APYX - Earnings call transcript Q2 2024 | Apyx Medical Corporation

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Operator

Hello, and welcome, ladies and gentlemen, to the second quarter of fiscal year 2024 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 the generally accepted accounting principles, or GAAP. We generally refer to these as non-GAAP financial measures. Investor financial in the available to accordance press on non-GAAP calculated comparable in turn those our release presented of to and with the the of floor measures now Mr. most to measures earnings website. I over Reconciliations would portion like Relations GAAP are and Charlie President Officer. Chief Goodwin, Apyx Executive Medical's Please sir. go ahead,

Charles Goodwin

Chief today's call quarter XXXX. second operator, welcome, call Matt Thanks, by the and everyone, for to Financial Hill, our joined our on Officer. earnings I'm

We XX% the exceeded products, were OEM $X.X several primarily review a with for year to sales you outlook we discuss revenue in results. By second in sales year-over-year customers. second the and guidance, provide Let few with our our decreased outline I'll results quarter, quarter of million, our the balance earnings the pleased operational by updated OEM thoughts which release on off year-over-year brief of of XX% driven to QX the me our today's to begin and call. see Q&A. Starting our which we recent our review a second our increased of our year to revenue Advanced some for $X.X then to a Matt our million. revenue million. the before priorities will of sales that by year-over-year full segment, highlights expectations offset quarterly products financial in quarter, XX% decreased $XX.X progress. stronger-than-expected performance part total Energy In closing of from and share sales today. I'll

in performance further the of Energy at our detail. segment Looking Advanced

decisions the in call, given Energy communicated on year. Most cosmetic continue expectations the and remains concerns surgery shared and companies we purchase have continued in that the macroeconomic broader our the prospective to performance last quarter our earnings As second soft reflect capital customers environment as last to the market since of purchasing environment. middle we market challenging for had delay experienced notably, anticipated other Advanced the the equipment about in

demand As year-over-year were sales impact and sales anticipated. handpieces as Energy from international growth decrease generator of customers global our to global customers expected, this helping we as of in environment, drive the more drove well Advanced year-over-year, of the which users. base sales revenue. In strong sales by fueled by this continued second spite generator challenging than increased to the pleased lower both as quarter, mitigate new XX% the U.S. markets of impact in to Handpiece in throughout our to

largely half we was performance XXXX expectations for sales in handpiece Our the consistent of the growth continued second I'll as discuss and well with as our later. expect quarter,

driving efficiency environment. sales to on this performance, remain controlling we our in to addition costs equally In cash optimize focused

Turning to our a discussion progress. recent operational of

prospective working third-party team partners surgeons focused and available concerns, interest rates. our with through of our these our the supports awareness levels. I'll and which market working has the surgeon offset technology navigate environment team of the to on identify best-in-class In adoption. to educating respect our high To our on about market, concerns financing customers generator X technology. turn, the evidence adoption. for challenging technology Renuvion, and to address best the creative solutions growing purchasing this Leveraging by progress its potential access the been with our strategy prospective to Our efforts surgeon our both with and market of facilitate clinical the each to portfolio extensive and discuss customers the seen environment executing to marketing at to them these options to surgeon diligently is in and beginning benefits engaging generate is now express our items raise our we've on barriers with patient

subscription reminder, in assist generator we models. prospective to through purchasing, addition in customers able both are place leasing financing a purchases to third-party partners in As and have that traditional

was best-in-class exhibited were its Open. Dr. author, the Bipolar this and at Reconstructive following burns, which fewer by Kluska RF of Beyond believe technology. of our lead and and addresses than an that coagulate technology, procedures. Renuvion as well RF, portfolio By We addressing a enables commonly for AACS and helium the atmospheric that demonstrate and studies. Most safer source. fellow down continue than that liposuction statistically about IDE our XXX market published these technology journal other or inherently these recently, concerns, soft published Plastic to retrospective a with multisite hypertrophic the They and of studies presented to in alternative treated Bipolar this, compared alternative the the to patients we best-in-class XX supported it Surgery on leveraging researchers strong tissue significantly directly cool significantly ideal surgeons events by earlier of as fewer of may and efficacy to Bipolar it a cold effective evidence. hematoma, including concluded ionizing heat scar believe adverse faster, and treated yesterday clinical methods. portfolio patients results to body extensive create more extensive Its continuous benefits fractions of raise peer-reviewed of Renuvion technology seroma. and and those the plasma, Because year to have soft papers the loose in safer, Dr. awareness skin we contract compelling X is more offer Renuvion contraction rapidly his Scientific temperature Its Meeting safety we Global our clinical with Kluska back Michael at clinical Renuvion used a posters found is RF contouring clinical tissue, than study abstracts profile series to second.

