STRATA Skin Sciences Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 27, 2024

There are 6 speakers on the call.

Operator

Greetings, and welcome to the Strata Skin Sciences 4th Quarter 2023 Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. It is now my pleasure to introduce your host, Rich Cockrell, Strata Investor Relations. Thank you, Rich.

Operator

You may begin.

Speaker 1

Thank you, operator. Good morning, everyone, and thank you for joining us for the Strata Skin Sciences 4th quarter and full year 2023 earnings conference call. Earlier today, we released our financial results for the quarter ended December 31, 2023. You can find a copy of the press release on the company's website. Before we begin, I'd like to remind everyone that this call may include forward looking statements.

Speaker 1

These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially. We encourage you to review the SEC filings, which highlight these risks and uncertainties. The company does not commit to updating any forward looking statements as new information becomes available. Now today on the call, we have Doctor. Dola Raffaele, our CEO and Christopher Lesovits, our CFO.

Speaker 1

Each will provide an overview of the company's Q4 performance and discuss the strategic outlook. After their remarks, we'll open the floor for questions. And with that, I'd like to turn the call over to Dolaiv. Go ahead, sir.

Speaker 2

Thank you, Rich, and good afternoon, everyone. Reflecting on 2023, it's evident that it was a pivotal year for Strata, characterized by strategic leadership adjustments, product innovation and substantial market expansion. The strategic change in leadership at the end of the year, which saw my return to Strata in October, marks a significant commitment to our proven strategic vision that drives growth and operation A robust reinvigorating of the direct to consumer DTC recurring revenue model has been a cornerstone of our strategy, proving to be a vital element of our success, especially evidenced during my previous tenure as CEO for our core extract business between 2011 2015 and from 2018 to 2021. It was these periods that marked a transformation in Strata, steering the business towards positive cash flow from operation, expanding our footprint both domestically and internationally, streamlining operations and sparking innovation through a launch of new product and services. Central to our plan has been the focus on our flagship products, the X Rap, the D Track and the 3rd Clear X.

Speaker 2

A key highlight of the year was the success of introduction of our Therapear X ACTI therapy system in January of 2020 3. By year's end, we placed 92 devices under the recurring procedure model. During 2023, Strata also significantly increased its domestic and international recurring revenue installed base to 964 extract devices as of December 31, 2023. This expansion underlines our capability to innovate and efficiently respond to market demand. Just last month, we took an important step to secure our future growth through the amendment of our credit facility with MidCap Financial Trust.

Speaker 2

This adjustment in our financial strategy, ensuring alignment with the company's current and future business projection in supporting operation and capital needs is crucial for our continued growth and further expansion of the efforts. More recently, we have initiated a campaign to extend insurance coverage to essential dermatological conditions, aligning with our mission to enhance patients' access to vital treatments through the improved insurance practices and broadening inclusion of CPT codes. Initially, our efforts are concentrated on securing payer coverage for extract treatments for multiple indications including Vitiligo, CTCL, alopecia areata and atopic dermatitis. This initiative is a testament to our commitment not only to increase the accessibility of our treatment, but also to advocate for the well-being and quality of life of those affected by these conditions. I note that not all of these conditions are currently in proved indications, but we are in the process of moving forward to see if such use may be approved in the future.

Speaker 2

Leveraging our best database of over 270,000 pest extract patients, we are actively collaborating with prominent patient advocacy groups and the wide dermatology key opinion leader community. Strata also commenced targeted advocacy with legislatures and to enhance access to the extra fleets. As we continue to ramp up the DTC revenue model in 2024, we remain laser focused on executing our key strategic priorities. 1st and foremost, we are working diligently to drive utilization and rationalizing placements of both our XTrax and TheraClearx devices. This involves leveraging our strengthening balance sheet to rebuild and expand the DTC capabilities and stimulate patients' demand.

Speaker 2

By bringing patients directly to physicians' offices, we can increase procedural holdings and device utilization, thereby generating incremental high margin recurring revenue. Let's now pivot to the review of our financial landscape of our CFO, Chris Lesovich. And then I will explain a little bit more on the operational side. Chris?

