Q3 2023 STRATA Skin Sciences Inc Earnings Call
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Speaker 1: Greetings and welcome to the Strata Skin Sciences 3rd Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Greetings and welcome to the strata skin Sciences third quarter earnings Conference call.
At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
It is now my pleasure to introduce your host rich Cockrell of Investor Relations. Thank you Rich you may begin.
Speaker 2: Good morning, everyone, and thank you for joining us today. Earlier today, Stratascan Sciences released its financial results for the third quarter and its September 30, 2023. A copy of that release is available on the company's website.
Good morning, everyone and thank you for joining us today.
Earlier today strata skin Sciences released its financial results for the third quarter ended September 32023, a copy of that release is available on the company's website.
Speaker 2: Now, before we begin, I'd like to remind everyone that comments made by management during this call may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Now before we begin I'd like to remind everyone that comments made by management. During this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of $19 95.
Speaker 2: These statements include, but are not limited to, remarks about future expectations, plans, and prospects for the company.
These statements include but are not limited to remarks about future expectations plans and prospects for the company.
Speaker 2: We encourage you to review the company's filings with the SEC, which identify specific risk factors that may cause actual results to differ materially from those contained in any four looking statements made today.
We encourage you to review the company's filings with the SEC, which identifies specific risk factors that may cause actual results to differ materially from those contained in any forward looking statements made today.
Speaker 2: The company does not undertake to update any forward-looking statements as a result of new information or future events or developments.
The company does not undertake to update any forward looking statements as a result of new information or future events or developments.
Speaker 2: With us on the call today are Adola Raffaelli, Vice Chairman, President, and Chief Executive Officer, and Chris Lesovitz, Chief Financial Officer.
With us on the call today are <unk> Ali Vice Chairman, President and Chief Executive Officer, and Chris <unk>, Chief Financial Officer.
Speaker 2: Following management's prepared remarks, we will open the call for questions.
Following managements prepared remarks, we will open the call for questions.
Speaker 2: And with that, I'd now like to turn the call over to Dolek. Go ahead, Dolek.
And with that I'd now like to turn the call over to Delek go ahead Thomas.
Speaker 3: Thank you, Rich, and good afternoon, everyone. We appreciate you joining us today for our third quarter 2023 Earnings Conference.
Thank you rich and good afternoon, everyone. We appreciate you joining us today.
Our third quarter 2020 earnings conference call.
Speaker 3: Chris will give an overview of the quarter after which I will provide remarks on the strategic direction of the business. Before I turn it over to Chris, I first want to address the recent changes in leadership at Stratis.
Chris will give an overview of the quarter after which I will provide remarks on the strategic direction of the business before I turn it over to Chris I first want to address.
The recent changes in leadership at the.
Speaker 3: The company has undergone a recent reorganization of its board of directors.
The company has undergone a recent reorganization of its board of directors.
Speaker 3: to streamline its structure and enhance its alignment with the company's strategic objectives.
To streamline structure.
Structure and enhance its alignment with the company's strategic objectives.
Speaker 3: As part of the reorganization, Bob Mortier has transitioned from his position as CEO and a member of the board.
Part of the reorganization ballpark yeah.
Has transitioned from his position as CEO and a member of the board.
Speaker 3: I am humbled and deeply honored to have accepted the board's offer to serve as vice chairman, president and CEO .
Humbled and deeply honored to have accepted the board's offer to serve as vice chairman President and CEO.
Speaker 3: accumulating over 30 years of experience in healthcare and medical devices, my vision moving forward is to
Accumulating over 30 years of experience in health care and medical devices.
<unk> vision moving forward is to.
Concentrate on advancing.
And expanding our core cut it.
Xtra be track and <unk>.
By reintroducing, our direct to consumer further referred to as DTC initiative.
That was in place.
In my previous 310 years and allowed for clear growth.
Yeah.
