Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $13.8 million, down $1.2 million, or 8% year-over-year [12] - Gross profit decreased by $1.1 million, or 11%, to $8.8 million compared to Q3 2024 [14] - Net loss attributable to stockholders for Q3 2025 was $22.6 million, or $12.14 per share, compared to a net loss of $9.3 million, or $13.10 per share for Q3 2024 [17] Business Line Data and Key Metrics Changes - Revenue from energy-based devices (EBD) increased 2% year-over-year to $9.5 million [12] - Revenue from product systems decreased by 12%, products other revenue decreased by 15%, and services revenue decreased by 5% [12] - The percentage of total systems revenue from internal lease programs was approximately 27%, up from 23% in the prior year [13] Market Data and Key Metrics Changes - U.S. revenue decreased by $1.1 million, or 12% year-over-year, while international revenue decreased by $0.2 million, or 3% year-over-year [12] - The company anticipates GLP-1 usage to grow to more than 32 million patients globally by 2030, which is expected to drive demand for its technologies [6] Company Strategy and Development Direction - The company is focusing on a turnaround strategy initiated in 2023, emphasizing the launch of the Venus Nova product as part of its strategic initiative [5][6] - The pending sale of the Venus hair business is seen as a strategic move to concentrate on the global medical aesthetics business [10] - The company aims to enhance its product portfolio to focus on total practice performance, integrating patient management from entry to post-treatment [8] Management's Comments on Operating Environment and Future Outlook - Management noted challenges in the hair restoration business due to economic uncertainty and tight credit markets affecting robotic system adoption [4] - The company is managing cash burn through disciplined cost management and is evaluating strategic alternatives to maximize shareholder value [11][19] - The company is not providing full-year 2025 financial guidance due to ongoing market conditions and strategic evaluations [19] Other Important Information - The company has made significant progress in improving its balance sheet, with cash and cash equivalents of $5.9 million and total debt obligations reduced to approximately $30.1 million [18] - The company has engaged in multiple transactions to enhance its financial profile, including a debt-to-equity exchange totaling $11.4 million [8][19] Q&A Session Summary Question: What is the outlook for the Venus hair business sale? - The company is facing challenges in closing the sale of the Venus hair business to MHG Coal Limited and is seeking assistance from the Delaware Court to meet closing conditions [9]

Financial Performance - As of September 30, 2025, the company reported an accumulated deficit of $355.5 million, up from $308.9 million as of December 31, 2024[217]. - For the three months ended September 30, 2025, the Company reported revenues of $13.8 million, a decrease of 8% compared to $15.0 million for the same period in 2024[256]. - For the nine months ended September 30, 2025, revenues were $43.1 million, down 12% from $49.1 million in the same period of 2024[256]. - The net loss attributable to the Company for the three months ended September 30, 2025, was $22.6 million, compared to a net loss of $9.3 million in 2024[256]. - The net loss attributable to the Company for the nine months ended September 30, 2025, was $46.7 million, compared to a net loss of $39.0 million in 2024[256]. - Adjusted EBITDA loss for the three months ended September 30, 2025, was $7.8 million, compared to a loss of $5.9 million in 2024[256]. - Adjusted EBITDA loss for the nine months ended September 30, 2025, was $25.0 million, compared to a loss of $15.1 million in 2024[256]. - Total revenue decreased by $1.2 million, or 8.2%, to $13.8 million for the three months ended September 30, 2025, compared to $15.0 million for the same period in 2024[300]. - Total revenue decreased by $6.0 million or 12.1%, totaling $43.1 million for the nine months ended September 30, 2025[312]. - Gross profit decreased by $1.1 million, or 11.1%, to $8.8 million in the three months ended September 30, 2025, with a gross margin of 64.0% compared to 66.1% in the prior year[303]. - Gross profit decreased by $6.4 million or 19.2%, resulting in a gross margin of 62.6% for the nine months ended September 30, 2025[315]. Cash and Financing - The company had cash, cash equivalents, and restricted cash of $5.9 million as of September 30, 2025, compared to $4.3 million as of December 31, 2024[217]. - The company plans to fund operations and capital expenditures through cash on hand, borrowings, and capital stock issuances until profitability is achieved[217]. - The company has entered into multiple private placements, including a 2023 Multi-Tranche