Q4 2023 STRATA Skin Sciences Inc Earnings Call

Okay.

Operator: Greetings and welcome to the STRATA Skin Sciences fourth quarter twenty-fifth earnings conference call and webcast. 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 held, and it is now my pleasure to introduce your host, Rich Cockrell, STRATA Investor Relations. Thank you, Rich. You may begin.

[music].

Greetings and welcome to the strata skin Sciences fourth quarter 2023 earnings conference call and webcast. 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 stride at Investor Relations. Thank you Rich you may begin.

Rich Cockrell: Thank you, operator. Good morning, everyone, and thank you for joining us for STRATA Skin Science's fourth quarter and full year 2023 earnings conference call. Earlier today, we released our financial results for the quarter ended December 31st, 2023. You can find a copy of the press release on the company's website. Before we begin, I'd like to remind everyone that this call may include forward-looking statements. These statements are not guarantees of future performance and involve risk and uncertainties that could cause actual results to differ materially. We encourage you to review the SEC filings, which highlight these risks and uncertainties. The company does not commit to updating any forward-looking statements as new information becomes available.

Rich Cockrell: Thank you operator, good morning, everyone and thank you for joining us for the strata skin Sciences fourth quarter and full year of 2023 earnings conference call earlier today, We released our financial results for the quarter ended December 31 2023.

Rich Cockrell: You can find a copy of the press release on the company's website.

Rich Cockrell: Before we begin.

Rich Cockrell: I'd like to remind everyone that this call may include forward looking statements. These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially.

Rich Cockrell: We encourage you to review the SEC filings, which highlight these risks and uncertainties. The company does not commit to updating any forward looking statements as new information becomes available.

Rich Cockrell: Now today on the call, we have Dr. Dolev Rafaeli, our CEO, and Christopher Lesovitz, our CFO. Each will provide an overview of the company's Q4 performance and discuss the Strategic Outlook. After their remarks, we'll open the floor for questions. And with that, I'd like to turn the call over to Dolev. Go ahead.

Speaker Change: Now today on the call we have Dr. Dollar Raphael <unk>, our CEO and Christopher less of it's our CFO.

Speaker Change: Each will provide an overview of the company's Q4 performance and discuss the strategic outlook after their remarks, well open the floor for questions.

Dolev Rafaeli: And with that I'd like to turn the call over to Dulles go ahead Sir.

Dolev Rafaeli: Thank you, Rich, and good afternoon, everyone. Resetting on 2023, it's evident that it was a pivotal year for..., characterized by strategic leadership adjustments, product innovation, and substantial market expenditure. The strategic change in leadership at the end of the year, which saw my return to STRATA in October, marks a significant commitment to our proven strategic vision that drives growth and operations. The robust reinvigoration of the direct-to-consumer DTC recurring revenue model has been a cornerstone of our strategy, proving to be a vital element of our society, especially evidenced during my previous tenure as CEO for our core extract business between 2011 and 2015 It was these periods that marked a transformation in STRATA.

Dolev Rafaeli: Thank you rich and good afternoon, everyone.

Dolev Rafaeli: Reflecting on 2023, it's evident that it was a pivotal year for strep.

Dulles: Characterized by strategic leadership adjustments for that.

Dulles: The Asian and substantial market expansion.

Dulles: The strategic change in leadership at the end of the year, which saw my return to strata in October marks a significant commitment to our proven strategy strategic vision that drives growth and operation excellence.

The robust reinvigorating of the direct to consumer DTC recurring revenue model.

Dulles: A cornerstone of our strategy.

Dulles: Proving to be a vital element of our success, especially evidenced during my previous tenure as CEO for our core extra business between 2011 and 2016 earnings from 2018 to 2020.

Dulles: It was <unk>.

Dulles: These periods that marks a transformation in strat steering.

Dolev Rafaeli: Steering the business towards positive cash flow from operations, expanding our footprint both domestically and internationally, streamlining operations, and sparking innovation through a launch of new products and services. Central to our plan has been the focus on our flagship products, the X-Rack, the B-Track, and the TheraClear. A key highlight of the year was the success of the introduction of our therapy or acne therapy system in January of 2020. By year's end, we placed 92 devices under the recurring procedure.

Dulles: Business towards positive cash flow from operation expanding our footprint, both domestically and internationally.

Dulles: The mining operations and sparking innovation through a launch of new products and services.

Dulles: Central to our plan has been the focus on our flagship product the extra feature and therapeutics.

Dulles: A key highlight of the year was the success of introduction of our therapy or act Etsy therapy system in January of 2020.

Dulles: By year's end, we placed 92 devices under the recurring procedure.

Dolev Rafaeli: During 2023, STRATA also significantly increased its domestic and international recurring revenue installed, to 964 extract devices as of December 31st, 2020. This expansion underlines our capability to innovate and efficiently respond to market changes. Just last month, we took an important step to secure our future growth through the amendment of our credit facility with MidCap Financial. This adjustment in our financial strategy, ensuring alignment with the company's current and future business projections in supporting operations and capital needs, is crucial for our continued growth and further expansion. More recently, we initiated a campaign to extend insurance coverage to essential dermatological conditions, aligning with our mission to enhance patient access to vital treatments through improved insurance practices and the broadening inclusion of CPT codes.

During 2023 try to also significantly increased its domestic and international recurring revenue installed base to 964 abstract devices as of December 30.

Dulles: 2020.

Dulles: This expansion underlines, our capabilities to innovate and efficiently respond to market.

Dulles: Just last month, we took an important step to secure our future growth through the amendment of our credit facility with Midcap Financial Trust. This adjustment in our financial strategy, ensuring alignment with the company's current and future business.

Dulles: Projections in supporting operation and capital needs is crucial for our continued growth and for further expansion.

Dulles: Yes.

More recently, we have initiated a campaign to extend insurance coverage to essential dermatology dermatological conditions aligning with our mission to enhance patient access to vital treatments through the improved insurance practices and broadly.

Dulles: The inclusion of CPT codes.

Dolev Rafaeli: Initially, our efforts are concentrated on securing payer coverage for extract treatments for multiple indications, including vitiligo, CTCL, alopecia areata, and atopic dermatitis. This initiative is a testament to our commitment, not only to increase the accessibility of our treatment, but also to advocate for the well-being and quality of life of those affected by the condition. I note that not all of these conditions are currently approved indications, but we are in the process of moving forward to see if such use may be approved in the future.

Dulles: Initially our efforts are concentrated.

Dulles: Traded on securing payer coverage will extract treatments for multiple indications, including vitiligo, Cte Seattle alopecia Areata in atopic dermatitis.

Dulles: This initiative is a testament to our commitment not only to increase the accessibility of our treatment, but also to advocate for the well being and quality of life of those affected by the condition.

Dulles: I note that not all of these conditions are currently approved indications, but we are in the process of moving forward to see you.

Dulles: If such use may be approved in the future.

