InMode Flags Slow Aesthetic Demand, Picofy-Driven Q1 Lift and Margin Pressure at Needham Conference

Key Points

• InMode reported roughly 5% year-over-year Q1 growthPicofy (about $4–5M of incremental revenue), but management said aesthetic demand has not meaningfully rebounded and 2026 guidance is broadly similar to 2025; meanwhile gross margin has fallen to about 75% from ~85% due to lower‑margin third‑party lasers, higher costs and pricing pressure.
• The company is funding multi‑year clinical programs (a 10‑site overactive bladder study not expected to reach market before end‑2027 and urology work targeting 2027), is moving to sell directly into China, and has prioritized capital returns via buybacks (prior repurchases ~$508M, current authorization roughly $90–100M) rather than pursuing M&A.

InMode NASDAQ: INMD discussed recent operating trends, product launches, margin pressure, and capital allocation during a fireside chat at the 25th Annual Needham Healthcare Conference. Needham & Company’s Mike Matson hosted the session with CEO Moshe Mizrahy and CFO Yair Malca.

Q1 performance and outlook

Matson noted that InMode pre-announced results that suggested approximately 5% year-over-year growth in the first quarter. Mizrahy said the company’s outlook for 2026 remains similar to 2025, adding that management does not currently expect a step-change in growth.

“The guidance that we gave for 2026, it’s about the same guidance we gave for 2025,” Mizrahy said. “Overall, we believe that 2026 will not bring us to a new level, let’s say growth of $20 million-$30 million.” He added that guidance could be updated if the second quarter performs well, but “right now, we don’t see any reason for that.”

On market conditions, Mizrahy said InMode is not yet seeing a meaningful rebound in demand. “We don’t see yet some kind of momentum in the aesthetic market,” he said.

New product contribution and installed base utilization

Mizrahy attributed much of the quarter’s incremental growth to Picofy, a new pico laser product introduced primarily in the U.S. during the quarter. He said the company is purchasing the system from a Korean manufacturer rather than producing it internally, which has influenced profitability. “I believe that the growth of about $4 million or $5 million this quarter came from basically this new product,” he said, noting that gross margin on the product is lower than InMode’s historically higher levels.

He said other products such as Optimas Max and IgniteRF were “about the same” as recent quarters. In disposables, Mizrahy said volumes have been steady for several quarters at around 200,000 to 210,000 units per quarter, which he suggested may reflect churn in systems actively used. While InMode has roughly 32,000 systems installed globally, he estimated that about half are actively operating. “We believe that the system that in operation are about…16,000-17,000 systems, about half,” he said.

Geopolitics and supply chain: limited impact so far

Matson asked about the impact of regional conflict given InMode’s operations in Israel. Mizrahy said the company did not see a material impact on first-quarter results. Manufacturing and operations “worked smoothly,” he said, although there were some shipping challenges due to reduced flights out of Israel. To mitigate that, he said the company kept inventory in subsidiaries and moved product between countries to cover gaps.

“Overall, regarding our revenue recognition, revenue, and sales, the war did not affect InMode in the first quarter,” Mizrahy said. Looking ahead, he said the business should not be affected if fighting does not resume.

On oil-related costs, Mizrahy said the primary channel of impact would be logistics. Shipping costs were “a little bit higher” late in the quarter, he said, but oil is not a raw material input for InMode.

Margin pressure: mix, pricing, and competition

Mizrahy said gross margin has declined from prior levels, attributing the change to higher costs and pricing pressure, as well as product mix from third-party lasers. “We used to be 85%, now it’s 75%,” he said. He cited higher manufacturing costs, labor, sales costs, and shipping costs, and said it has been difficult to raise prices, though the company “tried around 5%.”

He also highlighted intensifying competition in lasers, including pico lasers, which he described as less differentiated relative to InMode’s RF platforms. “Pico laser, all of our competitors has some kind of a pico laser, and the competition is on price,” he said, adding that the gross margin profile for the product is structurally lower given its cost.

Later, Mizrahy said the company’s gross margin guidance is 75% to 76%, which includes the impact of tariffs the company is currently paying. He noted that while there were reports of a court decision related to tariffs, “the customs is still charging the tariff,” and any potential refunds would be in the future.

