Venus Concept Inc.

Good day, ladies and gentlemen, and welcome to the first quarter 2022 earnings conference call for Venus Concept, Inc. At this time, all participants have been placed in the listen-only mode. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay. 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 could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our most recent 10-Q and our annual report on Form 10-K filed 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 at 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 GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in our earnings press release issued today on the investor relations portion of our website. I would now like to turn the call over to Mr. Dom Serafino, Chief Executive Officer of Venus Concept. Please go ahead, sir.

Thank you very much, operator, and welcome, everyone, to Venus Concept's first quarter of 2022 earnings conference call. I'm joined today by our Chief Financial Officer, Dominic Della Pena, and Ross Furtaro, our President of Global Sales. Let me start with a brief agenda of what we will cover during our prepared remarks. I will start with an overview of our revenue results in the first quarter. I will then provide a summary of creating progress in key areas in recent months. Then Dominic will provide you with a more in-depth review of our quarterly financial results, our balance sheet, and our guidance for the full year 2022, which we reaffirmed in today's press release. Then Ross will provide an update on our commercial progress and priorities. And then we will open up the call for your questions. With that overview in mind, let's get started with the review of our first quarter revenue performance and overall business trends. We reported gap revenue of $26.4 million, up 17% year-over-year. The increase in total revenue year-over-year was driven by 25% growth in the sales in the U.S. customer base and 10% growth in international customers in the period. Total sales and subscription revenue increased 22% year-over-year in Q1 and and our procedure-related disposable revenue increased 14% year-over-year, excluding our discontinued Bureau Grafter program from the prior year period as we exited this business line in Q4 of 2021. Importantly, revenue growth in Q1 was driven by the key franchises we prioritized as part of our commercial strategy, which we discussed in recent investor calls. Specifically, excluding our Bureau Grafters program, revenue sales in our growth franchises increased 19% year-over-year in Q1, fueled by a sales force focus and execution continued with strong demand for Artist IX robotic systems and the early clearance and initial commercial launch of our BlissMax in March. The early market response to BlissMax has been notable, and sales of this highly differentiated body contouring workstation drove growth in sales of products of our body franchise by more than 60% in Q1. With respect to procedure trends in the first quarter, our real-time IoT data gives a strong visibility into the active device trends for large portions of our medical aesthetic install base. This average usage per system continues to reflect measured improvement in patient activity. Outside of the US, we continue to see varying usage trends depending on the region of the world and the respective pace of recovery from the pandemic. Procedure trends in our hair restoration customers in the first quarter reflect improving growth after a slower part of the quarter as well. North America procedures exceeded previous four years Q1 records, while Latin America and EMEA were at similar levels to Q1 2021, but this was not enough to cover loss of procedures in APAC. APAC did have increase in artist installs in Q1, so we hope to see utilization return to normalized levels in Q2. Turning to a brief update on operating highlights for the first quarter and in recent months. Overall, we've made significant progress in the areas of new product development, clinical validation, regulatory clearances, and commercialization. Our efforts to expand the Venus Bliss portfolio of systems and products continues to progress. We received 510 clearance for the Venus Bliss Max in January and started our initial commercial in March. In April, we're pleased to announce the receipt of the new 510K clearance to market the BlissMax with an expanded indication for use in new areas of the body and an increase in RF energy output. This new clearance further expands our single body contouring workstation's versatility and utility and its indication for use to include non-invasive lipolysis of the back and thighs in addition to abdomen and flanks and by increasing maximum RF energy output by 50%, BlissMax now offers physicians more efficiency and flexibility in treatments, which we believe will provide even stronger clinical results and ultimately increases the revenue for our customers. Finally, we are proud of the continued progress we've made in recent months to advance our development, regulatory, and clinical strategy for AMIE, our non-surgical robotic technology platform for medical aesthetic applications. We announced 510 submission for a general indication of tissue excision and skin resurfacing on March 31st, and we look forward to engaging with the FDA during their review period of our submission. We continue to believe that Amy has the potential to bring true innovation to the medical aesthetic market by changing the way procedures are performed and bringing a new level of speed, safety, and clinical predictability. The submission of this 510 brings us one step closer to our goal of commercializing Amy in the U.S., and we continue to expect that we will be in a position to begin limited release in the fourth quarter of 2022. The prospects for non-surgical robotic technology platform AAMI are very compelling, and we look forward to introducing this disruptive technology beginning later this year. It's important to remember that AAMI is a platform, is just that, a platform. And it has been designed to support numerous different clinical applications via a unique upgrade path for clinicians making it extremely cost effective and differentiated from any products currently available to aesthetic device market today. In parallel to the process of submitting for general indications for skin excision and skin resurfacing, we have also made progress towards our strategy to secure specific clinical indications for Amy for the treatments of the face. As discussed on prior calls, we are pursuing an IDE clinical study evaluating the safety and efficacy of using AMIE for the treatment of moderate to severe facial wrinkles. This study will support our FDA submissions, specific clinical indications for the treatment of wrinkles on the cheeks, and will further expand our annual addressable market opportunity and enhance our long-term growth profile. We recently announced that the first patients has been treated with, and our four clinical investigation sites are busy enrolling and treating 70 patients in the study. With that, let me turn the call over to Dominic Della Penna, who will provide a detailed review of our first quarter financial results and discuss our balance sheet, financial conditions, and our 2022 guidance, which we reaffirmed in today's press release.

