InMode Q1 2025 Earnings Report

InMode EPS Results

• Actual EPS: $0.31
• Consensus EPS: $0.45
• Beat/Miss: Missed by -$0.14
• One Year Ago EPS: $0.32

InMode Revenue Results

• Actual Revenue: $77.87 million
• Expected Revenue: $82.21 million
• Beat/Miss: Missed by -$4.33 million
• YoY Revenue Growth: -3.00%

InMode Announcement Details

• Quarter: Q1 2025
• Date: 4/28/2025
• Time: Before Market Opens
• Conference Call Date: Monday, April 28, 2025
• Conference Call Time: 8:30AM ET

InMode (NASDAQ:INMD) designs, develops, manufactures, and markets minimally invasive aesthetic medical products based on its proprietary radiofrequency assisted lipolysis and deep subdermal fractional radiofrequency technologies in the United States and internationally. The company offers minimally invasive aesthetic medical products for various procedures, such as liposuction with simultaneous skin tightening, body and face contouring, and ablative skin rejuvenation treatments, as well as for use in women's health conditions and procedures. It also designs, develops, manufactures, and markets non-invasive medical aesthetic products that target an array of procedures, including permanent hair reduction, facial skin rejuvenation, wrinkle reduction, cellulite treatment, skin appearance and texture, and superficial benign vascular and pigmented lesions, as well as hands-free medical aesthetic products that target a range of procedures, such as skin tightening, fat reduction, and muscle stimulation. The company was formerly known as Invasix Ltd. and changed its name to InMode Ltd. in November 2017. InMode Ltd. was incorporated in 2008 and is headquartered in Yokneam, Israel.

InMode Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good day and welcome to InMode's First Quarter twenty twenty five Earnings Results Conference Call. All participants will be in listen only mode. I would now like to turn the conference over to Mary Segal, CEO of MS IR. Please go ahead.

[Miri Segal, Founder & CEO at MS-IR LLC]

Thank you, operator, and to everyone for joining us today. Welcome to InMode's first quarter twenty twenty five earnings call. Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward looking statements and the Safe Harbor statement outlined in today's earnings release also pertains to this call. If you have not received a copy of the release, please go to the Investor Relations section of the company's website. Changes in business, competitive, technological, regulatory and other factors could cause actual results to differ materially from these expressed by the forward looking statements made today.

[Miri Segal, Founder & CEO at MS-IR LLC]

Our historical results are not necessarily indicative of future performance. As such, we can give no assurance as to the accuracy of our forward looking statements and assume no obligation to update them except as required by law. With that, I'd like to turn the call over to Moshe Mizrahi, CEO. Moshe, please go ahead.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Thank you, Mary, and to everyone for joining us. With me today are Doctor. Michael Kreindel, our Co Founder and Chief Technology Officer Yair Malca, our Chief Financial Officer and Rafael Licherman, our VP of Finance. Following our prepared remarks, we will be all be available to answer your questions. The medical aesthetic market continued to face headwinds driven primarily by ongoing macroeconomic uncertainty and soft consumer demand.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Effective elective procedures, particularly in the surgical aesthetic segment, are often among the first to be pulled back during period of economic slowdown. And have seen that reflected in recent quarters across the last two years. Patients are deferring treatment and providers are taking more cautious approach to capital investment. Despite this near term pressure, we remain confident in the fundamental of our business. Consumer interest in minimally invasive aesthetic procedure continue to be solid and we believe demand will return as macro conditions stabilize and consumer confidence start to grow.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

We made a deliverable decision as a company not to cut corners, not to reduce our workforce and to remain committed to leading the industry because we believe that when the market rebound and demand will return, we will be ready to lead and benefit as we have in the past following major challenges. Later this year, we plan to unveil a new platform designed for wellness market, further expecting the depth of our product portfolio. This addition reflects our ongoing strategy to diversify our offering and tap into a new segment. We look forward to sharing more detail as we approach the official launch. As stated in the press release, we are proud to have completed our fifth share purchase program this month.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Earlier this month, we purchased six point nine five million shares totaling $127,000,000 In fact, over the past twelve months alone, we have returned more than $412,000,000 to the shareholders through share purchase, representing approximately 27% of our total capital. Finally, despite the macroeconomic challenges, we believe InMode is uniquely positioned to lead through this cycle with a strong balance sheet, a diversified portfolio and industry leading technology. Now I'd like to turn the call over to Yair, our Chief Financial Officer. Yair?

