Q2 2021 Inmode Ltd Earnings Call
Morning, and welcome to the <unk> Limited second quarter 2021 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
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Now I'd like to turn the conference over to Mary Seagal of MSI out. Please go ahead.
Thank you operator and everyone for joining us.
Today welcome to <unk> second quarter, 2021 earnings calls.
Before we begin I would like to remind our listeners that certain information provided on this call may contain forward looking statements and the safe Harbor statement outlined in today's earnings release.
Also pertains to this call. If you have not received a copy of the release. Please direct yourselves to the Investor Relations section of the company's website.
Change is [noise].
Gives me.
Changes in business competitive technological regulatory and other factors.
Could cause actual results to differ materially from these expressed by the forward looking statements made today. Our historical results are not necessarily indicative of future performance as such we can give no assurance as to the accuracy of our forward looking statements and assume no.
No obligation to update them, except as required by law.
Today with us are Ms Chamois Rocky in most chairman of the board and CEO, who will begin the call with a business update then he will turn the call over to Shaquille economy in most president of North America to discuss.
First our North American operations.
Finally, yeah your mouth our CFO.
We will discuss the financials of the company with that I'd like to pass for cold tumor Chamois Rafi Moshe. Please go ahead.
Thank you Mary and thank you everyone for joining.
Oh second quarter 2021 earnings call.
With me today are Doctor Microcline does a cofounder and Chief Technology Officer, Mr. Yaw Malka, our CFO, Mr. Shaquille economy, our president of North America Doctor's script outdoors out.
Our chief Medical officer, and or for early for them on our VP finance following our presentation, we will all be available for Q&A.
For the second quarter of 2021 in mode is happy to report record revenue of 87.3 million.
Yeah.
An increase of 184 per cent compared to the second quarter of 2020.
Also this quarter net income on a GAAP basis reached $49 million.
And $43.9 million on a non-GAAP basis.
During Q2.2021 sales of capital equipment.
Wanted for 89% of our total revenue the remaining 11% was derived for consumable and services, representing $9.5 million or for total revenue.
22% increase compared to last year.
Quarter by quarter over the last of the past year.
<unk> consistently posted sales of a record numbers of consumable.
From Q2.2020 until today sales of consumable have.
More than doubled this indicate that physician are successfully adapting our system with a greater frequency paving the way for this segment to continue even more to contribute to our revenue this ongoing demand reflect.
More of the minimally invasive aesthetic surgical space is growing.
71% of our revenue was derived for minimally invasive and ablative procedures, 22% from our hands free devices and 7% from our traditional laser and noninvasive RF.
For the U S continue to be debt.
The biggest contributor to our top line with the total sales, reaching 56 points.
$4 million.
Compared to $24.1 million in the same quarter last year.
As part of our growth strategy.
How and following our success in the United States market, we keep expanding globally, we continue to expand our net sales network in all day.
Graphic market this quarter Asia, and Europe, where top contributors total sales outside the U S.
$39 million more than triple what we reported during the same period last year. This represents 35% of our total revenue compared with 22% of our total revenue in Q2.2020 currently we operate.
We're 68 countries and we expect this number to grow.
We generally generally manage 12 to 15 regulatory project globally at any given time. Some of this project go behind the static and were medical and and are medically oriented presently.
Gently in more R&D pipeline is comprised of dozens of projects in our traditional area of activity in aesthetic surgery as well as in gynecology, ophthalmology and E&P and more.
Our newest platforms. The empower will be launched in August 15.
In <unk> platforms is expected to become the gold standard in women health and wellness.
Empower will will expand our business and marks a major step for inroads into the gynecology market.
Based on our successful performance in the first half of 2021, we have a.
Updated our full year 2021 revenue guidance and expect total revenue to be between $305 million to $315 million.
In addition, we intend to maintain our non-GAAP gross margin of 84% to <unk> 86.
Percentage for this year.
We are continuing to make important progress in our ESG related activity today, we will be publishing our business in commercial ethics interaction with healthcare professional guidelines and marketing X X ethics.
All will be posted on our on our website. Finally, we continue to support the Inmont work force as we continue to comply with all local and regional health and safety regulation to protect the welfare of our employees and customers.
Now I would like.
