ProSomnus(OSA) - 2023 Q3 - Quarterly Report

Financial Performance - Revenue for Q3 2023 was $7.1 million, a 42% increase from $5.0 million in Q3 2022, while the net loss widened to $11.2 million from $3.5 million[144]. - For the nine months ended September 30, 2023, revenue reached $19.8 million, up 45% from $13.6 million in the same period of 2022, with a net loss of $17.2 million compared to $9.4 million[144]. - Revenue for the three months ended September 30, 2023, was $7.1 million, a 41.5% increase from $5.0 million in the same period in 2022[159]. - Revenue for the nine months ended September 30, 2023, was $19.8 million, a 45.7% increase from $13.6 million in the same period in 2022[165]. - Net loss for the three months ended September 30, 2023, was $11.2 million, a 216.7% increase from a net loss of $3.5 million in the same period in 2022[161]. - Total operating expenses for the nine months ended September 30, 2023, were $24.4 million, a 93.9% increase from $12.6 million in the same period in 2022[164]. Cash Flow and Financial Position - Cash and cash equivalents were $12.0 million at September 30, 2023, which may not be sufficient for continued operations for at least one year[170]. - The company expects to continue incurring operating losses and negative cash flows from operations for the foreseeable future[168]. - For the nine months ended September 30, 2023, net cash used in operating activities was $10.3 million, an increase from $4.8 million in the same period last year, primarily due to higher operating expenses[174]. - Net cash used in investing activities for the same period was $1.9 million, up from $0.3 million, entirely related to purchases of property and equipment[175]. - Net cash provided by financing activities amounted to $8.3 million, compared to $5.8 million in the prior period, driven by a Financing Transaction that generated cash proceeds of $9.5 million[176]. - As of September 30, 2023, total recorded contractual obligations were $48.7 million, with senior and subordinated convertible notes accounting for $35.9 million[177]. - Cash and cash equivalents as of September 30, 2023, totaled $12.0 million, with no material exposure to changes in fair value due to interest rate fluctuations[184]. Expenses and Cost Management - Sales and marketing expenses increased by $0.9 million, or 39.7%, for the three months ended September 30, 2023, primarily due to personnel expenses and travel[160]. - Research and development expenses rose by $0.4 million, or 51.1%, for the three months ended September 30, 2023, driven by increased headcount-related costs[162]. - General and administrative expenses increased by $1.8 million, or 117.3%, for the three months ended September 30, 2023, mainly due to professional services and legal fees[162]. - The company maintains a focus on research and development, expecting to increase expenses as new products and services are developed[156]. Strategic Initiatives - ProSomnus aims to expand its North American direct sales organization and enter international markets, focusing on dentists and physicians in sleep medicine[151]. - The company plans to extend its product line to capture a larger share of treatments for OSA and related conditions, utilizing its unique manufacturing platform[152]. - ProSomnus received FDA clearance for an intraoral device enabling remote patient monitoring services, which could create a recurring revenue stream[153]. Market and Reimbursement - The reimbursement rates for intraoral appliance therapy range from $2,000 to $3,500 per patient from private insurance and $1,250 to $1,800 from Medicare[143]. Debt and Interest Rates - The Subordinated Convertible Notes bear a variable interest rate at Prime Rate plus an additional 9% per annum, leading to increased interest expenses as rates rise[186]. - As of September 30, 2023, the accumulated deficit stood at $228.0 million[144]. - The company has no off-balance sheet arrangements that could materially affect its financial condition or results of operations as of September 30, 2023[177]. Inflation Impact - Inflation has increased costs related to labor and research and development, but it has not materially affected the company's results of operations[187].