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 second quarter ended June
30, 2023.
Second Quarter 2023 and Recent Business
Highlights:
- Revenues in the second quarter of 2023 were $8.3 million,
compared to $9.1 million for the second quarter of 2022.
- Secured up to an additional $12 million financing with MidCap
Financial.
- Placed 73 TheraClear®X devices as of June 30, 2023.
"Throughout the second quarter, we achieved significant
operational milestones, including the JCAD TheraClearX publication,
the initiation of Dr. Ablon's clinical study for acne, and the
placement of 73 TheraClearX devices. Regarding second quarter
revenues, we expect international sales to improve sequentially, as
anticipated sales during the second quarter have shifted into the
second half of the year,” stated Bob Moccia, Chief Executive
Officer of STRATA Skin Sciences. “Furthermore, our recent financing
will allow for the continued implementation of our strategic
initiatives which are focused on profitable revenue growth.”
Second Quarter Financial ResultsRevenues for
the second quarter of 2023 were $8.3 million, as compared to
revenues of $9.1 million for the second quarter of 2022.
Global recurring revenues for the second quarter of 2023 were
$5.5 million, as compared to global recurring revenues of $5.6
million for the second quarter of 2022. Equipment revenues were
$2.8 million for the second quarter of 2023, as compared to $3.5
million for the second quarter of 2022, which included a $1.5
million one-time equipment sale to China.
Gross profit for the second quarter of 2023 was $4.3 million, or
52.3% of revenues, as compared to $5.0 million, or 54.8% of
revenues, for the second quarter of 2022. The decrease in gross
profit percentage was primarily attributed to higher depreciation
and material costs during the three months ended June 30, 2023.
Selling and marketing costs for the second quarter of 2023 were
$3.4 million, as compared to $4.1 million for the second quarter of
2022. The lower selling and marketing costs can be attributed to a
reduction in advertising costs. General and administrative costs
for the second quarter of 2023 were $2.5 million, as compared to
$2.3 million for the second quarter of 2022. The higher general and
administrative costs are primarily attributed to higher legal and
accounting and sales tax costs.
Other expense for the second quarter of 2023 was $1.2 million,
as compared to $0.2 million for the second quarter of 2022. The
increase in other expense for the second quarter was primarily
attributed to a loss on debt extinguishment of $0.9 for the three
and six months ended June 30, 2023.
Net loss for the second quarter of 2023 was $3.1 million, or a
loss of $0.09 per basic and diluted common share, as compared to
the net loss for the second quarter of 2022 of $1.9 million, or a
net loss of $0.05 per basic and diluted common share.
For the period ending June 30, 2023, the company had a cash
balance of $10.4 million. The increase in cash and cash equivalents
is due to the financing with MidCap Financial. The new debt
facility consists of a refinancing of the existing $8.0 million
term loan and an additional $7.0 million tranche funded at closing.
STRATA also has the option to receive an additional $5 million
tranche in 2024.
For the fiscal year ending December 31, 2023, we are revising
guidance in the range of $35 million to $38 million. This
adjustment is attributed to a slowdown in capital expenditure
spending and macroeconomic factors that have impacted our equipment
sales. While the company recognizes potential upside within this
guidance, the company believes this updated projection offers a
conservative perspective on its anticipated performance, ensuring
stakeholders have a balanced view of the year ahead.
Webcast and Conference Call InformationSTRATA
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 and will be archived for future
reference. To listen to the conference call, please dial
877-269-7756 (US/Canada), 1-201-689-7817 (International), and use
the conference ID number 13739272.
