Expects Continued Revenue Growth in 2024 and Takes Steps to Further Improve Operating Efficiency as the Company Pursues Profitability Goals LAKE FOREST, Calif., Jan. 29, 2024 /PRNewswire/ -- BIOLASE, Inc. (NASDAQ: BIOL), the global leader in dental lasers, announced preliminary unaudited revenue results for 2023 based on currently available information and expects to report year-over-year growth as it continues to generate interest among dental practitioners for its industry leading lasers. The Company is a ...

Robust Educational Courses Commence with an Advanced Mastery Course on February 2–3, 2024 LAKE FOREST, Calif., Jan. 8, 2024 /PRNewswire/ -- BIOLASE, Inc. (NASDAQ: BIOL), the global leader in dental lasers, has experienced growing demand for its robust educational offering and as a result has increased the number of dental laser courses planned for the first quarter of 2024. The full list of both in-person and virtual course options offered can be found through BIOLASE'S education web portal at Education.Bio ...

LAKE FOREST, Calif., Jan. 3, 2024 /PRNewswire/ -- BIOLASE, Inc. (NASDAQ: BIOL), the global leader in dental lasers, today announced that the Company has been awarded a Top Workplaces 2023 honor by the Inland News Group. This award is in addition to the Top Workplaces 2023 honor from the Orange County Register, previously announced. The awards are based solely on employee feedback gathered through a third-party survey administered by employee engagement technology partner Energage LLC. The confidential surve ...

John Beaver Yes. I mean -- is it a matter now of like overhead absorption? Or are there any other types of cost savings you can achieve through supply chain, for example? John Beaver Thank you, Bruce. Nelson Cox Yes. So Nelson, I would expect gross margins next year in 2024 to be approaching that 50% level that, Jen, referenced in her remarks. I think as volume continues to go up, we could get to the mid-50s in 2025 and beyond. But certainly a target for next year will be as close to that 50% as we can get ...

PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's discussion and analysis of BIOLASE, Inc. [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents BIOLASE, Inc.'s unaudited consolidated financial statements and detailed notes for the periods ended September 30, 2023, and December 31, 2022 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This table provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of September 30, 2023, and December 31, 2022 Consolidated Balance Sheets | ASSETS (in thousands) | September 30, 2023 (unaudited) | December 31, 2022 | | :-------------------- | :----------------------------- | :---------------- | | Cash and cash equivalents | $7,809 | $4,181 | | Accounts receivable, net | $4,388 | $5,841 | | Inventory | $13,824 | $15,884 | | Total current assets | $27,782 | $28,959 | | Property, plant, and equipment, net | $6,049 | $4,278 | | Total assets | $38,745 | $38,186 | | LIABILITIES & EQUITY (in thousands) | September 30, 2023 (unaudited) | December 31, 2022 | | :-------------------- | :----------------------------- | :---------------- | | Accounts payable | $7,178 | $5,786 | | Accrued liabilities | $7,613 | $9,210 | | Total current liabilities | $19,782 | $17,807 | | Non-current term loans, net of discount | $11,307 | $13,091 | | Total liabilities | $32,861 | $33,297 | | Total mezzanine equity | $5,552 | $0 | | Total stockholders' equity | $332 | $4,889 | | Total liabilities, convertible redeemable preferred stock and stockholders' equity | $38,745 | $38,186 | [Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This statement details the company's financial performance, including net revenue, gross profit, operating expenses, and net loss for specified periods Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share data) | (In thousands, except per share data) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net revenue | $10,921 | $12,010 | $35,674 | $34,411 | | Cost of revenue | $7,175 | $9,565 | $22,474 | $22,096 | | Gross profit | $3,746 | $2,445 | $13,200 | $12,315 | | Total operating expenses | $7,443 | $10,096 | $26,061 | $29,226 | | Loss from operations | $(3,697) | $(7,651) | $(12,861) | $(16,911) | | Net loss | $(4,589) | $(8,387) | $(15,306) | $(18,773) | | Comprehensive loss | $(4,694) | $(8,539) | $(15,292) | $(19,188) | | Net loss per share (Basic and Diluted)| $(3.89) | $(110.36) | $(22.28) | $(287.73) | [Consolidated