Q1 2024 BIOLASE Inc Earnings Call

Operator: Good day, and welcome to the BIOLASE first quarter 2024 results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal the conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone, and to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Michael Polyviou. Please go ahead, sir.

Good day and welcome to the BIOLASE first quarter 2024 results conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on <unk>.

Touchtone phone and plus draw. Your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr. Michael Poly view. Please go ahead Sir.

Michael Polyviou: Thank you, Chuck. Good afternoon, everyone, and thank you for joining us today to discuss BIOLASE's financial results for its first quarter ended March 31, 2024. On the call today from BIOLASE are John Beaver, President and Chief Executive Officer, and Jennifer Bright, Chief Financial Officer. John will review the company's operating performance for the first quarter and then turn the call over to Jennifer to give you the financials in more detail before opening the call for questions.

Michael Poly: Thank you Chuck good afternoon, everyone and thank you for joining us today to discuss BIOLASE financial results for its first quarter ended March 31 2024.

On the call today by a laser John Beaver.

Michael Poly: Chief Executive Officer, Jennifer Bright Chief Financial Officer.

John R. Beaver: John will review the Companys operating performance for the first quarter that turn the call over to Jennifer.

Jennifer Bright: Actuals in more detail before opening the call for questions.

Michael Polyviou: Before we begin, I'd like to remind everyone that a number of forward-looking statements, which are any statements that are not historical facts, will be made during this presentation and subsequent Q&A session, including forward-looking statements regarding the company's strategic initiatives and anticipated financial performance. These follow-look statements are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995 and based on BIOLASE's current expectations and assumptions and are subject to a variety of risks and uncertainties that could cause the company's actual results to differ materially from the statements made. Such follow-up statements only represent the company's view as of today, May 13, 2016. These risks are discussed in the company's filings with the Securities and Exchange Commission.

Jennifer Bright: Before we begin I'd like to remind everyone that a number of forward looking statements, which are any statements are not historical facts will be made during this presentation and subsequent Q&A session, including forward looking statements regarding the company's strategic initiatives and anticipated.

Michael Polyviou: A replay of this conference call will be available on BIOLASE's website shortly after the completion of today's call. When listening to this call, please refer to the news release issued earlier today announcing the company's 2024 first quarter financial results. If you do not have a copy of the news release, it is available in the investor section of BIOLASE's website at www.biolase.com. BIOLASE's financial results can also be found in the company's report on Form 10-2, which was filed with the SEC just a few minutes ago.

Jennifer Bright: These forward looking statements are forward looking statements as defined under the private Securities Litigation Reform Act 90, 95, and based on BIOLASE, its current expectations and assumptions and are subject to a variety of risks and uncertainties that could cause the company's actual results to differ materially from the statements made.

Jennifer Bright: Such forward looking statements only represent the company's view as of today May 13 2024.

Jennifer Bright: These risks are discussed in the Companys filings with the Securities and Exchange Commission.

Jennifer Bright: A replay of this conference call will be available at BIOLASE website. Shortly after the completion of today's call when listening to this call. Please refer to the unusually issued earlier today announcing the company's 2024 first quarter financial results. If you do not have a copy of the news release is available in the Investor section of BIOLASE website at Ww.

Jennifer Bright: W Dot BIOLASE Stockholm.

Jennifer Bright: <unk> financial results can also be found in the company's report on Form 10-Q, which will be filed with the SEC.

Jennifer Bright: A few months ago. The tables, we've provided in today's news release offer additional information additional financial information. So we encourage you to review them.

Michael Polyviou: The tables we've provided in today's news release offer additional information and additional financial information, so we encourage you to review them. Unaudited Gap, Net Loss, and Net Loss Per Share to Non-Gap Adjusted EBITDA Loss and Adjusted EBITDA Loss Per Share, as well as more information regarding the company's Non-Gap. With that, I'll turn the call over to John Beaver, BIOLASE's president. Chief Executive Officer

Jennifer Bright: The tables include the reconciliation of unaudited GAAP net loss and net loss per share to non-GAAP adjusted EBITDA loss and adjusted EBITDA loss per share as well as more information regarding the company's non-GAAP disclosures with that I'll turn the call over to John Beaver BIOLASE is president and Chief Executive Officer. Please go ahead.