Speaker 3: Some of you may recall that I managed a similar business strategy at the previous public company, growing it by over 300% and subsequently selling said business to Strata in 2015. I later served as Strata's President and CEO from 2018 to 2021, following an investment made into the company by myself and Excelman Grove Park.
Some of you may recall that I managed a similar business strategy.
The previous public company growing yet by over 300%.
Subsequently Sallie said business two strata in 2015.
I later served as stratas, President and CEO from 2018 to 2021, following an investment made into the company I myself and settlement growth partners.
Speaker 3: That second period was marked by a turnaround of the business's core growth elements. This turnaround helped in shifting the business to become a cash flow positive, growing the domestic and international install base and the corresponding revenue streams, eliminating costs and non-core activities.
That second period was marked by a turnaround of the business is core growth element. This turnaround helped in shifting the business to become a cash flow positive.
Growing the domestic and international installed base and the corresponding revenue streams, eliminating core and non core.
And non core activities enhancing.
Speaker 3: the technology by launching new products and filing new patents and making sure the platform was ready for any additional business.
The technology by launching new products, and feeling filing new patents and making sure the platform was ready for adding additional business.
Speaker 3: which in turn allows the company to successfully cross the COVID-19 challenge and be prepared for the core business growth and acquisitions that followed in 2021.
Which in turn allowed the company to successfully cross the COVID-19 challenge.
Be prepared for the core business growth and acquisitions that fall in 2021.
Speaker 3: As you will see during my remarks later, I believe this will directly increase our recurring revenue and unit utilization, thereby increasing our gross profit margins. It is back to basics here at Strata, and we look forward to your continued support. Now I will turn it over to Chris to review the financials.
As you will see during my remarks later I believe this will directly increase our recurring revenue and unit utilization, thereby increasing our gross profit margins. It is back to back to basics here at strata and we look forward to your continued support.
Now I will turn it over to Chris to review the financials.
Thank you Darla.
Speaker 4: I'll start with a quick overview of our third quarter 2023 results. With three months ended.
I'll start with a quick overview of our third quarter 2023 results.
For the three months ended total revenues were $8 9 million down 6% from $9 4 million in the prior year period and year to date, our revenue was $24 7 million compared to $25 6 million last year.
Speaker 4: down 6% from 9.4 million in the prior year.
Speaker 4: On year-to-date, our revenue was $24.7 million, compared to $25.6 million last year.
Speaker 4: We currently have 81 TheraClear devices in place year over year, which I'll review in a later video.
We currently have 81 therapy devices in place year over year, which I'll review in a later slide.
Speaker 4: As you can see, revenues have trended upwards from 2020 to 2022. With 2023, year-to-date revenues of $24.7 million.
As you can see revenues have trended upwards from 2020 to 2022 with.
2023 year to date revenues of $24 7 million.
We ended the third quarter and a solid cash position with $8 5 million in cash cash equivalents and restricted cash as of September 32023.
Speaker 4: With $8.5 million in cash equivalents and restricted cash as of September 30th.
Speaker 4: This cash position remains boosted by the refinancing of our senior term facility on June 30, 2023, offset by an increase in inventories and a decrease in accrued expenses and other current liabilities.
This cash position remains boosted by the refinancing of our senior term facility on June 32023.
All set by an increase in inventories and a decrease in accrued expenses and other current liabilities.
Speaker 4: We continue to carefully manage expenses while reinvesting in high ROI.
We continue to carefully manage expenses, while reinvesting in high ROI growth.
Speaker 4: On this slide, we show the revenue breakout of recurring versus equipment sales to physicians as well as our domestic versus international revenue. Recurring revenues from our
On this slide we show the revenue breakout of recurring versus equipment sales to physicians as well as our domestic versus international revenue.
Recurring revenues from our dermatology procedures were $5 3 million compared to $5 8 million last year and have remained relatively flat over the last two quarters.
Speaker 4: compared to 5.8 million last year and have remained relatively flat over the last
Speaker 4: We estimate this Q3 revenue represents about $70,000 extract treatment.
