ProSomnus Reports Record Fourth Quarter and Fiscal Year 2023 Financial Results
- None.
- Cost of revenue and expenses increased, affecting the bottom line despite revenue growth.
Insights
The reported growth in revenues and the strategic focus on reducing operating expenses are indicative of ProSomnus's operational success and efficiency gains. The company's significant revenue increase, both quarterly and annually, suggests strong market demand for its non-CPAP therapy devices for OSA. Notably, the 35% and 43% year-over-year revenue growth rates are impressive, potentially signaling a robust competitive position and successful sales and marketing strategies.
However, the rise in cost of revenue and operating expenses, particularly in sales and marketing, could raise concerns regarding the company's scalability and margin pressure. The 53% cost of revenue in Q4 indicates a need for continued efficiency improvements, especially as the company scales up. The cash and restricted cash decrease also warrants attention, as it reflects a significant burn rate that could impact financial stability if not managed alongside the strategic growth initiatives.
ProSomnus's record revenues highlight the growing acceptance of alternative OSA treatments in the medical device market. The company's Next Generation Remote Patient Monitoring (RPM) device represents a technological advancement that could disrupt traditional OSA treatment modalities. The successful pilot study and the FDA submission for label expansion suggest potential for market share growth in the severe OSA segment.
However, the market will be closely watching the FDA's decision on the label expansion, as it will have significant implications for the company's product reach and competitive edge. The ISO 13485:2016 certification is a positive indicator of quality management, which could enhance provider and patient confidence, potentially leading to increased adoption rates.
The strategic review of financing options indicates that ProSomnus is actively looking to fortify its balance sheet, which is important for funding future growth in the competitive healthcare market. The company's focus on maintaining high on-time delivery and satisfaction rates is essential for customer retention and brand reputation in the healthcare industry, where trust and reliability are paramount.
Moreover, the company's investment in R&D, as evidenced by the increased expenses, underlines its commitment to innovation, which is vital for long-term sustainability in the healthcare sector. The investment in clinical studies and FDA submissions could lead to expanded indications and market opportunities, but these efforts must be balanced with financial prudence to avoid overextending resources.
PLEASANTON, Calif., March 26, 2024 (GLOBE NEWSWIRE) -- ProSomnus, Inc. (NASDAQ: OSA), the leading non-CPAP therapy™ for the treatment of Obstructive Sleep Apnea (OSA), today announced financial results for the fourth quarter and year ended December 31, 2023.
Recent Business Highlights
- Generated record revenues of
$7.8 million for the fourth quarter and$27.7 million for the fiscal year 2023, a35% increase compared to$5.8 million for the fourth quarter 2022 and43% increase compared to$19.4 million for fiscal year 2022. The quarter marked the eighth (8th) sequential quarter of record revenues. - Continued focus on implementing reductions in operating expenses. Operating expenses, excluding cost of revenue, decreased over
8% compared to operating expenses reported for the second quarter of 2024 and decreased nearly19% as a percentage of revenue over the same period. - Initiated comprehensive review of financing and strategic alternatives to strengthen the balance sheet and fund future growth initiatives.
- Demonstrated technical feasibility of the Company’s Next Generation Remote Patient Monitoring (RPM) device for Obstructive Sleep Apnea (OSA). Data from a recently completed pilot study demonstrated that an oximeter embedded in a precision intraoral medical device can accurately, safely, and continuously monitor SpO2.
- Submitted 510(k) Premarket Notification to U.S. Food and Drug Administration for severe indication label expansion. Currently in substantive review phase.
- Maintained >
98% on time delivery and patient and provider satisfaction. - Secured ISO 13485:2016 certification of the Company’s quality management system
“I am thrilled to announce another record revenue quarter and fiscal year for ProSomnus, as we establish the ProSomnus EVO® precision intraoral technology as a truly differentiated therapy for Obstructive Sleep Apnea,” said Len Liptak, Chief Executive Officer. “The team worked tremendously towards executing on our strategic deliverables, and achieved a record number of procedures in both Q4 and the full year. 2023 was an impactful year, as we continued to generate and share strong clinical data supporting the use of ProSomnus precision oral appliance therapy as a first line therapy for Obstructive Sleep Apnea, advanced enrollment in the Severe Obstructive Sleep Apnea study, and prepared a robust dossier to support a premarket submission to the FDA earlier this year for label expansion to include severe OSA. We continued to fine-tune our operations in an effort to progress towards cash flow breakeven while maintaining strong top line growth. In all, it was a tremendous year of achievements as we advance our mission to position ProSomnus as the leading non-CPAP therapy for Obstructive Sleep Apnea. I am proud of the 2023 results, and I look forward to building upon this momentum during 2024.”
