STRATA Skin Sciences, Inc. (NASDAQ:SSKN) Q1 2024 Results Conference Call May 2, 2024 4:30 PM ET Company Participants Dolev Rafaeli - Chief Executive Officer Chris Lesovitz - Chief Financial Officer Conference Call Participants Jeffrey Cohen - Ladenburg Thalmann & Co. Operator Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the STRATA Skin Sciences Inc. First Quarter of 2024 Financial Results and Corporate Update Conference Call. [Operator Instructions] A webcast replay of the ...

PART I. FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2024 | December 31, 2023 | Change (vs. Dec 31, 2023) | | :-------------------------------- | :------------- | :---------------- | :------------------------ | | Cash and cash equivalents | $5,237 | $6,784 | -$1,547 | | Accounts receivable, net | $3,630 | $4,440 | -$810 | | Total current assets | $13,239 | $15,543 | -$2,304 | | Total assets | $40,048 | $42,016 | -$1,968 | | Accounts payable | $3,592 | $3,343 | +$249 | | Total current liabilities | $12,588 | $12,174 | +$414 | | Long-term debt, net | $15,075 | $15,044 | +$31 | | Total liabilities | $30,616 | $29,328 | +$1,288 | | Total stockholders' equity | $9,432 | $12,688 | -$3,256 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change (YoY) | | :---------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Revenues, net | $6,754 | $7,567 | -$813 | | Cost of revenues | $3,674 | $3,179 | +$495 | | Gross profit | $3,080 | $4,388 | -$1,308 | | Loss from operations | $(2,889) | $(2,586) | -$303 | | Net loss | $(3,368) | $(2,835) | -$533 | | Net loss per share, basic and diluted | $(0.10) | $(0.08) | -$0.02 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Changes in Stockholders' Equity (in thousands) | Metric | Balance at Jan 1, 2024 | Stock-based Compensation Expense | Net Loss | Balance at Mar 31, 2024 | | :------------------------ | :--------------------- | :------------------------------- | :------- | :---------------------- | | Total Stockholders' Equity | $12,688 | $112 | $(3,368) | $9,432 | - Stockholders' equity decreased by **$3,256 thousand** from January 1, 2024, to March 31, 2024, primarily due to a **net loss of $3,368 thousand**[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change (YoY) | | :------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net cash used in operating activities | $(804) | $(817) | +$13 | | Net cash used in investing activities | $(725) | $(1,792) | +$1,067 | | Net cash used in financing activities | $(18) | $0 | -$18 | | Net decrease in cash, cash equivalents and restricted cash | $(1,547) | $(2,609) | +$1,062 | | Cash, cash equivalents and restricted cash at end of period | $6,571 | $4,186 | +$2,385 | - The decrease in cash used in investing activities was primarily due to a **reduction in capital expenditures** after the launch of TheraClear in Q1 2023[153](index=153&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1: The Company – Background and Operations](index=7&type=section&id=Note%201%20The%20Company%3A%20Background) - STRATA Skin Sciences, Inc is a medical technology company specializing in dermatology, offering products like XTRAC® and Pharos® excimer lasers, VTRAC® lamp systems, and the TheraClear® X Acne Therapy System[22](index=22&type=chunk)[24](index=24&type=chunk)[115](index=115&type=chunk) - As of March 31, 2024, there were **907 XTRAC systems** placed in dermatologists' offices in the United States and **45 internationally** under a recurring revenue model[23](index=23&type=chunk)[117](index=117&type=chunk) - The company is transitioning its international distribution to a direct model, having signed distributor contracts in various countries since 2019[25](index=25&type=chunk) - The COVID-19 pandemic, Russia-Ukraine War, and Israel-Hamas conflict are noted as potential ongoing negative impacts on operations and financial performance[26](index=26&type=chunk)[27](index=27&type=chunk)[29](index=29&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [Note 1: Basis of Presentation and Accounting Policies](index=8&type=section&id=Note%201%20Basis%20of%20presentation) - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules for interim financial reporting[31](index=31&type=chunk) - No changes to significant accounting policies occurred during the