Good day, everyone, and welcome to Vivos Therapeutics' Q2 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow management's remarks. This conference call is being recorded. A replay of today's call will be available on the investor relations section of Vivos website and will remain posted there for the next 30 days. I will now hand over the call to Julie Gannon, Vivos Investor Relations Officer, for introductions and the reading of the Safe Harbor statement. Please go ahead.
Thank you, operator. Hello, everyone, and welcome to our conference call. A copy of our earnings press release is available on the investor relations section of our website at www.vivos.com. With us on today's call are Kirk Huntsman, Vivos Chairman and Chief Executive Officer, and Brad Amman, Chief Financial Officer. Today, we'll review the highlights and financial results for the Q2 of 2023, as well as more recent developments and Vivos plans for the remainder of 2023. Following these formal remarks, we will be happy to take questions. I would also like to remind everyone that today's call will contain certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning future events.
Words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties, and contingencies, and many of which are beyond the company's control. Actual results, including without limitation, the results of Vivos' growth strategies, operational plans, including sales, marketing, product acquisition and integration, research and development, regulatory initiatives, cost-saving plans, and plans to generate revenue, as well as future potential results of operations or operating metrics, such as the potential for Vivos to achieve future positive cash flows and other matters to be addressed by Vivos management in this conference call, may differ materially and adversely from those expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described and other disclosures contained in Vivos filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31st, 2022, and our other filings with the SEC, including the Form 10-Q filed with the SEC today, all of which are or will be accessible on the Investor Relations section of Vivos website, as well as the SEC's website. Except to the extent required by law, Vivos assumes no obligation to update statements as circumstances change. Finally, please be aware that the U.S. Food and Drug Administration has given certain Vivos appliances 510(k) clearance to treat mild to moderate OSA. Any reference herein regarding Vivos treatment or the Vivos method should be viewed in that context.
Treatment of patients with severe OSA is performed off-label at the sole clinical discretion of the treating doctor and are not part of the Vivos treatment protocol. At this time, it is my pleasure to introduce Kirk Huntsman, Chairman and CEO of Vivos. Kirk, please go ahead.
Thank you, Julie. I want to thank you all for joining us on today's conference call. In just a moment, I'll turn the call over to our Chief Financial Officer, Brad Amman, who will walk you through the highlights of our Q2 2023 financial and operating results. Once Brad is finished, I'll come back on and speak with you about the highlights of what we've accomplished at Vivos during the first half of 2023, and more recently, following the quarter end. I'll discuss our strategic revenue initiatives, including our previously announced acquisition of product rights and patents from Advanced Facialdontics, LLC, which has expanded our product offerings and to address a broader spectrum of patient needs and price points to drive long-term revenue growth.
I'll also talk about our progress with our pilot tests with certain Dental Service Organizations, known as DSOs, including the execution of new and existing pilots during the quarter with eight regional and national DSOs, representing over 1,000 locations nationwide. I'll also talk more about our distribution agreement with a nationally recognized Durable Medical Equipment company, known as a DME, that serves close to 2 million patients nationwide who are seeking alternatives to permanently being on CPAP machines. I'll talk about our previously announced actions to improve our organizational infrastructure. This is a series of steps we took to increase operational efficiencies, reduce expenses, and to position Vivos to capitalize on the growth opportunities available to us.
As our results indicate, we've already been seeing the benefits of these actions, including a substantially reduced operating expenses on both a sequential quarter and year-over-year basis. As an update, we previously disclosed that our goal was to decrease our costs and increase our revenues during 2023, with the aim of becoming cash flow positive from operations by the Q1 of 2024, without the need for additional financing, if possible. Although we've implemented cost savings measures and significantly reduced our cash used in operations, as we seek to achieve the positive cash flow from operations in the foreseeable future, our sales have not grown during 2023 as we desired. As such, in all likelihood, we will be required to obtain additional financing to satisfy our cash needs.
