Good day, everyone. And welcome to the Vivos Therapeutics First Quarter 2025 Earnings 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 replay for today's call will be available on the Investor Relations section of Vivos Web site, and will remain posted there for the next 30 days. I will now hand the call over to Brad Amman, Chief Financial Officer, for introductions and the reading of the safe harbor statement. Please go ahead.

Thank you, John. Hello everyone. And welcome to our conference call. A copy of our earnings press release is available on the Investor Relations section of our Web site at www.vivos.com. With us on today's call are Kirk Huntsman, Vivos Chairman and Chief Executive Officer, and myself, Vivos Chief Financial Officer. Today, we'll review the highlights and financial results for the first quarter of 2025, as well as more recent developments and Vivos plans for the rest of 2025, including developments in our marketing and distribution strategy pivot. Following these formal remarks, we will 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, seek, 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' pending acquisition of the Sleep Center of Nevada and other growth strategies, operational plans, including sales, marketing, 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 and profitability, and other matters about the future 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 in other disclosures contained in Vivos' filings with the Securities Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31, 2024 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 the Vivos Web site, as well as the SEC's Web site. Except to the extent required by law, Vivos assumes no obligation to update statements as circumstances change. Finally, be aware that the US Food and Drug Administration has given certain Vivos appliances 510(k) clearance to treat mild to severe OSA in adults. With the FDA clearance for severe, last November, treatment of patients with severe OSA is no longer needed to be performed off-label at the clinical discretion of the treating doctor and is now an integral part of the Vivos treatment protocol. That said, all Vivos appliances should only be used within their FDA cleared uses. Now, at this time, it's my pleasure to introduce Kirk Huntsman, Chairman and CEO of Vivos. Kirk, please go ahead.

