Apyx Medical Corporation

Q3 2023 Earnings Conference Call

11/9/2023

spk04: Hello and welcome, ladies and gentlemen, to the third quarter of fiscal year 2023 earnings conference call for Apex Medical Corporation. At this time, all participants have been placed in a listen-only mode. At the end of the company's prepared remarks, we will conduct a question and answer session. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly. 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 can cause actual results to differ materially from those indicated, including, without limitation, those identified in the risk factor section of our most recent annual report on Form 10-K, our most recent 10-Q filing, and the company's other filings 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. 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 a gap. We generally refer to these as non-gap financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings release, earnings press release on the investor relations portion of our website. I would now like to turn the call over to Mr. Charlie Goodwin, Apex Medical's president and chief executive officer. Please go ahead.
spk03: Thanks, operator, and welcome everyone to our third quarter of 2023 earnings call. I'm joined on today's call by our Chief Financial Officer, Tara Sem. Let me provide you with a brief outline of what we intend to cover today. I'll begin by discussing our third quarter revenue results, followed by an update on the operational progress our team has made during the third quarter and in recent months. Tara will discuss our financial results in detail, along with our 2023 financial guidance which we updated in our earnings release today. I'll then share some additional closing remarks before we open the call for questions. With that, let's begin with the review of our revenue results. In the third quarter, we achieved total revenue growth of 31% year over year to $12 million. Our total revenue growth was primarily fueled by sales of our advanced energy products which increased 39% year over year to $9.8 million, while sales of our OEM products increased 5% year over year to $2.1 million. Looking at the year over year performance in our advanced energy segment more closely, of the $2.8 million of total advanced energy revenue growth that we delivered year over year, we were pleased to see notable contributions from both the U.S. and international geographies. Our advanced energy revenue performance was primarily fueled by growth in global sales of our generators, which increased nearly 70% year over year, along with double-digit growth from our sales of handpieces. In the U.S. specifically, Sales of our advanced energy products increased 31% year-over-year, driven by generator sales growth that exceeded 70%. Importantly, a significant majority of our U.S. generator sales in the third quarter was driven by sales to new customers. This was driven by our continued effort to raise awareness of both the safety and efficacy of our Renuvion technology as supported by our new FDA clearances, as well as our next generation system, the Apix-1 console, which we launched at the beginning of this year. In addition to sales to new U.S. customers, we saw important contributions from generator sales to our existing users as well, as they took advantage of our program enabling them to upgrade to the APEX One console at a discounted pricing by trading in their prior generation system. Our generator sales performance more than offset slattish performance in sales of our U.S. handpieces. I'll discuss the factors that contributed to this performance in a minute. With respect to international advanced energy sales, we saw generator sales growth of nearly 70% year over year, with sales of our handpieces increasing more than 40%. Our growth in international generator and handpiece sales was primarily fueled by strong contributions from sales to our distributors in Latin America, although we saw year over year growth in all our other major geographic regions as well. To recap, our advanced energy growth in the third quarter of 39% year over year was due to balanced contributions from both our U.S. and OUS market and driven primarily by global sales of our advanced energy generators. With this as a backdrop, let me now take a few minutes to walk you through the third quarter revenue performance versus expectations. While we delivered strong revenue growth on a year-over-year basis, our total revenue in the third quarter was a little more than $3 million lower than the 15 to 16 million range we expected, range of expectations we provided on our most recent earnings call. This delta was driven by lower than expected sales of our advanced energy generators and hand pieces, primarily in the US. We believe three primary factors contributed to the softer advanced energy performance relative to our expectations in the third quarter. First, with respect to generator sales, the overall market for cosmetic surgery capital equipment proved to be weaker than our guidance had assumed. Specifically, as we progressed through the third quarter, we saw more prospective surgeon customers delaying capital equipment purchases, citing high interest rates and broader economic uncertainty. Second, during the third quarter, we observed strong seasonality related to potential patients and some surgeons taking summer vacations, This seasonal slowness was more pronounced than the trends we observed in recent years, and we experienced primarily in August and early September. This dynamic primarily impacted the sales of our handpieces with more potential patients on vacation and fewer seeking procedures. For surgeons experiencing slower than expected case volumes, It also proved another reason to take a wait-and-see approach to capital equipment purchasing. And third, our sales and marketing execution during the quarter ultimately did not meet our expectations. In response to these issues, we have taken proactive steps to help