After that, I'll talk about our plans for the rest of the year into 2024, leveraging what we've already achieved to accelerate revenue generation in the future. After that, we'll take your questions. Now, let me turn it over to Brad for, to review our financials. Brad, Brad, please go ahead.
Thank you, Kirk, and good afternoon, everyone. Today, I'll review the financial highlights of our Q2 and first half of 2023 financial results. For information on our results for the three and six-month periods ended June thirtieth, 2023, I'll refer you to our earnings release, which was distributed earlier today, and our quarterly report on Form 10-Q, which is available on the SEC Filings portion of the Investor Relations section of Vivos website at vivos.com/investor-relations. First, I wanted to provide a little more color around the slight delay we experienced in the filing of our quarterly results. We applied for an Employee Retention Tax Credit, or ERTC, under Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act.
In Q4 of 2022, we applied and received approximately $1.2 million of ERTC funds from the IRS in April and May of this year. On March 7, 2023, the IRS issued a renewed warning regarding the ERTC, urging, urging taxpayers to carefully review the ERTC guidelines. After reviewing the guidance with our independent registered public accountants, we elected to disclose the funds received as a separate line item under long-term liabilities on the balance sheet until more information becomes available. As a result, for the period ending June 30, 2023, approximately $1.2 million was recorded under long-term liabilities. For more information regarding this, I'd like to direct you to our Q2 Form 10-Q, filed today with the SEC.
Today, we reported Q2 2023 total revenue of $3.4 million, compared to $4.2 million for the Q2 of 2022. The quarter-over-quarter decrease was due to lower revenue generated quarter-over-quarter from appliance sales, revenue from Vivos Integrated Provider, or VIP enrollments, as well as lower center revenue. This was partially offset by increased Home Sleep Testing service revenue and an increase in conference and training-related revenue. Both Billing Intelligence Services and Myofunctional Therapy revenue were flat quarter-over-quarter. During the Q2 of 2023, we enrolled 43 VIPs and recognized revenue of approximately $900,000, compared to 58 VIPs for a total of $1.2 million in revenue during the same period last year.
Revenue growth was impacted by new entry levels into the VIP program, ranging from $2,500 to $50,000 and adding an $8,000 pediatric program, which was received very positively by our providers, but overall had the impact of decreasing our average enrollment price. We sold 2,083 oral appliance arches during the second Q2 of 2023, for a total of approximately $1.5 million, compared to 3,321 during the Q2 of 2022, for $2.1 million. During both the Q2 of 2023 and 2022, we recognized approximately $300,000 in revenue from myofunctional therapy services and $200,000 in billing intelligence service revenue.
Lastly, during the second Q2 of 2023, we recognized less than $100,000 in center product revenue, compared to $200,000 during the same period in 2022, and over $300,000 in revenue from our home sleep test ring lease program, compared to $200,000 in the comparable 2022 period. For the six months ended June 30th, 2023, revenue was $7.3 million, compared to $7.8 million for the six months ended June 30th, 2022. This decrease was attributable to the same factors I mentioned earlier for the quarter. During the first six months of 2023, we enrolled 81 VIPs for revenue of $2.2 million, an increase of 8% compared to 90 VIPs in revenue of $2.1 million for the same period in 2022.
During the first six months ended June thirtieth, 2023, we sold 4,452 oral appliance arches for a revenue of $3.2 million, an 18% decrease compared to the six months ended June thirtieth, 2022, when we sold 6,286 oral appliance arches for revenue of approximately $3.9 million. We attribute the decrease in product sales in part due to a CBS News report that came out in March of this year regarding an unrelated oral device that was not cleared for use by the FDA and was being used off-label. As Kirk will discuss in greater detail, the device created serious issues with a patient's detention, dentition in jaws, resulting in the loss of four front teeth.
