APYX - Earnings call 2 2023 | Apyx Medical Corporation

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Operator

Hello, and welcome, ladies and gentlemen, to the Second Quarter of Fiscal 2023 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 without limitation, those identified in the Risk Factors section of our most recent annual report on Form 10-K, our most recent 10-Q filing and the company's other filings 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. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise.This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. the financial in the available like accordance earnings release non-GAAP calculated comparable in to these of press presented portion over and with on turn of the measures would to most to measures the our call Reconciliations website.I Relations Mr. now Investor GAAP are Apyx Medical's Executive Charlie and Goodwin, Officer. Chief President Please go ahead, sir.

Charles Goodwin

Tara call Thanks, call. I'm earnings quarter of by Chief operator, our XXXX and welcome, everyone, to Semb. Financial Officer, on our today's second joined

brief results outline I'll today.I'll our to a in results a of XXXX will what to factors closing Let we provide review key cover me then with guidance, total for performance. questions. walk provide $XX.X let's financial contributed today. we to of begin XX% quarter, our reaffirmed With Tara of open call discuss million. revenue of operational which results.In some release earnings intend you our Then achieved growth in that year-over-year some sales the our review our along and accomplishments financial of that, detail our with with a through quarter. revenue our with during QX the revenue the I'll second remarks we before we begin the

orders.Looking approximately primarily softer-than-expected is our more OUS which Advanced Advanced sales and in detail. million. expectations by on our our demand from of was by part partially expectations, total which we to OEM year-over-year products, the which sales, Energy Energy second to provided quarter, of at believe driven decreased Our last increased $XXX,XXX Relative growth for driven offset that by earnings our we which revenue call, year-over-year exceeded our below XX% sales performance range we growth in $XX.X sales by sales Advanced shared $X.X timing in came million our to to results was the our Energy our due distributors, of $X.X million. expectations X% This OEM approximately

trends year-over-year medical communication continued the Advanced to Advanced on second was both XXXX, the basis, performance safety increasing customers to in consistent posted device in handpieces, sales originally sales the primary global and of U.S., Energy to a be we our products growth pleased global terms Advanced U.S. of to sales Energy impacted for pleased Energy internationally.In were year-over-year, with performance FDA Energy a a increased XX% strong by sales domestically that our our achieve March XX% basis. with While the quarter-over-quarter in of sales XX% we the to the the quarter disruption quarter related growth basis driver were on saw second quarter. expectations during of performance. Energy in return Advanced On and our our improving our business We generators to and the of year-over-year by sales the and Advanced represented

in we new continue the a receive existing we to performance discounted Apyx with reminder, Our driven order U.S. the primarily generator strong both following our console One well. in an upgrade for handpiece next-generation existing users Most sales new program to launch our to that at beginning contributions to of One introduced users was of from to of see in Apyx console. trade from sales pricing Renuvion due XXXX.As notably, and our existing prior sales generators combination by enables generation their a of our in customers growth as the demand U.S.

moment these our patients, positioning limitations second performance and we of our achieved balance sales of which generator primary driver driven And headwinds sales declines generator and the for in enhance all growth in progress us secured the believe in our summary, moderated markets among take international growth global to sales raise generators. in pleased U.S. our the the the important May. sales international of was to through our offset generator distributors, our customers by the to to the new generator region, growth on safety America by was East. the continuing experience condition.I'll progress the as by than I countries the impacted our communication, in of quarter the advance pleased outside particularly somewhat Energy performance detail. Advanced to communication, of our through year.Moving indications in and we in during multiple our which walk sales With ultimately, Middle distributor to strong primarily distributors internationally our we new more safety were in we items sales uptick by strong the we clinical the we both by the quarter.In adoption the remaining of by driven improvement Advanced continued we believe clearances U.S. Advanced expand a of across to U.S. achieve operational was pleased as sales with to to Energy we growth, discussion were sales were domestically safety made the demand in technology our Despite XX% the to performance.Our made now was potential performance. communication, further Energy strong the continue the updated each address while continue progress, U.S., fronts months product safety modest for to well, primarily recently and important in handpieces year-over-year see OUS Renuvion following part Europe influenced outside in portfolio the Asia-Pacific sheet that the related In we of was be the multiple quarter, Importantly, and a our awareness This experienced during we timing growth, sales orders communication second remaining surgeons to respect and quarter, second the which of the Latin

