STRATA Skin Sciences(US:SSKN)2021-11-11 01:49Financial Data and Key Metrics Changes - Total revenues for Q3 2021 were $7.7 million, a 37% increase year-over-year and a 4% increase sequentially [23] - Recurring revenue increased to $5.7 million, representing a 49% increase over Q3 2020 and a 5% increase over Q2 2021 [24] - Gross profit was $5.4 million, or 70% of revenues, compared to $3.2 million (58% of revenues) in Q3 2020 [26] Business Line Data and Key Metrics Changes - The installed base of recurring revenue XTRAC devices grew to 929 units, including 880 in the U.S. and 49 internationally, up from 889 total units at the end of June [12] - High-volume accounts increased from 186 to 214, a 15.7% sequential increase, contributing approximately $3.4 million in revenues, accounting for 56% of all recurring revenues [16] Market Data and Key Metrics Changes - International placements of XTRAC devices reached 49, a 104% increase over 2020, with 8 units placed in Q3 2021 [20] - The company identified China, Japan, and South Korea as key markets for growth, with plans to expand into additional countries in Asia and the Middle East in 2022 [48] Company Strategy and Development Direction - The company is focused on transitioning Ra Medical's customers to the XTRAC system, expecting this acquisition to be accretive to EBITDA in Q1 2022 [14] - STRATA is investing in direct-to-consumer marketing and direct dermatology marketing initiatives to drive growth in 2022 [15][19] - The company aims to return to 2019 recurring revenue levels by the end of 2021 and anticipates double-digit growth in 2022 [22] Management's Comments on Operating Environment and Future Outlook - Management noted that patient visits to dermatology offices have increased for three consecutive quarters, although staffing shortages due to the Delta variant have posed challenges [12] - The company is optimistic about growth opportunities in the vitiligo treatment market and plans to enhance coverage with payers for both vitiligo and atopic dermatitis [47] Other Important Information - The company entered into a new credit agreement for an $8 million senior secured term loan facility with favorable terms [30] - Cash and cash equivalents were $13.1 million as of September 30, 2021, down from $17 million at the end of June [31] Q&A Session Summary Question: Contribution from Ra Medical in the quarter - The company recognized around $336,000 from Ra Medical's deferred revenue in Q3 and moved 13 of their comebacks into its business [35] Question: Active accounts and recurring revenues - Active accounts are primarily high-volume customers who have overcome staffing issues, contributing to increased recurring revenues [39] Question: Margins and sustainability - The company expects to achieve sequential growth similar to the increase from Q2 to Q3, aiming for 2019 recurring revenue levels by year-end [44][45] Question: Patient treatment distribution - Approximately 75-80% of treatments are for psoriasis, with 15% for vitiligo and a smaller portion for atopic dermatitis due to coverage issues [46] Question: International business growth - The majority of international business is in China, Japan, and South Korea, with plans to expand into Europe and Latin America [48]