Private Placement with a total potential of $9.0 million[225]. - The company has drawn down a total of $7.9 million from a Loan and Security Agreement as of December 31, 2024, with additional draws of $15.3 million from January 27, 2025, to September 30, 2025[239]. - The Company expects to use proceeds from the 2023 Multi-Tranche Private Placement, totaling $9.0 million, for general working capital purposes[335]. - The 2022 Private Placement generated gross proceeds of $6.7 million before offering expenses, with costs totaling $0.2 million[334]. - The Company issued $2.0 million in 2024 Notes, accruing interest at 90-day adjusted SOFR + 8.5% per annum, convertible at an initial price of $13.761 per share[329]. - The Madryn Loan and Security Agreement includes a term loan of $2.2 million and delayed draw term loans of up to $26.0 million[331]. - The Company has financed operations through the issuance of common and preferred stock, debt financing, and customer payments[345]. - The Company anticipates that existing cash and proceeds from various financing agreements will fund operations for at least the next 12 months[346]. - Cash provided by financing activities for the nine months ended September 30, 2025, was $18.5 million, significantly higher than $6.4 million in 2024[351]. Operational Challenges - The company has incurred recurring net operating losses and negative cash flows from operations, indicating ongoing financial challenges[217]. - The company is facing economic uncertainties due to volatility in the global economy, including inflation and rising interest rates[218]. - Revenue decline in the first half of 2025 was attributed to tightening credit markets and economic uncertainty, affecting customers' ability to secure financing[267]. - Supply chain issues were experienced due to shipment delays from the Israel-Hamas and Israel-Iran conflicts, impacting production lead times[270]. - The company experienced a decrease in net operating assets of $3.5 million for the nine months ended September 30, 2025, primarily due to an increase in accrued expenses[352]. Sales and Market Performance - The total number of systems delivered in the three months ended September 30, 2025, was 198, a decrease of 22% from 253 systems delivered in the same period of 2024[263]. - The total number of systems delivered in the nine months ended September 30, 2025, was 630, down 20% from 789 systems delivered in the same period of 2024[263]. - Approximately 30% of aesthetic system revenues were derived from internal lease programs for the nine months ended September 30, 2025[250]. - Traditional sales accounted for approximately 62% of total system revenues for both the three and nine months ended September 30, 2025, compared to 61% and 59% in 2024[277]. - Distributor sales represented approximately 11% and 8% of total system revenues for the three and nine months ended September 30, 2025, down from 16% and 13% in 2024[281]. - Approximately 27% and 30% of total system revenues for the three and nine months ended September 30, 2025, were derived from internal financing programs, up from 23% and 28% in 2024[276]. Expenses and Losses - Operating expenses increased by $1.2 million, or 7.2%, to $18.3 million for the three months ended September 30, 2025, representing 132.9% of revenues[304]. - Loss from operations was $9.5 million for the three months ended September 30, 2025, compared to a loss of $7.2 million in the same period of 2024[298]. - The company recognized a $1.0 million non-cash loss from the March 2025 debt extinguishment, a $1.9 million loss from the June 2025 exchange, and an $11.3 million loss from the September 2025 exchange[294]. - The company recorded a loss on extinguishment of debt of $14.2 million for the nine months ended September 30, 2025[352]. - Bad debt expense for the three and nine months ended September 30, 2025, was $0.3 million and $2.6 million, respectively, compared to $0.4 million and $0.9 million for the same periods in 2024[266]. Future Outlook and Strategy - The company is expanding its ARTAS hair restoration business and robotics offerings through the AI.ME™ platform, targeting both traditional and non-traditional markets[216]. - The company plans to introduce and commercialize new products to grow revenues and penetrate new markets, which may increase expenses[348]. - Research and development expenses are expected to increase in absolute dollars as the company continues to invest in new products and technologies[291]. - The company launched the Venus Prime program in January 2024, replacing its legacy subscription program, aimed at improving cash generation and reducing exposure to defaults[251]. - The allowance for expected credit losses is based on the assessment of collectability and aging of customer accounts, reflecting the company's risk management strategy[368].