mitigate their future impact. Beginning in September, we introduced financing options for our potential surge in customers to provide them with further financial flexibility. And subsequent to quarter end, we made several changes in our sales and marketing team. We expect to see improving productivity from this reorganized team in 24 and beyond. Stepping back, while we are ultimately disappointed with the softer than expected sales performance in the quarter, We were pleased to see evidence that our recently secured 510 clearances and our next generation generator system are resonating with the surgeon community. And importantly, we completed the 31% year-over-year revenue growth in the third quarter with continued profitability improvements reducing our net loss attributable stockholders and our adjusted EBITDA by 20% and 21% year-over-year respectively. Turning to a brief discussion of our recent operational highlights, we continued our effort to raise awareness of our Renuvion technology and its benefits at both the surgeon and patient level. With respect to surgeons, we continue to capitalize on the progress made by our regulatory team in recent years, which enabled us to secure new 510K clearances in April for aesthetic body contouring following liposuction. We continue to believe that with the latest 510K clearance, our Renuvion APR handpiece is now the only device on the market with this indication for use following liposuction. During the third quarter, we continued to focus on educating potential new prospects on these developments, along with the extensive body of clinical and real-world evidence that has been established to support the safety and efficacy of our products for use in the cosmetic surgery procedures. In spite of the headwinds I discussed earlier, these developments have helped our team reengage with many new prospects, and we believe they will continue to benefit our growth. And at the patient level, we continue to advance our direct-to-consumer brand awareness campaign through the introduction of new content, including before and after photos, patient video testimonials, and other content leveraging the results achieved by actual patients. In addition to expanding our following and engagement on social media, we have begun to receive more incidental feedback from surgeons seeing patients coming in asking about our Renuvion technology. In terms of new product initiatives, as I mentioned earlier, we remain pleased with the U.S. market reception to our next generation generator, the APEX 1 console, which was an important contributor to our generator sales growth in the quarter. In late July, we also commenced the limited market release of our new Renuvion Micro Handpiece after securing 510 clearance in June. Based on the feedback we have gathered to date, the surgeon customers that are participating in our limited market release appreciate the significantly smaller instrument shaft of our micro handpiece and the benefits it brings to cases where smaller profile handpiece can provide improved access to the target region and ultimately facilitate soft tissue contraction. The feedback attained during the limited market release has proved important insights to enhance our surgeon training and recommendation as we prepare to initiate our full commercial launch by year end. In addition to driving strong profitability improvements in the third quarter, we continue to enhance our balance sheet condition and financial flexibility. In August, we received the $8.1 million payment from the Internal Revenue Service for the cash tax refunds that they approved at the beginning of the year. And we were pleased to announce today that we negotiated and entered into a new five-year agreement with Perceptive Advisors for a facility of up to $45 million in senior secured term loans. This agreement provided us with 37.5 million of proceeds at closing, approximately 11 million of which was used to satisfy all obligations under our prior credit agreement, as well as approximately 2.5 million of transaction fees and other expenses related to the transaction. This new facility provides us with access to additional capital at more favorable terms overall than our prior agreement, significantly strengthening our balance sheet and enhancing our financial flexibility. With our recent profitability improvements in the third quarter, $22.1 million of cash on our balance sheet at the end of the quarter, and the proceeds and additional borrowing capacity under our perceptive credit agreement, we believe we have the requisite capital and financial flexibility to pursue our strategic growth initiatives while driving continued progress towards our longer-term goals of generating sustained profitability and strong free cash flow generation. Before I turn the call over to Tara, I'd like to discuss an important announcement we made in our earnings press release this morning. Specifically, we announced Tara's intention to lead the company in order to pursue other opportunities. As we announced in our earnings press release, the Board of Directors initiated a formal search process that identified her successor. We expect to announce the formal appointment in the near future. In the interim, we appreciate Tara's commitment to continue in her position as Chief Financial Officer until her successor is formally appointed. Since joining Apix Medical in January of 2019, Tara has been an important contributor to our growth as an organization. Her efforts have enabled us to develop a strong financial and accounting team and to improve our analytical and reporting process to support the business. On behalf of the broader team, I'd like to take the opportunity on today's call to thank her for the important contribution she made while at Apex Medical, and I look forward to her continued support amid the smooth transition. I'll now turn it over to Tara to review the third quarter financial results and 2023 guidance, which we updated in today's press release. Tara?
