Good morning, ladies and gentlemen, and welcome to the Apyx Medical Third Quarter 2025 Earnings Conference Call. This call is being recorded on Thursday, November 6, 2025. I would now like to turn the conference over to Jeremy Feffer, LifeSci Advisor. Please go ahead, sir.

Thank you, and welcome, everyone, to our third quarter 2025 earnings call. Representing the company on the call are Charlie Goodwin, Chief Executive Officer; and Matt Hill, Chief Financial Officer of Apyx. Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including, without limitation, those identified in the Risk Factors section of our most recent annual report on Form 10-K, our most recent 10-Q filing and the company's other filings with the Securities and Exchange Commission. Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website. I would now like to turn the call over to Mr. Charlie Goodwin, Apyx Medical's President and Chief Executive Officer. Please go ahead.

Thank you, Jeremy, and thank you all for joining us today. For our usual format on these quarterly calls, I will start with a review of our performance over the past several months, and then I will turn the call over to Matt for a review of our third quarter financial results as well as our updated full year 2025 guidance. We will then open the call for your questions. But before I jump into the numbers, I'm excited to share an important update about the evolution of our company and our continued commitment to innovation and meaningful outcomes for our customers and their patients. With the development, clearance and launch of the AYON Body Contouring System, one thing has become clear, our identity and the way we present this segment of our business must evolve to reflect who we are today and where we are going tomorrow. That is why we are officially announcing the rebranding of our Advanced Energy segment, which will now be identified as Surgical Aesthetics. This is not just about a new name, it's about better aligning our brand with our mission and the durable and transformational results that our surgical products deliver. Let me begin with a review of our third quarter performance. We reported total revenue of $12.9 million, compared to $11.5 million in the same period last year. This growth was driven by a $1.8 million increase in sales of our Surgical Aesthetics products to $11.1 million for the third quarter. This is the result of an increase in U.S. sales of over 30% for the quarter and reflects initial sales from our commercial launch of our AYON Body Contouring System during the quarter as well as increased volume of single-use handpieces in both domestic and international markets. Overall, the AYON soft launch, which took place throughout much of the summer and the full commercial launch in September have been overwhelmingly successful. We are thrilled with the market feedback we're receiving, which has translated in both presales and now initial deliveries, which I will get into more in a moment. I want to note that this growth was offset slightly by a decline in our OEM revenue. For the third quarter, we reported $1.8 million, down from $2.2 million in the same period last year. This decline was anticipated and is due to reduced sales volumes to existing customers, including Symmetry Surgical under our 10-year generator manufacturing and supply agreement. Strategically, we have shifted our focus and manufacturing resource from OEM towards our Surgical Aesthetics segment, particularly the AYON launch as we believe this segment represents the future of the company. It is worth highlighting that we made this tremendous progress while emerging from the significant cost reduction and restructuring announced in November 2024. I am proud to share that these efforts have resulted in a leaner operating structure and a meaningful reduction in our cash burn. These improvements have strengthened our overall financial health, giving us the flexibility to invest in AYON and our broader growth strategy with greater confidence. While restructurings are always challenging, I want to express my sincere gratitude to the employees here at Apyx. It is encouraging to reflect on the positive outcome driven by our team's dedication and perseverance. Let me now provide a more detailed overview of our progress. It is amazing to think that only about 6 months ago, we received FDA clearance for the AYON system and soon after began to realize the significant impact this system could have on the market. AYON is a groundbreaking body contouring system designed by leading surgeons to address many of the challenges and limitations they experience with current systems in the market. And please keep in mind that most existing systems on the market are limited to a single function while AYON seamlessly integrates fat removal, closed-loop contouring, tissue contraction and electrosurgical capabilities, empowering surgeons to deliver the most comprehensive body contouring treatments available. With advanced features like LIFT technology for real-time adjustments and Renuvion for enhanced tissue contraction, AYON sets a new standard in surgical care, streamlining procedures and maximizing patient outcomes. The result is a system that combines precision, versatility and innovation in an all-in-one platform with unmatched return on investment. As part of our soft launch, we initiated an ambassador program with key opinion leaders in critical geographies throughout the U.S. Many of these leading surgeons are now actively discussing how AYON delivers consistent and reliable performance with several of them contributing at our workshops and clinical symposia supporting the broader commercial launch. The feedback has been incredible from the start, which we attribute to the system really filling a void in the market that nothing else has come close to addressing. Just last month, we hosted a virtual KOL event for investors and analysts featuring comments from world-renowned general and plastic surgeon, Dr. Paul Vanek. We were fortunate to have Dr. Vanek share several case studies using the AYON system, followed by his general insights on the system's functionality and its potential impact on surgical practices. I encourage any of you that missed this event to visit our events page on our company website to listen to the replay, which is just a very compelling overview of the AYON capabilities. One of the key points raised during the KOL event was the importance of AYON's integration with Renuvion. Our innovative, minimally invasive surgical solution for treating loose and lax skin. Renuvion provides durable transformational outcomes and is rapidly gaining traction among surgeons. We believe it represents the best-in-class option for treating loose skin and should be considered the new standard of care, particularly for patients experiencing skin laxity after significant weight loss, including those using GLP-1 medications. This expanding patient population presents a tremendous opportunity. With more than 15 million people currently on GLP-1 drugs in the U.S. alone, we're still in the early stages of this powerful market shift. We believe Apyx is uniquely positioned to meet this demand and help lead aesthetic market into the next phase of growth. As I have said before, the major shifts in the market with the rapid adoption of GLP-1s are unlike anything that we have seen in recent history, and Renuvion has proven to be an exceptional treatment option for the skin laxity experienced by many of these patients. Combined with AYON's other features, we believe Apyx is further differentiated and has elevated our position in the surgical aesthetics market, thereby making us the trusted surgical partner in the next era of aesthetic care. As I mentioned earlier, the full U.S. launch of AYON began in September and has been highly successful to date. Our team was well positioned following the soft launch earlier this summer and strong interest quickly translated into preorders ahead of the launch. I believe the launch and overall interest in AYON has exceeded all of my expectations across every metric. I look forward to realizing our long-term vision of walking into almost every surgical practice and seeing an AYON system at the center of the operating room. When we first introduced the AYON and talked about the initial capabilities, one of the commitments we made was the submission of an additional 510(k) to the FDA for the label expansion of AYON to include power liposuction. I am pleased that early last month, our team submitted this follow-up application and anticipate receiving clearance in Q1 of '26. This is an important update as receiving market clearance for power liposuction will solidify AYON's position as the first fully integrated body contouring system, positioning AYON as the new gold standard in surgical aesthetics. I think it is important to note that upon receiving clearance from the FDA, we will be able to activate this function on AYON systems already in the field. While we are still in the early stages of the launch, the market excitement is quickly turning into orders for AYON. As a result, we are updating our revenue targets for 2025, which Matt will detail in a moment. I will now turn the call over to Matt for a review of the third quarter 2025 financial results in more detail, along with our updated financial guidance for 2025.