three months ended March 31, 2024[33](index=33&type=chunk) - The company uses estimates and assumptions for revenue recognition, valuation allowances, goodwill impairment, and other financial metrics[34](index=34&type=chunk) - The fair values of cash, cash equivalents, restricted cash, and long-term debt approximate their carrying values[36](index=36&type=chunk) Warranty Accrual Activity (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Balance, beginning of period | $303 | $207 | | Additions | $39 | $27 | | Expirations and claims satisfied | $(64) | $(5) | | Total | $278 | $229 | [Note 1: Net Loss Per Share](index=9&type=section&id=Note%201%20Net%20Loss%20Per%20Share) - Diluted net loss per share is the same as basic net loss per share because potential dilutive securities are anti-dilutive when a net loss exists[39](index=39&type=chunk) Potentially Dilutive Securities Excluded from Diluted EPS (in thousands) | Security Type | March 31, 2024 | March 31, 2023 | | :-------------- | :------------- | :------------- | | Stock options | 5,391,069 | 4,464,714 | | Warrants | 800,000 | 373,626 | | RSUs | 22,654 | 119,597 | | Total | 6,213,723 | 4,957,937 | [Note 1: Recent Accounting Pronouncements](index=10&type=section&id=Note%201%20Recent%20Accounting%20Pronouncements) - The adoption of ASU 2020-06 (Accounting for Convertible Instruments) on January 1, 2024, had **no impact** on the financial statements[42](index=42&type=chunk) - The company is evaluating the effect of ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures)[43](index=43&type=chunk)[44](index=44&type=chunk) [Note 2: Liquidity](index=10&type=section&id=Note%202%20Liquidity) - The company believes current cash and anticipated revenues will be sufficient for the next 12 months despite a history of recurring losses[45](index=45&type=chunk)[151](index=151&type=chunk) - Market conditions, including geopolitical conflicts and supply chain disruptions, could interfere with the company's ability to access financing[45](index=45&type=chunk)[151](index=151&type=chunk) - In June 2023, the company amended its credit facility, refinancing an $8 million loan and borrowing an additional $7 million[45](index=45&type=chunk)[146](index=146&type=chunk) - As of March 31, 2024, **working capital was $651 thousand**, down from $3,369 thousand at December 31, 2023[145](index=145&type=chunk) [Note 3: Revenue Recognition](index=10&type=section&id=Note%203%20Revenue%20Recognition) - Revenues from dermatology recurring procedures are recognized over the estimated usage period[46](index=46&type=chunk) - Revenues from equipment sales are recognized when control is transferred to customers, typically upon shipment[49](index=49&type=chunk) - As of March 31, 2024, remaining performance obligations totaled **$628 thousand**, with $251 thousand expected to be recognized within one year[52](index=52&type=chunk) - The company recognized **$76 thousand** as revenue from deferred revenues for the three months ended March 31, 2024[53](index=53&type=chunk) Expected Future Undiscounted Fixed Treatment Code Payments (International) (in thousands) | Year | Amount | | :------------- | :----- | | Remaining 2024 | $1,064 | | 2025 | $934 | | 2026 | $716 | | 2027 | $445 | | 2028 | $19 | | Total | $3,178 | [Note 4: Inventories](index=13&type=section&id=Note%204%20Inventories) - The company wrote off **$141 thousand** of inventories during Q1 2024 due to the expiration of extended warranty service contracts[56](index=56&type=chunk) Inventories Breakdown (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :------------------------ | :------------- | :---------------- | | Raw materials and work-in-process | $2,421 | $2,192 | | Finished goods | $274 | $481 | | Total | $2,695 | $2,673 | [Note 5: Property and Equipment, net](index=14&type=section&id=Note%205%20Property%20and%20Equipment%2C%20net) - Depreciation and amortization expense was **$755 thousand** for Q1 2024, up from $677 thousand in Q1 2023[58](index=58&type=chunk) Property and Equipment, net (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :------------------------ | :------------- | :---------------- | | Lasers placed-in-service | $32,940 | $32,095 | | Lasers-in-process | $3,121 | $3,231 | | Total | $36,743 | $36,062 | | Less: accumulated depreciation and amortization | $(25,017) | $(24,284) | | Net | $11,726 | $11,778 | [Note 6: Intangible Assets, net](index=14&type=section&id=Note%206%20Intangible%20Assets%2C%20net) - Amortization expense for intangible assets was **$494 thousand** for Q1 2024, a decrease from $720 thousand in Q1 2023[59](index=59&type=chunk) - **No impairment charges** were recognized for intangible assets during Q1 2024 or Q1 2023[60](index=60&type=chunk) Intangible Assets, net (in thousands) | Category | March 31, 2024 Net Book Value | December 31, 2023 Net Book Value | | :------------------------ | :---------------------------- | :------------------------------- | | Core technology | $712 | $855 | | Product technology | $912 | $942 | | Customer relationships | $862 | $1,035 | | Tradenames | $187 | $225 | | Pharos customer lists | $4,152 | $4,262 | | Total | $6,825 | $7,319 | Estimated Future Amortization Expense for Intangible Assets (in thousands) | Year | Amount | | :------------- | :----- | | Remaining 2024 | $1,477 | | 2025 | $1,266 | | 2026 | $561 | | 2027 | $561 | | 2028 | $561 | [Note 7: Accrued Expenses and Other Current Liabilities](index=15&type=section&id=Note%207%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued Expenses and Other Current Liabilities (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :------------------------ | :------------- | :---------------- | | Warranty obligations | $175 | $180 | | Compensation and related benefits | $1,667 | $1,679 | | State sales, use and other taxes | $4,290 | $4,316 | | Professional fees and other | $137 | $131 | | Total | $6,269 | $6,306 | [Note 8: Long-Term Debt](index=15&type=section&id=Note%208%20Long-Term%20Debt) - The company's Senior Term Facility provides for a **$20 million** senior secured term loan, with **$15 million drawn** as of March 31, 2024[68](index=68&type=chunk) - The facility bears interest at a variable rate, resulting in an effective interest rate of **13.94%** as of March 31, 2024[69](index=69&type=chunk) - The company is required to make interest-only payments through June 1, 2026, with a final maturity date of June 1, 2028[69](index=69&type=chunk) - The company was in compliance with its financial covenants as of March 31, 2024[71](index=71&type=chunk)[147](index=147&type=chunk) - Interest expense increased to **$524 thousand** in Q1 2024 from $286 thousand in Q1 2023[75](index=75&type=chunk)[142](index=142&type=chunk) Future Minimum Principal Payments at March 31, 2024 (in thousands) | Year | Amount | | :------------- | :----- | | 2026 | $3,750 | | 2027 | $7,500 | | 2028 | $3,750 | | Total | $15,000 | | Exit fee | $600 | | Less: unamortized debt discount | $(525) | | Long-term debt, net | $15,075 | [Note 9: Stock-Based Compensation](index=17&type=section&id=Note%209%20Stock-Based%20Compensation) - Stock-based compensation expense for Q1 2024 was **$112 thousand**, a decrease from $325 thousand in Q1 2023[79](index=79&type=chunk) - Selling and marketing expense for stock-based compensation was negative in Q1 2024 due to award forfeitures[79](index=79&type=chunk) - Unrecognized compensation expense for stock options was **$1,687 thousand**, expected to be recognized over approximately 2.9 years[80](index=80&type=chunk) Stock Option Activity for Three Months Ended March 31, 2024 | Metric | Number of Shares Under Option Plan | Weighted Average Exercise Price per Option | | :------------------------ | :------------------------------- | :--------------------------------------- | | Outstanding at Jan 1, 2024 | 7,728,721 | $1.11 | | Granted | 100,000 | $0.54 | | Forfeited and expired | (2,437,652) | $1.55 | | Outstanding at Mar 31, 2024 | 5,391,069 | $0.89 | | Exercisable at Mar 31, 2024 | 1,231,465 | $1.70 | Restricted Stock Unit Activity for Three Months Ended March 31, 2024 | Metric | Number of Units | Weighted Average Grant Date Fair Value | | :------------------------ | :-------------- | :------------------------------------- | | Unvested at Jan 1, 2024 | 22,654 | $1.03 | | Vested | (5,663) | $1.03 | | Unvested at Mar 31, 2024 | 16,991 | $1.03 | [Note 10: Income Taxes](index=19&type=section&id=Note%2010%20Income%20Taxes) - **No income tax expense** was incurred for the three months ended March 31, 2024 and 