John R. Beaver: Thanks Michael and thank you everyone for joining us this afternoon. We appreciate your continued interest in BIOLASE. I want to start by restating our primary objective, which is to ensure our industry-leading don't lasers continue to attract heightened interest and demand. Everything we do at BIOLASE is to help accelerate the adoption curve of lasers, which we believe will become the gold standard of dental care. I'm pleased to share the progress we've made over the past quarter.

John R. Beaver: Thanks, Michael and thank you everyone for joining us. This afternoon. We appreciate your continued interest in Biolife.

John R. Beaver: Start by Restating, our primary objective, which is to ensure our industry, leading dental lasers continue to attract heightened interest and demand.

John R. Beaver: Everything we do at BIOLASE is to help accelerate the adoption curve of lasers, which we believe will become the gold standard of dental care I'm pleased to share the progress we've made over the past quarter.

John R. Beaver: The increased adoption of our industry-leading laser technology with approximately 67% of our U.S. water late cells during the first quarter coming from new customers is a testament to the value and efficacy of our product. Furthermore, approximately 42% of these sales were from BIOLASE specialists, indicating a growing recognition among this important contingent as we assess our ability to penetrate the market further. As we've cited on prior calls, there remains a significant untapped opportunity in the dental market for our BIOLASE lasers.

The increased adoption of our industry, leading laser technology with approximately 67% of our U S. Waterlase sales during the first quarter coming from new customers is a testament to the value and the efficacy of our products. Furthermore, approximately 42% of these cells were from Dell specialist, indicating a growing recognition among this important contingent.

John R. Beaver: As such our ability to penetrate the market further.

John R. Beaver: So we've decided on prior calls there remains a significant untapped opportunity in the dental market for BIOLASE lasers with more than 90% of Dennis you had to embrace all tissue laser technology.

John R. Beaver: With more than 90% of dentists yet to embrace all-tissue laser technology, as many of you already are aware, the dental community is among the slowest in terms of adopting new technologies compared to other healthcare-related technologies, so it does take time to make an impact, and I believe our efforts are working. We are already the predominant brand in this space, with approximately 60% market share globally under our WaterLase brand, and we continue to actively engage the remaining 90% of the market since this represents the majority of our growth opportunity.

John R. Beaver: As many of you already are aware of the dental community is among the slowest in terms of adopting new technologies compared to other health care related technologies. So it does take time to make an impact and I believe our efforts are working we're already the predominant brand in this space with approximately 60% market share globally under our Waterlase brand and we continue to actively engage.

John R. Beaver: The remaining 90% of the market since this represents the majority of our growth opportunity or.

John R. Beaver: Our targeted sales and marketing initiatives and enhanced training programs are expanding our reach among dental specialists and general practitioners, as we emphasize the benefits of laser dental solutions to practitioners and patients alike. In the first quarter, we continued to increase awareness of the benefits of laser dentistry by holding over 100 webinars, study clubs, trade shows, and training events. Our strategy to grow more the adoption of our lasers includes bolstering our unique education and training programs, which we continue to implement in the first quarter through our Water Laser and Epic Academies.

John R. Beaver: Our targeted sales and marketing initiatives and enhanced training programs are expanding our reach among dental specialists and general practitioners as we emphasized the benefits of place you don't solutions to practitioners and patients alike.

John R. Beaver: In the first quarter, we continued to increase awareness of the benefits of laser demonstrate bought holding over 100, Webinars study clubs trade shows and training events.

John R. Beaver: Our strategy to grow market adoption of our lasers includes bolstering our unique education training programs, which we continued implementing the first quarter through our Waterlase and epic academies.

John R. Beaver: We have simplified training on our products for dental specialists and dental hygienists and have articulated the significant return on investment that they can achieve with our lasers, not to mention the significant patient benefit. The State-of-the-Art BIOLASE Education Center also provides dental professionals with an engaging, hands-on learning environment tailored around laser education.

John R. Beaver: Training on our products for dental specialists in Delhi, Janice now have articulated the significant return on investment that they can achieve with our lasers not to mention the significant patient benefits, but steadily our BIOLASE Education Center also provides delicate niches.

John R. Beaver: With an engaging haynesville and learning environment tells me it around laser education.

