Q4 2020 Inmode Ltd Earnings Call
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Good day, and welcome to the inbound and limited fourth quarter and full year 2020 conference call. All participants will be in a listen only mode should you need assistance. Please for well conference specialist by pressing the star keys solid.
After todays presentation, there will be an opportunity to ask questions. Please note. This event is being recorded.
And I'd like to turn the conference over to Mary Segal, unless I am. Please go ahead.
Thank you operator, and good day to everybody and I would like to welcome all of you to <unk> fourth quarter and full year, 'twenty and 'twenty financial results Conference call.
Just on the line today are Mr. Musharraf smoothed ROTC chairman of the board and CEO, Dr. Michael Triangle, cofounder and CTO for your ear.
Your mouth Peng CFO.
Spiritual doro, CMO and Mr. Shaquille and Connie President of in Mode North America.
Before we begin I would.
I'd like to remind our listeners that certain information provided on this call may contain forward looking statements and the safe Harbor statement outlined in todays earnings release also pertain based coals.
We have not received a copy of the release, please Buick and the Investor Relations section on the company's website.
Ranges and business competitive technological and regulatory and other factors could cause actual results to differ materially from those expressed by the forward looking statements made today.
Our historical results are not necessarily indicative of future performance.
Such we can give no assurance as to the accuracy of our forward looking statements and assume no obligation to update them, except as required by law.
Moshe will begin the call with a business update and turn it over to Sheila Connie and most president of North America to discuss our North American operations, followed by your Malka in most CFO with an overview of the financials. We will then open the call for the question and answer session and now.
Ill turn the call to MS Chamois Lossy and mode C. O Boucher. Please go ahead.
Thank you Mary and thanks to all of you for joining our fourth quarter and full year, 'twenty and 'twenty financial results Conference call.
With me on the call today on <unk> CFO.
Shaquille Kelley, our president of North America booked on Michael Greiner, our cofounder and Chief technology, all herself and Doctor spill tell doors, our Chief Medical Officer also with me on this one roughly lithium on our VP finance.
What are you reported I believe debt, we will all remember this year for the west for life I remember our earnings call in February 'twenty and 'twenty before the crisis hit the market. We all expected another momentum here and none of us and the clue what would take place.
Only one months later.
2020, the world stood Steve all of our sales activity stock and not one of us knew how things will unfold, but the sales you said never let a good crisis go west with debt in mind. It took us a few days to recover and put together a worldwide claim.
Based on for major decisions one.
Not to lay off and you'll fall employee.
To continue talk business as usual and all other businesses disciplined other than sand.
Free to help out.
And what supply chain at all levels from component manufacturer for the total our distributors. So that they will also be able to operate in spite of the crisis for to use the time to upgrade our infrastructure worldwide and to train our team and our customers.
Doctors and prepare them for the day after the crisis.
This strategy paid off big time, when business began to get back to normal just before the summer.
And the fourth quarter of 2020, and more generated record revenue of $75.2 million and.
A 60% increase from the fourth quarter of 2019.
And were called off $36 $1 million net income on a GAAP basis, and $39 9 million of net income on a non-GAAP basis for.
For the full year of 'twenty, and 'twenty and more generated record revenue of $206 $1 million and so.
32% increase from the full year of 2019.
Record net income of $75 million, and 89 point and $1 million of net income on a non-GAAP basis.
And the full year, 'twenty and 'twenty, approximately 62% of our revenue derived from our surgical platforms engage and minimally invasive and sub dermal ablative sweep.
32% derived from our recently introduced hands free platform and only 6% from our traditional laser and non invasive RF platforms.
And the record revenue in the fourth quarter and the full year was driven by demand for our minimally invasive and hands free for auto electro surgical bipolar RF technology.
U S was a significant component and outperformance while international sales become a major growth engine with the 40 year, 'twenty and 'twenty international revenue more than doubling year over year.
During the year, we saw accelerated demand from our new product launches as our hands free devices enabled social distancing and allow physicians to offer solutions that cash the most feel comfortable with.
While effectively treat them the entire body and face the success, we have had and despite the outbreak of the global pandemic is a testament to our organization dedication and innovative technology.
And we'll look back on our action in 'twenty and 'twenty, we're proud of the decision to not only retain our work force during the COVID-19, pandemic, but expands our sales and marketing team.
Continue investing in our R&D and and our infrastructure and progress our regulatory processes and the U S and elsewhere around the world. We were confident in the future of and mode and so this is an opportunity to cement our sales as the market leader.
And as a result of a bold step we were able to capture pent up demand for our new <unk> and free and minimally invasive devices evoke and evolve and multi state. Additionally, we were able to penetrate new medical categories, such as obgyn offering.
