STRATA Skin Sciences (SSKN) Q3 Earnings call transcript Nov 13, 2024

STRATA Skin Sciences, Inc. (STRATA) recently reported its financial results for the third quarter of 2024, highlighting a period of significant progress towards stabilizing its financial performance and setting the stage for potential growth. In a call led by CEO Dolev Rafaeli and Vice President of Finance, John Gillings, the company provided a detailed update on its strategic initiatives and financial health.

Financial Metrics Show Improvement

One of the most notable trends emerging from the earnings call was the improvement in several key financial metrics. Revenue per XTRAC device grew by 2% year-over-year, marking a significant improvement from the flat revenue growth seen in the second quarter and a stark contrast to the decline of 10% seen in fiscal 2023. Gross margin also improved to 60.3% in the third quarter, up from 56% in the second quarter of 2023. These positive trends, combined with a reduction in non-GAAP operating expenses, contributed to the company's first operating profit since 2018 when excluding a one-time accrual.

Direct-to-Consumer Initiatives Show Promise

STRATA's DTC initiatives continue to be a central element of its turnaround strategy, with promising results emerging from this segment. Year-to-date, the company has scheduled over 1,900 new patient appointments through its DTC efforts, significantly surpassing the 8 appointments scheduled in all of 2023. The company has also expanded its geographic focus with DTC, launching efforts in Spanish language markets.

Strategic Focus on Acne Treatment

STRATA's TheraClearX devices have shown significant potential in the acne treatment market, with published study results highlighting improved outcomes and favorable feedback from doctors and KOLs. The company has secured preauthorizations for over 2,000 patients with acne at its partner clinics, demonstrating the potential for continued growth from this segment.

Legal Victory and Financial Strength

STRATA's recent legal victory against a competitor is a significant achievement, with the company securing a court order preventing the competitor from making misrepresentations about the technical merits of their laser device compared to STRATA's XTRAC excimer device. This win, coupled with the company's improved financial position and cash flow, positions STRATA well for continued growth and profitability.

Looking Ahead

Looking forward, STRATA remains committed to executing on its strategic goals for 2024, with a focus on driving growth through its DTC initiatives, expanding its geographic reach, and capitalizing on the potential of its TheraClearX devices. The company's financial health and strategic initiatives are promising, with a clear path to profitability and sustainable cash flow generation.

In conclusion, STRATA Skin Sciences' third-quarter financial results paint a picture of a company on the cusp of significant growth and stability. With a focus on strategic initiatives, a solid financial position, and a commitment to driving growth, STRATA is well-positioned to capitalize on the opportunities in the dermatology market. As the company looks ahead to reporting its year-end 2024 financial results, investors and stakeholders will be closely watching for further signs of progress and growth.