Thank you, Brad. And thank you all for joining us on today's conference call. In a moment, I'll turn the call back to Brad, who will walk us through the highlights of our first quarter of 2025 financial and operating results. After that, we'll be happy to take your questions. But before I do that, I'll offer some brief remarks on our progress throughout the first quarter and provide an update on our important ongoing business model pivot and why we believe this is critical for our company's growth prospects and financial success, both this year and over the long term. Keep in mind that what we are seeing in the first quarter and what we expect to see continue in the second quarter is the inflection point in our business as we strategically transition over to our new model of creating strategic alliances with or outright acquisitions of sleep medical providers as a means of both driving sales of our cutting-edge OSA treatment appliances and diversifying our revenue stream with diagnostic and consultative services. This pivot is less than a year old but we are very excited about its prospects and the position we believe it puts Vivos in for a new era of growth. As expected, our service revenues in the first quarter have declined as we eliminated our VIP enrollment sales team and the active recruitment of VIP dentists. Also, as expected, product sales have been growing nicely, especially in our pediatric guide appliance line. Total arches shipped grew 87% in the quarter from 1,996 in the same period last year to 3,736 this year. Product revenue for the quarter was up 8% due to the lower price points on certain pediatric products, but the overall sales volume trend is very positive as more patients than ever before are receiving Vivos treatment. Currently, we are expecting to close on our previously announced acquisition of Sleep Center of Nevada, or SCN, in the next month or two. When closed, this acquisition is expected to be accretive to our revenue and gross profit in the near term as SCN sees approximately 3,000 sleep patients a month. Also, as disclosed in our 10-Q today, we have signed a non-binding term sheet for a $7.5 million senior loan, which we expect to use to close the SCN transaction and for working capital, and things appear to be on track with that. The lender is requiring a simultaneous equity infusion of at least $1.5 million. And as we are in active discussions to bring in at least that amount as part of the SCN closing. We are very confident that we will be able to close this transaction. So in addition, our operations team has been on the ground in Las Vegas working overtime to ensure that once the transaction is closed, we can immediately begin generating revenue from SCN. Over 100 patient visits have already been booked starting in early June and several hundred more SCN patients are in process of being booked by our team. In short, we plan to hit the ground running to get the most we can out of this acquisition as quickly as possible. It is probably worth restating the importance of this SCN transaction for Vivos. In a prior communication, I used the term transformational. The closer we get to actually executing the transaction and beginning operations, the more that term seems appropriate. We continue to believe it will be a total game changer for Vivos. Simply put, we strongly believe SCN and future transactions like SCN, which we are actively exploring as well, is the fastest path to getting the most OSA patients into Vivos treatment at the highest level of revenue and profit per case to the company. Now let me walk you through once again why we are so bullish on this transaction. Number one, as mentioned, SCN tests over 3,000 new patients per month for obstructive sleep apnea and other sleep disorders. Approximately 90% of those patients test positive for OSA or related conditions. At least to start, logistically, we may not be able to capture all of those folks for Vivos appliance treatment, but we expect to convert a good number of them as well as capture diagnostic revenue. Why do we believe this? This is point number two. In our experience with our first strategic alliance with Rebis Health right here in Colorado, we have seen seven out of ten patients selecting some form of Vivos treatment over CPAP at an average revenue per case exceeding $4,500. After months of intense due diligence and analysis at SCN, we see no reason we would not ultimately realize similar levels of case acceptance and revenue there. Point number three, in fact, our plan is to add several new diagnostic and therapeutic services to our overall patient offerings, which we expect will yield even higher levels of revenue at SCN as compared to Rebis Health, which admittedly has progressed more slowly than we would have liked due to internal issues at Rebis that were beyond our control. Point number four, the net contribution margins for SCN revenue is expected to be 50% or better. Point number five, simple math tells the story. Even if we cut the above forecast figures in half, this transaction holds the prospect of solving our cash burn and generating significant positive cash flows and profits by the end of 2025 as we seek to ramp up to full capacity over the next six months. With a successful transaction closing and launch, we will also be proving out our thesis around the tremendous untapped potential for us in working directly with sleep labs and sleep medicine specialists. There are literally thousands of sleep medicine doctors with ties to sleep centers across the country who are in need of additional viable treatment options for their OSA patients. Moreover, no other company can bring to such marginally profitable sleep testing operations the kind of comprehensive state-of-the-art technology, the kinds of hands-on operational experience, and the kind of high margin profit opportunity that Vivos brings. Not to mention that in our experience, we represent the most patient-friendly and preferred treatment modalities on the market today, making Vivos attractive not only to sleep center owners but their patients as well. As we have previously mentioned, our business development and M&A team has been extremely busy fielding inquiries and calling on target companies across the country to explain our extraordinary value proposition. The reception across the sleep medicine community has exceeded our expectations, and we are finding a lot of interest in Vivos. We are currently in active negotiations with several groups for affiliation or acquisition opportunities. Some groups are larger than SCN and some are smaller, yet each holds significant upside potential for Vivos. We consider some of those negotiations to be in advanced stages, and we hope to be able to announce additional transactions from that pipeline in the future. Now I would also remind everyone that our management team here at Vivos has extensive experience in targeting, acquiring, and rolling out professional practices across the country. We've done this very thing quite successfully in a prior company in the dental space. I and senior members of the management team launched and grew one of the very first dental service organizations, or DSOs, back in 1995 and built it from scratch to over $250 million in revenue with over 165 locations when we sold it in 2008. To get to 165 locations, we acquired nearly 400 independent dental practices throughout our market footprint. Today, the overall DSO business in the United States is a multibillion-dollar market with tens of thousands of affiliated DSO offices around the country. Yet here at Vivos, we see this opportunity in sleep medicine as having even greater financial upside than our previous focus exclusively on dentistry. In sum, having successfully weaned ourselves off of our prior VIP driven model, we now feel that SCN is just the beginning of a very promising time for Vivos, and we look forward to continuing the rollout and execution of our new strategy. Now, let me turn the call back over to our Chief Financial Officer, Brad Amman, to review in greater detail our first quarter financial results.