Now to turn your attention to <unk>, our president in North America Shaquille.
Thank you Michelle Hello, everyone. Once again, we delivered a record performance in the second quarter with exciting developments on several fronts strong sales from capital equipment drove revenue for the quarter to $87.3 million consumables and service.
Services continued their consistent upward trajectory.
Light of Lockdown limitations being lifted North American physicians return to some semblance of normal capacity and we're able to treat more patients at a given time. This had a direct impact on consumer demand and ultimately more patients returned to physician offices seeking.
We continue to see physicians adopting our platforms frequently and successfully Moreover, pent up consumer demand and industry trends in the aesthetic space enabled in mode to offset much of the market's post pandemic deficit.
As these demands and trends materialized and strengthen consumers are seeking.
Previously delayed treatments. During this time, our sales force has exceeded expectations and we played a major role in transitioning the company into a new normal we plan to reinforce our growth by hosting a number of in person events throughout the year. These.
These events provide an opportunity to educate the medical and wellness community on the variety of.
Our troops minimally invasive and hands free applications as Michelle mentioned.
We will be launching our women's health and wellness platform empower, which we're confident will be a wonderful current technology in the market.
Finally, we commend our north American team for their continued impressive performance and we appreciate their loyalty dedication and hard work.
In my efforts for pivotal and helping us achieve another strong quarter now I'd like to hand over the call to your ear for a review of the financial results.
Thanks again.
For the 1 total.
Total revenue in the second quarter of 2021 increased kind of at an 84% year over year to $87.3 million daus.
There is a gross margin of 85% on a GAAP basis.
The increase in revenues was primarily due to the impact of the global Covid, 19, pandemic, which significantly reduced economic activity and cause shutdowns in the U S. During Q2 of 2020.
Highlighting significantly.
Well in each of our segments year over ear minimally invasive and sub dermal ablative technologies grew 247%.
Hands free platforms increased by 64% and laser and non invasive grew 397%.
In addition.
Second <unk> International sales continued to significantly increase year over year as we successfully implement our U S growth strategy across the globe.
Geographically, we saw the highest growth rate in Asia, and Europe, which increased by 253% and 467%.
Year over year, respectively.
Our capital equipment.
Counted for 89% of our revenue, while consumables and service revenue were 11%.
GAAP operating expenses in the second quarter of 2021 total approximately $33.1 million.
And 84% increase from the second quarter of 2020.
Sales and marketing expenses increased 97% in the second quarter of 2021 compared to the second quarter of 2020.
Stock based compensation increased to $2.9 million.
In the second quarter.
<unk> 21, compared to $1.2 million.
In the second quarter of 2020.
On a non-GAAP basis operating expenses total approximately $34 million in the second quarter of 2021 compared to operating expenses of $17 million in the same.
'twenty there of 2020.
An increase of 79%.
GAAP operating margin was 48% in the second quarter of 2021 compared to 26% in the second quarter of 2020.
Non-GAAP operating margin in the second quarter of 2021.
For 51%.
Compared to 30% in the second quarter of 2020.
This increase derived primarily from the interruption of the sales cycle in April and May 2020 by the COVID-19 pandemic, while the company continues to incur the non variable sales and marketing expenditure.
Well during those months.
In addition, the company's accelerated growth increased gross profit more than operating expenses, which translated to a higher operating margin for the quarter.
Also in the second quarter of 2021 marketing activities were still lower than expected.
In some regions due to public health restrictions prompted by the COVID-19 pandemic.
GAAP diluted earnings per share in the second quarter of 2021 were <unk> 95.
Compared to 21 cents per diluted share in the second quarter of 2020.
Non-GAAP diluted.
Expect earnings per share in the second quarter of 2021, we have 1 daughter and to.
Compared to 24 cents per diluted share for the same quarter of 2020.
We completed the second quarter with a strong balance sheet.
As of June 32021, the company had cash and cash equity.
Rebalance marketable securities and deposits of $332.9 million.
On the cash flow cash flow front, the company generated $46.8 million from operating activities for the second quarter of 2021.
With that I will turn the call back over to Moshe.
Thank you.
You should clean.
Operator, we're ready for Q&A.
We will now begin the question and answer session to ask a question you May Press Star then 1 on your Touchtone phone curious speakerphone. Please pick up your handset before pressing the keys.
