STRATA Skin Sciences, Inc. Q1 FY2025 earnings call

• Executed on a multifaceted turnaround strategy, focusing on generating higher per device recurring revenue by optimizing extract device placements and use in the partnership model driven physician practice.
• Elevate 360 consulting model facilitated higher patient conversion and increased device utilization in underperforming clinics.
• Strong performance from expanding Direct-to-Consumer marketing efforts, achieving increased XTRAC leads and patient appointments volume.
• Recurring revenue per device across domestic installed base of ~850 devices grew, with better margins and lower operating expenses.
• TheraClearX installed base grew, with revenue up over 50% in six of last seven quarters, and 1,000 patients submitted for reimbursement in Q1 2025 with a 138% increase vs Q1 2024.
• International business had strong performance, with sales up 8% and focus on recurring revenue placements.

Total revenue for the first quarter of 2025 was $6.8 million, up 1% compared to Q1 2024. Global recurring revenue was $4.7 million, also up 1% versus the prior year period. Equipment revenue was $2.1 million in Q1 2025, up 1.4% versus Q1 2024. Gross profit increased to $3.6 million for Q1 2025, up from $3.1 million in Q1 2024, resulting in a gross margin of 53.5% compared to 45.6% in Q1 2024. Operating expenses in Q1 2025 were $5.7 million versus $6 million in Q1 2024, a 5% year-over-year reduction. Non-GAAP adjusted EBITDA improved by $732,000, the best first quarter adjusted EBITDA since Q1 2022. Cash burn in Q1 was $749,000, an improvement from $1.55 million in the prior year. TheraClearX had an installed base of 160 in the US at the end of Q1 2025, up from 104 at the end of Q1 2024, with revenue growing over 50% in six of the last seven quarters. International business had sales of $2.5 million, up 8% versus the prior year period, with equipment sales up 13% and recurring treatments revenue up 27%, partially offset by a 5% decline in parts and maintenance.

• Cautious about potential impact of tariffs on international business.
• Expect to offer greater clarity on the second quarter call scheduled for mid-August.

• Potential negative impact of tariffs on international revenue if not resolved.

Q: Talk about TheraClear placements, marketplace learnings and year aspirational numbers A: TheraClearX installed base keeps growing, with ~160 devices in US at end of Q1 2025. Patients submitted for reimbursement support up 138% vs Q1 2024. Anticipate full deployment of installed base towards end of 2025 or beginning of 2026. Value of a patient ~$50-$60 per treatment times six treatments. Geographically expanding usage of TheraClearX.

Q: Utilization trends or time for an account to become mature for TheraClear A: One patient worth ~$300. Cost of goods for TheraPlear about half of XTRAC. XTRAC breakeven at ~$18,000, therapeutic breakeven at ~$9,000 per year. Analysis shows expansion in usage across different regions and clinics.

Q: Tariff impact on domestic business and international business A: Supply chain mildly impacted by tariff, but mostly on outbound to non-US markets. Impact on new sales and service/warranty support. Not clear on full implications beyond current situation.

Q: XTRAC installed base, focus on utilization vs new clinics A: Both utilization of current installed base and signing new clinics. Elevate 360 consulting model helps in analyzing and improving underperforming clinics. Saw success in redeploying devices into more productive accounts. ~10% penetration of Elevate 360 in accounts, with plans to expand as it proves effective