10-K: Vivos Therapeutics Reports Full Year 2024 Results, Focuses on Strategic Alliances

Vivos Therapeutics pivots towards strategic alliances and acquisitions to drive revenue growth after mixed results in 2024.

Summary

• Vivos Therapeutics, a medical technology company focused on sleep apnea treatments, reported its full year 2024 results, highlighting a shift in business strategy.
• The company is moving away from a reliance on dentists as the primary distribution channel, focusing instead on strategic alliances with sleep centers and potential acquisitions.
• In June 2024, Vivos entered its first strategic alliance with Rebis Health Holdings, an operator of multiple sleep treatment centers in Colorado.
• This alliance promotes all forms of OSA treatments, including the Vivos Method, and has shown promising results with patients selecting Vivos treatment at a rate of approximately 2 to 1 over CPAP at a single Rebis location.
• The company's average treatment times for its multidisciplinary Vivos Method have been reduced from 18-24 months to 9-12 months.
• Vivos is also implementing a more robust clinical diagnostic protocol to gather greater clinical data and drive higher insurance payer reimbursements.
• The company's revenue model is currently derived from recurring appliance sales, VIP office training and enrollment fees, SleepImage HST revenue, The Vivos Institute, the Airway Intelligence Service (AIS), Billing Intelligence Services (BIS), AireO2 Patient Management Software, M&A Group, and MyoCorrect (Orofacial Myofunctional Therapy) Program.
• Vivos reported a net loss of $11.1 million for the year ended December 31, 2024, compared to a net loss of $13.6 million for the year ended December 31, 2023.
• As of December 31, 2024, the company had approximately $6.3 million in cash and cash equivalents.
• The company believes that its new strategic business model has numerous advantages that, taken together, set it apart from the competition and position it for success in the marketplace.

Sentiment

Score: 5

Explanation: The document presents a mixed picture. While there are positive developments such as the strategic shift and FDA clearance, the company's financial performance and need for additional capital raise concerns.

Positives

• Strategic shift towards alliances and acquisitions could lead to increased revenue and profitability.
• Reduction in average treatment times makes the Vivos Method more appealing to patients.
• FDA clearance for DNA appliance to treat OSA in children expands the company's market opportunity.
• New CPT Codes issued by the American Medical Association (AMA) for billing medical insurance which apply only to Vivos C.A.R.E. appliances.
• The company has a comprehensive patent portfolio to protect its intellectual property and technology.

Negatives

• The company has a history of operating losses and may never achieve cash flow positive or profitable results of operations.
• The company will need to raise additional capital to fund and grow its business.
• The company previously identified material weaknesses in its internal controls.
• The company's future operating results are difficult to predict and may vary significantly from quarter to quarter.
• The company's business and results of operations may be impacted by the extent to which patients using The Vivos Method achieve adequate levels of third-party insurance reimbursement.

Risks

• The company's new business model has a limited operating history, making it difficult to evaluate and compare past performance with future prospects.
• The company may not be able to obtain additional capital on commercially reasonable terms in a timely manner.
• The company's products and third-party contract manufacturing activities are subject to extensive governmental regulation.
• The company may not be able to protect its patents and proprietary technology.
• The company faces the risk of product liability claims.
• The company's relationships with VIPs, other healthcare providers, and third-party payors will be subject to federal and state healthcare fraud and abuse laws.
• The misuse or off-label use of The Vivos Method or other Vivos products and services could result in injuries that lead to product liability suits or result in costly investigations, fines, or sanctions by regulatory bodies.
• The company has engaged in and will continue to pursue acquisitions of medical or dental practices or complementary businesses or technologies, which could divert the attention of management, and which may not be integrated successfully into the existing business.
• The market price of the company's common stock has been and may continue to be highly volatile, and you could lose all or part of your investment.
• The company's failure to meet the continuing listing requirements of The Nasdaq Capital Market could result in a de-listing of its securities.

Future Outlook

Vivos expects its new strategic marketing and distribution alliance model to positively impact revenue growth and stockholders equity in upcoming fiscal quarters. The company also anticipates that federal and state governments will continue to review and assess alternative healthcare delivery systems and payment methodologies, which could create a positive environment for the company.

Management Comments

• The company is focused on contractual alliances with (and, in the future, potential outright acquisitions by us of) OSA healthcare providers, including dentists, sleep centers and others and is based on a profit-sharing model between us and the provider which aligns our revenue generation more directly to sales of our novel appliances.
• When patients are educated about their OSA condition and the harm it does to their overall health, most of them would like to fix the problem and not have to wear a medical device such as CPAP for the rest of their lives.

Industry Context

The global sleep apnea devices market is expected to grow at a CAGR of 8.6% from 2025 to 2032, reaching $18.30 billion. Vivos is positioning itself to capture a larger share of this market by offering a non-surgical, non-invasive treatment option for OSA.

Comparison to Industry Standards

• CPAP is the gold standard treatment for over 90% of OSA patients, but no one wants to wear those devices to bed every night for life, rendering long-term compliance rates low.
• Traditional oral appliances can be effective over limited time frames but often create other problems with temporomandibular joint (or TMJ) dysfunction, open bites, infections, and more.
• More radical and invasive options such as neuro-stimulation devices, or maxillomandibular advancement surgery are likewise viewed more as treatments of last resort.
• When The Vivos Method is presented as a viable treatment option against the alternatives discussed above, our experience shows it will be the preferred choice of most patients by a factor of about 2 to 1.

Legal Proceedings

• The company is involved in ongoing litigation with Ortho-Tain, Inc. in the United States District Court for the District of Colorado and the United States District Court for the Northern District of Illinois.

Stakeholder Impact

• Shareholders face the risk of dilution from future equity offerings.
• Employees may be affected by cost-cutting measures and strategic shifts.
• Customers (patients) may benefit from improved treatment options and reduced treatment times.
• Suppliers may be impacted by changes in the company's manufacturing and sourcing strategy.

Next Steps

• Continue to seek additional strategic affiliations, acquisitions, or alliances with sleep testing and treatment centers nationwide.
• Continue to implement a more robust clinical diagnostic protocol to gather greater clinical data and drive higher insurance payer reimbursements.
• Continue to work with Stanford University to address the concerns that led to the hold on the clinical study and has continued engaged discussions with the university.
• Continue to explore a potential additional equity capital financing or financings to stay above the minimum threshold of the Equity Requirement.

Key Dates

Keywords

Vivos Therapeutics, sleep apnea, OSA, strategic alliance, acquisitions, DNA appliance, oral appliances, Vivos Method, Rebis Health Holdings, FDA clearance, financial results, revenue, profitability, CPAP, dentists, medical professionals