So withdraw your.
Your question. Please press Star then 2.
At this time, we will pause momentarily to assemble our roster.
Our first question today will come from Travis Steed with Barclays. Please go ahead.
Hi, Thanks for the question.
Curious.
With you if you could talk about some other trends for the quarter and how July is shaping up just curious to think about how to think about Q3 and the typical seasonality.
Particularly in light of your guidance looking at the full year guidance and basically the full year assumes about zero to 7% growth in the back half versus the front half which is well.
Well below the 2019 trend so I didn't know if.
That was just conservatism or if you're actually seeing something there on the seasonality part.
While this is small share.
I will try to answer the question usually going for the third quarter is usually the slowest quarter of in this in this business.
It was on the Summertime book.
Vacation and patients do not like to do a major.
Steady procedure.
So so the third quarter in Europe, you know months and they have their own vacation and in other countries as well. So this the third quarter.
Because the slowest 1.
For the fourth quarter is usually the strongest 1 for several reasons, but this is this is this is what we see.
In the last 20 years, the time involved in <unk> and the medical aesthetics sales.
As far as visibility.
This business is no backlog.
Clog business, so we don't have visibility.
We know who do we want to approach we have the budget.
We know what kind of marketing activity, we're going to do this quarter and the fourth quarter and the guidance that we gave between 305 and 315, yes, youre right. It is conservative but.
To be conservative and and do a better numbers than given numbers that we will not be able to deliver.
Do you think for Q3 revenue dollars will be able to grow versus Q2, or do you think theyre going to be down versus Q2.
I don't know now it's just the and the first the beginning of the quarter were not even.
We plan.
Out of the quarter and.
Now we are growing overall.
In total.
2000, 2020, the third quarter was stronger than the second quarter, but this is because of the situation with the COVID-19.
In the second quarter of 2020.
During the months of March and April.
Most of the doctors around the world not just in the United States have closed or clinics and basically we had revenue for 1 month and go for the third quarter. Once the clinics open was stronger than the second quarter 2000.
It is not a typical year as far as seasonality what will happen this year I cannot say.
Our best to do better than the second quarter, but it all depends on how the market will behave in and of course, the seasonality of the of the aesthetic business.
Okay and last question.
I will jump back in the queue and Thats on the hands free it looks like as a percentage of the U S. Revenue. It peaked here in Q2 of last year and 46%.
Now are down to like 29% just curious how you think about the hands free growth moving forward and as a percent of U S revenue or the growth overall, and if you could give a U S versus O U S installed base.
<unk> number of total that'd be great. Thank you.
Okay can you answer that.
Yes Travis.
So we do see it actually continuing to be a strong portion of the segment. We also as we mentioned we do have empower coming out so of course, it is not going to be a cannibalistic technology.
And any which way however, I do still see.
The hands free being a main driver of your if you want to jump in and answer the question regarding will be installed base that'd be great share.
Sure absolutely we have 90.150 units installed base worldwide out of which $46.50.
Yes.
Thank you.
Our next question will come from Matt Taylor with UBS. Please go ahead.
Hey, guys. Thanks for taking the question and congrats on a nice quarter.
Sure.
I guess the first 1 I just wanted to see if I could get more color on the quarter. We've gotten used to good results from you, but this was a particularly strong quarter and I wanted to know if theres anything special that happened, where there any big orders or new countries or was it just the continuation of momentum that we've seen.
Building here.
Well, Matt Hi, this is little share I think it's a combination of everything that you mentioned.
We had a strong current quarter.
Quarters in several countries.
The leading countries, who are Korea, China the market is starting to open.
Our Russia are I would say debt even U K was very strong. This year. This quarter. In addition of course for the U S and Canada and also 2 countries and in Asia in South America, Brazil, and Mexico, we did very well more than what.
Capex. It. So these are these are good news and the good news is debt all U S. We are growing.
Faster than what we thought and faster than what we projected.
But overall this quarter was strong.
Because I believe the market is open due to the due to the fact that.
In most countries people start to understand that they have to live with the Corona and business back to usual.
In the United States I will ask Shaquille, maybe to answer and tell you why.
How we did and what was the main reasons.
Yes, Matt so.
