Venus Concept Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 14, 2025

Key Takeaways

  • Positive Sentiment: We delivered 15% sequential revenue growth in Q2, driven by mid‐teens increases in both U.S. and international markets, in line with prior expectations.
  • Negative Sentiment: Total revenue declined 5% year‐over‐year, with an 18% drop internationally offsetting U.S. growth.
  • Positive Sentiment: The definitive agreement to sell the Venus Hair business for an all-cash $20 million is expected to strengthen focus on core medical aesthetics and improve cash flow.
  • Negative Sentiment: Gross profit fell 20% and gross margin declined to 60.1% from 71.5%, impacted by supply disruptions and adverse sales mix.
  • Positive Sentiment: Balance sheet improvements include reducing debt to $34.3 million, exchanging $17.5 million of notes for preferred stock, and raising $3.9 million in equity proceeds.
AI Generated. May Contain Errors.
Earnings Conference Call
Venus Concept Q2 2025
00:00 / 00:00

There are 3 speakers on the call.

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter twenty twenty five Earnings Conference Call for Venus Concept Inc. 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 would 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 Factors section of our most recent annual report on Form 10 ks 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 these 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.

Operator

Rajeev Dasilva, Chief Executive Officer of Venus Concept. Please go ahead, sir.

Speaker 1

Thank you, operator, and welcome everyone to Venus Concept's second quarter twenty twenty five earnings conference call. I'm joined on the call today by our Chief Financial Officer, Dominic Dellapenna. Let me start with an agenda of what we will cover during our prepared remarks. I will begin with a brief review of our second quarter results and operating developments in the recent months. Following that, Dominic will provide you with an in-depth review of our second quarter financial results as well as an update on our balance sheet and financial condition.

Speaker 1

With that agenda in mind, let's get started. As detailed in our press release issued today, we delivered 15% growth on a quarter over quarter basis in Q2, driven by strong execution from the team in a continued challenging environment. Importantly, the sequential growth performance in the second quarter was consistent with the expectations outlined on our first quarter call. Sequential growth was driven by mid teens growth in both The U. S.

Speaker 1

And international markets and was fueled primarily by 20% growth in total systems and subscription revenue. Second quarter revenue declined 5% on a year over year basis driven by a 5% growth in sales to U. S. Customers offset by an 18% decline in international sales compared to the 2024. Notably, year over year growth in The U.

Speaker 1

S. Was primarily driven by double digit growth in total systems and subscription revenue with cash system sales increasing 23% year over year in that period. The company views the year over year results as a potential sign of revenue stabilization. The global capital equipment environment continues to present a level of uncertainty as to the timing and pace of new systems adoption across the aesthetic sector as a whole. Customer financing pressures, economic uncertainty, high interest rates, try to credit markets and uncertainty related to proposed tariffs continue to impact customer system adoption throughout our business.

Speaker 1

While we are seeing these macro dynamics impacting adoption trends in The U. S, our international business is particularly exposed to macroeconomic headwinds including tariffs related to impacts to distributor demand. Despite the more challenged operating environment, we are encouraged by the team's continued focus on customer engagement and support as well as improving sales efficiency by prioritizing core products in The U. S, including BlissMax, VersaPro and VivaMD. The team also remains highly focused on our strategic priority to transition the company to higher quality cash revenues.

Speaker 1

Cash system sales in The U. S. Represented 65% of total U. S. System sales in the second quarter compared to 58% last year.

Speaker 1

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. That said, we are also pleased to have the optionality provided by our Venus Prime program to support system adoption high quality customers in a thoughtful and strategic manner. Before I turn the call over to Dominic, I wanted to review an important strategic announcement we made in June. On June 6, we announced a definitive agreement to sell the Venus Hair business to MHT Company Limited or Meta Health Group in an all cash transaction valued at $20,000,000 This transaction represents the first outcome of our evaluation of strategic alternatives to maximize shareholder value. Importantly, we believe this transaction strengthens Venus Concept by allowing us to focus on our global medical aesthetics business, which we expect will improve revenue growth, lower operating expenses, enhance the cash flow profile of the business and accelerate the path to long term sustainable profitability and growth.

Speaker 1

Meta Healthcare Group was established in 2011 is 2021 and is headquartered in Seoul, South Korea. Meta Healthcare Group operates as a holding company that develops and manages top tier clinic brands across various aesthetic medical fields. We believe that they are an ideal acquirer of the Venus hair business given their capabilities in the aesthetic medical field, including a presence in the hair transplant market, as well as the strategic investments in next generation medical industries including medical AI, medical robotics and R and D that drive innovation in healthcare technology. We are committed to ensuring a smooth transition for our employees, customers and other stakeholders and are confident Meta Healthcare Group will provide the strategic investment and resources needed to maximize the global addressable markets for the Artis and NeoGraft Technologies. The transaction is expected to close in the 2025 subject to the satisfaction or waiver of certain closing conditions, including an internal reorganization of the HAYAP business into Meta Robotics LLC.

