Q4 2022 Venus Concept Inc Earnings Call
Speaker 1: That.
Speaker 2: Please stand by.
Speaker 2: Good day, ladies and gentlemen, and welcome to the fourth quarter 2022 earnings conference call for Venus concept Inc.
Speaker 2: At this time, all participants have been placed in a listen-only mode.
Speaker 2: Please note that this conference call is being recorded and that the recording will be available on the company's website for replay.
Speaker 2: 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 can cause actual results that differ materially from those indicated.
Speaker 2: including those identified in the risk factor section of our most recent 10Q and our annual report on Form 10K filed with the Securities and Exchange Commission.
Speaker 2: Such factors may be updated from time to time in our filings with the SEC, which are available on our website.
Speaker 2: We undertake no obligation to publicly update or revise our phone looking statements as a result of new information, future events, or otherwise.
Speaker 2: This call may also include references to certain financial measures that are not calculated in accordance with the generally accepted accounting principles or GAAP.
Speaker 2: We generally refer to these as non-GAAP financial measures.
Speaker 2: The reconciliation 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.
Speaker 2: I would now like to turn the call over to Mr. Rajiv Dasilva, Chief Executive Officer of Venus Concept. Please go ahead, sir.
Speaker 3: Thank you, operator, and welcome everyone to VENUS Concepts fourth quarter 2022 earnings conference call.
Speaker 3: I am joined on the call today by our Chief Financial Officer, Dominic de la Pena, and by our President and Chief Innovation and Business Officer, Dr. Herman Varghese.
Speaker 3: Let me start with an agenda of what we will cover during our prepared remarks.
Speaker 3: I will begin with a discussion of the key findings from our comprehensive strategic review of the business which has reformed the development of our transformational new strategic plan for the company going forward.
Speaker 3: Payment will then provide a summary of our new R&D strategy and pipeline priorities for 2023.
Speaker 3: Then, Dominic will provide you with an in-depth review of our fourth quarter financial results and our balance sheet and financial condition at year-end, as well as a review of our 2023 financial guidance. & & Youtube Video & & & Millennials
Speaker 3: Following that, I will wrap up and open the call for your questions.
Speaker 3: With that agenda in mind, let us get started.
Speaker 3: As you would have seen in our press release issued this morning, in the fourth quarter of 2022, we delivered total revenue of $24.3 million.
Speaker 3: These results are in line with internal expectations and reflect the early impact of strategic actions taken to transition the company to higher quality cash revenues and an improved cash flow from operations profile.
Speaker 3: These strategic actions included a shift to cash sales versus subscription sales and our efforts to improve the long-term profitability profile of our international operations.
Speaker 4: We will cover these topics in detail later in the call.
Speaker 5: Importantly, we have now completed our comprehensive strategic review of the company, which included an evaluation of its competitive positioning in the industry, commercial product strategy, R&D and technology strategy, operating model and talent, and the development of the new
Speaker 5: systems and processes.
Speaker 5: and processes, financial performance,
Speaker 5: capital structure, and possible partnership opportunities, among other things.
Speaker 5: I am energized by the findings of our review and excited about the path ahead.
Speaker 5: My initial impressions were confirmed during the strategic review.
Speaker 5: Venus concept is an attractive platform in medical device aesthetics with competitive offerings across all key aesthetic treatment segments.
Speaker 5: a leadership position in automated hair restoration and a distinctive R&D platform in robotics.
Speaker 3: Our customers are passionate about the benefit.
Speaker 5: benefits of Venus Concepts existing technologies.
Speaker 3: which support the company's nearly 100 million in global annual sales and the pipeline of robotic platform applications with potential to be truly disruptive in the medical device aesthetics market in the future.
Speaker 3: Our revenue base is well diversified across our current portfolio of products. With nearly two-thirds of the company's total revenue in 2022 coming from key energy-based medical device aesthetics system sales of Versa, Legacy, Velocity, Bliss, and BlissMax, our company is well diversified across our current portfolio of products.
Speaker 3: and the industry leading Minimatic Advasive Robotic Care Reservation Platform, artist Iax.
