Q2 2020 Apyx Medical Corp Earnings Call
Please standby.
Good morning, ladies and gentlemen, and welcome to the second quarter fiscal year Twentytwenty earnings conference call for Apex Medical Corporation.
At this time, all participants had been placed Oh listen only mode.
The under the company's prepared remarks, we will conduct a question and answer session.
Please note that this conference is being recorded and that the recording will be available on the company's website for replay shortly.
Before we begin I would remind everyone that our remarks and responses to your questions. Today may contain forward looking statements that are based on the current expectations management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated.
Including those identified and the risk factor section of our most recent annual report on the form 10-K filed with Securities and Exchange Commission.
As well as our most recent 10-Q filing.
Such factors, maybe update there from time to time in our filings with the FCC, which are 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.
This call will also include references to financial measures that are not calculated in accordance with generally accepted accounting principles or gap.
We generally refer to these as non-GAAP financial measures.
Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with gap or available in the earnings press release on the Investor Relations portion Abra website.
I would now like turn the conference over to Mr., Charlie Goodwin apex, Medical's, President and Chief Financial Officer. Please go ahead Sir.
Thanks, Operator, welcome everyone to our earnings call for the second quarter up 2020.
I'm joined on the call. This morning by terrorists, Sam our Chief Financial Officer.
Let me provide you with a quick agenda for todays call.
Beginning with a review of our revenue results for the second quarter, including a summary of the impact of the Cobot 19 pandemic honor second quarter results.
Following this discussion I will provide you with an update on our recent operational highlights and progress we have made on the four initiatives, we're pursuing as part of our longer term growth strategy.
Terry will then provide you with a detailed review of our second quarter financial results.
Following tears remarks, I'll conclude by sharing some thoughts on or near term and long term outlook before we open the call for questions.
With that let's get started with a review of our revenue results.
We reported total revenue of four point Threemillion for the second quarter of 2020, representing a decrease of 35% year over year.
From a geographic standpoint, our total U.S. sales for the second quarter of 2020 decreased 25% year over year to 3.4 million why our total international sales decreased 57% year over year 2.9 million.
In terms of revenue performance in each of our business segments.
In our advanced energy business sales decreased 46% year over year to 2.9 million in our OEM business sales increased 10% year over year to 1.4 million.
The sales growth in our OEM business was driven by higher sales to our legacy OEM customers compared to the second quarter of 2019 due to timing of orders.
As anticipated the revenue performance in our advanced energy business was significantly impacted by the Corbett pandemic and the actions taken to slow it spread.
As discussed on our first quarter earnings call. The vast majority of procedures performed with our helium plasma technology our elected.
During the second quarter, many of our cosmetic surgery customers around the world continue to be affected by government actions, requiring elective procedures to be postponed and non essential businesses to close temporarily which resulted in slower adoption and utilization.
Specifically, the 46% decline in total advanced energy revenue in Q2 was direct was driven by a decline in generator sales, 60% year over year and a decline in hand piece revenue a 15% year over year.
While Q2 was undoubtedly challenging we were pleased to see improving trends in each month as we progress through the quarter.
We saw the largest impact from coal that in April with total advanced energy sales decreasing 93% year over year driven by declines in both the U.S. I know you asked markets.
In the U.S., where nearly all renewed beyond procedures are performed in outpatient facilities, such as doctors offices and surgery centers, we estimate that virtually all of our customers offices were temporary closed throughout the month of April as a result that state and local restrictions.
After a difficult month in April signs of recovery in trend started in may.
Specifically in May we were encouraged to see many of our U.S. surgeon customers reopened as restrictions on elective procedures and non essential businesses begin to be lifted in various regions across the U.S.
As at the end of May we estimate that roughly 70% of our U.S. customers had reopened.
As you asked practices reopened our customers were focused on rescheduling postponed or canceled procedures from late March and April.
Many also reported building strong pipelines fueled by successful implementation of virtual consultations why offices were closed.
We saw procedure actively increased steadily in May and June and we're particularly encouraged to see utilization based demand for our renewed be on hand pieces follow.
Specifically renew the on hand piece demand increase nearly 80% year over year in the month of June.
In one of the most challenging quarters for a medical device manufacturers, especially those with elective procedure exposure the number of renew the on hand pieces sold in the United States declined less than 2% year over year.
