VERO - Earnings call transcript Q2 2020

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Operator

Good afternoon, ladies and gentlemen, to the Second Quarter of 2020 Earnings Conference Call for Venus Concept. [Operator Instructions]. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay.

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 those identified in the Risk Factors section of our most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Such factors may be updated from time to time in our filings with the SEC, which are available on our website. to result or events of obligation statements our or no a as new undertake publicly revise update forward-looking otherwise. We information, future measures in will are accounting call also references GAAP. certain This include principles or not with accordance financial calculated generally accepted to that refer these to generally non-GAAP financial We measures. as our to Relations non-GAAP issued in measures our website. press most release calculated portion GAAP and Reconciliations of the with available these presented on are Investor the today of financial measures comparable in accordance earnings like now call to would the I to over Mr. turn Dom Serafino, Chief Executive Officer of Venus Concept. Please sir. ahead, go

Domenic Serafino

Second and XXXX today Thank everybody, our Della Chief you, operator, welcome, call Officer. Chad the Conference to Chief joined Venus I'm and Concept's Officer, Domenic our Penna; Quarter Call. Financial by Earnings Zaring, on Commercial

of were agenda what remarks. are a managed on our of revenue which $XX impacted July opening revenue representing including will by a brief decrease COVID-XX but a performance. a on how to high at provide results year-over-year, After million of XX. we review we our in of mind, the XXXX, our a be performance range, quarterly get revenue financial as you will well quarter, GAAP positioned of business today of more We let's overview remarks, for for with financial with start and will as questions. in our well preliminary quarter then ensure my reported Domenic summary of that announced revenue our trends end With second our We'll me open I with have And of we call covering of prepared recovery. color our business with condition. sheet balance during your XX% up start quarter the the the review second for started. in-depth an and our second will the how we we Let begin

business by significantly pandemic. the the disruption sales global second performance impacted As quarter in expected, caused our was by

to our improve throughout more reopenings device procedures were in XX% technologies followed of our by to As By the in year-over-year. unlike of sharp result device than virtual difficult mid-May, of call our in were closed was were customers future the sales our roughly procedures their increase a proud customers April very how month the least, environment began the steady June. ever year-over-year quarter the in built many I've as and hard patient outside of experienced had sector. I'm leveraging And were markets painful by and bounce but sales the June. discussed in their June. a we year-over-year primary the to this XX% as month first worse were It May conduct of May May, by pipelines say organization sales restrictions, our of XX% QX a a XX% dedication after federal of was U.S. operating back were U.S. well trends work improvement in our in closed. as opened the of while In customers declined in April, fundamentals end improving Roughly for the end month during to of trends then open and had These positioned rallied, of any month us and U.S., and our and the the of saw consultations U.S. offices solid

trends and Outside month improvement saw U.S., a material of of Although June compared year-over-year May. basis in we in sales the June. a in we a still May the improvement are to April, for similar flat trends on compared showed to

pockets look categorized operate. as as the and the of were this year-over-year. strength you the The are for relative certainly definitely depending country, world recovery and June than more but down which case of sales best still is across weakness the However, we the regions is region many XX% there on month in the of improving, of

roughly our open. a our July, customers of are Based productivity. large the our of is end portion feedback on the that strong have customers from usage really pre COVID of path encouraged are shape procedure our of were activity XX% on U.S. U.S. recovery and installed systems, base the we the visibility customers and of taking to for that and we As with our into the

the As U.S., for we the did an sales of business July. in total, our month during outside see in trends of improvement

variability very strong of in was variety depending countries region, we in wide in but EMEA recovery, on of a trends offset the Latin was softer region, there certain by July in the America. APAC pace a Although and had this

While the significant to by significantly for impacted amount and disruption around exposure overall the the second And the face the second been share of by to positioned of was market markets remains, at medical as global shocking largely procedures. year-over-year caused over quarter elective expected in the gains are global that quite revenue was restoration to it aesthetics continue takes global we timing and value, and a hair have given while our half to pandemic. decline The of shape significant the recovery believe well XXXX. uncertainty return the we pace recovery above-market growth

terms in the progresses. Our the These the outlined on early this a in are by initiatives evidence we global profitability maximizing strategic of and strategic and our areas as enhancing are of growth call. driven in focus initiatives recovery both capital competitive positioning seeing focused that squarely QX confidence driving our result of our terms of key improving is commercial belief in in as

few early of each on areas. a the success Let these in evidence thoughts me of share