Dominic? Thank you, Dom. Given Dom's detailed review of our revenue results, I will begin with a review of our financial performance across the rest of the P&L. For the avoidance of doubt, unless otherwise noted, my prepared remarks will focus on the company's reported results for the first quarter of 2022 on a gap basis and all growth-related items are on a year-over-year basis. Gross profit increased 2.5 million or 17% to 17.8 million. Gross margin was 67.3% compared to 67.4% of revenue in the first quarter of 2021. The change in gross margin was driven primarily by changes in mix, partially offset by higher shipping costs compared to the prior year period. Total operating expenses were $25.2 million compared to $22.1 million in the first quarter of 2021. The change in total operating expenses was driven by an increase of $2 million, or 26%, in sales and marketing expenses and an increase of $0.9 million, or 8% in general and administrative expenses, and an increase of $0.2 million, or 7%, in R&D expenses. First quarter operating expense growth reflects the strategic investments we are making to support our key growth initiatives, including our commercial launch of the BlissMax and our development, regulatory, and clinical programs for AIMEE. We continue to expect GAAP operating expenses in the range of 98 to 101 million for the full year 2022 period. Total operating loss was 7.4 million compared to 6.8 million in the first quarter of 2021. Net loss attributable to stockholders decreased 0.6 million or 7% to 8.6 million. Non-GAAP adjusted EBITDA loss increased 0.9 million, or 17% year-over-year, to 5.9 million. As a reminder, we have provided a full reconciliation of our GAAP net loss to adjusted EBITDA loss in our earnings press release. Turning to the balance sheet, as of March 31, 2022, the company had $17.9 million of cash and cash equivalents, and total debt obligations of approximately 77.5 million compared to 30.9 million and 77.8 million respectively as of December 31st, 2021. The year-over-year increase in cash operations is directly related to our strategic initiative which prioritized investments in inventory our ability to meet customer demand as we move through 2022 given the realities of ongoing supply chain challenges. Note, part of the increase in working capital related to incremental cash invested for advances to suppliers as part of this initiative. This strategic initiative is expected to result in additional cash investment in the second quarter. However, we continue to expect improving working capital trends as we move through 2022 and we continue to expect cash flow positive in the fourth quarter of 2022. Turning to a review of our guidance, as detailed in our press release, we reaffirmed our revenue guidance for the full year 2022 period. The company continues to expect total revenue for the 12 months ending December 31st, 2022, in the range of $126 million to $130 million, representing an increase of approximately 20% to 23% year-over-year compared to total revenue of $105.6 million for the 12 months ended December 31, 2021. While we are not providing formal profitability guidance for the full year 2022, our outlook continues to assume that we deliver another year of material profitability improvement including a target of achieving cash flow positivity in the fourth quarter of 2022. For modeling purposes, we would like to offer the following considerations to help investors understand the underlying assumptions driving our 2022 profitability targets. First, we expect our gross margins to be in the range of 68% to 71%, as we see continued improvement in gross margins driven by mix, but also expect inflationary headwinds to pressure our COGS in 2022. Second, we expect continued expense management to drive notable operating leverage in 2022. Specifically, we expect gap operating expenses in the range of $98 million to $101 million, representing growth of 10% to 13% year-over-year, compared to our total revenue growth range of 20% to 23% this year. Third, we expect our interest expense to be approximately $4 million and we expect non-cash CNA of 4.5 million and non-cash stock comp of approximately 2.4 million. Fourth, we continue to expect our weighted average shares outstanding to be approximately 64 million. There are two additional items to bear in mind when evaluating our full year 2022 revenue growth expectations. First, We continue to expect our body franchise to be a material driver of total company growth this year, fueled by commercialization of our Venus Bliss in OUS markets and the commercialization of our Venus Bliss Max in the U.S. We do expect growth in our body franchise to be stronger over second half of 2022, given the timing and expected ramp from our recent introduction of the Bliss Max. Second, our 2022 total revenue guidance does not assume material contributions related to the limited release of AMI and Q4 2022. We intend to update the investment community on the potential contributions from the initial commercial release of AMI following the receipt of 510K clearance. While AMI is not expected to materially impact our 2022 growth, it is fair to assume that we will be highly focused on ensuring that we are well prepared to execute our commercial strategy for this highly differentiated robotic technology as soon as possible following receipt of regulatory clearance and would expect Amy to be a material contributor to our total company growth beginning in fiscal year 2023 and beyond. With that, let me turn the call over to Ross for an update on our commercial progress and priorities. Ross?

