Q3 2024 Apyx Medical Corp Earnings Call
Speaker Change: Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com online.
Speaker Change: Ladies and gentlemen, good morning and welcome to the APEX Medical Third Quarter 2024 Earnings Conference Call.
Speaker Change: 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 and zero on your telephone keypad.
As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host Jeremy Pfeffer from Lifescife Advisors. Please go ahead.
Speaker Change: Thank you and welcome everyone to our third quarter 2024 earnings call.
Speaker Change: Representing the company on the call, Erstavros Vizirianakis, Executive Chairman of the APEX Board of Directors, will participate in the first part of the call, Charlie Goodwin, Chief Executive Officer, and Matt Hill, Chief Financial Officer of APEX.
Speaker Change: Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including, without limitation, those identified in the risk factors section of our most recent annual report on Form 10-K,
Speaker Change: our most recent 10-Q filing, and the company's other filings with the Securities and Exchange Commission.
Speaker Change: Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events, or otherwise.
Speaker Change: This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP.
Speaker Change: We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the investor relations portion of our website.
Speaker Change: I would now like to turn the call over to Mr. Charlie Goodwin, APEX Medical's President and Chief Executive Officer. Please go ahead.
Charlie Goodwin: Thank you, Jeremy, and thank you all for joining us today.
Charlie Goodwin: Per our usual format on these quarterly calls, I will be providing a review of our performance in the third quarter and then I will turn the call over to Matt for a review of our third quarter financial results and full year guidance.
We will then open up the call for your questions.
Charlie Goodwin: However, before I get started, I would like to have Stavros take a few minutes to address the strategic changes announced this morning at the board and corporate levels of APEX.
Charlie Goodwin: well as actions taken to strengthen the company's balance sheet. Stavros.
Stavros: Thank you, Charlie, for having me join you on today's call to address the strategic changes happening at APEX, along with the financial actions taken, which we believe strengthen the company's balance sheet.
Stavros: First, as announced in the press release issued earlier today, the APEX Board of Directors and management team have decided to implement an organisational restructuring that is expected to better focus the company's resources and streamline operations.
Stavros: Under the restructuring, APEX reduced its U.S. workforce by nearly 25 percent.
Stavros: As part of the reduction, Todd Hornsby, Executive Vice President of Sales and Marketing, will be leaving the company effective immediately.
Stavros: Todd has been a valuable member of our PSYOP team for more than 10 years.
Stavros: We are grateful for his contributions to the company during this time.
Stavros: Under the new structure, Charlie has assumed direct responsibility for the sales organization in addition to his other duties as CEO. As a reminder, Charlie has decades of experience leading medical device sales teams and is well positioned to support the function.
Speaker Change: In order to free up Charlie's time, I'm also pleased to announce Sean Roman has been promoted from his current position of Vice President Research and Development to Chief Operating Officer.
Speaker Change: Sean has been with the company since 2015 and is well qualified for his new role.
Speaker Change: In a moment, Matt will discuss the specifics in regards to the expected cost reduction and one-time costs, as well as how the restructuring is expected to extend our runway into 2027.
Speaker Change: I wanted to be clear that this wasn't a decision the board and management took lightly. We carefully evaluated our options and determined that this restructuring would move it to the right side of the business.
Speaker Change: Looking to the future with the introduction of our game-changing new platform which will enable the company to dominate surgical aesthetics with various best-in-class solutions.
Speaker Change: We expect to see an even greater utilization of our Nubian technology and a return to overall growth. Charlie will elaborate on this exciting new platform momentarily.
Turning to the board changes being implemented.
Speaker Change: We have decided to right-size the board, reducing the number of seats to five directors from the current eight. While we value the contributions each of our directors brings to the table, it's important to right-size the board given the changes in cost reduction being implemented at the corporate level.
Speaker Change: Board members John Andress, Michael Garrity and Craig Swandel have stepped down from the board effective this week.
Speaker Change: John, Michael, and Craig each have served on APEX's board with dedication for many years and their steady leadership and thoughtful counsel have helped advance APEX's mission to be a leader in the cosmetic surgery market.
Speaker Change: In line with the same thought process and in order to be fully aligned with shareholders, the board has also decided to take a significant reduction in cash compensation.
Speaker Change: The board has added John Featherstone as the board observer to further bolster our commercial efforts and align our interests more closely with shareholders.
Speaker Change: John is an accomplished commercial executive with over 20 years of progressive leadership experience in the aesthetic and medical device industry. He has held senior leadership positions at several leading medical aesthetics companies, including Sartrellus Biosystems.
