Q1 2022 Venus Concept Inc Earnings Call
Yeah.
Please standby.
Good day, ladies and gentlemen, and welcome to the first quarter 2022 earnings Conference call for Venus concept, Inc. At this time, all participants have been placed in a listen only mode.
Please note that this conference call is being recorded and that the recording will be available on the company's website for replay.
Before we begin I would like to remind everyone that our remarks and responses to your questions. Today may contain forward looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including those identified in the risk factors section of our most recent.
10-Q, and our annual report on Form 10-K.
Filed with the Securities and Exchange Commission, such factors may be updated from time to time in our filings with the SEC, 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 certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP, we generally refer to these as non-GAAP financial measures.
Conciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in our earnings press release issued today on the Investor Relations portion of our website I would now like to turn the call over to Mr. Dom Serafino, Chief Executive Officer of Venus concept. Please go ahead Sir.
Thank you very much operator, and welcome everyone to Venus Concept's first quarter of 2022 earnings Conference call I'm joined today by our Chief Financial Officer, Domenic della Penna, and Ross Potaro, our president of global sales.
Let me start with a brief agenda of what we will cover during our prepared remarks, I will start with an overview of our revenue results in the first quarter. I will then provide a summary of creating progress in key areas in recent months and Domenic will provide you with a more in depth review of our quarterly financial results, our balance sheet and our guidance for the full year 2022.
<unk>, which we reaffirmed in today's press release, and then Ross, who will provide an update on our commercial progress and priorities and then we will open up the call for your questions.
With that overview in mind, let's get started with a review of our first quarter revenue performance and overall business trends.
We reported GAAP revenue of $26 4 million up 17% year over year increase in total revenue year over year was driven by 25% growth unless you are in the sales in the U S customer base and 10% growth in international customers in the period.
Total sales in subscription revenue increased 22% year over year in Q1, and our procedure related disposable revenue increased 14% year over year, excluding our discontinued hero graft or program from the prior year period as we exited this business line in Q4 of 2021.
Importantly revenue growth in Q1 was driven by the key franchises, we prioritized as part of our commercial strategy, which we discussed in recent investor calls.
Specifically, excluding our Bureau graph just program revenue sales in our growth franchises increased 19% year over year in Q1 fueled by sales force focus and execution continued with strong demand for artist IX robotic systems and the early clearance and initial commercial launch of our Bliss Max in March.
<unk>.
The early market response to Bliss snacks has been notable and sales of this highly differentiated biotic body contouring workstation.
Roche drove growth in sales of products of our body franchise by more than 60% in Q1.
With respect to procedure trends in the first quarter, our real time, Iot data gives us strong visibility and to the active device trends for large portions of our medical aesthetic install base. This average usage for system continues to reflect measured improvement in patient activity.
Outside of the U S. We continue to see very usage trends, depending on the region of the world and the respective pace of recovery from and then.
<unk>.
Procedure trends in our hair restoration customers in the first quarter reflect improving growth after a slower part of the quarter as well North America procedures exceeded previous Q4 years Q1 Records, while Latin America and EMEA were at similar levels to Q1 2021.
This was not enough to cover loss of procedures and APAC APAC did have increase in artist installs in Q1, So we hope to see utilization returned to normalized levels in Q2.
Turning to a brief update on operating highlights for the first quarter and in recent months.
Overall, we've made significant progress in the areas of new product development clinical validation regulatory clearances and commercialization.
Our efforts to expand the Venus Bliss portfolio of systems and products continues to progress. We received five 10-K clearance for the Venus Bliss Max in January and started our initial commercial March.
April we're pleased to announce the receipt of the new five 10-K clearance for the market the Bliss Max with an.
Band it indication for use in new areas of the body and an increase in RF energy output.
New clearance further expands our single body contouring workstations versatility and utility and its indication for use to include noninvasive lipolysis of the Bakken side. In addition to the abdomen and flanks and by increasing maximum RF energy output by 50% Bliss snacks now offers physicians more.
