Full Year 2024 Vivos Therapeutics Inc Earnings Call
Speaker Change: Good day, everyone, and welcome to the Vivos Therapeutics' full-year 2024 earnings conference call. At this time, participants are in a list and only mode. A question and answer session will follow management's remarks.
Speaker Change: This conference call is being recorded, and a replay of today's call will be available on the Investor Relations section, the Vivos web site, and will remain posted there for the next 30 days.
Speaker Change: I will now hand a call over to Brad Amman, Vivos' chief financial officer for introductions and the reading of the Safe Harbor Statement.
Please go ahead, Brad.
Speaker Change: Thank you, Jenny. Hello, everyone, and welcome to our 2024 earnings conference call.
Speaker Change: With us on today's call, or myself, and Kirk Huntsman, Vivos Chairman, and Chief Executive Officer. Today, we will review positive highlights and financial results for the full year 2024, as well as key recent developments in our marketing and distribution strategy pivot. Following these formal remarks, we will be happy to take questions.
Speaker Change: I would also like to remind everyone that today's call will contain forward-looking statements.
Speaker Change: from our management, made within the meaning of Section 27A of the Securities Act of 1933 as amended in Section 21E of the Securities and Exchange Act of 1934 as amended concerning future events.
Speaker Change: Words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes
Speaker Change: Estimates, goal and variations of such words and similar expressions are intended to identify
Speaker Change: Estimates goal and various 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.
Speaker Change: Nancy's many of which are beyond the company's control.
Speaker Change: Actual results, including without limitation the results of the most.
Speaker Change: Growth strategies of operational plans, 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.
Speaker Change: <unk> such as the potential for Veeva to achieve future positive cash flows and other matters to be addressed by Veeva as management in this conference call may differ materially and adversely from those expressed or implied by such forward looking statements.
Speaker Change: Factors that could cause actual results to differ materially include but are not limited to the risk factors described and other disclosures contained in <unk> filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31 2020.
Speaker Change: Four which was filed with the SEC today and our other filings with the SEC all of which are or will be accessible on the investor Relations section of the Viva <unk> website as well as the Sec's website.
Speaker Change: Except to the extent required by law <unk> assumes no obligation to update statements as circumstances change.
Speaker Change: Finally.
Speaker Change: Please be aware that the U S food and drug administration has given certain veeva is appliances, five 10-K clearance to treat mild to severe.
Speaker Change: OSA with the FDA clearance for severe OSA and November 2023 treatment of patients with severe OSA is no longer needed to beef up the performed off label and the clinical discretion of the treating doctor and is now an integral part of the Beavers treatment protocols.
Speaker Change: That said all reverse appliances should only be used within their FDA cleared uses.
Curt: Now at this time, it's my pleasure to introduce <unk>, Chairman and CEO Curt. Please go ahead.
Curt: Thank you Brad.
Curt: I want to thank all of you for joining us on today's conference call.
Curt: In a moment I'll turn the call back to Brad who will walk us through the highlights of what we believe are vivo says positive 2024 financial and operating results after that we'll be happy to take your questions.
Brad Amman: But before I do that I'll offer some brief remarks on our progress throughout the past year and our strategic business business model pivot and why we believe this is important for our company's growth prospects and financial success.
Brad Amman: In 2024, we increased revenue, while we continue to lower our cost structure.
Brad Amman: We increased product revenue by 26%, while reducing operating expenses by 21%.
Brad Amman: These two items resulted in us reducing our operating loss for the year by 35% we.
Brad Amman: We believe these steps were prudent and necessary as we move away from our former business model, which was more reliant on VIP enrollment revenue.
And lay the foundation for our future in a dynamic new and high margin way of giving our life changing vivo technology out to the masses.
Brad Amman: And even though we are still early on in this effort.
Brad Amman: During 2024 alone Beavers providers placed just over 16000 vivo devices nearly twice as many total as in 2023 and in just one year accounted for more than 25% of all the votes appliance sales in the entire history of the comes.
Brad Amman: Any.
Brad Amman: During the year, we also successfully launched our expansion into the middle East working closely with and through our distributor there we gained regulatory approvals and access to several key markets, including Dubai.
Brad Amman: They're behmer, it's Jordan, Bahrain, Lebanon, Qatar, and others with Saudi Arabia approvals pending unexpected soon.
Brad Amman: Demand from that region has exceeded our forecast and we expect to see excellent sales and revenue growth going forward.
Brad Amman: Also in 2024, we took steps to strengthen our liquidity position and shore up our stockholders' equity.
Brad Amman: During the year, we raised approximately $17 $9 million through four separate equity transactions, including a key validating seven and a half million dollar investment from private equity firm, New set of partners, which we announced alongside the launch of our new marketing and distribution strategy.
Brad Amman: Our positive financial performance during the year helped lay the foundation for the critical pivot we made during the 2020 during 2024 to a new marketing and distribution strategy as.
Brad Amman: As we've discussed previously.
This new model focuses on contractual profit sharing alliances and or outright acquisitions of sleep testing clinics and sleep health care providers, whereas many as 125000 or more newly diagnosed OSA patients per month throughout the United States Army.
Brad Amman: Critical decisions as to what kind of OSA treatments to undertake.
Brad Amman: The key objective of our new model is for Veeva to be at the table. When those critical decisions are made and to also inform existing CPAP users that a new and better solution is now available for all severities of OSA.
