Sonendo Inc. Reports Third Quarter 2021 Financial Results and Issues Full Year 2021 Revenue Guidance

LAGUNA HILLS, Calif.--()--Sonendo, Inc. (“Sonendo”), a leading dental technology company and developer of the GentleWave® System, today reported financial results for the quarter ended September 30, 2021.

Recent Highlights

  • Total revenue of $7.9 million for the third quarter of 2021, representing growth of 29% compared to prior year period
  • GentleWave console revenue of $1.8 million for the third quarter 2021, representing growth of 44% compared to prior year period
  • Procedure instrument revenue of $3.7 million for the third quarter 2021, representing growth of 30% compared to prior year period
  • Software revenue of $1.7 million for the third quarter 2021, representing growth of 17% compared to prior year period
  • Completed initial public offering on November 2, raising approximately $84 million in net proceeds
  • Added Carolyn Beaver, Karen McGinnis, Raj Pudipeddi, and Sadie Stern to the Board of Directors
  • Issued 2021 full year total revenue guidance range of $32.0 million to $32.5 million

“We are very pleased with our quarterly results and continue to make great progress on expanding our commercial organization to make GentleWave the standard of care for root canal therapy,” said Bjarne Bergheim, Chief Executive Officer of Sonendo. “Additionally, we are excited about the completion of our IPO and are grateful for the support of the participating investors. Following the IPO, our focus is to invest and expand our commercial infrastructure to penetrate the endodontist channel to make the GentleWave Procedure the standard of care for root canal therapy.”

Third Quarter 2021 Financial Results

Total Revenue was $7.9 million in the third quarter 2021, an increase from $6.1 million in the third quarter 2020. Growth in the quarter was driven primarily by increased utilization among our current install base and increased GentleWave console sales. GentleWave console revenue was $1.8 million in the third quarter 2021, an increase from $1.2 million in the third quarter 2020. Procedure instrument revenue was $3.7 million, compared to $2.8 million in the prior year period. Software revenue was $1.7 million, compared to $1.5 million in the third quarter 2020. As of September 30, GentleWave ending install base was approximately 750 units.

Gross Margin for third quarter was 26.0% compared to 19.6% in the third quarter of 2020. The increase in gross margin was driven primarily by a reduction in inventory charges relating to excess inventory compared to the third quarter 2020 and improved overhead absorption in 2021.

Total operating expenses in the third quarter 2021 were $13.1 million, compared with $10.8 million in the prior year period. The increase was primarily driven by increased sales team hiring and higher General and Administrative costs, primarily legal and accounting. This was slightly offset by lower research and development costs.

Net loss was $12.7 million for the third quarter 2021 compared to $10.6 million in the prior year period.

Cash and cash equivalents as of September 30, 2021, totaled $13.7 million, while long-term borrowings totaled $30.0 million. The company received approximately $84 million of net proceeds from the initial public offering, which closed on November 2, 2021.

2021 Financial Guidance

The fourth quarter is typically Sonendo’s strongest quarter as a large number of endodontists wait to purchase capital equipment to maximize calendar year tax benefits. The Company expects full year 2021 total revenue to be in the range of $32.0 million to $32.5 million.

Webcast and Conference Call Information

Sonendo will host a conference call to discuss the third quarter 2021 financial results after the market close on Thursday, December 9th, 2021 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 (844) 200-6205 for domestic callers or (929) 526-1599 for international callers, using access code: 320412. 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 has developed 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.

Forward Looking Statements

In addition to background and historical information, this press release contains “forward-looking statements” based on Sonendo’s current expectations, forecasts and beliefs. 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 ongoing uncertainty of the impact of the COVID-19 pandemic, as well as COVID recovery impact, on its business. These and other risks and uncertainties include those described more fully in the section titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and elsewhere in its public filings with the U.S. Securities and Exchange Commission (SEC), including our prospectus filed with the SEC pursuant to Rule 424(b)(4) on November 1, 2021, the Quarterly Report on Form 10-Q for the period ended September 30, 2021 to be filed with the SEC, as well as any reports that we may file with the SEC in the future. 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.