Speaker 3

Thank you, Dolla. Let's dive into our financials for the Q4 and full year 2023. Our total revenue for the quarter was $8,700,000 $33,400,000

Speaker 4

for the

Speaker 3

full year. This decrease from the prior year is reflective of the decline in recurring revenue for the company, which we are now shifting back to in 2024. A crucial element of our approach involves re centering our efforts on our foundational business, collaborating with doctors' offices and driving customers to them. This is a return to our roots, a strategic maneuver to enhance the utilization rates within our recurring revenue model and we are confident that these efforts will start show a tangible impact in 2024. Breaking down the total revenues, our global recurring revenues for the full year 2023 were $21,500,000 as compared to global recurring revenues of $23,000,000 for the full year 2022.

Speaker 3

Equipment revenues were $11,800,000 for the full year 2023 as compared to $13,100,000 for the full year 2022. Looking forward to 2024, we are building upon the launch of the TheraClear X system in which our emphasis on recurring revenue has started to shape our revenue mix. This strategic pivot is designed to enhance long term sustainability and profitability with an emphasis on TheraClear X being reimbursed from CBT and continuing our focus on the recurring model for extract. Turning our attention to our operational efficiencies, particularly within our selling and marketing and G and A areas. I'm pleased to share that we've taken deliberate steps to refine our cost structure.

Speaker 3

In the latter half of 2023, we implemented reductions in sales and marketing expenditures, which are expected to come to full fruition in 2024. This is part of our broader strategy to return to the leaner expense structure as previously seen in 2019. In addition to the cost savings above, we intend to eliminate non productive accounts, not only by reducing the cost associated with servicing, but also repurposing those materials. On the G and A front, we have experienced a slight increase in expenses to $10,500,000 driven largely by one time legal and accounting costs and transitions within our executive team. Our strategic plan for 2024 will optimize the utilization of our devices, maximize operational efficiency and ultimately improve our bottom line.

Speaker 3

These sustainable and competitive cost base, allowing us to invest more deeply in growth and innovation. The full financial impact of these changes is anticipated by the end of 2024. Finally, despite a net loss for the quarter, which included the $2,300,000 goodwill impairment recognition mentioned in our earnings release, we are confident in our strategic direction. Our balance sheet remains strong with a solid cash position to support our growth initiatives. Cash and cash equivalents and restricted cash at December 31, 2023 were $8,100,000 compared to $6,800,000 at the year end 2022.

Speaker 3

With this stronger position combined with the anticipated revenues from the sale or use of our products, operating management and our amended credit facility with MidCap Financial, we believe we are well positioned to continue growing into 2024. I'll now hand the call back over to Dolaiv to discuss our strategic outlook and operational priorities.

Speaker 2

Thank you, Chris. As we conclude the Q4, we remain focused on aligning our operations more closely with the evolving market demand and our long term vision for STRAT. This quarter has been a foundational in setting the stage for the reinvigorating of our DTC marketing and business model, an approach we believe is critical for sustainable growth and enhanced profitability. Our journey towards this strategic realignment highlights our commitment to leveraging the inherent strengths of our business, particularly our close relationship with physicians and our robust clinical support infrastructure. These elements are pivotal not only in driving utilization of our devices, but also in creating valuable opportunities for both Strata and the healthcare providers we partner with.

Speaker 2

Our goal is to significantly improve our margins through heightened device utilization, generating substantial recurring revenue in the process. The core DNA of the DTC approach is providing unparalleled support at every touch point. The patient and provider insurance benefit support, the patient co pay support and provider clinical support and patient advocacy. It's important to acknowledge that shifts of this magnitude require time to fully manifest in our financials. The previous focus of our efforts, the direct to provider marketing has laid a solid foundation, yet the move towards a more DTC centric approach marks a return to a proven strategy that has historically driven our growth and success.

Speaker 2

As we advance, our primary focus will remain on maximizing the economic efficiency of each device placed. In the coming quarters, we anticipate the impact of these strategic shifts to become increasingly evident in our performance metrics. The XROC partnership represents a cornerstone of our strategy to enhance recurring revenue streams. Usage is driven by both Strata, facilitating a patient appointment utilizing DTC, as well as by the provider prescribing their own patients. The DTC approach fosters a halo effect in which patients are driven both directly as well as indirectly to the procedure.

Speaker 2

As a reminder, the abstract procedure benefits all. The patients receive a side effect free clinical effective procedure. The cost for the insurance payer is the lowest of all alternatives and the partner clinics generate incremental revenue. This slide encapsulates the past ebb and flow of patient engagement within our practices, punctuated by the influence of our DTC marketing efforts. The initial leads, Martin Blue, showcases patients' interest in our extra excimer laser treatment.