Speaker Change: Gutera Inc. and Sinashare Inc. where he leads strategic initiatives that drive revenue and build high-performance teams.
Speaker Change: We are pleased to announce our lender and partner, Perceptive Advices, has agreed to amend the revenue covenants as a result of the near-term macro challenges which caused us to narrowly miss the covenant this quarter.
Speaker Change: We've also added a covenants on total operating expenses in 2025 and 2026, which is in line with our plans.
Speaker Change: We are pleased to announce a $7 million registered direct cash investment from Nantahala Capital Management which serves to strengthen our balance sheet and further validates the potential of our technology.
Speaker Change: As a significant shareholder who purchased over 1.7 million shares in the spring, due to my belief in the technology and its ability to provide superior results for doctors and patients,
Speaker Change: I remain optimistic that the team will return the company to growth. I want it to be clear that the APEX Management team has the board's complete confidence and support. I've worked closely with Charlie and Matt over the last few months and I'm positive that we have the right team in place.
Speaker Change: We view this restructuring as a necessary step to extend our runway and return to growth.
Charlie Goodwin: I'll now turn the call over to Charlie to provide the third quarter update.
Charlie Goodwin: Thank you, Stavros. The management team and I appreciate your support.
Charlie Goodwin: The board's decision to make its own set of cost reductions, alongside the corporate restructuring, speaks volumes and is a positive signal to the entire team that everyone is committed to bring down costs.
while utilizing our resources to drive future revenue growth.
Charlie Goodwin: Moving now to our review of our third quarter performance, we reported total revenue of $11.5 million for the quarter, a decrease of 4% compared to $12 million for the same period last year.
Charlie Goodwin: Looking at this by segment, sales of our advanced energy products decreased six percent year-over-year to 9.3 million.
Charlie Goodwin: Our year-over-year business was down due to soft generator capital sales.
Charlie Goodwin: This is not unique to us and have seen other companies in the aesthetic space experiencing the same challenges due to the macroeconomic environment and GLP-1 drugs which has affected procedural volume.
Charlie Goodwin: What I am excited to share with you is that in spite of the reduction in the number of surgical procedures in our space,
Charlie Goodwin: In the third quarter, our disposable handpiece revenue grew 9% overall and 15% in the United States.
Thank you. Thank you.
Charlie Goodwin: This year we are approaching 90,000 units globally and disposable revenue now accounts for more than 60% of our total AE revenue.
Charlie Goodwin: Our OEM or generator manufacturing business continues to perform well and grow.
Charlie Goodwin: Going forward, we see even more opportunities for our technology due to the rapid uptake in the GLP-1 drugs and their associated side effects of loose skin.
Thank you.
Speaker Change: The broader market pressures I referred to are tied to the emergence of GLP-1 drugs, which has resulted in patients postponing aesthetic procedures.
Speaker Change: We expect these macroeconomic challenges will continue to negatively impact the capital equipment side of our business through the near future.
Speaker Change: While this market shift has pressured sales of our generators over the past year to 18 months, we believe there is an emerging opportunity within the market for surgical treatment of loose skin and our team is moving quickly to position Apex to be the leader.
Speaker Change: Due to this rapid weight loss, these patients will suffer significant loose and lax skin, which will require a surgical intervention and or body contouring procedure, which provides a durable and transformational result as compared to non-invasive procedures.
considering the size of the population already on GLP-1 drugs.
Speaker Change: Over time, this has the potential to be a significant tailwind for Renuvion, which is the only FDA-approved solution for loose skin.
Speaker Change: We believe this should be the standard of care for these patients.
We are approaching 400,000 procedures
Speaker Change: The procedure has proven to be transformational and durable for patients.
Speaker Change: Part of our strategy is to educate patients and doctors on the benefits of using Renuvion to treat loose and lax skin.
Speaker Change: We have launched a direct-to-consumer strategy in order to generate broader awareness for Renuvion at the patient level.
Speaker Change: This program leverages key influencers, amplifying awareness through our premier lifestyle expos and exclusive retreats that boost visibility for RenewBeyond.
Speaker Change: In addition, we have launched a campaign to educate patients and physicians on Renuvion as the number one trusted contouring technology focused on loose skin.
Speaker Change: And approximately 50% of consumers say they would consider a treatment to reduce loose skin because they want to look and feel more like themselves.
Speaker Change: In order to enhance patient outcomes and continue to lead surgical aesthetics, we are excited to announce the APICS team is in the final stages of developing the AON body contouring system.