in inform to our direct-to-consumer awareness we their technology and continue X of physician Renuvion late techniques team the mentor raise to over new with of months key and responses new Body quarter to X year-over-year customers form in surgeon surgeon on education all by best-in-class prospective we've latest the with peers and participated hosted a our the was in programs shows last the multiple XX second industry. We We've profile of partnered meeting total areas during courses of for and in and the been educating Our awareness communications pleased growth days. at addition in firm well. After in participated support leading the with use applying marketing where XX quarter, surgeons technology presentations. where and Renuvion Academy, order increased the in and via level of leadership countries to X DTC at featured Contouring in a as Renuvion on from well, our enable in learn And Renuvion clinical in seen experiences in presence in across research our based And on experience strong XXX we industry drove as these strategy. podium year, activities, which lastly, views. Vegas, Las of the U.S. our impressions, a discuss social recent initiatives we users from live and patient conferences a to Throughout their we've avenues. and training trade hosted surgeries enhance media sequential participants bringing XX presentations followers approaches

the of nationwide XX, we program. DTC Renewing Lives June evolution initiatives broader the of our a campaign, giveback part announced As on

to program, our U.S., future market. We feature of in performed in stories patients giveback Renewing to images for procedure treatment. In the Apyx growth with perception and our portfolio offset raise Supported the benefit fund this Apyx Renuvion navigate position our XX% our our market initiatives. Through expenses, XXXX, industry. global subside. Matt as near-term diligently people technology, the of to pursuing to strong engaged our every results in we will XX% more from a pleased these to customers people the the and financial continue during donate have of strategy growth growth for DTC can the were to detail, will evolving release. financial quarter solutions fund second team second received who the body to which impact intend which as able but to while worked who expand Lives with environment of under on giveback most by marketing materials. In educating our in of quarter in as in expanded We for review our For Medical today's challenging Medical publications to benefits we handpiece the some manage continue our we we in are educate technology. Renuvion the execute adoption treatment updated program afford summary, headwinds these to we partly addition to on OEM about exceeded treatment products. and our health along our creative and clinical patient's creation technology prospective we our a the efforts, in facilitate positive value conserving the headwinds offering awareness mental of driving our to now guidance our And can capital these our the procedures from sales, contouring the in unique industry not year-over-year aim

Matthew Hill

driven controlling to service which million $X.X million, reflecting included to million $X.X and second our completed was from professional to from $X.X expenses at our increased year-over-year segment gross total primarily $X.X the otherwise. Gross second mix covered our comprising be for our X percentage references on million of decreased emphasis primarily during by our to the is costs. operating XX.X% operations million, Since $X.X compared and in period. expenses OEM million. were in and results loss XX.X% profit XXXX expense, The and basis, to decrease the sales $X.X note operations decreased the the higher begin decrease in by related XXX% was line. expenses sales and $X.X financial higher GAAP million. international in noted sales offset XXXX and percentage I costs, to segment the by a of comprising respectively. revenue segments second or expenses The increased Charlie transaction administrative development It gain period. Operating geographic unless the million total the with that quarter Gross Charlie. was of and in continued a general research to compared XX% the of which was prior will that Clearwater or gross by important partially driven you, Thank property salaries a between of profit decreased $X.X mix on $XX Energy results, respectively. Loss already margin a and X% decreases and million $X.X related selling a within sale-leaseback our These changes prior quarter Advanced will or period. to profit $X.X All sales margin with our million million, quarter

as share XXXX, lower period. that $X.X quarter from prior million loss Excluding per XXXX, in we per transaction stockholders had joint liability or Net quarter to our the the the by also the debt income of $X.XX recorded net expense of was $X small to year and a compared sales $X.X of expense primarily the in our prior to net increased quarter quarter from XXXX. in leaseback borrowings obligations recovery of gain or share attributable the outstanding to we million million not second recur the other increased and our million second second $X.XX our XXXX that operations in period. In of did million was $X in interest several of was insurance compared change payroll driven related XX%. Total second The loss XXXX. in year $X.X release or

of second million non-recurring $X.X the to to in to $X.X Excluding sale-leaseback of in EBITDA or XXX% compared gain to the million attributable $X.X million stockholders or second quarter non-GAAP transaction quarter the loss the loss increased million increased net XX% $X.X XXXX, year-over-year. Adjusted related XXXX.

