Strata Skin Sciences, Inc.

Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the Strata Skin Sciences, Inc. first quarter of 2024 financial results and corporate update conference call. At this time, all participants are in a listen-only mode. And should you need any assistance during the call, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. And to withdraw a question, please press star, then two. Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call through November 15th, 2024. And with that, I'd like to turn the call over to Joey Delahousie. Please go ahead.

Good afternoon, and thank you for participating in today's conference call. Earlier this afternoon, the company released its financial results for the quarter ended March 31st, 2024. A copy of that press release can be found on the company's website at www.stratuskinsciences.com under the Investors tab. Joining me on today's earnings call from Stratuskin Sciences Management Team are Dr. Dolab Rafiali, Chief Executive Officer, and Chris Lesovitz, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address Stratiskin Sciences' expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Stratiskin Sciences' most recently filed annual report on Form 10-K and subsequent periodic reports filed with the SEC and Stratiskin Sciences' press release that accompanies this call, particularly the cautionary statements in it. The content of this call contains time-sensitive information that is accurate only as of today, May 15, 2024. Except as required by law, Stratiskin Sciences disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to CEO, Dr. Dola Rappialli.

Thank you, Joey, and good afternoon for everyone on the call. During the first quarter, we continued to execute on the multifaceted turnaround strategy introduced when I was appointed CEO late last year. Clinical results using extract are proven across the hundreds of thousands of patients treated for psoriasis, vitiligo, and eczema. And our strategy primarily focuses on adjusting our extract device placements and increasing our DTC marketing to drive extract device utilization and recurring revenue per device over the coming quarters. across our domestic installed base of approximately 900 devices. During my previous tenure here at Strata, we have been successful with these strategies, and we feel comfortable driving similar results in 2024 and beyond. We started our DTC spend ramp up at the beginning of the first quarter in a limited region of the country. and expect to increase our marketing allocation to DTC in the coming quarters to drive patient appointments and expand the program into additional geographical areas. During the first quarter, we have expanded from our original four targeted areas to six and generated over 500 patient appointments at a cost per appointment of under $300 and a cost per lead of under 40. These metrics are in line with our previous DTC campaigns from my previous 10 years and in stark contrast to the 21 appointments scheduled by Strata in the first quarter of 2023 when the company did not apply DTC. These metrics are in line with those achieved in the first quarters of each 2019 and 2021 in which with a full DTC spend budget across the nation, we achieved 1,900, 1,800 appointments respectively after three quarters of ramp up. The first quarters in each of those years followed periods of no DTC spend And as a reminder, domestic gross recurring revenue in both 2019 and 2021 experienced strong double-digit growth. Another strategic initiative is optimizing our extract device placement. We have some underperforming dermatology partners, so instead of staying saddled with underperforming assets, we constantly consider removing these devices from such clinics and placing the devices in other dermatology clinics that have demonstrated the potential for higher utilization. Higher utilization is a benefit for both the clinic and StrataSkin. So we are always looking to optimize our install base of extract placements. The opportunity to increase utilization of our extract devices from both increased DTC stand and a repositioning of underperforming devices is significant. Successful execution of our strategy could increase the average gross recurring revenue per device from approximately $21,000 in 2023 to $30,000, which we less enjoyed in fiscal 2019, right before the COVID pandemic. This transition will take some time. As a similar turnaround, that started in mid 2018 resulted in the fourth quarter of 2019 reaching nearly $8,000 in gross recurring revenue per device. A return to these efficiencies across our installed base of over 900 devices could mean an incremental $8 million in high margin revenue, allowing us to reach profitability and positive cash flow in the process. We have seen evidence that our domestic business may have already been positively impacted by our strategic initiatives and are encouraged by that we are on the right path. In the first quarter of 2024, our gross domestic recurring billings were down just 3% year over year, making that the smallest year over year decline in the past seven quarters since the end of the second quarter of 2022. During the most recent three quarters, from second quarter of 2023 to the fourth quarter of 2023, this metric was down 15%, 12%, and 14% respectively. Thus, this much smaller decline in gross domestic recurring billing of 3% in the first quarter of 2024 was a marked improvement, providing some optimism that this metric can turn positive in the upcoming quarters further cementing the business turnaround. As a part of our strategic turnaround, we successfully removed 32 extract devices in the first quarter of 2024 and placed 16 devices into new accounts, including six that were placed into comeback accounts that represent clinics with existing extramural laser business that opted to re-engage with Strata through our partnership model. These changes have resulted in a domestic recurring installed base of 907 extract devices at the end of the first quarter, down from 923 at the end of 2023. We expect this optimization to continue in the upcoming quarters. Beyond extract, we continue growing our domestic installed base of TheraClear X devices. through the implementation of our recurring revenue model. In the first quarter, we successfully grew the TheraClear Axe install base from 92 at the end of 2023 to 104 at March 31st, 2024. We are encouraged by the uptake of clinics beginning to use the Acne Surgery CPT code. The first quarter ended with 47 of the 104 clinics submitting RDX insurance reimbursement charts at a rate of 65 charts per week as compared to none in the same period previous quarters. There are over 50 million patients with acne in the U.S., and the unique and reimbursable underlying photognomatic approach with Teraflare X can address limitations of existing acne treatments and drive reimbursable recurring revenue for our dermatology partners, similar to the extract model. Lastly, continued penetration in key international markets is also an objective for us. In late December, 2023, we've extended our exclusive distribution agreement with our distributor in Korea. And in early April, We did the same with our exclusive distributors in China and Japan. International revenue typically accounts for approximately 30 to 35% of our total revenue. And these three territories alone account for over 50% of those revenues. So to extend these long lasting relationships is mutually beneficial for both sides. Going forward, we expect to see continued growth in our DTC marketing efforts, driving extra utilization and gross domestic recurring billings, each of which are key components for us to demonstrate improved operating leverage and reaching profitability. A key initiative in this turnaround is our focus on cost controls. Notably, in the first quarter, we've reduced our cash burn by $1.1 million, or 41%, and our operating expenses by $1 million, or 14%, compared to last year. We talked about these collective strategies, strategic initiatives before, and we will continue discussing them in the future. Calls and future calls. As these tangible financial changes and results are proof of our commitment to narrowing our losses, extending the cash runway of the company, and becoming profitable. Now I'd like to turn the call over to Chris, who will review our financial results in much more detail. Chris?