We estimate this Q3 revenue represents about 70000 extract treatments in the quarter.
Speaker 4: Equipment revenues were $3.6 million versus $3.6 million last year, remaining flat.
Equipment revenues were $3 6 million versus $3 6 million last year remaining flat.
Speaker 4: Domestically, we had $5.8 million in revenue compared to $6.1 million last year.
Domestically, we had $5 8 million of revenue compared to $6 1 million last year last year over the same period.
Speaker 4: While we had a steady increase in our equipment sales revenue, which Dolev will delve into more later, we expect these to decrease and recurring to be the real revenue driver for the business.
While we had a steady increase in our equipment sales revenue, we still don't have will delve into more later, we expect these to decrease in recurring to be the real revenue driver for the business going forward.
Speaker 4: As you can see here, non-GAAP-adjusted EBITDA improved 21% year-over-year. This growth stems from improved...
As you can see here non-GAAP adjusted EBITDA improved 21% year over year.
This growth stems from improved cash cost effectiveness with G&A and sales and marketing expenses decreasing 16, 5% year over year to $5 3 million.
Speaker 4: GNA and sales and marketing expenses decreasing 16.5% year-over-year to 5%.
As we prepare to ship back to a DC DTC model, we aim to reduce total revenue costs and increase margins.
We believe we are well equipped for this change and are optimistic about the future of strata.
Now I'll hand, it back over to Douglas.
Thank you, Chris we're very encouraged by the improving trends of our business through the third quarter I'd like to begin by discussing our changes in strategic direction to the company and the reintroduction of the DTC marketing and business model.
It has been shown before by myself and the team in Australia, and we can vastly increase the unit economics and margins in the business our ability to execute and grow all starts with our primary customer the physician.
Our clinical support infrastructure is there and by bringing back direct to consumer advertisements. We can vastly enhance the unit economics. The goal will be to drive improved margins through increasing utilization as our products generate incremental recurring revenue coupling the approach.
With the fully integrated suite of services.
<unk>.
Our partner clinics.
Speaker 5: We have a team standing by to support them through the whole sales cycle. We drive patients to the clinics, we support the clinics through clinical support teams, we support the clinics through reimbursement services, we support the patients through helping them out with their reimbursement payments, and we support technically the devices. So we're there to give them answers, whether it's the partner clinic or the patient.
We have a team standing by to support them.
Sales through the wholesale cycle, we drive patients to the clinic, we support the clinic through our clinical support team we support the clinic through reimbursement services, we support the patients through helping them out with their reimbursement payments and we support technically.
Devices. So was there to give them answers, whether it's the partner clinic or the patients with extra.
Speaker 5: With X-TRAC, the solution or the forward is very straightforward. We're going to be driving recurring revenue with the direct-to-consumer DTC approach, and this
The.
Solution or the board is very straight forward, we're gonna be driving recurring revenue.
The direct to consumer DTC approach and this.
Speaker 5: approach will be a win-win-win scenario for the physician, generating more revenue and patients through the clinic, for the patient driving a better clinical outcome, and obviously for the payer who are going to be paying less for the outcome of the patient.
Approach will be a win win win scenario for the physician.
Generating more revenue and patients through the clinic for the patient driving a better clinical outcome and obviously for the payer we're gonna be paying less for the outcome of the <unk>.
The patients.
Speaker 5: The table on slide nine shows the historical contribution of the DTC efforts for this.
The table on slide nine shows the historical contribution of the DTC efforts for this business.
Speaker 5: where the table illustrates that over the years when the company decided not to use direct-to-consumer approach through COVID-19 in 2020 and into 2021, and then again in 2022, these metrics have trended net down.
The payable table illustrates the over the years when the company decided not to use direct to consumer approach.
Through COVID-19 and in 2020.
Into 2021, and then again in 2022 these metrics have trended down the least shown in purple represents the number of patients demonstrating interest in the solution of the extra excimer laser.