spk08: Thanks, Charlie. It has been a privilege to serve as a member of the Apex Medical team and to help develop the organization during my time here. With the financial and operational progress we've made over the last four years and the depth of our financial and accounting teams, I truly believe that Apex Medical is well positioned going forward. I would like to thank my colleagues at Apex for their support and look forward to supporting a successful transition to the incoming CFO. Given that Charlie discussed our revenue results, I will begin at the gross profit line. And let's note it otherwise, all references to third quarter financial results are on a gap and year-over-year basis. Gross profit for the third quarter of 2023 increased $2.2 million or 39% to $8 million. Gross profit margin was 66.6% compared to 63.2% last year. The increase in our gross margin was driven primarily by changes in the sales mix between our two segments with our advanced energy segment comprising a higher percentage of total sales and changes in the product mix within our advanced energy segment offset partially by geographic mix within our advanced energy segment as international sales comprised a higher percentage of total advanced energy sales. Operating expenses increased $1.1 million, or 9%, to $12.6 million. The increase in operating expenses was driven primarily by salaries and related costs, which increased $0.8 million, or 21%, largely due to increases in bonus expense and labor and benefits costs. Lost from operations decreased $1.1 million, or 20%, to $4.6 million. We are pleased with the strong operating leverage we demonstrated in the third quarter despite the softer than expected revenue results. Total other expense net was $.4 million compared to income of $37,000. The change was driven by an increase in net interest expense related to the outstanding debt obligations on our term loan in the third quarter of 2023 compared to no outstanding borrowings in the prior year period. Income tax benefit was $0.3 million compared to income tax expense of $50,000 last year. Net loss attributable to stockholders decreased $1.1 million or 20% to $4.6 million or 13 cents per share compared to $5.8 million or 17 cents per share last year. Adjusted EBITDA loss decreased $0.8 million or 21% to $3.1 million compared to $3.9 million last year. As a reminder, we provided a detailed reconciliation from net loss attributable to stockholders to non-GAAP adjusted EBITDA loss in our earnings press release. For the three months ended September 30th, 2023, cash generated for operating activities was $3.7 million compared to cash used in operating activities of $5.4 million in the prior year period. The improvement was driven primarily by an increase in cash related to the receipt of payment from the Internal Revenue Service for cash tax refunds, as well as our improvement in net loss. As of September 30th, 2023, we had cash and cash equivalents of $22.1 million compared to $10.2 million as of December 31st, 2022. Turning to our review of our 2023 financial guidance, which we updated in our earnings press release today, for the 12 months ending December 31, 2023, we now expect total revenue in the range of $53 to $54 million, representing growth of approximately 19 to 21%. This compares to our prior range of $59 million to $62 million, or growth of 33% to 39%. Our total revenue guidance assumes advanced energy revenue of $44.5 to $45.5 million, representing an increase of 21% to 24%, which compares to our prior range of $51 to $54 million. and OEM revenue of approximately 8.5 million, representing growth of approximately 10%, which compares to our prior expectation of approximately $8 million. In terms of our profitability guidance for the full year 2023, we now expect net loss attributable to stockholders of approximately $16 million, compared to our prior expectation of approximately $10.5 million. This updated net loss guidance reflects our revised revenue and loss expectations for the second half of 2023, including approximately $2.6 million of other expenses related to our debt transactions and approximately half a million dollars of severance related to our CFO transition. Our formal financial guidance for 2023 incorporates the following consideration for modeling purposes. First, we expect gross margins of approximately 66% compared to the prior guidance range of 66.5 to 67.5%. Second, we now expect 2023 operating expenses to decrease approximately 