Good afternoon, ladies and gentlemen, and welcome to the Vapotherm second quarter 2022 financial results conference call. As a reminder, this call is being webcast live and recorded. It is now my pleasure to introduce your host, Mr. Mark Klausner of Westwicke. Please go ahead, sir. Good afternoon, and thank you for joining us for the Vapotherm second quarter 2022 financial results conference call. Joining us on today's call are Vapotherm's President and Chief Executive Officer, Joseph Army, and its Senior Vice President and Chief Financial Officer, John Landry. I would like to remind you that this call is being webcast live and recorded. A replay of the event will be available following the call on our website. To access the webcast please visit the events link in the IR section of our website, vapotherm.com. Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements. These statements are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the Risk Factor section of our annual report filed on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission, or SEC, on February 24, 2022. Our quarterly report filed on Form 10-Q for the quarter ended March 31, 2022, which was filed on May 4, 2022. Our quarterly report filed on Form 10-Q for the quarter ended June 30, 2022, which was filed today, and in any subsequent filings with the SEC. Such risk factors may be updated from time to time in our filings with the SEC, which are publicly available on our website. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events, or otherwise, unless required by law. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of the historical non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the investor relations portion of our website. With that, it's my pleasure to turn the call over to Vapotherm's President and Chief Executive Officer, Joseph Army. Thanks, Mark. Good afternoon, and thank you for joining us today. 2Q 2022 revenue was $13 million as worldwide respiratory census remained low and customers worked through disposables inventory purchased during the first quarter 2022 Omicron surge. We believe we are beginning to see some of these factors subside as revenue increased sequentially in May and June. Based on our channel checks, we do not believe we are losing competitively in the marketplace or that Precision Flow units installed during COVID are quote unquote dead boxes. We remain cautiously optimistic about the remainder of the year as we expect the trend towards a more normalized respiratory census to continue in the second half of 2022 and expect modest RSV and flu levels later this year in the U.S. We launched our new HVT 2.0 platform in July, and given early market feedback, expect this new product to drive growth in the second half of 2022 versus our first half 2022. On today's call, I will update you on the milestones we achieved in 2Q 2022 on our path to profitability plan and provide you with the latest on our debt covenant matter. As a refresher, there are four fundamental aspects of our plan. Number one, transform our business into a consistent, predictable 20% revenue grower beginning in 2023. Number two, drive gross margins to 60% by the fourth quarter of 2023 and set us up for expansion to 70%+. Number three, return our cash operating expenses to pre-COVID levels or $17 million-$18 million per quarter in 2023. Number four, drive the business to profitability with the capital that we currently have on our balance sheet, which includes the $50 million of cash plus $20 million of excess inventory that we will burn down by mid-2023. Now let me provide a little more color regarding each of these points. Top line growth in the near term will largely be driven by executing on our one hospital one day or 1H1D strategy and the full launch of HVT 2.0. Through 1H1D, we educate our customers on the full capabilities of our technology to help patients through all four care areas of their hospital that we serve today, regardless of whether the patients are hypoxic, like oxygen-deprived COVID patients, or hypercapnic, like COPD patients who retain excess carbon dioxide. In 2Q 2022, COVID hospitalizations and respiratory census were low, which gave our sales force full access to their customers. As a result, we were able to focus on the execution of our 1H1D strategy in person in our gold accounts. In addition, we trained over 11,000 clinicians via digital training programs. We continue to believe that executing on the 1H1D play will allow us to return our disposable utilization rates to their historical level over time as we go deeper and wider in our gold accounts. Despite the lower overall 2Q 2022 disposable utilization rate based on census, awareness and interest in our technology continues to grow. We added another four gold accounts since our May earnings call, and only 30% of our near 500 gold accounts