uLab Systems® continues impressive growth and reaches new milestones!
Dear Investor:
Thank you for your investment in our company and your continued confidence in our strategy. We remain committed to advancing the orthodontic market with valued innovations and delivering consistent commercial performance. We are happy to report continued progress on both fronts with this update.
COMMERCIAL HIGHLIGHTS
We’ve continued our strong growth trajectory and had another record-setting month, shipping over 81,000 units in March. We are reaching scale and are now on track to sell over 1 million uSmile™ aligners and retainers in 2024. Our uSmile revenues in Q1 2024 grew 40% over Q1 2023. This follows growth in the calendar year 2023 of 65% over 2022.
Our global footprint and customer base continues to grow. Since the Company’s launch, around 2,400 orthodontists have used our software for their treatment planning, and 75% of this group have purchased uSmile aligners and retainers from us.
In February, we announced that our products received the most votes in two categories of the 2023 Townie Choice Awards (Orthotown Magazine); The uSmile aligner system won the Clear Aligner Systems Category and the uAssist™ service won for the New Professional Services category. We are extremely excited and proud of this recognition and thank you for your votes.
In February, we celebrated another significant achievement—over one million patients have now been treated with our uDesign® treatment planning software! Since starting in 2018 as a software-only company, we are now a full-service clear aligner company, committed to supporting the orthodontic industry with unique and flexible options that bring innovation and efficiency to the practice of orthodontics.
As part of this commitment, we have continued to release updates of our uDesign treatment planning software—enabling flexibility in self-planning or concierge services, printing in-house or ordering uSmile, ordering in sprints to minimize waste, self-branded packaging, and even options to easily add key frames for additional aligners at the end of treatment. Our treatment planning software is the most flexible in the industry with options unavailable on any other platform as noted above, has now been used to plan over one million cases!
A major driver of our uSmile revenue growth is our uAssist service, which launched in Q3 2022. uAssist is a concierge service for digital treatment planning assistance. Customers can receive recommended treatment plans from orthodontists and dental professionals who are both clinically trained and experts on our uDesign software. Adoption has been swift, growing from ~20% of cases at the end of 2022 to over 40% today. We provide rapid turnaround and have a very high degree of cases accepted by orthodontists with zero modifications. This high acceptance rate is due to the diligence done upfront to learn customers’ preferences and an emphasis on proper biomechanics and staging in the recommended plans. The swift service speed and high treatment quality has resulted in incredibly positive customer feedback and is additionally validated with the Townie award for “best new service” mentioned earlier.
Last July, we released a game-changing pricing structure. In addition to industry first a-la-carte pricing which we launched with uSmile in 2020, we now offer “case bundles” which give clinicians even greater value—inclusive of uAssist services, 10-day shipping and custom packaging. Allowing both pricing models lets orthodontists purchase in whatever method they desire—giving them great flexibility at the right point in the treatment decision workflow. Our unique ability to allow them to choose their purchasing preference AFTER they have finished their treatment plan allows them to make the best choice for the patient, and they can order in sprints to minimize waste if refinements are needed further in treatment. Market acceptance has been strong, and feedback quite positive. For Q1 2024, approximately 34% of orders were placed as bundles.
OPERATIONAL HIGHLIGHTS
We continue to invest in and expand our state-of-the-art manufacturing facility in Memphis, TN. As a reminder, in 2023 we installed custom-bagging equipment – uLab is the only company in our industry to offer custom-branded boxes, aligner bags and aligner cases for our customers. We have also invested in world-class trimming machines, enabling maximum manufacturing precision, unique sorting capabilities which enable faster production and shipping, and increasing levels of automation and robotics.
We recently launched the proprietary Reva™ material for aligners, retainers, and templates. The Reva products are thinner than competitors but with a comparative sustained force retention over time for efficient patient results. The thinner profile has proven to provide superior patient comfort and the smooth clear finish is liked by patients and orthodontists. The favorable cost profile will also improve the margins from our uSmile franchise.
The combination of higher unit volume and cost containment has resulted in lower per/unit manufacturing costs, which are driving gross margin improvement. We also continue to carefully manage our operating costs, and we now expect to be cash-flow positive within the next twelve months.
CONCLUSION
We are committed to providing superior products and services to our orthodontist customers, and we believe that our value proposition is strong. We have the best treatment planning software in the industry, delivering consistent clinical outcomes with the highest level of efficiency for office workflow, which we believe positions us well for continued growth.
In closing, we have tremendous momentum and continue to deliver strong results. We remain confident in our strategy and our long-term opportunity. We thank you again for the confidence that you have demonstrated through your investment in uLab, and we are committed to continue earning your trust.
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This update (the “Update”) is for general informational purposes only. This Update contains forward-looking statements. These forward-looking statements include, among other things, statements about the plans, objectives, expectations (financial or otherwise) and intentions of uLab Systems, Inc. (the “Company”). The Company’s forward-looking statements involve risks and uncertainties. Actual results may differ significantly from those projected or suggested in any forward-looking statements. Any number of factors could cause the Company’s actual results to differ materially from those contemplated by any forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors which could cause the Company’s actual results, performance (financial or operating) or achievements to differ from the anticipated future results. This Update is not, and should not be regarded as, any offer to sell or a solicitation of an offer to purchase any securities in any jurisdiction.