Total solution to our two del practices.
As we introduce additional technologies and 21, we plan to expand into ophthalmology market, while continuing to grow our presence in the plastic surgery, dermatology and obgyn and communities.
Our goal is to and due to introduce two new platforms, each year and continue to diversify our R&D pipeline.
And to offer wellness, the static solution addressed either medical indications and continue to innovate and.
Additionally, we plan to further expand our international sales and marketing operation, while focus on Europe, and Asia Pacific in 'twenty and 'twenty. One our initial success in this region give us confidence that we can capture market opportunity as the world gradually recover from the pandemic.
As we expand into a new region and medical categories. We plan to continue developing patent protection for our novel method and our ex technology that differentiate our product portfolio also we will continue to defend our existing intellectual property.
The successful fill more so far has come from our innovation and the ability.
To generate interest across medical communities for our platforms the fed with our devices and platforms can effectively be performed and the doctor office without the need of anesthesia or any other invasive method has appealed to patient and physician that like we will continue to.
Labor and industry, leading solution using our unique technology to bridge the current significant treatment gap.
Considering our successful performance in 'twenty and 'twenty, we're providing a 40 F. 'twenty 'twenty, one guidance of revenue between $250 million and $260 million.
Non-GAAP gross margin between 84% and 86% and.
Non-GAAP income from operation between $100 million, and $104 million and and non-GAAP earnings per diluted share between $2 and 34% and $2 and 45.
Lastly, as fall for our recently introduced corporate social responsibility, we place a high value on our employees partners and stakeholders across the growing numbers of communities and market we operate in.
We aim to positively impact the local economies in the U S and and the rest of the world and we will continue to prioritize the health and welfare of our employees and customers.
With that I would like to turn the call to Shaquille, our president and North America.
<unk>.
Thanks for sharing and Hello, everyone, we reported a record fourth quarter and full year, and North America and accelerated demand for our new product launches led to record capital equipment and consumable volume and was very encouraging to see high levels of consumable purchases coincide and capital equipment sales. This clearly indicated that physicians are treating patients on.
Pre pandemic volumes and have successfully adapted to the restrictions on COVID-19.
And we're very pleased with the reception of our new products evolve evoke and Mark we see these products proved to be high and demand not only by physicians, but also patients.
The momentum you saw on the second half from 'twenty and 'twenty supported our decision to continue investing and our sales and marketing organization back in March and April we were able to bring in some of the top talent from across the industry during the market contraction and earlier this year.
This enabled us to successfully and capture the pent up demand for our products following the easing of restrictions and.
One of the key initiatives to keep physicians engaged during the pandemic will lose from technology, We introduced me and mud University or web based educational resource for physicians and aesthetic providers, and creating and impressive library and online tutorials and training content to sharpen the skills of our sales force and educate physicians on our newest products.
On the COVID-19, global pandemic accelerated consumer trends that were driven by efficiency results and innovation.
Which are the core building blocks of our organization.
Additionally, as the world transitions work and socialization from virtual meeting applications, such as and people are spending more time than ever analyzing their appearances.
This trend along with the flexibility and working remotely have created the need and opportunity for patients to visit a physician offices and request for static procedures more frequently and we believe that these trends are here to stay and we will continue to provide our innovative solutions to physicians and patients.
Coming out of 2020, our sales and marketing team has created a successful multi pronged approach to introduce and modes latest technologies.
Our ability to penetrate new offices and medical categories with new products is unparalleled and.
Which is illustrated by our financial performance. This year. Once again, we are proud of our team for their resilience and determination. During this pandemic and we're excited to take and modes momentum into the new year now.
Now, let me hand over the call to your ear to review our financial results in detail.
Thanks, Vicki and good day.
And we won.
Both on revenue and the fourth quarter of 2020 increased 60% to 75 2 million Dinos and you said gross margin of 86% on a GAAP basis.
The increase in revenues was driven primarily by the expansion of and most direct sales organization and the United States and the continued momentum of England's hands free technology and its Wayne.
And the recently introduced <unk> eight by the friction on technology.
Additionally, and let's continue to gain traction and to the Max.
And on the market as international revenues growing and handling and 2% year over year.
GAAP operating expenses in the fourth quarter of 'twenty, and 'twenty total approximately $29 $2 million and 27% increase from the fourth quarter of 2019.
Sales and marketing expenses increased 25, 4% in the fourth quarter of 'twenty and 'twenty compared to the fourth quarter of 2019.
Stock based compensation increased to $3 2 million daus, and the fourth quarter of 'twenty and 'twenty compared to $2 4 million daus and the third quarter of 2020.
This increase is due to higher than previously estimated vesting of performance based options and as a result, Oh for a record revenue and the fourth quarter.
