Apyx Medical Corporation reports Q4 and full-year 2023 results

Apyx Medical Corporation reported financial results for its fourth quarter and full year ended December 31, 2023, and introduced financial expectations for the full year ending December 31, 2024.

Management comments:
“We generated double-digit growth in sales of our Advanced Energy products in the fourth quarter, driven by growth in global generator and handpiece sales of more than 25% and 10% year-over-year, respectively,” said Charlie Goodwin, President and Chief Executive Officer. “As previously reported, our Advanced Energy revenue fell short of our expectations, as the capital equipment purchasing environment proved to be more challenging than anticipated. Ultimately, we were pleased to return to double-digit revenue growth on a full year basis in 2023. In addition, we reduced our annual net loss attributable to stockholders and Adjusted EBITDA loss by 19% and 13%, respectively, and delivered a significant reduction in cash used in operations this year.”

Mr. Goodwin continued: “Our 2024 guidance assumes Advanced Energy generator demand in the cosmetic surgery market will continue to be impacted, as prospective surgeon customers remain reticent to purchase new capital equipment, offset fully or partially by growth in handpiece sales this year. We intend to continue managing our resources efficiently while investing strategically, and with $44 million in cash and equivalents at year-end, we have the requisite capital to execute our initiatives. Our team remains focused on leveraging the strong progress we made in 2023, which enabled us to secure new 510(k) clearances for specific clinical indications, introduce our Renuvion Apyx One Generator and Micro Handpiece in the U.S., and expand awareness of the safety and efficacy of our technology. With this progress in view, we believe Apyx Medical is poised to capitalize on the unique capabilities of our Renuvion technology – and favorable long-term tailwinds in our industry – to target sustainable and profitable growth in the future.”

The following tables present revenue by reportable segment and geography:

Fourth quarter 2023 results:
Total revenue for the three months ended December 31, 2023, increased $2.1 million, or 16% year-over-year, to $14.7 million, compared to $12.6 million in the prior year period. Advanced Energy segment revenue increased $1.6 million, or 15% year-over-year, to $12.1 million. OEM segment revenue increased $0.5 million, or 22% year-over-year, to $2.5 million, compared to $2.1 million in the prior year period. The increase in Advanced Energy revenue was primarily due to growth in domestic sales, driven by increased sales of single-use handpieces, as well as sales of the Company’s new Apyx One Console (launched in January 2023) to existing customers. Advanced Energy revenue also benefited from growth in international markets, driven by an increase in generator sales. The increase in OEM segment revenue was due to increased sales volume to existing customers. Domestic revenue increased $2.0 million, or 23% year-over-year, to $10.7 million, and international revenue increased $0.1 million, or 2% year-over-year, to $4.0 million.

Gross profit for the three months ended December 31, 2023, increased $0.7 million, or 8% year-over-year, to $8.9 million, compared to $8.2 million in the prior year period. Gross profit margin for the three months ended December 31, 2023, was 60.9%, compared to 65.3% in the prior year period. The decrease in gross profit margins was primarily attributable to changes in product mix within the Company’s Advanced Energy segment, customer mix, higher material and inbound shipping costs to manufacture inventory and additional reserves on inventories as a result of lower than expected sales.

Operating expenses for the three months ended December 31, 2023, increased $0.5 million, or 4% year-over-year, to $14.7 million, compared to $14.2 million in the prior year period. The increase in operating expenses was driven by a $0.9 million increase in selling, general and administrative expenses and a $0.2 million increase in salaries and related costs. These increases were partially offset by a $0.6 million decrease in professional services expenses.

Other (expense) income, net for the three months ended December 31, 2023, and 2022 was $(3.8) million and $19 thousand, respectively. The change was driven primarily by a $3.1 million expense related to the extinguishment of the Company’s prior Credit Agreement, as well as increased interest expense compared to the prior year period.

Income tax expense for the three months ended December 31, 2023 and 2022 was $0.1 million and $0.2 million, respectively.

Net loss attributable to stockholders for the three months ended December 31, 2023, was $9.6 million, or $0.28 per share, compared to $6.0 million, or $0.17 per share, in the prior year period.

Adjusted EBITDA loss for the three months ended December 31, 2023 and 2022 was $4.7 million and $4.1 million, respectively.

Full year 2023 results:
Total revenue for the year ended December 31, 2023, increased $7.8 million, or 18%, to $52.3 million, compared to $44.5 million in 2022. Advanced Energy segment revenue increased $6.6 million, or 18% year-over-year, to $43.4 million, compared to $36.8 million in 2022. OEM segment revenue increased $1.3 million, or 16% year-over-year, to $9.0 million, compared to $7.7 million in 2022. The increase in Advanced Energy revenue was primarily due to growth in domestic sales, which was driven primarily by generator sales of the Company’s new Apyx One Console (launched in January 2023) to existing customers, as well as increased sales of single-use handpieces. Advanced Energy revenue also benefited from growth in international sales, driven by an increase in sales of generators. The increase in OEM revenue 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 the Company’s OEM development agreements. Domestic revenue increased $7.1 million, or 23% year-over-year, to $38.3 million, and international revenue increased $0.7 million, or 5% year-over-year, to $14.0 million.

Net loss attributable to stockholders for the year ended December 31, 2023, was $18.7 million, or $0.54 per share, compared to $23.2 million, or $0.67 per share, in the prior year.

Full year 2024 financial outlook:
The Company is introducing its financial guidance for the year ending December 31, 2024:

• Total revenue guidance assumes:
  • Advanced Energy revenue in the range of $41.6 million to $44.6 million, representing a decrease of approximately 4% to growth of approximately 3% year-over-year, compared to Advanced Energy revenue of $43.4 million for the year ended December 31, 2023.
  • OEM revenue in the range of $8.1 million to $8.3 million, representing a decrease of 10% to 7% year-over-year, compared to $9.0 million for the year ended December 31, 2023.

• Net loss attributable to stockholders of approximately $26.5 million to $24.3 million, compared to $18.7 million for the year ended December 31, 2023.

MB Bureau