You can see in flexibility in treatments, which we believe will provide even stronger clinical results and ultimately increases the revenue for our customers.
Finally, we are proud of the continued progress that we've made in recent months to advance our development regulatory and clinical strategy for Amy or non surgical robotic technology platforms for medical aesthetic applications.
We announced five 10-K submission for a general indication of tissue excision skin resurfacing on March 31, and.
And we look forward to engage with D. H P. F D. A drain their review period of our submission.
We continue to believe that Amy has the potential to bring true innovation to the medical aesthetic market by changing the way procedures are performed and bringing a new level of speed safety and clinical predictability.
The submission of this five 10-K brings us one step closer to our goal of commercializing aim in the U S. And we continue to expect that we will be in a position to begin limited release in the fourth quarter of 2022.
The prospects for non surgical robotic technology platform, Amy are very compelling and we look forward to introducing this disruptive technology begin later this year. Beginning later this year, it's important to remember that Amy is a platform is just that a platform and it has been designed to support numerous different clinical applications.
Our unique upgrade path for our clinicians, making it extremely cost effective and differentiated from any products currently available to aesthetic device market today.
In parallel to the progress until the process of submitting for general and indications for skin <unk>.
Susan and skin resurfacing. We've also made progress towards our strategy to secure specific clinical indications for Amy for the treatments of the face.
As discussed on prior calls we are pursuing and I D. I D E clinical study evaluating the safety and efficacy of using Amy for the treatment of moderate to severe facial wrinkles.
This study will support our FDA submission specific clinical indications for the treatment of wrinkles on the cheeks and will further expand our annual addressable market opportunity and enhance our long term growth profile.
We recently announced that the first patient has been treated with.
And our four clinical investigation sensor busy enrolling and treating 70 patients in this study.
With that let me turn the call over to Domenic della Penna, who will provide a detailed review of our first quarter financial results and discuss our balance sheet financial conditions, and our 2022 guidance, which we reaffirmed in today's press release Domenic.
Thank you Dom given this detailed review of our revenue herself.
We'll begin with a review of our financial performance across the rest of the P&L for the avoidance of doubt unless otherwise noted my prepared remarks will focus on the company's reported results for the first quarter of 2022 on a GAAP basis, and all growth related items are on a year over year basis.
Gross profit increased $2 5 million or 17% to $17 8 million.
Gross margin was 67, 3% compared to 67, 4% of revenue in the first quarter of 2021.
The change in gross margin was driven primarily by changes in mix, partially offset by higher shipping costs as compared to the prior year period.
Total operating expenses were $25 2 million compared to $22 1 million in the first quarter of 2021.
The change in total operating expenses was driven by an increase of $2 million or 26% and sales and marketing expenses and an increase of 0.9 million or 8% and general and administrative expenses and an increase of 0.2 million or 7% and R&D expenses.
First quarter operating expense growth reflects the strategic investments, we are making to support our key growth initiatives, including our commercial launch of the Bliss smacks and our development regulatory and clinical programs for Amy.
We continue to expect GAAP operating expenses in the range of $98 million to $101 million for the full year 2022 period.
Total operating loss was $7 4 million compared to $6 8 million in the first quarter 2021.
Net loss attributable to stockholders decreased <unk> 6 million or 7% to $8 6 million non.
non-GAAP adjusted EBITDA loss increased 0.9 million or 17% year over year to $5 9 million. As a reminder, we have provided a full reconciliation our GAAP net loss to adjusted EBITDA loss in our earnings press release.
Turning to the balance sheet as of March 31, 2022, the company had $17 9 million of cash and cash equivalents and total debt obligations of approximately $77 5 million compared to $30 9 million and $77 8 million respectively. As of December 31, 2020.
One.
Year over year increase in cash from operations was directly related to our strategic initiatives, which prioritize investments in inventory.
Sure our ability to meet customer demand as we move through 2022, given the realities of ongoing supply chain challenges.
Note part of the increase in working capital related to incremental cash invested for advances to suppliers as part of this initiative.
