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01/11 11:09
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary indicates a decline in total revenue and gross profit, increased operating expenses, and significant cash usage in operations, leading to liquidity concerns. The Q&A section highlights uncertainties around international business due to potential tariffs and ongoing legal issues. Management's reluctance to provide specific guidance further adds to the negative sentiment. Despite the positive impact of the Elevate 360 model, the overall outlook remains negative due to these challenges.
Total Revenue $7.7 million, down 9% compared to Q2 of 2024. This decline was primarily driven by the challenging international environment.
Global Recurring Revenue $5.1 million, down 4% versus the prior year period.
XTRAC Gross Domestic Recurring Billings $4.7 million, a decline of 2% versus the prior year period.
Equipment Business Revenue $2.5 million, down 18% versus the second quarter of 2024. This was due primarily to challenges in specific international markets with lingering trade disputations in China and supplier challenges in Korea.
Gross Profit $4.3 million or 56% of revenue, declined from $5 million during the same period in 2024. The reduction in gross profit was driven primarily by lower sales with increases in manufacturing overhead contributing.
Total Operating Expenses $6.5 million, up roughly $1 million versus $5.5 million in the prior year period. Selling and marketing increased 16% due to increases in headcount in the sales and call center and increase in DTC spending. G&A expense increased roughly $700,000, with $340,000 due to litigation expenses.
Adjusted EBITDA Loss of $762,000.
Cash Used in Operations $1.9 million in the second quarter. Of this, $1.3 million represents a payment of restricted cash to the state of New York related to the sales tax accrual from Q3 2024. The remaining $600,000 includes $340,000 related to legal expenses.
Cash and Equivalents $6 million as of June 30, 2025.
XTRAC 308-nanometer excimer laser: Expanded CPT codes to include multiple inflammatory and autoimmune skin conditions beyond psoriasis, effective January 1, 2027. Temporary G codes may accelerate access to 2026, potentially tripling the addressable market to 30 million patients.
TheraClearX: Installed base increased to 161 devices in the U.S. by Q2 2025, up from 117 in Q2 2024. Represents a growing portion of revenue.
Domestic Market Expansion: Direct-to-consumer (DTC) campaigns and Elevate 360 consulting model are driving increased utilization of XTRAC devices. Generated 1,100 DTC-driven patient appointments in Q2 2025 with a 61% show rate.
International Market Challenges: International revenue declined 15% YoY to $2.6 million in Q2 2025 due to trade disruptions in China and distributor issues in Korea. Strong demand expected to return once conditions stabilize.
Device Optimization: Removed 21 XTRAC devices from suboptimal partners and placed 19 with new accounts in Q2 2025, marking the highest U.S. placements in six quarters.
Recurring Revenue: Global recurring revenue was $5.1 million in Q2 2025, down 4% YoY. Domestic recurring billings for XTRAC declined 2% YoY to $4.7 million.
Litigation Against LaserOptek: Legal action for false and misleading marketing statements. Court added LaserOptek Korea and C. Dalton, LLC as defendants, potentially leading to significant damages.
Combination Therapy Expansion: Peer-reviewed studies support the use of XTRAC with JAK inhibitors for vitiligo and atopic dermatitis, opening new market opportunities. STRATA owns patents for these combination treatments.
Tariffs and Trade Disruptions: Uncertainty about tariffs and trade disruptions, particularly in China, has created a temporary drag on international business, with international revenue declining 15% compared to the prior year period. Lingering trade disruptions in China and distributor challenges in Korea have significantly affected international equipment sales.
Seasonality and Revenue Fluctuations: The company experiences seasonality in its business, with slower first and second quarters. This seasonality could impact revenue predictability and financial performance.
Litigation Costs: Legal expenses related to litigation against LaserOptek have increased G&A expenses by approximately $340,000 in the second quarter, contributing to overall financial strain.
Decline in Revenue and Gross Profit: Total revenue for Q2 2025 declined by 9% compared to Q2 2024, driven by challenges in international markets. Gross profit also declined from $5 million to $4.3 million, primarily due to lower sales and increased manufacturing overhead.
Device Placement Optimization: The company removed 21 devices from suboptimal partners and placed 19 devices with new accounts. While this represents progress, the net reduction in devices placed could impact short-term revenue.
Cash Flow and Operational Costs: Cash used in operations was $1.9 million in Q2 2025, with significant portions allocated to legal expenses and a payment related to a sales tax accrual. This could strain liquidity.
Revenue Opportunities: The company expects to accelerate access to revised CPT codes through temporary G codes, potentially pulling forward revenue opportunities by one year into 2026. This is due to expanded reimbursement eligibility for excimer laser treatments for multiple inflammatory and autoimmune skin conditions.
Market Expansion: The addressable market is expected to expand to 30 million patients, tripling the total available market (TAM). This expansion is driven by the inclusion of new indications for excimer laser treatments.
Reimbursement Rates: The company has submitted economic data to support a potential increase in reimbursement rates for its codes, which could lead to simultaneous growth in the number of eligible patients and revenue per patient procedure.
Device Utilization: The company anticipates significant opportunities to increase utilization of its XTRAC devices, supported by expanded CPT codes and direct-to-consumer marketing campaigns.
International Business: The company expects international markets, particularly China and Korea, to return to growth once trade disruptions and distributor challenges stabilize.
Seasonality: The company anticipates a seasonally stronger second half of 2025, with positive momentum heading into year-end.
Combination Therapy Market: The company is preparing for market expansion into combination therapy for challenging patients, supported by recent patents and clinical studies.
The selected topic was not discussed during the call.
Despite some positive aspects like increased recurring revenue and improved operating expenses, the overall sentiment is negative due to a significant decline in total and equipment revenue, persistent international challenges, and unclear guidance on key metrics like DTC campaign impact. The Q&A revealed management's avoidance of direct answers, which adds uncertainty. The lack of temporary CPT codes for 2026 and tariff impacts further contribute to a negative outlook. The absence of a market cap suggests a potentially stronger reaction, leaning towards a negative stock price movement.
The earnings call summary indicates a decline in total revenue and gross profit, increased operating expenses, and significant cash usage in operations, leading to liquidity concerns. The Q&A section highlights uncertainties around international business due to potential tariffs and ongoing legal issues. Management's reluctance to provide specific guidance further adds to the negative sentiment. Despite the positive impact of the Elevate 360 model, the overall outlook remains negative due to these challenges.
The earnings call summary presents a mixed picture. Financial performance shows modest growth with improved margins and reduced expenses, but concerns about tariffs and competitive pressures weigh negatively. The Q&A section highlights management's unclear responses about tariffs, adding uncertainty. While international sales growth is a positive, the overall sentiment remains cautious due to flat growth in the installed base and operational challenges. Given the absence of strong catalysts or negative surprises, a neutral stock price movement is predicted.
The earnings call summary presents mixed signals. While there are improvements in gross margin, cash flow, and certain revenues, overall revenue growth is minimal. The Q&A reveals concerns about tariffs and unclear management responses, impacting sentiment negatively. The positive factors such as improved cash burn and gross margin are offset by competitive pressures and regulatory issues. Given these mixed results and uncertainties, the stock price reaction is likely to be neutral in the absence of significant catalysts.
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