Speaker 2

Dark gray highlights the scheduled appointments, a direct result of our targeted marketing campaigns. The green bars are RDX charts reflect the translation of leads and appointments into actual new patient charts ready for the treatment. As we started ramping up our DTC efforts in 2024, we have focused on 4 geographic areas New York City, Florida, Texas and Illinois. We selected these areas to validate our historical cost per lead, which is around $30 to $40 and our historical cost per in clinic patient appointment, which is approximately $300 Each of the patients, whether driven by DTC or provided or provider generated, generates a patient chart in Strata's proprietary RDX system, which allows the tracking of insurance benefits and supporting the providers and patients in fully realizing these. As a reminder, during 2019 2021, we were able to drive 5000,06,000 patient appointments respectively, contributing about 25% of the overall new patient charts.

Speaker 2

As the value of full course of treatment of an individual patient to Strata and to the partner clinic is more than $1200 $2,900 respectively, The successful capture of these patients in the clinic and into procedures is critical. And our team monitors as these newly generated appointments are underway. For 2023, with DTC underutilized, Strata had a total of 185 leads, 23 appointments and 11,787 RDX charts. These numbers represent our baseline as we reinstate our DTC initiatives. Our DTC campaign started ramping up in the second half of January twenty twenty four and will continue expanding as we increase the number of targeted territories.

Speaker 2

The unit economics for each individual extract device is the best measure is best measured by an average revenue per device. Prior to the pandemic, in 2018 2019, when DTC was the core focus, we saw significant growth in the number of X rack devices deployed as well as an increase in the average revenue per device. In 2019, each of the 820 partner clinics generated on average $7,200 per quarter. Post pandemic, while the business has mostly returned, the company focused its marketing resources on direct to provider initiatives, increasing sales and marketing expenses from $12,000,000 to over $15,000,000 while reducing the DTC initiative and its cost. The impressive 13% growth in domestic installed base from 820 in 2019 to 923 in 2023 was coupled with a lack of DTC driven appointments and its associated halo effect, resulting in a reduction of 25% sorry, 28% in the average revenue per device per quarter to approximately $5,200 per device per quarter for 2023.

Speaker 2

The expansion in the installed base lays a robust foundation to revitalize our DTC initiatives aimed at boosting procedure volumes, enhancing device utilization and driving up the average revenue per device per quarter all while being able to rationalize the size of the installed base. The TheraClear X system represents a parallel success story with 92 devices already active in clinics focusing on cash paying patients. Yet, the substantial opportunity lies in integrating the TheraClear X into our clinical dermatology network where the focus shifts to insurance reimbursed treatments. This pivot not only reduces the financial burden on the patients, but also promises improved clinical outcomes, thereby potentially increasing patient volume and device utilization. Late in the Q4 of 2023, we have started transitioning existing accounts and adding others to the insurance reimbursed approach.

Speaker 2

To date, our insurance benefits team has processed several 100 individual patients charts, resulting in 86% payer pre authorizing a course of treatments for patients and providers all across the country. The CPT treatment code average Medicare payment rate is approximately $120 with private payers' dairy. RADA already owns approximately 200 Therapeutics devices and each additional patient represents approximately $500 $1200 of potential incremental revenue for Strata and Provider respectively. Internationally, as we expand into new markets, our installed base of over 1400 X Rec and V Track devices continues to provide a robust and reliable revenue stream. In closing, I want to emphasize the strides we've made in 2023 as we recommit to our DTC model and capitalize on our expanded installed base.

Speaker 2

The strategic efforts are integral to our mission of enhancing the patient and physician experience and are the driving force behind our anticipated growth and margin improvements. Looking ahead, our commitment to operational excellence and strategic marketing will elevate Strata's profitability and shareholder value in the near term. We thank you for your support and look forward to navigating the future with confidence and clarity. Let's now open the floor for questions. Operator?

Operator

Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.

Speaker 4

Hi, Deloitte and Chris. How are you?

Speaker 2

Hi, Jeff.

Speaker 4

Hi, Jeff. So, firstly, could you talk about how you're planning on defining nonproductive accounts? And perhaps give us a sense of what percent of accounts out there are currently falling beneath that nonproductive line?

Speaker 2

Absolutely. I'll start with that and Chris is going to add on more metrics if you wish. So this initiative is not new. This was already discussed by previous management going into the 3rd Q4 of last year. However, as you've been following this business for several years now, you know that probably the most important metric in how this business becomes profitable is how much revenue we generate per device because almost every other expense is fixed.