Dolev Rafaeli: Leveraging our VEST database of over 270,000 pest extract patients, we are actively collaborating with prominent patient advocacy groups and the wide Dermatology Key Opinion Leader community. STRATA has also begun targeted advocacy with legislatures to enhance access to the exer- As we continue to ramp up the DTC revenue model in 2024, we remain laser-focused on executing our key strategic priorities. First and foremost, we are working diligently to drive utilization and rationalize placements of both our X-TRAC and TeraClear-X people. This involves leveraging our strengthening balance sheet to rebuild and expand the DTC capabilities and stimulate patients' development. By bringing patients directly to physicians' offices, we can increase procedural holdings and device utilization, thereby generating incremental, high-margin recurrent medicine. Now, I'll pivot to a review of our financial landscape from our CFO, Chris Lesovitz. And then I will explain a little bit more on the operational side. Chris.

Dulles: Leveraging our vast database of over 270000 past expectations. We are actively collaborating with prominent patient advocacy groups and the why is the dermatology key opinion leader community strata also.

Dulles: Commenced targeted advocacy with legislatures and to enhance access to the extra week.

Dulles: As we continue to ramp up the DTC revenue model in 2024, we remain laser focused on executing our key strategic priorities.

Dulles: First and foremost we are working diligently to drive utilization and rationalizing placements of both our extraction spherically Rx devices. This involves leveraging our strengthening balance sheet.

Dulles: To rebuild and expand the DTC capabilities and stimulate patients.

Dulles: By bringing patients directly to physicians offices, we can increase procedural volumes and device utilization, thereby generating incremental high margin recurring revenue.

Dulles: Let's now pivot to review to the review of our financial landscape, our CFO, Chris Lesser Beach, and then I will explain a little bit more on the operational side Chris.

Christopher Lesovitz: Thank you, Dolev. Now, let's dive into our financials for the fourth quarter and full year 2023. Our total revenue for the quarter was $8.7 million and $33.4 million for the full year. This decrease from the prior year is reflective of the decline in recurring revenue for the company, which we are now shifting back to in 2024. The crucial element of our approach involves re-centering our efforts on our foundational business, which is collaboration with doctors' offices and driving customers to them. This is a return to our roots, a strategic maneuver to enhance the utilization rates within our recurring revenue model, and we are confident that these efforts will start to show a tangible impact in 2024. Breaking down the total revenues, our global recurring revenues for the full year 2023 were $21.5 million, as compared to global recurring revenues of $23 million for the full year 2022. Equipment revenues were $11.8 million for the full year 2023 as compared to $13.1 million for the full year 2022.

Chris: Thank you Darla.

Speaker Change: Let's dive into our financials for the fourth quarter and full year 2023.

Speaker Change: Our total revenue for the quarter was $8 7 million and $33 4 million for the full year.

Speaker Change: This decrease from the prior year is reflective of the decline in recurring revenue for the company.

Speaker Change: Which we are now shifting back to in 2024.

Speaker Change: A crucial element of our approach involves resetting our efforts on our foundation foundational business call.

<unk> with doctor's offices and driving customers to them.

Speaker Change: This is a return to our roots a strategic maneuver to enhance the utilization rates within our recurring revenue model and we are confident that these efforts will start to show a tangible impact in 2024.

Speaker Change: Breaking down the total revenues our global recurring revenues for the full year 2023 were $21 5 million as compared to global recurring revenues up $23 million for the full year 2022.

Speaker Change: Equipment revenues were $11 8 million for the full year 2023, as compared to $13 1 million for the full year 2022.

Christopher Lesovitz: Looking forward to 2024, we are building upon the launch of the TheraClear-X system, in which our emphasis on recurring revenue has started to shape our revenue mix. This strategic pivot is designed to enhance long-term sustainability and profitability, with an emphasis on TheraClear X being reimbursed from CBT and continuing our focus on the recurring model for X-Tract. Turning our attention to our operational efficiency, particularly within our selling and marketing and G&A areas. I'm pleased to share that we've taken deliberate steps to refine our cost structure. In the latter half of 2023, we implemented reductions in sales and marketing expenditures, which are expected to come to full fruition in 2024. This is part of our broader strategy to return to the leaner expense structure as previously seen in 2019. In addition to the cost savings above, we intend to eliminate non-productive accounts, not only by reducing the cost associated with servicing but also repurposing those materials. On the GNA front, we have experienced a slight increase in expenses to $10.5 million, driven largely by one-time legal and accounting costs and transitions within our executive team.

Speaker Change: Looking forward to 2024, we are building upon the launch of the therapy or X system.

Speaker Change: In which our emphasis on recurring revenue has started to shape our revenue mix.

Speaker Change: This strategic pivot is designed to enhance long term.

Speaker Change: Sustainability and profitability with an emphasis on therapy X being reimbursement CPT and continuing our focus on the recurring model for extraction.

Turning our attention to our operational efficiencies, particularly within our selling and marketing and G&A areas.

Speaker Change: The share that we've taken deliberate steps to refine our cost structure.

Speaker Change: The latter half of 2023, we implemented reductions in sales and marketing expenditures, which are expected to come to full fruition in 2024.

Speaker Change: This is part of our broader strategy to return to a leaner expense structure as previously seen in 2019.

In addition to the cost savings above we intend to eliminate nonproductive accounts.

Speaker Change: Not only by reducing the costs associated with servicing but also repurposing those materials.

Speaker Change: On the G&A front, we have experienced a slight increase in expenses to $10 5 million driven largely by one time legal and accounting costs and transitions within our executive team.

Christopher Lesovitz: Our strategic plan for 2024 will optimize the utilization of our devices, maximize operational efficiency, and ultimately improve our bottom line. These adjustments reflect our proactive stance in ensuring STRATA operates at a sustainable and competitive cost base. Allowing us to invest more deeply in growth and innovation. The full financial impact of these changes is anticipated by the end of 2024. Finally, despite a net loss for the quarter, which included the $2.3 million goodwill impairment recognition mentioned in our earnings release, we are confident in our strategic direction. Our balance sheet remains strong, with a solid cash position to support our growth initiatives. Cash & Cash Equivalents & Restricted Cash at December 31, 2023 were $8.1 million, compared to $6.8 million at year-end 2022.

Speaker Change: Our strategic plan for 2024, well optimize the utilization of our devices.

Speaker Change: Maximize operational efficiency and ultimately improve our bottom line.

Speaker Change: These adjustments reflect our proactive stance and assurance strata operates at a sustainable and competitive cost base, allowing.

Speaker Change: Allowing us to invest more deeply in growth and innovation.

Speaker Change: The full financial impact of these changes and it is anticipated by the end of 'twenty 'twenty four.

Speaker Change: Finally, despite a net loss for the quarter, which included the $2 $3 million goodwill impairment recognized recognition mentioned in our earnings release, we are confident in our strategic direction.

Speaker Change: Our balance sheet remains strong with a solid cash position to support our growth initiatives.

Speaker Change: Cash and cash equivalents and restricted cash at December 31, 2023 were $8 1 million compared to $6 8 million at year end 2022.

