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Sonendo, Inc. Reports Second Quarter 2024 Financial Results and Raises Full Year Revenue Guidance

Sonendo, Inc. (“Sonendo” or the “Company”) (OTCQX: SONX), a leading dental technology company and developer of the GentleWave® System, today reported financial results for the second quarter ended June 30, 2024.

Recent Highlights

  • Generated $8.3 million total revenue for second quarter of 2024 and carried over a healthy console backlog for the second straight quarter;
  • Drove substantial increases in GAAP gross margin and adjusted gross margins (non-GAAP) to 37.5% and 40.7%, respectively, based primarily on lower manufacturing and console warranty costs;
  • Significantly reduced GAAP operating loss to $6.7 million and adjusted EBITDA (non-GAAP) loss to $5.7 million, a 61% and 55% improvement, respectively, compared to the second quarter of 2023; and
  • Raised 2024 full year revenue guidance range to $31 to $32 million, from prior guidance of $29 to $31 million

“We are very encouraged by the early results of the strategic reset we embarked earlier this year,” said Bjarne Bergheim, President and Chief Executive Officer of Sonendo. “We are driving commercial discipline through a refined go-to-market strategy and we are exceeding our own timelines for delivering on gross margin expansion, all while dramatically reducing operating expenses and free cash flow burn through a leaner, more efficient organizational structure. Additionally, the increased reliability of the GentleWave® G4 System has improved the customer experience and enabled us to successfully re-engage our legacy customer base through upgrade programs while simultaneously expanding our new-customer base, both of which we expect to drive higher procedure instrument utilization and revenue in the long-term.”

Second Quarter 2024 Financial Results

Except as otherwise indicated, the GAAP and non-GAAP financial measures presented in this press release exclude discontinued operations associated with the Company’s divestiture of its TDO practice management software segment in March 2024.

Total revenue was $8.3 million for the second quarter of 2024, a 5% decrease compared to second quarter of 2023. GentleWave console revenue totaled $2.4 million, a 9% increase compared to the second quarter of 2023, which was comprised of 35 upgrades and a 13 unit increase to the installed base. The Company’s installed base totaled 1,155 as of June 30, 2024. Procedure instrument revenue totaled $4.7 million, a decrease compared to $5.6 million for the prior year quarter. Other product revenue totaled $1.2 million for the second quarter of 2024, a $0.2 million year-over-year increase.

GAAP gross margin for the second quarter of 2024 increased to 37.5%, compared to a negative gross margin of 5.5% for the second quarter of 2023. During the second quarter of 2024 and 2023, respectively, the Company recorded in cost of sales $0.2 million and $2.9 million in excess and obsolete inventory charges related to recently discontinued products. Adjusted gross margin (non-GAAP) for the second quarter of 2024 was 40.7% compared to 28.7% for the prior year quarter.

Total operating expenses for the second quarter of 2024 totaled $9.8 million, a $7.1 million reduction compared to the prior year period.

Operating loss totaled $6.7 million for the second quarter of 2024, a $10.7 million reduction compared to the prior year quarter. Adjusted EBITDA (non-GAAP) loss totaled $5.7 million, a $6.9 million reduction compared to the prior year period.

Net loss from continuing operations totaled $7.4 million for the second quarter of 2024, a $10.7 million reduction compared to the prior year quarter.

Free cash flow burn (non-GAAP), which the Company defines as the sum of net cash used in operating activities and purchases of property and equipment, totaled $(6.7) million for the second quarter of 2024, a $3.0 million improvement compared to the prior year quarter.

As of June 30, 2024, the Company’s cash and cash equivalents and short-term investments totaled $24.2 million, and there were $20.5 million of principal payments outstanding under its term loan facility.

2024 Financial Guidance

For the full year 2024, the Company is increasing its expectations for total revenue from continuing operations to be in the range of $31 to $32 million, compared to previous guidance of $29 to $31 million.

Webcast and Conference Call Information

Sonendo will host a conference call to discuss the second quarter 2024 financial results after the market close on Wednesday, August 7, 2024, at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. Investors interested in listening to the conference call may do so by dialing (833) 470-1428 for domestic callers or (404) 975-4839 for international callers, using access code: 699662. Live audio of the webcast will be available at: https://investor.sonendo.com. An archived recording will be available on the “Investors” section of the Company’s website for replay for at least 30 days after the event.

About Sonendo

Sonendo is a commercial-stage medical technology Company focused on saving teeth from tooth decay, the most prevalent chronic disease globally. Sonendo develops and manufactures the GentleWave® System, an innovative technology platform designed to treat tooth decay by cleaning and disinfecting the microscopic spaces within teeth without the need to remove tooth structure. The system utilizes a proprietary mechanism of action, which combines procedure fluid optimization, broad-spectrum acoustic energy and advanced fluid dynamics, to debride and disinfect deep regions of the complex root canal system in a less invasive procedure that preserves tooth structure. The clinical benefits of the GentleWave System when compared to conventional methods of root canal therapy include improved clinical outcomes, such as superior cleaning that is independent of root canal complexity and tooth anatomy, high and rapid rates of healing and minimal to no post-operative pain. In addition, the GentleWave System can improve the workflow and economics of dental practices.