Thanks for the question.
And of course.
I do think that I'm.
Seeing particularly from the U S and Canada. We saw the same kind of demand that we had seen a portion in Q2, but we are also a lot of the training that we've done.
As a group and as a team is really starting to pay off.
All of our teams that we have set up throughout.
The country have been working.
Working synergistically to really get to the point, where we now have a very very solid for us and we're still growing debt which is great.
We also did see some of the in person events, which I had mentioned earlier.
That was a very big driver and we do have that back loaded into Q.
Q3, and Q4 as well so I think that'll be a nice little cushion there to really help us get for the next level.
Okay. Thanks for that.
And I think we're all anticipating the empower launch here in ophthalmology. So I guess I was wondering if you could discuss a commercially how should we think about.
As you know how quickly can they they ramped versus being gated by training or these being new.
Ophthalmologist, especially new call point.
And then can you discuss any data.
You've seen around the debt.
The different packages within empower.
In ophthalmology debt, we could take home and think about how effective those technologies can be in different indications there.
Yeah sure Matt so.
I'll, let spiro jumping on the second part of the question and going towards the data, but when it comes to empower and even you know the ophthalmology side of things I think with empower.
1 thing.
Theres always done as a company when we started off with the minimally invasive technology, we got it in the right hands, we'd like to make sure that it's obviously a tried and proven technology. So we've established that which I'll, let spiro jumping on but right now as.
As we launch it and we're not going to just rush them Thankfully, we're in a position where you know.
We don't necessarily need another product to keep growing but it's always great to have which is why we're constantly innovating and introducing new technologies, however, with the women's health and wellness market.
It's kind of in the market that has been it's it hasn't been touched in quite some time and there's not been much focus on it so we see them.
A huge window when it comes to training and getting people.
Kickstarted it'll be the same as all of our other technology. So that's gonna be a super smooth transition.
We do have some really really good thought leaders that are already working with the technology and are very happy with what they're seeing so far so you know again.
We're not going to rush into this thing and just go gangbusters right off the bat, but I do think it'll it'll help add to the numbers for Q3 and Q4, obviously spread that you want to chime in on the data question yes.
Yes, sure Matt good to hear from you and thank you for your question.
It's important debt just like in plastic surgery, where we set the foundation differentiation.
<unk> ourselves between.
Within the RF community.
Fact that we have bipolar technology versus Uni polar and we did that in plastic surgery and we show the.
Fact debt bipolar is certainly the way it's delivered the way we're delivering it and our patented technology is far superior to unit for devices.
Within the years you saw that the companies that had unitholder basically have gone to the wayside and our own longer confidence or not able to compete in this sector.
I'm not sure.
So our he published came out last couple of weeks ago.
Showed statistical difference between bipolar and unitholders. So whatever you can afford devices are in the market.
Again here. We go same thing by force going to be a lot more effective and targeted and all the patents any mode has make it a superior delivery platform, that's our founder.
Foundation to push off of a.
Right off the bat, we have that security we know we have the right delivery system and what we're seeing now with the studies that I've already performed over the last 2 or 3 years, we're seeing women when it comes to issue I being dry.
A year out and that's a big Big Big deal.
In addition to that.
We're also seeing debt a lot of the symptoms of overactive bladder or stained or gone for urgency and frequency, we're not saying we have a treatment for that segment, yet, but we're saying that the symptoms are markedly improved and this is all per what we're hearing from our study group patients and now that were Shaquille.
Shaquille mentioned.
Mentioned have rolling it out to some of our luminaries.
For a very very excited about it so overall I think.
We are in the right place to give the sales force what they need the foundation they need to push off and go confidently into doctors' offices, we feel confident that we have we have a technology thankful to Michigan.
Mischka and what he has developed with us that can go into an office and say if you're a parent premenopausal.
Have a BMI of 30, and you're healthy and young and you have these issues of.
S UI and all of this fact that have we feel we feel very confidently that we can treat you and we can help you out and this.
This is having a major impact in the markets that we're seeing the patients are lining up just word of mouth, because there simply hasnt been a really good solution up to now so as.
As far as the data and the studies met we're very confident that it will do really well with this ophthalmology, we're getting there we know all our objective measurements are there other.
Panning out just as we.
Expected for dry eye.
But I'm not going to get into the details yet about the studies too much just saying that youre going along just as expected and we're very happy with the way things are going.
I hope that answers your question.
Yeah, that's perfect. Thanks for your I think guidance.
And congrats again on the quarter.
Thanks Matthew.
Our next question will come from Kyle Rose with Canaccord Genuity. Please go ahead.
Great. Thank you for taking the questions everyone. So I just want to start from maybe.
More thematic Big picture question, you had really strong expense control again in the quarter I mean, there is no surprise there given the.
Lower activity from.
From a commercial perspective.
During COVID-19, but can you just maybe frame out opex expectations on a longer term basis, I mean, you put up on.
Unquestionably stellar results. Despite these restrictions in place and the pandemic.
Have your thoughts towards the spend required for this commercial model changed at all.
Moving forward I mean, you just put up 51% non-GAAP operating margins and a record revenue quarter.
How much do you need to continue to spend.
To really drive this growth moving forward.
Well.
This is a little share.
I think that's typical P&L.
What we are showing.
We will continue to maintain 85% gross margin, although I have to say that.
Become more difficult because all kind of expenses like shipping logistic.
Going to the Sky.
Also you know those.
It was a problem with the supply chain of components around the world and and we fight for 24.7 every day in order to make sure that we will have enough component and sub assembly to maintain the production line up and running and deliver every system debt that the older and.
And at the same time.
10% to 84% to 86% on a non-GAAP basis gross margin.
As far as R&D and G&A. It will stay the same and I don't think we have to measure them percentage wise, we're spending around $2 million per quarter on R&D and thats.
Yes.
Enough in order to maintain the R&D pipeline of at least 2 indication 2 platforms for 2 product every year.
As far as G&A I'm sure you can compare us to any other company in the field or in any other failed and realize that we're very lean and mean and humble company.
We have 1.
$5 to $1.7 million.
Per quarter on G&A and the question is how much we need to spend on marketing and sales as we grow and as our business will go back to usual I believe we will spend more on marketing and sales, especially on marketing in the last year and a half we.
Less on marketing because the market there.
<unk> was close no exhibition no contract says everything was downloaded zoom salespeople did not travel much.
We manage of course, we manage but this business will go back to normal we will spend more on marketing and you should take into account.
Something in the range of 37, 38% marketing or sales expenses year over year, although I suppose stayed the same so overall the P&L structure there.
Typical P&L structure that we're showing today will remain.
Even if it will continue to grow at the same pace that.
We did in the last few years.
Thank you Moshe that's very helpful.
And then.
Maybe could you talk just a bit about at least within North America, great growth how much of that is coming from.
The historical core market, when we think about plastics in terms how much of that.
It's coming from some of the other medical specialties I know that will probably change as you launch from the more therapeutic products moving forward, but where do we stand now with respect to the installed base in core versus noncore.
Yes, great question Kyle.
So when it comes to core versus noncore.
Obviously, you started off.
Minimally invasive line and we penetrated the plastic surgery market. We continue to it has great brand recognition.
Seniors are actually asking for a lot of other products by name whether its body tighter morpheus aid or some of the hands free technology, but.
As we've rolled out some other hands free technology and some of the other things that are a little easier to implement we've actually seen.
With the growth in different and a different number of.
Categories in terms of specialty so when it comes to the derm market that was 1 of the goals that we had we never really did 2 well in penetrating that market because the focus was on the plastics and slowly we really started to get some big names onboard and it started to kind of work out where things are spread.
And word travels that when it comes to the non core market you know the non core markets always.
When you talked about more of a therapeutic devices of course, we're going to be.
Approaching women's health and wellness specialties some of the some of the ophthalmology practices, so on and so forth but.
1 other key things, which I've said in the past.
As long as managed care.
You know insurance based medicine keeps going where it's going overheads not coming down right. In fact, it's increasing and so as long as that's there, which I don't see that changing at any given time soon.
We'll always have that market that we can actually penetrate some of the opportunities are endless when.
To that and then obviously with the new products launching into those.
Thank you and then just 1 final question I'll keep spreading it around for Spyros and what are you seeing.
In.
And your patient volumes with respect to demand in waiting list has there been any.
