Good day, everyone, and welcome to the Vivos Therapeutics First Quarter 2024 Earnings Conference Call. [Operator Instructions] This conference call is being recorded, and a replay of today's call will be available on the Investor Relations section of Vivos' website and will remain posted there for the next 30 days. I will now hand the call over to Julie Gannon, Vivos' Investor Relations Officer for introductions and reading of the safe harbor statement. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to our conference call. A copy of our earnings press release is available on the Investor Relations section of our website at www.vivos.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 2024 as well as more recent developments and Vivos' plans for the rest of 2024. Following these formal remarks, we will be happy to take 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 aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties and contingencies, many of which are beyond the company's control. Actual results, including, without limitation, the results of Vivos growth strategies, operational plans, including sales, marketing, product acquisition and integration, research and development, regulatory initiatives, cost savings plans and plans to generate revenue as well as future potential results of operations or operating metrics, such as the potential for Vivos to achieve future positive cash flows or profitability and other matters to be addressed by Vivos' management in this conference call may differ materially and adversely 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 and other disclosures contained in Vivos filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31, 2023, and our other filings with the SEC, including our first quarter 10-Q filed with the SEC today, all of which are or will be accessible on the Investor Relations section of Vivos website as well as the SEC's website. Except to the extent required by law, Vivos assumes no obligation to update statements as circumstances change. Finally, please be aware that the U.S. Food and Drug Administration has given certain Vivos appliances 510(k) clearance to treat mild to severe OSA. With the FDA clearance for severe last November, treatment of patients with severe OSA no longer needs to be performed off-label at the clinical discretion of the treating doctor as it is now an integral part of the Vivos treatment protocol. Now at this time, it is my pleasure to introduce Brad Amman, CFO of Vivos. Brad, please go ahead.

Thank you, Julie, and good afternoon, everyone. Today, I will review the highlights of our financial results for the first quarter of 2024. For further information on our results for the 3-month period ended March 31, 2024, please see our earnings release, which was distributed earlier today, and our quarterly report on Form 10-Q, which is available on the SEC filings portion of the Investor Relations section of our website, as Julie mentioned, vivos.com/investor-relations. Today, we report first quarter of 2024 total revenue of $3.4 million compared to $3.8 million for the first quarter of 2023. The year-over-year decrease was due to $400,000 lower revenue generated from VIP enrollments and $200,000 less in appliance sales, offset by an increase of approximately $100,000 in Pediatric and Lifeline product sales to VIPs and an increase of approximately $100,000 from revenue generated by our home sleep test ring lease program. While revenue was essentially flat, we were pleased that the expansion of our product offerings, which were introduced last year, including the Pediatric and Lifeline products, have started to become additive to revenue. During the first quarter of 2024, we enrolled 50 VIPs and recognized VIP enrollment revenue of approximately $900,000 compared to 36 VIPs for a total of approximately $1.3 million in revenue during the same period last year. While the number of VIP enrollments increased, revenue was impacted by updates to key inputs in our revenue recognition methodology, primarily estimated customer lives and the addition of new entry levels into the VIP program at a lower price point. We sold 1,996 oral appliance arches during the first quarter of 2024 for a total of approximately $1.7 million compared to 2,369 during the first quarter of 2023 for $1.8 million. The decrease in revenue is due in part to fewer product discounts…

Thank you, Brad. Good afternoon, everyone, and thank you for joining us on today's conference call. Today in my remarks, I'd like to do two things: discuss our progress on the concrete initiatives we've been actively engaged in here at Vivos, and then give you my perspective on the strategic opportunities that are about to launch that we expect to dramatically impact our revenue and future growth. After that, we'll be happy to take your questions. As we have previously stated, our primary focus at Vivos for the past couple of years has been to get cash flow positive as soon as possible. Our goal has been to accomplish this through a dual strategy of driving top line revenue growth, coupled with phased-in expense reductions. As Brad just highlighted, our cost reduction initiatives have been strategic, methodical and consistently applied over the past seven consecutive quarters, and we were careful not to cut so deep that we impacted our revenues. Such cost reductions continue as we rightsize our business and execute our go-forward plans. On the revenue front, the growth initiatives that we've announced in the past have included the following eight key items: one, targeting large and small DSO groups, DSO dental groups; two, signing distribution agreements with DME companies such as Lincare; three, adding enhanced and diverse product lines featuring new technologies and services; four, publishing groundbreaking new peer-reviewed research; five, expanding insurance and Medicare coverage for Vivos products; six, achieving key new regulatory approvals, two of which, by the way, were unprecedented; seven, establishing and refining our Treatment Navigator Program; and eight, executing on our kickoff and boost programs for Vivos' trained dentists. Each of these revenue growth initiatives has been at the forefront of our efforts to drive near-term top line revenue growth. And while each…

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Lucas Ward from Ascendiant Capital Markets.

Thank you, operator, and good afternoon, gentlemen. Congratulations on your hard work and your business progress.

Thank you, Lucas.

Thank you.

So regarding the new channel relationships that you're talking about, I mean, obviously, we've heard about the DMEs, the DSOs, can you expound on the nature of these relationships, like what type of entity are we talking about? And how would it be different from the distribution agreements that you've already talked about?

