Financial Data and Key Metrics Changes - Fourth quarter revenue was $5.6 million, down from $8.2 million in the same period in 2023, primarily due to the temporary suspension of sales in France and macroeconomic headwinds [28] - Full year revenue for 2024 was $32.1 million, in line with pre-announcement guidance [17] - Gross profit for Q4 2024 was $2.5 million, or 45% of revenue, compared to $6.4 million, or 78% of revenue in Q4 2023 [29] - Operating expenses in Q4 decreased by 39% year-over-year, driven by restructuring and increased operational efficiency [18][31] - Loss from operations for Q4 was $17.1 million, down from $25.7 million in the same period in 2023 [32] Business Line Data and Key Metrics Changes - Procedure volumes grew by 4% in 2024, higher than previously issued guidance, attributed to patients entering the funnel after discontinuing GLP-1 medications [18] - Sales and marketing expenses for Q4 2024 were $7.9 million, down from $10.7 million in Q4 2023, including $3.1 million of restructuring costs [30] - Research and development expenses for Q4 2024 were $4.1 million, down from $6.1 million in Q4 2023 [31] Market Data and Key Metrics Changes - The U.S. market represents a significant opportunity due to high obesity rates and widespread use of GLP-1s, with over 40% of adults in the U.S. classified as obese [24] - The company expects to see the highest procedural volume increases in regions where GLP-1s are most mature, indicating a trend of patients returning for alternative treatments after discontinuing GLP-1s [46][73] Company Strategy and Development Direction - The company plans to focus on a new commercial strategy emphasizing B2B2C sales models and deeper penetration in key geographies [19] - Aiming for FDA approval for the Allurion Balloon and preparing for a U.S. launch [19] - The company intends to achieve profitability for its ex-U.S. business by the end of 2025 [19] - Plans to scale its AI product platform and resume commercialization in France [19][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential of the combination therapy of the Allurion Balloon with low-dose GLP-1s to redefine obesity care [16][35] - The company anticipates a revenue of approximately $30 million in 2025, with a steady build quarter-over-quarter driven by new commercial strategies and an expanded sales team [24][82] - Management expects operating expenses to decline by approximately 50% in 2025 compared to 2024 due to restructuring [24] Other Important Information - The company raised additional capital in Q1 2025, providing a cash runway into 2026 [26] - The French regulatory authority, ANSM, has cleared the company to resume sales in France, which is expected to contribute significantly in 2026 [26] Q&A Session Summary Question: Follow-up on results using balloons with low-dose GLP-1 - Management explained that the positive results were due to the lower dose of GLP-1 protecting lean body mass while achieving weight loss through synergistic mechanisms [40][41] Question: Key assumptions for 2025 guidance of $30 million - Management highlighted that the guidance is based on maintaining procedure volumes and re-engaging with clinics in France, expecting a gradual contribution from that market [44][46] Question: Progress on U.S. approval timeline - The next milestone is the completion of the PMA submission, anticipated in the first half of the year, with ongoing dialogue with the FDA [48][49] Question: Trends in procedure volume growth - Management confirmed that momentum continues in markets where GLP-1s are mature, with significant growth observed in pilot accounts [54][55] Question: B2B2C rollout status - The B2B2C strategy has been piloted in key markets and will continue to roll out as validation is obtained [68][69] Question: Metrics on regions with traction - Management noted promising results in the Middle East and Latin America, where GLP-1s have been widely used [71][73] Question: Operating expense reductions - The changes in operating expenses were implemented at the end of 2024, with no further reductions expected throughout 2025 [75]

Financial Data and Key Metrics Changes - Fourth quarter revenue was $5.6 million, down from $8.2 million in the same period in 2023, primarily due to the temporary suspension of sales in France and macroeconomic headwinds [28] - Full year revenue for 2024 was $32.1 million, in line with pre-announcement expectations [17] - Gross profit for Q4 2024 was $2.5 million, or 45% of revenue, compared to $6.4 million, or 78% of revenue in Q4 2023 [29] - Operating expenses in Q4 decreased by 39% year-over-year, driven by restructuring and reorganization efforts [18] Business Line Data and Key Metrics Changes - Procedure volumes grew by 4% in 2024, higher than previously issued guidance, attributed to patients entering the funnel after trying and stopping GLP-1 medications [18] - Sales and marketing expenses for Q4 2024 were $7.9 million, down from $10.7 million in Q4 2023, including $3.1 million of restructuring costs [30] - Research and development expenses for Q4 2024 were $4.1 million, down from $6.1 million in Q4 2023, also including