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

driven by in $X.X compared The months year cash X from the working in the million to period. $X.X operating ended improvements June million use in XX, For capital. our activities was reduction prior used XXXX, was cash

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

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

$XX.X revenue decrease $XX.X to the a prior decrease range approximately ending of For the $XX.X million, months compares million, of of approximately a total million $XX.X we flat. XX, This to XX to approximately expect X% now of XXXX, to million to representing our range of growth X% December X%. in representing

which decrease million growth Our approximately million, total XX% X%. million assumes X% growth $X.X which million, million X% representing revenue representing revenue compares of $XX.X X% $X.X to $X $XX.X our to revenue Energy and compares million, a of a decrease to of million, range representing of our $XX.X prior to guidance approximately of to X%, range a Advanced X%. $XX.X approximately to approximately a approximately And OEM range to of of down to of prior

terms compared our million. in loss we of In $XX.X million to XXXX, now net for expectation second of million year This updated expect profitability approximately half $XX.X quarter stockholders the to attributable of XXXX. and expectations for loss fiscal our guidance reflects guidance $XX.X to million and prior $XX.X to approximately revised our results loss second revenue of the net

financial assumes for end guidance stockholders the our purposes. following of low net now the formal modeling Specifically, to for attributable loss

compared prior to gross [ of First, XX%. of margins year ] this approximately our expectation approximately X%

total of $XX a approximately compared expectation of our decrease a or year-over-year million operating of year-over-year. to X% X% expect now a we approximately expenses $XX approximately approximately of decrease million, prior Second,

of tax approximately expect expense net of expectation of income approximately million. our net interest benefit compared Third, of $X.X million million loss guidance $X.X the fourth, a $X.X and of And $X.X $X.X our interest last assumes we tax of prior GAAP non-controlling versus an to approximately income benefit expense million end low year also range million. approximately

$XX.X our the and we expect of remarks. call $XX compared closing will guidance, back which cash we for $XX XXXX approximately to a million which Lastly, low the respectively. With assumed This a in of in million, now of operations at that, loss million. loss guidance, net for $XX.X Charlie used I to end is prior turn the calls million,

Charles Goodwin

Thanks, revenue Matt. of will the equipment through trends Based Energy observed of of first systems. balance in guidance the sales challenging impacting generator on the in Advanced year, half the our our our the capital XXXX, assumes environment continue updated industry

the the to strong sales internationally. both pleased As XX% handpiece I were mentioned U.S. quarter exceeded earlier, year-over-year, drive sales in that we with during second growth and

existing growth continued from half the expect demand over by in of technology. second our users handpiece and XXXX, new sales We fueled of both

in Specifically, handpieces, will low OEM in of our of sales our slower in respect our the the our XXXX help to raising assumes significantly quarter. sales global to impact updated we guidance now segment, second which growth offset revenue double-digit guidance reflect strong generator sales range XXXX. With are to our

more quarter second ordering revenue in about nearly million customer thinking of assume and remember quarterly on in half of order XXXX, Energy to the to strongest that continues quarter range guidance be updated our Our our Advanced year segment. $X revenue fulfillment. When OEM the of in a the the the with XXXX seasonally tends normalized of fourth basis second half

tends fourth vacations The during summer second seasonally period. slower third this quarter the typically and to due be than to quarters

be patients raise growth Looking strategy can with achieved and ahead, focused executing that our technology. remains our to Renuvion team continuing surgeons our by awareness educate and on the of outcomes about

evaluating our growth control manage in ways continue we efficiency the order to in our value unlock to We Chairman, sustained for remaining for new further have shareholders. In business also growth. return optimize enhance closely to strategic tandem, our to and order of our while our strong across a expenses poised with a review together organization conducted costs cash to our

this of drugs. Whether body near-term the of the and subside, contouring the process, its to in multiple safely, of well Renuvion plasma, cold root And from aging issue loose contracting positioned that need acceptance longer-term or believe aesthetic we effects we appearance. By we positioned patients social and to the on As and in capitalize addresses natural uniquely atmospheric rise rapid important of to their weight improve are the headwinds address capitalize issue key to cause including adoption increasing skin industry tailwinds, this treatments, quickly are effectively. tissue forward. soft seek a order on procedures remains of the with loss coagulating GLP-X our results going will clinical

as my our the efforts surgical liposuction and like for now the that body their to these distributor as procedures procedures global for to will Apyx thanking and fellow Medical. With opportunity let's We support of our that, component following call shareholders open integral Renuvion partners QX customers market continue colleagues in as contouring we continue operator, by close dedicated well as their an multibillion-dollar and establishing represent. I'd penetrate for questions.

