Q1 2024 STRATA Skin Sciences Inc Earnings Call

Speaker Change: [music].

Operator: Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the STRATA Skin Sciences, Inc. first quarter of 2024 financial results and corporate update conference call.

Ladies and gentlemen, thank you for standing by.

Speaker Change: Good afternoon, and welcome to the strata Skin Sciences, Inc. First quarter of 2024 financial results and corporate update conference call.

Operator: At this time, all participants are in a listen-only mode. And should you need any assistance during the call, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. And to withdraw a question, please press star, then two. Please be advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: And should you need any assistance during the call. Please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: After todays presentation, there will be an opportunity to ask questions.

Speaker Change: To ask a question you May press Star then one on your telephone keypad to withdraw a question. Please press Star then two.

Speaker Change: Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes.

Speaker Change: A replay of the call will be available approximately one hour. After the end of the call through November 15th 2024.

Operator: A webcast replay of the call will be available approximately one hour after the end of the call through November 15, 2024. And with that, I'd like to turn the call over to Joey Delahousse. Please go ahead. Good afternoon, and thank you.

Speaker Change: And with that I'd like to turn the call over to Joey Geller Hussaini. Please go ahead.

Joel Cohen: Good afternoon, and thank you for participating in today's conference call. Earlier this afternoon, the company released its financial results for the quarter ended March 31st, 2024. A copy of that press release can be found on the company's website under the Investors tab.

Speaker Change: Afternoon, and thank you for participating in today's conference call.

Speaker Change: Earlier. This afternoon. The company released its financial results for the quarter ended March 31 2020 for.

Speaker Change: A copy of that press release can be found on the company's website at www strata skin sciences dot com under the investors tab.

Joel Cohen: Joining me on today's earnings call from the STRATA Skin Sciences Management Team are Dr. Dolev Rafaeli, Chief Executive Officer, and Chris Lesovitz, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address STRATA Skin scientists' expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in STRATA Skin Sciences' most recently filed annual report on Form 10-K and subsequent periodic reports filed with the SEC and STRATA Skin Sciences' press release that accompanies this call, particularly the cautionary statements in it.

Speaker Change: Joining me on today's earnings call from Stratus can trying to his management team are Dr. Dolan property Ali Chief Executive Officer, and Chris less a bit Chief financial Officer.

Management: During this call management will be making forward looking statements, including statements that address strata skin sciences expectations for future performance or operational results.

Management: Forward looking statements involve risks and other factors that may cause actual results to differ materially from those statements.

Speaker Change: For more information about these risks please refer to the risk factors described in Stratus can science. Its most recently filed annual report on Form 10-K, and subsequent periodic reports filed with the SEC in strata skin Sciences press release that accompanies this call, particularly the cautionary statements in it.

Joel Cohen: The content of this call contains time-sensitive information that is accurate only as of today, May 15, 2024. Except as required by law, STRATA Skin's scientists disclaim any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to CEO, Dr. Dolev Rafaeli.

Speaker Change: The content of this call contains time sensitive information that is accurate only as of today may 15 2024.

Speaker Change: Except as required by law strata skin sciences disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.

Speaker Change: It is now my pleasure to turn the call over to CEO Dr. Raphael.

Dolev Rafaeli: Thank you, Joey. Good afternoon to everyone on the call. During the first quarter, we continued to execute on the multifaceted turnaround strategy introduced when I was appointed CEO late last year. Clinical results using X-TRAC are proven across the hundreds of thousands of patients treated for psoriasis, vitiligo, and eczema, and our strategy primarily focuses on adjusting our X-TRAC device placement and increasing our DTC marketing to drive X-TRAC device utilization and recurring revenue per device over the coming quarters across our domestic install base of approximately 900.

Dolev Rafaeli: Thank you Kelly and good afternoon to everyone on the call.

Dolev Rafaeli: During the first quarter, we continued to execute on our multifaceted corner on strategy introduced when I was appointed CEO late last year.

Speaker Change: Clinical results using extra work.

Dolev Rafaeli: Proven across the hundreds of thousands of patients treated course allows a little while ago and eczema and our strategy primarily focused on adjusting our extract device placements and increasing our DTC marketing to drive extra device utilization and recurring revenue.

Dolev Rafaeli: And you heard me highs over the coming quarters.

Speaker Change: Our domestic installed base of approximately 100 devices during.

