STRATA Skin Sciences’ Earnings Call Highlights Growth Amid Challenges

Strata Skin Sciences ((SSKN)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for STRATA Skin Sciences reflected a generally positive sentiment, highlighting several areas of growth such as international sales, TheraClearX device expansion, and improved margins. However, these positive developments were somewhat overshadowed by concerns over stagnant total revenue growth, potential tariff impacts, and challenges in domestic recurring billings.

Growth in Direct-to-Consumer Marketing Efforts

STRATA Skin Sciences has made significant strides in its Direct-to-Consumer marketing efforts, resulting in increased XTRAC leads. This has translated into a higher volume of patient appointments and greater device utilization, marking a positive trend for the company.

Elevation in Recurring Revenue

The company reported a rise in recurring revenue per device across its domestic installed base of approximately 850 devices. This marks the fourth consecutive quarter of year-over-year growth, indicating a successful strategy in enhancing revenue streams.

TheraClearX Device Expansion

The expansion of the TheraClearX device in the US has been notable, with the installed base increasing to 160 from 104. Additionally, there was a 138% increase in the number of patients submitted for reimbursement in Q1 2025 compared to the previous year, showcasing significant growth potential.

International Business Growth

International sales reached $2.5 million, reflecting an 8% increase from the previous year. Equipment sales rose by 13%, and recurring treatments revenue saw a 27% increase, underscoring the company’s successful international expansion.

Improved Gross Margin

STRATA Skin Sciences reported an improved gross margin of 53.5% in Q1 2025, up from 45.6% in the same period in 2024. This improvement was driven by efficiency gains and the absence of a one-time inventory write-off.

Reduction in Operating Expenses

The company successfully reduced its total operating expenses by 5% in Q1 2025 compared to the previous year. This reduction was achieved through cuts in engineering, product development, and selling expenses.

Flat Total Revenue Growth

Despite various areas of growth, total revenue for Q1 2025 was $6.8 million, only a 1% increase compared to Q1 2024. This indicates a stagnation in overall revenue growth, which remains a concern for the company.

Potential Impact of Tariffs

The company expressed concerns about the potential negative impacts of tariffs on its international revenue. If these issues are not resolved, they could lead to a significant reduction in revenue.

Challenges in Domestic Recurring Billings

Domestic recurring billings faced challenges due to changes in reimbursement rates and broader indication coverage, posing a headwind for the company’s domestic operations.

Forward-Looking Guidance

STRATA Skin Sciences reported strong progress in its turnaround strategy during the first quarter of 2025, focusing on increasing recurring revenue per device and optimizing device utilization. The company achieved over 1,000 patient appointments, marking a 33% increase in unique patients with insurance benefits handled compared to Q1 2024. The Elevate 360 consulting program facilitated higher patient conversion and improved clinic operations, leading to increased demand and device usage. International sales rose 8% to $2.5 million, with equipment sales up 13% and recurring treatment revenue up 27%, despite a 5% decline in parts and maintenance. The TheraClearX device also experienced growth, with an installed base reaching 160 devices and a 138% increase in patients submitted for reimbursement in Q1 2025 compared to the previous year. Overall, STRATA’s strategic initiatives have resulted in improved margins and controlled operating expenses.

In summary, STRATA Skin Sciences’ earnings call highlighted a generally positive outlook with multiple growth areas, including international sales and device expansion. However, concerns over stagnant revenue growth and potential tariff impacts remain. The company’s strategic initiatives have led to improved margins and reduced operating expenses, setting a promising foundation for future growth.