John R. Beaver: We remain committed to all of these revenue-generating activities as we believe these investments of time and resources will yield revenue opportunities in the future. As a result of these efforts, we continue to generate a strong number of marketing-qualified leads during the quarter, and our focus is on converting these MQLs to sales. It's important to repeat what we said in the past; each 1% increase in adoption of all-tissue lasers in the U.S. will equal approximately $50 million in additional revenue for BIOLASE, assuming we maintain our estimated 60% market share. This doesn't include potential increased adoption outside the U.S., where historically approximately 30-40% of our revenue has been generated, or the consumable revenue generated from the procedures performed with our laser system.

John R. Beaver: We remain committed to all of these revenue generating activities as we believe these investments of time and resources.

John R. Beaver: Old revenue opportunities in the future.

John R. Beaver: As a result of these efforts we continue to generate strong number of marketing qualified leads during the quarter.

John R. Beaver: Focus on converting these <unk> T cells.

It's important to repeat and what we said in the past each 1% increase in adoption of all tissue laser in the U S will equal approximately $15 $50 million in additional revenue for BIOLASE, assuming we maintain our estimate 60% market share. This doesn't include potential increase adoption outside the U S, where historically approximately 30% to 40% of our revenues.

John R. Beaver: Generated or the consumable revenue generated from the procedures performed with our laser systems.

John R. Beaver: On that note, sales of our consumables experienced remarkable growth this quarter, representing the third strongest quarter for consumable sales in our company's history. This is remarkable as the first quarter of the year, historically, has been our seasonally slowest quarter. With a 14% increase year-over-year, driven largely by over 600 memberships, we're thrilled with the momentum we've gained in this area. Additionally, our purposeful and prudent actions have significantly improved our operation. One of the most significant achievements during the quarter was a substantial reduction in our adjusted EBITDA loss. Our relentless focus on cost reduction initiatives enabled us to lower our Just E-Buy loss by 21% compared to the same quarter last year.

John R. Beaver: That note sales of our consumables experienced remarkable growth this quarter represented the third strongest quarter for consumable sales in our company's history.

John R. Beaver: <unk> is the first quarter of the year historically, it's been our seasonally slowest quarter with a 14% increase year over year driven largely by over 600 memberships were thrilled with the momentum we've gained in this area.

John R. Beaver: Additionally, our purposeful and prudent actions have significantly improved operations one of the most significant achievements during the quarter was a substantial reduction in our adjusted EBITDA loss.

John R. Beaver: Let's focus on cost reduction initiatives enabled us to lower our adjusted EBITDA loss of about 21% compared to the same quarter last year. This underscores our commitment to operational efficiency and financial discipline as we drive toward profitability, which we are on track to achieve by year end.

John R. Beaver: This underscores our commitment to operational efficiency and financial discipline as we drive toward profitability, which we are on track to achieve by year-end. These initiatives, coupled with our revenue expansion plans, position us for success in the quarters ahead. In summary, I believe the accomplishments in the first quarter point to a brighter future. Our performance reflects our unwavering commitment to growth and profitability. As we move forward, we remain focused on delivering value to our customers, driving growth, and maximizing shareholder value. With that, I'll turn the call over to Jennifer to provide further details regarding our first quarter results.

John R. Beaver: These initiatives coupled with our revenue expansion plans position us for success in the quarters ahead.

John R. Beaver: In summary, I believe the accomplishments in the first quarter point to a brighter future. Our performance reflects our unwavering commitment to growth and profitability as we move forward, we remain focused on delivering value to our customers driving growth and maximizing shareholder value.

John R. Beaver: With that I'll turn the call over to Jennifer to provide further details regarding our first quarter results Jeff.

Jennifer Bright: Thank you, John, and good afternoon everyone. I'm going to provide more context around some of the numbers as well as highlight some of the operational improvements we achieved during the first quarter. For further details, please refer to our financial results, which are included in the financial tables of our earnings release and our 10-Q. The challenging economic environment, including elevated interest rates, continued to impact our sales in the first quarter.

Jennifer Bright: Thank you John and good afternoon, everyone I'm going to provide more context around some of the numbers as well as highlight some of the operational improvements we achieved during the first quarter.

Jennifer Bright: Further detail please refer to our financial results, which are included in the financial table of our earnings release and our 10-Q.

Jennifer Bright: The challenging economic environment, including elevated interest rates continued to impact our sales in the first quarter, Although we were able to increase laser dentistry awareness through our education and training initiatives.

