Good day, everyone, and welcome to the Vivos Therapeutics, Inc. Second Quarter 2025 Conference Call. At this time, participants are in a listen-only mode. A question and answer session will follow management's remarks. This conference call is being recorded, and a replay of today's call will be available in the Investor Relations section of Vivos Therapeutics, Inc.'s website and will remain posted there for the next thirty days. I will now hand the call over to Mr. Brad Amman, Chief Financial Officer, for introductions and the 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 me on the call today is Kirk Huntsman, Vivos Therapeutics, Inc.'s Chairman and Chief Executive Officer. Today, we will review the financial results for the second quarter of 2025 as well as more recent developments in Vivos Therapeutics, Inc.'s plans for the rest of 2025 and beyond. Following these formal remarks, we will be happy to take questions. I would like to remind everyone that today's call will contain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended in 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 that 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 Therapeutics, Inc.'s growth strategies, operational plans, including sales, marketing, distribution, medical sleep provider 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 Therapeutics, Inc. to achieve future positive cash flows or profitability, and other matters to be addressed by Vivos Therapeutics, Inc. management in this conference call may differ materially and adversely from those expressed or implied by such forward-looking statements. Factors that could cause…

Thank you, Brad. Good afternoon, everyone, and thank you for joining us on today's conference call. 2025 was a period of significant change for Vivos Therapeutics, Inc. and the culmination of nearly two years of laying the groundwork for our new model. As previously announced, during the second quarter and subsequently, we completed the acquisition of the Sleep Center of Nevada, which we refer to as SCN, and have been rapidly ramping up our operations there. Generally speaking, what we found there since closing the transaction in early June has been extremely encouraging and above our forecast. First, the level of cooperation and buy-in from the existing SCN medical team and support personnel in Nevada has exceeded our expectations. In fact, two of the lead sleep MDs at SCN and their families were among our very first patients. Having the full and unwavering endorsement of the medical team at SCN, who have been waiting for a viable alternative option for CPAP for their patients, is critical to the ultimate success of our model. Second, there appears to be far more OSA patients interested in and willing to accept Vivos Therapeutics, Inc.'s treatment as alternatives to CPAP than we had forecast. So much so that we are already working to expand our physical facilities and also to recruit, hire, and train additional providers and staff in order to handle the patient demand. In that respect, to date, we have created and successfully deployed what we are calling sleep optimization or SO teams. Each SO team consists of approximately 16 medical, dental, and support staff who are all specially trained and equipped by Vivos Therapeutics, Inc. At present, we have deployed one and a half new sleep optimization teams that will help drive the growth of each center. By forming discrete SO…

We are currently in negotiations with several potential candidates in various key markets, with one potential acquisition currently under an exclusive letter of intent. Given our experience with SCN, we believe these opportunities should be similarly accretive. In summary, we believe this initial success at SCN is a strong indication of the potential and upside of our new model. As we roll forward, we expect to continue to modify and refine the model to make it even more efficient and with potential for even better gross margins. Furthermore, we expect that this model, including both acquisitions and affiliations, is highly replicable and scalable across multiple markets. It looks to be highly accretive to top-line revenue growth as well as bottom-line profitability. We believe that this methodical effort, patiently executed over time, has put Vivos Therapeutics, Inc. in a much better position to realize the full potential of our technological advantages and industry-leading products and services. And that concludes our prepared remarks. Now we'll be happy to take questions. Operator, could you please poll for questions?

Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. We will hear you prompt that your hand has been raised. And should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please make sure to lift your handset before pressing any keys. Your first question comes from the line of Scott Henry from May GP. Please go ahead.

Thank you, and good afternoon. Certainly, really interesting pivot with these SOT teams and the medical relationship. I guess, Kirk, for starters or Brad, Q2 was a nice sequential increase from Q1, numbers we haven't seen for a little bit. How should we think about the revenue in Q3 and Q4 relative to Q2?

I think the revenue will begin to track our ability to deploy these SO teams. I think you'll see a continuation of the expiration really of our old model and the replacement of the revenue with higher margin and more sustainable revenue from our new model. So as we deploy new teams and as we expand our footprint across not only Las Vegas but other markets that we're looking at right now, I think you're going to see that begin to track. And what we tried to do here is provide investors with a way to sort of think about this with these SO teams. So that's I think as those teams get in place and start to produce, you'll start to see our revenue growth and everything track accordingly.

Okay. So, the $3.8 million in hello?

