Executive Summary

Record revenue of $6.93M, up 43% year-over-year and 19% sequential; gross margin held at 54% despite scaling the new facility .
Positive net income of $0.90M driven by non-operating fair value gains; operating loss widened on higher Sales & Marketing, R&D, and public-company G&A costs .
Management highlighted “revenue growth which significantly exceeded expectations” and reiterated clinical and product milestones (FLOSAT data updates; SOS initial data readout 1H 2024; RPMO2 remote monitoring commercial first use in Q4 2023) .
Liquidity: cash on hand fell to $6.2M at quarter-end, underscoring near-term funding discipline and cost control as opex steps up .

What Went Well and What Went Wrong

What Went Well

Record quarterly revenue of $6.9M with 43% YoY and 19% QoQ growth, driven by growing clinical adoption in the U.S. and Europe and expanded field sales .
Gross margin remained strong at 54% despite overhead absorption from the new manufacturing facility; management expects leverage to improve margins as volumes rise .
Clinical and product momentum: updated FLOSAT data presented; SOS severe OSA readout timeline reaffirmed for 1H 2024; next-gen RPMO2 device with embedded remote monitoring expected to see first commercial use in Q4 2023. CEO: “ProSomnus delivered record revenues… I am proud of our revenue growth which significantly exceeded expectations.”

What Went Wrong

Operating expenses rose to $9.5M (+$5.5M YoY, +$2.3M QoQ), reflecting higher Sales & Marketing headcount, R&D for RPMO2, and elevated public-company G&A (audit, legal, compliance, staffing, facility) .
Cash declined to $6.2M at quarter-end, tightening the cushion amid interest expense and sizable fair value-marked debt liabilities (senior and subordinated convertible notes) .
Profitability remains dependent on non-operating fair value gains; core operations posted a $(5.74)M loss from operations despite revenue growth .

Financial Results

Summary P&L and EPS vs prior periods

Metric	Q2 2022	Q1 2023	Q2 2023
Revenue ($USD Millions)	$4.86	$5.81	$6.93
Gross Profit ($USD Millions)	$2.54	$3.05	$3.76
Gross Margin (%)	52%	53%	54%
Total Operating Expenses ($USD Millions)	$3.97	$7.20	$9.50
Loss from Operations ($USD Millions)	$(1.43)	$(4.14)	$(5.74)
Total Other Income (Expense) ($USD Millions)	$(1.39)	$(2.75)	$6.64
Net Income (Loss) ($USD Millions)	$(2.82)	$(6.89)	$0.90
EPS Basic ($USD)	$(0.71)	$(0.43)	$0.06
EPS Diluted ($USD)	$(0.71)	$(0.43)	$(0.01)

Key drivers (Q2 2023): change in fair value of earnout liability $6.70M, warrant liability $2.11M, debt $(0.80)M, interest expense $(1.24)M, totaling $6.64M in other income (expense) and supporting the positive net income despite an operating loss .

Balance Sheet KPIs

Metric	Dec 31 2022	Mar 31 2023	Jun 30 2023
Cash and Cash Equivalents ($USD Millions)	$15.92	$11.56	$6.18
Accounts Receivable, net ($USD Millions)	$2.84	$2.66	$3.56
Inventory ($USD Millions)	$0.64	$0.76	$1.31
Total Assets ($USD Millions)	$33.20	$28.59	$25.22
Senior Convertible Notes at fair value ($USD Millions)	$13.65	$14.48	$12.93
Subordinated Convertible Notes at fair value ($USD Millions)	$10.36	$12.08	$15.23

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
G&A Expense	H2 2023	Not disclosed	Expected to decrease in H2 2023 vs H1, but remain higher than 2022 levels	Lowered (qualitative)
Gross Margin	H2 2023+	Not disclosed	Management expects to leverage expenses as volumes rise, thereby increasing gross margin	Improved (qualitative)
RPMO2 next-gen device (remote monitoring)	Q4 2023	Not disclosed	First commercial use expected in Q4 2023	Timeline reaffirmed
SOS severe OSA clinical study	1H 2024	Not disclosed	Initial data readout in 1H 2024 remains on track	Timeline reaffirmed

Note: The company indicated it would provide updated financial guidance on the Q2 call; numeric guidance details are not in the 8-K press release .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2022, Q1 2023)	Current Period (Q2 2023)	Trend
Technology initiatives (RPMO2 remote monitoring)	Ongoing development of next-gen sensor device; commercialization planning	Completing development; first commercial use expected Q4 2023	Progressing toward commercialization
Clinical studies (FLOSAT, SOS)	FLOSAT fully enrolled; SOS first patient enrolled	Updated preliminary FLOSAT data presented; SOS initial readout timeline reaffirmed for 1H 2024	Evidence base strengthening; timelines on track
Manufacturing capacity	Relocation to new facility; capacity scale-up	New facility overhead absorbed; margins stable; facility quadrupled capacity (Q1 cited quintupled potential capacity)	Scale achieved; margin leverage expected
Commercial expansion	Direct sales expansion in U.S. and Europe	Adoption growing in U.S. and Europe; expanded field sales team impact	Accelerating adoption
Regulatory/label expansion	Severe OSA label expansion strategy laid out	Severe OSA FDA label expansion initiative ongoing; SOS data timeline	Continuing execution

Management Commentary

CEO Len Liptak: “ProSomnus delivered record revenues, significant revenue growth and strong organizational execution in the second quarter of 2023… I am proud of our revenue growth which significantly exceeded expectations…” .
On clinical data and adoption: “Data presented by KOLs… associated ProSomnus devices with effective, safe, and patient-preferred treatment.”
On margin durability: “With the increased facility costs the Company has maintained strong margins and expects to leverage this, and other expenses, as volumes increase thereby increasing gross margin.”
On operating expense trajectory: “The Company’s G&A in the first half of 2023 was atypically high… expects its G&A expense to decrease in the second half of 2023 but… remain higher than 2022 levels.”

Q&A Highlights

Q2 2023 earnings call transcript was not accessible due to a repository inconsistency; therefore, specific Q&A exchanges and guidance clarifications could not be retrieved [7:—]. Management indicated on the press release it would “provide updated financial guidance for the remainder of 2023” during the call .

Estimates Context

Wall Street consensus estimates (S&P Global) were unavailable for OSA due to a missing Capital IQ mapping in our SPGI system; as a result, we cannot present an actual-vs-consensus comparison for revenue or EPS this quarter [SpgiEstimatesError for OSA].
Management stated revenue “significantly exceeded expectations,” but no external consensus numbers were provided in filings; sell-side models may need to reflect higher volumes and sustained gross margin resilience .

Key Takeaways for Investors

Revenue acceleration and stable gross margin signal durable demand and effective commercial execution; adoption in U.S./Europe is a core growth driver .
Operating loss widened on deliberate growth investments and public-company costs; watch H2 for G&A normalization and margin leverage from scale .
Profitability upside in Q2 was non-operating (fair value gains); core profitability hinges on scaling volumes and opex discipline .
Liquidity tightened to $6.2M cash; monitor funding pathways, debt covenants, and interest expense as growth investments continue .
Near-term catalysts: RPMO2 first commercial use in Q4 2023 and SOS initial readout in 1H 2024; favorable clinical data may support physician adoption and payer narratives .
EVO product momentum from 2022 provides a base; continued evidence generation (FLOSAT/SOS) should help expand the addressable patient mix and support label strategy .
Absence of consensus estimates reduces beat/miss signaling; investors should focus on sequential trajectory, margin resilience, opex normalization, and liquidity management in H2 .

ProSomnus, Inc. (OSA)·Q2 2023 Earnings Summary