Financial Results for the Fourth Quarter and Year Ended December 31, 2023
Revenues increased to
Cost of revenue totaled
Sales and marketing expenses totaled
General and administrative expenses totaled
Research and development expenses totaled
Other income (expense) is comprised of interest expense and accounting charges associated with changes in fair values of certain assets and liabilities and charges associated with financings and debt restructuring. Total other expense for the year ended December 31, 2023 aggregated to
Cash and restricted cash at December 31, 2023 totaled
Conference Call and Webcast Information
Interested parties may register for the conference call at 1:30 pm PT / 4:30 pm ET, today March 26, 2024 using the following link: OSA Q4 2024 Financial Results Call. Alternatively, you may access the live webcast of the conference call by using the following link: OSA Q4 2024 Webcast. The links will also be posted in the Investor Relations section of the ProSomnus website at News & Events.
About ProSomnus
ProSomnus (NASDAQ: OSA) is the leading non-CPAP therapy for the treatment of Obstructive Sleep Apnea, a serious medical disease affecting over 1 billion people worldwide, that is associated with comorbidities including heart failure, stroke, hypertension, morbid obesity, and type 2 diabetes. ProSomnus intraoral medical devices are engineered to precisely track the treatment plan and anatomy for each patient. Non-invasive, patient preferred and easy to use, ProSomnus devices have demonstrated excellent efficacy, safety, adherence, and overall outcomes in a growing body of clinical investigations. ProSomnus precision intraoral devices are FDA-cleared, patented, and covered by commercial medical insurance, Medicare, TRICARE and many Government-sponsored healthcare plans around the world, representing over 200 million covered lives. To learn more, visit www.ProSomnus.com.
Important Notice Regarding Forward-Looking Statements
This Press Release contains certain “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended. Statements that are not historical facts, including statements about the Company’s review of potential financing and strategic alternatives, the Company’s research and development efforts, the Company’s prospects for 2024, the Company’s mission of becoming the leader non-CPAP therapy for Obstructive Sleep Apnea and the Company’s ability to fine tune its operations, are forward-looking statements. The words “expect,” “believe,” “estimate,” “intend,” “plan” and similar expressions indicate forward-looking statements, although not all forward-looking statements contain these or similar identifying words.
These forward-looking statements are not guarantees of future performance and are subject to various risks and uncertainties, assumptions (including assumptions about general economic, market, industry and operational factors), known or unknown, which could cause the actual results to vary materially from those indicated or anticipated. Such risks and uncertainties include, but are not limited to: ProSomnus’s ability to continue as a going concern; ProSomnus’s ability raise additional capital to fund its business on acceptable terms or at all; ProSomnus’s ability to regain compliance with the covenants under its convertible notes; ProSomnus’s ability to negotiate and consummate a financing or other strategic transaction; changes in the competitive industries in which the Company operates and variations in operating performance across competitors; changes in laws and regulations affecting ProSomnus’s business; the risk of downturns in the market and ProSomnus’s industry; risks related to the uncertainty of the projected financial information with respect to ProSomnus; risks related to ProSomnus’s limited operating history and history of losses; the timing of expected business milestones; ProSomnus’s ability to implement its business plan and scale its business, which includes the recruitment of healthcare professionals to prescribe and dentists to deliver ProSomnus oral devices; the understanding and adoption by dentists and other healthcare professionals of ProSomnus oral devices for mild-to-moderate OSA; expectations concerning the effectiveness of OSA treatment using ProSomnus oral devices and the potential for patient relapse after completion of treatment; the potential financial benefits to dentists and other healthcare professionals from treating patients with ProSomnus oral devices and using ProSomnus’s monitoring tools; ProSomnus’s potential profit margin from sales of ProSomnus oral devices; ProSomnus’s ability to properly train dentists in the use of the ProSomnus oral devices and other services it offers in their dental practices; ProSomnus’s ability to formulate, implement and modify as necessary effective sales, marketing, and strategic initiatives to drive revenue growth; ProSomnus’s ability to expand internationally; the viability of ProSomnus’s intellectual property and intellectual property created in the future; acceptance by the marketplace of the products and services that ProSomnus markets; government regulations and ProSomnus’s ability to obtain applicable regulatory approvals and comply with government regulations, including under healthcare laws and the rules and regulations of the U.S. Food and Drug Administration; the extent of patient reimbursement by medical insurance in the United States and internationally; and the outcome of any legal proceedings that may be instituted against the Company. A further list and description of risks and uncertainties can be found in the most recent filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements relate only to the date they were made, and the Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made except as required by law or applicable regulation.