Aon is an all-in-one platform that seamlessly integrates Renuvion
ultrasound-assisted liposuction,
power-assisted liposuction
Speaker Change: Infiltration, Aspiration, Electrocoagulation, and Fat Transfer into a single streamlined device.
Speaker Change: We believe AON is a game-changer for surgeons that will differentiate us and position APEX as their surgical partner.
Speaker Change: I can picture a time when we walk into just about any surgeon's practice and see an Aeon positioned in the heart of their operating room.
Speaker Change: Our goal is to be the company that surgeons think of when it comes to all of their surgical needs.
Speaker Change: We currently plan to submit a 510K for AON to the FDA no later than the end of Q1 2025.
Speaker Change: which we believe would put us on track to launch this new system in the second half of 2025 which should kick-start equipment sales growth again as we have the opportunity to capture new market share and expand our total addressable market in aesthetic surgery.
Speaker Change: This is an exciting opportunity for our business that is in the early stages.
Speaker Change: We look forward to gaining traction as we close out 24 and into 2025.
Speaker Change: I will now turn the call over to Matt for a review of our third quarter financial results in more detail along with our financial guidance for 2024 which we updated in today's release
Matt Hill: Thanks, Charlie. Before I get started, please note that all references to third quarter financial results will be on a gap and year-over-year basis unless noted otherwise.
Matt Hill: As Charlie mentioned, we reported a 4% decrease in total revenue to $11.5 million in the third quarter of 2024 when compared with the $12 million for the third quarter of 2023.
Matt Hill: The advanced energy decrease is mostly driven by a lower average selling price of advanced energy generators to domestic customers, fewer domestic customer upgrades to the APEX One console, and a decrease in international sales of new generators.
Matt Hill: These decreases were partially offset by increased volume of single-use handpieces domestically and sales of upgrades to the APEX One Console International.
Matt Hill: OEM segment sales increased 3% approximately 0.1 million dollars in the third quarter of 24 when compared to the third quarter of 23. The increase in OEM sales was due to increases in sales volumes to existing customers.
Matt Hill: Gross profit for the third quarter of 24 decreased 1 million dollars or 13% to 7 million dollars. Gross profit margin was 60.5% compared to 66.6% in the prior year period.
Matt Hill: The decrease in our gross margin was primarily driven by a decrease in the average selling price of generators
Matt Hill: Changes in the sales mix between our two segments with our OEM segment comprising a higher percentage of total sales.
Matt Hill: and changes in geographic mix within our advanced energy segment with international sales comprising a higher percentage of total sales.
Matt Hill: Operating expenses decreased $2 million, or 16%, to $10.6 million, reflecting our continued emphasis on controlling costs, including the elimination of 24 bonuses.
Matt Hill: The decrease in operating expenses was primarily driven by salaries and related costs and selling and general administrative expenses, which decreased by $1 million and $0.6 million, respectively.
Matt Hill: Loss from operations decreased $1 million or 22% to $3.6 million.
Matt Hill: Total other expense net was $1,000,000 compared to $0.4,000,000 in the third quarter of 2023.
Matt Hill: The change was driven primarily by increased net interest expense related to our outstanding debt obligations to the third quarter of 2024 as we had lower borrowings in the prior year period.
Matt Hill: Net loss attributed to shareholders was $4.7 million, or $0.14 per share, compared to $4.6 million, or $0.13 per share in the prior year period.
Matt Hill: Adjusted EBITDA loss decreased 0.6 million dollars or 20% to 2.4 million dollars compared to 3.1 million dollars in the third quarter of 23.
Matt Hill: As a reminder, we provide a detailed reconciliation from net loss attributable to stockholders to non-GAAP-adjusted EBITDA loss in our earnings press release.
Matt Hill: For the three months ended September 30, 2024, cash used from operating activities was $4.4 million.
Matt Hill: which is consistent with the $4.4 million used in the prior year period after adjusting for a one-time tax refund of $8.1 million.
as of September 30.
Matt Hill: 24, the company had cash and cash equivalents of 28 million dollars compared to 43.7 million dollars as of December 31, 23.
Matt Hill: We are pleased to announce we have closed a $7 million registered direct offering, but not to HALA Capital Management, allowing us to strengthen our balance sheet.
Matt Hill: In addition, we amended our credit agreement with our lender and partner, Perceptive Advisors, reducing our revenue covenants, and adding max operating expense covenants at $40 and $45 million for 2025 and 2026, respectively.