For more information about Sonendo and the GentleWave System, please visit www.sonendo.com. To find a GentleWave doctor in your area, please visit www.gentlewave.com.

Forward Looking Statements

This press release includes forward-looking statements (statements which are not historical facts) within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, express or implied forward-looking statements relating to the Company’s anticipated business and financial performance on an on-going basis and Sonendo’s 2024 financial guidance. You are cautioned that such statements are not guarantees of future performance and that our actual results may differ materially from those set forth in the forward-looking statements. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions; speak only as of the date they are made; and, as a result, are subject to risks and uncertainties that may change at any time. Factors that could cause the Company’s actual results to differ materially from these forward-looking statements are described in detail in our registration statements, reports and other filings with the Securities and Exchange Commission, including the “Risk Factors” set forth in our Annual Report on Form 10-K, as supplemented by our quarterly reports on Form 10-Q. Such filings are available on our website or at www.sec.gov. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent developments, events, or circumstances, except as may be required under applicable securities laws. Readers are cautioned not to put undue reliance on forward-looking statements, and the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

Use of Non-GAAP Financial Measures

Sonendo’s financial results are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). In this press release, the Company also presents various non-GAAP financial measures, including adjusted gross margin, adjusted EBITDA loss and free cash flow burn (collectively, the “Non-GAAP” measures). The Company recently revised its methodology for calculating the Non-GAAP Measures. The following tables present reconciliations of various financial measures calculated in accordance with GAAP to those Non-GAAP measures that exclude (or, in the case of free cash flow burn, include) items specified in the tables. The GAAP measures shown in the tables below represent the most comparable GAAP measure to the applicable non-GAAP measures shown in the table. For further information regarding the nature of these exclusions or inclusions, why the Company believes that these non-GAAP financial measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the Company’s Current Report on Form 8-K regarding this press release filed today with the SEC available on the SEC’s website at www.sec.gov and on the “Investors” page of the Company’s website at https://investor.sonendo.com.

SONENDO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

 

June 30,

 

December 31,

 

 

2024

 

2023

 

 

(Unaudited)

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

15,703

 

 

$

14,009

 

Short-term investments

 

 

8,533

 

 

 

32,773

 

Accounts receivable, net

 

 

4,528

 

 

 

4,790

 

Inventory

 

 

11,798

 

 

 

11,074

 

Prepaid expenses and other current assets

 

 

1,025

 

 

 

1,969

 

Current assets of discontinued operations

 

 

927

 

 

 

656

 

Total current assets

 

 

42,514

 

 

 

65,271

 

Property and equipment, net

 

 

766

 

 

 

461

 

Operating lease right-of-use assets

 

 

2,899

 

 

 

2,703

 

Other assets

 

 

124

 

 

 

128

 

Non-current assets of discontinued operations

 

 

 

 

 

9,597

 

Total assets

 

$

46,303

 

 

$

78,160

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

931

 

 

$

1,142

 

Accrued expenses

 

 

1,874

 

 

 

3,072

 

Accrued compensation

 

 

1,550

 

 

 

2,413

 

Operating lease liabilities

 

 

983

 

 

 

1,250

 

Current portion of term loan

 

 

10,800

 

 

 

24,900

 

Other current liabilities

 

 

1,592

 

 

 

1,844

 

Current liabilities of discontinued operations

 

 

 

 

 

700

 

Total current liabilities

 

 

17,730

 

 

 

35,321

 

Operating lease liabilities, net of current

 

 

1,765

 

 

 

1,423

 

Term loan, net of current

 

 

8,511

 

 

 

12,467

 

Other liabilities

 

 

428

 

 

 

530

 

Total liabilities

 

 

28,434

 

 

 

49,741

 

Commitments and contingencies

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock, $0.001 par value; authorized —10,000,000 shares; issued and outstanding - none

 

 

 

 

 

 

Common stock, $0.001 par value; authorized — 500,000,000 shares; issued and outstanding— 72,834,586 shares as of June 30, 2024 and 63,547,467 shares as of December 31, 2023

 

 

73

 

 

 

64

 

Additional paid-in-capital

 

 

461,938

 

 

 

458,357

 

Accumulated other comprehensive loss

 

 

(2

)

 

 

11

 

Accumulated deficit

 

 

(444,140

)

 

 

(430,013

)

Total stockholders’ equity

 

 

17,869

 

 

 

28,419

 

Total liabilities and stockholders’ equity

 

$

46,303

 

 

$

78,160

 

SONENDO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(In thousands, except share and per share data)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

2023

 

2024

 

2023

Revenue, net

 

$

8,314

 

 

$

8,763

 

 

$

15,361

 

 

$

17,441

 

Cost of sales

 

 

5,198

 

 

 

9,248

 

 

 

10,244

 