Financial Performance - Total revenue for Q3 2025 was $13.8 million, down 8% year-over-year and down 12% quarter-over-quarter, primarily due to a decline in the Hair Restoration business[6] - GAAP net loss for Q3 2025 was $22.5 million, compared to a net loss of $9.3 million in Q3 2024[6] - Adjusted EBITDA loss for Q3 2025 was $7.8 million, compared to a loss of $5.9 million in Q3 2024[13] - Gross profit for Q3 2025 decreased by $1.1 million, or 11%, to $8.8 million, with a gross margin of 64.0%[10] - Operating expenses increased by $1.2 million, or 7%, to $18.3 million in Q3 2025, driven by higher general and administrative and selling expenses[11] - Total revenue for the three months ended September 30, 2025, was $13,776, a decrease of 8.2% compared to $15,007 in the same period of 2024[24] - Gross profit for the nine months ended September 30, 2025, was $27,003, down 19.1% from $33,417 in the prior year[24] - Net loss for the nine months ended September 30, 2025, was $46,657, compared to a net loss of $38,955 for the same period in 2024, representing a 19.1% increase in losses[26] - The company reported a loss from operations of $9,496 for the three months ended September 30, 2025, compared to a loss of $7,157 in the same period of 2024[24] - For the three months ended September 30, 2025, the net loss was $22,549 thousand compared to a net loss of $9,302 thousand for the same period in 2024, representing an increase in loss of 142%[30] - Adjusted EBITDA for the three months ended September 30, 2025, was $(7,823) thousand, a decline from $(5,874) thousand in the prior year, indicating a deterioration of 33%[30] Assets and Liabilities - Total current liabilities increased significantly to $50,650 as of September 30, 2025, from $30,287 as of December 31, 2024[22] - Total assets decreased to $61,624 as of September 30, 2025, from $68,184 as of December 31, 2024[22] - Cash and cash equivalents at the end of the period were $5,931, up from $4,271 at the beginning of the period[26] - The company exchanged $11.5 million of subordinated convertible notes for preferred stock, resulting in a total debt reduction of 24% compared to December 31, 2024[6] - The company’s additional paid-in capital increased to $358,190 as of September 30, 2025, from $311,238 as of December 31, 2024[22] Sales and Revenue Sources - Energy-Based Device (EBD) system sales totaled $9.6 million, reflecting a 2% year-over-year increase[6] - The percentage of total systems revenue from internal lease programs was approximately 27% in Q3 2025, up from 23% in the prior year[9] Regulatory and Strategic Developments - The company received FDA 510(k) clearance for the Venus NOVA on November 10, 2025, marking a significant product launch[6] - The company is not providing financial guidance for FY 2025 due to ongoing evaluations of strategic alternatives and potential trade disruptions[15] Other Financial Adjustments - The company incurred a loss on debt extinguishment of $11,297 thousand for the three months ended September 30, 2025, compared to $454 thousand in the same period of 2024, reflecting a significant increase in costs[30] - Finance expenses decreased to $1,016 thousand in Q3 2025 from $1,665 thousand in Q3 2024, showing a reduction of 39%[30] - The company reported a foreign exchange loss of $35 thousand for Q3 2025, contrasting with a gain of $57 thousand in Q3 2024[30] - Other adjustments for the three months ended September 30, 2025, included legal and professional fees related to the sale of the Venus Hair Business[31] - The company is disputing a CRA assessment regarding the Canada Emergency Wage Subsidy Claim, which could result in a repayment request of $418 thousand[30] - Stock-based compensation expense decreased to $135 thousand in Q3 2025 from $239 thousand in Q3 2024, a reduction of 43%[30] - The company recognized a loss on disposal of subsidiaries amounting to $244 thousand for both the three and nine months ended September 30, 2025[30] - The company has made a provision under the Voluntary Correction Plan for discrepancies noted by the IRS regarding its 401(k) plan[32]