Brad Amman: The pivot was launched in June of 2024, with a strategic marketing and distribution alliance with Rebus health care and operator of multiple sleep testing and treatment centers in Colorado.
Brad Amman: We expect this initial alliance will be the first of a series of similar alliances or potential acquisitions of sleep health care providers across the country, which we will use to drive sales of our novel appliances and services under the New Alliance model, we are collaborating with <unk> to offer OSA patients.
Brad Amman: A full spectrum of evidence based treatments such as our own advanced proprietary an FDA cleared care oral medical devices oral appliances, traditional or appliances, and additional adjunct therapies and other methods, including traditional CPAP treatment.
Brad Amman: The program commenced in August of 2024, and the Longmont office of Rebase and has since expanded to two additional locations. We believe the advantages of our new strategic marketing and distribution model are compelling.
Brad Amman: First this new model provides access to many thousands of OSA patients who are likely candidates for vivo treatment options through the sleep testing centers as sleep medicine providers, including dentists, but expand into more medical professionals, who make OSA diagnoses.
Brad Amman: Second we expect to close meaning initiate treatment more vivo method cases, using veeva trained personnel in our pilot testing, which we conducted at over 45 separate locations around the United States. During 2023 and 2024, our vivo trained personnel were able to.
Brad Amman: Consistently close over 70% of OSA patients into some form of vivo treatment at a realized top line revenue of just over $4500 per case with contribution margins of up to 50%.
Brad Amman: These figures were relatively consistent across diverse demographic and economic patient profiles and geographies. This significantly alters the economics to leave us increasing top line revenues and per case start revenues by approximately four points of four to six.
Brad Amman: Times, when compared to our prior model, which focus more on exclusive it more exclusively on the dentistry market.
Third topline revenue and profitability per case are expected to continue to rise as we more fully implement our adjunct of diagnostic and therapeutic services alongside OSA treatment with our proprietary appliances, such as adjunctive services are expected to account for at least another.
Brad Amman: <unk> 1000 to $2500 and revenue per case at comparable or better contribution margins.
Brad Amman: We said all along and genuinely believe that vivo supplying says or simply better ways to treat OSA than traditional therapies like CPAP or surgery.
Brad Amman: Now under our new marketing and distribution model of either partnering with or acquiring sleep testing centers and other sleep medicine providers. We believe our product sales efforts will be more closely aligned with frontline OSA health care providers and thus, we expect to see vivo treatment options presented to more.
Brad Amman: Patients as an alternative to C pap or surgical implants.
In turn based on feedback that shows when presented the alternatives patients routinely choose vivo treatment.
Brad Amman: We expect more patients to select vivo treatment at much higher rates, thereby potentially generating more revenue and profit per case for us.
Brad Amman: In summary, our new model allows us to expose significantly more or OSA patients to vivo treatment in.
Brad Amman: In a setting where our experience has been that about 70% will select vivo treatment over CPAP.
Brad Amman: Or just doing nothing.
Brad Amman: We've also established predictable revenue levels per case of approximately $4500 across diverse demographics and payer types.
Brad Amman: We further expect to be able to raise that revenue per case figure as we more fully implement the entire range of our adjunct of diagnostic testing and treatment services to patients.
Brad Amman: Accordingly in our new model, we expect every 1000 newly diagnosed OSA patients per month, who were exposed to vivo treatment options to generate roughly 700, new case starts at an average revenue of $4500 or more each with strong contribution margin.
Brad Amman: Up about 50%.
Brad Amman: Thus every 1000 newly diagnosed OSA patients to which we are exposed should yield annual topline revenues of approximately $38 million with approximately 19 million net.
Brad Amman: The key now is to extend our model for affiliation with or with or acquisition of sleep health care providers. So that they can in turn help us maximize and extend our preferred treatment to as many OSA patients as possible.
Brad Amman: Fortunately there are over 2500.
Brad Amman: A a S M accredited sleep testing and treatment centers.
Brad Amman: Throughout the United States. Many of these clinics independent of hospitals typically operate on a high volume low margin business model, where CPAP is the go to solution for the vast majority of their patients yet many of these operators have expressed a desire for their patients to have a treatment.
Brad Amman: Treatment options beyond traditional CPAP that are both safe and effective.
Brad Amman: Vivo is treatment fits that need exceptionally well.
Brad Amman: In our recent efforts to introduce our high margin business model to the sleep testing and treatment centers.
Brad Amman: We have seen that our unprecedented 2023 and 2020 for F. D. A five 10-K clearances to treat severe OSA in adults and children have given vivo say high level of clinical credibility with sleep specialists and sleep testing clinic owners in short we firmly believe we have the right.
Brad Amman: Technology, now being delivered to and through the right clinical providers to the patients who need it most and who have proven they will choose and pay for it, especially when insurance can help offset the expense.
Brad Amman: I am therefore pleased to report that we have migrated our former medical integration personnel into our vivo M&A team.
Brad Amman: Which is currently negotiating several potential transactions with sleep providers across the United States that test and treat nearly 8500 newly diagnosed OSA patients per month.
Brad Amman: We are thus extremely optimistic that we will continue to experience highly accretive and profitable affiliation and acquisition opportunities across the United States in the months and years to come.
Brad Amman: This is this is major this major corporate focus this is a major corporate focus for US now and our aim is to announce new affiliations and or acquisitions in the near future and provide further guidance as to the financial impact on our business.
Brad Amman: We are currently exploring and evaluating a number of proposals to finance these expected transactions, including traditional debt facilities with and without warrant coverage as well as existing our existing ATM facility and other equity financing options.