2023[85](index=85&type=chunk) [Note 11: Business and Geographical Reporting Segments](index=19&type=section&id=Note%2011%20Business%20and%20Geographical%20Reporting%20Segments) - The company operates in two segments: Dermatology Recurring Procedures and Dermatology Procedures Equipment[86](index=86&type=chunk) - Dermatology Recurring Procedures revenue **decreased by 9.9% YoY**, and gross profit percentage declined[88](index=88&type=chunk)[137](index=137&type=chunk) - Dermatology Procedures Equipment revenue **decreased by 12.7% YoY**, and gross profit percentage declined significantly[88](index=88&type=chunk)[133](index=133&type=chunk)[138](index=138&type=chunk) Segment Revenues and Gross Profit (in thousands) | Segment | Q1 2024 Revenue | Q1 2023 Revenue | Q1 2024 Gross Profit | Q1 2023 Gross Profit | Q1 2024 Gross Profit % | Q1 2023 Gross Profit % | | :-------------------------------- | :-------------- | :-------------- | :------------------- | :------------------- | :--------------------- | :--------------------- | | Dermatology Recurring Procedures | $4,696 | $5,209 | $2,501 | $3,189 | 53.3% | 61.2% | | Dermatology Procedures Equipment | $2,058 | $2,358 | $579 | $1,199 | 28.1% | 50.8% | | Total | $6,754 | $7,567 | $3,080 | $4,388 | 45.6% | 58.0% | Geographical Revenue Breakdown (in thousands) | Region | Q1 2024 Recurring | Q1 2024 Equipment | Q1 2024 Total | Q1 2023 Recurring | Q1 2023 Equipment | Q1 2023 Total | | :------- | :---------------- | :---------------- | :------------ | :---------------- | :---------------- | :------------ | | Domestic | $4,320 | $141 | $4,461 | $4,847 | $496 | $5,343 | | Foreign | $376 | $1,917 | $2,293 | $362 | $1,862 | $2,224 | | Total | $4,696 | $2,058 | $6,754 | $5,209 | $2,358 | $7,567 | [Note 12: Significant Customer Concentrations](index=21&type=section&id=Note%2012%20Significant%20Customer%20Concentrations) - For Q1 2024, one international distributor accounted for **16.3%** of total revenues[94](index=94&type=chunk) - One customer represented **12.5%** of net accounts receivable as of March 31, 2024[95](index=95&type=chunk) [Note 13: Commitments and Contingencies](index=21&type=section&id=Note%2013%20Commitments%20and%20Contingencies) - The company executed new five-year leases in March 2024, increasing ROU assets and operating lease liabilities by **$977 thousand**[97](index=97&type=chunk) - The company is appealing a New York State ruling that its XTRAC treatment codes are subject to sales tax, covering **$1.484 million** of a total $3.943 million in assessments[102](index=102&type=chunk)[103](index=103&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - The company faces potential future earnout and royalty payments related to the 2022 acquisition of TheraClear devices[106](index=106&type=chunk)[148](index=148&type=chunk) - A PAGA class action lawsuit in California was settled for **$106 thousand**, with final approval granted on April 5, 2024[110](index=110&type=chunk)[163](index=163&type=chunk) Operating Lease Maturities as of March 31, 2024 (in thousands) | Year | Amount | | :------------- | :----- | | Remaining 2024 | $341 | | 2025 | $463 | | 2026 | $334 | | 2027 | $290 | | 2028 | $301 | | Thereafter | $231 | | Total remaining lease payments | $1,960 | | Less: imputed interest | $(494) | | Total lease liabilities | $1,466 | [Note 14: Subsequent Events](index=23&type=section&id=Note%2014%20Subsequent%20Events) - On April 26, 2024, the company announced a **1-for-10 reverse stock split** of its common stock, effective June 6, 2024[111](index=111&type=chunk)[125](index=125&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for Q1 2024 [Introduction, Outlook, Overview of Business Operations and Recent Developments](index=24&type=section&id=Introduction%2C%20Outlook%2C%20Overview%20of%20Business%20Operations%20and%20Recent%20Developments) - STRATA Skin Sciences is a medical technology company focused on dermatology, offering systems for various skin conditions[115](index=115&type=chunk) - The company's XTRAC system is widely recognized for treating psoriasis and vitiligo, with **907 systems** in the U.S. as of March 31, 2024[117](index=117&type=chunk)[123](index=123&type=chunk) - The TheraClear® X Acne Therapy System combines intense pulse light with vacuum for acne