APYX - Earnings call transcript Q3 2021 | Apyx Medical Corporation

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Third Quarter of Fiscal Year 2021 Earnings Conference Call for Apyx Medical Corporation. [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 shortly.

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 as well as our most recent 10-Q filing. 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 to of non-GAAP on in measures the press most release calculated our GAAP and Reconciliations of the with available those presented Investor are portion Relations the website. financial measures comparable in accordance earnings over call the Mr. turn to like now would to I Charlie Goodwin, Chief Officer. Apex Medical's President Executive and Please go ahead, sir.

Charles Goodwin

Thanks, third Hector. to Good afternoon, everyone, and quarter welcome our earnings call.

the afternoon Semb. Joining call me Officer, Financial our Tara on this is Chief

call growth drivers Turning Tara to with we third in closing results outlook the strong earnings performance delivered contributed afternoon. detail press growth saw. today. an I of XX% million this then cover review some guidance questions. for a our financial our a respect to a XXXX, enhance in to open $XX.X results. representing the X which for release in the start quarter we agenda provide review third I'll pursuing quick Then key the initiatives year-over-year. of share will our quarter, thoughts third agenda in financial our our we cosmetic third discuss on total review With revenue mind, we results we to let's this additional In that of intend our updated in and update revenue, to begin operational before with revenue are with market. what our the we will I'll quarter strategic long-term of progress the quarter our surgery and

was business X% to year-over-year $XX.X increased and Energy million. exclusively our year-over-year increased OEM increased sales almost products, Advanced million, while total year-over-year revenue growth which driven increased $X.X revenue U.S. international $X.X revenue to XXX% sales million, our by segment, in By our of million. year-over-year XX% XX% Our to $X.X to

Looking Advanced in Energy at results segment. the our

during quarter, sales sales handpieces, driven We Energy generators Advanced the global than strong handpieces expectations this year-over-year. strong along to from by U.S. customers variant emergence was shows. the tend each international were XX% of summer. Global third especially take to the for by in Delta in for the growth as our our from see for both customer part customers utilization-based primarily of year-over-year, onset new sales pleased base. the sales the quarter the has was surgeons potential engaging due generators with engagement experience pandemic, new of sales of process increased to in customers the the the since seasonality of return typical more the latter trade year virtual U.S. U.S. months we in demand in our primarily Our in with reflecting that more cosmetic driven resumption generators sales diversified XXX% the to demand XXX% strong and global of increased The our improve surgery continued to growth growth vacations in Renuvion and demand than than with contributions given exceeded of Global U.S. our our The strong greater industry efforts in our global and the distributors, handpiece for of increase notable QX our that market. of

equipment basis, third by was be purchasing to more sales our growth on the U.S. experienced in continued quarter-over-quarter global and quarter, saw performance quarter-over-quarter a to on sales environment we Internationally, in basis. generator As a while relatively both the double-digit year-over-year COVID-XX. affected a in as result, comparison the modest growth we in U.S. generator capital

quarter we trends were of was in stronger-than-anticipated geographies, with Taiwan. Plasma and in deliver another key net and distributors attributable largely including U.S. in by largely in reflecting Energy utilization In solid to year-over-year our proud growth our growth Brazil sales and performance of both our sales, driven our business, generator sales loss. Helium sales our performance summary, Advanced international XX% to Our sales driven stockholders by handpiece Technology. loss generator improvements pleased adjusted to We global our and adoption EBITDA to were complement very also

to Moving third highlights. quarter operating

strategic cosmetic to We with to position respect surgery in the long-term market. progress Apyx Medical to continue drive growth X our initiatives sustainable for intended

patient of Beginning regulatory and dermal the targeted to notification resurfacing to indications laxity. cosmetic pursuit study, a we With our of application. completed following U.S. we second XXX(k) our U.S., IDE Let neck Renuvion procedures, strategy update procedures, the the obtaining August, phase the May facilitate our submission the of laxity me of early for in specific our on for dermal continued of our them, have evaluating our focused beginning skin we agency treatment procedures FDA use take our with clinical of In skin resurfacing submental region. pursuit laxity the of the indication an the XX, in in surgery in each review you to the minute their with and skin premarket engage remain for to specifically on of in internationally. with enrollment and to indication an respect on procedures,

quarter future. submitting FDA we the continued U.S., second the our countries to of to our new for efforts Outside the in anticipate obtain notification products, XXX(k) the Energy of premarket this us Advanced to for commercialize registrations enabling indication XXXX. our in We continue to