On a non-GAAP basis operating expenses totaled approximately $26 1 million daus and the fourth quarter of 'twenty and 'twenty compared to operating expenses of $22 7 million DAU and the fourth quarter of 2019, and the increase of 15, 1%.
GAAP operating margin was 47% and the fourth quarter of 2020 compared to 38% and the fourth quarter and 19.
Non-GAAP operating margin and the fourth quarter of 'twenty, and 'twenty was 51% compared to 39% in the fourth quarter of 2019.
This increase in non-GAAP operating margin was primarily attributable to decreased Robyn and marketing activities and the United States, such as events and conference participation due to restrictions caused by the COVID-19 pandemic.
GAAP diluted earnings per share and the first quarter of 'twenty and 'twenty with 85 cents compared to 46 cents per diluted share in the fourth quarter of 2019.
Non-GAAP diluted earnings per share and the fourth quarter for 'twenty, 'twenty, 194% compared to 46 cents per diluted share in the fourth quarter of 2019.
We completed the fourth quarter with a strong balance sheet as of December 31st 2020, the company had cash and cash equivalents marketable.
Marketable securities and deposits of.
Dawn and $65 million.
On the cash flow front, the company generated $41 6 million from operating activities for the fourth quarter for 'twenty and 'twenty driven by day record sales volume.
Total revenue in the full view of 2020 and grew 32% to a record of $206 1 million daus.
The gross margin of 85% on a GAAP basis.
Year over year International on the revenue growth was 76%.
In 2020.
GAAP operating expenses in the full year of 2020, and total approximately $802 4 million and throw it out there.
And 33, 9% increase from the full year of 2019.
On the non-GAAP basis operating expenses totaled $19 1 million daus.
And the full year of 'twenty, and 'twenty compared to operating expenses of $75 million in the yield for 2019 and increase of $20 one per cent.
GAAP operating margin was 35% and the full year, 'twenty and 'twenty compared to 58 per cent for the full year of 2019.
Non-GAAP operating margin for the full year of 'twenty and 'twenty was 42 per cent compared to 13, 9% for the full year of 2019.
This increase in non-GAAP operating margin was and as previously mentioned I think music with a decreased dropping and marketing activities due to a different dynamic.
GAAP diluted earnings per share and the full year of 'twenty, 'twenty, one day, though and 78% compared to $1.60 per diluted share and the full year of 2019.
Non-GAAP diluted earnings per share and the full year of 'twenty and 'twenty with two dogs and 11 cents compared to one door line 63 cents per diluted share and the full year of 2019 and increase of 29, 4% on.
On the cash flow front, the company generated $79 $2 million from operating activities for the full year of 2020.
Is that and we intend to call back to him on shape.
Okay.
Okay.
Operator.
Alright, and maybe this is the operator for question and it has disconnected.
We will connect and a minute.
Your line please.
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Yeah.
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Alberto.
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Your line.
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And finally are going to start our question and answer session.
To begin our question and answer session to ask a question and you May Press Star then one on your touch on zone.
Speakerphone, please pick up your handset before pressing and Keith sure Jonathan.
Your question. Please press Star then two are for.
First question today comes from Matt Taylor with UBS. Please go ahead.
Hi, guys. Thank you for taking the question.
And congrats on a good quarter. So the first thing I wanted to start off with was just understanding the guidance for 'twenty, one and the way I'll frame. The question is yes.
You, obviously had a very strong Q4, and you're at a $75 million.
Run rate. So can you talk to us about how you derive for $2 $50 million to $260 million that would imply.
Average sales below that run rate was there some stuff that was one time and Q4 are you just being conservative to start the year, maybe you could talk about some of the ongoing trends and what you are saying.
Okay.
Hi, Matt This is Moshe and back again I was disconnected sorry.
And I'll problem yeah.
Yeah sure.
I think I said.
And the $75 million to $75 million in the fourth quarter.
And I believe.
That we gave you that how it was divided between between the product it was something like 62% on minimally invasive and 30 something percent on the hand free.
The $260 million.
And we need to remember that we are going to add another two platforms.
So percentage wise I believe maybe that although they will grow on the absolute numbers, but percentage wise maybe.
And maybe the minimal invasive and the hands free will go a little bit down.
And the Obgyn and business will go up from a few percentage to something like maybe a 7% to 9%.
All the rest will stay the same day laser and the regular noninvasive and will continue to be in the neighborhood of 5%.
Okay. Thank you and can you can you comment on any trends youre seeing here early in 'twenty, one and are you continuing to see strong demand for procedures and for capital.
Oh, yes.
Yes.
On the disposable that we're selling we reached a record EBITDA in Q4 and in the beginning of this year so far.
Very strong demand for consumable.
