Venus Concept Inc.

Please stand by. Good day, ladies and gentlemen, and welcome to the third quarter 2024 earnings conference call for Venus Concept Incorporated. At this time, all participants have been placed in 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 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 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. Rajiv De Silva, Chief Executive Officer of Venus Concepts. Please go ahead, sir.

Thank you, operator, and welcome everyone to Greenest Concepts Third Quarter 2024 Earnings Conference Call. I'm joined on the call today by our Chief Financial Officer, Dominic Della Pena, and by our President and Chief Operating Officer, Dr. Hemant Wagees. Let me start with an agenda of what we will cover during our prepared remarks. I will begin with a brief review of our third quarter results and operating developments in the 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 third quarter financial results, as well as a 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, our third quarter revenue results were softer than the expectations we outlined on our second quarter earnings call. We were pleased to see the improving trends from our international business in the third quarter, where sales were flat year over year, as we begin to see the initial benefits of the strategic restructuring activities we have executed over the last year. Our efforts to reposition our international business from unprofitable direct markets to partnering with high-value distributors is beginning to take shape. Sales to distributors increased nearly 60% in Q3, fueled by demand from new and existing distribution partners in the APAC and MAA regions. While we expect continued fluctuations in ordering patterns from our distribution partners in key international markets, We are encouraged by the early evidence that our efforts to evolve our international commercial strategy to enhance future growth and profitability are on the right track. We look forward to continued demand from our new distribution partners, particularly those in APAC, where we have registered new products in the second half of 2024, like the Bliss Max in Australia and multiple product certifications in India, one of the largest aesthetics markets in the world. We expect to benefit from these new products entering key major markets to begin within the fourth quarter. With respect to our results in the U.S. in the third quarter, the business continued to be impacted by macroeconomic headwinds, which are pressuring the aesthetic sector as a whole. Customer financing pressures, high interest rates, and tighter credit markets continue to impact customer systems adoption throughout our business. We did experience higher than expected end-of-quarter volatility, which led to key deals being pushed. The greatest challenge remains the overall time to close deals, which have not materially improved in recent quarters. We encourage that our commercial teams focus on prioritizing cash deals is proving effective. Cash system sales represented 76% of U.S. system sales in the third quarter compared to 69% last year and 67% in the first half of 2024. Importantly, this strategic shift in commercial focus has a direct impact on our lease revenue results, which declined 23% and 39% year-over-year in the U.S. and in total, respectively, in the third quarter. We continue to believe that our efforts to reposition the business to prioritize cash system sales is the right strategy to enhance the company's long-term profitability profile. I am proud of our team's continued commitment to our strategy despite the challenging operating environment. Before I turn the call over to Hemant, I wanted to provide an update on a few areas of notable progress made in the third 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 Q3 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 25% reduction in our cash use and operations year over year, which we view as solid performance in light of the softer than expected revenue results in the third quarter. We have delivered a 40% reduction in our cash used in operations over the first nine months of 2024, which is particularly impressive given the continued headwinds to revenue growth that aesthetic sector participants have been facing over the last year. We continue to believe that this performance represents the clearest evidence that we're making progress with respect to this important strategic initiative. Second, We made material progress towards a strategic initiative to restructure the company's debt obligations and secure bridge financing during the third quarter. On September 26th, the company exchanged $15 million of its senior debt held by Madryn Asset Management in the Series Y preferred stock. Following this transaction, the company had total debt obligations of approximately $34.6 million, down from 25%, from 46 million outstanding as of June 30th, 2024, and down 54% from 74.9 million outstanding as of December 31st, 2023. The substantial reduction in overall debt is evidence of continued progress in the restructuring of the balance sheet and will enable us to be best positioned for future growth. We're pleased that Madrid has demonstrated continued 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 October 17th, we were notified by NASDAQ that the company is eligible for an additional 180 calendar day period or until April 7th, 2025, to regain compliance with the minimum bid price requirements. We're pleased to have been granted this extension and will look forward to remedy the deficiency before the extension period. I would now like to turn the call over to Dr. Hemant Wagis, who will share an important update on recent progress related to our other initiatives. Hemant?

Thanks, Rajiv. Let me start by echoing Rajiv's comments by saying that despite the macroeconomic environment, that's affected the entire industry this quarter, I'm proud with the team for progressing our business in several key areas. While a difficult quarter with persistent market headwinds affecting all companies in the aesthetic capital equipment market, our team has shown great resiliency, leveraging the breadth of Venus' technology offering and strong financial partnerships to provide real business solutions for our customers looking to grow and expand their practices. Due to the longer than expected deal cycles, we had strong momentum into the final weeks of the quarter, but unfortunately had several opportunities push into the following quarter. Some of these deals have since closed. In addition, we continue to grow our highly successful and ecstatic event offerings in North America and now internationally, with each one showcasing our market-leading technology with testimonials from industry leaders and customers. We've recently expanded these events into international markets with our first event held recently in Madrid, where we received similar positive feedback from attendees similar to our previous events in North America. These next event experiences have been very well attended, highlighting a recovering level of demand and overall optimistic outlook for 2025. We look forward to seeing attendees at our upcoming events in Dallas, Toronto, Atlanta, and Miami. We continue to bring best in class partners into our international distribution network. Our team has been working hard to identify partner companies with regional expertise and reach to bring our aesthetic devices into major growth markets, and this quarter is an inflection point in this transition process. We're extremely excited to have Paragon and Spectra as our new partners, and we look forward to continuing the expansion of our international business in a profitable manner. In addition to finding strong partners, We're working hard to obtain regulatory clearances in key international markets for our products we believe can best fit local needs, such as Bliss Max and Venus Versa Pro, as evidenced from our latest registrations in Canada, Australia, and Israel. We expect to continue with a steady cadence of additional international product clearances for our core platforms through 2025. Lastly, we're working hard in developing new platforms that address our customers' most pressing needs. We continue to receive great feedback from users of our devices and have focused our targeted innovation efforts on our key platforms to address the major needs. We are pleased that we have completed the regulatory submission for our new body platform in the US. We are targeting the launch of this platform in Q1 2025, starting with the United States. We believe it will enable new and existing customers with the ability to provide patients with our best body technologies and deliver leading clinical results. We've also incorporated additional features and new capabilities designed to enhance workflow and practice development success. We look forward to providing more details over the coming months. With that, let me turn the call over to Dominic for a review of our third quarter financial results and balance sheet at quarter end. Dominic.