HORSHAM, Pa., Nov. 14, 2023 (GLOBE NEWSWIRE) -- STRATA Skin Sciences, Inc. (NASDAQ:SSKN), a medical technology company dedicated to developing, commercializing and marketing innovative products for the treatment of dermatologic conditions, today announced financial results for the third quarter ended September 30, 2023.
Third Quarter 2023 and Recent Business Highlights:
- Total Revenues were $8.9 million compared to $9.4 million for the third quarter of 2022, a total decrease of 6.0%.
- Non-GAAP EBITDA improved to $1.0 million compared to $0.6 million for the third quarter of 2022.
- Dr. Dolev Rafaeli, named new Vice-Chairman, President and CEO, effective October 31, 2023.
"I am pleased to have rejoined the STRATA Skin Sciences team," commented Dr. Dolev Rafaeli, Vice-Chairman, and Chief Executive Officer. "As a significant and long-standing shareholder, I am committed to ensuring that we maximize the inherent growth potential in the business by re-establishing our previous successful initiatives focused on driving utilization and average revenue per device in our domestic recurring partnership model. As we move forward, we will seek to drive value with our clinical partners and solidify our continued leadership in the market."
Third Quarter Financial Results
Revenues for the third quarter of 2023 were $8.9 million, compared to revenues of $9.4 million for the third quarter of 2022.
Global recurring revenues for the third quarter of 2023 were $5.3 million, compared to global recurring revenues of $5.8 million for the third quarter of 2022. Equipment revenues were $3.6 million for the third quarter of 2023, as compared to $3.6 million for the third quarter of 2022, staying flat.
Gross profit for the third quarter of 2023 was $5.0 million, or 56% of revenues, compared to $5.8 million, or 62% of revenues, for the third quarter of 2022. The decrease in gross profit percentage was primarily the result of higher depreciation due to more XTRAC lasers and new TheraClear devices placed into service, higher material costs, and a change in product mix with lower dermatology recurring revenue procedures during the three months ended September 30, 2023.
Selling and marketing costs for the third quarter of 2023 were $3.0 million, as compared to $3.8 million for the third quarter of 2022. The lower selling and marketing costs can be attributed to a reduction in advertising costs. General and administrative costs for the third quarter of 2023 were $2.3 million, as compared to $2.6 million for the third quarter of 2022. The reduction in general and administrative costs are primarily attributed to the decrease in employee-related expenses, such as salaries and stock-based compensation expense, and lower computer-related costs.
Other expense for the third quarter of 2023 was $0.4 million, compared to $0.2 million for the third quarter of 2022. The increase in other expenses for the third quarter was primarily attributed to the result of a higher interest rate on the variable rate Senior Term Facility entered into in September 2021.
Net loss for the third quarter of 2023 was $1.1 million, or a loss of $0.03 per basic and diluted common share, as compared to the net loss for the third quarter of 2022 of $1.0 million, or a net loss of $0.03 per basic and diluted common share.
For the period ending September 30, 2023, the company had a cash and cash equivalents balance of $8.5 million, compared to the balance on December 31, 2022, of $6.8 million. This increase was primarily attributed to additional proceeds received upon the refinancing of the Senior Term Facility on June 30, 2023, offset by an increase in inventories, and a decrease in accrued expenses and other current liabilities.
Suspension of Guidance
As a result of the recent management change, the company has suspended guidance for the fiscal year ending December 31, 2023, and until further notice.
"We look forward to Dr. Dolev Rafaeli's execution and proven business development experience on steering the Company back towards strong organic and inorganic revenue growth and profitability," stated Dr. Uri Geiger, Chairman of the Board. "Given his successful track record, the Board is enthusiastic about the opportunities ahead."
Webcast and Conference Call Information
STRATA management will host a conference call today, beginning at 4:30 PM ET. The conference call will be concurrently webcast.
The link to the webcast is available here: STRATA Skin Sciences Earnings Webcast
To listen to the conference call, please dial 877-269-7756 (US/Canada), 1-201-689-7817 (International), and use the conference ID number 13741439.
Reconciliation of Non-GAAP Measures
To supplement the Company's consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), the Company provides certain non-GAAP measures of financial performance, including non-GAAP adjusted EBITDA and Gross Domestic Recurring Billings.
The Company's reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards but is not a substitute for, nor superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of our current financial performance and to provide further information for comparative purposes.
Specifically, the Company believes the non-GAAP measures provide useful information to management and investors by isolating certain expenses, gains, and losses that may not be indicative of the Company's core operating results and business outlook. In addition, the Company believes non-GAAP measures enhance the comparability of results against prior periods. Reconciliation of the GAAP measures of net loss to non-GAAP measures included in this press release is as follows (in thousands) (unaudited):
| For the Three Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Net loss | $ | (1,053 | ) | $ | (995 | ) | ||
| Adjustments: | ||||||||
| Depreciation and amortization | 1,449 | 1,311 | ||||||
| Amortization of operating lease right-of-use assets | 89 | 67 | ||||||
| Loss on disposal of property and equipment | 31 | 17 | ||||||
| Interest expense, net | 438 | 209 | ||||||
| Non-GAAP EBITDA | 954 | 609 | ||||||
| Stock-based compensation expense | 337 | 455 | ||||||
| Non-GAAP adjusted EBITDA | $ | 1,291 | $ | 1,064 | ||||
XTRAC Gross Domestic Recurring Billings
XTRAC gross domestic recurring billings represent the amount invoiced to partner clinics when treatment codes are sold to the physician. It does not include normal GAAP adjustments, which are deferred revenue from prior quarters recorded as revenue in the current quarter, the deferral of revenue from the current quarter recorded as revenue in future quarters, adjustments for co-pay and other discounts. This excludes international recurring revenues.
