Allurion Technologies Inc. (NYSE:ALUR) Q4 2023 Earnings Call Transcript

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Shantanu Gaur: Yeah, it’s a great question. And it really is context specific. Many of our customers today are bariatric surgeons, and they certainly saw a drop in their bariatric surgery volume as GLP-1s grew in prominence in the second half of 2023. Some of our bariatric surgeons were able to pivot to more Allurion balloons over that period. Others just saw a drop of demand across the board. So their surgical volumes and their balloon volumes dropped. In other countries, it was mostly driven by macroeconomic headwinds where patients across the board were just pursuing cash pay procedures on a much lower basis. And so, it’s really context specific. It’s difficult to identify any trends that would be applicable globally. But what we can say is that coming out of Q4 and the trends that we’ve seen so far in Q1, particularly in January and February, it’s clear that some of those patients who were trying GLP-1s have turned off and are now looking for other options, whether it’s our balloon or bariatric surgery.

And that is consistent with the growth in procedural volume that we’re continuing to see as we turned into 2024.

Operator: Your next question comes from the line of Keay Nakae from Chardan Capital Markets.

Keay Nakae: A couple of questions. Chris, when we think about the G&A line going forward, what’s sort of a nominal level there you’re expecting in 2024?

Chris Geberth: As we look at G&A, and you’ll see in our press release, we have significant amount of bad debt we took this quarter, as well as some stock comp related to the deal that will not recur in the future. So just at a high level, if you look at what I said about G&A, I would remove those items and stick to more of a trend of that $5.5 million to $6 million a quarter.

Keay Nakae: In terms of VCS and the initial use of that with the clinics you announced earlier this year, talk about maybe two things. One, with those first set of clinics, what’s the economics associated with that? And then, what are the opportunities on some of the other territories where you’re currently at to enter into similar agreements?

Shantanu Gaur: In terms of the initial commercial agreements we’ve signed, those are sort of classic SaaS business agreements where clinics are paying us on a per patient per month type of model. We won’t go into the pricing now because these are early stage commercial agreements. But what we are seeing is that as these clinics expand their own weight loss practices, they are expanding into bariatric surgery, they’re expanding into GLP-1s, they’re expanding their underlying Allurion balloon business, and more and more patients ramp on to our software, we have an opportunity to generate potentially a significant amount of recurring revenue.

Keay Nakae: And the second part of that question, the opportunities on the geographies and maybe even looking out a little further, what are the opportunities once you enter the US for integrating them?

Shantanu Gaur: We believe the opportunity is abound when it comes to our B2B SaaS business. If you think about it, we have an existing base of business with accounts all over the globe using our balloon. Many of those accounts are going to end up using GLP-1s or introduce other weight loss therapies. So as I was mentioning earlier, we have an opportunity right in front of us with the customers that are currently using our balloon and are well known to us, not to mention new markets like the United States where if anything compared to any of our existing markets, GLP-1 usage is much higher. And therefore, there’s a greater need for software like ours to help manage these patients that are coming at high volumes to seek care in these clinics.

So I do believe that in the future, the digital platform, much like our balloon was several years ago, could allow us to land and expand in many of these accounts and that may end up driving our balloon business down the road versus the other way around.

Operator: We have no further questions in our queue at this time. And with that, that does conclude today’s conference call. Thank you for your participation and you may now disconnect.

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