Apyx Medical Corp Q4 FY2024 earnings call

Fourth Quarter Performance Review

• Total revenue was $14.2 million, down 3% from prior year. Advanced energy sales $12.1 million, flat year-over-year but up 30% sequentially from Q3 2024.

Impact of GLP-1 Drugs

• Softness in aesthetic space due to patients diverting funds to GLP-1 drugs and postponing aesthetic treatments. Believes GLP-1 patients will seek surgical solutions, and Renuvion is uniquely positioned for body contouring post-weight loss.

Direct-to-Consumer Marketing

• Since Q2 2024, direct-to-consumer marketing program has exceeded media placement and impressions goals, with brand featured in various publications. Leveraged influencers to drive engagement and brand awareness.

AYON Body Contouring System

• Submitted 510(k) for AYON to FDA ahead of schedule. Planned launch in back half of 2025 pending FDA clearance. AYON is an all-in-one surgical platform integrating multiple technologies.

Restructuring and Financial Moves

• In November 2024, restructured U.S. workforce, estimated annualized cost savings of $4.3 million. In fourth quarter 2024, completed registered direct offering with net proceeds ~$6.8 million and amended credit agreement with Perceptive Credit Holdings.

Total revenue for the fourth quarter was $14.2 million, a slight decrease of 3% from the prior year. Advanced energy products sales were $12.1 million for the quarter, essentially flat year-over-year but grew 30% sequentially from the third quarter of 2024. OEM segment sales decreased 16% in the fourth quarter of 2024. Domestic revenue increased 1% year-over-year to $10.6 million, while international revenue decreased 8% year-over-year to $3.7 million.

2025 Guidance

• Total revenue expected in range of $47.6 million to $49.0 million, compared to $48.1 million in 2024.
• Advanced energy revenue expected in range of $39.6 million to $41.0 million.
• OEM revenue expected to be approximately $8 million.
• Anticipate gross margins of approximately 60% for the year and total operating expenses not to exceed $40 million.

Risks

• Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from expectations, including risks identified in the company's SEC filings.
• References to non-GAAP financial measures, and potential impacts of market changes such as the rapid adoption of GLP-1 drugs on aesthetic procedures.

Q: Morning. Thanks for taking the questions. Matt, I just wanted to confirm, you said 60% gross margin for '25 here?

A: Yes, we're looking at similar margins that we had for '24 into '25 at around 60%.

Q: Okay. I'm just assuming there's probably some waiting from the I don't know if it's the AYON launch or I'm just guessing, or just try to figure out why that wouldn't recover, just given the proportion of revenue coming from Advanced Energy versus OEM, especially, domestically?

A: When you look at our gross margins, it depends on geographic mix, product mix, and segment mix. The current trends that we saw in '24 will continue into '25, which puts our estimated gross profit about at that, around that 60% mark.

Q: Good morning. Thanks for taking the questions. Maybe the first one, you noted that the success that you had in the DTC campaign, I'm just curious, kind of what were the changes that were implemented and how do you see that playing out in '25?

A: We didn't start our direct-to-consumer campaign until the middle of '23. In January of '24 we brought in a new PR partner and started rolling out programs in April 2024. The results have crushed metrics, and the message about body confidence and skin tightening post GLP-1 weight loss is resonating. We think similar results will play out in '25 as the market evolves.

Q: Good morning. Charlie and Matt, appreciate you taking the questions this morning. Maybe I could just follow up on that last point you were making and maybe get your thoughts on what you're hearing or what you're seeing from accounts that maybe have started to adopt GLP-1s versus those who haven't. And if you're getting that pull through on utilization for Renuvion at this point?

A: In the fourth quarter, we saw handpiece growth in the U.S. Consumables in the U.S. grew low double digits in a difficult aesthetic environment. Usage data supports that Renuvion is being utilized, and doctors' practices are seeing good results. '24 was a strong year for doctors focused on these patients.

Q: Yes, yes, it makes a lot of sense. And maybe just as my follow up here, where are we maybe in terms of the upgrades for the Apyx One Console? Just want to understand if the majority of majority of customers are now in the new system or if there's still more where customers love to be converted here?

A: Previously, upgrade to Apyx one generator was more for facial work. Now with AYON, Apyx one generator is the brains of the system. We will give best pricing to customers who upgrade to AYON before launch. There is still room for customers to upgrade to Apyx one.