Vivos Therapeutics Inc Stock

Good day, everyone, and welcome to the Vivos Therapeutics Second Quarter 2026 Conference Call. [Operator Instructions] This conference call is being recorded, and a replay of today's call will be available on the Investor Relations section of Vivos website and will remain posted there for the next 30 days.

I would now like to hand the conference over to Brad Amman, Principal Accounting Officer and former CFO for introductions and the reading of the safe harbor statement. Please go ahead.

Thank you, Ludy. Hello, everyone, and welcome to our conference call. A copy of our earnings press release is available on the Investor Relations section of our website at www.vivos.com.

With me on the call today is Kirk Huntsman, Vivos' Chairman and Chief Executive Officer; and Roman Franklin, Vivos' Chief Financial Officer and Principal Financial Officer. Today, we will review the financial results of the second quarter of 2026 as well as more recent developments and Vivos' plans for the rest of the year 2026 and beyond. Following these formal remarks, we will be happy to take questions.

I would also like to remind everyone that today's call will contain certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended, concerning future events.

Words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties and contingencies, many of which are beyond the company's control.

Actual results, including, without limitation, the results of Vivos' growth strategies, operational plans, including sales, marketing, distribution, medical sleep provider, acquisition and integration, research and development, regulatory initiatives, cost savings plans and plans to generate revenue as well as future potential results of operations or operating metrics such as the potential for Vivos to achieve future positive cash flows or profitability and other matters to be addressed by Vivos' management in this conference call may differ materially and adversely from those expressed or implied by such forward-looking statements.

Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described in other disclosures contained in Vivos' filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31, 2025, and our other filings with the SEC including our second quarter 10-Q filed with the SEC today, all of which are, or will be accessible on the Investor Relations section of the Vivos website as well as the SEC's website. Except to the extent required by law, Vivos assumes no obligation to update statements as circumstances change.

Finally, please be aware that the U.S. Food and Drug Administration has given certain specific Vivos appliances 510(k) clearance to treat mild to severe OSA in adults. With the FDA clearance of certain Vivos products for severe OSA in November of 2023, treatment of patients with severe OSA with these specific appliances is no longer needed to be performed off-label at the clinical discretion of the treating doctor and is now an integral part of the Vivos treatment protocol. Treatment of OSA of any severity or any other condition with any other of Vivos FDA-cleared devices remains at the clinical discretion of the treating doctor.

For further information on our results for the 3-month period ended June 30, 2026, please see our earnings release, which was distributed earlier today and our quarterly report on Form 10-Q, which is available on the SEC filings portion of the Investor Relations section of our website.

In the second quarter of 2026, Vivos completed its fourth full quarter of activity followed by our June 30 -- following our June 10 acquisition of -- in 2025 of the Sleep Center of Nevada, demonstrating that the pivot in our sales, marketing and distribution model has taken hold. Revenue increased by approximately $1.3 million or 35% to $5.2 million for the 3 months ended June 30, 2026, compared to $3.8 million for the 3 months ended June 30, 2025. The increase in total revenue during the second quarter of 2026 was impacted by an increase of $1.9 million in service revenue and a decrease of $0.5 million in product revenue to our VIPs. The increase in product revenue is attributable to a decrease in appliance sales of $1.1 million as a result of our strategic pivot away from VIPs to sleep centers, which is reported as treatment revenue under service revenue offset by a decrease of $0.5 million in discounts offered. The increase in service revenue is attributable to $1.5 million in sleep testing services, primarily generated from SCN and an increase of $800,000 in revenue generated from Vivos treatment to patients launched at 2 SCN locations, offset by a decrease of $100,000 in VIP enrollment revenue and $100,000 from sponsorship, seminar and other service revenue.

For the 6 months ended June 30, revenue increased by $3.5 million or 51% to $10.3 million compared to $6.8 million for the 6 months ended last year. The increase in total revenue during the period was impacted by an increase of $4.4 million in service revenue and a decrease of $900,000 in product revenue. The decrease in product revenue is attributable to a decrease in appliance sales to VIPs of $2.1 million, again, due to our strategic pivot, offset by a decrease of $200,000 in discounts offered. The increase in service revenue is attributable to $3.5 million of sleep testing services, primarily generated from SCN and an increase of $1.4 million of revenue generated from Vivos treatment to patients launched it to SCN locations, offset by a decrease of $300,000 in VIP enrollment revenue.

For the 3 months ended June 30, 2026, we sold 5,180 oral appliance arches for a total of approximately $1.4 million, a 28% decrease in revenue from the 3 months ended June 30, 2025. We when we sold 4,116 oral appliance arches for a total of $1.9 million. The decrease is directly attributable to a higher volume mix of preformed appliance sales, which are lower revenue-generating products when compared to Vivos care appliances.

For the 6 months ended June 30, 2026, we sold 10,484 oral appliance arches for a total of $2.8 million, a 24% decrease in revenue from the 6 months ended June 30 with last year when we sold 7,852 arches for a total of $3.7 million. The decrease is directly attributable to higher volume mix of the preformed appliance sales, which are lower revenue-generating products compared to our care devices, as I mentioned earlier.

Cost of sales increased $0.5 million or 29% to $2.2 million for the 3 months ended June 30 compared to $1.7 million for the same period in 2025. This was primarily attributable to higher costs associated with diagnostic services and patient therapy, including the addition of staff at the Vivos treatment centers.

For the 6 months ended June 30, 2026, cost of sales increased $1.1 million or 33% to $4.3 million compared to $3.2 million for the 6 months ended June 30, 2025. This was primarily related to the higher costs associated with diagnostic services, patient therapy, including additional staff at the Vivos treatment centers.

For the 3 months ended June 30, 2026, gross profit increased by $800,000 to $3 million. This increase was attributable to the increase in revenue of $1.3 million and an increase of cost of sales of $0.5 million. Gross margin increased to 57% for the 3 months ended June 30, 2026 compared to for the 3 months ended June 30, 2025, due to the increase in both revenue and cost of sales.

For the 6 months ended June 30, 2026, gross profit increased by $2.4 million to $6 million. This increase was attributable to the increase in revenue of $3.5 million and an increase in cost of sales of $1.1 million. Gross margin increased to 58% for the 6 months ended June 30 of this year compared to 53% for the 6 months ended last year due to the increase in revenue and smaller increase in cost of sales.

General and administrative expenses increased $700,000 or 11% to approximately $7.1 million through the 3 months ended June 30, 2026, as compared to $6.4 million for the 3 months ended June 30, 2025. The primary cause of this increase was $600,000 in salary and wages related to the acquisition of SCN and the opening of Vivos treatment centers and $300,000 in higher rent expense, offset by a reduction of $200,000 in bad debt and allowances.

For the 6 months ended this year, general and administrative expenses increased $4.8 million or 42% to $6.1 million as compared to $11.3 million for the 6 months ended last year. The primary driver of this increase related to the costs associated with acquiring and integrating SCN and establishing the Vivos treatment centers, including an increase in salaries and related compensation of $3 million for additional -- hiring additional staff and an increase of $900,000 for professional fees and an increase in rent of $600,000 and other costs of $300,000.

Sales and marketing expenses decreased $100,000 to $200,000 for the 3 months ended June 30 of this year compared to $300,000 for the 3 months ended June 30, 2025. This is attributable and significant part to our focus on reducing costs.

Sales and marketing expense decreased $200,000 to $400,000 for the 6 months ended June 30, 2026, compared to $600,000 for the 6 months ended June 30, 2025. This decrease was primarily driven by our decrease in sales and marketing campaigns, lower commissions paid to our employees, digital media services and reduction in use of marketing supplies due to our pivot.

Depreciation and amortization expense increased $200,000 for the 3 months ended June 30, 2026, and depreciation and amortization expense increased $0.5 million to $1 million for the 6 months ended June 30, 2026. Depreciation and amortization increased due to assets being placed into service during the period.

Other expense increased $900,000 for the quarter and $2 million year-to-date due to additional interest expense on a note during the 3 and 6 months ended June 30, 2026. This was offset by an increase in other income of $300,000 during the 3 and 6 months ended June 30, 2026 related to the valuation change in an earn-out related to the acquisition of SCN.

The financial statements have been prepared in conformity with GAAP, which contemplate a continuation of the company as a going concern. We have incurred losses since inception, including $5.5 million and $5 million for the 3 months ended June 30, 2026 and 2025, respectively, and $13.3 million and $8.9 million for the 6 months ended June 30, 2026 and 2025, respectively, resulting in an accumulated deficit of $138 million as of June 30, 2026.

Net cash used in operating activities amounted to approximately $9.2 million and $7.3 million for the 6 months ended June 30, 2026 and 2025, respectively.

As of June 30, 2026, we had total liabilities of approximately $28.1 million.

As of June 30, 2026, we had approximately $1.8 million in cash and cash equivalents, which will not be sufficient to fund operations and strategic objectives over the next 12 months from the date of issuance of these financial statements. Without additional financing, these factors raise substantial doubt regarding the company's ability to continue as a going concern.

We have implemented cost savings measures in our legacy business that have reduced cash in operations. During the first 6 months of 2025, many onetime costs related to the acquisition of SCN were recognized and were not reoccurring in 2026. As such, we have funded our operations through equity raises in the period ending June 30, 2026 and fiscal year ended December 31, 2025. We were required to obtain additional financing to satisfy our cash needs, including funding the SCN acquisition and increasing our stockholders' equity for NASDAQ compliance purposes as we seek to increase revenue with a view toward ultimately achieving positive cash flow from operations.

During the 6 months ended June 30, 2026, the company sold an aggregate of 694,564 ATM shares at an average price of $0.69 per share through the ATM sales agreement, resulting in proceeds of approximately $0.5 million net of commissions. Under the ATM offering, $2.3 million remain available for future sales as of June 30, 2026. However, the company is not obligated to make any sales under this program.

Given that our stockholders' equity at December 31, 2025 and June 30, 2026, was less than $2.5 million. We are presently not in compliance with NASDAQ Stock Market minimum stockholders' equity requirement. We are seeking to regain compliance by raising new funding in the form of equity and reducing our costs. However, we will be faced with delisting proceedings which will distract management and cost resources to remedy if we don't get remedy the $2.5 million stockholder equity requirement.

In summary, we're seeing significant increases in revenue, reflecting the acquisition of SCN, which has now contributed a full year of operations to our results and partnerships with 2 additional groups as well as related treatment revenue from providing patients with OSA treatment options, all of which is extremely encouraging. We are also seeing higher costs associated with diagnostic services and patient therapy, including addition of staff at the Vivos treatment centers. We believe the strategic move to acquire SCN to establish other affiliate alliances sets the stage for stronger performance in the upcoming quarters. For more detailed information, I refer you to our earnings release and our in our full Form 10-Q filed earlier today.

And with that, I'll hand the call over to our Chairman and CEO, Kirk Huntsman, to discuss the progress we have made to date on SCN and Vivos.

Thanks, Brad. Good afternoon, everyone, and thank you for joining us. I'd like to thank Brad Amman in particular, today for his time here at Vivos and his service at this company over the course of less 6 or 7 years. Brad, has been a key part of our management team and we're going to miss him.

I want to spend a few minutes, if I may, today, talking about the operational progress we're making within Sleep Centers of Nevada, something we refer to as SCN and also discuss several related strategic initiatives, because I think it's important for you to understand how these pieces fit together and what they could mean for Vivos over time.

When we first acquired SCN a little over a year ago, we saw an opportunity that went far beyond adding another source of revenue. We saw the potential to build a broader clinical platform around a growing patient population to provide more services to those patients, to add recurring sources of revenue, expand our capacity and when clinically appropriate, create additional pathways into the Vivos care model. In the second quarter, we saw that strategy beginning to take shape. As SCN patient volume continues to grow, we have seen more opportunities to generate revenue both within SCN itself, where most of the diagnostic services are rendered and also at our strategically located sleep and airway medicine centers, what we typically refer to as our SAMC centers where most of the actual treatment takes place.

That connection is important. At SCN, medical doctors and nurse practitioners conduct a variety of diagnostic tests and patient consultations and then refer patients out for treatment where medically necessary. At SAMC, SCN and other independent physician-referred patients with sleep and breathing disorders are provided a full and complete range of treatment options, from CPAP to lasers to oral appliances and other adjunctive treatments, including Vivos' proprietary rehabilitation and restorative care devices cleared by the FDA to treat all levels of obstructive sleep apnea severity, including severe OSA.

Thus, SCN is far more than just a business that simply sits next to Vivos and SAMC. To ensure optimal clinical outcomes for patients, these 2 independent groups must fully communicate and support one another. This synergy closes a significant gap in traditional care models throughout sleep medicine today, where there is a significant patient fallout rate due to the roadblocks encountered by patients as they navigate multiple providers and services.

I would now like to discuss the clinical and service initiatives to enhance patient care and revenue growth here at Vivos. To further drive top line revenue growth over the course of the second quarter, Vivos management has launched or expanded several key initiatives across multiple markets. These initiatives include: One, one of the most important clinical issues that we're actively pursuing is remote patient monitoring of patients on CPAP. Based on the preliminary data currently available to us, we estimate an addressable population of approximately 16,000 existing CPAP patients from SCN's legacy CPAP patient population. Under our current eligibility and enrollment estimates based on industry standard adoption metrics obtained from our current -- our contract service providers, we estimate that approximately 5,000 to 7,500 of those patients could be candidates for enrollment over the next 6 to 12 months, subject to clinical appropriateness, patient consent, coverage and enrollment. Based on extensive discussions and negotiations with our service provider, we estimate net revenue per patient per night to come in at between $40 and $50 each. That gives us a sizable existing patient platform population from which to build a strong recurring revenue program. To be sure, we are still early in this process, and the pace of adoption will depend on enrollment, reimbursement, implementation and our ability to execute. But this is exactly the type of opportunity we want to develop within Sleep Centers of Nevada, a recurring revenue service built around a patient population that is already there.

Second, separately, we are targeting a phased launch of a wholly owned DME-based CPAP program in early fourth quarter of this year. Based on preliminary vendor discussions and our current planning assumptions, if the program reaches the level of scale we are contemplating, we estimate it could generate between 150 -- approximately $150,000 to $250,000 per month in contribution margin. Actual results will depend on successful implementation, patient volumes, reimbursement, vendor economics and operating execution. If we execute well, this has the potential to add yet another recurring revenue stream to our operations at Sleep Center of Nevada.

Third, we continue to execute and implement our insomnia/EEG testing and treatment program at Sleep Center of Nevada. Patient encounters, patient tests administered and revenue generated from this program are all growing rapidly, with plenty of upside opportunities remaining.

Fourth, we have also expanded and opened our new state-of-the-art Henderson, Nevada sleep testing and treatment facility, which has effectively more than doubled our production capacity there in Henderson to well over $10 million annually. That expansion gives both Sleep Center of Nevada and SAMC, additional capacity and infrastructure as patient volumes grow.

It's a practical but important piece of this strategy. If we are successful in generating more demand, we also have to be able to serve it. Henderson and its expansion -- expanded facility gives us additional room to do just that and to support more services as the platform continues to develop. Any treatment decision, of course, remains with the independent clinicians that work at these facilities. When clinically appropriate, their evaluations may include consideration of Vivos treatment options, consistent with its applicable indications.

So there are 2 potential benefits. EEG could grow as a stand-alone service within each of these SAMC centers and Sleep Center of Nevada, and that can create another clinically appropriate entry point into the broader Vivos care model as those patients begin to receive treatment.

Another initiative we discussed publicly is our contemplated collaboration and partnership opportunities with large cardiology groups in both Arizona and Florida. We continue to actively pursue those options and expect to finalize our negotiations with both groups in the near future. We expect each of those affiliations to add significantly to our current revenue streams being worked in Colorado, Nevada and Michigan.

Moreover, we expect to extend essentially the same operating model across additional affiliation opportunities that we are pursuing across the country. Based on the operating plan we previously announced, an initial fully staffed sleep optimization team could serve roughly 250 patients per month and under the assumptions underlying that plan, generate more than $6 million in annual revenue with contribution margins approaching 40% to 50% once fully developed.

We have previously -- Number 6, we have previously announced our successful launch of a pediatric OSA testing and treatment program across all current markets. Today, I'm pleased to announce significant progress in this program with hundreds of children now receiving treatment and experiencing life-changing effects therefrom. We believe this program is still in its early stages and that there is significant and material upside to enroll and service many more children as we continue to expand this program and successfully execute. Keep in mind that there is an estimated 10,000 -- excuse me, 10 million children across the United States who suffer from sleep and breathing disorders such as obstructive sleep apnea.

Seventh, finally, we continue to refine and fully develop our current opportunities at Sleep Center of Nevada. After considerable work with providers and staff, we are already experiencing a significant uptick in the total referral volume from SCN to SAMC. Just since the end of the second quarter, we have been seeing 3 to 4x as many patients being referred by SCN physicians and nurse practitioners over to SAMC for treatment. We expect to see production from these referrals begin to impact our financial results in the third quarter.

Of course, the realization of these opportunities remain subject to definitive agreements, regulatory requirements, staffing, payer contracting, facility readiness, staff execution and other operating prerequisites. However, our deep experience in operating multi-site professional practices across multiple states as well as our deep experience in Nevada with SCN gives us a clear competitive advantage as we move forward. Keep in mind that we are still early on in these initiatives, and these results are still evolving within our operating model. Actual performance will depend on successful implementation and execution.

But the opportunity is straightforward. The combined effect of these clinical and operational initiatives could be and is expected to be material and significant in the weeks, months and quarters ahead.

So as we step back and look broadly at these initiatives together and their cumulative effect on our business, I think the strategy for us to achieve positive cash flow and profitability becomes much clearer. More patients from physician referrals gives us more opportunities to provide enhanced and recurring services. More production capacity from our facilities expansion, our providers and our new collaboration affiliations allow us to serve more patients at higher service levels and more patient and provider relationships can create, and we expect will create additional clinically appropriate ways to introduce patients into the core Vivos business ecosystem.

That is the model we are building. Based on our current assumptions and subject to successful implementation and scaling, patient enrollment and conversion, reimbursement, vendor economics, available capacity and operating execution, we see a clear path for Vivos' growth initiatives to become cash flow positive near the end of 2026 or in early 2027, and generate significant positive EBITDA for the company in its fiscal 2027.

That potential does not depend on just 1 program working perfectly. It reflects the combined opportunity we see across patient volume growth, remote patient monitoring, CPAP services, expanded capacities, EEG and our collaborations with cardiology groups in both Florida and Arizona.

Now there's still a lot of work to do. We have to launch these programs well. We have to enroll the right patients. We have to manage reimbursement and capacities. We have to prove the economics as we go. But that's what this team is focused on. We intend to measure what works, invest beyond programs that perform and be disciplined about how we scale them.

