Executive Summary

ProSomnus delivered record Q4 2023 revenue of $7.84M, marking the eighth straight quarter of sequential growth; net loss improved to $(6.87)M from $(11.24)M in Q3, though below a Q4 2022 positive net income driven by unusual other income last year .
Cost of revenue rose to $4.13M (53% of revenue), reflecting higher volumes and new facility overhead; operating expenses increased sequentially to $12.85M as sales and marketing, R&D, and G&A stepped up versus Q3 .
Management highlighted continued adoption of the EVO precision intraoral devices, >98% on-time delivery, and pilot validation of the next-gen RPM device with embedded oximetry; the company submitted a 510(k) for severe OSA label expansion, now in substantive review .
The company initiated a comprehensive review of financing and strategic alternatives as cash and restricted cash decreased to $7.06M at year-end from $12.02M at Q3, a key near-term stock catalyst alongside regulatory progress on severe OSA labeling and RPM commercialization .

What Went Well and What Went Wrong

What Went Well

Record quarterly revenue ($7.84M) and full-year revenue ($27.65M), with eighth consecutive quarter of sequential increases driven by EVO device mix and broader adoption .
Operational excellence: >98% on-time delivery and sustained patient/provider satisfaction; ISO 13485:2016 certification for the quality management system .
Technology and clinical progress: demonstrated feasibility of next-gen RPM device (continuous SpO2 monitoring embedded in intraoral device) and advanced severe OSA pathway with 510(k) submission in substantive FDA review. “I am thrilled to announce another record revenue quarter... as we establish the ProSomnus EVO precision intraoral technology as a truly differentiated therapy” — CEO Len Liptak .

What Went Wrong

Cost of revenue increased to 53% of revenue ($4.13M) in Q4, up versus Q3 ($3.58M), reflecting higher product costs and new facility overhead; total operating expenses also rose sequentially to $12.85M .
Net loss remained significant at $(6.87)M despite improvement from Q3’s $(11.24)M; cash declined by $4.96M during Q4 to $7.06M, including ~$1.0M for insurance renewals, prompting balance sheet actions .
Other income tailwinds seen in prior periods moderated; Q4 total other income (expense) was $(1.86)M vs $(7.02)M in Q3 2023 and $8.26M in Q4 2022, limiting bottom-line recovery .

Financial Results

Income Statement Highlights (USD Millions)

Metric	Q4 2022	Q3 2023	Q4 2023
Revenue	$5.792	$7.071	$7.838
Cost of Revenue	$2.687	$3.580	$4.133
Total Operating Expenses	$11.842	$11.287	$12.848
Loss from Operations	$(6.050)	$(4.216)	$(5.010)
Interest Expense	$(2.405)	$(1.489)	$(1.481)
Total Other Income (Expense)	$8.258	$(7.023)	$(1.859)
Net Income (Loss)	$2.208	$(11.239)	$(6.869)

Notes:

Cost of revenue represented 53% of revenue in Q4 2023 (implying ~47% gross margin) .
Q3 2023 gross margin was ~49% (management disclosure) .

Liquidity

Metric	Q4 2022	Q3 2023	Q4 2023
Cash and Restricted Cash	$15.916	$12.022	$7.063

KPIs and Operational Metrics

KPI	Q4 2023
On-Time Delivery (%)	>98%
Patient/Provider Satisfaction	Maintained
Procedures	Record number in Q4 and FY
Device Mix	Mix shift to EVO driving unit volumes

Segment breakdown: Not disclosed; company reports as a single product category .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q4 2023	Not disclosed in press releases/8-K	Not disclosed in press releases/8-K	Maintained (no formal guidance provided)
Gross Margin/OpEx	FY/Q4 2023	Qualitative: expected leverage as volumes increase; planned G&A moderation in H2	Qualitative: focus on OpEx reductions; decreased OpEx as % of revenue	Qualitative improvements noted
Financing/Strategic Alternatives	N/A	N/A	Comprehensive review initiated	New initiative
Regulatory (Severe OSA label)	N/A	Severe OSA study enrollment advancing	510(k) submitted; in substantive review	Progressed