[Yair Malca, CFO at InMode]

Thanks, Moshe, and hello, everyone. Thank you for joining us. I would like to review our Q1 twenty twenty five financial results in more detail. Starting with total revenue, InMu generated $77,900,000 in the first quarter of twenty twenty five, a decrease of 3% compared to the first quarter of last year. Gross margin was 78% on GAAP on a GAAP basis, sorry, compared to 80% in Q1 twenty twenty four.

[Yair Malca, CFO at InMode]

Non GAAP gross margins were 79% in the first quarter compared to 80% in Q1 of twenty twenty four. In Q1, our minimally invasive platforms increased to be 87% of total revenues. Moving to our international operations, first quarter sales outside of The U. S. Accounted for $38,000,000 or 49% of sales, a 1% increase compared to Q1 last year.

[Yair Malca, CFO at InMode]

In Q1, Europe was the largest revenue contributor from outside The U. S. And reached a record sales number. To support our operations and growth, we currently have a sales team of more than two eighty one direct reps and 76 countries through distributors worldwide. GAAP operating expenses in the first quarter were $45,300,000 a 1% decrease year over year.

[Yair Malca, CFO at InMode]

Sales and marketing expenses decreased to $39,700,000 in the first quarter compared to $39,800,000 in the same period last year. Share based compensation decreased to $2,500,000 in the first quarter of twenty twenty five. On a non GAAP basis, operating expenses were $43,100,000 in the quarter compared to $42,300,000 in the same quarter of 2024, representing a 2% increase. GAAP operating margin in Q1 was 20% compared to 23% in the first quarter of twenty twenty four, while non GAAP operating margin in the first quarter was 23% compared to 27% in the first quarter of twenty twenty four. GAAP diluted earnings per share for the first quarter were $0.26 compared to $0.28 per diluted share in Q1 of twenty twenty four.

[Yair Malca, CFO at InMode]

Non GAAP diluted earnings per share for this quarter were $0.31 compared to $0.32 per diluted share in the first quarter of twenty twenty four. Once again, we ended the quarter with a strong balance sheet. As of 03/31/2025, the company had cash and cash equivalents, marketable securities and deposits of $512,900,000 This quarter, Inmo generated $14,000,000 from operating activities. As Moshe mentioned, we remain committed to delivering shareholder value and returning capital to our investors in a disciplined and strategic manner. In addition, we continue to evaluate all avenues for capital allocation, including additional share repurchases, potential dividends and strategic M and A.

[Yair Malca, CFO at InMode]

Our approach remains focused on minimize on maximize long term shareholder value while preserving the strength and flexibility of our balance sheet. Looking ahead, we expect growing share of international markets along with the continued pressure in The U. S. Market to reduce operating margins by around 4% to 5%. In addition, with U.

[Yair Malca, CFO at InMode]

S. Tariffs at their current levels of 10%, we anticipate an impact of approximately 2% to 3% on our gross margins. As this situation remains fluid, we are closely monitoring developments and will adjust our forecast and strategy accordingly. Before I turn the call back to Moshe, I'd like to reiterate our guidance for 2025. Revenues between $395,000,000 to $4.00 $5,000,000 non GAAP gross margins between 78% to 80% compared to previous guidance of 80% to 82%.

[Yair Malca, CFO at InMode]

Non GAAP income from operations between $101,000,000 to $106,000,000 compared to previous guidance of $130,000,000 to $135,000,000 non GAAP earnings per diluted share between $1.64 to $1.68 compared to previous guidance of $1.95 to $1.99 I will now turn over the call back to Moshe.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Thank you, Eir. Operator, we are ready for Q and A session.

[Operator]

Thank you. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

[Operator]

Our first question comes from Matt Miksic from Barclays. Please go ahead.

[Matt Miksic, Equity Research Analyst at Barclays Investment Bank]

Hey, thanks. Good morning. Thanks for taking the questions. So maybe, Pierre, just a follow-up on this dynamic of mix. If you could kind of walk through when that started to happen more significantly and and how, you know, mix across some of your product lines or capital versus consumable is is playing into the new side?