Matt Hill: Associated with the amendment, we issue to Perceptive 150,000 shares of our common stock.
Matt Hill: As Stavros discussed in his prepared comments, we've just implemented a cost-savings restructuring that will reduce our workforce by nearly 25 percent.
Matt Hill: We estimate the annualized future cost savings from the reduction in force to be approximately 4.3 million dollars.
Matt Hill: which we expect to contribute to our goal of decreasing loss.
Matt Hill: and achieving cash flow breakeven. We will incur pre-tax charges of approximately $0.6 million in the fourth quarter of 24, representing, for the most part, one-time cash expenditures, severance, and other employee termination benefits.
Matt Hill: In addition to the organizational changes, we have identified other direct cost savings
Matt Hill: We foresee, in totality, these cost savings will reduce our operating expenses below $40 million.
turning to a reviewer of our 24 guidance.
which we updated in our earnings press release today.
For the 12 months ending December 31-24, we expect...
Matt Hill: total revenue in the range of $46.6 million to $47.6 million, representing a decrease of approximately 11% to 9% year over year.
Matt Hill: Our revenue guidance assumes advanced energy revenue in the range of $37.2 million to $38.2 million, representing a decrease of approximately 14% to 12% year-over-year.
Matt Hill: OEM revenue is expected to come in at approximately $9.4 million, representing growth of 5%. This range assumes approximately $2 million of OEM revenue in the fourth quarter of 2024.
Matt Hill: In terms of our profitability guidance for fiscal year 24, we expect a net loss attributable to stockholders of approximately $25 million compared to our prior expectation of approximately $24.5 million to $23.5 million.
Matt Hill: The low end of our formal financial guidance for net loss attributable stockholders now assumes the following remodeling purposes.
Matt Hill: First, gross margins of approximately 60% this year. Second, we expect total operating expenses in the range of $48 to $49 million. Lastly, at the low end of our net loss, we expect cash used in operations at $24 of approximately $20.1 million.
Matt Hill: This compares to cash, normalized cash, used in operations of approximately $13 million in 2023, excluding the one-time tax benefit in the third quarter of 2023.
Matt Hill: The year-over-year change in cash used in operations is driven by the change in net loss offset by improvements in working capital.
Lastly...
In our earnings release today, we introduced 2025 Revenue Guidance.
Matt Hill: for the 12 months ending December 31, 2025. We expect total revenue in the range of $47.6 million to $49.5 million, representing a growth of approximately 2% to 6% year over year when compared to the low end of our 24 guidance range.
Matt Hill: Our total revenue guidance range assumes advanced energy revenue in the range of $39.1 million to $41 million, representing a growth of approximately 5% to 7% year over year.
Matt Hill: OEM revenue is estimated approximately 8.5 million dollars representing a decrease of approximately 10% year-over-year as we return to more normalized customer ordering and order fulfillment.
Matt Hill: We expect that these revenue results will be achieved with operating expenses of no greater than $40 million.
Matt Hill: We believe, based on our projections, including the uptake of the AM platform, working capital management, our strict cost controls, and under the recent capital investment, we owe cash into 2027.
This completes our prepared remarks.
Matt Hill: Charlie and I will now open the call for questions. Operator?
Speaker Change: Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you'd like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star and 2 if you'd 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.
Speaker Change: Ladies and gentlemen, we will wait for a moment while we poll for questions.
Speaker Change: The first question comes from the line of Matthew O'Brien from Piper Sandlow. Please go ahead.
Matthew O'brien: Great, thanks for taking the questions and Shavra, it's good to reconnect here a bit this morning.
Matthew O'brien: Maybe just starting with 25 in the advanced energy commentary, Charlie or Matt, just where is this growth, this you know kind of seven and a half percent, going to come from? Is it really just on the Hamptons side of things or do you expect the
Matthew O'brien: The generator side is starting to flatten out and even improve somewhat next year as rates start to fall a bit.
Matt Hill: Yeah, so thanks for the question Matt. Our budget for 2025...
Matt Hill: assumes that the capital equipment market stays the same that it is right now. To your point, it is not expected to do that. It is expected to get better, but from a budget perspective, that is our expectation, that it doesn't get any better and it stays exactly the way that it is now.
Matt Hill: And so, yes, that growth would come from continued handpiece growth and a little bit from Aeon in the back half.
Thank you for watching. See you next time.