Pipeline updates: women’s health, urology, dry eye, and lasers

On the FDA’s safety communication about RF microneedling issued in October, Mizrahy said the company responded to FDA requests related to adverse events and has not heard back. He said utilization of Morpheus8 has not been “affected very heavily” by the FDA communication.

In women’s health, Mizrahy said InMode has begun a study aimed at supporting an overactive bladder indication. He described a roughly 10-site study, largely at university sites, and said the company’s IDE protocol has been approved, allowing the study to begin. He said timing is extended due to follow-up requirements and added, “We don’t expect that to be on the market…before the end of 2027.” He later said the overactive bladder study is a key driver of higher R&D spending, costing about $4 million.

In urology, Mizrahy discussed ApexRF, which he said is currently being sold without FDA approval for erectile dysfunction claims. Instead, InMode markets it under labeling related to blood circulation and collagen building. He said a study is underway with a key opinion leader, Dr. Mohit Khera, and that any FDA pathway could involve a 510(k) de novo process. He added that timing for potential next steps would be “only in 2027, not in 2026.”

On other platforms, Mizrahy said EmpowerRF and Envision have been “relatively flat,” each at roughly 50 systems per quarter, plus or minus about 10%. He also said InMode created a dedicated sales effort around Envision, adding 33 sales representatives to focus on that platform initially, with plans for them to later sell ApexRF and EmpowerRF into targeted physician specialties.

For dry eye, Mizrahy said InMode is pursuing a 510(k) de novo pathway due to a lack of predicate devices. He said the company recently submitted final animal safety testing results to the FDA, which were accepted, and InMode hopes to receive protocol approval to begin a study “toward the end of the second quarter.”

In lasers, Mizrahy said Solaria, a CO2 laser purchased from a Connecticut-based manufacturer and sold under InMode’s name, has reached about 200 systems sold so far. He suggested North American potential may be limited by competition and market size, saying, “If we will sell all together in North America 400, we will be happy.” He also said InMode plans to submit an FDA filing for an Erbium YAG laser component in the second quarter, with an expected clearance timeline of roughly six months and a potential fourth-quarter market introduction.

International expansion and China focus

Mizrahy said InMode sells into more than 100 countries, but emphasized that revenue is concentrated. He said about 80% of revenue comes from roughly 20 countries, with the remaining 80 countries contributing about 20%.

He said the company continues to add subsidiaries at a measured pace—“basically…one every year”—citing Thailand and Argentina as additions last year. This year, he said InMode is working on entering China’s “beauty market” directly, which he described as large and driven by chains purchasing lower-priced systems. He said the company is building an entity likely based in Beijing or Guangzhou and held through a Hong Kong company, and has hired a specialist with expertise in the China market.

Strategic review and capital returns

Mizrahy addressed InMode’s prior strategic evaluation process, saying it involved initial outreach to 71 groups, 34 NDAs, presentations to 12 parties, and four preliminary offers that eventually narrowed to two. However, he said the final pricing was not acceptable. “The price that they gave was not satisfactory to the Board,” he said, while also criticizing the process led by Bank of America, which was hired by the board.

On capital allocation, Mizrahy said InMode continues to return capital largely through buybacks. He said Israeli rules allow companies to repurchase up to 10% of shares without triggering dividend tax, which he described as a reason for the annual buyback approach. He said InMode previously spent $508 million on repurchases and expects the current authorization to total roughly $90 million to $100 million, depending on average prices. Mizrahy also noted that the company is not pursuing M&A at present, adding, “We need to allocate capital back to the shareholders, and that’s the only way to do it is through a buyback.”

About InMode NASDAQ: INMD

InMode Ltd. NASDAQ: INMD is a medical technology company headquartered in Israel that develops, manufactures and markets devices for aesthetic and medical treatments. The company specializes in energy-based technologies, primarily radiofrequency platforms, designed to deliver minimally-invasive and non-invasive procedures.

InMode's product portfolio encompasses a range of modular systems targeting body contouring, facial rejuvenation, skin tightening and other cosmetic applications. Key offerings include devices built on proprietary radiofrequency and radiofrequency-assisted lipolysis, enabling physicians to perform treatments such as tissue coagulation, skin resurfacing and subdermal volumizing with reduced downtime.

The company distributes its technologies through direct sales operations and distribution partners, serving medical professionals across multiple geographies including North America, Europe, Asia Pacific and Latin America.

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