restructuring costs [31] Market Data and Key Metrics Changes - The U.S. market represents a significant opportunity due to high obesity rates and widespread use of GLP-1s, with over 40% of adults in the U.S. classified as obese [24] - The company expects to see the highest procedural volume increases in regions where GLP-1s are most mature, indicating a trend of patients returning for alternative treatments after discontinuing GLP-1s [46] Company Strategy and Development Direction - The company’s strategy for 2025 is built around five pillars, including a new commercial plan focused on key geographies, gaining FDA approval for the Allurion Balloon, achieving profitability for the ex-U.S. business, scaling the AI product platform, and resuming commercialization in France [19] - The company plans to launch additional prospective studies to confirm initial findings on the combination of the Allurion Balloon with low-dose GLP-1s, aiming to define a new paradigm in obesity care [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum building in Q1 2025, with procedure volumes on track to increase by over 30% compared to Q4 2024 [22] - The company anticipates operating expenses to decline by approximately 50% in 2025 compared to 2024, while still investing in key growth areas [24] - Management highlighted the importance of the clinical data generated on the combination therapy, which could redefine obesity management standards [35] Other Important Information - The company raised additional capital through financings, providing a cash runway into 2026 and through expected FDA approval [26] - The company resumed sales in France after regulatory review, which is expected to contribute to future revenue growth [26] Q&A Session Summary Question: Follow-up on results using balloons with low-dose GLP-1 - Management explained that the positive results were driven by using lower doses of GLP-1, which protects lean body mass while still achieving weight loss through synergistic mechanisms [41][42] Question: Key assumptions for 2025 guidance of $30 million - Management indicated confidence in preserving procedure volumes and highlighted the importance of regions where GLP-1s are mature for future growth [44][46] Question: Progress on U.S. approval timeline - The next milestone is completing the PMA submission in the first half of the year, with updates to follow [49] Question: Trends in procedure volume growth - Management confirmed that momentum is continuing in markets where GLP-1s are mature, with significant growth observed in pilot accounts [55] Question: Cadence of revenue to reach $30 million - Management expects a steady build of revenue quarter-over-quarter, driven by the new commercial plan and an increase in the sales team [80][82] Question: Timing for meaningful contribution from France - Management does not expect a material contribution from France until late 2025 or early 2026 due to the time required to reengage with accounts [85] Question: Gross margin recovery expectations - Management anticipates a quicker recovery in gross margin than revenue build, starting in Q1 2025 [87] Question: Impact of launching the smaller balloon on margin - Management does not expect significant impact on gross margin from the next-gen balloon in 2025, but potential for expansion in 2026 [90]

Company Performance - Allurion Technologies, Inc. reported a quarterly loss of $7 per share, which was worse than the Zacks Consensus Estimate of a loss of $5, and an improvement from a loss of $15.75 per share a year ago, indicating a significant year-over-year reduction in losses [1] - The company posted revenues of $5.59 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 0.16%, and down from $8.24 million in the same quarter last year [2] - Over the last four quarters, Allurion has surpassed consensus EPS estimates only once, indicating challenges in meeting market expectations [2] Stock Performance - Allurion Technologies, Inc. shares have declined approximately 71.1% since the beginning of the year, contrasting sharply with the S&P 500's decline of only 1.8% [3] - The current consensus EPS estimate for the upcoming quarter is -$22.91 on revenues of $5.6 million, and for the current fiscal year, it is -$18.53 on revenues of $31.63 million [7] Industry Outlook - The Medical - Products industry, to which Allurion belongs, is currently ranked in the bottom 31% of over 250 Zacks industries, suggesting a challenging environment for companies in this sector [8] - The performance of Allurion's stock may be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Market Opportunity - The obesity treatment market is expected to reach $54 billion by 2030, driven by GLP-1 drug adoption and growing interest in weight management solutions[11] - Approximately 1% of the eligible population undergoes bariatric surgery each year, highlighting a significant unmet need[9] - The company estimates a massive $50B+ revenue opportunity by 2030[8] Allurion Solution & Results - The Allurion Balloon leads to an average of 15% weight loss in 4 months[28] - Sequential Allurion treatment leads to an average of 23% weight loss[21, 