The utilization based demand for removing on hand pieces continues to demonstrate that our system is not one of the many examples of the aesthetic market technologies that are adopted and rarely used instead. The continued demand for our hand pieces is the clearest example that are.
Cosmetic surgery customers have incorporated renewed me on into their practice value the strong clinical efficacy and compelling patient outcomes and appreciate this strong return on investment that the system offers to cosmetic surgery practices.
Turning to a brief discussion on our advanced energy business outside the United States. Unfortunately, the kobin related business disruption in our primary markets was more pronounced than what we experienced in the U.S. during the second quarter.
It is hard to characterize the relative improvement of our or U.S. business overall as the pace a recovery outside the U.S. has varied depending on the region.
[noise] April was a very challenging month as a result of coded related restrictions on elective procedures.
We did see business trends improved during the quarter with made better than April and June showing a very modest improvement in business trends compared to may.
While the O U S environment was extremely challenging in Q2, the progress we made towards one of our strategic growth initiatives in Q2 helped offset some of the kobin related headwinds in the quarter.
As I will discuss in more detail in a minute, we recently secured and new product registrations authorizing the sale of our helium plasma technology products in five new countries.
We shipped initial orders to two of these countries, Brazil, and Australia, which helped offset some of the year over year decrease in our international advance energy sales in Q2.
Simply stated Q2 was a difficult quarter for our business as anticipated given the pact of Cobot 19.
April represented a very challenging start to the quarter for our global advanced energy business with total global advanced energy sales declining 93% year over year.
In the U.S., we saw material improvement in business trends.
The latter half of the second quarter, why we were encouraged by the 80% growth in Handpiece sales. We saw in June they were only partially offset the challenging capital equipment environment and our U.S. sales were down 30% for the month of June.
Outside the U.S. Q2 was particularly challenging but we were pleased to see the impact of co that offset partially by the initial orders to Brazil and Australia.
We were certainly happy that the quarter ended on such on a much stronger now than where it began.
However, our total advanced energy sales for the month at June still declined 18% year over year end demand trends for generator adoption in both the U.S. and in our primary O U S markets reflect a market that isn't the very early stages of recovery.
Turning to discussion of our operational progress during the second quarter.
Despite the coated related disruption experienced during the second quarter.
We continue to make progress with respect to the four strategic initiatives were pursuing to position apex medical for long term growth in the cosmetic surgery market.
I'll take a moment to review our recent progress with respect to each.
Starting with our first initiative to pursue specific clinical indications that will enable us to market and salary newby on for new targeted procedures.
In the U.S. as a reminder, we're conducting two I'd he clinical studies designed to support our pursuit of new indications.
For use in dermal resurfacing and skin laxity procedures.
As discussed on our Q1 call clinical trial activity across the U.S. was significantly impacted by the disruption created due to cope at 19 beginning in March.
Up to that point, a Roman in both of our I'd. He clinical studies had been progressing but was paused as a result of the co bud related disruption.
In response, our clinical team was focused on working closely with the investigators from both studies to help mitigate the impact of this disruption.
Once restrictions on elective procedures were lifted in May we were pleased to resume our efforts in both clinical studies.
Despite the coded driven delay things are progressing now in both our I'd Derma resurfacing study and in phase one of our I'd. He skin laxity study, which is focused on one month safety data.
Outside the U.S., our regulatory strategy has focused on expanding our commercial foot plant by obtaining regulatory clearance for our helium plasma technology and new countries.
As part of this strategy, we're focused on owning the product registrations in the countries that we enter.
Our team continued to make important progress on this front during the second quarter. As a result on June 22nd we were excited to announce that we received regulatory approval to market and sell our products and five new countries, Australia, Brazil, Israel, Taiwan.
And Thailand.
While we expect the addition at each of these countries to benefit our longer term growth profile.
It's important to note that Brazil represents the second largest cosmetic surgery market in the world. Both in terms of total number of procedures performed and the number of surgeons.
During the second quarter, we shipped initial commercial orders to our distributors in Australia, and Brazil, and we expect to ship initial orders to the remaining three countries during the second half of the year.
In connection with our second strategic initiative, we continued our efforts to expand our portfolio of clinical evidence supporting the use of our renewed be on technology.