Thank you, Kirk. And good afternoon, everyone. Today, I will review the highlights of our financial results for the first quarter of 2025. For further information on our results for the three month period ended March 31, 2025, 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 Web site. Today, we reported first quarter 2025 total revenue of $3 million compared to $3.4 million for the first quarter of 2024. Year-over-year decrease was due to lower service revenue, in particular VIP enrollment revenue, resulting from Vivos' change in our marketing and sales strategy, as Kirk discussed. Specifically, revenue generated from VIP enrollments decreased $700,000, which was offset by an increase of approximately $100,000 in Vivos' product sales and $200,000 from sponsorship, conference and training revenue. We sold 3,736 oral appliance arches during the first quarter of 2025 for a total of approximately $1.8 million compared to 1,996 during the first quarter of 2024 for $1.7 million. The 8% year-over-year increase in product sales is attributable in part to higher volume in sales of our guides, which are lower revenue generating products compared to our Vivos care appliances. Lastly, during the first quarters of 2024 and 2025, our Billing Intelligence Service and Myofunctional Therapy service revenue remains relatively unchanged at $200,000 in each of those areas during these respective periods. Also, during the first quarters of 2025 and 2024, we recognized $300,000 in sleep testing service revenue. Cost of sales remained relatively constant for the comparable periods at $1.5 million. This related to higher costs associated with appliances, driven by the higher product sales, offset by lower costs associated with medical reporting expenses and VIP membership support costs as a result of not having any VIP enrollments during the period. Gross profit was $1.5 million for the first quarter of 2025 compared to gross profit of $1.9 million for the comparable period in 2024. The decrease was primarily attributable to the decrease in revenue and partially offset by a decrease in cost of sales, driven by the lower VIP enrollments and higher sales of appliances. Gross margin for the first quarter of 2025 was 50% compared to 57% for the first quarter of 2024 due to the decrease in VIP service revenue. Sales and marketing expenses were $400,000 for the first quarter of 2025 compared to $700,000 in the comparable prior year period. This decrease in cost reflects lower sales commissions and marketing expenses as we pivot to our new marketing and distribution model. General and administrative expenses decreased slightly by 1% with $4.9 million for both the first quarters of 2025 and 2024. Total operating expenses for the first quarter of 2025 decreased $300,000 or 5% versus the first quarter of 2024. This is mainly due to the cost-cutting initiatives we have taken beginning in 2023 and throughout 2024, which is important as we continue the pivot to our new model. Operating loss for the first quarter of 2025 was approximately $3.9 million compared to a $3.8 million loss for the first quarter of 2024. The slight decrease in operating loss was primarily from lower total sales offset by lower operating expenses from the cost-cutting initiatives. Net loss for the first quarter of 2025 was $3.9 million compared to a loss of $3.8 million for the first quarter of 2024. Turning to our statement of cash flows. Cash used in operations for the quarter ended March 31, 2025 was $3.8 million, a $1.3 million increase compared to $2.5 million during the comparable prior year period. The increase is due primarily to a reduction in our contract liability of $900,000 and a decrease in accrued expenses and accounts payable of $800,000, offset by an increase in other liabilities of $400,000. For the quarter ended March 31, 2024, net cash used in investing activities of $100,000 consisted of capital expenditures for software related to the development of ordering software for internal use, which was placed in service during the quarter. This compares to net cash used in investing activities of $200,000 in the comparable 2024 period, arising from capital expenditures for the ordering software. Note that our ordering software was placed into service during the quarter. No cash was provided by financing activities for the three months ended March 31, 2025 as compared to $3.6 million of net cash provided in financing activities for the three months ended March 31, 2024, attributable to the proceeds of $3.9 million from the issuance of common stock net of approximately $300,000 of professional fees and other issuance costs from the February 2024 warrant inducement transaction. As of March 31, 2025, we had approximately $2.3 million in cash and cash equivalents compared to $6.3 million as of December 31, 2024. As Kirk mentioned, we are actively seeking financing to close the SCN transaction and bolster our cash position.

Thank you, Brad. That concludes our prepared remarks. Now we'll be happy to take questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from Do Kim from Water Tower Research.

Kirk, I was hoping that you could expand a little bit more on the experience with the Rebis alliance and how its contribution has been so far and what that is in comparison to your expectations when the partnership started?

