- Earnings call transcript Q3 2022

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Operator

Greetings, ladies and gentlemen, and welcome to the STRATA Science – STRATA Skin Sciences' Third Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Nicole Jones, Investor Relations. Thank you. ahead. go Please

Nicole Jones

good and Thank afternoon, you, everyone.

XXXX. today Officer; Executive me financial available for September on Moccia, release website. the today, Chief Chris Lesovitz, results XX, ended quarter Bob the and the copy Chief is released of press Joining STRATA are A Financial company's Earlier Officer.

could are Safe the contained call the Act this facts to relate the of or Harbor statements forward-looking XXXX. call statements, within estimates performance meaning performance, of forward-looking These various Before of reliance like of that actual or you limitation, trends results without All statements. forward-looking our current will involve include expectations forward-looking matters financial remind we begin, risks implied to statements make and not that relating future management securities not anticipated made Reform cause these events, our results and statements. laws, which those differ provisions predictions Litigation these upon and including, to Securities operating Private of do federal undue assumptions. events Any place from historical statements. based should you I'd by are Accordingly, in statements to statements pursuant to are or or during those future on relate that uncertainties this materially the that

statements, December X, refer the obligation, uncertainties Exchange to STRATA Factors live financial because the with and required or measure annual in for to billings, otherwise. associated non-GAAP or and is ended law, comparable except presentation, of and A non-GAAP financial on broadcast Also recently is the to any the our our domestic and most a or refer third disclaims page XXXX, time-sensitive any This on measure. information, XXXX. risks the today, only accurate Relations information forward-looking description now or XX, our of September XX-K during website we financial of measure projections section recurring accessible which XX, as on will Risk financial the report this and website posted over the available public this to www.strataskinsciences.com. future including for of call events as revise is STRATA's new please update GAAP whether company's by list intention the fiscal gross the of quarter contains the a XXXX. filings November year conference For Commission the reconciliation Investor SEC's Form Securities business, which turn Bob. I to earnings release ended call is at with

Bob Moccia

you, Thank Nicole.

period announce representing We by record are for September of XX% $X.X XTRAC the XXXX, million really excited year-over-year to growth ending revenues strong driven very sales. XX,

growth company our accelerated We closing over loop acutely set positioning commercial coming the quarter. targeted focused We and which have between remained our the advertising in the execution success direct-to-consumer for remain believe has and dermatologists, and we the focused sales the on efforts this prescribing our approach stage the for quarters. on are

acne. mild-to-moderate During QX, for new product, our we introduced TheraClearX successfully

believe therapy about reducing simultaneously. who vacuum this while The acne. from has acting to the suffer billion sebum meaningful enthusiastic we into utilizes entering a product production with market, those clear pours are or for and We make $X.X extraction device impact potential occluded out light our treatment the to oil

quarter Importantly, to focus was well-established ability the we growth our in opportunity TheraClearX have commercial through sales. our to offerings, to our record sales have messaging, international opportunity sales our whereby STRATA – on this an our program. sell Contributing targeted new delivered partnership increasing exciting therapy shifting more our our markets we remained engagement. and international in key leader In equipment equipment opinion flexible markets,

will revenue projected marketing to we what our direct-to-dermatologist adoption as continued international capital equipment and come XTRAC. to marketing largely invest utilization ultimately As we quarter, awareness, known direct-to-consumer, STRATA this DTC in saw forward also from drive going has sales. that and is of

approach analytics drive our strategy decisions for Ladenburg of and key of Director Dr. – Assistant Center Professor and we been Series. marketing years. tactics on at at has efforts. FAAD, is care board-certified DermAssociates over In Trials as part University. Symposium as to Our Lockshin MD more STRATA to opinion also health or He drive serves become the a Clinical Clinical KOL, rely its our hosted Dr. focused of a to Lockshin, dermatologist as has an August, Benjamin leader, event Thalman with a around DTC for Georgetown XX Director

efforts device as in used like from Dr. would hosting event. thank We During and to chronic the KOL for XTRAC place psoriasis how XTRAC can and to patients skin spectrum vitiligo. and to time manage disease non-pharmaceutical discussed diseases this conditions be He cost-effective their option and safe Thalmann severity from therapy. a like Lockshin’s across a combination chronic and Dr. for presentation, he as approach highlighted monotherapy Lockshin Ladenburg suffering

