Core Insights - Vivos Therapeutics has announced a significant study published in the European Journal of Pediatrics, demonstrating the safety and efficacy of its Daytime-Nighttime Appliance (DNA) for treating obstructive sleep apnea (OSA) in children [1][2] - The study indicates that 79% of participants showed improvement in OSA symptoms, with 61.7% improving by 50% or more, and 17% experiencing complete resolution of their OSA [3] - The findings support Vivos' FDA 510(k) clearance for the DNA device, reinforcing its position as a non-surgical alternative to traditional adenotonsillectomy surgery [2][7] Company Overview - Vivos Therapeutics, Inc. is focused on developing non-invasive treatments for OSA, with its DNA device being a key product cleared for use in children aged 6 to 17 [9][12] - The company aims to address the significant number of undiagnosed OSA cases among children, estimated at 10 million in the U.S., with many linked to various health issues [5][10] - Vivos is actively pursuing collaborations and acquisitions to expand access to its treatments, including the recent acquisition of the Sleep Center of Nevada [9][11] Industry Context - The current standard treatment for pediatric OSA is adenotonsillectomy, with over 500,000 surgeries performed annually in the U.S., but with a high relapse rate of 68% within three years [6][7] - The study highlights the need for safer, evidence-based alternatives to invasive procedures, aligning with recent reports warning against overtreatment in pediatric healthcare [7][8] - Vivos' approach offers a non-invasive solution that promotes natural jaw development, potentially reducing the need for costly and traumatic surgeries [7][8]

Core Insights - Vivos Therapeutics has completed the acquisition of The Sleep Center of Nevada (SCN), enhancing its diagnostic revenue and expanding its treatment options for obstructive sleep apnea (OSA) patients in the Las Vegas area [1][2] - The acquisition marks a strategic pivot in Vivos' business model, shifting focus from dental providers to collaborations with medical sleep practices, allowing for immediate revenue capture from OSA diagnostics and consultations [3][6] - Vivos has secured over $11 million in financing, including a senior secured loan and an equity private placement, to support the integration of SCN and future growth initiatives [9][11] Acquisition Details - The SCN transaction is Vivos' first major acquisition of a sleep testing center, expected to generate higher-margin revenue from both diagnostics and sales of Vivos' OSA treatment devices [2][5] - SCN serves approximately 3,000 new patients monthly and has generated annual net revenues in the high seven-figure range, making it the largest sleep testing center in Nevada [5][6] - Vivos will manage SCN's operations and capture diagnostic and consulting revenues, with plans to expand treatment offerings across additional SCN locations over the next 12 to 18 months [7][11] Financial Aspects - The acquisition involved a cash payment of $6 million and $1.5 million in Vivos common stock, with potential future stock payments based on financial milestones [8] - Vivos financed the acquisition through an $8.225 million senior secured loan, which includes a $675,000 original issuance discount, and an additional $3.755 million equity investment from New Seneca Partners [9][10] - The financing will provide essential cash resources for Vivos to integrate SCN and pursue further growth opportunities [11] Strategic Outlook - Vivos is actively seeking additional collaborations or acquisitions to further expand its business in 2025 and beyond [4] - The company anticipates significant benefits from the SCN acquisition, including reduced cash burn and a move towards cash flow positivity as patient volumes increase [12]

Financial Data and Key Metrics Changes - The company achieved $317 million in revenue for Q1 2025, reflecting a 9% increase on a constant currency basis and a 10% increase on an organic basis compared to the prior year [29][30] - Adjusted operating income rose to $65 million, up from $53 million in Q1 2024, resulting in an adjusted operating income margin of 20% compared to 18% in the prior year [31][32] - Adjusted diluted earnings per share increased to $0.88 from $0.73 in Q1 2024, driven by operating income growth despite a higher effective tax rate [32] Business Line Data and Key Metrics Changes - Cardiopulmonary segment revenue was $176 million, a 15% increase year-over-year, with heart-lung machine revenue growing approximately 30% [12][13] - Epilepsy revenue increased by 4%, with Europe and the rest of the world regions growing a combined 13% [15][17] - The company expects cardiopulmonary revenue to grow 9% to 10% for the full year 2025, up from a previous forecast of 7% to 8% [13][14] Market Data and Key Metrics Changes - The U.S. Epilepsy business experienced a 2% growth year-over-year, impacted by procedure deferrals due to a voluntary field safety notification [16][17] - The company anticipates low single-digit growth in the U.S. for epilepsy, while Europe and the rest of the world are expected to grow in the low double digits [17][19] Company Strategy and Development Direction - The company is focused on expanding its portfolio in areas of high unmet clinical need, particularly in neuromodulation and OSA [52][43] - The recent twelve-month data from the OSREY trial positions OSA as a significant long-term growth opportunity [8][43] - The company is investing in additional manufacturing capacity to support growth in cardiopulmonary and neuromodulation segments [14][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage tariff impacts, estimating a negligible effect on adjusted operating income for the year [39][75] - The Italian Supreme Court's decision regarding the SNEA matter is seen as a positive development, allowing for greater capital allocation flexibility [36][43] - The company raised its overall organic growth outlook by 100 basis points to between 7% and 8% for 2025, reflecting strong first-quarter performance [19][40] Other Important Information - The company recorded a liability of $360 million related to the SNEA litigation, which is expected to retire a long-standing overhang [9][35] - Adjusted free cash flow for the quarter was $20 million, up from $11 million in the prior year, driven by stronger operating results [33][37] Q&A Session Summary Question: Can you help us understand the OSSPREY data in a competitive context? - Management highlighted the strength of the clinical data, noting that the trial included more severe patients and achieved a rapid therapeutic response [47][48] Question: What is the outlook for the HLM business and Essence rollout? - Management indicated strong demand for oxygenators and a significant increase in Essence placements, with regulatory approval in China being a major milestone [54][56] Question: Can you elaborate on the changes in the OUS Neuromodulation business? - Management noted improved commercial execution in Europe, with a focus on strengthening talent and customer segmentation [64][66] Question: What is the impact of tariffs on the company's guidance? - Management confirmed that the $5 million tariff impact is included in the guidance, with some pricing actions assumed to offset costs [70][75] Question: How does the company view its leverage ratio and capital allocation? - Management expressed confidence in a healthy leverage ratio and indicated a focus on investing in core businesses while remaining open to inorganic growth opportunities [88][89]