Our our Technology on steady pace multiyear adoption a this in recent front period. positions facilitate Plasma us to progress years over of well global of Helium the

technology the to our strategic for the clinical evidence of in cosmetic surgery expanding second Renuvion initiative, market. portfolio Moving our

on demonstrated a third liposuction study. compared and Renuvion found with in Renuvion's to in one were of independent liposuction liposuction arm use the The in subjects of we evaluate of to quarter. several our our subjects a arm and surgeon clinical during support from arm. discussed cosmetic laxity team strategic or With significant peers. X-subject to contour PMP working our laxity post-procedure, respect The alone. third We in top when customers, X was providing directly in initiative, our evaluators for July, Renuvion peer-reviewed the and X attended results participated skin the saw months opportunities combined combination over by X with X the the events market that retrospective During quarter, their article hosted with managing published with were and the the surgeon Cosmetic and existing which Renuvion. to our notable XXX publication and of host to from surgery during users, or liposuction mentor order received develop, X other either improvement liposuction quarter, physician practice in in combined with customers in-person. received new All in Journal compared received PMPs, how organize programs, Surgery enhancing researchers continued that physician results The arm Renuvion, combined to efficacy the the each virtually American which learn used were to and arm clinicians blinded with liposuction and that

markets. team ability to the distributors for customers newer their support international local educate X their to our Our virtual surgeon sessions and improve in in order hosted training

addition trade to industry conferences these shows. participated X and In in efforts, in-person we

events, resume events engage potential XX% pleased and customers. roughly these hosting other levels, podium educate educational us XX% at new and presentations enabling have was attendance in-person in-person pre-COVID to below While to to surgeon we been

the also our our We marketing existing materials continued to surgeons available via portal. and educational expand customers on online

commercial facilitate manufacturing and Lastly, the we from to Advanced manufacturing our regarding reduce introduction fourth manufacturing first of handpiece, of benefit effort the our initiative team's Energy capabilities final our continued the efficiencies, product strategic unit and cost to per APR to our improve our handpieces. to

for in And by we the country our drive XXXX international our made to gross where operate. expanding requisite handpiece and progress in product bringing handpiece and third Bulgaria Bulgarian capabilities this capacity. and facility handpiece multiyear during the we it Our effort OUS Most to are facilities. expect will We both this quarter, over Tara existing margins began handpieces allow Tara? believe the base notably, results at in our focused began will our now improving time. team groundwork manufacturing strategic our securing will review manufacturing guidance. each XXXX facility we advance updated future these financial lastly, material and the registrations customer to and us X remains success. continuing initiatives, in nearly on quarter this double Clearwater third we production laying improvements distributors By our product our our in

Tara Semb

increase tax begin compared million covered for profit $X.X million. revenue decreased salaries quarter unchanged in expense good year-over-year our million the of $X Since will related Gross million I line. $X.X margin The to the in expenses. to operations increased and increased results, the XXXX a third Income to XX% Thanks, of was and the in a year-over-year. a increase decreased for from million. year-over-year driven X% administrative million $X.X quarter XXXX. benefit income XX%, development million or year-over-year expenses $X.XX third profit $X.X Charlie, to general in per and of XX% research and to million a gross tax $XX $X.X of Operating $X.XX third an was $X.X increase quarter million or or $X.X quarter at $X.X Loss or or $X.X million. $X.X million million increase loss in for $X.X share Adjusted of profit Charlie million expenses loss attributable compared third year-over-year Net stockholders increase XXXX professional or million afternoon, XX% million. Gross $X.X $X.X in was was to share services and $X.X everyone. year-over-year EBITDA XXXX. to per the selling, operating million expenses, costs, by

to loss we reminder, press loss release our from a provided EBITDA non-GAAP detailed to this a adjusted afternoon. attributable reconciliation stockholders our in net As

million December XXXX. company September cash had and XX, of of $XX.X XXXX, As to $XX.X equivalents as the million cash compared of XX,

updated our Turning financial this XXXX guidance, release earnings of our to press a afternoon. which we in review