Statements of Convertible Redeemable Preferred Stock and Stockholders' Equity](index=4&type=section&id=Consolidated%20Statements%20of%20Convertible%20Redeemable%20Preferred%20Stock%20and%20Stockholders%27%20Equity) This statement tracks changes in the company's convertible redeemable preferred stock and stockholders' equity over the reporting periods - The company's total stockholders' equity decreased significantly from **$4,889 thousand** as of December 31, 2022, to **$332 thousand** as of September 30, 2023, primarily due to a net loss of **$15,306 thousand** and the reclassification of preferred stock to mezzanine equity[15](index=15&type=chunk)[19](index=19&type=chunk) - Mezzanine equity, consisting of Series H and Series J Convertible Preferred Stock, increased from **$0** as of December 31, 2022, to **$5,552 thousand** as of September 30, 2023, reflecting new issuances[15](index=15&type=chunk)[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities for the specified periods Consolidated Statements of Cash Flows (in thousands) | (In thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :---------------------------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash flows used in operating activities | $(11,808) | $(21,179) | | Net cash flows used in investing activities | $(1,126) | $(3,256) | | Net cash flows provided by financing activities | $16,549 | $4,635 | | Effect of exchange rate changes | $13 | $(415) | | Increase (decrease) in cash, cash equivalents and restricted cash | $3,628 | $(20,215) | | Cash, cash equivalents and restricted cash, beginning of period | $4,181 | $30,175 | | Cash and cash equivalents, end of period | $7,809 | $9,960 | - Cash used in operating activities decreased significantly from **$(21,179) thousand** in 2022 to **$(11,808) thousand** in 2023, primarily due to a lower net loss and changes in working capital[26](index=26&type=chunk)[217](index=217&type=chunk) - Net cash provided by financing activities increased substantially to **$16,549 thousand** in 2023 from **$4,635 thousand** in 2022, driven by proceeds from public offerings of common stock, pre-funded warrants, and convertible preferred stock[26](index=26&type=chunk)[219](index=219&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the company's accounting policies, revenue recognition, equity, debt, and other financial disclosures [NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION](index=10&type=section&id=NOTE%201%E2%80%94DESCRIPTION%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) This note describes BIOLASE, Inc.'s core business, significant events like the reverse stock split, and the going concern assessment - BIOLASE, Inc. is a leading provider of advanced laser systems for the dental industry, developing, manufacturing, marketing, and selling laser systems for minimally invasive dental procedures[29](index=29&type=chunk) - The company effected a **one-for-one hundred (1:100) reverse stock split** on July 27, 2023, retroactively adjusting all common stock share numbers and prices[32](index=32&type=chunk)[33](index=33&type=chunk) - The company's recurring losses and cash usage in operations raise substantial doubt about its ability to continue as a going concern, necessitating additional capital[34](index=34&type=chunk)[215](index=215&type=chunk) Liquidity Position (in thousands) | Metric | September 30, 2023 | December 31, 2022 | | :----- | :----------------- | :---------------- | | Working Capital | $8,000 | $11,200 | | Cash and cash equivalents | $7,800 | $4,200 | | Net accounts receivable | $4,400 | $5,800 | [NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%202%E2%80%94SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's key accounting policies, including recent adoptions and fair value measurements of financial instruments - The company adopted ASU 2016-13 (Credit Losses) effective January 1, 2023, which did not have a significant impact on its consolidated financial statements[51](index=51&type=chunk) - Financial instruments like cash, accounts receivable, accounts payable, accrued liabilities, warrants, and the SWK Loan approximate fair value due to their short maturity or market interest rates[41](index=41&type=chunk) [NOTE 3—REVENUE RECOGNITION](index=12&type=section&id=NOTE%203%E2%80%94REVENUE%20RECOGNITION) This note details the company's revenue recognition policies, breaking down revenue by timing of transfer and geographic area - Revenue from products and