Good day, everyone, and welcome to the Vivos Therapeutics Third Quarter 2023 Earnings 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 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 third quarter of 2023, as well as more recent developments and Vivos plans for the remainder of the year. 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 risk, uncertainties and contingencies and many of which are beyond Vivos' 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 saving plans and plans to generate revenue as well as future potential results of operations or operating metrics, such as potential for Vivos to achieve future positive cash flows 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 31st, 2022, and our other filings with the SEC, including our 10-Q filed with the SEC today, all of which are accessible on the Investor Relations section of the 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 have already given Vivos' appliance's 510(k) clearance to treat mild to moderate OSA. Any reference herein regarding Vivos treatment or the Vivos method should be viewed in that context. Treatment of patients with severe OSA is performed off-label at the sole clinical discretion of the treating doctor and are not part of the Vivos' treatment protocol. Now at this time, it is my pleasure to introduce Kirk Huntsman, Chairman and CEO of Vivos. Kirk, please go ahead.

Thank you, Julie. I want to thank you all for joining us on today's conference call. In just a moment, I'll turn the call over to our Chief Financial Officer, Brad Amman, who will walk you through the highlights of our third quarter 2023 financial and operating results. Once Brad is finished, I'll come back and speak with you about the highlights of what we accomplished at Vivos during the third quarter and more recently after the quarter end. This includes some key strategic relationships that we formed with a number of new commercial partners, including our recently announced distribution agreement with Lincare, who is a recognized durable medical equipment company or DME. We are especially excited about this relationship because Lincare serves close to 2 million patients nationwide, many of whom are unsatisfied with using CPAP machines and are seeking alternative methods of treatment, something we can certainly advise them with. In addition to Lincare, I'll talk -- I'll also talk a bit about some other agreements we've signed with partners such as with Ormco, a division of publicly-traded Envista Holdings Corporation, On Demand Orthodontist, which represents an exciting new service, we can now offer our Vivos providers and Noum in the Middle East region, who has developed and maintained a number of strategic relationships and accounts for diagnostic testing with sleep physicians, sleep centers, hospitals and other healthcare providers across the MENA region. Together, these relationships have expanded our product line and distribution channels and created new revenue opportunities for our company. We believe these new strategic relationships will generate a substantial number of patient referrals for our existing and extensive network of Vivos' trained dentists, which should bring significant new growth and revenue opportunities to Vivos. We also believe these initiatives will help to augment and accelerate…

Thank you, Kirk, and good afternoon, everyone. Today, I'll review the highlights of our financial results for the third quarter and the first nine months of 2023. For further information on our results for the three and nine month periods ended September 30, 2023, I'll refer you to 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 the Vivos website at vivos.com/investor-relations. Today, we reported third quarter 2023 total revenue of $3.3 million compared to $4.2 million for the third quarter of 2022. The quarter-over-quarter decrease was due to lower revenue generated quarter-over-quarter from appliance sales, revenue from VIP enrollments, as well as the impact from staffing and cost reductions. This was partially offset by increased sleep testing services and Myofunctional Therapy revenue. During the third quarter of 2023, we enrolled 29 VIPs and recognized VIP revenue of approximately $1 million compared to 56 VIPs for a total of $1.6 million in revenue during the same period last year. Revenue growth was impacted by new entry levels into our VIP program, ranging from $2,500 to $50,000 and adding an $8,000 pediatric program, which was received positive -- positively by our providers. Average enrollments during the period increased from approximately 28,000 during the three months ended September 30, 2022, to 34,000 during the three months ended September 30, 2023, and VIP enrollment Right to Buy revenue was recognized over a longer period of time, 23 months in 2023 versus 18 months in 2022. We sold 1,809 oral appliance arches during the third quarter of 2023 for a total of approximately $1.5 million compared to 3,057 during the third quarter of 2022 for $2 million. During both the third quarters of 2023…

Thank you, Brad. Let's jump right into it now and answer what are probably the most pressing questions on your mind regarding our company's performance in the third quarter year-to-date and our prospects for resuming real growth -- real revenue growth in 2024. First, why did top line revenue decline when the expectation was that Lincare, and other revenue initiatives were supposed to begin to impact revenue started in Q3? Well, I would point to four primary factors here: first, a reduction in staffing and support personnel; second, a reduction in marketing expenditures; third, lingering effects of the AGGA news reports and related government investigations, Brad mentioned earlier; and fourth, the unavoidable delay -- and an unavoidable delay in the Lincare project getting off the ground after a successful pilot. So let me discuss each of these. Throughout 2023, we have executed on broad cost-cutting measures that have included reductions in certain support personnel, which were very influential in assisting VIP dentists to get cases booked and processed as Vivos case starts. We were keenly aware that curtailing those support functions would tend to decrease case starts and appliance sales, which is exactly what we have experienced. Fortunately, our new product lines have begun to kick in. And here in the fourth quarter, we are seeing appliance sales and Myofunctional Therapy starts rebounding. As our cash resources declined, we were constrained to cut back on certain marketing expenditures as well. However, we did refocus and redirect our limited marketing spend to only those areas with the potential for the highest near-term returns. Next, as previously mentioned by Brad, the impact of that negative publicity and news reports regarding the AGGA device went deeper and lasted longer than we expected. You may recall that in March of this year, a CBS…

We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Lucas Ward from Ascendiant Capital Markets. Please go ahead.