ARTAS prior focused had Firstly, By the broad-based under of X and strategy. commercial for way to are not reminder, ARTAS services which strategy the Robotics. systems, adoption products commercial of new is happened this driving new Restoration the iX management tenets and there utilization, and on

the profile as the identified. significantly where goods list of ARTAS while result we model pricing gross improved still the margin lowered of significant cost reductions price an the of profit the that a in the First, improving we system

encouraged global to offering that we new the strategy underutilized and an a our improving the any are new With in XX% the is more trends new and for growth point adoption quarter the than the we clinicians be engage increased commercial ARTAS, including this enhancement And plan targeted solutions strategy end-to-end in operating able NeoGraft, reinvigorate Overall, driven sales second June compared given U.S. results believe our ARTAS today. new million. system is is where July. will impressive systems by most and competitor new of in tenet July, both period. results the in managers minimally customers, work VeroGrafter the stated, portfolio third practice like led key tenet ARTAS to technicians solutions strategy, to commercial strong prior billion strategy This utilization commercial products restoration of program. the from under. of the market. hair our XX% improve and ARTAS systems, Simply trends this in we sold to the procedure working. year-over-year Sales outside can't The comprehensive systems commercial now second the growth we has importantly, performance and The utilization customer-focused U.S. were the quarter to the restoration fact and invasive challenging overstated. clearly with new we and during which of to environment believe $X.X are to by offer unique customers year-over-year and second now hair increased improving U.S., really available of hair We've have we year $X.X the for

positions early are that initiatives, been more selling and these and investment underperforming the international reps dollars. call. for savings our the sales have team offers by attractive direct positions on American our the in our on Chad believe We of we Zaring multiple towards has include: competitive markets these in we in we relocated capital investment enhancing duplicative U.S. layers highest instrumental in a Consolidation higher expansion which direct management executing of team, also sales in calling of of which leadership throughout eliminating the which organization operations the of certain market; performing outlined portion enhance evidence sales success our these to and investing importantly, seeing return, goals reps; -- QX positioning, return North sales

and of commercial targeting, targeted implemented arming during X depending XX the region which sales geographic the messaging focused optimizing broad near-term on a of on our our portfolio tailoring pipeline strategy key country clinician more within focused direct we programs our team lines products. and our QX, product strategies tightening Lastly, is sales process, on commercialized sales with and

our high-touch our and clinical more targeted have with to programs supported already long-term commitment our changes marketing much strategy enhancement the enhance dividends. to These position builds customer-focused practice our direct our Importantly, to not team, near-term outstanding philosophy, continuous infrastructure customers, by paying our more. and competitive are relationships altered efforts commercial which sales education,

sales strong further and the drive far which seeing optimism focus. third supports performance to pipeline quarter sales thus the improving second U.S. are balance of cautious the results from Our we benefited XXXX. over this And in our quarter, strategic in our ability

conducted a we the maximize made XXXX. announced to program result to result and $XX combined XXXX on new few as the call, new believe before driver with notable reduction call operating to that cost efforts of opportunities we synergies XXXX, million forward discuss over the during our least review which will in for the a to profile have efforts and moments. in I identified we of other progress restructuring the us creation. realize approximately and restructuring allowing capital. the greater to I significant a expenses of specifically, way Domenic; into profile Simply April expense also expect progress in expected which our operating $XX item in By full this detail XXXX a turn for improvement budget which area R&D, these in highlight discussed million, last in 'XX. of our our cost significant of stated, is reductions, to QX, This in operating year long-term total We we company's continuing key a savings one made financial announced wanted additional in into value going program, previously is at our in expect Domenic we reduce in to reminder, our and

expertise our potentially discussed on XD R&D of with leveraging is Robotics' aesthetic solutions software. the focused noninvasive Restoration preoperative for powerful applications energy-based strategy technology, longer-term technology and Venus' expertise combination in calls, robotic prior planning in on As

robotic and opportunity we portfolio currently of that's Restoration's is capabilities treated only deep our Specifically, on us introduce robotic by not teams Jose there strong and minimally and what Israel restoration is -- robotic have develop aesthetic and solutions been only combination for positioned year. has that exactly The that a for the are next-generation of that truly intervention procedures beyond applications surgical medical new that to are manufacturing hair technologies IP are working this to diligently well that aesthetic in compelling San -- have believe invasive capabilities treated teams medical our what our disruptive, exactly in today.

virtual fall balance area innovation. device a and financial and We offering that near the will Della in exciting improve discuss technology new our are group and will We the development. customer of plan we areas analysts over will of core learn a have this me investors are excited safety condition. minimally With of development this significant and in detailed the surgery product making about we in more and let also well And with medical that on progress sheet as progress hosting where medical the we're clinical robotic aesthetic review plastic And financial the our can offer new event said, this this solution in to that who procedures longer-term acquisition. for dermatology competitive profile, product results invasive second Domenic? and R&D strategy we next-gen advantage as marketing physicians our predictability to and provide Domenic this of call turn outcomes. Penna, quarter believe made

