Vivos Therapeutics, Inc. Q2 FY2025 earnings call

• In 2025, Vivos pivoted to a sales, marketing, and distribution model focusing on sleep center provider-based alliances and acquisitions, with the acquisition of Sleep Center of Nevada on 06/10/2025.
• The integration of Sleep Center of Nevada (SCN) has been encouraging, with cooperation from the medical team exceeding expectations and patient demand for treatment options higher than forecast.
• Deployed sleep optimization (SO) teams, each consisting of medical, dental, and support staff, with plans to expand facilities and deploy more teams to meet demand.
• Growth initiatives include expansion of diagnostic/treatment services, pediatric OSA program, and collaboration with specialty medical groups. A new collaboration management model for non-acquired sleep centers was also introduced, with an agreement executed with MI Sleep, LLC in July.
• M&A team is in negotiations with potential candidates in key markets, with one potential acquisition under an exclusive letter of intent.

In the second quarter of 2025, VIP enrollment revenue decreased by about 6% to $3.8 million compared to $4.1 million in Q2 2024, reflecting the transition away from legacy VIP enrollment. Product sales were impacted by appliance discounts but offset by $500,000 from guide sales. Services saw a $500,000 uplift in sleep testing service revenue attributable to the acquisition of Sleep Center of Nevada and a $400,000 boost in sponsorship, seminar, and other service revenue. Overall, revenue decreased by $600,000 to $6.8 million in 2025 compared to the same period in 2024, primarily due to the drop in VIP enrollment revenue but offset by increases in sleep testing and sponsorship/seminar revenue.

• Revenue will track the deployment of SO teams as the new model replaces the old one.
• Expect cash flow positive in the fourth quarter of 2025 as SO teams are deployed and facilities expanded.
• Continues to refine the model for better gross margins and expects the model to be replicable and scalable across multiple markets, driving top-line revenue growth and bottom-line profitability.

• Execution risks related to growth strategies, including sales, marketing, distribution, and acquisition/integration of sleep centers.
• Regulatory uncertainties affecting the clinical discretion of treating doctors regarding device usage.
• Cost savings challenges and potential differences between forward-looking statements and actual results due to unforeseen risks and uncertainties.

Q: How should we think about revenue in Q3 and Q4 relative to Q2?

A: Revenue will begin to track the deployment of SO teams, with growth tied to the expansion of the footprint across markets.

Q: Will OpEx remain at the elevated rate under the new model or are there one-time events?

A: There were one-time events in Q2 related to the SCN acquisition, like professional costs and legal fees, which will not recur. Around $700,000 to $800,000 of nonrecurring costs are specific to the SCN acquisition.

Q: How do you recruit professionals for SO teams?

A: It takes several weeks to sift through resumes and evaluate applicants. The management team has experience from past dental operations, making them well-suited to recruit and train SO teams.

Q: Are you prioritizing bedding down the SCN acquisition or looking at other opportunities?

A: Continuing to evaluate other acquisition possibilities while bedding down SCN, with a capable operations team able to handle multiple tasks simultaneously.

Q: Plans to refinance debt and financial strategy?

A: Always seeking to reduce the cost of capital, leveraging relationships to pursue lower-cost financing as the model matures and performance improves.

Q: At what point could you be cash breakeven?

A: Actively putting teams in place, expecting cash flow positive in the fourth quarter as facilities expand and teams are deployed.