Although Vivos CARE devices are cleared by the FDA, based on our continuing discussions with our dentist customers, we believe that some practitioners paused purchases until they learn more about the issue. For both the six months ended June thirtieth, 2023, and June thirtieth, 2022, we had approximately $500,000 in Myofunctional Therapy revenue. For the six months ended June thirtieth, 2023, we had $400,000 in Billing Intelligence Services revenue, compared to $700,000 in the prior year period. For the six months ended June thirtieth, 2023, we recognized $600,000 in Home Sleep Testing service revenue, compared to $200,000 for the six months ended June thirtieth, 2022, and $100,000 in center product revenue, compared to $400,000 for the six months ended June thirtieth, 2022.
Gross profit was $2.1 million for the Q2 of 2023, compared to gross profit of $2.6 million for the comparable period in 2022. Gross margin remained the same for Q2 of 2023 at 62% when compared to the same period in 2022. Gross profit for the first six months of 2023 was $4.4 million, compared to $5.1 million for the first six months of 2022. Gross margin for the first six months of 2023 was 61%, compared to 66% for the six months of last year. Sales and marketing expense decreased by $1.1 million to $600,000 for the Q2 of 2023, compared to $1.7 million Q2 of 2022.
This decrease was primarily driven by decreased sales commissions on lower sales and a reduction in associated sales-related expenses. For the six months ended June 30, 2023, sales and marketing expense decreased by $1.7 million to $1.2 million, compared to $2.9 million for the six months ended June 30 last year. Importantly, general and administrative expenses decreased by $1.8 million, or 24%, to $5.9 million for the Q2 of 2023, compared to $7.7 million for the Q2 of last year. This year-over-year decrease reflects the substantial impact our previously announced cost-cutting efforts are making. We believe these important efforts will reduce our cash burn as we seek to ramp up revenues and move toward cash flow positive operations.
For the six months ended June 30, 2023, GNA expenses decreased $3.1 million, or 20%, to $12.4 million, compared to $15.5 million for the six months ended last year. Total operating expenses for the 2Q 2023 decreased by a significant amount, $2.9 million or 31%, versus the 2Q 2022, reflecting Vivos cost-cutting initiatives. For the six months ended June 30, 2023, operating expenses decreased by $4.7 million, or 25%, compared to the same period in 2022. Operating loss was $4.5 million and $9.5 million for the three and six months ended June 30, 2023, compared to $7 million and $13.6 million for the comparable periods last year.
The year-over-year decrease in operating loss was primarily from lower GNA due to expense cuts and the other factors I just discussed. Net loss was $5.5 million for the Q2 of 2023, compared to $7 million for the Q2 of 2022. The reduction in net loss was mainly due to the cost-cutting initiatives I described earlier. Net loss for the six months ended June 30th, 2023, was $7.2 million, compared to $12.3 million for the first six months of 2022. Turning to our statement of cash flows, cash burn from operations for the six months ended June 30th, 2023, was $6.4 million, a decrease of approximately $4.3 million compared to $10.7 million during the comparable prior year period. This is further evidence of the positive impact of our cost-cutting initiatives.
For the six months ended June 30th, 2023, net cash used in investing activities consisted of capital expenditures for software of $500,000 related to the development of VIP ordering software for internal use, which is expected to be placed in service in late 2023, as well as a purchase of patents and other intellectual property in February of this year. This compares to net cash used in investing activities of $600,000 in the comparable 2022 period, arising from capital expenditures for the internally developed ordering software. As of June 30th, 2023, we had $3.9 million in cash and cash equivalents, compared to $3.5 million as of December 31st, 2022.
We previously disclosed that our goal was to decrease our costs and increase our revenues during 2023, with the aim of becoming cash flow positive from operations by the Q1 of 2024, without the need for additional financing if possible. Although we have implemented cost savings measures and significantly reduced our cash used in operations as we seek to achieve positive cash flow operationally, our sales have not grown during 2023 as we desired. In all likelihood, we will be required to obtain additional financing to satisfy our cash needs. We are reviewing all options to obtain additional financing. With that, I'll now turn the call back over to Kirk.
