Sonendo, Inc. (“Sonendo”), a leading dental technology company
and developer of the GentleWave® System, today reported financial
results for the third quarter ended September 30, 2023.
Recent Highlights
- Total revenue of $10.4 million for the third quarter of 2023,
representing growth of 6%, compared to prior year period
- Reduced cash burn to approximately $10 million in the third
quarter of 2023; additionally, implemented reduction in force in
November 2023 to further conserve cash and improve operating
efficiency
- Procedure instrument revenue of $5.1 million for the third
quarter of 2023, representing growth of approximately 7% compared
to prior year period
- Ending installed base as of September 30, 2023, was 1,076
units
- Announced launch of second generation CleanFlowTM Procedure
Instrument for heightened efficacy and ease of use
“We are pleased with third quarter performance as we continue to
confront lingering macroeconomic challenges. Our sales pipeline
remains robust and we have integrated several new commercial
strategies to combat the impacts of lengthening sales cycles,” said
Bjarne Bergheim, president and chief executive officer of Sonendo.
“We remain confident in our business fundamentals and increased
adoption of our technology and improvements to the gross margin
profile.”
Third Quarter 2023 Financial Results
Total Revenue was $10.4 million for the third quarter of 2023,
an increase from $9.8 million for the third quarter of 2022.
GentleWave console revenue was $2.1 million for the third quarter
of 2023 compared to $2.1 million for the third quarter of 2022.
Procedure instrument revenue was $5.1 million, an increase from
$4.8 million for the third quarter of 2022. Other product related
revenue was $0.9 million for the third quarter of 2023 and $0.8
million for the third quarter of 2022. Software revenue was $2.2
million, an increase from $2.1 million for the third quarter of
2022.
Gross margin for the third quarter of 2023 was 24%, compared to
24% for the third quarter of 2022. During the third quarter of
2023, we recorded $1.3 million impairment charges of long-lived
assets in cost of sales. Excluding the charges, Non-GAAP gross
margin for the third quarter of 2023 would have been 36%.
Total operating expenses for the third quarter of 2023 were
$18.5 million, compared to $16.9 million for the third quarter of
2022. During the third quarter of 2023, we recorded $2.1 million
impairment charges of long-lived assets in operating expenses.
Loss from operations was $16.1 million for the third quarter of
2023, compared to $14.6 million for the third quarter of 2022.
Non-GAAP loss from operations was $10.4 million for the third
quarter of 2023 compared to $12.4 million for the third quarter of
2022. Non-GAAP loss from operations excludes stock-based
compensation expense, depreciation and amortization expense and
impairment of long-lived assets.
Net loss was $17.0 million for the third quarter of 2023,
compared to $15.5 million for the third quarter of 2022.
Cash and cash equivalents and short-term investments as of
September 30, 2023 totaled $55.9 million.
2023 Financial Guidance
The company expects total revenue for the full year of 2023 to
be approximately $44.0 million.
Webcast and Conference Call Information
Sonendo will host a conference call to discuss the third quarter
2023 financial results after the market close on Wednesday,
November 8, 2023 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)
975-4893 for international callers, using access code: 878491. Live
audio of the webcast will be available on the “Investors” section
of the company’s website at: https://investor.sonendo.com. The
webcast will be archived and available for replay for at least 90
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. Sonendo is also the parent company
of TDO® Software, the developer of widely used endodontic practice
management software solutions, designed to simplify practice
workflow. TDO Software integrates practice management, imaging,
referral reporting and CBCT imaging, and offers built-in
communication with the GentleWave System.
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
In addition to background and historical information, this press
release contains “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as
“believe,” “estimate,” “expect,” “may,” “plan,” “will” and similar
expressions (as well as other words or expressions referencing
future events, conditions or circumstances) convey uncertainty of
future events or outcomes and are intended to identify these
forward-looking statements. The forward-looking statements are
based on Sonendo’s current expectations, forecasts and beliefs
including statements related to Sonendo’s 2023 financial guidance.
