Apyx Medical Corporation Reports First Quarter 2023 Financial Results and Updates Full Year 2023 Financial Outlook

Apyx Medical Corporation (NASDAQ:APYX) (the “Company”), the manufacturer of a proprietary helium plasma and radiofrequency technology marketed and sold as Renuvion^®, today reported financial results for its first quarter ended March 31, 2023, and updated financial expectations for the full year ending December 31, 2023.

First Quarter 2023 Financial Summary:

• Total revenue of $12.1 million, down 3% year-over-year.
  • Advanced Energy revenue of $9.7 million, down 10% year-over-year.
  • OEM revenue of $2.5 million, up 46% year-over-year.
• Net loss attributable to stockholders of $3.5 million, compared to $5.9 million for the first quarter of 2022.
• Adjusted EBITDA loss of $4.0 million, compared to $4.0 million for the first quarter of 2022.

First Quarter 2023 Operating Summary:

• On January 3, 2023, the Company announced the launch of its first direct-to-consumer brand campaign. Entitled #ThisIsMe, the campaign is aimed at U.S. consumers who are interested in a minimally invasive procedure with the Renuvion technology.
• On January 25, 2023, the Company announced the launch of its latest-generation Renuvion generator, the Apyx One Console, in the United States.
• On February 21, 2023, the Company announced that it and its subsidiaries had entered into a new, five-year secured credit facility with MidCap Financial. The credit agreement provides for an up to $35 million facility consisting of senior, secured term loans of up to $25 million and a revolving facility of up to $10 million.
• On February 27, 2023, the Company announced that it received 510(k) clearance from the FDA “for the use of the Renuvion APR Handpiece for the delivery of radiofrequency energy and/or helium plasma where coagulation/contraction of soft tissue is needed. Soft tissue includes subcutaneous tissue.”

Highlights & Developments Subsequent to Quarter End:

• On April 28, 2023, the Company announced that it received 510(k) clearance from the FDA “for coagulation of subcutaneous soft tissues following liposuction for aesthetic body contouring.”
• On May 8, 2023, the Company closed on a Purchase Agreement and concurrently executed a 10-year agreement to leaseback its underlying real property in Clearwater, FL with VK Acquisitions VI, LLC. The Company received net cash proceeds of approximately $6,600,000, after withholding the security deposit equal to one years rent, taxes, first months rent, expenses, and fees.
• On May 10, 2023, the FDA posted an update to the Medical Device Safety Communication (“Safety Communication”) to inform consumers and healthcare providers about the clearance for the Renuvion APR handpiece for use under the skin in certain procedures intended to improve the appearance of the skin, including for coagulation of subcutaneous soft tissues following liposuction for aesthetic body contouring. The Company believes that the May 10, 2023 FDA update to the Safety Communication addresses the issues set forth in the original Safety Communication from March 14, 2022.

Management Comments:

“While our revenue performance in the first quarter continued to reflect the business disruption related to the Medical Device Safety Communication, we were pleased to deliver sales results which ultimately exceeded our expectations,” said Charlie Goodwin, President and Chief Executive Officer. “Our Advanced Energy revenue decreased 10% year-over-year, primarily due to softer sales of generators and handpieces to our international distributors. In the U.S., however, we were pleased to see year-over-year growth in generator revenue of approximately 40% year-over-year, as many of our users upgraded to our latest-generator Renuvion generator – the Apyx One Console – following its launch in January. In addition to introducing the Apyx One Console, we obtained two new 510(k) clearances for our Advanced Energy products in February and April. Yesterday, we were pleased to see the FDA issue an update to their Safety Communication informing consumers and health care providers that our Renuvion APR Handpiece is now cleared for coagulation of subcutaneous soft tissues following liposuction for aesthetic body contouring. We believe this update addresses the issues set forth in the original Safety Communication from March 14, 2022. Lastly, we implemented activities to reduce our operating expenses, while securing additional capital to strengthen our balance sheet and enhance our financial flexibility.”

Mr. Goodwin continued: “We are raising our 2023 guidance today to reflect our stronger-than-anticipated performance in the first quarter, and now expect to drive global sales growth of our Advanced Energy products in excess of 38% for the full year. With four new 510(k) clearances secured for our Renuvion technology over the last 12 months, along with the recent progress made by our sales, marketing and product development teams, we expect to see improved global generator and handpiece demand in 2023 as we leverage our recent achievements and continue our strong pace of execution with respect to our stated strategic priorities.”

