Venus Concept Q1 2025 Earnings Report

Venus Concept EPS Results

• Actual EPS: -$17.44
• Consensus EPS: -$14.08
• Beat/Miss: Missed by -$3.36
• One Year Ago EPS: N/A

Venus Concept Revenue Results

• Actual Revenue: $13.64 million
• Expected Revenue: $14.59 million
• Beat/Miss: Missed by -$952.00 thousand
• YoY Revenue Growth: N/A

Venus Concept Announcement Details

• Quarter: Q1 2025
• Date: 5/15/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 15, 2025
• Conference Call Time: 8:00AM ET

Venus Concept (NASDAQ:VERO) Ltd. (NASDAQ: VERO) is a Canada-based medical aesthetic device company that designs, develops and commercializes minimally and noninvasive solutions for face and body rejuvenation. The company’s core product portfolio leverages proprietary technologies such as multi-polar radio frequency, pulsed electromagnetic fields and intense pulsed light to offer treatments for skin tightening, body contouring, wrinkle reduction and vascular lesion removal.

Among its flagship offerings are the Venus Legacy platform, which combines radio frequency and electromagnetic pulses for cellulite reduction and circumferential reduction, and the Venus Versa system, a multi-application device for facial revitalization, acne treatment, hair removal and photorejuvenation. Venus Concept continually invests in research and development to enhance treatment efficacy, patient comfort and practice efficiencies for aesthetic clinics.

The company markets its products worldwide through a combination of direct sales teams and distribution partners, serving markets across North America, Europe, Asia Pacific and the Middle East. Venus Concept’s global footprint includes offices in Toronto, New York and Munich, supported by a network of certified training centers and clinical educators to ensure optimal operator proficiency and patient outcomes.

Founded in 2010, Venus Concept transitioned into a publicly traded company in 2014 to fuel its expansion into new geographies and broaden its product suite. Under the leadership of Chief Executive Officer Orit Rahamim and Chief Financial Officer Dan Lee, the company has focused on strategic investments in technology innovation, clinical evidence generation and operational scalability to strengthen its position in the competitive medical aesthetics industry.

Venus Concept Q1 2025 Earnings Call Transcript

Key Takeaways

• First quarter revenue was down 22% year-over-year, driven by delayed system sales in late March that largely shifted into early April.
• The company increased the share of cash system sales in the U.S. to 80% of total U.S. system sales, up from 75% last year, aiming to improve long-term profitability.
• Venus Concept bolstered its balance sheet by converting $11 million of debt to equity, securing a $10 million bridge loan amendment, and raising $2.7 million in a common stock offering.
• GAAP operating loss widened to $9.5 million and adjusted EBITDA loss increased to $8.3 million, reflecting softer sales and continued cost pressures.
• The company is not providing full-year 2025 guidance but expects sequential revenue growth in the second quarter.

Presentation

[Operator]

Good day, ladies and gentlemen, and welcome to the first quarter 2025 earnings conference call for Venus Concept. At this time, all participants have been placed in a listen-only mode. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay. Before we begin, I'd like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the risk factor section of our most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Such factors may be updated from time to time in our filings with the SEC, which are available on our website.

[Operator]

We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events, or otherwise. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those Non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in our earnings press release issued today on the investor relations portion of our website. I would now like to turn the call over to Mr. Rajiv De Silva, Chief Executive Officer of Venus Concept. Please go ahead, sir.

[Rajiv De Silva, CEO at Venus Concept]

Thank you, Operator, and welcome everyone to Venus Concept's first quarter 2025 earnings conference call. I'm joined on the call today by Chief Financial Officer, Domenic Penna. Let me start with an agenda of what we will cover during our prepared remarks. I will begin with a brief review of our first quarter results and operating developments in the recent months. Following that, Domenic will provide you with an in-depth review of our first quarter financial results, as well as an update on our balance sheet and financial condition. Then we will open the call for your questions. With that agenda in mind, let's get started. As detailed in our press release issued today, our first quarter revenue results came in modestly softer than expected due to delays in the timing of new system sales expected in late March, driven by current market conditions.