Thank you, Charlie. Before I get started, please note that all references to third quarter financial results will be on a GAAP and a year-over-year basis unless noted otherwise. As Charlie mentioned, total revenue for the third quarter '25 increased 12% to $12.9 million, compared to $11.5 million in the prior year period. Revenue for Surgical Aesthetics segment increased 19% or $1.8 million to $11.1 million compared to the $9.3 million last year. As Charlie referenced, this growth was driven by sales of AYON as we commenced our commercial launch during the quarter and an increased volume of single-use handpieces in both domestic and international markets. These increases were partially offset by decreases in domestic sales of generators, including upgrades to the Apyx One console, where the purchase of AYON was not part of the sale and upgrades to the Apyx One console in international markets. Turning to the OEM segment, sales decreased 18% or approximately $0.4 million to $1.8 million for the third quarter of '25, compared to $2.2 million for the third quarter of '24. The decrease in OEM sales was due to a decrease in the sales volume to existing customers, including Symmetry Surgical under our 10-year generator manufacturing and supply agreement. Domestic revenue increased 20% year-over-year to $9.3 million, and international revenue decreased 4% year-over-year to $3.5 million. As a reminder, the medical device industry typically experiences some seasonality with revenue trends generally the lowest in the first and third quarters and strongest in the second and fourth. Gross profit for the third quarter '25 increased to $8.3 million, compared with $7 million in the prior year period. Gross profit margin for the third quarter '25 increased to 64.4%, compared to 60.5% in the prior year period. With respect to tariffs, we continue to monitor trade policy and tariff announcements, including the recent executive orders issued by the U.S. Federal Administration regarding tariffs on imports from various countries. At this time, the overall impact on our business related to these or any other tariffs that may be imposed remains uncertain and depends on multiple factors. Operating expenses decreased to $9.1 million for the third quarter '25, compared to $10.6 million in the prior year period. The decrease in operating expenses was driven by a $0.6 million decrease in selling, general and administrative expenses, a $0.3 million decrease in research and development expenses, a $0.3 million decrease in salaries and related costs and a $0.2 million decrease in professional services expenses. We are pleased to see the results of the cost-cutting measures taken in the fourth quarter of '24 in our current numbers. Loss from operations decreased $2.8 million or 77% to $0.8 million. Net loss attributable to stockholders was $2 million, or $0.05 per share for the third quarter '25, compared to $4.7 million, or $0.14 per share in the prior year period. Adjusted EBITDA loss decreased 96% to $0.1 million, compared to $2.4 million in the third quarter of '24. As a reminder, we provide a detailed reconciliation from net loss attributable to stockholders to non-GAAP adjusted EBITDA loss in our earnings press release. For the 3 months ended September 30, 2025, cash used in operating activities decreased to $3.5 million, compared to $4.4 million used in the prior year period. For the 9 months ended September 30, 2025, cash used in operating activities decreased to $5.5 million, compared to $15.1 million used in the prior year period. We are pleased with the cash and working capital management in the first 9 months of 2025 with cash burn returning to a lower but more normalized rate in the back half of the year as a result of the changes in working capital due to the AYON launch. As of September 30, 2025, the company had cash and cash equivalents of $25.1 million, compared to $31.7 million as of December 31, 2024. We believe, based on our cash projections, including the uptake of the AYON platform, working capital management and our strict cost controls, we will yield cash through 2027. Turning to a review of our '25 guidance, which we updated in our third quarter 2025 financial results press release issued earlier today. For the 12 months ending December 31, 2025, we expect total revenue in the range of $50.5 million to $52.5 million, up from our previous range of $50 million to $52 million. We believe this increase shows the strength of the AYON ongoing commercial launch, especially when you look back at our original guidance of $47.6 million to $49.5 million for '25 or compared to the $48.1 million for the year ended December 31, '24. Our revenue guidance assumes Surgical Aesthetics segment revenue in the range of $43 million to $45 million, up from the previous guidance of $42 million to $44 million. Again, since we initiated the soft launch of AYON this summer, we have increased expectations for our original guidance of $39.1 million to $41 million. In addition, this is compared to the $38.6 million for the year ended December 31, 2024, reflecting current trends. OEM revenue is expected to come in at approximately $7.5 million, down from the previous guidance of $8 million as the company focused resources on the Surgical Aesthetics segment, this is compared to the $9.5 million for the year ended December 31, 2024. For the purposes of clarity, we increased the guidance in the Surgical Aesthetics segment by $1 million and decreased the guidance in the OEM segment by $0.5 million from the guidance previously provided in our second quarter conference call. We now anticipate gross margins of approximately 61% for the year and total operating expenses not to exceed $40 million. This completes our prepared remarks. Charlie and I will now open the call for questions.