Any change in demand as the economy has reopened and perhaps patients are reallocating discretionary spend dollars towards vacations and activities like that or are you still seeing robust demand.
In your practice.
That's a great question.
So New York City, and considering what's happened here.
And it currently.
Would be reflective of service for the urban cities as well.
Our demands there it's really strange at this time of the year's things do start to slow down.
But it's it's coming in heavy it's coming in heavy and it continues to come out which is unusual.
Last year.
I would.
Say it was due to pent up demand this year, even though traveling is coming back and people are.
We are starting to spend on other things, it's still not at a critical mass I think there's still other people are scared or other stay home or not even go overseas or whatever they're doing so yes, our demand is strong and solid all the way into.
For a certain number.
Waiting lists it's it's no different than at least here in New York, It's about a month's out but.
We were surprised.
I'll tell you this right I'm surprised it's still carry on but I think it has to do more with the fact that we're not quite there yet considering the delta variant and all of the scared.
So it caused I think people are still cautious so what are they do they are still staying home a majority of them are still are staying home regardless of the increase in the travel industry and we're spending on on what.
What we do the most interesting part here is again a.
A lot of percentage of the patients at least over 1 third of the new patients coming.
That's never had anything done before the first time, we've considered so this is definitely open to market and I can say that for a lot of confidence we predicted that last year. We're seeing it continue this year.
Hi, Thank you for revenue.
As Phil said I think the best way to measure.
Is that to show.
Interval and to see how many disposables.
Selling every quarter.
We're getting.
Close to 100000 disposable every quarter and this is only for the surgical part for the minimally invasive and ablative.
The other the other equipment and plan.
We manufacture do not need disposable the hands free.
Not need disposable and also down.
We're growing 20% quarter over quarter with the numbers of disposable debt.
We're selling worldwide worldwide and that's a good measurement for the users.
While for the system.
Thank you very much it's very helpful. Congrats on another strong quarter.
Thank you.
The next question will come from Mike Matson with Needham <unk> co. Please go ahead.
Yes. Good morning, Thanks for taking my questions.
For them, though.
Just on empower you know there is obviously a large population of Ob gyn.
How do you sort of plan to target the ones that are most likely to be interest in the product like this and then do you have a sense of the.
The fraction of the Ob Gyn population that would consider this.
This type of product.
Yes. So good question. So we know this isn't the first time debt.
Many of our North American sales force have been going out to the obgyn market when Mona Lisa touch was launched back in cynosure. There's a good percentage of people that had been through that launch. So this is different.
Because we're going to be able to offer multiple different things will not just covered.
Vaginal atrophy.
When it comes to what we're going to be doing here theres going to be you know as we launch it.
It will obviously cut out there, but theres going to be.
A large number of different things that we're going to be able to do so when it comes down to it.
Moving out.
We typically it's going to start with your Obgyns urologists and your organic colleges now. The thing is is that when you're targeting that market. The hardest hurdle for them is to understand that they can't get.
Ah patient to fork out $30 for their co pay yet they're going to spend $2000 I'm trying to fix something because we've seen this before.
And because a lot of these solutions are more medical based and they improve quality of life and wellness significantly.
<unk> seen that transition actually been quite smooth for that so as we as we penetrate those markets. We've already gotten some of the key thought leaders as I mentioned earlier onboard with this and that typically holds a lot of weight.
For them to make others feel comfortable but it has to be a good mix of academics and also people that can get up on a podium, which we've been able to accomplish already.
Okay. Thanks.
And then I didn't hear any mention of <unk>.
Envisioned in the ophthalmology area I think you were.
Targeting to launch.
Also in the second half for this year is that still the case.
Damn vision the vision platforms.
We're planning to launch sometime towards the end of the year I have to say that we're already received clearances for all the applicators from the SBA and.
We're working on other countries as well so it's everything would be okay.
The Corona.
Next wave will not close countries.
We will be able to launch it sometime in November December.
Okay. Thanks.
And then.
This is probably a day.
What's that.
The answer but.
How should we think about market penetration.
Among the plastic surgeons in terms for the more esthetic type products, I mean look I understand youre going into to Ob Gyn and ophthalmology those are greenfield opportunities, but your.
<unk> sold a lot.
Difficult.