secured progress remaining the of in new we to and First our FDA's notable obtain XXXX. sales original and on In made safety indications outlined strategy and most clinical we from April, support communication March with for an issues to regulatory a liposuction address for our coagulation subcutaneous efforts marketing body we importantly, the Renuvion the on believe our following of handpiece clearance aesthetic for significant is X call, shared reasons. indication new primary contouring.As this XXX(k) tissues APR clearance soft our last we for

communication, XXXX.Since with and is APR following use the XX, as the the use a XXX(k) in The address this recent developments now the latest it second, backdrop indication, specific new care X continue only about the we of posted. liposuction. since potential safety it since have market issues XXX(k) which we squarely cleared of our Renuvion the efforts on the with existing the customers. believe the a months May been for the focused believe to and XX, recommendations the informed of consumers a the addressed device updated for FDA And for APR posted clearance among over First, our stated has combination update the we clearance, and revise XX, had update initially providers from It the indications not with health safety communication. on safety secured the forth March clinical products been accordingly handpiece was FDA these in this to original outlined limitations X related have set Renuvion our that FDA remaining raising safety communication communication safety liposuction.With use May and remaining communication directly the to little product handpiece our awareness that Renuvion was on FDA's originally been

worked their materials distributors surgeon significance. educate these update team accordingly to customers quickly and sales and effectively and our to Our developments communicate marketing our and reps,

recent the Surgery our and leveraged at the aesthetic medical also awareness the including conferences Cosmetic raise in presence industry. in June meetings, We show to Vegas

at use tissue micro of on which providing current our surgeons worth and providing clearances contraction that One the console, limited takes our system. from shaft, addition new and earlier, forward surgeon designed of recent progress complement end look for believe compelling customers our that pleased smaller XXX(k) surgeons Renuvion drive smaller and/or another of subcutaneous It's noting While to handpiece.It's FDA release potential offering option to the discussed well-received of profile quarter.I'm with handpiece to resulting June One indication continue soft to commence benefit radio for to the the to our Renuvion with may handpiece is our tissue, being generation release speed our an of commercializing building been use is with product to our limited our needed. preparing announce APR exclusively XX, in existing July. Renuvion achieve we our a contraction After of console, where coagulation XXX(k) respect micro it including the new community with is today handpiece market half focused clearance cases bring Renuvion delivery width we tissue has the that helium progress.In designed micro soft receipt On plasma time energy this Apyx The I by commenced we product our our clearance, to up Apyx on which frequency the our Renuvion updates, new team market securing news we during pipeline. on and the a by to latest XXX(k) handpiece. third also announce to of features our for a is to we reasons to the update for were handpiece instrument pleased to or micro have

second market from to the of which condition. improve pleased targeting to in second existing highest are capital enhance inform sheet the limited margin, full of forward to loss. We our year. we cash drive from we quarter capital revenue launch, to commercial and results.We users flow to the to our our During operations continued release look performance select our securing total our operating efficiency we feedback the in while stronger-than-expected gaining areas quarter, our priority the surgeon investments balance deliver operating quarter group continue improvements on operating leverage fourth additional softer-than-expected the this to and our for in phase, finally, important And focus a despite were maximize

from million transaction, excluding delivered leaseback $X.X operating in our in year-over-year loss reduction QX. $X sale Specifically, million the we gain a

approved of balance $X.X interest. we refunds $X.X Internal refund for as completed and we beginning included to of over the payment million had excited operating actually million.And in sale-leaseback received property, Clearwater cash the XXXX an improvements today, of $X.X net payment that they the the This proceeds well. lastly, expect at our related provided the million us Xth, May this of transaction announce which that losses $X.X year. for million refunds from $XXX,XXX Revenue Service I'm We of

