Strata Skin Sciences, Inc.

Hello, and welcome to the StrataSkin Sciences fourth quarter 2022 and full year earnings call-in webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Gabby Deep-Gravina. Please go ahead.

Thank you, and good morning, everyone. Joining me today are Bob Moshe, Chief Executive Officer, and Chris Lezavitz, Chief Financial Officer. Earlier today, Strata released financial results for the quarter ended December 31st, 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 meaning of the federal securities laws which are made pursuant to the safe harbor provisions of the Private Segurities Litigation Reform Act of 1995. Any statements contained in this call that do not relate to matters of historical facts or relate to expectations or predictions of future events, results of 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 place undue reliance on these statements. For a list and description of these risks and uncertainties associated with our business, please refer to the risk factor section of our public filings with the SEC. including our annual report on Form 10-K for the year ended December 31st, 2022. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March 31st, 2023. 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, refer to gross domestic recurring billings, which is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure is available in the company's earnings released for the fourth fiscal quarter and to December 31st, 2022. which is accessible on the SEC's website and posted on the investor relations page of Strata's website. And with that, I'll turn the call over to Bob Moshe. Bob?

Thank you, Gabby. Thank you to all for joining us today. 2022 proved to be a record year for Strata. We announced record revenue of $36.2 million, which was above guidance, representing a 20.6% growth compared to the prior year period. Our successes are a direct result of our acute focus on commercial execution and strategic priorities. As a brief recap, this year we achieved record revenues, acquired and successfully commercially launched TheraClear X for acne treatment, launched X-TRAC 1.0 Momentum, a faster laser device than our standard model, strengthened our leadership team with the addition of John Bagdasarian, Vice President of Professional Relations, and Mike Goodman, Head of International Sales. entered into new international markets, including Israel and Mexico, and continue to raise awareness of our extract and therapeutic systems at various dermatology conferences. To achieve this strong double-digit growth, we continue to invest in direct-to-consumer marketing and direct-to-dermatologist marketing, engaged with high-volume accounts, refurbished and deployed underutilized assets, interacted with key opinion leaders to fine-tune our messaging, and helped deliver clinical support to our devices. Since September 30, 2022, we placed 45 extract machines, resulting in a total of 909 systems placed in dermatologists' offices in the United States. This growth signals the demand and need for additional treatment options for psoriasis, eczema, and vitiligo. Extract continues to present us with unique opportunity, as 80% of the usage in the United States is for psoriasis. As we have previously mentioned, we have an initiative with our commercial team to drive usage for vitiligo. We expect the recent approval of the first FDA drug treatment for vitiligo, ruxolinib cream, more commonly known as Opsalura, could complement extract treatment and drive traffic to dermatologist offices. In February of this year, we announced the launch of our new extract website. The new website is patient-forward, educational, and easy to use. It allows potential patients to find a dermatologist in their surrounding area by using the practice finder function. The website emphasizes our focus on broadening patient awareness with the ultimate goal of serving patients who suffer from dermatologic conditions and increasing extract usage. At the beginning of 2022, we announced the acquisition of TheraClear X from TheraVant Corporation. TheraClear X is a non-invasive, in-office treatment targeting the root cause of mild to moderate acne. In July 2022, we commercially launched TheraClear X. As part of our launch, we carried out additional market research, built inventory, invested in our sales force, and created a marketing plan. We have utilized the extract sales channels to sell through the TheraClear X system, and we are excited to continue patient and physician education on the TheraClear X device. The cost of TheraClear X to the patient is a fraction of the cost of the competitor device launched this year. As a reminder, 20% to 25% of all visits to dermatologists are for acne. often treated with prescription drugs that can be costly. Our device delivers a unique combination of broadband light and vacuum technology that begins to clear the skin rapidly. Our TheraClear X treatment can help potentially increase compliance of prescription acne treatments as patients begin to see results rapidly. A poster titled, Advancement in Personalized Photodynamic Therapy for Rapid Visible Improvement in Patients with mild to moderate acne was presented this January at the ODAC Dermatology Aesthetic and Surgical Conference. The clinical assessment was conducted by Dr. Gili Manavali, MD, Medical Director and Founder of Dermatology Laser and Vein Specialists of Carolinas in Charlotte, North Carolina, and Dr. Jason Smith and Dr. Taylor Smith of Northwest Georgia Dermatology. The objective of the clinical assessment was to evaluate via photographs changes in visible acne lesions and skin texture after a series of tailored photognomatic therapy treatments delivered to patients with mild to moderate acne. Highlights from the clinical assessment included all patients experienced a visible reduction in comedones, pustules, and inflammatory facial lesions. Redness reduction and improvement in skin texture, pore size, and perilesional erythema was observed in the treatments. Most patients responded with two to three treatments. one adult female patient with persistent perioral acne experienced complete clearance, and adverse events were infrequent and limited to mild erythema, mild bruising, superficial erosions, and temporary changes in pigmentation. These results are encouraging to continue to highlight the efficacy and safety of TheraClear X as a treatment for acne. This February, TheraClear X was demonstrated in the inaugural Winter Clinical Conference. Dr. Joel Cohen, MD, who is a director of about skin dermatology in Greenwood Village, Colorado, spoke during the live presentation. In Dr. Cohen's practice, he utilizes TheraClearX to build confidence and compliance in patients while waiting for prescription therapy to kick in. The results from the clinical assessment and the demonstration at the Winter Clinical Conference continue to highlight TheraClearX's safety and efficacy for treating acne. With continued exposure in clinic and at industry conferences, As well as exposure to our existing sales channels, we are confident in the potential growth of TheraClear X in 2023. This exposure helps us to broaden the awareness of our device and its proven capabilities. We are excited to see TheraClear X make an impact on revenues this year. Now turning to our international operations. Internationally, we sold 100 systems made up of 88 X-Track and 12 V-Track systems. This compares to the 38 systems we sold in 2021. As a reminder, we have signed distribution agreements in Korea, Japan, China, Israel, Saudi Arabia, Kuwait, Oman, Qatar, Bahrain, UAE, Jordan, Iraq, and most recently, Mexico. This January, we announced an exclusive agreement with Minolabs, a private company that represents international pharmaceutical companies to commercialize innovative products in Mexico. for the distribution of X-TRAC, B-TRAC, and TheraClear X in Mexico for three years. When we look at Mexico's population, it is estimated that 80% of the population is affected by mild to severe acne. We are excited to enter into Mexico's nearly $300 million market, as there is a great need for additional treatment options. We look forward to updating the community on our progress in gaining regulatory approval, which we expect to receive in the fourth quarter of this year. In our international markets, there remains a great opportunity to market our TheraClearX system, and we expect this to be a focus this year. This year, we welcomed Michael Goodman to Strata as the head of international sales. We have already seen meaningful improvement in our international operations, specifically noting our increased international sales and Strata's expansion into Israel and Mexico. With that, I'll now turn the call over to our CFO, Chris Lesovitz. Chris?