Vivos Therapeutics Q4 2024 Earnings Report

Vivos Therapeutics EPS Results

• Actual EPS: -$0.28
• Consensus EPS: -$0.43
• Beat/Miss: Beat by +$0.15
• One Year Ago EPS: N/A

Vivos Therapeutics Revenue Results

• Actual Revenue: $3.70 million
• Expected Revenue: $3.89 million
• Beat/Miss: Missed by -$185.00 thousand
• YoY Revenue Growth: N/A

Vivos Therapeutics Announcement Details

• Quarter: Q4 2024
• Date: 3/27/2025
• Time: Before Market Opens
• Conference Call Date: Monday, March 31, 2025
• Conference Call Time: 5:00PM ET

Vivos Therapeutics (NASDAQ:VVOS) is a medical technology company focused on the development and commercialization of oral appliance therapy for the treatment of obstructive sleep apnea (OSA) and other airway-related disorders. The company’s proprietary Vivos System integrates clinical diagnostic protocols, three-dimensional imaging, and custom-designed dental appliances to address mild to moderate forms of sleep-disordered breathing through non-surgical, non-invasive means.

The Vivos System comprises a range of custom oral devices, digital workflow tools, and a structured treatment protocol. Clinicians are guided through patient assessment, imaging and diagnostic procedures, appliance design and fitting, and ongoing monitoring. In addition to device manufacturing, Vivos Therapeutics provides comprehensive training and certification programs for dental professionals, enabling a standardized approach to screening, treatment planning, and patient follow-up within the Vivos network.

Headquartered in Lone Tree, Colorado, Vivos Therapeutics markets its solutions through a network of licensed dental practitioners across the United States and select international regions, including Canada, Europe and parts of Asia-Pacific. The company continues to expand its footprint by partnering with accredited educational institutions and professional societies to promote awareness of oral appliance therapy as a first-line intervention for airway health.

Vivos Therapeutics Q4 2024 Earnings Call Transcript

Key Takeaways

• Vivos reported 2024 revenue of $15 million (up 9%), 26% growth in product sales, and a 21% cut in operating expenses, leading to a 35% reduction in operating loss.
• Providers placed over 16,000 Vivos devices in 2024—nearly double the volume of 2023—accounting for more than 25% of all appliances sold in company history.
• The company has pivoted to a new marketing and distribution model centered on profit-sharing alliances and acquisitions with sleep testing clinics, aiming for approximately $4,500 revenue per case at ~50% contribution margins.
• Vivos gained regulatory approvals in key Middle East markets (Dubai, UAE, Jordan, Bahrain, Lebanon, Qatar) with Saudi approvals pending, and raised ~$17.9 million in equity— including a $7.5 million investment from New Seneca Partners.
• Despite improved results, Vivos used $12.7 million in operating cash during 2024 and will require additional financing in the near term to support operations and planned M&A efforts.

Presentation

[Operator]

Good day, everyone, and welcome to the Vivos Therapeutics Full Year 2024 Earnings Conference Call. At this time, participants are in a listen-only mode. A question-and-answer session will follow management's remarks. This conference call is being recorded, and a replay of today's call will be available on the Investor Relations section of Vivos' website and will remain posted there for the next 30 days. I will now hand the call over to Brad Ammon, Vivos' Chief Financial Officer, for introductions and the reading of the Safe Harbor Statement. Please go ahead, Brad.

[Brad Ammon, CFO at Vivos Therapeutics]

Thank you, Jenny. Hello, everyone, and welcome to our 2024 Earnings Conference Call. A copy of our earnings press release is available on the Investor Relations section of our website at www.vivos.com. With us on today's call are 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. I would also like to remind everyone that today's call will contain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities and Exchange Act of 1934 as amended, concerning future events.

[Brad Ammon, CFO at Vivos Therapeutics]

Words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant, known, and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant risk, uncertainties, and contingencies, many of which are beyond the company's control. Actual results, including without limitation, the results of Vivos' growth strategies, 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 or operating metrics, such as the potential for Vivos to achieve future positive cash flows and other matters to be addressed by Vivos management in this conference call, may differ materially and adversely from those expressed or implied by such forward-looking statements.

[Brad Ammon, CFO at Vivos Therapeutics]

Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described and other disclosures contained in Vivos' 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, 2024, 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 Vivos website, as well as the SEC's website. Except to the extent required by law, Vivos assumes no obligation to update statements as circumstances change. Finally, please be aware that the U.S. Food and Drug Administration has given certain Vivos appliances 510(k) clearance to treat mild to severe OSA.