And then that brings me back to what I think is most important about our reports here today. The infrastructure that we are building here at Vivos is designed to reinforce the core business, not simply operate alongside of it. We expect to see -- continue to see more patients with more capacity for generating revenue off of those patients with more recurring touch points and recurring revenue streams and more clinically appropriate pathways into treatment for those patients.

As we execute, we believe we can create a substantially stronger foundation for future growth across Vivos.

I'd like to close by saying that we continue to see a bright future for this company, irrespective of what's happened in -- to our stock price in the market, we still believe that this company has a tremendous future. We believe that our technology is -- continues to lead the world in terms of its ability to resolve the conditions of obstructive sleep apnea in both children and adults. And we continue to believe that opportunities to deploy this technology will continue to arise across various platforms. As we do that, this company will emerge as an industry leader, and we believe that it will continue to set the pace for the future of an entire industry of advanced sleep medicine.

And with that, I will close my remarks. Thank you for your time and attention today. And operator, we'll take a few questions from those who are in attendance today.

[Operator Instructions] And your first question comes from the line of Yi Chen with H.C. Wainright.

This is Katie on for Yi. Quick follow-up on the call. The release -- and you guys have described the cardiology partnership in Florida and Arizona as approaching finalization. What kind of capital does each 1 require? And if you can give us a target quarter that would be reasonable as we expect revenue to begin?

So we would expect that each of those will require CapEx of between $800,000 and $1 million. And we would see them beginning to generate revenue in the first part of -- the first quarter to second quarter of 2027.

Great. If I have time, a quick follow-up on the insomnia and EEG program. They're cited as a growth driver for kind of the first time. Are you able to define its currently quarterly revenue? And how is the reimbursement pathway working for those programs?

So let me address the reimbursement pathway. So far, so good with the reimbursements. We're seeing broad participation of insurance payers in the Nevada market, in particular, for the EEG testing services with average reimbursements running around $800 plus or minus. There's quite a broad range there of reimbursement levels. But we're seeing roughly $800 per patient on that score for just the testing. And then the actual treatments, we're just now beginning to refer to the patients that have been -- that have tested positive for insomnia via the EEG. We begin referring them in. We don't really have a beat yet on the level of reimbursements, but there's multiple ways in which those multiple different treatment options, including some of our appliances, our oral appliances and in particular, what we call our Vivos Vida appliance. So there are a number of ways that patients can be treated, traditional ways through CBTI and other traditional methods as well as some of the methods that we use with our oral appliances.

So I think it's a little early on the treatment reimbursement front, but it is definitely a big win on the reimbursement front. That's a pretty significant level of reimbursement for us as we think about the total volume of patients that could go in and we expect to be going into this evaluation and testing treatment program for insomnia.

And I'm showing no further questions at this time. I would like to hand it back to Kirk Huntsman for closing remarks.

Thank you, operator. In closing, I'd just like to say that we believe here at Vivos that we have -- we continue to see great progress in patient volumes and margin growth and actual revenue growth, we see things happening here that are just now beginning to emerge and should be -- we've always said that the third quarter of 2026 would probably be the time that we would start to see this show up in the financials. We're starting to see some good positive signs in Q2, but we see a lot greater opportunities for growth and development ahead in Q3 and as we round the corner going into 2027, which we expect to be a very, very good year for Vivos.

We recognize we have some headwinds with respect to sort of our NASDAQ standing and other things, but we are working closely with our investor groups and key constituents to ensure our viability and continuation as best we can on NASDAQ and to comply with all the regulatory requirements that we have before us.

So with that, I'll close out today. We appreciate everyone's support of this company. We continue to feel like we're making a difference in the world doing this, and we appreciate each one of you for your support for Vivos. Thank you very much, and have a great day.

And this concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

Good day, everyone, and welcome to the Vivos Therapeutics' First Quarter 2026 Conference Call. [Operator Instructions] This conference call is being recorded, and a replay of today's call will be available on the Investor Relations section of Vivos' website and will remain posted there for the next 30 days.

I will now hand the call over to Brad Amman, Chief Financial Officer, for introductions and the reading of the safe harbor statement. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to our conference call. A copy of our earnings release is available on the Investor Relations section of our website at www.vivos.com.

With me on the call today is Kirk Huntsman, Vivos' Chairman and Chief Executive Officer. Today, we'll review the financial results for the first quarter of 2026 as well as more recent developments and Vivos' plans for the rest of 2026 and beyond. Following these formal remarks, we'll be happy to take questions.

I would also like to remind everyone that today's call will contain certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended concerning future events.

Words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal and variations of such words and similar words regarding future events are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties and contingencies, many of which are beyond the company's control.

Actual results, including, without limitation, the results of Vivos' growth strategies, operational plans, including sales, marketing, distribution, medical sleep provider acquisition and integration, research and development, regulatory initiatives, cost savings plans and plans to generate revenue as well as future potential results of operations and operating metrics such as the potential for Vivos to achieve future positive cash flows or profitability and other matters to be addressed by Vivos management in this conference call may differ materially and adversely from those expressed or implied by such forward-looking statements.

Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described and other disclosures contained in Vivos' filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31, 2025, and our other filings with the SEC, including our first quarter -- our first quarter 10-Q filed with the SEC today, all of which are or will be accessible on the Investor Relations section of the Vivos website as well as the SEC's website. Except to the extent required by law, Vivos assumes no obligation to update statements as circumstances change.

Finally, please be aware that the U.S. Food and Drug Administration has given certain specific Vivos appliances, 510(k) clearance to treat mild-to-severe OSA. With the FDA clearance of certain Vivos products for severe OSA in November of '23, treatment of patients with severe OSA with these specific appliances is no longer needed to be performed off-label at the clinical discretion of the treating doctor and is now an integral part of the Vivos treatment protocol.

Vivos treatment of OSA of any severity or any other condition with any other of Vivos' FDA-cleared devices remains at the clinical discretion of the treating doctor. For further information on our results for the 3-month period ended March 31, 2026, please see our earnings release, which was distributed earlier today and our quarterly report on Form 10-Q, which is available on the SEC filings portion of the Investor Relations section of our website.

Now I'll turn to the review of our first quarter results. In the first quarter of 2026, Vivos completed its third full quarter of activity following our June 10, 2025 acquisition of the Sleep Center of Nevada or SCN, demonstrating that the pivot in our sales, marketing and distribution model has taken hold, notably with a very significant increase in revenues.

Revenue increased approximately $2.1 million or 70% to $5.1 million for the first quarter of 2026 compared to $3 million for the first quarter of 2025 and 34% over fourth quarter of 2025. This was due to an increase of approximately $2 million in sleep testing services and an increase of $900,000 of revenue generated from Vivos treatment of OSA patients launched at 2 SCN locations.

The increase in revenue during Q1 was offset by the decline in product revenue attributable to a decrease of approximately $900,000 in appliance sales to our legacy Vivos Integrated Provider, or VIP dentist customers, offset by an increase of $500,000 in tooth positioner sales to VIPs. Additionally, we had a decrease in service revenue of $200,000 in our VIP enrollment revenue due to our strategic pivot to acquire and partner with sleep centers.

An important note is that our 70% increase in year-over-year revenue occurred notwithstanding the decrease in our VIP enrollment revenue. In fact, there were no new VIP enrollments in Q1. All of this shows that we have weaned ourselves off of reliance on VIP enrollments as we have pivoted to our new revenue model.

During the first quarter of 2026, we sold 5,304 oral appliance arches and tooth positioners for a total of approximately $1.4 million, a 21% decrease in revenue from the same period in 2025 when we sold 3,735 oral appliance arches and tooth positioners for a total of $1.8 million.

The revenue decrease is directly attributable to $500,000 in discounts offered in the first quarter versus $200,000 of discounts offered during the same period in 2025, coupled with a product mix that included more lower-priced products.

Cost of sales increased by approximately $600,000 or 38% to $2.1 million for the first quarter 2026 compared to $1.5 million for the first quarter of 2025. This was primarily due to $700,000 in higher costs related to additional staff associated with SCN and our Detroit sleep center affiliation.

We are hopeful that our investments in integrating SCN into our business will continue to pay off going forward. For the first quarter of 2026, gross profit increased by $1.5 million or 103% to $3.1 million. This increase was attributable to an increase in revenue of $2.1 million, offset by an increase in cost of sales of $600,000.

Gross margin increased 10 percentage points to 60% for the first quarter of 2026 when compared to 50% for the same period in 2025. This reflects the higher-margin nature of our new business model.

General and administrative expenses increased $4.1 million to $9 million for the first quarter 2026 compared to $4.9 million for the prior year period. This increase was primarily due to $1.5 million in costs associated with running SCN's operations, which we did not have in first quarter of 2025.

In addition, we incurred $1.5 million in salaries and wages for Vivos treatment center personnel in Nevada and $900,000 in nonrecurring professional fees that we did not have in the first quarter of 2025. Depreciation and amortization expense was approximately $500,000 for the first quarter of 2026 compared to $200,000 for the prior year quarter. Depreciation and amortization increased due to an increase in depreciable assets related to the SCN asset acquisition and other affiliations.

Net cash used in operating activities amounted to approximately $6 million and $3.8 million for the 3 months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had total liabilities of approximately $26.3 million as compared with $26.7 million as of December 31, 2025. As of March 31, 2026, we had approximately $2.1 million in cash and cash equivalents. We have implemented cost savings measures that have reduced cash used in operations.

And while our revenue increased in the first months post SCN acquisition, our revenue did not grow enough to outpace our expenses due to dentist shortages and not being in network with payers as we continue to integrate SCN into our operations and refine and improve our product offerings and distribution strategies.

As such, we raised equity capital throughout 2025 and during first quarter 2026, including our ATM program. We will be required to obtain additional financings to satisfy our near- and longer-term cash needs and bolster our stockholders' equity for NASDAQ compliance purposes.

We believe our Q1 results show the work we've put in towards increasing revenue and reducing costs and moreover, that the prospect for future revenue growth is there. In addition to bolster our stockholders' equity, we are actively evaluating plans to restructure our senior debt to reduce our debt service obligations and reclassify some of the debt on our balance sheet as equity. Our main goal, of course, is to achieve cash flow positive operations in the foreseeable future.

So in summary, we're seeing significant increases in revenue, reflecting the acquisition of SCN in both diagnostic service as well as related revenue from providing OSA patients with treatment options, which is extremely encouraging. We are also seeing increased costs from hiring SCN personnel on the diagnostic side and additional hiring on the treatment side as these costs were nonexistent in the prior year quarter.

We believe the strategic move to acquire SCN and other potential affiliate alliances and acquisitions set the stage for stronger performance in coming quarters. For more detailed information, I refer you to our earnings release and our full Form 10-Q filed today.

And with that, I'll hand the call back over to our Chairman and CEO, Kirk Huntsman, to discuss the progress we have made to date on SCN and [indiscernible]. Kirk?

Thank you, Brad. Good afternoon, everyone, and thank you for joining us on today's conference call. It was just over a month ago that we reported our 2025 annual results. From that report, some investors became concerned that the drop in revenue during our fourth quarter 2025.

We explained that the primary contributing factors of decreased provider office days and insurance headwinds were both temporary and correctable and that we had already made the necessary corrective adjustments. Our core thesis behind our strategic pivot was still emerging, and we remain highly confident in our model and its potential.

So now we are extremely pleased to report that our confidence has been validated with a 34% revenue increase quarter-over-quarter and a 70% increase year-over-year in year-over-year revenue. Notably, our first quarter total completed patient appointments rose an impressive 72% from 2,438 in Q4 to 4,186 in Q1 of this year. Another key aspect of our treatment, myofunctional therapy visits have likewise risen by 43% during Q1, going from 337 visits in January to 481 in March.

Now I could go on to cite similar impressive KPIs related to the growth in total laser treatments, frenectomies, diagnostic procedures and other clinical procedures from our Nevada operations. But the simple truth is our strategic model pivot is taking hold and the prospects for further growth are there.

Here in the second quarter, the upward surge in revenue-generating patient encounters continues as more available provider days and in-network insurance coverage fully begin to kick in. In April, for example, we experienced our highest ever number of patient visits. We call them Visit 2s, where patients select their treatment pathway and commit financially.

Those are the visits where we generate most of our money. Our recent facility expansions at each of our 2 locations in Las Vegas are expected to allow for even greater numbers of patients to be seen and treated. At our Henderson location, due to come fully online in June, we have doubled our footprint in production capacity.

Now keep in mind that the total potential volume of patients from SCN who could benefit from our treatment services still far outpaces our production capacity, and we continue to add providers and staff as rapidly as possible to meet the demand. So here's the basic equation behind our success in the first quarter.

More trained providers who are in network with payers -- in network with payers leads to more available provider days, which means more appointment availability, which means more patients can be seen and presented with treatment options. More participation and coverage from payers means more patients will accept treatment.

Another important factor in our revenue comes from the growing confidence and skills of our providers. When I say providers, I'm referring to medical and dental professionals of all stripes, doctors, nurse practitioners, dentists and physician assistants. These providers are not robots. They are humans who come with varying clinical skills and communication abilities, all of which impact their individual production capacity.

The more experience they have using our technology and methods, the better and more confident they are at recommending treatment. Thus, we are seeing growth not only for more total provider days, but also in total production per day per provider.

Let me give you an example. In one notable case, a dentist who was near the bottom of the pack in terms of her daily production as compared to her peers was extensively retrained and coached up from an average of under $3,000 per day to production of over $10,000 per day, all within a matter of just a couple of weeks. Her peak production day post retraining saw 7 out of 8 of her patients accepting treatment, representing well over $40,000 in just a single day.

Similar, though not so dramatic productivity gains continue to occur amongst our growing pool of relatively new providers. Thus, we see opportunities for significant additional and continued growth from providers who are simply getting better and more proficient at what they do. We are obviously pleased with our first quarter revenue growth and the way it validates our core thesis that when patients are given the opportunity to choose their treatment pathway and when providers exude confidence and clarity in explaining all the options and when insurance picks up at least a portion of the tab, a large majority of patients will opt for some form of Vivos-sponsored treatment. Moreover, as impressive as our first quarter was in terms of top line revenue growth, the real story that is continuing -- that is currently emerging from our data is the normalized profitability gains.

From the outset of our business model pivot, we have maintained that our new model has the potential to deliver significant profits from operations with net contribution margins approaching 50% or more at the practice level. Now I recently fielded a call from an analyst who said that she was unfamiliar with the term net contribution margin. Think of it as a proxy for EBITDA, but it's essentially an EBITDA or cash-generating number.

One key factor of this profitability is the fact that total salaries and wages remained flat from Q4 of 2025 through Q1 of this year despite a 34% increase in revenues in Q1. We believe that, that represents great progress towards our profit goals. So as we continue to evolve here in the second quarter, we are beginning to see such profits emerge, and we look forward to reporting on them in our report for Q2 and the quarters that lie ahead.

Now before I close, I would like to highlight 3 additional initiatives that we believe will play major roles in our future. The first is our pending affiliations with large medical specialty groups such as cardiologists. As I have previously recounted, when the word got out that Vivos had acquired Sleep Centers of Nevada, we began fielding phone calls and inquiries from medical practitioners, especially cardiologists from around the country, inquiring as to whether or not we could provide clinical sleep testing and OSA treatment for their patients.

Over and over again, we heard the same refrain from the doctors. Our patients are sick, and we believe their undiagnosed and untreated obstructive sleep apnea is behind it. We need help getting them tested and treated, and we think Vivos represents a great solution.

Now we have since been engaged in a series of collaborative efforts to jointly extend such services to patients at high risk of OSA, who are already suffering from one or more conditions, typically cardiovascular disease and other hypertension and other disorders that are clinically related to obstructive sleep apnea.

We believe such affiliations represent significant financial opportunities for Vivos to extend virtually the same business model being perfected with Sleep Center of Nevada to many more and even larger medical specialty practices around the country. We look forward once again to reporting on our progress as these relationships unfold in the near future.

The second initiative pertains to an extension of our clinical diagnostic and testing services for the very large and growing market for insomnia and other sleep disorders. Statistically, over 40% of obstructive sleep apnea patients also have insomnia and another 10% to 20% have other sleep disorders that we can diagnose and treat.

We have found that many medical doctors, even sleep specialists looking at sleep patients tend to focus primarily on obstructive sleep apnea and neglect testing and treating the other disorders. Testing and treating insomnia patients in our existing platform can easily add between $2,000 and $3,000 per patient during the first year alone.

Gross margins on these services can match or exceed those we see in testing and treating obstructive sleep apnea. Some patients who do not test positive for OSA do test positive for insomnia and require treatment, which we can deliver profitably. We believe this project will add significantly to our overall top line revenue and growth in the months and years ahead, and it has already been initiated in our Las Vegas market.

The third and final major initiative is from our pediatric program. Over the past couple of years, we have sponsored a large clinical trial based in Colorado aimed at treating children with obstructive sleep apnea. That trial has been hugely successful and also quite profitable for the company. Important data has come out of that trial that has resulted in a clinical paper being written by researchers at Stanford University.

In analyzing the financial impact of the trial, management has determined that the model, the basic model can be readily duplicated across all new and existing markets. Net margins in the pediatric program exceed 60% and top line revenue per site can approach $1 million or more per year. We expect to begin generating revenue in July from this pediatric program and we'll make it in Nevada and we'll make it a part of each new expansion and affiliation going forward.

In conclusion, we think 2026 is off to a great start. Clearly, there is more work to be done to fully exploit the benefits we are seeing from SCN. We need more providers and staff. We need to further optimize SCN's operations into our own and expand them. We need to execute on similar revenue-generating collaborations.

And we do need capital and debt service relief to get us to the point where our growing revenues exceed our investment and expenses. But we believe there is evidence that our Q1 -- from our Q1 results to support our optimism.

We continue to push hard to make this company all it can be, both for patients, doctors and our shareholders. Our mission has never been more clear and never closer to being realized than it is now. We appreciate your support and look forward to many more great quarters ahead.

Operator, we can now take questions if there are any.

[Operator Instructions] And your first question comes from the line of Yi Chen with H.C. Wainwright.

This is Katie on for Yi. Thinking about your higher-margin model, should we think about that margin jump as a step function? Or will it ramp up over time? And if it's ramping up, how long until you reach that anticipated peak higher margin?

Yes, that's a great question. I would say it's more of a ramp than a step function. And I would say that we are -- our forecasts project that we will be in places where we have established teams and established providers, we expect to see that -- those profit margins realized by the end of this year.

So within this calendar year, we expect to see it -- see those margins gradually improve and increase until we get to the full steady state, what I would call steady-state operating levels.

Great. If I could sneak one more in. How much residual VIP deferred revenue is still on your balance sheet? And when do you think that, that revenue will really become relevant?

Brad, do you want to take?

Yes. That revenue has already become irrelevant, as you can see from our filing. That deferred revenue is around $100,000 and will be completely recognized by the end of the year.

Brad, is that $100,000 a quarter? Or what is that, just so she's...

No, that's left. And so...

That's all [indiscernible]. I just wanted to clarify that.