capacity potential sheet and the and $XX.X adequate and refunds on and growth at we to Tara flow review end work second our cash initiatives as which goals tax the of it guidance, under our our turn operations press cash and today's profitability our we balance capacity achieving have that the of quarter, credit and to remain these confident sustainable results With we borrowing release. near-term to agreement generation.I'll strong support million of XXXX capital in we financial now Tara? free over cash the quarter longer-term updated towards second

Tara Semb

was Gross I or gross and by and Gross XX.X% $X.X the period. SG&A our partially revenue Advanced the period. by year-over-year expenses. as to professional million our in percentage of comprising to million second Charlie. operations performance gain services product or between Energy of expenses increased quarter compared by both million offset an is second our These from and our the of a margin the since in million results. primarily this increased in of our Included million. for by related million. higher sales will and second XX% Charlie of was XX% $X.X year-over-year primarily $X.X $X.X X operations begin segment line at increase increase the changes Loss covered profit year-over-year driven compared in Thanks, Energy to our sale-leaseback $X.X increase by within prior in mix with profit quarter million. that $X.X items review my XXXX XXXX.Operating financial margin Advanced X.X% in from R&D year and salaries XX.X% loss expenses, occurred or $X.X to a increased sales segment million segments, gross our quarter $X.X the total were the expenses operating decrease The both year-over-year. transaction in The $X.X million decreased from which costs was geography expenses by driven profit

term transaction, sale-leaseback $XXX,XXX was last expense loss net other debt total our was to increase related from other in compared or driven The year. income the our gain million.Total to attributable to the to quarter the per year-over-year compared to XXXX second to million million operations an XX% our change or per on outstanding loss $XXX,XXX Excluding or share from in stockholders period. interest $X.X compared year-over-year XXXX. in decreased $X.X income to $X of borrowing by $X $X.X for the obligations million outstanding $X.XX million Net the net net share XX% second prior in of or loan no quarter $X.XX year decreased

$X.X net million attributable year-over-year. million or the year-over-year XX% $X.X decreased in loss Adjusted period. compared non-GAAP $X.X stockholders gain, decreased nonrecurring million $X.X or to year our loss XX% prior million to to Excluding EBITDA

million year-over-year in capital offset $X.X attributable driven sale gain stockholders period, earnings by to in the from of operations compared $X.X the to for and net compared quarter reconciliation cash net EBITDA As to the improvement on by XX second release in press of partially a prior ending used year was the in and higher today.Cash working XXXX. the reminder, use June loss, million adjusted detailed we X our provided loss non-GAAP a to months

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

related $X.X and to received payment million release we at the press financial payment reaffirmed refunds this Charlie mentioned, a This we in of interest.Turning $X.X beginning which $XXX,XXX of of the Service refunds refund review today cash they Internal our million an of tax Revenue earnings As our year. XXXX for the approved includes guidance, $X.X today. million from

the XX% XXXX, to million million, For continue of months in ending the XX December to we year-over-year. growth XX% revenue $XX XX, range $XX expect of to representing total approximately

and revenue revenue million total in approximately $XX range of to continues OEM million. range of Advanced revenue million assume Energy $X guidance Our to the $XX

XXXX, loss for modeling In our we of financial continue incorporates terms approximately expect for profitability to of million.Our formal guidance considerations stockholders $XX.X net full to XXXX for following the year guidance attributable purposes. the

expenses expect XX.X%, expect in XXX assumptions.Second, gross prior versus we to First, guidance growth our margins operating approximately year-over-year. mid-single-digit low to roughly points XX.X% we up of now basis