[Matt Miksic, Equity Research Analyst at Barclays Investment Bank]

And then I have one one quick follow-up.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Well, I mean, the slowdown that we're experiencing today started in the middle of twenty twenty three. It's already almost seven quarters. It started in the middle of twenty twenty three when interest rate and inflation went up significantly in The United States. At that time, the leasing companies have raised the interest rate on leasing packages, which as you know, is the main financing method for physicians, doctors, and clinicians to buy our equipment. The typical interest rate was around 67% on five years lease package, and it went up to approximately 1415%, which this started the slowdown in capital equipment expenditure capital equipment purchasing by doctor.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

In addition to that, the consumer confidence went down in the last year, which also brought down the numbers of procedures that are being performed by doctor. We have to remember that minimally invasive procedures are not a typical $300 to $400 laser treatment for hair removal or skin rejuvenation. It can cost thousands of dollars. I mean, it's a minimally invasive, RFAL can cost $9,000 per treatment. And also on the Morpheus, it's not 304 hundred dollars So people, when a slowdown occur, they try to postpone treatment, which are relatively expensive in the medical aesthetic, especially in the aesthetic surgical.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

And that also did not help us. I can give you the numbers. On Q1, we sold 237,000 disposable. Each disposable is probably maybe in most cases is one treatment. In maybe in Latin America and other places and they use it twice, but it's basically built to be a single use disposable per treatment.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

At the same time, two years ago, at the end of the first quarter of twenty twenty three, we sold two forty of something like that 1,000. But we need to take into consideration that during the last two years, we have installed another close to 9,000 system worldwide. That means that the average per doctor went down around, I would say, 30% users or 30% less treatments, which are minimally invasive. And this is the main, I would say, factor that determine how many patients are basically considering doing minimally invasive. As of now, I have to say based on the first quarter and the start of the second quarter, we don't see the light at the end of the tunnel.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

We don't see the slowdown coming with some new momentum. We have introduced two new platforms to the market. And usually, when we introduce two new systems to the market, we see a new momentum. Currently, since 2024, we do not see that yet. And that's the main reason why we are selling less than the first quarter in 2020, '20 '20 '4, even more than the '80 versus '79 because on the first quarter of twenty twenty four, if everybody remember, we had the Warren as well, and that also suspended some of the sales.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

This quarter, we did not have any obstacle as a war to stop down or to slow down. So the first quarter of twenty twenty five is not a good quarter for us, I have to say. But we are confident that once everything will get back to normal, we will close the gap and go back to normal growth.

[Matt Miksic, Equity Research Analyst at Barclays Investment Bank]

Got it. Now so the mix has been going on for a while, but now we're seeing kind of the pull through of utilization mix that that is that it would account for the the additional comments in the press release and the guide. Is that is that a fair way

[Yair Malca, CFO at InMode]

to If you're talking if you're talking about geographic mix, if you look at 2023, '20 '20 '4, U. S. Usually accounted for 62%, sixty three % of the total revenue. And this quarter, it went down almost to 50%. We definitely experienced

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Right. Used is 50%, and our W is 50%. But again, that's percentage wise. Yes, percentage wise. Decline or the decrease in The U.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

S. Market was much more than the rest of the world. The headwinds that we're experiencing in The U.

[Yair Malca, CFO at InMode]

S. Are stronger, mainly because we are also the one of the largest players in The U. S.

[Matt Miksic, Equity Research Analyst at Barclays Investment Bank]

Right. That's very helpful color. Just one quick follow-up on the guide as well is the shortfall in Q1 that you've announced several weeks ago. Holding the guide. So where in that dynamic do you expect?

[Matt Miksic, Equity Research Analyst at Barclays Investment Bank]

Is it stronger trends OUS? Or is it some delayed deals in The U. S. That will come back that gets you to holding the guidance? Well, it's a follow-up.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

We're to be optimistic. And we try to think about the market in The U. S. That probably it will come back during 2024. But to be 2025.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

But to be honest with you, it all depends how the results on Q2 will look like. If the results on Q2 will not be significant higher than what we saw on Q1, we will have to lower the guidance because Q2 is much stronger than Q1 on a seasonality base because Q1 after Q4 is always a slower quarter and Q2 is the strongest quarter. So we're waiting to see how Q2 will recover, if I can say it this way, from Q1. Usually, April is not the strongest month, so we don't see it yet. But May and June hopefully will be stronger.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

If we will do as we anticipate in Q2, we will maintain the guidance. If we not, we'll have to touch it.