Plastic surgery, there are more of the installed base has gotten quite big but yet youre seeing really strong growth still but I guess my 1 here is that that growth just all of a sudden.
What was down.
And expectedly, because you're kind of saturated the market.
So.
Based on the numbers.
It doesn't seem like you're near that point, but I just wanted to see what your thought on that.
That's a good question I mean, I think the way to look at it is.
When it comes to penetrating the markets and I mentioned that earlier in terms of dermatology, we have we actually don't have a super strong.
Penetration in the Derm World.
But we've started to of course in the last 2 or 3 quarters.
So I don't.
Keep in mind, though I think the biggest thing here to note is that we're not a 1 trick pony right. So if we had just 1 product and that's all we were going to sell them, yeah I'd understand concerns for penetration.
Penetration. However, I mean, we have so many different platforms that can all do something.
Which allows our sales force to go in and actually customize what makes sense for the practice and as you heard motion myself mentioned, we've seen people consistently be able to actually introduce certain technologies into their practice and what the consumable numbers that the margin had talked about.
We do see people utilizing their units, which might sound railroad.
The difference kind of the whole point of this but typically when they get 1 unit and they do well with it they want to add in a second or a third unit in our wholesale team, which has done a phenomenal job in our sales team, which has done a phenomenal job.
Trained in the sense that they know exactly what to do win.
For the most part so I think because we have so much different.
For in Technology, and then obviously the new stuff we're constantly innovating. That's why we're seeing this massive growth that we've had the companies that we've seen who've gone stagnant or either trying to you know get.
<unk> from overseas rebrand it repackage it there's been plenty of different companies that are just rebranded old technology and that's not innovation.
So I think because of Dr. Michael Kindel, and and his brand and the way. He creates these things when we give them some ideas as to what the market needs I think that's really a big differentiator and I think that's why we're frankly, we're not worried at all about over saturation.
Mike This is spiro really just to answer your questions for plastic.
<unk> surgeon.
I think what we've been used to in the past with energy based devices on average in the plastic surgery market you have a 10% penetration of that number hasn't really changed until we came along and the reason is.
There is a basic change in the way we're doing things for plastic surgeons. This is not just.
1.1.
That's just like Sam mentioned, that's going to go away and I'll come back just like every plastic surgeon has a device for example for liposuction Thats a staple that's every operating room has that device.
We and the whole goal here has always been from the very beginning that's why we took the hard road approach. This group first.
To make sure that our machines are.
For the exact.
<unk> seen sort of the you in other words you need a tiny device you have to have this standard it become standard of care across the board and in that respect.
<unk> based devices is the first time, we're getting so far into it because of that.
Sismi change in.
Ability to tie in skin, we said the Holy Grail. So in that respect we have a long way to go still we're not resting on our laurels. We have the early adopters now we have the main plastic surgery, but we still have ways to go we're not concerned about it and the innovation of course, allowing the plastic surgeons develop new operations new ways.
Days of doing things and there's no. There's no. That's the biggest benefit to risk is when theyre doing it themselves and developing new things for us.
Because they are finding solutions and they're excited about it that just drives growth.
Exponentially.
Okay.
This is mostly I just want to add on what Phil said.
Yes.
In the United States, we started early.
Early in 2017.2016.
But on.
All of that value well in a very embryonic stage with plastic surgeon.
In those countries, where we have a clear lens from the regulatory bodies will adjust.
Adding to introduce it.
With a great deal I would say our momentum.
We have overall we.
We have.
We have a long way to go in order to penetrate all day market.
Okay. That's helpful. Thanks.
Our last question today will come from Jeff Johnson with Baird. Please go ahead.
Thank you good morning, guys Spiro and check maybe I could put some numbers or maybe you could help me put some numbers on some of the conversations that just took place and I think all of that was very helpful. But if I look at your 46.50 installed U S based and we.
We know Theres, what maybe 17000 derm plastic in aesthetics in the U S that would say.
<unk> right about 25, 27% somewhere in there obviously some of those docs do loan to platforms and things like that so do you think that penetration rate now is closer to 20% instead of mid to upper Twenty's.
And then Spiro to your point on standard of care do you think that penetration and I know, it's tough to predict I'm not wouldn't hold you to this but can that get to 40, 50% over the next 3 to 5 years or something just how to think about kind of the numbers today and where those numbers could go.