treatment, though insurance reimbursement is limited[118](index=118&type=chunk)[123](index=123&type=chunk) - Global events like COVID-19 and geopolitical conflicts continue to pose risks to business conditions and supply chains[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) - A **1-for-10 reverse stock split** was announced, effective June 6, 2024, to meet Nasdaq's minimum bid price requirement[125](index=125&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) - Dermatology Recurring Procedures revenue decreased due to a reduction in direct-to-patient advertising and lower deferred revenue recognition[129](index=129&type=chunk)[130](index=130&type=chunk) - Dermatology Procedures Equipment revenue decreased primarily due to a reduction in Pharos service billings and discounts on international sales[133](index=133&type=chunk) - The decrease in overall gross profit percentage was driven by lower deferred revenue recognition, a **$141 thousand inventory write-off**, and higher depreciation costs[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - Selling and marketing expenses decreased primarily due to a reduction in sales force size and lower commissions[140](index=140&type=chunk) - General and administrative expenses decreased due to lower stock-based compensation, legal fees, and board fees[141](index=141&type=chunk) Revenue by Segment (in thousands) | Segment | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change (YoY) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Dermatology recurring procedures | $4,696 | $5,209 | -$513 | | Dermatology procedures equipment | $2,058 | $2,358 | -$300 | | Total revenues, net | $6,754 | $7,567 | -$813 | Gross Profit Analysis (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change (YoY) | | :------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | Gross profit | $3,080 | $4,388 | -$1,308 | | Gross profit percentage | 45.6% | 58.0% | -12.4 pp | Operating Expenses (in thousands) | Expense Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change (YoY) | | :------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | Engineering and product development | $241 | $315 | -$74 | | Selling and marketing | $3,018 | $3,742 | -$724 | | General and administrative | $2,710 | $2,917 | -$207 | | Interest expense | $524 | $286 | +$238 | [Non-GAAP Adjusted EBITDA](index=29&type=section&id=Non-GAAP%20adjusted%20EBITDA) - **Non-GAAP adjusted EBITDA worsened** to $(1,279) thousand in Q1 2024 from $(759) thousand in Q1 2023[144](index=144&type=chunk) Non-GAAP Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(3,368) | $(2,835) | | Depreciation and amortization | $1,249 | $1,397 | | Amortization of operating lease ROU assets | $95 | $105 | | Loss on disposal of property and equipment | $13 | $0 | | Interest expense, net | $479 | $249 | | Non-GAAP EBITDA | $(1,532) | $(1,084) | | Stock-based compensation expense | $112 | $325 | | Inventory write-off | $141 | $0 | | Non-GAAP adjusted EBITDA | $(1,279) | $(759) | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - Working capital decreased to **$651 thousand** as of March 31, 2024, from $3,369 thousand at December 31, 2023[145](index=145&type=chunk) - Cash, cash equivalents, and restricted cash totaled **$6,571 thousand** as of March 31, 2024[145](index=145&type=chunk) - The company's credit facility was amended in June 2023, with an effective interest rate of **13.94%** as of March 31, 2024[69](index=69&type=chunk)[146](index=146&type=chunk) - The company believes its current cash and anticipated revenues will be sufficient to meet liquidity requirements for at least the next 12 months[151](index=151&type=chunk) - Net cash used in operating activities remained consistent at **$(804) thousand** in Q1 2024[152](index=152&type=chunk) - Net cash used in investing activities decreased to **$(725) thousand** in Q1 2024 from $(1,792) thousand in Q1 2023[153](index=153&type=chunk) [Commitments and Contingencies](index=31&type=section&id=Commitments%20and%20Contingencies) - No significant impacts on commitments and contingencies were noted beyond those discussed in the 2023 annual financial statements[155](index=155&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosure about Market