Thank you, Brad. It should come as no surprise to those of you who followed Vivos closely, that this company has always held the promise of doing great things, the things that could change the world. After all, no company has ever come to market with a technology that has been proven time and time again in both clinical studies and in actual practice, to reverse or eliminate sleep apnea in a majority of patients without lifelong nightly intervention. Because sleep apnea either causes or contributes to virtually every major chronic health condition out there, we believe that what we're doing here at Vivos is and will continue to be a very big deal. By practically any measure, our sleep apnea solutions are superior to everything else on the market.
Generally speaking, Vivos treatment is less expensive, less invasive, more effective, more comfortable, longer lasting, as safe as CPAP, and safer than Neurostimulation implants. Yet those technologies, despite being undesirable, last resorts, continue to dominate the marketplace, and the companies behind them command multibillion-dollar market caps. We didn't come this far to take second or third place. We're playing to win. We have to win. There are far too many patients counting on us to prevail. I'm sure the question on everybody's mind is: how do you explain the results? With a virtually unlimited blue ocean type of market to work with, and tens of millions of suffering patients yearning for an alternative solution to CPAP and surgery, why hasn't Vivos garnered more market share? What's going to be different this time around?
I'd like to take a moment and make the case that the issue is not and never has been our technology or the science behind it or anything of the sort. It has never been our strategy or the effectiveness of management in executing the strategy. Disruptive innovation and new technologies simply take time to dislodge old technologies and old paradigms of thought and practice. Here's why we believe the time has finally come for Vivos. First, we finally have a true national network of Vivos providers, armed with a comprehensive suite of products and services that will enable them to serve larger numbers of new patients. It takes lots of dentists who are specially trained and competent, who are conveniently located to where the patients really are.
It also takes a comprehensive product offering to address a wide range of diverse patient needs, from disease prevention to disease management and even rehabilitation. Developing and growing that national dental provider network and the suite of product offerings aimed at treating OSA, is what we have spent the last five years creating. This was always phase one of our go-to-market strategy, because without a national network of competent, committed Vivos oral appliance providers, armed with an assortment of evidence-based, highly effective products that patients need and want, nothing else really matters. Dentists cannot do this alone or in isolation from other healthcare providers, such as primary care physicians, ENTs, neurologists, pulmonologists, pediatricians, cardiologists, functional medicine doctors, chiropractors, and physical therapists. All of whom see patients suffering from breathing and sleep disorders such as OSA every single day. What do all these patients have in common?
They dislike or are unable to tolerate their CPAP treatment and are looking for something better. One way or another, patients must come from and through those other healthcare providers while making their way into specially trained dental offices such as Vivos VIP offices, to receive treatment. Facilitating the referral of medical patients with sleep apnea into our network of trained Vivos offices thus becomes phase two of our go-to-market strategy. Fortunately, we've been finding new and creative ways to drive failed or disgruntled CPAP patients into Vivos treatment. Our recently executed national distribution agreement with a major Durable Medical Equipment company, or DME company, is a prime example. On June 1, 2023, we entered into a non-exclusive distribution agreement with a leading supplier in the United States of home health and respiratory products, such as CPAP equipment.
Our new distributor currently provides respiratory products to approximately 1.8 million patients nationwide. Pursuant to this agreement, our distributor has begun to distribute certain of our products in the United States, including the Vivos, Vivos Sleep, and Versa, all of which we acquired earlier this year. The agreement called for an initial 90-day trial period in Colorado and Florida, which made the contract subject to potential cancellation. However, within weeks of starting the trial, our distributor reported an initial 36% positive patient response, along with other positive feedback, and requested a modification to our agreement that would make it exclusive for the period of 1 year. Excuse me. We are currently negotiating the potential terms of exclusivity.
Plans are already underway to extend the scope of the distribution territory beyond the initial 2 markets into Texas, Virginia, North Carolina, New Jersey and at least one other major market. A nationwide rollout is expected to follow soon thereafter. Our hope is to be able to share with the market even more definitive information about this exciting development in the near future. Regardless of the outcome of our present negotiations for exclusivity, we are confident that this new form of arrangement with DME companies will help us increase our product revenues during the second half of 2023 and beyond. There are many more such DME companies out there, some of which are substantial public companies serving millions of patients in the United States and Canada.