PROSOMNUS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) | |||||||||||||||||||||||||
Three Month Period Ended | Three Month Period Ended | ||||||||||||||||||||||||
December 31 | September 30 | December 31 | December 31, 2023 vs. | December 31, | |||||||||||||||||||||
2023 | 2023 | 2022 | September 30, 2023 | 2022 vs 2023 | |||||||||||||||||||||
($) | (%) | ($) | (%) | ||||||||||||||||||||||
Revenue | $ | 7,838 | $ | 7,071 | $ | 5,792 | $ | 767 | 10.8 | % | $ | 2,046 | 35.3 | % | |||||||||||
Operating expenses | |||||||||||||||||||||||||
Cost of revenue | 4,133 | 3,580 | 2,687 | 553 | 15.4 | % | 1,446 | 53.8 | % | ||||||||||||||||
Sales and marketing | 3,378 | 3,240 | 2,415 | 138 | 4.3 | % | 963 | 39.9 | % | ||||||||||||||||
Research and development | 1,367 | 1,040 | 1,065 | 327 | 31.4 | % | 302 | 28.4 | % | ||||||||||||||||
General and administrative | 3,970 | 3,427 | 5,675 | 543 | 15.8 | % | (1,705 | ) | -30.0 | % | |||||||||||||||
Total operating expenses | 12,848 | 11,287 | 11,842 | 1,561 | 13.8 | % | 1,006 | 8.5 | % | ||||||||||||||||
Loss from operations | (5,010 | ) | (4,216 | ) | (6,050 | ) | (794 | ) | 18.8 | % | 1,040 | -17.2 | % | ||||||||||||
Other income (expense) | |||||||||||||||||||||||||
Interest expense | (1,481 | ) | (1,489 | ) | (2,405 | ) | 8 | -0.5 | % | 924 | -38.4 | % | |||||||||||||
Change in fair value of earnout liability | 110 | 3,880 | 9,260 | (3,770 | ) | -97.2 | % | (9,150 | ) | -98.8 | % | ||||||||||||||
Change in fair value of debt | 258 | 3,700 | 553 | (3,442 | ) | -93.0 | % | (295 | ) | -53.3 | % | ||||||||||||||
Change in fair value of warrant liability | 39 | 593 | 3,255 | (554 | ) | -93.4 | % | (3,216 | ) | -98.8 | % | ||||||||||||||
Loss on extinguishment of debt | (707 | ) | (9,743 | ) | (2,405 | ) | 9,036 | -92.7 | % | 1,698 | -70.6 | % | |||||||||||||
Other | (78 | ) | (3,964 | ) | - | 3,886 | -98.0 | % | (78 | ) | - | ||||||||||||||
Total other income (expense) | (1,859 | ) | (7,023 | ) | 8,258 | 5,164 | -73.5 | % | (10,117 | ) | -122.5 | % | |||||||||||||
Net loss | $ | (6,869 | ) | $ | (11,239 | ) | $ | 2,208 | $ | 4,370 | -38.9 | % | $ | (9,077 | ) | -411.1 | % | ||||||||
Year Ended | Year Ended | ||||||||||||||
December 31 | December 31 | December 31, | |||||||||||||
2023 | 2022 | 2022 vs 2023 | |||||||||||||
($) | (%) | ||||||||||||||
Revenue | $ | 27,652 | $ | 19,393 | $ | 8,259 | 42.6 | % | |||||||
Operating expenses | |||||||||||||||
Cost of revenue | 13,641 | 9,127 | 4,514 | 49 | % | ||||||||||
Sales and marketing | 13,085 | 8,865 | 4,220 | 47.6 | % | ||||||||||
Research and development | 4,802 | 2,981 | 1,821 | 61.1 | % | ||||||||||
General and administrative | 15,230 | 9,895 | 5,335 | 53.9 | % | ||||||||||
Total operating expenses | 46,758 | 30,868 | 15,890 | 51.5 | % | ||||||||||
Loss from operations | (19,106 | ) | (11,475 | ) | (7,631 | ) | 66.5 | % | |||||||
Other income (expense) | |||||||||||||||