services transferred at a single point in time (primarily laser systems and consumables) accounted for **87%** and **89%** of net revenue for the three and nine months ended September 30, 2023, respectively[52](index=52&type=chunk) - Revenue from services transferred over time (product training and extended warranties) accounted for **13%** and **11%** of net revenue for the three and nine months ended September 30, 2023, respectively[53](index=53&type=chunk) Net Revenue by Geographic Area (in thousands) | Geographic Area | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :---------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | United States | $7,298 | $8,413 | $24,797 | $24,290 | | International | $3,623 | $3,597 | $10,877 | $10,121 | | Total Net Revenue | $10,921 | $12,010 | $35,674 | $34,411 | Net Revenue by Timing of Transfer (in thousands) | Timing of Transfer | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :----------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Over time | $1,366 | $2,076 | $3,950 | $4,406 | | At a point in time | $9,555 | $9,934 | $31,724 | $30,005 | | Total Net Revenue | $10,921 | $12,010 | $35,674 | $34,411 | [NOTE 4—CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY](index=14&type=section&id=NOTE%204%E2%80%94CONVERTIBLE%20REDEEMABLE%20PREFERRED%20STOCK%20AND%20STOCKHOLDERS%27%20EQUITY) This note describes the company's convertible redeemable preferred stock issuances, their classification, and stock-based compensation expenses - In September 2023, the company sold **75,000 Units** of Series J Convertible Redeemable Preferred Stock and Series J Warrants, generating gross proceeds of **$4.5 million**; the Series J Preferred Stock is mandatorily redeemable by September 13, 2024[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) - In May 2023, the company sold **175,000 Units** of Series H Convertible Redeemable Preferred Stock and Series H Warrants, generating gross proceeds of **$4.6 million**; the Series H Preferred Stock is mandatorily redeemable by May 24, 2025[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) - Both Series J and Series H Convertible Preferred Stock are classified as mezzanine equity due to contingent redeemability and holder conversion options[71](index=71&type=chunk)[77](index=77&type=chunk) - Stock-based compensation expense for the nine months ended September 30, 2023, was **$1.1 million**, down from **$1.7 million** in the same period of 2022[92](index=92&type=chunk)[95](index=95&type=chunk) [NOTE 5—INVENTORY](index=21&type=section&id=NOTE%205%E2%80%94INVENTORY) This note provides a breakdown of inventory composition and details adjustments for excess and obsolete amounts Inventory Composition (in thousands) | Category | September 30, 2023 | December 31, 2022 | | :-------------- | :----------------- | :---------------- | | Raw materials | $6,566 | $6,697 | | Work-in-process | $1,850 | $1,871 | | Finished goods | $5,408 | $7,316 | | Total Inventory | $13,824 | $15,884 | - Inventory was reduced by estimates for excess and obsolete amounts totaling **$1.7 million** as of September 30, 2023, a decrease from **$2.2 million** as of December 31, 2022[116](index=116&type=chunk) [NOTE 6—PROPERTY, PLANT, AND EQUIPMENT](index=21&type=section&id=NOTE%206%E2%80%94PROPERTY%2C%20PLANT%2C%20AND%20EQUIPMENT) This note details the composition of property, plant, and equipment, along with associated depreciation expenses Property, Plant, and Equipment, Net (in thousands) | Category | September 30, 2023 | December 31, 2022 | | :------------------------ | :----------------- | :---------------- | | Total (before land) | $16,565 | $12,661 | | Accumulated depreciation | $(10,669) | $(8,538) | | Property, plant, and equipment, net | $6,049 | $4,278 | - Depreciation expense for the nine months ended September 30, 2023, was **$2.1 million**, a significant increase from **$0.4 million** in the same period of 2022, partly due to a cumulative adjustment for laser equipment transferred for marketing[121](index=121&type=chunk)[122](index=122&type=chunk) [NOTE 7—INTANGIBLE ASSETS AND GOODWILL](index=21&type=section&id=NOTE%207%E2%80%94INTANGIBLE%20ASSETS%20AND%20GOODWILL) This note discusses the company's intangible assets and goodwill, including impairment tests and amortization policies - The company performed annual and additional quantitative impairment tests for goodwill as of September 30, 2023, and March 31, 2023, respectively, and determined