XTRAC now physicians We smaller our has patients faster enthusiastic alike. XTRAC. improved Turning remain Earlier allows we sleeker which about year, and and technology provides an rollout treatment momentum in of experience footprint laser the this it for Momentum, to represents excimer debuted as a for latest times. procedure

units December the XXX offices United in As XX, from an XTRAC the there XXXX. in placed XX, of XXX systems increase are period in placed September dermatologist States, XXXX, ended

utilize other of effort allows from been and It underutilized have We helps continue parts on removed. cost multiple on refurbishing that those focused assets. the to our of fronts. goods we redeploying since machines sold to strategy reduce able This STRATA to be are

pigment. keeping lose to are chain basis. us the Osler manage allows first that FDA-approved vitiligo, supply machines for the below In optronic will as XX% market causes level better became a Insights, ensure utilized treatment they believe condition issues underutilized our the in July, to weather arrive. machines the it autoimmune on We minimum Additionally, being that skin

first for XTRAC complement of demand and a dermatologist for as for vitiligo. the this patients treatments prescription the services approval the believe into prescription help to we office vitiligo, drive treatment With could

year, of allowing full last existing eliminating Medical's Systems Ra solution As assets a us an The additional accounting practices, medical base the accounts. business dermatology Ra to our XXX in major August effectively reminder, acquisition XXX acquired market of to base. increased installed by competitor STRATA our in equipment our Medical for new

is converting Our XTRAC uses model. Pharos focused sales force aggressively partnership on to the

who have totaling to pleased quarter of to are committed. to uses are XTRAC this We converted XX the Pharos XX in date customers partnership

track on are expectations. with conversion We our

offer $X.X dermatologists treatment our acne to conversions to are of Through XX% in the model. believe With able the patients acne. need partnership we accounting device mild-to-moderate we treatment In the our company July, in-office launching dermatological TheraClearX have to noninvasive partnership the we for Pharos a equipment. without The the a company. largely synergy when combines to device market. need to of dependent of visits, acne, be acne announced TheraClearX vacuum convert billion XTRAC treat expensive XX% at the commercial we customer introduction that to to the program, to root to and previously cause As which, serviced, technology light time, mentioned, the for great the on be the are broadband targeting purchase will TheraClearX, opportunity could

its team and national sales leveraging force through STRATA is its sell to commercial channels. existing Additionally,

approach. remained to execute has to respect and sales. in to have launch end on emphasize XXXX. our a cash-driven are sold you our reimbursement expect With operations, full to We model, the to directly In more several have XXXX we strategy, places international equipment this shifted by flexible of the dermatologists which devices

to growth the a the have agreements that, we on our focus reminder, call acne I would With we delivers China, a As to operations, hope now and to the distribution future. international East over Korea, financials. see which believe in the international with to device. address like will we we turn large Middle opportunity, Chris to Israel. Chris? TheraClearX into discuss Furthermore, Japan, With meaningful continue

Chris Lesovitz

Thank you, increase quarter the third Bob. quarter the a third of over XXXX $X.X of XXXX. were XX% for million Revenues

million was quarter strong Recurring Equipment for the of $X.X was in adjusted XXXX. amortization TheraClearX equipment million were acquisitions revenue as $X.X The of as compared quarter for was our a XXXX. sales. driven quarter $X.X compared revenues international million quarter gross XX.X% third margin to in and by quarter gross due million quarter $XXX,XXX revenues and Non-GAAP third associated $X.X lower Our third $X.X the or to of or in EBITDA to third third $X.X compared $X intangible were the third quarter of the the million gross was million of the profit of compared increase recurring billings to was XXXX. $X.X to Overall, Non-GAAP the million of as for third quarter XXXX. asset recent as increase quarter the with in primarily the XXXX. X% as a for compared decrease expenses the million third XX.X% for Pharos. revenues of to million domestic XX% for revenues $X.X quarter third

Excluding gross in a was mix recurring product which margin QX higher versus was of The of lower profit XX% in margin than dermatology procedures XXXX decrease XX.X% of gross the QX XXXX. the in equipment, primarily with of result procedures. amortization, percentage dermatology sales has

to expenses of At gross loss basic quarter XXXX. for of to or see to quarter marketing, professional or at for of equivalent of was of $X.X $XXX,XXX million the diluted and per consulting million, million cash million compared throughout higher and Looking XXXX. the a quarter million XXXX commercial of share. cash higher were per XX.X% of an expect $X.XX service the remainder $X.X $X expenses and increase in of XX, Net as was XXXX. to in we continue basic the Operating compared net improvement share employee-related XX, direct-to-dermatologists increase September the margin a investments compared various reflects and the $X.XX expenses XXXX third third loss ahead, XXXX, diluted June common loss our The to strategy, $XX increased including third related of common activities, as to launch $X.X costs. TheraClearX, loss relations

laid full the Now out year. year beginning we to our turning the of in guidance

$XX call I the revenues closing $XX to over to year Bob? Bob remarks. turn million. continue expect million full We for now XXXX range the will be to his to in of

Bob Moccia

our we already at we revenues. We will As project are to reiterate, drive a to to plan market in few that continue contributor force significant XXXX. remainder utilizing the year, To we look existing to device. of catalysts believe the our a on sales the be revenues TheraClearX there

are that TheraClearX look provide and for acne, complementary nonprescription for dermatologists confident necessary. As results clinical treatment we benefit could

launched The design allow treatments be utilization. increased we will to customers. earlier, Momentum completed drive mentioned major throughput we for could and As quicker, which increased for our XTRAC devices improved

our international to making able remainder initiative sales aggressively focusing potential us the machines markets, meaningful where has and By the sales. flexible the this goal towards channels which we for to the with Over plan equipment model more manage redeployed When underutilization chain on our a and the underutilized STRATA into XX%. continue costs impact are on has year, towards this issues. revenues, looking implemented sales allowed strategy, the moved past to were international year shift By reduce we to to the an were machines of beyond. measure, supply

their purchase dermatologists is to Our users acquisition We Ra convert equipment, offerings. Ra remain require to as not the to allows of as servicing will to need our contribute model also revenue Systems their repair. our the catalyst ideal roll dermatologists we excited grow practices our partnership model our turn capital-intensive believe in growing in to devices dermatologists as the I of which does Medical to over on for flexible The and growth TheraClearX, the XTRAC presence extract markets, remain it or asset-light we we aim direct-to marketing to XTRAC and utilization, our a to call drive will year, will top-line. on focused operator our session. of continue Operator? meaningfully international capitalize in for and out direct-to-consumer to over continue question-and-answer to contribute remainder will this the

Operator

today Thank from The you. question go of Cohen coming Instructions] Please Jeff first ahead. [Operator is Thalmann. Ladenburg

Destiny Hance

Jeff. questions. on Thank taking Destiny for our this Hi, for you is

Bob Moccia

Destiny. Hi,

Destiny Hance

existing your DTC getting some costs. hope and doing well. Hi, that with the TheraClear. commentary just that, that awareness first are other around top-line, additional your accounts, of but us your marketing color also will for leveraging Can your to you’re campaigns on for only the are in in XTRAC out leveraging terms terms like and have that guys benefits give I’d of start to benefits you sales not growing you

Bob Moccia

Sure. Yes.

success promotion model for partnership – of we’ve well particular, we the As advertising, with just patients. been at a the haven’t success as will company media with past driving full using you program for know, XTRAC with that has And direct-to-consumer social lot offices had a we out TheraClear of lot And a had platforms driven well office the in out point. this as in as treatments. the patients from with completely their rolled into to in work dermatologist TheraClear in-office think

know, As here the materials, as launch part well since and But full in-office media having be of as to waiting bring our we’re the into DTC a you launch XXXX. patients for July room TheraClear can utilizing type we procures materials, do social as really see that controlled and we up XXXX. our gearing marketing plan opportunity for we’ll move for overall develop home,

I’ve closing it Destiny, that I relates the is, As sales in and our talked about think, loop. marketing to efforts, mind, my really before, it’s

the make sure sure that into dermatologist that when we’ll XTRAC that up So, TheraClear also choice providers is is do that the for patients dermatologist or right patient. direct-to office to with want the send that we We follow marketing.

not requires the or that relations your our so our professional activities, for sales that their only that TheraClear Does in there but question? and providers message patients. confident right in So force to marketing prescribing XTRAC answer they our feel delivering

Destiny Hance

Thank I’d does. when that that. for And definitely hosting new enjoyed your STRATA was And benefit there was your commentary vitiligo. that in around he you transition discussing discussing like remarks. towards drug discuss briefly heard from then you to and be for We prepared I launched, Lockshin this opportunity I to recently that could also event It he for Dr. guess investor our that.

you trends So, if any a I’m can wondering if little to And there you’re that? seeing speak bit early are on? more just

Bob Moccia

Absolutely. Sure.

vitiligo. – So drug as the been treatments matter. medical really longtime hasn’t for know, is indication that for or device to there you is anything a the one probably that available vitiligo approved a few XTRAC for of

see on had think is saw with of XTRAC, there load light. drug good for to the to dermatologists So on the is who between the the with KOLs probably patients approval the work not vitiligo. said a believe, vitiligo lot Dr. out a light is some of is patient anecdotal use we going as for to a you Opzelura return dermatologist therapy, there only obviously, will additional And but Lockshin into discussion I this therapy, coming targeted caused very all in And that about. to them, treatment be haven’t while that interview might XTRAC better what effective

dermatologists get or they into as experience more Opzelura, that believe incorporate may we So, with light XTRAC therapy that regimen. treatment

force exciting marketing that’s sales And armed information us. think and I for promote So we’ve already to that our message. materials around with that

Destiny Hance

more Thank around lastly And more can device? your us, OUS taking bit for TheraClear question. for Thank a Got Okay. you it. just we strategy then our and specifically you. discuss the

Bob Moccia

Sure. Thanks, Destiny. Yes.

have capital we as you little think, do earlier started We this model I OUS. a to year, still more So, bit to know, transition a there. sales, equipment out placement

from some some selling did in that could be We equipment get more countries. actually of feedback they number of effective we capital that they Asia. thought placements in in our a But of the have distributors

our want those boots on So, to with that markets distributors. the figure they we be ground than They do. flexible we and know better have

give it partners more we’re And in year. and helpful did we had looking flexibility them the for as remember seeing million overall continues for very us. paid for we it’s versus them well machines That more that China. off really in Particularly, their last and and was sale sell of the placement. quarter, countries QX our if as going a So, purchase $X forward, you to

other particularly think we going TheraClear. an So think or as And that similar opportunity to as – sales. very We that’s Asian XTRAC start Latin probably TheraClear well. when that’s countries, in expensive launch they’ll not that mainly will countries the worked be we in is with be as believe device to capital equipment America, there’s well VTRAC It’s matter. the an for as we

looking to model. more see in our of us the we’ll from think placement TheraClear the probably I partners So, than purchase

Destiny Hance

right, it. our taking thank you back I’ll jump All Got in questions. for queue.