Interest expense | (5,382 | ) | (6,120 | ) | 738 | -12.1 | % | ||||||||
Change in fair value of earnout liability | 12,190 | 9,260 | 2,930 | 31.6 | % | ||||||||||
Change in fair value of debt | 1,328 | 553 | 775 | 140.1 | % | ||||||||||
Change in fair value of warrant liability | 1,896 | 3,235 | (1,339 | ) | -41.4 | % | |||||||||
Loss on extinguishment of debt | (10,450 | ) | (2,598 | ) | (7,852 | ) | 302.2 | % | |||||||
Other | (4,571 | ) | - | (4,571 | ) | - | |||||||||
Total other income (expense) | (4,989 | ) | 4,330 | (9,319 | ) | -215.2 | % | ||||||||
Net loss | $ | (24,095 | ) | $ | (7,145 | ) | $ | (16,950 | ) | 237.2 | % | ||||
PROSOMNUS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) | ||||||
December 31, 2023 | December 31, 2022 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash, restricted cash and cash equivalents | $ | 7,063 | $ | 15,916 | ||
Accounts receivable, net | 3,839 | 2,843 | ||||
Inventory | 2,039 | 640 | ||||
Prepaid expenses and other current assets | 1,369 | 1,851 | ||||
Total current assets | 14,310 | 21,250 | ||||
Property and equipment, net | 3,358 | 2,404 | ||||
Finance lease right-of-use assets | 3,265 | 3,650 | ||||
Operating lease right-of-use assets | 5,069 | 5,633 | ||||
Other assets | 285 | 263 | ||||
Total assets | $ | 26,287 | $ | 33,200 | ||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 4,047 | $ | 2,102 | ||
Accrued expenses and other current liabilities | 6,756 | 3,706 | ||||
Equipment financing obligation | 57 | 59 | ||||
Finance lease liabilities | 1,052 | 1,009 | ||||
Operating lease liabilities | 304 | 215 | ||||
Senior Convertible Notes at fair value, current portion | 2,125 | — | ||||
Total current liabilities | 14,341 | 7,091 | ||||
Equipment financing obligation, net of current portion | 129 | 186 | ||||
Finance lease liabilities, net of current portion | 2,009 | 2,081 | ||||
Operating lease liabilities, net of current portion | 5,221 | 5,526 | ||||
Senior Convertible Notes at fair value, net of current portion | 12,152 | 13,651 | ||||
Subordinated Convertible Notes at fair value | 18,320 | 10,356 | ||||
Earnout and warrant liability | 716 | 14,802 | ||||
Total liabilities | 52,888 | 53,693 | ||||
Commitments and contingencies | ||||||
Redeemable convertible preferred stock: | ||||||
11,555 | — | |||||
Stockholders’ deficit: | ||||||
Common Stock | 2 | 2 | ||||
Additional paid-in capital | 196,731 | 190,299 | ||||
Accumulated deficit | -234,889 | -210,794 | ||||
Total stockholders’ deficit | -38,156 | -20,493 | ||||
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit | $ | 26,287 | $ | 33,200 | ||
Investor Contact
Mike Cavanaugh
ICR Westwicke
Phone: +1.617.877.9641
Email: Mike.Cavanaugh@westwicke.com
Media Contact
Heather Whalen
ProSomnus
Phone: +1.925.360.2990
Email: HWhalen@ProSomnus.com
FAQ
What were ProSomnus, Inc.'s (NASDAQ: OSA) record revenues for the fourth quarter and fiscal year 2023?
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