no impairment[123](index=123&type=chunk)[125](index=125&type=chunk) - Goodwill remained at **$2.9 million** as of September 30, 2023, and December 31, 2022; all intangible assets have been fully amortized, with no amortization expense recognized[126](index=126&type=chunk) [NOTE 8—ACCRUED LIABILITIES](index=22&type=section&id=NOTE%208%E2%80%94ACCRUED%20LIABILITIES) This note provides a detailed breakdown of accrued liabilities, including payroll, preferred stock warrant liability, and warranty accruals Accrued Liabilities (in thousands) | Category | September 30, 2023 | December 31, 2022 | | :---------------------------- | :----------------- | :---------------- | | Payroll and benefits | $2,541 | $4,674 | | Preferred stock warrant liability | $1,529 | $0 | | Warranty accrual, current portion | $1,364 | $1,293 | | Total Accrued Liabilities | $7,613 | $9,210 | - The preferred stock warrant liability of **$1.5 million** is a new item in September 2023, reflecting the liability classification of warrants issued in recent public offerings[127](index=127&type=chunk) - The warranty accrual balance increased to **$1,827 thousand** as of September 30, 2023, from **$1,653 thousand** at the beginning of the nine-month period[127](index=127&type=chunk) [NOTE 9—DEBT](index=23&type=section&id=NOTE%209%E2%80%94DEBT) This note outlines the company's debt structure, including term loans, interest expense, and repayment schedules Debt Details (in thousands) | Debt Type | September 30, 2023 | December 31, 2022 | | :-------- | :----------------- | :---------------- | | SWK Loan | $14,650 | $14,650 | | EIDL Loan | $150 | $150 | | Discount and debt issuance costs | $(693) | $(1,009) | | Total | $14,107 | $13,791 | | Current term loans, net of discount | $2,800 | $700 | | Non-current term loans, net of discount | $11,307 | $13,091 | - Interest expense increased by **41%** to **$0.6 million** for the three months ended September 30, 2023, and by **39%** to **$1.8 million** for the nine months, primarily due to rising interest rates on the term loan[131](index=131&type=chunk)[198](index=198&type=chunk)[209](index=209&type=chunk) - Principal repayments for the SWK Loan are set to begin in November 2023, with quarterly payments of **$0.7 million** until maturity in May 2025[133](index=133&type=chunk) [NOTE 10—LEASES](index=24&type=section&id=NOTE%2010%E2%80%94LEASES) This note details the company's lease liabilities, including remaining lease terms and discount rates - The company's weighted-average remaining lease term is **2.0 years**, with a weighted-average discount rate of **12.3%** as of September 30, 2023[140](index=140&type=chunk) Maturities of Lease Liabilities (in thousands) | Year | September 30, 2023 | | :---------------- | :----------------- | | 2024 | $1,047 | | 2025 | $875 | | 2026 | $207 | | Total lease liabilities | $1,872 | [NOTE 11—SEGMENT INFORMATION](index=25&type=section&id=NOTE%2011%E2%80%94SEGMENT%20INFORMATION) This note confirms the company operates in a single business segment and provides a breakdown of revenue by geographic area - The company operates in a single business segment; for the nine months ended September 30, 2023, U.S. sales accounted for **70%** of net revenue, and international sales for **30%**[145](index=145&type=chunk) [NOTE 12—CONCENTRATIONS](index=26&type=section&id=NOTE%2012%E2%80%94CONCENTRATIONS) This note discusses revenue concentrations by product category and customer, and highlights reliance on single suppliers Revenue by Product Category (in thousands) | Product Category | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :---------------- | :------------------------------ | :----------------------------- | | Laser systems | $6,647 (60.9%) | $21,666 (60.7%) | | Consumables and other | $2,908 (26.6%) | $10,058 (28.2%) | | Services | $1,366 (12.5%) | $3,950 (11.1%) | | Net Revenue | $10,921 (100.0%) | $35,674 (100.0%) | - No individual customer represented more than **10%** of revenue for the three and nine months ended September 30, 2023 or 2022[151](index=151&type=chunk) - The company relies on single suppliers for certain key components, posing a risk of manufacturing delays and sales loss if suppliers change[153](index=153&type=chunk) [NOTE 13—INCOME TAXES](index=26&type=section&id=NOTE%2013%E2%80%94INCOME%20TAXES) This note details the company's income tax provision and explains the factors contributing to its effective tax rate - The company recorded an income tax provision