Speaker 2

So for reference, in 2018, our average revenue per device was in the range of $5,000 per device per quarter and we were able to push that up with all of our initiatives in the DTC

Speaker 4

to almost

Speaker 2

$7,500 per device by the end of 2019. So 2019 represented about $30,000 per device. In 2019, we have 820 devices. The same installed base met the company at the other end or almost the same installed base met the company at the other end of pandemic coming into 2021 and then company started extending the sold base. Coming out of pandemic in 2021, the business or the year was a story of 2.5s.

Speaker 2

In the beginning, offices were coming out of the pandemic and starting their businesses back up. But then by the end of 2021, we were back at the same run rate. So if you look at 2021 as a whole, the average revenue per device for 8.90 devices by the end of 2021 was approximately $25,000 per device. Now fast forward to 2023, we have over 900 devices in the market, 9 23. However, the average is about 21,000 for the whole year.

Speaker 2

And that gives us an opportunity. The opportunity is either reviving existing devices or removing them and using them instead of building new devices when we start expanding again. The threshold metric would be obviously how much revenue this device is generating or how much this device can generate. But as a whole, if you look at this as an installed base, every one of these devices that does not generate in excess of on average in excess of $15,000 $16,000 is not contributing to the bottom line. And that's the target.

Speaker 2

So the target is going to be to optimize the installed base on the one hand and increase utilization on the existing installed base on the other hand. I would not anticipate very strong moves in the installed base either way. If you look back into the company's disclosures in the past, we have every year removed in the range of 100 to 120 devices. And in the years that the company was expanding, we placed more than 100 or 120. And in the years that the company was shrinking, we've placed less than 100 or 120.

Speaker 2

So it's not going to be the complete stop of extensions, but it's going to be somewhat of a shrinkage of non performing devices just in order to replace them in with accounts that could be more productive as we reintroduce our DTC. Chris, do you want to add something?

Speaker 3

Neto, I think you nailed it pretty much there. Gola mentioned, the main goal here is to get these nonproductives out and use that excess inventory for us internally at the warehouse and then we redeploy them to actual producing dermatology offices. So yes, pretty much sums up pretty good.

Speaker 2

So Jeff, it's more a movement within the balance sheet. So instead of having to recreate additional devices, new devices and move them into PP and E, we already have them. We're moving them away from non productive accounts either into other productive accounts or into the warehouse, so that these can be utilized into productive accounts.

Speaker 4

Got it. Okay. Could you talk about alopecia a little bit as far as what's the recommended number of treatments over what duration? And are there any current data points or studies ongoing?

Speaker 2

So great question. Alopecia and some other indications are indications that are that have extensive clinical data. I will make sure to follow-up after this call and send you clinical data for that where the excimer laser is used for the treatment of these conditions. Specifically, I was talking about alopecia alieta, which is the hair loss patches caused by autoimmune diseases. And I was also talking about CTCL, which is another autoimmune inflicted disease.

Speaker 2

These conditions are and have been used by clinicians or the XRAC has been used by clinicians to treat them. And these conditions are being treated from the company's perspective, they're being treated off label because the FDA labeling of the device is for the treatment of psoriasis, vitiligo, atopic dermatitis and leukoderma. However, these conditions are being treated, have been treated over multiple years and are being paid and accepted by the commercial payers. What we are trying to do is we're trying to bridge that gap. We cannot actively promote anything that's not labeled.

Speaker 2

So that's on the FDA front. And so we're inactively promoting it. We're providing clinical data, but promote the use of the device. And we can also it's very hard for us to negotiate with the payers if it's an off label indication. However, we have very solid track record of these conditions being approved by and paid by the payers, both Medicare as well as the private payers.

Speaker 4

Okay, got it. Next question, could you talk a little bit about some of the clusters out there OUS as far as direct and growth in say, LatAm, Europe as well as Asia?

Speaker 2

Yes. So our biggest clusters of users have always been in Asia, China, Japan, South Korea China, Japan and South Korea as well as in the Middle East. These markets are different from each other in the sense that in some markets like Japan and in South Korea, this procedure is covered by the insurance company, healthcare and children companies. And we have been accepted as a brand. We've been accepted as the leading brand in these markets.

