Core Insights - STRATA Skin Sciences, Inc. has reported growth in partner clinics utilizing its Elevate 360 consulting services platform, which aims to optimize revenue through best practices in marketing, reimbursement, and patient retention [1][2][4] Group 1: E360 Program Impact - The E360 program has been adopted by 99 out of approximately 844 clinics under STRATA's XTRAC usage agreement, leading to an average growth of 7% year over year for participating clinics [4] - A partner clinic that adopted the E360 program expanded from two to nine clinics, resulting in revenue of $61,800 for STRATA in the first half of 2025, indicating significant growth potential [6] Group 2: Business Optimization - The E360 program assists clinics in managing the entire treatment process, from patient referrals to securing insurance reimbursements and scheduling follow-up visits, thereby enhancing patient retention [3][5] - STRATA's initiatives under the E360 program include turn-key marketing solutions and optimization of business systems, which have shown quick improvements in partner clinic financial performance [2][7] Group 3: Market Potential - The company anticipates continued growth opportunities from recent improvements in reimbursement policies that expand treatment indications for XTRAC lasers, including conditions like vitiligo and autoimmune skin disorders [7] - The E360 program is positioned to help clinics meet patient demand and realize market potential, suggesting a strategic focus on enhancing clinic operations and patient care [7]

Core Viewpoint - STRATA Skin Sciences, Inc. has announced a registered direct offering of 1,097,547 shares of common stock at a price of $2.204 per share, aiming to raise approximately $2.42 million for working capital and general corporate purposes [1][3]. Group 1: Offering Details - The offering is being facilitated by Ladenburg Thalmann & Co. Inc. as the exclusive placement agent, with the closing expected around September 4, 2025, pending customary closing conditions [2]. - The gross proceeds from the offering, before deducting fees and expenses, are projected to be about $2.42 million [3]. Group 2: Company Overview - STRATA Skin Sciences is focused on developing and marketing innovative products for dermatologic conditions, including psoriasis, vitiligo, and acne, with products like the XTRAC excimer laser and TheraClearX Acne Therapy System [6]. - The company employs a unique Partnership Program that offers a fee per treatment cost structure, providing on-site training, service, maintenance, and advertising support to practices [7].

Core Insights - STRATA Skin Sciences, Inc. is a medical technology company focused on developing and marketing innovative products for dermatologic conditions [1][2] - Dr. Dolev Rafaeli, President and CEO, will present a corporate overview at the H.C. Wainwright 27th Annual Global Investment Conference from September 8 to 10, 2025 [1] - The presentation will be available on demand for registered investors starting September 5, 2025 [2] Company Overview - STRATA specializes in in-office treatments for dermatologic conditions such as psoriasis, vitiligo, and acne [2] - Key products include the XTRAC excimer laser, VTRAC lamp systems, and TheraClearX Acne Therapy System [2] - The company employs a unique Partnership Program that offers a fee per treatment cost structure, on-site training, service and maintenance, and co-op advertising support [3]

Core Insights - STRATA Skin Sciences, Inc. is focused on expanding its market by pursuing the inclusion of expanded CPT codes for its XTRAC excimer laser treatments, targeting all inflammatory and autoimmune skin conditions, with implementation expected by January 1, 2026 [1][5] - The company emphasizes its strong patent portfolio, which provides intellectual property and market exclusivity for combination therapies, enhancing its competitive position against inferior technologies [2][3] - STRATA's patents are critical for establishing rights around combination therapies that are likely to become standard care for difficult-to-treat dermatologic conditions, positioning the company at the forefront of integrative dermatologic treatment [3][4] Patent and Technology Developments - STRATA holds three key patents related to the use of Excimer laser therapy in combination with systemic drugs, which are essential for addressing limitations in treating severe or systemic skin diseases [3][4] - The patents enable a synergistic therapeutic effect, potentially leading to enhanced treatment responses, prolonged remission, and improved safety by limiting UV exposure to affected areas [4] Market Expansion and Financial Implications - The American Medical Association's approval of updates to CPT codes will expand reimbursement eligibility for XTRAC treatments, effectively tripling the addressable patient population and improving treatment economics for providers and the company [5] - STRATA's partnership program offers a fee per treatment cost structure, which may enhance revenue opportunities and market penetration [7]