of **$15 thousand** and **$46 thousand** for the three and nine months ended September 30, 2023, respectively, with an effective tax rate of **0.3%**[156](index=156&type=chunk) - The effective tax rate differs from the statutory rate of **21%** primarily due to a full valuation allowance against net deferred tax assets and current liabilities from estimated state and foreign income tax liabilities[157](index=157&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, operational results, and future outlook [Overview](index=29&type=section&id=Overview) This overview introduces BIOLASE as a dental laser systems provider and highlights key financial performance indicators - BIOLASE is a leading provider of advanced laser systems for the dental industry, offering Waterlase (all-tissue) and diode (soft-tissue) systems for minimally invasive procedures[164](index=164&type=chunk)[166](index=166&type=chunk) - The company also manufactures and sells consumable products and accessories, which accounted for approximately **39%** of total sales during the quarter ended September 30, 2023[167](index=167&type=chunk) Key Financial Highlights (in thousands) | Metric | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :------------ | :------------------------------ | :----------------------------- | | Net Revenues | $10,900 | $35,700 | | Net Losses | $(4,600) | $(15,300) | [Business and Outlook](index=30&type=section&id=Business%20and%20Outlook) This section outlines the company's strategic focus on market awareness, product expansion, and revenue growth forecasts - The company's strategy focuses on increasing awareness and demand for its products among dental practitioners and patients, and growing consumables revenue[172](index=172&type=chunk) - BIOLASE plans to expand its product line and clinical applications through enhancements and transformational innovations, including exploring adjacent medical applications[173](index=173&type=chunk) - The company forecasts revenue for fiscal year 2023 to be above fiscal year 2022, driven by new customers and increased consumable sales[174](index=174&type=chunk)[175](index=175&type=chunk) [Recent Developments](index=31&type=section&id=Recent%20Developments) This section highlights recent corporate actions, including a public offering of preferred stock and warrants - On September 13, 2023, BIOLASE completed a public offering of Series J Convertible Redeemable Preferred Stock and warrants, raising **$4.5 million** in gross proceeds[176](index=176&type=chunk) [Critical Accounting Policies](index=31&type=section&id=Critical%20Accounting%20Policies) This section confirms no significant changes to the company's critical accounting policies during the reporting period - No significant changes occurred in the company's critical accounting policies during the nine months ended September 30, 2023, from those disclosed in the 2022 Form 10-K[177](index=177&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's financial performance for the three and nine months ended September 30, 2023, versus 2022 Consolidated Operating Results (in thousands, as % of net revenue) | Metric | 3M Sep 2023 | 3M Sep 2022 | 9M Sep 2023 | 9M Sep 2022 | | :------------------------ | :---------- | :---------- | :---------- | :---------- | | Net revenue | $10,921 (100.0%) | $12,010 (100.0%) | $35,674 (100.0%) | $34,411 (100.0%) | | Gross profit | $3,746 (34.3%) | $2,445 (20.4%) | $13,200 (37.0%) | $12,315 (35.8%) | | Total operating expenses | $7,443 (68.2%) | $10,096 (84.1%) | $26,061 (73.0%) | $29,226 (84.9%) | | Loss from operations | $(3,697) (33.9%) | $(7,651) (63.7%) | $(12,861) (36.0%) | $(16,911) (49.1%) | | Net loss | $(4,589) (42.0%) | $(8,387) (69.8%) | $(15,306) (42.8%) | $(18,773) (54.6%) | Adjusted EBITDA Reconciliation (in thousands) | Metric | 3M Sep 2023 | 3M Sep 2022 | 9M Sep 2023 | 9M Sep 2022 | | :---------------------------------------- | :---------- | :---------- | :---------- | :---------- | | GAAP net loss attributable to common stockholders | $(4,589) | $(8,387) | $(15,306) | $(18,990) | | Adjustments (e.g., Interest, Depreciation, Stock-based comp) | $1,440 | $2,851 | $5,166 | $5,157 | | Adjusted EBITDA | $(3,149) | $(5,623) | $(9,910) | $(13,616) | [Three Months Ended September 30, 2023 Compared with Three Months Ended September 30, 2022](index=33&type=section&id=Three%20Months%20Ended%20September%2030%2C%202023%20Compared%20with%20Three%20Months%20Ended%20September%2030%2C%202022) This