Speaker 2

And we do take a leading position in that market in terms of the market share of providers using this, where the other markets are either more aesthetically driven, so China where it's mostly cash pay or state healthcare insurance driven like the Middle East to be mostly the Kingdom of Saudi Arabia and the other countries there. We have north of 1500 devices in these markets and we've had them for over 14 years. We started doing this 14 years ago. And the sales into these markets is broken into 3 components. We sell capital equipment, so we sell new devices, and that is used for replacement of existing devices and going into new accounts.

Speaker 2

We sell parts and consumables into these markets, which represents about 1 third of the revenue, where the Eximod laser requires jazz and other components to maintain it. We've seen this in these markets as well as in the domestic market that the lifespan of these of the XTRAC devices has been well north of 10 years. We have devices that have been in the market for 14, 15 years, but it does require maintenance and parts. And the 3rd component, which is something that we've introduced in 2021, is the placement of devices and basing on recurring revenue, which has started at the end of 2020 and grew to the extent of about $1,500,000 in revenue annually as of last year. This was true for all of the Asian markets.

Speaker 2

1 of the Asian markets, China, decided to move away from that, mostly because of their limitations on maintaining devices in the market that are not owned by them. But we continue having placement devices in Korea and as well as in Japan. This allows users to commit to the therapy without having to commit to hundreds of thousands of growers

Speaker 4

in

Speaker 2

the cost of the year capital equipment.

Speaker 4

Okay, got it. And then lastly for us, if I may press you a little bit on 2024. So firstly, I'm wondering how many 3rd curve devices you aspire to having at the end of the year? And then secondly, no guidance on top or bottom line. You did mention growth, are you referring to 5% growth or 20% growth or any idea there that you can provide that does it for us?

Speaker 2

Let me start with the second question. The key initiative in 2024 is to bring the company back into a growth mode and the recurring side while maintaining the other components of the company. Now I'll parse the recurring side. So the recurring side has 3 components. 1, I just spoke about, which is the non U.

Speaker 2

S. And as I said, there are it's an existing and growing market, very stable. We've been in these markets for many years. We are the leading brand and it's a very don't want to say easy, but it's a very efficient transaction for us as well as for the distributors and the customers on that side. And in 2023, as I said, it was and you can see this in the 10 ks, but it was approximately $1,500,000 for these markets.

Speaker 2

The second component and you've touched upon this is the fair clear. So the company owns in terms of have acquired about 200 devices. So without having in that investment sits in the PPNE and E and in the balance sheet. And the deployment of these devices and getting them to utilization was the prime target of the changes we've made at the end of Q4 2023 when we decided instead of continuing to pursue cash paying patients or cash paying physicians or physicians that are collecting cash flow procedures, we have pivoted towards going after clinics where the insurance reimbursement is the main target. And as I've explained in the Q3 earnings call in November, this is the goal and we're first going to be tracking through can we get these clinics to use the procedure, Can we get patients cleared through insurance?

Speaker 2

And then can we get on the other hand, can we get the clinics to collect on the procedure as they're being reimbursed. As I said in my prepared remarks, by now we've had several 100 patients submitted to insurance. We've had a very high percentage of approval rate, a very nominal non approval rate. And now we're on the back end of that looking at providers treating the patients, submitting for reimbursement and getting paid. And as I said in my remarks, what we see is that the average Medicare rate is about $120 and the private payers are paying on average that amount, but in some areas it's much higher than that and in some areas, it's lower than that.

Speaker 2

As we stand now, we have hundreds of patients in the process of being treated and of payments being collected. And I would assume that by the end of Q1, we'll be able to provide actual guidance on what would we anticipate recurring revenue per device to be to grow to and what would be the number of devices we will anticipate having by the end of the year. I can say just as a side note for the Q1, we are seeing a growing acceptance of the usage of the reimbursement code. And that is happening in light of 2 trends. One is, there was another device in the market that took a lot of attention in the last couple of years.

Speaker 2

And there is disappointment from that device, not from its technology, it's a different company, not from its technology, but over the inability of driving patients for cash pay. And the realization that patients can get covered by insurance and their exposure is their out of pocket co pay. And having done that now in all regions of the country and with a very large number of payers gives us a lot of confidence that by the end of Q1, we will be able to provide guidance on quantity targets and revenue targets. I hope that explains that. On the XRAC, I did speak about where we want to be.