Jennifer Bright: Although we were able to increase laser dentistry awareness through our education and training initiatives, we continued our momentum with new customer adoption, with 67% of our U.S. water-laid sales coming from new customers, and 42% of U.S. water-laid sales coming from dental specialists. Additionally, as John mentioned, we reported the third highest consumable sales quarter in company history, with consumable sales increasing 14% year over year, driven by the increased utilization of our laser systems, from our education and training pathways, and the benefit of over 600 consumable memberships during the quarter.

Jennifer Bright: We continued our momentum with new customer adoption, but 67% of our U S. Waterlase sales coming from new customers and 42% of U S. Waterlase sales coming from dental specialists.

Jennifer Bright: Additionally, as John mentioned, we reported the third highest consumer wholesale quarter in company history.

Jennifer Bright: Consumable sales, increasing 14% year over year, driven by the increased utilization of our laser system from our education and training pathways and the benefit of over 600 kilo ball membership during the quarter.

Jennifer Bright: These are positive indicators of the increased demand we are experiencing for our industry-leading dental lasers in the U.S. and abroad, setting the stage for accelerated growth as the economic environment improves. Our gross margin, although relatively flat compared to the year-ago quarter, improved by 1% of net revenue from lower warranty expenses, reflecting the benefit of in-house manufacturing for our trunk fiber component, which was partially offset by severance expenses incurred in the first quarter of 2024 as cost reduction initiatives were implemented this year. As a result of the trunk fiber acquisition at the end of 2022, our in-house trunk fiber now makes up 100% of the trunk fiber we will be shipping in 2024.

Jennifer Bright: These are positive indicators and the increased demand we are experiencing for our industry, leading dental lasers in the U S and abroad getting that.

Jennifer Bright: Page for accelerated growth as the economic environment and Crazy.

Jennifer Bright: Our gross margin, although relatively flat compared to the year ago quarter improved by 1% of net revenue.

Lower warranty expenses, reflecting the benefit of in house manufacturing for our trunk cyber component.

Jennifer Bright: This was partially offset by severance expenses incurred in the first quarter 'twenty 'twenty four as cost reduction initiatives were implemented this year.

Jennifer Bright: As a result of the trunk fiber acquisition at the end of 'twenty. Thank you are and how strong fighter now makes up a 100% and they're trying to fiber you'll be shipping in 2024.

Jennifer Bright: We expect these cost savings to increase gross margin, improve cash flow, and get us closer to the 50% margin needed to reach profitability. On the expense line, total operating expenses were $7.9 million for the quarter, down from $8.6 million in the year-ago quarter. This 9% decrease was mainly due to the cost savings initiatives we implemented during 2023, which included a roughly 20% reduction in BIOLASE's U.S. workforce in June 2023. The workforce reduction is part of the company's broader efforts to gain greater efficiencies throughout the organization without impacting our revenue-generating strategies or the company's ability to continue delivering unparalleled quality and value to its global customer base.

Jennifer Bright: We expect these cost savings to increase gross margin.

Jennifer Bright: Free cash flow and get us closer to the 50% margin needed to reach profitability.

Jennifer Bright: On the expense line total operating expenses were $7 9 million for the quarter.

Jennifer Bright: From $8 6 million in the year ago quarter.

Jennifer Bright: It's 9% decrease mainly due to the cost savings initiatives, we implemented during 2023.

Jennifer Bright: Which included a roughly 20% reduction in violated U S workforce in June 2023.

Jennifer Bright: The workforce reduction as part of the company's broader efforts to gain greater efficiency throughout the organization without impacting our revenue generating strategies or the company's ability to continue delivering unparalleled quality and value to its global customer base.

Jennifer Bright: We expect to generate approximately $5-6 million of annualized cost savings due to these initiatives. We also expect to significantly lower WTP expenses for the full year 2024 by utilizing our centralized training and education facility. We have two dentists on staff to train prospective customers, and we continue to work with educational facilities nationwide to host WTP events at their locations at little to no cost. During the remainder of 2024, we expect to host about 50 to 100 practitioners at WTP events, so the expense savings will be quite meaningful. While we cannot control the macro environment, we can control certain manufacturing costs and operating expenses.

Jennifer Bright: We expect to generate approximately $5 million to $6 million of annualized cost savings due to these initiatives.

We also expect to significantly lower W. T P expenses for the full year 'twenty 'twenty four.

Jennifer Bright: Utilizing our centralized training and education facility.

Jennifer Bright: We have two dentists on staff to train perspective customers and we continue to work with educational facilities nationwide.

Jennifer Bright: W. T P event at their location at little to no cost.