of in compared year approximately updated Third, total is gain Note $XXX,XXX we of XXXX compared total the million, recognized weighted shares $X quarter outstanding expect XX.X other of approximately full approximately million assumes guidance to net our million on and diluted income The assumed we And our expense now the updated to $X.X our of prior million, guidance non-controlling an to $X.X previously. expense we net which our driven expense of compared stock-based XXXX in approximately by expect versus interests $XXX,XXX XXXX GAAP which of shares. in benefit assumes $X.X of interest expectation income tax net sale-leaseback, now and approximately would million. approximately the total compensation in $XXX,XXX prior $X.X of treatment prior lastly, for to our approximately of operating other noncash $X.X average on previously.Fourth, recognized it guidance, amortization loss for second expense be noncash net. XXXX million depreciation in other million compared guidance now expense change

on to and I'll assume year sheet as Charlie formal the approximately end call an cash X% closing the quarter range of for remarks. million, approximately third in $XX cash approximately the in XX% million revenue XX/XX/XXXX.With in with by decrease year-over-year, balance our range that, offset XXXX, for the For anticipate of turn a back continues of sales Energy XX% of XXXX we $XX year-over-year.Lastly, Advanced of in by sales million total partially guidance $XX to to our equivalents increase in driven OEM we the to

Charles Goodwin

made we we our XXXX the to confidence to ability conclusion, in in improvement new are second reaffirming operational year-over-year notable In growth product believe of the Advanced the raise benefit tailwinds, XXX(k) year-over-year, our Having and Energy Tara. of specific subsequent XX% in Energy environment coupled expand of we future an and market, sales sheet. the addressed our in and in to our that evidence opportunity for improve of continued market ahead technology Renuvion we the driving the Renuvion our including most safety balance the against thanking initiatives From very commercialization issues XX% in surgery seen profitability.By positioning the we business our across of indications to addition the Medical enabled over the in have levels, our today of delivering obtained global positioning so call sales quarter quarter, expanding a X our And well supporting new year, standpoint, improvements to continued while loss from technologies portfolio continue secured our as loss. lies use strong Advanced for multibillion-dollar today's improvements our to our for remaining to towards and close our with clinical U.S. call contributions Advanced generators share fronts, initiatives. the our deliver address recent growth achieve in half we outlined Thanks, to including customers, bringing clinical and team our of sales along at half communication balance our our on in safety technologies, communication.U.S. in are expenses reductions operator, by our these the let's us efforts questions. which in enhance to are clearances strong second safety awareness portfolio all to committed our the consumer to with that, focused mission.With open and can continue the past now Apyx on products year.We the the of XXX(k) direct-to-consumer and our remain managing market.I'd pleased continuing we our recent communication, Apyx for with combined investors clearance their our we update progress and as driving the raise enhancing console second we for expect U.S. for product net performance of progress year, strategic our year-over-year partners that for beginning growth globally technologies operating our offering while to interest for of continuing the expand the growth One cosmetic support both our deliver this We like XXXX, provider during at and our excess XXXX of FDA will and of remaining significant everyone awareness progress to guidance in our on the the in their by the XXXX. based distributor and multiple this with in Energy

Operator

from Piper come line O'Brien And Instructions] of Sandler. Matthew the first will our [Operator question with

Unknown Analyst

This source markets driving quarter? of I what speak one, certain And to strength individual international dynamic you was the growth? but is geographies. called for Matt. stocking differences in of Understanding a that you called just of versus what in guess the out, confidence might of magnitude [ you to differences? be kind those international return out ] to Will softness to the weakness the just pockets those start, tack on, you Can in gives on the

Charles Goodwin

Yes.

developments take positive saw minute. some back We QX. for business me a our really a let in in Just step

sales the and improvements that clearance everybody good also and sure communication we the feel that our quarter-over-quarter significant really had liposuction safety we notice which XX% XXX(k) make obtained expected. update XX% understands Advanced about year-over-year. the in increased Renuvion I We following performance, we And saw want as are. from saw for where we So Energy to

were and Energy Our OUS generator consistent with growth sales our U.S. Advanced sales expectations. growth

distribution So other those was into were sales OUS some get than it had to our that our in those largely today the due expected.Our the orders. we feel we not than I'm handpiece details that's for what right the a guidance orders not and And single were and say growth going to expected, that objectives the we we're reaffirming timing And XXXX. to expectations lower half stated one why distributor year we back or expect full reasons of QX. and about good of of