Speaker 2

So we are we've ended 2023 at just over $5,000 And if we could get by the end of 2024 to be where we were at the end of 2021, which is the range of $7,000 $7,200 per device for the Q4, this is going to be a great outcome because it's going to provide a meaningful upside on the recurring run rate. Just as a reminder, the recurring revenue for the company has been in decline for the past several quarters. So being able to get to a softer than decline and then start seeing the decline, in my eyes, would be

Speaker 4

Perfect. Okay. That does it

Speaker 2

for us. Thanks for taking the questions. Thank you, Jason.

Operator

Thank you.

Speaker 5

Thank

Operator

you. Our next question comes from the line of Jonathan Lawrence with Johnson and James.

Speaker 5

Hey, Jonathan. Hey, Dola. Hey, Dola. Chris, how are you doing? My questions was answered.

Speaker 4

Can you

Speaker 5

hear me? Yes. Yes. Okay, great. I was just curious on the direct to consumer business.

Speaker 5

How is that going as far as the traction in both Xtract and also on TheraClear X? As far as what you saw previously when you were doing this and kind of if anything's changed or it's just spending the dollars and getting the leads?

Speaker 2

Great question. Thank you. I'll just point out to a few things I said through my prepared remarks. When Strata left off DTC, which was at the beginning of 2022, DTC spend or the Arete de Consumer spend for the year of 2021 was in the range of approximately $2,000,000 That $2,000,000 generated about 6,000 appointments, which were approximately 25% of the new patients introduced into the clinic. So if you wish, the company subsidized about 25% of the patient growth into the clinic.

Speaker 2

In 2022, the company stopped doing DTC. And then in 2023, it moved most of its resources towards direct to provider marketing and promoting the new therapy rep. By going back into DTC, we would like to see the restart of getting these leads in, getting these appointments in. And the most important first step was to reestablish where are we in terms of cost because 2 years have gone by, the cost of media has changed, the rules on online advertisement have changed, The available solutions being promoted through social media and online have changed through different pharmaceutical companies. So we wanted to see where we stand.

Speaker 2

We started doing DTC in the second half of January of twenty twenty four with only 4 territories, as I mentioned in my remarks, in anticipation to see where we stand in terms of results. And we were happily surprised to see that our cost per lead in the range of $30 and our cost per appointment in the range of $300 remains stable. We have since expanded 2 additional territories, which I will be happy to provide more details as the Q1 ends. And we're seeing a growing number of leads, a growing number of appointments being scheduled into clinics. And by that, we should see the results of the BTC in the range of 2 to 3 months into the campaign because it takes time from the time the appointment is scheduled, the first appointment happens, the procedure is prescribed and then the patient starts getting treated and then there is consumption of treatment codes and we see that coming our way.

Speaker 2

We I would like to be at the end of 2024 in a position to say that in Q4, we spent as much as we spent in Q4 of 2021. And I would also like to be in a position to say that at the end of Q4 2024, we generated as many appointments as we had at the end of 2021. I've provided in my remarks the baseline so that in a subsequent conference calls, people will be able to follow through the success or the progress of this initiative. But I am confident that with these levels of cost per lead and cost per improvements, we will be able to expand the efforts meaningfully through the end of Q1 and then into Q2.

Operator

There are no further questions at this time. I would like to turn the floor back over to Doctor. Raffaele for closing comments.

Speaker 2

I would like to thank everyone for showing up for our earnings call. We will be back at the end of the Q1 to provide further updates. Thank you very much.

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Key Takeaways

  • Leadership update: CEO Dola Raffaele returned in October 2023, recommitting to the proven direct-to-consumer recurring revenue model to drive growth and device utilization.
  • Installed base expansion: the company grew its domestic and international recurring-revenue footprint to 964 XTRAC devices and placed 92 TheraClear X systems under the recurring procedure model by year-end.
  • Financial review: Q4 revenue was $8.7 million and full-year 2023 revenue was $33.4 million, down on lower recurring procedures, but cost reductions in sales, marketing and G&A aim to improve margins by end of 2024.
  • DTC marketing ramp-up: pilot campaigns in select U.S. markets achieved stable unit economics (~$30 per lead, ~$300 per appointment), targeting a return to pre-pandemic average revenue per device levels.
  • Insurance coverage push: launched advocacy to broaden CPT codes and secure payer coverage for dermatological indications including vitiligo, CTCL, alopecia areata and atopic dermatitis.
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Earnings Conference Call
STRATA Skin Sciences Q4 2023
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