[Rajiv De Silva, CEO at Venus Concept]

Some of these sales were consummated in early April. First quarter revenue declined 22% Year-over-Year, driven by a 25% decline in systems revenue and, to a lesser extent, a high single-digit decline in procedure-related products and service revenue. Our team delivered solid execution despite the continued challenging environment. The global capital equipment environment continues to present a level of uncertainty as to the timing and pace of new system adoption in both the U.S. and international markets across the aesthetic sector as a whole. Customer financing pressures, economic uncertainty, higher interest rates, tighter credit markets, and uncertainty related to proposed tariffs continue to impact customer system adoption throughout our business. Despite the more challenged operating environment, the team continues to focus on our strategic priority to transition the company to higher quality cash revenues.

[Rajiv De Silva, CEO at Venus Concept]

Cash system sales in the U.S. represented 80% of total U.S. system sales in the first quarter, compared to 75% last year. We continue to believe that our efforts to reposition the business to prioritize cash system sales is the right strategy to enhance the company's long-term profitability profile. While the overall time to close deals continues to impact our Quarter-to-Quarter systems sales results, we are encouraged by the team's continued focus on customer engagement and support, as well as prioritizing co-products in the U.S., including Bliss Max, VersaPro, and Viva MD, to improve sales efficiency. Our international results in the first quarter also reflect the impact of disrupted distributor ordering patterns due to the hesitancy on the part of our distributor partners, given the uncertainty related to increased global macro headwinds and trade concerns.

[Rajiv De Silva, CEO at Venus Concept]

While we expect continued fluctuation in ordering patterns from our distribution partners in key international markets, we are encouraged by the early evidence that our efforts to evolve our all-U.S. commercial strategy to enhance future growth and profitability are on the right track. Our priority now is to ensure that we are as well positioned as possible to return to growth when the overall global capital equipment environment improves. We are actively working on evolving our portfolio and look forward to announcing our next body device in the second half of 2025. We are managing our cash burn through disciplined cost management and making targeted investments to support our long-term growth.

[Rajiv De Silva, CEO at Venus Concept]

We believe that the increase of GLP-1 usage by consumers is an exciting catalyst for the industry and a chance for Venus to highlight the complementary benefits of our body technology, specifically skin tightening, to our customers that are on weight loss mitigations. We enhanced our balance sheet condition in March by converting $11 million of Madryn debt to equity. In April, we secured a new bridge loan amendment from Madryn and two equity capital transactions, which together represent further validation from existing and new investors of the potential value creation opportunity that Venus offers. With that, let me turn the call over to Domenic for a review of our first quarter financial results and balance sheet. Domenic.

[Domenic Penna, Chairman and CEO at Venus Concept]

Thanks, Rajiv. For the avoidance of doubt, unless otherwise noted, my prepared remarks will focus on the company's reported results for the first quarter of 2025 on a GAAP basis, and all growth-related items are on a Year-over-Year basis. We reported total revenue of $13.6 million, down $3.8 million, or 22% Year-over-Year. As Rajiv mentioned earlier, our revenue results were softer than expected, given the timing of system deals closing in the U.S. and distributor ordering patterns. We were encouraged to see some of the deals that were expected to close in late March close in early April. Distributor hesitancy towards placing orders remains a potential headwind, given the heightened level of global macro and trade uncertainty in recent months. The year-over-year decrease in total revenue in the first quarter was driven by a 29% decrease in international revenue and a 16.5% decrease in the United States.

[Domenic Penna, Chairman and CEO at Venus Concept]

The Year-over-Year decrease in total revenue by product category, a 25% decrease in product systems revenue, a 25% decrease in lease systems revenue. The percentage of total systems revenue derived from the company's internal lease programs, Venus Prime and our legacy subscription model, was approximately 25% in the first quarter of 2025 compared to 25% in the prior year period. Turning to a review of our first quarter financial results across the rest of the P&L, gross profit decreased $2.9 million, or 25%, to $8.8 million. The decrease in gross profit is primarily due to the effects of tighter third-party lending practices, which negatively impacted capital equipment sales in the U.S., and a decrease in revenue in our international markets driven by the accelerated exit from unprofitable direct markets, combined with distributor uncertainty over economic and trade patterns facing the macro environment.