[Part I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Net losses widened in Q2 and H1 2025, total assets decreased to **$30.7 million**, and operating cash flow showed a larger cash use [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$30.7 million** by June 30, 2025, with stockholders' equity significantly dropping to **$0.3 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,966 | $7,261 | | Total current assets | $13,774 | $16,595 | | Total assets | $30,722 | $36,157 | | Total current liabilities | $14,004 | $14,625 | | Long-term debt, net | $15,270 | $15,192 | | Total liabilities | $30,414 | $31,185 | | Total stockholders' equity | $308 | $4,972 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 revenues decreased to **$7.7 million**, leading to a net loss of **$2.5 million**, a significant increase from Q2 2024, with H1 revenues also declining Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $7,663 | $8,435 | $14,475 | $15,189 | | Gross profit | $4,306 | $4,977 | $8,083 | $8,173 | | Loss from operations | $(2,224) | $(486) | $(4,239) | $(3,375) | | Net loss | $(2,489) | $(99) | $(4,921) | $(3,467) | | Net loss per share | $(0.60) | $(0.03) | $(1.18) | $(0.99) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for H1 2025 substantially increased to **$2.5 million** due to higher net loss Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,491) | $(213) | | Net cash used in investing activities | $(138) | $(1,070) | | Net cash used in financing activities | $— | $(18) | | Net decrease in cash | $(2,629) | $(1,301) | | Cash at end of period | $5,966 | $6,817 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's medical technology business, liquidity, **$15.3 million** long-term debt, segment performance, and **$4.9 million** in sales tax disputes - The company's business focuses on XTRAC® and Pharos® excimer lasers for psoriasis and vitiligo, and the TheraClear® system for acne, with **844 XTRAC systems** placed in the U.S. under a recurring revenue model as of June 30, 2025[22](index=22&type=chunk)[23](index=23&type=chunk) - Management believes existing cash, anticipated revenues, and expense management will be sufficient for working capital needs for at least the next 12 months, despite a history of recurring losses[51](index=51&type=chunk) - The company has outstanding sales tax assessments from New York and California totaling **$4.9 million**, with New York executing on a **$1.3 million** appellate bond during Q2 2025 following an adverse ruling[109](index=109&type=chunk)[111](index=111&type=chunk) Revenue by Business Segment - Six Months Ended June 30 (in thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Dermatology Recurring Procedures | $9,846 | $10,035 | | Dermatology Procedures Equipment | $4,629 | $5,154 | | **Total Revenues, net** | **$14,475** | **$15,189** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A discusses a **9%** Q2 2025 revenue decline, gross profit margin compression to **56.2%**, increased operating expenses, and negative working capital of **$0.2 million** - Total revenues for Q2 2025 were **$7.7 million**, down from **$8.4 million** in Q2 2024, with six-month revenues also declining to **$14.5 million** from **$15.2 million** in the prior year[131](index=131&type=chunk) - Gross profit percentage for Q2 2025 decreased to **56.2%** from **59.0%** in Q2 2024, attributed to higher manufacturing overhead, increased material costs, and tariffs[139](index=139&type=chunk) - Selling and marketing expenses increased to **$3.5 million** in Q2 2025 from **$3.1 million** in Q2 2024, driven by higher employee-related expenses and increased direct-to-patient advertising[148](index=148&type=chunk) - As of June 30, 2025, the company had negative working capital of **$0.2 million**, a significant decline from positive working capital of **$2.0 million** at the end of 2024, mainly due to decreases in cash and accounts receivable[154](index=154&type=chunk) [Quantitative and Qualitative Disclosure about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) This item is noted as not applicable for the company, common for smaller reporting companies - The company has indicated that this section is not applicable[166](index=166&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were not effective as of June 30, 2025, due to a material weakness in management review of account reconciliations - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025[167](index=167&type=chunk) - The ineffectiveness is due to a material weakness identified as of December 31, 2024, related to a lack of detailed management review of account reconciliations and analyses[167](index=167&type=chunk) - The company is in the process of improving processes and controls, including enhancing senior management review, to remediate the material weakness[167](index=167&type=chunk) [Part II. OTHER INFORMATION](index=35&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) No new material legal proceedings, but New York executed on a **$1.3 million** appellate bond regarding an adverse sales tax determination - During the three months ended June 30, 2025, the State of New York executed on the **$1.3 million** appellate bond related to an adverse sales tax ruling[172](index=172&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) New tariffs introduced in 2025 on goods from numerous countries pose a significant risk, potentially increasing costs and reducing profits - In 2025, the U.S. government announced additional tariffs on goods from numerous countries, which poses a significant risk to the company's business operations[174](index=174&type=chunk) - The tariffs may materially increase costs, reduce profits, and lead to higher pricing that could reduce customer demand[174](index=174&type=chunk) [Other Information](index=35&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during Q2 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025[176](index=176&type=chunk) [Exhibits](index=36&type=section&id=Item%206.%20Exhibits) Exhibits include CEO and CAO certifications as required by the Sarbanes-Oxley Act - Exhibits filed include CEO and CAO certifications pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002[177](index=177&type=chunk)