ending assume: $XX assumes by to range, U.S. assumed months assumes subdermal to demand is Energy revenue year-over-year. December to of international driven which related XX% year-over-year. which XX% range XX% updated the to XX% the XX% now in as sales range, XX% guidance its range million, continues to Energy guidance we primarily our million This Renuvion prior only of to of liposuction prior $XX XX% year-over-year. use guidance XX, following updated The contributions international to XX% growth of XX revenue coagulator This and Advanced driven growth existing by procedures; total our to from The growth to of For representing markets. growth expect range is revenue growth growth compares a year-over-year. compares XXXX, in revenue total guidance Advanced

of decline range decline assumes a OEM revenue to compared prior approximately also year-over-year year-over-year. guidance total an XX% which X% updated guidance, revenue Our approximately of our assumed

profitability In our guidance range we in of million year of terms compares guidance loss $XX.X range expect XXXX, to attributable $XX.X to stockholders million. million net the now to for fiscal of This prior $XX.X adjusted million. to prior range million million. $XX we to loss expect million guidance EBITDA $XX.X range to in million. of This of $XX.X $XX.X And compares our to $XX.X the

formal financial the considerations modeling Our to for following incorporate continues XXXX for guidance purposes.

First, our we by exclusively our business. the assume period revenue driven full for growth year company total Advanced XXXX Energy will be

in We and expect sales growth midpoint U.S. customers assumes internationally, the XXXX. to international customers U.S. the Advanced in strong Advanced growth XX% both growth, Energy sales our guidance year-over-year of Energy in now and in and XX% to

mix year, expect approximately driven gross margins and last by XX.X% now segment, benefits year, XX% by product. compared continued of we Second, primarily geography by this by to

approximately to noncash XXXX approximately a tax loss approximately expense a in last year, benefit tax to compared operating we benefit noncash to of stock-based driven depreciation approximately of in to of $XXX,XXX expense the carryback amortization year. $XXX,XXX, expect in compared $X.X by Act. And expect increase income we was interest to CARES range to compensation income X% approximately of from our and million lastly, $X.X XX% of operating we $XXX,XXX diluted of of operating and With I'll year-over-year, shares. interest XX which driven approximately to we million shares to for weighted growth benefit GAAP noncontrolling $XX,XXX remarks. expense million, net million XXXX million Third, XX other closing Charlie an by and Fourth, $XXX,XXX the call a expenses. $X.X outstanding average of expect expect $XXX,XXX tax expense approximately Fifth, continue back last net turn that, normalized

Charles Goodwin

largely Tara. the by to pleased U.S. environment deliver exceeded globally, execution performance across and another driven and overall handpiece our capital of quarter Thanks, improving particularly QX, In impressive were environment in entire in team an expectations, we that improving the demand, equipment our

strength continued sales. the expect to to XXXX, ahead and look remainder we we generator both global in U.S. see sales As of handpiece

in updated incorporates Our performance as updated expectation XXXX revenue as QX. guidance well better-than-expected for growth an QX range the

from and our increased customers U.S. growth U.S. OUS handpiece We equipment customers generator based from the both demand demand for in expectations the expectations continued market. have have increased recovery and capital U.S. for on

investors remain most to Our you guidance and utilization forward increase to as to reflect surgery as global awareness, we believe to the thanking Technology. growth at call and, for share relatively future their progress. company the sheet, By expectations we thus, our our the We on disruptive our of the on of I'd the operator, time. a conclude now remains adoption in to to distributors strategic cosmetic strategy forward Helium my strong guidance. our OUS also to remarks market. their versus momentum, for expand made multibillion-dollar the like bringing this unchanged challenging are achieving the quarter and and prior conclusion we support. and customers, for that recent thank have surgery cosmetic and Apyx past everyone our emerge goal global our over updating I'd that, team, solid questions. like focus Ultimately, more our recent capital executing With success Medical leveraging our today Plasma aim dedicated open possible. technology to XXXX to continues look the we equipment this let's QX by environment Building we efforts growth our which look balance months,

Operator

comes Turkaly with Dave question Securities. first from JMP our And Instructions]. [Operator

David Turkaly

progressed, lot on, because Charlie, I Delta, back the but then want early then and look quarter anything, quarter A better. coming of more question ask It hear how doesn't of like in you. saw you out have sort here. wouldn't July, the Or competitors I of coming exact out the normally October. but the about, talked challenges your end a me to opposite, August challenges ask you about towards just of maybe having and

there As the essentially strong across you really, from I quarter the progressed, Delta? this I were And you mean, were guess, impact that board? saw no