Thanks, Dom. We're most pleased with our commercial execution in Q1 with key initiatives. We continue to attract proven aesthetic leaders in the industry that are attracted to our industry-best new product innovation and key growth drivers in body and hair. As I mentioned most recently, We started at the senior management level, and we are finishing our execution at the field level. As we mentioned earlier, our investment in the U.S. was rewarded with 25% growth in sales. BlissMax was a key driver with 60% growth with our body franchise. We continue to expand our KOL install base and body, and we expect the growth to continue based on the initial market acceptance of the only platform that addresses fat, skin, and muscle. The early feedback from our initial launch of the Bliss Max has been very positive. We are especially encouraged by the response from highly regarded practitioners, including Dr. Scott Garish, a leading expert in regenerative medicine and aesthetics, and a pioneer with first-generation fat technologies that changed our industry. Dr. Garish noted, and I quote, The BlissMax system represents a truly synergistic addition to his body contouring practice. It offers improved outcomes with both tightening and muscle stimulation and attractive practice economics given the lack of consumable cost per treatment. Artis IX and Neograph had another strong global quarter as we continue to sell the business of hair restoration versus just systems. With that, I'll turn the call back to Dom for closing remarks. Dom?

Thanks, Ross. In closing, we remain confident in our full-year outlook and continue to expect improving growth trends as we move through 2022. Our 2022 total revenue outlook continues to assume that more than 75% of our total revenue growth year-over-year comes from two key growth franchises, specifically our body franchises, which includes systems and procedure revenue related to the Bliss Max and Venus Bliss products, and our hair restoration franchise, which includes systems and procedure-related revenue for our Artist and NeoGraft products. Importantly, we expect the contributions of total revenue growth from these two growth franchises to fuel continued growth in sales of procedure-related revenue and to be accretive to our total company gross margins. Our 2022 total revenue outlook also assumes growth contributions from the portions of our business dedicated to a medical aesthetics outside of the body franchise. This portion of our business includes contributions from six commercialized aesthetic products, including two of our largest product lines, the Venus Legacy and the Venus Versa. We continue to expect sales of these products to increase in the mid to high single digits year over year in 2022, reflecting a continuation of the durable, stable growth profile demonstrated in recent years. With that, operator, we'll now open the call to questions. Operator?

Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you'd like to ask your question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, It may be necessary to pick up your handset before pressing the star key. In the interest of time, if you could please limit yourself to one question and one follow-up, and then re-queue for additional questions. Our first question comes from the line of Maria Dybalt with BTIG. Please proceed with your question.