Which are being used as you know and dominion non invasive and ablative and also on the.
For Teva the women health platforms, so hopefully and I'm on the way it looks like we will break the record again into Q1.
And Matt just to add there.
As far as what we've seen momentum wise January is typically a slower month.
We see some really good momentum come up and February here and normally February and March are kind of the bulk of Q1, so it's tracking.
Tracking and a positive way.
Great. Thanks, Jack.
And maybe I'll just ask one more so you highlighted the women's health.
Offering and I know Youre BP and up for a bigger launch here.
And 21 can you talk about the components of that.
And how you expect to market and and how it's differentiated from some of the other.
Systems that are out there.
It appears from your answer that.
Alright.
Matt why don't I start off and I'll pass it over to Spiro So basically.
As we know there has been.
And the passengers basically been.
Worsening other companies and competitors in the space and the women's health and wellness market and many of them have actually left the space based on what happened.
A year and a half two years ago, our B FDA. However, we decided to invest very heavily with this.
And essentially what we're going to do without giving away too much as you know what we would like to do in this case and with the technology that we will be launching as it will not just be.
A unit focused products. So we're not just going to have and focused on one aspect of the women's health and wellness. The idea with this is to have a multipronged approach to it where we can actually have multiple revenue streams from physicians and also beneficial ways of treating.
On the women's health and wellness market Spiro did you want and just add onto that.
Yes, I think share. Thank you Matt great question.
Obviously, everything we do hear it and mode. We tried it backup with solid science and publications and peer review journals. So when we attack this problems debt.
I have been plaguing women for a very long time.
We stood back and and we looked how can we approach it and thats been the focus of our research and R&D with Myszka for the last two years. So we finally got to the point, where we feel confident enough to to provide different elements.
Of those solutions, which have not been addressed as well before and especially since the fact that as we know radio frequency is quietly is very differentiated from lasers. So the fact that we can go deeper and we can remodeled tissue and RF does not see pigment I would say that's the core of what we're doing and the women's health and and.
<unk> to utilizing.
Some of our technology, which have been so successful up to this point such as morphine state and micro needling, so bringing that into the women's health with expanded capabilities on the Morpheus day platform. In addition to the EMS, which we have been very successful with on the.
On the evolve platform both of those two core elements will be on will be part of the solution that will providing women going forward, Matt Im sorry.
And I'm not trying to be vague here, but.
We like to not.
Get ahead of ourselves, but I can tell you right now we're very confident just like all of the products, we and when we launch within mode that he actually worked and that's our reputation and the market and certainly with clinicians and patients who we'd like to keep it that way.
Okay, great and I'll leave it there. Thank you guys.
Thank you Matt.
And yet and if you have a question. Please press Star then line and next question comes from Colorado from Canaccord. Please go ahead.
Hi, good morning, everyone.
And for taking the questions.
Just a few for me.
I wanted to see if you could check you talked about.
Some of the strengthening of the commercial team that took place in 2020, just wondering if you could help us understand that a little bit more I mean, maybe on where did you and.
From a head count perspective, and then how should we think about.
And your hiring moving forward I mean is there any real white space left and when we think about.
Territories to build out do you need to build specialized teams to go after some of these.
Specialized markets just help us understand how the sales force should should trend over the coming 12 to 24 months sure.
Great question. So I think first and foremost we ended up around 130 for head count for the year.
And we're definitely going to be adding for that and then when it comes to a specialized sales force, it's tricky and based on my experience.
And can go either way, but I think learning from some of the things and my passion and and the team has passed I think the way we're going to look at this call is we're going to take a hybrid approach to it so.
And this business.
It's very challenging to find people, who can close capital equipment and Luckily we've found that formula were going to take that and integrated within to that and kind of have a farming system similar to what you see and the major leagues. So I think as we.
And as we start to develop some of our people you know all of our our sales force. They all want upward mobility, and we know that and we support that 100% and so I think and doing that as they can kind of learn from the skill sets that they need in order to actually close business and find business and so on and so forth the women's health and wellness space and a very.
Very very specialized sales obgyn urologist your organic apologists.
This is within their scope of practice right and within their scope from specialty so we need to have people that can actually talk their lingo and understand what the what theyre going to benefit from this so with that being said we have a plan to do that but what we'd like to do is take a hybrid approach to it.
And how that's going and then eventually transitioning to <unk>.
Special items so it makes.
Sure.
It does and that's very helpful. Thank you and.
Then most.
Moshe area you are I wanted to circle back just on I don't want on Matt's questions just with respect to.
Guidance for the year and I appreciate you framing it out with respect to the.