Dolev Rafaeli: During my previous tenure here at STRATA, we have been successful with these strategies, and we feel comfortable driving similar results in 2024 and beyond. We started our DTC spend ramp up at the beginning of the first quarter in a limited region of the country and expect to increase our marketing allocation to DTC in the coming quarter to drive patient appointments and expand the program into additional geography. During the first quarter, we expanded from our original four targeted areas to six and generated over 500 patient appointments at a cost per appointment of under $300 and a cost per lead of under $40.

Speaker Change: During my previous tenure here at travel we have been successful with these strategies and we feel comfortable driving similar results in 2024 and beyond.

Speaker Change: We started our DTC spend ramp up at the beginning of the first quarter in a limited region of the country and expect to increase our marketing allocation to DTC in the coming quarters.

Speaker Change: Drive patient appointments and.

Speaker Change: Okay.

Speaker Change: Core growth into additional geographical areas.

Speaker Change: During the first quarter, we have expanded from our original four targeted areas to six and generated over 500 patient appointments at a cost per appointment of under $300 and a cost per lead of under 40. These.

Dolev Rafaeli: These metrics are in line with our previous DTC campaigns from my previous 10 years and in stark contrast to the 21 appointments scheduled by STRATA in the first quarter of 2023 when the company did not apply DTC. These metrics are in line with those achieved in the first quarters of each 2019 and 2021, in which, with a full DTC spend budget across the nation, we achieved 1,900 and 1,800 appointments, respectively, after three quarters of ramp-up. The first quarters of those years followed periods of no DTC spend.

Speaker Change: These metrics are in line with our previous DTC campaigns from my previous tenure and in Stark contrast to the 21 appointment scheduled by strata in the first quarter of 2023, when the company did not apply DTC.

Speaker Change: These metrics are in line with those achieved in the first quarters of 2019 in 2020, one in which with a full DTC spend budgets across the nation. We achieved 1000 901800 appointments respectively. After three quarters of ramp.

Speaker Change: The first quarters in each of those years, followed periods of no DTC spend and as a reminder, domestic gross Woodford revenue in both 2019 in 2021 experienced strong double digit growth.

Dolev Rafaeli: And as a reminder, domestic gross recurring revenue in both 2019 and 2021 experienced strong double-digit growth. Another strategic initiative is optimizing our extract device plate. We have some underperforming dermatology partners.

Speaker Change: Another strategic initiative is optimizing our extra device placements.

Speaker Change: We have some underperforming dermatology partners.

Dolev Rafaeli: So instead of staying saddled with underperforming assets, we constantly consider removing these devices from such clinics and placing the devices in other dermatology clinics that have demonstrated the potential for higher utilization. Higher utilization is a benefit for both the clinic and STRATA Skin. So we are always looking to optimize our installed base in extra places.

Speaker Change: So instead of saying saddled with underperforming assets.

Speaker Change: Constantly consider removing these devices from such clinics and placing the devices in other dermatology clinics that have demonstrated the potential for higher utilization higher stimulation is a benefit for both the clinic and strata SKU.

Speaker Change: So we are always looking to optimize our installed base or the extra placements.

Dolev Rafaeli: The opportunity to increase utilization of our X-ray devices from both... The increase in DTC spam and a repositioning of underperforming devices is significant; successful execution of our strategy could increase the average gross recurring revenue per device from approximately $21,000 in 2023 to $30,000, which we last enjoyed in fiscal 2019 right before COVID. This transition will take some time as a similar turnaround that started in mid-2018 resulted in the fourth quarter of 2019 reaching nearly $8,000 in gross recurring revenue per year.

Speaker Change: The opportunity to increase utilization of our extra devices for both.

Speaker Change: Increased DTC spend and a repositioning of underperforming devices.

Speaker Change: Michigan's successful execution of our strategy could increase the average gross recurring revenue per device for from approximately $21000 in 2020 suites to $30000, which we list enjoyed in fiscal 2019 right before the Covid pandemic.

Speaker Change: This transition will take some time as a similar turnaround.

Speaker Change: Started in mid 2018 resulted in the fourth quarter of 2019, reaching nearly $8000 in gross recurring revenue per device.

Dolev Rafaeli: A return to these efficiencies across our installed base of over 900 devices could mean an incremental $8 million in high-margin revenue, allowing us to reach profitability and positive cash flow in the near term. We have seen evidence that our domestic business may have already been positively impacted by our strategic initiatives, and are encouraged by that we are on the right track. In the first quarter of 2024, our gross domestic recurring billings were down just 3% year over, making During the most recent three quarters, from the second quarter of 2023 to the fourth quarter of 2023, this metric was down 15%, 12%, and 14%, respectively.