4% year over year compared to our prior guidance of low to mid single digit growth year over year. Note, excluding the gain on our sale lease pack transaction, GAAP operating expenses are expected to be up 1% year over year in 2023. Third, we expect total other expense net of approximately $3.6 million in 2023 compared to our prior guidance of approximately $900,000. The increase is driven by 2.6 million of non-recurring fees and expenses incurred as part of our debt transactions. Note, we continue to expect interest expense net of approximately $1.6 million for 2023. And lastly, our guidance for 2023 now assumes non-controlling interest of approximately 160,000 compared to 180,000 previously. An income tax benefit of approximately 2.4 million versus 2 million previously. Non-cash depreciation and amortization of approximately 0.7 million unchanged versus our prior assumptions. Non-cash stock-based compensation expense of approximately $5.5 million versus $5.6 million previously, and weighted average diluted shares outstanding of approximately 34.7 million shares. Lastly, our updated guidance for 2023 now implies approximately $39 million in cash and cash equivalents on our balance sheet at December 31st, 2023, compared to our prior guidance of approximately $20 million. This updated target reflects the $24 million of net proceeds from our debt transactions and our revised net loss and cash flow assumptions based on our third quarter results and updated expectations for the fourth quarter. With that, I'll turn the call back to Charlie for closing remarks.
spk03: Thanks, Tara. As Tara mentioned, our updated guidance reflects both our performance in the third quarter as well as our revised expectations for the balance of the year. Specifically, our 2023 revenue guidance implies advanced energy sales growth in the fourth quarter of 26% to 35% year over year, which contemplates the following assumptions. The impact of the strategic reorganization of our sales and marketing team during the fourth quarter. We expect surgeons will remain reticent to purchase cosmetic surgery capital equipment given the continued concerns related to the current financing environment and broader macroeconomic uncertainty. And lastly, our guidance assumes sequential improvements in procedure volumes in the fourth quarter. We are committed to achieving our updated guidance expectations by continuing to leverage the important progress made by our team in recent years including our 510K clearances for specific clinical indications, the development and U.S. commercial introduction of our next-generation APEX1 console, and our recent efforts to raise awareness and educate all levels of cosmetic surgery market through our direct-to-consumer initiatives, along with programming at conference and trade shows. And lastly, from an operational standpoint, we remain focused on driving continued execution with respect to our remaining strategic initiatives for 2023 to improve our positioning longer term. These are bringing new technologies like our Renuvion Microhandpiece to the market, expanding our portfolio of clinical evidence, and managing our expenses as we drive continued progress towards profitability. In closing, after more than five years of dedication and exclusive focus on the cosmetic surgery market, we know our Renuvion technology represents true innovation that addresses the needs of surgeons and their patients for a range of applications where other technologies have fallen short. Surgeons who begin using our Renuvion technology immediately recognize its advantages. And importantly, this drives them to continue using this differentiated technology going forward. The loyalty and utilization we see across our global customer base is perhaps best evidenced by the fact that revenue from sales of our hand pieces has represented more than half of the $42 million of advanced energy revenue that we generated during the trailing 12 months ending December 30th. With this in mind, despite recent near-term setbacks, we remain confident in the well-established capabilities of our Renuvion technology and our ability to expand our share of the multi-billion dollar global market that lies ahead of us by facilitating its adoption and utilization. I'd like to thank our team and distributor partners for their efforts and continued dedication, as well as our customers and shareholders for their support. With that, operator, let's now open the call for questions.
