Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $6.9 million, down 20% compared to Q3 2024, primarily due to a challenging international environment [10] - Recurring revenue remained solid, with gross code sales up 4.1% and net U.S. recurring XTRAC revenue up 2.8% [10] - Global recurring revenue of $5.5 million increased 3% year over year, while equipment revenue decreased 60% [10] - Gross profit for Q3 2025 was $4.2 million, representing a gross margin of approximately 60%, which was flat compared to the prior year [11] - Net loss for Q3 2025 was $1.6 million, or EPS of negative $0.36, compared to a net loss of $2.1 million, or EPS of negative $0.51 in Q3 2024 [11] - Adjusted EBITDA was slightly positive in the quarter compared to negative $240,000 in the comparable quarter of the prior year [11] Business Line Data and Key Metrics Changes - Average gross billings per device for U.S. partner clinics was $5,981 for Q3 2025, an increase of 8.5% versus Q3 2024, marking the highest since Q4 2022 [7] - 99 out of approximately 838 clinics have entered the Elevate 360 program, resulting in an average growth of 7% year over year for those businesses [6] Market Data and Key Metrics Changes - The expansion of CPT codes for STRATA's XTRAC laser is expected to increase the addressable market to over 30 million patients, tripling the total available market [6] - The company is experiencing challenges in its international business, primarily due to current U.S. trade policies, which have pressured total revenue [8] Company Strategy and Development Direction - The company is focused on expanding reimbursement eligibility for excimer laser treatments to include multiple inflammatory and autoimmune skin conditions, which is pivotal for future growth [4] - STRATA is strengthening practice partnerships through the Elevate 360 consulting model and innovative direct-to-consumer (DTC) campaigns [6] - The company aims to increase utilization of existing devices while removing non-productive devices from the market [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a seasonally stronger Q4 2025, driven by expanded indications for the excimer laser and favorable reimbursement trends [12] - The lingering impact of tariffs on international business was acknowledged, with hopes for improvement in the future [13] Other Important Information - The company raised $2.2 million net in a common registered direct offering during the quarter [11] - The litigation against LaserOptic is progressing positively, with potential for significant damages and an injunction limiting further damage to the domestic recurring business [9] Q&A Session Summary Question: Can you talk about average revenue per device in Q3 and trends for Q4? - The average revenue per device was $5,981, the highest since 2022, with expectations for continued growth due to increased utilization and removal of non-productive devices [15] Question: Any increase in show-up rates from DTC campaigns? - DTC campaigns have shown improved cost per acquisition and better conversion rates, contributing to increased recurring revenue [20] Question: What is the installed base for TheraClearX by the end of 2025? - The U.S. install base for TheraClearX is about 161 devices, with expectations to approach 200 devices by the end of 2025 [26] Question: Any updates on the litigation and potential device recoveries? - The company is actively pursuing the return of approximately 75-100 accounts affected by false claims, with a significant number of devices expected to come back [38] Question: Will there be temporary codes for 2026? - CMS has indicated that they do not plan to create temporary codes for 2026, focusing instead on the expanded codes effective January 1, 2027 [44]

Financial Data and Key Metrics Changes - Revenues for Q2 2025 were $7.3 million, down from $9.2 million in Q2 2024, primarily due to fewer capital system sales [18] - Gross profit decreased to $2.9 million in Q2 2025 from $5.4 million in Q2 2024, with gross margin dropping to 39.7% from 58.7% [19] - Net loss for Q2 2025 was $1 million, or $0.06 per share, compared to net income of $1.6 million, or $0.10 per diluted share, in Q2 2024 [20] - Adjusted EBITDA for Q2 2025 was negative $1.8 million, down from positive $2.1 million in the prior year [20] Business Line Data and Key Metrics Changes - The company delivered 19 SRT systems in Q2 2025, with four sold to China, indicating growing international demand [9] - FDA treatment volume increased by 27% over Q1 2025, suggesting improved efficiency and patient awareness of SRT [9] Market Data and Key Metrics Changes - The proposed local coverage determination (LCD) by Medicare has temporarily stalled domestic sales momentum, impacting market activity [5][6] - The proposed physician fee schedule by Medicare could significantly increase reimbursement for SRT delivery, potentially transforming the U.S. commercial strategy [16] Company Strategy and Development Direction - The company is focused on increasing patient awareness for SRT, growing internationally, and advancing its product pipeline [14] - A new partnership with Radiation Oncology Systems (ROS) aims to enhance distribution in hospital-based oncology segments [10] - The company is preparing for commercial deployment of its next-generation TBI platform, with FDA feedback anticipated later this year [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for increased reimbursement rates and the positive impact on SRT adoption [23] - The company is actively lobbying against the proposed LCD, believing it will not be implemented due to their efforts and supporting evidence [30][36] - Management indicated that the pause in purchasing from a large customer is temporary and that interest in SRT remains strong [42][43] Other Important Information - The company ended the quarter with $22.2 million in cash and no debt, maintaining a strong balance sheet [23] - The MD SAP certification allows the company to access markets in Brazil, Canada, Japan, and Australia, enhancing its international growth prospects [15] Q&A Session Summary Question: Impact of proposed CMS reimbursement changes - Management clarified that the LCD and proposed physician fee schedule are separate, with the LCD focusing on ultrasound utilization [28][30] Question: Effects of LCD on FDA treatment volumes - Management noted a pause in market activity due to uncertainty from the LCD, but they believe ultrasound's role in SRT will be validated [34][35] Question: Status of large customer purchases - Management confirmed that the largest customer has paused purchases due to reimbursement uncertainties but remains committed to SRT [42][43] Question: Potential for increased sales in China - Management expressed optimism about continued orders from China and potential new orders from other international markets due to MD SAP [46][70] Question: Macro-level softness in capital equipment spending - Management indicated that the current pause is specific to SRT and not indicative of broader market trends, with expectations for growth in Q3 [72][73]