8-K: Vivos Therapeutics Reports 17% Revenue Increase and Reduced Operating Loss in Q3 2024

Vivos Therapeutics announced a 17% increase in revenue and a 27% reduction in operating loss for the third quarter of 2024, alongside key operational milestones.

Summary

• Vivos Therapeutics reported a revenue of $3.9 million for the third quarter of 2024, a 17% increase compared to $3.3 million in the same period of 2023.
• The company's gross profit for Q3 2024 was $2.3 million, up from $1.7 million in Q3 2023, with a gross margin of 60%, compared to 53% in the prior year.
• Operating expenses decreased by 8% in Q3 2024 compared to Q3 2023, marking the ninth consecutive quarter of year-over-year reductions.
• The operating loss for the third quarter of 2024 was reduced by 27% year-over-year, a $1 million improvement.
• Vivos anticipates achieving positive cash flow from operations by mid-2025.
• The company closed a $4.3 million registered direct equity offering in September 2024, improving its cash position to $6.3 million and stockholders equity to $7.7 million as of September 30, 2024.
• Over 47,000 patients have been treated with Vivos oral appliances worldwide, and more than 2,000 dentists have been trained in the Vivos Method.
• Vivos received FDA 510(k) clearance for its oral medical device to treat moderate to severe OSA and snoring in children aged 6 to 17.
• The American Medical Association issued new CPT medical codes for Vivos CARE devices, effective January 1, 2025.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong revenue growth, reduced operating losses, and key regulatory approvals. The company's strategic initiatives and financial improvements suggest a positive trajectory, although some risks remain.

Positives

• Revenue increased by 17% in the third quarter of 2024 compared to the same period in 2023, indicating strong sales growth.
• Operating loss decreased by 27% year-over-year in Q3 2024, demonstrating improved cost management.
• Gross margin improved to 60% in Q3 2024, up from 53% in Q3 2023, reflecting better profitability.
• The company received FDA clearance for its device to treat OSA in children, opening a new market segment.
• New CPT codes from the AMA will likely increase insurance coverage and adoption of Vivos devices.
• Vivos has successfully reduced operating expenses for nine consecutive quarters.
• The company's cash position improved to $6.3 million following a $4.3 million equity offering.

Negatives

• Myofunctional therapy revenues decreased, offsetting some gains in product and service revenue.
• The new marketing and distribution model did not generate material revenue in the third quarter, although expansion is planned.
• The company is still operating at a loss, with a net loss of $2.6 million for the quarter and $8.3 million for the nine months ended September 30, 2024.

Risks

• The company's ability to implement revenue, sales, and marketing strategies to increase revenues is a risk.
• There is a risk that some patients may not achieve the desired results from using Vivos products.
• Regulatory scrutiny and adverse publicity in the sleep apnea treatment sector could negatively impact the company.
• Vivos may be unable to secure additional financing on reasonable terms when needed, or maintain its Nasdaq listing.
• The new marketing and distribution model is still in early stages and may not perform as expected.

Future Outlook

Vivos anticipates achieving positive cash flow from operations by mid-2025 and expects its new marketing and distribution model to positively impact new case starts, revenue growth, and gross profit in 2025. The company also plans to expand its new marketing model to additional locations.

Management Comments

• Kirk Huntsman, Vivos Chairman and CEO, stated that the company reported a 17% increase in third-quarter topline revenue.
• Mr. Huntsman noted that the third-quarter results mark the ninth consecutive quarter of year-over-year decreases in operating expenses.
• Management believes that the new marketing and distribution model shows promise and will be expanded.
• Management expects the company's move into affiliations with medical specialists to positively impact new case starts, revenue growth, and gross profit in 2025.

Industry Context

The announcement highlights Vivos' progress in the sleep apnea treatment market, particularly with its FDA clearance for pediatric use, which positions it to address a significant unmet need. The new CPT codes also align with industry trends towards greater insurance coverage for medical devices.

Comparison to Industry Standards

• While specific competitor data is not provided, the 17% revenue growth and 27% reduction in operating loss suggest Vivos is performing well compared to other medical device companies in the growth phase.
• The FDA clearance for pediatric OSA treatment is a significant milestone, as many companies focus primarily on adult OSA.
• The achievement of new CPT codes is a positive development, as it can improve market access and adoption of Vivos devices, similar to how other medical device companies benefit from favorable reimbursement policies.
• The company's focus on cost reduction is a common strategy among growth-stage companies aiming for profitability, and Vivos' nine consecutive quarters of reduced operating expenses is a positive sign.

Stakeholder Impact

• Shareholders will benefit from the increased revenue, reduced losses, and improved financial position.
• Employees may see increased job security and potential for growth as the company expands.
• Customers will have access to new treatment options for sleep apnea, including children.
• Suppliers may see increased demand for Vivos products.
• Creditors may view the company as a lower risk due to its improved financial performance.

Next Steps

• Vivos plans to expand its new marketing and distribution model to two additional locations in Colorado by the end of 2024 or early 2025.
• The company is in discussions to expand the model through similar alliances with other medical sleep providers.
• Vivos will continue to refine the new marketing model based on its experiences.
• The company will file its full 10-Q report with the SEC.
• Vivos will host a conference call to discuss the financial and operating results of the third quarter of 2024.

Key Dates

Keywords

Vivos Therapeutics, Sleep Apnea, Obstructive Sleep Apnea, OSA, Medical Device, Oral Appliance, FDA Clearance, CPT Codes, Revenue Growth, Operating Loss, Financial Results