Brad Amman: Given the highly accretive nature of the potential affiliations and acquisitions. We believe these financings will help drive shareholder value.
Brad Amman: I want to thank all of you for joining us on today's conference call now, let me turn the call over to our Chief Financial Officer, Brad Ammann to review in more detail our year end financial results. Brad. Please go ahead. Thank you Kurt today I'll review the highlights of our financial results for the full year 2024.
For further information on our results for the 12 months periods ended December 31, 2024, and 2023 I'll refer you to our earnings release, which was distributed later or earlier today and our annual report on Form 10-K, which was filed today and is available on the SEC.
Brad Amman: Billings portion of the Investor Relations section I'll leave us website at Veeva Dot com forward Slash Investor Dash relations.
Brad Amman: Okay.
Brad Amman: Today, we reported total 2020 for revenue of $15 million compared to $13 8 million in 2023.
Brad Amman: This year over year increase of $1 2 million or 9% was due to higher product revenue generated from our client sales, partially offset by a decrease in service revenue from fewer VIP enrollments. The decrease in VIP enrollments was expected and occurred as part of the change in marketing and strategy.
Brad Amman: <unk>.
Brad Amman: Marketing and sales strategy Kirk just described during the full year 2024, we sold 16182 oral appliance arches and guide for a total of approximately $7 $9 million or 26% increase in revenue compared to 8240 <unk>.
Brad Amman: Oh appliance arches and guides for $6 3 million in 2023, the $1 $6 million increase in product revenue is attributable to an increase in guide sales as well as a 71% decrease in discounts offered with less than $200000 in discounts offered during 2020.
Brad Amman: Four compared to 700002 thousand 23.
Brad Amman: The year over year increase in product revenue was partially offset by a decrease in service revenue of $400000.
Brad Amman: For the full year ended December 31, 2024 gross profit increased by approximately $700000 to $900000. This increase was attributable to the increase in revenue of $1.2 million offset by an increase in cost of sales of 500000.
Brad Amman: Gross margin remained constant at 60% for both years ended December 31, 2024 and 2023.
Brad Amman: Sales and marketing expenses were lower year over year.
Brad Amman: For the full year ended December 31, 2024 sales and marketing expense was approximately $1 $7 million compared to $2 5 million for the year ended.
Brad Amman: 31 2023.
Brad Amman: The lower spend reflects lower sales commissions and sales related expenses in 2024 on lower VIP enrollments.
Brad Amman: We continue to see a significant reduction in general and administrative expense due to our cost cutting efforts.
Brad Amman: General and administrative expenses decreased approximately $4 $6 million or 20% to $17 9 million for the year ended December 31st 2024, compared to 22 and a half million dollars for the year ended 2023.
Brad Amman: The primary driver of the decrease was a change in personnel related and related compensation of approximately $1 $7 million as a result of the reduction in force implemented during the last two years.
Brad Amman: In addition, we reduced professional fees.
Brad Amman: By $1.8 million travel meals and entertainment by 400000 insurance expense by 300000 in.
Brad Amman: In infrastructure costs of 200000.
Brad Amman: We continue to believe these cost cutting efforts will reduce our cash burn as we began to ramp revenues and move toward our goal of cash flow positive operations.
Brad Amman: Our operating loss was approximately $11.2 million in 2024 compared to $17 3 million in 2023, the year over year decrease of $6 $1 million or 35% was due to higher revenue and gross profit.
Brad Amman: And lower SG&A result, resulting from our expense cuts.
Brad Amman: Turning to our statement of cash flows cash used in operations for the year ended December 31, 2024 was $12 $7 million compared to $11 9 million during the prior year.
Brad Amman: The ink the increase is primarily due to approximately $2 3 million in accounts payable and accrued expenses offset in part by the lower loss in 2024 and changes in the fair value of warrant liability in 2023 that wasn't present in 2024.
Brad Amman: As of December 31, 2024, we had total liabilities of approximately $7 $3 million.
Brad Amman: As compared to.
Brad Amman: $10 3 million as of December 31, 2023.
Brad Amman: For the year ended December 31, 2024, net cash used in investing activities of 600000 consisted of software related capital expenditures for the development of ordering software for internal use which was placed in service in the first quarter of 2025.
Brad Amman: This compares to net cash used in investing activities of 900000 in the comparable 2023 period.
Brad Amman: A rising from 2023 capital expenditures incurred for the same ordering software as well as the purchase of our patent portfolio in February of 2023.
Brad Amman: Yeah.
Brad Amman: Net cash provided by financing activities of.
Brad Amman: Of $17 9 million for the years ended December 31, 2024 is attributable to gross proceeds of $19 2 million from the issuance of common stock and warrants net of approximately $1 4 million of professional fees and other issuance cost related to our February warrant induced.
Brad Amman: Matt and our June September and December equity offerings.
For the year ended December 31, 2023, net cash provided from financing activities of $10 9 million related to our January and November 2023 private placements.
Brad Amman: As of December 31, 2024, we had approximately $6 3 million in cash and cash equivalents compared to $1.6 million as of December 31, 2023.
Brad Amman: Although we have increased revenue and implemented cost saving measures in 2024 and are pivoting the business model, which we believe will drive topline revenue. We are currently using cash to fund operations, which will require us to seek additional financing in the near term as.
Brad Amman: As well as financing in support of our alliance and acquisition efforts when needed.
