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Apyx Medical Corporation (APYX)

Q3 2025 Earnings Call· Thu, Nov 6, 2025

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Transcript

Operator

Operator

Good morning, ladies and gentlemen, and welcome to the Apyx Medical Third Quarter 2025 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, November 6, 2025. I would now like to turn the conference over to Jeremy Feffer, LifeSci Advisor. Please go ahead, sir.

Jeremy Feffer

Analyst

Thank you, and welcome, everyone, to our third quarter 2025 earnings call. Representing the company on the call are Charlie Goodwin, Chief Executive Officer; and Matt Hill, Chief Financial Officer of Apyx. 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, without limitation, those identified in the Risk Factors section of our most recent annual report on Form 10-K, our most recent 10-Q filing and the company's other filings 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 the earnings press release on the Investor Relations portion of our website. I would now like to turn the call over to Mr. Charlie Goodwin, Apyx Medical's President and Chief Executive Officer. Please go ahead.

Charles Goodwin

Analyst

Thank you, Jeremy, and thank you all for joining us today. For our usual format on these quarterly calls, I will start with a review of our performance over the past several months, and then I will turn the call over to Matt for a review of our third quarter financial results as well as our updated full year 2025 guidance. We will then open the call for your questions. But before I jump into the numbers, I'm excited to share an important update about the evolution of our company and our continued commitment to innovation and meaningful outcomes for our customers and their patients. With the development, clearance and launch of the AYON Body Contouring System, one thing has become clear, our identity and the way we present this segment of our business must evolve to reflect who we are today and where we are going tomorrow. That is why we are officially announcing the rebranding of our Advanced Energy segment, which will now be identified as Surgical Aesthetics. This is not just about a new name, it's about better aligning our brand with our mission and the durable and transformational results that our surgical products deliver. Let me begin with a review of our third quarter performance. We reported total revenue of $12.9 million, compared to $11.5 million in the same period last year. This growth was driven by a $1.8 million increase in sales of our Surgical Aesthetics products to $11.1 million for the third quarter. This is the result of an increase in U.S. sales of over 30% for the quarter and reflects initial sales from our commercial launch of our AYON Body Contouring System during the quarter as well as increased volume of single-use handpieces in both domestic and international markets. Overall, the AYON soft…

Matthew Hill

Analyst

Thank you, Charlie. Before I get started, please note that all references to third quarter financial results will be on a GAAP and a year-over-year basis unless noted otherwise. As Charlie mentioned, total revenue for the third quarter '25, increased 12% to $12.9 million, compared to $11.5 million in the prior year period. Revenue for Surgical Aesthetics segment increased 19% or $1.8 million to $11.1 million compared to the $9.3 million last year. As Charlie referenced, this growth was driven by sales of AYON as we commenced our commercial launch during the quarter and an increased volume of single-use handpieces in both domestic and international markets. These increases were partially offset by decreases in domestic sales of generators, including upgrades to the Apyx One console, where the purchase of AYON was not part of the sale and upgrades to the Apyx One console in international markets. Turning to the OEM segment. Sales decreased 18% or approximately $0.4 million to $1.8 million for the third quarter of '25, compared to $2.2 million for the third quarter of '24. The decrease in OEM sales was due to a decrease in the sales volume to existing customers, including Symmetry Surgical under our 10-year generator manufacturing and supply agreement. Domestic revenue increased 20% year-over-year to $9.3 million, and international revenue decreased 4% year-over-year to $3.5 million. As a reminder, the medical device industry typically experienced some seasonality with revenue trends generally the lowest in the first and third quarters and strongest in the second and fourth. Gross profit for the third quarter '25 increased to $8.3 million, compared with $7 million in the prior year period. Gross profit margin for the third quarter '25, increased to 64.4%, compared to 60.5% in the prior year period. With respect to tariffs, we continue to monitor trade…

Operator

Operator

[Operator Instructions] Your first question comes from Dave Turkaly with Citizens.