are using our technology in three or more care areas, which represents a significant growth driver for us. It is important to note that the more care areas we're used in, the higher the disposables revenue per installed unit. We launched the next generation HVT 2.0 platform in early 3Q 2022, and our sales pipeline is growing. Early feedback from our sales team and customers has been positive. With its internal blower, HVT 2.0 enables us to access the 50% of all U.S. hospital beds on general care floors that don't have medical air in the room. This is important as accounts using our High Velocity Therapy in the general care floor areas have higher than average disposable utilization rates. Over time, we expect HVT 2.0 to replace older Precision Flow units, which is the same trend we saw when we launched the Precision Flow Plus in early 2018. In the first year of post-Precision Flow Plus launch, we replaced roughly 5% of the legacy Precision Flow installed base and expect similar results with HVT 2.0 in the pre-COVID installed base as hospital capital budgets begin to normalize. We expect to primarily sell HVT 2.0 units as opposed to placing units and anticipating material uptick in both capital and disposable ASPs for the HVT 2.0 platform due to increased clinical and economic utility for the customer. Our second key focus is improving gross margin to 60% by 4Q 2023 with a pathway to 70%, which is an important part of our profitability plan. We made good progress on this as we signed an agreement with a third-party company to source and hire operational personnel for us in Mexico. We've also identified a facility and signed a lease. Assumptions related to our labor and overhead cost structure are on track, and we expect to be producing product at our cost of goods sold target by year-end 2022, early 2023. Direct costs associated with the move to Mexico will be charged as a period expense in 4Q 2022 and will negatively impact gross margin in that quarter. Our third key priority is to normalize our cash operating expenses to pre-COVID levels of $17 million-$18 million per quarter in 2023. While our published results don't yet reflect it, we took meaningful steps in the quarter. We began the process of normalizing at plan sales compensation. We brought most of the R&D work back in-house and are winding down arrangements with third-party R&D design firms. As part of this effort, we're establishing a technology center in Singapore, which will be a wholly owned Vapotherm subsidiary, and we're working with the Singapore Economic Development Board to finalize grant funding. Having an R&D operation in Singapore will allow us to have R&D resources working around the clock on projects. This will be helpful as we develop our HVT Home and digital offerings. We've identified other areas that we will normalize as we further adjust our quarterly operating expense levels without impacting our future growth drivers. These three actions have put us on a path to become adjusted EBITDA positive in Q4 2023. We have more work to do, but I remain convinced that we can achieve this goal with the capital on our balance sheet today. Before I turn the call over to John, I want to address the revenue covenant in our debt facility. The covenant was based on hitting a trailing six-month revenue milestone in the first six-month period ending July 31 and reportable in August to our lender. We entered into an agreement with our lender to extend the first six-month measurement period by one month to the six-month period ending August 31. We're in discussions with our lender regarding that revenue covenant and anticipate having this fully addressed before the first reporting period. With that, I'd like to turn the call over to John. Thank you, Joe. Total revenue in 2Q 2022 was $13 million, with April revenue being a low point and growing sequentially in May and again in June. Disposables revenue was $7.9 million in 2Q 2022 due to lower respiratory census and the bleed off of customer inventory purchased during the 1Q 2022 Omicron surge. Our monthly U.S. disposable turn rate was 0.77 in 2Q 2022. In reviewing gold accounts that were added during COVID, 80% of them had disposable turn rates that were equivalent to pre-COVID gold accounts, which continues to suggest to us that we don't have dead boxes in new gold accounts that we added during COVID. Capital revenue was $2.6 million in 2Q 2022, and our worldwide installed base grew by 403 units in 2Q 2022. At the end of the second quarter, our worldwide installed base consisted of approximately 36,100 units, reflecting 13% year-over-year growth. Worldwide service revenue was $2.5 million in 2Q 2022. Gross profit in 2Q 2022 was $2.4 million, resulting in a gross margin of 18.2%. Gross margin was negatively impacted by lower revenue and production levels, inventory reserves, and the