Brad Amman: In short we believe these are very positive financial results with higher revenue lower cost, which help us.
Brad Amman: Set the foundation for our new marketing and sales model.
Kurt: And now I'll turn it back over to Kurt.
Kurt: Thank you Brad.
Kurt: That concludes our prepared remarks, now we'll be happy to take questions operator.
Kurt: Thank you.
Kurt: Ladies and gentlemen, we will now begin the question and answer session.
Kurt: Did you have a question. Please press the star followed by the one you touched on.
Kurt: Should you wish to cancel your request. Please press the star followed by the team.
Kurt: If youre using each speaker filing please lift the handset before pressing.
Kurt: Keith.
Kurt: Once again that is star one should you wish to ask a question.
Speaker Change: Your first question is from Dunkin'.
Watercolor research your line is now open.
Speaker Change: Hi, Kirk and Brad Congrats on the progress and thanks for taking my question.
Speaker Change: First one I have on the reversal line.
Speaker Change: We understand that with the new marketing model you have the potential to generate higher margin revenue.
Speaker Change: But could you help us.
Speaker Change: No what's the incentive for rebuilds here in this collaboration.
Speaker Change: Sure.
Speaker Change: I think that's actually a great question, because as we go out to the market.
Speaker Change: You know, we're we're pitching the sleep centers and leak testing groups, such as health care basically on the same value proposition and just to give you a little a little history. There that's kind of interesting. These guys reached out to us Oh, I guess, maybe a little over.
Speaker Change: 18 months ago, they reached out and said hey, we'd like to talk.
Speaker Change: We are frustrated with giving our patients all the CPAP unit.
Speaker Change: Pat around here, we've kind of given up on some of the other treatment therapies. They just don't seem to work as well et cetera. So we hear good things about the Bose and we'd like to talk about we'd like to talk about what you're doing and.
Speaker Change: And how we might work together.
Speaker Change: So that really we had already been looking as to where we were going to begin to introduce our new strategic Alliance and acquisition model and it was right here in our backyard. These guys were here in Colorado, They actually have five locations I believe and in Colorado here, along the front range.
Speaker Change: And we are we began talking with them and and going through and planning and then we began in June we executed an agreement.
Speaker Change: And we began to do that now their incentive.
Speaker Change: To get to your point is that they see.
Speaker Change: Not only an improvement in in the quality of care that they can offer to their patient.
Speaker Change: But they see this as an important.
Speaker Change: Advancement in the in the method of care that that is available for patients. They see they see opportunities to extend the kinds of treatments that are that theyre, making available and that really involves vivo is front and center and so I think it was a way for them to.
Speaker Change: To differentiate I mean, they compete with other sleep testing facilities, just like anybody and so I think it gave them a way to differentiate it gives them a way to profit.
Speaker Change: And sign up a new a new profit stream and create a new profit center for their are there things in there were a lot of patients that they had almost 100000 I think it's over 90000 patients in their database.
Speaker Change: Many of those patients I'm not sure the exact numbers, but a large large number maybe half or more of those patients had probably stopped.
Speaker Change: Using their CPAP and so to go back to those patients with a a new option a new alternative that might put those patients back in some form of treatment again, another profit opportunity, but also another way of improving and increasing the kind of care that they give so we found this to be true Dow with.
Speaker Change: With every one of the sleep testing groups, we've gone to so far.
Speaker Change: And it's been without exception.
Speaker Change: They've all welcomed the advent of a new and and differentiated treatment, that's now safe and effective according to the F. D. A for their patients and many of them realize that the CPAP model, which has been the only go to model for the last 40 years.
Speaker Change: Ours is.
Speaker Change: Is now probably run its course and there needs to be.
Speaker Change: Technology is coming forward that can make it better so I would say that it's the profit motive and the ability to improve.
Speaker Change: And differentiate their services offerings to patients that's giving them.
Speaker Change: Motivating them to work with us.
Speaker Change: Yep.
Speaker Change: It sounds like a perfect match right in your backyard.
Speaker Change: You you also talked about Repurposing your medical integration division into a M&A team.
Speaker Change: I was hoping you could expand a little bit more on that and if you're able to talk about what regions that they are deployed in and whether.
Speaker Change: Certain territories, our focus and what you hope.
Speaker Change: Hope you gain from from this whole transition.
Speaker Change: Yeah.
Speaker Change: Well a good another good question. So you know we realized probably.
Speaker Change: I'm trying to think when we first established our medical integration vision, but it's probably about five years ago and we.
Speaker Change: Put a group together that we call our medical integration Division and we took a guy that had been very experienced in the medical field, calling on physicians and whatnot and we but we put them out there with our model.
Speaker Change: That really it it wasn't really right and we had to experiment with it we had to kind of learn from it. It was actually the learnings from that helped inform our decision to make the pivot quite frankly, and so while we while the model itself didn't work the way we had hoped the learnings that we.
Speaker Change: Again from that pointed us in the direction that we are today and so it was very helpful.
Speaker Change: But these guys are now they're ones out there pitching rather than us trying to attract dentists, who will come in and get training to go out and carry the water for vivo in their practices, we're going directly to the medical communities the medical.
Speaker Change: Sleep testing centers and their their M D physician owners or or collaborators and we're going to them.
Speaker Change: And we're bringing the dentists to the table and so that's a huge difference in terms of how the model gets implemented in the trenches because now what happens is is that these testing centers are front and center with patients at that critical moment in a patient journey, where they know they've got they've got sleep apnea, they've got the test.