David Turkaly

Analyst

Congrats on the launch and the spending progress. I just had a clarification one upfront here. I know you said the generator sales were down, but I don't think I actually understood the explanation for why that wasn't. You said something about AYON, but I just want to clarify that upfront, if I could.

Charles Goodwin

Analyst

Yes. So look, we're changing, obviously, the way that we classify things because AYON obviously has to have an Apyx One generator. And if you think of our customer base, we have customers that already have an Apyx One generator, they can actually just buy the rest of AYON and have their existing Apyx One generator integrated into AYON. And then we have an installed base of RS3 generators. They need to upgrade to an Apyx One generator and then buy the rest of AYON. And then obviously, if they don't have any of our Renuvion technology, they would need to buy all of AYON that would include an Apyx One and an AYON with it. And so we're obviously classifying those as just AYON sales even though they have an Apyx One in them.

David Turkaly

Analyst

Got it. And then trying to think about the gross margin impact from this. I haven't -- I don't know that you publicly commented on sort of the ASPs or what the uptick might be here. But I guess I'm imagining that the handpiece and the capital might be premium to what you were selling in the past. And as we're looking forward, I don't know if you are comfortable giving any commentary, but I imagine there has to be a significant gross margin uptick if that is the case. And I don't know if you can give any color as we're all trying to look to the out years now, but how significant or how much of an uptick do you anticipate as this rollout continues?

Charles Goodwin

Analyst

Yes. No, thanks for the question, Dave, but you probably know what my answer is going to be in that we're not giving guidance out from either a revenue or a gross margin point of view. The only thing that I would say to that, just to give you a little bit of color is we've always said that the Surgical Aesthetics business, obviously, especially in the U.S., has the highest gross margins anywhere. So the more we sell here of that, the better it is for the entire company. But we're not going to give any color or any guidance on what that is right now.

Operator

Operator

The next question comes from Sam Eiber with BTIG.

Sam Eiber

Analyst · BTIG.

So clearly, a really exciting opportunity on AYON and getting devices out in the market. But I want to ask maybe about on the consumable side and maybe some pull-through you can get on higher device utilization because of all the new capabilities that AYON has. So I guess my question is, should we also expect a big uptake in consumables in addition to capital sales next year?

Charles Goodwin

Analyst · BTIG.

So I think the uptake would come back from selling new units to people who don't have Renuvion technology today. I think for customers that are upgrading to Renuvion, they're using, obviously Renuvion after their liposuction procedures today. So I don't know that you would necessarily see an uptick from the existing base. But obviously, adding new customers will certainly help that. We had a good third quarter from a consumable standpoint, both in the United States and internationally. And obviously, we're always focused on driving utilization. So as we add more customers, that's going to be the greatest driver of utilization in the future.

Sam Eiber

Analyst · BTIG.

Okay. That's helpful. Maybe I can ask a follow-up on the latest you're just seeing in the market environment. Just getting a sense of any changes to demand trends, GLP-1 dynamics at play? Would just your latest thoughts on the market at this point.

Charles Goodwin

Analyst · BTIG.

Yes. Look, I think it's consistent with what we've talked about before is we've always said that we believe the market has been disrupted from the GLP-1 drugs. We think that companies that have technologies that address skin laxity and address body contouring and are focused on the surgical side of things are going to be where the action is at. And we obviously think the technologies that we have with AYON and Renuvion are going to be very well suited to this marketplace as we keep moving forward and as more people are taking these drugs and having the side effects from these drugs and then wanting to have treatment from these. I think the other side of it is it was McKinsey that just came out with the study that 63% of these patients that are on the GLP-1 drugs are new to aesthetics. And so I think we're just going to see -- I think we're in the early innings of this drug. And I think over the next decade, it's going to be a very good time to be a plastic surgeon in the world. That's for sure.

Operator

Operator

The next question comes from Alex Fuhrman with Lucid Capital Markets.

Alex Fuhrman

Analyst · Lucid Capital Markets.

Congratulations on a really nice quarter and the launch of AYON. I wanted to ask you, Charlie, how much of your growth in the quarter was driven by the single-use handpieces? And what's really driving that? Are you seeing more lipo procedures being performed or better attach rates for Renuvion, or are you perhaps starting to see more stand-alone uses of Renuvion as well?