Core Viewpoint - Venus Concept Inc. reported financial results for Q3 2025, highlighting challenges in the aesthetics market but showing signs of stabilization in its Energy Based Device (EBD) business. The company is focused on long-term success through cash management and targeted investments, alongside a new product launch and ongoing strategic transactions [3][5]. Financial Results Summary - Total revenue for Q3 2025 was $13.8 million, down 8% year-over-year and down 12% quarter-over-quarter, primarily due to a decline in the Hair Restoration business [5][6]. - EBD revenues showed signs of stabilization with total sales of $9.6 million, up 2% year-over-year [5]. - GAAP net loss for Q3 2025 was $22.5 million, compared to a loss of $9.3 million in Q3 2024. Adjusted EBITDA loss was $7.8 million, compared to a loss of $5.9 million in the prior year [5][11]. Revenue Breakdown - U.S. revenue decreased by $1.1 million, or 12%, year-over-year, while international revenue decreased by $0.2 million, or 3% [6][7]. - Revenue by product category showed a 12% decrease in products – systems revenue, a 15% decrease in products – other revenue, and a 5% decrease in services revenue, partially offset by a 9% increase in lease systems revenue [7]. Operating Performance - Gross profit for Q3 2025 decreased by $1.1 million, or 11%, to $8.8 million, with a gross margin of 64.0%, down from 66.1% in Q3 2024 [8]. - Operating expenses increased by $1.2 million, or 7%, to $18.3 million, driven by higher general and administrative and selling and marketing expenses [9]. Strategic Developments - The company announced FDA 510(k) clearance for the Venus NOVA, its next-generation multi-application platform, marking a significant step in its R&D strategy [5]. - The company is actively pursuing the sale of its Venus Hair Business, facing challenges with the counterparty and seeking court assistance to close the transaction [3]. Balance Sheet and Cash Flow - As of September 30, 2025, the company had cash and cash equivalents of $5.9 million and total debt obligations of approximately $30.1 million, a reduction from $39.7 million at the end of 2024 [11]. - The company executed a debt-to-equity exchange transaction totaling $11.5 million, resulting in a 24% reduction in total debt compared to December 31, 2024 [5].

Core Insights - Venus Concept Inc. has received FDA 510(k) clearance for its new product, Venus NOVA, marking a significant milestone in the company's R&D strategy [1][3] - Venus NOVA is designed to provide a comprehensive solution for non-invasive body, face, and skin treatments, integrating multiple advanced technologies [2][3] Product Features - Venus NOVA incorporates Adaptive Electrical Muscle Stimulation (EMS), Multi-Polar Radio Frequency (RF) combined with Pulsed Electromagnetic Fields (PEMF), and Advanced VariPulse™ technology [2][4] - The platform aims to enhance body contouring, muscle conditioning, skin treatments, and reduce wrinkles and cellulite [2] Strategic Initiatives - The launch of Venus NOVA aligns with the company's turnaround strategy initiated in 2023 and the Venus AI strategic initiative, focusing on innovation and customer partnerships [3] - The product is expected to support the growing demand for aesthetic treatments, particularly for patients using GLP-1 medications, with an anticipated increase to over 32 million users globally by 2030 [3] Market Positioning - Venus NOVA is positioned to penetrate the multi-billion-dollar body and skin market, contributing to the company's long-term growth profile [3] - The product will be available in the U.S. starting December 2025, with global rollouts planned for 2026 and beyond [6] Support Programs - The Venus Jumpstart Program will provide a 30-day roadmap for advanced clinical education and marketing enablement to ensure successful integration of Venus NOVA into existing practices [4][5]

Core Viewpoint - Venus Concept Inc. has successfully reduced its outstanding debt by exchanging $11.48 million of subordinated convertible notes for preferred stock, improving its financial position significantly [1][2]. Financial Position - The total debt obligations of Venus Concept are now approximately $30.1 million, reflecting a 24% reduction from $39.7 million as of December 31, 2024 [1]. Strategic Initiatives - The debt-to-equity exchange is part of Venus Concept's strategy to enhance financial flexibility and support long-term growth and profitability [2]. - The partnership with Madryn Asset Management is viewed as invaluable in advancing the company's transformation plan [2]. Company Overview - Venus Concept is a global leader in medical aesthetic technology, offering a wide range of minimally invasive and non-invasive products across over 60 countries [4]. - The product portfolio includes various aesthetic device platforms and hair restoration systems, supported by prominent healthcare industry investors [4].

