Financial Data and Key Metrics Changes - Second quarter revenue was $9.1 million, reflecting a 23% year-over-year growth, including a one-time capital equipment sale in China of approximately $1 million [9][29] - Equipment revenues for the second quarter were $3.5 million, an 83% increase compared to $1.9 million for the second quarter of 2021 [29] - Recurring revenues in the second quarter were $5.6 million, a 2% increase over the second quarter of 2021 [31] - Overall gross profit for the second quarter was $5 million or 55% of revenues, compared to $4.8 million or 65% of revenues for the second quarter of 2021 [31] - Net loss for the second quarter of 2022 was $1.9 million, compared to net earnings of $1.1 million for the second quarter of 2021 [35] Business Line Data and Key Metrics Changes - Domestic XTRAC installed base increased to 915 devices, up from 903 at the end of Q1 2022 [10] - High volume accounts contributed 54% of total gross domestic recurring revenues in Q2, up from 51% in Q2 2021 [12] - The company plans to deploy 15 to 20 XTRAC Momentum machines by year-end, focusing on high volume customers [13][42] Market Data and Key Metrics Changes - The company is targeting the $5.5 billion acne treatment market with the launch of TheraClearX, a noninvasive in-office procedure [16] - Internationally, the company received a one-time payment of approximately $1 million from a capital equipment sale in China, reinforcing its strategy to offer flexible models to international customers [23] Company Strategy and Development Direction - The company continues to focus on high volume accounts, which are critical for revenue generation [12] - STRATA is expanding its portfolio and entering new markets, with a strong emphasis on direct-to-consumer and direct-to-dermatologist marketing [13][27] - The company aims to improve gross margins throughout the remainder of 2022, returning to historical levels in the mid-sixties [32] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of 2022, expecting full-year revenue growth in the range of 10% to 17% year-over-year [26] - The company is monitoring macroeconomic factors and adjusting commercial strategies as necessary [26] - Management noted that patient levels have returned to normal, although staffing remains an issue in some offices [50] Other Important Information - The company welcomed a new Head of International Sales to enhance its commercial leadership team [24] - STRATA is actively engaging with key leaders in dermatology to support partner clinics and drive product adoption [18] Q&A Session Summary Question: Should we expect the lump from China to normalize back to previous levels for the back half of the year? - Management confirmed that the one-time capital equipment sale was an anomaly and expects normalization going forward [39] Question: Do you expect the ex-U.S. revenue to occur on the recurring side? - Management indicated that Japan has a good recurring revenue model, but other partners are more focused on equipment sales [40] Question: Can you walk us through some of the differences on the Momentum machine? - Management described the Momentum machine as more efficient and faster, allowing dermatologists to see more patients [41] Question: Any updates on the per system metrics for utilization? - Management stated that average recurring revenue per system is around $5,700, with a trend of increasing quarter-over-quarter [49] Question: Any material COVID or staffing impacts in any of your geographies? - Management noted that patient levels have returned to normal, but staffing remains an issue in some offices [50] Question: Any updates on topical Jack inhibitors and their impacts? - Management mentioned that new approvals for atopic dermatitis and vitiligo could drive more patients seeking treatment [53] Question: Is the conversion rate still in the range of 40% to 45%? - Management confirmed that the conversion rate remains in that range and is expected to improve as older machines begin to break down [55]
STRATA Skin Sciences(SSKN) - 2022 Q2 - Earnings Call Transcript