Q1 2025 Apyx Medical Corp Earnings Call
Speaker Change: Ladies and gentlemen, good morning and welcome to the Apyx Medical first quarter 2025 earnings conference call.
Speaker Change: At this time, all participants are in 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 Feffer, from Lifeside Vizers. Please go ahead.
Jeremy Feffer: Thank you, and welcome everyone to our first quarter 2025 earnings call. Representing the company on the call are Charlie Goodwin, Chief Executive Officer and Matt Hill, Chief Financial Officer of Apyx.
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 involved inherent risks and uncertainties that could cause actual results to differ materially from those indicated.
Speaker Change: including, without limitation, those identified in the risk factor section of our most recent annual report on Form 10K, our most recent 10Q 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 GAT. We generally refer to these as non-GAT financial measures.
Speaker Change: Reconciliation of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with Gap 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, Apyx Medical's president and chief executive officer. Please go ahead.
Charlie Goodwin: Thank you, Jeremy, and thank you all for joining us today.
Speaker Change: For our usual format on these quarterly calls, I will be providing a review of our performance in the first quarter of 2025, and then I will turn the call over to Matt for a review of our first quarter financial results, as well as our full year 2025 guidance.
We will then open the call for your questions.
Speaker Change: Let me start with a review of our first quarter performance.
Speaker Change: We reported total revenue of 9.4 million for the quarter, a decrease of 8% compared to 10.2 million for the same period last year.
Speaker Change: While sales of our OEM products decreased as expected, sales of our advanced energy products increased 6% to 7.9 million for the first quarter of 2025 compared with last year's period
Speaker Change: This reflects a building trend we have seen over the past year with stronger sales of single use hand pieces in the United States.
Speaker Change: We also continue to see demand for capital equipment stabilized with increases year-over-year for two consecutive quarters in the U.S.
Speaker Change: We believe this speaks to the benefits offered by Renovion as the only FDA-clear device for use after liposuction, as well as its ability to treat loose and lack skin.
Speaker Change: Digging further into our financial performance for the quarter, I want to point out that our team delivered the solid top line results, somewhat define the industry.
Speaker Change: We also implemented significant cost-cutting measures and a restructuring program that right-sized our operations just six months ago.
Speaker Change: I think these initial results show this program is achieving its attended outcomes of reducing
Speaker Change: Reducing Cashburn and speaks to the dedication of our commercial strategy and vision for Apyx.
Speaker Change: Matt and I are very appreciative of everyone's effort and I am truly excited about the direction we are heading.
Speaker Change: We've laid a strong foundation that is energizing and setting the stage for meaningful growth, innovation and impact.
Speaker Change: There are persistent macroeconomic headwinds impacting the global aesthetic space. At the same time, we believe the primary impact on the market is coming from the explosive growth of GLP-1s.
Speaker Change: We estimate that over 15 million patients are currently using GLP1 drugs, many of which we believe will seek treatment for loose and lack skin due to the associated rapid weight loss.
Speaker Change: As I've mentioned previously, we are still in the early innings of this market when it comes to our role in serving these patients' needs as they meet their goal weight.
Speaker Change: In fact, Dr. Randy Boyad, in her podcast, cited a study of 1,028 GOP1 patients across 424 clinics examining the top 10 aesthetic treatments.
Speaker Change: after medical weight loss. Number one was skin tightening treatments at 63%, and number two was body contouring fat reduction at 52%.
Speaker Change: As the only true surgical aesthetics company, we believe we are uniquely positioned to take advantage of this burgeoning tailwind.
Speaker Change: This brings me to our renewing on offering. We believe this minimally invasive surgical procedure is the best treatment option to address loose and lack skin, providing a durable and transformational result.
Speaker Change: It is our belief that Renovion should be the standard of care for all patients, including those who have lost significant weight as a result of GLP-1 drugs.
Our results are supported by long-term data
Speaker Change: Just last month, we announced the publication of two peer-reviewed articles.
on two separate clinical studies,
Speaker Change: that evaluated the use of renewavion during body-contouring procedures, including lipo-abdominal plasticity following significant weight loss.
Speaker Change: In these studies, the authors reported that patients in the Renovion group demonstrated improvements in abdominal skin laxity and excess skin, along with higher satisfaction scores.