Speaker 5: The leaves shown in purple represent the number of patients demonstrating interest in the solution of the extract eczema laser procedure offering the benefits to them. The appointments in orange resulted by our call center.
Procedure offered offering the benefits to them and the the appointments in Orange.
Noted.
Our call center and work.
Speaker 5: where the patients were placed into an appointment with the physician in their clinic.
Where are the patients were placed into an appointment with the physician in their clinics and finally in Green you can see the rdx charged which are the patient charts created by the physicians for patients that they found.
Speaker 3: created by the physicians for patients that they found extra meeting their needs to be treated.
Meeting the meeting expert meeting their needs to be treated I believe that the de emphasis of patient marketing and support services during the.
Speaker 5: I believe that the de-emphasis of patient marketing and support services during the
Speaker 5: period between 2021 and today severely impacted the product utilization because Strata was no longer driving patients to the physician's offices and consequently offered less partner support services to the clinics, which in turn impacted our partnership relationships with the physicians.
Period between 2020, one and today are severely impacted the productivity mutation because travel was no longer driving patients to their physicians' offices, and consequently offered less partner support services to the clinics, which in turn impacted our partnership relationships will disappear.
Speaker 5: is already being demonstrated three times in the past, between 2018 and 2019 pre-pandemic, then between 2020 and 2021 post-pandemic.
He has already been demonstrated three times in the past between 2018 in 2019 pre pandemic, then between 2020 and 2021 post pandemic.
Speaker 5: And once again, before when I built this business in the previous company, that by focusing on the patient and the consumer marketing, that would drive the patient's interest coming into the clinics. That would also drive the business in the clinic.
And once again before when I built this business in the previous company.
At.
By focusing on the patient and the consumer marketing that would drive the patients interest coming into the clinic that would also drive the business.
In the clinic.
Speaker 5: And as you can see on slide 10, the domestic growth strategy is focused on.
As you can see on slide 10.
Domestic growth strategy is focused on.
Speaker 5: on expanding installations within the established position networks and by driving the average revenue per device in these
On expanding in store installations within the established physician network and by driving the average revenue per device in these in these oh.
Speaker 5: clinics. Historically, as you can see, that the revenue per device
Clinics and historically as you can see that the revenue per device.
Speaker 5: prior to the company stopping direct-to-consumer patient advertising was $7,100 per device per quarter. And today with an install base that is larger by 25%, driving that average revenue per device will further increase not only unit economics, but the top-line revenue.
<unk> to the company stopping direct to consumer patient advertising with $7100 per device per quarter and today with an installed base that is larger by 25% driving that average revenue per device.
Further increase not only unit economics, but the topline revenue. This also.
Speaker 5: This also holds true for TheraClearX. We currently have 81 TheraClearX devices deployed in clinics that mostly pursue cash-paying patients. However, as evident by our market data, the more successful users and those who pursue the procedure as a clinically relevant and insurance-reimbursed versus out-of-pocket pay to patients.
Holds true for therapy racks. We currently have 81 third clear ax devices deployed in clinics that mostly pursue cash paying patients. However, as evidenced by our market data the more successful users and those who are.
Pursue the procedure is a clinically relevant and insurance reimbursed versus out of pocket pay to patients.
Speaker 5: are more successful. I believe there is a much better opportunity in placing therapeutics with our clinical dermatologist network and leveraging our already established suite of services, helping them use insurance reimbursement codes to reduce out-of-pocket costs.
Our more successful I believe there is a much better opportunity, placing therapy or act with our clinical dermatologists network and leveraging our already established suite of services, helping them use insurance reimbursement codes to reduce out of pocket costs.
Speaker 5: to the patients and provide better clinical outcomes.
Two of the patients and provide better clinical outcomes.
Speaker 5: thereby increasing patient volumes and utilization.
Thereby increasing patient volumes and utilization.
