Sonendo, Inc. (NYSE:SONX) Q3 2023 Earnings Call Transcript

Bjarne Bergheim: Yes. So Jason, maybe I’ll start off by saying that Q4 is still going to be our strongest quarter, 0.1 like Mike said, we are dialing a level of conservatism in this because of the environment changing on us. And I think everyone are appreciating that across MedTech and across the health care spectrum right now. We are still very, very much believing — obviously, we’re believing in what we’re doing here. And I think the programs that we are putting in place especially around the trial and around the DSO opportunity here. Those will really help drive a lot of upside to the business. So point one, there’s a level of conservatism dial-in numbers for Q4. We’re going to continue to drive growth in — as we go into 2024.

And that’s what we obviously aspire to be. We aspire to be a growth company, and it’s incumbent on us to really drive the growth engine in this environment. As with regards to the lengthening sales cycle here. Again, that’s what we — that’s one of the things that we’re solving for with the trial program. We have a lot of customers very interested in our technology that are in the late-stage funnel. And in this environment, we’re looking at a couple of different tools to really drive them to kind of move them into buying this technology. And this is where trials can really help us. And just maybe just commenting briefly on the trial here. This is — what we’re seeing across here is that this is really a program that can really help drive and help us sell more consoles.

And we have already had a lot of examples here where this can be very successful. One anecdotal example, for example, is that we had one doctor trialed the console. And because he like it so much, it ended up being a multiunit sale where the doctor didn’t just want to standardize all his offices, but he also wanted to standardize all his chairs to GentleWave. So that is an example of the tools that we’re using in this environment, and I think that we can be very, very effective at really helping us drive sales rep productivity and really drive this going forward. So with all of this, we’re very excited about the opportunities to grow this business. So again, so this is — like we said, this is a level of conservatism that we’re dialing into the fourth quarter.

Jason Bednar: Okay. That’s helpful, Bjarne. And then maybe shifting over to the volume point. Those obviously seeming also a little bit lighter. You mentioned some deferrals that might be taking place on the patient side. Do you think the volumes that you’re seeing are reflective of what’s occurring in the market, do you have a sense of lower procedure volumes that you’re seeing are consistent with [indiscernible] root canals or doctors getting maybe more cost sensitive and on the margin shifting away from CleanFlow PIs and over to [indiscernible] just to save some dollars?

Bjarne Bergheim: Yes, Jason. So substantially, the simple answer is this is, I think, affecting everyone across the endodontic space. This is not just us. So some of the trends that we’re seeing are reflective and that are happening across the entire endodontic space. So maybe to give you a little bit more color here. So what we’re seeing is that some of our doctors are seeing less patients as patient volumes in Q3. And I was like — we talked about in our prepared remarks, this happened probably more during the last month of the quarter. It’s not universal across all practices, but we’ve definitely observed it in some of the practices. And we think what’s happening here is that a small portion — not a large portion, but a small portion of root canal procedures are elective in nature.

The majority of them, like we’ve talked about before, are nonelective. But some of them are asymptomatic. They are elective in nature, and that’s what some customers are choosing to delay. And the other small element that we size that in the low-volume group, as you remember, we have a couple of different pricing tiers. So in our low volume group, we saw that — which are the ones that saw the highest price increase in the beginning of this year, this is where we saw a slight reduction in our utilization. Except for that, the dynamics that we’re seeing are effectively happening across, at least to our knowledge, is happening across the entire endodontic industry.