PLEASANTON, Calif., March 30, 2023 (GLOBE NEWSWIRE) -- ProSomnus, Inc. (“the Company”) (NASDAQ: OSA), a pioneer in precision medical devices for the treatment of Obstructive Sleep Apnea (OSA), today announced financial results for the fourth quarter and fiscal year ended December 31, 2022.
Recent Business Highlights
- Generated revenues of $5.8 million for the fourth quarter and $19.4 million for the fiscal year 2022, an increase of 32% from the same period in 2021, and 38% year-over-year from 2021
- Surpassed 200,000 devices prescribed by healthcare providers
- Commenced execution of multiple growth initiatives, including the expansion of direct sales team in the U.S. and Europe, the commercialization of our next generation sensor device, the relocation to a new manufacturing facility, and the development of marketing and medical affairs programs
- Announced first patient enrolled in the Severe Obstructive Sleep Apnea (SOS) study
- Announced full enrollment of patients with moderate to severe obstructive sleep apnea in the First Line Obstructive Sleep Apnea Treatment (FLOSAT) study
- Began trading on the Nasdaq Stock Exchange in December under the ticker “OSA”
“2022 was a monumental year for ProSomnus,” said Len Liptak, Chief Executive Officer. “ProSomnus generated record revenues and top decile growth rates, while getting the company publicly listed on the Nasdaq Stock Exchange in a challenging macroeconomic environment. We believe our rapid growth reflects increasing acceptance of our precision intraoral medical devices as a front-line treatment for mild and moderate OSA, and as a safe, effective, non-invasive, and easy-to-use alternative for patients who cannot tolerate CPAP. Listing ProSomnus on Nasdaq enables ProSomnus to access the capital markets necessary to accelerate our growth initiatives and establish ProSomnus devices as the leading option for the treatment and management of OSA.”
Financial Results for the Fourth Quarter and Fiscal Year Ended December 31, 2022
Revenue for the three-month period and year ended December 31, 2022 totaled $5.8 million and $19.4 million, respectively, reflecting increases of 32% and 38% compared to $4.4 million and $14.1 million for the same periods during 2021. On a sequential quarter basis, revenue increased 16% compared to $5.0 million for the three-month period ended September 30, 2022. Growth in revenue reflects increased volume in our EVO line of precision intraoral devices, with customer shipments of our EVO Select and EVO PH devices commencing during the fourth quarter of 2022. ProSomnus’s EVO family of devices now accounts for 75% of revenue compared to 56% in the prior year and is accountable for substantially all of the growth reflected.
Gross Margin for the three-month period and year ended December 31, 2022 was 53.6% and 52.9% respectively reflecting modest improvements on a period over period basis from 51.4% and 51.9% for the same periods during 2021. On a sequential quarter basis gross margin improved from 49.2% for the three-month period ended September 30, 2022.
Sales and Marketing expense for the three-month period and year ended December 31, 2022 totaled $2.4 million and $8.9 million, respectively, reflecting increases of 44.8% and 53.5% compared to $1.7 million and $5.8 million for the same periods during 2021. On a sequential quarter basis, sales and marketing expense increased 4.1% compared to $2.3 million for the three-month period ended September 30, 2022. Increases in the period presented reflect increases in headcount, principally direct sales personnel, increases in commissions paid commensurate with higher sales levels, and increased marketing activity.
Research and development expense for the three-month period and year ended December 31, 2022 totaled $1.1 million and $3.0 million, respectively, reflecting increases of 131.8% and 57.8% compared to $0.5 million and $1.9 million for the same periods during 2021. On a sequential quarter basis, research and development expense increased 54.8% compared to $0.7 million for the three-month period ended September 30, 2022. Research and development expenses reflect the development expenses relating to the EVO Select and EVO PH products introduced during the fourth quarter, enrollment in the FLOSAT clinical study and ongoing development efforts into our next-generation sensor device with remote patient monitoring.
General and administrative expense for the three-month period and year ended December 31, 2022 totaled $5.7 million and $9.9 million, respectively. Current period general and administrative expenses reflect the costs incurred during the fourth quarter relating to the business combination of $4.2 million including $2.2 million of non-cash stock-based compensation.
Other income (expense) for the three-month period and year ended December 31, 2022 totaled $8.3 million and $4.3 million, respectively. Other income (expense) is comprised of interest expense on debt outstanding during the course of the period presented plus the periodic non-cash mark-to-market adjustments for instruments issued during the business combination. These mark-to-market adjustments impact the valuation adjustments tied to changes in our stock price between the business combination date and December 31, 2022.
Conference Call and Webcast Information
Interested parties may register for the conference call using the following link: ProSomnus Q4 Earnings Registration Link. Participants may alternatively access the live webcast of the conference call by using the following link: ProSomnus Q4 Earnings Call. The link will also be posted in the Investor Relations section of the ProSomnus website at News & Events.