28] - Approximately 33% of Allurion patients have tried a GLP-1 before[21, 22] - The Allurion Balloon has a lower serious adverse event rate, approximately 10x lower than other liquid-filled balloons[21] Business Strategy & Financials - The company is implementing a new commercial plan focused on B2B2C marketing and organic demand creation[43] - A major restructuring in Q4-24 is expected to reduce OPEX by approximately 50% in 2025[46] - The company aims to reduce cash burn by 50% in 2025 from $34 million in 2024[46] US Market & FDA Approval - The AUDACITY FDA pivotal trial showed a greater than 50% responder rate in Allurion Balloon subjects[47, 48] - The company expects to complete PMA submission in 2025 and potentially receive FDA approval and launch in the US in 2026[46, 53]

Revenue and Financial Performance - Revenue for the nine months ended September 30, 2024, was $26.519 million, compared to $45.232 million in the same period in 2023, reflecting a significant decrease[9] - Gross profit for the nine months ended September 30, 2024, was $18.970 million, compared to $35.067 million in the same period in 2023[9] - Total revenues for the three months ended September 30, 2024 were $5.367 million, a significant decrease from $18.2 million in the same period in 2023[75] - Revenue from Turkey dropped to $966,000 in Q3 2024 from $3.517 million in Q3 2023, representing a 72.5% decline[75] - All Other Countries contributed $3.347 million (62.4% of total revenue) in Q3 2024, down from $11.122 million (61.1% of total) in Q3 2023[75] - For the nine months ended September 30, 2024, total revenues were $26.519 million compared to $45.232 million in the same period in 2023, a 41.4% decrease[78] - No revenue was generated in the United States for both the three and nine months ended September 30, 2024[78] - The Company recognized a reduction to revenues of $1.2 million due to customer returns of the Allurion Balloon following its suspension in France[190] Net Loss and Profitability - Net loss for the nine months ended September 30, 2024, was $5.580 million, compared to a net loss of $61.427 million in the same period in 2023, showing a substantial improvement[9] - Net loss per share for the nine months ended September 30, 2024, was $2.62, compared to $50.01 in the same period in 2023[9] - Net loss for the nine months ended September 30, 2024 was $5.58 million, compared to a net loss of $61.43 million for the same period in 2023[17] - The company incurred losses from operations of $33.1 million and $53.3 million for the nine months ended September 30, 2024 and 2023, respectively[37] - Basic and diluted net loss per share for Q3 2024 was $(3.51), compared to $(13.56) in Q3 2023, showing a significant improvement[168] - Net loss attributable to common shareholders for Q3 2024 was $(9.004 million), compared to $(21.885 million) in Q3 2023[168] Cash Flow and Liquidity - Cash and cash equivalents decreased to $28.654 million as of September 30, 2024, from $38.037 million as of December 31, 2023[6] - Net cash used in operating activities for the nine months ended September 30, 2024 was $29.03 million, compared to $43.11 million for the same period in 2023[17] - Net cash provided by financing activities for the nine months ended September 30, 2024 was $20.26 million, compared to $116.39 million for the same period in 2023[17] - Cash and cash equivalents and restricted cash at the end of September 30, 2024 was $29.05 million, compared to $80.10 million at the end of September 30, 2023[17] - Cash outflows from operating activities were $29.0 million and $43.1 million for the nine months ended September 30, 2024 and 2023, respectively[37] - The company repaid $48 million for the Fortress Term Loan on April 16, 2024, including $43.1 million principal repayment and $4.6 million in fees[96] - The company recorded an $8.7 million loss on extinguishment of debt related to the Fortress Term Loan repayment in the nine months ended September 30, 2024[96] Assets and Liabilities - Accounts receivable decreased to $9.935 million as of September 30, 2024, from $18.194 million as of December 31, 2023[6] - Inventory decreased to $4.568 million as of September 30, 2024, from $6.171 million as of December 31, 2023[6] - Total current assets decreased to $44.829 million as of September 30, 2024, from $64.816 million as of December 31, 2023[6] - Total liabilities decreased to $114.510 million as of September 30, 2024, from $142.199 million as of December 31, 2023[6] - Inventory decreased to $4.568 million as of September 30, 2024 from $6.171 million at December 31, 2023, with finished goods inventory down 19.8%[79] - Property and equipment net value decreased to $3.08 million as of September 30, 2024 from $3.381 million at December 31, 2023[81] - Total accrued expenses and other current liabilities decreased to $7.973 million as of September 30, 2024 from $15.495 million at December 31, 2023[82] - Long-lived assets in the United States decreased from $5,381 thousand in 2023 to $4,690 thousand in 2024, while in France, they decreased from $1,010 thousand to $673 thousand[194] Stock and Equity Transactions - The company issued 