Risk](index=31&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company - This item is not applicable to the company[156](index=156&type=chunk) [ITEM 4. Controls and Procedures](index=31&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024 - Management concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2024[157](index=157&type=chunk) - Control systems provide **reasonable, not absolute, assurance** that objectives are met due to inherent limitations[159](index=159&type=chunk) - **No material changes** in internal control over financial reporting occurred during the most recent fiscal quarter[160](index=160&type=chunk) PART II. OTHER INFORMATION [ITEM 1. Legal Proceedings](index=32&type=section&id=ITEM%201.%20Legal%20Proceedings) This section updates on legal matters, including a class action settlement and ongoing state sales tax appeals - A proposed representative class action under California's PAGA was settled for **$0.1 million**, with final approval granted on April 5, 2024[163](index=163&type=chunk) - The company is appealing a New York State Appellate Division ruling that its XTRAC treatment codes are subject to sales tax[164](index=164&type=chunk)[165](index=165&type=chunk) - New York and California have assessed the company an aggregate of **$3.9 million** for sales and use tax[164](index=164&type=chunk)[166](index=166&type=chunk) - The company filed a motion for leave to appeal the New York State Appellate Division's decision on April 11, 2024[165](index=165&type=chunk) [ITEM 1A. Risk Factors](index=33&type=section&id=ITEM%201A.%20Risk%20Factors) This section refers to the comprehensive business risks detailed in the company's 2023 Annual Report on Form 10-K - A description of business risks is set forth in Item 1A of the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023[168](index=168&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds during the reporting period - None[169](index=169&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=33&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period - None[170](index=170&type=chunk) [ITEM 4. Mine Safety Disclosures](index=33&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section states that there are no mine safety disclosures applicable to the company - None[171](index=171&type=chunk) [ITEM 5. Other Information](index=33&type=section&id=ITEM%205.%20Other%20Information) This section confirms no directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended March 31, 2024[172](index=172&type=chunk) [ITEM 6. Exhibits](index=33&type=section&id=ITEM%206.%20Exhibits) This section lists exhibits filed with the report, including credit agreement amendments and officer certifications - Exhibits include amendments to the Credit and Security Agreement, a letter agreement, and Rule 13a-14(a) Certificates of the CEO and CFO[174](index=174&type=chunk) - Certifications pursuant to 18 U.S.C. Section 1350 are attached as Exhibit 32.1[174](index=174&type=chunk) [Signatures](index=34&type=section&id=Signatures) This section contains the required signatures of the registrant's authorized officers for the quarterly report - The report is signed by Dolev Rafaeli, President & Chief Executive Officer, and Christopher Lesovitz, Chief Financial Officer, on May 15, 2024[177](index=177&type=chunk)

Exhibit 99.1 STRATA Skin Sciences Reports First Quarter 2024 Financial Results and Provides a Corporate Update HORSHAM, Penn., May 15, 2024 – STRATA Skin Sciences, Inc. ("STRATA" or the "Company") (NASDAQ: SSKN), a medical technology company dedicated to developing, commercializing, and marketing innovative products for the treatment of dermatologic conditions, announces its financial results for the quarter ended March 31, 2024 and provides a corporate update. First Quarter 2024 Highlights • Revenue in the ...

STRATA Skin Sciences, Inc. (NASDAQ:SSKN) Q4 2023 Earnings Conference Call March 27, 2024 4:30 PM ET Company Participants Rich Cockrell - Investor Relations Dolev Rafaeli - President & Chief Executive Officer Christopher Lesovitz - Chief Financial Officer Conference Call Participants Jeffrey Cohen - Ladenburg Thalmann Operator Greetings, and welcome to the STRATA Skin Sciences' Fourth Quarter 2023 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A brief question ...