And we have no further questions at this time. I would like to turn it back to Kirk Huntsman for closing remarks.

Thank you, operator. We are very pleased, as you can probably tell, with the validation that we're seeing from our experience now as we go forward out there in the Las Vegas market. Keep in mind that we are still very, very early on. This was -- this represented our third full quarter of operations out there in that market, doing something that's never been done before.

And I think we're learning a little bit as we go, but we've also perfected a lot of things. And I think now that we've got our arms around this, I think the major types of headwinds that we experienced in the fourth quarter, in particular of last year, we don't expect to see going forward.

To that end, we have actually aligned ourselves with a national firm that has insurance contracts and licensure for sleep medicine in all 50 states. This will give us an incredible competitive advantage as we go forward throughout the United States and as we expand across state lines, having nearly instant access to a full complement of both government-sponsored plans such as Medicare, Medicaid and as well as commercial payer plans.

So this will help us avoid some of the delays and start-up issues that we had in Nevada as we got our ball rolling out there. But going forward, we see lots of opportunity. The opportunity to be with the -- to collaborate with these cardiologists just seems to be an endless train of inquiries and people wanting to get to see us and talk to us about working with their patients and getting them tested for sleep apnea and treated.

So we're seeing incredible opportunities before us. We are obviously going through a little bit of an eye of the needle-type experience with our capital, but we feel highly confident that we're going to be able to restructure our debt and get the capital we need to continue on to realize the potential that's before us.

Our technology is the best in the world. We know it. We believe it. We see it every day. I would invite everyone on this call who's not been to our new website at vivos.com, V-I-V-O-S.com to go there and just listen to some of the testimonials, listen to some of the things, look at some of the patient cases that we put up there, read some of the research and just see what's happening and why patients are choosing Vivos whenever they have an opportunity to make a choice. 92% of all patients who are diagnosed across this country with obstructive sleep apnea are getting CPAP, CPAP, CPAP, CPAP.

That's the reflective or reflexive sort of go-to treatment that is being given over and over again. When patients are given full transparent clarity on the fact that they now have an FDA-cleared treatment option that can treat their moderate-to-severe sleep apnea. Most of the time, the vast majority of the time, they select a non-CPAP option.

We think that portends great things for our company and for what we're doing as we gain -- continue to garner market share and gain traction. So with that, I'll bring this to a call. I want to express our gratitude in management for the shareholders and supporters that we have out there for our Board of Directors, which has remained vigilant and dedicated to the success of this company. And we wish you all the very best, and we thank you for your time this afternoon. Thank you very much.

Thank you. And this concludes today's conference call. Thank you all for joining. You may now disconnect.

Good day, everyone, and welcome to the Vivos Full Year 2025 Earnings Conference Call. [Operator Instructions] This conference call is being recorded and a replay of today's call will be available on the Investor Relations section of Vivos' website and will remain posted there for the next 30 days.

I will now hand the call over to Brad Amman, Chief Financial Officer for introductions and the reading of the safe harbor statement. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to our 2025 conference call. A copy of our earnings press release is available on the Investor Relations section of our website at www.vivos.com.

With me on the call today is Kirk Huntsman, Vivos Chairman and Chief Executive Officer. Today, we will review the financial results for the full year 2025 as well as more recent developments and Vivos' plans for 2026 and beyond. Following these formal remarks, we will be happy to take questions.

I would also like to remind everyone that today's call will contain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended, concerning future events. Words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties, contingencies many of which are beyond the company's control.

Actual results, including, without limitation, the results of Vivos' growth strategies, operational plans, including sales, marketing, distribution, medical sleep provider, acquisition and integration, research and development, regulatory initiatives, cost savings plans and plans to generate revenue as well as future potential results of operations or operating metrics such as the potential for Vivos to achieve future positive cash flows or profitability and other matters to be addressed by Vivos management in this conference call may differ materially and adversely from those expressed or implied by such forward-looking statements.

Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described in other disclosures contained in Vivos' filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31, 2025, which was filed with the SEC today our interim quarterly reports and other filings with the SEC, all of which are -- or will be accessible on the Investor Relations section of the Vivos website as well as the SEC's website.

Except to the extent required by law, Vivos assumes no obligation to update statements as circumstances change.

Finally, please be aware that the U.S. Food and Drug Administration has given certain specific Vivos appliances, 510(k) clearance to treat mild to severe OSA with the FDA clearance of certain Vivos products for severe OSA in November 2023 and moderate to severe OSA in children ages 6 to 17 years of age in September of 2024. Treatment of patients with severe OSA with these specific appliances is no longer needed to be performed off-label at the clinical discretion of the treating doctor and is now an integral part of the Vivos treatment protocol. Treatment of OSA of any severity or any other condition with any other of Vivos FDA-cleared devices remains at the clinical discretion of the treating doctor.

For further information on our results for the years ended December 31, 2025 and 2024, please see our earnings release which was distributed earlier today and our annual report filed on Form 10-K, which is available on the SEC filings portion of the Investor Relations section of our website.

With that, I'll turn to a discussion of our 2025 year-end results.

In the fourth quarter of 2025, Vivos completed its second full quarter of activity following our June 10, 2025 acquisition of the Sleep Center of Nevada, demonstrating that our pivot of our sales, marketing and distribution model has taken hold. Overall, revenue was positively impacted by the sales strategy shift and focus towards sleep center affiliations.

The full year 2025 revenue increase of $2.4 million or 16% was due primarily to an increase of approximately $4.8 million in sleep testing services and an increase of approximately $2.2 million of revenue generated from the treatment to patients launched at 2 of SCN's 7 sleep center locations. The increase in revenue during the year was partially offset by the decline in product revenue to our legacy VIP dentists of approximately $1.4 million in appliance and tooth positioner sales.

Additionally, we had a decrease in service revenue of approximately $2 million in our VIP enrollment revenue and a decrease of $700,000 in sponsorship, conference and training related revenue.

As we pivoted our business model to a medical provider focused business strategy and reduced our dependence on enrolling and training VIP dentists to sell our products, we fully expected revenue from these legacy programs to decline.

For the year ended December 31, 2025, we sold 25,441 oral appliances and tooth positioners for a total of approximately $6.5 million, an 18% decrease in revenue from the year ended 2024, when we sold 16,182 oral appliance and tooth positioners for a total of $7.9 million. The revenue decrease is directly attributable to an increase in discounts offered during the same period with $1.6 million in discounts offered during the year ended December 31, 2025, when compared to approximately $200,000 of discounts offered during the year ended 2024.

Coupled with an increase in tooth positioner sales, a lower price point product when compared to Vivos more advanced appliances.

We will discuss this more in a bit, but now that we've gotten through the initial integration phase of SCN, including the achievement of critical insurance coverage for our more advanced OSA appliances, we are expecting more revenue from higher price point products in 2026 and beyond.

Cost of sales increased by approximately $900,000 or 15% to $6.9 million for the full year ended 2025 compared to $6 million for the year ended 2024. This was primarily due to approximately $1.1 million in higher costs in diagnostic services related to new sleep center affiliations and an increase of $0.5 million related to additional staff associated with the sleep center affiliations in both Nevada and our Detroit affiliated center.

Gross profit was $10.5 million for the full year ended December 31, 2025, compared with $9 million for the full year ended December 31, 2024, an increase of 17%. The 17% increase in gross profit during the full year 2025 compared to 2024 was attributable to an increase in revenue of approximately $2.4 million, offset by an increase in cost of sales of $900,000.

Gross margin remained constant at 60% for the years ended December 31, 2025 and 2024.

Operating expenses for the first -- for the full year ended December 31, 2025, were $30.4 million compared to $20.2 million for the full year ended 2024. This increase resulted primarily from an increase in general and administrative expenses related to our new model.

General and administrative expenses increased $9.8 million to $27.7 million for the year ended 12/31, 2025 compared to approximately $17.9 million for 2024. This increase was primarily due to $6.7 million in costs associated with running SCN operations and related Vivos treatment centers.

In addition, we incurred approximately $1.6 million related to professional fees, most of which were onetime expenses and $800,000 associated with salaries and wages in Vivos personnel as well as infrastructure costs of approximately $600,000 when compared to the year ended December 31, 2024.

Sales and marketing expenses decreased by $300,000 to $1.4 million for 2025 compared to $1.7 million for 2024. This decrease was primarily driven by a $200,000 decrease in commissions as well as a $100,000 decrease in convention and trade show expenses. This is again attributable to our focus on bringing SCN online rather than our legacy business model.

Depreciation and amortization expense was approximately $1.3 million for the year ended 2025 compared to $600,000 for the year ended 2024. Depreciation and amortization increased due to an increase in depreciable assets related to the SCN asset acquisition and additional depreciation on affiliations model assets.

For the full year ended December 31, 2025, our net loss increased to $21.2 million, reflecting higher costs of our strategic transition during the year. Approximately $1.4 million of expenses were onetime out-of-pocket costs.

In addition, resources were used in recruiting and training staff, rightsizing the team in anticipation of demand and procuring space and equipment requirements.

Regarding cash flow, net cash used in operating activities amounted to approximately $15.3 million and $12.7 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had total liabilities of approximately $26.7 million compared with $7.3 million as of December 31, 2024, reflecting the debt we incurred to acquire and fund SCN.

As of December 31, 2025, we had approximately $2 million in cash and cash equivalents. Subsequent to the end of fiscal year 2025, on January 16, 2026, we announced that we raised $4.6 million in gross proceeds from a warrant inducement transaction. On April 7, 2026, we announced the completion of a private placement with our existing private equity investor, New Seneca Partners raising gross proceeds of $2.25 million. These financings bolstered our post year-end stockholders' equity, which we need to continue to augment with additional equity financing in order to stay in compliance with NASDAQ's minimum stockholders' equity requirement.

In summary, we're seeing significant increases in revenue reflecting the acquisition of SCN and related treatment revenue from providing patients with OSA treatment options, which is extremely encouraging. We are also seeing increased costs from hiring SCN personnel on the diagnostic side as well as additional hiring on the treatment side. We believe the strategic move to acquire SCN and other potential affiliate alliances and acquisitions set the stage for stronger performance in the coming quarters.

For more detailed information, I refer to you to our earnings release and our full Form 10-K filed today.

With that, I'll now hand over the call to our Chairman and CEO, Kirk Huntsman, to discuss the progress we have made to date on SCN, our Detroit affiliation and our business generally. Kirk?

Thank you, Brad. Good afternoon, everyone, and thank you for joining us on today's conference call.

After many years of actively searching for a business and distribution model, capable of more fully realizing the monetary and profit potential of our advanced proprietary technology, we are pleased to announce today that we are beginning to see the emergence of the very kind of improved financial results we always believe were possible.

As we moved to acquire Sleep Centers of Nevada in June of 2025, we said we believed that our new business and distribution model could deliver impressive financial returns for the company as many more patients would be exposed to and select Vivos treatment. And whereas the company would, at the same time, have far superior economics as compared to our legacy VIP model.

Today, we are pleased to report that our MSO DSO provider support model as implemented at SCN there in Las Vegas has proven to be everything we expected it to be. As a result of our emerging momentum and success in Las Vegas at SCN, many other revenue and profit opportunities are also emerging, which we believe will further grow and expand our top line revenue with strong margins and enhanced patient outcomes.

Thus, 2025 was a pivotal year for Vivos, a year in which we proved our core thesis around patient demand and preference for our Vivos method over other more traditional treatment modalities such as CPAP or surgery, a year in which we experienced strong clinical support and endorsement from actual medical sleep specialists a year in which we took great strides forward with insurers towards providing more comprehensive coverage for our treatments and a year in which our pathway forward came boldly and clearly into focus.

As Brad mentioned, in 2025, we grew full year revenue by 16%, something we regard as quite an achievement, considering that much of our financial gains from the SCN transaction were directly offset by revenue losses attributable to our strategic pivot away from our prior market selling through dentists. We also maintained gross margin despite significant ramp-up investments in our sleep testing and treatment services and the integration of the Sleep Center in Nevada.

So while our 2025 operating loss includes material onetime upfront investments in this new model, we believe these actions, together with recently announced significant cost savings initiatives and strengthened capital structure have now positioned Vivos to drive higher top line growth, better contribution margins and a clear path forward towards our goal of cash flow positive operations by the end of this year.

Of course, in June 2025, we completed the acquisition of SCN and have been ramping up our operations there in Las Vegas.

Generally speaking, what we found there since closing the transaction in early June has been extremely encouraging. We note that the enthusiastic endorsement of Vivos treatments by medical specialists at SCN who have been patiently waiting many years for a viable alternative option to CPAP for their patients has been critical to our ultimate success in that market.

Thus far, we have seen many more OSA patients from SCN who are interested and willing to accept Vivos treatment as alternatives to CPAP than we had forecast. So much so that we have expanded the physical facilities and also our staffing and number of clinical providers to handle the patient demand.

No doubt, it has taken time, investment and hard work to integrate SCN into our operations, and more work remains to be done. But put simply, these important efforts are starting to pay off. Notably, we recently announced that SCN has received notices of in-network status with a number of commercial health insurance payers, along with participating status with Medicare. We believe this major development, along with the addition of several newly trained providers will positively impact patient access to our patented and proprietary OSA treatments and modalities and the resulting top line revenue and gross profitability from operations in that market.

The insurance payers now covering our SCN operations collectively cover a substantial portion of the insured population in the greater Las Vegas metropolitan area, representing what we believe to be a significant addressable patient population for both OSA testing and treatment.

Central to our efforts to build revenue and momentum across all markets has been our creation of what we call Sleep Optimization or SO teams. Each SO team consists of approximately 16 medical, dental and support staff who are all specially trained and equipped by Vivos. The primary focus of each SO team is to ensure that each and every patient is fully informed and educated about all treatment options and what might be best for their condition and situation, and then to assist them in getting into their treatment of choice, which most of the time involves treatment from Vivos products and services.

Our operational growth plan is driven by our deployment of our SO teams, each consisting of one nurse practitioner or physician's assistant and 2 specialty trained dentists, employed by an independent medical or dental professional corporation, 6 dental assistants, 6 administrative support personnel and 1 treatment navigator. These SO teams can be dedicated to high-demand locations or spread across multiple locations as circumstances dictate. We currently have approximately 1.5 SO teams deployed across 2 SCN locations and expect to have additional partial or whole SO teams deployed during 2026. We anticipate an initial ramp of up to 60 days for SO teams to become fully functional and up to 6 months or longer before net revenue collections match revenue-generating activities such as OSA Diagnostic Services or OSA treatment case starts.

Based on the current volume of OSA patient demand, we believe the current addressable market served by SCN could support several additional SO teams, especially if certain planned growth initiatives and patient referrals meet expectations. Such initiatives include, but are not limited to, the expansion of diagnostic and treatment services, the establishment and rollout of a pediatric OSA program and the collaboration with certain specialty medical groups who treat patients with comorbid OSA who lack the ability to test, evaluate and treat such patients within their existing practice environments.

Keep in mind that there are well over 240,000 OSA patients that have been tested and seen by SCN providers since 2019. Based on our experience to date, we believe our limiting constraints for near-term revenue growth at SCN have been: one, insufficient physical space to see an optimal number of patients; two, an adequate number of providers and staff recruiting, training and onboarding; and three, customary issues with third-party payer credentialing.

At the end of 2025, our operations at the 2 SCN locations we have onboarded were fully booked for appointments through April of 2026, and we were processing what we believe were less than 40% of patients attempting to get appointments for treatment.

Our 2 greatest barriers to servicing more OSA patients at that time we're a lack of Vivos train providers and delays in obtaining full access to most major insurance carriers. As I mentioned, we have made good progress in both areas since then, although further work remains. We are working to fully meet current demand by adding SO 2 teams, further insurance participation access being granted and additional facility space is made ready. We view this as significant upside potential for Vivos.

Our initial average case revenue and acceptance rate for Vivos treatment at SCN to date based on a limited number -- or limited period of operations at 2 of SCN's 7 locations suggests that each SO team could potentially generate collections well in excess of $500,000 per month, net of adjustments with contribution margins well above 50%.

In addition to current Vivos diagnostic and treatment options, we expect to be able to offer SCN patients additional diagnostic and treatment services that could generate and will generate, we expect, additional revenue.

Our operational experience in Las Vegas at SCN is proven to be invaluable in terms of providing numerous additional revenue and profit growth opportunities and also positioning us as the clear market leader with several competitive advantages. No other sleep testing or treatment center in Nevada or elsewhere in the United States offers patients the full range of treatment options, including the ability to rehabilitate and restore their airway health like we do nor does any other testing or treatment center offer patients the kinds of adjunctive treatments and services that we offer, such as CO2 laser treatments, myopia functional therapy and home EEG testing or alternative treatments for insomnia, excessive daytime drowsiness, chronic sinusitis or other sleep disorder related conditions. We believe our particular combination of such services represents a much needed evolution over the traditional CPAP-only type treatments that are currently the norm across the United States today. Each of those services enhance patient care and clinical outcomes while adding significantly to our overall revenue and profit potential.

Perhaps most importantly, as news of our relationship with SCN has spread throughout the medical community, we have begun fielding inquiries from across the United States from rather large medical specialty groups such as cardiologists, neurologists, functional medicine doctors, primary care groups, hospitals and others. And while each group may have their own individual reasons for reaching out, they all tend to share 1 thing in common, a large majority of their patients have obstructive sleep apnea and their OSA is rendering whatever other health conditions they may have, such as diabetes, cardiovascular disease, hypertension, Alzheimer's, depression, et cetera, much, much worse.

One prominent cardiologist recently said to me, "Kirk, obstructive sleep apnea is cardiovascular disease. We now know that and it is rocking our cardio interventions and killing our patients prematurely if they don't get the help they need to identify and treat it."

These groups all say basically the same thing, that they are not sleep specialists and thus are ill prepared to treat their patients sleep and breathing disorders. They need someone else to handle it for them and Vivos is very well positioned to do just that. We are currently exploring partnering and affiliation opportunities with several medical specialty groups in various parts of the United States. Each of these groups report treating between 20,000 and 40,000 patients per month within their specialty and tell us that they believe 85% to 90% of those patients also have obstructive sleep apnea, with most of them undiagnosed and untreated.

Creating these affiliations and optimizing them will come with financing and other challenges such as we've dealt with at SCN, but the prospect of replicating our new model around the country has us excited.

One significant benefit of our affiliation model as opposed to our acquisition model, is that it is much more capital efficient than a pure acquisition model. Typical capital outlays for an affiliation are under $1 million a piece, while similar sized acquisitions may require 10 to 15x as much capital. Moreover, affiliations typically preserve about 75% to 80% of the economics for the company.

Typically, in each affiliation, we will seek to collaborate with local medical groups to enhance the diagnosis and treatment of their patients with OSA through a regulatorily compliant services and support model suited to each circumstance, but largely patterned after our Sleep and Airway Medicine Center, what we call SAMC model in Nevada with SCN. We believe the SAMC model not only meets the clinical and medical requirements of both patients and providers, but also present significant revenue-generating opportunities for Vivos.