About ProSomnus
ProSomnus (NASDAQ: OSA) precision intraoral medical devices offer effective, economical, and patient-preferred treatment for patients suffering from Obstructive Sleep Apnea (OSA). ProSomnus is the first manufacturer of mass-customized Precision Oral Appliance Therapy (OAT) devices to treat OSA, which affects over 74 million people in North America and is associated with serious comorbidities, including heart failure, stroke, hypertension, morbid obesity, and type 2 diabetes. ProSomnus’s patented, FDA-cleared devices are a less invasive and more comfortable alternative to Continuous Positive Airway Pressure (CPAP) therapy, and lead to effective and patient-preferred outcomes. A growing body of research, including studies published by the Journal of Clinical Sleep Medicine and Military Medicine, suggests ProSomnus’s Precision OAT devices are an effective treatment for mild to moderate OSA. Additional clinical research has shown that ProSomnus’s Precision OAT devices mitigate many of the side effects associated with alternative treatments and improve economics for payers and providers. With more than 200,000 devices delivered, ProSomnus’s devices are the most prescribed Precision OAT in the U.S. ProSomnus’s FDA-cleared devices are authorized by the Department of Defense and the U.S. Army, and are often covered by medical insurance, Medicare, and social health programs in key international markets. 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 parties’ perspectives and expectations, are forward-looking statements. The words “expect,” “believe,” “estimate,” “intend,” “plan” and similar expressions indicate forward-looking statements. 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: (i) the effect of the announcement or the business combination on ProSomnus’s business relationships, operating results and business generally; (ii) risks that the business combination disrupts current plans and operations of ProSomnus; (iii) the outcome of any legal proceedings that may be instituted against ProSomnus or Purchaser related to the business combination; (iv) changes in the competitive industries in which ProSomnus operates, variations in operating performance across competitors, changes in laws and regulations affecting ProSomnus’s business and changes in the combined capital structure; (v) the ability to implement business plans, forecasts and other expectations after the completion of the business combination, and identify and realize additional opportunities; (vi) the risk of downturns in the market and ProSomnus’s industry including, but not limited to, as a result of the COVID-19 pandemic; (vii) costs related to the transaction and the failure to realize anticipated benefits of the transaction or to realize estimated pro forma results and underlying assumptions, including with respect to estimated stockholder redemptions; (viii) the risk of potential future significant dilution to stockholders resulting from lender conversions under the convertible debt financing; and (ix) risks and uncertainties related to ProSomnus’s business, including, but not limited to, risks relating to the uncertainty of the projected financial information with respect to ProSomnus; risks related to ProSomnus’s limited operating history, the roll-out of ProSomnus’s business and 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; and the extent of patient reimbursement by medical insurance in the United States and internationally. A further list and description of risks and uncertainties can be found in Lakeshore’s initial public offering prospectus dated June 10, 2021 and in the Company’s quarterly reports on Form 10-Q and annual reports on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) subsequent thereto and in the Registration Statement on Form S-4 and proxy statement that has been filed with the SEC by Lakeshore in connection with the business combination, and other documents that the parties may file or furnish with the SEC, which you are encouraged to read. 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 and its subsidiaries undertake 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. | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 15,916,141 | $ | 1,500,582 | ||||
| Accounts receivable, net | 2,843,148 | 2,098,982 | ||||||
| Inventory | 639,945 | 378,769 | ||||||
| Prepaid expenses and other current assets | 1,846,870 | 148,207 | ||||||
| Total current assets | 21,246,104 | 4,126,540 | ||||||
| Property and equipment, net | 2,404,402 | 3,356,595 | ||||||
| Right-of-use assets, net | 9,283,222 | — | ||||||
| Other assets | 262,913 | 154,797 | ||||||
| Total assets | $ | 33,196,641 | $ | 7,637,932 | ||||
| LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,101,572 | $ | 955,648 | ||||
| Accrued expenses | 3,706,094 | 3,078,578 | ||||||
| Revolving line of credit | — | 587,816 | ||||||
| Subordinated loan and security agreement | — | 968,493 | ||||||
| Equipment financing obligation | 58,973 | 55,333 | ||||||
| Finance lease liabilities | 1,008,587 | 926,104 | ||||||
| Operating lease liabilities | 215,043 | — | ||||||
| Total current liabilities | 7,090,269 | 6,571,972 | ||||||
| Subordinated loan and security agreement, net of current portion | — | 6,589,563 | ||||||
| Equipment financing obligation, net of current portion | 185,645 | 244,617 | ||||||
| Finance lease liabilities, net of current portion | 2,081,410 | 866,853 | ||||||
| Operating lease liabilities, net of current portion | 5,525,562 | — | ||||||
| Subordinated notes | — | 7,331,254 | ||||||
| Senior Convertible notes | 13,651,000 | — | ||||||
| Subordinated Convertible note | 10,355,681 | — | ||||||
| Earnout Liability | 12,810,000 | — | ||||||
| Warrant liability | 1,991,503 | 562,244 | ||||||
| Deferred rent | — | 57,741 | ||||||
| Total noncurrent liabilities | 46,600,801 | 15,652,272 | ||||||
| Total liabilities | 53,691,070 | 22,224,244 | ||||||
| Series B redeemable convertible preferred stock | — | 12,389,547 | ||||||
| Series A redeemable convertible preferred stock | — | 26,245,000 | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock | 1,604 | 2,456 | ||||||
| Additional paid-in capital | 190,298,562 | 150,425,960 | ||||||
| Accumulated deficit | (210,794,595 | ) | (203,649,275 | ) | ||||
| Total stockholders’ deficit | (20,494,429 | ) | (53,220,859 | ) | ||||
| Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit | $ | 33,196,641 | $ | 7,637,932 | ||||
| PROSOMNUS, INC. | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| For the years ended December 31, 2022 and 2021 | ||||||||
| 2022 | 2021 | |||||||
| Revenue | $ | 19,393,343 | $ | 14,074,649 | ||||
| Cost of revenue | 9,127,338 | 6,764,319 | ||||||
| Gross profit | 10,266,005 | 7,310,330 | ||||||
| Operating expenses | ||||||||
| Sales and marketing | 8,865,328 | 5,776,084 | ||||||
| Research and development | 2,981,271 | 1,889,208 | ||||||
| General and administrative | 9,894,899 | 4,467,576 | ||||||
| Total operating expenses | 21,741,498 | 12,132,868 | ||||||
| Loss from operations | (11,475,493 | ) | (4,822,538 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense | (6,119,806 | ) | (3,245,220 | ) | ||||
| Loss on extinguishment of debt | (2,597,842 | ) | — | |||||
| Change in fair value of earnout liability | 9,260,000 | — | ||||||
| Change in fair value of warrant liability | 3,234,586 | (190,911 | ) | |||||
| Change in fair value of debt | 553,235 | — | ||||||
| Forgiveness of PPP loans | — | 2,281,262 | ||||||
| Total other income (expense) | 4,330,173 | (1,154,869 | ) | |||||
| Net loss | $ | (7,145,320 | ) | $ | (5,977,407 | ) | ||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.71 | ) | $ | (1.51 | ) | ||
| Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 10,021,632 | 3,957,783 | ||||||
| PROSOMNUS, INC. | ||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| Three-month period ended | ||||||||||||
| December 31, | September 30, | December 31, | ||||||||||
| 2022 | 2022 | 2021 | ||||||||||
| Revenue | $ | 5,792,312 | $ | 4,997,979 | $ | 4,402,974 | ||||||
| Cost of revenue | 2,686,863 | 2,540,287 | 2,138,216 | |||||||||
| Gross profit | 3,105,449 | 2,457,692 | 2,264,758 | |||||||||
| Operating expenses | ||||||||||||
| Sales and marketing | 2,415,155 | 2,319,362 | 1,667,995 | |||||||||
| Research and development | 1,065,750 | 688,541 | 459,723 | |||||||||
| General and administrative | 5,674,961 | 1,577,048 | 1,233,158 | |||||||||
| Total operating expenses | 9,155,866 | 4,584,951 | 3,360,876 | |||||||||
| Loss from operations | (6,050,417 | ) | (2,127,259 | ) | (1,096,118 | ) | ||||||
| Other income (expense) | ||||||||||||
| Interest expense | (2,405,029 | ) | (1,421,702 | ) | (939,802 | ) | ||||||
| Loss on extinguishment of debt | (2,405,111 | ) | — | — | ||||||||
| Change in fair value of earnout liability | 9,260,000 | — | — | |||||||||
| Change in fair value of warrant liability | 3,255,342 | — | (146,577 | ) | ||||||||
| Change in fair value of debt | 553,235 | — | — | |||||||||
| Forgiveness of PPP loans | — | — | — | |||||||||
| Total other income (expense) | 8,258,437 | (1,421,702 | ) | (1,086,379 | ) | |||||||
| Net loss | $ | 2,208,020 | $ | (3,548,961 | ) | $ | (2,182,497 | ) | ||||
Investor Contact
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ICR Westwicke
Phone: +1.617.877.9641
Email: Mike.Cavanaugh@westwicke.com
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ICR Westwicke
Phone: +1.646.866.4012
Email: Sean.Leous@westwicke.com
