STRATA Skin Sciences Reports Third Quarter 2023 Revenue

Company to Host Conference Call and Webcast Today, November 14, 2023, at 4:30 PM ET

HORSHAM, Pa., Nov. 14, 2023 (GLOBE NEWSWIRE) -- STRATA Skin Sciences, Inc. (NASDAQ: SSKN), a medical technology company dedicated to developing, commercializing and marketing innovative products for the treatment of dermatologic conditions, today announced financial results for the third quarter ended September 30, 2023.

Third Quarter 2023 and Recent Business Highlights:

  • Total Revenues were $8.9 million compared to $9.4 million for the third quarter of 2022, a total decrease of 6.0%.
  • Non-GAAP EBITDA improved to $1.0 million compared to $0.6 million for the third quarter of 2022.
  • Dr. Dolev Rafaeli, named new Vice-Chairman, President and CEO, effective October 31, 2023.

“I am pleased to have rejoined the STRATA Skin Sciences team,” commented Dr. Dolev Rafaeli, Vice-Chairman, and Chief Executive Officer. “As a significant and long-standing shareholder, I am committed to ensuring that we maximize the inherent growth potential in the business by re-establishing our previous successful initiatives focused on driving utilization and average revenue per device in our domestic recurring partnership model. As we move forward, we will seek to drive value with our clinical partners and solidify our continued leadership in the market.”

Third Quarter Financial Results
Revenues for the third quarter of 2023 were $8.9 million, compared to revenues of $9.4 million for the third quarter of 2022.

Global recurring revenues for the third quarter of 2023 were $5.3 million, compared to global recurring revenues of $5.8 million for the third quarter of 2022. Equipment revenues were $3.6 million for the third quarter of 2023, as compared to $3.6 million for the third quarter of 2022, staying flat.

Gross profit for the third quarter of 2023 was $5.0 million, or 56% of revenues, compared to $5.8 million, or 62% of revenues, for the third quarter of 2022. The decrease in gross profit percentage was primarily the result of higher depreciation due to more XTRAC lasers and new TheraClear devices placed into service, higher material costs, and a change in product mix with lower dermatology recurring revenue procedures during the three months ended September 30, 2023.

Selling and marketing costs for the third quarter of 2023 were $3.0 million, as compared to $3.8 million for the third quarter of 2022. The lower selling and marketing costs can be attributed to a reduction in advertising costs. General and administrative costs for the third quarter of 2023 were $2.3 million, as compared to $2.6 million for the third quarter of 2022. The reduction in general and administrative costs are primarily attributed to the decrease in employee-related expenses, such as salaries and stock-based compensation expense, and lower computer-related costs.

Other expense for the third quarter of 2023 was $0.4 million, compared to $0.2 million for the third quarter of 2022. The increase in other expenses for the third quarter was primarily attributed to the result of a higher interest rate on the variable rate Senior Term Facility entered into in September 2021.

Net loss for the third quarter of 2023 was $1.1 million, or a loss of $0.03 per basic and diluted common share, as compared to the net loss for the third quarter of 2022 of $1.0 million, or a net loss of $0.03 per basic and diluted common share.

For the period ending September 30, 2023, the company had a cash and cash equivalents balance of $8.5 million, compared to the balance on December 31, 2022, of $6.8 million. This increase was primarily attributed to additional proceeds received upon the refinancing of the Senior Term Facility on June 30, 2023, offset by an increase in inventories, and a decrease in accrued expenses and other current liabilities.

Suspension of Guidance
As a result of the recent management change, the company has suspended guidance for the fiscal year ending December 31, 2023, and until further notice.

“We look forward to Dr. Dolev Rafaeli’s execution and proven business development experience on steering the Company back towards strong organic and inorganic revenue growth and profitability,” stated Dr. Uri Geiger, Chairman of the Board. “Given his successful track record, the Board is enthusiastic about the opportunities ahead.”

Webcast and Conference Call Information
STRATA management will host a conference call today, beginning at 4:30 PM ET. The conference call will be concurrently webcast.