continued run out of higher cost of inventory built in the second half of 2021 to meet COVID demand. While the one-time setup cost of our Mexico operations, which we expect to incur in the fourth quarter of 2022, will negatively impact our gross margin in the short term, they will set us up to better handle future fluctuations in customer demand and to achieve our long-term gross margin objective of 60% by 4Q 2023. Operating expenses included $18.7 million of non-cash impairment charges as we wrote down the net carrying value of goodwill and intangible assets recorded as part of our HGE and RespirCare acquisitions, which form the basis of our Vapotherm Access reporting unit. While we will continue to invest in HGE and RespirCare, we completed an interim goodwill impairment assessment as a result of our year-to-date stock price decline and wrote down our goodwill to its estimated fair value, which decreased as a result of reduced revenue expectations. We also wrote off intangible assets related to customer relationships and developed technology as part of an overall impairment assessment. These non-cash impairment charges do not impact our revenue guidance. Operating expenses also include $1.8 million of severance related expenses due to senior level personnel retirements and transitions. Total operating expenses in 2Q 2022 were $42.2 million. Cash operating expenses, excluding impairment charges, depreciation and amortization, stock-based compensation expense, change in the value of contingent consideration, and the impact of severance accruals were $21.7 million in 2Q 2022 versus $24.3 million in 1Q 2022. Net loss in 2Q 2022 was $42.7 million, or $1.61 per share, compared to a net loss of $17.3 million or $0.67 per share in 2Q 2021. Adjusted EBITDA loss for 2Q 2022 was - $20.2 million compared to - $12.3 million in 2Q 2021. The year-over-year increase in adjusted EBITDA loss was primarily due to lower revenue and gross margin. As of June 30, 2022, cash and cash equivalents were $49.9 million compared to $72.9 million as of March 31, 2022. The decrease in cash in second quarter of 2022 was primarily due to our net loss. For 2022, we expect revenue in the range of $76 million-$81 million. This guidance reflects a continuing trend toward more normal respiratory census and modest RSV in late 3Q as kids go back to school and a modest flu season, which typically begins in the fourth quarter in the U.S. We are not factoring in any significant impact from COVID. Our guidance assumes U.S. disposables utilization rates of approximately 60%-70% of pre-COVID levels as seasonally adjusted for third quarter and fourth quarter. We now expect gross margins for the full year of 2022 in the range of 30%-32% with a material step-up expected in 2023. This margin factors in the inventory reserves we recorded in the second quarter of 2022, the remaining burn off of higher cost of inventory built in the second half of 2021, and the anticipated direct cost from the move of current operations to Mexico. We anticipate most of the move-related costs will be recorded as period expenses in Q4 2022. We expect to increase our gross margin into the low 50s% in 2023 and exit the year with a 60% gross margin. Labor cost of $6 per hour in Mexico are tracking to our expectations as we recruit production staff. This compares to approximately $28 per hour here in the U.S. We continue to expect to reduce our inventory balance by more than 50% by mid-2023 as we return to historical inventory turns of 4 turns per year, which we were operating at pre-COVID. Importantly, this reduction in inventory will return over $20 million of cash to the balance sheet from current levels. We now expect total GAAP operating expenses, excluding impairment charges, of $97 million-$100 million in 2022, a decrease from previous guidance of $99 million-$102 million. We now expect cash operating expenses, excluding impairment charges, depreciation and amortization, stock-based compensation expense, change in the value of contingent consideration, and the impact of severance accruals in the range of $84 million-$86 million in 2022, a decrease from previous guidance of $86 million-$88 million. We are pleased with the progress we made in the second quarter on our path to profitability plan regarding expense normalization without impacting future growth drivers. We expect to exit 4Q 2022 with a quarterly cash OpEx run rate of $17 million-$18 million per quarter and have identified other areas that we will normalize to pre-COVID levels as we further adjust our operating expense levels without sacrificing future growth. We expect to end 2022 with $15 million of cash plus another $15 million of excess inventory, which we expect to convert into cash by mid-2023 as we return our inventory turn rates to our pre-COVID levels of 4 turns per year. This will allow us to