This strategic initiative is expected to result in additional cash investment in the second quarter. However, we continue to expect improving working capital trends as we move through 2022, and we continue to expect cash flow positive in the fourth quarter of 2010.
Turning to a review of our guidance as detailed in our press release, we reaffirmed our revenue guidance for the full year 2022 period.
The company continues to expect total revenue for the 12 months ending December 31, 2022 in the range of $126 million to $130 million, representing an increase of approximately 20% to 23% year over year compared to total revenue of $105 six.
For the 12 months ended December 31 2021.
While we are not providing formal profitability guidance for the full year 2022.
Our outlook continues to assume that we deliver another year of material profitability improvement, including a target of achieving cash flow positivity in the fourth quarter of 2022.
For modeling purposes, we would like to offer the following considerations to help investors understand the underlying assumptions driving our 2022 profitability targets.
First we expect our gross margins to be in the range of 68% to 71% as we see continued improvement in gross margins driven by mix, but also expect inflationary headwinds to pressure our Cogs in 2022.
Second we expect continued expense management to drive notable operating leverage in 2022, specifically, we expect GAAP operating expenses in the range of 98 million to $101 million representing growth of 10% to 13% year over year compared to our total revenue growth range of 20 to 20.
3% this year.
Third we expect our interest expense to be approximately $4 million.
We expect noncash and a $4 5 million and noncash stock comp stock comp of approximately $2 4 million.
Fourth we continue to expect our weighted average shares outstanding to be approximately 64 million.
There are two additional items to bear in mind, when evaluating our full year 2022 revenue growth expectations.
First we continue to expect our body franchise to be a material driver of total company growth. This year fueled by commercial commercialization of our Venus Bliss and O U S markets and the commercialization of our Venus Bliss Macs in the U S. We do expect growth in our body franchise to be stronger over second half.
A 2022, given the timing and expected ramp from our recent introduction of the snacks.
Second our total 'twenty, sorry, second our 2022 total revenue guidance does not assume material contributions related to the limited release of Amy in Q4, 2002, we intend to update the investment community on the potential contributions from the initial commercial release of.
Amy following the receipt of five 10-K clearance.
While amey is not expected to materially impact our 2022 growth. It is fair to assume that we will be highly focused on ensuring that we are well prepared to execute our commercial commercial strategies for this highly differentiated robotic technology as soon as possible following the receipt of regulatory clearance and what.
I expect a need to be a material contributor to our total growth beginning in fiscal year 2023 and beyond.
With that let me turn the call over to Ross for an update on our commercial progress and priorities Ross.
Thanks, Tom.
We're most pleased with our commercial execution in Q1 with key initiatives. We continue to attract proven aesthetic leaders in the industry that are attracted to our industry best new product innovation and key growth drivers and body and hair as I mentioned most recently, we started at the senior management.
And we are finishing our execution at the field level as.
As we mentioned earlier our investment in the U S was rewarded with 25% growth in sales lift Max was a key driver with 60% growth with our body franchise, we continue to expand our kols installed base and body and we expect the growth to continue based on the initial market acceptance.
The only platform that addresses fat skin and muscle.
The early feedback from our initial launch of the Bliss Max has been very positive we are especially encouraged by the response from highly regarded practitioners, including Dr. Scott Garish, a leading expert in regenerative medicine, anesthetics and a pioneer with first generation bad technology.
<unk> that changed our industry.
Dr. Gary noted and I quote.
The Bliss Max system represents a truly synergistic addition to his body contouring practice. It offers improved outcomes with both tightening and muscle stimulation and attractive practice economics, given the lack of consumable cost per treatment.
Artist.
<unk> had another strong global quarter as we continue to sell the business of hair restoration versus just systems with that I will turn the call back to Tom for closing remarks.
Thanks, Ross in closing, we remain confident in our full year outlook and continue to expect improving growth trends as we move through 2022.
Our 2022 total revenue outlook continues to assume that more than 75% of our total revenue growth year over year comes from two key growth franchises, specifically our body franchise, which includes the systems and procedure revenue related to the Bliss, Max and Venus Bliss.
