Strata Skin Sciences, Inc.

Greetings. Welcome to the StrataSkin Sciences 2Q2023 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to your host, Nicole Jones, Investor Relations. You may begin.

Thank you. Joining on today's call will be Bob Moshe, Chief Executive Officer, and Chris Lesovitz, Chief Financial Officer. Earlier today, Strada released financial results for the quarter ended June 30th, 2023. 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 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 facts or relate to expectations or predictions of future 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 this forward-looking statement. Accordingly, you should not place 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 with the SEC, including our annual report on Form 10-K for the year ended December 31, 2022. This conference call contains time-sensitive information and is accurate only as the live broadcast today, August 9th, 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, we refer to domestic growth 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 release for the second fiscal quarter, June 30, 2023, which is accessible on the SEC's website and posted on the Investor Relations page of Strata's website at www.strataskinsciences.com. And with that, I'll turn the call over to Bob Moshe.

Thank you, Nicole. And thank you all for joining us on today's call. In the second quarter, we continue to make progress operationally, achieving milestones across various aspects of our business. A few notable achievements include our TheraClear X review and expert perspectives publication in the Journal of Clinical and Aesthetic Dermatology, securing a $12 million financing with MidCap Financial, increasing our TheraClear X install base to over 70 devices, Dr. Glynis Ablon initiating and treating patients in the TheraClear X clinical study and placing 18 new extract devices domestically. During the second quarter of 2023, we recognized revenues of $8.3 million versus $9.1 million in the same period of 2022. When excluding a significant one-time order we received from China during the second quarter of 2022 of $1.5 million, Sales increased 8.8% during the period. There were also approximately 900,000 of expected international sales that were shifted to the second half of 2023 as a result of seasonality and lower capital spending due to higher interest rates and slowed macroeconomic factors. We expect to recover those sales during the second half of 2023. We continue to see large opportunities on the horizon for XTRACT, As we have previously mentioned, there are new FDA-approved treatment options for vitiligo that have emerged over the past year. As a reminder, non-segmental vitiligo accounts for approximately 15% of domestic extract procedures. We believe that as the level of interest in vitiligo treatment options increases, we expect to see more opportunities to expand the awareness and usage of extract. For the remainder of the year, we plan to continue removing non-profitable or underutilized devices from our installed base. We are also evaluating a plan to move lower tiered partners into existing membership programs that would offer them a number of codes commensurate with their usage. These changes would result in a more predictable revenue stream for Strata. Earlier this year, we announced the official broad launch of TheraClear X. which we expect to become one of the key drivers of our business. We have seen tremendous momentum with 73 TheraClear X devices placed as of June 30th, 2023. Additionally, as we mentioned in our last earnings call, we have sold over 6,000 TheraClear X treatment codes, showcasing the increasing adoption and effectiveness of our acne solution. We continue to expand the awareness of TheraClear X through multiple avenues, we have implemented TheraClear X training programs for both our Salesforce and new TheraClear X providers. The training sessions focus on how to engage patients and promote cash pay services in their respective offices to ultimately drive utilization. In addition to expanding our training program, we have also hosted peer-to-peer webinars with dermatologists who are experienced with TheraClear X explain best practices to users of the device. This May, we announced that Dr. Glynis Ablon of Ablon Skin Institute and Research Center in Manhattan Beach, California, initiated and treated the first six patients in her TheraClear X open-label, single-arm clinical research study. The study titled, A Seven-Week Open-Label Study Evaluating the Efficacy and Safety of TheraClear X, on mitigating mild to moderate acne in healthy teenagers and young adults. Aims to further substantiate the efficacy and safety of Theraclear X as a standalone treatment for mild to moderate acne. The study will evaluate 30 healthy male and female subjects aged 12 to 40 years and older over the course of seven weeks. We expect the study to be completed by the end of Q3. As a reminder, acne affects up to 50 million Americans annually and accounts for up to 20 to 25% of dermatology visits. Acne is also prevalent in adolescents with 85% experiencing some degree from the ages of 12 to 24 years old. We believe Theraclit-X's FDA cleared technology is well suited to address this need in the market. In July 2023, we announced that the Journal of Clinical and Aesthetic Dermatology, also known as JCAD, published a review and expert perspective article in the June 2023 supplemental edition titled, Photonematic Technology for the Treatment of Mild to Moderate Acne Vulgaris. The expert perspectives roundtable featured dermatologists Ashish Bhatia, Cheryl Burgess, Girish Manavali, and Jason Smith. Some key takeaways from the roundtable were TheraClear X is safe and efficacious, providing visible improvement in acne as soon as the second treatment. Additional benefits include visible improvement of pore size, erythema, and skin texture. TheraClear X's settings can be customized to treat all Fitzpatrick skin types. Treatment sessions are quick and comfortable with no downtime, resulting in compliant and satisfied patients. TheraClear X is ideal for a new acne patient wanting to expedite their acne clearance and or an existing patient wanting to enhance their current acne regimen. The review in JCAD, authored by Dr. Girish Manavali, highlighted TheraClear X's mechanism of action, key features of the device, and the outcomes experienced in the clinic. Dr. Manavali mentioned that he often utilizes TheraClear X in his clinic to treat mild to moderate acne. He also described the benefits to patients as they experience little to no downtime and visible reductions in redness early on in the treatment. The expert perspective article in the roundtable showcased the safety, efficacy, and visible improvements patients experience with TheraClear X. This publication serves as another treatment to the device's efficacy and helps us to continually increase the device's market awareness. Looking ahead, we remain committed to our strategic priorities, advanced sales training, and expanding our market presence through virtual events and industry conferences. These efforts will further solidify our position as a leader in providing innovative phototherapy solutions to patients and healthcare providers worldwide. I will now turn the call over to Chris to discuss the financials.