For reference, our current revenue per case in Nevada averages just under $5,000 with contribution margins above 50%. We expect those figures to improve further as we continue to roll out additional diagnostic and treatment modalities, some of which are already underway.

I would also like to take the opportunity to point out some significant progress being made by our research and development team led by Dr. Bahar Esmaili at our Highlands Ranch Clinic in Colorado. Her team's efforts there are showing what we believe are unprecedented and consistently positive clinical outcomes for patients with sleep and breathing disorders, many of whom are seriously ill and desperate for help and who have typically flown in from all around the world to receive treatment there in Colorado.

We firmly believe that through the efforts of Dr. Esmaili's team in Colorado significant diagnostic and clinical breakthroughs are being made, such that later this year and throughout 2027, we expect to begin publishing key case studies and clinical results.

In December, we announced the grand opening of our latest SAMC Center near Detroit in Auburn Hills, Michigan. Our opening in Auburn Hills signals the continuation of Vivos' national expansion strategy to leverage commercial affiliations with high-volume sleep clinics and physician on sleep and other medical practices to bring Vivos' proprietary line of FDA-cleared diagnostic and therapeutic products and services to tens of millions suffering from OSA and related health conditions, as I just referenced.

We believe our new affiliation model will be very attractive to both medical specialty groups and more than accredited sleep center operators and owners around the country who may not want to be acquired but may instead be looking to grow their business and referral networks by offering a highly differentiated treatment package to OSA patients.

We have several growth initiatives planned for 2026 and beyond, which have the potential to further increase our growth in current -- in our current and new markets. Such initiatives include the expansion of diagnostic and treatment services, the establishment and rollout of a pediatric OSA program, and the collaboration with certain specialty medical groups who treat patients with comorbid OSA, but who lack the ability to test, evaluate and treat such patients within their existing practice environments.

Importantly, we have designed our model to be readily expanded and adapted to other locations throughout the United States. Our M&A team continues to field calls and inquiries from both acquisition and affiliation prospects around the country. As previously mentioned, we are currently in negotiation with several potential affiliation candidates in various key markets. Given our experience with SCN, we believe these opportunities should be similarly accretive.

In summary, we believe our initial results with SCN are a strong indication of the potential upside for Vivos. As we roll forward, we expect to continue to modify and refine our model to make it even more efficient with the potential for even higher revenue and better gross margins.

Furthermore, we fully expect that this model, including the potential for both acquisitions and affiliations is highly replicable and scalable across multiple markets. As it expands, we expect that we'll continue to be highly accretive to top line revenue growth as well as create the potential for cash flow positive operations and bottom line profitability. We believe that this methodical effort patiently executed over time has put Vivos in a much better position to realize the full potential of our technological advantage in industry-leading products and services.

Most importantly, perhaps, we believe this new model will now begin to help improve the lives and health of many more patients, who have up until now not had access to the kind of life-changing treatment that we provide. For all of us here at Vivos, that mission of improving lives and providing fresh hope to the tens of millions of Americans who suffer from breathing to sleep disorders is what drives us each and every day.

Now that we found a business model to match the superiority of our technology, those aspirations are becoming a reality, and it feels great.

That concludes our prepared remarks. Now we'll be happy to take questions. Operator?

[Operator Instructions] Your first question is from Scott Henry from AGP.

A lot of moving parts with the new business model. Just an observation followed by questions. Obviously, you did about $6.8 million in Q3 which dropped to $3.8 million in Q4, if I back out the 3 quarters, assuming that's accurate. Two questions. One, what happened in Q4 to make it lower than Q3? And two, we're already in April, what are your thoughts on Q1? Do you expect it to look more like the third quarter or the fourth quarter?

Okay. Great question, Scott. So listen, our new model is highly dependent upon total doctor days. We have to have providers who show up and are available to treat patients. And when providers are absent or provider -- or we have insufficient numbers of providers then our production necessarily declines. And that's exactly what we experienced in Q4. We had some challenges with some of our existing -- at the time, our existing provider group, most specifically are dentists. So we had -- some dentists have -- they had family problems, some of them had health issues, some of them had travel constraints, and we just had an unexpected and unforeseeable set of circumstances that whereby we lost a lot of -- we lost a few providers that we didn't expect to lose. And we set about immediately trying to recruit and train, but that doesn't happen overnight. And so throughout the fourth quarter, we struggled with that issue. We remedied it. We recruited an excessive number of -- what we believe an excessive number of providers. So we have some redundancy now. And as we move into Q1 and especially as we go further into Q2 here, we feel very, very good. Some of those providers to replace the ones that we lost were -- they came on throughout the quarter in Q1. So the full impact of having replaced these doctors and replaced the doctor base will start to be seen towards the end of Q1 and then into Q2. But that's a great question. And I think it highlights some new dynamics of our model, which are, we have to have sufficient dentists in network with payers and having them producing every single day. When a dentist doesn't show up for a day, it can be it can be $15,000, $20,000, $30,000 or more of lost production -- lost productivity. So if you have just a few days a week of doctors who you've lost doctor days with, it can make a significant impact on your monthly revenues pretty quick, and that's what happened in Q4.

Okay. So it sounds like we should see some improvement in Q1, but the bulk of it probably in Q2.

Yes. And there's a couple of reasons for that. It's doctor days, as I mentioned. And it's also, as we got towards the end of Q1, Scott, you'll see that in February -- or I'm sorry, in March, we announced that we had in-network access. We've been granted in-network access with a number of of payers. Well that in-network access just started to fold into the revenue productivity stream in the latter part of Q1. So yes, for all of those reasons, you'll see it start to fold into Q1, but most of the impact is going to be in Q2 forward. But it's a significant change. Both of those things combined are significant.

Okay. And then you mentioned possibly being cash flow positive exiting 2026. What kind of quarterly revenue run rate would you need to achieve that goal? Approximately.

Brad, do you want to take that?

Yes. I mean this analysis involves a revenue increase as well as reducing -- as you heard in our last press release, we trimmed some legacy VIP costs. So it's not just revenue, but there's costs associated as well. We were -- yes, $17 million for 2025, roughly on a run rate basis, we need to be close to double that by 2027 to hit that number going forward on a net income positive basis.

Okay. All right. Great. Just final question on the balance sheet. I see that $8.3 million in current portion of long-term debt. Do you have to deal with that in the next 12 months? Or what's the status of that situation now that it's classified as short term or current?

Yes. I mean when -- throughout the year when we're reporting that in our quarterly filings, that was long term, the maturity date on that is in 2026. So we've reclassified all of that in -- as short-term debt on our balance sheet.

Okay. And I guess you would anticipate rolling that over at some point?

Rolling it over or paying it off. I mean, so far, we have been compliant with the debt covenants on those pieces of debt. So we'd either raise capital to pay it off or you'll roll it over into additional debt and extend those terms.

[Operator Instructions] Your next question is from Robert Sassoon from Water Tower Research.

I've got a few questions actually. One, if we look at the leverage performance, can you speak to the year-on-year growth you saw in diagnostic and treatment revenue generated under the new model?

So I'm not sure exactly what the question is. Can you just clarify that?

On the growth in sleep testing services and treatment centers, is that is -- Robert, is that kind of what...

Yes, that's correct. Yes. That's correct.

I mean we had about $4.8 million in sleep testing service revenue over 2024. So we had about $6 million sleep testing service revenue in 2025. That increase of $4.8 million is entirely due to SCN, on the diagnostic side.

On the treatment center side, in 2025, those diagnostics, people testing positive for OSA are what allowed us to recognize $2.2 million in treatment revenue. So in total, between those 2 buckets, the diagnostic of $6 million and the $2.2 million of treatment revenue is an increase of over $8 million of revenue, and that revenue is really where we think the growth is going to be.

If you look at the full year, the total revenue was $2.4 million increase. That $2.4 million increase was offset had some VIP revenue decreased by $2 million and some of the other legacy items decreased accordingly. So the fact that we had an increase of $7 million to $8 million in new model revenue, that was offset by VIP revenue, which we totally expected. But going forward, that VIP revenue starts to roll off. So we won't see those big decreases in legacy revenue as we move into 2020 -- throughout 2026 and beyond.

Okay. Got it. So you mentioned your strategies to expand your alliance model. So what key lessons have you learned from the integration of SCN and how that -- will that shape your -- that particular expansion in alliance?

That's a great question. I would say we've learned how to work with medical doctors in a collaborative manner. We've learned how to coordinate treatment and care of patients across the various specialties. We've learned how to navigate the insurance payer community and how to also set up the entities that we need to be regulatorily compliant. So we have to navigate a number of different fronts to make these things come about. But once we get the structure in place for each situation and once we -- stuff them with sufficient providers and then put those providers under contract in-network with these payers, we have a significant -- I think, a significant advantage over anybody else coming into the market because this is a, as I think somebody else said, there are a lot of moving parts and there's a lot of structure that has to go into place, and it's not for somebody that doesn't understand it. So yes.

So we have it down. We haven't figured out. We have it -- also we're in the process of contracting with a national firm that has insurance contracts across the country in each state, and all of those things accelerate by contracting with them, we will accelerate our in-network participation and the time to revenue generation is cut dramatically down.

So those are lessons that I would say we've learned and we're applying them as we go.

Yes. You -- I have a couple of other questions. What is -- you recently announced a partnership with SoundHealth, are you seeing any traction from that yet? Or is it still early days?

Yes. We're -- it's still fairly early. But in Las Vegas, we're having trouble keeping those -- their units in stock. I think patient demand for that is good. I don't think that even if that continues on that, that will be a material aspect of our earnings or profits or whatnot. But the patient demand there has been -- has exceeded expectations and patients are loving the treatment, and we're seeking to expand that relationship.

Okay. So final question for me. Can you discuss your long-term growth prospects and explain why you're particularly excited about the opportunities ahead?

Well, look, we spent -- it seems like a long time wandering in the desert of trying to figure out what kind of business model we could deploy that would do justice to our breakthrough technology. And we really came to the conclusion back a couple of years ago that furthering our efforts down the path of the dental community was just not going to ever get it done. And so as we pivoted, we basically told the world that well, we've got a different way to do this, and we think this is going to work. And so we put forward that prospect. We went out on a limb. We sort of bet the farm here on what our experience was going to be out there at SCN. And -- I mean, to our great pleasure what's happened out there at SCN so far has been really, really good. And again, I know that it doesn't show up fully in the numbers. But the core underlying thesis that we had going into that acquisition in June of last year, our core underlying thesis that we could, in fact, generate great patient demand by intercepting the patients at the time that they are being diagnosed and deciding upon their treatment modality that at that juncture in the patient journey, that was the ideal juncture in which to introduce Vivos as an alternative to CPAP. And we bet that patients would rather fix their OSA in 9 to 12 months and prefer that option over going into a CPAP where they have to wear that thing for the rest of their life, every night.

So we made that bet, that bet is paying off. We see further, as I mentioned in my remarks, the amount and number of clinical contacts that we've had with specialty groups around the country, hospitals, cardiology groups, neurologists, all these groups coming to us saying, we need what you guys are doing. We hear that you have something different than CPAP. Our patients don't like CPAP. They don't want CPAP. When can you come see us. And that kind of demand is something we're excited about. The cost to affiliate and set up SO teams in various markets is a fraction of what it costs for us to acquire these companies like we did with SCN.

And so because of all those things, we are really, really excited about what the future holds. I mean, we used to talk about whether our -- whether patients were getting better, whether we were having clinical success, we're so far beyond that right now. We know beyond any shadow doubt that we have the best technology there is on the market today to treat and resolve obstructive sleep apnea. There's no question about it. Now the issue is how can we get that in front of as many people as possible.

Right. And do you think you're going to get over those sort of barriers that you mentioned earlier in terms of recruiting the right people, the right -- expanding the SOTs to be able to implement that?

Yes, I do. In fact, we've demonstrated that here in the first quarter. We've constituted the full measure of a team and a half out there in Las Vegas. We have additional doctors and providers, nurse practitioners and others ready to go for other opportunities that we're exploring right now. So we are -- I don't think that's going to be a limiting constraint in the future. I readily admit that it took us a little bit by surprise in Q4. We just didn't expect some of the attrition that we had in our provider pool. But now we know to have redundancy, to have the kind of team that is perhaps a little more robust than what we had planned for. But at the same time, the redundancy will pay dividends when we have providers who leave unexpectedly or have personal issues or whatever. So we're learning as we go, but I think we're in great shape to do that. There's no difficult -- we have no challenges recruiting doctors or recruiting nurse practitioners or recruiting staff members. Yes, we -- that's always what we're going to be doing, and it's going to be an ongoing effort as we roll forward. But there is no shortage of dentists or nurse practitioners or staff members available to work in our model. We just had to be out in front of that, and we got caught a little by surprise in Q4.

Anyway, it sounds like it's a pretty encouraging picture looking ahead.

Our next question is from Yi Chen from H.C. Wainwright.

Yi, are you there?

Yi Chen, your line is open.

All right. Operator, let's go ahead and close off. I don't think he's there.

Thank you. There are no further questions at this time. Please proceed with the closing remarks.

On behalf of Vivos, I would just like to express our gratitude and thanks for all of the investors and analysts and investment bankers and whatnot that have supported us over the course of time. I think it's been a little bit of a longer journey than any of us had hoped for. But we -- I think it's pretty clear from this report, we are more optimistic about the prospects for this company today than we probably have ever been. And the cooperation of providers, of the medical sleep community, of specialists, of payers, of all the different constituencies, which make this all possible is just so gratifying, and we are very pleased about all that. And I just want to express on behalf of all of us here at Vivos, a profound gratitude for everyone who's hanging there with us all these years. And I just know that the brighter days are ahead, and we're excited about this. And we think the future here at Vivos is very bright.

So thank you very much, everyone, and have a great night and appreciate your participation today. Thank you.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.

Hello, everybody. I'm Robert Sassoon, healthcare analyst at Water Tower Research. I have the double pleasure of hosting Kirk Huntsman, CEO of Vivos Therapeutics; and Brad Amman, the company's CFO, for this fireside chat.

Vivos is a revenue stage medical technology company focused on developing and commercializing a suite of innovative diagnostic and nonsurgical treatment methods for patients suffering from breathing and sleep issues arising from certain dentofacial abnormalities, primarily obstructive sleep apnea or OSA, often referred to as the silent killer, and is estimated to affect as many as 90 million people in the U.S., 1 billion worldwide. The stock trades on the NASDAQ under the ticker VVOS. You can find the company's disclosures regarding forward-looking statements in the company's SEC filings, that can be found on its website at www.vivos.com as well as the SEC website.

So without further ado, let me welcome Kirk and Brad.

Thank you for both taking time out of your busy schedules to be with us today for this fireside chat.

Thank you, Robert.

Thanks, Robert.

So let me start. As the year draws to a close, 2025 stands out as one of the most pivotal in the company's history. It marked the launch of a potentially transformative shift in VIVOS' business model, highlighted by the June acquisition of the Sleep Center of Nevada or SCN. Before we get into the operational progress of the transition, Kirk, could you start by sharing what motivated the strategic pivot and how you're bringing it to life?

Yes, absolutely. We've known for a long time that we have an extraordinary technology. We've known that we can have a huge impact in this space of obstructive sleep apnea, which is a disease that is so common and commonly associated with other comorbidities such as hypertension, all forms of cardiovascular disease, cancer, it just goes on and on and on. The list of chronic illnesses that are comorbid with obstructive sleep apnea is second only to obesity in the world. And so we have a major health crisis going on in that more and more people are coming up with breathing and sleep disorders and the most difficult of that is this obstructive sleep apnea. And for 45 years, the go-to solution for the medical community has been to put people on CPAP. And nobody wants a CPAP machine. There's nobody that gets a smile on their face when they're told they got to wear that thing for the rest of their life.

And so we've had this amazing technology where within less than a year, in most cases, we can correct this disorder or at least ameliorate the symptoms to the point where it's no longer a life-threatening or a real problem with other comorbidities. And so we've been on this journey for quite a while. We initially -- because this is -- our technology is mediated through an oral appliance device. We launched this initiative going after the dental community as our primary channel of distribution. And what we discovered was is that the dentists are just not going to do it. Some of them did, some of them jumped in and were great and then are doing really wonderful with their patients, but the vast majority of dentists are more concerned about dental things than they are sleep apnea.

And so we pivoted, as you mentioned here, in 2025. This has been in the works for a couple of years, quite honestly, just planning, preparing, making sure that we had the right formula, the right systems to go in and operate practices. My team here at Vivos has been previously involved in the DSO business, which is the dental service and support organization business where we -- it's the corporate roll-up of multiple dental offices around the country. We were a leading edge group in that role -- in that -- in the development of that whole movement. And so for us to operate medical dental practices is just really -- we know how to do that. So we launched with this first acquisition, as you mentioned, Sleep Center of Nevada. It just was a transaction that we had some exposure to. It kind of fell into our lap and we said, "You know what, this is a perfect opportunity for us to test our thesis around what this could mean for this company." And so we plunged in, and it's been a great ride so far. And things are panning out.

It's taken us a little longer, a few road bumps that we've encountered, but honestly, everything that we had hoped for, everything that we were expecting out of this is coming to pass. So we're very excited about this. And what this means for investors, what this means for this company is not only a tremendous opportunity from a growth standpoint. But the profitability here is outstanding.

When we were in the dental business, if we had a professional practice that threw off a 20% EBITDA margin at the practice level, we were excited about that. These practices are throwing off 50%, 55%, 60% EBITDA. So we're really excited about what that means for this company. The growth opportunities appear to be unlimited. And so it's just a matter of us continuing to execute, continuing to roll out.

We announced this morning -- as you might have noticed, we announced just this morning another rollout in Detroit, Michigan. This one is an affiliation where we retain nearly all of the economics, but we don't have the upfront cost of acquisition. So very minimal CapEx -- very capital-efficient way to grow the business. Lots and lots of opportunity there to partner up with sleep centers to do that on a partnering basis.

Right. Well, I'll probably get into that a little later. Now you own Sleep Center of Nevada for approaching 6 months. How do you assess the progress on its integration and the broader business model shift? And have any of the operational elements evolved faster than expected? Or conversely, are there any lagging areas that are behind schedule? And how are you addressing any of those challenges? Maybe either both of you could sort of answer that sort of -- those questions.

Let me take a first shot at it and then I'll hand it over to Brad. The surprise to us out there has been the -- just the overwhelming demand. We knew that there were going to be a lot of patients coming our way. But I think we were somewhat caught off guard by the way that these patients responded and came down. And they were -- so we intervene when the patients -- in their patient journey, when they've gone through the sleep testing process and have conferred with their sleep doctor about their treatment options, then the sleep doctor refers them over to what we call our Sleep and Airway Medicine Center. And just the sheer number of patients that were desirous to do that so they could be evaluated for our technology and for our treatment has really taken us a little bit aback. And so we're scrambling to catch up. We've almost doubled the size of our facilities footprint out there. We've added doctors and staff as fast as we could to keep up with this demand, but we are currently booking into next March for some of these patients on the revenue visit that we have them do.