[Matt Miksic, Equity Research Analyst at Barclays Investment Bank]

Understood. Thank you so much.

[Operator]

Thank you. Your next question comes from Danielle Antalffy from UBS. Please go ahead.

[Danielle Antalffy, Analyst at UBS Group]

Hey, good morning. Good morning, guys. Thanks so much for taking the question. Moshe, just to just to follow-up on on what you just said. Thanks for all the the color you're giving.

[Danielle Antalffy, Analyst at UBS Group]

I I mean, I guess, much and I I I it's hard. There's no real precedent for the current times that we're in. But I'm thinking less specifically about the tariff impact and things like that, but how you guys are factoring in things like potential, like, weaker economic environment going forward, Or it would that cause incremental downside pressure to the guidance? So thinking about will we or won't we go into a recession. I know these are all questions right now, but a little bit more color on sort of the macro environment that you're factoring into the guidance reiteration there would be helpful.

[Danielle Antalffy, Analyst at UBS Group]

Thank you.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Well, I believe we say that. I mean, we gave the guidance of $400,000,000 or $3.95, 4 0 5 at the beginning of the year when we knew that the first quarter is usually 8020% of the year. So I mean 20% of 400,000,000 is $80,000,000 We did less. We did 77,000,000 or $78,000,000 not far from the basic guidance that help us to guide the year. Typically, Q2 should be much higher.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

I would say, at least 25% or more of Q1 because Q2 usually represents 25% or 26%, up to 27% of the total year. And then Q3 is also a very slow one and Q4 is the strongest. So based on that and the 77,000,000 or $78,000,000 that we did, we decided not to lower the guidance at this stage, hoping that we will see some momentum in the next two quarters. If and I will say it again, if it will not happen in Q2, mean that Q2 will not be 25% to 26% of the year, meaning that it will not be above $100,000,000 we will need to lower the guidance.

[Danielle Antalffy, Analyst at UBS Group]

Okay. Okay. Got it. That's helpful. And just to confirm, mean, I know you guys are still investing in the business, but how and and I appreciate that strategy very much.

[Danielle Antalffy, Analyst at UBS Group]

But how are you keeping, you know, the sales force engaged at a time like this? And maybe you could talk a little bit about how you did it during COVID what practices you're implementing here from your learnings then. Thanks so much.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Well, the COVID time was totally different. In the COVID time, we stopped selling for almost four months, zero. And we took the risk because we said we are a growing company. We have a good sales team in The U. S, in Canada and in some countries where we started subsidiaries.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

And we said we don't want to lose them because it's all about people. I mean, this the talent. I mean, if we lose them like the other company, fire them and rehire them when the COVID will disappear or when with COVID, then we might not be able to find them. They will go to other competitors. So we kept everybody and we took the risk.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

It cost us about $10,000,000 a year. This time, we're still selling. We did not stop selling. There was a slowdown, of course. It's more than 25% of what we sold per quarter in 2023, and the profit went down 50%, not 25%, from $45,000,000 a quarter to $21,000,000 a quarter on a non GAAP basis.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

That's a lot. But again, we have the resources, and we made the same decision. Although it's helping our profitability, we can cut costs some like, I don't know, 5,000,000, 6 million a quarter by firing some of the engineers and stop developing or get rid of some of their salespeople. This type of behavior or this type of philosophy communicate something that's not solid to the company. Because we're not a capital intensive company, We're a people intensive company.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

And that's why we're taking again the risk. Maybe it will hurt our profitability. But in the future, if everything will go and I said if, nobody knows when and how long it will take, we don't know. And we don't want to predict. We made the mistakes in the middle of twenty twenty four, and we said that in the second half of twenty twenty four, the market will go back to normal, and it didn't.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

And we have to eat the statement that we said, and we will not do it again. So right now, we continue to develop. We bring new product to the market. No, not in 2025. In 2025, we have probably another product to bring to the market.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

But in 2026, we'll see. One thing I want to say, we in 2024, in the middle of the slowdown, we decided to bring products to the market, the Ignite and the Optimus MAX. Now this is because we thought maybe the market will get better. On a typical slowdown, it's not smart to bring your best product to the market, to launch them. You have to wait.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

But we did it. And we hope that when the market will recover, we'll do better again.