In April we published a manuscript discussing the results of our first U.S. I'd. Each study on dermal resurfacing in the peer reviewed journal lasers in surgery and medicine.
In addition to this publication our team continues to make progress on additional clinical manuscripts, and we expect to complete and summit multiple manuscripts for publication during the second half of 2020.
With respect to our third strategic initiative, enhancing physician and practice support for our cosmetic surgery customers.
During the second quarter, we shifted our approach to educational programming and began hosting events virtually for the benefit of both current and perspective customers around the world.
In the U.S., our sales and marketing and field clinical teams hosted for virtual physician education events, which drew close to 200 physician attendees.
These events included Webinars, where our leading physician customers discussed a variety of topics.
Including the factors that drove their decision to adopt renewed beyond.
Their experience with the technology their strategies for marketing the technology and their thoughts on pricing and return on investment.
Outside the U.S., our team hosted continuing education and training sessions on J plasma and renewed beyond with our current international distributors.
They also conducted calls with groups of international prospects interested in learning about renewed me on technology.
Lastly, let me briefly discuss our fourth strategic initiative, improving our manufacturing capabilities inefficiencies.
Our work to identify and implement new lean initiatives continues to progress to progress and remains an important area of focus for our organization, helping us realize continued improvements over the coming years.
As a reminder, one of our focus areas with respect to this initiative has been to implement new process improvements in order to reduce the per unit manufacturing cost of our advanced energy products.
We have begun to see early evidence of these activities in the form of improving Handpiece margins.
Given our progress towards this initiative, we continue to move forward with the a PR hand piece as our primary renew the on hand piece.
While this decision resulted in a near term PML impact related to the write down of prior generation hand piece inventory in Q2.
We expect considerable contributions to our longer term profitability as the a PR handpiece becomes a larger portion of our total handpiece sales going forward.
This is a clear example of how the progress we're making towards our strategic initiatives is enhancing our long term growth and profitability profile.
Stepping back despite the impacts of covert pandemic I'm very pleased with our Companys financial and operational performance this quarter and the excellent job done by our teams under these challenging circumstances.
With that let me turn the call over that Terra to discuss our second quarter financial results and comments made in our earnings press release This morning Tara.
Thanks, Charlie.
I'll begin my review of our financial results across the rest of the piano as Charlie covered our second quarter revenue performance in detail.
Gross profit for the second quarter of 2020 decreased 2.6 million or 55% year over year to 2.1 million.
Gross profit margin for the second quarter up 2020, it was 48.7% compared to 70.3% last year.
Our GAAP gross profit in the second quarter of 2020 was impacted by inventory write downs during the period.
We reassessed our forecasted product mix due to covert 19 increased the availability of our newest newer handpiece design and benefited from earlier than expected completion of product registrations in certain international market.
As a result, certain products were reduced to a lower carrying value and some components were also written off as it was determined to seize further production.
Of these models.
This resulted in an increase in GAAP cost of goods of approximately 8.4 million.
During the second quarter of 2020.
Excluding the increase in cost of goods related to inventory write down the year over year change in gross profit margin for the three months ended June Thirtyth 2020 was driven by product mix within both our advanced energy an OEM segment.
Revenue Nick between our segment Dream geographical revenue mix.
And improved product margins in our advanced energy segment as a result of our continued manufacturing efficiency initiative.
Operating expenses for the second quarter of 2020 decreased point 8 million or 9% year over year to 8.3 million compared to 9.1 million for the second quarter up 2019.
The decrease in operating expenses year over year was driven by a point 8 million in decrease in south selling general and administrative expenses and they point 1 million decrease in salaries and related costs, partially offset by a point 1 million increase in research and development expenses.
Importantly, the decrease in operating expenses reflects our initiatives to control costs and reduced our discretionary spending and response to the impact of cobot 19 on our financial condition.
Specifically, our operating expenses decreased 21% quarter over quarter as a result of our proactive efforts to control costs and the more challenging operating environment.
Loss from operations for the second quarter of 2000 26.2 million compared to operating loss of 4.4 million last year.
Income tax benefit and the second quarter of 2020 was 1.5 million compared to income tax expense of 76000, and the second quarter up 2019.
And the second quarter of 2020, we benefited from a GAAP tax benefit related to the cares Act, which was enacted by the U.S. government to provide relief from the current Corona virus pandemic.
As discussed on our Q1 call. The cares that includes a net operating loss or Noel carry back provision from which we expect to receive a cash tax refund of approximately 3.7 million by the end of 2020.
We recognize an income tax benefit of approximately 1.4 million in the second quarter of 2020, which reduced our GAAP effective tax tax rate.
Net loss for the second quarter of 2020, with 4.7 million or 14 cents per share compared to a net loss of 4.3 million or 13 cents per share for the second quarter of 2019.
Second quarter 2020, adjusted EBITDA loss was 4.9 million compared you want to adjusted EBITDA loss of three to 3.6 million last year.
Excluding the increase in cost of goods related to inventory write downs in the period, our adjusted EBITDA loss increased only 22% over year year over year compared to a 35% decrease in total revenue year over year.
Our Q2, adjusted EBITDA loss decreased 23% quarter over quarter, which represents the company's proactive effort to lower our opex during the challenging operating environment.
As a reminder, we provided a detailed reconciliation from GAAP net loss to adjusted EBITDA in our press release this morning.
As of June Thirtyth 2020, the company had cash and cash equivalents, a 46.2 million compared to cash and cash equivalent of 58.8 million as of December 31st 2019.
The company had working capital 60.2 million as of June Thirtyth 2020, compared to 64.4 million as of December 31st 2019.
Lastly, as mentioned in our earnings press release. This morning, given the ongoing challenges and uncertainties posed by the global Covance 19 pandemic. The company will not be providing full year 2020 financial guidance on today's call.
Assuming a more normalized business environment prevails at the time of our third quarter results Conference call in November we plan to provide updated expectations at that time.
With that I'll turn the call back to Charlie for closing remarks, Charlie.
Thanks, Terra as Terry mentioned, the timing of returning to normalized operating environment remains highly uncertain.
Given this uncertainty in July we continue to monitor the business trends and solicit feedback from our customers to determine the ongoing impacts of the pandemic.
We saw a promising trends in the market.
Were nearly all of our existing customers were open as of the end of June.
The feedback we received from our U.S. customers in July indicated that they were very busy working to accommodate the backlog in cases caused by the cobot pandemic.
Accounts have reported extending their office hours or adding additional days to their schedule in order to accommodate these cases.
Interestingly some accounts that perform consultations virtually during the second quarter mentioned that they have continued this practice to some extent in order to free up more of their time in the office to perform procedures.
By all accounts July was a very busy month.
And for our clinician customers in the U.S. fueled by strong backlog of cases that were rescheduled from late March and April and a strong pipeline of procedures.
While procedure volumes have been challenged in some areas of the country that our co that hot spots overall, we continue to see strong demand for our renewed the on hand pieces from customers in the U.S. cosmetic surgery market in July.
On the capital equipment front in July we saw some initial signs of improving generator adoption in the U.S.
However, the recovery and capital equipment purchasing remains in the early stages overall, and the timing and cadence of the recovery in the capital equipment.
Demand remains uncertain.
Outside the U.S. in July we saw some limited improvements in hand piece demand and pockets of relative strength in some regions.
However, the demand for hand pieces in our primary markets continues to lag behind the trends seen in the U.S.
And the overall purchasing environment for capital equipment remains in the very early stages of recovery.
We appreciate the high level of focus from the investment community on understanding how companies are faring in the early stages of the recovery from the global pandemic.
In the entrance of transparency, we are providing current quarter details that we otherwise would not include in our quarterly disclosures.
To that end in addition to the commentary on the business trends that we have seen in the first month of Q3.
We're also reporting that our advanced energy sales in July increased 35% year over year, driven by strong growth in the U.S. and negative growth outside the U.S.
We're obviously pleased that our year over year advanced energy sales trends reflect growth in July compared to declines in June.
However, we would highlight that this growth performance benefited from a softer prior year growth comparison.
More importantly, we are still uncertain as to how much of the recovery in our sales trends has been driven by backlog related purchasing.
Versus a true reflection of a return to a more normalized operating environment, which is the key leading indicator for sales of generators going forward.
At this point, we believe it is more likely the former and thus we remain cautiously optimistic that we will see continued improvement in our advanced energy business trends as we progress through the second half of 2020 with hopes of returning to year over year growth in the fourth quarter.