Jennifer Bright: During the remainder of 2024.

Jennifer Bright: Back to her about 50 to 100 practitioners a W. T. P event, so the expense savings will be quite meaningful.

Jennifer Bright: While we cannot control the macro environment, we can control certain manufacturing costs and operating expenses.

Jennifer Bright: And these improvements in growth margin and operating expenses are positive indicators of our ongoing efforts to optimize operational efficiency and drive profitability. Our continued efforts to drive further operating improvements and efficiencies also reduced our first quarter adjusted EPITDA loss by 21% to $3.5 million compared to $4.4 million in the prior year first quarter. Now let's turn to the balance sheet. We finished the first quarter with cash and cash equivalents at $6.4 million, and we believe we have sufficient liquidity to execute our near-term growth strategy and reach positive adjusted EBITDA for the full year 2024.

And these improvements in gross margin and operating expenses are positive indicators of our ongoing efforts to optimize operational efficiency and drive profitability.

Jennifer Bright: Our continued efforts to drive further operating improvements and efficiency also reduced our first quarter adjusted EBITDA loss by 20.

Jennifer Bright: 21% to $3 5 million compared to $4 4 million in the prior year first quarter.

Speaker Change: Now, let's turn to the balance sheet.

Speaker Change: Finished the first quarter with cash and cash equivalents of $6 4 million and we believe we have sufficient liquidity execute our near term growth strategy and reached positive adjusted EBITDA for the full year 'twenty 'twenty four.

Jennifer Bright: We believe we can achieve this goal through the combination of top-line growth due to protected sales volume increases and certain price increases, expected lower cost of goods due to the trunk fiber acquisition, and the positive impact of our cost reduction initiatives. Now moving on to guidance. We are reiterating our full year 2024 guidance, which includes expected revenue growth of between 6 and 8% year over year to between 52 and 53 million in full year revenue.

Speaker Change: We believe we can achieve that goal through the combination of topline growth.

Speaker Change: Protected sales volume increases and certain price increase it.

Speaker Change: Expected lower cost a good chunk fiber acquisition and the positive impact of our cost reduction initiatives.

Speaker Change: Now moving onto guidance.

Speaker Change: We are reiterating our full year 2024 guidance, which includes expected revenue growth of between six and 8% year over year to between 52 and $53 million in full year revenue.

Jennifer Bright: This reflects the continued adoption of lasers and consumables by the dental community, including general dentists, dental specialists, and dentists in general, as well as dental hygienists and group practice entities, DSOs, offset by challenging business environments. Additionally, as I mentioned earlier, with a higher gross margin, expected WPP savings, and the cost savings initiatives I referenced, we continue to expect to achieve positive adjusted EBITDA for the full year of 2024. In summary, we believe our growth strategy, combined with our focus on improved operational efficiency, has positioned BIOLASE for long-term, sustained success.

Speaker Change: This reflects the continued adoption of lasers and consumable by the dental community.

Speaker Change: Clothing general dentists.

Speaker Change: Dental specialists.

Speaker Change: Hi, Janet and group practice and he has done.

Speaker Change: Sat fi challenging business environment.

Speaker Change: Additionally, as I mentioned earlier with a higher gross margin.

Speaker Change: <unk> W. P P savings and the cost savings initiatives I reference we continue to expect to achieve positive adjusted EBITDA.

Speaker Change: All year 2024.

In summary, we believe our growth strategy.

Speaker Change: And with our focus on improved operational efficiency has position BIOLASE for long term sustained success.

Operator: With that, I'd like to turn the call over to the operator to open the call with questions. Thank you. We will now begin the question and answer session.

Speaker Change: With that I'd like to turn the call to the operator to open the call with a question.

Speaker Change: Thank you.

Speaker Change: We will now begin the question and answer session.

Operator: To ask a question, you may press star then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Bruce Jackson with the Benchmark Company. Please go ahead.

Speaker Change: Ask a question you May press Star then one on your Touchtone phone.

Speaker Change: If you're using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: Anytime Youre question has been addressed.

Speaker Change: To withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.

Speaker Change: And the first question will come from Bruce Jackson with the Benchmark Company. Please go ahead.

Bruce David Jackson: Hi, good afternoon. Thanks for taking my questions. So with regard to the seasonality of business, are we expecting revenue to be up sequentially in the second quarter?

Bruce David Jackson: Hi, good afternoon, and thanks for taking my questions.