Speaker Change: The test has come back in and the patient now knows okay I have moderate to severe OSA.
Speaker Change: And now what are my treatment options and now vivo has a seat at the table to say.
Speaker Change: You know that CPAP, you don't have to take that there is an alternative to rehabilitate your airway.
Speaker Change: And it's now been approved by the FDA and cleared to treat moderate to severe OSA in both adults and children. So that the value proposition when 80%, 70% to 80% of the patients choose vivo <unk>, we think that we've got a very strong.
Speaker Change: Strong value proposition to these patients.
Speaker Change: And the testing center people the medical people are liking it because the patients are happier there more pleased and satisfied with the services. They feel like they've been heard and theyre not forced into something that they don't really want.
Speaker Change: Being CPAP and so it's a win win win all the way around so our medical integration Division our team has been.
Speaker Change: They've been scouring the.
Speaker Change: The nation for who's doing the sleep test.
Speaker Change: Where are they being done who are the groups that might be open to a dialogue with us and a possible affiliation or acquisition.
Speaker Change: And it's been pretty pretty incredible the leads and the caliber of people that we've been turning up and and I really want to commend our M&A guys for doing a great job of getting out there and and really pivoting to this new model.
Speaker Change: And making good presentations two good prospects and candidates said, we're finding no shortage of interest levels in fact to the point, where we had to kind of dialing back a little bit we've got more people interested than we could actually <unk>.
Speaker Change: <unk> handle right now so we're but we are the reception.
Speaker Change: From.
Speaker Change: The the sleep testing groups and whatnot out there has been very very pleasing and very almost surprising to us, but we're we're very pleased by that so.
Speaker Change: Okay.
Speaker Change: Great. Thanks for taking my questions and looking forward to your next announcements.
Speaker Change: Alright, thank you.
Speaker Change: Yeah.
Scott Henry: Thank you. Our next question is from Scott Henry from Alliance Global Partners. Your line is now open.
Scott Henry: Thank you and good afternoon, gentlemen couple of questions.
Scott Henry: First and I know you have a lot of moving parts with the changing business model, but any thoughts on how we should think of.
Scott Henry: 2025 relative to 2024 as far as top line revenues.
Scott Henry: And even made perhaps a little easier.
Scott Henry: The sequential change from fourth quarter to first quarter.
Speaker Change: Today's the last day of the first quarter. Thank.
Scott Henry: Thank you.
Scott Henry: Yeah. Good question Scott.
Scott Henry: The revenue from our affiliation with Reavis is not show its not showing up in 2024.
Scott Henry: It will begin to show up in 2025.
Scott Henry: Probably now accelerating as we get into the second quarter and third quarter of the year, So very little of that revenue because of the way. We got started out there with reverse and the.
Scott Henry: The sort of the startup nature of everything we had to kind of feel our way through what we needed to do and how we needed to do it with our with the team out there re was held.
Scott Henry: Worked through a lot of operational concerns.
Scott Henry: Concerns and challenges and all the all the normal things you go through when you're starting something up but we've seen here lately and acceleration of things that's why between reverse and in vivo. We jointly made a call to extend the model to two additional locations that.
Scott Henry: That we have in the greater Denver market.
Scott Henry: The success of what we had at the very first location was such that everybody was onboard with with making the capital requirements and the spin the expenditures to to extend the model into two new two additional locations and so we're excited about that we think that will.
Scott Henry: Accelerate now as they've hired I want to say, it's 15 or 17 additional P as to handle the demand so they're talking about and some additional doctors so they've they've they've got more demand, they're they've got more capacity to refer patients. So we expect to see <unk>.
Scott Henry: Actually starting here in the second quarter, we expect to see the first real contributions to our our our financial results will start to happen in the second quarter and then accelerate throughout the year at Rebase.
Scott Henry: We don't expect as we get into some of these other affiliations and acquisitions, we don't expect the delay to be nearly this long in terms of turning these things into profitable profitable affiliations in acquisition. So.
Scott Henry: I think as you look at 2025.
20th twenty-five is gonna be materially better in terms of just top line revenue and hopefully net profits than 2024 as we get into the specifics of each transaction will provide you with guidance as far as what the size of each one of these is different and so we.
Scott Henry: I'll provide you with guidance as to what we think the contributions and accretive.
Scott Henry: You know sort of nature of each one of these transactions will be and then we'll start.
Scott Henry: We'll start stacking it up and as we stack up.
Scott Henry: The interactions with.
Scott Henry: More and more sleep treatment centers and more and more patients are there.
Scott Henry: The revenue will follow and the profits will follow as well I will say this we expect this year to be substantially materially better than last year.
Scott Henry: Okay.
Scott Henry: Great and.
Scott Henry: The income statement is changing.
Scott Henry: With the new business model.
Scott Henry: A patient comes in.
Scott Henry: You you expect to get $4500 of revenue from that patient.
Scott Henry: How does that $4500 work through the income statement I mean does it go on this.
Scott Henry: Appliances.
Scott Henry: Okay.
Scott Henry: Does it come through the income statement and then what.
Scott Henry: Yes, Scott that'll continue to come through appliances or appliances that are being sold there will be a change to our cogs.
Scott Henry: Not only will it be the Cogs.
Scott Henry: The cost of the appliance, but it'll also be and in the case of an affiliate it'll be any any amounts that are yes.