2,260,159 shares of preferred stock in connection with a private placement, net of issuance costs, raising $979,000[15] - The company issued 653,351 shares of common stock in connection with a public offering, net of issuance costs, raising $5.07 million[15] - The company's total stockholders' deficit decreased from $70.49 million as of January 1, 2024 to $64.79 million as of September 30, 2024[15] - The company's accumulated deficit increased from $212.80 million as of January 1, 2024 to $218.38 million as of September 30, 2024[15] - The company's other comprehensive income increased from a loss of $700,000 as of January 1, 2024 to a gain of $2.89 million as of September 30, 2024[15] - The company completed a 1-for-25 reverse stock split effective January 3, 2025[31][32] - Following the reverse stock split, each public warrant is exercisable for 0.056818 shares of common stock at an exercise price of $202.50 per share[33] - Legacy Allurion common stock holders received Allurion Common Stock at an exchange ratio of approximately 0.9780[52] - The total number of Allurion Common Stock shares outstanding after the Business Combination and Reverse Stock Split was 1,892,058[56] - PIPE Investors purchased 215,468 shares of Allurion Common Stock at $176.00 per share, totaling $37.9 million[58] - Legacy Allurion convertible notes totaling $21.8 million were converted into 132,049 shares of Allurion Common Stock[72] - The company assumed 528,277 public warrants to purchase 750,394 shares of Allurion Common Stock at $202.50 per share, valued at $13.8 million[73] - Earn-Out liabilities for potential issuance of additional shares were initially valued at $53.0 million[74] - The company issued 2,260,159 shares of Series A Preferred Stock and 90,407 Private Placement Warrants, raising net proceeds of $2.5 million after deducting $0.2 million in offering costs[147] - The company issued 576,261 shares of Common Stock and 662,701 Public Offering Warrants, raising net proceeds of $15.2 million after deducting $1.0 million in underwriting discounts and $1.0 million in offering costs[156] - As of September 30, 2024, the company had 2,574,783 shares of Common Stock outstanding, up from 1,907,529 shares as of December 31, 2023[155] - The company has 769,257 warrants outstanding to purchase Common Stock, with a weighted average exercise price of $30.00[162] - The company entered into a Chardan Equity Facility, allowing it to sell up to $100 million in Common Stock, with 5,730 shares sold for $0.4 million as of September 30, 2024[166][167] - The company has 528,269 outstanding Public Warrants exercisable for 750,383 shares of Common Stock, with no redemptions as of September 30, 2024[165] - The company has reserved 2,294,777 shares of Common Stock for potential conversion or exercise of its securities as of September 30, 2024[159] Debt and Financing - The company borrowed $60.0 million under the Fortress Term Loan, used to repay the 2021 Term Loan[63] - Interest expense for the three months ended September 30, 2023 related to the Fortress Term Loan was $1.7 million, with an average interest rate of 14.94%[97] - Interest expense for the nine months ended September 30, 2024 related to the Fortress Term Loan was $2.3 million, with no interest expense for the three months ended September 30, 2024 due to loan extinguishment[98] - The 2021 Convertible Notes were converted into 5,345 shares of Allurion Common Stock with a corresponding recognition of APIC of $2.2 million on August 1, 2023[101] - The 2022 Convertible Notes were converted into 3,329 shares of Allurion Common Stock with a corresponding recognition of APIC of $1.2 million on August 1, 2023[104] - The 2023 Convertible Notes were issued for gross proceeds of $28.7 million with a stated interest rate of 7.0% per annum[105] - Interest expense for the nine months ended September 30, 2023 related to the 2023 Convertible Notes was $0.5 million[107] - The RTW Convertible Notes were issued for $48.0 million with an annual interest rate of 6% and a maturity date of April 16, 2031[115] - The fair value of the RTW Convertible Notes at issuance was $49.1 million, with a corresponding $1.1 million loss recognized in Other income, net[116] - RTW paid Allurion an aggregate of $40.0 million Investment Amount, with revenue interest payments up to 6.0% of annual net sales prior to December 31, 2026, and up to 10.0% thereafter until December 31, 2030[120] - If RTW has not received at least 100% of the Investment Amount by December 31, 2027, the company must make a cash payment to catch up to 100%, and if not 240% by December 31, 2030, a payment to reach 240%, with a Hard Cap of 260%[121] - The company has made $3.6 million in royalty payments to RTW as of September 30, 2024[122] - The RIFA Amendment increased the rate of revenue interest payments to 12% for net sales ≤ $100 million prior to December 31, 2026, and after January 1, 2027[123] - The fair value of the Revenue Interest Financing and PIPE Conversion Option were $38.5 million and $9.9 million, respectively, as of September 30, 2024[126] - For the three months ended September 30, 2024, the company recorded