Dolev Rafaeli: With this stronger position, combined with the anticipated revenues from the sale or use of our products, Operating Expense Management, and our embedded credit facility with MidCap Financial, we believe we are well positioned to continue growing into 2024. I'll now hand the call back over to Dolev to discuss our strategic outlook and operational priorities. Thank you, Chris.

Speaker Change: With this stronger position combined with the anticipated revenues from the sale or use of our products.

Speaker Change: Operating expense management, and our amended credit facility with Midcap financial.

Speaker Change: We believe we are well positioned to continue growing into 2024.

Speaker Change: I'll now hand, the call back over it all up to discuss our strategic outlook and operational priorities.

Thank you Chris as we conclude the fourth quarter, we remain focused on aligning our operations more closely with the evolving market demand and our long term vision for strep.

Dolev Rafaeli: As we conclude the fourth quarter, we remain focused on aligning our operations more closely with evolving market demand and our long-term vision for STRATA. This quarter has been foundational in setting the stage for the reinvigoration of our DTC marketing and business model, an approach we believe is critical for sustainable growth and enhanced profit. Our journey towards this strategic realignment highlights our commitment to leveraging the inherent strengths of our business, particularly our close relationship with physicians and our robust clinical support in front of them.

None: This quarter has been a foundational in setting the stage for the <unk>.

Speaker Change: Invigorating of our DTC marketing and business model and approach. We believe is critical for <unk>.

Speaker Change: Sustainable growth and enhanced profitability.

Speaker Change: Our journey towards this strategic realignment highlights our commitment to leveraging the inherent strength of our business.

Speaker Change: Particularly our close relationship with physicians.

Speaker Change: Robust clinical support infrastructure. These elements are pivotal not only in driving utilization of our devices, but also in creating valuable opportunities for both strata in the health care providers, we partner.

Dolev Rafaeli: These elements are pivotal, not only in driving utilization of our devices but also in creating valuable opportunities for both STRATA and the healthcare providers we partner with. Our goal is to significantly improve our margins through heightened device utilization, generating substantial recurring revenue. The core DNA of the DTC approach is providing unparalleled support at every touch point. Patient and Provider Insurance Benefit Support, Patient Co-Pay Support, and Provider Clinical Support and Patient Advocacy. It's important to acknowledge that shifts of this magnitude require time to fully manifest in. The previous focus of our efforts, direct-to-provider marketing, has laid a solid foundation, yet the move toward a more DTC-centric approach marks a return to a proven strategy that has historically driven our growth and success. As we advance, our primary focus will remain on maximizing the economic efficiency of each device.

Speaker Change: Our goal is to significantly improve our margins through high like heightened device utilization generating substantial recurring revenue in the forces.

Speaker Change: The core DNA of the DTC approach is providing unparalleled support at every touch.

Speaker Change: The patient and provider insurance benefits support.

Speaker Change: <unk> co pay support and provider clinical support and patient advocacy.

Speaker Change: It's important to acknowledge that shift of this magnitude require time to fully manifest in our financials.

Speaker Change: The previous focus of our efforts with direct to provider marketing has laid a solid foundation yet the move towards a more DTC centric approach marks a return to a proven strategy that has historically driven our growth and success.

Speaker Change: As we advance our primary focus will remain on maximizing the economic efficiency of each device leaks.

Speaker Change: In the coming quarters, we anticipate the impact of these strategic shifts to become increasingly evident.

Speaker Change: In our performance metrics.

Speaker Change: The extra partnership represents a cornerstone of our strategy to enhance recurring revenue suites usage is driven by both strata facilitating a patient appointment utilizing DTC as well as by the provider prescribing their own.

Dolev Rafaeli: In the coming quarters, we anticipate the impact of these strategic shifts to become increasingly evident in our performance. The XROOC partnership represents a cornerstone of our strategy to enhance recurring revenue. Usage is driven by both STRATA, facilitating a patient's appointment utilizing DTC, as well as by the provider prescribing their own patients. The DTC approach fosters a halo effect in which patients are driven both directly as well as indirectly to the procedure. As a reminder, the abstract procedure benefits all. The patients receive a side-effect-free clinically effective procedure. The cost for the insurance payer is the lowest of all alternatives.

Speaker Change: Patients with DTC approach fosters a halo effect in which patients are driven both directly as well as indirectly to the to.

To the procedure.

Speaker Change: As a reminder, the extra procedure benefits for the patients receive a side effect preclinical effective procedure.

Speaker Change: Cost for the insurance payer is the lowest of all alternatives and the partner clinics generate incremental net.

Speaker Change: This slide encapsulates the past ebb and flow of patient engagement within our practices.

Speaker Change: Punctuated by the influence of our DTC marketing efforts.

Dolev Rafaeli: And the partner clinics generate incremental benefits. This slide encapsulates the past ebb and flow of patient engagement within our practice, punctuated by the influence of our DTC marketing. The initial leads, marked in blue, showcase patients' interest in our extra-eczema laser treatment. Dark gray highlights the scheduled appointments, a direct result of our targeted marketing campaign.

Speaker Change: The initial leads marketing bloom.

Speaker Change: Cases patient interest in our extra excimer laser treatment.

Speaker Change: Dark green highlights the scheduled appointments a direct result of our targeted marketing campaigns. The green bars are rdx charge reflects the translation of leads and appointments into actual new patient charts ready for that.

Speaker Change: As we started ramping up our DTC efforts in 'twenty 'twenty four we have focused on <unk>.

Dolev Rafaeli: The green bars are RDX charts, reflecting the translation of leads and appointments into actual new patient charts ready for the future. As we started ramping up our DTC efforts in 2024, we focused on four geographic areas: New York City, Florida, Texas, and Illinois. We selected these areas to validate our historical cost per lead, which is around $30 to $40, and our historical cost per in-clinic patient appointment, which is approximately $300.

Speaker Change: <unk> geographic areas, New York City, Florida, Texas and Illinois.

Speaker Change: We have selected these areas to validate our historical cost per lead which is around 30 to $40 and our historical cost per in clinics patient appointment, which is approximately $300.

Speaker Change: Each of the patients, where they're driven by DTC or provided or provider generates it generates a patient chart in stratus for Fiat proprietary rdx system, which allows the tracking of insurance benefits and supporting the.

Dolev Rafaeli: Each of the patients, whether driven by DTC or provider-generated, generates a patient chart in STRATA's proprietary RDX, which allows the tracking of insurance benefits and supports the providers and patients in fully realizing As a reminder, during 2019 and 2021, we were able to drive 5,000 and 6,000 patient appointments, contributing about 25% of the overall new patients, as the value of the full course of treatment of an individual patient to STRATA and to the partner clinic is more than $1,200 in $2,900 receipts. A successful capture of these patients in the clinic and in the procedures is critical. And our team monitors as these newly generated appointments are underway. For 2023, with DTC underutilized, STRATA had a total of 185 leads, 23 appointments, and 11,787 RDX shots.

Speaker Change: Providers and patients in fully realizing these.

