Strata Skin Sciences, Inc.

Greetings, ladies and gentlemen, and welcome to the Stratus Skin Sciences Third Quarter 2022 Earnings Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Nicole Jones, Investor Relations. Thank you. Please go ahead.

Thank you, and good afternoon, everyone. Joining me today are Bob Moshe, Chief Executive Officer, and Chris Letzovitz, Chief Financial Officer. Earlier today, Strata released financial results for the quarter ended September 30th, 2022. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meeting of the Federal Securities Laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that do not relate to matters of historical fact or relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation those relating to our operating trends and future financial performance, are based upon our current estimates and various assumptions. These statements involve material risk and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not face undue reliance on these statements. For a list and description of the risk and uncertainties associated with our business, please refer to the risk factors section of our public filings to the Securities and Exchange Commission, including our annual report, on Form 10-K for the year ended December 31st, 2021. This conference call contains time-sensitive information and is accurate only as the live broadcast today, November 9th, 2022. Strata disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. Also during this presentation, We refer to domestic growth recurring billing, which is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the most recently comparable GAAP financial measure is available in the company's earnings release for the third fiscal quarter ended September 30, 2022, which is accessible on the SEC's website and posted on the investor relations page of Strata's website at www.strataskinsciences.com. I will now turn the call over to Bob.

Thank you, Nicole. We are really excited to announce very strong revenues of $9.4 million for the period ending September 30, 2022, representing 22% year-over-year growth driven by record extract sales. We have remained acutely focused on the commercial execution and positioning the company for accelerated growth over the coming quarters. We remain targeted in our sales approach and are focused on closing the loop between our direct-to-consumer advertising efforts and the prescribing dermatologists. which we believe has set the stage for our success this quarter. During Q3, we successfully introduced our new product, TheraClear X, for mild to moderate acne. We are enthusiastic about entering into this $5.5 billion acne treatment market, and we believe our product has the potential to make a meaningful impact for those who suffer from acne. The device utilizes vacuum extraction with light therapy to clear out the occluded pores while reducing sebum or oil production simultaneously. Importantly, TheraClear X delivers Strata an exciting new commercial growth opportunity whereby we have the ability to sell through our well-established partnership program. Contributing to our record sales this quarter was our focus on our targeted therapy messaging, increasing equipment sales in our international markets, and key opinion leader engagement. In our international markets, we have remained flexible in our offerings, shifting to more equipment sales. As we saw this quarter, what we projected going forward is that our international revenue will largely come from capital equipment sales. Strata has continued to invest in direct-to-consumer, also known as DTC marketing, and direct-to-dermatologist marketing to ultimately drive awareness, adoption, and utilization of extract. Our approach to DTC has become more focused as we rely on analytics to drive our tactics and strategy to drive decisions around our marketing efforts. In August, Ladenburg-Fellman hosted a Key Opinion Leader, or KOL, event with Dr. Benjamin Lachshin, MD, FAAD, for Strata as part of its Healthcare Symposia Series. Dr. Lachshin is a director of the Clinical Trial Center at Derm Associates and has been a board-certified dermatologist for over 18 years. He also serves as an assistant professor at Georgetown University. During Dr. Laskin's presentation, he highlighted extract as a safe and cost-effective option for patients suffering from chronic skin conditions like psoriasis and vitiligo. He discussed extract's place as a non-pharmaceutical approach to manage chronic diseases and how the device can be used across the spectrum of disease severity, from monotherapy to combination therapy. we would like to thank Ladenburg-Fallman and Dr. Lockskin for their time and efforts in hosting this KOL event. Turning now to X-TRACK. Earlier this year, we debuted X-TRACK Momentum, which has a smaller sleeker footprint and allows for faster procedure times. We remain enthusiastic about our rollout of Momentum as it represents the latest in eczema laser therapy technology and provides an improved treatment experience for physicians and patients alike. As of September 30th, 2022, There are 899 extract systems placed in dermatologists' offices in the United States, an increase from 890 units placed in the period ending December 31, 2021. We continue to be focused on our strategy of refurbishing and redeploying underutilized assets. This effort helps on multiple fronts. It allows Strata to reduce costs of goods sold since we are able to utilize the parts from those other machines that have been removed. Additionally, it allows us to better manage our weather supply chain issues as they arrive. We believe keeping underutilized machines below 15% will ensure that the machines in the market are being utilized on a minimum level basis. In July, in sites, Opsalura became the first FDA-approved treatment for vitiligo, a chronic autoimmune condition that causes the skin to lose pigment. With the approval of the first prescription treatment for vitiligo, we believe this could help drive patients into dermatologist's office and demand for extract services as a complement to the prescription treatments for vitiligo. As a reminder, Strata acquired the assets of Rob Medical Systems in August of last year, effectively eliminating our major medical equipment competitor and allowing us to market our full business solution to Rob Medical's existing base. The acquisition increased our installed base by an additional 400 dermatology practices, accounting for 250 new accounts. Our sales force is aggressively focused on converting Pharos users to the extract partnership model. We are pleased to have converted 10 of the Pharos users to extract partnership this quarter, totaling in 67 customers to date who are committed. We are on track with our conversion expectations. As we previously mentioned, conversions are largely dependent on when a Pharos device will need to be serviced, in which at that time we have the opportunity to convert the customer to the extract partnership model. In July, we announced the commercial introduction of TheraClear X, our non-invasive in-office treatment targeting the root cause of mild to moderate acne, launching the company into the $5.5 billion acne treatment market. The device combines vacuum technology and broadband light to treat acne. Through our partnership program, dermatologists are able to offer the TheraClear X to patients without the need to purchase expensive equipment. With acne accounting for 20% to 25% of dermatological visits, we believe TheraClear X could be a for the company. Additionally, Strata is leveraging its national sales force and commercial team to sell through its existing channels. We expect to have several places by the end of 2022 and execute on our full launch in 2023. With respect to our international operations, we have remained flexible to the strategy, which has shifted to more equipment sales. In this model, devices are sold directly to dermatologists, emphasizing a cash-driven reimbursement approach. As a reminder, we have distribution agreements in Korea, Japan, China, the Middle East, and Israel. Furthermore, ACME delivers a large international opportunity, which we hope to address with Theraclear X device. With our focus on international operations, we believe we will continue to see meaningful growth into the future. With that, I would like to now turn the call over to Chris to discuss the financials. Chris?