fund our business through 2023 and get us to adjusted EBITDA positive in 4Q 2023. Now I'm going to hand it back to our CEO, Joseph Army, to wrap up before we take questions. Thanks, John. In closing, we're going to go back to work and execute on our plan to drive 20% revenue growth, improve gross margins to 60%, and normalize our cost structure to pre-COVID levels or sub-$18 million per quarter in 2023. Execution of this plan will drive us to self-sustainability with the capital we have today and get us to adjusted EBITDA positive in Q4 2023. This is truly a unique business made up of best-in-class people that has done amazing things together, especially meeting every customer need during COVID. I want to thank every one of them for their dedication and commitment to our customers, patients, and each other. Thank you for trusting us with your capital. Now I'd like to open it up for questions. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, please press star one again. We'll pause for just a moment to compile the Q&A roster. Our first question comes from Margaret Kaczor from William Blair. Please go ahead. Your line is open. Hey, guys. Good afternoon. You know, maybe just to start, you know, let's start with kind of a sense around if you can giving us a percentage of the accounts or of the installed base maybe that didn't order disposables. Should we assume that it's roughly 40% that's not a gold account or the gold account's also not, you know, ordering because of the inventory issues you had referenced? Hi, Margaret. This is John. Thanks for joining today. In terms of our install base ordering accounts, we did some analysis on the accounts that we acquired, the gold accounts specifically that we acquired during COVID. We found that approximately 80% of those were ordering disposables at essentially the same as the pre-COVID gold accounts that we had. It's a smaller percentage of those accounts, about 20% of those accounts that weren't ordering. In that 20%, the install base of those accounts was relatively small in the materials. We think, you know, largely most of the accounts are ordering and the majority of those gold accounts that we had both pre-COVID as well as during COVID were ordering disposables during that period of time. Okay. You know, if we think about this being an inventory issue, what data do you guys have on sell-in versus sell-through of the disposables? Yeah, it's a good question, Margaret. We can't tell, to your point, exactly when a disposable is used. We don't have an ability to track it when it's actually used within the Precision Flow units. So a lot of it is done via, you know, physical inspection by our reps. So as we looked at it, in the second quarter, as our reps were able to get back into the accounts, we're able to see the inventory levels, you know, early in the quarter. We were able to see them get burned off over the balance of the second quarter. We're able to also take a look at the ordering patterns that we saw, again, starting to see those accounts reorder again through our, what we call our disposal purchasing pattern sheet. We then saw sequential increases from April to May and then again into June. You know, the majority of that stocking, we believe, occurred during the Omicron surge as customers were anticipating a severe surge during Omicron that didn't quite materialize, and the acuity of the respiratory illness with these patients wasn't quite as severe. It took a period of time for them to burn off their inventory levels, which we're seeing now through second quarter. Okay. So to the extent you can talk about, you know, what you saw in July, are you seeing any trends to suggest it continues to improve at this point? Really what I'm trying to get to is as we kind of focus on the 20% growth in 2023, what does that imply for the churn rates and kind of the confidence that you have that you can reach back out on those numbers? Thanks. Sure. Yeah, absolutely. July is typically our slowest season of the year, so it's tough to discern a pattern, you know, from what we've seen so far, you know, early in the third quarter. You know, as we think about going forward in terms of that growth rates, you know, we expect this year by, you know, for the remainder of the year, we expect our churn rates in the U.S. anyways to get back to roughly 60%-70% of their pre-COVID historical levels. As we go through and get through our 1H1D activities this year and then go touch those accounts again next year, you know, we expect to get to the end of 2023 and exit with near historical churn levels and then return to that level in 2024 as we work through our accounts. Our growth rate for 2023, that 20% will be really comprised of a return to near normalization of the churn rates and our HVT 2.0 launch, which we just completed here in the early third quarter. Okay. Thanks, guys. Our