ALLURION TECHNOLOGIES, INC. Q4 FY2023 earnings call

• Revenue in the fourth quarter of 2023 was $8.2 million, and full-year 2023 revenue was $53.5 million, in line with the preannouncement in early January. - Certain markets faced macroeconomic headwinds leading to temporarily lower reorder rates, but markets are stabilizing and demand is improving. - Guided 2024 revenue to be in the range of $60 million to $65 million, representing 13% to 23% growth. - 2023 procedural volume increased by 30% compared to 2022, showing strong consumer demand for the Allurion Program. - Completed strategic cost reduction initiatives, including a reduction in force, aiming to reduce cash burn to approximately $30 million for the full year. - Completed enrollment in the AUDACITY FDA trial ahead of schedule. - Presented scientific studies demonstrating significant weight loss with the Allurion Program, such as 14% weight loss in a 5,000-patient study and 95% weight loss maintenance 16 months later. - The Allurion Program can be used effectively with GLP-1 drugs, with studies showing 18%-19% weight loss. - Expanded the Allurion Virtual Care Suite as a B2B SaaS offering, with commercial agreements signed in 2024.

Fourth quarter 2023 revenue was $8.2 million, and full-year 2023 revenue was $53.5 million. The fourth quarter revenue decreased by 57% compared to the fourth quarter of 2022. Gross margins in the fourth quarter were 78% compared to 79% in the same period the previous year. The Allurion Program segment contributed the main revenue, with the fourth quarter and full-year figures as stated.

• 2024 revenue is guided to be between $60 million and $65 million, representing a growth of 13% to 23%. - Expect cash burn for the full year 2024 to be approximately $30 million. - 2023 procedural volume increased by 30% compared to 2022. - Gross margin for 2024 is expected to be between 77% and 79%, with Q1 being lower and Q4 higher but scaled operations to maintain a decent margin throughout the year.

• Actual results may differ materially from forward-looking statements due to certain risks and uncertainties described in the company's Securities and Exchange Commission filings, including the most recent 10-Q filed on November 14, 2023.

Q: Talk about the trends in Q1 and revenue phasing for 2024.

A: So far in Q1, there's sustained growth in new app users. Some patients who churned off GLP-1s in the second half of last year are re-entering the funnel. Expect de-stocking to continue into Q1 and Q2, with revenue lighter in Q1 and Q2 and increasing as the year progresses.

Q: Can we expect gross margin to follow the top line and improve through the year?

A: We expect gross margin to be between 77% and 79% for the year. It will be a little less in Q1 and a little more in Q4, but we have scaled our operations accordingly to maintain a decent margin throughout the year.

Q: Balance of spending reductions and driving the top line?

A: When lowering cash burn, we reduced variable expenses in sales, support, and marketing which ebb and flow with revenue. We also right-sized other departments, and our commercial model gives flexibility in variable expenses to react to market trends.

Q: What's the nominal level of G&A expected in 2024?

A: Remove one-time items like accounts receivable reserves and stock-based compensation related to the deal, and expect a trend of $5.5 million to $6 million per quarter.

Q: Economics and opportunities for the VCS with the clinics announced?

A: The initial commercial agreements are SaaS business agreements with clinics paying on a per patient per month model. There's potential for significant recurring revenue as clinics expand their weight loss practices.

Q: Opportunities in geographies and US integration for VCS?

A: The B2B SaaS business can leverage the existing balloon customer base. In the US, with higher GLP-1 usage, there's a greater need for software like the VCS to manage patients, and the digital platform could drive growth in accounts.