ProSomnus(US:OSA)2024-05-20 20:35Financial Performance - The company generated revenue of $7.5 million and a net income of $3.4 million for the three months ended March 31, 2024, compared to revenue of $5.8 million and a net loss of $6.9 million for the same period in 2023[166]. - Revenue for the three months ended March 31, 2024, was $7.458 million, an increase of $1.650 million or 28.4% compared to $5.808 million for the same period in 2023[188]. - The Company recorded a net income of $3.441 million for the three months ended March 31, 2024, compared to a net loss of $6.892 million for the same period in 2023, representing a change of $10.333 million or 149.9%[188]. - The company reported a net income of $3.4 million for the three months ended March 31, 2024, compared to a net loss of $6.9 million in the same period of 2023[197][198]. Restructuring and Capital - The company initiated a voluntary restructuring process under Chapter 11 on May 7, 2024, to secure approximately $20 million of new capital for ongoing operations and strategic initiatives[157]. - The restructuring plan includes $11 million from a debtor-in-possession credit facility and a potential $9 million new-money equity capital raise[159]. - The Company expects to enter into a DIP Credit Agreement for a senior subordinate secured debtor-in-possession term loan facility of $13 million, subject to Court approval[174]. - The interest rate on borrowings under the DIP Credit Agreement will be the prime rate plus 9.00%, with borrowings due on November 7, 2024[175]. Operational Efficiency - The company expects to maintain normal business operations during the restructuring process, including fulfilling customer and vendor obligations[158]. - For the three months ended March 31, 2024, net cash used in operating activities was $2.5 million, a decrease from $3.1 million in the same period of 2023, reflecting improved operational efficiency[197][198]. - The net cash used in investing activities was $0.03 million for the three months ended March 31, 2024, compared to $1.0 million in 2023, indicating a significant reduction in capital expenditures[200]. - Net cash used in financing activities remained consistent at $0.3 million for both periods, primarily due to principal payments under finance lease and equipment financing obligations[201]. Expenses and Costs - Total cost of revenue increased by $1.1 million or 39.1% to $3.833 million for the three months ended March 31, 2024, primarily due to higher sales volume and increased material costs[190]. - Sales and marketing expenses decreased by $0.8 million or 30.0% to $1.976 million for the three months ended March 31, 2024, compared to $2.824 million for the same period in 2023[190]. - General and administrative expenses decreased by $0.9 million or 25.9% to $2.485 million for the three months ended March 31, 2024, compared to $3.353 million for the same period in 2023[191]. - Research and development expenses decreased by $0.1 million or 6.3% to $0.955 million for the three months ended March 31, 2024, compared to $1.019 million for the same period in 2023[193]. Other Financial Metrics - The accumulated deficit as of March 31, 2024, was $231.5 million[166]. - Total other income increased by $8.0 million or 290.4% to $5.232 million for the three months ended March 31, 2024, compared to a total other expense of $2.748 million for the same period in 2023[193]. - The company had unrestricted cash of $3.5 million as of March 31, 2024, with no material exposure to changes in fair value due to interest rate fluctuations[212]. - The Subordinated Convertible Notes bear a variable interest rate at Prime Rate plus an additional 9% per annum, indicating potential increases in interest expense as rates rise[212]. - The company anticipates ongoing operating losses and negative cash flows from operations to continue for the foreseeable future, dependent on successfully exiting Chapter 11 restructuring[195]. Compliance and Reporting - The company was notified by Nasdaq of noncompliance with listing requirements, leading to the suspension of trading of its common stock on April 18, 2024[160]. - There were no changes in internal controls over financial reporting that materially affected the company's financial reporting during the quarter ended March 31, 2024[217]. - Non-cash adjustments for the three months ended March 31, 2024, included $4.8 million, primarily driven by changes in fair value of earn-out liability and non-cash interest expense[197]. Market and Product Information - The company has 36 direct sales representatives focusing on sleep medicine providers in the U.S., Canada, and Europe[166]. - ProSomnus precision intraoral devices have been prescribed for over 250,000 patients since their commercial availability in August 2014[162]. - The average reimbursement for intraoral appliance therapy ranges from approximately $2,000 to $3,500 per patient by private insurance and $1,250 to $1,800 by Medicare[165].