So they come in for an initial evaluation, but the main revenue happens on a visit with a doctor that we -- and we just need more doctors. So we've got those people in place. They're in the process of getting licensed and trained and ready to go. And come the first of the year here, we'll be just about where we need to be to handle the demand. So we're excited about that. Brad, do you want to add any color to that?

Yes, you bet. Thanks, Kirk. The legacy, there's a two-pronged approach to the success out there. In the third quarter, SCN had $2.2 million of their own revenue, the diagnostic service revenue. And then like Kirk had said, they hand that off to Vivos for the treatment side. And then on the treatment side, in the third quarter, we had $1.3 million of treatment revenue. So this is really -- you can see this is really a synergistic approach to this being able to offer a soup to nuts solution for patients. They get diagnosed with OSA, and then once they get diagnosed, there's a handoff to Vivos side for the treatment. So it's really a vertically integrated solution.

It's -- the first full quarter of operations was the third quarter, and we're really seeing some great pull-through in terms of not only the diagnostic side of the revenue, which was -- of the business, which was $2.2 million of revenue, but then the additional Vivos side. So there's a lot better pull-through when you have patients that are waiting to be -- to have treatment once they're diagnosed, then there is looking at the dentist model, which the dentists are tasked with looking at their patient base and seeing if any of their patients have OSA.

And so this just gets us closer to the patient and is a much better vertically integrated solution for the patient.

Great. So you mentioned the third quarter results you recently reported, and you reported a 76% year-on-year surge in revenues to approaching $7 million. And that was really driven by the first full quarter contribution from SCN. But can you break down how much of the growth -- I mean, you've already mentioned just maybe to reemphasize, how much of the growth came from SCN integration versus new business generated through the model pivot, specifically converting diagnostics into treatment using care products?

Additionally, what conversion rates do you anticipate in the coming quarters as SCN's sleep optimization teams continue to scale, and what conversion rates and what number of fully scaled -- SCN teams do you require for Vivos to actually achieve positive cash flow, all other things being equal?

Okay. So you got a lot of questions there, Robert. I will see if I can pick them off a little bit here. So just to sort of put this in a little bit of context, one of the things to keep in mind as you look at these revenue surges is that we're also in a declining state of reporting the revenue from our historic VIP model. So that revenue has just about evaporated. And I believe there was $800,000 or $900,000 in difference between the prior year quarter, what we reported and then what was reported here this year. So not only are we reporting less from those activities, but then the surge of revenue out there happens to -- it has to overcome that decline in revenue plus the other. So we feel really good about this.

We're pretty much on target with where we had expected to be in terms of coming out of the gate on this. One of the challenges has been getting our providers onboarded. I think I mentioned that a minute ago. And then the credentialing of these providers with the insurance payers. In just the past few weeks, since the close of the third quarter, which we reported on, we have had a number of these payers that have come forward and credentialed our doctors. So in the third quarter, we didn't have any of the payers having fully credentialed all of our doctors. Now we have all of our current doctors credentialed with several payers, UnitedHealthcare, a large workman's comp group out there, several of the other large payers out there in this market, TRICARE, for example, a big military program and federal government program. All of these groups have now given us clearance.

So for -- so starting in the fourth quarter and moving forward, where we now have most of the payers, not all of the big payers, but most of the payers have credentialed our doctors. So that's a huge bump in revenues. It allows us to bill for services that we could not bill for before. So that right there makes a huge difference in our ability to generate revenue out of our model. And so there is a little bit of a lag time. We thought the lag time was going to be 60 to 90 days, it turns out, it's more like 6 months as we're learning, at least in that market. I don't think other markets will be quite as long, but in that market, it turns out to be that way.

But we have -- one of the things I think we should note is that when a patient is referred to one of our centers. For instance, the patient that has been tested positive for OSA or it has failed their CPAP, they are referred over. Those patients that come in for a visit, 94% of those patients will move on to a second visit for further evaluation and for a treatment plan. So in the first visit where they're actually introduced to the technology and they are given -- they're shown their options, we talk about the various things that they can do to treat this disease, their sleep disorder. And 94% of those patients come back for a second visit.

Now that's really important because it's at the second visit that they actually are introduced to a doctor that they work, first of all, in the first visit with a nurse practitioner. Then they introduce -- they're introduced to a dentist who is going to give them sort of a full evaluation and talk to them about their treatment and the treatment options using Vivos' technology and other options that they have before them. We have adjunctive technologies such as laser, myofunctional therapy, other things that we do with these patients. And so they're showing the complete gamut of what's there. And 64% of those patients are accepting treatment. And so we have basically a funnel here where at the top of the funnel, you have all these people that are being referred in. And then you have 94% from the first visit, will take a second visit, 64% will then accept treatment. And then trying to get those patients in for that second visit is where our choke point has been because we have not had enough providers.

Starting in January, we will have more providers coming on board. And throughout the month and throughout Q1, those providers will come on board in our days out. Right now, we're booking patients for that visit 2, that second visit into March. And so once we get those accelerated and brought forward to where we're able to keep patients with some good momentum going through the funnel, then we expect to see further accretions in revenue generation. Brad, did you want to add anything to that?

Yes. Just on the quarter side of things, we had a 50% -- we talked about a 76% increase year-over-year in revenue. Of the $6.8 million that we had in the third quarter, 50% of that related to the new Nevada services. So about 20% was related to the diagnostic -- I'm sorry, the treatment side of the house and about 30% was on the SCN diagnostics side of the house.

Right. Okay. So as a follow-up, maybe Kirk can address this at first. You have said that CPAP remains the go-to first-line treatment option, and I think I remember you closing it maybe in an earnings call that up to 95% of patients first diagnosed with sleep apnea, despite the limitations and challenges of the treatment, they are recommended to do a CPAP. So beyond the scaling the sleep optimization teams, are there any additional strategies or initiatives you're implementing to drive adoption of your alternative solutions and grab a good chunk of a large market opportunity?

Well, we are actively educating physicians about what's going on here. For many years, physicians have defaulted to CPAP because there really was nothing else. I mean, literally, unless you opted for a surgical procedure, and this is where the implant devices from the neurostimulation devices from Inspire Medical or other groups come into play. And then there's other surgical procedures as well. They're not quite as effective, but the medical community has not had any other great solutions.

And so part of the preference for CPAP is that there was really nothing else. And this has happened since 1980 -- early 1980s is when CPAP first came on the scene and was introduced in the United States. I mean you can imagine, 45 years of really just very marginal sort of at the periphery changes in the core technology of CPAP and nothing new has come to market. And meanwhile, obstructive sleep apnea, every few -- every couple of years is found to be more comorbid with more and more chronic illnesses. And so while the condition appears to be more and more debilitating, more and more dangerous to our health and wellness, the solution never changed. And people were -- we found that people were avoiding getting tested because they didn't want to be told that they had to wear one of those CPAP units.

And so a lot of people, 50% of patients in the first year will reject their CPAP machine. And so what are we left with? We're left with a broken and dysfunctional sleep medicine community, sleep medicine program. And so these patients are left out there wondering, well, what do I do? If I don't want to go get surgery, if I don't want to do this. Well, along comes Vivos, and we need to educate. We are shouting it from the rooftops with professional groups and educational forums. And I mean we attend medical shows now. We no longer attend [ Dell ] shows. We attend medical shows. I was just at one out in Las Vegas this weekend. And we are shouting from the rooftops that sleep matters and that there is an alternative.

Because what's really important here for investors to understand, Robert, Vivos has the only oral appliance devices in the world that are approved -- that are cleared. I have to use the right term. It's FDA cleared for moderate to severe obstructive sleep apnea. All the other oral devices on the market, there's over 200 of them. They are cleared only for mild to moderate and snoring. We are able to go toe to toe with the CPAP option for treatment because we're the only one cleared to treat for severe. The other issue is, is that the treatment with us is limited in its duration. It only takes 6 to 9 months, sometimes as much as a year to get the full benefit that a patient is going to get with our treatment. So there's no more lifelong wearing this thing around.

I get on airplanes, and I see people [ slept ] in their CPAPs on the airplane. And I'm like -- I hand out my card and say, there is a choice, folks, you have a choice here. And so our thing to educate the medical community, we're enlisting key opinion leaders to get the word out. And this is becoming -- we're using social media. We're in the process -- we'll have a brand-new website rolled out here in the next month or so. So we're really upping our game when it comes to getting the word out there to the medical community so they know that their patients have a choice.

Well, it seems from me that I think in the number you quoted in the previous -- to the answer to the previous question that 64% of those diagnosed at least in the Nevada Sleep Center are choosing the alternative.

Well, here's -- yes. So we have 64% is for us, is not a great number. We have had experience in the past. I told you we spent 2 years ramping up to this and the conversion rates that we had while we were ramping up were 80% to 90%. What we've seen here in Sleep Center of Nevada is that the patient population there in the demographics that we're serving is quite low. And so we're running into some issues there with the sort of people sort of trying to figure out how they're going to navigate, how to afford this and pay for this, what their insurance company doesn't cover? That's why this insurance coverage is so wildly important to us is because now patients won't have to come out of pocket. Now they'll be paying or at least not as much. They'll be able to rely more on their insurance to help cover and defray the cost of this, which is a huge, huge -- I can't emphasize how important this is.

We're actually going back and calling patients who may have not have gone forward with treatment to say to them, "Hey, your insurance will now cover this." And so we're getting those patients back in. So we're excited about that opportunity there, and that's a big milestone for us.

That's pretty encouraging. Okay. So on the -- let's go back to your results. On the expense side, in the third quarter, they increased sharply. I think I calculated up $5 million year-over-year. That's up 77% up across cost of sales and operating expenses. How much of this increase is actually would you consider -- could be considered nonrecurring and tied to the SCN acquisition and integration versus what should be now considered the new baseline due to the expansion?

Additionally, can you provide your insight on cost dynamics in the coming quarters, particularly balancing the cost of scaling, sleep optimization teams against expected productivity gains from more subs teams that you have? Maybe that's a question for Brad.

Yes. Well, for the third quarter, our G&A expenses did increase $3.4 million in the quarter. But keep in mind that, of that, there's about $1.8 million of that, that is payroll and rents and operating expenses of the SCN model. So we've always indicated that the diagnostic side of the house is going to not have the margins that the treatment side has. So we knew that going into this. But I think it's important to know that, that's -- those are baseline costs on the diagnostics side, where we really have the margin and where the business model really works is when those patients get diagnosed with OSA and then referred to Vivos for treatment. And those were the margins are much, much higher in the 60% to 70% plus range.

So one of the things, Robert, that I think is really important to understand. Remember what I said in the beginning, we underestimated the demand. And so as we got rolling there, and we realized that we did not have enough physical facility space, and we did not have enough staff and we did not have enough providers to accommodate the demand that we were seeing, remember that we went ahead and hired people in advance. Most of these costs that you're seeing are us reinvesting in additional staff and facilities. So you're seeing a lot of costs associated with this that, yes, they were -- that made it look like, yes, they're growing revenues, but they're also growing at about the same clip they're growing their expenses. Well, the only reason for that is that we're trying to get ahead of this thing so that when the -- when we get the staff trained up, providers onboarded, we're all ready to go, and we can start flipping the switch on the revenue-generating thing.

Our model, we talked about this -- you mentioned the sleep optimization teams. So let me give you -- and we've disclosed this before, so I don't think this is anything new, but each sleep optimization team should generate about $500,000 a month. The cost of that sleep optimization team is going to be -- on a labor basis, is going to be about 25% or so of that. So there's lots of margin above that. But if I'm trying to now hire additional sleep optimization teams, and I'm putting those -- I'm burdening that first sleep optimization team with additional personnel and costs, so now I'm generating the $300,000 to $500,000 a month or whatever it's going to end up being, I'm generating that, but I'm also carrying the cost of the next sleep optimization team until we flip the revenue switch, which is just now beginning to happen late here in the fourth quarter and into Q1 of next year.

So when you look at those numbers, on the first quarter, it looks like, okay, both cost and revenue are accelerating at about the same pace. Where is the profit? Well, as soon as we flip the switch to get those other trained employees and providers productive, that will even out. And when we get back to the steady state model for how these things are going to go, we do expect to -- we've not encountered any aspect of this that leads us to think that we cannot sustain a contribution margin from these sleep clinics in above 50%. So very, very excited. But temporarily, we got to grow into this.

So this is going to be sort of an evolution over a few quarters, I guess, and you continue to scale up?

Yes. And we do expect in 2026, we do -- just to be clear, we do expect to continue to add capacity in -- so let me just tell you another aspect of this that's happening right now. So there's some very large cardiology practices in Nevada and in Arizona, and these large cardiology practices are also looking at -- and in Nevada, they're already referring their cardiology patients. Probably -- they estimate 9 out of 10 of their cardiology patients have sleep apnea, and they have not done a good job of doing anything about it. They know their patients need to be treated. They need to be tested, but they've not had a good partner to do that, and they've selected Vivos to be that partner.

Now -- so what that means is, I mean, one of these cardiology groups sees 30,000 patients a month, the other one sees 20,000 a month. These are huge numbers. And so we have -- we're talking about each sleep optimization team being able to handle just a few hundred case starts a month. So we have a number of additional sleep optimization teams that we're going to need to roll out over the course of 2026 and beyond to meet the demand.

Right. Right. So while you're going to continue to integrate SCN, you've already begun executing -- you mentioned this at the beginning of our fireside chat. We've already begun executing strategy to expand Vivos' sleep center ecosystem in the U.S. And you recently partnered with a Michigan-based sleep specialist that you've mentioned in the greater Detroit area. How is that partnership structured? How do the economics of an affiliate arrangement differ from an ownership model? And additionally, can you update us on the progress of the Michigan partnership and its potential financial impact on Vivos?

Yes, that's a great question. The model is very similar actually to what we have. The difference being that we don't have the large capital outlays for acquisition. So what we tried to do in one of these like what we just announced this morning in Detroit, is we try to make sure that we are -- that our interests are totally aligned and we use an MSO model, a tried and proven management services organization model for medicine. We fold in a DSO model so that we're using a management services company that we control. And then the doctor has financial incentives and financial alignment through the management company, which is all cleared with all the regulatory issues with Stark and both state and federal law and all that sort of thing. We've cleared all that. And we have all of those things in place in Nevada, it's the same model.

It's just -- we didn't have to spend the millions of dollars to buy these guys to control that patient flow and to sort of get the affiliation going. Now we have a different way of doing it, and it appears to be working. I mean we're -- fingers crossed, we're still in the early stages of this. But so far, very, very excited about what we're seeing there, a lot of alignment, a lot of great progress. The people are excited when they come to know, even professionals. Sleep specialists of 30 years are excited to know that there's something new and different and better perhaps that they can offer their patients. And so the enthusiasm level is quite high wherever we go.

Great. Now going on to take that a step further, you've as I say, you've just -- you've recently announced that Michigan partnership. You've also stated that you're also -- you're conducting negotiations with several other potential candidates, both acquisition and affiliation prospects in various key markets. Can you say which region markets you are really prioritizing in your growth plans?

Well, right now, I think we probably have a biased orientation towards the Intermountain West region, California, Arizona, Colorado, Nevada, that area just because that's where we're at. That doesn't mean -- we're actually talking to groups on the East Coast. We have groups in Florida, in North and South Carolina. We have Maryland. We have groups across the country really that have reached out to us. They've heard about what we're doing. There's a lot of people in the sleep business that are keeping their eye on Vivos. There's a lot of people that are aware of what we do. They're aware of our technology. They're aware of our FDA clearances. And so we've got a bit of a presence and so people in the industry know who we are. And they're actually reaching out to us to say, "Hey, come do this for me."

I explained this in the press release that we issued this morning, but I really want to emphasize, the sleep business in the United States is dependent upon high-volume and low margins. It's a low-margin business. And so you have to have a high volume. So that the number of sleep clinics in the United States has contracted over time, and it's because there's been a compression in the reimbursements. And now what's happened is that with the advent of the technology from home sleep test, there's more and more demand for treatment because more and more people are being tested through the home sleep testing technologies. And so there's going to be almost 3 million sleep tests being done this year in the United States. That's unprecedented. And the home sleep test business has grown 20 fold over the last decade. And so as this technology becomes more ubiquitous, more people will get tested. And as more people get tested, more people are going to have that quintessential question of now what do I do? I've got this. It's not going to go away. What do I do?

And for most people, it's not just about losing weight. That's a misnomer and a stereotype. This is not just a disease of old fat males. This is a disease that affects females and children and the elderly and young people. One of the largest demographics of the new patients that we're getting today is the to 21- to 35-year olds. So that whole millennial type generation, up to maybe 40, that millennial generation is having all kinds of breathing and sleep issues. So yes. So that -- I think we're very excited about what the technology is doing and how it's driving people to want to affiliate with us because we do control the only real option to CPAP for their sleep apnea patients.

And do you see yourself as really in the pole position to be really consolidated the sleep center treatment business?

Absolutely. Absolutely. Without a doubt. I mean, we are the #1 game in town. I got to tell you, out of this medical conference this last weekend, I mean people were lining up to talk to us. They -- the functional medicine world, which is sort of operated at the periphery has suddenly sort of started to come alive. And these doctors know that the one thing that they've not ever had access to in their arsenal of solutions for chronic disease patients is something to properly address their sleep and breathing disorders. And for them to find somebody at their conference that was talking about that was just off the charts good. So they were very, very excited about what we had to say.

Great. So from what you and Brad have been conveying to us in the fireside chat they've been doing it for a while, it seems like Vivos has a pretty exciting growth story unfolding. But the investor response to the strategic pivot has been a bit muted in my -- and the stock continues to trade at a fairly deep discount to peers in the OSA treatment market. So it would be interesting to get your take on that. But in doing so, could you address probably one of the major concerns and maybe the major concern, the sort of block on the landscape, if you like, as part of the strategic shift, you have taken on a significant amount of debt, and that's actually reasonably topped up, I understand. And can you walk us through both of you, your financial strategy to derisk the balance sheet and ameliorate these concerns?

Well, I'm under the I'm -- for myself, I'm sort of a fundamentalist guy. I believe that when you turn consistently profitable the money will follow. And all good things will sort themselves out. I can't really say, except for some of the concerns that have been expressed that you just stated. I can't speak for why our stock has not gone up to a level commensurate with peers and whatnot. I can say there's probably a little investor fatigue out there because Vivos did -- we stuck by this primary distribution model of going through the dentists. And we -- and one of the reasons for that, quite frankly, was pre-COVID, we did not experience what we experienced post-COVID. So it did take us a minute to try to readjust our sites because pre-COVID, our growth rate was like this amongst our providers. And the dentists were adopting the technology. They were integrating it. They were presenting to patients.