next question comes from Bill Plovanic from Canaccord. Please go ahead. Your line is open. Yeah, great. Thanks for taking my questions. So it's Margaret asked, and I'm gonna ask it a little different way. As you look at the top end and the bottom end of guidance. Kinda, you know, how much of that is gold, silver, and kinda the other accounts coming back? You say 60%-70%, but is that only gold coming back and then kind of the non-gold not? Then, as you know, as we think about that productivity as you come up to speed. Then how do you think about how long. And I wanna make sure I heard this right. You said you thought you'd get to 1H1D by year-end 2022 to all accounts. Is that. Did I hear that correctly? It's really all these questions you're just getting at is kinda what sort of visibility do you have today? What's gonna drive the numbers you're talking about at the high end and the low end, and what gives you comfort? Mm-hmm. Thank you. In terms of the comfort around this guidance, Bill, in terms of the breakdown of the gold, silver, and bronze, we don't break out the percentages of revenue very specifically around those, but we're very concentrated in the gold, which as you might surmise, you know, we parlayed it out, and that's really the main driver of the business, as we go deeper into those accounts, complete the 1H1D, which to your point, was to be completed by the end of 2022. We expect to see those turn rates recover in those accounts, which you know, drives the large percentage of the book of business. We have visibility into those accounts as we continue to execute the 1H1D strategy. Again, 1H1D, to answer that question, is around wrapping it up by the end of this year, getting to all of those accounts, in particular the gold accounts that we have, and then driving that deeper and wider in the care areas that we're in in those gold accounts. We're only in about 30%. 30% of those accounts we do have are in all four care areas. To the extent that we do the 1H1D program, extend deeper and wider into those accounts, that's also gonna increase the utilization of disposables in those accounts throughout those gold accounts that we have in the U.S. To ask this another way, does the low or high end of your guidance assume that you're 100% penetrated back up and running on just the gold accounts? Or are you making the assumption that some of your other business comes back? No. We didn't build it up like that. In terms of, you know, the low and the high end of the range, we're thinking 60% of our pre-COVID historical level will be the overall turn rate. 70% at the high end of the guidance range, and that's on the overall book of business. You know, of course, a big chunk of that is driven by the gold accounts. Okay. I'll get back into queue on questions. Thank you. Our next question comes from Marie Thibault from BTIG. Please go ahead. Your line is open. Hi, Joe. Hi, John. Wanted to follow up on Margaret's question here about July trends. I know you're aiming to get back to 60%-70% of historical levels. If you could take your best estimate of where you are right now in July versus historical levels for July? Yeah, I mean, I think, you know, we feel good with that 60%-70%, based on, you know, the visibility we have. You know, still early in the quarter, but based on, you know, what we've seen, you know, and again, in what's a seasonally slow quarter for us, the slowest turn rate quarter of the year at, you know, historically 1.6, 1.65, you know, we feel good with where, you know, things are at this point. Okay. As we consider the guidance, you know, the back half of this year, it certainly looks like really the outlook hasn't changed much for the back half of the year. It looks like you moved the guidance down really for what we'd consider a miss here. You know, in terms of thinking about the cadence of the back half, should we be thinking about Q4 being really the bulk of that, or do you think, you know, a Q3 really could be a substantial step up from Q2? Yeah. I think when I think about the splits between three and four, again, Q3's seasonally lowest, so, you know, we would think probably roughly 40-ish% of the revenue is probably in the third quarter and the 60% in the fourth. So that's gonna be more heavily weighted to the fourth quarter. You know, in connection with the guide for the back half of the year, I think, you know. You mentioned the delta in consensus to the guidance range here. A couple things went into that. You know, we factored in what we saw in the second quarter with regard to, you know, revenue, which was a little bit less than our expectation due to the lower respiratory census and destocking. We have a little bit of conservatism built in there. We believe for the back half of the year as some of the respiratory census starts to kick back in, especially in the third