Good morning, ladies and gentlemen, and welcome to the Apyx Medical Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference call over to Jeremy Feffer, LifeSci Advisors. Please go ahead.

Thank you, and welcome, everyone, to our fourth quarter and full year 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 these 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.

Thank you, Jeremy, and thank you all for joining us today. Per our usual format on these quarterly calls, I will begin with a review of our performance over the past several months and then turn the call over to Matt for a review of our fourth quarter and full year 2025 financial results, along with our guidance for full year 2026. We will then open the call for your questions. Let me begin with a review of a few key highlights from our fourth quarter and full year 2025 performance. We reported a record revenue of $19.2 million compared to $14.2 million in the same period last year. This growth was driven by a 38% increase in sales of our surgical aesthetics products to $16.7 million for the fourth quarter, which was primarily attributable to sales of our AYON body contouring system. As many of you are aware, the fourth quarter represents the first full quarter of AYON sales following its full commercial launch in September of '25. As a result, this is a very telling moment for us as a company as we begin to see the market excitement we have discussed over the past several quarters meaningfully reflected in our financial results. Looking back since unveiling AYON approximately one year ago when it was submitted for FDA clearance, we have seen a steady and consistent rise in market interest. Following market clearance in May of 2025, we initiated a soft launch that generated overwhelmingly positive feedback from the early adopters, and it quickly became clear to our team that this system was special and positioned us to have significant impact on the future of aesthetic surgery market. I am excited to report that this positive feedback has translated into strong market demand and sales following full launch,…

Thank you, Charlie. Before I get started, please note all references to fourth quarter and full year financial results will be on a GAAP and year-over-year basis, unless noted otherwise. As Charlie mentioned, total revenue for the fourth quarter '25 increased 35% to $19.2 million compared to $14.2 million in the prior year period. Revenue for the Surgical Aesthetics segment increased 38% or $4.6 million to $16.7 million compared to $12.1 million for the prior year period. As Charlie referenced, this growth was driven by sales of AYON as the company commenced its commercial launch in September and 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 net sale and upgrades to the Apyx One Console in international markets. Overall, Surgical Aesthetics sales domestically increased by nearly 50% from the prior year period. Turning to the OEM segment, sales increased 16% or approximately $0.3 million to $2.5 million for the fourth quarter of '25 compared to $2.1 million for the fourth quarter of '24. The increase in OEM sales was due to an increase in sales volume to existing customers, including Symmetry Surgical under our 10-year generator manufacturing and supply agreement. Domestic revenue increased 42% year-over-year to $15 million and international revenue increased 15% year-over-year to $4.2 million. As a reminder, the medical device industry typically experienced some seasonality with revenue trends generally lowest in the first and third quarters and strongest in the second and fourth. Gross profit for the fourth quarter '25 increased to $12 million compared with $9 million in the prior year period. Gross profit margin for the fourth quarter '25 decreased to 62.6% compared…

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

Congrats. Charlie, I think I heard some commentary about a handpiece and CapEx sales, but I was wondering if we might be able to get a little more color maybe just even domestically. Obviously, we know the aesthetic growth rate in the quarter. But I was wondering if you could maybe give us color, I would imagine maybe capital is growing faster given AYON, but -- could you comment on directionally, which is growing faster and then maybe if CapEx is seeing a price uptick?

When you say CapEx, do you mean handpieces? What do you mean by CapEx?

Capital, capital equipment. Just -- system sales.

Yes. Look, our growth in the fourth quarter was definitely driven by AYON, and that was our focus as a company. It was our focus as a sales team, especially in the United States was driving AYON systems. The whole organization was working hard to produce systems, and we were selling systems. And obviously, that was the driver of growth in the fourth quarter for us. Domestically, we grew almost 50% in the U.S., and I think it was 38% as a total company. And so it was on the back of AYON. It was on the back of this revolutionary platform for sure.

And I guess just as a follow-up, any pricing commentary that you give on that? I think you're able to sell that given the components at a higher price. But also sort of looking for maybe some commentary around new customers. Are you seeing is it mostly repeat folks that are upgrading to AYON that you know? Or is it -- any color on how many new customers are interested in the system?

Yes. So it is a combination of both. It is a combination of people who already have the Renuvion platform, whether it be an Apyx One generator or an RS3 generator that would upgrade to AYON. And that was, I would say, probably about 80% of our sales in the fourth quarter, but there were still about 20% of new customers that were both new to the Renuvion platform and obviously, the AYON platform. that purchased AYON. And so we're seeing a nice mix of both for sure, and we would expect that to continue. As far as pricing goes, we haven't actually talked about the specific pricing other than the list price of AYON is about $360,000, and that is simply the list price of the Apyx One generator, plus all the competitors' components that make up AYON. And remember, we've said that we're able to bring it to the market at a much greater value buying it together than all the separate pieces. So there is a value proposition for the doctors to get an integrated system, along with the benefits that they get from the technologies that are in AYON and along with the benefits that they and their staff get from a workflow benefit of AYON.

Your next question is from Sam Eiber from BTIG.

Congrats on a nice finish to the year. Charlie, sitting here, I guess, 6 months into the AYON launch, I guess, what's been going well? What's going better than expectations? What are some things that maybe you have to fine-tune? Would just love any updates on, I guess, what you're hearing from customers and then from the commercial reps out in the field?