Reconciliation of Non-GAAP MeasuresTo
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 June 30, |
|
|
2023 |
|
2022 |
Net loss |
|
$ |
(3,148 |
) |
|
$ |
(1,892 |
) |
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,428 |
|
|
|
1,339 |
|
Amortization of operating lease right-of-use assets |
|
|
63 |
|
|
|
92 |
|
Loss on disposal of property and equipment |
|
|
24 |
|
|
|
18 |
|
Interest expense, net |
|
|
277 |
|
|
|
198 |
|
Non-GAAP
EBITDA |
|
|
(1,356 |
) |
|
|
(245 |
) |
Stock-based compensation expense |
|
|
352 |
|
|
|
452 |
|
Loss on debt extinguishment |
|
|
909 |
|
|
|
— |
|
Non-GAAP adjusted
EBITDA |
|
$ |
(95 |
) |
|
$ |
207 |
|
|
|
|
|
|
|
|
|
|
XTRAC Gross Domestic Recurring
BillingsXTRAC 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 second
quarter 2023 and 2022 (in thousands):
|
Three Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
Gross domestic recurring billings |
$ |
5,057 |
|
|
$ |
5,956 |
|
Co-Pay adjustments |
|
(88 |
) |
|
|
(204 |
) |
Other discounts |
|
(31 |
) |
|
|
(46 |
) |
Deferred revenue from prior quarters |
|
2,025 |
|
|
|
1,970 |
|
Deferral of revenue to future quarters |
|
(2,005 |
) |
|
|
(2,499 |
) |
GAAP Recorded domestic revenue |
$ |
4,958 |
|
|
$ |
5,177 |
|
|
|
|
|
|
|
|
|
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 HarborThis 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 CockrellCG CapitalPhone:
+1 (404) 736-3838sskn@cg.capital
STRATA Skin Sciences, Inc. and
SubsidiaryCondensed Consolidated Balance Sheets(in thousands,
except share and per share amounts)
|
|
June 30, 2023 |
|
December 31, 2022 |
|
|
(unaudited) |
|
|
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
9,034 |
|
|
$ |
5,434 |
|
Restricted cash |
|
|
1,361 |
|
|
|
1,361 |
|
Accounts receivable, net of allowance for credit losses of $244 and
$382 at June 30, 2023 and December 31, 2022, respectively |
|
|
4,401 |
|
|
|
4,471 |
|
Inventories |
|
|
5,921 |
|
|
|
5,547 |
|
Prepaid expenses and other current assets |
|
|
528 |
|
|
|
691 |
|
Total current assets |
|
|
21,245 |
|
|
|
17,504 |
|
Property and equipment,
net |
|
|
8,319 |
|
|
|
7,498 |
|
Operating lease right-of-use
assets |
|
|
807 |
|
|
|
975 |
|
Intangible assets, net |
|
|
15,959 |
|
|
|
17,394 |
|
Goodwill |
|
|
8,803 |
|
|
|
8,803 |
|
Other assets |
|
|
71 |
|
|
|
98 |
|
Total assets |
|
$ |
55,204 |
|
|
$ |
52,272 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,880 |
|
|
$ |
3,425 |
|
Accrued expenses and other current liabilities |
|
|
6,731 |
|
|
|
6,555 |
|
Deferred revenues |
|
|
2,436 |
|
|
|
2,778 |
|
Current portion of operating lease liabilities |
|
|
392 |
|
|
|
355 |
|
Current portion of contingent consideration |
|
|
681 |
|
|
|
313 |
|
Total current liabilities |
|
|
14,120 |
|
|
|
13,426 |
|
Long-term debt, net |
|
|
14,987 |
|
|
|
7,476 |
|
Deferred revenues and other
liabilities |
|
|
596 |
|
|
|
314 |
|
Deferred tax liability |
|
|
306 |
|
|
|
306 |
|
Operating lease liabilities,
net of current portion |
|
|
387 |
|
|
|
610 |
|
Contingent consideration, net
of current portion |
|
|
7,899 |
|
|
|
8,309 |
|
Total liabilities |
|
|
38,295 |
|
|
|
30,441 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
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;
34,881,453 and 34,723,046 shares issued and outstanding at June 30,
2023 and December 31, 2022, respectively |
|
|
35 |
|
|
|
35 |
|
Additional paid-in capital |
|
|
250,085 |
|
|
|
249,024 |
|
Accumulated deficit |
|
|
(233,211 |
) |
|
|
(227,228 |
) |
Total stockholders’ equity |
|
|
16,909 |
|
|
|
21,831 |
|
Total liabilities and stockholders’ equity |
|
$ |
55,204 |
|
|
$ |
52,272 |
|
STRATA Skin Sciences, Inc. and
SubsidiaryCondensed Consolidated Statements of Operations(in