Sean do you want to handle the first part and I'll.
Handle for a second part.
Okay great.
Yeah, Great question, Geoff So I think when you look at it.
It is lower or closer towards the 20, lower 20% side of things.
So there is some upside there, but like you were talking about some of the specialties do own.
2 are multiple units.
Again, not to sound redundant, but going back to what I was saying is that.
There's you know if you have 17000, those core specialties well you know you start adding it up where you start doing the math and multiplying by 2.3 for units that number is.
1 big runway right. So I do think on that side of things with the plastics with the German we've seen it happen we've already been seeing it currently and.
And I think we're going to keep seeing them in the future just based on people being I think the key thing here is that physicians need to be successful with their technology and if they are successful they'll reinvest with us and that's trying.
Got it.
Even the success from the last quarter and as we start getting more brand recognition for did you want to chime in on the second part yes.
Jeff It's an excellent question your average plastic surgeon the 1 other thing to do pure cosmetic surgery or a small minority right. So majority of plastic surgeons out there.
About 50% of reconstructive or 50 per cent cosmetic as refractory.
It's a pretty matures so for.
Patients and their reconstructive world haven't even start you know skin tightening is not just cosmetic thing for aesthetic surgery, its overall and as other applications everywhere and as this technology starts to mature as it starts to enter into the into the training centers, which we've already seen.
Yeah.
It goes all back to if you look at the laser interesting of what Moshe said.
The major industry back in the Ninety's. So RF, we think is superior in many ways. It goes deeper we can modulate a lot of things. So we are just the beginning of the peak of our whole industry change and if it wasn't the case our competition wouldn't be trying to.
Continuously try to develop RF right. So if you look at debt and step back in for 30000 per view do we have a runway because just like laser penetrated a whole market segment of this type of doctors, we think RF has that potential runway as well.
You know with what we have and with the way our technology.
These protected and patented.
It's all it's all clear skies as far as that's concerned Jeff so to put things in perspective shocked.
Absolutely the right thing and I agree with them, we have ways to go and we're confident about that.
Yeah Fair enough and then last question for me just on the G by end market.
You're hearing.
Knowledge July data points and in overactive bladder is that is that the main.
Wave. This this new platform is going to be used I know it'll be the way you marketed obviously, how much do you think off label use will be for other type of rejuvenation procedures things like that that we've heard about in the past I will.
Some of the other appeal me be on both the therapeutic side and the cosmetic side or is it is this really going to be focused on the therapeutic side only.
Jeff That's a great question as you know we have to be very very careful because of the history and the language that the FDA put out there.
Cosmetic wise.
Well certainly as you know the American society of gynecology as against certain things in the cosmetic broker this disrespect, but theres always a demand for that I think the push if you had to look at this platform as a Swiss army knife, It's got many modalities and many applications and we and our whole mantra of going into physician offices, saying look.
Here's your for training here's what you've done here is a patient population that's already in your office already youre not taking advantage of them.
And other ways you don't have to go out necessarily in a market. This because you have a captive population right. So every woman who delivers is it potential patient that's going to benefit from.
<unk> empowers ability to therapeutically helped propel the floor to help certain things like we discussed as well as solely move into cosmetic right up the other day, where does Fedex company and introducing our platform into a into a segment, where they can actually find a medical indication.
Use of medical indications and then slowly ease them into the cosmetic that's been always our mantra, but if you're asking a specific question as to this platform.
How this launch is a little different than all the other ones. Yes, we have a strong therapeutic and there we're going after that's why it took us 3 years to do the studies right and bring the right key opinion leaders on board.
Does that answer your question is yes. It does yeah very helpful. Thank you guys.
Thank you.
This concludes our question answer session I would like to turn the conference back over to Moshe and that's roughly chairman and CEO for any closing remarks.
Thank you operator again.
I want to thank everybody who was on the line today that join us in the second quarter, earning call I want to thank all of our employee worldwide I assume many of them are listening to us today I want to thanks to our investors.
For the trust.
And the loyalty.
I want to take all of the management team of free Mod are well on the line today and and others.
And we all look forward for the third quarter to have you all joining us.
Famous today, Thank you all.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.