Speaker Change: A return to these efficiencies across our installed base of over 900 devices could mean, an incremental $8 million in high margin revenue, allowing us to reach profitability and positive cash flow in the pulses.

Speaker Change: We are seeing evidence that our domestic business may have already been positively impacted by our strong strategic initiatives and are encouraged by that we are on the right path.

Speaker Change: In the first quarter of 2024, our gross domestic recurring billings were down just 3% year over year.

Speaker Change: Making that the smallest year over year decline in the past seven quarters since the end of the second quarter of 2022.

Speaker Change: During the most recent three quarters from second quarter of 2020 fleet to the fourth quarter of 2023.

Speaker Change: This metric was down 15%, 12% and 14% respectively. Thus this much smaller decline in gross domestic recurring building of 3% in the first quarter of 'twenty 'twenty four was a marked improvement providing some optimism that this metric can turn positive.

Dolev Rafaeli: This much smaller decline in gross domestic recurring billing of 3% in the first quarter of 2024 was a marked improvement, providing some optimism that this metric can turn positive in the upcoming quarters, further cementing the business turnover. As part of our strategic term. We successfully removed 32 extractive devices in the first quarter of 2020 and placed 16 devices into new accounts, including 6 that were placed into Comeback, that represent clinics with existing external agents that opted to re-engage with STRATA through our partnership.

Speaker Change: In the upcoming quarters further cementing the business turnaround.

Speaker Change: As part of our strategic turnaround, we successfully removed 42 extra devices in the first quarter of 2024 and placed 16 devices into new accounts, including six that were placed into comeback accounts that represent quite clinics that with existing excimer laser.

Speaker Change: Business that opted to reengage with strata through our partnership model. These changes have resulted in a domestic recurring installed base of 907 extra devices at the end of the first quarter down from 923 at the end of 2023, we expect.

Dolev Rafaeli: These changes have resulted in a domestic recurring installed base of 907 extract devices at the end of the first quarter, down from 923 at the end of 2023. We expect this optimization to continue in the upcoming Beyond X-TRAC, we continue growing our domestic installed base of Fair Clear X devices through the implementation of our recurring revenue model. In the first quarter, we successfully grew the TheraClear X install base from 92 at the end of 2023 to 104 on March 31st, 2021.

Speaker Change: This optimization to continue in the upcoming quarters.

Speaker Change: On the Xtra, we continue growing our domestic installed base of four clear X device through the implementation of our recurring revenue model.

Speaker Change: In the first quarter. We successfully grew the therapy are actually installed base for 92 at the end of 2023 to 104 at March 31 2024.

Dolev Rafaeli: We are encouraged by the uptake of clinics beginning to use the acne surgery CPT. The first quarter ended with 47 of the 104 clinics submitting RDX insurance reimbursement charts at a rate of 65 charts per week as compared to none in the same period previously. There are over 50 million patients with acne in the U.S., and the unique and reimbursable underlying photopneumatic approach with TeraClear X can address limitations of existing acne treatments and drive reimbursable recurring revenue for our dermatology partners, similar to the X-TRAC model.

Speaker Change: We are encouraged by the uptake of clinics beginning to use the Acme surgery CPT codes.

Speaker Change: First quarter ended with 47 of the 104 clinics submitting Rds insurance reimbursement charts at a rate of 65 charts per week as compared to none in the same period previous quarters.

Speaker Change: There are over 50 million patients with acne in the U S and the unique and Reimbursable underlying photo nomadic approach with both near X can.

Speaker Change: I can address the limitations of existing acne treatments and drive Reimbursable recurring revenue for our dermatology partners similar to the extra model.

Speaker Change: Lastly continued penetration in key international markets is also an objective for us in late December 2023, we've extended our exclusive distribution agreement with our distributor in Korea and in early April we did the same with our exclusive distributors in China and.

Dolev Rafaeli: Continued penetration in key international markets is also an objective. In late December 2023, we extended our exclusive distribution agreement with our distributor in Korea. And in early April, we did the same with our exclusive distributors in China and. International revenue typically accounts for approximately 30 to 35% of our total revenue, and these three territories alone account for over 50% of that. So to extend these long-lasting relationships is neutrally beneficial for both parties.

Speaker Change: Japan.

Speaker Change: International revenue typically accounts for approximately 30% to 35% of our total revenue and these three territories alone accounts for over 50% of those revenues.