a $6.7 million loss and a $5.8 million gain on the Revenue Interest Financing[127] - The fair value of RTW Convertible Notes was $36.09 million as of September 30, 2024, classified under Level 3[128] Stock-Based Compensation and Employee Benefits - Stock-based compensation expense for the nine months ended September 30, 2024 was $2.22 million, compared to $6.35 million for the same period in 2023[17] - Total stock-based compensation expense for Q3 2024 was $860,000, compared to $5.539 million in Q3 2023[172] - As of September 30, 2024, 284,332 stock options were outstanding with a weighted average exercise price of $57.00 per option[173] - The company has $5.6 million of unrecognized compensation costs related to unvested stock options, expected to be recognized over 3.0 years[173] - Total stock compensation expense related to RSUs for Q3 2024 was $0.2 million, with $1.0 million of unrecognized compensation costs remaining[178] - The company's 2023 ESPP reserves 89,045 shares of Common Stock for issuance, with no shares issued as of September 30, 2024[180] - The company's 401(k) retirement plan matching contributions were less than $0.1 million for both Q3 2024 and Q3 2023[181] Leases and Real Estate - The company has 51,000 square feet of leased office, manufacturing, and laboratory space across six leases, expiring between March 2025 and March 2028[184] - Operating lease costs for Q3 2024 were $259,000, compared to $285,000 in Q3 2023[186] - Future commitments under non-cancelable operating lease agreements total $2,810 thousand, with a present value adjustment of $354 thousand, resulting in total lease liabilities of $2,456 thousand[187] - The weighted-average remaining lease term decreased from 3.7 years in 2023 to 2.9 years in 2024, while the weighted-average discount rate remained at 9.9%[187] Fair Value Measurements - The fair value of Public Warrants was $531,000 as of September 30, 2024, based on a Level 1 input[128] - The fair value of Legacy Allurion Common Stock Warrant Liabilities was $71,000 as of September 30, 2024, classified under Level 3[128] - The fair value of the PIPE Conversion Option was $9.85 million as of September 30, 2024, classified under Level 3[128] - The fair value of Preferred Stock Warrants decreased from $2,679 thousand to $715 thousand from June 30, 2023, to September 30, 2023, a decline of 73.3%[132] - The fair value of Common Stock Warrants decreased from $1,351 thousand to $207 thousand from June 30, 2023, to September 30, 2023, a decline of 84.7%[132] - The fair value of Public Offering Warrants was $5,970 thousand as of September 30, 2024, following a fair value issuance of $13,157 thousand and a change in fair value of $(7,187) thousand[132] - The fair value of Private Placement Warrants was $810 thousand as of September 30, 2024, following a fair value issuance of $1,670 thousand and a change in fair value of $(860) thousand[132] - The fair value of the Revenue Interest Financing was remeasured as of September 30, 2024, using a discount rate of 23.5%[136] - The fair value of the PIPE Conversion Option was measured using a stock price of $15.25 and an expected volatility of 130.0% as of September 30, 2024[137] - The fair value of the Earn-Out Liability was measured using a stock price of $15.25 and an expected volatility of 105.0% as of September 30, 2024[138] - The fair value of the RTW Convertible Notes was remeasured as of September 30, 2024, using a stock price of $15.25 and an expected volatility of 90.0%[142] Taxes - The company recorded income tax expense of $0.1 million for the three months ended September 30, 2024, representing an effective tax rate of (0.8%)[144] - The company maintained a full valuation allowance against its net deferred tax assets as of September 30, 2024, due to significant operating losses[145] Customer Concentration - Customer A accounted for 18% and 19% of total revenue for the three months ended September 30, 2024 and 2023, respectively[46] - Customer A accounted for 15% and 16% of accounts receivable as of September 30, 2024 and December 31, 2023, respectively[46] - Customer B accounted for 11% of total revenue for the three months ended September 30, 2023[46] Going Concern and Future Outlook - The company has concluded there is substantial doubt about its ability to continue as a going concern for one year from the date of the financial statements[38] - The company expects to continue generating significant operating losses for the foreseeable future[37] - As of September 30, 2024, the company had an accumulated deficit of $218.4 million[37] Other Transactions and Agreements - The company incurred $22.7 million in transaction costs, including $15.2 million recorded to additional paid-in capital and $5.0 million as general and administrative expenses[54] - Net proceeds from the Business Combination were $61.652 million after deducting transaction costs and other liabilities[56] - RTW paid $40.0 million for revenue interest payments, with rates up to 6.0% of annual net sales before December 31, 2026, and up to 10.0% thereafter[59] - The Company recorded gains of $1.8 million and $3.1 million for the three months ended September 30, 2024 through the condensed consolidated statements of operations and other comprehensive income (loss), respectively[117] - The Company is in compliance with the financial maintenance covenants in the Amended Note Purchase Agreement as of September 30, 2024[118] - The Company entered into a consulting agreement with KKG Enterprises and Remus Group Management, paying $0.2 million and $0.3 million respectively, which were terminated in June 2023[196] - Allurion sold $13 million of 2023 Convertible Notes to Hunter Ventures Limited, a related party

