STRATA Skin Sciences Reports Second Quarter 2018 Financial Results

Conference call and webcast, today at 4:30 pm Eastern Time

HORSHAM, Pa., Aug. 13, 2018 (GLOBE NEWSWIRE) -- (NASDAQ: SSKN) STRATA Skin Sciences, Inc. (“STRATA”) a medical technology company in Dermatology and Plastic Surgery dedicated to developing, commercializing and marketing innovative products for the treatment of dermatologic conditions, today reported financial results for the quarter ended June 30, 2018.

Financial highlights of the second quarter of 2018 include the following (all comparisons are with the first quarter of 2018 and all figures are quoted in GAAP, unless stated otherwise):

• Revenues were $7.5 million, an increase of 17% 
• Recurring XTRAC^® revenues were $5.2 million, or 69% of total revenues, an increase of 15%
• International XTRAC revenues were $2.1 million, an increase of 57%
• Gross profit of $4 million
• Gross margins were 54%, an increase of 5%
• Dermatology Recurring Procedures Revenue margin of 63.6%, an increase of 6.9%
• Net loss of $1.4 million or ($0.06) per basic and diluted common share, compared with a net loss of $2.2 million or ($0.13) per basic and diluted common share and ($21.60) per series C preferred share
• Net loss includes $.6 million in severance and consulting and $.1 related to the write down of the discontinued Nordlys product line
• Installed base of XTRAC recurring revenue systems in the U.S. is 746 units
• Cash and cash equivalents as of June 30, 2018 of $14.4 million 

“We are very pleased with the results of the first full quarter of this turnaround,” stated Dr. Dolev Rafaeli, President and Chief Executive Officer of STRATA. “The recent financing has allowed us to reboot our investment in our direct to consumer (“DTC”) advertising program which started driving higher recurring revenue and margins in sequential quarters.”

Dr. Rafaeli continued, “We also experienced improvements in other key operational performance indicators as our quarterly average revenue per consigned domestic XTRAC system has increased from $6,000 to $6,900 and scheduled patient appointments increased sequentially from 250 in the first quarter of 2018 to 870 in the second quarter. With advertising efficiencies far exceeding our expectations, we anticipate that our marketing team will be able to double that number in the upcoming third quarter and to be able to achieve 2,000 appointments by the fourth quarter.”

“While the investment in our DTC program carries delayed fruits, as the resulting revenues build over the future quarters, that investment is what differentiates us strategically. Our renewed focus on generating value-add for our partner clinics resulted in a major turnaround this quarter as we successfully ended our trend of six consecutive quarterly declines in our installed base, and we anticipate that it will grow once again by the end of this year,” said Dr. Rafaeli. “Our 2018 results as compared to the comparable periods in 2017 have been impacted by the lower DTC spending in the prior quarters. In the turnaround we can expect to see higher recurring revenue as we increase the DTC spend.”

“We are excited with this quarter’s results – indicating that the first steps of our strategic turnaround are already driving improved performance. Moreover, we expect projected investments and growth in patient appointments to deliver increased recurring revenue growth, system productivity, as well as higher gross margins in the coming quarters,” Dr. Rafaeli concluded. 

Reported Financial Results
Revenues for the second quarter of 2018 were $7.5 million compared with revenues for the second quarter of 2017 of $8.5 million.

Net loss for the second quarter of 2018 was $1.4 million or ($0.06) per basic and diluted common share and ($21.60) per series C preferred share, which included $0.3 million in interest expense, $1.3 million in depreciation and amortization expenses. This compares with net loss for the second quarter of 2017 of $1.2 million or ($0.52) per basic and diluted common share, which included $1.6 million in interest expense and $1.7 million in depreciation and amortization expenses and $0.1 million for income tax expense.

Revenues for the six months of 2018 were $14.0 million compared with revenues for the six months of 2017 of $15.6 million. Net loss for the six months of 2018 was $3.6 million or ($0.17) per basic and diluted share and ($64.69) per series C preferred share, which included $0.7 million in interest expense, $2.7 million in depreciation and amortization expenses and $0.1 million for income tax expense. This compares with net loss for the six months of 2017 of $3.4 million or ($1.53) per basic and diluted common share, which included $2.9 million in interest expense and $3.2 million in depreciation and amortization expenses and $0.1 million for income tax expense.

As of June 30, 2018, the Company had cash and cash equivalents of $14.4 million, compared with $4.1 million as of December 31, 2017.

Non-GAAP Measures
To supplement the Company’s consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the Company provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP adjusted EBITDA.

The Company’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, nor superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of our current financial performance and to provide further information for comparative purposes.

Specifically, the Company believes the non-GAAP measures provide useful information to both management and investors by isolating certain expenses, gains and losses that may not be indicative of the Company’s core operating results and business outlook. In addition, the Company believes non-GAAP measures enhance the comparability of results against prior periods. Reconciliation to the most directly comparable GAAP measure of all non-GAAP measures included in this press release is as follows:

* Includes depreciation of lasers placed-in-service- of $898 and $1,856 for the three and six months ended June 30, 2018 and 2017, respectively and $1,080 and $2,151 for the three and six months ended June 30, 2018 and 2017.

STRATA previously announced the scheduling of a conference call with investors to review the results of the second quarter. Following is the pertinent information for accessing that call.

Conference Call Detail:

About STRATA Skin Sciences, Inc.
STRATA Skin Sciences is a medical technology company in Dermatology and Plastic Surgery dedicated to developing, commercializing and marketing innovative products for the treatment of dermatologic conditions. Its products include the XTRAC^® excimer laser and VTRAC^® lamp systems utilized in the treatment of psoriasis, vitiligo and various other skin conditions; and the STRATAPEN^® MicroSystem, marketed specifically for the intended use of micropigmentation.

The Company’s proprietary XTRAC excimer laser delivers a highly targeted therapeutic beam of UVB light to treat psoriasis, vitiligo, eczema, atopic dermatitis and leukoderma, diseases, which impact over 35 million patients in the United States alone. The technology is covered by multiple patents, including exclusive rights for patents for the delivery of treatments to vitiligo patients.

STRATA’s unique business model leverages targeted Direct to Consumer (DTC) advertising to generate awareness and utilizes its in-house call center and insurance advocacy teams to increase volume for the Company’s partner dermatology clinics.

The XTRAC business has used this proven DTC model to grow its domestic dermatology partner network to over 740 clinics, with a worldwide installed base of over 2,000 devices. The Company is able to offer 90% of DTC patients an introduction to physicians prescribing a reimbursable solution, using XTRAC, within a 10 mile radius of their house. The Company is a leader in dermatology in-clinic business generation for its partners.   

Safe Harbor
This press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. These statements include but are not limited to the Company’s plans, objectives, expectations and intentions and may contain words such as “will,” “may,” “seeks,” and “expects,” that suggest future events or trends. These statements, the Company’s ability to generate the growth in its core business, the Company’s ability to continue to monetize the remaining MelaFind assets, develop social media marketing campaigns, and the Company’s ability to build a leading franchise in dermatology and aesthetics, are based on the Company’s current expectations and are inherently subject to significant uncertainties and changes in circumstances. Actual results may differ materially from the Company’s expectations due to financial, economic, business, competitive, market, regulatory and political factors or conditions affecting the Company and the medical device industry in general, as well as more specific risks and uncertainties set forth in the Company’s SEC reports on Forms 10-Q and 10-K. Given such uncertainties, any or all of these forward-looking statements may prove to be incorrect or unreliable. The Company assumes no duty to update its forward-looking statements and urges investors to carefully review its SEC disclosures available at www.sec.gov and www.strataskinsciences.com.