Domenic Della Penna

our prepared few remarks reported transaction on reviewing unless regarding company's My Dom. results a To and noted. a financial on will confusion merger when basis, our this evaluating results when me otherwise SEC Robotics. reported the highlight avoid our filings, Thanks, items with Restoration results afternoon focus let historical GAAP or

legacy Concept to the Venus year XXXX referred business fiscal prior quarter results Ltd. our Venus and reported of the to of First, in the reflect operations business, fourth SEC Concept performance filings. as

fourth results contributions Robotics. beginning our quarter Second, with year and XXXX the fiscal periods, include Restoration from the reported

million. revenue year-over-year to GAAP or decreased total $XX.X quarter XX% $XX Second million

GAAP and services. products services products as our XXXX from revenue products decrease XXXX services $X.X million, increased to Sales of included services $X.X driven $X.X quarter services by systems, stand-alone Total on income and revenue $X.X and XXXX year-over-year in global business second to reported or in compared pandemic. ARTAS public and the Robotics million a or XX% of ARTAS million. reported million they quarter were the year-over-year the XX% statement, $X.X in in and revenue disruption total total of As revenue quarter products was the revenue $X.X sale XX% decreased systems, lease primarily second ARTAS year-over-year iX and when of of million Restoration in decreased and the company. that million revenue and caused lease to of second the products by The

in XX% we geography and XX-Q and filings. revenue or line, in year-over-year million year-over-year second GAAP year-over-year revenue, of of by decrease revenue, million GAAP procedure-related category and second is with revenue our represents decrease discuss change in sales change total driven by geography or payments product is system a other total $X.X The to and $X.X subscription decrease XX kits year-over-year period. quarter which offset by year-over-year how of $X.X year-over-year in These XX% XX% decrease including expected year-over-year or to was million which a sales. in in were review in our and $X by was an is sales U.S. XX% reported of systems compared an products, less million of sales product year by: of A which Turning in and months; brief than incidentally system our in XX-K leases products. months; are or sales performance $X revenue by where typical international and program service prior lease driven or million report sales The or consumable a the $X.X partially million XX% our revenue decrease in cash increase with terms of year-over-year a quarter XX% or of XX sales ARTAS decreases all

of related of COVID-related impacted mix well combination P&L. quarter $XX.X yet which rest a driver a business Gross gross were not decreased XX% of representing million. GAAP XX% XXXX in review lower gross year-over-year profit second Total adjustments margin the quarter Robotics margins, readily across a expenses. the the margin compared fair prior performance Robotics' as expenses recognized on decrease year this general for a item quarter total sales saw of or our business profit in This having expenses, $XX.X to the items to to Note, sales higher the sales. inventory is disruption. last change directly a compared total increase period, merger improvement The the this research XX% The margin offset margin or decrease and, compared apparent partially million, year. to lesser and value by was in XX% gross QX to year-over-year $X.X XX% or ARTAS the the year-over-year result XXXX million, to a these primary not of as operating long-term XX% Restoration or XXXX. not expenses $X.X transaction. in sales in profit year in a of drivers year-over-year of operating system, Restoration revenue initiative expense million the in gross million to driven with and of we GAAP in closed $X.X was XX% gross gross and second strategic extent, profitability of of a improvement XX% reflects administrative a Turning QX our primary is million the change was primarily one representing XX.X% The million ARTAS-related $X.X our as results of early to by the marketing of to by decreased evidence were decrease $X.X which in of in improve approximately approximately that development of

normalized Our incremental by QX items impacted two our GAAP G&A to OpEx. were that was

charge, in. a our recorded the $X accounts million bad markets and customers subscription across from of we by COVID-XX receivable operate the collections reductions First, debt driven we

loss had in higher party third Bulgarian subsidiary, in markets was Venus a to direct the our a a strategic related the XX% and capital direct in sale to transaction specifically, & Central the million attractive return, result of of of more Dom in share we certain $X.X the one Ltd. Second, Eastern that initiatives international This our the U.S. period. of Concept earlier; market. operations selling consolidation Europe investing

declined GAAP GAAP year-over-year Restoration which XXXX. merger of G&A operating our would absorbing did from expenses quarter expenses items, Robotics, second two despite OpEx our impact have the with these not Excluding the in