Oh, sorry. So I was just going to your first part of your question was around first-quarter revenue and the growth between first and second quarter sequentially. And you're exactly right. We increased revenue around $800,000 from Q1 to Q2 to $3.8 million. And that was a 27% growth. What you'll see, I think, going forward is more growth on the product side of the house rather than the service side of the house primarily because of the additional referrals from SCN into Vivos Therapeutics, Inc.'s products.

Okay. That's helpful, Brad. And you did have some strength in the sleep testing services and the sponsorship line. Will those continue, or will those trend back down? Just trying to get a sense of how this model comes together.

So just remember that at SCN, all that they do there today and historically is test and consult with patients. So the testing revenue increase is a direct reflection of the business operations that we acquired. And I think we're just beginning to see that revenue line appear and the growth in that revenue line will continue as we bring on more testing centers, doing more tests and providing patients with more consults. Where we come into the picture is after the tests are done and those patients are referred over for treatment, that's where the treatment that we provide through our what we call our SAMC centers, which is our sleep and airway medicine centers. So the patients start with the medical providers. They are tested and consulted with the results of those tests, if they're positive for OSA, they're referred over to our centers to be evaluated and educated about their treatment options.

Okay. Great. Thanks for that color. And then on the OpEx side, OpEx was about $7 million in 2Q '25. Would we expect that to be the new elevated rate under this new model with the acquisition of SCN? Or is there some one-time events within those numbers?

Yeah. We you know, there were some one-time events, you know, in this quarter, certainly, because of the acquisition of SCN. You know, we have some professional costs and more one-time fees, you know, accounting and legal fees that were more related to the transaction, which will not recur. We do have salaries about a $500,000 increase in salaries and infrastructure costs were about another $300,000. Those that $800,000 will continue, but we do have, you know, around $700,000 to $800,000 worth of costs that are nonrecurring, that are really specific more toward the acquisition of SCN and some of the due diligence that we had to do around that. And which are all more one-time costs.

Okay. So there's about $700,000 to $800,000 in one-time. And then was SCN in the numbers for the full second quarter? Or is it just part of No.

We just started consolidating those at the date of close, which was June 9. So we only had twenty days of activity in the quarter from SCN, which generated about $500,000 of revenue from their legacy sleep center business.

Okay. Great. I'll jump back into the queue. Thank you for taking the questions.

Thank you, Scott.

If you are using a speakerphone, please make sure to lift your handset before pressing any keys. The next question comes from the line of Robert Sessions from Water Tower Research. Please go ahead.

Hi. Thank you for taking my questions. I want to call you talked about the SO teams. How do you go about recruiting those professionals? And is there a sort of a timeline in your mind as to how long you can put together each team?

Yeah. It's a good question. So it takes several weeks for us to put the word out and, you know, sift through the resumes that come in and evaluate the providers who apply for things. So there's a full-court press type effort to get one of these SO teams put together. But once we have the team together, we like to train them together as a team. If we can get two of them on at a time, which is I think where we're at right now, we're trying to add two more out there. And so to the extent we can train up all these people at the same time, that gives us some economies of scale. But what we found is that the demand for the job demand for and the available labor pool for the positions that we're advertising for and that we're looking for seem to be very robust. We're not having any difficulty recruiting for these type positions and then we can train up the teams in fairly short order.

Okay. Great. You mentioned that you're always looking for opportunities for acquisition, but are you prioritizing bedding down the SCN acquisition? Are you going to be opportunistic and take and look at acquiring or partnering with other sleep centers?

Well, I think if we were to just sort of curtail the evaluation of other acquisition possibilities or prospects, I mean, we could spend the next ten years optimizing SCN. There's that much potential there. Honestly, we're going to continue to do that. But I believe our operations team has demonstrated the ability to walk and chew gum at the same time. And so I think what we're going to do is we've already begun hiring some strong leadership, not only nationally, I think those of you who follow us note that we hired a couple of strong senior management level people, one in human relations and the other in operations. And we're going to continue to build the bench strength of our operations team so that we can go into a market, make the acquisition or affiliation, establish the SO team or teams that are necessary to get things started. And then from there, we'll just keep moving along. And we'll leave behind a capable and strong SO team or a number of teams with strong regional leadership and management. We just actually hired our first regional manager out there at SCN. And these people, as they demonstrate their capabilities to lead and to just sort of make things happen, then we'll continue on and continue forward. We have no shortage of opportunities to affiliate and acquire and or acquire additional SCN type groups throughout the country. And as the word has spread, we're getting calls every week, it seems like, inquiring about whether we can come out and evaluate and explore opportunities really throughout the country.