Your first question comes from Dave Turkaly with Citizens.

Congrats on the launch and the spending progress. I just had a clarification up front here. I know you said the generator sales were down, but I don't think I actually understood the explanation for why that was. You said something about AYON, but I just want to clarify that upfront, if I could.

Yes. So look, we're changing, obviously, the way that we classify things because AYON obviously has to have an Apyx One generator. And if you think of our customer base, we have customers that already have an Apyx One generator. They can actually just buy the rest of AYON and have their existing Apyx One generator integrated into AYON. And then we have an installed base of RS3 generators. They need to upgrade to an Apyx One generator and then buy the rest of AYON. And then obviously, if they don't have any of our Renuvion technology, they would need to buy all of AYON that would include an Apyx One and an AYON with it. And so we're obviously classifying those as just AYON sales even though they have an Apyx One in them.

Got it. I’m considering the impact on gross margin from this. I’m not sure if you’ve shared any details about the average selling prices or potential increases. I assume that the handpiece and the capital might be at a higher price point than what you offered previously. Looking ahead, I’m curious if you can provide any insights. It seems likely there will be a significant increase in gross margin if that’s the case. As we look toward the future, how substantial of an increase do you expect as this rollout progresses?

Yes. No, thanks for the question, Dave, but you probably know what my answer is going to be in that we're not giving guidance out from either a revenue or a gross margin point of view. The only thing that I would say to that, just to give you a little bit of color, is we've always said that the Surgical Aesthetics business, obviously, especially in the U.S., has the highest gross margins anywhere. So the more we sell here of that, the better it is for the entire company. But we're not going to give any color or any guidance on what that is right now.

The next question comes from Sam Eiber with BTIG.

So clearly, a really exciting opportunity on AYON and getting devices out in the market. But I want to ask maybe about on the consumable side and maybe some pull-through you can get on higher device utilization because of all the new capabilities that AYON has. So I guess my question is, should we also expect a big uptake in consumables in addition to capital sales next year?