Speaker 3: The business also has a valuable recurring revenue stream from the sale of procedure-based consumables and services.
Speaker 3: The existing commercialized portfolio of energy-based devices and hair-resolution solutions.
Speaker 3: I indeed compelling.
Speaker 3: They enjoy strong brand recognition, address key unmet needs in the market place, and represent important road drivers for the company going forward as they continue to gain market share in their primary addressable markets, which we estimate to be nearly 1.9 billion annually in the U.S. alone.
Speaker 3: That said, it is the company's pipeline of new and development states technologies that represent the most significant opportunities to transform the company's growth and profitability profile in the years to come.
Speaker 3: I fully believe that the robust technology foundation the company has built over the last 10 years is truly impressive and that the potential of our robotics platform is very much underappreciated.
Speaker 5: Venus concept has established technology expertise across robotics and multiple modalities of energy-based devices.
Speaker 3: This technology expertise has led to the development of a diverse range of proprietary and industrial leading offerings.
Speaker 5: supported by more than 100 US patents and pending applications.
Speaker 3: We will see more color on the pipeline and our R&D strategy later on the score.
Speaker 5: Our comprehensive strategic review of the business, which has now been completed, also confirmed the significant challenges in the financial and organizational structure of the business concept.
Speaker 3: The business model had two fundamental differences versus other small-cap medical technology companies which have contributed to the lack of profitability improvement and cash flow generation to date. First, the significant commercial and operating infrastructure built in markets outside the U.S. over the company's history.
Speaker 3: And second, the industry first and highly differentiated subscription model, which enabled the company's growth historically, but at the cost of poor cash flow generation.
Speaker 3: After our review, I am confident that these challenges can be addressed by a new strategy for the company.
Speaker 3: Our comprehensive assessment of the business informed the development of a consummational new strategic plan which we have begun to execute. This new strategic plan has six main pillars.
Speaker 3: Our comprehensive assessment of the business informed the development of a transformational new strategic plan which we have begun to execute. This new strategic plan has six main pillars. Firstly,
Speaker 3: Right-size in the business by rationalizing international infrastructure, reducing cost and simplifying the organization.
Speaker 3: in recognizing that international infrastructure, reducing cost and simplifying the organization. 2.
Speaker 3: Producing reliance on the use of the subscription sales model significantly.
Speaker 3: 3. Focusing on the US as a primary market while maintaining an optimal mix of direct presence and distributors in international markets.
Speaker 3: or maintaining a broad portfolio focus on energy-based devices and robotics, but with better customer segmentation and a more robust customer-centric model to support market building.
Speaker 3: 5. Investing in R&D with the primary focus on robotics as the future road driver with targeted efforts to reach a banana energy-based para portfolio and to build a sustainable consumables revenue-based complement by sales and sex.
Speaker 3: leveraging an improved financial profile to provide a platform for inorganic growth and consolidation through M&A.
Speaker 4: Let me cover each of these elements briefly.
Speaker 3: We have already begun to implement the main actions related to right size in the company.
Speaker 3: As a reminder, we announced in early February a restructuring of the company which has now been fully implemented in North America and Israel.
Speaker 3: We continue the streamline operations in international markets.
Speaker 3: The restructuring focused on simplifying the organization, streamlining infrastructure, targeted business model changes, and reduction of spend not directly related to sales initiatives.
Speaker 5: As previous disclose, when completed, we expect these restructuring activities will result in total annual pre-tax savings of $13 to $15 million beginning in 2024.
Speaker 3: With respect to the subscription model, well clearly innovative and a questionably effective at driving adoption of Venus' concepts medical aesthetic technologies over the early years.
Speaker 3: The growth this model enabled came at the expense of heavy working capital investment during the deferral of valuable cash flows.
Speaker 3: In Addison, the company took on customer credit exposure which increased due to the impacts of the COVID-19 pandemic and changes in the macro environment over the last few years. To be clear, the subscription model has a place in our Go Forward Strategy.