Speaker Change: These papers highlight the use of Renovion in combination with Lyft procedures which are growing
Speaker Change: And please keep in mind that these newly published data simply reinforce a larger and growing body of evidence supporting the safety and utility of Renovion in aesthetic body contouring.
Speaker Change: For further validation, we are excited to announce just a few weeks ago that Renovion won the 2025 New Beauty Award for best, minimally invasive skin titaner.
Speaker Change: As part of this process, new beauty editors tested thousands of products leading up to the 15th annual awards issue with a goal of selecting the most innovative beauty products, treatments
Speaker Change: They also collaborate with board certified doctors and medical experts to determine the most effective results driven in office treatments and post-procedure essentials.
Speaker Change: And so we are honored to have our game changing technology receive this accolade by such a trusted authority in the aesthetic space.
Speaker Change: Regarding our direct-to-consumer marketing strategy, our program continues to deliver outstanding results, generating significant reach, views, and PR beyond our expectations.
Speaker Change: As I have mentioned previously, as part of this program, we have successfully leveraged several influencers who each bringing a unique voice and engaged audience to our campaign.
Speaker Change: Most recently, we announced the appointment of Dolores Cantina as the Chief of Confidence for the Brands' Renew You Consumer Marketing Campaign, which exemplifies the brand's ability to reshape bodies and lives.
Speaker Change: As a beloved personality of the real housewives of New Jersey, Dolores provides a real take on the problem patients face with loose skin and the power of our body contouring technology. She is a powerful advocate for choosing
board-certified plastic or cosmetic surgeons for treatments and procedures.
Speaker Change: This overlaps really well with our messaging that Renovion is the number one trusted body contouring technology among these doctors, along with clinical data, and we believe she will be a valuable member of the Apyx team.
Speaker Change: Turning to our development pipeline, we are very excited to have introduced our A on-body contouring on our third quarter call following the submission of the 510K to the FDA in December .
This all-in-one platform seamlessly integrates Renovion, ultrasound-assisted liposuction.
Speaker Change: Power-assisted liposuction, infiltration, aspiration, electro-quagulization, and fat transfer
Speaker Change: Considering the major shifts in the market with rapid adoption of GOP1s, we believe Aeon is a game changer for surgeons that will differentiate us and position Apyx as their surgical partner.
Speaker Change: Our goal for the next few years is to be able to walk into almost any surgeons practice and see A on position in the heart of their operating room, pending clearance.
Speaker Change: In late March, we offered an early look at Aeon system to board-certified plastic and cosmetic surgeons during the aesthetic meet in Austin, Texas, which is considered the premier event in aesthetics.
Speaker Change: I am excited to report that the feedback exceeded all expectations as many of the physicians we spoke with confirmed that the Aeon would be a welcome addition to many of their practices and provided for all of their surgical needs.
Speaker Change: Regarding timing, we are preparing for a planned launch of Aeon in the back half of 2025 pending clearance.
Speaker Change: We expect the introduction of the Aeon system to the market will help kickstart our equipment sales growth as we have an opportunity to capture new market share and expand our total addressable market in aesthetic surgery.
Speaker Change: I will now turn the call over to Matt for a review of our first quarter 2025 financial results in more detail along with our financial guidance for 2025.
Matt Hill: Thanks, Charlie. Before I get started, please note that all references to first quarter financial results will be on a gap and year-over-year basis unless otherwise noted. As Charlie mentioned.
Matt Hill: Total revenue for the first quarter 25 decreased 7.9% to 9.4 million dollars compared to 10.2 million dollars in the prior year period.
Revenue for the Advanced Energy Segment
increased 5.8 percent.
Matt Hill: to $7.9 million, as a result of increased volume of single use handpieces domestically, domestic and international sales of upgrades of the Apyx I console, and domestic sales of new generators.
Matt Hill: These increases are partially offset by lower average selling price of generates to domestic customers and a general decrease in international sales.
Matt Hill: OEM segment sales decrease 44.7% or approximately $1.2 million for the first quarter of 25 we compare it to the first quarter of 24.
Matt Hill: The decrease in OEM sales was due to decrease in sales volume to existing customers excluding symmetry surgical under our 10-year generator manufacturing and supply agreement.