The product categories, but maybe just help us understand them and you exited and the second half of the year, particularly in Q4 with record numbers and guidance for the full year 'twenty, one is suggesting a little bit of a slowdown I'm just trying to understand is that more just there's still ongoing dynamics from COVID-19.
And of new product launches.
Just because to get to that $252 60.
It does suggest a step downs, maybe help us understand what you're assuming as far as the puts and takes of what happens and 21 okay.
Alright.
As you probably noticed and the last three years, we were growing about $50 million plus minus one or two every year.
And and basically growing from 206 to 260, it's about the same $50 million.
So I know that.
And when you calculate that on a $200 million percentage wise and it's come a little bit less than what we did between two and 19 into 2020.
But overall $50 million.
We are on medical equipment, when you have to deal with regulation on on 27 different regulatory bodies around the world and you have to deal with the clinical studies and we have to deal with the training.
Not it's not a small number.
Uh huh.
Introducing two platforms as we are in in addition to the graph and the existing portfolio by $50 million every year, that's something that we would like to beat that number and hopefully it will be above 260, but as far as the guidance 260, which is $55 million.
More than 2020, we believe its a fair growth and and and we hope to achieve that and and do even better than debt. I mean, it's easy to say fourth quarter was $75 million, let's multiply that by for and we will get $300 million.
But I am sure you will remember we discussed that several times before.
And there was some seasonality and this business and the fourth quarter is the strongest one all the way.
Taking the fourth quarter, which usually it's about 40% of the total year and multiply that by four and expect to us to do $300 million.
Hopefully, we'll do it but it's a little bit more than then.
And then the guidance that we can get.
In addition to that yes, youre right. The for the first quarter, we still see a lot of the effect of the pandemic, especially in Europe. They have day, all experiencing the second wave.
No debt in the United States things are getting better, but in South America and not getting better.
And in some countries in Asia things are getting better, but the other countries like India are suffering. So overall, we believe that the first quarter. We will continue to see the effects of the pandemic and therefore on the fourth quarter as far as the budget.
And is concerned.
And we took it into account, but overall $260 million in 2021.
And it's it's a challenge, but we will be.
Thank you very much and then just one final question for me.
Shaq are spiro.
I think the one thing that surprised us and 2020 was the durability of the interest from from patients as far as Youre getting treatments I think theres a lot of.
Maybe conjecture or or reasons for that why that might have happened and just wanted to see if you can maybe give us your thoughts on the pulse of the market as we head into 2021 and particularly.
And hopefully the market reopens and people are out doing more you know do you expect to continue to be a big focus on on image and wellness and.
Disposable income being allocated towards towards these type of procedures, just what youre seeing from from the commercial appeal there or your peers.
Yes, no great Great question, and I'll pass it over to Spiro after and talk a little more from a patient perspective, but yes, I think one of the things that we saw very early on with the pandemic is that no one really knew how to deal with it. So it was for and to everybody and I think once you got to the point, where people learned and you go from having 10 to 15 people sitting on their waiting room too.
Now having people coming in checking the temperature and then having them come in and it almost feels like and VIP type of experience for them right. So I think now that physicians have learned and patients have learned how to deal with the pandemic. There are little more gun shy and Thats why we saw back in March and April things pretty much just went completely debt and since then.
Unfortunately, we haven't seen that I do think from what we've seen and what we've heard and based on consumable sales that we certainly have seen.
And an uptick in procedures, which is great and I'll, let <unk> comment on why that might be.
Well I think it's a great question right.
On the practice and classic Surgeons can tell you and New York. So I can tell you. This much theres a group of patients who always had this no matter what this and existing pool, that's going to come in and no matter what happens.
Happened differently and we've seen this reflected by the volume coming into the different offices across the country, which I'm in touch with is there is a lot of new patients that never considered classic sewage or we never considered a static medicine and it for themselves and I think the reason is people have reconsidered a lot of things that are going on and there are.
Our lives.
This is a big full stop for a lot of people. So yes for the disposable income no question, yes, they're not traveling as much not spending as much on restaurants and stuff like that so they do have disposable income, but I think there is a reset on the on the on the thought process, saying you know what I need to take care of myself I need to work out and need to do these things and I need.
And to look good too and <unk>.
On a self reflection has found its way into expanding this aesthetic market. So even though we saw we thought the volume was going to be sort of shifted since usually the volume for plastic surgery. The highest is and the spring and usually in the fall and sort of tapers off and we saw that pushed back and we thought that it would basically that's what it was.
But it has continued and I think to continue and the part. The reason is is that the market has expanded and people start to take care of themselves and that's part of what we do as well so I don't anticipate any change in 2021.
I think debt. This has been a wonderful year for a lot of plastic so just on that on how tough it has been.