Speaker 3: though with much more stringent qualification requirements. However, we have already shifted the business away from subscription sales to cash sales meaningfully.
Speaker 3: and we will continue to prioritize cash sales over subscription sales going forward.
Speaker 3: The US continues to be the largest and most profitable medical devices in the sterics market.
Speaker 3: With that strategic orientation, the US will be a priority focus.
Speaker 3: International markets represented between 51% and 57% of total revenue for the 2018-2021 fiscal year periods.
Speaker 3: While these markets continue to be important to the company, we will transition our less profitable markets to rely on distribution partners.
Speaker 3: This process began in 2022 and will continue in 2023.
Speaker 3: We believe that diversiting our interests in smaller and less profitable international markets and reinvesting those resources in higher opportunity markets like the US, represented key driver of profitability improvement in the future.
Speaker 3: The Venus product portfolio is distinctive in that it enables the company to compete in a broad array of market sub-segments including face, body, hair removal and hair restoration.
Speaker 3: We see the benefit of continuing to serve all these Morgan segments into the future. We will however differentiate and segment our para portfolio to better serve the needs of distinct customer segments.
Speaker 3: In addition, we will seek to better serve our customers in the key segments by utilizing data derived from our devices and by better supporting practice development efforts.
Speaker 3: We intend to continue to make investments in R&D.
Speaker 3: Our R&D efforts would be primarily focused on advancing our robotics platform in aesthetics, which we expect to be a key driver of our organic growth going forward.
Speaker 3: At the same time, we will make targeted investments to upgrade our energy-based device portfolio as well.
Speaker 3: In addition, we intend to pursue more durable, consumable components as part of our next generation devices as well.
Speaker 3: And finally, as we improve our financial profile, we foresee being an ideal platform for both on acquisitions and combinations in this fragmented industry.
Speaker 3: As we execute this strategy, 2023 is a year of refocusing and the position of business concept to enhance the cash flow profile of the business and to accelerate the path to long-term sustainable profitability and growth.
Speaker 3: I was strong leadership team in place with clear responsibilities in support of our five-year strategic plan. And they are all highly engaged, focused on value creation and ready to lead the organization through this next stage of development.
Speaker 3: We believe that are newly defined strategic plans, positions as to deliver positive cash flow from operations in the second half of 2024.
Speaker 3: and gap operating profitability and single digit adjusted EBITDA margins on a fully abasis in 2025.
Speaker 3: given by prudent expense management, strong contributions to our total revenue growth from robotic system cells, increasing at a 40% keg of over the next three years and sustained performance in our energy-based portfolio.
Speaker 3: This plan will provide the foundation for achieving a long-term revenue in the new KG, 10% plus, and double-digit adjusted EBITDA margins.
Speaker 3: While our path to maximizing multi-year value creation is taking place, we are highly focused on maximizing our capital resources as we work to secure the requisite capital to execute our strategy and meet our near-to-intermediate term debt obligations.
Speaker 3: I would now like to turn the call over to Dr. Hemant Waghis for a discussion of our R&D strategy and pipeline priorities.
Speaker 6: Thank you, Rishi.
Speaker 6: Venus has a strong history as a developer of high quality, non-invasive, and minimally invasive treatment devices for the global aesthetic and hair restoration markets.
Speaker 6: We believe the value proposition underpinning our long-term growth strategy is the strength of our new product pipeline and our leading robotics and energy-based device R&D team.
Speaker 6: This dedicated group of scientists and engineers have collectively brought to market over 10 innovative energy-based aesthetic platforms and now two clinical robotic systems over the past 10 centuries.
Speaker 6: With unique product offerings targeting treatment solutions for all key customer segments, in face, body, hair removal, and hair restoration. At the key part of our new strategic plan,
Speaker 6: We have dedicated investment to refocus the organization towards continuous innovation, building on our successful portfolio of treatment solutions with key new product introductions and differentiated new advancements for both physician oriented and MediSpa focused markets, highlighting advanced features, connectivity and customer engagement solutions to drive utilization.
Speaker 6: Better treatment outcomes and ultimately enhance ROI to our end customers.