These forward-looking statements are subject to inherent
uncertainties, risks, and assumptions that are difficult to
predict. Actual outcomes and results could differ materially due to
a number of factors, including the degree of market acceptance of
our products by dental practitioners and our ability to maintain
strong working relationships with our customers, risks associated
with manufacturing our products in large-scale commercial
quantities, our dependence on third party suppliers, our ability to
raise capital when needed, and our ability to comply with extensive
government regulation and oversight. These and other risks and
uncertainties include those described more fully in the company’s
Annual Report on Form 10-K for the year ended December 31, 2022
filed with the U.S. Securities and Exchange Commission (SEC) on
March 8, 2023, as well as any reports that we may file with the SEC
subsequently and in the future, including without limitation to our
Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2023 and June 2023, under the sections titled “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operation”. Forward-looking statements contained in
this announcement are based on information available to Sonendo as
of the date hereof. Sonendo undertakes no obligation to update such
information except as required under applicable law. These
forward-looking statements should not be relied upon as
representing Sonendo’s views as of any date subsequent to the date
of this press release and should not be relied upon as prediction
of future events. In light of the foregoing, investors are urged
not to rely on any forward-looking statement in reaching any
conclusion or making any investment decision about any securities
of Sonendo.
Use of Non-GAAP Financial Measures
Sonendo’ financial results are prepared in accordance with
generally accepted accounting principles in the United States of
America (“GAAP”). This press release and the reconciliation tables
included in the financial schedules below include non-GAAP gross
profit, non-GAAP gross margin and non-GAAP loss from operations
(collectively, the "Non-GAAP measures"). Non-GAAP gross profit and
non-GAAP gross margin exclude impairment of long-lived assets.
Non-GAAP loss from operations exclude, as applicable, stock-based
compensation expense, depreciation and amortization and impairment
of long-lived assets. Management believes that Non-GAAP measures
are useful in helping identify the company’s core operating
performance and enables management to consistently analyze the
period-to-period financial performance of the core business
operations. Management also believes that Non-GAAP measures, will
enable investors to assess the company in the same way that
management has historically assessed the company’s operating
results against comparable companies with conventional accounting
methodologies. The company’s definition for each of the Non-GAAP
measures has limitations as an analytical tool and may differ from
other companies reporting similarly named measures. Non-GAAP
measures should not be considered measures of financial performance
under GAAP, and the items excluded from such Non-GAAP measures
should not be considered in isolation or as alternatives to
financial statement data presented in the financial statements as
an indicator of financial performance or liquidity. Non-GAAP
measures should be considered in addition to results prepared in
accordance with GAAP but should not be considered a substitute for
or superior to GAAP results.
For a reconciliation of our Non-GAAP measures presented herein
to GAAP measures, the most directly comparable GAAP financial
measure, please see “Reconciliation of GAAP to Non-GAAP Gross
Profit and Gross Margin” and “Reconciliation of GAAP to Non-GAAP
Loss from Operations” in the financial schedules below.
