About BIOLASE

BIOLASE, Inc. (BIOLASE) is a leading provider of advanced laser systems for the dental industry. The company develops, manufactures, markets, and sells laser systems that provide significant benefits for dental practitioners and their patients. The company’s proprietary systems allow dentists, periodontists, endodontists, pediatric dentists, oral surgeons, and other dental specialists to perform a broad range of minimally invasive dental procedures, including cosmetic, restorative, and complex surgical applications. The company’s laser systems are designed to provide clinically superior results for many types of dental procedures compared to those achieved with drills, scalpels, and other conventional instruments. Potential patient benefits include less pain, fewer shots, faster healing, decreased fear and anxiety, and fewer appointments. Potential practitioner benefits include improved patient care and the ability to perform a higher volume, and wider variety of procedures. The company offers two categories of laser system products: Waterlase (all-tissue) systems and diode (soft-tissue) systems. The company’s flagship brand, the Waterlase, uses a patented combination of water and laser energy and is FDA cleared for over 80 clinical indications to perform most procedures performed using drills, scalpels, and other traditional dental instruments for cutting soft and hard tissue. For example, Waterlase safely debrides implants without damaging or significantly affecting surface temperature and is an effective, safe solution for preserving sick implants. In addition, Waterlase disinfects root canals more efficiently than some traditional chemical methods. The company offers its diode laser systems to perform soft tissue, pain therapy, and cosmetic procedures, including teeth whitening. As of December 31, 2022, the company maintained approximately 259 active and 24 pending United States and international patents, with the majority relating to its Waterlase technology. The company’s patent portfolio is regularly evaluated, and it strategically prioritizes its core patents to ensure optimal Intellectual Property coverage while minimizing annual maintenance fees. The company also manufactures and sells consumable products and accessories for its laser systems. The company’s Waterlase and diode systems use disposable laser tips of differing sizes and shapes depending on the procedure being performed. The company also markets flexible fibers and hand pieces that dental practitioners replace at some point after initially purchasing laser systems. For its Epic line of diode laser systems, the company sells teeth whitening gel kits. During the year ended December 31, 2022, the sale of lasers accounted for approximately 65% of the company’s total sales, and consumables, accessories, and services accounted for approximately 35% of its total sales. The company operates in a single reportable business segment. Products The company’s laser systems can provide dental professionals with enhanced capabilities for minimally invasive treatment. The company’s product offering consists of the following: Waterlase All-Tissue Laser Systems: The company’s all-tissue Waterlase dental laser systems consist of its flagship Waterlase iPlus, Waterlase Express, and Waterlase MDX. Each of these systems features a proprietary laser crystal that produces electromagnetic energy with absorption and tissue interaction characteristics specifically designed for dental procedures. They are minimally invasive and can precisely cut hard tissue, such as bone and teeth, and soft tissue, such as gums and skin, without the heat, vibration, bleeding, or pressure associated with traditional dental treatments. By combining the laser light and water, the company’s Waterlase systems can eliminate the need for anesthesia in most cases and result in faster healing times compared to traditional methods of treatment, both of which could lead to improved patient-reported outcomes. The all-tissue Waterlase is especially effective for treating all types of dental cavities for both children and adults, moderate and advanced periodontal and peri-implant disease, root canals, and esthetic procedures for gummy smiles. The Waterlase systems incorporate an ergonomic hand-piece and a user-friendly digital interface with presets for a wide range of clinical applications that control a combination of laser energy, air, and water, as well as the pulse rate for clinical efficiency and patient comfort. Each system also has been designed to be easily moved from operatory to operatory within a practice. The company developed the Waterlase systems using internally developed intellectual property, as well as intellectual property obtained through various acquisitions. The Waterlase systems are FDA-cleared in the United States, CE mark-approved in Europe, and approved for sale in more than 80 other countries for dental uses. In the United States, the company also has regulatory clearance for dermatological, aesthetic, and other general surgery uses. Diode Soft-Tissue Laser Systems: The company’s diode soft tissue laser systems consist of the Epic X, Epic Hygiene, and Epic 10 diode lasers that perform soft tissue, hygiene, cosmetic procedures, teeth whitening, and provides temporary pain relief. Epic X, and Epic 10 systems feature its proprietary 940 nanometer wavelength with patented pulse technology called ComfortPulse, which is designed for added patient comfort. Epic Hygiene was introduced in December 2019 as the company’s latest innovation in proven Epic laser technology, which is designed to manage non-surgical periodontitis and increase clinical production. The system includes proven step-by-step clinical protocols, including pocket therapy and perio debridement, to facilitate implementation. The Epic Hygiene is the only hygiene specific diode laser with FDA 510 (k) clearance for Laser Bacterial Reduction (LBR), a preventive periodontal procedure