STRATA Skin Sciences(SSKN) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2021 was $7.4 million, representing an 83.1% year-over-year increase and a 28% sequential increase from Q1 2021 [13][24] - Recurring revenue reached $5.5 million, a 95% increase year-over-year and a 17% increase sequentially [13][24] - Gross profit was $4.8 million, or 64% of revenues, compared to $2 million or 49% of revenues in Q2 2020 [28] Business Line Data and Key Metrics Changes - Equipment revenues were $1.9 million, a 56% increase compared to Q2 2020 and a 65% increase from Q1 2021 [25] - The installed base of recurring revenue XTRAC devices increased to 889 units, with 848 in the U.S. and 41 internationally [13] Market Data and Key Metrics Changes - Patient visits have returned to approximately 90% to 95% of pre-COVID levels, with most customer practices reinstating normal operations [14][22] - The acquisition of Ra Medical's dermatology business positions the company to address a $6 billion U.S. market for chronic disease treatments [9] Company Strategy and Development Direction - The company is focused on transitioning from capital equipment sales to a recurring revenue model, enhancing predictability in revenue streams [20] - The acquisition of Ra Medical is expected to be accretive to EBITDA in Q1 2022, enhancing the company's market position [11][33] - Continued investment in direct-to-consumer marketing and re-engagement with high-volume accounts is a priority [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about reaching 2019 revenue levels by the end of 2021 and achieving double-digit growth in 2022 [21] - The company is monitoring the impact of the Delta variant on operations but remains confident in its recovery trajectory [22][57] Other Important Information - The acquisition of Ra Medical includes an upfront payment of approximately $3.7 million and the assumption of service contract obligations [11] - The company has seen a significant increase in direct-to-consumer advertising, which has positively impacted patient engagement [15] Q&A Session Summary Question: Impact of Ra Medical acquisition on existing customers - Management indicated that they will honor existing service contracts and aim for a smooth transition to their technology, leveraging existing relationships with dermatologists [36][38] Question: Expectations for margins and future revenue - Management expects margins to improve as recurring revenue grows, with a target to reach pre-COVID levels in recurring revenue [41][42] Question: Timing of the Ra Medical acquisition closure - The acquisition has already closed as of the date of the call [43] Question: Regional performance and pandemic impact - Management noted that while most regions are recovering, areas like California and New York are slower to return to pre-pandemic levels [55][57]