8-K: Vivos Therapeutics Reports 2023 Financial Results, Highlights Cost Reductions and FDA Clearance

Vivos Therapeutics announced its fourth quarter and full year 2023 financial results, showcasing a significant reduction in operating expenses and progress in FDA clearances for its sleep apnea treatments.

Summary

• Vivos Therapeutics reported a revenue of $3.2 million for the fourth quarter of 2023 and $13.8 million for the full year, compared to $4.0 million and $16.0 million in the same periods of 2022, respectively.
• The decrease in revenue was primarily due to lower appliance revenue and Vivos Integrated Provider (VIP) enrollments, partially offset by increased revenue from home sleep testing and seminars.
• Gross profit was $2.1 million for the fourth quarter and $8.3 million for the full year 2023, compared to $2.4 million and $10.0 million in 2022.
• Operating expenses decreased by 26% in the fourth quarter and 27% for the full year 2023, due to cost-cutting initiatives.
• Net loss decreased by 30% in the fourth quarter and 43% for the full year 2023, compared to 2022.
• The company had $1.6 million in cash and cash equivalents at the end of 2023, and subsequently raised $4.0 million through a warrant exercise in February 2024.
• Vivos has treated over 42,000 patients worldwide with its oral appliances and trained over 1,900 dentists in its methods.
• The company received FDA 510(k) clearance for its CARE oral appliances to treat severe OSA in adults in November 2023.
• Vivos anticipates becoming cash flow positive from operations by the end of 2024, contingent on revenue growth.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to the significant cost reductions and FDA clearance, but tempered by the decrease in revenue and the need for additional capital. The company is making progress but still faces challenges.

Positives

• Vivos successfully reduced operating expenses by 27% in 2023, demonstrating effective cost management.
• The company achieved a significant 43% reduction in net loss for the full year 2023.
• FDA 510(k) clearance for severe OSA treatment using Vivos CARE appliances is a major regulatory milestone.
• The 38% sequential increase in signed VIP enrollment contracts in Q4 2023 indicates growing market interest.
• The warrant exercise in February 2024 provided a $4 million boost to the company's cash position.
• Strategic partnerships with Ormco, On Demand Orthodontist, and NOUM DMCC are expected to drive revenue growth.
• The clinical trial at Stanford Medicine will provide further validation of the Vivos DNA appliance.
• The company has expanded its reach to over 42,000 patients and 1,900 trained dentists.

Negatives

• Revenue decreased to $13.8 million for the full year 2023, down from $16.0 million in 2022.
• Gross profit also decreased to $8.3 million for the full year 2023, compared to $10.0 million in 2022.
• The company's cash and cash equivalents were $1.6 million at the end of 2023, which is a relatively low amount.
• Governmental investigations of unrelated third parties in the sleep apnea space negatively impacted Vivos case starts and VIP enrollments in 2023.

Risks

• Vivos may be unable to implement revenue, sales, marketing, and collaboration strategies to increase revenues.
• 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.
• The company may face challenges in maintaining its Nasdaq listing.
• The company's ability to achieve cash flow positive operations by the end of 2024 is contingent on revenue growth.

Future Outlook

Vivos anticipates becoming cash flow positive from operations by the end of 2024, contingent on revenue growth. The company expects that key relationships and collaborations will drive higher patient referrals and create long-term revenue opportunities. They also expect to raise additional capital in 2024.

Management Comments

• In 2023, we took a number of steps to expand our portfolio of proprietary products, open up new revenue streams, lower our cost structure and strengthen our liquidity position.
• We have made substantial progress and are now starting to see the benefits of our actions.
• Based on our progress to date and our revenue growth efforts for 2024, we continue to anticipate becoming cash flow positive from operations by the end of this year.
• We believe we have all the necessary tools in place to implement our growth plans, drive increased revenues and achieve cash flow positive operations and profitability in the foreseeable future.

Industry Context

The announcement comes amid increasing focus on non-invasive treatments for sleep apnea. Vivos' FDA clearance for its oral appliances positions it as a significant player in the market, potentially disrupting the traditional CPAP treatment approach. The company's partnerships and expansion into the MENA region also reflect a broader trend of medical device companies seeking global growth opportunities.

Comparison to Industry Standards

• Vivos' revenue of $13.8 million for 2023 is relatively small compared to established medical device companies like ResMed (approximately $4.2 billion in 2023 revenue) and Philips (approximately $19.5 billion in 2023 revenue), which dominate the sleep apnea market with CPAP devices.
• However, Vivos' focus on oral appliances and its recent FDA clearance for severe OSA treatment differentiate it from these larger players.
• The 27% reduction in operating expenses is a positive sign, as many medical device companies struggle with high operating costs during the growth phase.
• The company's gross margin of 60% is comparable to some medical device companies, but lower than some of the larger players in the industry.
• The clinical trial at Stanford Medicine is a significant step for Vivos, as it will provide further validation of its technology against the industry standard CPAP treatment.

Stakeholder Impact

• Shareholders may be impacted by the decrease in revenue and the need for additional capital, but also by the potential for future growth and profitability.
• Employees may be impacted by the cost-cutting initiatives, but also by the potential for future growth and success.
• Customers (patients) may benefit from the FDA-cleared treatment options and the expansion of Vivos' product line.
• Suppliers may be impacted by the company's growth and expansion.
• Creditors may be impacted by the company's financial performance and its ability to repay debts.

Next Steps

• Vivos plans to implement its growth plans, drive increased revenues, and achieve cash flow positive operations and profitability.
• The company will continue to cultivate relationships and collaborations with medical doctors to assist in treating their OSA patients.
• Vivos will continue to expand its product line and extend its international presence.
• The company will participate in a clinical trial at Stanford Medicine for its DNA appliance.
• Vivos will file its full 10-K report with the SEC.

Key Dates

Keywords

Vivos Therapeutics, Obstructive Sleep Apnea, OSA, FDA 510(k) Clearance, Oral Appliances, Medical Devices, Sleep Apnea Treatment, Cost Reduction, Revenue Growth, Financial Results