is discretionary Our of and XXXX loss functions. share was $X.XX to strategy attributable this prior response reduced the operating loss full expect per of to Venus million to compared million to Venus and million Inc. million during permanent way quarter of for new savings X.X Concept program. restructuring $X.XX to to in contribute A in By $X.X quarter new mainly Concept $XX.X year our beneficial savings to million on and second compared through temporary of million period. or was reduction of Series average unpaid program the the business attributable or second This for of Weighted EBITDA second included of expense cost quarter, quarter streamlining elimination of attributable restructuring year overhead and across operating million in prior realized the million spending in loss to expected loss to leave of freezes, used quarter week significant year share preferred COVID-XX progress more per environment quarter XXXX the focused $X.X conversion, the departments. and was holders hiring XXXX Net million Total were realize program all $X XXXX. of noncash share loss second we certain than continue for $XX compute for of from June of to conversion a net second new employees challenging restructuring quarter dividend of our second XXXX of We cost an work the Venus shares was $X.X per XXXX. XX.X period. a reminder, the includes operating program enterprise compared this restructuring the Inc. by caused combination reductions, performance Concept EBITDA to in for initiated and financial certain a improvement to headcount overall occurred of is and a respectively. second for the related XXXX, on quarter stock XXXX $X.X of second adjusted feature $XXX,XXX deemed Adjusted the XX, for $X.X million of which to the Inc. loss XXXX. Net income the

our provided full in net our have to of reconciliation a We loss press afternoon. EBITDA release GAAP this adjusted

of approximately assistance obligations million of $XX issuance placement was of to in government borrowings under common the the federal million repayment and December line from of borrowings million year-to-date Park $XX.X and $X.X the activities, activities by stock in of activities million financing Program of $XX including CARES by total in from change agreement, of which as Paycheck of we the $X.X and The new offset June, Proceeds driven of company million. from compared by: of an Act; primarily XX, XX, two business from of from cash including debt of offset financing loans provided of increase obligations private The $XX.X million, $XX.X The proceeds to Protection to million, $X.X driven XXXX. Lincoln of small equity million of million. of December $XX.X $X.X XXXX, credit XXXX, QX; our our purchase turning in loans partially of of signed credit June $X.X cash by our $XX.X credit balance increase and was in XX, had line $X proceeds million sheet. cash equivalents cash approximately And Now cash under at million and facility million a respectively. million total debt operating cash use from under

the XX, XX, the and kind. on calls an June for be with for to XXXX payments into entered company XXXX Madryn, ending Finally, which period in beginning interest June X, paid agreement and January amended including

required was XXXX, of As all the June XX, compliance covenants. in company with

At the a to Due of for specific its March Turning and its impact the review the COVID-XX XX, from this which date, the to company revenue withdrew operating was company of or the issued January cannot previously fiscal year the extent on the evolving On rapidly fiscal and guidance year COVID-XX. environment announced XX, XXXX XXXX, results outbreak on duration XXXX. our guidance. financial of predict impact XXXX. continued of uncertainties the

additional As call. are guidance third this to not plan We time. such, provide our financial extent the XXXX able we to information provide quarter at of to practicable earnings during

While we that, In million $XX following million to approximately roughly operator, XXXX, in like OpEx the a in in not million The QX the million third had $X.X of in a reduction XXXX was OpEx company normalized offer $XX.X so $XX to XXXX. OpEx which in QX normalized a the merger-related we million total combined the your questions. With implies at Restoration total, from which to position of of are in Robotics. GAAP came in offer modeling companies to XXXX, purposes. The combined of open $X year-over-year combined OpEx QX we XXXX. we this OpEx QX will for roughly time, quarter guidance expect now included considerations costs, X/X call Operator? formal realize of would

Operator

Suraj Oppenheimer Company. comes question Kalia & first from [Operator Instructions]. And our with

Suraj Kalia

missed the were a and and you, in, I Dom, numbers so Domenic. floating lot commentary. can if for forgive questions one maybe me pace Dom, of with a chip keep Chad for couple around, of So there Try this. question to

was biz U.S. the So XX% down QX year-over-year. in

can was June, XX% And your Maybe cadence I going? of offline. end percent walk But heard contribute? my point business screwed up us I just and the you I QX that is if U.S. usually do think I a normalized what in customers circumstance, that they through of what say in you And again. guess were up. by so of

Domenic Serafino

Right.

a U.S. XX% about the consolidated So basis, represents of in our normalized business global revenues.

little about In regional Just our on X% end customers grew the there. because April, bit about that trend. XX% June, of of, business were In And our to we of a working the disparities were of you open. XX% May, with correct obviously, by to customers being active.

still of So substantive base this future most And dark. consideration into what doing a very we moved into and time XX% QX our were QX. targeting during our and as on period of in time, States pipeline spent solid customer for, United Suraj, obviously, we was working pretty creating the

in were the in an markets and ARTAS and device improvement our specifically June, very in the May Venus we our sales. down trends started improvement of in XX% overall, sales year-over-year. significant the sales broader year-over-year a trends product. So And really our on in opened, see, demonstrated April areas to as Bliss

Suraj Kalia

Fair enough.