[Brad Ammon, CFO at Vivos Therapeutics]

With the FDA clearance for severe OSA in November 2023, treatment of patients with severe OSA is no longer needed to be performed off-label at the clinical discretion of the treating doctor and is now an integral part of the Vivos treatment protocol. That said, all Vivos appliances should only be used within their FDA-cleared uses. Now, at this time, it's my pleasure to introduce Kirk Huntsman, Chairman and CEO of Vivos. Kirk, please go ahead.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Thank you, Brad. I want to thank all of you for joining us on today's conference call. In a moment, I'll turn the call back to Brad, who will walk us through the highlights of what we believe are Vivos' positive 2024 financial and operating results. After that, we'll be happy to take your questions. Before I do that, I'll offer some brief remarks on our progress throughout the past year and our strategic business model pivot, and why we believe this is important for our company's growth prospects and financial success. In 2024, we increased revenue while we continued to lower our cost structure. We increased product revenue by 26% while reducing operating expenses by 21%. These two items resulted in us reducing our operating loss for the year by 35%.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

We believe these steps were prudent and necessary as we moved 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 getting our life-changing Vivos technology out to the masses. Even though we are still early on in this effort, during 2024 alone, Vivos providers placed just over 16,000 Vivos devices, nearly twice as many total as in 2023, and in just one year accounted for more than 25% of all Vivos appliance sales in the entire history of the company. During the year, we also successfully launched our expansion into the Middle East, working closely with and through our distributor there.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

We gained regulatory approvals and access to several key markets, including Dubai, the United Arab Emirates, Jordan, Bahrain, Lebanon, Qatar, and others, with Saudi Arabia approvals pending and expected soon. Demand from that region has exceeded our forecast, and we expect to see excellent sales and revenue growth going forward. Also, in 2024, we took steps to strengthen our liquidity position and shore up our stockholders' equity. During the year, we raised approximately $17.9 million through four separate equity transactions, including a key validating $7.5 million investment from private equity firm New Seneca Partners, which we announced alongside the launch of our new marketing and distribution strategy. Our positive financial performance during the year helped lay the foundation for the critical pivot we made during 2024 to a new marketing and distribution strategy.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

As we've discussed previously, this new model focuses on contractual profit-sharing alliances and/or outright acquisitions of sleep testing clinics and sleep healthcare providers, whereas as many as 125,000 or more newly diagnosed OSA patients per month throughout the United States are making critical decisions as to what kind of OSA treatments to undertake. The key objective of our new model is for Vivos 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. The pivot was launched in June of 2024 with a strategic marketing and distribution alliance with Rebis Healthcare, an operator of multiple sleep testing and treatment centers in Colorado.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

We expect this initial alliance will be the first of a series of similar alliances or potential acquisitions of sleep healthcare 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 Rebis to offer OSA patients a full spectrum of evidence-based treatments such as our own advanced proprietary and FDA-cleared CARE oral medical devices, oral appliances, traditional oral appliances, and additional adjunctive therapies and other methods, including traditional CPAP treatment. The program commenced in August of 2024 in the Longmont office of Rebis and has since expanded to two additional locations. We believe the advantages of our new strategic marketing and distribution model are compelling.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

First, this new model provides access to many thousands of OSA patients who are likely candidates for Vivos treatment options through the sleep testing centers and sleep medicine providers, including dentists, but expanding to more medical professionals who make OSA diagnoses. Second, we expect to close, meaning initiate treatment, more Vivos method cases using Vivos-trained personnel. In our pilot testing, which we conducted at over 45 separate locations around the United States during 2023 and 2024, our Vivos-trained personnel were able to consistently close over 70% of OSA patients into some form of Vivos treatment at a realized top-line revenue of just over $4,500 per case, with contribution margins of up to 50%. These figures were relatively consistent across diverse demographic and economic patient profiles and geographies.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

This significantly alters the economics to Vivos, increasing top-line revenues and per-case start revenues by approximately four to six times when compared to our prior model, which focused more exclusively on the dentistry market. Third, top-line revenue and profitability per case are expected to continue to rise as we more fully implement our adjunctive diagnostic and therapeutic services alongside OSA treatment with our proprietary appliances. Such adjunctive services are expected to account for at least another $1,000-$2,500 in revenue per case at comparable or better contribution margins. We said all along and genuinely believe that Vivos appliances are simply better ways to treat OSA than traditional therapies like CPAP or surgery.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