It has taken much longer than we anticipated since we began our partnership with Rebis about a year ago. Honestly, Rebis has been facing several internal challenges, including changes in ownership and some management issues. Consequently, the patient referrals we expected from Rebis have not materialized, which is frustrating because the volumes are lower than we anticipated. In light of this, we have concentrated on maximizing what we can control, ensuring that every patient receives significant attention due to the reduced volume. This experience has provided valuable insights. We aimed to demonstrate that we could attract patients from sleep labs by presenting them with a full range of treatment options, and we’ve seen evidence to support that. Although we are working with several hundred patients instead of several thousand, our core finding remains: about 71% of those patients presented with Vivos as an alternative to CPAP chose Vivos treatment in some form. We offer a variety of treatments beyond just our Vivos care devices. Given this, we are optimistic about the upcoming opportunities in Las Vegas. If we can achieve this level of patient conversion under less-than-ideal conditions at Rebis, we believe that by having total control over the patient funnel, we could see an even better conversion rate there. Some Rebis revenues are included in our first-quarter earnings, but they are not significant as we had hoped. Nevertheless, with a 71% conversion rate and an average revenue of $4,500 per patient, the potential numbers for Las Vegas look very promising. So, there’s good and bad regarding Rebis, but we’re not giving up on that partnership just yet. Our private equity partner, Seneca, who is a significant shareholder at Vivos, has a noteworthy investment in Rebis and is actively working to strengthen their management team to address the internal issues. We remain hopeful, though we still need to see how this all plays out. For now, our main focus is undoubtedly on Las Vegas.

And it sounds like you anticipate the integration of the Sleep Center of Nevada to go a lot better than Rebis. You've already booked, I think, you said over 100 patients for June. When you look at the first strategic alliance with Rebis, what can you take away when you're negotiating other potential partners or acquisition targets? Are there certain elements or the conditions of these sleep centers that you would have to take a much closer look at to proceed with that transaction?

That's a really good question. We have a long history of successfully acquiring and integrating professional practices into a larger corporate organization. However, sometimes unforeseen circumstances arise that we have to navigate, which can lead to slower progress than we would like. What we've learned includes optimizing within a medical insurance-focused environment and understanding how to enhance revenues and services for patients, who are often sensitive to their insurance coverage and status. We've become adept at evaluating and working around some of the limitations imposed by payers. These insights will be valuable as we move forward in Las Vegas and explore potential partnerships. We're now closely scrutinizing potential partners and have made adjustments in our agreements to gain better control over processes, ensuring a smooth patient flow without unnecessary delays. While it's challenging to articulate all that we've learned, there are definitely operational and deal structure lessons we've taken from our experiences.

Your next question comes from the line of Lucas Ward from Ascendiant Capital Markets.

I was wondering if you could help us understand the impact on the P&L of the acquisition. So for instance, in Q3, like how much revenue would be added from SCN's revenues and how much cost and when would you expect the acquisition to become accretive?

Brad, do you want to take the first half of that and I'll take the second half?

The acquisition of SCN has some legacy revenue and legacy expenses that will be accretive to Vivos. They are currently operating at a net income position. We'll be able to leverage onto the patients. As we've discussed in this call, we'll be able to utilize the 3,000 patients that they see on a monthly basis and a portion of those test positive for OSA and a portion of the people that test positive will want to go into Vivos appliances. And we'll be selling basically at a retail price to the patients rather than a wholesale price to the dentist who turns around and marks up the price to the patient. So we may basically, in this model, take out the middleman. And so the economics, on a revenue basis, are much more favorable to Vivos than they had been in the past and that was really what's attractive about this model. In addition, we're paying the dentist as a salaried employee rather than treating them as a wholesaler. And so there'll be some additional costs associated with payroll and bringing those on and that's part of our cost of sales. So that part, cost of sales, will increase but the revenue will more than offset the additional cost of having employees, doctors as employees. So there's a huge advantage for Vivos in this model. And with that, I'll turn it back over to Kirk.