Yeah. I was also just following up on the SOT question. Have you actually worked with the SOTs before? Have there been any issues that you would consider?

Yeah. That's a great question. So, the senior management team here at Vivos Therapeutics, Inc. was effectively the same senior management team that rolled out one of the very first dental service and support organizations. They're called DSOs. This is the corporate roll-up of dental practices, which we began back in 1995. And over the years, we have operated and managed, now they weren't called SO teams back in that day, but dental teams, consisting of anywhere from 10 to 20 staff members and, you know, all of them with a common mission and purpose in coordinating various professionals. Sometimes there would be hygienists, general dentists, specialists, all working under the same dental office. So this is something that this particular management team is extremely well-suited to. We've been here before. We know how to do this. We know how to do this well. I think the fact that this operations team has brought this all about in a relatively short period of time, on time, under budget, and performing at the level it is right out of the gate, I think speaks volumes about our ability to execute this as we go. So this is an experienced group of people doing something that we've done successfully in the past. And we continue to see our ability to leverage this and to take this out as something right in our wheelhouse.

Right. Right. Just another question on the balance sheet. You've taken on a bit of debt now. Expensive debt, I think. Are there any plans to refinance that and or, you know, maybe you can give us a run-through on the financial strategy that's going forward?

Well, we always are seeking to reduce the cost of capital. And we realized that the financing that we secured for SCN was very much on the expensive end of the scale. We also realized that we have a model now that we didn't have before that has a certain predictability to it and consistency. And the things that lenders or more conventional financing entities would look for. And so we're always looking to reduce our cost of capital. So I can just say that we believe we have some very good and deep relationships out there that we intend to pursue and to tap as those types of financings become available. And as our model matures and grows and the predictability and confidence of it continues to evolve. So yeah, we will continue to look for that sort of thing. And if our acquisition model continues to evolve and performance matches what we've seen already in the first little bit over time, then it opens up the door for us to do bank lending with credit facilities and all kinds of things that lower the cost of our acquisition funds even further. So, yeah, we're very familiar with that type of thing and capable of doing that as we go.

Yeah. And there's a final question for me. Is there a sort of a level of revenues you need? At what point do you think you could be cash breakeven at, you know, what point of revenue?

Well, we are deploying these highly accretive and highly profitable SO teams as rapidly as we can. We have no shortage of patients. We have some constraints around the physical plant and facilities that we're operating out of right now. We're really putting a full-court press effort to make sure that we expand the facilities, equip those facilities, and put these teams in place as rapidly as possible, which we expect to happen early in the fourth quarter. Now as those things unfold, we're going to be in a much better position to just continue the growth and to see it become more predictable. I don't know. Did I answer your question? I kind of got off.

Yeah. That's yeah. I mean, I just wanted to probably you'll have a better idea as the next few quarters go on. You know? So I guess it's really dependent on how quickly you recruit.

Yeah. So let's just say this. We are actively putting these teams in place. We think that we will have sufficient revenue generation and profit flowing in that we should be cash flow positive sometime in the fourth quarter. We're really pushing hard for that. And that's our hope right now.

Okay. Thanks for all that, and I'll jump back in the queue.

Alright. Thank you, Robert.

There are no further questions at this time. I'd like to turn the call back to Mr. Kirk Huntsman, Chairman and CEO, for closing comments. Sir, please go ahead.

I just want to thank everybody. This is obviously a very pivotal time for Vivos Therapeutics, Inc. We have been talking about this pivot and preparing to execute on this pivot for quite some time. Now that we've begun to really execute on our new model, we're just extremely encouraged by what we've seen so far. And I just want to give a shout-out to our operations team who's done just a tremendous job of putting things together and making things happen. Like I said, I feel like we're all very pleased with what we're seeing so far. We think that this is something that we see no reason why we can't extend this out into the future on future acquisitions or affiliations. And we're just going to continue to methodically execute on our game plan, and I think the results will speak for themselves. We look forward to sharing our continued progress with everyone as we continue to execute in the remainder of 2025 and then into next year. I want to thank everybody for being here. And I think further information will be available in our 10-Q and more details and specifics as well as in our upcoming 8-K filing, which we'll have out in the next little while. So, anyway, thank you, everybody, and we look forward to future reports. Thank you very much.

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