Speaker Change: So to extend these long lasting relationships is mutually beneficial for both sides.

Dolev Rafaeli: Going forward, we expect to see continued growth in our DTC marketing efforts, driving Extract Utilization and Gross Domestic Return Billing, each of which are key components for us to demonstrate improved operating leverage and reach profit. A key initiative in this turnaround is our focus on cost. Notably, in the first quarter, we've reduced our cash burn by $1.1 million, or 41%, and our operating expenses by $1 million, or 14% compared to last year.

Speaker Change: Going forward, we expect to see continued growth in our DTC marketing efforts.

Speaker Change: Giving extra utilization and gross domestic recurring billings each of which are key components for us to demonstrate improved operating leverage and reaching profitability.

Speaker Change: A key initiative in this turnaround is our focus on cost controls, notably in the first quarter, we've reduced our cash burn by $1 1 million or 41% and our operating expenses by $1 million or 14% compared to last year.

Dolev Rafaeli: We talked about these collective strategies, and strategic initiatives before, and we will continue discussing them in future calls and Future Calls, as these tangible financial changes and results are proof of our commitment to narrowing our losses, extending the cash runway of the company, and becoming profitable. Now I'd like to turn the call over to Chris, who will review our financial results in much more detail. Chris?

Speaker Change: We talked about these collective strategy strategic initiatives before and we will continue discussing them in the future.

Speaker Change: Coal in future calls as these tangible financial changes and results are proof of our commitment to narrowing our losses, extending the cash runway of the company and becoming profitable now I'd like to turn the call over to Chris who will review our financial results in much more detail.

Christopher Lesovitz: Our total revenue for the first quarter of 2024 was $6.8 million versus $7.6 million in the first quarter of 2023. Revenue was negatively impacted by deferred gross billing, lower domestic equipment revenue, and the discontinuation of STRATAPAN. Global recurring revenue for the first quarter of 2024 was 4.7 million versus 5.2 million in the first quarter of 2023, excluding deferred billing and other gap adjustments.

Speaker Change: Chris.

Chris: Thank you dawn.

Chris: Our total revenue for the first quarter of 2024 was $6 8 million versus $7 6 million in the first quarter of 2023.

Chris: Revenue was negatively impacted by the deferred gross billings.

Chris: Lower domestic equipment revenue and the discontinuation of <unk>.

Global recurring revenue for the first quarter 2024 was $4 7 million versus $5 2 million in the first quarter of 2023.

Chris: Excluding deferred billings and other GAAP adjustments extract gross domestic recurrent billings were $4 6 million in the first quarter 2024 down 3% from $4 7 million in the first quarter of 2023.

Christopher Lesovitz: Extract gross domestic recurring billings were $4.6 million in the first quarter of 2024, down 3% from $4.7 million in the first quarter of 2023. Equipment revenue was $2.1 million in the first quarter of 2024, versus $2.4 million in the first quarter of 2023. International sales of X-TRAC and V-TRAC devices comprised the majority of the equipment revenue in both periods. Gross profit decreased to $3.1 million for the three months ended March 31, 2024, from $4.4 million during the same period in 2023.

Chris: Equipment revenue was $2 1 million in the first quarter of 2024 versus $2 4 million in the first quarter of 2023.

Chris: International sales of extracting beat track devices compromise the majority of the equipment revenue in both periods.

Chris: Gross profit decreased to $3 1 million for the three months ended March 31, 2024 from $4 4 million during the same period in 2023.

Christopher Lesovitz: As a percent of revenues, gross profit was 45.6% for the three months ended March 31st, 2024, as compared to 58% for the same period in 2023. The decrease in gross profit percentage was primarily the result of lower recognition of Q4 deferred revenue and Q1 from the prior year in the same period. Higher depreciation costs due to more extract lasers and new TheraClear X devices placed into service. Higher Material Production Costs, and the write-off of obsolete Farris Inventory Assets.

Chris: As a percent of revenues. The gross profit was 45, 6% for the three months ended March 31st 2024, as compared to 58% for the same period in 2023.

Chris: The decrease in gross profit percentage was primarily the result of lower recognition of Q4 deferred revenue in Q1 from the prior year in the same period.

Chris: Higher depreciation costs due to more extract lasers, and new therapy or extra devices placed into service.

Chris: Higher material and production cost and the write off of obsolete ferrous inventory assets.

