Good day, everyone, and welcome to the Vivos Second Quarter 2024 Earnings Conference Call. [Operator Instructions] This conference is being recorded, and a replay of today’s call will be available in Investor Relations section of Vivos’ website and will be remaining posted there for the next 30 days. I will now hand the call over to John Lee, Vivos’ Executive Vice President of Marketing, for the instructions 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 us on the call today 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 second quarter 2024 as well as more recent development and Vivos’ plan 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 company’s control. Actual results, including without limitation, the results of Vivos’ growth strategies, operational plans, including sales, marketing, distribution, product acquisition and integration, research and development, regulatory initiatives, cost savings plan 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 flow 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…

Thank you, John, and good afternoon, everyone. Today, I will review the highlights of our financial results for the second quarter of 2024. For further information on our results for the three and six month periods ended June 30, 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 John mentioned, at www.vivos.com. Today, we are pleased to report second quarter 2024 total revenue of $4.1 million compared to $3.4 million for both the second quarter of 2023 and the first quarter of 2024, a 19% increase both sequentially and year-over-year. This year-over-year growth was due to an increase of approximately $400,000 in product revenue from higher sales and fewer discounts of Vivos appliances and guides, coupled with an increase of $200,000 in service revenue, reflecting an increase in Vivos Integrated Provider, or VIP, enrollment revenue, which you will recall we recognize over time, as well as an increase of $100,000 in sponsorship, seminar and other service revenue. This was partially offset by a decrease of $100,000 in Myofunctional Therapy revenues. Billing Intelligence Service and home sleep testing service revenue remained relatively unchanged year-over-year. For the six months ended June 30, 2024, total revenue was $7.5 million compared to $7.3 million for the comparable period in 2023. During the second quarter of 2024, we enrolled 32 VIPs and recognized VIP enrollment revenue of $1.2 million, a revenue increase of 28% compared to the second quarter of 2023 when we enrolled 43 VIPs for a total of $900,000 in revenue. Approximately $600,000 in revenue was attributable to accelerated revenue recognition on several contracts for VIPs who did not complete their required training during the first 90…

Thank you, Brad. Good afternoon, everyone, and thank you for joining us on today’s conference call. The second quarter of 2024 was a period of significant progress for Vivos along a number of fronts. Just to recap and highlight a few financial metrics, year-over-year same period revenue, up 19%, with product revenue up 28%. Year-over-year same period operating losses, down 57%. Year-over-year same period net loss, down 65%. Year-over-year six months operating losses, down 40%. Year-over-year six months net loss, down 21%. Consecutive quarter gross profit, up 26%. Consecutive quarter net loss, down 49%. Consecutive quarter net loss per share, down 63%. Cash and cash equivalents on hand at December 2023, $1.6 million. Cash and cash equivalents on hand in June 2024, $6.9 million. So you can see from that brief overview, the second quarter of 2024 saw the culmination of many long hours of work our team has been putting in to get our company in a position to succeed long-term. As Brad just mentioned, this quarter marked our eighth consecutive quarter where we’ve delivered lower operating expenses on a year-over-year basis. And as we’ve said before, we aren’t done yet as we continue to explore ways of cutting costs without harming revenue. We believe this methodical effort patiently executed over time has put Vivos in a much better position to now execute on our new strategic marketing and distribution model. As we have previously indicated, our new strategic alliance model is designed to deliver higher total revenue per clinical case along with higher gross profit. In July, we launched the first phase of our first strategic alliance with a multicenter sleep clinic operation right here in Colorado. Although it is still very early, we can confirm that our previously reported experience in terms of patient acceptance and other…

[Operator Instructions] And we now have our first question, it comes from the line of Do Kim from Water Tower Research. Your line is now open. Please go ahead.

Great. Hi, thanks for taking my question and congrats on the quarter’s results. First, for Kirk, it seems that the strategic alliance with the sleep clinic is pretty important in the evolution of Vivos Therapeutics. Could you maybe expand on that a little bit? And when you say that you’re seeing you had previously reported experience in terms of like patients acceptance, are you referring to your marketing pilot study and the high rate of patients that choose Vivos’ oral appliances?