Speaker 6: Furthermore, our robotics R&D team located at our medical robotics center of excellence in San Jose, California, as decades of experience working together and a proven track record of developing prior to proprietary technology.
Speaker 6: In state-of-the-art vision recognition, IOT, artificial intelligence and mechanical controls.
Speaker 6: delivering seeds repeatable truvenous with predictable outcomes, and they become the true engine for the company's new product development strategy.
Speaker 6: We've recently announced the introduction of the latest generation of artist IX, which has a new standard for hair transplantation by leveraging cutting edge robotics, machine vision, artificial intelligence, and machine learning technologies.
Speaker 6: This advanced system offers a new level of speed to the implementation process, now allowing the implementation of up to 1000 grafts per hour while also improving speed harvesting, resulting in a procedure that is up to 25% faster.
Speaker 6: Additional improvements include the new vision system, which improves patient tracking and focal centering, resulting in better graph quality and enhanced precision.
Speaker 6: Going forward, this team will be a key catalyst for future growth in the business, and our new Product Development Strategy will be an essential component to our revenue growth starting in 2024 and over the next several years.
Speaker 6: To do this, and as a key part of the new strategy, we have made a conscious choice to refocus efforts in 2023 with targeted investments to finalize development and bring forward two new systems by mid-2024.
Speaker 6: One of these new systems will be a brand new body contouring project called the Stera.
Speaker 6: Building on everything we've learned over the last decade in innovative system design and advancing our best in class proprietary MP2 technology.
Speaker 6: New all-in-one body shaping system will incorporate a full suite of new features and enhancements that will address some of the most pressing concerns we hear from customers around body contouring, including skin laxity, cellulite, and muscle training.
Speaker 6: More to come on this exciting program as we close your launch in the first half of 2024. The second is Amy.
Speaker 6: Our next generation aesthetic robot is platform, which received SDA 510 clearance this past December for fractional skin resurfacing.
Speaker 6: We believe that Amy has the ability to truly revolutionize aesthetic medical treatment paradigms.
Speaker 6: The AMI robotic system utilizes an advanced visualization system, machine vision and artificial intelligence algorithms to target the dermis in a pre-planned, selective and predictable manner. It uses a smart array of microcoring hollow punches to precisely core and excise microskin fractions.
Speaker 6: At precise depth to remove up to 10% of the skin in the treatment area, leading to collagen deposition and fractional skin resurfacing of the treated area.
Speaker 6: AIMI is a first-of-its-kind robotics platform offering physicians minimally invasive treatments for high-demand procedures.
Speaker 6: We see Amy as a versatile platform which we will continue to develop to provide innovative solutions in areas of mechleastetics starting with fractional skin resurfacing. This new technology may become a real game changer in the area of mechleastetics, offering a new level of consistency, predictability.
Speaker 6: and visualization, which will differentiate it from existing energy-based solutions. These critical advancements showcase Venus concepts ongoing investment in technology innovation and clinical research towards robotics applications in the field of medical aesthetics. The AME technology will be critical to maximizing the synergy between our well-established medical aesthetics business.
Speaker 6: and our pioneering robotics R&D capability. We are in the process of establishing a medical advisory board of leading physician partners that will support our preparation for full commercial launch of AMIE in the second half of 2024.
Speaker 6: Following the commercial launch of these priority products in 2024, we plan to continue with our commitment to our end-of-the-art strategy. The several new technologies, systems and features coming out over the next several years. More to come on this topic in future updates.
Speaker 6: With that, let me turn the call over to Dominic for a review of our fourth quarter financial results and balance sheet as of December 31. Dominic? Thanks, thank you.
Speaker 6: For the avoidance of doubt, unless otherwise noted, my paired remarks will focus on the company's reported results for the fourth quarter of 2022 on a gap basis, and all growth-related items are on a year-over-year basis.
Speaker 6: We reported gap revenue of $24.3 million down 26% year over year. The decrease in total revenue by region was driven by a 37% decrease year over year in international revenue and a 14% decrease year over year in United States revenue. The decrease in total revenue by product category was driven by a 37% decrease in revenue by region.