With respect to near term outlook for our international advanced energy business as discussed it remains highly uncertain and we are hoping to see trends improve over the second half of 2020, such that the business trends improve enough by year end to began returning to growth year over year in.
Early 2021.
Ultimately, while the timing of a return to a more normalized environment remained highly an uncertain.
We are well capitalized to weather the ongoing effects of this pandemic and well positioned to execute our growth strategy as the recovery progresses.
We have been proactive by controlling our cost by reducing discretionary spending implementing hiring freezes and delaying investment in certain R&D projects and clinical studies until they can be efficiently our efficiently pursued under a more normalized environment.
The resulting environment in our operating expense profile wasn't material contributor to our financial performance during the second quarter and is expected to benefit our results in the second half of the year as well.
At the same time, given our strong balance sheet condition.
We have continued to invest in areas of our business that ribs represent key elements of our growth strategy.
Most importantly, we continue to maintain the size of our sales team, which remains focused on engaging with both existing and potential customers using virtual means when necessary.
We also continue to invest in our four strategic initiatives that I discussed earlier, which will position us to drive long term growth in the cosmetic surgery market by facilitating the broad based adoption of our technology.
As we enter the second half of 2020, our organization continues to demonstrate their ability to support our customers and execute our long term strategy. Despite the ongoing challenges of co bid pandemic.
Going forward, we will remain intently focused on these objectives as we position apex medico to return to our prior track record of growth.
With an estimated 1.5 billion dollar addressable market opportunity in the U.S. alone.
And recently expanded addressable market opportunities outside the U.S.
We continue to believe we're uniquely positioned longer term to drive sustained growth for many years to come.
As the post cobot recovery takes shape.
We look forward to continuing to expand our market share and elevate the global cosmetic surgery market with our transformational helium plasma technology for the benefit of our surgeons patient and shareholders.
In closing I'd like to offer a special thanks to all of our employees for their hard work flexibility and commitment to our success, which makes me proud to be a member of the apex team.
I'd also like to thank our distributors customers and shareholders for their continued support and those on this call for their interest in apex medical with that operator, let's now open the call for questions.
Thank you.
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We do Aslett you limit yourself to one question and one follow up.
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And our first question will come from.
Matt Hewitt of Craig Hallum. Please proceed with your question.
Good morning, thank for taking the questions.
Good morning math.
First one is there any weight and I know April and May.
It's probably not worth getting too far into that but when you look at June and July where you are seeing pretty rapid recovery is there any way to parse out how much of that was working through backlog up procedures that have been canceled versus new demand.
Yeah, Matt you know in April like we mentioned virtually all the customers were closed we started to see recovery in may and customers, we're doing virtual consultations and getting their practices back to order and as we got into late June near.
Really all the customers were opened as of June and the activity in the offices in June and particularly July have been very strong and we were obviously in June encouraged to see the utilization demand up nearly 80% year over year and those trends were still strong in the in the.
A month of July and you know in one of the most challenging quarters of Medtech history.
Our hand piece growth it was just down 2% year over year and so.
We.
We continue to see that they're very busy but we're just on sure at this point in time and that's why there's a little uncertainty as we go forward here into the third quarter about whether this is real demand or just driven by the backlog that the great thing is the cost that our customers are extremely busy and we just need to continue to see if that will continue.
You are not in at this point in time I don't know that we've we've got a great answer for you there.
That's that's alright.
I understand and maybe a follow up question.
Regarding the capital equipment, obviously, there's some delays there in purchasing completely understandable what do you think will be the trigger both domestically and internationally for those customers just come back and start buying capital equipment is it.
Is it just simple dollars in the sense when they've gotten through their backlog and they feel comfortable that things are going to stay open or or is there something that you could do maybe from a marketing perspective to help them adopt the technology a little bit earlier.
Yeah. So look we obviously have a lot of programs for them right now to help them, but I think the bigger issue for them quite frankly is just what do they think is going to happen with the virus in the back half of the year and I think its is it's as simple as that you know we've got lots of programs that we can help them adopt our technology.
Gee, if necessary, but I think they in their minds each person's individually they would like to have some form of confidence about what the virus is going to do in the second half of the year, because obviously that affects their business in a great way, whether they're going to make a capital investment or not.
Got it thank you.
Thank you.