The following is a reconciliation of non-GAAP XTRAC gross domestic billings to domestic recorded revenue for the third quarter of 2023 and 2022 (in thousands):
| For the Three Months Ended September 30, | |||||||||
| 2023 | 2022 | ||||||||
| Gross domestic recurring billings | $ | 4,883 | $ | 5,548 | |||||
| Adjustments: | |||||||||
| Co-Pay adjustments | (85 | ) | (188 | ) | |||||
| Other discounts | (29 | ) | (40 | ) | |||||
| Deferred revenue from prior quarters | 2,005 | 2,499 | |||||||
| Deferral of revenue to future quarters | (1,913 | ) | (2,309 | ) | |||||
| GAAP Recorded domestic revenue | $ | 4,861 | $ | 5,510 | |||||
About STRATA Skin Sciences, Inc.
STRATA Skin Sciences is a medical technology company dedicated to developing, commercializing and marketing innovative products for the in-office treatment of various dermatologic conditions such as psoriasis, vitiligo, and acne. Its products include the XTRAC® excimer laser, VTRAC® lamp systems, and the TheraClear®X Acne Therapy System.
STRATA is proud to offer these exciting technologies in the U.S. through its unique Partnership Program. STRATA's popular partnership approach includes a fee per treatment cost structure versus an equipment purchase, installation and use of the device, on-site training for practice personnel, service and maintenance of the equipment, dedicated account and customer service associates, and co-op advertising support to help raise awareness and promote the program within the practice.
Safe Harbor
This press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. These statements include but are not limited to the Company's plans, objectives, expectations and intentions and may contain words such as "will," "may," "seeks," and "expects," that suggest future events or trends. These statements, the Company's ability to launch and sell an acne treatment device and to integrate that device into its product offerings, the Company's ability to develop, launch and sell products recently acquired or to be developed in the future, the Company's ability to develop social media marketing campaigns, direct to dermatologist marketing campaigns, and the Company's ability to build a leading franchise in dermatology and aesthetics, are based on the Company's current expectations and are inherently subject to significant uncertainties and changes in circumstances. Actual results may differ materially from the Company's expectations due to financial, economic, business, competitive, market, regulatory, adverse market conditions labor supply shortages, or supply chain interruptions resulting from the coronavirus, fiscal, and political factors, responses, or conditions affecting the Company, the medical device industry and our customers and patients in general, as well as more specific risks and uncertainties set forth in the Company's SEC reports on Forms 10-Q and 10-K. Given such uncertainties, any or all these forward-looking statements may prove to be incorrect or unreliable. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not undertake any obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release. The Company urges investors to carefully review its SEC disclosures available at www.sec.gov and www.strataskinsciences.com.
Investor Contact:
Rich Cockrell
CG Capital
Phone: +1 (404) 736-3838
[email protected]
| STRATA Skin Sciences, Inc. and Subsidiary Condensed Consolidated Balance Sheets (in thousands, except share and per share amounts) | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 7,131 | $ | 5,434 | ||||
| Restricted cash | 1,334 | 1,361 | ||||||
| Accounts receivable, net of allowance for credit losses of $128 and $382 at September 30, 2023 and December 31, 2022, respectively | 4,802 | 4,471 | ||||||
| Inventories | 6,125 | 5,547 | ||||||
| Prepaid expenses and other current assets | 330 | 691 | ||||||
| Total current assets | 19,722 | 17,504 | ||||||
| Property and equipment, net | 8,256 | 7,498 | ||||||
| Operating lease right-of-use assets | 718 | 975 | ||||||
| Intangible assets, net | 9,623 | 17,394 | ||||||
| Goodwill | 8,803 | 8,803 | ||||||
| Other assets | 71 | 98 | ||||||
| Total assets | $ | 47,193 | $ | 52,272 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,157 | $ | 3,425 | ||||
| Accrued expenses and other current liabilities | 5,901 | 6,555 | ||||||
| Deferred revenues | 2,385 | 2,778 | ||||||
| Current portion of operating lease liabilities | 404 | 355 | ||||||
| Current portion of contingent consideration | 178 | 313 | ||||||
| Total current liabilities | 12,025 | 13,426 | ||||||
| Long-term debt, net | 15,016 | 7,476 | ||||||
| Deferred revenues and other liabilities | 585 | 314 | ||||||
| Deferred tax liability | 306 | 306 | ||||||
| Operating lease liabilities, net of current portion | 282 | 610 | ||||||