SONENDO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

September 30,

 

December 31,

 

 

2021

 

2020

ASSETS

 

(Unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,748

 

 

$

51,722

 

Accounts receivable, net

 

 

1,914

 

 

 

1,934

 

Inventory

 

 

7,050

 

 

 

4,338

 

Prepaid expenses and other current assets

 

 

3,357

 

 

 

901

 

Total current assets

 

 

26,069

 

 

 

58,895

 

Property and equipment, net

 

 

2,527

 

 

 

3,153

 

Operating lease right-of-use assets

 

 

2,943

 

 

 

3,308

 

Intangible assets, net

 

 

3,122

 

 

 

2,208

 

Goodwill

 

 

8,454

 

 

 

8,454

 

Other assets

 

 

115

 

 

 

123

 

Total assets

 

$

43,230

 

 

$

76,141

 

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,987

 

 

$

1,930

 

Accrued expenses

 

 

4,290

 

 

 

3,247

 

Accrued compensation

 

 

3,391

 

 

 

3,714

 

Operating lease liabilities

 

 

935

 

 

 

802

 

Term loan

 

 

 

 

 

28,352

 

Other current liabilities

 

 

2,009

 

 

 

2,756

 

Total current liabilities

 

 

12,612

 

 

 

40,801

 

Warrant liabilities

 

 

4,225

 

 

 

1,914

 

Operating lease liabilities, net of current

 

 

1,964

 

 

 

2,449

 

Term loan, net of current

 

 

26,374

 

 

 

 

Forward obligation

 

 

3,300

 

 

 

2,750

 

Other liabilities

 

 

469

 

 

 

776

 

Total liabilities

 

 

48,944

 

 

 

48,690

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Convertible preferred stock

 

 

281,342

 

 

 

281,342

 

Stockholders’ deficit:

 

 

 

 

 

 

Common stock

 

 

2

 

 

 

2

 

Additional paid-in-capital

 

 

11,326

 

 

 

9,703

 

Accumulated deficit

 

 

(298,333

)

 

 

(263,545

)

 

 

 

(287,005

)

 

 

(253,840

)

Less: Treasury stock

 

 

(51

)

 

 

(51

)

Total stockholders’ deficit

 

 

(287,056

)

 

 

(253,891

)

Total liabilities, convertible preferred stock and stockholders’ deficit

 

$

43,230

 

 

$

76,141

 

SONENDO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(In thousands, except share and per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2021

 

2020

 

2021

 

2020

Product revenue

 

$

6,186

 

 

$

4,675

 

 

$

18,166

 

 

$

10,690

 

Software revenue

 

 

1,701

 

 

 

1,457

 

 

 

5,140

 

 

 

3,990

 

Total revenue

 

 

7,887

 

 

 

6,132

 

 

 

23,306

 

 

 

14,680

 

Cost of sales

 

 

5,838

 

 

 

4,931

 

 

 

17,422

 

 

 

12,550

 

Gross profit

 

 

2,049

 

 

 

1,201

 

 

 

5,884

 

 

 

2,130

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

8,495

 

 

 

5,802

 

 

 

22,400

 

 

 

19,423

 

Research and development

 

 

4,633

 

 

 

4,920

 

 

 

14,310

 

 

 

14,551

 

Change in fair value of contingent earnout

 

 

19

 

 

 

30

 

 

 

12

 

 

 

(478

)

Total operating expenses

 

 

13,147

 

 

 

10,752

 

 

 

36,722

 

 

 

33,496

 

Loss from operations

 

 

(11,098

)

 

 

(9,551

)

 

 

(30,838

)

 

 

(31,366

)

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest and financing cost, net

 

 

(1,076

)

 

 

(1,080

)

 

 

(3,224

)

 

 

(2,877

)

Change in fair value of warrant liabilities

 

 

(159

)

 

 

38

 

 

 

(176

)

 

 

105

 

Change in fair value of forward obligation

 

 

(400

)

 

 

 

 

 

(550

)

 

 

 

Loss before income tax benefit

 

 

(12,733

)

 

 

(10,593

)

 

 

(34,788

)

 

 

(34,138

)

Net loss and comprehensive loss

 

$

(12,733

)

 

$

(10,593

)

 

$

(34,788

)

 

$

(34,138

)

Net loss per share attributable to common stock – basic and diluted

 

$

(10.33

)

 

$

(8.84

)

 

$

(28.54

)

 

$

(28.58

)

Weighted-average shares used in computing net loss per share attributable to common stock – basic and diluted

 

 

1,232,921

 

 

 

1,197,919

 

 

 

1,218,815

 

 

 

1,194,562

 

 

Contacts

Investor Contact:
Gilmartin Group
Matt Bacso, CFA
IR@Sonendo.com

Contacts

Investor Contact:
Gilmartin Group
Matt Bacso, CFA
IR@Sonendo.com