Matt Hill: Domestic revenue decreased 3.4% year-over-year to $6.7 million and international revenue decreased 17.7% year-over-year to $2.7 million.
Matt Hill: As a reminder, there's somewhat of a seasonality to the medical device business where quarterly revenue is normally the lowest in Q1 and Q3 and the highest in Q2 and Q4.
Matt Hill: Gross profit from the first quarter 25 decreased to $5.7 million, compared with a $5.9 million in the prior year period.
Matt Hill: Gross Profit Margin, for the first quarter of 25, was 60.1% compared to 58.1% in the prior year period.
Matt Hill: The increase in gross profit margins was primarily attributable to the mix between our segments with the dense energy comprising a higher percentage of total sales and geographic mix within our vents energy segment with domestic sales comprising a higher percentage of total sales.
Matt Hill: These increases were partially offset by decreasing the average selling price of generators to domestic customers and product mix within our OEM segment.
Matt Hill: With respect to tariffs, we are actively monitoring trade policy and tariff announcements, including the recent executive orders issued by the U.S. Federal Administration regarding tariffs on imports from various countries.
Matt Hill: At this time, the overall impact on our business related to these or any other tariffs that they be imposed, remains uncertain and depends on multiple factors.
Matt Hill: Moving on to operating expenses which decreased to $8.7 million for the first quarter 25 compared to $12.6 million in the prior year period. The decrease in operating expenses was driven by $1.6 million decrease in salaries of related costs.
Matt Hill: A $1.5 million decrease in selling in general administrative expenses, a $0.6 million decrease in research and development expenses, and a $1 million decrease in professional services expenses.
Matt Hill: Laws from operations decrease $3.6 million or $54% to $3.1 million $3.2 million.
Matt Hill: Netloss Intervital of the shareholders was $4.2 million or $0.10 per share for the first quarter of 25.
Matt Hill: Compare with $7.6 million of $22 cents per share in the prior year period.
Matt Hill: Adjusted to even a loss, decreased 54% to $2.4 million, compared to $5.3 million in the first quarter of 24.
Matt Hill: As a reminder, we provide a detailed reconciliation from net loss and trivial to stockholders to non-gab-adjusted eat-a-lots in our current press release.
Matt Hill: For the three months ending March 31, 2025, cash used operating activities decreased to
Matt Hill: Compare to $6.3 million used in the prior year period. We were pleased with the cash and working capital management in the first quarter and we expect to return to more Romanized cash burn for the balance of $25.
Matt Hill: As of March 31, 25th, the company had cash and cash equivalents of $31 million, compared to $31.7 million as of December 31, 24.
Matt Hill: We believe, based on our projections, including the uptake of the AM platform, working capital management and our strict cost controls, we will yield cash into 2027.
Matt Hill: Turning to a review of our 25 guidance which we reaffirmed in our first quarter, 25 financial results press release issued earlier today.
Matt Hill: For the 12 months ending December 31, 25, we expect total revenue in a range of $47.6 million to $49 million as compared to $48.1 million for the year ended December 31, 24.
Matt Hill: Our revenue guidance assumes advance energy revenue in the range of $39.6 million to $41 million. As compared to $38.6 million for the year ended December 31, 24.
Matt Hill: OEM revenue is expected to come in at approximately $8 million as compared to $9.5 million for the year end of
Matt Hill: We see OQ2 OEM revenue to be similar to Q1 with the balance of the $8 million to be allocated to the back half of the year.
Matt Hill: We still anticipate gross margins of approximately 60% per year and a total operating expenses not to exceed $40 million. This completes our prepared remarks. Charlie and I will now open the call for questions. Operator?
Speaker Change: Thank you, ladies and gentlemen, we will now begin the question and answers session. Should you have a question, please press star, followed by one on your touchstone phone. You will hear a prompt that your hand has been raised.
Matt Hill: Should you wish to decline from the polling process, please press star followed by the two.
Speaker Change: If you are using speakerphone, please lift the handset before pressing any keys.
Speaker Change: First question comes from Matt Hewitt with Craig Hewitt and the Capital Group. Please go ahead.
Thank you.
Speaker Change: One of the opportunities with the Aeon platform was that for the practices to obtain one of those they were going to have to kind of get in queue and to do that. You were going to give priority to those that had upgraded to the Apyx I console. How was that progressing? Are you seeing customers enroll for that?