The next question is from Matthew O'brien of Piper Jaffray. Please proceed with your question.
Good morning, Jan Thanks for your Marni.
Charlie Antero, Thanks for taking my questions.
Maybe just.
Little bit more on some of these hot spots I'm curious how your customers are adjusting right now to mitigate the risk of any potential impact.
Some of these outbreaks, what we're seeing around there and Jamie.
Some pretty big states. So what are they doing to make sure that we don't go through another big round of shutdowns and then you on those virtual advance that start about this 200 in individuals that you saw how many of those were new versus existing.
Customers.
Yes, so so for the hotspot look the big advantage that we do have where these procedures are done is they're done in the doctor's office setting or in a small surgery center that they typically on and so Fortunately for us the.
Patients in the United States anywhere aren't having to go into a hospital and be subject to that and so the good news for our clinicians is that they control the environment and can you know space out.
Patients appropriately you know whether they haven't weight in their car until the next one comes in at it totally depends on the clinician. The state the guidelines all of that kind of stuff. So it's a little bit all over the board, but the good news is is that they themselves have control over how they keep their patient phase and from what we.
We understand the vast majority obviously they are doing in a great job if not all of them I haven't heard anything out of the contrary for that so that so that is that as an advantage that they can.
That they can do that in there in control of these situations themselves and are having to rely on bigger institutions, where theres a lot more people and all of that kind of stuff. So so that part is encouraging from our side.
As far as the 200 clinicians and how many of them are brand new versus not I would say the vast majority of them our new prospects are new clinicians before they types of events that we've been having.
And to have a customer that already owns the technology on their to listen to it there there's not a lot that they're going to get from these type of events and so the 200 that we were speaking to there for the most part the vast majority of them would be a new clinicians.
Okay. That's really helpful. And then as the follow up you talked about these five new countries, obviously, Australia, and Brazil, or our large opportunities any Brazil. The generally soft right. Now. So can you talk about how can add to sum up the opportunities.
Of those five new countries, how big how big it off I would both be and when can they be meaningful contributors from made.
[music].
A recurring revenue perspective, I know you had some onetime sales here and there were some stocking sales due to a bit more more contributors.
From a recurring revenue perspective.
Look as I mentioned before Brazil is the second largest.
Cosmetic surgery market in the world both in terms of procedures and physicians. The Big question is is that all of them are.
Going to be contributors as we go forward. The real question is is what's happening in with the virus in each one of those areas and so from that perspective, we're basically saying that they're probably not recurring revenues until 2021 with respect to just what's happening in the virus and a lot of those different areas. We.
Good ship as I mentioned, Brazil, and Australia in Q2, and we do expect to ship initial orders to the remaining three countries during the second half of the year, but.
You know.
Unfortunately different things are happening and each of those markets with respect to the virus and so that will determine you know when when those really be start to kick in and really become recurring revenue on a regular basis.
Okay. That's helpful. Thank you so much.
Yeah.
The next question is from Dave Turkaly of JMP Securities. Please proceed with your question.
Thanks.
Charlie we spoke about a bit about.
The doctors and practices being reopen so thanks for all that color.
Just curious.
About the actual customers the patients.
I'd love to get your current thoughts on sort of their mindset. You mentioned that these are mostly outpatient or office procedures, but.
You know, we talked about maybe people, having some downtime and being willing to get a procedure done Im just curious as to what you're saying you're hearing from.
Maybe even from the patient base out there are the things improving and I guess do you expect that to hold.
Yeah by all accounts.
All our customers in the month in July we're busy insight in some regards they said it was the busiest july that they've they've ever seen.
As far as do I expect that to hold I think it's in the early stages right now and I think its top end demand remains uncertain and so.
That is why in the remarks that we said, we hope for a quarter over quarter growth in the fourth quarter. We were obviously extremely pleased by July to be able to grow our business, 35% year over year, but the big question is what happens to demand and what happens in the back half of the year and and.
As as we sit here today, we're extremely.
Excited and cautiously optimistic about what that looks like going forward.
But.
I don't have the answer to that I do know that there wasn't an article just published in Burns that talked about you know cause our car cosmetic surgery, just going crazy right now, but who knows if that last who knows it. If you know there's a whole bunch of factors in there and it just remains uncertain.
Got it and I don't know if I've asked you this in the past but.
