearer picture.
Of what that's going to entail, but when you think about the condition that.
And millions of patients are in who have been diagnosed with sleep apnea, who know they suffer from it but who are.
Unable for a variety of reasons to use our CPAP machines.
They really don't have any other options short of some type of radical surgery or an implant like inspire or something else, it's very difficult for them to know what to do or how to treat their condition and vivo represents a huge alternative first line of defense type of opportunity and I think we're creating relation.
These ships with Payors, and we're creating relationships with employers and we're creating relationships with these <unk> companies that are all going to be in a position to refer patients into devos providers across the country. The fact that we have a network nationwide. The fact that we now have lower price point products and.
Services, the fact that we have.
A differentiated technology is all very very appealing to these groups and.
I just think we're kind of at that at that inflection point, where it's hard for us to predict.
But we're we're cautiously optimistic about what we're seeing and the feedback we're getting and as Scott rightly pointed out the bar has been set pretty high and we're shooting for it so.
But I would I would say that by this time.
By the time, we report on Q2, and we start talking about.
What's going on with these these new relationships will start we'll start to be able to to grasp. What this is going to mean, but I think.
It's a little it's a definite inflection point for us and we expect revenue and volume to increase dramatically here as we go into the second half of the year.
Okay. Thanks Curt.
One more question you guys have mentioned that the AFP acquisition fills out an important product gap for you guys in terms of having.
More economical solutions or for providers.
Could you give us an update on the sales traction of the AFG devices.
Yeah, Yeah, that's that's going to be an easy one those are those are not yet reflected in any of our financials or returns.
We.
These products are.
A little bit technical.
Very different kind of technology than what we have in our.
Historically, so what we've had to do is create a whole new <unk>.
Training program.
And what we do know is that because these these products have been used by the advanced facial dawn takes doctors.
Have been used for years and years and there's there's really several thousand patients that have benefited from the use of these products. So we have a very good grasp of what the products do how efficacious they are.
And now it's time for us to two <unk>.
Train, our doctors retrain them on certain aspects of how to use products like the pod and the sleep pod and and other devices, but these products.
There are simpler they.
Require less chair time than our traditional products do they don't do all the things that are traditional products do which.
Which is an important distinction, but from a doctor standpoint.
They can they can fill and meet a need they can fill a gap and meet a need at a very very cost effective way with minimal chair time, and very high levels of patient satisfaction. So.
As we mentioned before.
The product offering was a little bit binary in that.
Patient either agreed to or at 8% to $10000 treatment plan or are we really didn't have anything to offer it was really the doctors if theyre going to take the case on they were going to get paid well for it or they weren't going to do it now the doctor can say well Mrs. Jones, if youre not quite ready for this treatment we've got a.
Other options for you here.
It might be that might be more appealing and and while they don't do the same thing.
That that the more expensive treatment does we can still give you some relief and maybe relief from your migraine headaches. Your T M D pain, you're <unk>.
Congested nasal passages theres, a number of different ways in which the patients can be benefited.
At a much lower price point, so instead of that patient walking out the door feeling.
Feeling like they couldnt afford the treatment now they walk out the door with having spent 500 to 300 $3500.
And it's affordable and it's.
Again, it might not do everything, but it's going to it's going to get the patient a long way to being better. So we feel very good about that our provider network is very excited about this there is a buzz out there around the pod and what's what its potential is we have started some research at some universities.
With.
With the pod, we're in the process of starting that right now as I mentioned and so we've got some very exciting things to come on that.
But I think it's the ability to offer a very cost effective treatment.
Protocol or treatment.
Modality that will actually make the difference for for our doctors it gives them something else.
To do with patients, who may not yet be ready to afford or pay for even with insurance benefits theres still an out of pocket portion there and it just it just gives them an alternative so I think we're going to see some and thats rolling out.
Even as we speak that's being rolled out right now are we finished our training.
Preparations with.
Videos and online training.
All of the resource materials that needed to be done and created for that and now it's been rolled out to our provider network. So again Q3, Q4, youre going to start to see the impact of of the new product lines more fully realized in Q Q3 and Q4.
Okay, great. Thank you very much.
Thank you, okay, ladies and gentlemen.
There are no further questions at this time I would like to turn the call back over to management for closing remarks.
Well. Thank you everyone for being here today, we as you can probably tell we feel like this is an exciting time in our history.
<unk> truly believe that someday, we will look back and see this particular time as as they are.
A watershed moment in the history of this company and we're excited about what the future holds in store.
We appreciate all of your support and the.
The patients you've had as we've gotten to this point.
We look forward to sharing our continued progress with you in the future. So thank you very much and have a great evening.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.