Christopher Lesovitz: Total operating expenses in the first quarter of 2024 were $6 million versus $7 million in the first quarter of 2023. The decrease in operating expenses is a direct result of our right-sizing efforts and a purposeful leaner cost structure implemented in late 2023. Southern marketing declined by approximately 725,000 year-over-year, and G&A declined by approximately 200,000 year-over-year.

Chris: Total operating expenses in the first quarter of 2024 6 million versus 7 million in the first quarter 2023.

Chris: The decrease in operating expenses is a direct result of our right sizing efforts and a purposeful leaner cost structure implemented in late 2023.

Chris: Sales and marketing declined by approximately 725000 year over year and G&A declined by approximately 200000 a year over year.

Christopher Lesovitz: The goal is to return a leaner cost structure last seen in 2019. Our cash, cash equivalents, and restricted cash position of 6.6 million at March 31 2024, along with our modified credit facility with MidCap Financial, supports our growth initiatives and leaner cost structure. We continue to believe we can execute on our strategic goals for 2024, given our current financial position. As of March 31st, 2024, the company had 35,060,920 common shares outstanding. That concludes my prepared remarks, and I'd like to turn the call back over to Dolev for any remaining comments.

Chris: Goal is to return a leaner cost structure last seen in 2019.

Chris: Our cash cash equivalents and restrict cash position of $6 6 million at March 31, 2024.

Chris: Along with our modified credit facility with Midcap financial supports our growth initiatives and leaner cost structure.

Chris: We continue to believe we can execute on our strategic goals for 2024, given our current financial position.

Chris: As of March 31, 2024, the company had 35 million 60920 common shares outstanding.

Doyle: That concludes my prepared remarks, and I'd like to turn the call back over to Doyle for any remaining comments.

Doyle: Thank you Chris with both extra comparison here, we have two solutions for the dermatology market.

Dolev Rafaeli: With both X-Ray and TheraClear X, we have two solutions for dermatology that benefit patients, the dermatology clinics, and healthcare systems through reimbursed treatments. And, of course, STRATA Skin.

Doyle: That benefits patients the dermatology clinics and health care system through reimbursed treatments and of course throughout the scheme.

Dolev Rafaeli: Our turnaround strategy is starting to take root, and some of the metrics in the first quarter, including a narrowing decline in recurring revenues and a significant reduction in operating expenses, point to that. We have successfully right-sized our operating and corporate overheads, re-emphasized the DTC growth engine domestically to drive device utilization, and anticipate adjusting our domestic extract device footprint on a routine basis to remove devices from underperforming accounts and placing them with more promising ones. We expect to be successful with our multi-pronged strategy, but as I've said before, it will take some time to reach the finish line and complete the tournament.

Doyle: Our turnaround strategy is a.

Doyle: Starting to take root and some of the metrics in the first quarter, including narrowing decline in recurring revenues and a significant reduction in operating expenses pointed out we have successfully right sized on operating and corporate overheads.

Doyle: Ill reemphasize, the DTC growth engine domestically to drive device utilization and anticipates adjusting our domestic extra device footprint on a routine basis to remove devices from underperforming accounts and placing them with more promising channels we have.

Doyle: To be successful with our multi pronged strategy, but as I've said before it will take some time to reach the finish line and completes the turnarounds.

Dolev Rafaeli: Our team and strategies are proven, and we are resolute in our drive. We thank our investors for their support and look forward to reporting continued corporate progress. Now, I'd like to turn the call over to the operators so that we can begin the question and answer session. Operator.

Our team and strategies, our proven and we are resolute in our dry we thank our investors for their support and look forward to reporting continued corporate focus now I'd like to turn the call over to the operator, so that we can begin the question and answer session.

Doyle: Operator.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. And to withdraw a question, please press the star, then two. At this time, we will pause momentarily to assemble our roster, and our first question here will come from Jeffrey S. Cohen of the Leinberg Ptolemy Company. Please go ahead.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

If youre using a speakerphone please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: And our first question here will come from Jeffrey Cohen with Ladenburg Thalmann and company. Please go ahead.

Jeffrey Scott Cohen: Hi Dolev and Chris, how are you?

Jeffrey Scott Cohen: Hi, Chris how are you.

Dolev Rafaeli: Hi Jeff, good afternoon.

Chris: Hi, Jeff good afternoon.

Jeffrey Scott Cohen: So I guess firstly, could you talk about or identify the region of the country you're referencing in DTC, and then maybe give us a sense of the number of regions that you'll have in place, say, by the end of 24.

Chris: So.

Jeffrey Scott Cohen: Just firstly could you talk about or identify the region of the country, you're referencing in DTC and then may be give us a sense of.