Financial Data and Key Metrics Changes - Total revenue for the second quarter of 2025 was $7.7 million, down 9% compared to 2024, primarily due to challenges in the international environment [20] - Global recurring revenue was $5.1 million, a decline of 4% year-over-year [20] - Gross profit for the quarter was $4.3 million, representing 56% of revenue, down from $5 million in the same period of 2024 [21] - Total operating expenses increased to $6.5 million, up roughly $1 million from the prior year [22] - Adjusted EBITDA for the second quarter was a loss of $762,000 [23] Business Line Data and Key Metrics Changes - XTRAC gross domestic recurring billings were $4.7 million, a decline of 2% compared to the prior year [20] - Equipment revenue was $2.5 million, down 18% versus 2024, affected by international market challenges [20] - The installed base of TheraClear X devices reached 161 units, up from 117 at the end of 2024 [11] Market Data and Key Metrics Changes - International revenue was $2.6 million, a decline of 15% compared to the prior year, impacted by trade disruptions in China and distributor challenges in Korea [12] - The domestic market has approximately 18 million patients with atopic dermatitis, indicating a significant potential market for the company's products [19] Company Strategy and Development Direction - The company is focused on expanding its addressable market to 30 million patients by leveraging newly expanded CPT codes for various skin conditions [6] - The Elevate360 consulting model aims to improve revenue for clinics and the company by optimizing the use of XTRAC lasers [7] - The company is pursuing litigation against LaserOptik for false advertising, which could result in significant damages [14][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth opportunities due to expanded reimbursement eligibility and the potential tripling of the patient population [26] - There is caution regarding the impact of tariffs on international business, particularly in China [26] - The company anticipates a stronger second half of 2025, although uncertainties remain due to tariffs [28][30] Other Important Information - The company has submitted economic data to support potential increases in reimbursement rates for its codes [6] - Recent peer-reviewed studies support the efficacy of excimer laser therapy, expanding its potential applications [17][18] - The company is actively engaging with CMS and the AMA to secure temporary G codes for expanded indications [54][61] Q&A Session Summary Question: Expectations for the international business in the second half of the year - Management expects the second half to be similar to the prior year but cautioned that tariffs could significantly impact results [28][30] Question: Details on the lawsuit and expected damages - The expected damages from the lawsuit against LaserOptik are in the eight-digit range, with legal expenses mostly behind the company [32][33][39] Question: Metrics on Elevate360 consulting services impact - Clinics that completed the Elevate360 process showed higher revenue in Q2 compared to the previous year, with some experiencing significant growth [62] Question: Status of TheraClear devices and revenue growth - The focus remains on XTRAC devices due to their higher revenue potential, while TheraClear revenue is growing but remains small [70]