With widely recognized CPAP adherence rates of just 30%-60%, every DME company, depending on its size, has the records of thousands or tens of thousands and perhaps hundreds of thousands of known OSA patients who have failed CPAP. Often, these patients have nowhere to go and do nothing further to treat their OSA until they get desperate enough to try neurostimulation implants or surgery. As an authorized Vivos distributor, DME companies can now offer their OSA patients a much more attractive non-surgical alternative therapy. Launching our distribution model in the DME space is a milestone achievement. We now have the model, the infrastructure, the product line and the provider network to service large numbers of patients.
We believe this model will appeal to many other DME companies, as it gives them an easy way to monetize and reengage patients who are not currently receiving treatment for their OSA. Each month in the United States, DME companies distribute roughly 500,000 new CPAP units to freshly diagnosed OSA patients. Every month, about half of that number stop using their CPAP units. If the current rate of 36% of such patients expressing interest in oral appliance treatment holds true over time, the number of new prospects flowing into Vivos VIP offices could be substantial. With roughly just 2,500 new case starts per month from DMEs, or about 1% of the total monthly failures, CPAP failures, Vivos revenues could easily double, advancing us toward our goal of becoming cash flow positive.
In our current DME distribution effort, we don't yet know the final conversion rate of these patients, but what we do know so far is that 36% of the CPAP failed patients contacted by our current DME partner are saying yes to seeking oral appliance therapy at a Vivos provider. Historically, our experience suggests that conversion rates for such patients are around 80%. Within a few weeks, we should have reliable data on conversion rates, which should then allow for more accurate forecasts. In addition to our DME distribution model, a select few Vivos-trained dentists, or VIPs, have seen great success by actively seeking patient referrals from a wide variety of local medical doctors, such as cardiologists, primary care physicians, ENTs, neurologists, pediatricians, and other healthcare providers who see patients with OSA every day.
Some of these Vivos-trained dentists, known as VIPs, are generating millions of dollars per year in oral appliance airway treatments from their independent practices. It is a model that we believe is working across multiple offices, and we believe it is therefore replicable and scalable. As a second key part of our phase two go-to-market strategy, we are more sharply focused on establishing medical referrals into our VIP doctor practices on a much broader scale. Along with DME company referrals, we believe these initiatives will bring significant new growth opportunities to Vivos in the months and years ahead. We see them augmenting and accelerating our other VIP and DSO enrollment efforts because as we are able to deliver more and more new patients to Vivos-trained VIPs, the intrinsic value proposition for becoming a VIP or DSO affiliate increases significantly.
In the long run, that is how we see our business unfolding over the next 18 to 24 months. Now, earlier in this call, we alluded to an unforeseen market event that occurred during the second quarter that had an adverse impact on our revenue. In early March, a televised CBS News story broke about a widely publicized lawsuit and ensuing governmental, including criminal, investigations into an unrelated, non-Vivos, non-FDA cleared oral appliance called the AGGA, A-G-G-A, purporting to treat sleep apnea. Although Vivos was not named in either the lawsuit or any of the initial publicity, rumors, speculation, and viral misinformation created significant confusion and concern among both dentists and patients.
This occurred despite our best efforts to counter such misinformation by reminding our customers that all Vivos appliances are duly registered or cleared by the FDA and have been proven both safe and effective in numerous studies, as well as in treating over 40,000 patients. Not long after reports of this matter began to circulate, Vivos began to experience declines in both new VIP enrollments and CARE appliance sales. Our CARE devices are the oral appliances most likely to be confused with the AGGA oral appliance noted above. These declines may also have been impacted by certain Q2 personnel cuts to our practice advisor support teams. Regardless, the decline in CARE appliance sales continued throughout the Q1 .
Importantly, through the end of the Q2 , units of our Guide appliances for pediatric growth and development rose 89% year to date, compared to the same period in 2022. Guide appliances are high margin products, priced much lower than CARE devices, it takes larger unit growth of Guides to be able to overcome the decrease in CARE unit sales. In addition, our non-Guide, non-CARE devices, which we began to introduce in the Q2 , also showed tremendous growth. These product lines have continued to grow rapidly here in the Q3 , we remain very optimistic about the continued growth going forward.