The link to the webcast is available here: STRATA Skin Sciences Earnings Webcast

To listen to the conference call, please dial 877-269-7756 (US/Canada), 1-201-689-7817 (International), and use the conference ID number 13741439.

Reconciliation of 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, including non-GAAP adjusted EBITDA and Gross Domestic Recurring Billings.

The Company’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards but is 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 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 of the GAAP measures of net loss to non-GAAP measures included in this press release is as follows (in thousands) (unaudited):

  For the Three Months Ended September 30, 
  2023  2022 
Net loss $(1,053) $(995)
Depreciation and amortization  1,449   1,311 
Amortization of operating lease right-of-use assets  89   67 
Loss on disposal of property and equipment  31   17 
Interest expense, net  438   209 
Non-GAAP EBITDA  954   609 
Stock-based compensation expense  337   455 
Non-GAAP adjusted EBITDA $1,291  $1,064 

XTRAC Gross Domestic Recurring Billings
XTRAC gross domestic recurring billings represent the amount invoiced to partner clinics when treatment codes are sold to the physician. It does not include normal GAAP adjustments, which are deferred revenue from prior quarters recorded as revenue in the current quarter, the deferral of revenue from the current quarter recorded as revenue in future quarters, adjustments for co-pay and other discounts. This excludes international recurring revenues.

The following is a reconciliation of non-GAAP XTRAC gross domestic billings to domestic recorded revenue for the third quarter of 2023 and 2022 (in thousands):

  For the Three Months Ended September 30,
  2023   2022 
Gross domestic recurring billings $4,883   $5,548 
Co-Pay adjustments  (85)   (188)
Other discounts  (29)   (40)
Deferred revenue from prior quarters  2,005    2,499 
Deferral of revenue to future quarters  (1,913)   (2,309)
GAAP Recorded domestic revenue $4,861   $5,510 

About STRATA Skin Sciences, Inc.
STRATA Skin Sciences is a medical technology company dedicated to developing, commercializing and marketing innovative products for the in-office treatment of various dermatologic conditions such as psoriasis, vitiligo, and acne. Its products include the XTRAC® excimer laser, VTRAC® lamp systems, and the TheraClear®X Acne Therapy System.

STRATA is proud to offer these exciting technologies in the U.S. through its unique Partnership Program. STRATA’s popular partnership approach includes a fee per treatment cost structure versus an equipment purchase, installation and use of the device, on-site training for practice personnel, service and maintenance of the equipment, dedicated account and customer service associates, and co-op advertising support to help raise awareness and promote the program within the practice.

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 launch and sell an acne treatment device and to integrate that device into its product offerings, the Company’s ability to develop, launch and sell products recently acquired or to be developed in the future, the Company’s ability to develop social media marketing campaigns, direct to dermatologist 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, adverse market conditions labor supply shortages, or supply chain interruptions resulting from the coronavirus, fiscal, and political factors, responses, or conditions affecting the Company, the medical device industry and our customers and patients 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 these forward-looking statements may prove to be incorrect or unreliable. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not undertake any obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release. The Company urges investors to carefully review its SEC disclosures available at and

Investor Contact:
Rich Cockrell
CG Capital
Phone: +1 (404) 736-3838 

STRATA Skin Sciences, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
  September 30, 2023  December 31, 2022 
Current assets:      
Cash and cash equivalents $7,131  $5,434 
Restricted cash  1,334   1,361 
Accounts receivable, net of allowance for credit losses of $128 and $382 at September 30, 2023 and December 31, 2022, respectively  4,802   4,471 
Inventories  6,125   5,547 
Prepaid expenses and other current assets  330   691 
Total current assets  19,722   17,504 
Property and equipment, net  8,256   7,498 
Operating lease right-of-use assets  718   975 
Intangible assets, net  9,623   17,394 
Goodwill  8,803   8,803 
Other assets  71   98 
Total assets $47,193  $52,272 
Liabilities and Stockholders’ Equity        
Current liabilities:        
Accounts payable $3,157  $3,425 
Accrued expenses and other current liabilities  5,901   6,555 
Deferred revenues  2,385   2,778 
Current portion of operating lease liabilities  404   355 
Current portion of contingent consideration  178   313 
Total current liabilities  12,025   13,426 
Long-term debt, net  15,016   7,476 
Deferred revenues and other liabilities  585   314 
Deferred tax liability  306   306 
Operating lease liabilities, net of current portion  282   610 
Contingent consideration, net of current portion  2,786   8,309 
Total liabilities  31,000   30,441 
Stockholders’ equity:        
Series C convertible preferred stock, $0.10 par value; 10,000,000 shares authorized; no shares issued and outstanding      
Common stock, $0.001 par value; 150,000,000 shares authorized; 34,913,886 and 34,723,046 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively  35   35 
Additional paid-in capital  250,422   249,024 
Accumulated deficit  (234,264)  (227,228)
Total stockholders’ equity  16,193   21,831 
Total liabilities and stockholders’ equity $47,193  $52,272 