When dentistry reconstituted itself after the COVID closures and a lot of dental practices disbanded, a lot of hygienists got out of dentistry. When dentistry reconstituted itself, dentists just had a different idea about where their priorities were and sleep apnea was not one of them. And so we wrestled with that for years thinking that we were going to be able to get back to our pre-COVID days. And so we might have had a little bit of investor fatigue over that. There may be a little bit of skepticism around whether our team can execute. But I can tell you, we're executing right now out there, and we continue to do that. And we'll address the debt.

I think we're feeling very good about the cash because this is so accretively profitable, we believe that we will be able to service the debt, and we believe that we'll be able to eventually retire that debt or refinance that debt with lower cost debt as we go forward. And we're moving as rapidly as possible to make that happen. So I realize it looks like we've taken on some debt. It's a little bit expensive. We get that. We're not -- we're sophisticated enough to understand that. But as some of these new revenue streams come on board that are -- that require minimal capital outlays and have high accretion, i.e., things like we did in Detroit, other things like we're doing with these cardiology clinics and others, these things are minimal capital outlays and high, high revenue potential things. That activity is going to drive us to be able to service our debt, retire the debt and really generate the kind of profits that this company and the investors?

Anything to add to that, Brad?

Brad, do you want to add to that?

Yes, you bet. I think Kirk outlined it very succinctly. We raised equity and debt to purchase SCN back in June. We did that acquisition because not only do we get the $2.2 million revenue that we got in the third quarter of the diagnostic side. But we also -- the real funnel in the -- we bought a patient pipeline as well as the treatment in the diagnostics side of the new revenue stream. That really helps our top line, but we're going to be seeing a lot more dropping down the bottom line as we get more patients in the -- through the pipeline and into treatment. The Detroit side of things allows us without the upfront capital expenditure to really have the same or similar economics. We still have the same hiring that we need to -- of the dentist, the same personnel to help support the dentists and the same capital outlay is about $250,000 of equipment to have the imaging equipment, the IT, the leasehold improvements and so forth.

But these new models, which we really want to explore and integrate going forward like Detroit, are going to really help us without having to raise a lot of additional capital help us to get to cash flow positive quicker because we have that same pipeline that -- and we participate with the medical doctor in the net income from that. So it's a really great model for us, and allows us to scale without having to raise capital to do acquisitions. Not that the acquisitions are going to be going away, but it's just -- it's a great model for us to acquire that pipeline that allows us to drive top line revenue on the treatment side.

Okay. That's great. Thanks. Unfortunately, we've run out of time, and we'll have to leave it there. But thanks. That was great. Kirk and Brad for -- thank you for the conversation and keeping us surprised at the latest strategic and financial developments of Vivos. If you have more questions for Kirk and Brad, please send them to me and I'll be sure to pass them on. For our analysis of the company, please refer to our Open Access website at www.watertowerresearch.com, Finally, let me close by reminding viewers that the views expressed in this fireside chat may not necessarily reflect the views of Water Tower Research and are provided for informational purposes only.

Once again, I'd like to thank Kirk and Brad for their participation and everyone for joining us in this fireside chat. Have a great day.

Thank you.

Thank you, Robert.

Good day, everyone, and welcome to the Vivos Third Quarter 2025 Conference Call. [Operator Instructions] This conference call is being recorded, and a replay of today's call will be available on the Investor Relations section of Vivos' website and will remain posted there for the next 30 days.

I will now hand the call over to Brad Amman, Chief Financial Officer, for introductions and reading of the safe harbor statements. Please go ahead, sir.

Thank you, Constantine. Hello, everyone, and welcome to our conference call. A copy of our earnings press release is available on the Investor Relations section of our website at www.vivos.com.

With me on the call today is Kirk Huntsman, Vivos' Chairman and Chief Executive Officer. Today, we'll review the financial results for the third quarter of 2025 as well as more recent developments and Vivos' plans for the rest of 2025 and beyond. Following these formal remarks, we'll be happy to take questions.

I would also like to remind everyone that today's call will contain certain forward-looking statements from our management made by -- made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended concerning future events. Words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties and contingencies, many of which are beyond the company's control.

Actual results, including, without limitation, the results of Vivos' growth strategies, operational plans, including sales, marketing, distribution, medical sleep provider acquisition and integration, research and development, regulatory initiatives, cost savings plans and plans to generate revenue as well as future potential results of operations or operating metrics, such as the potential for Vivos to achieve future positive cash flows or profitability and other matters to be addressed by Vivos management in this conference call may differ materially and adversely from those expressed or implied by such forward-looking statements.

Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described and other disclosures contained in Vivos' filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31, 2024, and our other filings with the SEC, including our third quarter 2025 Form 10-Q filed with the SEC today, all of which are or will be accessible on the Investor Relations section of Vivos' website as well as the SEC's website. Except to the extent required by law, Vivos assumes no obligation to update statements as circumstances change.

Finally, please be aware that the U.S. Food and Drug Administration has given certain specific Vivos appliances 510(k) clearance to treat mild to severe OSA with the FDA clearance of certain Vivos products for severe OSA in November of 2023. Treatment of patients with severe OSA with these specific appliances is no longer needed to be performed off-label at the clinical discretion of the treating doctor and is now an integral part of the Vivos treatment protocol. Treatment of OSA of any severity or any other condition with any other Vivos FDA-cleared devices remains at the clinical discretion of the treating doctor.

For further information on our results for the 3- and 9-month periods ended September 30, 2025, please see our earnings release, which was distributed earlier today and our quarterly report on Form 10-Q, which is available on the SEC filings portion of the Investor Relations section of our website.

With that, I'll now review our financial results for the quarter. We are very excited about our results of operations for the third quarter of 2025, which show the outcome of our first full quarter of activity following our June 10, 2025, acquisition of the Sleep Center of Nevada or SCN. The message from our numbers is very clear. The pivot to our sleep medical practice acquisition and strategic alliance model is taking hold.

For the third quarter of 2025, revenue increased 76% to $6.8 million compared to $3.9 million in Q3 2024 and 78% sequentially versus second quarter of 2025. The increase in total revenue during the quarter reflected an additional $2.7 million in service revenue and approximately $200,000 in additional product revenue.

During the quarter, we saw a $2.2 million increase in OSA sleep testing services, primarily generated by SCN and $1.3 million generated from treatment centers launched at 2 SCN locations in Las Vegas. You will see this new treatment center revenue broken out separately in our financial statements. Because of SCN, this is our first time we are recognizing this kind of revenue.

Our revenue growth was offset slightly by a decrease of $800,000 in VIP enrollment revenue from our legacy business model. We are pleased to see that VIP enrollment revenue is becoming increasingly less material to our company as our new model grows, and we are expecting to be finished with recognizing any such legacy revenue by the end of 2026.

For the 9 months ended September 30, 2025, our revenue increased approximately $2.3 million or 20% to $13.6 million compared to $11.3 million for the 9 months ended September 30, 2024. The increase in total revenue was impacted by an increase of approximately $2 million in service revenue and $300,000 in product revenue.

The increase in services revenue is attributable to $2.8 million in sleep testing services, primarily generated by SCN and $1.6 million of new treatment center revenue. This was offset by a decrease of $2.6 million in VIP revenue from our legacy business model, which is -- which as noted, we continue to wean off of.

For the 3 months ended September 30, 2025, cost of sales increased $1.3 million or 87% to approximately $2.8 million compared to $1.5 million for the 3 months ended September 30, 2024. This was expected and primarily attributable to higher costs associated with key investments we made in integrating SCN, including $0.5 million related to appliance, pediatric and lifeline fees, $400,000 related to SCN operations, $300,000 increase in support costs for the treatment centers, such as staff compensation and financing fees and a $100,000 increase in software and medical reporting services.

For the 3 months ended September 30, 2025, gross profit increased approximately $1.6 million to $3.9 million. This increase was attributable to the increase in revenue of $2.9 million, offset by an increase in cost of sales of $1.3 million.

Gross margin increased slightly to 58% for the 3 months ended September 30, 2025, compared to 60% for the 3 months ended September 30, 2024, due to the higher increase in cost of sales as a percentage of revenue.

For the 9 months ended September 30, 2025, cost of sales increased $1.7 million or 37% to $6.1 million for the 9 months ended September 30, 2025, compared to $4.4 million for the comparable period in 2024. This again reflects our investment in SCN, as I noted.

For the 9 months ended September 30, 2025, gross profit increased $600,000 to $7.6 million. This increase was attributable to the increase in revenue of approximately $2.3 million, offset by an increase in cost of sales of $1.7 million.

General and administrative expenses increased by approximately $5.7 million or 42% to $19.2 million for the 9 months ended September 30, 2025, as compared to $13.5 million for the same period last year. The primary cause of the increase was approximately $2 million in costs associated with running SCN operations, $1.6 million related to professional fees, $1.1 million associated with salaries and wages on additional personnel, infrastructure costs of $600,000 and equipment, repairs and maintenance of $200,000. Other expense increased by $600,000 and $800,000 for the 3- and 9-month periods, respectively.

Our net loss increased to $5.4 million in Q3 and $14.3 million for the full 3 quarters of 2025, reflecting the higher costs associated with our business model pivot. During the first 9 months of 2025, we used $1.7 million more in cash in operations and $5.5 million more in investing activities compared to the comparable periods in 2024, largely due to our acquisition of SCN and increased net loss.

We also secured both debt and equity financing, providing us with $14.2 million in net cash from financing activities. The equity financing in 2025 came from an affiliate of our existing significant investor, Seneca Partners. As of September 30, 2025, our balance sheet showed total liabilities of $23.1 million with cash and cash equivalents of $3.1 million and stockholders' equity at $2.5 million.

In summary, we're seeing significant increases in revenue, reflecting the acquisition of SCN and related OSA diagnostic and treatment revenue, which is extremely encouraging. We are also seeing some increased costs from the hiring of SCN personnel on the diagnostic side and additional hiring on the treatment side, plus some noncash depreciation expense.

We've learned a lot from our first quarter of operating SCN, and our goal will be to drive growing revenue by meeting the significant demand from OSA patients we are seeing while better understanding and prudently managing costs as we have historically. We believe the strategic move to acquire SCN and other potential affiliate alliances and acquisitions set the stage for stronger performance in coming quarters. For more detailed information, I refer you to our earnings release and in our first full Form 10-Q filed today.

And with that, I'll hand the call over to our Chairman and CEO, Kirk Huntsman, for his thoughts on our Q3 performance and what it means for the future of Vivos. Kirk?

Thank you, Brad. Good afternoon, everyone, and thank you for joining us on today's conference call. The third quarter of 2025 will go down in the history of Vivos as a watershed quarter and an inflection point in the trajectory of our business. It is this latest quarter that first signaled our company's ability to monetize on a potentially large scale our life-changing technology for treating sleep-related breathing disorders such as obstructive sleep apnea.

Here at Vivos, we have firmly believed for many years that we possess the most innovative, most clinically effective, most cost-effective, most safe, the most preferred and easiest-to-use treatments for OSA in the world. And we backed up those beliefs with literally dozens of peer-reviewed published studies in both medical and dental journals around the world. Time after time and study after study, Vivos' novel and proprietary oral medical devices have been shown to be safe and highly effective in treating OSA.

In a landmark study first published in 2022, independent researchers revealed actual clinical results showing complete nonsurgical resolution of OSA symptoms using industry standard metrics in adults after just 10 months of Vivos treatment, and with no need for further intervention. To our knowledge, no one had ever before shown such amazing clinical results.

Many of those studies were authored by some of the leading researchers and clinicians from universities and hospitals like Stanford and Mount Sinai . Regulators at the FDA and other international agencies also took note. And over the past dozen years, granted this company multiple unprecedented clearances, thereby opening the door for Vivos to compete head-to-head on with the medical industry's 40-year-old and much maligned gold standard treatment of CPAP.

Today, Vivos CARE  oral medical devices are the only oral appliances in the world that are FDA cleared to treat severe OSA in adults and moderate to severe OSA in children. Ironically, over the past 5 years or so, that same FDA has recalled millions and by some accounts, as many as 10 million CPAP units here in the United States because of over 560 reported deaths and over 130,000 adverse health incidents potentially caused by CPAP use.

A recent study just showed that prolonged CPAP use actually increases the risk of adverse cardiovascular events. Yet despite all those warnings, CPAP remains the go-to first-line treatment option for up to 95% of patients first diagnosed with sleep apnea. It is difficult to imagine a more perfect scenario or market timing for Vivos. Our technology is clearly superior to virtually every other option for most people. And based on our experience in Las Vegas and elsewhere, it is widely preferred by a large majority of patients over its primary competition, which virtually no one really wants to use every night for the rest of their lives. So we have the right patented and FDA-cleared products or technology, and we have a large and growing market to service. Our challenge has always been figuring out the best way to get our breakthrough solutions into the market. And we believe this past quarter's results show that we've struck upon the right model to do just that.

Our strategic pivot away from a reliance on dentists and towards more direct affiliations with or acquisitions of medical sleep practices and testing centers was designed to put Vivos technology and solutions in front of far more OSA patients while yielding a higher financial return to our company. We see these third quarter results as a validation of our core thesis, which was that when OSA patients are fully informed and presented with the full measure of clinical treatment options, a large majority will choose Vivos over the alternatives, including CPAP.

Now to briefly review how we got here. In June, we closed on our acquisition of Sleep Center of Nevada. This group medical practice in the Las Vegas area specializes in a full range of in-lab and home sleep testing solutions with corresponding sleep study interpretations and consultations. Historically, SCN did not venture into the treatment aspect of things, but a large majority of their patients were referred by SCN medical professionals for CPAP and a small minority were referred for traditional oral appliance therapy.

One important factor here behind our success to date at SCN has been that the level of cooperation and buy-in from the existing SCN medical team and support personnel in Nevada has exceeded our expectations. In fact, 2 of the lead sleep MDs at SCN and their families were among our very first patients. Having the full and unwavering endorsement of the medical team at Sleep Center of Nevada who have been waiting for a viable alternative option for CPAP to CPAP or surgical solutions for their patients has been critical to the ultimate success of our model.

As a result of the SCN acquisition, Vivos established what we call Sleep and Airway Medicine Centers or what we call SAMC centers in 2 locations, one being co-located in the same building as SCN's flagship center, which we call Charleston; and the other in Henderson, Nevada, a Las Vegas suburb. The purpose of these operations was to educate and evaluate SCN's patients for treatment and provide them with whatever treatment option they might choose. Our SAMC clinics there are staffed by what we call our sleep optimization teams of medical, dental and specially trained providers and staff. These teams are at the heart of our new model and are driving the revenue growth we experienced in the third quarter.

Now, early in the third quarter, we realized that the demand for SAMC services was far outstripping the production capacity of our SAMC centers and teams. We, therefore, immediately moved to expand the facility at Charleston and relocate the facility at Henderson. Concurrently, we recruited, hired, trained and deployed additional sleep optimization team members as rapidly as we could. These efforts have proceeded ahead of schedule and under budget. However, the costs associated with such growth are immediate and occur for up to 60 days or more prior to when the first patients can be seen and revenue production can kick in. This reality has impacted our third quarter results by showing higher-than-normal expenses relative to recognized revenue.

In addition, as Brad mentioned, every day we are learning lessons on the ground that over time will help us optimize existing and expanded operations. This includes things like the time it takes to assemble teams to service demand, train those teams and obtain in-network insurance coverage. We are applying these lessons and thus, we expect that revenue growth in the coming quarters will outpace expenses as we more fully deploy these new teams into 2026.

We believe we are currently servicing significantly less than 40% of the potential new patients being tested each month at Sleep Center of Nevada. We believe there are even more legacy SCN patients out there who are either dissatisfied with their CPAP units or who have discontinued their CPAP treatment altogether and are looking for alternatives. Well over 210,000 OSA patients have been tested and seen by SCN providers since 2019. And as of now, we have not even begun to address that deep well of patients.

As of today, this overall excess in patient demand for appointments and services has us booking patients out into the latter part of February 2026. Ideally, patients should expect no more than to have to wait 2 to 3 weeks out for their next visit in order to maintain momentum and enthusiasm for treatment. So our operations and HR teams have been working very hard to expand our production capacity there in Las Vegas. As I just mentioned, we've expanded our facilities and significantly increased the size and number of our teams in order to more efficiently handle this demand with more to come.

In addition, after some great work by our SCN sales staff, a local and very large cardiology practice with multiple locations has recently been referring many more cardiology patients than they were earlier in the third quarter, adding to the congestion and making the urgency of our expansion efforts even more acute. As our capacity expands and based on current trends, we anticipate that this cardiology practice could eventually refer several hundred patients per month. If that proves successful, that funnel may in and of itself become yet another avenue for us to deliver turnkey sleep disorder treatment options to large clinical groups, whether they be primary care, cardiology, neurology, pediatrics, internal medicine or even OB/GYN doctors. Each of these medical specialties regularly deals with patients who have OSA or another sleep disorder. Through our SAMC model, Vivos is very well positioned to meet those needs in a win-win relationship that is expected to be highly accretive to Vivos.

So in terms of our current revenue-generating capacity in Nevada, we have been somewhat constrained to date by the number of fully licensed and credentialed dental providers on our sleep optimization teams. We currently have a number of new dentists and nurse practitioners in the onboarding process, and we expect to have sufficient providers fully licensed and well on their way to being fully credentialed in the first part of 2026. There is a usual and customary credentialing process that all new providers must go through with third-party insurance payers. We are actively working with the payers and our consultants to expedite that process, which typically takes anywhere from 2 to 6 months depending on the payer. Certain payers have recently consented to us billing out the codes we need to optimize coverage and reimbursement. So we do see progress along those lines.

Now as we have been saying for some time, OSA patients who have either failed CPAP or who have just been diagnosed have been accepting Vivos treatment at high levels. This has happened despite many patients not always having full coverage from their insurance payer. In Las Vegas, for example, just under 2/3 of SCN patients who are presented with a full array of clinical treatment options choose some form of Vivos oral appliance treatment with an average dollar amount per case just over $5,000. Most patients are paying at least some of those amounts out of pocket or with the help of third-party financing. We expect that dollar value per case to rise further as we continue to add diagnostic and therapy services and as our staff gains valuable experience in explaining and presenting treatment options.

As mentioned in our 10-Q filed today, we have several initiatives planned for 2026 and beyond, which have the potential to further increase the number of OSA patients we can service in both current and new markets. Such initiatives include, but are not limited to, the expansion of diagnostic and treatment services, the establishment and rollout of a pediatric OSA program and the collaboration with certain specialty medical groups like the cardiology practice there in Nevada that I mentioned earlier, who treat patients with comorbid OSA, but who lack the ability to test, evaluate and treat such patients within their existing practice environments.

