Allurion Technologies Inc. Q3 FY2024 earnings call

Key Pillars for 2025:

• New commercial plan focused on deeper penetration in smaller footprint with B2B2C marketing.
• Scale AI product platform through various business models.
• Gain FDA approval for Allurion Balloon and prepare for U.S. launch.
• Achieve profitability for ex-U.S. business by end of 2025.
• Resume commercialization in France.

Commercial Strategy Shifts:

• Reduced DTC marketing spend by 77% in Q3, with procedure volumes still increasing by 2%.
• Retool sales team with B2B2C experienced talent, focus on deepening in high-potential markets, and exit less profitable markets.

AI Product Growth:

• AI product revenues grew over 80% YOY, driven by expansion in U.S. with GLP-1 patients and Europe with GLP-1 prescribing growth. Plan to test Coach Iris in different use cases in 2025.

FDA PMA Progress:

• Last patient exited AUDACITY trial, on track for data readout end of 2024. Submitted first three modules of PMA to FDA, with positive conversations, and plan to submit fourth module early 2025.

Study Highlights:

• Published studies show Allurion Balloon effectiveness with virtual guidance, weight reduction in adolescents, meta-analysis on comorbidity improvements, and real-world experience across 72 countries.

Third quarter revenue was $5.4 million, which included a $1.2 million reduction from product recalled in France. The AI native platform, Allurion Virtual Care Suite (VCS), saw recurring revenue growth for a third quarter in a row, with AI product revenues growing over 80% year-over-year and on track to double by year end. The balloon business was affected by suspension in France, macro headwinds, and GLP-1 drug competition, but had strength in the Middle East with 20% procedure volume growth compared to last year and parts of Latin America showing recovery.

2024 Revenue: Expected to be in the range of $30 million to $35 million, with procedure volume flat compared to 2023.

Profitability: Aim to achieve profitability for ex-U.S. business by end of 2025.

FDA Timeline: Plan to submit fourth module of PMA early 2025 for Allurion Balloon, with expectation of capitalizing on U.S. opportunity if approved.

Risks:

• Macro headwinds in certain markets.
• Competition from GLP-1 drugs.
• Regulatory uncertainties in France and other markets.
• Execution risks of new commercial and operational strategies.

Q: Josh Jennings asked about PMA filing status and Virtual Care Suite revenue generation.

A: Shantanu Gaur stated first three PMA modules filed and being reviewed by FDA with positive conversations, and VCS monetized on per patient, per month basis for providers using Allurion Balloon or GLP-1s.

Q: Matt Taylor asked about U.S. revenue in 2025 and gross margins.

A: Shantanu Gaur said some U.S. revenue expected from VCS AI product, Chris Geberth mentioned Q4 margin likely in low to mid 60s and margin expected to creep up to mid-70s by end of 2025.

Q: Unidentified Analyst asked about impact from France and cost reduction plan staging.

A: Chris Geberth said France used to be ~15% of revenue with over $1M impact and recall adjustment, Shantanu Gaur said most cost reduction implemented in Q4 with some in Q1.