conducted in conjunction with routine cleaning. Epic Hygiene, which utilizes a 980 nanometer wavelength, gives dental hygienists the ability to offer dental laser technology to their patients, including minimally invasive and less painful treatments that are designed to allow for quicker procedures and faster recovery times. Epic 10 is a portable, powerful diode laser that facilitates clinical versatility with surgical, pain therapy, and whitening capabilities and provides an exceptional laser with an attractive value proposition. In December 2014, the company introduced the Epic X diode laser, an enhanced soft tissue laser system featuring upgrades and improvements from its Epic 10. The Epic X, Epic10, and Epic Hygiene are FDA-cleared in the United States, CE mark-approved in Europe, and approved for sale in more than 80 other countries for dental uses. In the United States, the company also has regulatory clearance for dermatological, aesthetic, and other general surgery uses. In 2021, BIOLASE designed, developed, received FDA clearance for and began production of a laser using BIOLASE’s proprietary Er,Cr:YSGG laser technology (the EdgePro) in partnership with EdgeEndo, a leading endodontic company. The EdgePro is a state-of-the-art microfluidic irrigation device designed to clean and disinfect root canals. The partnership with EdgeEndo is BIOLASE’s first exclusive OEM agreement. Related Accessories and Consumable Products In addition to sales of its laser systems, the company manufactures and sells consumable products and accessories for its laser systems. The company’s Waterlase and diode systems use disposable laser tips of differing sizes and shapes depending on the procedure being performed. The company also markets flexible fibers and hand pieces that dental practitioners replace at some point after initially purchasing laser systems. For its Epic systems, the company sells teeth whitening gel kits. Laser Solutions The company’s Waterlase systems precisely cut hard tissue, bone, and soft tissue with minimal or no damage to surrounding tissue and dental structures. The company’s diode systems are designed to complement its Waterlase systems, and are used only in soft tissue procedures, pain therapy, hygiene, and cosmetic applications, including teeth whitening. The diode systems, together with its Waterlase systems, offer practitioners a broad product line with a range of features and price points. Business Strategy The key elements of the company’s strategy include increasing awareness of its products among dental practitioners; increasing awareness and education in laser dentistry; increasing awareness of and demand for its laser systems among patients; strengthening customer training and clinical education; strengthening sales and distribution capabilities; strengthening and defending technology leadership; expanding its product portfolio to dental practitioners; and creating value through innovation and leveraging existing technologies into adjacent medical applications. Marketing and Sales Marketing The company markets its laser systems worldwide. The company’s marketing efforts are focused on driving brand awareness for its laser solutions with dental practitioners. The company also continues to test methods to increase awareness of its brands’ benefits by marketing directly to patients. Dental Practitioners: The company markets its laser systems to dental practitioners through regional, national, and international educational events, seminars, industry tradeshows, trade publications, digital/social media, field sales forces, and agents and distributors. The company also uses social media, sales materials, direct communications, public relations, and other promotional tools and materials. The company’s primary marketing message to dental practitioners focuses on the ability of its lasers to resolve dental challenges and delivers improved cash flow, which can be realized with improved patient-reported outcomes. BIOLASE Education is a leader in educating and training dental practitioners in laser dentistry. BIOLASE has also developed a Waterlase Academy for Endodontists, Periodontists, Pediatric specialists and general practitioners, and an Epic Diode Academy for both dental hygienists and dentists. These academies are designed to foster peer-to-peer learning on the appropriate and effective use of the company’s products. The Waterlase Exclusive Trial Program that the company is continuing in 2023, which allows dentists to evaluate its Waterlase technology during a trial period, also helps in increasing the awareness of the benefits of laser dentistry. The company has also developed relationships with research institutions, dental schools, and dental laboratories that use its products for clinical research and in-clinical training, and these relationships will continue to increase awareness of and demand for the company’s products. Patients: During 2023, the company expects to distribute a docuseries Talk Dental to Me that will focus on the benefits of its technology for the patient. The company can be found online at www.biolase.com, and on Facebook, Twitter, LinkedIn, YouTube, and Instagram. Sales The company sells its products primarily to dentists in general practice through its field sales force and its distributor network. United States Sales: In the United States, the company primarily sells its products directly to dental practitioners utilizing a field sales force consisting of laser sales representatives and regional managers. The company also has an in-house sales force, which is located at its corporate headquarters and consists of sales representatives and lead generators who work in partnership with the field sales team to maximize sales by leveraging the existing installed customer base. International Sales: The company’s distributors purchase laser systems and disposables from it at wholesale dealer prices and resell them to dentists in their sales territories. All