The following tables present revenue by reportable segment and geography:

First Quarter 2022 Results:

Total revenue for the three months ended March 31, 2023 decreased $0.4 million, or 3% year-over-year, to $12.1 million, compared to $12.5 million in the prior year period. Advanced Energy segment sales decreased $1.1 million, or 10% year-over-year, to $9.7 million. OEM segment sales increased $0.8 million, or 46% year-over-year to $2.5 million. The decrease in Advanced Energy revenue was driven by decreased demand for the Company’s generators in international markets and decreased global demand for handpieces following the FDA Safety Communication on March 14, 2022. These decreases were partially offset by generator sales to domestic customers, as customers upgraded to the Company’s new Apyx One Console, which was launched in January 2023. The increase in OEM sales was due to increased sales volume to existing customers, as well as incremental new sales upon the commencement of the supply arrangement related to the completion of the development portion of some of our OEM development agreements. For the first quarter of 2023, revenue in the United States decreased $1.3 million, or 18% year-over-year, to $8.9 million, and international revenue decreased $1.7 million, or 34% year-over-year, to $3.3 million.

Gross profit for the three months ended March 31, 2023, decreased $0.6 million, or 8% year-over-year, to $7.6 million, compared to $8.2 million in the prior year period. Gross margin for the three months ended March 31, 2023, was 62.4%, compared to 65.8% in the prior year period. The decrease in gross profit margins for the three months ended March 31, 2023 from the prior year period was primarily attributable to changes in the sales mix between our two segments, with our OEM segment comprising a higher percentage of total sales, and to product mix within our Advanced Energy segment. These decreases were partially offset by geographic mix within our Advanced Energy segment, with domestic sales comprising a higher percentage of total sales.

Operating expenses for the three months ended March 31, 2023 decreased $0.9 million, or 6% year-over-year, to $13.2 million, compared to $14.1 million in the prior year period. The year-over-year change in operating expenses was driven by a $0.5 million decrease in professional services, a $0.2 million decrease in selling, general and administrative expenses and a $0.1 million decrease in salaries and related costs.

Income tax (benefit) expense for the three months ended March 31, 2023 and 2022 was $(2.3) million and $0.1 million, respectively.

Net loss attributable to stockholders for the three months ended March 31, 2023 was $3.5 million, or $0.10 per share, compared to $5.9 million, or $0.17 per share, in the prior year period.

Adjusted EBITDA loss for the three months ended March 31, 2023 and 2022 was approximately $4.0 million.

Full Year 2023 Financial Outlook:

The Company is updating financial guidance for the year ending December 31, 2023 to:

• Total revenue in the range of $59.0 million to $62.0 million, representing growth of approximately 33% to 39% year-over-year, compared to total revenue of $44.5 million for the year ended December 31, 2022. The Company’s prior guidance range for total revenue was $58.0 million to $61.0 million, representing growth of 30% to 37% year-over-year.
  • Total revenue guidance assumes:
    • Advanced Energy revenue in the range of $51.0 million to $54.0 million, representing growth of approximately 39% to 47% year-over-year, compared to Advanced Energy revenue of $36.8 million for the year ended December 31, 2022. The Company’s prior guidance range for Advanced Energy revenue was $50.0 million to $53.0 million, representing growth of approximately 36% to 44% year-over-year.
    • OEM revenue of approximately $8 million, representing growth of approximately 4% year-over-year, compared to $7.7 million for the year ended December 31, 2022. This is unchanged versus the Company’s prior guidance assumptions.
• Net loss attributable to stockholders of approximately $10.5 million, compared to $23.2 million for the year ended December 31, 2022. The Company’s prior guidance for net loss attributable to stockholders was approximately $14.0 million.

Conference Call Details:

Management will host a conference call at 8:00 a.m. Eastern Time on May 11, 2023 to discuss the results of the quarter, and to host a question and answer session. To listen to the call by phone, interested parties may dial 877-407-8289 (or 201-689-8341 for international callers) and provide access code 13737575. Participants should ask for the Apyx Medical Corporation Call. A live webcast of the call will be accessible via the Investor Relations section of the Company’s website.

Source: https://www.businesswire.com/