 

 

15,948

 

Gross profit (loss)

 

 

3,116

 

 

 

(485

)

 

 

5,117

 

 

 

1,493

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling and marketing

 

 

4,072

 

 

 

7,693

 

 

 

9,216

 

 

 

15,674

 

General and administrative

 

 

4,163

 

 

 

6,416

 

 

 

9,080

 

 

 

12,549

 

Research and development

 

 

1,568

 

 

 

2,764

 

 

 

3,757

 

 

 

5,691

 

Total operating expenses

 

 

9,803

 

 

 

16,873

 

 

 

22,053

 

 

 

33,914

 

Operating loss

 

 

(6,687

)

 

 

(17,358

)

 

 

(16,936

)

 

 

(32,421

)

Other expense, net:

 

 

 

 

 

 

 

 

Interest and financing costs, net

 

 

(759

)

 

 

(739

)

 

 

(2,699

)

 

 

(1,318

)

Loss before income tax expense

 

 

(7,446

)

 

 

(18,097

)

 

 

(19,635

)

 

 

(33,739

)

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations, net of tax

 

 

(7,446

)

 

 

(18,097

)

 

 

(19,635

)

 

 

(33,739

)

Income from discontinued operations, net of tax

 

 

81

 

 

 

407

 

 

 

5,508

 

 

 

678

 

Net loss

 

$

(7,365

)

 

$

(17,690

)

 

$

(14,127

)

 

$

(33,061

)

 

 

 

 

 

 

 

 

 

Other comprehensive income (net of tax):

 

 

 

 

 

 

 

 

Unrealized (loss) gain on short-term investments

 

 

(1

)

 

 

(25

)

 

 

(13

)

 

 

31

 

Comprehensive loss

 

$

(7,366

)

 

$

(17,715

)

 

$

(14,140

)

 

$

(33,030

)

Net loss per share from continuing operations – basic and diluted

 

$

(0.08

)

 

$

(0.19

)

 

$

(0.21

)

 

$

(0.36

)

Net income per share from discontinued operations – basic and diluted

 

$

 

 

$

 

 

$

0.06

 

 

$

0.01

 

Net loss per share – basic and diluted

 

$

(0.08

)

 

$

(0.19

)

 

$

(0.15

)

 

$

(0.35

)

Weighted-average shares outstanding – basic and diluted

 

 

95,429,233

 

 

 

93,684,289

 

 

 

95,085,847

 

 

 

93,538,676

 

SONENDO, INC.

RECONCILIATION OF GAAP TO NON-GAAP

FINANCIAL MEASURES

(unaudited; in thousands; except percentage)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

2023

 

2024

 

2023

Gross profit (loss)

 

$

3,116

 

 

$

(485

)

 

$

5,117

 

 

$

1,493

 

Gross margin

 

 

37.5

%

 

 

(5.5

%)

 

 

33.3

%

 

 

8.6

%

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

Excess and obsolete inventory reserve related to recently discontinued products

 

 

241

 

 

 

2,917

 

 

 

241

 

 

 

2,917

 

Impairment of long-lived assets

 

 

15

 

 

 

 

 

 

161

 

 

 

 

Stock-based compensation expense

 

 

8

 

 

 

79

 

 

 

310

 

 

 

218

 

Adjusted gross profit

 

$

3,380

 

 

$

2,511

 

 

$

5,829

 

 

$

4,628

 

Adjusted gross margin

 

 

40.7

%

 

 

28.7

%

 

 

37.9

%

 

 

26.5

%

 

 

 

 

 

 

 

 

 

Loss from continuing operations, net of tax

 

$

(7,446

)

 

$

(18,097

)

 

$

(19,635

)

 

$

(33,739

)

Adjustments:

 

 

 

 

 

 

 

 

Interest and financing costs, net

 

 

759

 

 

 

739

 

 

 

2,699

 

 

 

1,318

 

Depreciation and amortization

 

 

73

 

 

 

397

 

 

 

128

 

 

 

750

 

Excess and obsolete inventory reserve related to recently discontinued products

 

 

241

 

 

 

2,917

 

 

 

241

 

 

 

2,917

 

Stock-based compensation expense

 

 

635

 

 

 

1,422

 

 

 

2,433

 

 

 

2,766

 

Impairment of long-lived assets

 

 

15

 

 

 

 

 

 

161

 

 

 

 

Adjusted EBITDA

 

$

(5,723

)

 

$

(12,622

)

 

$

(13,973

)

 

$

(25,988

)

 

 

 

 

 

 

 

 

 

Cash Flows

 

 

 

 

 

 

 

 

Cash flow used in operating activities

 

$

(6,718

)

 

$

(9,365

)

 

$

(17,407

)

 

$

(26,341

)

Purchases of property and equipment

 

 

(15

)

 

 

(417

)

 

 

(161

)

 

 

(627

)

Free cash flow (burn)

 

$

(6,733

)

 

$

(9,782

)

 

$

(17,568

)

 

$

(26,968

)

 

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