Speaker 5: FairClearActs offers a compelling solution for an acne sufferer that is reimbursable when prescribed to treat active inflammatory lesions. Refocusing our messaging can open up a much larger patient population.
<unk> offers a compelling solution for and actually suffer Debbie is reimbursable.
When prescribed to.
To treat to treat active inflammatory lesions refocusing our messaging can open up a much larger patient population.
Speaker 5: As evident over the past few years, the international install base of over 1,400 devices has proven to be able to provide a solid revenue stream of capital equipment sales, service, and device placements. I'm confident that with the new markets initiated in the past three years, this trend will be further strengthened. Thank you.
As evidenced over the past few years the international installed base of over 1400 devices has proven to be able to provide a solid revenue stream of capital equipment sales service and device placements I'm confident that with the new markets initiated by <unk> in the past three years this trend will be.
Further strengthened.
Speaker 5: With our strengthened balance sheet and improved profitability, rebuilding DTC is our top strategic priority and will provide improved, profitable, near-term growth. As we close our third quarter, I want to reiterate
With our strengthened balance sheet and improve profitability rebuilding DTC is our top strategic priority and will provide improved profitable near term growth as we close our third quarter I want to reiterate.
Speaker 5: Our top priority is to reignite the customer experience and value to our clinical partners while improving the quality of life for their patients. Our new marketing initiative, along with strategic management of our install base, will support rebuilding recurring revenue growth and margin expansion over the long term.
Our top priority is to reignite, the customer experience and value to our clinical partners, while improving the quality of life for their patients our new marketing initiatives, along with strategic management of our installed base will support we building recurring revenue growth.
And margin expansion over the long term, we remain intently focused on executing our strategic plan to drive profitable revenue growth and thereby enhance state.
Speaker 5: We remain intently focused on executing our strategic plan to drive profitable revenue growth and thereby enhance state shareholder value. I'll now ask the operator to open the line for questions.
Shareholder value.
Now ask the operator to open the line.
Four questions.
Operator.
Speaker 1: Thank you. We will now be conducting a question and answer session.
Thank you we will now be conducting a question and answer session.
Speaker 1: If you would like to ask a question, please press star 1 on your telephone keypad.
I would like to ask a question. Please press star one on your telephone keypad.
Information tone will indicate your line is in the question queue. You May Press Star two if you will.
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Speaker 1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
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One moment, please while we poll for questions.
Speaker 1: Thank you. Our first question comes from the line of Jeffrey Cohen with Landenburg-Salmon. Please proceed with your question.
Thank you. Our first question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
Chris how are you.
Hey, Jeff how are you.
Speaker 6: Excellent. So, a couple of questions from our end. So, I guess firstly, big picture from the breakout of recurring and equipment of that five, three, and three, six, we're going to see the recurring bounce back and drive the business more so than the equipment line going forward.
Excellent so.
Couple of questions from our end, so I guess, firstly big picture from.
The breakout of recurring and equipment of about five three and three six we're going to see the.
The recurring.
Bounce back and drive the business more so than the than the equipment line going forward is that.
Speaker 6: Safe to assume, and could you maybe talk about.
Safe to assume then could you maybe talk about.
How that's happening over the coming weeks and months as far as.
The call center, and marketing support services et cetera.
I'll take that hi, Jeff how are you good afternoon, good happy to be back.
And so as you've been with the company you've been covering the company through the past few years.
<unk> seen that rebound happens.
Twice the first time in 2018, when the company was coming out of a period of two years of no direct to consumer advertising it mostly focused on capital equipment sales in the second time in the transition between Covid and non COVID-19 coming into 2021, when the company reignited.
The direct to consumer advertising.
What <unk> seen is that turn.
<unk> direct to consumer advertising backlog.
While it takes time, because we need to.
Start advertising get the leads in once we get the leads and we need to send them into appointments. These appointments need to show up in the clinics.
The demand on the clinics to pull through the clinics starts.
Why is that.
It takes time and it takes anywhere between.
Between quarter three quarters depends on how fast we can ramp up.