Hi, guys, thanks for the overview. My first question is on G&A expenses, those have really been coming down pretty dramatically over the last six quarters really. I was wondering what your expectations are for G&A run rate in Q4 and into next year.

Brad, do you want to take that?

Yes, you bet. As I said earlier, we cut around $2.7 million of personnel-related costs. We've also cut a number of non-essential vendors and consultants, professional fees have come down substantially. We expect that fourth quarter G&A expenses will be very similar to what we experienced in the third quarter.

I would add to that, that it's important to know that we are constantly evaluating and reevaluating our G&A expenditures relative to our revenue. And so, we may be making as circumstances dictate additional changes, either up or down depending on how our revenue begins to develop, whether it recovers or whether it continues to go flat for a little bit here. But we fully expect that we will continue to right size our G&A according to our revenue streams. And I think we've now, as Brad indicated, I think we've now got that just about right, but we're always looking at it and always reevaluating.

Okay, great. And just a follow-up question on the revenue front. In terms of the overall market opportunity, you mentioned, I think, last quarter that if you could convert just 1% of the so-called failed CPAP revenues, from the DMEs, for instance, that might be enough to get you to breakeven. So clearly, there's a very large sort of penetration opportunity there. I'm wondering like what would be the catalysts -- catalyst or catalysts to really convert those sales into Vivos?

Good question. So the first step in that process is for the DME companies or the other referral sources depending on wherever they are, right, the other places, where these patients are known to identify, who might be a candidate, so to identify and enter into a dialogue with a CPAP failed patient. Now most of the DME companies monitor their CPAP patients remotely. So they have a good sense of who's using their CPAP and who isn't. And so, the first outreach effort, whether regardless of the source, the first outreach effort is an engagement with the patient to understand what happened there, why aren't they using their CPAP and would they be interested in an alternative therapy. Most of the time that they're getting some really good flow through at that level, and that's all handled by the DME company. So Lincare handles that part of it. They then hand that over to our treatment navigator, those patients that indicate an interest, they hand them over to a Vivos' treatment navigator, who takes that patient provides further education about oral appliance therapy and attempts to get that patient to set up an appointment up. So the process is fairly straightforward. The numbers of patients that sort of fit that criteria set are vast. I mean, we're talking about in the millions of patients here. And so, it's just -- it just is a matter of time. I didn't know, if you were starting to say -- it's a matter of time. And I think one of the things that are -- let me just finish with one other thought, and that is that what we've demonstrated with our Boost program, when we go into a dental office, we asked the dentist and his team to set up a full schedule of patients. So between seven -- let's say, seven to 10 patients each day for two days. They go in to do a Boost program, and they've got probably between 10 and 20 at [Indiscernible] with patients, and our results are just outstanding. I mean, we're getting -- I mean, I think we had one that was 19 for 20 converted into treatment. Another one was 11 for 11 and 10 for 10 and six of nine. And I mean, we keep going down here. We're getting conversion rates very, very high in our office -- in the offices when we're sending our professional teams in there to show these doctors how to do it. So if the [Indiscernible] are in the chair and the patients are there, we've demonstrated the ability to close it. We just have to get more doctors with the confidence level and the staff members to be able to close those things and that's what we're working on now.

Okay. Great, Kirk. If I could, just one more question. You had this uptick in the ring lease revenues, up 300% versus last year. To what extent is that an indicator of future sales in other areas, given that, that's sort of a testing program?

Well, we always think of the sleep testing kind of being the front end of the process and the more tests that a provider completes with their patients, theoretically, the more case starts should result of that. A lot of our providers are testing a lot of their patients. We're just working on mechanisms and ways to increase the conversion from the test to a case start.

Yes. So let me add on to that a little bit. The -- I think as Brad just mentioned, the sleep testing program using the sleep image rings that we refer to as Vivos score rings, that's the tip of the spear. It's the first opportunity that a patient has to really begin to understand that they have sleep apnea. And so, it's really the entry point. Now we do about 75,000 tests a year throughout our network, and most of those patients -- about half of those patients test positive. So there's a large number of patients that are testing positive, but these patients are not being closed by the dental offices. They're not -- their cases are not being properly explained, and they're not getting the closure on those cases. So when we send our corporate teams out there to, again, show these people step-by-step how to close the cases, and we're closing like 90% of these people, then the dental team start to get it. They start to understand. And we may have trained them 10 times. But when they see it happening in their own offices, what we found so far and its -- our data set is fairly limited here, but what we see so far is that once we show them the way in their offices, they then are able to pick up and continue that high level of closing. And that's really something that we've taken great hard in because it's a sea change type event for us to see 10 out of 11 patients being closed. If we had, had that all along in these dental offices, I mean, we'd be having a totally different type of conversation here. But now that we figured out a little bit of how to generate that kind of confidence and competency in the offices, we think that, that portends very good things to come so.

Great. Thank you very much.

Thank you, Lucas.

I show no further questions in the queue. At this time, I'd like to turn the call over to Mr. Kirk Huntsman, Chairman and CEO, for closing remarks.

Thank you, operator. I would like to thank, everyone again for joining us on today's call and for your continued interest in Vivos Therapeutics. We look forward to sharing our continued progress to you in the coming weeks and months. Thank you and have a great evening.

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