Speaker Change: As a reminder, during 2019 in 2021, we were able to drive 5000 6000 patient appointments respected.

Contributing about 25% of the overall new patient choice.

Speaker Change: That's the value of full course of treatment of an individual patients to strata into the partner Clinique is more than $200 in $2900, respectively. The successful capture of these patients in the clinic and into procedures is critical.

Speaker Change: And our team monitors as these newly generated appointments are underway.

Speaker Change: For 2020 suite with DTC underutilized strata had a total of 185 leads twenty-three appointments and 11787 Rvs charts. These numbers represent our baseline as we reinstate our DTC initiatives.

Speaker Change: Our DTC campaign started ramping up in the second half of January 2024, and we will continue expanding as we increase the number of targeted Terry.

Speaker Change: The unit economics for each individual extract device.

Speaker Change: Is the best measure is best measured by an average revenue per device.

Dolev Rafaeli: These numbers represent our baseline as we reinstate our DTC. Our DTC campaign started ramping up in the second half of January 2024 and will continue expanding as we increase the number of targeted tariffs. The unit economics for each individual extract device is best measured by an average revenue per device.

Speaker Change: Higher to the.

Speaker Change: And then in 2018 and 19 when DTC was the core focus we saw significant growth in the number of extract devices deployed as well as an increase in the average revenue per viewpoints in 2019, each of the 820 partner clinics generate.

Speaker Change: Is it on average $7200 per quarter.

Dolev Rafaeli: Prior to the pandemic in 2018 and 2019, when DTC was the core focus, we saw significant growth in the number of extraction devices deployed, as well as an increase in the average revenue per device. In 2019, each of the 820 partner clinics generated, on average, $7,200 per clinic. Post-pandemic, while the business has mostly returned, the company focused its marketing resources on direct-to-provider initiatives, increasing sales and marketing expenses from $12 million to over $15 million, while reducing the DTC initiative and its cost. The impressive 13% growth in the domestic install base from 820 in 2019 to 923 in 2023 was coupled with a lack of DTC-driven appointments and its associated halo effect, resulting in a reduction of 28% in the average revenue per device per quarter to approximately $5,200.

Speaker Change: Post pandemic, while the business has mostly returned.

Speaker Change: Companies focused it's marketing resources on direct to provider initiatives, increasing sales and marketing expenses from $12 million to over $15 million, while reducing the DTC initiatives and its cost.

Speaker Change: The impressive 13% growth in domestic installed base of 822019 to 923, and 2023 was coupled with a lack of DTC driven appointments and its associated Halo effect, resulting in a reduction of 25.

Speaker Change: Sorry, 28% in the average revenue per device per quarter to approximately $5200.

Speaker Change: Device per quarter for 2020.

Speaker Change: The expansion in the solid base lays a robust foundation to revitalize our DTC initiatives aimed at boosting procedure volumes enhancing device utilization and driving up the average revenue per device per quarter.

Speaker Change: All while being able to <unk>.

Speaker Change: Rationalize the size of the installed base.

Speaker Change: The therapy IRS system represents a parallel success story with 92 devices already active in clinics focusing on cash pay patients. Yes. The substantial opportunity lies in integrating the therapy of X into our clinical dermatology network.

Dolev Rafaeli: Per device per quarter for twenty... The expansion in the installed base lays a robust foundation to revitalize our DTC initiatives, aimed at boosting procedure volumes, enhancing device utilization, and driving up the average revenue per device per quarter, all while being able to rationalize the size of these. The TheraClearF system represents a parallel success, with 92 devices already active in clinics, focusing on cash-paying patients. Yet, the substantial opportunity lies in integrating the TheraClear apps into our clinical dermatology network, where the focus shifts to insurance-reimbursed treatments. This pivot not only reduces the financial burden on patients but also promises improved clinical outcomes, thereby potentially increasing patient volume and device utilization. Late in the fourth quarter of 2023, we started transitioning existing accounts and adding others to the insurance reimbursement.

Speaker Change: Where the focus shifts to insurance reimburse treatments.

Speaker Change: This pivot not only reduces the financial burden on the patients, but also promises improved clinical outcomes, thereby potentially increasing patient volume and device usage.

Speaker Change: Late in the fourth quarter of 2023, we have started transitioning existing accounts and adding others to be insurance reimbursed approach.

Speaker Change: Dave our insurance benefits team as process several hundred individual patient charts, resulting in 86% payer Preauthorized Reauthorizing a course.

Speaker Change: Treatments for patients and for providers.

Speaker Change: Providers all across the country.

Speaker Change: The CPT treatment codes average Medicare payment rate is approximately $120 with private peers dairy.

Speaker Change: Strata already owns approximately 200 therapy or exit devices and each additional patient represents approximately $500 and $200 of potential incremental revenue for strata and provider respected.

Dolev Rafaeli: To date, our insurance benefits team has processed several hundred individual patient charts, resulting in 86% of payers preauthorizing a course of treatments for patients and providers all across the country. The CPP Treatment Code average Medicare payment rate is approximately $120, with private payers willing. STRATA already owns approximately 200 TheraClearX devices, and each additional patient represents approximately $500 and $1,200 of potential incremental revenue for STRATA and provider respect.

Speaker Change: Internationally as we expand into new markets, our installed base of over 1400 extra can hue track devices continues to provide a robust and reliable revenue stream.

None: In closing.

None: I want to emphasize the strides we've made in 2023 as we recommit to our DTC model.

None: Capitalize on our expanded installed base.

The strategy efforts the strategic efforts are integral to our mission of enhancing the patient and physician experience and are the driving force behind our anticipated growth and margin improvements.

Dolev Rafaeli: Internationally, as we expand into new markets, our installed base of over 1,400 X-REC and V-TRAC devices continues to provide robust and reliable revenue. In closing, I want to emphasize the strides we've made in 2026 as we recommit to our DTC model and capitalize on our expanded installation. The strategic efforts are integral to our mission of enhancing the patient and physician experience and are the driving force behind our anticipated growth and margin improvement. Looking ahead.

None: Looking ahead, our commitment to operational excellence and strategic marketing will elevate strategy.

None: Profitability and shareholder value in the near term.

None: We think we thank you for your support and look forward to navigating the future with confidence and clarity.

None: Let's now open the floor for questions operator.

None: Thank you we will now be conducting a question and answer session.

None: I'd like to ask a question. Please press star one on your telephone keypad.

None: Confirmation tone will indicate your line is in the question queue. You May press star two if he 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 star keys.

None: One moment, please while we poll for questions.

Dolev Rafaeli: Our commitment to operational excellence and strategic marketing will elevate STRATA's profitability and shareholder value in the near future. We thank you for your support and look forward to navigating the future with confidence and clarity. Operator?

None: Thank you.

None: First question comes from the line of Jeffrey Cohen with Lindenberg Thalmann. Please proceed with your question.

Jeffrey Scott Cohen: Uh-huh devoted and Chris how are you.

Jeffrey Scott Cohen: Hey, Jeff.

