Earnings Call Transcript - INMD Q3 2023

Operator, Operator

Good day, and welcome to the InMode Third Quarter 2023 Earnings Results Conference Call. Please note today’s event is being recorded. I'd now like to turn the conference over to Miri Segal of MS-IR. Please go ahead.

Miri Segal, MS-IR

Thank you, operator, and to everyone for joining us today. Welcome to InMode's third quarter 2023 earnings call. Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements. The safe harbor statement outlined in today's earnings release also pertains to this call. If you have not received a copy of the release, please visit the Investor Relations section of the company's website. Changes in business, competitive, technological, regulatory, and other factors could cause actual results to differ materially from those expressed by the forward-looking statements made today. Our historical results are not necessarily indicative of future performance. As such, we can give no assurance as to the accuracy of our forward-looking statements and assume no obligation to update them, except as required by law. With that, I'd like to pass the call over to Moshe Mizrahy, Chairman and CEO. Moshe, please go ahead.

Moshe Mizrahy, Chairman and CEO

Thank you, Miri, and thank you to everyone for joining us. With me today are Dr. Michael Kreindel, our Co-Founder and Chief Technology Officer; Yair Malca, our Chief Financial Officer; Shakil Lakhani, our President in North America; Dr. Spero Theodorou, our Chief Medical Officer; and Rafael Lickerman, our VP of Finance. Following the prepared remarks, we will all be available to answer your questions. The third quarter was the first time that we saw a slowdown and experienced normal seasonality that is common in the medical device industry in general and specifically in the aesthetic space. We ended Q3 with revenue of $123.1 million, a slight increase of 2% compared to the third quarter of 2022. Until the third quarter, InMode has been in an accelerating growth rate as we established our presence in the US and globally. Furthermore, the last three years of the COVID pandemic led to an abnormal environment in the aesthetic space, resulting in pent-up demand and different aesthetic treatment patterns. Pre-pandemic, summertime hasn't been a popular time for aesthetic treatment due to travel and the requirement to avoid sun exposure post-treatment. This summer, patients and physicians in the US and in Europe returned to the normal seasonal cycle and this trend was reflected in our Q3 financial results. In addition, record interest rates impacted the financing environment of new leasing agreements in our industry. Salespeople often say time kills deals, and as the credit clearance process takes longer, fewer platforms were sold in the United States. However, despite these macro challenges, we were pleased to see that demand for InMode treatment has not been slowed down and remains high. Patent and gold standard technology and innovation are InMode's key differentiators. We constantly improve and upgrade our technology. We remain committed to developing new minimally invasive technology and platforms, as well as upgrading our existing platforms. In addition, we will aggressively enhance and protect our intellectual property and patents. This will ensure our long-term position as a leader in the industry and will enable us to benefit and become stronger following the current challenges in the market. Before I turn the call over to Shakil, I would like to reiterate our message regarding the conflict in Israel. As we stated in our press release, our employees are safe and together with their management team in Israel and in the United States, we are all as committed as we have always been to the success of this company. InMode is committed to supporting all customers, distributors, employees, and salespeople worldwide. We prioritize the safety and well-being of our employees and will continue to do so as we execute our strategy. We don't anticipate any interruptions to production. Our inventory levels globally and in Israel are sufficient and include components and sub-assemblies for the next three quarters. As a result, we expect all platforms and consumables will be delivered on time and will meet the highest standards. In addition, InMode takes all required measures to ensure continuous customer support and exceptional service; we are all as committed as we have ever been to the company's success. Now I would like to turn the call over to Shakil Lakhani, our President in North America. Shakil?

Shakil Lakhani, President North America

Thanks, Moshe and everyone for joining us. InMode's third quarter was challenging for North America. Despite the headwinds of lower platform sales in North America in the third quarter, we are encouraged by the strength in consumable sales and view this year-over-year increase as an indication of continued demand for InMode's treatments. Revenue from consumables and services accounted for 15% of total Q3 revenues and grew 28% year-over-year. We are pleased with the successful launch of Envision, our non-surgical ophthalmic platform in Q3. It is progressing well in North America and is gaining traction among leading optometrists and ophthalmologists. Additionally, at the very end of Q3, we successfully launched Define, the new and improved version of our hands-free technology for the face. We expect early revenues to be in Q4. As always, I'd like to thank our entire North American team and all employees everywhere for their continued hard work during these challenging times. I will now turn the call over to Yair for a review of the financial results in more detail. Yair?