[Danielle Antalffy, Analyst at UBS Group]

Got you. Thank you for that.

[Operator]

Thank you. Before we take the next question, a reminder to all the participants, if you wish to register for a question, please press and one now. Our next question comes from Matt Taylor from Jefferies. Please go ahead.

[Matt Taylor, Managing Director at Jefferies & Company Inc]

Hi. Thank you for taking the question. Sorry. So I did want to follow-up on the guidance question and just ask more specifically what you're expecting for Q2 and the phasing for the rest of the year. And then my other question was on the tariffs, if you could be specific about where the impact is coming from in your tariff guidance?

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Okay. Let's start with the guidance. We gave $400,000,000 in the beginning of the year. We are this is based on $80,000,000 in the first quarter or 81,000,000 or $82 something similar to that dollars 102,000,000 on the second quarter. That's about, let's say, dollars 185,000,000.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

And then another, I would say, 90,000,000 on the third quarter and the rest of the fourth quarter. That's a typical seasonality of this industry. I know in 2024, it did not happen. In 2023, the third and the fourth quarter behaved differently because that was the start of the slowdown. But if you grow years ago, that was a typical seasonality for the Medical Aesthetics.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Now and that's how we came up with the $400,000,000 because we thought we want to stabilize the company. We did about close to $400,000,000 in 2024, and we would like to repeat that number. And if the market will behave differently, then we'll see what to do. If Q1 if Q2 will be and I'll be honest, Q1 will be 90,000,000 or $95,000,000 we will lower the guidance. Absolutely.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

There's no other way because we know what can happen in the third and the fourth quarter. The third quarter is usually slow because it's summertime. People don't do aesthetic procedure in the summertime. They go to they go on vacation, and they spend the money there. And the fourth quarter is the strongest one.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

But unfortunately, on Q4 twenty twenty four, it was a very slow down quarter, did not help us. So this is how we calculate the guidance. And this is why we said, okay, we are less than what we anticipated in Q2 Q1. Are we going to lower the market the target the guidance or not? And finally, we decided not to and wait for the second quarter.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

That was the internal decision that we made as a management. Now regarding the tariffs. The tariffs the original tariff that was imposed on Israel was 17%. Now the business in The U. S.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Is 50%. And the transfer price on which we're paying the tariff, let's say, is also 50%. So the tariff effect, 17% on 25%. You basically divide the tariff, the 17, by four. That's a rough calculation, Matt.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

So if it's 17%, it should be above 4% effect on the gross margin and also on the bottom line. If it's remain not remain 17% and it will be 10 like what is now because of the as you know, the President of The U. S. Decided to give some kind of relief for three months before we imposed everything. Then if it's 10%, then it's between 2% to 3%, something like 2.5% on the gross margin and on the bottom line.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

That's how we calculated that. But I want to tell you that everybody is confused, including the custom authorities in The United States. They don't know what to do. What is included? Software and non software.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

If we buy components from The U. S, can we deduct them or not deduct them? There's uncertainty right now. Nobody explained, there's no rules, nobody published something. We have discussed that with our PWC auditors and they don't know.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Everybody is guessing. So we need to wait and see for some clarification.

[Matt Taylor, Managing Director at Jefferies & Company Inc]

Maybe just one follow-up on the guidance. So it sounds like you're really forecasting the market and the seasonality. I didn't hear anything about the new product. I mean, do you expect the new product to contribute to the guidance? How important are they to getting to the 400,000,000

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Well, Matt, we are bringing new products almost every year. And always, the new products are if we have like, for example, like now 10 platforms, the new products are not 20% of the total, the new products are more than 20%. And therefore, it's always the old products are less than 20% and the new products are a little bit more than 20%, but the total remains the same. When we're growing, then the new products are the winner and then contribute some of the growth. When we're not growing, we cannot anticipate that the new products will bring more than the average.