quarter as RSV kicks in for kids as they go back to school, fourth quarter as flu starts to kick in in the U.S., and, you know, we're excited about the initial market receptivity to our HVT 2.0. We, you know, have factored that into our guidance for the back half of the year. Thank you for that, John. One last one, if I could sneak in, on the HVT 2.0 launch. What are you hearing from your hospital customers in terms of, you know, the number of units they have, the number of units that they feel they need to have, and sort of their appetite for capital equipment at this point? Thanks again for taking all the questions. Sure. Sure, Marie. I guess in terms of HVT 2.0, I was fortunate enough to do a field ride towards the end of the quarter and was able to go into several accounts where we demonstrated and trained on the HVT 2.0 product. The customer sensitivity was very positive, especially around the ability to transport patients throughout the hospital to get to areas of their hospital that didn't have piped-in air. They really like that. They like the ease of use, the simplicity of setup and breakdown of the equipment. That was very positive. Those facilities have, you know, a fairly large installed base of Precision Flows. Really, we're looking at the HVT 2.0 as an option to be able to take that unit and be able to move their patients from their EDs to either their general care floors or areas of the hospital ICUs that didn't have piped-in air. Despite having installed units and, you know, pretty decent sized fleets of installed units, we're interested in acquiring two flavors. One, additional units to build out their fleet further, and there was some desire to replace some of their older Precision Flow Plus units that they might have had for a while. Thank you for that. You're welcome. Our next question comes from Joseph Downing from Piper Sandler. Please go ahead. Your line is open. Hey, guys. It's Joe on for Jason Bednar today. One from us on the environment. How are hospitals approaching lower priced capital compared to areas of higher priced capital today, from your perspective? Is there any way to tease out capital spending on newer technologies versus equipment going into next month? Thanks. You know, as I've connected with different, you know, hospital systems as they're thinking about capital, to your point, generally, you know, lower cost capital items tend to receive, you know, less scrutiny than the higher-ticket items. That said, if a hospital is acquiring, you know, multiple units, it does tend to trip over some sort of CapEx approval limit. It does typically go through a value analysis committee type of review, if there's a requirement for multiple units. Again, you know, I think we've seen a situation where respiratory gear has largely, during the pandemic, been at the top of the order in terms of prioritization from CapEx. I think what we've seen is respiratory is not at the top of the list right now. I think it's more CapEx is being earmarked for more profit-generating procedures for the hospital. I think, you know, we've moved down the list some, but we're not near the bottom of the list based on some analysis that we've seen in hospital surveys. We're not quite, you know, at the bottom of the list but not at the top either. I think the combination of smaller CapEx spend for our equipment plus the appetite to continue and invest in respiratory technologies is a positive for us. Thanks. One more from us on staffing. There's been a lot of discussion, obviously, on the topic, across the healthcare landscape, and we're curious how your hospital customers are approaching utilization of Precision Flow in response to staffing shortages across the country. Thanks. This is Joe. I'll take that one. They got an awful lot of experience with how to use that equipment during, you know, all the various surges. There's been an awful lot of turnover in hospitals, you know, not only in the United States, but Western Europe as well. I think that's also one of the things that we're hearing a little bit about with HVT 2.0, given the, you know, much simpler user interface and the fact that the disposable comes all preassembled. There's gonna be an element of having a fundamentally easier product to use that, you know, has a very good safety profile. We're not seeing a lot of issues today with Precision Flow, but we do see a way to take away some friction and challenges for hospitals given that staffing turnover. Great. Thanks, guys. We have no further questions in queue. I would like to turn the call back over to the company for closing remarks. Yeah, this is Joseph Army. Thank you all very much for joining us today and your interest in Vapotherm. We really appreciate it, and we look forward to updating you on our progress again next quarter. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.