Yes. Great question, and thank you for that. So as to the importance of this strategic pivot, I think I can’t overstate how important this is for the company. The truth of the matter is in being sort of locked into a dental-only channel of distribution, we found that there were just simply too many dentists that just got distracted by dental things. And it wasn’t a reliable -- it’s certainly not a scalable source of growth and opportunity for us. So we realized that, that was not going to happen. There were some doctors, some dentists out there that were extremely, extremely successful with it and extremely profitable doing it, but there weren’t enough of them. So when we looked around and we said, how, where is the model here for success? And the model is clearly with dentists and physicians working together. And by that, I mean physicians who have patients who they either suspect have obstructive sleep apnea or who they know have obstructive sleep apnea and they want alternative treatment options besides CPAP. In today’s world, 90% to 95% of all patients who are diagnosed with OSA are prescribed with CPAP. And most of those patients, I think it’s safe to say the vast majority of them, would rather have anything else than a CPAP to wear to bed every night. And so to have an alternative that doctors can prescribe, and now that we have the severe sleep apnea clearance from the FDA, that opens up the door for medical doctors to feel very comfortable in saying, look, there’s a couple of first line treatment options now available and approved by FDA. One is the CPAP. The other is this treatment from Vivos, and you can be in and out treatment in 12 months and…

Yes, you did. I mean a 70%, 80% conversion rate would mean an amazing opportunity for you guys. That’s extraordinary. What do you see happening with the VIP doctors or dentists that you’ve enrolled going forward?

Well, fortunately, for all of us, the market is huge, right? There’s not -- we’re not going to be, we could treat all the patients that we see from the medical community and barely scratch the surface. And so there’s plenty of work for them to continue to do. We’re going to continue to support. We’re going to continue to train. We’re going to continue to teach. And we have our Vivos Institute here in Denver that is booked out fully for this next year, and we’re really excited about all the different courses that we’re offering now. And so the continuing education will be here, the training and support will be here. We’re just not going to go aggressively after dentists. They’ll have to, it will be more of an organic growth scenario for them. And we’ve lowered some of the prices for entry so that training is more affordable and all that. But our real focus here is going to be in this other channel through the medical community. But the Vivos doctors will continue to be, they’ll continue to be supported. They’ll continue to be catered to, and all the things that we’ve done in the past will continue for them.

Okay. That makes sense. And just one quick question for Brad. Congrats on the cost-cutting efforts. It looks like it’s really starting to reduce the cash burn. Maybe you could provide a little more detail about what happened over the last several quarters to achieve this. And is there more room for additional cost to come off?

Yes. Great question, Do. Thank you for that. In Q3 of 2021, our SG&A costs were around $8.7 million. In Q2 of this year, SG&A was around $6 million or $4.6 million. On a quarter-over-quarter basis for comparable quarters, we’ve seen a reduction of, on average, $2 million per quarter for eight consecutive quarters, and operational cash flow has been reduced from a high of over $6 million back in Q1 of 2022 to $3 million this quarter. This was certainly achieved through reductions in our workforce from a high of 180 employees to now, we have just over 100 employees. We cut website development expenditures, conferences, digital, print, marketing, travel, meals, entertainment and other costs. Non-essential vendors were either eliminated or restructured or renegotiated here recently. And we have new proposed expenditures, we need to go through an ROI analysis, return on investment analysis, to make sure that those additional expenditures or new -- any new expenditures have a return on them. So we’re going to continue to review our expenditures, see what we can cut, what’s nonessential and what is essential. So we’ll continue to go down that path and trim where we need to trim. But the important thing is that we work both the top line and our expense side to get to a point where we’re positive cash flow from operations. Did that help?

Yes, absolutely. And it looks like it will pay off in the near future, hopefully. Great progress, guys. Thanks for taking my questions.