Yair Malca, CFO

Thanks, Shakil, and hello everyone. Thanks again for joining us. InMode generated revenue of $123.1 million in the third quarter of 2023, representing a 2% year-over-year increase with a gross margin of 84% on a GAAP basis within the company model of 83% to 85%. Third quarter sales outside of the U.S. accounted for $44.9 million, or 36% of sales, compared to $39.8 million, or 33% in Q3 of last year. We continue to see growth coming from different regions around the world, and in Q3, sales from Asia hit a new record. To support our operations and growth, InMode now operates in a total of 93 countries with a sales team of more than 267 direct representatives and 82 distributors worldwide. Capital equipment in the third quarter represented 85% of total revenue, while consumer business service revenues accounted for the remaining 15%. Sales and marketing expenses increased to $50.8 million in the third quarter, compared to $43.1 million in the same period last year. This increase is attributed to the addition of new sales representatives as well as investment in direct-to-consumer advertising campaigns and hosting in-person events. The share-based compensation accounted for $6.6 million in the third quarter of 2023, a decrease compared to $7.9 million in the third quarter of 2022. GAAP operating expenses in the third quarter were $56.6 million, a 16% increase year-over-year. On a non-GAAP basis, operating expenses were $50.6 million in this quarter, compared to a total of $41.4 million in the same quarter of 2022, representing a 22% increase. GAAP operating margin for the third quarter of 2023 was 38%, compared to an operating margin of 44% in the third quarter of 2022. Non-GAAP operating margin for the third quarter of 2023 was 43%, compared to 51% for the third quarter of 2022. GAAP diluted earnings per share for the third quarter were $0.54 compared to $0.58 per diluted share in Q3 of 2022. Non-GAAP diluted earnings per share for this quarter were $0.61, compared to $0.66 per diluted share in the third quarter of 2022. Once again, we ended the quarter with a strong balance sheet. As of September 30th, 2023, the company had cash and cash equivalents, marketable securities, and deposits of $675.8 million. Before I turn the call back to Moshe to take your questions, I'd like to reiterate our revised guidance for 2023. Revenue between $500 million and $510 million, Non-GAAP gross margin between 83% and 85%, Non-GAAP income from operations between $220 million and $225 million, Non-GAAP earnings per diluted share between $2.53 and $2.57. I will now turn over the call back to Moshe.

Moshe Mizrahy, Chairman and CEO

Thank you, Yair. Thank you, Shakil. Operator, we now can get into Q&A.

Operator, Operator

Today's first question comes from Matt Miksic with Barclays.

Matt Miksic, Analyst

Thanks so much for taking the questions and for the call around the results. I'm wondering if we could start with some of the things that caused the shortfall to the third quarter relative to street estimates, even though I think directionally it was in line with your increased seasonality. And I'm speaking of the pressure around financing and leasing costs and how that affected Q3. On that topic, just wondering if you have any additional color to share as we progressed into Q4 here. And any thoughts across the management team as to how, what InMode can do to potentially alleviate some of those delays or pressures that caused a little bit of a slowdown there in Q3? And they have one follow-up.

Moshe Mizrahy, Chairman and CEO

Okay, hi, this is Moshe. I’m going to answer, and I believe my colleagues will complement me. I believe we specified the three main reasons why we are a little bit short on what the market expects. First, I believe the seasonality, which is now normal in the medical aesthetic. As you probably know, in 2021 and ‘22 were COVID years, and the COVID was in the beginning of the year, and therefore Q3 was much stronger than expected and sometimes stronger than Q2. But that's not normal in the medical aesthetic. I've been in medical aesthetics for 25 years, from my time at C-Luminous, Syneron, and now InMode. It's always the case that the third quarter, because of summertime, because people don't want to get treatment during the summer and expose themselves to the sun on vacation, is a slower quarter and the fourth quarter usually is the strongest one. So this is one of the reasons, and we cannot avoid it. Second, as far as financing, what we said is that today a leasing cost is 14% to 15% annually. That's the interest rate lease companies are charging customers. So I'm sure that you would not take a mortgage with a 14% to 15% interest rate. Although this is a working machine that generates money, the return on investment with this kind of interest rate will take longer. Of course, doctors are afraid of what will happen. The economy is slowing down. Everybody can see that. It's not just in the medical aesthetic or in the medical field. And therefore, when the interest rate is still going up, or at least has not started to go down, and the leasing financing will cost 14% to 15%, I don't know for how long. We believe that doctors will think twice if they want to do it. The third reason is the fact that leasing companies are tightening their procedures and their screening. They are afraid doctors will go bankrupt and they will not see the money. And therefore, before issuing the purchase order to us to actually take the order, they conduct a very long, I would say, rigorous processing time. Sometimes it takes two to three weeks. When you have two to three weeks, some of our competitors come into play. Doctors hesitate, thinking maybe they need to wait a little bit. All these processes are taking place now. How do we overcome it? We have a lot of resources, especially, we have a lot of cash. Therefore, we're working with the leasing company to come up with some solutions. First, to optimize the processing so that it does not take three weeks; it might take a few days as it used to. We might do some in-house financing and other programs to ease the financing for certain doctors. The main project is to work with the leasing company to find solutions. We have some ideas and we have already discussed them with them, and when we implement that—hopefully in Q4—it will ease the process. It won't lower the rate; the rate will stay 14% to 15%, but at least it will ease the process. That's the only thing that we can do. In addition to continue R&D, continue marketing, continue development. In the third quarter, despite the slowdown, we had 1,000 doctors' user meetings in Chicago in August. We had a 400-doctor summit in Cyprus with participants from 40 countries. We continue to invest in IP and marketing. We participated in 12 medical conferences around the world. So we're not essentially sitting down and cutting costs. That's the last thing we will do. Although it's a challenging time, the company DNA is different. We will not fire people; we will not lay off people; we will keep everybody. On the contrary, we're hiring this quarter, and we will continue to invest in marketing, sales, R&D, regulation, and product development. We received two FDA approvals this quarter which will enhance our position in the fourth quarter and next year. So overall, although we're taking the slowdown and the situation seriously, we're not sitting idly and waiting to see what happens in the market.