sales to distributors are final, and the company can terminate its arrangements with dealers, agents, and distributors for cause or non-performance. The company has granted certain distributors the right to be its exclusive distributor in select territories. These distributors are generally required to satisfy certain minimum purchase requirements to maintain their exclusivity. The company has sold its products directly to end users in Germany since 2011 and directly to end users in India and neighboring countries since 2012. Customer Concentration: The company sells its products through its field sales force, agents, and distributors. Customer Service: The company provides high quality maintenance and support services in the United States through its support hotline and dedicated staff of in-house and field service personnel. Outside the United States, the company maintains a network of factory-certified service technicians to provide maintenance and support services to customers. The company’s international distributors are responsible for providing maintenance and support services for products sold by them. The company provides parts to distributors at no additional charge for products covered under warranty. Financing Options: Most customers (other than distributors) finance their purchases through several third-party financial institutions with which the company has established good relationships. In the United States, third-party customers enter into a financing agreement with one of the financial institutions that purchases the product from the company or one of its distributors. Seasonality: Typically, the company experiences fluctuations in revenue from quarter to quarter due to seasonality. Revenue in the first quarter typically is lower than average and revenue in the fourth quarter typically is higher than average due to the buying patterns of dental practitioners. Engineering and Product Development During the year ended December 31, 2022, the company’s engineering and product development expenses totaled approximately $7.3 million. Intellectual Property and Proprietary Rights As of December 31, 2022, the company maintained approximately 259 active and 24 pending United States and international patents, with the majority relating to its Waterlase technology. The company’s patent portfolio is regularly evaluated, and it strategically prioritizes its core patents to ensure optimal Intellectual Property coverage while minimizing annual maintenance fees. While the company holds a variety of patents that cover a broad range of technologies and methods, the majority of these patents provide market protection for its core technologies incorporated in its laser systems and related accessories. Existing patents related to the company’s core technology, which are at various stages of being incorporated into its products, are scheduled to expire as follows: 5 in 2023 and the majority of the remaining patents having expiration dates ranging from 2025 to 2042. Government Regulations The company’s products are subject to extensive regulation particularly as to safety, efficacy, and compliance to FDA Quality System Regulation and related manufacturing standards. The company’s products marketed in the United States are marketed pursuant to 510(k) pre-marketing clearances and are either Class I or Class II devices. Any devices the company manufactures and distributes pursuant to clearance or approval by the FDA are subject to ongoing regulation by the FDA and certain state agencies. These include product listing and establishment registration requirements, which help facilitate FDA inspections and other regulatory actions. As a medical device manufacturer, the company’s manufacturing facility is subject to inspection on a periodic basis by the FDA. The company is required to adhere to detailed current good manufacturing practice (cGMP) requirements, as set forth in the FDA’s Quality System Regulation (QSR), which require those who design, manufacture, package, label, store, install, and service devices, including third-party manufacturers, to follow design, testing, control, documentation, and other quality assurance procedures during all phases of the design and manufacturing process. The company must also comply with post-market surveillance and complaint handling and adverse event reporting regulations, including medical device reporting (MDR) requirements which require that it reviews and reports to the FDA any incident in which its products may have caused an adverse event which required medical attention or contributed to a death or serious injury. The company must also comply with FDA regulations pertaining to recalls and notices of corrections and removals. The company has registered with the FDA as a medical device manufacturer and it has obtained a medical device manufacturing license from the California Department of Public Health. As a medical device manufacturer, the company is subject to announced and unannounced facility inspections by the FDA and the California Department of Public Health to determine its compliance with various regulations. The company’s facilities manufacturing medical devices for the EEA market are EN ISO 13485 (Medical devices - Quality management systems - Requirements for regulatory purposes) certified. Moreover, the company’s Waterlase and diode laser systems have the CE mark. In addition, the company has attained the proper licensing for Waterlase and diode laser systems for sale in Canada, meeting the Canadian Medical Device Regulation requirements as part of the ISO certification process. Furthermore, the company is subject to various reporting requirements including those prescribed by the Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. History The company was founded in 1984 as Societe Endo Technic, SA. In 1994, the company changed its name to BIOLASE Technology, Inc. and then to BIOLASE, Inc. in 2012. The company was incorporated in 1987.