Hi, good evening, and thank you for taking my questions. I'll ask two quick ones here. Congrats on the expanded indication for BlitzMax. Very nice to see you. It took us by surprise. Was that something that was planned? Was that requested by early users? What was kind of driving the decisions for that expansion, and what does that mean for the total addressable market?

We were quite pleased with that, Marie, and good evening. What was really nice about this particular clearance, it gives us real confidence in the process that the FDA is going through, even with Amy. We were able to achieve this clearance in a 54-day cycle. This was something that our client base wanted to be able to market, and so to be able to add additional body zones in the marketing materials that are used day in and day out in the field is a big help. So we're pleased with the 54-day turnaround from our submission, and hopefully that type of turnaround will help us in facture submissions to the FDA and other products that we choose to market.

Sure. Very good. Okay. And then a quick follow-up here on some of the OUS headwinds you addressed. Would you say, I guess maybe a two-part question on that, would you say that some of those headwinds are starting to improve here now that we're into May? What are you seeing on the ground? And then in terms of FX headwinds, what should we be baking into kind of our outlook for the rest of the year?

Sarash, you want to take the first one, and GDP, you can answer the second one as well.

Yeah, absolutely. You know, regardless of OUS, you know, you really have to break it into the three markets of EMEA, LATAM, and APAC. In EMEA, you know, we certainly have a strong direct presence. And, you know, certainly from a pandemic standpoint, you know, that's becoming less and less a factor each day. And the, you know, existing core product portfolio of Venus Concept and Artists remains strong. As far as APAC, there is a little bit of headwind, you know, certainly that we all know with Hong Kong and China and the pandemic. But our risk in that market is less based on our product portfolio and certainly what we're looking at in business in May and June. And then certainly in Mexico, you know, we're direct in that marketplace and we are, you We don't have any limitations, let's just say, from pandemic or any outside supply chain type issues. As far as FX, I'll leave that to DDP.

Hey, Marie. So our FX for Q1 was actually pretty much flat. I don't think we've reported anything for the first time in a long time. Usually it's a plus or a minus. It's been manageable. We don't manage our, we don't hedge our FX, our currencies, but we do seem to have a natural hedge between the currencies that, you know, the major ones are the US dollar, the euros, the Israeli shekel, and the Canadian dollar. And between those four movements, we found that typically we're not seeing huge swings quarter on quarter. Yes, there are movements between two individual currencies, but If one is down, there tends to be some other currency that kind of offsets it. And so we haven't seen any really strong headwinds, nor am I projecting. It's a very difficult thing to project, but we don't have a strategy to hedge those currencies.

Okay. Very good. I appreciate the color. I'll hop back in queue. Thank you.

Thanks, Marie. Our next question comes from the line of Jeffrey Cohen with Lattenberg Bauman. Please receive your questions.

Oh, hi, Dom, Dominic, and Rob. How are you?

Hey, good, Jeff. How are you?