Yes. That's a great question, and it's one that -- I'll do the best I can with giving you an answer with what I can say today. But -- and one of the reasons for that, Lucas, is that the nature of the organizations that we're targeting is -- will vary somewhat. They could be large medical groups. They could be hospitals. They could be sleep testing centers and facilities. They could be any number of similar or affiliated type groups like that. For example, we have a prospective relationship happening with a large ENT group out in California. We have some testing groups that we're working with, some sleep testing groups. And so one of the things that all of these groups have in common is that they all have CPAP failure patients that they don't know what to do with or they have patients that are just beginning their journey who have just tested positive for obstructive sleep apnea and need to know what their treatment options are. In today's world of insurance-driven health care, most of these OSA patients are automatically given a CPAP device to go home with. The industry sort of tongue in cheek refers to this as the [ slap and pat ] model or pat and slap model, I'm not sure which way. I'm not sure whether the pat or the slap comes first. But it's a model that is -- where the patients are basically given very little education about their condition, given very little information about treatment options and alternatives, where they've given very little information about the risks that they're at, given their condition or what the future might hold if they don't treat it. And so in the current insurance-based model, many patients are left just sort of figure…

Okay, Kirk. So if I hear you correctly, it sounds like the big difference with these new partners is that they already have live patients. They're dealing with the end customer.

Exactly. [indiscernible]

I guess a follow up question...

I don't have any [indiscernible]

Yes. Yes, go ahead. Go ahead. So a follow-up would be like what do you need to do to execute those opportunities? I mean, how resource-intensive is it for you to be able to actually serve these partners and their patients?

Well, we have the teams that are trained. We've been taking teams and putting them out in the field to gain experience and expertise working with patients all around the country. We've done this from coast to coast in north and south throughout the United States. And so we're very, very well versed in our methodologies and our systems. We know how to close the cases. We know how to get patients into treatment. And now all we have to do is just work with these -- so for example, let me just give you an example of a testing company. So a sleep testing company that's performing sleep test. So they send a patient -- a prospective OSA patient, they send them a test, a sleep test, a home sleep test. That home sleep test will yield to that testing company probably, let's just say, $200. That's probably a little bit on the high end. But let's just say it's $200. Well, by the time they do all the things that they've got to do, they may make $100 on that case. And then they have the contract out for a physician to read it, a sleep physician and the sleep physician may make $50 for reading and interpreting the test. Under our new model, the dentist has historically made, let's just say circa $5,000 to $6,000, maybe $8,000 on a case. So the order of magnitude that the dentists have been realizing on these cases is dramatically disproportionate to the amount of money being made by the medical community and the testing company. By bringing the testing company into our MSO network, we then can reallocate the amount of money that is being compensated for them. And so they have an opportunity to make far more money than they ever made before, and that incentive is strong. And so they will work and we will work collaboratively to make sure that patients are given the same treatment options, every opportunity to go to whatever makes the most sense. At the end of the day, we are -- from our experience, we know more of them will choose the kind of treatment that we have available.

Okay. Got you. If I could, just one more follow-up. You've made very two powerful announcements, a very powerful announcements, one that your CARE devices are approved -- FDA-approved for severe sleep apnea treatment and also that your eligible -- those devices are eligible for Medicare reimbursement. I guess my question is, I mean that sounds great, but how does it -- how do you monetize that? Like how does that impact your business model, your revenue opportunities, your sales and marketing?

Well, the first thing is -- thank you for that, by the way, Lucas. The first aspect of that is a certain credibility that comes along with having the world's only FDA-cleared oral appliance device to treat severe sleep apnea. Roughly 20% of all sleep apnea cases are severe, but probably 80% of all of the comorbidities and severe conditions that OSA causes and creates are among the severe population. So for our ability to treat severe and to treat it very cost effectively is really garnering a tremendous amount of attention among the medical providers and the medical community. So this is elevated Vivos into an entirely new level of respect and an entirely new level of credibility. And the dialogues that are happening today with medical providers around the country as a result of this severe clearance, they never would have happened a year, 2 years, 3 years ago, and they're happening today. And so we're seeing more and more medical doctors getting very, very comfortable with recommending our therapy to patients. So that tends to drive more patients to the therapy. It tends to provide patients with a much greater level of confidence in the technology, and it just opens the door for so many different levels of collaboration and opportunities to work with the medical community that have just never been there before. Dentistry has always operated in a silo, and that silo has really been somewhat resented by the medical community historically and never fully embraced. With our clearance, we noticed almost immediately that the medical community sort of sat back and said, "Well, this is really interesting here. How did this happen? And who are these people? And what is this technology and what does it do? And why is it different?" And all of a sudden, all these questions started to arise. And we see this happening and building a lot of momentum as we go into the future here. So it takes a little bit of time. This isn't happening overnight. But now on the Medicare front, it's just another wallet on the table for patients that may need some assistance in terms of how they pay for this. And whether in network or participating Medicare providers, Medicare patients now have additional assistance in paying for their treatment. So it's another wallet on the table.

Thank you very much.

You bet.

And speakers, there are no further questions at this time. I would like to hand over the call to Kirk Huntsman, Chairman and Chief Executive Officer. Please continue.

Thank you, operator. I would just like to thank everyone for joining us on today's call and for your continued interest and support of Vivos Therapeutics. We know this has been a long journey. And I think it's safe to say that we have -- despite all the adversity and all the opposition and all of the things that we've had to overcome, I think it's safe to say that we've never felt more optimistic about our future and about the growth and prospects for this company going forward. And we look forward to sharing our continued progress with you as we continue to execute on our plans that we just announced throughout 2024 and beyond. Thank you all, and have a great evening.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.