Products and our hair restoration franchise, which includes systems and procedure related revenue for our artists and Neil graph products.
Importantly, we expect the contributions of total revenue growth from these two growth franchises to fuel continued growth in sales of procedure related revenue and to be accretive to our total company gross margin.
Our 2022 total revenue outlook also assumes growth contributions from the portions of our business dedicated to a medical aesthetics outside of the body franchise.
This portion of our business includes contributions from six commercialized aesthetic products, including two of our largest product lines. The Venus legacy in the venous versa. We continue to expect sales of these products to increase in the mid to high single digits year over year in 2022, reflecting a continuation of the durable stable growth.
Profile demonstrated in recent years.
With that operator, we'll now open the call to questions operator.
Ladies and gentlemen at this time well be conducting a question and answer session. If you'd like to ask a question you May press star one on your telephone keypad, a confirmation tone will indicate your line is there any question you.
You May press Star two if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the starkey.
In the interest of time, if you could please limit yourself to one question and one follow up and then re queue for additional questions.
Our first question comes from the line of Maria <unk> with <unk>. Please proceed with your question.
Hi, Good evening and thank you for taking my question I'll ask two quick ones here. Congrats on the expanded indication called Bliss snacks very nice to see it took us by surprise was that something that was planned was that requested by early users what was kind.
Kind of driving the decisions for that expansion and what does that mean for the total addressable market.
We are we were quite pleased with that Marie and good evening.
What was really nice about this particular clearance that gives us real.
And in the process that the FDA is going through even with Amy we were able to achieve this clearance and a 54 days cycle.
This is something that our client base wanted to be able to market and so to be able to add additional bodies zones in our marketing materials that are used day in and out in the field is a big help. So we're pleased with the 54 day turnaround from our submission and hopefully that type of turnaround will help us.
Sure submissions to the FDA and other products that we choose the market.
Sure very good Okay, and then a quick follow up here on some of the headwinds you addressed them would you say are I guess, maybe a two part question on that would you say that some of those headwinds are starting to improve here now that we're into may what are you seeing on the ground and then in terms of FX headwinds what should we be baking in cheese.
Our outlook for the rest of the year.
Suraj you want it you want to take the first one in and GDP you can answer the second the second one as well.
Yeah, absolutely you.
You know were going O U S. You know you really have to break it into the three markets of EMEA a lot.
Latam and APAC and EMEA you know, we we certainly have a strong direct presence and you know certainly from a pandemic standpoint, you know, that's becoming less and less a factor each day and B you know existing core product portfolio of Venus concept and an artist.
<unk> remained strong and as far as APAC. There is a little bit of headwind you know certainly that we all know with with with Hong Kong, and China, and and and the pandemic, but our risk in that market as last based on our product portfolio and certainly.
What we're looking at in business and in May and June and then certainly in Mexico. You know, we're direct in that marketplace and we are very very optimistic we don't have any limitations, let's just say from pandemic or any outside our supply chain type issues as.
As far as that backs all I'll leave that to GDP.
Hi Marie.
So our FX for Q1 was actually pretty.
Pretty much flat I think we've reported I don't think we've reported anything for the first time in a long time, usually it's a plus or minus it's been manageable. We don't manage our we don't hedge our FX our currencies, but we do seem to have a natural hedge between the currencies that are the major ones are the U S dollar or the euro.
He Israeli shekel and the Canadian dollar and between those four movements. We found that typically we're not we're not seeing huge swings quarter on quarter. Yes, there are movements between two individual currencies, but they're.
They're they're 10, if one is down there tends to be some some other currency that kind of offsets it.
And so we haven't seen any really.
Strong headwinds nor I, nor my projecting it's a very difficult thing to project, but we don't have a strategy to hedge those currencies.
Okay very good I appreciate the color I'll hop back in queue. Thank you.
Thanks Mary.
Our next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
Oh hard Tom Tom and Mike and Rob how are you.
Good Jeff.
So too.