You know, what is the pipeline look on that side?
Speaker Change: Yeah, thanks, Matt. I appreciate the question. Look, we're not going to comment on the pipeline for Aon yet. We're still waiting for clearance from the FDA and so we'll have plenty of time to update everybody on Aon and what's going on there.
Speaker Change: But obviously, the announcement of Aeon gives doctors and clinicians a huge emphasis to upgrade to the Apyx I because of the excitement around Aeon and so we're very happy with what we're seeing in the marketplace regarding that.
Speaker Change: You know, I apologize. I could have been a little more clear. I was asking about the Apyx 1 console. The upgrades to just getting Q for Aiano, I was just curious if you were seeing increased demand for the Apyx 1 ahead of that.
Speaker Change: Yeah, no, that is actually what I tried to answer, and the answer to that is, you know, we're happy with what we're seeing for that is the upgrade, is people upgrading to the Apyx 1 and waiting for AR.
Got it. All right. And then as far as, um,
Speaker Change: There was going to be a soft launch later this year.
Speaker Change: I think you'd last call, you would kind of mention that you kind of had a list, but if you kind of solidify the list of practices that will be receiving Aeon and
Speaker Change: You know, are they getting set up, but we'll kind of walk through the process once you do receive approval from the FDA. What that, that kind of first batch of KOLs, you know, what that'll look like.
Speaker Change: Yeah, so we do. We have that list all solidified. We've got 20 A on ambassadors throughout the United States that are ready to go once we get clearance.
Speaker Change: Obviously we would install the systems, get them and their staffs trained on everything and then they would obviously start performing cases and and give us feedback and all of that and and that clock starts you know when we get
Speaker Change: When we get clearance and then when you know we get everything installed and ready to go but we are we are making great progress with all of that and now it's just a matter of of of waiting.
Speaker Change: I mean, one last one and I know you touched on this a little bit in your prepared remarks, but obviously front of mind for a lot of investors recently has been tariffs, maybe just remind everyone where you're obtaining your products from and what if anything would need to be done to mitigate any potential tariff impact. Thank you.
Matt Hill: Yeah, no thanks, Matt. So look, we've got a supply chain where we get parts from all over the world.
Matt Hill: But one of the advantages that we have as a company is we have manufacturing both in the United States and we have manufacturing both in Sophia Bulgaria. So based on what the...
Matt Hill: You know, the environment is and what the best path for us we can adjust manufacturing between the two facilities and so we do have a little bit of flexibility when it comes to that.
That's great. Thank you.
Mm-hmm.
Eiberg with BTIG, please go ahead.
Heiberg: A good morning, Charlie Matt. Thanks for taking the question here. Maybe I can just follow up into the last question on tariffs. And obviously, no, there's a lot of moving parts here. But I guess I was currently contemplated today, any way to size the impact to margins at this point.
Speaker Change: So, if Matt's prepared remarks, he talked that we're still expecting gross margins to be around 60% for the entire year, I think that's what we said at the beginning of the year and all of that would impact everything that we know right now based on the current situation.
Thank you.
Speaker Change: Okay, it just sounds like pretty minimal impact at this point, and then maybe I can use my follow-up here.
Speaker Change: on just how you're thinking about investments to support DA on launch. Obviously I know you're keeping a close eye on.
Speaker Change: Cashburn and Operating Expenses, but how are you positioning investments to support this launch while also preserving capital here?
Speaker Change: Yeah, look, obviously expense control and cash management is incredibly important to us, but it's not at the expense of the A-on launch and everything that we've contemplated into our budget and the investments that we're making is there to support A-on and to be able to grow that.
Remember, we think that a-on is...
Speaker Change: a huge differentiator for us at Apyx Medical and makes us a true partner for the surgeons.
Speaker Change: And we've got plans for how not only are we going to use capital to build new aons, but obviously part of the social strategy to talk about that and everything else. So it's always been contemplated in there. We are going to do our best to keep managing expenses and managing our cash burn, but like said it won't be at the expense of the launch of aons.
Okay, very good. Thanks for taking the questions.
You bet.
There are no further questions. Please continue.
Thank you, everyone, for joining us today.
Con. [inaudible]
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.