Jeffrey Scott Cohen: Hey, Jeff so.

Jeffrey Scott Cohen: Firstly could you talk about how you're planning on defining nonproductive accounts, and perhaps give us a sense of what percent of accounts out there.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question... Press Star. Like, Comment, Share, and Subscribe! You may press Star 2 if you would like to remove your question from the line.

Jeffrey Scott Cohen: Currently the hauling beneath that non productive one.

None: Absolutely I'll start with that and Christopher.

None: Matrix, if you wish.

None: So this initiative is not new this was already discussed by a previous management.

Operator: For participants using speaker, it may be necessary to pick up your handset before pressing the button. One moment, please, while we pull for questions. Thanks. Our first question comes from the line: Jeffrey Cohen, Landenburg-Faumann, Hi Dolev and Chris, how are you? Hey Jeff. Hey Jeff.

None: Going into the going.

None: Going into the third and fourth quarter.

None: Last year, however, as you've been following this business.

None: Several years now you know that.

None: Probably the most important metric in this business becomes profitable is how much revenue we generate per device because almost every other expense is fixed.

None: So for reference.

Dolev Rafaeli: So... Firstly, could you talk about how you're planning on defining non-productive accounts and perhaps give us a sense of what percent of accounts out there are currently falling beneath that non-production. Absolutely, I'll start with that, and Chris is going to add on and we'll make sure. So, this initiative is not new; this was already discussed by previous management going into the Thank you for watching. Holder.

None: In 2000.

None: Our average revenue per device was in the range of $5000 per device per quarter and we.

None: We were able to.

None: Pushed out with all of our initiatives in the DTC to almost.

None: So almost oh.

None: $7500 per device.

None: By the end of 2019, so 2019 represented about $30000 per device.

None: In 2019, we have 820 devices.

None: The same installed base.

None: Next the company at the other handler almost the same installed is meant to compensate the other angels a pandemic coming into 2021 that Didnt company started extending the installed base.

Dolev Rafaeli: However, as you've been following this business for several years now, you know the most important metric in how this business becomes profitable is how much revenue we generate per device because almost every other expense is generated by the device. So, for reference, in 2018, our average revenue per device was in the range of $5,000 per device per quarter. And we were able to... Push that up with all of our initiatives and the DTC to almost, to almost... $7,500 per device by the end of 2019, so 2019 represented about $30,000 per device. In 2019, we have 820...

None: Coming out of and then making 2021.

None: The business for the year was a story of two halves in the beginning offices were coming out of the pandemic and starting to starting their businesses back up but then by the end of 2020. One we were back at the same.

None: Run rate. So if you look at 2021 as a whole.

None: The average revenue per device for 890 devices by gaining the points, where you won was approximately $25000.

None: <unk>.

None: Now fast forward to 2023, we have.

None: Over 900 devices in the market 923, the average.

None: <unk> is about 21000.

None: And that's what gives us an opportunity the opportunity is either revising existing existing devices or.

None: Removing them and using them instead of building new devices, when we start expanding again.

None: The threshold metric would be obviously, how much revenue. This device is generating or how much. This device can generate but as a whole. If you look at this as an installed base every one of these devices that does not generate.

Dolev Rafaeli: The same install base met the company at the other end, or almost the same install base met the company at the other end of the pandemic coming into 2021, and then companies started extending the install base. Coming out of the pandemic in 2021, the business, where the year was a story of two halves. In the beginning, offices were coming out of the pandemic and starting their businesses back up. But then, by the end of 2021, we were back at the same run rate.

<unk> in excess of one averaging in excess of 15 and $16000.

None: <unk> is not is not contributing to the bottom line.

None: And.

None: That's the that's the target because the target is going to be to optimize the installed base.

None: On one hand and increased utilization on the existing installed base.

None: On the other hand.

None: I would not anticipate very strong moves in the <unk> and the installed base either way.

None: If you.

None: Look back into the company's disclosures in the past we have every year removed in the range of 100 to 120 devices and in the years that the company was extending we placed more than 100 or 120 and in the years of the company was <unk>.

Dolev Rafaeli: So if you look at 2021 as a whole, the average revenue per device for 890 devices by the end of 2021 was approximately $25,000. Now, fast forward to 2023, we have over 900 devices in the market, 923, but the average is about 21,000. And that gives us an opportunity.

None: We've placed less than 100 and 120, so it's not going to be it's not going to be the complete stop of expansion, but it's going to be.

None: Somewhat vague on the shrinkage of nonperforming devices just in order to we placed them in with accounts that are that can be more productive as we reintroducing the DTC.

Chris you want to add something.

Chris: That's all I think you know that.

Chris: Pretty much there at all.

Chris: As mentioned the main goal here is to get these nonproductive.

Chris: Use that excess inventory.

Chris: <unk>.

Chris: For us internally at the warehouse and then yeah, we redeploy them to actual producing dermatology offices.

Dolev Rafaeli: The opportunity is either to reviving existing devices or removing them and using them instead of building new devices when we start expanding again. The threshold metric would be, obviously, how much revenue this device is generating or how much this device can generate, but as a whole, if you look at this as an installed base, every one of these devices that does not generate, in excess of, on average, in excess of $15,000-$16,000 is not contributing to the bottom line. That's the goal.

None: Exactly yes, okay, Paraguay myself it sounds pretty good.

None: So Jeff it's more it's more it's more of a movement within the balance sheet. So instead of instead of having to re create additional devices new devices and moving into <unk>. We already have them, we're moving them away from non productivity accounts either into other productive accounts or angel.

None: Our house.

These can be utilized and into productivity.

Jeff: Got it Okay could you talk about our P show, a little bit as far as what's the recommended number of treatments over what duration and are there any current.

Dolev Rafaeli: So the target is going to be to optimize the installed base. On the one hand, we have increased utilization of the existing installed base on the other. I would not anticipate very strong moves in the installed base either way.

Jeff: Data points or studies ongoing.

Jeff: So great question.

Jeff: Sure.

None: And some other indications are indications that are.

None: It has.

None: Extensive clinical data I will make sure to follow up after this call and send you.

Dolev Rafaeli: If you look back at the company's disclosures in the past, we have every year removed in the range of 100 to 120 devices, and in the years that the company was expanding, we've placed more than 100 or 120, and in the years that the company was shrinking, we've placed less than 100 or 120. So it's not going to be the complete stop of the extension, but it's going to be somewhat of a shrinkage of non-performing devices just in order to replace them with accounts that could be more productive as we reintroduce them. Chris, do you want to add something?

None: Clinical data for that.

None: We are.

None: Yes.

None: Excimer laser is used for the treatment of these conditions, specifically I was talking about our vishal yellow, which is the <unk>.

None: Are the parallels patches caused by auto immune diseases and he was also talking about about CTC L which is another.

None: Ultimately.

None: Inflicted disease.

None: These conditions are and have been used by clinicians are the Exxon has been used by clinicians to treat them and these physicians are being treated.

None: From the Companys perspective, theyre being treated off label because the the.