Speaker 6: in the fourth quarter of 2022, compared to 40% in the prior year period.
Speaker 6: The primary driver of the year-over-year decline in total revenue is our recent strategy to focus on quality of revenue by prioritizing cash deals over subscription deals in the United States in order to improve cash generation and preserve liquidity, as well as our proactive efforts to rationalize
Speaker 6: The primary driver of the year-over-year decline in total revenue is our recent strategy to focus on quality of revenue by prioritizing cash deals over subscription deals in the United States in order to improve cash generation and preserve liquidity, as well as our proactive efforts to rationalize unprofitable and fast-food markets.
Speaker 6: Turning to a review of our fourth quarter financial results across the rest of the P&L.
Speaker 6: Both profit decreased 7 million or 31% to 15.8 million.
Speaker 6: The change in gross profit was driven primarily by the year-over-year decline in revenue.
Speaker 6: Gross margin was 55% compared to 70% of revenue in the quarter of 2021.
Speaker 6: The change in gross margin was due to lower system sales of energy-based devices primarily sold under a subscription model as a result of our focus on cash system sales. Sales of our artists' robotic systems remain strong in the fourth quarter, are sold at slightly lower margins, and are sold at a lower margin.
Speaker 6: Artists systems are not offered on subscription and therefore were not impacted by the strategic shift to cash.
Speaker 6: The operating expenses decrease 2.2 million or 8% to 24.7 million.
Speaker 6: The change in total operating expenses was driven by a decrease of 2.7 million or 22% in sales and marketing expenses.
Speaker 6: a decrease of 0.1 million or 3% in research and development expenses, offset partially by an increase of 0.5 million or 4% in general and administrative expenses.
Speaker 6: Fourth quarter of 2022 GAAP general and administrative expenses include restructuring plan payments of $0.7 million and a $0.1 million of severance payments.
Speaker 6: Excluding the expenses related to severance and other restructuring related activities, our non-GAAP operating expenses declined $3 million, or 11% year-over-year. I want to take a moment to call your attention to an item of note as you review our fourth quarter and fiscal year 2022 GAAP operating expenses.
Speaker 6: reclassify clinical affairs costs and clinical training costs previously presented within general and administrative expenses into research and development and selling and marketing expenses respectively.
Speaker 6: We have provided a detailed reconciliation of the reclassification adjustments between these gap operating expense line items on the company's Form 10K filed on March 28, 2022, as well as the unaudited Form 10Q filings for the period 2021 and 2022. Returning to a review of our fourth quarter financial results.
Speaker 6: The total operating loss was $8.9 million compared to $4.1 million in the fourth quarter of 2021.
Speaker 6: Net interest and other expenses were $1.9 million compared to $1.4 million in the first quarter of 2021.
Speaker 6: Other expenses in the fourth quarter of 2022 includes $1.5 million of loss on the discontinuation of subsidiaries, specifically Venus France and Venus Argentina, compared to $0.4 million in the prior year period.
Speaker 6: Net loss attributable to stockholders for the fourth quarter of 2022 was $9.9 million or $0.14 per share compared to $4.3 million or $0.08 per share for the fourth quarter of 2021. A death to EBITDA loss for the fourth quarter of 2022 was $6.3 million.
Speaker 6: compared to $2.5 million for the fourth quarter of 2021.
Speaker 6: As a reminder, we have provided a full reconciliation of our GAAP net loss to adjusted EBITDA loss in our earnings press release.
Speaker 6: Turning to the balance sheet, as of December 31, 2022, the company had cash and cash equivalents of $11.6 million and total debt obligations of approximately $77.7 million.
Speaker 6: compared to $30.9 million and $77.3 million respectively as of December 31, 2021.
Speaker 6: Cash used in operations for the three months ended December 31st was $3.4 million, a 12% decrease in cash use quarter over quarter. The improvement in cash used in operations was driven by improvements in working capital and the benefits of cash flow generation as a result of our initiative to focus on cash
Speaker 6: and reductions in advances to suppliers, which were partially offset by increases in cash used to the lower payables and higher accrued expenses as compared to our working capital performance in the third quarter of 2022.
