SONXD Sonendo Inc (QX)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 12, 2024

 

 

Sonendo, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			001-40988	20-5041718
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
26061 Merit Circle, Suite 102
Laguna Hills, California				92653
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (949) 766-3636

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		SONX		OTC Markets

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 2.02 Results of Operations and Financial Condition.

On November 12, 2024, Sonendo, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2024 (the “Press Release”). A copy of the Press Release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02 of this Current Report on Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Discussion of Non-GAAP Financial Measure

In the Press Release, in addition to financial measures reported in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company provides various non-GAAP financial measures, including (1) gross profit and gross margin excluding certain excess and obsolete inventory charges, long-lived asset impairment charges, and stock-based compensation expense (“Adjusted Gross Profit” and “Adjusted Gross Margin”), (2) earnings (loss) before income tax expense, interest and financing costs, net, depreciation and amortization, excluding certain excess and obsolete inventory charges, stock-based compensation expense, long-lived asset impairment charges and transaction and financing costs related to the Company’s attempted acquisition of Biolase (“Adjusted EBITDA Loss”), and (3) the sum of net cash used in operating activities and purchases of property and equipment (“Free Cash Flow (Burn)”).

Management believes that the presentation of Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA Loss and Free Cash Flow (Burn) (collectively, the “Non-GAAP Measures”) is useful in helping identify the Company’s core operating performance and enables management to consistently analyze the period-to-period financial performance of the core business operations. Management also believes that the Non-GAAP Measures will enable investors to assess the Company in the same way that management has historically assessed the Company’s operating results against comparable companies with conventional accounting methodologies. The Company’s definition for each of the Non-GAAP Measures has limitations as an analytical tool and may differ from other companies reporting similarly named measures. Non-GAAP Measures should not be considered measures of financial performance under GAAP, and the items excluded from (or, in the case of Free Cash Flow (Burn), included in) such Non-GAAP Measures should not be considered in isolation or as alternatives to financial statement data presented in the financial statements as an indicator of financial performance or liquidity. These Non-GAAP Measures should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results.

Adjusted Gross Profit and Adjusted Gross Margin

Adjusted Gross Profit and Adjusted Gross Margin represent GAAP Gross Profit and GAAP Gross Margin, respectively, excluding the impact of the following items recorded in cost of sales:

Adjusted EBITDA Loss

Adjusted EBITDA Loss consists of GAAP earnings (loss) before income tax expense, interest and financing costs, net, depreciation and amortization (“EBITDA”), excluding the impact of stock-based compensation, excess and obsolete inventory charges related to recently discontinued products, impairments of long-lived assets and transaction and financing costs related to the Company’s attempted acquisition of Biolase, recorded herein. In addition to the explanations provided above, the Company’s excludes transaction and financing costs related to the Company’s attempted acquisition of Biolase in the calculations of Adjusted EBITDA because such amounts are infrequent and highly volatile in nature because acquisitions are not a core component of the Company’s strategy nor its recurring operations.

Free Cash Flow (Burn)

Free Cash Flow (Burn) is calculated by subtracting (adding) cash used to purchase property and equipment expenditures from (to) net cash flows provided by (used in) operating activities. Free cash flow is an important indicator of how much cash is generated or used

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by the Company’s business operations, including capital expenditures. Management uses free cash flow to measure progress on its capital efficiency and cash flow initiatives.

For a reconciliation of the Non-GAAP Measures presented herein to the most directly comparable GAAP financial measure, please see the “Reconciliation of GAAP to Non-GAAP Measures” section in the Press Release.

The Company may, in the future, incur expenses of a nature similar to many of the non-GAAP adjustments described above, and exclusion (or inclusion) of these items from (in) its Non-GAAP Measures should not be construed as an inference that all of these costs are unusual, infrequent or non-recurring.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are furnished as part of this report:

 

Exhibit Number	Description
99.1	Press Release issued by Sonendo, Inc., dated November 12, 2024
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Sonendo, Inc.
Date:	November 12, 2024	By:	/s/ Bjarne Bergheim
			Bjarne Bergheim President and Chief Executive Officer

 

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Sonendo, Inc. Reports Third Quarter 2024 Financial Results

LAGUNA HILLS, CA – November 12, 2024 – 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 third quarter ended September 30, 2024.