spk04: Thank you. If you'd like to ask a question, please signal by pressing star 1 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. We do ask that you limit yourself to one question and one follow-up. If you would like to ask additional questions, we invite you to add yourself to the queue again by pressing star 1. And our first question will come from Frank Takanin of Lake Street Capital Markets. Please proceed with your questions.
spk06: Hey, thanks for taking the questions. I was hoping we could start with just the assumptions around Q4. Obviously, I heard the detailed guidance, but it still seems like a pretty good step up there. So maybe talk through how you're thinking the seasonality will play out in Q4. What's normal seasonality in Q4, and how do you think that could be different this year based on your learnings from the front half of this year, and how are you thinking about the Renovion handpiece portion of the SNAP Act?
spk03: Yeah. All right. Thanks, Frank. Our updated guidance implies ae revenue growth of 26 to 35 percent year over year in q4 and importantly we see no improvement in the capital purchasing environment as compared to q3 so we would think that q3 and q4 from a capital purchasing environment would be the same We see sequential improvement in procedure volumes in handpiece sales compared to Q3, as Q4 is always typically much more procedures are done than the Q3 time period. And it also reflects the changes that we made in our sales and marketing team in the fourth quarter.
spk06: Okay, that's helpful. And then maybe talking a little bit about the new perceptive line, can you talk through any covenants we should be aware of if there are any there on that front that could come into effect later?
spk03: Yeah, so look, we are very pleased to secure this new credit facility, and we've made a lot of regulatory, financial, and operational process in recent months. And that has put us in a different position than when we first took out the previous credit facility. And so we made the strategic decision to pursue this new agreement. And some of the keys for it was we wanted to obviously strengthen our balance sheet. And we wanted it to provide us more financial flexibility as far as the covenants go on those. And so we were able to do both with this new agreement. The access to capital is up to $45 million, and it has more favorable financial flexibility terms overall. And with this new facility, we will be incredibly well capitalized to pursue our growth and value creation. And we'll obviously 8K the facility itself, so you'll get to see what all the different things are in that.
spk06: Okay, that's helpful. I'll stop there. Thanks, guys.
spk04: Thank you. Our next questions come from the line of Matthew O'Brien with Piper Sandler. Please proceed with your questions.
spk05: Morning. Thanks for taking the questions, and Tara, best of luck to you in your future endeavors. Maybe just following up on that last question on Q4, Charlie, you know, I'm looking at the model here and, you know, the bump that we're thinking about in Q4 is a little steeper than we've seen historically from APEX. And, you know, we've got a tougher environment. So I'm just wondering what you're seeing so far in October and early November that give you the confidence in being the bigger step up and what's the more challenging macro environment?
spk03: Yeah. Yeah. Look, I think that we're confident in our ability to deliver this for a few reasons. We've updated our guidance to reflect both the weaker environment of the capital equipment purchasing and the changes we've made to our organization in Q4. And now that we're beyond the summer months, we would expect sequential improvements in the procedure volumes and handpiece sales compared to Q3. We still see multiple tailwinds that we have as an organization. We've obviously got our new regulatory clearances and being the only company to have the clearance for body contouring procedures after liposuction is really resonating well with customers. We've still got obviously very good demand and very good momentum with our Apex One generator, both to new customers here in the United States but also from upgrades. And even though we believe that we can do a better job in our direct-to-consumer initiatives, we are starting to see fruition on that where doctors are saying patients are coming in and asking specifically for Renuvion. And so that's what gives us the confidence in our Q4 guide.
spk05: Charlie, did you see that in October specifically?
spk03: So We won't comment necessarily on month by month when we're talking about what we had, but the last two weeks of September were very strong from a demand perspective, and we have maintained a nice level of that since.