Unknown Analyst

that to smaller about just of we guess can about I lift you And handpiece. of the a shaft? instrument Apyx out bit to think a talk big What a And lift as the device One should this expect console? that How interest how micro deal year? the here is

Charles Goodwin

Yes.

we in remarks, remember, So our started as the QX. soft I have outlined in just launch

is surgeon to the we're so the wanted And of smaller use they're quarter, into device is the important we in out take of with fourth where can thing there. is top now need and information safe we it effective and will hands areas to develop size the gaining APR right feedback it that, about smaller and have in roll that we our in something using and the now where the customers some okay?And micro it the that that doctors go to and the of all existing handpiece and guidelines want start didn't

about like face, think think fine so some think ankles, of the knees, areas areas places want about where the contraction. of hands, smaller think form people about about think about the still skin the And the

to our the that, mind Apyx keep in handpiece portfolio.And this the will a it going thing an addition the is to And micro if nice with to upgrade we you're other be so console. One to requires believe too use this

handpiece of itself so micro the in really And to we fourth more benefit impact quarter, XXXX. of the see an will it's some have going to but in that start

Operator

Our comes with line of Matt the next Hewitt from question Craig-Hallum.

Matthew Hewitt

rate conversion your maybe off, from Apyx far? the regarding I users One, relatively of been early feedback it's so customers? has been realize what's but first still days, what existing Maybe the

Charles Goodwin

doctors of the that proven and seen been far they of gas been features, has automatically.And were the driver The a an initial it's cloud just which for the the now this has having amount to can important generator and in positive the amount advanced on and they and launch connectivity Apyx usage we've stuff recording because their for of The all this that different stuff patient's and of One been phase, and upload nice a user QX the which we're so remain the the really it response procedures And been of were us really record important has with feedback that's for resonating by Yes. highlighted and so second be the this presets 'XX. way lot touchscreen year, expect functionality, feature. the and staff is happy the very for surgeons bodies we important with us an been amount really do chart too. contributor the jewels, manually to the it's will the of half and the for

Matthew Hewitt

sales, bit shifting handpiece then you And I correctly, a back it's little international half. regarding it's timing-related like issue. I more But heard here. sounds understand If it a the

imply international would from So these in here already to received back QX longer? you here take Any orders that does QX, have Or anticipate there it's bouncing international, in a we color be specific that going distributors? shouldn't some bit helpful. maybe additional little

Charles Goodwin

Look, confident think year one that reaffirmed detail of in we're give going that the we're And the going those guidance and half that And to about why expect on get the in I of back some the our of the half all the because some think was we're to year. for back that's just wasn't It that. back to know half I distributor we this Yes. year. handpieces. that's is orders, it those the orders important thing

Operator

with of the question next line George from Sellers Stephens. comes Our

George Sellers

trend detail the versus just with with give curious I'm quarter. FDA start following trended clearance? that you liposuction how to utilization on changed if Maybe some And standalone? if could the

Charles Goodwin

any updated behind in Yes. safety can remember with that just the had the middle we and quarter of FDA the mean where weeks else. anything data that I basically us. I was don't to speak in I that or was know May trend time communication of X that

terms notable tens we safety monthly after uptick or there, the communication May. specificity out did in in so And the a of U.S. in adoption call

out after there can started a we that that that have you is that we only after or rate greater the did that. to So than was of thing tell adoption much before I

obviously has encouraged that the the year. rest for of so And very us

George Sellers

guidance And here. maybe switching to

curious in guidance, the detail? contribution but some expectations. change your you're just you obviously expecting detail. if be just could more bit that little the more reiterated You U.S.? I'm you there from would Or revenue give Maybe if gross profit helpful. give little Is maybe a the a international raised bit could versus

Charles Goodwin

Yes.