Core Points - Venus Concept Inc. will release its third quarter financial results for fiscal year 2025 on November 13, 2025, before market opening [1] - A conference call will be held at 8:00 a.m. Eastern Time on the same day to discuss the results and answer questions [2] - A replay of the conference call will be available for two weeks for those unable to participate live [3] Company Overview - Venus Concept is a global leader in medical aesthetic technology, offering a wide range of minimally invasive and non-invasive products [4] - The company operates in over 60 countries and has 9 direct markets, with a diverse product portfolio including various aesthetic device platforms and hair restoration systems [4] - Venus Concept is supported by prominent healthcare industry growth equity investors [4]

Market Overview - The global Cellulite Treatment Market was valued at USD 2.30 billion in 2024 and is projected to reach USD 5.19 billion by 2032, expanding at a CAGR of 10.47% from 2025 to 2032 [1][7] - The U.S. market alone was worth USD 711.91 million in 2024 and is expected to grow at a CAGR of 10.54% [1][3] Growth Drivers - The market growth is driven by a shift in consumer preference towards non-invasive and minimally invasive procedures, along with continuous innovation in FDA-approved devices [3] - Societal focus on body shape and contour, influenced by media and lifestyle trends, is increasing the demand for quick, safe, and cost-effective cellulite reduction treatments [3] Market Segmentation By Treatment Procedure - Non-invasive procedures led the market in 2024, accounting for 62.52% of total revenue, and are projected to grow at the highest CAGR of 11.09% from 2023 to 2030 [8] - Popular non-invasive treatments include radiofrequency, ultrasound, acoustic wave, and laser therapy, with products like Emtone®, Venus Legacy®, and Velashape® driving market confidence [8] By Type of Cellulite - In 2024, soft cellulite accounted for the largest share at 47.18%, while hard cellulite registered the highest growth rate with a CAGR of 12.57% [9] By End-User - Specialty dermatology clinics captured the highest market share at 54.90% in 2024, attributed to patient confidence in licensed professionals and advanced technologies [10] - Ambulatory surgical centers (ASCs) are projected to be the most opportunistic segment due to rising demand for cost-effective outpatient procedures [10] Regional Analysis - North America accounted for 38.50% of the global market in 2024, supported by established healthcare infrastructure and high-income populations [12] - Europe, particularly Germany, France, Italy, and the UK, is also a significant market due to a mature aesthetic culture and access to advanced dermatology [12] - Asia-Pacific is anticipated to be the fastest-growing region with a CAGR of 11.26%, driven by increasing disposable income and medical tourism [13]

Financial Data and Key Metrics Changes - The company reported total revenue of $15.7 million, a decrease of $900,000 or 5% year over year [14] - Gross profit decreased by $2.4 million or 20% to $9.4 million compared to the previous year [15] - Gross margin was 60.1% of revenue, down from 71.5% in the previous year [17] - Net loss attributable to stockholders was $11.7 million or $8.03 per share, compared to a net loss of $20 million or $30.93 per share for the previous year [18] - Adjusted EBITDA loss was $8.8 million compared to an adjusted EBITDA loss of $4.1 million for the previous year [18] Business Line Data and Key Metrics Changes - Total systems and subscription revenue grew by 20% in the second quarter [5] - Cash system sales in the U.S. represented 65% of total U.S. system sales, up from 58% the previous year [9] - Revenue from the company's internal lease program, Venus Prime, accounted for approximately 37% of total systems revenue, compared to 34% in the prior year [15] Market Data and Key Metrics Changes - U.S. revenue increased by 5% year over year, while international sales declined by 18% [6] - The company noted that customer financing pressures and economic uncertainty are impacting system adoption [7] - The international business is particularly exposed to macroeconomic headwinds, including tariffs affecting distributor demand [8] Company Strategy and Development Direction - The company announced a definitive agreement to sell the Venus Hair business for $20 million, allowing a focus on the global medical aesthetics business [10] - The strategic transaction is expected to improve revenue growth, lower operating expenses, and enhance cash flow [10] - The company aims to transition to higher quality cash revenues and is focused on launching a new body device by early 2026 [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed that the year-over-year results indicate potential revenue stabilization despite a challenging capital equipment environment [6] - The company is managing cash burn through disciplined cost management and targeted investments for long-term growth [13] - Due to ongoing market conditions and trade disruptions, the company is not providing full-year 2025 financial guidance [20] Other Important Information - The company has made significant progress in improving its balance sheet, with cash and cash equivalents