Okay.

procedures. latest a -- invasive competitive sneak aesthetic uptake mentioned product-specific on your the on and -- you on Venus And in the peek on Dom, So Chad, you and on us Plus, greatest chime the can minimally on provide can you just the maybe maybe, positioning. profile, issues, robotics commentary its

just there, can us great. additional color some that would you be If give

Domenic Serafino

Right.

you in in We some combined up that out as the we with the And in have and mode to were soft on QX. parts we component So keep with launch normal improved we our we under were in Chad. it of pleased which launch the part, circumstances. had, significantly demand what of we North normally full I'll able to been were may first where we I'll in mode -- while and were to in recall, we touch realize challenges were able sales then QX. America, terms of But has pass China, getting with QX, in of would target over

to from so our element unit to competitiveness, while into counts can't on, related don't enough. So somewhere us. product this a no really to peers, obviously well and a I and between get of X-year disposable perspective, $XXX and compared devices $XXX a with X-year their this and the seems stress who working to projection utilization we the That warranty have assumptions sell price our This per charge for treatment. be warranty typical

the we treat need treatment remember about to that that are their contouring on with treatment, Lastly, the built of that in dollars getting to one to so I reduction Bliss fat our the a only is value conjunction fat do more to for device treatment but patients think things noninvasively, a product Venus not itself, body the compared we simultaneously peers.

relates it As an to of sort overview bit Chad, a of give little robotics, perhaps, you to want there.

Chad Zaring

and the model, we practice. eventually capital to is then who giving a on to the underutilized want model from core We physicians side. Sure. get size of tenet an customers our in installed robotic the NeoGraft, the see barrier to the all the commercial capital in fits so systems lower core We reinvigorating portfolio restoration ARTAS which product hair and end-to-end creating a of selling pricing were a sales, is robotics, one and you second strong saw which kind is on able doctors focusing improvements quarter. and base. strategy utilization both improved good side of outlined, making return And that start strong in utilization And if for into look our at

Suraj Kalia

Fair it. Domenic, final you. for enough. question Got And one

Sort a question. X-part of

seeing sectors, And are the Domenic, would think and speaking, think we generally capital how and QX OUS? U.S. we equipment least what contribution did all quarter credit that seeing in well are of the RR you harder. you pretty relatively, about sort counterintuitive, would also, Are should at hit changing? getting right? and it's in ARTAS terms for Just QX? in be other It's

seeing. should about happening of importantly, kind margin think great. guys And that more would guidance, but next our arms Any walk just the with what's up. are credit be because necessarily around quarters. just color Not terms through there to get So also, how we us X gross also ticked you

Domenic Della Penna

Sure.

credit same. the We is terms in So changed We're we respect basically has sales. dealing to have capability we haven't the on focused But mean, the subscription this our terms to whatever not are down pay on we're make. the very requirements do with of want do subscription that environment, very, based model. which our sure make want and we the to a customer on really checks in more being we we can side, public sure payment, careful I that make why reference get

north a there's our still sure fact, if of approach, changed, that bit we at we're terms up they're qualify end careful. especially signing not there's But a that $XXX,XXX. because So on in little that a diligent more but more that's package diligence has customers to more for much risk. And our we're we bit There's in more care make the a have. there appropriately, of

next Now in -- terms they've rates have XX-day of the markets, obviously, credit come the negative. is overnight to down, LIBOR global the

and is we still as resurgence those notwithstanding will bit seen policy So the bullish the other certainly, pandemic think especially QX. help. a lot that's a and factors, is fact out which easing alive in But there's QX, of about well. signs that feel of But easy there and we'd there, QX in quantitative U.S., money I the

bucking of question kind ARTAS, Your and we're around trend. the

understand make Dom -- this sure together comment very, well, what I on pieces is us three margin on... price year. business disarray. we've this we're what to When do But the half our both that for in was is starting right of on ago, -- put first bit very of it and as think, the yes, that working. And we of point, in we And to works right a is drive year have how strategy the utilization. those a may that worked the the all well want

Domenic Serafino

Yes, by one competitive point performance very to have. had asset that we I us an that we what did validated a about to interesting is and And in demonstrate Restoration robotic if installed was traditionally quite story bought a that just that didn't provide for proper that, real to interest the which to What footprint could was restoration, because was in Suraj, of North able the we base, a want QX add it I contribution perspective. having product was outside the it advantage the support promising the marketing attention. we us Europe. the equal global by could U.S. had with year. more we we And especially solutions broke because that it there virtually -- of understood that a broken in from America knew very pleasing part But the last is were that in mean, hair

it I'll at and Lastly, leave this.

is the restoration of surgical We understand to treatment ROI that highest for physicians. a have outside intervention hair

the $X,XXX So when chase hair to generating compelling anywhere to they're quite to opposed on removal as hair an with hour from advertising. treatment, $XX $X,XXX an trying restoration becomes that Groupon average procedures

continue will took with organization, our we've believe restoration, made And proposition into we're our QX beyond. So we hair that and very a for value doctors that significant understood on a represented our doing and QX that and it with current based it into -- what and us. impact pipeline

Operator

from Vendetti comes with question Maxim next Group. Our Anthony

Anthony Vendetti

but Obviously, comment On you April, in the XX% June. on XX% it only the was wondering looks July. X% said business reopen, -- I in starting in May, but slowly. U.S. if is could to And obviously, you like,

Domenic Serafino

Yes. Yes.

So what's they're anecdotal. we give -- when really you these numbers, good not about

on done U.S. through with report Internet that they about the we're of the procedures we globally. With have, integration able were our our XX% customers see July, devices can open with what measure And devices. able our use IT and being we were is end of of generating revenues devices, that of the as of Things the meaningful and to to

are weird the have know, base, we -- in very is a feel customer and we those typically that QX. though XX% window, we the moved year and represents we of July and quarter all even in we of the our believe And rules we QX strong August, end that slowest sort as September out surveyed we saw bit industry, then to in July and continually this our think when the a the of through August. we continue as So finished the that a into that of expect increase year will

are been think the somewhat challenges. of not immune people So becoming that some there this. trend quite pockets many most But There's is yet. direction. obviously part, in the moving to right It's I for the

we've on really second recognize in and point which group fear look COVID of The movement everything from procedures took around the the to think usually we age thing I else, our our shifting XX seen were on of And a demographic bit. important we towards the collect XX-year the this, I as little out who patients is these at profile data significant our industry, the want a XX the to demographic. devices, of that majority to based patients advantage plus. is Typically,

in that which telling our get younger now it's and of been is program being the to as is saggy it can us are the what when certainly more wrinkles on and skin we that a case So so your so that they seems of in telling population care fat traditionally doctors ahead and reactive XXs, has and you're industry. preventative starting opposed work the what with us like

Chad Zaring

And third ability Dom, I'll our core long-term that -- to add focus have is our focus -- have products consumables. have a too, is our to product to point that,

in consumables. can And core devices customers our that number at real-time predict have we to and that reopening. allows are that of that look percentages And of us if ordering see trends really customers terms the to so are

Anthony Vendetti

then That's the consumables Okay. side. And just helpful. on

that that XX% was Is your July, I up correct time think that restoration, frame. hair June, you and NeoGraft, the for mentioned in ARTAS year-over-year utilization number?

Domenic Serafino

Correct. Correct.

Anthony Vendetti

to? in XQ. that business? increase the XX% attribute talk consumable in what disarray in But know business you utilization, year, you that of both about can in, that last Domenic changed little bit would I mentioned a you in XQ, what part And the was the

Domenic Serafino

be of days if anything not of head, there's the of of after. hair doctors COVID, Yes. already X open were to downtime, back positive add a this I may in have I think a in I'll a towards to if holding that think bit portion patients markets way the want is the daily address continue is as mean that and to And And workplace. it. X to people part deciding been more normal Zoom and necessarily that, it. to the where themselves we've the probably open, the led the terms activity. This activity, Typically, it shift restoration. the type something shaved. procedure outcome were the established a very requires markets on first And you typically all head, that Chad, I is identified that of right that by of before people in didn't of doing for with who had what off to that time return But

the words, doctors dollars removal. day that improved they doctors X hair can in revenue pricing and that investment allowed of do In the hair XX generate a patient clinic. I position see again, their the to it's So an only their do return other with in justify time that rather a I'd want treatment, clinics $XX,XXX highest than to in area their available doing on had make if they've procedures. And with model, I patients restoration better can think where for limited the

Chad Zaring

that third a component as well. add I'd to

then those Number into and or we focus. North presented speak customer that product our So customer list, roll in has the a There's an clinical recover. America. #X, we extensive opportunity define higher in number launched there's that But initiative to to them speak. -- X, marketing; And X so whatever every there's We've buckets: with volume a that for to COVID also opportunity. training; out feedback directly QX undergone pathway. is, a procedures. lower number to X, wish that revenue, product an shift X, we team And U.S. use patients we also the to to the pretty take to initiative break

to to system base. that in and for as believe system each utilization And the driving goal sales because apply sales. apply overall through plan to that doctor drive the marketing, base the installed our have initiatives much a training will strong increase focus the able we So us be for place, to as we'll new utilization across utilization new we is product

Anthony Vendetti

ARTAS little for then the gross And we capital the if equipment, can margin. just bit great. margin, either a ARTAS. Okay, the The obviously gross and case system, overall per talk the then about

-- want margin you down for that down, and the obviously, the what's well. I you However, significantly down. to But or ARTAS what's brought gross But cost the gross margin break the know of either brought the as you've the goods goal system? price current

Domenic Serafino

Yes.

ahead, go to So you want Dom?