subsection compares the company's financial results for the three-month periods, highlighting changes in revenue, gross profit, and operating expenses - Net revenue decreased by **9%** to **$10.9 million**, primarily due to lower U.S. laser system sales impacted by the macro-economic environment and reduced product training revenue, partially offset by increased consumables sales[191](index=191&type=chunk) - Gross profit increased by **53%** to **$3.7 million**, with gross margin improving by **14 percentage points** to **34%**, driven by improved supply chain, lower inventory charges, and a favorable mix towards higher-margin consumables[192](index=192&type=chunk) - Total operating expenses decreased by **26.3%** to **$7.4 million**, mainly due to reductions in sales and marketing (**32% decrease**), general and administrative (**14% decrease**), and engineering and development (**31% decrease**) expenses, reflecting cost-saving initiatives[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Net loss improved to **$(4.6) million** from **$(8.4) million** in the prior year period[200](index=200&type=chunk) [Nine Months Ended September 30, 2023 Compared with Nine Months Ended September 30, 2022](index=35&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202023%20Compared%20with%20Nine%20Months%20Ended%20September%2030%2C%202022) This subsection compares the company's financial results for the nine-month periods, detailing trends in revenue, gross profit, and operating expenses - Net revenue increased by **4%** to **$35.7 million**, primarily driven by a **20% increase** in worldwide consumables and other revenue, partially offset by a decrease in product training revenue[202](index=202&type=chunk) - Gross profit increased by **7%** to **$13.2 million**, with gross margin improving by **1 percentage point** to **37%**, attributed to resolving supply chain issues, lower inventory charges, and a favorable mix from higher-margin consumables[203](index=203&type=chunk) - Total operating expenses decreased by **10.8%** to **$26.1 million**, reflecting lower sales and marketing (**7% decrease**), general and administrative (**15% decrease**), and engineering and development (**16% decrease**) expenses due to cost-saving initiatives[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) - Net loss improved to **$(15.3) million** from **$(18.8) million** in the prior year period[212](index=212&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, financing activities, and ongoing concerns about its ability to fund operations - Cash and cash equivalents increased to **$7.8 million** as of September 30, 2023, from **$4.2 million** at December 31, 2022, primarily due to **$15.7 million** in net proceeds from public offerings and warrant exercises[213](index=213&type=chunk) - The company's recurring losses and cash usage in operations continue to raise substantial doubt about its ability to continue as a going concern, necessitating additional capital or increased sales and expense control[215](index=215&type=chunk)[224](index=224&type=chunk) - Future liquidity needs depend on business growth, working capital demands, manufacturing capacity, and potential acquisitions, requiring the company to raise capital through equity or debt offerings[222](index=222&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective with no material changes in internal controls - The company's disclosure controls and procedures were effective as of September 30, 2023[239](index=239&type=chunk) - No material changes in internal control over financial reporting occurred during the period[240](index=240&type=chunk) PART II. OTHER INFORMATION This section includes legal proceedings, updated risk factors, and other required disclosures for the reporting period [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the legal proceedings information from the company's 2022 Form 10-K [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors, emphasizing the substantial doubt about the company's ability to continue as a going concern and redemption obligations - The company received a deficiency letter from Nasdaq regarding its common stock bid price falling below the **$1.00** minimum requirement, but subsequently regained compliance after a **one-for-one hundred reverse stock split** effective July 27, 2023[244](index=244&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) - Recurring losses and negative cash flow from operations raise substantial