[Operator]

Thank you. Your next question comes from Caitlin Cronin from Canaccord Genuity. Please go ahead.

[Caitlin Cronin, Director at Canaccord Genuity Inc]

Hi. Thanks for taking the question. So I know you guys have noted expectations to maintain your sales force and spending. I mean, any kind of updated guidance for OpEx this year given the continued macro challenges?

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Good purchasing goods per month.

[Yair Malca, CFO at InMode]

So you're you're talking the guidance for on the operating profit?

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

We we which guidance did you talk about?

[Caitlin Cronin, Director at Canaccord Genuity Inc]

Yeah. They just got operating expenses. I think you guys have talked about kind of maintaining, you know, not not letting anyone go and maintaining, you know, sales and marketing type spend. But, I mean, any kind of updated expectations there?

[Yair Malca, CFO at InMode]

So the expectation is that we'll continue to keep all the investment that we plan to do in the beginning of the year, including expansion of the teams, whether in The U. S. Or internationally where we open new subsidiaries. This results in additional costs. And as I mentioned regarding the change in the geographical revenue mix with U.

[Yair Malca, CFO at InMode]

S. Experiencing tougher headwinds than in the rest of the world, that would have additional impact on the profitability at the end of the day. And we are expecting roughly around 4% to 5% impact only from that.

[Caitlin Cronin, Director at Canaccord Genuity Inc]

Got it. Okay. And then any updates on The U. S. Management structure, Moshe?

[Caitlin Cronin, Director at Canaccord Genuity Inc]

I know you've been acting as the Interim President of U. S. North America. Any updates there?

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

We have not yet hired a new President for The U. S. Or nominated somebody from within. I'm still the active, I would say, or the acting President of The U. S.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

I spend every month few days in The U. S. And I'm doing it from Israel most of the time, but every month I'm in The U. S. With the team.

[Caitlin Cronin, Director at Canaccord Genuity Inc]

Got it. Thanks for taking the questions.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Thank

[Operator]

you. The next question comes from Mike Matson from Needham and Co. Please go ahead.

[Mike Matson, Senior Equity Research Analyst at Needham & Company]

Yes. Thanks. So just one on the tariffs. So it sounds like you're not assuming you're able to offset the tariff impact with price increases. So is that right?

[Mike Matson, Senior Equity Research Analyst at Needham & Company]

And I why not try to pass some of it through to your customers?

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Well, we thought about it, Mike. But in a tough market like this, if we will go to the market and raise prices just because we're an Israeli company and not American company and explain that, that this is an import product and we have to raise prices, it will not help us. You are not raising prices in a market where the trend is down or where the slowdown and when the market is very sensitive to price, especially when the interest rate on the leasing packages are high and the monthly payments go higher again as well because of the interest rate. So we have decided not to raise prices, not to raise prices because of the tariff. I mean, the only time that we are raising prices is when we bring new product to the market.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

And if the new product is an upgrade for something similar that we sold, then maybe we can raise a little bit the price. But other than that, from the marketing and commercial point of view, I don't think it will be smart right now for InMode to go to the market and raise prices, let's say, by 10%. No, it will not help.

[Mike Matson, Senior Equity Research Analyst at Needham & Company]

Okay. Yes, that makes sense. And then just the wellness platform that you mentioned, when do you expect to launch that? And given your commentary around kind of better to have launches during when the market's recovering or stronger, is that something where you're going to maybe hold off until you see signs of improvement in the market?

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

The two wellness products that we have today, one is the Empower for women's health for SUI and some vaginal treatment and the other one is Envision for dry eye and periorbital treatment. Both of them we're still selling both of them. And by the way, we started to hire specific salespeople just for this product, which was more medical than the others. But what we see now that those products the revenue from those products went down in the same 20% or 25% that we're experiencing on the entire portfolio.

[Mike Matson, Senior Equity Research Analyst at Needham & Company]

Yes. Sorry, Moshe. I was referring to the I think you said earlier in the call that you were gonna have a new platform for wellness.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Yes. Yes. I was asking for it. I didn't know. Not yet.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

We have we have a new product that we will bring to the market for Wences and we will release the indication once we finish with the clinical study.