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 front-line OSA healthcare providers, and thus we expect to see Vivos treatment options presented to more patients as an alternative to CPAP or surgical implants. In turn, based on feedback that shows when presented the alternatives, patients routinely choose Vivos treatment. We expect more patients to select Vivos treatment at much higher rates, thereby potentially generating more revenue and profit per case for us. In summary, our new model allows us to expose significantly more OSA patients to Vivos treatment in a setting where our experience has been that about 70% will select Vivos treatment over CPAP or just doing nothing.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

We've also established predictable revenue levels per case of approximately $4,500 across diverse demographics and payer types. We further expect to be able to raise that revenue per case figure as we more fully implement the entire range of our adjunctive diagnostic testing and treatment services to patients. Accordingly, in our new model, we expect every 1,000 newly diagnosed OSA patients per month who are exposed to Vivos treatment options to generate roughly 700 new case starts at an average revenue of $4,500 or more each, with strong contribution margins of about 50%. Thus, every 1,000 newly diagnosed OSA patients to which we are exposed should yield annual top-line revenues of approximately $38 million, with approximately $19 million net.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

The key now is to extend our model for affiliation with or acquisition of sleep healthcare providers so that they can, in turn, help us maximize and extend our preferred treatment to as many OSA patients as possible. Fortunately, there are over 2,500 AASM-accredited sleep testing and treatment centers 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 treatment options beyond traditional CPAP that are both safe and effective. Vivos treatment fits that need exceptionally well.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

In our recent efforts to introduce our high-margin business model to these sleep testing and treatment centers, we have seen that our unprecedented 2023 and 2024 FDA 510(k) clearances to treat severe OSA in adults and children have given Vivos a high level of clinical credibility with sleep specialists and sleep testing clinic owners. In short, we firmly believe we have the right 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. I am therefore pleased to report that we have migrated our former medical integration personnel into our Vivos M&A team, which is currently negotiating several potential transactions with sleep providers across the United States that test and treat nearly 8,500 newly diagnosed OSA patients per month.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

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. 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. 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 our existing ATM facility and other equity financing options. Given the highly accretive nature of the potential affiliations and acquisitions, we believe these financings will help drive shareholder value. I want to thank all of you for joining us on today's conference call.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Now, let me turn the call over to our Chief Financial Officer, Brad Ammon, to review in more detail our year-end financial results. Brad, please go ahead.

[Brad Ammon, CFO at Vivos Therapeutics]

Thank you, Kirk. Today, I'll review the highlights of our financial results for the full year, 2024. For further information on our results for the 12-month periods ended December 31, 2024, and 2023, I'll refer you to our earnings release, which was distributed earlier today, and our annual report on Form 10-K, which was filed today and is available on the SEC filings portion of the investor relations section of Vivos website at vivos.com/investor-relations. Today, we recorded total 2024 revenue of $15 million compared to $13.8 million in 2023. This year-over-year increase of $1.2 million, or 9%, was due to higher product revenue generated from appliance 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 sales strategy Kirk just described.

[Brad Ammon, CFO at Vivos Therapeutics]

During the full year 2024, we sold 16,182 oral appliance arches and guides for a total of approximately $7.9 million, a 26% increase in revenue compared to 8,240 oral 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 $200,000 in discounts offered during 2024 compared to $700,000 in 2023. The year-over-year increase in product revenue was partially offset by a decrease in service revenue of $400,000. For the full year ended December 31, 2024, gross profit increased by approximately $700,000-$900,000. This increase was attributable to the increase in revenue of $1.2 million, offset by an increase in cost of sales of $500,000. Gross margin remained constant at 60% for both years ended December 31, 2024, and 2023.

[Brad Ammon, CFO at Vivos Therapeutics]

Sales and marketing expenses were lower year-over-year. 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 December 31, 2023.

[Brad Ammon, CFO at Vivos Therapeutics]

The lower spend reflects lower sales commissions and sales-related expenses in 2024 on lower VIP enrollments. We continue to see a significant reduction in general and administrative expense due to our cost-cutting efforts. General and administrative expenses decreased approximately $4.6 million, or 20%, to $17.9 million for the year ended December 31, 2024, compared to $22.5 million for the year ended 2023. The primary driver of the decrease was a change in personnel and related compensation of approximately $1.7 million as a result of the reduction in force implemented during the last two years. In addition, we reduced professional fees by $1.8 million, travel, meals, and entertainment by $400,000, insurance expense by $300,000, and infrastructure cost of $200,000.