Jeffrey Scott Cohen: No move regions that you have in place or anybody in their 24.

Dolev Rafaeli: Good question. We anticipate to be covering all regions by the end of the year. We hope to get there by the end of, by the middle of the third quarter in terms of DTC spend. We have moved the needle up in terms of DTC spend based on efficiencies. We need to see the cost per lead and the cost per appointment remain within these ranges. We also need to see the uptake of these patients into the funnel and convert into patients for extra treatment. And as we do that, we grow gradually. So, as I said, the end of Q2 or the middle of Q3 to be fully determined.

Speaker Change: Good question, so we anticipate to be covering all regions by the end of the year.

Speaker Change: We hope to get there.

Speaker Change: By the end of by the middle of the third quarter.

Speaker Change: In terms of DTC spend.

Speaker Change: We moved the needle up in terms of DTC stand.

Speaker Change: Based on efficiencies, we need to see the <unk>.

Speaker Change: Cost per lead in the cost per appointments remain within these ranges. We also need to see the uptake of these patients into the into the funnel and converting into X two patients in extra treatment and as we do that we grow gradually so as I said end of Q.

Speaker Change: End of Q.

Speaker Change: Two were the middle of Q3 to be fully deployed.

Speaker Change: Yeah.

Jeffrey Scott Cohen: And you're seeing all the regions this year.

Speaker Change: And Youre, saying all regions this year.

Dolev Rafaeli: Yes, I'm saying that by the end of this year, we're going to be advertising in all regions. I refer the listeners to the Investor Deck presentation that we have online, which shows the outcome of the first quarter in terms of patient leads in the New York City area, which was one of the four areas we advertised in. That page has both the placements of the devices in the market, as well as the patient leads, and we anticipate the same visual to be in all of the regions.

Speaker Change: Yes, I'm, saying that by the end of this year, we're going to be we're going to be advertising in all regions.

Speaker Change: E refer the listeners to the L b.

Speaker Change: Investor deck presentation that we have online which shows.

Speaker Change: The outcome of the first quarter in terms of.

Speaker Change: Peaches leads in the New York City area, which was one of the four areas we advertise.

Speaker Change: That's page has both the placements of the devices in the market as well as the patient needs and we anticipate the same.

Speaker Change: Same visual to be in all of the regions.

Dolev Rafaeli: These advertisements, these leads that come in, that are converted into an appointment, the appointments happen two, three weeks later as these are being scheduled in, and then patients start to be treated, so revenue follows that by a couple of weeks. But yes, by the end of this year, we're going to be covering all of that.

Speaker Change: These advertisement these leads that come in.

Speaker Change: That are converted into an appointment.

Speaker Change: The Appointment's happened.

Speaker Change: Two or three weeks later as diesel being scheduled in and then patient starts to be treated so revenue follows that with a couple of them with a couple of weeks, but yes by the end of this year, we're going to be covering all regions.

Jeffrey Scott Cohen: Okay, got it. So could you talk about for a bit and kind of in a perfect world and what you're planning for? Give us kind of a guesstimate on where you think extract placements could be through Q2 at the end of the year and the same with their

Speaker Change: Okay got it so can you talk about for the.

Speaker Change: And kind of in a perfect world and what you're planning for.

Speaker Change: Give us kind of a guesstimate of where you think extract placements could be.

Speaker Change: In Q2 at the end of the year and the same with there are clear.

Dolev Rafaeli: I'll start with TheraClear, which we have, as I've detailed in previous calls, we have an inventory on hand of just about 200 devices. And we would like to be in a position where, by the end of this year, or the first quarter of next year, we're going to be at or close to deploying all of the devices.

Speaker Change: I'll start with therapy or.

Speaker Change: Which which we have as I detailed.

Speaker Change: In previous calls we have the inventory on hand of just about 200 devices and we would like to be in a position where.

Speaker Change: By the end of this year or the first quarter of next year, we're going to be at or close to deploying all of these devices are.

Speaker Change: So utilizing the inventory we own.

Dolev Rafaeli: [inaudible] The deployment of these devices, as we've outlined before, is mostly with accounts that are going to be using reimbursement. I say mostly because not all of them do, and these accounts need reimbursement, need the patient flow to go through. And as I've presented in my prepared remarks, we are now up to 65 new patients a week, which is a run rate of over 3000 new patients for this new clinic. And this is only coming from 47 of the 104 accounts.

Speaker Change:

Speaker Change: The deployment of these devices.