doubt about the company's ability to continue as a going concern, requiring additional capital or increased sales and expense reduction[249](index=249&type=chunk)[251](index=251&type=chunk) - The company has an accumulated deficit of **$311.5 million** as of September 30, 2023, and has experienced net losses for the past three years and the current nine-month period[253](index=253&type=chunk) - The company's ability to meet redemption obligations for Series J and Series H Preferred Stock (due September 2024 and May 2025, respectively) depends on earnings and cash flows, with no assurance of sufficient funds[255](index=255&type=chunk)[256](index=256&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section states that there were no unregistered sales of equity securities, use of proceeds, or issuer purchases during the period [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various amendments and certifications

BIOLASE, Inc. (NASDAQ:BIOL) Q2 2023 Earnings Conference Call August 10, 2023 4:30 PM ET John Beaver - President & Chief Executive Officer Bruce Jackson - Benchmark Company I would now like to turn the conference over to Todd Kehrli of EVC Group. You may begin. Todd Kehrli - EVC Group Conference Call Participants Operator Todd Kehrli Before we begin, I'd like to remind everyone that a number of forward-looking statements, which are any statements that are not historical facts will be made during this present ...

6 BIOLASE, Inc. ("BIOLASE" and, together with its consolidated subsidiaries, the "Company") is a leading provider of advanced laser systems for the dental industry. The Company develops, manufactures, markets, and sells laser systems that provide significant benefits for dental practitioners and their patients. The Company's proprietary systems allow dentists, periodontists, endodontists, pediatric dentists, oral surgeons, and other dental specialists to perform a broad range of minimally invasive dental pr ...

Financial Data and Key Metrics Changes - The company reported net revenue of $10.5 million for Q1 2023, representing a 3% year-over-year growth, marking the ninth consecutive quarter of year-over-year growth [9][83] - GAAP net loss for the quarter was $5.8 million, compared to a net loss of $4.8 million in Q1 2022, while adjusted EBITDA loss was $4.4 million compared to $3.9 million in the same period last year [66][90] - Gross margin decreased to 32% from 49% a year ago, primarily due to supply chain issues and a higher percentage of revenue generated outside the US [90] Business Line Data and Key Metrics Changes - International laser sales increased by 22% year-over-year, indicating a return of international revenue growth [3][65] - Record consumable sales were reported, with US consumable sales up 19% year-over-year, driven by increased procedures using BIOLASE laser systems [3][9] - The success rate of the Waterlase exclusive trial program increased over 20% year-over-year to over 60% [32][87] Market Data and Key Metrics Changes - 58% of US Waterlase sales came from new customers, with approximately 33% of sales coming from dental specialists [65] - The company holds approximately 60% share of the worldwide all-tissue dental laser market [60] - The number of Marketing Qualified Leads (MQLs) increased by 400% to over 4,000 in the US in 2022, with a continued increase of nearly 50% in Q1 2023 [5][26] Company Strategy and Development Direction - The company aims to increase awareness of dental lasers among the majority of the market that is not currently using them, focusing on education and training to drive growth [4][27] - A three-pronged strategy is in place to increase market adoption, targeting dental specialists, corporate dentists, and universities [28][30] - The company plans to leverage its brand and grow the overall market by engaging with the remaining 90% of dentists [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year revenue growth of at least 25% and positive adjusted EBITDA for 2023 [84][92] - The company expects to see improved gross margins due to in-house production of trunk fiber, which is projected to account for approximately 50% of requirements [91][92] - Management noted that while the economic environment is challenging, the sales cycle has not significantly impacted overall sales [46][49] Other Important Information - The company completed an acquisition of a trunk fiber supplier, which is expected to reduce backlog and overall costs [10] - A