of $4.9 million and total debt obligations reduced to approximately $34.3 million [19] - The company exchanged $17.5 million of subordinated convertible notes for preferred stock, enhancing its financial profile [20] Summary of Q&A Session - There was no live Q&A session due to international travel conflicts, and all follow-up questions were directed to the investor inquiries email address [21]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Unaudited **Q2 2025** financials report net losses, negative cash flow, and substantial doubt about going concern [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance sheet shows total assets at **$63.1 million**, liabilities at **$60.3 million**, and an accumulated deficit of **$333.0 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $3,878 | $4,271 | | Total current assets | $45,108 | $48,512 | | Total Assets | $63,085 | $68,184 | | **Liabilities & Equity** | | | | Note payable (current) | $18,419 | $8,271 | | Total current liabilities | $41,118 | $30,287 | | Long-term debt | $15,866 | $31,437 | | Total Liabilities | $60,313 | $65,346 | | Accumulated deficit | $(332,983) | $(308,899) | | Total Stockholders' Equity | $2,772 | $2,838 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) **Q2** revenue **$15.7 million** (net loss **$11.7 million**); **H1** revenue **$29.3 million** (net loss **$24.1 million**) Key Operating Results (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $15,692 | $16,582 | $29,335 | $34,061 | | Gross Profit | $9,431 | $11,849 | $18,186 | $23,496 | | Loss from Operations | $(9,041) | $(5,596) | $(18,569) | $(13,356) | | Loss on debt extinguishment | $1,865 | $10,901 | $2,914 | $10,901 | | Net Loss | $(11,742) | $(19,864) | $(24,108) | $(29,653) | | Net Loss Per Share (Basic) | $(8.03) | $(30.93) | $(22.18) | $(48.60) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash outflow was **$11.8 million**, financing provided **$12.5 million**, ending cash at **$4.9 million** Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,758) | $(4,210) | | Net cash used in investing activities | $(197) | $(47) | | Net cash provided by financing activities | $12,549 | $4,593 | | **Net change in cash** | **$594** | **$336** | | Cash, cash equivalents and restricted cash - End of period | $4,865 | $5,732 | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail strategic review, Venus Hair Business sale for **$20 million**, going concern warning, and debt restructurings - The company is evaluating strategic alternatives to maximize shareholder value, which may include mergers, sales of assets, or other transactions[26](index=26&type=chunk) - On **June 5, 2025**, the company agreed to sell its Venus Hair Business (including ARTAS and NeoGraft technologies) to Meta Healthcare Group in an all-cash transaction valued at **$20 million**, expected to close in **Q3 2025**[28](index=28&type=chunk)[29](index=29&type=chunk)[31](index=31&type=chunk) - The financial statements were prepared on a going concern basis, but the company's recurring net operating losses, negative cash flows, and an accumulated deficit of **$333.0 million** as of **June 30, 2025**, raise substantial doubt about its ability to continue as a going concern[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) - The company has engaged in multiple complex debt restructurings, including exchanging portions of its MSLP Loan and Madryn Convertible Notes for newly created Series Y Convertible Preferred Stock, resulting in significant non-cash losses on debt extinguishment[83](index=83&type=chunk)[104](index=104&type=chunk)[108](index=108&type=chunk) - A **1-for-11** reverse stock split was implemented on **March 3, 2025**[146](index=146&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses **Q2** and **H1** revenue declines, gross margin decrease, liquidity challenges, and strategic initiatives - The company has recurring net operating losses and negative cash flows, with an accumulated deficit of **$333.0 million** as of **June 30, 2025**[223](index=223&type=chunk) - The Board is reviewing strategic alternatives, and the company has entered into an agreement to sell its Venus Hair Business for **$20 million** in cash[225](index=225&type=chunk)[226](index=226&type=chunk) - Management attributes the revenue decline in the first half of **2025** to a significant tightening in credit markets, higher interest rates impacting customer financing, the wind-down of underperforming international markets, and supply disruptions from the Israel-Iran conflict[272](index=272&type=chunk) - The company's liquidity is a major concern, with cash used in operations increasing to **$11.7 million** in **H1 2025**. The company believes existing cash and proceeds from recent financings will be sufficient for at least the next **12 months**, but acknowledges the need for additional capital[328](index=328&type=chunk)[353](index=353&type=chunk) [Results of Operations](index=56&type=section&id=Results%20of%20Operations) **Q2** revenue down **5.4%** to **$15.7 million**; **H1** revenue down **13.9%** to **$29.3 million**, with gross margin decline Revenue Comparison for Q2 (in thousands) | Revenue Type | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Venus Prime / Subscription | $4,681 | $4,517 | $164 | 3.6% | | Products—Systems | $7,939 | $8,588 | $(649) | (7.6)% | | Products—Other | $2,444 | $2,647 | $(203) | (7.7)% | | Services | $628 | $830 | $(202) | (24.3)% | | **Total** | **$15,692** | **$16,582** | **$(890)** | **(5.4)%** | Revenue Comparison for H1 (in thousands) | Revenue Type | H1 2025 | H1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Venus Prime / Subscription | $7,330 | $8,048 | $(718) | (8.9)% | | Products—Systems | $15,842 | $19,123 | $(3,281) | (17.2)% | | Products—Other | $4,864 | $5,204 | $(340) | (6.5)% | | Services | $1,299 | $1,686 | $(387) | (23.0)% | | **Total** | **$29,335** | **$34,061** | **$(4,726)** | **(13.9)%** | - Gross margin decreased to **60.1%** in **Q2 2025** from **71.5%** in **Q2 2024**, primarily due to supply disruptions causing an adverse sales mix and higher device system costs from lower manufacturing volumes[307](index=307&type=chunk) - General and administrative expenses increased by **8.9%** in **Q2 2025**, mainly due to higher bad debt expense and inflation, partially offset by savings from exiting unprofitable markets and proceeds from ERC claims[310](index=310&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity challenged with **$4.9M** cash, **$11.7M** operating cash use, and **$34.3M** total debt - The company's cash, cash equivalents, and restricted cash was **$4.9 million** as of **June 30, 2025**[328](index=328&type=chunk)[352](index=352&type=chunk) - Total debt obligations were approximately **$34.3 million** as of **June 30, 2025**, down from **$39.7 million** at year-end **2024**[328](index=328&type=chunk) - Cash used in operating activities increased by **$7.5 million** to **$11.7 million** for the six months ended **June 30, 2025**, compared to the same period in **2024**[328](index=328&type=chunk)[359](index=359&type=chunk) - The company has engaged in numerous financing activities in **2024** and **2025**, including a bridge financing agreement with Madryn for up to **$21.0 million**, multiple registered direct offerings, and debt-for-equity exchanges to manage its liquidity[336](index=336&type=chunk)[345](index=345&type=chunk)[350](index=350&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide market risk disclosures - The company is a smaller reporting company and is not required to provide disclosure for this item[383](index=383&type=chunk) [Controls and Procedures](index=71&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal controls over financial reporting were effective - Based on an evaluation as of **June 30, 2025**, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[384](index=384&type=chunk) - Management concluded that the company's internal controls over financial reporting were effective as of **June 30, 2025**[385](index=385&type=chunk) [Part II. Other Information](index=72&type=section&id=PART%20II.%20Other%20Information) [Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) The company was not a party to any material active or pending legal proceedings as of **June 30, 2025** - The company was not a party to any material legal proceedings as of **June 30, 2025**[389](index=389&type=chunk) [Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) Key risks include Middle East geopolitical instability, customer credit defaults, Nasdaq listing, and increased tariffs - The ongoing conflicts in the Middle East, including the Israel-Hamas war and the recent Israel-Iran conflict, may adversely affect the company's operations, as certain operations, employees, and contract manufacturers are located in Israel[391](index=391&type=chunk)[393](index=393&type=chunk)[394](index=394&type=chunk) - The company is exposed to credit risk from its internal lease programs (Venus Prime and legacy subscription), which accounted for approximately **32%** of system revenues in **H1 2025**. Customer defaults could negatively affect financial results[398](index=398&type=chunk) - Although the company regained compliance with Nasdaq's minimum stockholders' equity and minimum bid price requirements, it is subject to a "Mandatory Panel Monitor" through **June 4, 2025**. Noncompliance during this period would result in a delist determination without the opportunity to submit a new compliance plan[404](index=404&type=chunk)[405](index=405&type=chunk)[409](index=409&type=chunk) - Increased U.S. tariffs on goods imported from Israel (recently increased to **10%**) will raise the cost of goods for the company's systems, which are primarily sourced from Israel, leading to modest margin erosion[410](index=410&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred in **Q2 2025**, except as previously disclosed - There were no unregistered securities issued and sold during the three months ended **June 30, 2025**, other than those previously disclosed in Form **8-K** filings[414](index=414&type=chunk) [Defaults Upon Senior Securities](index=76&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - None[417](index=417&type=chunk) [Other Information](index=76&type=section&id=Item%205.%20Other%20Information) No other information was reported for this item - None[419](index=419&type=chunk) [Exhibits](index=76&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form **10-Q**, including corporate documents and agreements