Yes. No, it's a great question. And the great news is it's all good news. The customers love AYON. The one thing that they would like to have with AYON is the power-assisted handpiece, which we expect that definitely here in the first half of the year because that completes the liposuction portion of AYON. And so there is no question that there are a lot of people that want the power-assisted portion. But the feedback from AYON itself has exceeded every expectation that we have had. The launch has gone incredibly well. Sure, there's been a couple of minor hiccups along the way, but the team has done an incredible job of dealing with those and making sure that everybody is happy with the system. And like we said in the prepared remarks that every metric that we had has been there and then some with AYON. And remember, there is nothing like this system in the marketplace today. And so really haven't ran into a single surgeon that hasn't thought it's a great idea, hasn't really liked it and is going to consider how to bring this into their practice. And so we are just getting started. When you said 6 months, it's been 6 months since we basically got approval. But remember, we didn't start shipping the product until September. And like I said, we're still waiting on the power-assisted handpiece to get that into the hands of the doctors to complete the liposuction offering for AYON.

Yes. Very good. And maybe just a quick follow-up for Matt. I guess just thinking about the gross margin guidance, relative to 2025. Is it fair to think of that maybe is a little conservative considering the mix coming from OEM is going to be a little bit lighter next year? Just love to hear the puts and takes to the gross margin guidance.

Sam, great question. Yes, any time we're giving guidance, we're trying to be as conservative as possible. It will depend on -- the levers are the lower margins coming out of OEM as compared to the higher margins coming out of the Surgical Aesthetics segments, offset by sales mix geographically. So if we have higher sales in China, full year sales in China in 2026 as well. So there will be some geographic mix.

Your next question is from Alex Fuhrman from Lucid Capital Markets.

Congratulations on the strong AYON launch and a strong year in 2025. I wanted to ask about the new salespeople that you're adding. Can you talk a little bit about how you're dividing territory and incentivizing the sales force? And where do you see the most opportunity to leverage these new hires?

Yes. No, I appreciate the question. So as far as territories go, what we've done is we've just made some change in basically with some of the people that we have had. The nice thing with AYON is it definitely puts us in a position of strength as a company to go out and get some of the top talent in the industry. And obviously, we brought John Featherstone in to help us with that. And for the -- if you look at the aesthetics industry and especially the surgical side of aesthetics, I don't know if there's a more exciting product or platform than AYON to be selling in the marketplace today. And so it really does put us in a strength as a company. We are no longer just a one technology company, but we've got a whole suite of offerings for body contouring. And quite frankly, as we talked in the prepared remarks, with the change in the patient population and with the adoption of the GLP-1 drugs and the weight loss associated with that and the loose and lax skin as a result of that, body contouring becomes a huge part of the doctor's practice. And we think that AYON and Renuvion are uniquely positioned to help them with the tools to be able to take care of these patients. And so from our perspective, it's a perfect time to be out there getting the absolute best sales talent in the industry to execute this and to drive it for many years to come.

And your next question is from Matt Hewitt from Craig-Hallum.

This is Tollef Kohrman on for Matt Hewitt. Can you remind us what countries AYON is approved in? And what your plans are for further expansion there?

You asked about AYON specifically, correct?

Yes.

Yes. So right now, it's just the United States. There are a couple of countries outside the United States that take FDA. And obviously, it would be registered in there. There's a couple in the Middle East. and the Caribbean, believe it or not. But other than that, we're still -- we still will this year be trying to register it in a lot of key countries outside the United States with obviously Europe, Brazil and Colombia being high on that list. So as we've talked about before, we are just getting started with this. And obviously, we've got a lot of areas throughout the world to get this registered and to get it sold in.

Awesome. And then with the liposuction label expansion now expected midyear, did you incorporate any contribution this year? Or does that represent upside?

We typically do not forecast, if you will, for stuff that we don't have. So obviously, we will still be selling AYON consoles and those consoles were obviously implied in the guidance, if you will. But the handpieces itself, those will be on an upside basis.

Your next question is from Kyle Bauser from ROTH Capital Partners.

Maybe just on console sales. So obviously, AYON was a very big reason for the strong results to the end of the year last year. Just curious, going forward, are the majority of console sales AYON? Or are they still Renuvion? Just trying to get a sense of what that mix is or what you anticipated.

Yes. So we actually still sell Renuvion only even in the United States where we have AYON. So if somebody just wants to acquire the skin tightening portions for their practice, we will obviously sell them stand-alone Renuvion. And obviously, outside the United States, we don't have AYON registered, and so we are selling stand-alone Renuvion outside the United States. And so we will always have both available to the marketplace because it's such an important part, especially to treat these new patients, the Renuvion handpiece. But as far as mix goes, in the U.S., I would imagine that more and more people will be acquiring Renuvion through AYON, if I had to guess. But outside the United States, it's obviously right now just Renuvion only.

Okay. Got it. That's helpful. And then, Matt, in your prepared remarks, sorry if I missed it, you mentioned something about 2027. I believe it was about being cash flow positive. Correct me if I'm wrong, just -- and related to that, what are some assumptions that we'll want to keep an eye on in order to kind of achieve reaching cash flow generation?

Great question, Kyle. So from a perspective of cash flow, what we said is that we would have -- we would have cash through 2027, but the plan is that we would be cash flow positive no later than the fourth quarter of 2026.

There are no further questions at this time. I will now hand the call back over to Charlie Goodwin for the closing remarks.

Thank you, everybody, for attending the call. I want to thank the entire Apyx Medical team for their dedication and tireless execution throughout 2025 and as we enter what is expected to be an exciting period of growth for 2026 as we see our plan turn into reality. We appreciate all the support we have received from our shareholders during this time, and thank you all for attending today's call. Thank you.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.