Speaker Change: Got it. And then, can you just talk a little bit more about Aon, you know, and coming to market with such a robust product? First of all, just the development requirements to get that product to market. I mean, 510K seems like it makes sense, although something as robust as this seems pretty differentiated. So, I'm not sure what you anchor it to specifically, but just, you know, you know, how that product specifically can catalyze the company late next year and then end in 26. Thanks.
Thank you. Thank you. Thank you.
Speaker Change: Yeah, thanks for the question and I'm so happy that we actually get to actually talk about this now because it's been in development for quite a while and it's been part of our overall strategy.
to be the company that all...
Speaker Change: Aesthetic surgeons think about for surgery. We think that this is a game changer. We think combined with the Apex One Generator that this becomes the heart and soul of every doctor's operating room because quite frankly there's not a single surgical procedure that they cannot do without this platform now and it's all integrated into one incredibly nice package.
Speaker Change: But it is just a 510K, and I don't want to say anything's relatively simple, but there are predicate devices for all the technologies.
Speaker Change: And so that makes it a lot easier when you're going through the 510k route.
Speaker Change: and we actually did a pre-submission already with the FDA to let them know what is coming and already got their feedback. So we feel pretty good that we're on the right path.
Speaker Change: for getting this through the agency in a pretty good length of time. But obviously it's incredibly exciting for us here at Apex Medical and something that's been the hardest thing not to talk about for the longest time now because we've been working on it for a while, obviously.
Thank you. Thank you.
Got it. Thank you.
Speaker Change: Thank you. The next question comes from the line of Matt Hewitt from Craig Hallam Capital Group. Please go ahead.
Thank you.
Speaker Change: Good morning. Thank you for taking the questions. Maybe first up
Speaker Change: Can we talk a little bit about the environment right now? I obviously with expectations that rates are going to come down
Speaker Change: How are you positioning for this return to growth in 2025 either from a pricing perspective or you know are you still actively participating in marketing campaigns just how do you kind of position things for growth next year?
Speaker Change: Yeah, no, it's a great question. Thank you. Yes, as you know, we talked about on the call we we unfortunately had a 25% reduction in our force
Thank you.
Speaker Change: this week to lower our cost basis and to basically right-size the organization and get us ready for all of this. But one of the things that we actually are spending more on next year is our direct-to-consumer campaign. It is—we're starting to see unbelievable metrics.
Speaker Change: From that the uptick is starting to be really good from the efforts that we're putting in there, and we think that You know putting more on that and educating patients more about the options that they have for loose skin is Is going to pay dividends and as I've mentioned before it's not just direct to consumer It is also business to business too, and so that is an area of Focus for us as we move into 25 and into 26 to help do this
and so that is something that we will keep doing.
Got it. And then regarding the Aeon...
Speaker Change: Will this replace Renuvion? Is it the same generator and then just different attachments? I'm just trying to figure out if there's any risk to maybe cannibalizing a little bit of the Renuvion market. Just help me understand that a little bit better.
Speaker Change: Yeah, no, it's a really good question and it's really important at this point that everybody understands.
Speaker Change: heart and soul of the Aion system, the brains of the Aion system, is the Apex-1 generator. The Apex-1 generator was designed with this in mind, because obviously we had this in the works too, and so the Aion system will not work
without an APEX wand.
Speaker Change: And so for all the doctors that have already upgraded to the Apex One, now they could just upgrade the rest of their body contouring offering around that.
Speaker Change: and for the doctors who have the RS-3, they would need to upgrade to APEX-1 first for that because the APEX-1 is the key. And for all the other technologies that are in AON, I think it's important to note this.
Speaker Change: When we looked at designing this system, we worked with some of the top body contouring doctors in the world to help design this platform.
Speaker Change: We have taken everything that is in there and made it better and state-of-the-art.
Speaker Change: Some of these technologies that are in AEON had not been enhanced in about 20 years. And you can imagine with technology...
Speaker Change: 20 years is antiquated. And so we have not only taken some of the technologies and made them better, but we have taken all of the processes and all of the things that help make the procedure safer.
Speaker Change: faster, more convenient for the doctor, and then we have put it elegantly into one tower. And so if you think about space in these procedure rooms, they've got stuff all over the place. This is going to be elegant and all into one tower with.
State-of-the-art everything that exists in the marketplace today
That's super helpful. Thank you, Charlie.
Thank you.
Speaker Change: Thank you. The next question is from the line of Sam Iver from BTIG. Please go ahead.