Bruce David Jackson: So.

Bruce David Jackson: With regard to the seasonality of the business are we expecting revenue to be up sequentially in the second quarter.

John R. Beaver: Yes, we are, Bruce. Historically, if you rank our quarters by best revenue to lowest revenue, it would be Q4, Q2, Q3, and Q1, and I don't see any reason that this year would not follow that same seasonality.

Bruce David Jackson: Yes, we are a bruise historically, yeah, if you rank our quarters by best revenue to lowest revenue. It would be Q4, Q2, Q3, and Q1 and I don't see any reason that this year would not follow that same season.

Bruce Jackson: Audi.

Bruce Jackson: Okay.

John R. Beaver: And then we had positive radiographic data come out from the McGuire study. Has that helped you at all with any of the dental service organizations?

Bruce Jackson: Then we had the positive where geographic data come out from the Mcguire study has that helped you at all with them and use the dental service organizations.

Audi: [laughter] you you would think it would Bruce.

John R. Beaver: You would think it would, Bruce. I think it has allowed us to continue conversations with those DSOs. But I think what we're finding is that just the presence of the study, you know, it's not going to make anybody BIOLASER. The study, as you know, and, you know, you've seen the study, shows that the clinical efficacy was equivalent, if you will, to traditional membrane-based surgical technique for periodontal surgery. But the benefits were really in the patient-reported outcomes, less pain, and so forth.

Audi: It has allowed us to continue conversations with those Oh dsos.

Audi: But I think what we're finding is that just the presence of the.

Audi: The Ah study you know, it's not going to make any buy bought laser.

Audi: The study as you know and and you know you've seen the study.

Audi: Show that the clinical efficacy was equivalent if you will to our traditional minimally invasive surgical surgical technique.

Audi: Oh surgery, but the benefits were really in the the patient reported outcomes less pain, and so forth I think as more and more dentists, including the D. S. O C patient acceptance of the periodontal surgery with a laser you know more and more will get onboard.

John R. Beaver: And I think as more and more dentists, including the DSOs, see patients' acceptance of periodontal surgery with a laser, you know, more and more will get on board here. Because that's really from a financial standpoint, I think where the benefit is, patient case acceptance. Nobody wants to have traditional periodontal surgery, and certainly nobody will have it again if they've gone through it once. I think as more patients become aware of, you know, it's not bad, and it's certainly a ton better from a pain standpoint than traditional surgery, I think the DSOs will get on board. But it's been a, you know, it's taken longer than I thought, frankly.

Audi: Here, because that's really from a financial standpoint, I think where the benefit is is that patient case acceptance nobody wants to have traditional parallel surgery.

Audi: And certainly nobody will happen twice, if they've gone through it once.

Audi: I think as as more patients become aware of it's.

Audi: It's not bad and and the it's certainly a ton better from a patent standpoint than traditional surgery I think the dsos will get onboard but it's been a.

Audi: It's taken longer than what I thought frankly.

Audi: Okay.

Audi: Yeah.

Edward Moon Woo: The next question will come from Ed Woo with Ascendian Capital. Please go ahead.

Audi: The next question will come from Ed Woo with <unk> capital. Please go ahead.

John R. Beaver: Yeah, congratulations on the quarter. My question is, have you noticed any significant change in, you know, the economic outlook from, you know, your dental customers? Are they more concerned about the economy, less concerned, or about the same as they were last quarter?

Edward Moon Woo: Yeah. Congratulations on the quarter. My question is have you noticed any significant change in the economic outlook from you know your dental customers are they more concerned about the economy less concern or about the same as it was last quarter.

John R. Beaver: Yeah, I would put that needle somewhere between the same or less concerned. I don't hear as many dentists talking about the fear of losing patients, you know, patient traffic going down. So I think it is, you know, in general, most dentists are not thinking it's going to get worse. It's going to stay the same or get better. But, you know, Ed, that's anecdotal, just based on our conversations with dentists.

Edward Moon Woo: Yeah, I would put that needle somewhere between the same or less concerned.

Edward Moon Woo: I I don't hear is my many dentists talking about fear of losing patience.

Edward Moon Woo: Patient traffic going down.

Edward Moon Woo: So I think it is.

Edward Moon Woo: In general are most interested in I think it's gonna get worse.

Edward Moon Woo: Who would stay the same or get better.