Technology and Product Efficacy - The XTRAC excimer laser technology is FDA-cleared and has been shown to have an 89% efficacy rate in treating psoriasis, with significant improvement in plaques and severity scores in as few as six to ten treatments [28]. - The XTRAC system has been cited in over 45 clinical studies, demonstrating its effectiveness and safety in treating various skin conditions [28]. - The TheraClear Acne Therapy System, acquired in January 2022, combines vacuum and broadband light for effective treatment of inflammatory acne, with treatments taking only 10 minutes [37]. - The XTRAC product line competes with pharmaceutical compounds and methodologies for treating skin conditions, with a focus on its clinical effect, minimal side effects, and cost-effectiveness [38]. - The XTRAC Momentum® 1.0, launched in February 2022, features higher power and a faster repetition rate compared to previous models, enhancing treatment efficiency [25]. Market Presence and Distribution - As of December 31, 2023, there are over 1,000 XTRAC lasers in use in the U.S., with 923 systems included in the dermatology recurring procedures revenue model [26]. - The company estimates that the target U.S. audience for XTRAC lasers comprises approximately 3,500 dermatologists who perform disease management [26]. - The company has transitioned its international sales to a direct distribution model, signing distributor contracts in multiple countries including Mexico and India in 2023 [27]. - The company has 923 partner clinics in the United States as of December 31, 2023, primarily in the dermatology procedures recurring revenue model [79]. Regulatory Compliance and Legal Matters - The XTRAC and TheraClear devices are classified as Class II medical devices, requiring FDA 510(k) clearance for marketing, which has been obtained for various skin conditions [48][51]. - The company has received FDA 510(k) clearance for the XTRAC Momentum Excimer Laser platform, enhancing its product offerings in dermatological treatments [49]. - The company is approved by the European Union to affix the CE mark to its XTRAC laser and VTRAC lamp systems, allowing marketing in the European Economic Area [54]. - The company is subject to various federal and state laws aimed at preventing fraud and abuse in healthcare programs, impacting its operational compliance [56]. - The False Claims Act imposes liability for knowingly presenting false claims, which could significantly affect the company's financial performance if violated [63]. - The company is subject to the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws, impacting its international customer relationships [65]. - Compliance with HIPAA regulations entails significant costs for the company, despite not being classified as a covered entity [67]. - The Health Information Technology for Economic and Clinical Health (HITECH) Act has increased civil penalty amounts for HIPAA violations up to an annual maximum of $1.5 million for uncorrected violations [68]. - The California Consumer Privacy Act (CCPA) provides specific privacy protections for California residents, impacting how the company handles personal data [66]. Operational Challenges - The impact of the COVID-19 pandemic has led to significant disruptions in business operations, affecting financial performance and customer behavior [21]. - The ongoing Russia-Ukraine conflict has affected the supply and pricing of noble gases essential for the operation of the company's lasers [22]. - Third-party reimbursement for the company's products is challenged by payers who may deny reimbursement based on cost-effectiveness or alternative treatments [73]. - The company maintains third-party relationships for the manufacture and maintenance of its systems, ensuring sufficient capacity to meet demand [40]. Financial and Employment Overview - The company had 99 full-time employees as of December 31, 2023, including 2 executive officers and 35 sales and marketing staff [78]. - As of December 31, 2023, the national payment rates assigned by CMS for phototherapy treatments are $153 for areas less than 250 square centimeters, $168 for areas between 250 to 500 square centimeters, and $228 for areas over 500 square centimeters [77].

Exhibit 99.1 STRATA Skin Sciences Reports Fourth Quarter and Full-Year 2023 Earnings Company to host conference call and webcast today, March 27, 2024, at 4:30 PM ET HORSHAM, Pa., Mar. 27, 2024 (GLOBE NEWSWIRE) -- STRATA Skin Sciences, Inc. (NASDAQ: SSKN) ("STRATA" or "the Company"), a medical technology company dedicated to developing, commercializing and marketing innovative products for the treatment of dermatologic conditions, today announced financial results for the fourth quarter and full-year ended ...

STRATA Skin Sciences, Inc. (NASDAQ:SSKN) Q3 2023 Earnings Conference Call November 14, 2023 4:30 PM ET Company Participants Rich Cockrell – Investor Relations Dolev Rafaeli – President and Chief Executive Officer Chris Lesovitz – Chief Financial Officer Conference Call Participants Jeffrey Cohen – Ladenburg Thalmann Operator Greetings, and welcome to the STRATA Skin Sciences Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ___________ Commission File Number 0-51481 STRATA SKIN SCIENCES, INC. (Exact name of registrant as specified in its charter) Delaware (State or other j ...

STRATA Skin Sciences, Inc. (NASDAQ:SSKN) Q2 2023 Earnings Conference Call August 9, 2023 4:30 PM ET Company Participants Nicole Jones - IR Bob Moccia - CEO Chris Lesovitz - CFO Conference Call Participants Destiny Hance - Ladenburg Thalmann Operator Greetings. Welcome to STRATA Skin Sciences' 2Q 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is bein ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ___________ Commission File Number 0-51481 STRATA SKIN SCIENCES, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisd ...