Good afternoon, and welcome to the Vivos Therapeutics, Inc. Second (sic) [First] Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Edward Loew, Investor Relations Officer. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to Vivos Therapeutics First Quarter 2021 Earnings Conference Call. A copy of the company's earnings press release is available on the Investor Relations section of our website at www.vivoslife.com. With us on today's call are Kirk Huntsman, Vivos' Chairman and Chief Executive Officer; and Brad Amman, Chief Financial Officer. Today, we'll review the highlights and financial results for the first quarter 2021 as well as recent developments. Following these formal remarks, we will be prepared to answer your questions. I would also like to remind everyone that today's call will contain certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, concerning future events. Words such as may, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the company's control. Actual results, including the results of Vivos' growth strategies, operational plans, results of operations and other matters to be addressed by Vivos management in this conference call, may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described in other disclosures contained in Vivos' filings with the Securities and Exchange Commission, including our first quarter 2021 10-Q, which is being filed today. Except to the extent required by law, Vivos assumes no obligation to update statements as circumstances change. Now at this time, it is my pleasure to introduce Kirk Huntsman, Chairman and CEO of Vivos. Kirk, please go ahead.

Thanks, Ed, and thank you, everyone, for joining us today on our first quarter 2021 earnings conference call. This is our second quarterly call as a public company, and I'm excited to provide you with an update on our progress. Afterwards, our Chief Financial Officer, Brad Amman, will review the highlights of our first quarter financial results. Following that, we will be happy to take your questions. For those of you not familiar with Vivos, we are a growing revenue stage medical technology company focused on developing and commercializing innovative diagnostic products and therapeutic treatments for adult patients suffering from sleep disorder breathing, including obstructive sleep apnea or OSA. OSA is a chronic illness affecting nearly 1 billion people worldwide and over 54 million in the U.S. alone. OSA can also lead to many other debilitating and deadly health conditions such as high blood pressure, heart failure, stroke, diabetes, dementia and other debilitating or life-threatening diseases. This creates substantial societal and health care system costs, not to mention the personal toll it inflicts on people and their families. At Vivos, our mission is to rid the world of obstructive sleep apnea. We market and sell 2 primary innovative products, 1 diagnostic and the other therapeutic, each of which represents what we believe to be a best-in-class technology. Together, we believe they give us a great competitive advantage in the market for the identification and treatment of OSA, consistent with our FDA approvals. Our flagship therapeutic product is the Vivos System, a multidisciplinary set of clinical therapies and protocols featuring our patented and customized mRNA oral appliance. Studies have shown that treatment with the Vivos System can reduce OSA severity, as measured by Apnea Hypopnea Index scores, by 67.4% on average. Our VivoScore product, which we gained access to and launched…

Thank you, Kirk, and good afternoon, everyone. Today, I'll review our first quarter 2021 financial results. We reported total revenue of $3.4 million for the first quarter of 2021 compared to $3.2 million for the first quarter of 2020. The 8% quarter-over-quarter increase was related to revenue from VIP enrollments, billing intelligence service subscriptions and a small amount of initial management fees from our Medical Integration Division or MID program. During the first quarter, we enrolled 53 VIPs and recognized revenue of approximately $1.8 million compared to 32 VIPs and recognized revenue of $1.5 million during the same period last year. Additionally, our billing intelligence service revenues increased from $156,000 in the first quarter of 2020 to $203 million -- $203,000 for the first quarter of 2021. During the first quarter of 2021, we sold 2,570 oral appliance arches compared to 2,099 total oral appliance arches during last year's first quarter with revenues slightly higher in 2021 due to volume increases. Gross profit was $2.7 million for the first quarter of 2021, up 11% compared to gross profit of $2.4 million for the first quarter of 2020. For the first quarter of 2021, gross margin was 78%, an increase of 2 percentage points compared to 76% for the first quarter of 2020. We continue to see improvement as our business continues to be driven by high-margin service revenues, including VIP enrollments and billing intelligence service revenues during the period. General and administrative expenses were $5.1 million for the first quarter of 2021 compared to $4.2 million for the first quarter of 2020. This increase was due to additional personnel that were hired during the course of 2020 and early 2021 to support our continued growth and new status as a public company. The net loss was $3.4 million for the…

[Operator Instructions] The first question comes from Alex Nowak with Craig-Hallum Capital.

Just over the last 6 months or so, we've seen Vivos build out a pretty nice portfolio of products treating OSA at the dental office. You got the Pneusomnia clinics, the VivoScore, the OMT telemedicine app and then the patient management software. Are there any other areas you'd like to bring on to round out that portfolio?