Recent Highlights

 

“We are pleased by the results we reported for the third quarter and remain encouraged by our continued successful execution of the strategic reset we embarked on earlier this year,” said Bjarne Bergheim, President and Chief Executive Officer of Sonendo. “While we are disappointed that we were not the winning bidder in the bankruptcy auction for the acquisition of Biolase, we remain committed to our customers, our shareholders and our employees. The executive team, along with our Board of Directors, continues to evaluate the various financing options and other strategic alternatives for Sonendo. We will update these important stakeholders as we make any decisions with respect to those options.”

Third 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 $8.0 million for the third quarter of 2024, a 2% decrease compared to third quarter of 2023. GentleWave console revenue totaled $1.9 million, a 10% decrease compared to the third quarter of 2023. The Company maintains an active user base of more than 800 customers. Procedure instrument revenue totaled $5.1 million, compared to $5.1 million for the prior year quarter. Other product revenue totaled $1.1 million for the third quarter of 2024, a $0.1 million year-over-year increase.

GAAP gross margin for the third quarter of 2024 increased to 41.2%, compared to 10.8% for the third quarter of 2023. During the third quarter of 2023, the Company recorded in cost of sales a $1.3 million impairment charges of long-lived assets. Adjusted gross margin (non-GAAP) for the third quarter of 2024 was 42.6% compared to 27.8% for the prior year quarter.

Total operating expenses for the third quarter of 2024 totaled $10.1 million, a $7.3 million reduction compared to the prior year period.

Operating loss totaled $7.5 million for the third quarter of 2024, a $9.9 million reduction compared to the prior year quarter. Adjusted EBITDA (non-GAAP) loss totaled $5.1 million, a $5.9 million reduction compared to the prior year period.

Net loss from continuing operations totaled $7.5 million for the third quarter of 2024, a $9.9 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 $4.3 million for the third quarter of 2024, a $6.1 million improvement compared to the prior year quarter.

As of September 30, 2024, the Company’s cash and cash equivalents and short-term investments totaled $17.3 million, and there were $17.8 million of principal payments outstanding under its term loan facility.

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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. 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 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.

 

Investor Contact:

Gilmartin Group

Greg Chodaczek

IR@Sonendo.com

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SONENDO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

		September 30,				December 31,
		2024				2023
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	13,096			$	14,009
Short-term investments			4,188				32,773
Accounts receivable, net			4,445				4,790
Inventory			11,487				11,074
Prepaid expenses and other current assets			508				1,969
Current assets of discontinued operations			1,000				656
Total current assets			34,724				65,271
Property and equipment, net			691				461
Operating lease right-of-use assets			2,592				2,703
Other assets			124				128
Non-current assets of discontinued operations			—				9,597
Total assets		$	38,131			$	78,160
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	686			$	1,142
Accrued expenses			3,202				3,072
Accrued compensation			2,008				2,413
Operating lease liabilities			884				1,250
Current portion of term loan			10,800				24,900
Other current liabilities			1,535				1,844
Current liabilities of discontinued operations			—				700
Total current liabilities			19,115				35,321
Operating lease liabilities, net of current			1,570				1,423
Term loan, net of current			6,084				12,467
Other liabilities			396				530
Total liabilities			27,165				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— 418,038 shares as of September 30, 2024 and 317,737 shares as of December 31, 2023			84				64
Additional paid-in-capital			462,555				458,357
Accumulated other comprehensive loss			3				11
Accumulated deficit			(451,676	)			(430,013	)
Total stockholders’ equity			10,966				28,419
Total liabilities and stockholders’ equity		$	38,131			$	78,160

 