As we've outlined.

Speaker Change: I'll try and before is mostly with with accounts that are going to be using reimbursement I'm, saying, mostly because not all of them do.

Speaker Change: And these accounts needs.

Speaker Change: Need to patient flow to go through and as our.

Speaker Change: Presented in my prepared remarks, we are now up to 65, new patients a week, which is a run rate of over 3000, new patients or this new.

Speaker Change: This new technology.

Speaker Change: Technology.

Speaker Change: And this is only coming from 47 of the 104 accounts. So the rest of the account and the rest of the accounts 50.

Dolev Rafaeli: So the rest of the accounts, 50... 57 accounts are still based on cash-paying patients. So that's with TheraClear, and as we move forward throughout the year, we do anticipate to start talking about account utilization, and the same as with X-Track, replacing existing devices in the market if we cannot get the throughput and the utilization from any one of these devices. And there was a press release that came out this week that discussed the nature of the accounts we go into.

Speaker Change: 57 accounts are still based are these hotels are still based on cash paying patients. So that's with the third clear.

Speaker Change: As we move forward towards throughout the year.

Speaker Change: We do anticipate to start talking about intelligence utilization and and.

Speaker Change: And the same is with extract the replacement.

Speaker Change: Of existing devices in the market, if we cannot get the.

Speaker Change: Rupert and the utilization from from any one of these devices. So.

Speaker Change: There was a press release that came out this week to discuss the nature of the accounts. We go into we mostly target existing extract accounts and mostly with.

Dolev Rafaeli: We mostly target existing XTRAC accounts and mostly with private equity-owned group roll-up clinics where we can have a clear understanding of how they're going to be using the devices and how they're going to be using the reimbursement codes because once we put our devices out there, the utilization of the device is the only way we can make money as well as they can make money. So that's for TheraClear. Our next track... We ended 2023 with 923 devices deployed in the market, just over $5,000 per device, average revenue per device for every quarter in 2023.

Speaker Change:

Speaker Change: Divot equity owned group rollout clinics, where we can.

Speaker Change: We can have a clear understanding on how they're going to be utilizing the devices and how theyre going to be utilizing the reimbursement codes because once we put our devices out there the organization is.

Speaker Change: As the only way utilization of the device is the only way, where we can make money as well as they can make money.

Speaker Change: So that's where that's where therapy an extract.

Speaker Change: We've ended.

Speaker Change: 2023, with 923 devices deployed in the market just over $5000 per.

Speaker Change: Device average revenue per device for every quarter in 2023.

Speaker Change: Sure.

Dolev Rafaeli: As you can see from the numbers we put out, we actually took that number down to 907, and we will continue the process of redeploying these devices, taking them out of non-productive accounts, redeploying them with more productive accounts, and using the existing inventory without having to expand or build more devices into our own balance sheet before we fully utilize these 923 devices.

Speaker Change: As you can as you can see from the numbers, we put out we're actually we actually took that number down to 907, and we will continue the process of redeploying these devices of taking them out from nonproductive accounts.

Speaker Change: Redeploying them with more productive accounts and using the existing inventory without having to <unk>.

Speaker Change: Expand or build more devices into our own balance sheet before we.

Speaker Change: We fully utilize these 923 devices.

Jeffrey Scott Cohen: Okay, got it. And then just tie that in lastly, the lab force as far as these, um, New Accounts. Talk a little bit about the funnel or the trends with regard to X-TRAC, more importantly as far as utilization trends, the funnel, and the upside. Is it coming on the utilization side, and how does that funnel of leads or new placements look? Thank you.

Speaker Change: Okay got it and then just sorry, lastly to learn for us as far as these.

Speaker Change: New accounts talk little bit about the funnel or the trends with regards to.

Speaker Change: Ex truck more importantly, as far as utilization trends.

Speaker Change: Tunnel and.

Speaker Change: The upside is coming on the utilization side, and how does that funnel bleach or.

Speaker Change: The new placements looking.

Speaker Change: Thank you.

Dolev Rafaeli: Spinal is most, sorry, the utilization is the biggest upside we have because placing more devices is easy with the approach that says we place the technology free of charge, we charge a fee per use, and there's no minimum charge. We can place as many devices as we want, but the outcome of that is higher depreciation, which we started experiencing in 2022 and more so in 2023. And that's why I'm replacing and repositioning these assets before we extend the number of assets we have. Expanding Utilization, and we ended 2023 with just over $5,000 per device per quarter. And just for reference, we ended 2019 with $7,500.

