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STRATA Skin Sciences, Inc. (SSKN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $6.81M, below Wall Street consensus of $7.28M; EPS was -$0.58 vs. -$0.52 consensus, as seasonality and domestic recurring softness offset strong international momentum; gross margin expanded to 53.5% (+790 bps YoY), driven by efficiency gains and no repeat of last year’s inventory write-off . Revenue Consensus $7.28M*, EPS Consensus -$0.52*.
  • International revenue rose 8% YoY to ~$2.5M (equipment +13%, recurring +27%), now ~36% of total; management cautioned potential tariff-driven pressure on international revenue in Q2 if unresolved, tempering near-term outlook .
  • Strategic execution continued: average net revenue per domestic XTRAC system increased to $4,776 (+3% YoY) on 846 systems; adjusted EBITDA improved by $0.73M to -$0.55M; operating cash flow improved to -$0.55M; cash and restricted cash ended at $7.85M .
  • Post-quarter, AMA expanded CPT 96920–96922 to include broader reimbursable excimer indications (vitiligo, atopic dermatitis, alopecia areata, CTCL, etc.), a structural catalyst to expand addressable reimbursed volumes and patient access over time .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded to 53.5% (+790 bps YoY), driven by recurring efficiency gains and absence of a one-time equipment inventory write-off from Q1 2024: “Gross margin of 53.5%… driven primarily by continued efficiency gains… and the absence of a one-time inventory write-off” .
  • International strength: “sales of $2.5M, up 8% YoY… equipment sales up 13% and recurring treatments revenue up 27%,” and segment now ~36% of total revenue, demonstrating diversification and momentum outside the U.S. .
  • DTC and Elevate 360 execution: “over 1,000 appointments in the first quarter… unique Psoriasis +32% and Acne +128%,” and Elevate 360 improving utilization with redeployments to more productive clinics (approaching 100 accounts) .

What Went Wrong

  • Missed consensus on revenue and EPS: actual revenue $6.81M vs. $7.28M* and EPS -$0.58 vs. -$0.52*, reflecting seasonal Q1 softness and domestic recurring declines (-4% domestic XTRAC recurring; gross domestic recurring billings down to $4.09M from $4.58M) . Revenue/EPS consensus*.
  • Installed base effectively flat/sequentially lower, with ongoing removals of underperforming devices and measured redeployments (Q4 had 864 systems; highlight references 846 in Q1), limiting near-term domestic recurring growth while utilization initiatives scale .
  • Tariff uncertainty: management warned of potential “meaningful reduction in international revenue” if tariffs persist beyond the 90-day reprieve, impacting both new sales and service/warranty parts flow into Asia .

Financial Results

Core P&L vs. Prior Periods and Prior Year

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$6.75 $9.60 $6.81
Gross Margin (%)45.6% 60.1% 53.5%
Diluted EPS ($USD)-$0.96 -$1.18 -$0.58

Segment Mix

Segment ($USD Millions)Q4 2024Q1 2025
Total Recurring Revenue$5.80 $4.70
Equipment Revenue$3.80 $2.10

KPIs and Operating Metrics

KPIQ1 2024Q1 2025
Avg. net revenue per domestic XTRAC system ($)—$4,776 (+3% YoY)
Domestic XTRAC installed base (systems)—846
XTRAC gross domestic recurring billings ($USD Millions)$4.58 $4.09
Intl. revenue ($USD Millions)—~$2.50
International % of total revenue—36%
Adjusted EBITDA ($USD Millions)-$1.28 -$0.55
Operating Cash Flow ($USD Millions)-$0.80 -$0.55
Cash + Restricted Cash ($USD Millions)$6.57 $7.85
TheraClearX installed base (U.S.)140 160
TheraClear patients submitted for reimbursement (Q1)438 ~1,000; pre-auth >85%

Notes: Where Q1 2024 values are not explicitly disclosed in Q1 2025 materials, cells are left as “—” to avoid estimation.

