Venus Concept Inc.

Please stand by. Good day, ladies and gentlemen, and welcome to the second quarter 2024 earnings conference call for Venus Concepts, Inc. At this time, all participants have been placed in a 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 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 factor section of our most recent 10Q 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, 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 to 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. Rajiv De Silva, Chief Executive Officer for Venus Concept. Please go ahead, sir.

Thank you, operator, and welcome everyone to Venus Concept's second quarter 2024 earnings conference call. I am joined on the call today by our Chief Financial Officer, Dominic Della Pena, and by our President and Chief Operating Officer, Dr. Hemant Wagis. Let me start with an agenda of what we will cover during our prepared remarks. I will begin with a brief review of our second quarter results and operating developments in recent months. Hemant will then share an update on our progress in several key operating areas. Following that, Dominic will provide you with an in-depth review of our second quarter financial results, as well as our balance sheet and financial condition at quarter end. Then, we will open the call for your questions. With that agenda in mind, let's get started. As detailed in our press release issued today, we are pleased to deliver revenue for second quarter that modestly exceeded the expectations we outlined on our first quarter earnings call. While our total business results reflect a decrease of 17% on a year-over-year basis, we're encouraged by the continued improvement in the underlying trends in our business during the quarter, particularly in the U.S. Sales to U.S. customers posted only mid-single-digit declines year-over-year. Outside the U.S., revenue decreased 29% year-over-year in the second quarter, reflecting impacts related to the strategic restructuring activities we executed last year. Additionally, our OUS revenue results were impacted by fluctuations in ordering patterns from our new distribution partners in key international markets, as we had expected. While the business continues to be impacted by macroeconomic headwinds, which are pressuring the aesthetic sector as a whole, we are encouraged by the continued improvement in the underlying trends in our U.S. business. We believe this improvement represents further evidence that the strategy we've implemented to focus our resources on higher opportunity markets with the goal of enhancing the company's long-term growth and profitability profile is working. That said, the operating environment remains challenging. Customer financing pressures higher interest rates, and tighter credit markets continue to impact customer systems adoption throughout our business. This is especially the case with high ASP systems deals, where time to close continues to lengthen. I am proud of our team's continued commitment to our strategy despite the challenging operating environment. The positive energy and enthusiasm give me confidence that my expectations for continued solid execution and improving results over the balance of 2024 is appropriate. Before I turn the call over to Hemant, I wanted to provide an update on a few areas of notable progress made in the second quarter with respect to three of our key strategic initiatives. First, we remain focused on our strategic initiative to enhance the cash flow profile of the business and accelerate the path to long-term sustainable profitability and growth. Dominic will discuss our solid cash flow performance in Q2 later on the call. But I wanted to call out a few important highlights to underscore our recent progress on this front. We achieved a 37% reduction in our cash use and operations year over year, which we view as particularly impressive given the continued headwinds to revenue growth that the aesthetic sector participants are facing over the last year. We continue to believe that this performance represents the clearest evidence that we are making progress with respect to this important strategic initiative. Second, as discussed on our first quarter call, we announced multiple transactions reflecting material progress towards our strategic initiative to restructure the company's debt obligations and secure bridge financing. On April 23rd, one of our largest lenders and investors, Madryn Asset Management, purchased the company's Main Street Lending Program loan, or MSLP loan, from City National Bank of Florida for an undisclosed amount. Following the close of the MSLP loan purchase, we entered into a loan and security agreement with Madryn for an aggregate principal amount of up to $5 million in debt financing to support our near-term liquidity requirements. And on May 28th, we announced a debt-to-equity exchange, which resulted in a net reduction in outstanding borrowings of $35 million. These transactions facilitated a 39% reduction in our total debt outstanding over the first half of 2024 to approximately $46 million, as of June 30th, compared to $74.9 million as of December 31st, 2023. We are pleased that Madeline has demonstrated further commitment to Venus Concept's long-term prospects with these transactions and look forward to our continued engagement with them as we execute our strategic plan. Third, on June 6th, we announced that we were notified by the NASDAQ stock market that Venus Concept has regained continued listing compliance. The debt-to-equity transaction with Madryn served to bring the company above the minimum stockholder's equity requirement. I would now like to turn the call over to Dr. Hemant Varghese, who will share an update on recent progress related to our other initiatives.

Hemant? Thanks, Rajiv. As outlined on our last earnings call, we were focused in 2024 on our restructuring programs as well as our commercial strategy, customer engagement, product development and regulatory initiatives. Let me share a little colour on our recent progress in each of these areas. First, our restructuring, cost reduction and cash management initiatives continue to progress well and our focus on protecting near-term cash runway has been productive. Specifically, We delivered a 13% reduction in our operating expenses year over year, reflecting the significant restructuring activities we've executed as part of our corporate turnaround strategy over the last 18 months. As part of this effort, it's important to understand that we are also focused on allocating our resources to high priority strategic initiatives that will support our future growth. This includes our efforts to advance certain new product pipeline projects such as the regulatory clearance and commercialization of our next body contouring system in early 2025. Our strategic focus on accelerating the company's path to cash flow break-even and sustaining operations has resulted in difficult decisions, like to delay the highly compelling R&D initiatives, including our AIME robotics platform. We continue to believe that our AIME robotics platform has the potential to revolutionize aesthetic medical treatment paradigms, The AMI technology will be critical to maximizing the synergy between our well-established medical aesthetics business and our pioneering robotics R&D capability. As we continue to stabilize the core business and enhance our overall financial security and investment flexibility, we look forward to returning to an expanded R&D program and new product development strategy, which will be an essential component of our long-term revenue growth. Second, Our efforts to rationalize our international infrastructure, reduce costs and simplify the organization continues to progress as well. As part of this initiative, we continue to engage with existing and several new distribution partners to align our new international strategy. Importantly, we remain on track to be substantially completed with our international repositioning in the coming months and ready to return to growth outside the US in 2025. Third, during the second quarter, we continued to drive progress with respect to our efforts to secure new regulatory clearances and execute successful commercial launches. Specifically, we secured TGA clearance in Australia for our Venus Versa Pro on April 3rd. The initial launch in this important global market is progressing favorably. In June, we announced the receipt of a medical device license to market Venus Versa Pro in Canada. Venus Versa Pro continues to receive positive feedback from customers regarding its multimodal system capabilities and best-in-class treatment. Fourth, we're pleased with positive early market response from our company-wide rebranding initiative, Venus AI, and the encouraging feedback from physician participants in our Next Thetics programs. We've been pleased to see a significant increase in the popularity and attendance at our Next Thetic events, which as a reminder, bring together our network of aesthetic leaders and practitioners to learn about the science behind Venus AI technologies and our best-in-class practice development programs. The Nextesthetics program represents a great example of how we're enhancing our focus on physician education and practice enhancement by empowering professionals in the aesthetics field with the knowledge, tools, and support they need to grow their businesses. Since launching the first event in March, we've hosted thousands of registrants including our largest gathering to date, which was held in Houston, Texas in June. Looking ahead to the remainder of 2024, Nexthetic Events will continue to expand across the United States with upcoming events in Phoenix, New York City, Atlanta, Dallas, and Minneapolis. With that, let me turn the call over to Dominic for a review of our second quarter financial results and balance sheet at quarter end. Dominic?