Speaker Change: Funnel as most Saudi deal utilization is is the biggest upside we have.

Speaker Change: Because placing more devices is easier.

With the Oh.

Speaker Change: Would be an approach that says we place the technology free of charge, we charge a fee per use and there is no minimum charge, we can place as many devices as we want but the outcome of that is the higher depreciation, which we we started experiencing in 2022 and more so in 2023.

Speaker Change: That's why.

Speaker Change: Replacing repositioning these assets before we extend the number of assets we have in the market.

Speaker Change: Expanding utilization and we ended 2023 with just over $5000 per device per quarter and just for reference we ended 2020.

Speaker Change: 2019 with 7500, so the upside is about 50% in.

Dolev Rafaeli: So the upside is about 50% in recurring revenue, and that's where the team is focused. And we break the accounts by tier, so both by working on Tier 1 and Tier 2 accounts, which are the big utilizers, and seeing what we can do to help them grow by either serving patients through DTC or training their staff, as well as working on the lower tiers to see if we can move accounts from Tier 5 up to Tier 3 and 4. Or if we can't move them up, we move them out, and we cut them out from the bottom, that's Tier 5, and we try to move them up the tier ladder, if you wish.

Speaker Change: And the recurring revenue so.

Speaker Change: And that's where the team is focused.

Speaker Change: Both with.

And we break the accounts by tier so both by working on tier one tier one and tier two accounts, which are the big utilizes and seeing what we can do to help them grow with either serving them patients to DTC or training or or training their staff as well as working on the on the lower tiers.

Speaker Change: To see if we can move accounts from tier five up to tier three and four or if we can't move them up we move them out and we.

Speaker Change: We cut out from the bottom that's tier fives, and we tried to move them up.

Speaker Change: The tier letter if you wish.

Dolev Rafaeli: And we outlined this in a press release earlier this week by saying that our best... Our best result would come from someone that has or had an existing, um, Exsumer Laser franchise, and they owned the device, whether this was our device extract or it was a Theros device. In the last quarter, we placed 60 new devices, six of which were into accounts that had previously owned an Exsumer Laser and had a business.

Speaker Change: We've outlined this in our press release earlier this week by saying that our best.

Speaker Change: Our best results would come from someone that has already had an existing.

Speaker Change: Super laser franchise.

Speaker Change: And they have all the device whether this was our device extract or it was a faro device.

Speaker Change: In the last quarter, we placed 60, new devices six of which were into accounts there.

Speaker Change: Previously owned in excimer laser and head of business and the reason we are mostly seeking these accounts and there are about 250 of these in the market is that they have an existing business, we don't need to build from scratch, we come in and we we grandfather in existing business and what.

Dolev Rafaeli: And the reason we are mostly seeking these accounts, and there are about 250 of these in the market, is that they have an existing business. We don't need to build them from scratch. We come in, and we grandfather an existing business. And what we need to do is provide them with the technology, the training, the support, the reimbursement support, and so on. But it gives us a head start on taking a new account and starting.

Speaker Change: We need to do is provide them the technology to training to support the reimbursement support and so on but it gives us a head start on taking a new account and starting from scratch.

Dolev Rafaeli: Got it. Okay, perfect. That does it for us. Thanks for taking the questions. Thank you, Jeff.

Speaker Change: Got it okay perfect.

Thanks for taking the questions.

Jeff: Thank you Jeff.

Jeffrey Scott Cohen: And again, if you have a question, you may press star, then one to join the queue. And this will conclude our question and answer session. I'd like to now turn the conference back over to Dr. Dolev Rafaeli for any closing remarks. I want to thank all of you.

Speaker Change: And again, if you have a question you May press Star then one to join the queue.

Speaker Change: And this will conclude our question and answer session.

Speaker Change: Like to now turn the conference back over to Dr. Dolor Raphael for any closing remarks.

Dolev Rafaeli: I want to thank all of you for participating in today's call and for your interest in STRATA Skin Sciences. We look forward to sharing our progress on our next quarterly conference call when we report our second quarter 2024 financial results, likely in July of 2024. Thank you, and have a good day.

Speaker Change: I want to thank all of you for participating in today's call and for your interest in strata skin Sciences, we look forward to sharing our progress on our next quarterly conference call. When we report our second quarter 2024 financial results likely in July.

July of 2024, Thank you and have a good day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

The conference has now concluded.

Speaker Change: Thank you for attending today's presentation you may now disconnect your lines.