Actual vs. Wall Street Consensus (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Millions)$7.28*$6.81
EPS ($USD)-$0.52*-$0.58
EBITDA ($USD Millions)-$0.27*-$0.80 (Reported non-GAAP adjusted EBITDA -$0.55)

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q2 2025No formal guidance providedNo formal guidance; management cautions potential tariff-driven decline in international revenue if unresolvedQualitative caution added
InternationalQ2 2025N/APotential “meaningful reduction” if tariffs persist; 90-day reprieve unclearLowered (qualitative)
Gross Margin / OpEx2025N/AContinued focus on margin expansion and cost control (seasonally weak Q1 improved YoY)Maintained efficiency focus
Regulatory/Coding2025N/AAMA CPT expansion to broader conditions, expected to reduce denials and expand accessPositive structural catalyst

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
DTC strategyRapid ramp in 2024; >1,900 DTC appointments YTD by Q3; cost-per-lead improved 1,000+ appointments in Q1; unique Psoriasis +32%, Acne +128% YoY Strengthening execution
Elevate 360 utilizationFocus on relocating/removing underperformers; early impact in Q3/Q4 Program expanded to ~100 accounts; redeployments to productive clinics; per-device revenue rising Scaling
Tariffs/macroNot a central headwind in Q3/Q4; international growth strong Management warns Q2 impact possible if unresolved; affects sales and warranty/service parts imports Emerging headwind
International growthQ4 international sales $4.1M; strong equipment placements (Japan) Q1 international ~$2.5M (+8% YoY), recurring +27%; 36% of total revenue Positive, but tariff risk
Regulatory/legalCourt order enjoining competitor claims re CPT codes AMA CPT expansion to broader reimbursable indications (post-quarter) Structurally positive
TheraClearXInstalled base grew (92 → 135 by Q3); insurance billing adoption accelerating Installed base 160; 1,000 patients submitted; pre-auth >85%; breakeven ~$2,500/quarter/device Building traction

Management Commentary

  • “Our strategy focuses on generating higher per device recurring revenue… through our Elevate 360 consulting model… facilitating higher patient conversion and increased device utilization” .
  • “Gross margin of 53.5%… driven primarily by continued efficiency gains… and the absence of a one-time inventory write-off” .
  • “Internationally, we’re building strong momentum… equipment sales up 13% and recurring treatments revenue up 27%” .
  • “If the situation is not resolved, we would expect to see meaningful reduction in international revenue” (tariff caution) .
  • AMA CPT expansion: “accepted revision to CPT codes 96920-96922, expanding reimbursement eligibility… expected to reduce systemic denials and the need for prior authorizations” .

Q&A Highlights

  • TheraClear deployment and pipeline: STRATA owns ~250 devices, ~160 deployed; targeting full deployment by late 2025/early 2026; per-patient economics ~$50–$60 per treatment x 6 treatments; breakeven ~$2,500/quarter/device; pre-auth >85% across payers .
  • Elevate 360 operational uplift: Example clinic turned from ~$13K annual revenue to $28K in Q4 and expanded across 7 additional clinics; program now ~100 accounts (≈10% penetration) with hands-on consulting and analytics .
  • Tariff impact: Minimal domestic supply chain impact; primary issue is outbound to Asia including parts for warranty/service where tariffs up to 145% could apply; 90-day reprieve unclear; quantification not yet possible .
  • Installed base trajectory: Net installed base seen as at/near a low point; ongoing removals of nonperformers with redeployments to higher-utilization clinics; ~100 devices available for redeployment .

Estimates Context

  • Q1 2025 actuals missed consensus: Revenue $6.81M vs. $7.28M*; EPS -$0.58 vs. -$0.52*; EBITDA -$0.80M vs. -$0.27M*, with non-GAAP adjusted EBITDA at -$0.55M (improved $0.73M YoY) . Consensus values*; adjusted EBITDA improvement .
  • Drivers of the miss: seasonal Q1 weakness, domestic recurring declines (-4% domestic XTRAC recurring; gross domestic recurring billings down), offset by international growth and margin expansion .
  • Estimate adjustments likely: near-term consensus may moderate for Q2 on international revenue given tariff commentary; medium-term constructive on expanded CPT coverage supporting volume and mix .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: Expect cautious Q2 outlook due to tariff uncertainty impacting international revenue; watch for management updates mid-August .
  • Margin trajectory: Structural improvement evident (53.5% gross margin; efficiency gains; no repeat inventory write-offs); continued focus on cost control supports EBITDA improvement .
  • Domestic recurring: Utilization initiatives (Elevate 360, DTC) are showing tangible KPIs (per-device revenue up; 1,000+ appointments; redeployments), but installed base pruning may cap growth until programs scale further .
  • International diversification: Strong momentum and higher mix provide resilience, but tariff path is the key swing factor near term .
  • TheraClear runway: Insurance-reimbursed use case gaining traction with high pre-auth rates; installed base growth and clear breakeven economics suggest growing contribution in 2025–2026 .
  • Structural catalyst: AMA CPT expansion to broader excimer indications should reduce denials, expand addressable reimbursed volumes, and support domestic recurring growth over time .
  • Liquidity: Cash and restricted cash of $7.85M with improved operating cash flow (-$0.55M) underpins execution while company refocuses assets to productive accounts .