spk05: Okay. I appreciate that. And then the follow-up question is, just around the Salesforce adjustments. Can you be a little bit more specific on what you're doing there? And then historically, as I've watched this space, these Salesforce changes take some time to really get traction. So I guess what's the expectation here for Q4? And then what's the expectation in terms of the traction you'll get from these modifications in 2024? Thanks.
spk03: Yeah, thanks, Matt. As I mentioned, our... Our sales and marketing execution in the third quarter did not meet our expectations. And I want to be clear because I know I've got my commercial team that is listening to this. We had a great majority of our commercial team that was overachieving their expectations. And so I want to make sure that they know and everybody knows that it is not the entire team, obviously. But in response to the fourth quarter, we implemented strategic reorganizations in both sales and our marketing team, and our updated guidance contemplates the impact from this in Q4. But we believe, obviously, that we've made the right changes to improve both areas of sales and marketing, and we're going to be more productive from that group the rest of this year, but also 24 in the long run. But our our expectations are built into that change.
spk05: Understood. Thank you so much.
spk04: Thank you. Our next questions come from the line of Matt Hewitt with Craig Hallam. Please proceed with your questions.
spk07: Good morning and thanks for taking the questions. Maybe first up, on the international front, it sounds like you saw a rebound there. Do you feel like we've gotten past the safety communication issue and now it's more just a function of kind of introducing the platform to new customers and working with your distributors? Or is there still a little bit of kind of education, if you will, regarding the recent approvals?
spk03: Yeah, no, it's a very good question. I think for the most part, we are past the safety notice for the most part. Obviously, it still comes up if people are going to Google and look at the company. So it is always something that you know, we'll have to answer. But we have equipped our reps, our distributors, and everybody else on obviously how to handle that, how to talk through that. And then just the tremendous amount of clinical data that we have to support that obviously helps that. And then the real kicker is to have the indications that we have now and to get those final indications, you know, the middle of this year has been a huge help because obviously now the FDA is saying that this technology is safe and effective and specifically for these body contouring procedures. So we're very well equipped to be able to handle that as and if it does come up. But for the most part, we're moved past that and we're focused on how we make sure that we get more customers that get to see the benefits of Renuvion for their patients.
spk07: That's great. And then separately, maybe any initial feedback on the micro hand pieces following your soft launch this past quarter? You know, what are you hearing from the practices that are using it? Is this something that you expect to ramp quickly upon the full launch? Thank you.
spk03: Yeah, so the micro handpiece has been having great reviews by our doctors that are using it. We're in the final stages right now of developing the protocols for some of the specific areas and probably the three specific areas where we're seeing the most success with the micro handpiece are obviously the face, which that's not a surprise. We talked about that before, but also the hands. and the labia are also areas where they're getting very good results with the microhand piece. And so, like I said, we're working through with our clinical team to work through the training, and we would expect that the microhand piece would have a material contribution sometime next year.
spk07: Excellent. Thank you.
spk04: Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next questions come from the line of George Sellers from Stevens. Please proceed with your questions.
spk02: Hey, good morning, and thanks for taking the question. Maybe to start with the domestic market, I'm just curious if you could give some additional detail on the split between legacy device placements and APEX One device placements, so how many of the new sales in the U.S. in the quarter? Where are you in rolling out the APEX One to some of your legacy customers that are still using the legacy device?
spk03: Yeah, so we don't break down the actual numbers just to make sure that we're clear from APEX Ones and everything else, but the majority of our generator growth in the U.S. was from sales to new customers, okay? We did also have customers who took advantage of the upgrade program to the APEX One, and so, but the vast majority of growth that happened, that 70% growth in the U.S. came from sales of new generators, and the vast majority of those were APEX Ones that were sold.
spk02: Okay, that's helpful. Yep, sorry, go ahead. No, that's it. Okay. That's helpful. And then on the underlying market, have you seen any changes or shifts in how physicians are using this device? Any growth in standalone procedures or any changes in sort of the breakout between in conjunction with liposuction versus standalone skin tightening?