In addition to our acquisition model, like we have with SCN in Las Vegas, Vivos has developed and refined a new collaboration affiliation model for sleep centers not interested in being acquired outright. Under our refined affiliation model, Vivos retains full operational control over the patient experience and the provision of treatment through its managed clinical practices while collaborating with the local sleep clinic to ensure patients receive the full array of OSA treatment options. These health care delivery operations have been properly structured and reviewed by legal counsel to ensure full compliance with both state and federal health care laws. We've already put this refined collaboration model into practice.

In July, Vivos executed an agreement with MISleep LLC, a Michigan sleep specialist entity engaged in sleep testing and OSA treatment in the Greater Detroit area. We expect to have this fully operational and seeing patients by the first week of December with one nearly complete sleep optimization team already trained and ready to begin seeing patients and with the potential for additional teams to be deployed in 2026 according to demand. We believe this new model corrects some of the issues we faced with our first strategic alliance in 2024 here in Denver, and we believe it will be very attractive to sleep center operators and owners who may not want to be acquired by us, but are looking to grow their business and referral networks by offering a highly differentiated treatment package to their OSA patients.

Our M&A team continues to field phone calls and inquiries from both acquisition and affiliation prospects around the country. We are currently in negotiations with several potential candidates in various key markets. Given our experience with SCN, we believe these opportunities should be similarly accretive. In summary, we believe this initial success at SCN is a strong indication of the potential and upside of our business. As we roll forward, we expect to continue to modify and refine our model to make it even more efficient with the potential for even better gross margins. Furthermore, we expect that this model and in particular, our affiliation model is highly replicable and scalable across multiple markets.

Although these third quarter results are early returns and without diminishing the headwinds that remain, we firmly believe this new model will continue to be highly accretive to top line revenue growth, which will, in turn, reduce our cash burn and move us closer to bottom line profitability. We believe that this methodical effort patiently executed over time has now put Vivos in a much better position to realize the full potential of our technological advantages and industry-leading products and services.

And that concludes our prepared remarks. Now we'll be happy to take questions. Operator?

[Operator Instructions] Your first question comes from the line of Lucas Ward from Ascendiant Capital Markets.

Congrats on the quarter. So now that we have this acquisition in the mix, how should we model sales for the next few quarters? Like what's the growth potential?

Well, I would say, Lucas, that we expect the revenues, the top line revenues to continue to grow. We are not yet anywhere close to full capacity for our teams that are out there right now. The key element here is the addition to our teams of the dental providers and the nurse practitioners. These providers are where the -- they're the source of revenue-generating activities. And so as we now have several new doctors and new nurse practitioners in the queue, for both licensing and credentialing, then we're going to continue to see that revenue growth grow rather dramatically.

And we do believe that as those providers are deployed, that what you're going to see is you're going to see the proper settling out of and sort of rightsizing between our expenses and our revenues. And as we tried to say a minute ago, we've been carrying additional expenses here even in the third quarter, we've been carrying expenses beyond what would be what I would consider steady-state operational levels. And that's just because we had to hire -- you have to hire in advance and then you deploy it and then you get the revenue boost after you deploy it that rationalizes your expenses, your cost of labor.

Okay. So okay. So there's an upfront investment in personnel and then sort of a delayed benefit in terms of revenues. Like how big is that gap? Is it a quarter or 2?

It will be -- it's a little bit of a -- there's a ramp. And that ramp is probably going to be depending on how quickly we get our doctors licensed and credentialed, it's probably a 3- to 6-month ramp. But it's not like we can't start generating revenues. In most cases, we can start generating -- we have providers in place. We just don't have the optimal number of providers. So we're leaving money on the table until we can get our provider teams built up and credentialed. And so that's where that comes. But I would say for most -- in most cases, to get to full optimized revenue levels, I would give it a 6-month ramp.

Okay. And then in terms of the additional operating expenses that we saw in this quarter, presumably some of that was sort of onetime or acquisition related. I'm just wondering like what would be reasonable in terms of operating expenses like next quarter or the quarter after?

Well, if you look at the way that we have structured these SAMC operations, our SAMC operations at steady state should be throwing off contribution margins of 50% to 60%. And so that's our model. That's what we're expecting and anticipating. And there's nothing that's happened thus far to dissuade us from that analysis. We had that analysis going in. We're now 3 or 4 months along. There's nothing that dissuades us from that. So if you -- when you get in your model, when you get to steady state and you assume contribution margins of roughly 50%, 55%, you're going to be right there with where we expect to see these things operate long term. And then as we continue to experience excess demand, we'll be expanding the number of teams in order to meet that demand in each market.

Okay. Okay. Last question on cash flow breakeven, can you give us an update on your -- kind of your goal there?

Well, our goal is cash flow breakeven. I mean, there's just no question about it. And I don't mean to be -- I don't mean to take that question lightly. But we are -- the ability to generate profit at the practice level from these SAMC centers is directly tied to our abilities to generate cash flow breakeven. Now, we have expanded our home-based infrastructure in our accounting teams, and our IT infrastructure and our personnel so that we can handle this growth. So there's been some additions to our team that are -- that we think are essential to us being able to properly manage and handle this growth. But eventually and not too far down the road, the accretion of profits and revenues from our SAMC center operations will basically turn the corner, and we will see this company get to cash flow breakeven. I hesitate to say exactly when that will happen, but the further out that we get, the more of these affiliations and acquisitions that we do, the closer we will be to cash flow breakeven.

[Operator Instructions] Your next question comes from the line of Robert Sassoon from Water Tower Research.

Exceptional quarter. A question, under the new business model and with revenues on the rise, how should investors look at the company now and in 6 months from now?

Well, that's a great question. And I think the answer to that, Robert, is that, look, we have waited for nearly 9 years in this company to actually settle in on a model that was equal to the technological advantages that our product line had. To be able to finally find that model and to monetize it, that's why we're so enthusiastic about this. But the full measure of what this model is going to do for this company is still down the road. I mean, it's still going to continue to grow. I mean, we're thrilled by these results. Don't get me wrong. But the -- the best is yet to come. And so we see this as just the very first stage of a long march towards profitability and expansion and growth because this model is replicable, it's scalable, and we can take this model and apply it in virtually any market in the United States and then beyond.

So as I think about this from an investor standpoint, I mean, when you look at the valuations that our company has in the market right now and relative to what's actually happening here on the inside of this company, I think the potential for continued growth is just extraordinary. And so -- I mean, obviously, I'm biased, but I would say that as an investor, you should continue to watch for what's happening and what we report in the months and weeks ahead. What we report about how much progress we're making with new affiliations. I mean, we talked a little bit about this exciting new opportunity with medical specialty groups. We are really excited about the potential for actually working right alongside cardiology and neurology practices, in particular, because they have a very acute interest in seeing that their patients who have obstructive sleep apnea somehow find a way to get tested and treated for that sleep apnea and nobody is filling that void right now.

And so we feel like we have a value proposition and a technology that can actually do that. And it's a very low-cost way for us to get -- to deploy teams and get involved with them and satisfy that need. So what I would say is that over the next 6 months, 9 months, 12 months, watch and see how many affiliations we're doing and the progress of our current affiliations as a sort of a bellwether indicator of what's to come because these deployments, these SAMC centers and these other teams that we have, all of that is highly accretive revenue, both top line and contribution margin to our bottom line. So it's really -- we finally found a way to monetize this in a very, very effective way. So I think this is really -- as I mentioned in my opening statement, I think this is a true inflection point for this company and that the future is very bright from that respect.

That sounds like a very interesting development. We'll definitely monitor that. Maybe a question to Brad. How does the recognition of revenue differ between the various models?

Great question, Robert. In the case of an acquisition like SCN, our new model allows us to capture sales at the point in time when shipment of the related product occurs as well as OSA diagnostic and treatment revenue. In the case of contractual alliances, through varying arrangements, we capture revenue from appliance sales as principal in the transaction. And depending on the agreement, either pay a fee or split gross profit or net income with sleep medical provider affiliate.

Operator, there are no further questions?

Yes, we do have no further questions at this time. So I'd like to turn the call back to Mr. Kirk Huntsman for closing comments. Sir, please go ahead.

Thank you, operator. Well, I would just like to thank everyone for joining us on today's call. And again, thank you for your continued interest in Vivos Therapeutics. This is obviously a very exciting time for Vivos as we begin to reap the fruits of our business model pivot. We look forward to sharing our continued progress with you as we continue to execute on our plans during the remainder of 2025 and into the next year. Thank you all, and have a very good evening. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.

Good morning. On behalf of our Board of Directors and our officers and employees, I would like to welcome everyone to the 2025 Annual Meeting of Stockholders of Vivos Therapeutics, Inc., which is being held via live webcast.

I am Kirk Huntsman, Chief Executive Officer and Chairman of the Board of Directors of Vivos. I will act as Chair of this meeting. Here with me today is Brad Amman, our Chief Financial Officer, Secretary and Treasurer, who will act as the Secretary of the meeting; and Donna Ackerly of Lioness Consulting, our proxy solicitation adviser, who has appointed as the Inspector of Election of this meeting. Also present today in listen-only mode are the members of our Board of Directors as well as many of our employees and our outside legal counsel.

As we did last year, we are pleased to hold our annual meeting virtually via the Internet. Virtual shareholder meetings are increasing in prevalence and allow for improved access and increased attendance. By hosting our meeting virtually, all of our shareholders are more easily able to attend. All stockholders of record on September 8, 2025, are eligible to vote either by proxy or virtually at this meeting.

If you have already submitted a proxy to the company and do not wish to change your vote, you do not have to vote again. However, if you are a record holder as of the record date and have not submitted a proxy or if you desire to change your vote, you may receive a proxy card and vote now by e-mailing our proxy solicitation adviser, Donna Ackerly of Lioness Consulting at [email protected]. This information is on our screen. Donna is also available at that e-mail to assist our Street name holders as well.

We will now move forward to conduct the business of today's meeting. The first part of the meeting will be to conduct the business of the 2025 Annual Meeting of Stockholders as set forth in our proxy materials. We will not be taking questions during the formal business part of the meeting. Following the close of the formal portion of the meeting, we will have a question-and-answer period. As Chair of this meeting, I reserve the right to answer such questions as I deem appropriate. If you wish to submit a question for the Q&A session, please submit your question in writing using the Q&A option at the bottom of your screen.

I'd now like to introduce Brad Amman, our Chief Financial Officer, who will provide our forward-looking statement disclaimer.

Good afternoon, and welcome. Please note that various remarks that Vivos' personnel may make at this meeting about management's future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995 and related provisions of the U.S. federal securities laws. These statements include, without limitation, statements regarding our business plans and strategies or compliance with applicable regulatory requirements and future trends related to our business in the market in which we operate.

You are cautioned that actual results may differ materially and adversely from those indicated by those forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC and other filings on Form 10-Q and Form 8-K that we make with the SEC as well as our press releases. In addition, these forward-looking statements represent our management's expectations only as of today. While Vivos may elect to update these forward-looking statements, it specifically disclaims any obligation to do so, except as may be required by law. Any forward-looking statements should not be relied upon as representing our management's estimates or views as of any date subsequent to today.

Finally, please be aware that the U.S. Food and Drug Administration has given certain Vivos appliances specific 510(k) clearances to treat mild to severe OSA with the FDA clearance for severe OSA in November of 2023 and more recently, in September, 2024, the pediatric FDA clearance for treating moderate to severe OSA in children ages 6 to 17, the treatment of patients with severe OSA with Vivos-specific appliances is no longer needed to be performed off-label at the discretion of the treating doctor and is now an integral part of the Vivos treatment protocol.

Any statements made today regarding Vivos treatment or the Vivos method should be viewed in that context. Treatment of OSA in any severity or any other sleep, breathing or other conditions with any other Vivos FDA-cleared devices remains at the clinical discretion of the treating doctor. Thank you, and back to you, Kirk.

Thank you, Brad. As I mentioned, Donna Ackerly has been duly appointed as Inspector of Election for today's meeting. Prior to the meeting, Donna provided her executed oath of office, whereby she has been sworn to faithfully perform the duties of Inspector of Election with impartiality according to the best of her ability. Donna?

Thank you, Kirk. The record date for determining the holders of common stock entitled to notice of and to vote at this meeting was September 8, 2025. I have in my possession a list of stockholders as of the close of business on the record date. This list will be filed with the records of the company. I'm also in possession of an affidavit of the Stock Transfer, Vivos' transfer agent, attesting that the notice of annual meeting and proxy materials, the 2024 annual report and form of proxy card were mailed commencing on or about October 1, 2025, to each stockholder of record at the close of business on the record date. This affidavit of mailing, along with the proxy materials will be annexed to the minutes of this meeting.

On the record date, there were 7,504,807 shares of common stock issued outstanding and entitled to vote at this meeting. Each share of common stock is entitled to 1 vote. For a quorum to be present, a majority of the shares entitled to vote must be present at the meeting.

Prior to the meeting, as Inspector of Election, I submitted a report of the number of shares of common stock present or represented by proxy at this meeting. This report shows that represented at this meeting, there are either in person or by proxy, approximately 4,968,728 shares of common stock of the company out of a total of 7,504,807 shares of common stock issued outstanding and entitled to vote at this meeting.

This constitutes approximately 66% of the company's outstanding shares of common stock entitled to vote at this meeting. Therefore, I declare there is a quorum present at this meeting for the transaction of business.

Back to you, Kirk.

Thank you, Donna. We will now proceed with the matters to be voted upon at the meeting. The polls are open online and will remain open until after each of the matters to be presented at the meeting has been submitted.

The first item of business is the election of directors for the coming year. A Board of Directors of 6 members is to be elected to serve until the next Annual Meeting of Stockholders or until their successors shall be elected and qualified. The following persons have been nominated to serve as directors R. Kirk Huntsman, Dr. Ralph E. Green, Anja Krammer, Mark F. Lindsay, Leonard J. Sokolow and Dr. Matthew Thompson.

In my capacity as a stockholder, I hereby move that the foregoing persons be nominated for election as directors. Would a stockholder second the motion and also please state their name?

My name is Jennifer Hauser, and I am a stockholder of the company. I second the motion.

Since no further nominations have been made or now can be made under the company's bylaws, the nominations for director are closed.

The second item of business to come before this meeting is a proposal to approve an amendment to the company's 2024 Omnibus Equity Incentive Plan to increase the number of shares of our common stock available for issuance under the 2024 Omnibus Plan from 1,600,000 shares to 4,100,000 shares as described in the proxy statement for this meeting.

In my capacity as a stockholder, I hereby move that this proposal proceed. Would a stockholder second the motion and also please state their name?

My name is Jennifer Hauser, and I am a stockholder of the company. I second the motion.

The final item of business is to ratify the appointment by the Audit Committee of the Board of Directors of the company of the firm of Baker Tilly US as successor to Moss Adams LLP as Vivos' independent registered public accounting firm for fiscal year ended December 31, 2025. In my capacity as a stockholder, I hereby move that the foregoing motion proceed.

Would a stockholder second the motion and also please state their name?

My name is Jennifer Hauser, and I am a stockholder of the company. I second the motion.

All matters to be voted on at this meeting have now been presented. If you have not already voted or you would like to change your vote, please do so now by e-mailing Donna Ackerly of Lioness Consulting at [email protected] as I described earlier.

A majority of the votes cast at this meeting is required to approve each of the matters presented at this meeting. We will pause for a moment to ensure that those wishing to vote now may finish doing so.

[Voting]

At this time, everyone should have completed voting. This concludes the presentation of the business items on the agenda for this annual meeting. The polls are now closed. We will now pause for a moment to allow the Inspector of Election to make any adjustments due to the voting that occurred at this meeting.

I now ask Ms. Ackerly to present her report as Inspector of Election on the preliminary results of the voting.

For the election of directors, each of the director nominees has received a majority of the votes cast at this meeting, and therefore, each of the director nominees is elected as a director for a 1-year term concluding at the next Annual Meeting of Stockholders or until their successors shall be elected and qualified.

For the proposal to adopt -- approve and adopt an amendment to the company's 2024 Omnibus Equity Incentive Plan to increase the number of shares of our common stock available for issuance under the 2024 Omnibus Plan, a majority of the votes cast on this proposal have voted in favor of this proposal. Therefore, it has been approved.

For the ratification of auditors, a majority of the votes cast at this meeting have voted in favor of the proposal. Therefore, this proposal has been approved.

I shall file the final report of the Inspector of Election in the corporate records of the company.

Thank you, Donna. As there is no further business to come before this meeting, I would now like to adjourn the formal business part of this meeting. I will then open up the meeting for appropriate questions from stockholders.

In my capacity as a stockholder, I hereby move that this meeting be adjourned. Do I hear a second motion to adjourn the formal part of this meeting?

My name is Jennifer Hauser, and I'm a stockholder of the company. I second the motion.

Thank you, Jennifer. I declare the formal part of this meeting adjourned. Thank you to our shareholders for your support. We will now have a brief Q&A session. Please note that as Chair of this meeting, I have the ability to deem questions inappropriate.

It appears that there are no questions in the queue. So with that, we will go ahead and close the meeting. I would just like to say on behalf of all of us here at Vivos, that we are very excited about some of the things that are happening. We look forward to presenting more detail around these things at our report of the third quarter, and we expect that to happen here later this month.

So until then, we again, express our gratitude and appreciation to all of our shareholders for your support. And we look forward to having a very good report later this month. Thank you very much.

Good day, everyone, and welcome to the Vivos Second Quarter 2025 Conference Call. [Operator Instructions] This conference call is being recorded, and a replay of today's call will be available on the Investor Relations section of Vivos' website and will remain posted there for the next 30 days. I will now hand the call over to Mr. Brad Amman, Chief Financial Officer, for introductions and the reading of the safe harbor statement. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to our conference call. A copy of our earnings press release is available on the Investor Relations section of our website at www.vivos.com.

With me on the call today is Kirk Huntsman, Vivos' Chairman and Chief Executive Officer. Today, we'll review the financial results for the second quarter 2025 as well as more recent developments and Vivos' plans for the rest of the -- 2025 and beyond. Following these formal remarks, we will be happy to take questions.

I would like to remind everyone that today's call will contain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended concerning future events. Words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks that are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties and contingencies, many of which are beyond the company's control.

Actual results, including, without limitation, the results of Vivos' growth strategies, operational plans, including sales, marketing, distribution, medical sleep provider acquisition and integration, research and development, regulatory initiatives, cost savings plans and plans to generate revenue as well as future potential results of operations or operating metrics such as the potential for Vivos to achieve future positive cash flows or profitability, and other matters to be addressed by Vivos' management in this conference call may differ materially and adversely from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include but are not limited to risk factors described in other disclosures contained in Vivos' filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31, 2024, and our other filings with the SEC, including our second quarter 10-Q, which was filed today with the SEC, all of which are or will be accessible on the Investor Relations section of Vivos' website as well as the SEC website. Except to the extent required by law, Vivos assumes no obligation to update statements as circumstances change.