[Domenic Penna, Chairman and CEO at Venus Concept]

Gross margin was at 54.2% of revenue compared to 66.6% of revenue for the first quarter of 2024. Total operating expenses decreased $1.1 million, or 6%, to $18.3 million. The reduction in first quarter 2025 operating expenses reflects our continued progress in cost containment and streamlining of our operations. GAAP operating loss was $9.5 million compared to $7.8 million in the first quarter of 2024. Net interest and other expenses were $2.5 million compared to $2 million in the first quarter of 2024.

[Domenic Penna, Chairman and CEO at Venus Concept]

The Year-over-Year change in net interest and other expenses was driven primarily by a $1 million non-cash loss on debt extinguishment, which did not impact prior period results, and a non-cash foreign exchange gain of $0.1 million compared to a non-cash loss of $0.3 million last year, offset partially by lower interest expense on outstanding borrowing, which totaled $1.6 million in the first quarter compared to $1.7 million last year. Net loss attributable to stockholders for the first quarter of 2025 was $12.4 million, or $17.44 per share, compared to net loss of $9.8 million, or $16.91 per share for the first quarter of 2024. Weighted average shares outstanding for the first quarter of 2025 and 2024 gives effect for the company's 1-for-11 reverse stock split effective March 3, 2025.

[Domenic Penna, Chairman and CEO at Venus Concept]

Adjusted EBITDA loss for the first quarter of 2025 was $8.3 million compared to adjusted EBITDA loss of $5.1 million for the first quarter of 2024. As a reminder, we have provided a full reconciliation of our GAAP net loss to adjusted EBITDA loss in our earnings press release. Turning to the balance sheet, as of March 31, 2025, the company had cash and cash equivalents of $3.2 million and total debt obligations of approximately $35.5 million compared to $4.3 million and total debt obligations of approximately $39.7 million, respectively, as of December 31, 2024. This represents a $4.2 million reduction in total debt obligations in the quarter. As Rajiv mentioned previously, we announced a new bridge loan amendment with our primary lender, Madryn Asset Management, which increased our financing capacity by $10 million.

[Domenic Penna, Chairman and CEO at Venus Concept]

We continue to appreciate the support of Madryn as we execute on enhancing the financial profile of the business. We also announced three important items subsequent to quarter end. On April 1, 2025, the company exchanged $11 million of its subordinated convertible notes held by affiliates of Madryn Asset Management for 379,311 shares of its Series Y preferred stock. This transaction allowed us to maintain NASDAQ compliance through achieving NASDAQ stockholders' equity threshold. On April 10 and 14, the company announced registered direct offering priced at the market for the sale of a combined 715,273 shares of common stock for combined proceeds of $2.7 million gross before deducting placement agencies and other offering expenses.

[Domenic Penna, Chairman and CEO at Venus Concept]

Lastly, with respect to our financial outlook for 2025, given the company's active dialogue with existing lenders and investors, the ongoing evaluation of strategic alternatives with various interested parties to maximize shareholder value, and current market conditions impacted by trade disruptions, the company is not providing full year 2025 financial guidance at this time. The company does expect to see sequential revenue growth in the second quarter. With that, I'll turn the call over to the operator to open the call for your questions. Operator.

[Operator]

Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Our first question comes from the line of Thomas McGovern with Maxim Group. Please proceed with your question.

[Tom McGovern, Research Analyst at Maxim Group]

Hey, guys. Thank you for taking my question. First, I want to talk about, you know, you mentioned on the call several times as it relates to the international business, but just curious to have a better understanding as to how you expect recently enacted and proposed tariffs to impact your business as we move throughout 2025. Thanks.

[Rajiv De Silva, CEO at Venus Concept]

Domenic, do you want to take that, and I'll add to it?

[Domenic Penna, Chairman and CEO at Venus Concept]

Sure. I can take that. As you know, our business is primarily on the energy-based side. We source our products directly from Israel through a U.S. contract manufacturer. The tariffs that are announced in respect of Israel relate to about 10% at this stage. Negotiations are ongoing, but if we assume the 10% tariffs hold, then that impact on the energy-based side would have, in 2025, an impact of between 1-1.5% on our gross margins, and that is exiting 2025. As we move into 2026, that impact could be between 2-2.5% of gross margins. When we include our robotics business, which represents between 20-25% of our business, the impact is somewhat similar. It would be in the 1-2% range in 2025 and the second half.