During previous calls and filings, we stated that our goal was to decrease costs and increase revenues during 2023, with the aim of becoming cash flow positive from operations by the Q1 of 2024, without the need for additional financing, if possible. As Brad stated earlier, Vivos has successfully implemented cost savings measures and significantly reduced cash used in operations. However, sales have not grown during 2023 as anticipated, due to the external factors just mentioned. As such, Vivos now anticipates that it will likely be required to obtain additional financing to satisfy cash needs as Vivos works towards increasing revenue and achieving cash flow positive operations in the foreseeable future. We are presently working to determine the best path forward to ensure Vivos has the necessary resources to meet the opportunities before us.
As previously highlighted, throughout this year, we significantly reduced our cash burn, which was aided greatly by the 31% quarter-over-quarter and 25% year-over-year reduction in operating expenses we achieved in the Q2 . At the same time, we strategically expanded our product offerings to address a broader spectrum of patient needs and price points to drive long-term growth and long-term revenue growth. This included our acquisition of certain key patents, trademarks, product rights, and trade secrets earlier in 2023, which filled certain gaps in our product offerings to providers and patients. This strategic move has already shown great promise, as these new products proved critical to Vivos landing this national distribution agreement with the large DME company during the Q2 , and which will add significantly to our revenue over time.
As we just highlighted, those new product lines have also been growing at a significantly faster rate than our CARE products, which is fully in line with our expectations as those products filled some important gaps in our product line offerings. We believe that we'll continue to see solid revenue improvement here in the second half of 2023. We continue to look at opportunities to expand our product offerings and partnerships, and just recently signed an agreement with DEKA to offer DEKA digital lasers to Vivos clients through The Vivos Institute. DEKA recently introduced new advanced technology that can be used to effectively treat snoring, as well as swollen tonsils and other soft tissues that can obstruct the human airway. DEKA is the dental laser subsidiary of the world's largest laser manufacturer, El.En. Group, an $800 million Italian public company.
Other product distribution and collaboration agreements are in advanced discussions and will be announced if and as they are consummated. Management believes that such product representation and collaboration agreements will continue to build revenue and growth lines for Vivos in the months and years ahead. While we face some headwinds in the market on the revenue side, we also see new revenue opportunities emerging as marketplace momentum and sales build across our entire suite of products. The Q2 also saw continued progress in our pilot tests with DSOs, including the execution of new and existing pilots during the quarter with eight regional and national DSOs, representing over 1,000 locations nationwide.
As an indicator of our momentum in the DSO space, since the close of the Q2 , we have progressed to having advanced discussions, including on-site meetings with an additional 5 DSO groups, with another 12 groups being added to our sales funnel after expressing high levels of interest. We are also pleased to report significant progress from our ongoing efforts to obtain additional FDA clearances and indications of use for our products. We now have submitted several rounds of what we believe to be compelling data to the FDA, pursuant to our applications to expand the scope of authorization for use of our medical devices. We believe such applications and requests are in the latter stages of consideration. If and as so, any such new clearances are received, we will publish those milestones immediately. In addition, our clinical advisory board, led by Dr.
Clete Kushida of Stanford University, along with certain independent clinicians and researchers, have continued to work diligently to publish new data and peer-reviewed papers, providing further scientific validation of the efficacy and safety of our technology. Currently, five new papers have been submitted and accepted for publication and presentation at medical professional conferences over the next few months. At least two additional papers have also been submitted and are currently under peer review. Through the combination of our strategic revenue initiatives, internal operating cost reductions, and new capital raising initiatives, we believe we have positioned Vivos to achieve revenue growth and ultimately cash flow positive operations and profitability in the foreseeable future....In summary, while the larger economic and market environment is creating challenges for both medical and dental communities, Vivos has taken steps to address those challenges, and our long-term growth drivers remain in place.
