Vivos Therapeutics, Inc. Q1 FY2025 earnings call

• Vivos is pivoting its business model towards forming strategic alliances with or acquiring sleep medical providers to boost product sales and diversify revenue. - Product sales have been growing, especially in the pediatric guide appliance line, with total arches shipped up 87% in the quarter. - The company expects to close the acquisition of Sleep Center of Nevada (SCN) in the next month or two, which is anticipated to be accretive to revenue and gross profit as SCN sees approximately 3,000 sleep patients monthly. - The experience with the Rebis Health alliance was slower than expected due to internal issues at Rebis, but it validated the thesis that a significant portion of patients would select Vivos treatment. - Vivos plans to add new diagnostic and therapeutic services at SCN, aiming for net contribution margins of 50% or better.

In the first quarter of 2025, Vivos Therapeutics reported total revenue of $3 million, down from $3.4 million in the first quarter of 2024. Service revenue decreased primarily due to changes in marketing and sales strategy, with VIP enrollment revenue dropping by $700,000. Product sales saw growth, with total arches shipped increasing 87% from 1,996 in the first quarter of 2024 to 3,736 in the first quarter of 2025. Product revenue for the quarter was up 8% despite lower price points on certain pediatric products. Sleep testing service revenue remained relatively unchanged at $300,000 in both the first quarters of 2024 and 2025. Cost of sales was $1.5 million for both comparable periods, and gross profit decreased from $1.9 million in 2024 to $1.5 million in 2025, with gross margin falling to 50% from 57% due to lower VIP service revenue.

• Expect the acquisition of SCN to close in the near term, with the transaction expected to be accretive to revenue and gross profit shortly after closing. - Anticipate SCN to start generating substantial revenue in the third quarter, helping to eliminate cash burn and move towards positive cash flows. - Operating expenses are likely to increase in the third and fourth quarters due to absorption of new staff and facilities, but revenue is projected to grow rapidly enough to outpace the incremental spending.

• Integration risk associated with the acquisition of SCN, including challenges in converting patients and integrating operations smoothly. - Operational risks stemming from internal issues at Rebis Health that affected the progress of the Rebis alliance. - Cash flow risk as the company needs to secure financing to close the SCN transaction and support ongoing operations.

Q: Do Kim from Water Tower Research asked about the experience with the Rebis alliance and its comparison to expectations.

A: Kirk Huntsman stated the Rebis alliance has progressed slower than initially expected due to internal issues at Rebis, but it proved the thesis that a significant portion of patients would select Vivos treatment.

Q: Lucas Ward from Ascendiant Capital Markets inquired about the impact of the SCN acquisition on the P&L, when it would be accretive, and operating expenses.

A: Brad Amman mentioned the acquisition has legacy revenue and expenses that are accretive, and Kirk Huntsman expected accretions to show up in the third quarter. He also noted operating expenses may increase in the third and fourth quarters due to absorption, but revenue would grow faster to outpace the additional spending.