Scott Henry: <unk> paid to the affiliate if there is a profit sharing and so forth that will show up as Cogs.
Scott Henry: But the rest of it is all pretty much the same.
Scott Henry: In terms of product revenue and I wanted to say to get out of that.
Scott Henry: We've always talked about product revenue.
Scott Henry: Being that the.
Scott Henry: The area that we're going to see the highest growth N and service revenue going down and historically, we've seen at 60% service, 40% product but.
Scott Henry: You can see in 2024, we were at 52% product in 48 service centers already seeing this shift and the alliance model. This new marketing distribution model will <unk>.
Scott Henry: Exact rebate that even further.
Speaker Change: Sure I did get a chance to look at the 10-K, which you have to back out fourth quarter. So have you changed any of the previous quarters.
Scott Henry: That may create some noise.
Scott Henry: But when I backed out fourth quarter. It looked like you there was a huge bolus of arches coming through like 10000 of the 16000.
Scott Henry: All came in the fourth quarter.
Speaker Change: Am I doing that math correctly in or is there a reason why that all showed up in the fourth quarter.
Speaker Change: We have a very large customer that buys.
Speaker Change:
Speaker Change: That advised guidance from us and they and they use it in their in their business.
Speaker Change: With their.
Speaker Change: They are our customers.
Speaker Change: And that was all.
Speaker Change: Portrayed in the fourth quarter, even though that happened throughout the numbers are all came through in the fourth quarter.
Speaker Change: So youll status after the biggest piece of the of the change there.
Speaker Change: So.
Speaker Change: When you booked all of that in the fourth quarter of this year does that cover prior periods or could that signal you know if your biggest customer orders. This year, that's a pretty big order.
Speaker Change: Maybe not order for a couple of quarters or is this backward looking.
Speaker Change: Well the revenue from that is pro rata.
Speaker Change: Has it occurred as it was shipped throughout the throughout the year. The numbers are and they did make a large purchase right at the end of the year.
Speaker Change: Which took care of some of their demand you know in the first couple of months of 2025.
Speaker Change: Certainly, but they did make a.
Speaker Change: A large fourth quarter purchase.
Scott Henry: Hey, Scott.
Speaker Change: Or it is the thing of it is with with that particular customer is they're experiencing just truly unprecedented demand and growth and expansion.
Speaker Change: And so we don't expect them to go into a holding pattern I don't know that they are carrying a whole lot of inventory they've just been seen.
Speaker Change: A real surge in demand for the guides products they've got a very.
Speaker Change: Innovative and a very effective marketing and go to market strategy, that's really working well for them and so they are they're they're they're executing well on their plan and I wouldn't I would not expect to see that do anything to get better they've actually said to us that there they're expecting.
Speaker Change: <unk>.
Speaker Change: To see their revenue and their.
Speaker Change: There are.
Speaker Change: Orders Triple this year over what they were last year. So I mean, I think we're going to see continued growth from them as well.
Speaker Change: And some of our other lines, we have other product lines that are up as well not quite to the extent that that one is but we have other product lines as well that are up.
Scott Henry: Okay, that's great and final question, Brad I, just a couple of other numbers that just kind of bounced around this quarter, but it looked like sponsor seminar other amongst service component was about a million higher than it typically is for a quarter and it looked like VIP was actually a negative number for the quarter.
Speaker Change: Anything.
Speaker Change: To take from those trends that will be helpful going forward or or would you just put that in the noise category.
Speaker Change: Thank you.
Speaker Change: You know with seminar in sponsorship revenue.
Speaker Change: We utilize our television centre, which is the you know the old.
Speaker Change: Frontier Airlines training Center.
What we've repurposed for our vivo training training center.
Speaker Change: T I is actually hosting a number of events.
Speaker Change: For Seattle steady club for some other.
Speaker Change: Customers of ours, and theirs revenue and we're seeing more and more revenue from that comes.
Speaker Change: Coming onboard just utilizing that for other purposes other than just our own.
Speaker Change: I think it's important to note guys that we made a huge investment in infrastructure to teach and train all of the Dennis We've had over 5000 dentists that have come through over the last four or five years and they've come through our facilities out there at T V. I would recall the vivo <unk> Institute.
Speaker Change: And that the the mandate that we gave of the challenge. We gave our team was now that we're not doing as many of those kinds of sales events and and other things fill this place up with.
Speaker Change: With with people that will be relevant we were holding for example last fall we held a very successful womens.
Speaker Change: Women's conference on sleep disorders, and women's specifically for females.
Speaker Change: Hosted and staffed and and all the speakers were medical dental are all different but they were all women's speakers, we had and we.
Speaker Change: We premiered a brand new documentary on sleep breathing disorders sleep, OSA and and it was a huge success and so we're doing that again this year all of those are events that we use in our facilities.
Speaker Change: They're paid events and so people are coming to those events their pain I wouldn't consider that noise I would consider that.
Speaker Change: Things that you can count on as part of our revenue stream its going to cover the cost and put the T V I into the black as far as just being a revenue generator not an anchor that were dragging as we go forward and there are many ways that we can leverage that asset into profit profits for us. So.
Speaker Change: That's what you're seeing there.
Speaker Change: Okay, great. Thank you for taking my questions.
Brad Amman: You bet. Thanks, Scott.
Brad Amman: Thank you once again, please press star one is should you wish to ask a question.
Speaker Change: Our next question is from Lucas <unk> from that.
Speaker Change: From Janney capital markets. Your line is now open.