[Q2 2025 Earnings Release and Corporate Update](index=1&type=section&id=Q2%202025%20Earnings%20Release%20and%20Corporate%20Update) This report details STRATA's Q2 2025 financial performance, strategic growth initiatives, and key operational highlights [Executive Summary and Business Highlights](index=1&type=section&id=Executive%20Summary%20and%20Business%20Highlights) STRATA expands its XTRAC laser market with new reimbursement codes, achieving operational gains and near cash flow breakeven - The company's growth strategy focuses on expanding into new indications for its XTRAC Excimer laser, leveraging revised reimbursement codes that could more than **triple** the available patient population[3](index=3&type=chunk)[4](index=4&type=chunk) - STRATA is strengthening its intellectual property around the combined use of its excimer laser with JAK inhibitors, an emerging treatment paradigm[4](index=4&type=chunk) - In Q2, the company placed **19 new XTRAC devices**, the highest number in six quarters, while removing 21 from underperforming accounts[4](index=4&type=chunk) - Average gross billings per device increased by **2.7%** over the comparable prior-year period to **$5,512**[4](index=4&type=chunk) - The company ended the quarter with **$6.0 million** in cash and was nearly at operating cash flow breakeven after adjusting for a **$1.3 million** tax payment and approximately **$340 thousand** in legal expenses[4](index=4&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) Q2 2025 revenue decreased 9% to $7.7 million, resulting in a $2.5 million net loss and negative adjusted EBITDA [Q2 2025 Financial Results](index=2&type=section&id=Q2%202025%20Financial%20Results) Q2 2025 revenue declined 9% to $7.7 million, with gross profit at $4.3 million and a net loss of $2.5 million Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $7.7M | $8.4M | -9% | | Global Recurring Revenue | $5.1M | - | -4% | | Equipment Revenue | $2.5M | - | -18% | | Gross Profit | $4.3M | $5.0M | -14% | | Gross Margin | 56% | ~59% | -3 p.p. | | Operating Expenses | $6.5M | $5.5M | +18% | | Net Loss | ($2.5M) | ($0.1M) | -2400% | | EPS (basic & diluted) | ($0.60) | ($0.03) | -1900% | | Cash and Equivalents | $6.0M | - | - | - The significantly lower net loss in Q2 2024 was partially due to the benefit of **$864 thousand** in funds from the Coronavirus Aid, Relief, and Economic Security ("Cares") act[6](index=6&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) Q2 2025 Non-GAAP Adjusted EBITDA was a loss of $0.76 million, reversing prior-year positive, with XTRAC billings reconciled to GAAP revenue Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net loss | $(2,489) | $(99) | | Non-GAAP EBITDA | $(890) | $1,713 | | **Non-GAAP adjusted EBITDA** | **$(762)** | **$1,012** | Reconciliation of XTRAC Gross Billings to GAAP Revenue (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Gross domestic recurring billings | $4,652 | $4,735 | | **GAAP domestic revenue** | **$4,417** | **$4,715** | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) Consolidated statements as of June 30, 2025, show total assets of $30.7 million, liabilities of $30.4 million, and equity of $0.3 million [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $30.7 million, with cash at $6.0 million and stockholders' equity significantly reduced to $0.3 million Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,966 | $7,261 | | Total assets | $30,722 | $36,157 | | Total liabilities | $30,414 | $31,185 | | Total stockholders' equity | $308 | $4,972 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 revenues were $7.7 million, with a gross profit of $4.3 million, leading to a net loss of $2.5 million Statement of Operations Summary - Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenues, net | $7,663 | $8,435 | | Gross profit | $4,306 | $4,977 | | Total operating expenses | $6,530 | $5,463 | | Loss from operations | $(2,224) | $(486) | | **Net loss** | **$(2,489)** | **$(99)** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for the six months ended June 30, 2025, increased to $2.5 million, with cash ending at $6.0 million Cash Flow Summary - Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,491) | $(213) | | Net cash used in investing activities | $(138) | $(1,070) | | Net cash provided by financing activities | $0 | $(18) | | **Net decrease in cash** | **$(2,629)** | **$(1,301)** | | **Cash at end of period** | **$5,966** | **$6,817** | [Corporate Information](index=2&type=section&id=Corporate%20Information) This section outlines STRATA's business model, partnership program, earnings call details, and forward-looking statement disclaimers - STRATA is a medical technology company focused on dermatologic conditions, offering products like XTRAC® and VTRAC® through a unique fee-per-treatment partnership program rather than direct equipment sales[15](index=15&type=chunk)[16](index=16&type=chunk) - An earnings conference call was scheduled for 4:30 p.m. ET on August 13, 2025, to discuss the financial results and corporate developments[8](index=8&type=chunk) - The press release contains a "Safe Harbor" statement, cautioning that forward-looking statements are subject to significant uncertainties and risks and are not guarantees of future performance[17](index=17&type=chunk)