I believe the other aspect of your question, Lucas, is a good one. It relates to when we should anticipate the accretions to materialize. It may be a bit optimistic, but I actually think you'll see this in the third quarter. We expect that right from the start, we are preparing; I was in Las Vegas recently and visited the facility. We've constructed around 5,000 to 6,000 square feet next to one of the testing centers operated by SCN in Las Vegas. The facility is nearly complete and ready to go. We will be ready by the time we close. As mentioned, patients are already being scheduled. I witnessed patients lining up in the lobby of the testing center, excitedly encouraged to set appointments for treatment with Vivos or for evaluations. We have already scheduled over 100 patients for new appointments, and our initial week and a half is almost entirely booked. We are adding capacity and new patients daily. Therefore, I anticipate that some of the diagnostic services we are introducing will be immediately beneficial in significant ways. Even with the testing and diagnostics we are contributing, we should see revenue and cash flow turning significantly in Q3. Thus, we have the potential in the very near term to reduce our losses, and that's our priority—to achieve positive cash flow as quickly as possible. We believe this is the main avenue to accomplish that, and it won't take six months; it will take a month or two, with Q3 being our current expectation.

As a follow-up, when we analyze operating expenses, should we expect them to increase in Q3 and Q4 due to absorption, considering they have been decreasing quarter-over-quarter for some time?

I estimate that we will see an increase in staffing and expenses related to doctors because we have been reducing personnel and cutting SG&A costs. Now, out of necessity, we are hiring and training new staff, and setting up the entire facility. In the early stages, we will experience a rise in these expenses, as Brad mentioned. However, we believe that the revenue growth will quickly exceed these additional costs, resulting in a positive cash flow that can help offset our historical losses and quickly move us toward profitability. That is our objective and goal.

So last question, according to press release, the acquisition price was $9 million. I'm just curious how you arrived at that, like how was it valued?

We hired an accounting firm to provide a quality of earnings report. After reviewing the report and evaluating their analysis, we considered the value it would add for Vivos. Ultimately, we paid a good multiple for the overall transaction, but the main focus was on the number of patients we could see. We could have priced this higher and still made it a lucrative deal, but we chose not to. Instead, we offered Dr. Prabhu and his wife, who own the Sleep Center in Nevada, a fair price with incentives based on performance to align our interests. We assessed the intrinsic value of the business and its potential revenue and profit, but primarily we were interested in the patient generation capability. Currently, we refer to around 3,000 patients, but they recently opened new facilities that are not fully operational, so that number could rise to 4,000 or more in the future. We recognized the potential of the existing patient base in that market, and compared it with other national sleep groups that didn’t appeal to us due to their dispersed operations. The concentration of patients in a moderately sized market like Las Vegas, where we have a market leader providing services to 37 hospitals, creates a favorable situation. This group has numerous referral sources, which was a significant factor in our analysis. Moreover, Dr. Prabhu will continue with us, which mitigates risks and reassures referral sources about our commitment. These elements contributed to our valuation, and after some negotiations and adjustments, we settled on the $9 million price. Out of that amount, $6 million is cash, while the remainder consists of Vivos stock or performance-based incentives.

Lucas, just to put a little finer sharpened pencil on that. The $6 million of cash and $1.5 million of equity is paid at the beginning and then there's another $1.5 million of equity, which is based on achievement of certain financial milestones. So it's contingent consideration to make up the full $9 million. So the last $1.5 million is, we get the good doctor's buy-in because he'll want to achieve that. And so I think that makes it for a win-win transaction for both parties.

There are no further questions at this time. I will now turn the call over to Kirk Huntsman. Please continue.

Thank you, operator. I want to express my gratitude to everyone on this call. I recognize some familiar names, and I know some of you have been with Vivos for a long time while others are new. We truly appreciate the support our core investors have shown as we've navigated this journey. Vivos has incredible technology, and we have treated close to or over 70,000 patients. We continue to witness remarkable outcomes with this technology, positively changing lives. However, we haven't yet found a way to monetize it that reflects its true value. We believe we are now on the verge of achieving this, and we’re confident that this is the right moment to make a significant shift. We are thankful for the patience of the investment community and especially appreciate the support from our private equity partner, Seneca, who has been fantastic throughout this process. If you were to speak to them, you would sense their enthusiasm and optimism about our future. Thank you again for being here and listening today. We look forward to updating you on our continued progress as we implement our plans for the rest of the year. 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.