Core Viewpoint - Allurion Technologies, Inc. (ALUR) has shown a significant price increase of 58.1% over the past four weeks, with a mean price target of $28.67 indicating a potential upside of 374.7% from the current price of $6.04 [1] Price Targets and Analyst Estimates - The mean estimate includes three short-term price targets with a standard deviation of $18.58, where the lowest estimate of $16 suggests a 164.9% increase, and the highest estimate predicts a surge of 727.8% to $50 [2] - A low standard deviation among price targets indicates strong agreement among analysts regarding the stock's price movement, which can serve as a starting point for further research [7] Earnings Estimates and Analyst Optimism - Analysts have shown growing optimism regarding ALUR's earnings prospects, as evidenced by a 17.1% increase in the Zacks Consensus Estimate for the current year, with three estimates moving higher and no negative revisions [10] - ALUR holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates, suggesting a strong potential upside in the near term [11] Caution on Price Targets - While price targets are often sought after by investors, they can mislead more than guide, as empirical research indicates that they rarely reflect actual stock price movements [5] - Analysts may set overly optimistic price targets due to business incentives, which can inflate expectations [6] - Investors should approach price targets with skepticism and not rely solely on them for investment decisions [8]

Core Viewpoint - Allurion Technologies is experiencing a rise in share price following the announcement of a planned clinical study to evaluate the combination of its Allurion Program with GLP-1 agonists [1] Group 1: Clinical Study and Weight Loss - The company is addressing concerns regarding muscle loss associated with GLP-1 treatments, which can lead to a reduction of approximately 40% in lean mass relative to total weight lost [2] - Allurion's previous studies indicate that its gastric balloon, along with the Virtual Care Suite, has enabled patients to lose weight while maintaining or even increasing muscle mass [2] - The planned study aims to confirm if the combination of the Allurion Balloon and Virtual Care Suite with GLP-1 therapy can provide a more metabolically healthy approach to weight loss, potentially positioning the Allurion Program as a leading option in obesity treatment [3] Group 2: Financial Developments - The company has entered into a securities purchase agreement to raise approximately $7.4 million in gross proceeds through the sale of 1.24 million shares at $6.00 per share [4] - Roth Capital Partners is acting as the exclusive placement agent for this offering, which is expected to close on or around January 27, 2025, pending customary closing conditions [5] - The net proceeds from the offering are intended for working capital and general corporate purposes [5] Group 3: Market Reaction - Allurion shares increased by 120% to $8.15 at the time of publication, reflecting positive market sentiment following the announcements [5]

Core Insights - Allurion Technologies (ALUR) shares tripled as the company aims to leverage the growing obesity drug market by testing its gastric balloon in combination with GLP-1 medications [1][4] - Previous research indicated that GLP-1 treatments resulted in approximately 40% reduction in lean mass as a proportion of total weight lost, while Allurion's gastric balloon users maintained or even increased muscle mass [2][4] - The CEO highlighted the significance of muscle mass decline in GLP-1 users and suggested that the combination of the gastric balloon and GLP-1 could set a new standard in obesity care [3] Company Developments - Allurion Technologies announced plans to conduct a study to evaluate the effectiveness of its gastric balloon alongside popular GLP-1 drugs [1][4] - The company has faced a challenging year, with shares down over 85% from their peak in summer 2023, despite the recent surge [3][4] Market Context - The obesity drug market is experiencing significant growth, prompting Allurion to explore innovative solutions to enhance weight loss outcomes while preserving muscle mass [1][3]