Operator

Instructions] come question [Operator Matt And Craig-Hallum. with will first from our Hewitt

Matthew Hewitt

sales. on I'd And guess handpiece I the Congratulations off to like there. start

still you're at is where look curious, or as the on and So seeing the that what that obviously, better But think utilization primarily the being drivers primary adoption. procedures, users the X is to do percentage is this strong with attach handpiece your the driving you I'm some growth a can of of GLP-Xs? you you X Or side? utilized, just

Charles Goodwin

Yes, those global our we And starting XX% of the GLP-X performance is with for come of see budget question, are expectations that. our our And the Matt. thanks -- no yes, our and and remarks, base. it we said consistent question saw. strong And for treatments did we of the we it that handpieces demand was from over in year. And our need to in for some their happy had prepared as largely our that skin. There's very lose had growth we of the some sales were we with in patients about because

having happy we're that as entire so And with in on the And double-digit we handpieces for performance. we mentioned, growth plan year.

Matthew Hewitt

bit. maybe then And gears a great. that's little shifting Well,

kind given X you yet geographies, New or this been a the environment? any that Or on for year? opportunity of put burner has to the add there is new geography back

Charles Goodwin

worries. no Yes,

both of that before, got As are are those markets and and Korea markets countries. significant we're into X South not mentioned in the the registrations we've we've China,

be let you know. obviously get that, soon on And that so something as would would news we as we

Operator

Street with comes Capital. Your next Instructions] question Frank from [Operator Lake Takkinen

Frank Takkinen

sure I'm with parsed potentially about international. it you on versus one not if intentional. handpieces. can also start you talk But maybe out as U.S. I'll

And stronger give geographies I saw the you other? than stronger equipment sales I strong, than other? one were was that any both were does coming insight if the think capital back maybe those either but into

Charles Goodwin

XX% U.S. more than both both for Look, Yes. international year-over-year and up were handpieces.

So environment, U.S. our have our see how performances. will about rest the in we it challenged of capital challenged, guidance the had throughout the they that that the in assumes both nice is see very we remain it you're how still here it basically and we year That's guidance. talking -- When

Frank Takkinen

Okay. to specifically QX, in also back pretty comments regular I down. contemplated growth typically that seems from up year-over-year in into to a it guidance, Fair seasonality does line up enough. with on What's in stepping macro imply seasonality. then for what With heard QX And the QX in about more one perspective solid context good and be pretty mind, a stepping QX? double-digit step

Charles Goodwin

Yes, you're correct.

does year-over-year to a imply half XX guidance the growth in 'XX. first half Our stronger second the of compared of

talked that 'XX half we the first reminder, about a began always cosmetic challenging 'XX. second half. versus the And the half back the in in that assumed year-over-year in guidance As a has our in surgery mind, growth fiscal the year of stronger environment really with

Operator

next question Your comes with from George Sellers Stephens.

George Sellers

Apyx placing Apologies was new missed curious, versus was experience that have system within if maybe of Renuvion systems upgrading prepared this with with you from that One? practices many the customers? How in much how remarks, just are but to that I new already customers are I've sales,

Charles Goodwin

Yes.

adding sales But capital all. are I the that But vast that quarter their actually didn't any break majority are adopting quarter say Now to that remarks, have customers We the it of given expanding things. typically, miss new good technology. us, doctors would at vast for practice prepared new always We out are customers. of in majority of the more and the was question. you so that's in didn't a the

George Sellers

any or also Got in of what's have the with utilization upgraded patient on the just piece bought a strong greater growth from demand you that a Apyx curious started a perspective That's One in Okay. in And driving it. who handpiece helpful. seeing with the micro have One, -- or micro similar new vein, with Is handpiece? the acceleration handpieces? customers then who Apyx to customers the

Charles Goodwin

definitely micro those all the new micro sales or because growth of for the So no comparison is past. in there's

the So just of that The remember, it. that, micro there's the question the the the for no a areas there But is knees, hands, body, that. labia on incremental driver driver we areas handpieces face, is the small biggest like the part big contouring picks still growth the the growth obviously, That's the of for handpieces. it's the see. body handpiece. micro But still up that anytime is somebody of

Operator

this rest conference you currently of are have wonderful no does your at and participation, Thank your That showing questions a for day. We for our conclude today. remitting time.

Apyx Medical (APYX) 8 Aug 242024 Q2 Earnings call transcript