Christopher Lesovitz: Neto, I think you nailed it pretty much there. As Dolev mentioned, the main goal here is to get these non-productives out and, you know, use that excess inventory for us internally at the warehouse. And then, you know, we redeploy them to actual producing dermatology offices. And yeah, that pretty much sums it up pretty well.

None: The FDA labeling of the device for the treatment of psoriasis, vitiligo, atopic dermatitis and Leucoderma.

None: However, these conditions are being treated have been treated over multiple years.

None: And are being paid and accepted by the commercial payors.

None: We're trying to do is we're trying to bridge that gap.

Dolev Rafaeli: So, Jeff, it's more a movement within the balance sheet, so instead of having to recreate additional devices, new devices, and move them into PD&E, we already have them. We're moving them away from non-productive accounts, either into other productive accounts or into the warehouse so that these can be utilized in production. Got it. Okay, um, could you talk about alopecia a little bit as far as what's the recommended number of treatments over what duration, and are there any current data points or studies ongoing?

None: We cannot actively promotes anything that's not labels. So that's on the.

None: On the FDA front and so we're actively promoting it will provide the clinical data, but we cannot we cannot.

None: Promote the use of the device.

None: And we can also it's very hard for us to negotiate with the with the Payors issues. If it's an off label indications. However, we had very solid track records of these conditions being approved by and paid by the.

None: Payers, both both Medicare and private payers.

None: Okay got it.

Next question could you talk a little bit about <unk>.

Dolev Rafaeli: So, great question. Alopecia and some other indications are conditions that have extensive clinical data. I will make sure to follow up after this call and send you clinical data for that where the eczema laser is used for the treatment of these conditions. Specifically, I was talking about alopecia areata, which is the hair loss patches caused by autoimmune diseases, and I was also talking about CTCL, which is another autoimmune disease, incurable disease.

None: Some of the clusters out there O U S as far as direct and growth in say Latam Europe as well as Asia.

None: Yes, so our biggest clusters of users have always been in Asia.

None: China, Japan.

None: South Korea.

None: In China, Japan, and South Korea, as well as in the Middle East. These these markets are different from each other in the sense that in some markets like Japan.

None: And in South Korea. This procedure is covered by the reinsurance from the health care insurance companies and we have been.

Dolev Rafaeli: These conditions are and have been used by clinicians, or the X-TRAC has been used by clinicians to treat them, and from the company's perspective, they're being treated off-label because the FDA labeling of the device aims for the treatment of psoriasis, vitiligo, atopic dermatitis, and leukoderma. However, these conditions are being treated, have been treated over multiple What we're trying to do is bridge that gap. We cannot actively promote anything that's not labeled, so that's on the FDA front, and so we're inactively promoting it. We're providing clinical data, but we cannot, And we can also; it's very hard for us to negotiate with the payers if it's an off-label indication.

None: Accepted as a brand we've been accepted as the leading brand in these markets and we do.

None: Thank you.

None: <unk>, leading position in that market in terms of the market share of AV providers using this where the other markets.

None: Are either more aesthetically driven so China, where it's mostly cash pay.

None: Or states healthcare insurers Jayson like.

None: The middle East.

None: Most of the Kingdom of Saudi Arabia.

None: Other.

Other countries there.

None: We have.

None: North of 500 devices in these markets.

None: And we've had them for over.

None: 14 years, we started doing this 14 years ago.

None: And the sales into these markets as well.

None: Looking into three components, we sell capital equipment. So we saw new devices.

None: And that is used for replacement of existing devices and going into your account, we sell parts and consumables into these markets, which represents about one third of the revenue.

Dolev Rafaeli: However, we have very solid track records of these conditions being approved by and paid by the providers. Repair, both Medicare as well. Okay, got it. Next question, could you talk a little bit about some of the clusters out there, OUS as far as direct and growth in, say, LATAM, Europe, as well as Asia.

None: Where the excimer laser requires jazz and other components to maintain it.

None: We've seen.

None: We've seen this in these markets as well as in the domestic market.

None: Lifespan of these of the extra devices.

None: Well north of 10 years, we have devices that have been in the market for 14 15 years, but it does require.

None: And of course.

None: Third four hours, which is something that we've introduced for 2021.

None: The.

Dolev Rafaeli: Yes, so our biggest clusters of users have always been in Asia, China, Japan. South Korea, China, Japan, and South Korea, as well as in the Middle East, these markets are different from each other in the sense that in some markets, like Japan and in South Korea, this procedure is covered by the insurance company, healthcare insurance companies, and we have been accepted as a brand, we've been accepted as the leading brand in these markets, and we do take a leading position in that market in terms of the market share, of providers using this, where the other markets are either more aesthetically driven, so China where it's mostly cash pay, or, State Health Care Insurance Driven, like the Middle East, mostly the Kingdom of Saudi Arabia, and the other.

None: Placement of devices are basing our recurring revenue, which is which is.

None: Starting at the end of 2020.

None: Sure.

None: To the extent of about $1 $5 million.

None: They do annually.

None: As of last year this was true for.

None: All of the Asian markets.

None: One of the anchor markets hierarchy cyber too.

None: Move away from that is mostly because of weaker over there.

None: Limitations on.

None: Okay devices in the market that are not covered by now but we.

None: We continue to have in place for.

None: Devices, and Korea as well as in Japan. This allows users.

None: Two clicks curvy therapy without having to place to hundreds of thousands of course.

Dolev Rafaeli: Deal Learner, Um, we have North of 1500 devices in these markets, and we've had them for over 14 years. We started doing this 14 years ago, And the sale into these markets is broken into three components. We sell capital equipment, so we sell new devices. Use for Replacement of Existing Devices and Going into New Accounts. We sell parts and consumables into these markets, which represents about one-third of the revenue, where the eczema laser requires batteries and other components to maintain it. We've seen this in these markets, as well as in the domestic market, where the lifespan of the extract devices is well north of 10 years.

None: Uh huh.

None: And.

None: The cost of the aircraft equipment.

None: Okay got it and then lastly for us if I may.

None: Firstly, a little bit on 'twenty 'twenty four so firstly I'm wondering how many sort of occur devices you aspire to housing.

None: At the end of the year and then secondly.

None: No guidance on top or bottom line you did mentioned growth are you referring to.

None: 5% growth or more.

None: 8% growth or any idea there that you cannot provide that goes across.

None: Let me start with your second question.

None: He has the key initiatives in 2024 is too.

None: Is to bring.

None: The company back into a growth mode.

The recurring side, while maintaining the other components of the company.

Dolev Rafaeli: We have devices that have been in the market for 14, 15 years, but they do require maintenance and parts. And the third component, which is something that we've introduced in 2021, is the placement of devices and based on recurring revenue, which started at the end of 2020 and grew to the extent of about $1.5 million in revenue annually as of last year. This was true for all of the Asian markets.

None: Parse the recurring side. So the recurring side has three components. One I just spoke about which is the non U S and as I said there are.

None: There are.

None: It's an existing and growing market very stable.