[Yair Malca, CFO at InMode]

It's going to be later this year. We are not sure exactly when we'll announce it once we decide.

[Mike Matson, Senior Equity Research Analyst at Needham & Company]

Okay, got it. Thank you.

[Operator]

Thank you. The next question comes from Sam Iver from BTIG. Please go ahead.

[Sam Eiber, Vice President - Equity Research at BTIG]

Maybe I could just start on a clarifying question on the tariff impact. Is that 2% to 3% on a full year basis? So if we assume those go into effect maybe July 1, the impact would be closer to 1%? And then is that reflected in the 78% to 80% new gross margin guidance?

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

No. We did not take it into account yet.

[Yair Malca, CFO at InMode]

Yes. Yes and yes. Yes on both. On both? Yes on both question.

[Yair Malca, CFO at InMode]

2% to three on an overall, assuming it remains 10%. If it go back to 17%, we will need to get back and update the guidance. We really hope it's going to stay at 10%, but no one really knows what's going on until the administration makes its final decisions. And yes, we did count it into the existing guidance to the assuming 10% tariffs from Q2 through Q4.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

So that's a clarification.

[Sam Eiber, Vice President - Equity Research at BTIG]

Okay. That's helpful. And then maybe I can use my follow-up on capital allocation. You know, it sounds like, you know, more to more to come for the rest of the year. I guess, way, you know, how you're thinking about prioritizing share repurchases, dividends, M and A?

[Sam Eiber, Vice President - Equity Research at BTIG]

And then any more details in terms of the tax impact if you were to do an additional share repurchase program later this year?

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Well, I will start from your last question. We are not considering right now to do another share purchase. Now just to take you through the history, we started to do share buyback about two point five years ago. We started when the stock was fifty and sixty, and we bought already stock for $500,000,000 By the way, dollars $5.00 8,000,000. With the average price per share of altogether, all the packages or all the program, which was about four to five program, the price per share that we purchased was close to $20,000,000.20 dollars a share, which is, just to be precise,

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Now actually, from investment point of view of the company, we actually invested $500,000,000 but it did not help the stock price. The stock price is on 15 today. So basically, it was not the best investment from the corporation point of view, and I'm sure it was not the best investment from the shareholders' point of view. So we need to think right now what to do. Because basically, we left over with $500,000,000 We invested 500 or spent $500,000,000 for buyback with no results and to the shareholders and to the company.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

And And if we want to do any acquisition, which we believe that's something that we're considering, we don't want to be left with no cash or no money to do it. So right now, at that point, after we bought 30% of the stock for $500,000,000 we are not considering another one in the near future.

[Sam Eiber, Vice President - Equity Research at BTIG]

Okay. That's helpful. And then maybe I could just squeeze the last one here just because it hasn't been asked yet about Europe and what you're seeing there that makes that market relatively stronger than maybe what you're seeing in The U. S. And I guess how sustainable that strength is?

[Yair Malca, CFO at InMode]

In Europe?

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

In Europe, the first quarter was better. As you know, we made a lot of changes in the management of our subsidiaries, and it's worked well. And Europe now performing better than The U. S. Per capita or per country.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Prices in Europe are less than in The U. S. Per system. And you have to take into consideration that in many countries in Europe, we still sell through distributors, So we are recognizing only the transfer price. We're not recognizing the full price.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Just in Europe, the credit is getting tighter because there was sign of inflation in certain countries, which will not help us. And therefore, we had to open a pool with the leasing company to help to share the risk with them like we do in The United States, the pool that we opened in 2024 for 6%. And we'll see. Hopefully, it will help and it will keep the momentum or will keep some kind of growth in Europe then in to the distributors and through the subsidiaries.

[Sam Eiber, Vice President - Equity Research at BTIG]

Great. Thanks for taking the question, sir.

[Operator]

Thank you. Your next question comes from Dane Reinhart from Baird. Please go ahead.

[Dane Reinhardt, Senior Equity Research Associate at Baird]

Hey, guys. Thanks for the time here. Maybe a follow-up on, I think, Mike's question regarding pricing on the systems here. I know it sounds like you're not raising prices on kind of existing products, but you did mention that you would take price on the new products. And just kind of based on the math that you report out with systems revenue and new placements that you've installed kind of in the past few quarters, it does seem like there's been kind of a noticeable step up in ASPs, particularly in The U.

