Apyx Medical Corporation (NASDAQ:APYX) Q2 2023 Earnings Call Transcript

Frank Takkinen: Great. Thanks for taking the questions. I was hoping to ask one on the guide as well. I was hoping you could parse out a couple of pieces to the growth expectation. The primary question I want to ask is just how are you thinking about growth in handpieces versus console, which do you expect to be growing faster or is it kind of broad-based strength amongst both?

Charles Goodwin: Yeah. Look, we had growth both in generators and in handpieces globally, right? And we had that for the quarter that we just had, where we had faster growth and more growth was the adoption of new generators and specifically in the U.S., but also outside the U.S. And we expect that to remain really strong in the back half of the year and that is part of the momentum that we had. And we’ve got that, especially in the U.S. because of multiple tailwinds. We’ve got the indications that we’ve talked about. We’ve got the reduced headwinds now that the FDA updated the safety notice. We’ve got the Apyx One generator, which right now, remember, is only launched in the United States. So that is a U.S. thing in particular.

And right now, our direct-to-consumer marketing is only in the United States too. And so we expect the U.S. to be a bigger driver. If the U.S. is the bigger driver that means that our gross margins go up, that there is a positive impact on our gross margins.

Frank Takkinen: Okay. That’s fair. And then maybe for my second one. I want to ask on [indiscernible] obviously, it’s been a hot topic in all headlines recently. Curious, if you could kind of illustrate or explain how you think that could positively or negatively impact your business in the future?

Charles Goodwin: Yeah. The first thing is, is that we see it as a tremendous tailwind to our business. We think it is going to be very positive for our company. The thing that I want to make sure that everybody understands is this is just playing out right now and just getting started in real time. And we are working with some of our clinicians that are actually doing this. They’re actually marketing the skinny shots and they’ve got a whole program for people to come in and lose the weight and then be able to take care of their slack skin after. And remember, for us, we’ve got an indication for use of liposuction, but we’ve also got the indication for just — for soft tissue contraction. And we really don’t care how the skin gets black.

What we care about is that people don’t like black skin and they want to get it treated, and Renuvion still is the best technology in the marketplace today to treat that black skin. And so for us, it’s a tremendous benefit. It’s a tremendous benefit that we think is going to continue for many years to come, quite frankly.

Frank Takkinen: Okay. Maybe I’ll squeak one more in here. With the FDA notice that came shortly after the liposuction 510(k), I think there was an inference in there related to the FDA enforcing on-label usage across the industry. Have you seen this play out at all in the field as it relates to your competition or is this something that hasn’t come to fruition yet?

Charles Goodwin: Yeah. Unfortunately, we have not seen any sign of that. There are still people that are making claims that they shouldn’t make and doing things that they shouldn’t be doing. So as of right now, we really have not seen any evidence of that, even though it was — you are correct. It was stated in the safety notice that they were going to do that. But in fairness to the FDA, that safety notice did just come out on May 10 and so we are not that far away from that still, so.