[Domenic Penna, Chairman and CEO at Venus Concept]

In 2026, it would be somewhere in the 2-2.5% range as well. When you sort of dissect the business, three quarters of the business is sort of sourced from products from Israel, and one quarter of that relates to products that are manufactured through the robotics side in the U.S., but there are component parts that come from Europe in relation to the robotics side of the business. In both counts, the tariffs we expect are in the 10% range, but could be lower depending on how the negotiations pan out with both Israel and the EU. Overall, it would have a slight marginal impact on margins, and that is without any mitigation efforts on our part, right?

[Domenic Penna, Chairman and CEO at Venus Concept]

We have the opportunities to try to recover some of that margin hit, but assuming there is no pricing recovery, that would be the maximum extent of the impact.

[Rajiv De Silva, CEO at Venus Concept]

Overall, Thomas, the actual impact of the tariffs on us is going to be very modest and likely manageable through pricing. I think the disruptions we're talking about is the fact that generally there's overall economic uncertainty around the world because of the uncertainty of the tariffs, which is causing our distributors to be more hesitant in terms of their purchasing patterns, right? It is not a direct impact, it is an indirect impact.

[Tom McGovern, Research Analyst at Maxim Group]

Understood. That makes a lot of sense. You mentioned also that there were several contracts and several sales that you expected to close at the end of the first quarter that were pushed into the second quarter. Were these mostly related to U.S. sales, or were you seeing some distributor orders that maybe you expected in the first quarter that had been pushed into here?

[Rajiv De Silva, CEO at Venus Concept]

It's a combination of the two. Again, it's generally tied to this issue of hesitancy in light of economic conditions, right, which is relevant to our U.S. customers as well as our international distributors. People have the need for these devices but are being more cautious. Oftentimes, a lot of our sales happen very much towards the very end of the quarter, literally on the last couple of days. Sometimes when these deal negotiations extend, it just extends beyond the end of the quarter, right, which is the phenomenon that we saw at the end of the first quarter.

[Domenic Penna, Chairman and CEO at Venus Concept]

Yeah, Thomas, the lending practices are much more difficult. The protocols that the lenders are taking in terms of validating credit, et cetera, just take a lot longer. It is tougher to get some of these deals closed. We experienced not only on the distributor side, but in the U.S., that was our direct business. Even in Australia, we had deals that almost made it through in Q1, but closed shortly after Q1 ended. It is impacting all markets.

[Tom McGovern, Research Analyst at Maxim Group]

Understood. I appreciate the color there. Last thing for me, just you mentioned it briefly on the call, but obviously still planning to launch this next-gen body contouring device. Just curious if you could give us an update on that, on the timeline, if that remains on track for some time, you know, early second half of 25. Just maybe talk high level on kind of your initial expectations for traction and how you plan to ramp adoption of the next-gen contouring device in the back half of the year. Thanks.

[Rajiv De Silva, CEO at Venus Concept]

Sure. On the first part of your question, yes, we do expect the same timing that we've talked about before, which is an approval and launch sometime in the early part of the second half of the year. The regulatory process is underway, and as of now, there's no reason to believe that the timing should extend. We have not yet really talked publicly about all aspects of the products. I'm not going to go into too many details other than to say that this is a device that has been developed based on a lot of customer feedback on some of our best-selling devices that are already on the market. We do expect meaningful market uptake when we do have it available. There's already a lot of customer excitement about it. We expect to make more public commentary about it when the product is approved.

[Tom McGovern, Research Analyst at Maxim Group]

Understood. I appreciate you taking the time to answer all my questions.

[Rajiv De Silva, CEO at Venus Concept]

Great. Thank you.

[Domenic Penna, Chairman and CEO at Venus Concept]

Thanks, Thomas.

[Operator]

Thank you. We are currently showing no additional participants in the queue. That does conclude our conference for today. Thank you for your participation.

[Domenic Penna, Chairman and CEO at Venus Concept]

Great. Thank you.

[Domenic Penna, Chairman and CEO at Venus Concept]

Thank you.

Participants

Executives

• Domenic Penna, Chairman and CEO
• Rajiv De Silva, CEO

Analysts

• Tom McGovern, Research Analyst at Maxim Group