Financial Performance - Allurion generated revenue of $26.5 million for the nine months ended September 30, 2024, a decrease of 41.5% compared to $45.2 million for the same period in 2023[149] - The company incurred a net loss of $5.6 million for the nine months ended September 30, 2024, significantly reduced from a net loss of $61.4 million for the same period in 2023[149] - Revenue decreased by $12.8 million, or 71%, to $5.4 million for the three months ended September 30, 2024, and decreased by $18.7 million, or 41%, to $26.5 million for the nine months ended September 30, 2024, compared to the same periods in 2023[171] - The net loss for the three months ended September 30, 2024, was $9.0 million, compared to a net loss of $21.6 million for the same period in 2023, reflecting a decrease of $12.6 million[170] - The loss from operations was $12.3 million for the three months ended September 30, 2024, compared to a loss of $26.2 million for the same period in 2023, indicating an improvement of $13.8 million[170] - The company incurred a net loss of $61.4 million for the nine months ended September 30, 2023, compared to a net loss of $5.6 million for the same period in 2024[182] Cash Flow and Financing - Cash outflows from operating activities were $29.0 million for the nine months ended September 30, 2024, down from $43.1 million in the same period in 2023[182] - Cash provided by financing activities was $20.3 million for the nine months ended September 30, 2024, compared to $116.4 million in the same period of 2023[195][197] - The company received $15.2 million in net proceeds from the issuance of common stock and warrants on July 1, 2024[185] - The Company issued $48 million in convertible senior secured notes with a 6.0% annual interest rate, maturing on April 16, 2031[152] - The company received $40.0 million upfront from the Revenue Interest Financing Agreement with RTW, obligating it to remit certain revenue interest payments until December 31, 2030[203] Expenses and Cost Management - Cost of revenue decreased by $2.0 million, or 47%, to $2.3 million for the three months ended September 30, 2024, and decreased by $2.6 million, or 26%, to $7.5 million for the nine months ended September 30, 2024, compared to the same periods in 2023[172] - Gross profit decreased by $10.9 million, or 78%, to $3.1 million for the three months ended September 30, 2024, and decreased by $16.1 million, or 46%, to $19.0 million for the nine months ended September 30, 2024, compared to the same periods in 2023[173] - Sales and marketing expenses decreased by $8.8 million, or 63%, to $5.2 million for the three months ended September 30, 2024, and decreased by $18.1 million, or 50%, to $18.0 million for the nine months ended September 30, 2024, compared to the same periods in 2023[174] - Research and development expenses decreased by $4.0 million, or 55%, to $3.2 million for the three months ended September 30, 2024, and decreased by $8.4 million, or 39%, to $13.2 million for the nine months ended September 30, 2024, compared to the same periods in 2023[174] - General and administrative expenses decreased by $11.9 million, or 63%, to $7.0 million for the three months ended September 30, 2024, and decreased by $9.9 million, or 32%, to $20.7 million for the nine months ended September 30, 2024, compared to the same periods in 2023[175] Regulatory and Compliance Issues - The French regulatory authority suspended sales of the Allurion Balloon, prompting the Company to implement a remediation plan[159] - The Company was notified by NYSE that its common stock's average closing price was below $1.00, triggering compliance measures[160] - The Company must obtain stockholder approval for the conversion of notes into common stock, with a proposal due by December 31, 2025[152] Product and Market Development - Allurion completed the enrollment of 550 patients in the AUDACITY clinical trial across 17 sites in the United States, with the last patient treated in September 2024[149] - The Allurion Program includes the world's first swallowable intragastric balloon, which is designed to assist in weight loss without surgery or anesthesia[145] - The Allurion Virtual Care Suite (VCS) provides AI-powered remote patient monitoring tools and a behavior change program, enhancing patient engagement and support[147] - The Allurion VCS was launched in the United States in April 2024 for patients utilizing various weight loss treatments, including anti-obesity medications and bariatric surgery[148] - Allurion's products are currently sold in multiple regions, including Europe, the Middle East, Africa, Latin America, Canada, and the Asia-Pacific region[149] Future Outlook and Strategic Plans - The company expects to continue incurring net losses as it focuses on regulatory approvals, sales strategies, and research and development efforts[150] - The company anticipates needing additional funding for operational expenses, including selling, marketing, and research and development[150] - The company expects to continue generating significant operating losses for the foreseeable future and may need to raise additional capital[184] Stock and Shareholder Information - Allurion's stock began trading on the New York Stock Exchange under the ticker symbol "ALUR" following the completion of its Business Combination on August 2, 2023[151] - The Company raised $15.2 million in net proceeds from a public offering of 14,406,508 shares at an offering price of $1.20 per share[157] - The Company terminated and repaid