Speaker 3: we expect a lot of work in 2023 just to make sure we get it right. This is one of those types of systems that is truly innovative, and we want to make sure we position this properly when we go with full commercial launch. And so we're going to do that with the full support of the clinical team that's coming in place. That's really helpful. One of our prior launches as a company is that we just haven't done a great job of preparing the market ahead of these launches. So that really is what we are focused on. And part of what we want to focus our medical advisory board on is really also defining our ongoing efforts towards new indications for AIMI as well. Because our expectation is that there will be a series of new indications over time for the platform. And some of the work that the medical advisory board will be doing will be defining that pathway for us as well. Okay, makes sense. Thank you so much for the detail, and thanks for taking the questions.
Speaker 3: work in 2023 just to make sure we get it right. This is one of those types of systems that is truly innovative and we want to make sure we position this properly when we go with full commercial launch and so we're going to do that with with the full support of the clinical team that's in place. One of our prior launches of the company is that we just haven't done a great job of preparing the market ahead of these launches so that really is you know what we are focused on and part of what we want to focus our medical advisory board on is really also defining our ongoing efforts towards new indications for AIMI as well. Because the expectation is that there will be a series of new indications over time for the platform and some of the work that the medical advisory board will be doing will be defining that for us as well. Okay, makes sense. Thank you so much for the detail and thanks for taking the questions. Thank you, Marie.
Speaker 2: Thank you. Our next question has come from the line of Anthony Vendetti with Maxim Group. Please proceed with your questions. Thanks. Yes, sir. So, Dominic mentioned some of the countries that you're exiting that were unprofitable.
Speaker 6: How many of those, and I know some of them you are going to convert to a distributed model, but how many are you getting out of completely, and then just a follow-up on the new artist system.
Speaker 6: So, in 2022, we effectively exited three countries and the plans for 23 are in line with another three that we're evaluating on that basis.
Speaker 7: Laureugal right here.
Speaker 7: And then at AAD you had the new artist system at your booth. Can you talk about?
Speaker 7: whether or not you generated any orders or sales at AAD, and then your expectation of the, or the initial traction you're seeing for that new system, what separates it, what differentiates it from the old system?
Speaker 5: Sure Anthony, this is Rajeev. Look, I think the reception to the new artist IX, which we're calling the artist IX version, has been very encouraging. We obviously don't specifically track sales at specific events, but we did get a lot of interest.
Speaker 3: both of the AAD as well as a lot of the regional events that we've had. We have a lot of payments and just kind of talk a little bit about some of the system improvements that we have in this latest version. As we've mentioned, we've gotten great feedback so far since the introduction.
Speaker 3: both from clinicians and other customers. Speed and efficiency is really what it's about. The software enhancements as well as on the vision system really is a four-fold increase in the rate of implantation, which is really a game changer when you look at this compared to whether it be manual procedures or augmented procedures.
Speaker 3: And so that really puts the robot in a place all its own, able to compete with the workflow that you'd expect in a normal transplant, except with all the benefits, let's say, in terms of precision and repeatability that you would get from the robotic system.
Speaker 3: great feedback so far and we're early days on its release, but so far it's going really well.
Speaker 7: And the pricing is it similar or you talk about that?
Speaker 5: The overall system pricing remains similar and obviously the way we work with our previous customers who have an artist Ix system versus brand new customers, the system is a little different. But the pricing has brought you to the same. Yeah.
Speaker 7: Okay, great. I'll have that in two minutes.
Speaker 2: Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad.
Speaker 2: Our next questions come from the line of Jeffrey Cohen with Lattenberg-Baughman. Please proceed with your questions.
Speaker 8: Good morning, gentlemen. How are you?
Speaker 8: How are you? Good morning, Jeff.
Speaker 9: So just a few questions from Aaron. I think firstly for Dominic, talk about inventory write downs. I see there is I think 2.4 written down the fourth quarter and then correlate that over to
Speaker 9: I think it was 23.9 now with some receivables around 37 and long-term receivables of 20 and the effect on the outlook, what you might expect for that for this year and also some of the ramifications going to that 70% cash sales model.