Edward Moon Woo: But yeah, that's anecdotal just based upon our conversations with Dennis.

John R. Beaver: Have you noticed any significant changes in how long it takes for them to think about and decide whether to move forward to buy a water-related system or not?

Edward Moon Woo: Have you noticed any significant changes in how long it takes for them to think about it and decide whether to move forward to a buyer.

Edward Moon Woo: Now waterlase system or not.

John R. Beaver: I think, you know, if we go back maybe four to five quarters, that's where we started seeing the delay in decision-making time, if you will, on purchasing an all-tissue laser, less so on diodes because they sell for much less, but for the water lathes, we saw a ramp up in that decision-making time. That stayed pretty consistent over the course of 2023, hasn't really, you know, didn't go up through the course of the year from kind of the tick up it had in the first half of 23, and so far this year, you know, I think it's remained pretty constant.

Edward Moon Woo: I think you know if we go back maybe a four to five quarters, that's where we started seeing the delay and and decision making time, if you will on purchasing I.

Edward Moon Woo: All tissue laser less so on diodes, because they're you know much they sell for much less but.

But for the water lies.

Edward Moon Woo: We saw a ramp up in that decision making time.

Edward Moon Woo: That stayed pretty consistent over the course of 2023 hasn't really.

Speaker Change: Yes. It did not go out through the course of the year from kind of a tick up they had in the first half of 'twenty three and so far this year, Yeah. I think it's it's remained pretty constant.

Operator: Great. Well, thank you for answering my questions, and I wish you guys good luck. Thank you.

Speaker Change: Great well. Thank you for answering my questions and I wish you guys. Good luck. Thank you.

Speaker Change: Thank you Ed.

Bruce David Jackson: Again, if you have a question, please press star, then 1. Our next question is a follow-up from Bruce Jackson with the Benchmark Company. Please go ahead.

Speaker Change: Again, if you have a question. Please press Star then one our next question is a follow up from Bruce Jackson with the Benchmark Company. Please go ahead.

Bruce David Jackson: Great, thank you. Just one more for me.

John R. Beaver: Congratulations on the trunk fiber being barred in-house. That's been a big project, I know. You've got the price increases coming up. You should be getting some scale in the business. Where do you think that the gross margins could end up for the year?

Bruce David Jackson: Oh, great. Thank you just one more for me congratulations on the shrunk fiber being brought in house, that's been a big project I know.

Bruce David Jackson: You've got the the price increases coming up you should be getting some scale.

Bruce David Jackson: On the business, where do you think that the gross margins could end up for the year.

John R. Beaver: And so, Bruce, I believe that in the middle part of the year, say, the second and third quarters, we will be approaching kind of that mid-40s type gross margin. And I think we can, you know, close here in the fourth quarter, you know, right at or very near 50%, which is really a long-term target. Okay, great.

Speaker Change: Yeah. So so Bruce I, you know I believe that in the middle part of the year say second and third quarters will be approaching kind of that mid forty's type gross margin and I think we can you know close to here in the fourth quarter.

Speaker Change: Right at or very near 50%, which is really.

Speaker Change: Our long term target.

Bruce David Jackson: Okay, great. That's it for me. Thank you.

Bruce David Jackson: Okay, Great. That's it for me thank you.

Speaker Change: Thank you Bruce.

Operator: We have reached our allotted time for today, and this will end our question and answer session. I would like to turn the conference back over to Mr. John Beaver for any closing remarks. Please go ahead, sir.

Speaker Change: We have reached our allotted time for today and this will end our question and answer session I would like to turn the conference back over to Mr. John Beaver for any closing remarks. Please go ahead Sir.

John R. Beaver: Thank you, Operator. I want to thank everyone for being on today's call and the BIOLASE team for their continued commitment and dedication. Each of them has worked tirelessly to help our customers deliver an elevated standard of care and safety through laser dentistry. Thank you, Operator, and thank you everyone for your interest in BIOLASE. This concludes our call. Have a great day.

John R. Beaver: Thank you operator, I want to thank everyone for being on today's call and the BIOLASE team for their continued commitment and dedication.

John R. Beaver: Each of them have worked tirelessly to help our customers deliver and elevate the standard of care and safety through late to demonstrate.

Speaker Change: Operator, and thank you everyone for your interest in BIOLASE. This concludes our call have a great day.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: [music].

Operator: Copyright 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.

Speaker Change: Yeah.

Speaker Change: [music].