Speaker 1

In closing, we delivered solid sequential growth in Q2 and significantly improved our year over year decline despite a continued challenging capital equipment environment. We made material progress towards improving our balance sheet and financial condition, which Dominic will review in detail shortly. We announced a significant strategic transaction with the sale of the Venus Hair business, which strengthens Venus Concept by allowing us to focus on our global medical aesthetics business and the proceeds from which will further enhance our balance sheet and financial condition and provide valuable capital to fund strategic growth initiatives. Our priority remains on ensuring that we are as well positioned as possible to return to growth. We are actively working on evolving our portfolio and look forward to launching our next body device by early twenty twenty six.

Speaker 1

We believe that the increase of GLP-one usage by consumers is an exciting catalyst for the industry and a chance of Venus to highlight the complementary benefits of our body technology, specifically skin tightening to our customers that are on weight loss medications. We are managing our cash burn through disciplined cost management and making targeted investments to support our long term growth. We also intend to continue the ongoing evaluation of strategic alternatives to maximize shareholder value. With that, let me turn the call over to Dominic for a review of our second quarter financial results and balance sheet. Dominic?

Speaker 2

Thanks, Rajeev. For the avoidance of doubt, unless otherwise noted, my prepared remarks will focus on the company's reported results for the 2025 on a GAAP basis, and all growth related items are on a year over year basis. We reported total revenue of $15,700,000 down 900,000 or 5% year over year. The decrease in total revenue by region was driven by an 18% decrease year over year in international revenue, offset partially by a 5% increase year over year in United States revenue. The year over year decrease in total revenue by product category was driven by a 4% increase in lease systems revenue, offset by an 8% decrease in products systems revenue, an 8% decrease in products, other revenue, and a 24% decrease in services revenue.

Speaker 2

The percentage of total systems revenue derived from the company's internal lease program, Venus Prime, and our legacy subscription model was approximately 37% in the 2025 compared to 34% in the prior year period. Turning to a review of our second quarter financial results across the rest of the P and L. Gross profit decreased $2,400,000 or 20% to $9,400,000 compared to the 2024. The decrease in gross profit is primarily attributable to the effects of customer uncertainty about economic stability, tighter third party lending practices, which negatively impacted capital equipment sales and a decrease in revenue in our international markets driven by the exit from unprofitable direct markets as well as the uncertainty created by international tariffs, actions, and threats. To a lesser extent, gross profit declines were also impacted by supply disruptions caused by the Israel Iran conflict impacting production at our contract manufacturers' facility in Israel.

Speaker 2

Gross margin was 60.1% of revenue compared to 71.5% of revenue for the 2024. The decrease in gross margin is primarily attributable to the supply disruptions noted above, resulting in an adverse sales mix due to the shortages of higher margin devices and to a lesser extent, higher device system cost of goods sold tracing to manufacturing overheads spread over a lower volume base. The total operating expenses increased $1,000,000 or 6% to 18,500,000.0 Total operating expenses increased $200,000 or 1% on a quarter over quarter basis. The modest increase in operating expense reflects our continued progress in cost containment and streamlining of our operations. GAAP operating loss was 9,000,000 compared to $5,600,000 in the 2024.

Speaker 2

Net interest and other expenses were $2,500,000 compared to $14,100,000 in the 2024. The year over year change in net interest and other expenses was driven by a $1,900,000 noncash loss on debt extinguishment compared to 10,900,000.0 last year, a noncash foreign exchange gain of 500,000.0 compared to a noncash loss of 800,000.0 last year, and lower interest expense on on outstanding borrowings, totaled 1,200,000.0 in the second quarter compared to 2,500,000.0 last year, buoyed by our progress on debt extinguishment. Net loss attributable to stockholders for the 2025 of 11,700,000.0 or $8.03 per share compared to net loss of 20,000,000 or 30.93 per share for the 2024. Weighted average shares outstanding for the 2025 and 2024 gives effect for the company's one four eleven reverse stock split effective 03/03/2025. Adjusted EBITDA loss for the 2025 of $8,800,000 compared to adjusted EBITDA loss of $4,100,000 for the 2024.

Speaker 2

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 06/30/2025, the company had cash and cash equivalents of $4,900,000 and total debt obligations of approximately $34,300,000 compared to $4,300,000 and total debt obligations of approximately $39,700,000 respectively as of 12/31/2024. We have made significant progress towards improving our balance sheet and financial condition over the first six months of 2025. We announced amendments with our primary lender, Madron Asset Management, which increased our financing capacity under our existing bridge loan facility.

Speaker 2

We continue to appreciate the support of Madron as we continue to enhance the financial profile of the business. We exchanged a total of $17,500,000 of subordinated convertible notes held by affiliates of Madron Asset Management LP for preferred stock, including $6,500,000 exchanged for 325,651 shares of its Series Y preferred stock in the second quarter. And we raised gross proceeds of $3,900,000 in multiple equity capital markets transactions from existing and new investors. Lastly, with respect to our financial outlook for 2025, given the company's active dialogue with existing lenders and investors, 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. That concludes our prepared remarks.

Speaker 2

Given international travel conflicts, we are not hosting a live q and a session this afternoon. Please direct all follow-up questions to our investor inquiries email address ir dot venusconcept dot com. Thank you for your interest in Venus Concept.

Operator

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines or lock off the webcast at this time, and enjoy the rest of your day.

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