Speaker Change: Thank you hi, guys good afternoon.
Speaker Change: My first question is about.
Speaker Change: Hi.
Speaker Change: So the conversion of new customers. After your sleep centers, starting with rebates like you've you've described some very large volume opportunities there 100000 existing customers thousand plus people a month coming in to get new diagnosis.
Speaker Change: So I.
Speaker Change: I guess my question is what gates, the speed at which you can turn that potential customer base into vivo customers.
Speaker Change: That's a great question look that you honed in on one of the key.
Speaker Change: <unk> metrics one of the key Kpis that we're tracking here, which is the conversion rate of all of these patients were going to be in front of these patients were going to have the opportunity to present them with the full spectrum of their treatment options no no longer will patients get diagnosed for sleep apnea and just.
Speaker Change: Automatically be sent to the you know the next door for fitting for their CPAP. They will now be in any given education and information about their alternatives and there are options and if they still choose CPAP, that's still available, but if they want to to try to rehabilitate their airway if they want to try it.
Speaker Change: To address what we consider to be the root causes of the sleep apnea that theyre experiencing.
Speaker Change: Then that is where that is where it comes in so so what we're saying here is is that in our experience across multiple different markets in multiple different encounters at dental offices at medical offices now at CSI out there in Boulder in Longmont, we're actually experiencing a 70% to 80% uptake.
Speaker Change: So patients who are saying, hey, I wanted to I wanted to take a vivo treatment.
Speaker Change: And take a vivo device of some core that we have a whole spectrum of clinical options. There. Some of the cases are $3500 and some of them are you know eight.
Speaker Change: 80, $510000. It just depends on the needs of the patient it depends on their insurance coverage. It just depends on a lot of different things as to which they they typically select but now they have a choice.
Speaker Change: And so when they were given a choice what we're finding is is that most people do not want CPAP and they they they will choose something other than CPAP. When it's presented properly and so that's what we're trying to do and that's what we are doing and we're finding it to be very very successful, but that you asked about the gating factors there well.
Speaker Change: You know we have we.
Speaker Change: We have to have dentists that are trained in vivo <unk>. Fortunately, we have over 2000 of them to choose from out there in the in the in the marketplace that we've that we've trained and certified over the course of time.
Speaker Change: And many of those doctors have expressed to us interest in coming to work for us in these in this new model with this new these new advantages treating sleep for a dentist is much easier than doing general dentistry, it's much more rewarding rewarding financially it's much more it's less taxing on their bodies and so one of the <unk>.
Speaker Change: <unk> features is finding dentists and so far we have found a ready pool of interested and enthusiastic providers to provide the dental services that are required.
Speaker Change: And so I think right now that that's probably the gating factor, but we.
Speaker Change: We have the manufacturing capacity in place so that we can meet the demand which will be accelerating we have the we.
Speaker Change: We have the the staffing models that we've worked out we have all of the software and hardware for billing and practice management.
Speaker Change: That we that we know how to do this so I think I think we really expect to see.
Speaker Change:
We expect to be able to see that we can we can meet this demand without encountering too many choke points, along the way and as we encounter those will obviously work through it but from the standpoint of of identifying the patients. We know they're there we know they're there in abundance.
Speaker Change: We've got to train and teach staff to get up to speed and we're we're feeling very good about what we've experienced so far there's a ready workforce out there. That's that's excited about what we're doing and excited to join the vivo team or the team that's going to be delivering this out wherever this may be.
Speaker Change: We have most of our opportunities that we're exploring right now happen to be in.
Speaker Change: In the Midwest and the west.
Speaker Change: But we're also hearing from what we're hearing from our sleep.
Speaker Change: Word is spreading so people are reaching out and contacting us from all across the country. So where we've had some interest here recently from the east coast as well, but right now most of this are geographically dispersed so that our management team can get there and can you know we were familiar with these markets were familiar with the providers were familiar with the insurer.
Speaker Change: Coverages out here. So so we feel really good about all those different things. So far so I don't think that we're finding are encountering too many.
Speaker Change: <unk> points that we can't we can't get through.
Speaker Change: Okay. Thanks, Kirk. So does this mean then that youre working with dentists that are not vips to get the prescriptions.
Speaker Change: Filled for people.
Speaker Change: Help me understand the sales funnel, a little bit better for like rebus like someone gets a diagnosis.
Speaker Change: Yeah. They are presented vivo since an option what.
Speaker Change: What are the steps that they would then go three to actually.
Speaker Change: Yeah, So let's let's.
Speaker Change: That really quick so yeah. The patient journey, that's a great question. So the patient journey typically begins with a patient as their primary care provider. There's the the MD that's doing an annual physical is doing this or the other and then the MD for whatever reason to suspect that this patient might have.
Speaker Change: Asleep for breathing disorder like obstructive sleep apnea. They then write a script that script is for them to go get tested and theyre going to get tested at a place like reavis. So theyre going to go over to reverse health, which is DBA, Colorado Sleep Institute, they're Gonna go there, they're going to present their script for their sleep.
Speaker Change: Test they'll get they'll go through the process, there and whether it's a <unk>.
Speaker Change: And in lab overnight polysomnogram or whether it's a home sleep test that's typically determined.
Speaker Change: By their provider and their and their insurance company, but they'll get tested for sleep apnea, if they come back positive for OSA, which.
Speaker Change: 80% to 90% of the time, they're going to get a positive diagnosis for OSA.