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SONENDO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(In thousands, except share and per share data)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Revenue, net		$	8,036			$	8,163			$	23,397			$	25,604
Cost of sales			4,726				7,279				14,970				23,227
Gross profit			3,310				884				8,427				2,377
Operating expenses:
Selling and marketing			3,642				6,954				12,858				22,628
General and administrative			4,872				7,708				13,952				20,257
Research and development			1,588				2,787				5,345				8,478
Total operating expenses			10,102				17,449				32,155				51,363
Operating loss			(6,792	)			(16,565	)			(23,728	)			(48,986	)
Interest and other expense			(744	)			(884	)			(3,443	)			(2,202	)
Loss before income tax expense			(7,536	)			(17,449	)			(27,171	)			(51,188	)
Income tax expense			—				—				—				—
Loss from continuing operations, net of tax			(7,536	)			(17,449	)			(27,171	)			(51,188	)
Income from discontinued operations, net of tax			—				469				5,508				1,147
Net loss		$	(7,536	)		$	(16,980	)		$	(21,663	)		$	(50,041	)
Other comprehensive income (net of tax):
Unrealized (loss) gain on short-term investments			5				24				(8	)			55
Comprehensive loss		$	(7,531	)		$	(16,956	)		$	(21,671	)		$	(49,986	)
Net loss per share from continuing operations – basic and diluted		$	(15.77	)		$	(37.01	)		$	(57.18	)		$	(108.93	)
Net income per share from discontinued operations – basic and diluted		$	—			$	0.99			$	11.59			$	2.44
Net loss per share – basic and diluted		$	(15.77	)		$	(36.02	)		$	(45.59	)		$	(106.49	)
Weighted-average shares outstanding – basic and diluted			477,857				471,427				475,188				469,934

 

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SONENDO, INC.

RECONCILIATION OF GAAP TO NON-GAAP

FINANCIAL MEASURES

(unaudited; in thousands; except percentage)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Gross profit		$	3,310			$	884			$	8,427			$	2,377
Gross margin			41.2	%			10.8	%			36.0	%			9.3	%
Adjustments:
Excess and obsolete inventory reserve related to recently discontinued products			100				—				341				2,917
Impairment of long-lived assets			—				1,341				161				1,341
Stock-based compensation expense			14				44				324				262
Adjusted gross profit		$	3,424			$	2,269			$	9,253			$	6,897
Adjusted gross margin			42.6	%			27.8	%			39.5	%			26.9	%
Loss from continuing operations, net of tax		$	(7,536	)		$	(17,449	)		$	(27,171	)		$	(51,188	)
Adjustments:
Interest and other expense			744				884				3,443				2,202
Depreciation and amortization			75				402				203				1,152
Excess and obsolete inventory reserve related to recently discontinued products			100				—				341				2,917
Stock-based compensation expense			630				1,739				3,854				5,654
Impairment of long-lived assets			—				3,392				161				3,392
Transaction and financing costs related to Biolase acquisition			874				—				874				—
Adjusted EBITDA		$	(5,113	)		$	(11,032	)		$	(18,295	)		$	(35,871	)
Cash Flows
Cash flow used in operating activities		$	(4,311	)		$	(10,216	)		$	(21,718	)		$	(36,557	)
Purchases of property and equipment			—				(216	)			(161	)			(843	)
Free cash flow (burn)		$	(4,311	)		$	(10,432	)		$	(21,879	)		$	(37,400	)

 

 

 

 

 

 

 

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v3.24.3

Document And Entity Information	Nov. 12, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 12, 2024
Entity Registrant Name	Sonendo, Inc.
Entity Central Index Key	0001407973
Entity Emerging Growth Company	true
Entity File Number	001-40988
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-5041718
Entity Address, Address Line One	26061 Merit Circle, Suite 102
Entity Address, City or Town	Laguna Hills
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92653
City Area Code	(949)
Local Phone Number	766-3636
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Ex Transition Period	false
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	SONX
Security Exchange Name	NONE

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