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
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807264818/en/
Investor Contact: Gilmartin Group Greg Chodaczek
IR@Sonendo.com
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