So thanks, Alex. Good question there. We are always looking opportunistically for the right kind of platform to leverage, whether it's a technology or some other means of accessing the marketplace. So I would say there's not anything directly. We've pretty well assembled what we have today, and now it's a matter of execution. But we're always looking at different platforms and other opportunities to extend the reach.

Okay. No, that makes sense. And perhaps expand on the ways to leverage the investment dollars from the IPO to expand the sales and marketing strategy here for Vivos. The press release today mentioned it looks like there's a new marketing firm. So just expand how you're looking to change the marketing of the appliances, how you're going to change the marketing or expand the marketing for the VIP enrollments? And yes, I guess I'll leave it there, and I'll ask a separate question.

Yes. Another good question. So we validated a model for our sales force prior to the IPO, where we took -- rather than having a series of independent sales reps that were out there sort of operating on their own, we actually formed teams. And the team -- we had one fully constituted team that had a variety of different functions and people playing different roles on the team. And what we've done now is, since the IPO, we've actually replicated our second team and now a third team. So whereas we were -- we had a sort of a limited capacity prior to the IPO and limited resources to be able to accelerate and add more marketing people, we're now scaling up by replicating these teams across the country. So we have a second team and a third team that will be fully constituted by the 1st of June. And then we'll add additional teams as needed throughout the balance of the year. And that's how we're approaching the enrollment side of things. On the VivoScore side, we've had to basically put an entire department together. The demand that we saw once we announced the VivoScore product, the demand came fast and furious and frankly caught us a little bit by surprise just at the nature of it. It was global. We had people calling us from around the world. I didn't know if anybody was reading our press releases, quite frankly, but they did. And apparently, they had interest. And so we were fielding calls from all over. And so we knew we needed to gear up the company, make sure we had a robust division led by people that had experience in these things. So we've made some new hires. We've constituted the VivoScore division. We've got programs put in place. I just got back from a conference in Dallas. We had another conference down in Florida, where we had some amazing results leading -- I referred to the VivoScore product as the tip of the spear, and I think that's really what's happening. It's the first exposure that these doctors have to us. And it works so well and so seamlessly, we gave a bunch of doctors the devices to go sleep with overnight. And they came back the next morning, and I don't remember too many doctors that didn't have some concerns of varying levels with the sleep that they had. It was just -- it was a really eye-opening experience for these doctors, and it opened the dialogue for us to really have a conversation with these dentists about the need for this in their practices and the opportunity that Vivos represent. So by leading with VivoScore, we're opening up the dialogue with many more professionals, both on the dental side and the medical side. And they're able to have the conversations more readily with their patients.

No. That's great. And just a follow-up to the sales point. On those teams that you've established here, is there a focus as well to improve same-store sales? And I guess what I'm trying to get at, you have some VIPs that are doing a high number of cases. You mentioned those in the prepared remarks, but then the average is lower. So just curious, where are you focusing the sales side to improve the same-store sales performance?

That's -- okay. Yes. So down a parallel track to our enrollment teams, we also have what we call practice analysts. And so these practice analysts are actually experienced people from within the dental space who have lots of experience in rolling out products within dental offices. They are dispatched to the new enrollees. So what happened was with COVID, a lot of these dental practices shut down for a period of time last year. And a lot of them took the time to get enrolled, but they couldn't get -- and they could get -- they could start their training, but they couldn't quite get everything done to get onboarded and to get really -- get that first -- the first few cases are always the hardest. So what they -- what we've done is we've hired and continue to hire people on our practice adviser level, and they have reduced the number of practices that have yet to engage by a significant amount. I don't have that number off the top of my head, but I remember being really pleased with it as the number of doctors that have actually started cases with us is now -- it was over 88%, the last number that I looked at. So whereas during the middle of COVID, it was down around 50%, it's actually come up. It's come up quite a bit. So we're actually seeing a much greater engagement level from our doctors. As they come out of COVID, they get the full measure of the training. There is a part of their training that we ask them to come to Denver for. It's now mostly online. It used to be all in Denver. Now it's mostly online with some of it in Denver. But they have to get to Denver to see the -- to feel the appliances, to actually get their minds around what this is and how it works and to get comfortable enough that they're going to tell a patient, "Let's do this." And that's actually where we feel really good about what's going on. So we're running down parallel tracks there. In addition to the new enrollments, we have a whole another initiative from that division that is working on same-store sales.

Okay. Understood. That makes sense. And then just last question, just an update on the Stanford study and then any other data readouts we should be watching for.

Yes. So Stanford, I think, Brad, are we signing it this week? We should be signing it.

Yes. It's ready to be launched.