Thank you, Do.

Thank you. And the next question comes from the line of Lucas Ward from Ascendiant Incorporated. Your line is now open. Please go ahead.

Thank you. Good afternoon, gentlemen and congrats on your business progress.

Thank you.

So I’m curious about, it seems like a significant portion of the revenue jump was due to lower discounts. Brad mentioned 70% lower discounts year-on-year. How does that come about? Was that just a unilateral policy, you just decided not to give them? Or did something in the business model change to achieve that?

Let me take that one. Well, a little bit of both. I mean it was a conscious effort and something that we just felt like, especially with some of our new regulatory clearances that frankly are unique and special, we just felt like it wasn’t really necessary for us to be discounting our products as much. So I think there’s a lot of things behind that. A lot of it has to do with some of the discounts that we were giving on the initial enrollments, etcetera. So I just think we’re taking a little bit more disciplined approach than we have to just sort of standing by our prices and standing by our, the value proposition that our treatment delivers. And so I think there’s a lot of work done by our people in accounting, Brad and his team, and also working with our clinical folks and our operations people to bring that about. But I think it was a conscious effort.

Okay. And then sort of similarly, you had a big sequential decline in sales commissions. So you’re saving $300,000 or something sequentially. Like is that also a unilateral...

We restructured all that. Yes, we restructured our sales force and restructured not only the number of salespeople that we had, but we also restructured the compensation model. And I think it -- we did that with the specific -- the express intent of achieving some savings and that’s what we were able to do. Yes, that was deliberate, yes.

Okay. With respect to overall operating expenses, which are now at $4.5 million, yes. What do you see as a steady state for operating expenses because they really went down a lot and they just keep going down?

Yes. I don’t think we see a steady state right now, and I’ll tell you why. And I realize this makes it harder for you guys to model something. But we’re simply, we’re pivoting into a new world here. And so we’ve continued to reduce staffing in the here into the third quarter. And so you could say that we’ve continued along that same track. But at the same time, we’re also staffing up in other arenas for the growth that we’re experiencing. So we have to go through a little bit of a transition time while we continue to cut back on some types of expenditures and some types of personnel. And then we’re actually also replacing them with other types of personnel that have to be trained and processed and sort of brought up to speed so that when the big bolus of patients begins to hit, which will -- it’s literally going to be starting here in the next few weeks. When all of that starts to unfold, we got, we have to have the staffing and the doctors and the personnel in place to do that. So there’s -- a steady state for us, I think we’re going to be -- as we look at some of these acquisitions and some of the revenue potential sitting in these acquisitions, just those acquisitions alone, we’re going to need to add personnel just to be able to service the capacity -- to have the capacity to process those patients through. So it’s just, I think just stay tuned as we announce some of these new affiliations and how we’ll try to provide you guys with some idea for what type of, how much of an impact, how many patients we’re expecting to flow through the system. And once,…

All right. That’s all I have. Thank you very much.

Thank you, Lucas.

Thank you. I show no further questions in the queue. At this time, I would like to turn the call over to Mr. Kirk Huntsman, Chairman and CEO, for closing remarks. Please go ahead, sir.

Thank you, operator. Well, for those of you who’ve been with us and again, like I said earlier, those of you who’ve hung in there with Vivos while we’ve tried to figure this out, we’ve always realized we had something special with respect to our technology. And it was just a matter of trying to figure out how to get it out there and get it into the hands of the right people. So I would just like to thank everybody who’s hung in there with us, who is joining us today on this call. I’d like to extend a thank you to the people at, the folks over at Seneca, and their efforts to work with Vivos and support us here, as well as our Board and all those who have been longtime supporters of the company. We look forward to sharing our continued progress with everyone as we continue to execute on our plans during the remainder of this year and on into next year. So thank you very much, everyone, and please have a great evening. Thank you.

Thank you. This concludes our conference for today. Thank you all for participating. You may now disconnect.