Good, thanks. So two questions from Aaron here. Firstly, could you talk a little more about Amy and the FDA, the agency? So it looks like you're going after initially this quote-unquote general indication, which is tissue excision and skin resurfacing with this idea. It looks like there's a 70 patients expected and you started enrolling, so curious on the timing there. And then talk to us a little bit about wrinkles. Tell us, if you could, the type of energy or the pulsation that you may be using. And then perhaps talk to us also about dermal microcoring and how or when we might see that come to fruition and also other anticipated tips, if you will, over the coming years.

Yeah, look, I think for our first clearance, we're quite excited about the, I'll call it the versatility of the areas of the body that the device can be used in general terms. For competitive reasons, we don't really want to disclose kind of where we're targeting right now. But I think that the doctors who will be able to be our first 10 or 15 sites once we get our FDA approval will teach us a lot about some of the things that we've already seen in our clinical trials, feasibility trials, and our pig studies as to what happens to dermal remodeling, or collagen remodeling as well. So I think that there's a lot of different indications for, I'll call it the first generation Amy. The second generation Amy, which is the more specific clinical indications for the face, because we do believe that minimally invasive treatments of a variety of different areas of the face will benefit greatly from this very predictive, very safe, and very quick technology, will also allow us to expand the other clinical indications as we go forward. The FDA has asked us to do the study in two phases. The first phase being 12 patients to confirm what we saw in our general indication submission, a very high level of safety profile. But when you're working on the phase, the FDA wants to make sure that we're on side. So we understand that and we're aggressively pursuing that phase one. Phase two will add the additional 58 patients All of this, we anticipate, will be completed by the end of the year, given the nature of the treatment itself, where we have to have a month delay between treatments, and we'll typically do two treatments per patient. In some cases, three, depending on the area we're treating. So it'll be done in phases, and that's not going to preclude us from launching AMIE, nor does it preclude us from currently in the background working on other clinical indications that we'll be able to add to the AMIE platform as I said, via the purchase of an upgrade path, an app, et cetera, et cetera. So we're very excited about what this platform will do to the market in general because we do think it's time for the market to see something that's truly unique and differentiated from what normally gets sold by our competitors.

That's very helpful. And could you talk a little bit about AIME and its development and bring into context the restoration robotics platform and any architectural similarities between both platforms as far as their development? I think that you were already somewhat underway on the AMI side prior to restoration, but has that played an effect on the hardware, software end of things?

It has, because a lot of the technology that has been built into the AMI, the vision system, the artificial intelligence capabilities, the machine learning, et cetera, came from the... the massive amounts of money that were spent into developing the artist robot by the previous restoration robotics team. So it's benefited us because we've been able to be extremely efficient financially in bringing this next generation robot to the market. What we're pleased about is that we learned a lot of lessons from the amount of money spent by restoration, and we're very confident that we're going to be able to cut the cogs on this device by half from the current hair system which will allow us to price the next generation robots at around $150,000 and actually improve our margins to north of 70% from the 60% we're at now. So I think it's going to allow us, you know, there's a big difference at $150,000 in the addressable market versus $250,000 in the addressable market. So I think we're excited about that because it'll make it a meaningful proposition, economic proposition for the clinics. And then as the clinic has the ability to upgrade with a variety of different apps, you know, I think it'll just be much more efficient. And by the way, just to remind everybody, every procedure that we will do on the AMI platform will have a meaningful but yet reasonable cost of utilization and, you know, call it the razor blade model. So we feel that over the next few years, we're going to be able to dramatically improve our revenue from disposable products. disposables on the device. Finally, the platform for Amy is about half the size of the current restoration robotics platform, and the industrial design will be very elegant and very appealing. So, you know, all of those things play important roles in aesthetics, and we're excited about what this opportunity will provide us, especially in the core market of dermatology and plastic surgery.

That's helpful. And then a quick one for GDP, if I could. Can you talk about the... the services impact from the Vero grafters? I know it was only 3% of business, but what percent decrease should we model in for that ceasing during 2022? Because I know you saw the extended warranty side.

