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 - 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]