[Brad Ammon, CFO at Vivos Therapeutics]

We continue to believe these cost-cutting efforts will reduce our cash burn as we begin to ramp revenues and move toward our goal of cash flow positive operations. 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 and lower SG&A resulting from our expense cuts. 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. 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 was not present in 2024.

[Brad Ammon, CFO at Vivos Therapeutics]

As of December 31, 2024, we had total liabilities of approximately $7.3 million as compared to $10.3 million as of December 31, 2023. For the year ended December 31, 2024, net cash used in investing activities of $600,000 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. This compares to net cash used in investing activities of $900,000 in the comparable 2023 period, arising from 2023 capital expenditures incurred for the same ordering software, as well as a purchase of a patent portfolio in February of 2023.

[Brad Ammon, CFO at Vivos Therapeutics]

Net cash provided by financing activities of $17.9 million for the year 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 costs related to our February warrant inducement 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. 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 Ammon, CFO at Vivos Therapeutics]

Although we have increased revenue and implemented cost-saving measures in 2024 and are pivoting the business model, which we believe will drive top-line revenue, we are currently using cash to fund operations, which will require us to seek additional financing in the near term, as well as financing in support of our alliance and acquisition efforts when needed. In short, we believe these are very positive financial results with higher revenue, lower costs, which help us set the foundation for our new marketing and sales model. Now I'll turn it back over to Kirk.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Thank you, Brad. That concludes our prepared remarks. Now we'll be happy to take questions. Operator?

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Do you have a question? Please press the star followed by the one on your touch-tone phone. Should you wish to cancel your request, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. Once again, that is star one should you wish to ask a question. Your first question is from Do Kim from Water Tower Research. Your line is now open.

[Do Kim, Senior Biotech Analyst at Water Tower Research]

Hi, Kirk and Brad. Congrats on the progress, and thanks for taking my questions. The first one I have on the Vivos Alliance. We understand that with the new marketing model, you have the potential to generate higher margin revenue. Could you help us know what the incentive for Vivos here is in this collaboration?

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Sure. I think that's actually a great question because as we go out to the market, we're pitching the sleep centers and sleep testing groups such as Vivos Healthcare basically on the same value proposition. Just to give you a little history there that's kind of interesting, these guys reached out to us, I guess maybe a little over 18 months ago. They reached out and said, "Hey, we'd like to talk. We are frustrated with giving our patients all the CPAP units, and it's just nothing but CPAP around here. We've kind of given up on some of the other treatment therapies. They just don't seem to work as well, etc.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

We hear good things about Vivos, and we'd like to talk about what you're doing and how we might work together. That really, we'd already been looking as to where we were going to begin to introduce our new strategic alliance and acquisition model. It was right here in our backyard. These guys were here in Colorado. They actually have five locations, I believe, in Colorado here along the Front Range. We began talking with them and going through and planning. We began in June, we executed an agreement, and we began to do that.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Now, their incentive, to get to your point, is that they see not only an improvement in the quality of care that they can offer to their patients, but they see this as an important advancement in the method of care that is available for patients. They see opportunities to extend the kinds of treatments that they're making available, and that really involves Vivos front and center. I think it was a way for them to differentiate. I mean, they compete with other sleep testing facilities just like anybody. I think it gave them a way to differentiate. It gave them a way to profit and sign up a new profit stream, create a new profit center for their things. There were a lot of patients that they had, almost 100,000. I think it's over 90,000 patients in their database.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Many of those patients, I'm not sure the exact numbers, but a large number, maybe half or more of those patients had probably stopped using their CPAP. To go back to those patients with 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. We found this to be true, though, with every one of the sleep testing groups we've gone to so far, and it's been without exception. They've all welcomed the advent of a new and differentiated treatment that's now safe and effective, according to the FDA, for their patients.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Many of them realize that the CPAP model, which has been the only go-to model for the last 40 years, has now probably run its course, and there needs to be technologies coming forward that can make it better. I would say that it's the profit motive and the ability to improve and differentiate their services offerings to patients that's motivating them to work with us.