So I primarily mix by is our favorable it geography assumptions and driven mix it's by really, by Energy within and product. Advanced mean, segment

Operator

Instructions] from the Street next line question Markets. Our Takkinen [Operator with Capital Frank Lake comes of

Frank Takkinen

amongst I is kind one pieces couple could to to of parse broad-based strength question well. you versus console, on handpieces both? ask you about Or which faster? guide just was are I it growth as hoping was the ask is hoping a I to the want of thinking in out expectation. to do growth The primary how you expect be growing

Charles Goodwin

And the generators reduced we and of part is tailwinds. where adoption the in also right? U.S. updated And notice. the remember, had growth generator, indications in expect strong momentum the the but that the States. we to multiple for handpieces that back Yes. remain more the the and generators that in quarter that we was had the really the of we in U.S., we faster outside growth had, both had in and had. growth that, specifically new U.S. launched the especially Look, is got globally, just of We've that headwinds we We've safety the only got talked got now, One in and Apyx that the right that We've we've And year which now because United got about. we've the of FDA half

particular.And too. States, marketing our in direct-to-consumer right in thing United U.S. now is a is that So the only

to that impact U.S. expect driver means U.S. the margins. a that bigger be we our is up, so gross If that is there the margins go our the gross bigger And a driver. on positive

Frank Takkinen

in [ for negatively illustrate my think all future? the on if to second positively you you or how been a business then want explain that topic Curious Olympus hot kind ]. ask Obviously, it's could impact And of maybe I or could one. your in headlines recently.

Charles Goodwin

Yes.

tailwind out right in very to that this The with to playing marketing we They're shots it skinny people first the company. going think positive actually is everybody it that our a our business. we and got this. come The sure as just actually tremendous now care some thing getting their lose for is, care understands they've an see just for weight make is also that and and the slack What of working We a for indication just And got and to we doing marketplace for that Renuvion today I use don't for us, they is want we've skin. the contraction. really that the real our want to be indication whole be remember, in started are after.And and is to still are we clinicians thing program best it skin to the gets and get soft how black skin in tissue black technology like liposuction, we've black. is for don't is then treated, of about to care able treat skin got And of people that time. take but

to we it's a to tremendous think It's many is And for years tremendous going so a benefit. quite frankly. for come, us, benefit continue that

Frank Takkinen

squeak one in Maybe more I'll here.

the is your XXX(k), that this relates liposuction I FDA the the that was industry. field this notice the something at usage Or on-label seen as out to hasn't FDA Have competition? yet? shortly there the play inference With to it related come fruition an to in in came there think all you enforcing after across

Charles Goodwin

be making of have There claims Yes. that seen and things doing. people still they are that. are sign that Unfortunately, any make doing they shouldn't not we shouldn't that

you really in were fairness the So It as did not that safety to though seen But notice was have do safety on that. just notice the are that, correct. of of stated -- we was that XX. it May evidence going any in even now come FDA, out right to they

And far away that so still, from we so. are not that

Operator

is with question next Our Hewitt from Craig-Hallum. Matt

Matthew Hewitt

just opportunity. about the still countries curious past your been follow-up approvals? at in the few a a you regarding moment. there's But in have going OUS realize a OUS works. those I lot you that if Just plate seeking potentially the I'm believe other you I talked still are on are the after. incremental

Charles Goodwin

guidance not new as and the Yes, registrations our South we that are any But in QX big any many for China. for contributions did mentioned, not sure. assume Korea markets countries. and in new X doesn't you are We obtain

And both we forward the clearance are that in can markets. to pursuing those those of that And I tell we of places. so day you look still we got both

So we'll sure. for happens that everybody that when knows make sure

Operator

you that, are We no remaining our today. conclude at currently showing time. with And this conference your participation. this Thank questions for does

Apyx Medical (APYX) 10 Aug 232023 Q2 Earnings call transcript