It has really shown debt, yes people are sort of re determined what their priorities are and believe it or not this is one of them. So the psychological factor of this pandemic has had a huge impact and as well and I'm sure that you guys have heard about zoom face and zoom calls so people look at the sales for hours on.
On the computer.
And so helped us so we anticipate this trend to continue I think that the percentage of new patients is what's fueling this market and I expect that to continue as things open up, especially if you consider the optimism behind that and and the vaccinations will help that as well does that answer your question.
It absolutely does thank you very much.
Welcome.
Okay.
The next question comes from Jeff Johnson with Baird. Please go ahead.
Thank you and good morning, guys three questions for me and let me ask my I guess my first one my own gating question on on 2021 guidance I think what we're all trying to figure out here is we want to get the quarters right to and I know you guys don't guide quarterly.
But putting kind of pieces together should we think about the first and maybe second quarter being down sequentially off fourth quarter by a good solid amount 15, and 20% and then how do you think about the second half of the year against these tough tough comps and the big pent up demand recovery is there solid growth you can put up year over.
Year or should we really dialed down our year over year growth expectations on the second half against those tough comps.
Well this is moshe.
The first quarter of 2021 as compared to the first quarter of 2020, we will see a big growth.
We will see a big role and you always have to compare quarter over quarter, you cannot compare with Q1.
And you cannot compare Q1 to Q for.
Q1, 'twenty and 'twenty, one to queue for 2020.
And just because of seasonality of our business, but if you compare Q1, 'twenty 'twenty, one and Q1, 'twenty and 'twenty, you'll see it you'll see a big growth.
And think that we can assure you.
Even in our budget.
And again as I said before we still see the effects of the pandemic on Q1, 2021, and southern part of the countries.
Including including and Canada, and North America, but also in other countries.
We believe that starting Q2 2021 once.
Once most of the world will get the vaccine or at least we hope. So then we will see a big a big.
Momentum start and the numbers for Q2, Q3, and Q4 will pass of course, the Q2 Q3 and Q4 of 2020. So overall the growth for 55 or close to close to $55 million year over year will spread over the fourth quarter and.
Quarter over quarter, we believe that we will see and nice growth between 21 and 2020 day.
<unk> 21 and 2020.
Did I answer your question.
You did thank you Moshe and I guess, one follow up on that you mentioned the women's health care and maybe growing to eight to nine I think you said or maybe 7% to 9% of revenue the numbers you gave.
And I do the quick math that would suggest we're getting good growth out of that business. This year up and maybe $20 million to $25 million.
Contribution from that product versus only about 5.002 million 20, it kind of puts the <unk> or the minimally invasive and the hands free growing closer to maybe 15% year over year for the year is that just conservatism have we gone through kind of a big bolus of demand for the MRI and the.
Hands free and now we have to dial our growth expectations down there just how to kind of think about kind of your comments on the women's health care versus what that implies for the other two big platforms.
Why don't we always we always try to be conservative.
We are especially when we give guidance.
And because it I'll try to be conservative and do better than the guidance and I think that's what we did and the last week and the last since well since we're a public company now as regard to the women has.
I believe as we have as we said when we intend to launch sometime in the second quarter and net of platforms for the women have which call day empower and I think.
Dr. <unk> talked about all of the modalities that this platform will include we're now doing clinical study and initial results are showing are promising.
We expect that the debt that will go to something like 67% and now in 2021.
If it's $20 million for $15 million time will say, but we will see an increase one thing I want to remind you all.
If you remember the letter from the FDA and the middle of 2018 debt actually brought the women health market almost two zero across all the companies in and debt.
And that actually marketed product to the obgyn and community I want to remind you that we are the only company debt.
We responded to the FDA letter and received a letter from the FDA that allow us to continue to sell to this community and where and this is the reason why we continue to develop product for new indication for the women have so yes, the obgyn and the women has market is that is the growth.
And just for US we intend to invest on it.
Also in <unk>.
Chuck described and a special.
And our distinguished Salesforce, and we will take it seriously as we did with the plastic surgery and steady and all the out all day minimally invasive and then free product that we have allowed to the market and the last two years.
Thank you and then maybe my last question I just wanted to follow up on some comments Bureau made about patient demand.
It sounds like obviously, some pent up demand here and the second half and and the disposable income and zoom effect had been helping is that been broad across the U S. Euro My question I guess more where we still see significant shutdowns and L. A where maybe the service economy is still quite pressured and a place like like Las Vegas, historically biggest static markets and.
La Las Vegas is there still pent up demand that could come out in 2021 and help or do you feel like even in those market share hearing from some of your colleagues and the demand has already rebounded quite a bit.
That's a really good question.
So the biggest markets traditionally for plastic surgery on New York L, a Miami and Texas.
And I'm in touch with all of my colleagues.