Finally, please be aware that the U.S. Food and Drug Administration has given certain specific Vivos appliances 510(k) clearance to treat mild to severe OSA. With the FDA clearance of certain Vivos products for severe OSA in November of 2023, treatment of patients with severe OSA with these specific appliances is no longer needed to be performed off-label at the clinical discretion of the treating doctor and is now an integral part of the Vivos treatment protocol. Treatment of OSA of any severity or any other condition with any other Vivos FDA-cleared devices remains at the clinical discretion of the treating doctor.

For further information on our results for the 3- and 6-month periods ended June 30, 2025, please see our earnings release, which was distributed earlier today and our quarterly report on Form 10-Q, which is available on the SEC filings portion of the Investor Relations section of our website.

In the second quarter of 2025, Vivos achieved a major milestone in our pivot of our sales, marketing and distribution model to focus on sleep center provider-based alliances and acquisitions with our June 10, 2025, acquisition of The Sleep Center of Nevada. Kirk will discuss the exciting progress we have made to date on SCN and its importance to Vivos. While this was occurring, we continued to wean ourselves off of our legacy VIP enrollment revenue. The combination caused us to experience some expected increases in cost, much of which related to SCN and declines in VIP enrollment revenue where VIPs pay Vivos to get trained.

For the second quarter of 2025, we saw a slight decrease in revenue, down about 6% to $3.8 million compared to $4.1 million in the second quarter of 2024. The decline in revenue reflects additional expenses related to the transition and integration of our SCN into our operations. On the product side, appliance discounts impacted product sales by $600,000. However, we saw a silver lining as our guide sales picked up, offsetting the decrease by $0.5 million. In services, while VIP enrollment revenue declined by $1 million in the second quarter, we made significant gains elsewhere.

Importantly, we saw an immediate $500,000 uplift in sleep testing service revenue attributable to SCN, and that's just for the period from June 10, which was the SCN closing through the end of the quarter. We are very encouraged by this. We saw a $400,000 boost in sponsorship, seminar and other service revenue as well.

Looking at the first half of 2025, our revenue decreased by $600,000 to $6.8 million compared to the same period in 2024. This 9% decline was primarily due to our -- an expected $1.7 million drop in VIP enrollment revenue as we pivoted away from our legacy VIP-focused model. However, the expected decline in enrollment revenue was partially offset by increases in sleep testing revenue of $0.5 million from SCN as noted and increases in sponsorship and seminar revenue of $0.5 million.

Our oral client sales also tell an interesting story. In second quarter, we sold 4,116 arches for $1.9 million, a 5% revenue decrease from second quarter of '24. This shift reflects our higher volume of guide sales, which generate lower revenue compared to our more advanced care appliances. Cost of sales and operating expenses increased significantly, primarily due to our acquisition and integration of Sleep Center of Nevada. The closing of the transaction and integration of SCN led to higher quarter-over-quarter professional fees, personnel costs and infrastructure expenses.

The primary cause of this increase was approximately $1.8 million in costs associated with acquiring and integrating SCN, including professional fees of about $900,000, salaries and wages of approximately $0.5 million and infrastructure costs of approximately $300,000. Our operating loss widened to $4.9 million in second quarter and $8.8 million for the first half of 2025, reflecting these higher expenses and lower revenues during our strategic transition.

On the cash flow front, we used more cash in operations and investing activities compared to last year, largely due to our acquisition efforts and increased net loss, however, as we secured significant debt and equity financing providing us with $11.5 million in net cash from financing activities. Of note, the equity financing came from an affiliate of our existing significant investor, Seneca Partners. As of June 30, 2025, our balance sheet showed total liabilities of $21.5 million, with cash and cash equivalents of $4.4 million and stockholders' equity of $4.6 million.

In summary, while we are seeing some short-term impacts on our financials, these numbers reflect our ongoing transition and investment in the future of our company, particularly through the SCN acquisition, which we are extremely encouraged by, both on its own and as a catalyst to our exploration of similar acquisitions and similar sleep provider collaborations. We believe these strategic moves are setting the stage for stronger performance in the upcoming quarters. For more detailed information, I refer you to our earnings release and to our full Form 10-Q filed earlier today.

And with that, I'll hand the call over to our Chairman and CEO, Kirk Huntsman.

Thank you, Brad. Good afternoon, everyone, and thank you for joining us on today's conference call. The second quarter of 2025 was a period of significant change for Vivos and the culmination of nearly 2 years of laying the groundwork for our new model. As previously announced, during the second quarter and subsequently, we completed the acquisition of The Sleep Center of Nevada, which we refer to as SCN, and have been rapidly ramping up our operations there.

Generally speaking, what we found there since closing the transaction in early June has been extremely encouraging and above our forecast. First, the level of cooperation and buy-in from the existing SCN medical team and support personnel in Nevada has exceeded our expectations. In fact, 2 of the lead sleep MDs at SCN and their families were among our very first patients. Having the full and unwavering endorsement of the medical team at SCN who have been waiting for a viable alternative option for CPAP for their patients is critical to the ultimate success of our model.

Second, there appears to be far more OSA patients interested and willing to accept Vivos' treatment as alternatives to CPAP than we had forecast, so much so that we are already working to expand our physical facilities and also to recruit, hire and train additional providers and staff in order to handle the patient demand. In that respect, to date, we have created and successfully deployed what we are calling sleep optimization or SO teams. Each SO team consists of approximately 16 medical, dental, and support staff who are all specially trained and equipped by Vivos.

At present, we have deployed 1.5 new sleep optimization teams that will help drive the growth of each center. By forming discrete SO teams, we believe we can optimize productivity and collaboration among providers and staff. The primary focus of each SO team is to ensure that each and every patient is fully informed and educated about all treatment options and what might be best for their condition and situation and then to assist them in getting into their treatment of choice, which most of the time involves Vivos' products and services.

In light of this progress and the growth that it portends, we worked hard to secure significant financing to fund the acquisition and to support the current and future growth of the company. As our growth trajectory continues to rise and as other similar acquisition and affiliation opportunities materialize, we fully expect to raise additional growth capital to fund that growth.

Now let me return to our core message and provide you with further details on our progress at SCN and why we believe it portends well for our business model. As we've mentioned, the integration of SCN is well underway with 2 locations already integrated ahead of schedule and under budget. We began seeing patients late in the second quarter. As I just mentioned, initial patient demand has outpaced our capacity to service them. And we believe we are currently servicing significantly less than 40% of the potential new patients being tested each month at SCN.

We also believe that there are even more legacy SCN patients out there who are either dissatisfied with their CPAP units or who have discontinued their CPAP treatment altogether and are looking for alternatives. Keep in mind that well over 200,000 OSA patients have been tested and seen by SCN providers since 2019. As I just mentioned, we have currently deployed 1.5 sleep optimization or SO teams across 2 locations in Las Vegas. To meet the demand, we are in the process of expanding 1 SCN location to accommodate 2 full-time SO teams there.

In addition, we are relocating and expanding a second SCN location where we expect to have 1.5 SO teams deployed during the fourth quarter of this year, bringing our total to 3.5 SO teams in that market by year-end. Another full SO team is expected to be deployed in the first quarter of 2026, bringing our total to 4.5 SO teams across 2 locations. And we are -- and we currently believe that there is the potential to deploy up to 8 total SO teams at SCN based on the current demand.

Now to quantify this, based on our limited operating experience to date, we believe each fully operational SO team can process approximately 250 patients per month, potentially generating over $500,000 in monthly net collections with contribution margins above 50%. Obviously, there will be some ramp-up times associated with each team being able to operate at optimal levels. The existing SO teams are experiencing multi-week backlogs, and there is a sense of urgency to onboard new SO teams as quickly as possible.

As mentioned in our 10-Q filed today, we have several growth initiatives planned for the remainder of 2025, 2026 and beyond, which have the potential to further increase our growth -- our current growth and also in new markets. Such initiatives include but are not limited to the expansion of diagnostic and treatment services, the establishment and rollout of a pediatric OSA program, and the collaboration with certain specialty medical groups who treat patients with comorbid OSA but who lack the ability to test, evaluate and treat such patients within their existing practice environments.

There is a usual and customary credentialing process that also affects our ability to scale that all new providers must go through with third-party payers. We are actively working with payers and our consultants to expedite that process, which we expect will take anywhere from 2 to 6 months depending on the payer.

In addition to our acquisition model like SCN in Las Vegas, Vivos has developed and refined a new collaboration management model for sleep centers not interested in being acquired. Now unlike our 2024 strategic collaboration with Rebis Health here in Colorado, under our new and refined model, Vivos retains full operational control over the patient experience and the provision of treatment through its managed clinical practices while collaborating with the local sleep clinics to ensure patients receive the full array of OSA treatment options.

Under this new collaboration management model, in July, Vivos executed an agreement with MISleep LLC, a Michigan sleep specialist entity engaged in sleep testing and OSA treatment in the greater Detroit area. We expect to have this fully operational with one full SO team deployed in the fourth quarter this year and expect further SO teams to be deployed in 2026. We expect this new model will be very attractive to sleep center operators and owners who may not want to be acquired by us but who are looking to grow their business and referral networks by offering a highly differentiated treatment package to OSA patients.

Our M&A team continues to field calls and inquiries from both acquisition and affiliation prospects around the country. We are currently in negotiations with several potential candidates in various key markets, with one potential acquisition currently under an exclusive letter of intent. Given our experience with SCN, we believe these opportunities should be similarly accretive.

In summary, we believe this initial success at SCN is a strong indication of the potential and upside of our new model. As we roll forward, we expect to continue to modify and refine the model to make it even more efficient and with potential for even better gross margins. Furthermore, we expect that this model, including both acquisitions and affiliations, is highly replicable and scalable across multiple markets. It looks to be highly accretive to top line revenue growth as well as bottom line profitability. We believe that this methodical effort patiently executed over time has put Vivos in a much better position to realize the full potential of our technological advantages and industry-leading products and services.

And that concludes our prepared remarks. Now we'll be happy to take questions. Operator, could you please poll for questions?

[Operator Instructions] Your first question comes from the line of Scott Henry from AGP.

Certainly really interesting pivot with these SO teams and the medical relationship. I guess, Kirk, for starters, or Brad, Q2 was a nice sequential increase from Q1, numbers we haven't seen for a little bit. How should we think about the revenue in Q3 and Q4 relative to Q2?

I think the revenue will begin to track our ability to deploy these SO teams. I think you'll see a continuation of the expiration really of our old model and the replacement of the revenue with higher margin and more sustainable revenue from our new model. So as we deploy new teams and as we expand our footprint across not only Las Vegas but other markets that we're looking at right now, I think you're going to see that begin to track. And what we've tried to do here is provide investors with a way to sort of think about this with these SO teams. So that's -- I think as those teams get in place and start to produce, you'll start to see our revenue growth and everything track accordingly.

Okay. So the $3.8 million in -- hello?

Sorry. I was just going to -- your first part of your question was around first quarter revenue and the growth between first and second quarter sequentially. And you're exactly right. We increased revenue around $800,000 from Q1 to Q2 to $3.8 million and that was a 27% growth. The -- what you'll see, I think, going forward is more growth on the product side of the house rather than the service side of the house, primarily because of the additional referrals from SCN into Vivos products.

Okay. That's helpful, Brad. And you did have some strength in the sleep testing services in the sponsorship line. Will those continue or will those trend back down? Just trying to get a sense of how this model comes together.

So just remember that at SCN, all that they do there today and historically is test and consult with patients. So the testing revenue increase is a direct reflection of the business operations that we acquired. And I think we're just beginning to see the -- see that revenue line appear, and the growth in that revenue line will continue as we bring on more testing centers, doing more tests and providing patients with more consults.

Where we come into the picture is after the tests are done and those patients are referred over for treatment, that's where the treatment that we provide through our -- what we call our SAMC centers, which is our Sleep and Airway Medicine Centers. So the patients start with the medical providers. They are tested and consulted with the results of those tests. Then if they're positive for OSA, they're referred over to our centers to be evaluated and educated about their treatment options.

Okay. Great. And then on the OpEx side, OpEx was about $7 million in 2Q '25. Would we expect that to be the new elevated rate under this new model with the acquisition of SCN? Or is there some onetime events within those numbers?

Yes. We -- there were some onetime events in this quarter certainly because of the acquisition of SCN. We have some professional costs and more onetime fees, accounting and legal fees that were more related to the transaction, which will not recur. We do have salaries, about a $500,000 increase in salaries, and infrastructure costs were about another $300,000. Those -- that $800,000 will continue, but we do have around $700,000, $800,000 worth of costs that are nonrecurring, that are really specific more toward the acquisition of SCN and some of the due diligence that we had to do around that and which are all more onetime costs.

Okay. So there's about $700,000 to $800,000 in onetime. And then was SCN for the -- in the numbers for the full second quarter or is it just part...

No, no. We just started consolidating those at the date of close, which was June 9. So we only had 20 days of activity in the quarter from SCN, which generated about $500,000 of revenue from their legacy sleep center business.

[Operator Instructions] The next question comes from the line of Robert Sassoon from Water Tower Research.

You talked about the SO teams. How do you go about recruiting those professionals? And is there sort of a time line in your mind as to how long you can put together each team?

Yes, it's a good question. So it takes several weeks for us to put the word out and sift through the resumes that come in and evaluate the providers who apply for things. So it's a -- there's a full court press type effort to get one of these SO teams put together. But once we have the team together, we like to train them together as a team. If we can get 2 of them on at a time, which is I think where we're at right now, we're trying to add 2 more out there, and so to the extent we can train up all these people at the same time, that gives us a -- that gives us some economies of scale.

But what we found is that the demand for -- the job demand for -- and the available labor pool for the positions that we're advertising for and that we're looking for seem to be very robust. We're not having any difficulty recruiting for these type positions, and then we can train up the teams in fairly short order.

Okay. Good. You mentioned that you're always looking for opportunities for acquisition. But are you prioritizing bedding down the SCN acquisition? Or are you going to be opportunistic and take -- and look at -- and acquire or partner with other sleep centers?

Well, I think if we were to just sort of curtail the evaluation of other acquisition possibilities or prospects, I mean, we could spend the next 10 years optimizing SCN. There's that much potential there. And honestly, we're going to continue to do that. But I believe our operations team has demonstrated the ability to walk and chew gum at the same time.

And so I think what we're going to do is we've already begun hiring some strong leadership, not only nationally. I think those of you who follow us note that we hired a couple of strong senior management level people, one in human relations and the other in operations. And we're going to continue to build the bench strength of our operations team so that we can go into a market, make the acquisition or affiliation, establish the SO team or teams that are necessary to get things started. And then from there, we'll just keep moving along. And we'll leave behind a capable and strong SO team or a number of teams with strong regional leadership and management. We just actually hired our first regional manager out there at SCN. And these people, as they demonstrate their capabilities to lead and to just sort of make things happen, then we'll continue on and continue forward.

We have no shortage of opportunities to affiliate and acquire, and/or acquire additional SCN type groups throughout the country. And we're getting -- as the word has spread, we're getting calls every week, it seems like, inquiring about whether we can come out and evaluate and explore opportunities really throughout the country.

Yes. I was -- just following up on the SOT question. Have you actually worked with SOTs before? Has there been any issues you would consider?

Yes, that's a great question. So the senior management team here at Vivos was effectively the same senior management team that rolled out one of the very first dental service and support organization. They're called DSOs. This is the corporate roll-up of dental practices which we began back in 1995. And we have -- over the years, we have operated and managed -- now they weren't called SO teams back in that day but dental teams consisting of anywhere from 10 to 20 staff members and all of them with a common mission and purpose and coordinating various professionals.

Sometimes there would be hygienists, general dentists, specialists all working under the same dental office. So this is something that this particular management team is extremely well suited to. We've been here before. We know how to do this. We know how to do this well. I think the fact that this operations team has brought this all about in a very short -- relatively short period of time, on time, under budget and performing at the level it is right out of the gate, I think, speaks volumes about our ability to execute this as we go. So this is an experienced group of people doing something that we've done successfully in the past. And we continue to -- we see our ability to leverage this and take this out as something right in our wheelhouse.

Right. Just another question on the balance sheet. You've taken on a bit of debt now, fairly expensive debt, I think. Are there any plans to refinance that? And/or what -- maybe you can give us a run-through on the financial strategy going forward.

Well, we always are seeking to reduce the cost of capital. And we realized that the financing that we secured for SCN was very much in the expensive -- on the expensive end of the scale. We also realized that we have a model now that we didn't have before that has a certain predictability to it and consistency and the things that lenders or more conventional financing entities would look for. And so we're always looking to reduce our cost of capital.

So I can just say that we believe we have some very good and deep relationships out there that we intend to pursue and to tap as those type of financings become available and as our model matures and grows and the predictability and confidence of it continues to evolve. So yes, we will continue to look for that sort of thing. And if our acquisition model continues to evolve and performance matches what we've seen already in the first little bit over time, then it opens up the door for us to do bank lending with credit facilities and all kinds of things that lower the cost of our acquisition funds even further. So we're very familiar with that type of thing and capable of doing that as we go.

Yes. And as a final question for me is, is there a sort of a level of revenues you need. At what point you think it could be cash breakeven? At what point of revenue?

Well, we're deploying these highly accretive and highly profitable SO teams as rapidly as we can. We have no shortage of patients. We have some constraints around the physical plant and facilities that we're operating out of right now. We're really putting a full court press effort to make sure that we expand the facilities, equip those facilities and put these teams in place as rapidly as possible, which we expect to happen early in the fourth quarter. Now as those things unfold, we're going to be in a much better position just to continue the growth and to see it become more predictable. And I don't know. Did I answer your question? I kind of got off on a tangent.

Yes, I mean, I just wondered. It's probably you'll have a better idea as the quarter -- next few quarters go on. So I guess it's really dependent on how quickly you recruit.

Yes. So we're -- let's just say this. We are actively putting these teams in place. We think that we will be -- have sufficient revenue generation and profit flowing in that we should be cash flow positive sometime in the fourth quarter. We're really pushing hard for that and that's our hope right now.

There are no further questions at this time. I'd like to turn the call back to Mr. Kirk Huntsman, Chairman and CEO, for closing comments. Sir, please go ahead.

I just want to thank everybody. This is obviously a very pivotal time for Vivos. We have been talking about this pivot and preparing to execute on this pivot for quite some time. Now that we've begun to really execute on our new model, we're just extremely encouraged by what we've seen so far. And we just -- a shout-out to our operations team who's done just a tremendous job of putting things together and making things happen.

Like I said, I feel very -- like I feel like we're all very pleased with what we're seeing so far. We think that this is something that we see no reason why we can't extend this out into the future on future acquisitions or affiliations. And we're just going to continue to methodically execute on our game plan, and I think the results will speak for themselves. We look forward to sharing our continued progress with everyone as we continue to execute in the remainder of 2025 and then into next year.

So I want to thank everybody for being here. And I think further information will be available in our 10-Q and more details and specifics as well as in our upcoming 8-K/A filing, which we'll have out in the next little while. So anyway, thank you, everybody, and we look forward to future reports. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.