Core Insights - STRATA Skin Sciences, Inc. reported its financial results for the second quarter of 2025, highlighting a strategic focus on expanding its patient population through newly approved reimbursement codes for its XTRAC Excimer laser treatment [1][3]. Financial Performance - Revenue for Q2 2025 was $7.7 million, a decrease of 9% compared to Q2 2024 [4]. - Global recurring revenue was $5.1 million, down 4% year-over-year, while equipment revenue decreased by 18% to $2.5 million [4]. - Gross profit for the quarter was $4.3 million, representing 56% of revenue, down from $5.0 million in the same quarter of the previous year [4]. - Total operating expenses increased to $6.5 million from $5.5 million in the prior-year period [5]. - The net loss for Q2 2025 was $2.5 million, or a loss per share of $0.60, compared to a net loss of $0.1 million, or a loss per share of $0.03, in Q2 2024 [5][24]. Operational Highlights - The company is managing costs while expanding its patient pool through direct-to-consumer (DTC) efforts and strengthening partnerships with practice partners [3]. - STRATA has seen a historic expansion of CPT codes for reimbursement, effectively tripling the covered patient population in the U.S. [8]. - The average gross billings per device increased by 2.7% to $5,512 compared to the prior-year period [8]. - The company removed 21 underperforming XTRAC devices and placed 19, marking the highest number of placements in six quarters [8]. Cash Position - As of June 30, 2025, cash and cash equivalents were $6.0 million, despite a payment of $1.3 million in restricted cash related to sales tax accruals [6][8].

Core Insights - STRATA Skin Sciences is working with CMS to obtain temporary codes for expanded reimbursement of its XTRAC excimer laser treatment, aiming for implementation as early as the 2026 rule cycle [2][3] - The American Medical Association has approved updates to CPT codes, expanding reimbursement eligibility for XTRAC treatments to include various inflammatory and autoimmune skin conditions effective January 1, 2027 [2] - STRATA's efforts could potentially triple the addressable patient population, benefiting over 30 million individuals with chronic skin conditions [3] Company Developments - STRATA has received significant support from legislators, patient advocacy groups, and academic leaders, reinforcing confidence in the efficacy of Excimer Laser therapy [4] - Recent peer-reviewed studies have confirmed the safety and effectiveness of combining 308-nm excimer laser therapy with JAK inhibitors for treating vitiligo, with one study showing a 100% overall response rate [5][6] - The company is involved in ongoing litigation against LaserOptek America, with the Federal District Court agreeing to add LaserOptek Korea as a defendant, indicating potential for significant damages [7][8] Product and Market Strategy - STRATA's XTRAC excimer laser is positioned as a leading drug-free option for treating skin conditions, with a focus on enhancing patient outcomes [4][9] - The company offers a unique Partnership Program that includes a fee per treatment cost structure, on-site training, and marketing support to promote its technologies [11] - STRATA's intellectual property portfolio includes patents for localized treatment methods, positioning the company for future growth in the dermatology market [9]

Company Overview - STRATA Skin Sciences, Inc. is a medical technology company focused on developing, commercializing, and marketing innovative products for dermatologic conditions such as psoriasis, vitiligo, and acne [5] - The company's product offerings include the XTRAC excimer laser, VTRAC lamp systems, and the TheraClearX Acne Therapy System [5] Upcoming Financial Results - STRATA will report its second quarter 2025 financial results on August 13, 2025, after the market closes [1] - A conference call will be held on the same day at 4:30 p.m. ET to review the financial results and provide updates on corporate developments [2] Conference Call Details - Interested parties can listen to the conference call by dialing 1-866-524-3160 for domestic calls or 1-412-317-6760 for international calls, with a recommendation to join approximately 10 minutes prior to the start time [3] - A telephonic replay of the call will be available until August 20, 2025, and a webcast replay will be accessible approximately one hour after the live call until February 13, 2026 [4] Partnership Program - STRATA offers a unique Partnership Program that includes a fee per treatment cost structure instead of requiring equipment purchase, installation, and use [6] - The program provides on-site training for practice personnel, service and maintenance of equipment, dedicated account and customer service associates, and co-op advertising support [6]