Domenic Della Penna

Yes.

margin XX%. experienced gross we of in on ARTAS QX the approximately mean, the I So business

able product pricing. QX wider of changed to revised that's done margin. same And its reduce We've favorably appeal we've the in compares commitment terms so, But point. given the XX% we've costs, of that the at and audience a price a good outcome to continue So pretty made that time, true we've the our to to XXXX. to increase to been in

there's had XX%. won't QX. a it we're high that procedures progress terms think of margins result but a overall that still to think with go thus the focus margin we far. north as pretty the kits, of we So comfortable continue some margins. I happen of overall It driving in made huge overnight, hasn't that And of on business help quite with comfortable the getting to quite opportunity we've on actually continue and to is our that will ARTAS And for XX% We're as ARTAS impact component margin. the

Anthony Vendetti

Exactly. Right.

if X Okay. also rank would new Bliss? new Maybe on launched like business. and how MD driver then and categorize probably growth the of that how Bliss. And the I your And it? Viva main you side Epileve? some it's about drivers, these you nor platforms would And Viva focus you base then you how products the would not of MD. talk your the -- Or business, -- Venus the main know the And then and the then Bliss new your -- base is know Epileve on I the

Domenic Serafino

appeal has see if the terms of dollar broad value both are, to you're products, at if overall when Anthony, fat believe, we I the biggest contribution, the Venus will X the of simply because driver about category dollar you overall, So products, in we where talking be sexes. the Bliss, ranking the assume of look I we which think

of and no-disposable it's fat really or warranty a certainty important. doing cost that which fat, So I looking are model, think value people at pretty the -- been understand and proposition have well-established is X-year

essentially, outside bundling a again, the hair; are have to revenue our of in In generator say, I'm bundling per we being people that a opportunities ARTAS the terms of up hair, serious in bring everything lot ASP they intervention-wise. is so at the breast to surgical way driver, the allows it robot NeoGraft who clinic for for us the one-stop and look the highest related going together to there's solution which a by second anything of procedure augment,

X the are key those areas. So

lot a to deeper get on. the physician a Viva for product better a base In who our we MD plastics contributions Epileve of I'll QX. of really in both That Viva something and essentially the acne having derms a renewed little to and call of more group products terms didn't strategy Viva on it, go-forward consistent and fell aggressive be more with of specifically pores, the wrinkles, have those MD, -- bigger of core was a, scars focus tool said, designed in love with wanted so and bit

to over developing add and Viva years that product more feel the the previous treat opportunity element platform. aggressive that to a range the a So almost we ability combined disposable with X broader also from to spent meaningful patient we the of MD we model, problems, took

because carte. to of were to So our be I Versa technology the be la of overall, and probably ability built #X. its of revenue #X I and combination Bliss sort continue of the be think will being mean, that products, its rank terms our ARTAS still NeoGraft #X if a will And to you in modularity generation,

to that And typically platform that ASP much diversified higher most offer. it's probably a the product. allows we get the for so And us

just started for the in getting So that people are right the platform. it's business,

Chad Zaring

core allow significant without Four the consumables, unique to where our competition. the that. I if core it's last something of hair products have add And a six ARTAS to Hair, with restoration, just solution the NeoGraft could us VERO into and market one lead point

one that stream, strategic increase revenue the clinic. the for what that's mentioned, the Bliss, the So then it's Dom way for. doesn't are consumable as a product And customers to the asking have

strategic complement on like that We based then market established market. in products, nice or it's drives bundling. with in reduction on So needs, another customer we're in a either products layer fat to go able an our and really

Operator

[Operator Instructions].

Our comes next with BTIG. Marie question from Thibault

Marie Thibault

of recovery, can terms are I us tell given back the if procedure your the us the a wanted call. of volumes procedures are little all are a bit online appreciate this Guess on you to metrics you've -- seeing. throughout and who time bit spend about of point? fastest. volumes in some Where, of I I'm this I to customers wanted range at more back volume curious customers are little more what coming successful procedure

Domenic Serafino

Yes. sure. cautious in, ways for environment going find message that and to to we're mean restoration just transportation is I that X in their I'll is I are it, what real the the and the to and the handicap is hair an working categories they're clinics treatments revenue fat traffic. are procedure, hard while I minimizing call was with what -- I think what if think #X trying it's here specifically optimism, still their by #X, #X pinpoint And like exactly that maximize X, of, default, to

disease this our where Europe, had they've to so volume. we're In us data back hair for a reduction markets -- point, that is better where wrinkle like strongly. And removal example, of points of that's lot coming seeing they've and IoT telling are been control this