[Do Kim, Senior Biotech Analyst at Water Tower Research]

Yep. It sounds like a perfect match right in your backyard. You also talked about repurposing your Medical Integration Division into an M&A team. I was hoping you could expand a little bit more on that, and if you're able, talk about what regions that they're deployed in and whether certain territories are a focus and what you hope to gain from this whole transition.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Another good question. We realized probably, I'm trying to think when we first established our Medical Integration Division, but it's probably about five years ago. We put a group together that we called our Medical Integration Division, and we took a guy that had been very experienced in the medical field, calling on physicians and whatnot. We put them out there with a model that really it wasn't really right. 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. While the model itself didn't work the way we had hoped, the learnings that we gained from that pointed us in the direction that we are today. It was very helpful.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

These guys are now the 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 Vivos in their practices. We are going directly to the medical communities, the medical sleep testing centers and their MD physician owners or collaborators, and we are going to them, and we are bringing the dentist to the table. That is a huge difference in terms of how the model gets implemented in the trenches. Because now what happens is that these testing centers are front and center with patients at that critical moment in a patient journey where they know they have got sleep apnea. They have got the test.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

The test has come back, and the patient now knows, "Okay, I have moderate to severe OSA, and now what are my treatment options?" Now Vivos has a seat at the table to say, "You know that CPAP? You don't have to take that. There's an alternative to rehabilitate your airway, and it's now been approved by the FDA and cleared to treat moderate to severe OSA in both adults and children." The value proposition, when 70-80% of the patients choose Vivos, we think that we've got a very strong value proposition to these patients. The testing center people, the medical people are liking it because the patients are happier. They're more pleased and satisfied with the services. They feel like they've been heard, and they're not forced into something that they don't really want being CPAP.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

It's a win-win-win all the way around. Our medical integration division team has been scouring the nation for who's doing the sleep tests, where they are being done, who are the groups that might be open to a dialogue with us and a possible affiliation or acquisition. It's been pretty incredible, the leads and the caliber of people that we've been turning up. I really want to commend our M&A guys for doing a great job of getting out there and really pivoting to this new model and making good presentations to good prospects and candidates. We're finding no shortage of interest levels, in fact, to the point where we've had to kind of dial them back a little bit. We've got more people interested than we can actually properly handle right now.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

The reception from the sleep testing groups and whatnot out there has been very, very pleasing and very almost surprising to us. We're very pleased by that.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Great. Thanks for taking my questions and looking forward to your next announcement.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

All right, Do. Thank you.

[Operator]

Thank you. Your next question is from Scott Henry from Alliance Global Partners. Your line is now open.

[Scott Henry, Managing Director and Senior Research Analyst at Alliance Global Partners]

Thank you. Good afternoon, gentlemen. A couple of questions. First, I know you have a lot of moving parts with the changing business model, but any thoughts on how we should think of 2025 relative to 2024 as far as top-line revenues and even maybe perhaps a little easier the sequential change from fourth quarter to first quarter since today's the last day of the first quarter? Thank you.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Yeah. Good question, Scott. The revenue from our affiliation with Rebis is not showing up in 2024. It will begin to show up in 2025, probably now accelerating as we get into the second quarter and third quarter of the year. Very little of that revenue because of the way we got started out there with Rebis and 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 the team out there at Rebis Health. Worked through a lot of operational concerns and challenges and all the normal things you go through when you're starting something up. We've seen here lately an acceleration of things.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

That's why between Rebis and Vivos, we jointly made a call to extend the model to two additional locations that we have in the greater Denver market. The success of what we had at the very first location was such that everybody was on board with making the capital requirements and the expenditures to extend the model into two additional locations. We are excited about that. We think that will accelerate now as they've hired, I want to say it's 15 or 17 additional PAs to handle the demand. They are talking about and some additional doctors. They have got more demand. They have got more capacity to refer patients. We expect to see actually starting here in the second quarter, we expect to see the first real contributions to our financial results will start to happen in the second quarter and then accelerate throughout the year at Rebis.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

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 affiliations and acquisitions. I think as you look at 2025, 2025 is going to 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, we'll provide you with guidance as far as what the size of each one of these is different. We'll provide you with guidance as to what we think the contributions and accretive sort of nature of each one of these transactions will be. We'll start stacking it up.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

As we stack up the interactions with more and more sleep treatment centers and more and more patients, 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, Managing Director and Senior Research Analyst at Alliance Global Partners]

Okay. Great. The income statement is changing with the new business model. If a patient comes in and you expect to get $4,500 of revenue from that patient, how does that $4,500 work through the income statement? I mean, does it go under appliances? Where does it come through, the income statement? In what fashion?