Speaker Change: That's when they sit down with the medical Doctor the sleep specialist and they asked the question what do I do now what do I do about this now I know I have moderate to severe OSA or might even mild what do I do about this and will it go away on its own will it help if I lose weight will do all of that you know all of these different things with their doctors.
Speaker Change: Going to walk them through their options. He will also then hand them over to a treatment navigator, who will further educate them and help them understand their insurance coverages. There there are different kinds of treatment options that are available and the treatment navigators are key here because they spend more time with the patients and the doctors are able to.
Speaker Change: And so they help them understand they they can either manage this disease with a C. Pap. They can manage this disease with an oral appliance device or they can rehabilitate with one of the vivo suppliers and so the patients who hear that story typically we'll make a decision.
Speaker Change: And that decision will then determine whether they go into the CPAP path down the CPAP path or whether they go into some type of oral appliance in which all of that is considered vivo treatment. So if they do a mandibular advancement device, that's vivo treatment because we're delivering a dental.
Speaker Change: Device.
Speaker Change: But it's one of our proprietary or one of our design custom design.
Speaker Change: Clients and then they get.
Speaker Change: They can if they want to rehabilitate they'll go down that path and so at each step along the way the patient is informed as to the clinical their clinical status and they are informed as to what kinds of out of pocket costs. They have what kinds of coverage their insurance carrier's gonna have and in fact, we've just developed we haven't announced it yet but we've just developed.
Speaker Change: Software that helps us and streamlines, our ability to get the carriers to give us the coverage that's going to be given on these people right away. So it's really saving us some ftes in our billing services department to our knowledge nobody else in the country has anything like this and it's really a competitive advantage.
Speaker Change: Because it actually lowers our costs and streamlines, our ability to bill, but the patient then is fully aware at every stage of the game what all their treatment options are and what the potential benefits of each of each path forward might be and so some patients we've already seen some patients will.
Speaker Change: Select.
Speaker Change: In the near term they may select going down a path of of.
Speaker Change:
Speaker Change: Okay.
Speaker Change: Treatment.
Speaker Change: One of them I think my mind just went blank.
Speaker Change: CPAP treatment I'm, sorry, the other they might select the CPAP because of some financial considerations in the short run and then come back to US later and say now I want to go and start the rehabilitative process. So that's actually the way that we see that the patient journey unfolding and thats kind of how that goes.
Speaker Change: Okay. Thanks.
Speaker Change: Final question on M&A. It sounds like you are looking potentially to acquire sleep centers I'm, just wondering like what would be the scale of that type of acquisition.
And how would it change your patient conversion rates or economics to own a sleep center as opposed to being.
Speaker Change: You know an affiliate or a partner or provider in one.
Speaker Change: Well, here's what we found so far we've looked at I don't know how many.
Speaker Change: Probably a dozen or more sleep centers operations across the country, they're typically profitable there.
Speaker Change: They're not wildly profitable because they operate on a high volume rather low margin high volume low margin business. However, when when you combine what they're doing with the metrics that I've already given you about the conversion into vivo Street, but which is a high margin product.
Speaker Change: What you find is is that all of a sudden these businesses become wildly profitable and so they've got the volume they've got the patients they've got the patients interest at that very inflection point when the patients are trying to decide what kind of treatment they want and so on.
Speaker Change: You know I think that's one of the reasons why the sleep centers are so anxious to talk to us is because they.
Speaker Change: It's not a high margin, it's not a high margin business. It's a business that works. It's a business that can be profitable. It's a business that is scalable, but it's not a business that that where you've got you know.
Speaker Change: Huge margins and so when they when we come along and say Hey, why don't we tweak this model that you've got here, which is mildly successful <unk>.
Speaker Change: Moderately profitable and why don't we add in to what Youre doing what we do here at <unk> and look at what happens to your business when we do that and so when.
Speaker Change: When that happens.
Speaker Change: And we show them that they get really excited that's how that's what <unk> got excited about that the other ones that we'll be announcing over the next few weeks and months they they've gotten really excited about it and.
Speaker Change: You'll see as we go through and make some of these announcements in the in the upcoming weeks and months, you'll see more details around this that I think you'll find them.
Speaker Change: You'll find them pretty compelling and it's compelling to these guys as well so.
Speaker Change: I think that's that's why that's why we have such optimism about what this this inflection point for vivo as we call. It our pivot, but this inflection point in terms of revenue growth and and and opportunities for 2025 and beyond.
Speaker Change: Okay. Thanks, that's all I have and congrats on your progress.
Speaker Change: Alright, Thank you Lucas Thanks Lucas.
Speaker Change: Thank you there are no further questions at this time. Please proceed.
Speaker Change: Okay. So I would like to thank everyone. Once again for joining us on today's call and for your continued interest in vivo.
Speaker Change: This is a very important time in our history and we believe our business model pivot in 2024, when combined with the benefits of.
Speaker Change: Of an unprecedented unprecedented regulatory approvals for our products will provide a bright future for the company.
Speaker Change: Furthermore, given the relationship that we've established our success in managing costs, and our and reducing our cash burn our increased liquidity and enhanced capital structure. We are extremely excited about our prospects for 2025 and beyond we look forward to sharing our continued progress with you as we.
Speaker Change: To execute on our plans throughout 2025, so thank you very much and have a great evening.
Speaker Change: Thank you, ladies and gentlemen, the conference has now and.
Speaker Change: Thank you all for joining you may all disconnect your lines.