So I think the uptake would come back from selling new units to people who don't have Renuvion technology today. I think for customers that are upgrading to Renuvion, they're using, obviously Renuvion after their liposuction procedures today. So I don't know that you would necessarily see an uptick from the existing base. But obviously, adding new customers will certainly help that. We had a good third quarter from a consumable standpoint, both in the United States and internationally. And obviously, we're always focused on driving utilization. So as we add more customers, that's going to be the greatest driver of utilization in the future.

Okay. That's helpful. Maybe I can ask a follow-up on the latest you're just seeing in the market environment. Just getting a sense of any changes to demand trends, GLP-1 dynamics at play? Would just your latest thoughts on the market at this point.

Yes, I believe our previous discussions remain relevant. We've consistently maintained that the market has been disrupted by GLP-1 drugs. We anticipate that companies with technologies addressing skin laxity and body contouring, particularly those focused on surgical methods, will be the ones to watch. Our technologies, AYON and Renuvion, are ideally positioned for this market, especially as more individuals start using these drugs and seek treatments to address their side effects. Additionally, a recent McKinsey study indicated that 63% of patients on GLP-1 drugs are new to aesthetic treatments. I believe we are just at the beginning of this trend, and the next decade will be an opportune time for plastic surgeons.

The next question comes from Alex Fuhrman with Lucid Capital Markets.

Congratulations on a really nice quarter and the launch of AYON. I wanted to ask you, Charlie, how much of your growth in the quarter was driven by the single-use handpieces? And what's really driving that? Are you seeing more lipo procedures being performed or better attach rates for Renuvion, or are you perhaps starting to see more stand-alone uses of Renuvion as well?

Yes. So I think the one thing that the quarter-by-quarter is always a tougher way to look at it. As you know, I think last quarter, we were down a bit. This quarter, we were really strong, both the United States and internationally in the growth of handpieces. And I think the answer to your question is all of the above. So we're obviously seeing new doctors come in to adopt the technology for the first time. We're seeing a higher attach rate from patients that are coming into doctor's office and requesting Renuvion. And so after a body contouring procedure, they're going to use that. And then we are seeing it used on a stand-alone basis. And so I think the answer is all of the above for that. And again, as people are looking for solutions to take care of their loose and lax skin, especially following the treatment of GLP-1s, I think this is a trend that's going to play out for a lot of years to come.

The next question comes from Matt Hewitt with Craig-Hallum.

Charlie, congratulations on the strong quarter. I would like to discuss the pipeline a bit. You've successfully launched the platform, and customers are adopting and using it. You've held some KOL events that are helping promote awareness. Are you noticing not only growth in the pipeline but also a possible inflection point where things are accelerating? If that’s the case, how are you managing the implementations with your team? Have you needed to expand the team to handle the demand? Any insights on this would be appreciated.

Yes, we have increased our guidance by $1 million for Surgical Aesthetics in the fourth quarter. You can do the math to see what that translates to in terms of revenue for that period, which is supported by our expectations for AYON. Regarding our pipeline, I won't go into much detail, but the team has done an excellent job stabilizing the supply chain to capitalize on the interest and orders we are receiving for AYON. For installations, we have engaged a third party to assist, alleviating some pressure from our current employees. Our company is effectively managing to install the products, train the doctors, and prepare their staff, resulting in a successful rollout of this complex and sophisticated product. The team has truly excelled in this effort.

That's great. I understand it's still early and your focus is on the U.S. market, which makes sense. However, how should we consider the timing for rolling AYON out internationally? Are there one or two regions you'd like to target for 2026? Also, could you remind us of the process to introduce AYON to a broader audience outside of the U.S.?

Yes. No, it's a good question, Matt. And we're not going to get specific on that on today's call. But obviously, we want to have AYON registered everywhere in the world because it's not just a product for the United States. It's a product for every surgeon worldwide. Some of the bigger focus markets, obviously, would be Europe, the Middle East, Brazil, Latin America, and some other countries in Latin America. Europe is all together. So Europe, you just need a CE mark. And once you get one, you get them all. There are some countries in the Middle East that actually accept FDA. And so obviously, those we would probably start sometime next year there. And then each individual country has its own registration process, and we'll be starting those processes in a lot of the countries. So we'll talk more about that when we get into '26 and we start doing that. And you're right, our focus right now for the third quarter and the fourth quarter is solely on the United States.

At this point, there are no further questions. I will now turn the call over to Charlie Goodwin for closing remarks. Please go ahead, sir.

Thank you, everybody, for attending the call. I want to thank the entire Apyx team for their dedication and tireless execution over the past 3 months. It has been an exciting time for the company as we see our plan turn into reality. We appreciate all the support we've received from our shareholders during this time, and I thank you all for attending.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.