Charles Goodwin

Analyst · Lucid Capital Markets.

Yes. So I think the one thing that the quarter-by-quarter is always a tougher way to look at it. As you know, I think last quarter, we were down a bit. This quarter, we were really strong, both the United States and internationally in the growth of handpieces. And I think the answer to your question is all of the above. So we're obviously seeing new doctors come in to adopt the technology for the first time. We're seeing a higher attach rate from patients that are coming into doctor's office and requesting Renuvion. And so after a body contouring procedure, they're going to use that. And then we are seeing it used on a stand-alone basis. And so I think the answer is all of the above for that. And again, as people are looking for solutions to take care of their loose and lax skin, especially following the treatment of GLP-1s, I think this is a trend that's going to play out for a lot of years to come.

Operator

Operator

The next question comes from Matt Hewitt with Craig-Hallum.

Matthew Hewitt

Analyst · Craig-Hallum.

Charlie, congratulations on the strong quarter. Maybe -- and I apologize if I missed this, but talking a little bit about the pipeline. So obviously, you've gotten the initial launch out. Customers have adopted and are utilizing the platform. You've done some KOL events. They're helping kind of spread the word. Are you seeing that pipeline not just grow, but maybe you're reaching an inflection point where it's accelerating faster? And if so, how are you able to kind of get those implementations done with the team? Have you had to add to that team to meet the demand or anything -- any color along those lines would be helpful.

Charles Goodwin

Analyst · Craig-Hallum.

Yes. Obviously, we increased our guidance by $1 million for Surgical Aesthetics in the fourth quarter. And so -- and you can see what that -- obviously, you can do the math and translate to see what that works out to in the fourth quarter from a revenue perspective. And obviously, that is on the back of AYON and our expectations for AYON. As far as pipeline, I'm not going to comment too much about that, but the team has done an amazing job of get shoring up the supply chain, getting the supply chain to where it needs to be and being able to take advantage of the interest and the orders that we're getting with that we're getting with AYON. As far as the installations go, we've got a third party that is helping us do that. And so that is taking away some of the burden from the existing employees. And -- but we're doing a really good job as a company of being able to make these to get them installed and to get the doctors trained and get their staff trained and get them up and running. And so it's been a very, very good rollout of a new product and especially a product with this much technicality and sophistication in it, and the team has just done an amazing job of that.

Matthew Hewitt

Analyst · Craig-Hallum.

That's great. And maybe -- and I realize it's early days and you're focused on the U.S. market and rightfully so. But how should we be thinking about cadence of rolling AYON out internationally? Are there maybe 1 or 2 geographies that you'd like to target for '26? And remind us what that process is to bring AYON to the masses outside of the U.S.

Charles Goodwin

Analyst · Craig-Hallum.

Yes. No, it's a good question, Matt. And we're not going to get specific on that on today's call. But obviously, we want to have AYON registered everywhere in the world because it's not just a product for the United States. It's a product for every surgeon worldwide. Some of the bigger focus markets, obviously, would be Europe, the Middle East, Brazil, Latin America, some other countries in Latin America. Europe is all together. So Europe, you just need a CE mark. And once you get one, you get them all. There are some countries in the Middle East that actually accept FDA. And so obviously, those we would probably start sometime next year there. And then each individual country has its own registration process, and we'll be starting those processes in a lot of the countries. So we'll talk more about that when we get into '26 and we start doing that. And you're right, our focus right now for the third quarter and the fourth quarter is solely on the United States.

Operator

Operator

At this point, there are no further questions. I will now turn the call over to Charlie Goodwin for closing remarks. Please go ahead, sir.

Charles Goodwin

Analyst

Thank you, everybody, for attending the call. I want to thank the entire Apyx team for their dedication and tireless execution over the past 3 months. It has been an exciting time for the company as we see our plan turn into reality. We appreciate all the support we've received from our shareholders during this time, and I thank you all for attending.

Operator

Operator

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.