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

Michael Watts: So just to add on to that as well. So we know who those low-volume customers are, and we have the opportunity now to go back to them and show them the full benefits of GentleWave. So that’s our next step here and something that’s ongoing and active with our consumable sales team.

Jason Bednar: Okay. Very helpful. Maybe one — last one to squeeze in here. I wanted to ask on your debt covenants. I think you have some minimum revenue covenants out there that you need to clear these admittedly are looking a little difficult by the middle part of next year, just given where revenues may be expected to end this year. Can you talk about your plans to address these covenants with your lenders? Have there been any early discussions on removing or reducing these covenants?

Michael Watts: So without getting into specifics, we are, of course, discussing and have ongoing discussions with our — with Perceptive who holds our debt and continuing to just evaluate different scenarios as well there. But we’ve always had a good relationship with them, and we expect that to continue moving forward.

Operator: And our next question go to Erin Wright of Morgan Stanley.

Justin Wang: This is Justin Wang on for Erin. Can you provide some more color regarding the reductions in force in November, specifically, to what extent does this impact the sales force? And how does this affect the ability to drive top line. Additionally, are there any other areas of cuts? And I have a follow-up.

Bjarne Bergheim: Yes, Justin, the simple answer is that we don’t believe this is not going to impact our ability to grow the top line. It’s also not going to impact our customers in any way. Let me just give you a little bit more color, though, to kind of put these cuts into perspectives. From where we are right now, there are a number of projects around the organization that are complete. They’re done. An example of that is development to the G4, that’s substantially all done. Development of the second-generation CleanFlow, substantially all done. We’re also getting much more efficient on different areas around the organization like manufacturing, operations, et cetera. So because of that, because there are some of these areas that are complete, we can now stop.

And there’s something about starting a project, but it’s also important to talk about stopping a project. Second, the other thing that we’ve done during this reduction for us, we have now an opportunity to reallocate resources around the organization. That’s another thing that we’ve done. But ultimately, at the end of the day, with all this, this is really all about us doing more with less. That’s never easy, but that’s something that we need to be all over, and that’s something that the team and the organization here has responded very well to this. And everyone are on board with this, and that’s exactly what we’re going to do from an execution perspective going forward. But I want to emphasize this, we are still absolutely focused on commercial.

We aspire to be a growth company but we’re, at the same time, we’re going to balance growth and cash. But we’re also, at the same time, we’re going to manage and we’re going to fund key critical initiatives like cavities that we’re really excited about that. It can really provide an inflection point for us going forward. We’ve been through a pandemic. We know how to make cuts like this. We have done it before. We’ve learned a lot. But I think this is the right step for us at this time to allow us to be good stewards of cash. And — but at the same time, to getting back to the core elements of your question, we’re going to still continue to grow the Company and growing top line and this will not impact customers in any way.

Justin Wang: That’s very helpful. Additionally, you’ve taken a good amount of price during the year. So I was wondering if you can help us understand what’s in store for 2024 regarding price? And also on that vein, any practitioner pushback on price that we should be aware of?