thousands, except share and per share amounts)(unaudited)
|
|
Three Months Ended June 30, |
|
|
2023 |
|
2022 |
Revenues, net |
|
$ |
8,250 |
|
|
$ |
9,105 |
|
Cost of revenues |
|
|
3,932 |
|
|
|
4,112 |
|
Gross profit |
|
|
4,318 |
|
|
|
4,993 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Engineering and product development |
|
|
374 |
|
|
|
209 |
|
Selling and marketing |
|
|
3,416 |
|
|
|
4,146 |
|
General and administrative |
|
|
2,490 |
|
|
|
2,332 |
|
|
|
|
6,280 |
|
|
|
6,687 |
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(1,962 |
) |
|
|
(1,694 |
) |
|
|
|
|
|
|
|
|
|
Other (expense) income: |
|
|
|
|
|
|
|
|
Loss on debt extinguishment |
|
|
(909 |
) |
|
|
— |
|
Interest expense |
|
|
(298 |
) |
|
|
(208 |
) |
Interest income |
|
|
21 |
|
|
|
10 |
|
|
|
|
(1,186 |
) |
|
|
(198 |
) |
Net loss |
|
$ |
(3,148 |
) |
|
$ |
(1,892 |
) |
Net loss per share of common
stock, basic and diluted |
|
$ |
(0.09 |
) |
|
$ |
(0.05 |
) |
Weighted average shares of
common stock outstanding, basic and diluted |
|
|
34,881,453 |
|
|
|
34,723,046 |
|
STRATA Skin Sciences, Inc. and
SubsidiaryCondensed Consolidated Statements of Cash Flows(in
thousands)(unaudited)
|
|
For the Six Months Ended June 30, |
|
|
2023 |
|
2022 |
Cash flows from
operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(5,983 |
) |
|
$ |
(4,394 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,390 |
|
|
|
1,224 |
|
Amortization of operating lease right-of-use assets |
|
|
168 |
|
|
|
181 |
|
Amortization of intangible assets |
|
|
1,435 |
|
|
|
1,436 |
|
Amortization of deferred financing costs and debt discount |
|
|
83 |
|
|
|
76 |
|
Change in allowance for credit losses |
|
|
(138 |
) |
|
|
(47 |
) |
Stock-based compensation expense |
|
|
677 |
|
|
|
820 |
|
Loss on disposal of property and equipment |
|
|
24 |
|
|
|
35 |
|
Loss on debt extinguishment |
|
|
909 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
208 |
|
|
|
491 |
|
Inventories |
|
|
(272 |
) |
|
|
(898 |
) |
Prepaid expenses and other assets |
|
|
190 |
|
|
|
(203 |
) |
Accounts payable |
|
|
351 |
|
|
|
1,419 |
|
Accrued expenses and other liabilities |
|
|
211 |
|
|
|
(217 |
) |
Deferred revenues |
|
|
(95 |
) |
|
|
(135 |
) |
Operating lease liabilities |
|
|
(186 |
) |
|
|
(197 |
) |
Net cash used in operating activities |
|
|
(1,028 |
) |
|
|
(409 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(2,337 |
) |
|
|
(1,510 |
) |
Cash paid in connection with TheraClear asset acquisition |
|
|
— |
|
|
|
(631 |
) |
Net cash used in investing activities |
|
|
(2,337 |
) |
|
|
(2,141 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from long-term debt |
|
|
7,000 |
|
|
|
— |
|
Payment of deferred financing costs |
|
|
(35 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
|
6,965 |
|
|
|
— |
|
Net increase (decrease) in cash, cash equivalents and restricted
cash |
|
|
3,600 |
|
|
|
(2,550 |
) |
Cash, cash equivalents and restricted cash, beginning of
period |
|
|
6,795 |
|
|
|
12,586 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
10,395 |
|
|
$ |
10,036 |
|
Cash and cash equivalents |
|
$ |
9,034 |
|
|
$ |
10,036 |
|
Restricted cash |
|
|
1,361 |
|
|
|
— |
|
|
|
$ |
10,395 |
|
|
$ |
10,036 |
|
Supplemental disclosure of cash flow
information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
497 |
|
|
$ |
329 |
|
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 |
|
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 |
|
$ |
102 |
|
|
$ |
449 |
|
Accrued payment of contingent consideration |
|
$ |
42 |
|
|
$ |
— |
|
Accrued exit fee recorded as debt discount |
|
$ |
450 |
|
|
$ |
— |
|
Deferred financing costs in accounts payable |
|
$ |
62 |
|
|
$ |
— |
|
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