Charles Goodwin

improving the in States, the shortage QX double We were specifically it the actually environment events QX, globally utilization-based reflects easier U.S. Well, outside did globally engage of reporting handpieces. for still demand in capital see improving various States, in in digits to overall, environment, to by for new handpieces, our strong customers and our so strong procedures. in U.S. particularly But and open capital and handpiece regions. side we an remains demand impacted became customers demand us country with And varied back it saw quarter-over-quarter requesting performance in And but were potential U.S. States, our the COVID up show our outside as no patient growth from equipment United OUS by industry again. sales the United country. United the are these generator trade

delivered still our sales generator and in QX. States, the quarter-over-quarter United outside we even year-over-year in However, growth

quarter. very and we yes, a a good had strong very So

David Turkaly

down. maybe people the had time thoughts indicates don't your slowing love we are and have it down, guess, And people seem back, it guidance And you early in to pandemic, a on to I to just uptick still they're slowed and get procedure on while in coming going now get I'd said, XQ I hey, are see but home, anything off. your doesn't they the that done the guess,

overall, So those are it's cosmetic initiatives? you you really the guys I just executing well do mean, think market or on

Charles Goodwin

technology see that is thing we for procedure global The a this and basis. this do on demand Yes. really

this. level. in this performing so And at are clinicians wanting high our And obviously, a are coming and customers

combination excited know market fourth that quarter very we're we're and the our but in. that the quarter I But the going that situation just it's the so had we with a we're And happy both, technology into. or about don't if just of very we're or

Operator

with Sandler. next Piper Our Matthew O'Brien of from question the line comes

Matthew O'Brien

international. a little reconcile So on help your me commentary bit

Just the strong here, again. really as I it's at looked performance

but comp, the QX, Charlie, narrow to international things trying commentary, really bit little business in how the terms growing also smaller kind easy than capital has 'XX? domestically, we a between handpiece how think very into this lumpy. phenomenal. what which seen at, sounds continue the had can I as I'm get of has the an here the those big been delta of which last And But of domestically the it's of growth domestic business seen based on But like those you've growth to years. then, handpiece I two know know growth do dovetailing With translation that QX, are is growth head franchise. about over in off is? several quickly been overall two -- still with your generator growth generator we know that, in the we've of the I -- the

Charles Goodwin

if of there by are equipment cautious parts that there's parts would the for the United -- affected We OUS other the remained obviously, because world and States unchanged. optimism the outside capital generator both the just we that that keep guidance we U.S., our million growth by on in end low driven in QX, high on by that increased guidance better-than-anticipated and and the for our for And total million procedure the for So see was growth the in the handpieces is QX. expectations you look then both at end. And United we expect reflects that increased reason gave, $X.X and And expectations $X.X we our being U.S. is strong, demand increased States. and updated of volume. still the more. the the for that to demand, And in OUS our we COVID

It States. up as as the Our generators for United the much was growth, just year-over-year wasn't outside quarter-over-quarter. still States and though, United

not the did level in see that the outside still just to United the States. but So States, we're United growth seeing we

Matthew O'Brien

Okay.

Okay. leave it I'll there.

Although domestically. what has I seen of versus doubled your versus think do QX essentially -- international 'XX business we've so

we I'm about in full of over to the dermal hear update a or with full I chatting I'm reset or the approval at wondering update here with as resurfacing. know I get a trajectory outside didn't just where curious, far So why soon? kind a expect on there growth agency, of should May. them. clock, Is submitted that's you But as moving you're there. fairly really the still

Charles Goodwin

as is with predict far would We them. and obviously, that, your will we're engaging it when that it. when to working we mine. get to good as as predicting we'll when with guess told we're Unfortunately, you you, Yes. actually be, as tell going is the when submitted But that we opposed it's -- FDA, to But tough we happen. it. And

So all know, with is tell guys can facilitate the And that will them you I now as you application. still engaging as soon we we're to right know.