Two questions from.
Around here, Firstly could you talk a little more about our.
Amy and the FDA the agency so it looks like you're going after initially this quote unquote general indication, which is tissue their exploration and skin resurfacing with his idea it looks like yours.
70 patients expected when you started enrolling so curious on the timing there and then talk to us a little bit about wrinkles told us if you could be the type of energy for the pulse duration that you may be using it then perhaps talk to US also about.
Normal micro coring and kind of when we might see that come to fruition and I'll show you now.
Other anticipated chips, if you will over the coming years.
Yeah look I think for our first clearance, we're quite excited about the I'll call. It diversity of the areas of the body that they use the device can be used in general terms for competitive reasons, we don't really want to disclose kind of where we're targeting right now, but I I think that the doctors, who will be able to be our first 10 or 15 sites.
Once we get our FDA approval will teach us a lot about some of the things that we've already seen in our clinical trials feasibility trials and our pig studies as to what happens to the dermal remodeling.
Collagen remodeling as well so I think that there's a lot of different indications for it I'll call. It the first generation Amy the second generation of Ami, which is the more.
More specific clinical indications for the face because we do believe that minimally invasive treatments a variety of a variety of different areas of the face will benefit greatly from this very predictive very safe and very quick technique.
Technology will also allow us to expand other clinical indications as we go forward. The FDA has asked us to do the study in tooth in two phases. The first phase being 12 patients two to confirm what we saw in our general indication submission a very high level of safety profile, but when youre working.
On the face of the FDA wants to make sure that you know we're on site. So we understand that and we're and we're aggressively pursuing that phase one phase two will add the additional 58 patients all of this we anticipate will be completed by the end of the year given the nature of the treatment itself, where we have to have a month delay between treat.
<unk> and will typically do two treatments per patient in some cases, three depending on the area where were trading but so it'll be done in phases, and that's not going to preclude us from launching Amy nor does it preclude us from currently in the background working on other clinical indications that we'll be able to add to the amey platform.
As I said by.
The purchase of an upgrade path and App et cetera et cetera. So we're we're very excited about what this platform will do to the market in general because we do think it's time for the market to see something that's truly unique and differentiated from what normally gets sold by our competitors.
That's very helpful. And then could you talk little bit about Amy in its development.
Bring into context, the restoration robotics platform.
Any architectural similarities between both platforms as far as their development I think that you are already somewhere underway on the Ami side prior to our administration, but.
Does that play to effect on the hardware software and its age.
Because a lot of a lot of the technology that has been built into the Amy the vision system, the artificial intelligence capabilities, the machine learning et cetera.
I'm from the the massive amounts of money that was spent into developing the the.
Artist robot by the previous restoration robotics team. So it's benefited us because we've been able to be extremely efficient financially and bringing this next generation robot to the market. What we're pleased about is that we learned a lot of lessons in the amount of money spent by restoration and where.
Very confident that we're going to be able to cut the cogs on this device by half from the current hair system, which will allow us to price.
The next generation robots at around $150000 and actually improve our margins to north of 70% from the 60%. We're at now so I think it's going to allow US you know theres, a big difference at $150000 addressable market versus $250000 in your addressable market. So I think we're excited about that because.
Does it it will make it a meaningful proposition economic proposition for the clinic and then as the clinic has the ability to upgrade with a variety of different apps I think it'll just become much more efficient and by the way just to remind everybody. Every every procedure that we will do on the Ami platform will.
How they are meaningful, but yet reasonable cost of utilization and you know call. It the razorblade model. So we feel that over the next few years, we're going to be able to dramatically improve.
Our our revenue from disposable.
This was on the device. The finally the platform for Amy is about half the size of the current restoration robotics platform and the industrial design will be very elegant and very appealing. So you know all of those things play important roles in aesthetics and we're excited about what this opportunity will.
<unk>, especially in the core market of dermatology and plastic surgery.
That's helpful. And then a quick one for you Peter if I could could you talk about the the services impact from the.