[Dane Reinhardt, Senior Equity Research Associate at Baird]

S. So have you raised prices on those new Optimus MAX and Ignite platforms? And how does that seem to be kind of being received by your customers at this point?

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

We did not raise prices on the Ignite. The prices that we set up for the Ignite and Optimus MAX in 2024, we did not change them because of the tariff. They are the same price prices. What I said is, whenever we introduce a new system like Optimus Max to replace the Optimus, then the Optimus Max is priced a little bit higher than the Optimus. When we launch the Ignite to replace the body type, not to replace, to complement the body type, then we the price for the Ignite was higher than the body type, the body type platforms.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

But when you bring new platforms on a new indication, then the prices need to be compatible to the market and not prices that you want. I mean, in certain technology, when we are unique, we can charge a little bit more. But this market right now, it's very competitive. And therefore, we see no way or no reason to raise prices in the middle of the slowdown or just because of the tariff.

[Dane Reinhardt, Senior Equity Research Associate at Baird]

Okay. Thanks, Yes, just even clarifying that there was a price increase unlike Optimus MAX relative to Optimus. That's helpful. And then just my second follow-up. Obviously, U.

[Dane Reinhardt, Senior Equity Research Associate at Baird]

S. Consumer confidence has kind of slowed here as we've throughout the first quarter. So just from a cadence perspective, I know what you laid out through kind of Q2 through Q4. But just within the first quarter itself, did you kind of see any worsening from January to March and into April just as those U. S.

[Dane Reinhardt, Senior Equity Research Associate at Baird]

Consumer confidence numbers have kind of weakened? Thanks again.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Well, the consumer confidence went down, isn't it? Yes, it did.

[Yair Malca, CFO at InMode]

But especially when it comes to capital equipment, most of the revenue is anyway in March. January and February are slow anyway. So you cannot really make too much out of comparing the cadence of the consumer confidence index during January through March and expect to see an impact throughout the quarter. Most of the revenue every quarter, we generate most of the revenue in the last quarter of or in the last months of the quarter. So but it will be interesting to see how June and overall Q2 would look like comparing Q1.

[Operator]

Dane, does that answer your question?

[Dane Reinhardt, Senior Equity Research Associate at Baird]

Yes, that does. Thank you very much. I guess just maybe even one follow-up here. I'll tack on. I'm not sure if you answered it in the prior question, but what can you just remind us what again, you know, potential tax implications would be if you did do any sort of dividend?

[Dane Reinhardt, Senior Equity Research Associate at Baird]

Because I know you've kind of mentioned that, but it seems like buybacks are off the table, maybe looking at M and A, but just remind us the tax implications if you did do a dividend now. Thanks.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

On a dividend, according to the Israeli tax law, you have to pay 20% dividend tax before you distribute the money. So for example, if you want to allocate $100,000,000 for dividend, 20% check you send for the Israeli IRS is ending and $80,000,000 to the shareholders.

[Operator]

Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Moshi Mr. Ahi, InMode's CEO for closing remarks.

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

Okay. Thank you, operator. Thank you, Miri. I want

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

to thank

[Moshe Mizrahy, Chairman and Chief Executive Officer at InMode]

first our team, InMode team worldwide that worked very hard in the first quarter, like always, knowing that there was slowdown and that we have to perform. I want to thank all the shareholders for being with us in this earning call. As we said, we'll meet again sometime in June in July. Hopefully, the market will improve by then, and we will be a little bit more optimistic. Thank you all.

[Operator]

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Moshe Mizrahy, Chairman and Chief Executive Officer
• Yair Malca, CFO

Analysts

• Miri Segal, Founder & CEO at MS-IR LLC
• Matt Miksic, Equity Research Analyst at Barclays Investment Bank
• Danielle Antalffy, Analyst at UBS Group
• Matt Taylor, Managing Director at Jefferies & Company Inc
• Caitlin Cronin, Director at Canaccord Genuity Inc
• Mike Matson, Senior Equity Research Analyst at Needham & Company
• Sam Eiber, Vice President - Equity Research at BTIG
• Dane Reinhardt, Senior Equity Research Associate at Baird