| Contingent consideration, net of current portion | 2,786 | 8,309 | ||||||
| Total liabilities | 31,000 | 30,441 | ||||||
| Stockholders' equity: | ||||||||
| Series C convertible preferred stock, $0.10 par value; 10,000,000 shares authorized; no shares issued and outstanding | — | — | ||||||
| Common stock, $0.001 par value; 150,000,000 shares authorized; 34,913,886 and 34,723,046 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 35 | 35 | ||||||
| Additional paid-in capital | 250,422 | 249,024 | ||||||
| Accumulated deficit | (234,264 | ) | (227,228 | ) | ||||
| Total stockholders' equity | 16,193 | 21,831 | ||||||
| Total liabilities and stockholders' equity | $ | 47,193 | $ | 52,272 | ||||
| STRATA Skin Sciences, Inc. and Subsidiary Condensed Consolidated Statements of Operations (in thousands, except share and per share amounts) (unaudited) | ||||||||
| Three Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Revenues, net | $ | 8,852 | $ | 9,413 | ||||
| Cost of revenues | 3,898 | 3,614 | ||||||
| Gross profit | 4,954 | 5,799 | ||||||
| Operating expenses: | ||||||||
| Engineering and product development | 248 | 216 | ||||||
| Selling and marketing | 3,038 | 3,754 | ||||||
| General and administrative | 2,283 | 2,615 | ||||||
| 5,569 | 6,585 | |||||||
| Loss from operations | (615 | ) | (786 | ) | ||||
| Other (expense) income: | ||||||||
| Interest expense | (528 | ) | (244 | ) | ||||
| Interest income | 90 | 35 | ||||||
| (438 | ) | (209 | ) | |||||
| Net loss | $ | (1,053 | ) | $ | (995 | ) | ||
| Net loss per share of common stock, basic and diluted | $ | (0.03 | ) | $ | (0.03 | ) | ||
| Weighted average shares of common stock outstanding, basic and diluted | 34,912,104 | 34,723,046 | ||||||
| STRATA Skin Sciences, Inc. and Subsidiary Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) | ||||||||
| For the Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (7,036 | ) | $ | (5,389 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 2,119 | 1,816 | ||||||
| Amortization of operating lease right-of-use assets | 257 | 248 | ||||||
| Amortization of intangible assets | 2,155 | 2,155 | ||||||
| Amortization of deferred financing costs and debt discount | 112 | 116 | ||||||
| Change in allowance for credit losses | (205 | ) | 24 | |||||
| Stock-based compensation expense | 1,014 | 1,275 | ||||||
| Loss on disposal of property and equipment | 55 | 52 | ||||||
| Loss on debt extinguishment | 909 | — | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (126 | ) | (246 | ) | ||||
| Inventories | (344 | ) | (1,616 | ) | ||||
| Prepaid expenses and other assets | 388 | (110 | ) | |||||
| Accounts payable | (268 | ) | 1,547 | |||||
| Accrued expenses and other liabilities | (611 | ) | (267 | ) | ||||
| Deferred revenues | (165 | ) | (472 | ) | ||||
| Operating lease liabilities | (279 | ) | (236 | ) | ||||
| Net cash used in operating activities | (2,025 | ) | (1,103 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (3,166 | ) | (2,037 | ) | ||||
| Cash paid in connection with TheraClear asset acquisition | — | (631 | ) | |||||
| Net cash used in investing activities | (3,166 | ) | (2,668 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from long-term debt | 7,000 | — | ||||||
| Payment of deferred financing costs | (97 | ) | — | |||||
| Payment of contingent consideration | (42 | ) | — | |||||
| Net cash provided by financing activities | 6,861 | — | ||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 1,670 | (3,771 | ) | |||||
| Cash, cash equivalents and restricted cash, beginning of period | 6,795 | 12,586 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 8,465 | $ | 8,815 | ||||
| Cash and cash equivalents | $ | 7,131 | $ | 7,454 | ||||
| Restricted cash | 1,334 | 1,361 | ||||||
| $ | 8,465 | $ | 8,815 | |||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 917 | $ | 523 | ||||
| Supplemental disclosure of non-cash operating, investing and financing activities: | ||||||||
| Inventories acquired in connection with TheraClear asset acquisition | $ | — | $ | 71 | ||||
| Intangible assets acquired in connection with TheraClear asset acquisition | $ | — | $ | 10,182 | ||||
| Change in operating lease right-of-use assets and liability due to amended lease | $ | — | $ | 446 | ||||
| Contingent consideration issued in connection with TheraClear asset acquisition | $ | — | $ | 9,122 | ||||
| Common stock issued in connection with TheraClear asset acquisition | $ | — | $ | 500 | ||||
| Modification of common stock warrants | $ | 384 | $ | — | ||||
| Transfer of property and equipment to inventories | $ | 234 | $ | 486 | ||||
| Change in intangible assets and fair value of contingent consideration | $ | 5,616 | $ | — | ||||
| Accrued exit fee recorded as debt discount | $ | 450 | $ | — | ||||