For your advanced energy specifically is there is there a median age that you've talked about in terms of the patient to patient that are seeking.
Therapy there.
Well I don't know if Theres, a median age but we've done ages from while we have in our cut our our customers have done ages from Twentys to Eightys and so if you're going to probably pick a median age it probably fits in that.
45 to 60.
Age group is probably the the sweet spot for for skin tightening if you will.
Got it and just.
Just quickly you mentioned the sales team was held steady I wondered if you maybe kind of sharing the details of that salesforce like the size and.
Either you know maybe just even domestically.
Yeah, the size hasn't changed from the beginning of the year. We haven't made any we haven't made any changes in our size and I quite honestly don't have the exact number on the top of my head of how many we have because we haven't we haven't changed it in.
Since the end of last year, and I think were I don't even want to give you the number I know rthirty some direct.
People, but I don't know with exact number is right at the top of my head no. That's fine, but thank you for that and thanks for all the detail.
Thank you.
The next question is from a Kyle Boller of call. Your security. Please proceed with your question.
Hey, Charlie in Terra Thanks for taking the questions.
Maybe I'll start off with the skin laxity trial. So as you mentioned two phases. The first phase is 20 patients evaluated for safety I think one month follow up.
And then you can proceed with the subsequent 32 patients with all 52 evaluated for efficacy.
Can you just talk about the status of the trial and the first phase of this for that initial 20 patients in kind of where we are.
Yes, so look we're not going to give specific updates on where we are but as I mentioned all the activity was impacted by quoted.
Thank goodness that all of our sites are back up and running and we're making progress towards that.
For that study in particular, the next milestone that we would give out is after we have received approval to begin phase two of that study that that's the next phase of that study and until then you know we're working towards that goal of of being able to proceed to the phase two.
To that study.
Okay. That's helpful. Thanks.
And I know capital equipment sales were pretty minimal in Q2, given the shut down.
Practices, just aren't putting up the money for for capital equipment right now, but it would therefore seem to value proposition that your partner Med shift provides would be pretty compelling right now since practices can just do a monthly subscription and get access to these does this model maybe see more interesting right now to custom.
There's since they don't have to buy the capital equipment or is it too early to tell.
Yeah, No and look at it isn't very good model met shift is they're very good partner for us and it is a.
Another way for our customers to adopt that technology and as a way that we always have offered that and so as I mentioned before we have outright capital purchases. We have leasing programs. We have the med shift program and so we definitely try to make it as easy on the practice and Taylor.
Or an approach to the practice to have them adopt the the capital as as you know whatever fits best into their business model and so that it's wonderful to have met shift as a partner for that and yes. It is it is a good approach.
The biggest thing though is still has the customers still have to have confidence that they're going to be able to stay open and get a return on that investment and I think that's really still the biggest thing and the reason why there is why we're cautiously optimistic about the second half is just because of we obviously don't have control the virus.
[music].
Okay got it.
Got it well thanks for taking the questions and I appreciate the color on a favorable trends in July air.
Thanks Scott.
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Our next question comes from Russell Cleveland of run capital. Please proceed with your question.
The little photos and the question is on the cash refund or will we be getting actually 3.7 million then that will add to our cash or are we already showing that in our cash balances.
Yes, no Oh.
Yes.
Yes, that's that's it's at approximately 3.7 isn't an actual refund because we'll be carrying back the last Q2 thousand 18, when we paid income taxes.
So we're going to get print once a day in more this year, which is of course, a big helped to US or act. Okay question, Hey weren't Russell Russell hold on one second I'm, sorry to interrupt not only will we get 3.7 million back this year, but then we'll get that depending on what our losses are for this year, we will get another chunk of.
Back the following year to.
Okay. So match drained is not as bad as we think.
That's the point.
Correct.
No wonder is like.
My other question is you know many were surprised that Brazil was the number two cosmetic country. One other countries are saying the top fiber top 10, do you know that.
Yes, the two biggest ones that we do not.
I've registration in right now, our China and South Korea.
Third the top five.
Are there there both in the top five and we don't have business and a either one of those are products aren't registered there yet.
Are we going after those markets or is it a regulatory problem.
No we have strategies for both of those markets yet.
Right, Okay, that's all extra money thanks Russell.
That does conclude our conference for today. Thank you for your participation.
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