None: We've been in these markets for many years, we are the leading brand and it's it's.

None: It's a very.

None: I don't want to say easy, but it's a very efficient transaction for us as well as for the distributors and the customers on that side and then in 2023 as I said it was I mean, you can see this in the 10-K, but it was approximately $1 5 million for these markets.

The second component and you've touched upon this is the.

Dolev Rafaeli: One of the Asian markets, China, decided to move away from that, mostly because of their limitations on... Maintaining devices in the market that are not owned by them, but we continue to have placement devices in Korea and as well as in Japan. This allows users to commit to the therapy without having to commit to hundreds of thousands of dollars over the course of the year. Okay, I got it.

None: So the company owns.

In terms of have acquired about 200 devices, so without having in that investment sits in the PP&E.

None: And.

None: And our balance sheet.

None: The deployment of these devices and getting them to utilization was the prime target.

Dolev Rafaeli: And then lastly for us, if I may, um... Press you a little bit on 2024. So, firstly, I'm wondering how many TheraClear devices you aspire to have at the end of the year. And then secondly, no guidance on top or bottom line. You did mention growth. Are you referring to 5% growth or 20% growth? Or any idea there that you can provide that doesn't surprise us?

None: The changes we've made at the end of Q4 2023, when we decided.

None: Instead of continuing to pursue.

Cash paying patients or cash pain physicians.

None: Uh huh.

None: You mentioned that are collecting cash flow procedures, we've pivoted towards going after clinics where the.

Dolev Rafaeli: Let me start with the second question. The key initiative in 2024 is to bring the company back into a gross mode and the recurring side while maintaining the other. Now I'll parse the recurring side. So the recurring side has three components. One I just spoke about, which is the non-US.

None: The insurance reimbursement is the main target and as I've explained in the.

None: In the third quarter, earning call in November. This is the goal and we're first going to be tracking through.

None: Can we get these clinics, who use the procedure can we get patients cleared through.

Dolev Rafaeli: And as I said, there are. There are. It's an existing and growing market, very stable.

None: Sure.

None: And then can we get on the other on the other hand till we get the clinics to collect on the procedure as theyre being reimbursed as I said in my prepared remarks.

Dolev Rafaeli: We've been in these markets for many years. We are the leading brand. It's a very, I don't want to say easy, but it's a very efficient transaction for us, as well as for the distributors and the... On that side.

None: Bottom now we've had several hundred patients.

None: <unk> submitted to insurance.

None: We've handled and very high percentage of.

Dolev Rafaeli: And in 2023, as I said, it was, and you can see this in the 10k, but it was approximately These, The second component, and you've touched upon this, is the therapy. So the company owns, in terms of having acquired, about 200 devices. So without having an investment shift in the PP&E, and in the end, out.

None: Oh boy.

None: Very nominal.

None: Monitor all right and and now we're on the back end of that looking at it.

None: Providers.

None: Treating the patients submitting for reimbursement and getting paid and as I said in my in my remarks, what we see is that the.

None: The average average Medicare rate is about $120 via private payers are paying.

Dolev Rafaeli: And the deployment of these devices and getting them into utilization was the prime target of the changes we made at the end of Q4 2023 when we decided. Instead of continuing to pursue cash-paying patients or cash-paying physicians, or physicians that are collecting cash for procedures, we have pivoted towards going after clinics where insurance reimbursement is the, And as I've explained in the third quarter earning call in November. This is the goal, and we're first gonna be tracking through, can we get these clinics to use the procedure? Can we get patients cleared through insurance?

None: Sure.

None: On average that amount, but but in some areas, it's much higher than it happened in some areas it's lower.

None: As we as we stand now we have hundreds and hundreds of patients and the process.

None: Of being treated and of payments being collected.

None: Hum.

None: I would assume that the first quarter, we will be able to provide guidance.

None: Guidance.

None: What would we anticipate.

None: Our recurring revenue per device or for growth are working.

None: What would be the.

None: The number of new license, we will anticipate having.

None: The end of the year.

None: I can I can say.

None: It's a high hurdle for the first quarter, we are seeing there.

Dolev Rafaeli: And then, on the other hand, can we get, can we get the clinics to collect on the procedure as they're being reimbursed? As I said in my previous remarks, by now, we've had several hundred patients submitted to insurance. We've had a very high percentage of them, Homeboy.

None: Growing.

None: Scepter.

None: The usage of the reimbursement code.

None: And that is happening in light of.

None: One is there wasn't loved it wasn't other than Pfizer the market took a lot of attention in the last couple of years and there was good performance coming from Hercules voice for not for weeks petrology, It's a different company.

Dolev Rafaeli: And now we're on the back end of that, looking at... Providers, treating the patients, submitting for reimbursement, and getting paid. And as I said in my remarks, what we see is that the average Medicare rate is about $120, and private payers are paying about that amount on average, but in some areas it's much higher than that, and in some areas it's lower than that.

None: I'll first technologies.

None: Sure.

None: Driving patients for cash pay.

None: The realization of our reorganization there Eric.

None: The patients.

None: Get covered by insurance.

None: Our exposure is there out of out of pocket co pay.

None: Having gone that route.

None: Sure.

None: The country.

None: A very large number of payers gives us a lot of controversy.

Dolev Rafaeli: As we stand now, we have hundreds and hundreds of patients in the process of being treated and of payments being collected. I would assume that by the end of the first quarter, we'll be able to provide actual guidance on what we anticipate. The Current Revenue Per Device to be, or to grow to, and what the number of devices we will anticipate having by the end of the year. I can say, just as a side note for the first quarter, we are seeing a glowing, [inaudible] Not for its technology, but more for the inability to drive patients for cash pay and the realization, the realization that... Patients can get covered by insurance, and their only exposure is their out-of-pocket copay.

None: At the end of Q1, we will be able to provide.

None: Guidance.

None: Sure.

None: <unk> targets.

None: Revenue.

None: I hope that explains all the extra.

None: Yeah.

None: I did speak about where we want to be so we are we ended 2023.

None: Just over $5000.

None: If we could get by the end of 2024 to be where we were at <unk>.

None: 2020 were within the range of seven.

None: 7000 $7200 per device for the fourth quarter. This is gonna be.

None: There isn't going to be a great outcome, because it's going to provide a meaningful oxide.

None: Yeah.

None: Alrighty.

None: Reeker recurring run rate.

Dolev Rafaeli: And having done that now in all regions of the country and with a very large number of payers gives us a lot of confidence that by the end of Q1, we will be able to provide. I hope that explains that. On the extract, I did speak about where we want to be. So we've ended 2023 at just over $5,000. And if we could get by the end of 2024 to be where we were at the end of 2021, which is in the range of. 7,000 units, $7,200 per device, for the fourth quarter.

None: Just as a reminder, the recurring revenue for the company has been in decline.

None: Several quarters, so being able to get through a stock with a decline let's start seeing the declines.

None: It would be.

None: Okay.

None: Perfect. Okay that does for us thanks for taking the questions.