Yes. It's ready to be executed. So the final documents that we were back and forth a little bit with Stanford on, we've resolved all those issues. And so I think we're ready to sign the deal and get started. So the Stanford study will start right away. So very excited about that. There's other studies that we are -- that we have underway. I'll remind you that other IRB studies that have been underway are about to conclude in the next few months, and we will be reporting on the results and publishing those papers later this year.

The next question is from Scott Henry with ROTH Capital.

A couple of questions. First, I know you recently brought in that second sales force team. Can you talk about where they are in the cycle? Are they productive at this point? Are they generating new VIPs at this point?

Yes. They are. So yes, I'll just tell you that we're very happy with the way that they are ramping up. And they're not quite to the same productivity level as our first team. But I think we're really happy with the way that's come along. So yes, the answer is yes.

Okay. Great. It sounds like a lot of positive leading indicators in this first quarter. Would you expect to see sequential upticks throughout the year on a kind of quarter-to-quarter basis in total revenues and perhaps on the VIP front as well, although you might get some choppiness here or there?

Well, I would tell you that our forecasts -- as you well know, our forecasts call for us to see acceleration in enrollments as well as appliance sales throughout the year. So there's nothing that's happening now that dissuades us from that. We're seeing daily records set in the number of appliance orders. So we're very excited about the recurring revenue streams as well as the new enrollments. And we're quite confident in our long-term targets given the current momentum that we talked about today.

Excellent. And G&A, a little higher in Q1. Do you think Q1 is representative of what we should expect throughout the year?

On G&A, yes, we do have some infrastructure-type expenditures. We have an ERP system that we're planning on bringing on here later this quarter. And we do have, certainly, sales and marketing expenditures or plan to increase to help drive top line revenue.

So what happens here, though, is that -- and I think this is true of most businesses. But in our business, in particular, we have to hire in advance of when people will start generating revenue. So for the add-on of marketing expenses, et cetera, in the current quarter, we're not going to see the benefit of that. We're just going to be sinking costs into the marketing assets that we need, the personnel that we need. The VivoScore department hires that have to be hired up, trained up and dispatched, all of those things require capital to go out and expenses to be incurred in advance of when you start to see the ROI. That's why, as I sit here today, we're making a lot of those investments. The IPO and secondary offering capital is being very judiciously applied to these areas where we can see in the second half of this year, from Q3 forward, we're going to start to see -- we're going to see some of it in Q2. But it's going to be mostly Q3, Q4 that we're going to see the results of some of these capital deployments and investments in that. So I would say, yes, we are experiencing some higher -- slightly higher G&A, but it's all with the eye towards seeing future near-term growth in the business.

Okay. Final question, just with regards to the mmRNA, let's say you get that approval later this year. How long does it take from approval to being able to get Medicare reimbursement? And what are the steps in that process to make that happen?

Well, there's several steps associated with that. So we have to get CMS to approve it. That requires a PDAC, what's called PDAC clearance. So there's a step involved in sort of a third party looking at the actual mechanics of it. That shouldn't be a problem. We've already completed all of the biomechanical work that needed to be done. It's a hinge basically that we went back to the FDA with. It's -- there's no functionality changes or anything. It's basically the switching out of one type of hinge for another type. It's -- the other type is what is required by Medicare. Why they would do that? We don't know. Nobody can tell us, but it is what it is. So we have several steps along the way. And we can't say with certainty what the timing looks like or how all these people are going to respond. But it should be fairly straightforward to get this approval and to get it through this process. And then we could be -- if we can get the FDA to release it in the next, say, month or 2 or 3, we should be -- 6 to 8 weeks after that, we should be able to get the clearance and go forward.

This concludes our question-and-answer session. I would like to turn the conference back over to Kirk Huntsman for any closing remarks.

Thank you, operator. We feel like with the capital, the much-needed capital that we obtained through our IPO and our secondary, that we have positioned this company to be a disruptive force in the market. As we move forward, as we begin to get the name Vivos and our brand out there using Osmond Marketing, our new marketing group that we have, they have just embraced this full tilt. And they are aggressively creating marketing assets and helping us with the rollout. We're very pleased with that. We're very pleased with the way our medical division is rolling out and the exposure that we've seen. Some of these new papers that I've referenced here that have come to market that Dr. Singh has published and others have published give us great hope for being able to continue to make the case that Vivos has a game-changing technology from a therapeutic standpoint and certainly from the diagnostic standpoint, something that's already showing some disruptive capabilities in the market. So I think we've positioned this very well. I always say, if the world knew what we really had here, it would be a much different story for us. But we are gradually and judiciously putting this thing together and putting it out in a way that we think will optimize the growth opportunities that we have and maximize shareholder value. So with that, we'll close this out. I appreciate everybody's support of the company and our team here, and we look forward to having you on board and see you again next quarter. Thank you.

Thanks, everybody.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.