The thing that really impacts is the what do we had a closure of elective procedures and.
That's what happened in March so if you're a closure of elective procedures at that point you just really can't do anything so that has not been the case.
And California as far as the doctors and I'm speaking to and so the demand is still there there is still coming in and will there'll be a pent up demand after that I'm sure I'm.
I am sure, especially New York and L. A are probably the super strict and what Theyre doing and the patients are still coming in.
Will it be more afterwards, it's hard to predict I am sure. There are people who are scared.
We're not probably coming in so I anticipate once the vaccination process continues just like everything else I expect that trend to.
Two to continue with it and the ones that are actually are concerned and wanted that elective procedure done will probably be a lot more confident that come through so if I had to answer the question as simple way, yes, there is going to be pent up demand and those markets.
We expected and anticipated, but the volume right now has not been impacted the existing volume everyone's doing quite well because of the fact that elective procedures have not been stopped which was which was very different back in March does that answer your question.
It does thank you.
And welcome.
Sure.
Yeah, the numbers of disposable sales.
And the second and Jeff.
The number of disposable debt, we solved and till now from the beginning of the year.
More than what we saw and in the first month and a half and in the fourth quarter.
Yeah.
Yeah, and if you have a question. Please press Star then one and.
Next question comes from Lisa Flores on Nalley with Oppenheimer. Please go ahead.
Thank you for taking our questions and again congratulations on a very impressive year.
I guess, maybe if we could just start on the new product launches can you walk us through how you're seeing the timing of the launches as we move through 'twenty and 'twenty, one sorry back half on half back half.
Yes.
ISS how are you.
Well, yes.
We intend.
In 2021 to launch two products one is they said and power for the Obgyn and this we have all the FDA approval already and we're waiting for the clinical study and clinical proof.
I think Spiro <unk> gave some insight on.
On all the studies that we're doing there we.
We believe that this product will be launched sometime in the second quarter.
We also intend to lounge.
And the other platforms for the ophthalmology market, mainly for dry eye and some some aesthetic I offer and lower lead our procedures.
And that will come probably towards the end of the third quarter, we're still working on this platform.
Don't have and FDA yet it's in process, we submitted for FDA approval, so that will come probably in the next two months.
In addition to that we continue we are putting the production line for these platforms, which will be ready and the second quarter, starting to manufacturing and and and hopefully that will be also on time.
Okay. That's very helpful. I appreciate it.
And you know.
Maybe I guess on the competitive front and maybe there's an opportunity for you guys to comment on it.
I think we all appreciate the commentary on the healthy demand for aesthetics broadly but.
And we look across the other public medical aesthetics comps, whether it be injectables or cryo or obviously even lasers.
And relative weakness. So if you guys maybe want to kind of take this as an opportunity to comment on it and how youre seeing not just on what specifically you're kind of solutions is taking share and what the feedback is from physicians that would be helpful.
Sure So I'll start off and I'll pass it on the spill. So I mean, we've definitely seen over the last two years and.
Youre absolutely correct. There has been some decrease and obviously with with any.
And anything like that there is an opportunity right and I think we've kind of seize that opportunity and do.
And what we've done.
Just in the global space there have been a lot of the competitive issues have been based on consolidation within the industry as we've seen so private equity getting involved and purchasing other companies.
Big pharma, so on and so forth and I think what we've done is we you know this is just this is what we do when we specialize in and capital equipment or consumables side of things you know are.
Our minimally invasive solutions, which no one really has per se and then we obviously have our hands free which is a competitive space, but again a lot of those cash.
Companies have been gobbled up by by larger companies and I can be at that point lose focus on what they are trying to do and accomplish and they don't really have a property and navigate the ship and so I think that we definitely created a situation where we can now coming on and capitalize on this type of situations spill from a patient person.
And did you want to come on.
Yes, I think Chuck Thank you for saying all that I think what's important here to understand is that we've identified.
And what we call the treatment gap, that's a concept that we noticed and a market we've been unmet need and what does that mean and I'll repeat again for the for people who don't know so you have two ends of the spectrum you have the one on the spectrum, we have major operations of plastic surgery operations take here and the hospitals and then you also have on the other side of the spectrum you have a lot of these non invasive procedures.
Lasers, et cetera, et cetera, which were not as effective as it can be.
So you have Uh huh.
The number of patients between 35 to 60, and 50 560 years old which are.
Not bad enough to have a big operation by being bad enough, maybe they don't have enough skin laxity and they're not ready for a face lift the same token and they've tried everything else and it hasn't really worked and Theyre getting Andrews for T component involved there right getting fillers every three months coming and getting these laser so finally.
You can find a procedure that will essentially ty and their skin or given the long lasting result, and one session and 45 minute session, even though it might be a higher price at the end of day.