Matthew O'Brien

more And to here? course have kind anything normal bit. little Is just information? from there sorry, some they a there up follow asked that's of Charlie, deviating

Charles Goodwin

for an they always process, and levels it's of Well, interactive information. always various ask

through And with that them. so working just process we're still

Operator

from Colliers question line comes next Securities. Bauser Kyle Our the of with

Kyle Bauser

thanks Charlie and all and updates. here, for great the results Tara,

seeing quantify you up? direct-to-consumer? opportunity we're laxity, kind -- to incredible market do skin So the consumers already continued How incremental of with direct you're do already think growth to addressable words, that you're some other of adoption opens market clearly, seeing growth. what with really coagulation. you nice sort able Once In subdermal with subdermal coagulation or for

Charles Goodwin

that, growing inside continue talking that's about skin believe question, keep you. the start to do in right business way we and we that going that Yes, laxity market can Remember, away some therapies, done think once XXX,XXX the We probably CoolSculpting. talking when tummy market. is away But that tuck. talk right No, the United we like be could want now. it than customers of that the bigger we even we on can procedures now. this directly are from United in is But other the customers that. them, dramatically back And potentially the to market, is it Kyle. that to can we're now, that can consumer than a directly Yes. obviously, a look, doubles for And the honestly, market United opportunity, States. able when just more the the liposuction we're we're the market doing Renuvion can great the to Thank what about United States, take open consumers, And think outside States. than we quite what conservatively we think of the then, it States, take bigger would we to the

fast believe laxity. really skin And so the -- can the technology can tell of consumers we the TAM when when to directly Renuvion becomes start when benefits for really big, we we

Kyle Bauser

if laxity That's of And helpful. agencies? number then obtain indication? the And numbers you then it. once sales you do field-based reps and do Got sales these changing, envision managers latest that what's and all, how independent skin at

Charles Goodwin

Yes.

the So we've we about where feet with held steady are. That's XX street. about on

We find ourselves for to somewhere in would XX is XX, skin few haven't But we but would XX, definitely any indication time. But we I that. or that changes with be sure. we indication, point laxity wouldn't could from going we add -- until reps would at We definitely, the would range. when wait that think probably that XX when indication had that get to -- here, there take a probably that XX in to from go

Operator

comes Capital. question from Craig-Hallum next Matt with Hewitt Our

Matthew Hewitt

some one you that any been questions. that's in in change of any headlines one for curious issues demand some resulted I'm first Have there's I they've since me been Renuvion. the just some in me, of aybe here for having press the customers. prompted given CoolSculpting? And incremental with regarding regarding it the think seen demand prior if

Charles Goodwin

being demand at this Yes, for that to from really we hard asking I tell patients U.S., have that the In are really procedure. point just this customers in our reported don't is time. strong know.

that's don't driving can people that are out Renuvion patient what I got strong So it it's know we know just if or for we've finding and do because demand, them. if

Matthew Hewitt

open impact in expect and a maybe we into any as as opportunity Bulgaria, gross from beyond get follow-up, the facility should given having that Got I 'XX just on opened manufacturing? it. then, facility up guess, the up margins, And in we and

Charles Goodwin

margins forward. Yes. have part is Bulgaria That progression serving our we will of the it and definitely a that for sure. primarily be multiyear help going is gross strategy Eastern European But markets. move manufacturing It's remember, there. as Middle will to And we

Operator

[Operator Instructions].

next Our with Capital. RENN Cleveland Russell the question of line comes from

George Cleveland

is question, sensational was a the it FDA market it My about of do how Give some quarter. call indication, lift. answered earlier dermal part -- was It think the I facelift, you and to face if the the in the me United And again, taking resurfacing, long big could and the those trying for the States But how so comment big is we're clear why it FDA. out you to it's the overseas? figure questions. on

Charles Goodwin

Yes.

it be for is skin the So being the ablative selling part that company. clinicians big an the we're be promoting laxity It resurfacing of is our fully And would as very that that a technology. business, The now. we today, first we and the dermal the not remember are business would of is indication driving portion that's currently that time. used by but off-label business

And XXX,XXX long, but about good. the would recovery that are the therapy. the so be the roughly would that is really that for patients the that time want available results reason procedures And in United type is, there's of States is only

downtime, size. we've and many probably States, the to about there moved about that States. in talked market lot Outside same the the has that's United a it's there's market of less the So the times. the fractional portion Again, where United

with FDA. length of that it's hear we I wish control. this get I that, update I as far but from everybody obviously as could the outside taking them. soon that to is will as time mentioned, we As of my like control And the

Operator

That no conference remaining Thank does are we participation. currently at gentlemen, your all for today. questions our you for and this Ladies conclude time. showing

Apyx Medical (APYX) 12 Nov 212021 Q3 Earnings call transcript