Apyx Medical(US:APYX)2024-05-11 22:33Financial Data and Key Metrics Changes - Total revenue for Q1 2024 decreased 16% year-over-year to $10.2 million, driven by a 23% decline in Advanced Energy product sales to $7.5 million, partially offset by a 14% increase in OEM product sales to $2.8 million [6][24] - Gross profit decreased $1.6 million or 21% to $5.9 million, with gross profit margin at 58.1% compared to 62.4% in the prior year [24] - Net loss attributable to stockholders increased 118% to $7.6 million or $0.22 per share, compared to $3.5 million or $0.10 per share in the prior year [26] Business Line Data and Key Metrics Changes - Advanced Energy segment sales decreased nearly 40% year-over-year, primarily due to slower sales of generators, while global sales of handpieces saw a modest decline [8][9] - OEM segment revenue was reported at $2.8 million for Q1, in line with expectations, with guidance indicating a high single-digit decrease in OEM sales year-over-year [42] Market Data and Key Metrics Changes - The decline in Advanced Energy sales was largely driven by slower sales in the U.S. market, with international sales showing strength in regions like Europe, the Middle East, Africa, and APAC [9][45] - The company noted that the cosmetic surgery capital equipment market remains challenging, impacting sales dynamics [7][32] Company Strategy and Development Direction - The company is focused on driving adoption and utilization of Renuvion technology, leveraging clinical evidence and regulatory clearances to enhance market presence [10][12] - Apyx Medical aims to capitalize on long-term market trends, including demand for body contouring procedures and the adoption of GLP-1 drugs for weight loss [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges in the capital equipment environment but expects modest improvements in the second half of 2024 [32] - The reaffirmation of 2024 guidance reflects consistent performance expectations, with a focus on controlling costs and preserving capital [33][34] Other Important Information - Andrew Makrides, the Chairman of the Board, is retiring after over 40 years of service, with Stavros Vizirgianakis appointed as the new Chairman [20][22] - The company continues to invest in direct-to-consumer advertising initiatives to enhance market awareness and drive sales [15][49] Q&A Session Summary Question: Can you provide more color on the guidance and confidence in sequential ramp? - Management indicated that the operating environment remains challenging, with expectations for modest improvements in capital equipment sales in the second half of the year [36] Question: What is the status of GLP-1 patients in the treatment funnel? - Management noted that patients on GLP-1 drugs are at various stages in their weight loss journeys, impacting their readiness for procedures [38][39] Question: Can you discuss alternative selling models for capital equipment? - Management confirmed multiple acquisition models for doctors, including straight purchase, leasing options, and a subscription model, but ruled out placing generators for free [41][42] Question: What is driving better performance in certain OUS geographies? - Management highlighted stronger demand in Europe, the Middle East, and APAC, attributing it to recent strategic changes and increased focus in those regions [45] Question: How do you expect gross margins to trend throughout the year? - Management maintained that gross margins are expected to be around 61%, with variations due to sales mix and geographical factors [46][47] Question: Can you clarify the operating expense guidance and DTC spending? - Management reiterated a 3% decline in operating expenses for the year, with increased spending allocated to direct-to-consumer initiatives [48][50]