Apyx Medical Corporation Q2 FY2025 earnings call

• Appointed 2 senior sales leaders: John Featherstone for North American sales and Simon Davies for Europe and Asia.
• Total revenue in Q2 2025 was $11.4 million, slightly down from prior year, driven by decrease in OEM product sales but Advanced Energy sales were $9.7 million with steady demand.
• Cost reduction and restructuring initiatives implemented in November 2024 have driven improvements, reducing cash burn and strengthening financial health.
• Renuvion is gaining traction as a minimally invasive surgical solution for skin tightening, with presence at Miami Swim Week and launch in China.
• AYON presales exceeded expectations, with the system receiving 510(k) clearance and a soft commercial launch underway, leading to updated revenue targets for 2025.

Total revenue for the second quarter of 2025 was $11.4 million, a slight decline from $12.1 million in the same period last year. The Advanced Energy segment had revenue of $9.7 million, relatively flat compared to the prior year. The OEM segment saw sales decrease 29% or approximately $1.7 million, due to a decrease in sales volume to existing customers including Symmetry Surgical under the 10-year generator manufacturing and supply agreement. Domestic revenue was $7.8 million, down 11% year-over-year, and international revenue was $3.6 million, down 4% year-over-year.

• Total revenue for 2025 expected to be in the range of $50 million to $52 million, up from previous guidance of $47.6 million to $49 million.
• Advanced Energy revenue expected to be in the range of $42 million to $44 million, up from previous guidance of $39.6 million to $41 million.
• OEM revenue expected to be approximately $8 million, down from $9.5 million in 2024.
• Anticipates gross margins of approximately 60% for the year and total operating expenses not to exceed $40 million.

Q: Maybe I can start here on AYON. It sounds like a lot of enthusiasm and pent-up demand is building here. Charlie, you also talked about the existing market environment that we're in. So I guess, how should we be thinking about the customer receptivity at this environment?

A: Yes. Thanks for the question, Sam. The reaction from the doctors has been nothing short of spectacular so far since we've launched AYON. And there has really not been a lot of innovation in this space. There hasn't been anything to update the technologies and to combine the technologies and to work on the workflow. And remember, this system was designed by surgeons for surgeons. We just facilitated their wishes, if you will, in the nicest possible way. And it seems that the team did an incredible job of meeting the doctors' needs and the doctors have been obviously overwhelmingly positive to the thing -- to AYON. And obviously, the presales show that. And that's obviously the reason that we were very comfortable to raise our guidance today with that. And yes, it does fly in the face of a little bit of what's going on in the marketplace. But when you really look at it, body contouring lax skin. A lot of them have been on GLP-1 drugs for weight loss. But we really believe, as I've said before, that the next decade is be that surgical company that helps them take care of their patients' needs.

Q: Maybe I can use my follow-up here on some of the new commercial hires. Really glad to see John and positions you guys to take advantage of this opportunity in front of you?

A: Yes, Sam, I'm glad you're thrilled that they're here. Remember, I've been doing this job, too, for the last 9 months. So nobody is happier than I am to have them here. But we are incredibly fortunate to have their expertise and their knowledge to help us drive AYON and Renuvion, both in North America and in Europe and Asia. And obviously, John Featherstone brings over 20 years of have him on board. Simon Davies comes to us, obviously, with a lot of experience, too. But remember, he just got -- he was the leader of VASER in Europe and the Middle East for the last quite a few years. And his passion and his knowledge in body contouring is, quite honestly, big things out of them to keep driving the adoption of AYON worldwide.

Q: If I could just squeeze one last question here for Matt on the comments about seasonality. Is it -- are those comments really referencing typical seasonality, we think of a sequential dip in Q3 and then a rebound in Q4. Are you saying that we might see Q3 step up because maybe some of the initial orders from AYON and then decline in Q4? Just want to make sure I'm thinking about those comments correctly?

A: No -- Sam, it's a great question. So what I'm looking at, you normally see a dip from Q2 to Q3. We're launching -- commercially launching AYON in September. So depending on the timing of those orders, you might see a change between Q2 and Q3. We're still going to have a very strong Q4 as most of AYON shipments are going to go out October through December, that are currently in the backlog, yes.

Q: Maybe I'll just squeeze in a final question here on the China opportunity because that's new here also. I'd love to understand maybe the market opportunity there, how to think about revenue contribution either this year or maybe next year? And then as a third part of the question, why GlamMoon is maybe the right partner to really be successful with Renuvion?

A: Yes. Look, we've obviously been after China for a while. We've got the joint venture over there and obviously are very happy that we're now starting commercial operations in China. And the China opportunity is a big opportunity. There's about 5,000 plastic surgeons in China. So it's a very good market, a very good middle to upper class is obviously emerging there. And so we've got a lot of hope -- we got a lot of future in China for the next few years. The partner that we've got, we think we've got an amazing partner in GlamMoon. They've -- they're looking at this in the long run and taking a really nice approach. But they own a lot of facilities over in China, a lot of aesthetic facilities. And so we believe that they will be able to obviously get the technology into those right away and then obviously branch out from there. And so we're very happy with our partnership so far. It's obviously in the early innings of that, but we expect China to be a revenue driver for years to come.