new training facility has been opened to enhance education and training efforts, which is expected to drive revenue and laser adoption [63][102] Q&A Session Summary Question: How have supply chain constraints impacted the company? - Management acknowledged supply chain issues but noted that transitioning to in-house fiber production is expected to alleviate these constraints [18][19] Question: What is the outlook for gross margins moving forward? - Management indicated that in-house production will reduce costs and improve quality, leading to better gross margins in the future [74][90] Question: How many WETP events will be held in-house versus on the road? - The company plans to host about 35 WETP events this year, with some being held at the new training facility [102][103] Question: What is the current backlog situation? - Management stated that there is minimal backlog currently, with shipping on schedule [106][107]

Not applicable. ITEM 4. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Our management has evaluated, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our President and Chief Executive Officer and Chief Financial Officer have conclu ...

Financial Data and Key Metrics Changes - Total revenue for 2022 was $48.5 million, representing a 24% increase year-over-year [7][37] - U.S. laser sales increased by 39% year-over-year to $20.4 million, while U.S. consumables sales increased by 25% to $7.5 million [37] - Adjusted EBITDA loss for 2022 was $20.1 million, compared to a loss of $14.7 million in 2021 [40] - GAAP net loss for 2022 was $28.6 million, compared to a net loss of $16.2 million in 2021 [57] Business Line Data and Key Metrics Changes - The success rate of the Waterlase exclusive trial program improved to nearly 50% in 2022, with expectations to reach 60% in 2023 [22][74] - 84% of U.S. Waterlase sales in 2022 came from new customers, with 47% from dental specialists [55] - Record-breaking consumable sales in 2022 were driven by an increase in procedures using BIOLASE lasers [37] Market Data and Key Metrics Changes - Less than 10% of dentists in the U.S. and less than 2% outside the U.S. currently use dental lasers, indicating significant market growth potential [9] - The number of marketing qualified leads (MQLs) in the U.S. increased by 400% compared to 2018, growing from less than 1,000 to 4,000 in 2022 [10] Company Strategy and Development Direction - The company plans to combine specialist academies into two academies for its product families, aiming to enhance education and training [26] - A focus on increasing education and training for dental specialists is expected to drive higher demand for BIOLASE products [13] - The company aims to leverage its brand to engage with the remaining 90% of dentists who do not currently use dental lasers [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving at least 25% revenue growth in 2023, despite a slower start [43][86] - The recent banking environment has created uncertainty, but management believes it will be short-lived [61] - The company expects to achieve positive adjusted EBITDA for the full year 2023 [43][60] Other Important Information - The gross margin for 2022 was 33%, down from 42% in the previous year, primarily due to supply chain issues [38] - The company completed an acquisition of a trunk fiber supplier, which is expected to reduce costs and improve cash flow [56][59] Q&A Session Summary Question: What is the expected gross margin progression for 2023? - Management expects to approach 50% gross margins by the fourth quarter of next year, with improvements from in-house production and reduced training costs [62] Question: Can you provide more details on the growth guidance and revenue split? - Management anticipates gradual revenue growth in Q2 and Q3, with a similar revenue split among systems, services, and consumables [48][65] Question: How is the Heartland study progressing? - The trial with Heartland showed positive results, with lasers being paid off in four to seven months through additional procedures [63][82] Question: Have there been any financing issues due to recent banking events? - There has been no significant pullback in financing for dentists, although market sentiment has affected some sales [66][104] Question: What is the reception of the new fractional handpiece? - The reception has been positive, with many inquiries from dentists, and it is expected to provide a recurring revenue stream [99]