The once that starts happening we see the.
The leaves driving appointments and those driving the procedure revenue and as we've shared on the on the slides.
On the earnings call site and we've shared in the past that is.
Controlled by the company in that ramp up period can be controlled by the company.
It would be safe to assume that that ramp up is going to take between.
Thank you.
Take effect between the second and third quarter of next year only because the first quarter is always a slower quarter for the recurring revenue because thats when insurance benefits are being reset so.
That's usually traditionally historically in the past 20 years have been a slower quarter, but you can start seeing that effect happening in the second and into the third.
Third quarter of next year.
That has no impact.
Capital equipment sales, which happened mostly outside of the U S.
And are driven by our traditional markets.
At least.
China, Japan, Korea, as well as new markets, which are expected to take for next year and the company has discussed over the last year and these markets are Mexico.
In India and Israel.
So the combination of these.
Old markets and new markets is going to keep on driving capital equipment sales.
The addition of recurring revenue on it.
Into 2024 is good.
Potentially drive.
Operating margins up.
And by that drives cash flow from operation to be positive again.
No.
The second portion of my comment had to do with <unk>.
The <unk> as you know is an equity treatment device, but the company's approach to the deployment of that device, which was launched.
At the beginning of 2023.
As to place these devices with physicians that are seeking a P.
<unk> that are willing to pay out of pocket.
That is.
Despite the fact that there is a specific reimbursement code that.
Covers that procedure and that reimbursement code.
Pes and average National average Medicare average of $118.
Private payer codes.
Our private payer payment that it pays up to upwards of $300 per procedure.
And as you can look through in my prepared remarks, we believe that.
Deployment of these devices with partners that are actually utilizing the reimbursement code is going to make to the expansion of that procedure.
Most of the company as well as for the physicians and the patients because bye bye.
Rising the full suite of services that the company has.
Starting from driving patients to the clinics and supporting the clinics through reimbursement.
Reimbursement process.
As well as supporting the patients and their own payments is going to help.
Drive that that that revenue from our perspective, but also the deployment of devices and usage by physicians and the number of patients being treated.
The procedure itself is clinically proven and has been.
Working very nicely for several years prior to the time the company has acquired it.
I think the change that we're trying to do now is going to.
Result, if successful.
Growth in utilization unit economics and by that expanding the.
Bottom line results.
Got it and one more if I may could you maybe compare and contrasting the the recurring model currently with the recurring model for extract do you perceive coming back in the U S as far as.
For energy pay per session with or without.
Our monthly weekly or minimum okay. So.
Youre asking compare and contrast extract with <unk>.
Okay.
Yes, so so extra today uses three CPT codes.
169, 202122, which are.
Used for treatment of areas of skin areas that are.
Up to 200 square 250 square centimeters between $2 50, and 500 above 500.
And these three reimbursement codes.
Pay to the physician and average of about $180 per treatment.
Scale, there is three three codes and different payouts, but about $180.
Our average.
Take from that is about $80 all of that information is included in the 10-Q, but.
We're taking about about 40% of that.
And we're taking that for the provision of a suite of services to the physician and that suite of services includes all the way from driving patients to the clinic.
Handling the pre procedure, so getting getting them pre authorized preapproved by the payer.
I will provide a clinical training to the clinic, providing training to the reimbursement team at the backend and also supporting the patients themselves by providing.
Co pay support so.
Patient.
Have the opportunity of us.
Not having any out of pocket costs for sure.
Their procedure. So if you want to look at the patient is being a unit.
The unit economic of the patient that patient is going to go through eight to 20 procedures for treatment of psoriasis and that would result in eight times to 20 times of $180 to the physician or eight times to one 220 times.
Payment to us in.
2019 pre pandemic the company had.
23000, approximately 23000, new patient charts. So the company had in treatment.
Within the partner network approximately 23000 individual patients.
As we speak now in the charts will show when when when these go on the website.
