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Vivos Therapeutics closes $7.5 million PE-backed investment

Vivos Therapeutics, Inc. announced the execution of a strategic marketing and distribution alliance with an operator of multiple sleep testing and treatment centers in Colorado.

This alliance, which Vivos hopes will be the first of a series of similar alliances across the country, marks an important pivot in Vivos’ marketing and distribution model for its cutting edge OSA appliances.

Vivos also announced the related closing of a $7.5 million equity growth investment from New Seneca Partners, Inc. (Seneca), a leading North American private equity sponsor based in Southfield, Michigan. This investment materially bolsters Vivos’ cash on hand and stockholders’ equity and will facilitate the launch of the new strategic alliance and potentially other similar alliances, which is expected to positively impact Vivos’ revenue growth.

Under the new alliance, Vivos and the sleep center operator have agreed to collaborate to offer OSA patients a full spectrum of evidence-based treatments such as continuous positive airway pressure (CPAP) machines, and Vivos’ advanced, proprietary and FDA-cleared CARE oral medical devices, oral appliances and additional adjunctive therapies and methods offered by Vivos. The program will commence in two existing sleep treatment centers in Colorado, with operations expected to begin in July 2024. Vivos’ sleep center collaborator is presently rebranding its name in light of the new alliance, and Vivos expects to be able to share further details in the near future.

Kirk Huntsman, Chairman and CEO of Vivos, commented, “We cannot overstate the importance of this alliance to Vivos and its future, coupled with a validating private equity-led investment from Seneca. Over the last several years, peer-reviewed studies have confirmed our longstanding belief that Vivos has the most effective, safe, and potentially lasting non-surgical solution for all severities of OSA in adults that does not require lifelong nightly intervention. This was further validated by recent unprecedented FDA clearances Vivos has received, including the only FDA clearance for an oral medical device to treat severe OSA in adults.”

“We firmly believe this new strategic marketing and distribution alliance will serve as the initial launch of a scalable model and the first of many such alliances throughout the United States that will be the means of highlighting and delivering Vivos treatment options to millions of new and existing OSA patients seeking non-surgical alternatives to CPAP. In our field operations experience, OSA patients who are presented with all available OSA treatment options strongly prefer Vivos.”

“Our intense operational focus in the near term is to execute at a high level with this new model to eliminate our cash burn and make Vivos cash flow positive and, ultimately, profitable. Simultaneously, we are already in talks with other local and national sleep testing and therapy companies to expand and establish this model on a national scale. Further, we believe this new model’s significantly higher gross profit per case and lower patient acquisition costs will be highly beneficial for our future results of operations. We believe this can scale relatively quickly and broaden our revenue channels, giving us the potential to drive our revenue growth,” Mr. Huntsman concluded.

Michael Skaff, Managing Director of Seneca, stated “We’ve been working with Vivos for more than nine months on this project, and our diligence has led us to strongly believe in both the significant health challenges and costs associated with OSA and the ability of Vivos’ suite of appliances and methods to address OSA. We also strongly believe in Vivos’ new marketing and distribution model through alliances with sleep health practitioners, which creates the opportunity for Vivos to significantly increase the revenue and gross profit it can generate from its proprietary and effective products, while dramatically lowering its customer acquisition costs and related overhead burden. Our investment in Vivos shows our commitment to this new endeavor for the long term, and we look forward to leveraging our experience in the healthcare space and working closely with the Vivos management team on this exciting endeavor.”

Certain key terms of the Seneca investment and strategic alliance
The $7.5 million private placement investment by Seneca into Vivos consists of 3,220,266 shares of common stock (or a pre-funded warrant to purchase common stock in lieu of shares of common stock) and a five-year common stock warrant to purchase an aggregate of up to 3,220,266 shares of common stock. Seneca paid a purchase price of $2.329 for each share and associated warrant, with such price being “at the market” for purposes of Nasdaq Stock Market rules. The warrants are exercisable for $2.204 per share. No placement agent was utilized in connection with the financing. Seneca has also been provided with Vivos Board of Directors observation rights.

The new marketing and distribution strategic alliance is based on a revenue-sharing model between Vivos and the sleep center operator. Subject to certain conditions, Seneca will participate in Vivos’ net cash flow allocation from the alliance up to an agreed-upon amount as partial consideration for its management advisory services to Vivos.

Additional details regarding these transactions will be provided by Vivos in a Current Report on Form 8-K, expected to be filed shortly with the U.S. Securities and Exchange Commission.
MB Bureau

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