Venus Concept ((VERO)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Venus Concept Inc. presented a balanced sentiment, highlighting both significant achievements and ongoing challenges. The company reported strong growth in cash system sales and a noteworthy reduction in debt, reflecting effective strategic shifts. However, these positive developments were tempered by an overall revenue decline, increased cash usage, and macroeconomic challenges that continue to pose hurdles.
Increase in Cash System Sales in the U.S.
Cash system sales in the U.S. saw a remarkable increase of 27% year-over-year, making up 87% of total U.S. system sales in the fourth quarter, a significant rise from 58% the previous year. This growth underscores the company’s successful focus on cash sales over subscription models.
Reduction in Total Debt Obligations
Venus Concept made substantial progress in reducing its total debt obligations by 47%, bringing it down from $74.9 million in 2023 to $39.7 million by the end of 2024. This reduction is a testament to the company’s strategic financial management.
Successful Strategic Initiatives
Sales through distributors more than doubled year-over-year in the fourth quarter, driven by strong demand in the APAC and EMEA regions. This success highlights the effectiveness of the company’s strategic initiatives in expanding its market reach.
Improved Gross Margin
The company reported an improvement in gross margin, rising to 69.1% from 66.5% year-over-year. This increase was driven by effective margin management and a favorable product mix.
Management Restructuring
Several leadership changes were announced to streamline decision-making processes and position the company for future growth. These changes are part of Venus Concept’s efforts to enhance operational efficiency.
Amendment to Bridge Loan Agreement
An amendment to the bridge loan agreement with Madryn Asset Management increased the company’s financing capacity by $10 million, providing additional financial flexibility.
Overall Revenue Decline
The fourth quarter saw a revenue decline of $2.4 million or 13% year-over-year, primarily due to a decrease in systems revenue and procedure-related products and service revenue.
Decline in Lease Revenue
Lease revenue experienced a significant decline of $3.5 million or 58% year-over-year in the fourth quarter, reflecting the company’s strategic shift away from subscription models.
Macroeconomic Headwinds
Global systems adoption was impacted by economic uncertainty, higher interest rates, tighter credit markets, and supply-related inventory shortfalls, posing challenges to the company’s growth.
Increased Cash Used in Operations
Cash used in operations for the fourth quarter was $3.8 million, compared to $0.8 million last year. This increase was driven by changes in net working capital.
Net Loss Attributable to Stockholders
The net loss attributable to stockholders for the fourth quarter was $8 million or $11.23 per share, an improvement from $11.1 million or $20.14 per share last year.
Forward-Looking Guidance
During the earnings call, Venus Concept’s leadership provided guidance focusing on prioritizing cash system sales over subscription models. The company reported a 13% year-over-year decline in fourth-quarter revenue to $15.8 million, primarily due to a 58% decrease in lease revenue. Despite this, U.S. cash system sales increased by 27%. The strategic shift led to a 47% reduction in total debt obligations by year-end. The company emphasized improvements in cash used in operations, aligning with their transformation strategy. They projected total revenue of at least $14 million for the first quarter of 2025, without providing full-year guidance due to ongoing strategic evaluations.
In conclusion, the earnings call for Venus Concept Inc. presented a mixed picture, with strong cash system sales and debt reduction highlighting strategic successes, while revenue declines and macroeconomic challenges underscored ongoing difficulties. The company’s focus on strategic shifts and financial management indicates a proactive approach to navigating the current economic landscape.