STRATA Skin Sciences, Inc. Q3 FY2024 earnings call

• Revenue per XTRAC device grew 2% year-over-year, and gross margin improved for the third consecutive quarter to 60.3%.
• Excluding a one-time $1.8 million sales tax accrual, non-GAAP operating expenses decreased to $5.2 million in Q3 2024.
• DTC initiatives have seen promising results with over 1,900 new patient appointments scheduled YTD, and a Spanish language DTC effort launched.
• Installed base of XTRAC devices decreased slightly, but average revenue per XTRAC device was the highest since end 2022.
• TheraClearX installed base increased to 135, with preauthorizations for over 2,000 acne patients.
• Positive litigation outcome preventing a competitor from making false material presentations in sales efforts.
• Raised $2.1 million in gross proceeds through equity sale in July 2024.

Total revenue for the third quarter of 2024 was $8.8 million versus $8.9 million in the third quarter of 2023, a decline of 1%. Global net recurring revenue for the third quarter of 2024 was $5.4 million versus $5.3 million in the third quarter of 2023. Excluding deferred billings and other GAAP adjustments, XTRAC gross domestic recurring billings were $4.8 million in the third quarter of 2024, down 2% from $4.9 million in the third quarter of 2023. Equipment revenue was $3.4 million in the third quarter of 2024 versus $3.6 million in the third quarter of 2023. Gross margin as a percentage of revenue improved to 60.3% in the third quarter versus 56% in the second quarter of 2023. Direct to Consumer initiatives saw over 1,900 new patient appointments scheduled YTD versus 8 in all of 2023, and the domestic installed base of XTRAC devices decreased slightly, but the third quarter average revenue per XTRAC device was the highest since the end of 2022. The installed base of TheraClearX devices reached 135 at the end of the third quarter, up from 117 at the end of the second quarter, with over 2,000 preauthorizations for acne patients secured YTD.

Management sees a path to profitability and sustainable cash flow generation, and looks forward to reporting year-end 2024 financial results likely in March 2025.

Risk factors described in STRATA Skin Sciences' most recently filed annual report on Form 10-K and subsequent periodic reports filed with the SEC; also, the $1.8 million sales tax accrual related to a New York state audit and potential monetary damages from ongoing litigation.