spk03: Yeah, no, it's a very good question. Yes, we have started to see evidence of them using Renuvion just as a standalone modality instead of following liposuction. And one of the big reasons for that is because of some of the success that patients are having on these GLP-1 drugs and they lose weight and then have black skin. And so, obviously, they're going to see plastic or cosmetic surgeons because I believe that they're going to be the greatest group that is going to benefit from the GLP-1 drugs over time. But then obviously if they've got lax or loose skin, there's not a better technology out there to address that minimally invasively than Renuvion. And so we are starting to see patients coming in with that issue and doctors being able to provide a solution for them.
spk02: Okay, great. Thanks for that, Culler, and I'll leave it at just two. Thank you all for the time. Thank you.
spk04: Thank you. Our next questions come from the line of Dave Turkeley with JMP Securities. Please proceed with your questions.
spk01: Hey, good morning. Culler, I was just wondering if you might share your latest sort of market research on aesthetic procedures just broadly, what you're expecting sort of for the end of this year and then into next year, you know, recession or not, like sort of How are the procedure volumes? What are you expecting? And I guess even more specifically, what are you expecting for liposuction volume?
spk03: Yeah, so we expect – so the first thing is just as a thing, the market data doesn't change that quick as far as the research reports go. And so – but we would expect over many, many years for body contouring procedures to – to expand and at a great rate. We saw liposuction in 2021 that grew 17% worldwide, and we would see that procedure keep growing. Probably not at that kind of kegger, but it will still have, I would say, a high single-digit kegger for a lot of years to come. And when you look at the need that is going to be in the marketplace for all types of skin laxity, I think the procedure volumes are going to be huge for many, many years to come in this. And as I mentioned in the previous one, I think that plastic and cosmetic surgeons are going to be some of the bigger beneficiaries of these glp-1 drugs because they create lack skin when you lose weight and and people have been trying to lose weight for years are now going to be motivated to go do something and that go do something is to is to go see a a plastic or cosmetic surgeon thank you that's what i had yeah
spk04: Thank you. Our next questions come from the line of Matt Hewitt with Craig Hallam. Please proceed with your questions.
spk07: Thank you for the follow-up here. I just wanted to go back to something you said in your prepared remarks, Charlie. I think you said that revenues from sales of your handpiece has represented more than half of the $42 million in advanced energy generated during the trailing 12 months. Is it your expectation that now that you've kind of crossed over that median with the handpiece sales, that that will continue to be the primary driver that, yes, you're obviously going to continue to sell the boxes, but now it's really about driving utilization and going forward? Thank you.
spk03: Yeah, no, thanks, Matt. And thanks for the question. Yeah, look, From quarter to quarter, things could change based on the amount of capital that obviously we sell just from a math perspective. But what won't change is the vast amount of our business that is from the consumable side of things and driving utilization. As you know, because you've been with the story for a while, we have spent a ton of time on evidence-based medicine and our clinical team helping drive utilization. And one of the things that we are very fortunate to have is an incredible group of users that are incredibly passionate about the technology. And they're passionate about the technology because of the results they're able to achieve with it for their patients. And as we keep bringing in more instruments and allowing them to treat more areas, And they talk amongst themselves and figure out how each are using it in different areas and for different types of patients, you know, whether it's lipo patients or GLP-1 patients. That is going to keep driving that progress. that adoption and utilization of our hand pieces. And that has always been a tremendous focus for us as an organization. We certainly do not want to be the company that is selling a piece of capital and having it sit in the doctor's office. For us, the focus is driving that utilization and partnering with the practice and allowing them to provide this great technology for their patients to give them these results. And so that has always been our focus. and we will keep driving that number as high as we possibly can.
spk07: Great. Thank you.
spk04: Thank you. We are currently showing no rewinding questions at this time. With that, that does conclude our conference for today. Thank you for your participation. You may now disconnect.
Disclaimer

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