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Yeah, Scott, that'll continue to come through appliances. Those are appliances that are being sold. There will be a change to our COGS. Not only will it be the COGS from the cost of the appliance, but it'll also be in the case of an affiliate, it'll be any amounts that are paid to the affiliate. If there's a profit sharing and so forth, that'll show up as COGS. The rest of it is all pretty much the same in terms of product revenue. I wanted to say too that we've always talked about product revenue being the area that we're going to see the highest growth in and service revenue going down. Historically, we've seen it 60% service, 40% product. You can see in 2024, we were at 52% product and 48% service.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

You're already seeing this shift, and the Alliance model, this new marketing distribution model, will exacerbate that even further.

[Scott Henry, Managing Director and Senior Research Analyst at Alliance Global Partners]

To your honor, I did get a chance to look at the 10-K, which you have to back out fourth quarter. If you changed any of the previous quarters, that may create some noise. When I backed out fourth quarter, it looked like there's a huge bolus of arches coming through, like 10,000 of the 16,000 all came in the fourth quarter. Am I doing that math correctly, or is there a reason why that all showed up in the fourth quarter?

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

We have a very large customer that buys guides from us, and they use it in their business with their customers. That was all portrayed in the fourth quarter. Even though that happened throughout, the numbers all came through in the fourth quarter. That is the biggest piece of the change there.

[Scott Henry, Managing Director and Senior Research Analyst at Alliance Global Partners]

When you booked all of that in the fourth quarter of this year, does that cover prior periods, or could that signal if your biggest customer order is a pretty big order, may they not order for a couple of quarters, or is this backward-looking?

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

The revenue from that is pro-rata as it occurred, as it was shipped throughout the year. The numbers, and they did make a large purchase right at the end of the year, which took care of some of their demand in the first couple of months of 2025, certainly. They did make a large fourth-quarter purchase.

[Brad Ammon, CFO at Vivos Therapeutics]

Scott, the thing of it is, the thing of it is with that particular customer is they're experiencing just truly unprecedented demand and growth and expansion. 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 seeing a real surge in demand for the guides products. They've got a very innovative and very effective marketing and go-to-market strategy that's really working well for them. They're executing well on their plan. I would not expect to see that do anything but get better. They've actually said to us that they're expecting to see their revenue and their orders triple this year over what they were last year. I think we're going to see continued growth from them as well as in some of our other lines.

[Brad Ammon, CFO at Vivos Therapeutics]

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, Managing Director and Senior Research Analyst at Alliance Global Partners]

Okay. That's great. Final question, Brad. Just a couple of other numbers that just kind of bounced around this quarter, but it looked like sponsor, seminar, other among service component was about $1 million higher than it typically is for a quarter. It looked like VIP was actually a negative number for the quarter. Anything to take from those trends that will be helpful going forward, or would you just put that in the noise category? Thank you.

[Brad Ammon, CFO at Vivos Therapeutics]

With seminar and sponsorship revenue, we utilize our TVI Center, which is the old Frontier Airlines Training Center. That's what we've repurposed for our Vivos Training Center. TVI is actually hosting a number of events for Seattle Study Club, for some other customers of ours. There's revenue, and we're seeing more and more revenue from that coming on board, just utilizing that for other purposes other than just our own.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

I think it's important to note, guys, that we made a huge investment in infrastructure to teach and train all the dentists. We've had over 5,000 dentists that have come through over the last four or five years, and they've come through our facilities out there at TVI, which we call the Vivos Institute.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

The mandate that we gave and the challenge we gave our team was now that we're not doing as many of those kinds of sales events and other things, fill this place up with people that will be relevant. For example, last fall, we held a very successful women's conference on sleep disorders and women, specifically for females. It was hosted and staffed, and all the speakers were medical, dental, all different, but they were all women speakers. We premiered a brand new documentary on sleep breathing disorders, sleep OSA, and it was a huge success. We are doing that again this year. All of those events that we use in our facilities, they're paid events. People are coming to those events. They're paying. I wouldn't consider that noise.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

I would consider that things that you can count on as part of a revenue stream. It's going to cover the costs and put the TVI into the black as far as just being a revenue generator, not an anchor that we're dragging as we go forward. There are many ways that we can leverage that asset into profits for us. That's what you're seeing there.

[Scott Henry, Managing Director and Senior Research Analyst at Alliance Global Partners]

Okay. Great. Thank you for taking the questions.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

You bet. Thanks, Scott.