SONENDO, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data)
September 30,
December 31,
2023
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
12,090
$
17,665
Short-term investments
43,849
73,784
Accounts receivable, net
5,600
5,798
Inventory
11,442
15,462
Prepaid expenses and other current
assets
2,510
8,397
Total current assets
75,491
121,106
Property and equipment, net
216
2,860
Operating lease right-of-use assets
3,300
2,455
Intangible assets, net
748
2,292
Goodwill
8,454
8,454
Other assets
118
118
Total assets
$
88,327
$
137,285
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
950
$
4,438
Accrued expenses
3,817
5,357
Accrued compensation
3,110
3,616
Operating lease liabilities
1,334
1,114
Other current liabilities
1,840
2,191
Total current liabilities
11,051
16,716
Operating lease liabilities, net of
current
1,782
1,095
Term loan, net
37,202
36,746
Other liabilities
512
773
Total liabilities
50,547
55,330
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— 52,971,301 shares as
of September 30, 2023 and 49,974,281 shares as of December 31,
2022
53
50
Additional paid-in-capital
456,868
451,060
Accumulated other comprehensive loss
(6
)
(61
)
Accumulated deficit
(419,135
)
(369,094
)
Total stockholders’ equity
37,780
81,955
Total liabilities and stockholders’
equity
$
88,327
$
137,285
SONENDO, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF
OPERATIONS AND COMPREHENSIVE
LOSS
(unaudited)
(In thousands, except share
and per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Product revenue
$
8,163
$
7,795
$
25,604
$
23,440
Software revenue
2,243
2,051
6,569
5,986
Total revenue
10,406
9,846
32,173
29,426
Cost of sales:
Product and software
6,619
7,528
23,942
22,276
Impairment of long-lived assets
1,341
—
1,341
—
Total cost of sales
7,960
7,528
25,283
22,276
Gross profit
2,446
2,318
6,890
7,150
Operating expenses:
Selling, general and administrative
13,442
12,586
42,859
37,393
Research and development
3,049
4,328
9,841
13,196
Impairment of long-lived assets
2,051
—
2,051
—
Total operating expenses
18,542
16,914
54,751
50,589
Loss from operations
(16,096
)
(14,596
)
(47,861
)
(43,439
)
Other expense, net:
Interest and financing costs, net
(884
)
(943
)
(2,180
)
(2,759
)
Loss before income tax expense
(16,980
)
(15,539
)
(50,041
)
(46,198
)
Income tax expense
—
—
—
—
Net loss
$
(16,980
)
$
(15,539
)
$
(50,041
)
$
(46,198
)
Other comprehensive income (loss) (net of
tax):
Unrealized gain (loss) on short-term
investments
24
(7
)
55
(49
)
Comprehensive loss
$
(16,956
)
$
(15,546
)
$
(49,986
)
$
(46,247
)
Net loss per share – basic and diluted
$
(0.18
)
$
(0.47
)
$
(0.53
)
$
(1.61
)
Weighted-average shares outstanding –
basic and diluted
94,286,107
33,116,536
93,790,557
28,688,018
SONENDO, INC.
RECONCILIATION OF GAAP TO
NON-GAAP
GROSS PROFIT AND GROSS
MARGIN
(unaudited, in
thousands)
Three Months Ended
Nine Months Ended September
30,
2023
2022
2023
2022
Gross profit
$
2,446
$
2,318
$
6,890
$
7,150
Gross margin
24
%
24
%
21
%
24
%
Adjustments:
Impairment of long-lived assets
1,341
—
1,341
—
Non-GAAP gross profit
$
3,787
$
2,318
$
8,231
$
7,150
Non-GAAP gross margin
36
%
24
%
26
%
24
%
SONENDO, INC.
RECONCILIATION OF GAAP TO
NON-GAAP
LOSS FROM OPERATIONS
(unaudited, in
thousands)
Three Months Ended
Nine Months Ended September
30,
2023
2022
2023
2022
GAAP loss from operations
$
16,096
$
14,596
$
47,861
$
43,439
Adjustments:
Stock based compensation:
Included in cost of sales
(55
)
(123
)
(294
)
(364
)
Included in selling, general and
administrative
(1,584
)
(1,435
)
(4,927
)
(3,820
)
Included in research and development
(145
)
(165
)
(564
)
(887
)
Depreciation and amortization
Included in cost of sales
(257
)
(168
)
(740
)
(507
)
Included in selling, general and
administrative
(262
)
(232
)
(758
)
(613
)
Included in research and development
(32
)
(33
)
(94
)
(122
)
Impairment of long-lived assets
Included in cost of sales
(1,341
)
—
(1,341
)
—
Included in operating expenses
(2,051
)
—
(2,051
)
—
Non-GAAP loss from operations
$
10,369
$
12,440
$
37,092
$
37,126
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108071006/en/
Investor Contact: Gilmartin Group Greg Chodaczek
IR@Sonendo.com
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