all outstanding obligations under the Fortress Credit Agreement[155] Risk Factors - The company is exposed to foreign currency risks, particularly in Europe, the Middle East, and the Asia-Pacific region, with a potential 10% adverse change in exchange rates impacting revenues by approximately 6% and net income by about 2%[209] - The company has not engaged in any foreign currency hedging activities to date but will reassess its approach as international operations grow[209] - A hypothetical 10% change in interest rates would not have a material impact on the value of the company's cash, cash equivalents, net loss, or cash flows[209] Accounting and Reporting - The company is classified as an emerging growth company under the JOBS Act, allowing it to delay adopting new accounting standards[208] - The company is also a smaller reporting company, which provides certain exemptions from disclosure requirements, potentially complicating financial comparisons with other public companies[208] - The company may choose to early adopt new accounting standards when permitted for private companies[208] - The fair value of the Revenue Interest Financing Agreement is calculated using a discounted cash flow method based on future revenue projections[203] - The estimated fair value of Legacy Allurion shares was determined by the board of directors, considering various factors including market conditions and financial performance[205]

Financial Data and Key Metrics Changes - Third quarter revenue was $5.4 million, a significant decrease from $18.2 million in the same period of 2023, primarily due to destocking, macroeconomic headwinds, and a product recall in France [35][36] - Gross profit for the third quarter was 58%, down from 77% year-over-year, impacted by the product recall and lower production volumes [36] - Loss from operations decreased to $12.3 million from $26.2 million in the same period last year, driven by reduced operating costs despite lower gross profit [41] Business Line Data and Key Metrics Changes - The AI product revenues grew more than 80% year-over-year, with expectations to double revenues by year-end, driven by expansion in the U.S. and Europe [15][16] - Procedure volumes in the Middle East grew by 20% compared to last year, indicating strength in that region despite challenges in other markets [11] Market Data and Key Metrics Changes - The company noted a recovery in parts of Latin America, which appears to be improving from a macroeconomic standpoint [11] - Approximately 33% of patients now have previously tried an anti-obesity medication, up from 25% last year, indicating a growing market for the Allurion Program [71] Company Strategy and Development Direction - The company announced a new strategy built around five pillars, including a new commercial plan focused on deeper penetration in select markets and scaling the AI product platform [17][18] - The company aims to achieve profitability for the ex-U.S. business by the end of 2025 and resume commercialization in France [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about resuming commercialization in France and highlighted the potential for the Allurion Balloon as a second-line treatment after GLP-1 discontinuation [30][56] - The management acknowledged macro headwinds but emphasized that the execution of their new plan is within their control [18] Other Important Information - The company has reduced its global headcount by approximately half and consolidated functions under centralized leadership to streamline operations and reduce costs [28] - The last patient exited the AUDACITY trial, with data readout expected at the end of the year, which is crucial for the FDA approval process [29] Q&A Session Summary Question: Can you provide details on the PMA filing and interactions with the FDA? - The first three modules of the PMA have been filed and are under review by the FDA, with positive feedback received so far [48] Question: What is the revenue generation model for the Virtual Care Suite? - The Virtual Care Suite generates revenue on a per patient, per month basis, with both basic and premium versions available for providers [52] Question: Will there be any revenue from the U.S. in 2025? - Some revenue is expected from the Virtual Care Suite in the U.S., but timing for the Allurion Balloon FDA approval remains uncertain [59] Question: Can you quantify the impact from France and destocking in the quarter? - France accounted for over $1 million in revenue, with an additional $1.2 million reduction due to product recall adjustments [66] Question: What is the expected gross margin for Q4 and 2025? - Gross margin is expected to be in the low to mid-60s for Q4, with potential to reach mid-70s by the end of 2025 [60] Question: How are the cost reductions being implemented? - Cost reductions are across all departments, with a focus on maintaining sales effectiveness while reducing marketing expenses [62] Question: What regions showed stronger revenue performance? - The Middle East showed recovery in the balloon business, while Latin America experienced favorable growth due to improved macroeconomic conditions [70]