STRATA Skin Sciences, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
  Three Months Ended September 30, 
  2023  2022 
Revenues, net $8,852  $9,413 
Cost of revenues  3,898   3,614 
Gross profit  4,954   5,799 
Operating expenses:        
Engineering and product development  248   216 
Selling and marketing  3,038   3,754 
General and administrative  2,283   2,615 
   5,569   6,585 
Loss from operations  (615)  (786)
Other (expense) income:        
Interest expense  (528)  (244)
Interest income  90   35 
   (438)  (209)
Net loss $(1,053) $(995)
Net loss per share of common stock, basic and diluted $(0.03) $(0.03)
Weighted average shares of common stock outstanding, basic and diluted  34,912,104   34,723,046 

STRATA Skin Sciences, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(in thousands)
  For the Nine Months Ended September 30, 
  2023  2022 
Cash flows from operating activities:      
Net loss $(7,036) $(5,389)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  2,119   1,816 
Amortization of operating lease right-of-use assets  257   248 
Amortization of intangible assets  2,155   2,155 
Amortization of deferred financing costs and debt discount  112   116 
Change in allowance for credit losses  (205)  24 
Stock-based compensation expense  1,014   1,275 
Loss on disposal of property and equipment  55   52 
Loss on debt extinguishment  909    
Changes in operating assets and liabilities:        
Accounts receivable  (126)  (246)
Inventories  (344)  (1,616)
Prepaid expenses and other assets  388   (110)
Accounts payable  (268)  1,547 
Accrued expenses and other liabilities  (611)  (267)
Deferred revenues  (165)  (472)
Operating lease liabilities  (279)  (236)
Net cash used in operating activities  (2,025)  (1,103)
Cash flows from investing activities:        
Purchase of property and equipment  (3,166)  (2,037)
Cash paid in connection with TheraClear asset acquisition     (631)
Net cash used in investing activities  (3,166)  (2,668)
Cash flows from financing activities:        
Proceeds from long-term debt  7,000    
Payment of deferred financing costs  (97)   
Payment of contingent consideration  (42)   
Net cash provided by financing activities  6,861    
Net increase (decrease) in cash, cash equivalents and restricted cash  1,670   (3,771)
Cash, cash equivalents and restricted cash, beginning of period  6,795   12,586 
Cash, cash equivalents and restricted cash, end of period $8,465  $8,815 
Cash and cash equivalents $7,131  $7,454 
Restricted cash  1,334   1,361 
  $8,465  $8,815 
Supplemental disclosure of cash flow information:        
Cash paid for interest $917  $523 
Supplemental disclosure of non-cash operating, investing and financing activities:        
Inventories acquired in connection with TheraClear asset acquisition $  $71 
Intangible assets acquired in connection with TheraClear asset acquisition $  $10,182 
Change in operating lease right-of-use assets and liability due to amended lease $  $446 
Contingent consideration issued in connection with TheraClear asset acquisition $  $9,122 
Common stock issued in connection with TheraClear asset acquisition $  $500 
Modification of common stock warrants $384  $ 
Transfer of property and equipment to inventories $234  $486 
Change in intangible assets and fair value of contingent consideration $5,616  $ 
Accrued exit fee recorded as debt discount $450  $