With our innovative, evidence-based technology and network of trained providers, we remain committed to our core mission of addressing the crisis of sleep apnea and breathing-related sleep issues. For all of those reasons and more, we are undaunted by the current challenges, and we remain fully committed to our core mission and purpose. We believe Vivos is positioned now better than ever to do great things and to begin to realize its full potential. We thank you for your patience and support. We know it has taken longer to get here than we had expected, but we see a very bright future ahead. This concludes our prepared remarks. Now, we'll be happy to take questions.
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question comes from Scott Henry with Roth Capital Partners. Please proceed with your question.
Thank you, and good afternoon. A couple questions. First, the negative impact of this AGGA device, are you still noticing any impact at this point in time, or is it kind of blown over?
Good question. It's blown over, but, you know, good news or let's just say, bad news travels fast and good news takes a little while to get out there. We responded to this situation very proactively, and I think we got out ahead of it as much as we could. There were still doctors who had been tremendous providers. I was back in New York 2 weeks ago, and I met with one of our leading producers, and he said he just completely shut down, just out of sheer fear over this whole thing, and that he's just now... I spoke with him again last night, and he's just now getting back, back into, you know, putting patients into Vivos CARE devices. I think it's blown over, Scott.
I would say we, we are starting to see some rebounds take place, but it was a, it was a body blow. There's just no getting around it. It was a body blow that we did not anticipate and could not have foreseen, but I do believe we've weathered the storm. We've made it very clear that, you know, this was an unrelated, non-Vivos device that, that uses a completely different mechanism of action to evoke the changes that it purports to do. It was not a FDA-cleared device. There's no research that we could find out there about it. It's just a, some guy hawking these things out of the back of his car type thing, and we just tried to distance ourselves as far as we could from it.
I, I feel good about the fact that it's behind us. There might be some residual doctors out there that we need to still sort of bring back on board, but I think for the most part, we're seeing, we're seeing most of these guys come back around.
Okay, and then I know you made some comments on growth in the second half of 2023, but more specifically, Q3, do you expect sequential growth over Q2? Over Q2 is kind of a lower base. Just want to get a sense if you expect improvement over that number.
We do. We do. Another great question, I, I believe in my last earnings call, you, you'll recall that I, I said, "Look, I, I think Q2 is probably not going to be anything to write home about. It's probably gonna be relatively flat." We ended up being down a little bit because of this AGA debacle. I, I think we're seeing some nice, nice things happening here in Q3. I think we can, we can probably expect a much better, much better report in Q3 than we have here in Q2. I will say that the second half of the year is gaining momentum, and you know, most of the gains are gonna be towards the latter part of the year as we move into 2024.
This is, this is going to be due to the, to the revenue ramp that we see coming out of Lincare, out of this, company that we talked about. So we will be, we will be, keeping everybody apprised of how that goes.
Okay, and then on the spending side, when we look at the 2Q numbers, do you expect cost-cutting beyond there, or should we think about 2Q as their base?
We're continuing to cut costs. We've, we've implemented some, some pay cuts. We've implemented some further reductions in staff. We're continuing to watch this, and we're trying not to cut into the bone of sales. One of the things that I had mentioned earlier in this call was that we think some of the, the, the loss of revenue was due to some of the cuts we made of our boots-on-the-ground practice advisors. In retrospect, I think we did the right thing. I think the overhead for, that, that was associated with, with having those people on board was just not consistent with what it just was unsustainable. When we did, when we did do the staff reductions there, it did have an impact on sales to some degree.
I think we've, basically, everybody's adjusted to the new reality now, and I think we're going forward. I think with the, with the routine, sort of everyday, sort of the, the automatic feed of patients from the DME distribution companies, I think we're gonna see a much more steady and predictable flow of patients, and I think that's gonna be good for everyone.
Okay, great. Final question from me. In 2Q, the revenue per VIP sign-up was down a bit from Q1. What do you think is more reflective going forward, Q1 or Q2, or is it somewhere in between?