Year to date at 10000.
The difference between 23010 thousand comes from two sources one the reduction.
In the number of patients that were put into.
Into treatment.
Hi.
By the DTC process so in <unk>.
2019, It was 6000 and the other is the reduction in regardless of a direct to consumer the reduction in in the individual unit economics of the individual clinic economics.
Utilization of the devices and that is driven by that.
<unk>.
The focus of the company being more towards clinical promotion and <unk>.
Direct to provider promotion so.
Speaking about the clinical benefits of the procedure and less.
Using the tools that were in place of promoting the front half of the front end of the office driving patients to the office. The back end of the office, helping them through the reimbursement process and helping them through getting paid.
Getting paid and helping the patients with their <unk>.
Copay these value add services, which have been there for years have proved to be very successful in driving the business from a standstill and I'm using 2018 is a standstill and im using 2021 is a same steel because there was no no DTC prior to 2018.
For a few years and there was no DTC prior to 2021 because of COVID-19, driving it within the following fiscal year to be very productive. So we have seen.
That for every patient that we've set up with an appointment in a clinic, we actually had a halo effect.
The multiplier was two points one we sent one patient to the clinic and two points one new charts showed up why because patients were speaking among themselves and because people were seeing the advertisement and not calling us but call. It the clinic directly or also because the clinic was Morris.
Average was more enthusiastic at driving that the patients for the procedure. So.
If you look at the difference between 2018 and in 2019.
Gross margins were pushed up by more than 15%.
And only because that that revenue comes with an incremental contribution.
Contribution margin in excess of 90% now I'll compare that to say are clear access requests so Sarah clear X.
The Medicare reimbursement rate for the.
For the CPT reimbursement code that represents.
What <unk> does which is the treatment of acne lesions through suction and removal of of.
Whatever is inside the lesion.
The number is 10040, but.
Average Medicare national reimbursement for that is $118.
What we have seen it among partner clinics that already use this Eric <unk> is that they treat the patient they build that code, but they also build an office visit code that ranges between 50 and $70 per visit so the unit economics for the office is anywhere between.
170 to $190 per visit.
The patients need six to eight visits to to get fully cleared and.
And so you can you can do the multiplier for the office you can do the multiplier for the patients however, the big difference.
<unk> for the patient is that instead of paying.
In our case cash pay approach instead of paying 200 to $250 per visit what they are only responsible for is either their copay or if we fully deploy that we're going to even take care of parts of that.
Copay.
And so that makes a huge change for the for the patient where the physician has less of a convincing job to do because he does not have to push the.
Ah patients towards a cash pay procedure, but rather treat them in the clinic now as a reminder, acne as the number one.
Condition that clinical dermatologists are treating so so theres no theres no shortage of patients.
So that's about the right economic deal.
Company has chosen historically to place these devices with a monthly minimum charge and a per procedure charge that was much lower.
That resulted in some of the clinics take.
The advantage of the first few months and trying to see if it works and when it didn't work they pulled back.
What.
The clinics at.
That were productive where the clinics that were actually doing what I have described which is a reimbursable procedure.
As you have seen in the in.
In the past few quarters since the deployment of the normally the expansion was slower in terms of expansion and number of clinics and was also limited in the.
Returns per clinic and the sales margin.
Revenue.
Per.
Revenue per device per clinic. So that's Michael Caron contrast between the two of them I think moving forward.
We stand a chance to be successful at deploying gives us a reimbursable procedure because we have all of the support mechanism to give the suite of services and provide these services.
To the clinics and to the patients.
Yes.
Okay perfect. Thank you very much for taking the questions I appreciate it.
Absolutely. Thank you.
Okay.
Thank you.
As a reminder, press star one to ask a question at this time.
Okay.
Alright, I see no further questions at this time I would now like to turn the floor back over to management for any closing remarks.
Thank you operator, and everyone for your time and investment in strata skin Sciences, we look forward to update you on our progress in the next quarterly call.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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