[Operator]

Thank you. Once again, please press star one should you wish to ask a question. Your next question is from Lucas Ward from Ascendiant Capital Markets. Your line is now open.

[Lucas Ward, Senior Research Analyst at Ascendiant Capital Markets]

Thank you. Hi, guys. Good afternoon. My first question is about.

[Brad Ammon, CFO at Vivos Therapeutics]

Hi.

[Lucas Ward, Senior Research Analyst at Ascendiant Capital Markets]

Hi. The conversion of new customers at these sleep centers, starting with Rebis, you've described some very large volume opportunities there, 100,000 existing customers, 1,000-plus people a month coming in to get new diagnoses. I guess my question is, what gates the speed at which you can turn that potential customer base into Vivos customers?

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

That's a great question. Look, you honed in on one of the key metrics, one of the key KPIs that we're tracking here, which is the conversion rate of all these patients. We're going to be in front of these patients. We're going to have the opportunity to present them with the full spectrum of their treatment options. No longer will patients get diagnosed for sleep apnea and just automatically be sent to the next door for fitting for their CPAP. They will now be given an education and information about their alternatives and their options. If they still choose CPAP, that's still available. If they want to try to rehabilitate their airway, if they want to try to address what we consider to be the root cause of the sleep apnea that they're experiencing, that is where it comes in.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

What we're saying here is that in our experience across multiple different markets and multiple different encounters at dental offices, at medical offices, now at CSI out there in Boulder and Longmont, we're actually experiencing a 70-80% uptake. Patients are saying, "Hey, I want to take a Vivos treatment and take a Vivos device of some quarter." We have a whole spectrum of clinical options there. Some of the cases are $3,500, and some of them are $8,500, $10,000. 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 typically select. Now they have a choice. When they're given a choice, what we're finding is that most people do not want CPAP, and they will choose something other than CPAP when it's presented properly.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

That is what we are trying to do, and that is what we are doing, and we are finding it to be very, very successful. You asked about the gating factors there. We have to have dentists that are trained in Vivos. Fortunately, we have over 2,000 of them to choose from out there in the marketplace that we have trained and certified over the course of time. Many of those doctors have expressed to us interest in coming to work for us in this new model with these new advantages. Treating sleep for a dentist is much easier than doing general dentistry. It is much more rewarding financially. It is less taxing on their bodies. One of the gating features is finding dentists. So far, we have found a ready pool of interested and enthusiastic providers to provide the dental services that are required.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

I think right now that that's probably the gating factor, but we have the manufacturing capacity in place so that we can meet the demand, which will be accelerating. We have the staffing models that we've worked out. We have all of the software and hardware for billing and practice management that we know how to do this. I think we really expect to see we expect to be able to see that we can meet this demand without encountering too many choke points along the way. As we encounter those, we'll obviously work through it. From the standpoint of identifying the patients, we know they're there. We know they're there in abundance. We've got to train and teach staff to get up to speed. We're feeling very good about what we've experienced so far.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

There's a ready workforce out there that's excited about what we're doing and excited to join the Vivos team or the team that's going to be delivering this out wherever this may be. Most of our opportunities that we're exploring right now happen to be in the Midwest and the West. We are also hearing from sleep. The word is spreading. People are reaching out and contacting us from all across the country. We've had some interest here recently from the East Coast as well. Right now, most of this is geographically dispersed so that our management team can get there and we're familiar with these markets. We're familiar with the providers. We're familiar with the insurance coverages out here. We feel really good about all those different things so far.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

I don't think that we're finding or encountering too many choke points that we can't get through.

[Lucas Ward, Senior Research Analyst at Ascendiant Capital Markets]

Okay. Thanks, Kirk. Does this mean then that you're working with dentists that are not VIPs to get the prescriptions filled for people? Help me understand the sales funnel a little bit better for Rebis. Someone gets a diagnosis. They are presented Vivos as an option. What are the steps that they would then go through to actually get them?