Well, on the Vero grafters, you should be modeling zero on that. The revenue in the previous year was, I think, just over $2 million. but you should be modeling nothing going forward. We may have had a little bit trickle in in the first quarter, but we essentially discontinued the operations in December.

So the service segment should go from 4 million. It should be cut in half.

It'll be offset. Well, then there'll be an offset by growth and services, right?

Just for the benefit of those on the call, the definition of VeroGrafters is that we used to have a program where we would actually deploy 1099s to help physicians carry out the procedures, and we just felt that that was a low-margin business that wasn't really going to be a big part of our future, and therefore what we've done is essentially given our customers who use robots and or VeroGraft, the ability to directly access this particular group of 1099s, and that's worked out pretty well, still supporting our customers, but not necessarily having to be the middleman in the whole process.

Thank you.

And, Jeff, our guidance assumptions on revenue take into account, have always taken into account, the fact that we would suspend the Bureau grafter services.

Our next question comes from the line of John Block with Stifel. Please proceed with your question.

Thanks, guys. Good afternoon. Don, maybe just the first one. You know, when we think about artists, Bliss Max, they're great systems, but they're also higher ASP systems and, you know, I believe usually financed by the doctor. And I know you said the market trends continue to be solid through your IoT data, certainly in North America. But just You know, we'd love your thoughts on any trepidation now or several quarters from now from doctors down the line on these higher ASP systems and any reluctance to purchase, and especially if the financing terms get more scrutinized or more difficult and what that does to the total cost of ownership.

Yeah, I think that, and that's a great question, John, because I think that with anything that has higher ASPs, the true analysis that needs to be done is what is the rate of return? on those ASPs. We know that, for example, right now the artist hair restoration technology at an ASP of somewhere around $140,000, $150,000 has a rate of return of about $1,500 an hour to the clinic when they're doing hair treatments. So it's easily justifiable in their ROI calculations. As we look at the real-time data that we have on Bliss and Bliss Max, payback periods even at a higher ASP And just to remind everybody that the ASPs on the Bliss Max are in the 175, 180 range. Those payback periods are less than a year. So it's not necessarily about, you know, what the cost of the device is. It's how quickly can they recoup their investment. And so these happen to be two very big growth areas. Hair, obviously, is the number one procedure for men. And fat and body contouring and muscle stimulation are is quickly becoming the number one procedure demanded in clinics, both for male and female. So the fact that we've extended our clinical indications really does help continue to further the validation of the ROI on these devices. Look, we don't know, obviously, what we don't know. If credit becomes tighter down the road for whatever reasons, you know, we'll have to revisit that. But I think, generally speaking, If you're taking an ROI from 26 or 28 weeks to 32 or 34 because of increased interest costs or things of that sort, we don't think that that's going to be material, and I don't think that that's going to really impact our sales pitch whatsoever.

Fair. Obviously, to your point, it's a very compelling ROI overall. Maybe just a couple other quick questions. I think you called out in the press release and again on the call sort of 60% sales growth in – product of the body franchise. You talked about in the previous call, you know, body and hair are going to play an integral role in the overall growth in 22. Did you give an artist number just year-over-year growth or anything sequentially? And then maybe just attack on, ask everything up front. Commentary around freedom seemed a little muted. And, you know, I know you were working out the business model, and it seemed like a capital-light type of business model. But anything more on freedom? I had heard some... Chatter that the FDA was giving that a little bit more scrutiny. Just would love your thoughts on freedom, the biz model, and how you want to move forward there. Thanks.