Zero graft or as I know it was only 3% of the business, but what percent decrease should we.
Model N for that Susan during 2022.
Because I know you saw the extended warranty.
Well on the on the Bureau, Crafters, you should be modeling zero on that.
The revenue in the previous year was I think just over 2 million.
But you should be modeling.
Nothing going forward, we may have had a little bit stricter than in the first quarter.
But we essentially a discontinued the operations in in December .
So the service segment should go from.
Formula.
It should be cut in half.
Okay.
So it'll be offset.
Well, then there'll be an offset by growth in services right.
Yep.
Just really just for the benefit of those on the call.
Definitions of zero graft.
Is that we used to have a program, where we would actually deploy $10 99 to help physicians carryout to procedures and we just felt that that was a low margin business that wasn't really going to be a big part of our future and therefore, what we've done is essentially given our customers who use our robots and Neil.
Graph the ability to directly access this particular group of 10, 90, nines and that's worked out pretty well.
Still supporting our customers, but not necessarily having to be the middleman in the whole process.
Thank you.
And Jeff the our guidance assumptions on revenue take into account I have always taken into account. The fact that we would suspend the bureau graft or services.
Our next question comes from the line of Jon Block with Stifel. Please proceed with your question.
Oh, Thanks, guys good afternoon.
Don maybe just the first one you know when we think about.
Artists Bliss Max Great systems, They're also higher Asp's systems, and I believe he's really financed by the Doctor and I know you said that the market trends continue to be solid through your Iot data certainly in North America, but just you.
I would love your thoughts on any trepidation now or several quarters from now from Doctor has gotten to align all of these higher E. S. P systems, and any reluctance to purchase and especially if the financing terms get more scrutinized were more difficult and what that does to the total cost of ownership.
Yes, I think that and that's a great question, John because I think that with anything that has higher asps.
The true analysis that needs to be done is what is the rate of return on those asps. We know that for example, right now the artist hair restoration technology at an ASP of somewhere around 140, $150000 has a rate of return of about $1500 an hour to the clinic when theyre doing hair hair treatments.
So it is easily justifiable in their ROI calculations as we look at the real time data that we have on Bliss and Bliss Max payback periods, even at a higher ASP.
And just to remind everybody that the the asps on the Bliss Max or in the 175 180 range.
Those payback periods are less than a year. So it's not necessarily about you know what the cost of the devices. It's how quickly can they recoup their investment and so these happen to be two very big growth areas. Here. Obviously is the number one procedure for men.
And fat and body contouring and muscle stimulation is quickly becoming the number one procedure demanded in clinics both for male and female. So the fact that we've extended our our clinical indications really does help continue to further the validation of the ROI on these devices look are we.
Don't know obviously, what we don't know if if credit becomes tighter down the road for whatever reasons, we will have to revisit that but I think generally speaking the you know if you're taking an ROI from 26 or 28 weeks to 32% or 34 because of increased interest costs or things of that sort.
We don't think that that's going to be material and I don't think that that's going to really impact our sales pitch whatsoever.
Fair, obviously to your point, so very very compelling ROI overall, maybe just a couple of other quick questions. I think you called out in the press release, when you get them to call sort of 60% sales growth in products in the body franchise, you talked about on the previous call body and hair are going to play an integral integral role in the overall growth in 'twenty. Two did you give an artist.
Number I'm just year over year growth or anything sequentially and then maybe just to tack on to ask everything upfront.
Freedom seemed a little muted and you know I know you were working out the business model and it seemed like a capital light type of business model, but anything more on freedom.
I had heard some chatter that the FDA was giving that a little bit more scrutiny just would love your thoughts on freedom. The Biz model, Andrew how do you want to move forward. There. Thanks, yeah. So so one of the things that we have.
I looked at.
Seriously as we're a company that has 12 different platforms that we market day in and day out having 12 different platforms that we market day in and day out it makes it very difficult and challenging from a marketing perspective, a focus perspective et cetera. So we made a strategic decision a few quarters ago to focus on the hair of franchise and the body franchise that we've talked about.