None: Thank you.

None: Thank you.

None: As a reminder, press star one to ask a question at this time.

None: Thank you. Our next question comes from the line of Jonathan Lawrence with Dawson James.

Jonathan Lawrence: Hey, Joe Hey, Dara.

Jonathan Lawrence: Hey, Chris how are you doing.

My questions was answered.

None: Can you hear me.

None: Yes.

None: Okay, Great I was just curious on the direct to consumer business.

Dolev Rafaeli: This is gonna be a great outcome because it's gonna provide a meaningful upside on the. And just as a reminder, the recurring revenue for the company has been in decline for several quarters. So being able to get to a softer decline and then start seeing the decline. In my eyes, we're beautiful.

None: How is that going as far as the traction in both extract and also on <unk>.

As far as.

None: What you saw previously when you were doing this and kind of.

None: Anything's changed or its just are just.

None: Spending the dollars in getting the leads.

Dolev Rafaeli: Perfect. Okay, that does it for us. Thanks for taking the question. Thank you. As a reminder, press star 1 to ask a question. John, Hey Dolev. Hey Dolev. Hey Dolev. Chris, how are you doing? My questions were answered. Can you hear me?

None: Great question. Thank you al I'll, just point out to a few things I said through my prepared remarks.

None: When when shadow left off DTC, which was the.

None: At the beginning of 2022.

None: Okay.

None: Yeah, Eric consumer score for the year of 2021, we're going to a range of approximately $2 million.

John: Yeah. Yes. Okay, great. I was just curious about the direct-to-consumer business. How is that going as far as the traction for both X-TRAC and also for TheraClear?

That's $2 million generated about 6000 of forklifts.

None: Which were which were approximately 25% of the.

None: The new patients introduce them to the clinic. So if you wish.

Dolev Rafaeli: Um, as far as what you saw previously when you were doing this and kind of, if anything's changed, or it's just, just spending the dollars and getting the lead. I'll just point out a few things I said in my prepared remarks. When STRATA left off DTC, which was..., the beginning of 2022. The DTC spend, or the direct to consumer spend for the year of 2021 was in the range of approximately $2 million. That $2 million generated about 6,000 appointments, which were approximately 25% of the new patients introduced into the clinic. So, if you wish, the company subsidizes about 25% of patient growth into the clinics.

Okay subsidized about 25% patient growth.

None: Thanks for the.

None: Enter the clinic.

None: In 2020 for the company.

None: Great.

None: And then in 2023.

None: Most most of its resources towards.

Erika provider marketing and promoting.

None: We're working with the new therapy right.

Go.

None: Bachelor until you can see.

None: I would like to see.

None: Sure.

None: Restart of getting these leads and getting he is upon us.

None: And the most important first.

None: First step was to reestablish where are we in terms of cost because two years have gone by.

None: Sure.

None: Rules on online advertising.

None: The available solutions being for all kinds of crew social media and online.

Dolev Rafaeli: In 2022, the company stopped doing DTC, and then in 2023, it moved most of its resources towards direct-to-provider marketing and promoting the new therapy. By going back into DTC, we would like to see the restart of getting these leads in, getting these appointments in, and the most important first step was to re-establish where we are in terms of cost. Two years have gone by, the cost of media has changed, the rules on online advertising have changed, the available solutions that are being promoted through social media and online have changed, by different pharmaceutical companies. So we wanted to see where we stand. We started doing DTC in the second half of January of 2024 with only four territories. We were happily surprised to see that our cost per lead in the range of $30 and our cost per appointment in the range of $300 remained the same.

None: Yes for sure.

None: Pharmacy pharmaceutical companies. So we wanted to see where we start we started doing you can see in the.

None: Second half of January of 2024.

None: With only four territories as I mentioned in my remarks.

None: Our anticipation is to see where we stand in terms of results and we were happily surprised to see that our cost per lead.

None: In the range of 30 doors, and our cost per our process and the <unk>.

None: Range of $300.

None: Remains.

None: Stable.

None: We have.

None: Expanded to additional categories, which I will be happy to provide more details.

None: First quarter F.

None: There were some.

None: A growing number of a growing number of protocols being scheduled to come to our clinics.

Dolev Rafaeli: We have since expanded to additional categories, and I will be happy to provide more details. We're seeing a growing number of leads, and a growing number of appointments being scheduled into clinics. By that, we should see the results of the DTC in the range of two to three months into the campaign. Because it takes time from the time the appointment is scheduled until the first appointment happens. The procedure is prescribed, and then the patient starts getting treated, and then there is a consumption of treatment codes, and we see that coming our way.

None: Hi.

None: We should see.

None: The results of the BTC.

None: And the range of quarter two.

None: So those are the comparator because it takes time for retiree.

None: The first one schedule first of all the first half.

None: The procedure is prescribed.

Patient starts getting great there.

None: As construction Preclinicals and we see that occurring.

None: Okay.

None: Well.

None: I would like to be.

None: Of 2020 for the acquisition was to say that in Q4, we scored as watch as we spent in Q4 of 2021.

Dolev Rafaeli: I would like, at the end of 2024, to be in a position to say that in Q4, we've spent as much as we have spent in Q4 of 2021, and I would also like to be in a position to say The End of 2021. I've provided in my remarks the baseline so, on conference calls, people will be able to follow through on the success or the progress of this initiative. But I am confident that with these levels of cost per lead and cost per appointment, we will be able to expand the effort.

None: I'd also like to be in a position to say that.

None: Q4, 2024, we generate as many important fronts.

None: As we are.

None: 2021.

None: I provided in my remarks, the baselines.

None: Subsequence.

None: Of course people will behave.

None: It will to fall through the <unk>.

None: Success or the progress.

None: Jim.

None: But I am confident that with these levels of cost per lead and cost per person as we will be able to expand the efforts.

John: Meaningfully through the end of Q1 and then into Q2. Okay, thank you very much. Thank you, John. There are no further questions. I'd like to turn the floor back.

None: Internationally through the end of Q1.

None: <unk> for Q.

None: Okay. Thank you very much.

None: Thank you Tom.

None: Thank you there are no further questions at this time.

None: I would like to turn the floor back over to the Doctor Raffaelli for closing comments.

Dolev Rafaeli: Rafael, I would like to thank everyone for showing up for our earnings poll. We will be back at the end of the first quarter to provide further, Thank you very much.

Dolev Rafaeli: I would like to thank everyone for showing up for our earning call.

Dolev Rafaeli: We will be back at the end of.

Dolev Rafaeli: The first quarter to provide further updates thank you very much.

Operator: This concludes today's telecast. Disconnect Your Lines. Thank you for your participation. (inaudible)... (inaudible) Bye!

None: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

None: Yes.

None: Yes.

None: Yeah.

None: Okay.

None: Uh-huh.

None: [music].

None: Okay.

None: Mhm.

None: [music].

None: Hum.

None: Okay.

None: Yes.

None:

None: Hum.

None: [music].

None: Hum.

None:

None: [music].

Okay.

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None: Okay.