Vivos Therapeutics, Inc. Common Stock 2026 Q2 Earnings Call

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 Chairman and Chief Executive Officer, and Roman Franklin, Vivos Chief Financial Officer and Principal Financial Officer. Today, we will review the financial results of the second quarter of 2026, as well as more recent developments in Vivos's plans for the rest of the year 2026 and beyond. 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 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'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 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's 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, 2025, and our other filings with the SEC, including our second quarter 10-Q filed with the SEC today, all of which are or will be 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 has given certain specific Vivos appliances 510(k) clearance to treat mild to severe OSA in adults.

With the FDA clearance of certain Vivos products for severe OSA in November of 2023, treatment of patients with severe OSA with these specific appliances 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. Treatment of OSA of any severity or any other condition with any other of Vivos FDA-cleared devices remains at the clinical discretion of the treating doctor. For further information on our results for the three-month period ended June 30, 2026, 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.

In the second quarter of 2026, Vivos completed its fourth full quarter of activity, following our June 10 acquisition in 2025 of The Sleep Center of Nevada, demonstrating that the pivot in our sales, marketing, and distribution model has taken hold. Revenue increased by approximately $1.3 million, or 35%, to $5.2 million for the three months ended June 30, 2026, compared to $3.8 million for the three months ended June 30, 2025. The increase in total revenue during the second quarter of 2026 was impacted by an increase of $1.9 million in service revenue and a decrease of a half a million dollars in product revenue to our VIPs.

The increase in product revenue is attributable to a decrease in appliance sales of $1.1 million as a result of our strategic pivot away from VIPs to sleep centers, which is reported as treatment revenue under service revenue, offset by a decrease of a half a million dollars in discounts offered. The increase in service revenue is attributable to $1.5 million in sleep testing services, primarily generated from SCN and an increase of $800,000 in revenue generated from Vivos treatment to patients launched at two SCN locations, offset by a decrease of $100,000 in VIP enrollment revenue and $100,000 from sponsorship, seminar, and other service revenue. For the six months ended June 30, revenue increased by $3.5 million, or 51%, to $10.3 million, compared to $6.8 million for the six months ended last year.

The increase in total revenue during the period was impacted by an increase in $4.4 million in service revenue and a decrease of $900,000 in product revenue. The decrease in product revenue is attributable to a decrease in appliance sales to VIPs of $2.1 million, again, due to our strategic pivot, offset by a decrease of $200,000 in discounts offered. The increase in service revenue is attributable to $3.5 million of sleep testing services, primarily generated from SCN, and an increase of $1.4 million of revenue generated from Vivos treatment to patients launched at two SCN locations, offset by a decrease of $300,000 in VIP enrollment revenue.

For the three months ended June 30th, 2026, we sold 5,180 oral appliance arches for a total of approximately $1.4 million, a 28% decrease in revenue from the three months ended June 30th, 2025, when we sold 4,116 oral appliance arches for a total of $1.9 million. The decrease is directly attributable to a higher volume mix of preformed appliance sales, which are lower revenue-generating products when compared to Vivos CARE appliances. For the six months ended June 30th, 2026, we sold 10,484 oral appliance arches for a total of $2.8 million, a 24% decrease in revenue from the six months ended June 30th of last year, when we sold 7,852 arches for a total of $3.7 million. The decrease is directly attributable to higher volume mix of the preformed appliance sales, which are lower revenue-generating products compared to our CARE devices, as I mentioned earlier.

Cost of sales increased to half a million dollars, or 29%, to $2.2 million for the three months ended June 30th, compared to $1.7 million for the same period in 2025. This was primarily attributable to higher costs associated with diagnostic services and patient therapy, including the addition of staff at the Vivos treatment centers. For the six months ended June 30th, 2026, cost of sales increased $1.1 million, or 33%, to $4.3 million, compared to $3.2 million for the six months ended June 30th, 2025. This was primarily related to the higher costs associated with diagnostic services, patient therapy, including additional staff at the Vivos treatment centers. For the three months ended June 30th, 2026, gross profit increased by $800,000 to $3 million. This increase was attributable to the increase in revenue of $1.3 million and an increase of cost of sales of half a million dollars.

Gross margin increased to 57% for the three months ended June 30th, 2026, compared to 55% for the three months ended June 30th, 2025, due to the increase in both revenue and cost of sales. For the six months ended June 30th, 2026, gross profit increased by $2.4 million to $6 million. This increase was attributable to the increase in revenue of three and a half million and an increase in cost of sales of $1.1 million. Gross margin increased to 58% for the six months ended June 30th of this year, compared to 53% for the six months ended last year, due to the increase in revenue and smaller increase in cost of sales. General and administrative expenses increased $700,000, or 11%, to approximately $7.1 million for the three months ended June 30th, 2026, as compared to $6.4 million for the three months ended June 30th, 2025.

The primary cause of this increase was $600,000 in salary and wages related to the acquisition of SCN and the opening of Vivos treatment centers, and $300,000 in higher rent expense, offset by a reduction of $200,000 in bad debt and allowances. For the six months ended this year, general administrative expenses increased $4.8 million, or 42%, to $6.1 million, as compared to $11.3 million for the six months ended last year. The primary driver of this increase related to the cost associated with acquiring and integrating SCN and establishing the Vivos treatment centers, including an increase in salaries and related compensation of $3 million for hiring additional staff, an increase of $900,000 for professional fees, an increase in rent of $600,000, and other costs of $300,000.

Sales and marketing expenses decreased $100,000 to $200,000 for the three months ended June 30th of this year, compared to $300,000 for the three months ended June 30th of 2025. This is attributable in significant part to our focus on reducing costs. Sales and marketing expense decreased $200,000 to $400,000 for the six months ended June 30th, 2026, compared to $600,000 for the six months ended June 30th, 2025. This decrease was primarily driven by our decrease in sales and marketing campaigns, lower commissions paid to our employees, digital media services, and reduction in use of marketing supplies due to our pivot. Depreciation and amortization expense increased $200,000 for the three months ended June 30th, 2026, and depreciation and amortization expense increased half a million to $1 million for the six months ended June 30th, 2026. Depreciation and amortization increased due to assets being placed into service during the period.