You know, Q2 had such an anomaly in it. It's hard to predict right now. I could do a better job of answering that for you, unless Brad has some color to add. I could do a better job of answering that for you when we get another quarter without this anomaly of this market situation with the AGA. Do you have any color to add to that, Brad?
Yeah, I mean, we did lower the entrance prices for certain VIPs, you know, doing just pediatric or just doing MAD devices and so forth. That, you know, has the impact of lowering the average sales price on an enrollment.
I think he was asking, correct me if I'm wrong, Scott, but I think you asked about the productivity per VIP. Is that right?
No, I was talking about the, the revenue per VIP sign-up, you know?
Oh, okay. Okay, I misunderstood.
If I take that-
Okay.
VIP number, divide it by 43, yeah.
One of the things that, one of the things that we learned, we have regular interactions with our VIP community, and one of the things we learned is that, you know, we were, we were presenting a very binary product offering to the world, and it was either you sign up and you pay, you know, a relatively high entry fee to play, or we don't really have an option for you. We created, strategically, we created a number of lower price entry points. If somebody wanted to just do pediatric guided growth and development appliances, there is an entry point that's, you know, $7,000-$8,000. If somebody wanted to do our midline series of mandibular advancement devices, which we call our lifeline products, they could do that for the same.
There's different entry points at a fraction of the cost of what we had before, but they don't get access to our CARE devices. If somebody wants to come in and get access to the full thing, it requires more training, and that means more of a burden and on support, and systems, and training, and everything else. You will see that number continue to decline. We hope to see the actual number as we go into the second half of this year, the actual number of enrollees accelerate or increase, because theoretically, more doctors should come on board at lower price points.
If they wanna, if they wanna expand the scope of what they're able to do, they can always sign up for more programs internally with us, and they can, they can go from guided growth to our Lifeline program to our full CARE device program and become a full-fledged VIP. Right now, what we've tried to do is, is give doctors a chance to put their toe in the water, test, test drive some of our, our products and appliances and our systems and our support, and then once they get hooked, then we can bring them on to the full, you know, the full measure of what they wanna do. It's really, it breaks down like this. It breaks down: do you wanna do preventive things with the pediatric guided growth and development? That's a preventive type product.
Do you wanna manage this disease state, which is our Lifeline products, which, which are the Vivi, the Versa, the Vivi Sleep? Those are our Lifeline products that we mentioned earlier. Do you wanna rehabilitate this condition in your patients? That's what we call our CARE line that's the mRNA, DNA, mmRNA. That's the, the full measure of the more complex appliances, the more expensive appliances, and it's really now up to a doctor to say, "Okay, this is how I wanna play the game. I wanna get trained to do this, and then I'll maybe later do that, or maybe I'll go all in." Now they have a choice. Before, we didn't give them a choice.
Now that we have a broader spectrum of, of products, it makes it a much easier entry point and much easier way for these guys to get started.
Okay. All right, great. Thank you for the color, and thank you for taking the questions.
You bet.
Thank you. There are no further questions at this time. I'd like to turn the floor back over to management for closing comments.
Thank you, operator. We're grateful for the opportunity to be where we are. We wish that things had gone a little bit better for us in the Q2 . We wish that that situation that happened with the AGA device had never happened, but it did, and we are where we are. Regardless of all that, the future that we see around here with our new relationships and the new opportunities that are before us seems very bright. We are not that far away from cash flow break even. We need about 2,500 new units a month, from our distribution effort with this DME company, which for them, it doesn't seem like it's a big lift. We're currently, as we mentioned, in discussions for an exclusive relationship there.
We hope to have further information, be able to report on that as it goes, but we feel very, very confident and very bright about the future. We, we know we're gonna have to go raise some money. We wish we didn't have to do that. We tried very hard not to have to do that, but, here we are. We're leaning into the wind, and we're headed forward, and we're gonna make this work. We appreciate everybody's patience and, and, hanging in there with us, and we'll just, we'll leave it at that. Thank you, everyone, for, for being here today and listening to us, and we'll, we'll turn it back over to the operator.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.