Speaker 6: Yes, so Jeff, the inventory write-down we took was in the third quarter, and it was 1.4 million. The reference to 2.4 million might be more on the FX side.
Speaker 6: But the inventory right now was 1.4 and it had to do with some cleanup in relation to some of the subsidiary discontinuations, etc. We had some cleanup that we did and we took that charge. There was not a big inventory charge in the fourth quarter.
Speaker 6: And we're not expecting any big write-offs in 2023. As far as the inventory level goes, we really don't provide any forward indication on inventory, but we will manage inventories in line with 2022.
Speaker 6: And we don't expect a big investment in inventory the way we've done in the past as a result of improved supply chain and some of the conditions that we're seeing out there in terms of lead times and so on. They've improved a bit so that should help us.
Speaker 6: The slight offset is that as we invest in the robotic strategy, some of those component parts are a little more expensive, but net-net we expect working capital to be a source of cash to receivables. But inventory, we don't expect that to be a drain in 2023.
Speaker 9: Okay, God. And then secondly for us, I did want to follow up a couple of Anthony's questions on the artists. You could talk about the improvements. Are they both hardware and or software? And then could you walk us through the current fleet and give us an indication of what the
Speaker 9: the size of the fleet and utilization trends that you've seen over the past number of months. Thank you.
Speaker 6: Yeah, so Tamith here. Thank you. So we're not going to give product level guidance on sales performance or sales expectations. But as I mentioned, the system updates largely involve software upgrades, but significant improvements on...
Speaker 3: both the speed and precision that are capable with the system.
Speaker 3: There are minor hardware upgrades in terms of handling increase in data provided by the enhanced speed, but for the most part we're talking about software upgrades to the system.
Speaker 5: Okay, that's helpful. Can I give you some questions? One of the other things we have done is to really increase our efforts around training the systems and precision practices. We actually now have in San Jose a full preceptorship procedure room set up.
Speaker 9: this level of clarity, but can you talk about explant cases versus implant cases or cases which are using both explants and implants and give us an indication there are any trends there that would be helpful. Thank you.
Speaker 9: Sorry Anthony, could you repeat the question again? I'm not sure who you call it. I'm trying to get a sense of hair transplantation and if Casey is using artists or doing both explantation and implantation using the artist. And listen...
Speaker 3: I believe we saw improvements both on the harvesting side as well as the implantation side if that's what you're getting at. The enhancements in the new iX system actually improved the speed and quality of both.
Speaker 9: Thanks for taking our questions.
Speaker 10: Thanks, Chef. Thank you.
Speaker 2: Thank you. Our next question has come from the line of Anthony Vendetti with Maxim Group. Please proceed with your questions.
Speaker 7: Thanks. Just a couple quick follow-ups. On the workforce reduction, is all of that
Speaker 7: And I know there are some charges that will still happen in 23, but is that largely over and when do you expect these, I guess it seems like more second half 23 when the efficiency seems well?
Speaker 7: start to be realized? Is that the way to look at it?
Speaker 5: Yes, that's correct. If you look at the projected $13 to $15 million of full-year run rate savings that we are projecting for 2024, there's a component of that that is headcount and personnel. There's a component of that which is
Speaker 5: more variable expense as a component in their reduction in lease costs. There are lots of different components which we'll kick in at different times in 2023. Now in terms of the actual head count reductions, we are completed with those restructuring proportion of key legal ordinances and we're just starting to see how many of you'll be thinking up in on the first one.
Speaker 5: With international markets, it's a little bit more complex because we continue to evaluate markets in terms of profitability and for potential to move to distributed relationships. When you do that, sometimes it results in restructuring, sometimes it results in...
Speaker 5: turning over our workforce to a new owner, effectively a new distributor. So the way the transitions happen work a little differently, which is why it will take us the better part of this year to fully implement all of those changes.
Speaker 10: Okay, great. That's all I have.
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