Speaker Change: Hey, good morning everyone. Thanks for taking the questions this morning. Maybe I can start on the reduction in force and just better understand where some of the reductions are coming from. Is it really across the board? Are you still maybe emphasizing some of the commercial teams? Just want to better understand where that is coming from.
Speaker Change: Yeah, it was really across the board of the entire organization. We looked at...
Speaker Change: We looked at things that we could live without and focus on the things that we had to have over the next couple of years to get the profitability. And I just want to be clear on that 25%. That was just in the US. The Bulgaria facility stays the same, but that was just a US reduction.
Thank you.
Charlie Goodwin: Okay, that's really helpful Charlie, and then maybe following up on some of the questions for Aeon and specifically the new features
Charlie Goodwin: You know, is this something surgeons are necessarily asking for, you know, updated ultrasound and...
Charlie Goodwin: P.A.L. also, just want to better understand adding all those features and some of the benefits that could drive for APEX.
Thank you.
Speaker Change: The short answer to that is absolutely. One of the things that they were asking for is to have all of this put together because they've got, you know, stuff all over their procedure room and space is limited. But we didn't want to just put it together. We wanted to make the procedure safer, faster, more efficient, and everything else.
Speaker Change: and so when you look at what we have actually done, we have actually made the surgeons and their staffs job.
easier in almost every way.
Speaker Change: And this will help drive better patient outcomes, this will help drive more efficiency, this will help reduce the time that is needed for the procedure. And so there is really nothing that this platform won't help these surgeons out and our goal obviously has always been to have Renuvion be the standard of care for all of these body contouring procedures and we think that this just tremendously helps in that area.
Great, thanks for taking the question.
Thank you.
Thank you. The next question is from the
Good morning guys. Thanks for taking the questions
Speaker Change: Yeah, no, look, we've got everything. There are no extra one-time charges. And just to give you a level of the cost reductions, the cost reductions just haven't been going on for 25 and 26. I think, I believe that we finished the end of last year with an operating expense of around $53 million.
Matt's nodding his head. My CEO, Matt, is correct.
Speaker Change: and so we will go all the way from that over the next two years down to no more than 40 million next year and all of that has been factored into everything so we've we've had substantial cost reductions this year too we're just carrying it on to another level for next year
Speaker Change: So that four million dollar run rate that'll come out sometime in the current quarter and then you'll get the benefit of it as we get into 2025 and beyond.
Speaker Change: Yeah, that's correct. So that the charges for that point six million dollars that we talked about is specifically related to Q4 in 24.
Speaker Change: Okay, got it. And then on the the change in an assumption on advanced energy utilization
Speaker Change: How does, or did that change to inform the altered guidance for the remainder of the year, or does it mostly stay the same on the the
the utilization side and less on the
Speaker Change: Yeah, yeah, no, I understand the question. The utilization and the growth of our disposables is still going to stay. I think we said that we expect to grow disposables low double digits for the year and that still remains the same. The softness still is in the capital equipment market.
Speaker Change: product is going to be quite the unit, but just curious if you worry at all about kind of an Osborne effect where prospective customers kind of wait on things until, you know, this fantastic new unit comes out. I mean, do you think that that could impact capital sales as we get into, you know, I guess the remainder of this year in 2025?
Speaker Change: So are you asking if it's going to hurt capital or potentially help capital?
Speaker Change: Well, I would imagine by the end of next year it would certainly help, but in the meantime, do you get folks that maybe would have purchased a unit kind of sitting on their hands waiting for aeon?
Speaker Change: Yeah, I think it's actually just the opposite because remember that doctors have to have the Apex One.
Speaker Change: in order to be able to use AEON and we will prioritize
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host
Speaker Change: It's just the opposite. One of the reasons that we wanted to start talking about this too is because doctors are always planning their businesses and we've got people that are opening new practices and doing new things later in the year. We wanna make sure that they know that this is an option for them. And when they're looking to replicate their body contouring offering, that they would come and talk to us about that. So we don't see it as any,
Speaker Change: hindrance in the short run. In fact, it's probably a net net positive.
Speaker Change: Okay, got it. Just wanted to make sure there that's very helpful. Thanks for taking the questions guys.
Thank you.
Speaker Change: Ladies and gentlemen, this concludes our question and answer session. I would now hand the conference over to Charles Goodwin for his closing comments.
Charles Goodwin: Thank you everybody for attending the call. We appreciate it very much and thanks for all your support. Thank you.
Speaker Change: Thank you. The conference of APEX Medical has now concluded. Thank you for your participation. You may now disconnect your lines.