No dividend guidance disclosed .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2023, Q3 2023)	Current Period (Q4 2023)	Trend
RPM device / Technology	Completing development of next-gen precision OAT with embedded RPM; first commercial use expected Q4 2023	Pilot demonstrated accurate, safe, continuous SpO2 monitoring via embedded oximeter	Advancing from development to feasibility validation
Regulatory / Label Expansion	Severe OSA study timeline on track (initial readout 1H24) ; Enrollment advancing	510(k) submitted for severe indication label; substantive review phase	Progressed to FDA submission
Financing / Balance Sheet	N/A (Q2); Completed $10.4M financing in Q3, with associated losses/write-offs	Initiated review of financing and strategic alternatives	Heightened focus on capital structure
Operations / OpEx Discipline	G&A atypically high; expected to decrease in H2 2023	Operating expense reduction of 19% sequentially in Q3	Continued OpEx optimization; Q4 reduction in OpEx as % of revenue
Product Performance / Adoption	Record revenue; expanded sales team; sustained gross margins	Record quarter and FY; EVO mix shift and clinical adoption driving volumes	Ongoing adoption and growth

Because the Q4 2023 earnings call transcript could not be retrieved due to a database inconsistency, themes are based on press releases/8-Ks; no additional call-specific details are available .

Management Commentary

“I am thrilled to announce another record revenue quarter and fiscal year for ProSomnus... The team worked tremendously towards executing on our strategic deliverables, and achieved a record number of procedures in both Q4 and the full year.” — Len Liptak, CEO .
“We continued to fine-tune our operations in an effort to progress towards cash flow breakeven while maintaining strong top line growth.” — Len Liptak, CEO .
“ProSomnus delivered another record setting quarter further establishing ProSomnus as the leading non-CPAP therapy... we will continue to fine tune our operations with the goal of achieving cash flow breakeven…” — Len Liptak, CEO (Q3) .

Q&A Highlights

The Q4 2023 earnings call transcript was unavailable due to a retrieval error; therefore, Q&A themes, guidance clarifications, and tone changes from the call cannot be summarized at this time .

Estimates Context

Wall Street consensus from S&P Global Capital IQ was unavailable for OSA due to missing CIQ mapping; as a result, we cannot determine revenue or EPS beats/misses versus consensus for Q4 2023 at this time. If/when mapping is resolved, we will update comparison to “Revenue Consensus Mean” and “Primary EPS Consensus Mean” from S&P Global.

Key Takeaways for Investors

Top-line momentum continues: record Q4 and FY revenue with eighth consecutive sequential increase; EVO device mix shift underscores differentiated product-market fit .
Margin dynamics mixed near term: cost of revenue at 53% reflects scaling costs from the new facility; management expects leverage as volumes rise, but Q4 showed higher COGS dollars and total OpEx sequentially .
Regulatory de-risking catalyst: 510(k) submission for severe OSA label expansion in substantive review; successful RPM feasibility (embedded oximetry) adds a potential tech-enabled monitoring angle to the device narrative .
Balance sheet actions underway: initiated financing/strategic alternatives review amid cash decline to $7.06M in Q4; watch for capital raises, restructuring, or partnerships as key near-term stock drivers .
Operating discipline: management is reducing OpEx intensity (as % of revenue) and focusing on breakeven; continued execution could narrow losses and support valuation re-rating over time .
Lack of formal guidance and missing consensus mapping limit immediate estimate-based trading signals; investors should monitor FDA milestones, financing outcomes, and RPM commercialization timing for catalysts .
Cross-quarter narrative is improving on adoption and operational rigor; sustained delivery (>98%) and clinical validation efforts support medium-term growth and credibility in non-CPAP OSA therapy .

Cross-References and Notes

Q4 2023 press release (Exhibit 99.1) and detailed consolidated statements provide the quantitative backbone for revenue, expenses, and cash .
Q3 and Q2 2023 press releases corroborate sequential growth, margin context, and development timelines for RPM and severe OSA study .
Earnings call transcript for Q4 2023 could not be read due to a database inconsistency; summary relies on SEC-furnished press releases/8-Ks .

ProSomnus, Inc. (OSA)·Q4 2023 Earnings Summary