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Yeah. Let's go through that really quick. Yeah, the patient journey. That's a great question. The patient journey typically begins with the patient at their primary care provider. The MD that's doing an annual physical is doing this or the other. The MD, for whatever reason, suspects that this patient might have a sleep or breathing disorder like obstructive sleep apnea. They then write a script. That script is for them to go get tested. They're going to get tested at a place like Rebis. They're going to go over to Rebis Healthcare, which is DBA Colorado Sleep Institute. They're going to go there. They're going to present their script for their sleep test. They'll go through the process there. Whether it's an in-lab overnight polysomnogram or whether it's a home sleep test, that's typically determined by their provider and their insurance company.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

They'll get tested for sleep apnea. If they come back positive for OSA, which 80-90% of the time they're going to get a positive diagnosis for OSA, that's when they sit down with the medical doctor, the sleep specialist, and they ask the question, "What do I do now? What do I do about this? Now I know I have moderate to severe OSA or even mild. What do I do about this? Will it go away on its own? Will it help if I lose weight? Will it do all these different things?" The doctor's 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, their different kinds of treatment options that are available.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

The treatment navigators are key here because they spend more time with the patients than the doctors are able to. They help them understand. They can either manage this disease with a CPAP, they can manage this disease with an oral appliance device, or they can rehabilitate with one of the Vivos appliances. The patients who hear that story typically will make a decision, and that decision will then determine whether they go down the CPAP path, or whether they go into some type of oral appliance in which all of that is considered Vivos treatment. If they do a mandibular advancement device, that's a Vivos treatment because we're delivering a dental device. It's one of our proprietary or one of our custom design appliances.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

If they want to rehabilitate, they'll go down that path. At each step along the way, the patient is informed as to their clinical status, and they're informed as to what kinds of out-of-pocket costs they have, what kinds of coverage their insurance carrier is going to have. In fact, we've just developed—we haven't announced it yet, but we've just developed some 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. 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 because it actually lowers our costs and streamlines our ability to bill.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

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 path forward might be. Some patients we've already seen. Some patients will select in the near term. They may select going down a path of the treatment. My mind just went blank. The CPAP treatment. I'm sorry. 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." That's actually the way that we see the patient journey unfolding, and that's kind of how that goes.

[Lucas Ward, Senior Research Analyst at Ascendiant Capital Markets]

Okay. Thanks, Kirk. Final question on M&A. It sounds like you are looking potentially to acquire sleep centers. I'm just wondering, 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 an affiliate or a partner or provider in one?

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Here's what we found so far. We've looked at—I don't know how many, probably a dozen or more sleep centers' operations across the country. They're typically profitable. They're not wildly profitable because they operate on a high volume, rather low margin. It's a high volume, low margin business. However, when you combine what they're doing with the metrics that I've already given you about the conversion into Vivos treatment, which is a high margin product, what you find is that all of a sudden, these businesses become wildly profitable. 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.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

I think that's one of the reasons why these sleep centers are so anxious to talk to us is because 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 where you've got huge margins. When we come along and say, "Hey, why don't we tweak this model that you've got here, which is mildly successful, moderately profitable, and why don't we add in to what you're doing, what we do here at Vivos, and look at what happens to your business when we do that?" When that happens and we show them that, they get real excited. That's what Rebis got excited about.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

The other ones that we'll be announcing over the next few weeks and months, they've gotten really excited about it. You will see as we go through and make some of these announcements in the upcoming weeks and months, you will see more details around this that I think you'll find pretty compelling. It is compelling to these guys as well. I think that's why we have such optimism about what this inflection point for Vivos—we call it our pivot—this inflection point in terms of revenue growth and opportunities for 2025 and beyond.

[Lucas Ward, Senior Research Analyst at Ascendiant Capital Markets]

Okay. Thanks. That's all I have. Congrats on your progress.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

All right. Thank you, Lucas.

[Brad Ammon, CFO at Vivos Therapeutics]

Thanks, Lucas.

[Operator]

Thank you. There are no further questions at this time. Please proceed.

[Kirk Huntsman, Chairman and CEO at Vivos Therapeutics]

Okay. I would like to thank everyone once again for joining us on today's call and for your continued interest in Vivos. This is a very important time in our history, and we believe our business model pivot in 2024, when combined with the benefits of unprecedented regulatory improvements for our products, will provide a bright future for the company. Furthermore, given the relationships that we've established, our success in managing costs and reducing our cash burn, our increased liquidity, and enhanced capital structure, we are extremely excited about our prospects for 2025 and beyond. We look forward to sharing our continued progress with you as we continue to execute on our plans throughout 2025. Thank you very much and have a great evening.

[Operator]

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.

Participants

Executives

• Brad Ammon, CFO
• Kirk Huntsman, Chairman and CEO

Analysts

• Do Kim, Senior Biotech Analyst at Water Tower Research
• Lucas Ward, Senior Research Analyst at Ascendiant Capital Markets
• Analyst
• Scott Henry, Managing Director and Senior Research Analyst at Alliance Global Partners