I So Marie. regional, it's think

into And stuff APAC and I then of is nice will, during jumped day. This sort moderation, to clinics degree in of think challenges and America. seen in the Latin some places of the staying if you opening that of a out came terms back open start hours have opening in the of we've field. less like some or we still kind that

-- is as of will through whatsoever. August, And that sleep you August we move Now indication that's EMEA QX. and what I in have in -- and QX August, get that through July normally, July QX and and seen goes is to any that tell was -- in we not

think that's in X or compensate that that fact, that revenue we've down. opposite. the And completely X trying clinics what they're where for they are of In locked terms byproduct were during period of lost months closed to I for seen a shutdown

least They've the Zoom with and us go dealing they're about better demonstrated in So patients. comfort consultations, specific with procedure up patient interacting their mode broader in been higher to physicians of potential picture surgical eliminate or talking lot terms that What working The of procedures. sort a typical patient way rates can to at which has I or tell through dramatically. the to a we've still of is potential are from the able to procedures new go-to-market been comfort that have get and within this you, process their shutdown to while to by type stronger of directly through somewhat touch the home. led clinic points to

Marie Thibault

thoughts a And as who then customers there, go and confident subscription feeling, to guess, healthy the about kind of is environment enough of think or we buying? system, of model? the on subscription enough purchase on system any are the I systems and kind this ahead characteristics legacy in any Who

Domenic Serafino

Yes.

it look, been be as from deals. away we just mix the the way going on to numbers I a be represents total while said, mean, the there's the seem to product move of clear, a was at model, subscription looked So dollars number there's we that influence may the this

contributions ARTAS business higher-priced together, and of percentage of cash on between contributions blend So subscription Bliss like and perspective the that deals. that and all the a does cash-only disproportionately of products system, the with revenue impact with Venus when you the disposables, the a

focus So was to average of very with X which products, are intentional selling a higher-than-average partially our degree, that X prices prices. -- selling on

do to the getting perceive we program business, leasing is in get And appealing we business what to hair market. about and carry the and competitive still is this surgery also into the is to or optionality. why what continue the into able bank noncore that we've institutions the clinics dermatology back offer still is products fat. to globally demand their In restoration them we solutions we that of area want what of interesting in go some have to what's opportunity thinking plastic decent seen an People they to and this which subscription, to gives the to do terms not to in -- it need that call with about gives advantage, saw to things be technologies, state-of-the-art be that offer especially robotics, it

Marie Thibault

here. Very you helpful. for Last one

monthly quarter. debt You charge work on see second bad reverse mentioned give payments is that the the And whether of us reactivate of could update in of I going you customers and Can and the your some half status know we team that how back your to that get some subscription in doing those a some online. is of year? the

Domenic Della Penna

it's can $X.X in million. what unfolded, took the America. is predicting year-to-date, want provision I We something mean, small $X a about you all that that I stage Yes. of in reversal least this unknowns. charge, as wouldn't a given at North at fact, the touch to the pandemic But just million in had I QX tell

on the So allowance because the of between that's of that correlate term. risk. gross current to $X.X a of that's at amount balance million, for $XX gross basket basis, million the that And is our the accounts on And before receivables you the sheet. that's have total receivable and the basket accounts long to doubtful receivable

to for correlate know but that cetera. codes, identified we because here clinic them, try million, and it there you watching the you are shut and not works saying, they're down. out be et may that know we've problem X.X% $X.X on when So what, $XX million to asking activation a They're contact is closed, we

and So basically to we keep at they're we just an and got okay, on aside eye them. those risk, have said, put

our know of that that's of for such business. down where will cases, successful closed at in been So to made X offer But is is missing. the make months, of think $X.X cases in make the a contact process. it securing can that What of have over million I it's the couldn't totality were we've vast the customer in I they next especially a majority payment, we the receivables, context number don't big out whatever a I been they arrangement X good whack. of our the majority that a has is repayment and on with that you

arranging asked that involves they've unless We activation typically to again, that code. open activation come they based very can on a a day they've that won't for on release $X,XXX demonstrate that plan we've and a payment been now in past those in they dates. repayment for are or And very specific code a programs. certain So round willing payment charge And an cases, of repayment an payments repay. successful

So I'm very far encouraged and has what thus done team things my out. working how are by

Operator

Thank you.

We are additional and a you you. no participants Thank queue. your our for today. showing the have currently does That day. good Thank in conclude all for conference participation,

Venus Concept (VERO) 13 Aug 202020 Q2 Earnings call transcript