If you look at the number of continuing.
Treatments over a period of time financially. It makes more sense just to have one procedure done here is finished and the last for eight to 10 years. So this being a paradigm shift and the way people are looking at these things.
And the combination of what Shack mentioned in addition to the fact that people are starting to Smarten up there like if I'm, having filler three times, a year and I'm, having these things done and I put it altogether and just easier for me to have something like this which is permanent and it looks good and looks great. So.
And the minimally invasive approach to what we're doing is a paradigm shift and aesthetic medicine and Thats why youre seeing the growth that youre seeing because we're able to penetrate these offices, but most importantly, you have the patients what they really need and the doctors are relieved because they don't have to explain themselves afterwards and why this works it doesn't work.
Here you go and.
And to the fact that you have the hospitals and patients are afraid of hospitals and the fact and office based procedures is where it's at all of these elements.
Are what make us competitive, but also changing the way the industry has been the past so I'm not surprised there is a weakness and other sectors.
Aside from the Asps.
Aspects that shock brought out.
Also a combination of patients, having what I call fill and fatigue.
For example.
Okay, that's very helpful.
And we'll show.
And.
And I believe will discuss debt when we met and is that.
I think it's a mistake to compare us to the laser companies.
Fully familiar with them I am sure. There are many of the top private companies, but there are three public companies and.
And that Venus and Kyocera and when you look on those street company's performance in 2020, and you compare them to the performance of in mold in 'twenty and 'twenty you understand the difference 95% of their business rely on one energy, which is the laser energy laser energy today.
Is becoming a commodity and commodity and commodity technology on a commodity product and they have no IP protection anymore gross margin of about 50% to 55% and all losing money barely breakeven. So we don't have our category the new category that we have established day.
Minimally invasive.
Surgical procedure, it's a new category I don't think we have a.
Nice comparable or recognize Peter.
I think I think we need to we need to be judge based on outperformance not comparing to other company because most of the other laser companies are not doing well these days.
The market is saturated the dose overcapacity prices of the system are going down.
You can buy today, the best laser for less than $60000.
And and and the best IPL for from Korea for 30, 35000, and with this type of prices they cannot make money.
So the strategy and the DNA of this company is to work on things that we will have intellectual property protection.
Protection and also some uniqueness and this is the reason why this category was established.
Okay, Great and just last question on my end.
So once again exceptionally strong growth and the international business can you give US you guys helped us out last quarter and giving us some color on some of the underlying countries. I mean, I guess may be most interested and there'll be any commentary you can get on a on how things are developing and China anything that you.
I think is is on its.
And as Robyn.
Yes.
Okay, Okay, I'll give you the debt.
Let's divide answering too and to 3333 answers one.
Currently.
We have five outside out.
Like North America, and I'm, not including Canada, we have a five fully owned subsidiary.
Okay.
And <unk>.
Pain for us.
Australia and India.
All the rest were selling for distributors.
So by the way just to give you some idea 85% to follow sales is direct North America, and those five and those five subsidiary or the Westwood sell toward distributors in 'twenty and 'twenty.
We build the company and in France.
And also are we.
And I owe the more direct people and the other subsidiaries we changed several distributors, but most important we have received.
Regulatory approvals in China.
In Australia, and Korea, and also in Brazil.
And these are major countries debt actually drive that debt the graph and the international market. We continue to invest heavily on on regulatory bodies with regulatory our processes.
Processes.
And in many countries and don't forget we have to deal with 27 countries 27 languages and 27 different submission. It is not everything FDA youll see in Europe, but we continue to do it because we believe once all of our portfolio.
Will be approved and will be cleared and those countries.
And it will continue it will grow for the it will.
Our drive for growth.
So we work on three of three basic avenues, one to enhance the distribution in certain countries like we did in Italy and Germany.
To enhance our position with all of our subsidiaries in those countries, where we go direct and continue to invest in regulatory processes in order to get all of our portfolio approved by most of the regulatory bodies around the world. This is something that we're doing parallel and this is the reason.
And why in 2020, the rest of the world to have one.
As you said more than 70% compared to 2019 and I believe that this process will continue in 'twenty and 'twenty one.
Okay. Thank you guys. That's all for me.
This concludes our question and answer session I would now like to turn the conference back over to my phone and Sarah for any closing remarks.
Okay. Thank you everybody for joining us today.
We hope the 'twenty and 'twenty, one we will continue the momentum that we have seen and the third and the fourth quarter.
We will do our best.
To meet that guide the guidance or do even better than the guidance come up with the new products.
And and create value for the shareholders. Thank you everybody.
This conference has now concluded. Thank you for attending today's presentation you may now.