Yeah. So one of the things that we have, you know, looked at, you know, very seriously is we're a company that has 12 different platforms that we market day in and day out. Having 12 different platforms that we market day in and day out makes it very difficult and challenging from a marketing perspective, a focus perspective, etc., So we made a strategic decision a few quarters ago to focus on the hair franchise and the body franchise that we've talked about over the last few quarters. We think that this has really aligned our sales organization much better in terms of where their attention is, where our marketing's attention is, etc., etc., and it's starting to pay some dividends. While we don't break out the hair restoration franchise, we do know that Q4 was a record quarter for us overall since the beginning of of hair restoration in terms of robotics. And Q1 was a record quarter of all Q1s in this particular business segment. So we don't normally break out to two, but as we said earlier, it will continue to represent the biggest area of our particular focus and where we expect our growth to be for the balance of 2022 and moving into 2023 when we continue to streamline our product offering into a more robotic, uh... focus than you know the traditional handheld devices that you see today as far as freedom you're you're a hundred percent right i mean the fda uh... does continue to monitor you know the marketing activities and so on which is why we've taken a very pragmatic approach here in terms of ensuring that we endear ourselves to the appropriate koal network to be able to support this particular product uh... you know would we like to bring it to market sooner with The typical off-label indications that all of our competitors have done, sure, but we try to be a little bit more responsible about how we're going to the market. We think that this is a great product, and we don't want to, quite frankly, we want to take our time to make sure that we properly pursue the appropriate regulatory pathways and, more importantly, working with the appropriate KOLs to ensure that that happens.

Okay. Thanks, Isaac. I'll follow up offline. Appreciate it.

Yeah, no problem. Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.

Thanks.

Yeah, so just following up on some of the points, just want to make sure I have this right. So 60% of, well, you're expecting 60% growth in the body franchise, which is the Bliss and the Bliss Max. And then for the year, 75% of the growth in your revenues for the year will come from the body franchise and the hair restoration franchise. Is that correct? Correct.

We think it'll be more, but yeah, for the sake of 75%. Okay.

And then, and just on, on Amy. So can you talk a little bit more about, I know you said the gross margin, you're, you're expecting that to be 70%, which is great, but can you talk a little bit more about the business model there when that's what that would look like, you know, just in terms of pricing, consumable, you know, just give a little more color to that. Thanks.

Oh, no problem, Anthony, at all. So the bottom line on this is that we expect that we're going to be arranged for $150,000 on an ASP basis. We do expect that every device will have a utilization to it simply by the nature of the procedures that we intend to especially in the first generation of the technology. That disposable, we haven't calculated yet, but if the device margins will be in the 70% range or greater, we expect that the disposable portion of it will be north of 80% in that range in North America. So we think that that will have a significant potential impact on our overall blended gross profit margin, which is the intent here. And as we go forward with the AMI platform, once we understand the FDA pathways, we will be able to, you know, give you more color as to, you know, what we plan to do with the next generation of this particular platform and the various clinical indications that we're quite excited about but are not prepared to disclose at this particular point in time for competitive reasons.

No, that makes sense. And then just to follow up on the IP, obviously you acquired a lot of IP data. when you acquired restoration robotics. Can you talk about, just in general, after Amy, what the other opportunities are, you know, maybe in order of where you intend to go next in terms of pursuing automation of aesthetic products?

Yeah, look, you're spot on. I mean, one of the benefits of acquiring restoration was a very deep portfolio of IP that they had accumulated over the years. We've been able to leverage a lot of that IP in what we're doing right now, but more importantly, use that as the foundation for other clinical indications. We're quite confident that we're going to have an ability to build with pretty solid IP protection solutions in a variety of different things that are already being treated right now, big categories, areas like cellulite and so on, that we feel we have some interesting potential solutions that are completely differentiated than anything else that's in the market today. I don't want to go too much further than that, Anthony, simply because we're in the early stages of this, but we're quite confident that we have some solid IP in this particular area or in the process of completing that at this point.

Okay, great. Makes sense. Thanks for the call. I'll hop back in there too.

No problem. As a reminder, it is star one to ask a question. There are no more questions in the queue. This does conclude our call. Thank you for your participation. You may now disconnect your lines and have a wonderful day.