You know over the last few quarters, we think that this is really aligned our sales organization much better in terms of where their attention is where our marketing attention is et cetera, et cetera, and it's starting to pay some dividends, while we don't break out the the hair restoration franchise. We don't we do know okay that Q4 was a record quarter for us.
Overall since the beginning of hair restoration in terms of robotics and Q1 was a was a record quarter of all Q1s. In this in this particular business segments. So we don't normally break out the two but as we said earlier it will continue to represent the most most the biggest area of our particular focus.
And where we expect our growth to be for the balance of 2022 and moving into 2023, when we continue to streamline our product offering into a more robotic focus than the traditional handheld devices that you see today.
As far as freedom, you're 100% right I mean, the F. D. A does continue to monitor the marketing activities and so on which is why we've taken a very pragmatic approach here in terms of ensuring that we India ourselves to the appropriate K O L network to be able to support this particular product.
Would we like to bring it to market sooner with the typical off label indications that all of our competitors have done sure, but we try to be a little bit more responsible about how we're going to the market. We think that this is a great product and we don't want them quite frankly, we want to take our time to make sure that we properly pursue the appropriate regulatory.
Pathways and more importantly, working with the appropriate kols to ensure that that happens.
Okay. Thanks, guys I'll follow up offline I appreciate it yeah no problem.
Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.
Thanks, Yeah. So just following up on on some of the points.
Just want to make sure I have this right so 60% of.
Well, you're expecting 60% growth in the body franchise, which is which is the <unk>.
Blessing, the Bliss, Max and then and then for the year.
75% of the growth in your revenues for the year will come from the body franchise and the hair restoration franchise is that correct.
Correct, we think it'll be more but yeah for the sake of 75%.
Okay and then.
And just on and on Amy So.
Can you talk a little bit more about I know you said the gross margin you're expecting that to be 70%, which is great. But can you talk a little bit more about the business model there when that.
What's that what that would look like.
Uh huh.
Just in terms of pricing consumable.
You have to just give you a little more color there. Thanks.
Oh no problem at all so the bottom line on that says that we expect that we're going to be $150000 on an ASP basis. We do expect that every device will have a our utilization which is simply by the nature of the procedures that we intend and.
Especially in the first generation of the technology that disposable we haven't calculated yet, but it will be.
If the device if the device margins will be 70% range.
Greater we expect it to disposable portion of it will be north of 80% in that range in North America. So we think that that will have a significant potential impact on our overall blended gross profit margin, which is the intent here and and and as we go forward with any platform once we understand the.
FDA pathways.
We will be able to give you more color as to what we plan to do with the next generation of this particular platform and they are in the various clinical indications that we're quite excited about but are not prepared to disclose at this particular point in time for competitive reasons now that makes sense and then just a follow up on.
On the IP, obviously, you've acquired a lot of IP.
When you when you are.
Acquired restoration robotics.
Can you talk about just in general.
After Amy what the other opportunities are.
You know maybe in order of where you intend to go next in terms of pursuing our automation.
Automation of.
It's a static products.
Yeah look I, you're spot on I mean, one of the benefits of acquiring restoration was a very deep portfolio of IP that they have accumulated over the years, we've been able to leverage a lot of that IP and what we're doing right now, but more importantly, you don't use that as the foundation or other clinical indications.
We're quite confident that we're going to have an ability to build with pretty solid IP protection solutions in a variety of different things that are already being treated right now big categories areas like cellulite and so on that we feel we have some interesting potential solutions that are completely differentiate it.
Anything else fits in the market today I don't want to go too much further than that Anthony simply because we're in the early stages of this but.
We're quite confident that we have.
Some solid IP.
And in this particular area or in the process of completing that at this point.
Okay, Great makes sense. Thanks for the color I'll hop back in the queue.
No problem.
As a reminder, it is star one to ask a question.
Yes.
Okay.
There are no more questions in the queue. This does conclude our call.
Thank you for your participation you may now disconnect your lines and have a wonderful day.
Okay. Thank you.