Bob Moccia

Destiny. Thanks,

Operator

next from Suraj The Please question ahead. go Kalia you. Thank Oppenheimer. of is coming

Unidentified Analyst

on is This Suraj. Chris. Mike and actually Bob afternoon for Good

Bob Moccia

you Hey, Mike how are doing?

Unidentified Analyst

Good especially for I any you’ve you think a can And I dollars is versus revs comment if the [ph] that don’t metrics – of thing. shared account questions. gave wanted the that if lower Bob. of know revs, past of of around taking by in Thanks you volume of percent higher accounts high-volume on accounts? in to start our kind revs the system, accounts utilization volume how I asking per number

Bob Moccia

operational heck have whole Yes, seem we from over XX% They’re our That know come if XX%, fluctuate drivers last some bit – lot a accounts. equity. this a overall a business. lot of did to it you have number They And seeing practices XXX real maybe talked lot. to we that continue you year. in issues high-volume as a more it. lot revenue. that have staffing a little of of out accounts, we’re the of There’s issues a overcome generating their of dermatologists of of We be the We – private about some know will. they to our there. quarter, about middle sold doesn’t We’ve around

to been lot job good the but the and there’s navigating done through business. I in changes landscape, we’ve think that, So, really of customers, high-volume a drive dermatology particular, in continue our post-COVID, a

Unidentified Analyst

this behavior, completion of That are to any environment, Okay. turning the seeing consumer sort that Bob. on changes impact rates, current you their sense, any then session consumer makes Thanks. in in And thing?

Bob Moccia

No.

for waits appointment. come I talking have dermatologists strong. and mean, of waiting think practice, they patients to that I private in long are long in really have the patients back lists

a not the of problem industry. other and Again, So a real has turnover been any They’ve of just operationally. had like number lot been hiring the in has issue. problem an staffing patients is

been that that’s kind the seen real all long. year of So we’ve headwind

strong We’re hoping other now really and in we’re starting that it’s the a direction expecting to go QX.

some headwind will been those has I care I say mean start to issues take those would think I that’s a thing – So, themselves. that But of us. really the for of only

patients patients have the As go, been far strong. as very back

Unidentified Analyst

Okay. you guide the color obviously, reaffirmed on the relative a at look your Any gross to to That’s the nice performance today. line or XQ margin either the year you And great expect would top-line strong beat said as year, hear. the to of offer of then for the sort balance you you XQ. despite

Bob Moccia

let that I’ll one. Chris on Yes. take

Chris Lesovitz

mean can little the anticipating still three compared to for that always as I QX With sure. Equipment-wise, see margins expect said, us, dipped Historically, again. we’re bit. occur to always that and being you a here. historically, recurring has Yes, increase you’ll best prior QX quarter been the quarters to has revenue, international. the

So the recurring strong quarter. we’re there, another a revenue expecting same we’re strong quarter and but anticipating

Bob Moccia

of Yes, States our just Great. the is you mean, in Mike, for that’s to starts flare that. to usage know, to as majority XTRAC. add the weather gets the psoriasis I And as cooler, psoriasis up. United when

the we well. as this quarter won’t to very fourth time being reason for around no strong be see very, So and that reason it believe always

Unidentified Analyst

Okay, really helpful. that’s all Thanks guys.

Bob Moccia

Sure.

Operator

[Operator time. back Instructions] Moccia. over turn We’re the questions Mr. showing to like this floor no queue at in additional to I’d

Bob Moccia

you progress. joining have to We evening. you quarter us for Everybody, look third continued the earnings updating again call. good Thank for a on our forward

Operator

Ladies today’s gentlemen, event. your you thank This for and participation. concludes

time, your You enjoy evening. lines of rest and may at this your the disconnect

STRATA Skin Sciences (SSKN) 10 Nov 222022 Q3 Earnings call transcript