Matt Miksic, Analyst

That's a super helpful color. I just have one follow-up, if I could, on some of the events that have unfolded, unfortunately, in the past months in Israel. And you issued some comments around the time that this conflict began about your ability to supply and your supply chain, your risk of disruption, ability to deliver products and so on, if you could maybe walk us through. And any updates that you have on that and how far into ‘24 you feel confident that you're positioned to deliver given the current status of course. Thanks.

Moshe Mizrahy, Chairman and CEO

Yes, okay. Thank you for your question. Yes, it's a very difficult time in Israel, but we try to run the company business as usual. We have two production facilities, both of them on the northern part of Israel, which are not currently affected. They are not affected by the war, but mainly the southern part of Israel is. All the team in Israel is safe. We are located in the northern part of Israel in a city called Yokneam, which is relatively not close to the war area. All the team in Israel is safe and their families; we are taking care of them. We have accumulated inventory in the US and in Israel and in some countries in Europe in order to ensure supply for at least two quarters of finished goods and three quarters of components and subassemblies. So we will cover everything. I'm optimistic, but I cannot—I’m not a prophet. I cannot tell you that everything is 100%. Hopefully, the war will not extend to the northern part of Israel where we are located. As far as that, if that does not happen and we continue to have the situation as it is right now, everything will be okay. Also in Q4 and the beginning of 2024. We have some employees on their army reserve duty, especially in the manufacturing side, but we took care of that by switching to work two shifts. We hired more people who are not going to the reserve duty in the army, and we're working two shifts to keep our capacity the same as we planned. It's a 24-hour a day challenge, I mean, although it's not easy, but we're managing.

Operator, Operator

And our next question today comes from Young Li with Jefferies.

Matthew Taylor, Analyst

Hey guys, it's Matt on for Young. How are you doing? I just wanted to ask a couple of questions about your forecast. Maybe you could talk to us about how you arrived at the Q4 forecast after seeing the seasonality and low growth in Q3, what are some of the key assumptions that you looked at in developing that? And as an extension, can you talk about your confidence in growing in 2024?

Moshe Mizrahy, Chairman and CEO

When you said the focus, you meant the guidance that we gave for last time?

Matthew Taylor, Analyst

Well, for Q4 and implying by full-year guidance.

Moshe Mizrahy, Chairman and CEO

Okay. In order to meet the $500 million target, to be above the $500 million target, as we stated, we need to achieve $140 million revenue in the fourth quarter. Okay, I can tell you that I have worked with all the territories: North America, Europe, Asia, Latin America. Currently, I believe we will meet this target of $140 million in the fourth quarter to exceed the $500 million 2023 target that we provided. As far as Israel is concerned, we have all the capacity to supply everybody in the territories with the $140 million of platforms, handpieces, disposables; it's all in inventory. So from that perspective, we are not going to have a problem. From a sales point of view, I can tell you that October is always the first month of that quarter, and therefore, it does not reflect what's going on. As you know, more than 50% of the quarter revenue is generated in the last month, which is December. But I'm very optimistic that we will do the $140 million. If it does not happen, we will notify everybody. Now regarding 2024, we do not have a target yet. We want to see what happens on the market in Q4 as far as the slowdown in the economy and mainly in the medical aesthetic. Toward the end of the year, we will conduct some analysis of all the territories. We're working on preparing a budget for 2024. Based on that, we will give guidance.

Matthew Taylor, Analyst

Got it. Maybe just one follow-up, ask the question in a different way on Q4. The implied growth rate for your guidance at the midpoint is about 70% or so. So I guess why is that the right number? Why wouldn't it be 2% or 12%? How did you arrive at 70%? What are some of the key inputs that are informing that level of growth versus something lower or higher?

Moshe Mizrahy, Chairman and CEO

Yair, do you want to answer that?

Yair Malca, CFO

Sure, I think what we did is we looked at the different territories. We obviously see the slowdown impacting more significantly in some territories than others. Some of them would not grow year-over-year; some would, and offset the ones that would not. And looking at taking all this into the mix, we arrived at this slight single-digit growth year-over-year in terms of revenue. In terms of profitability, we assume a slight decline in profitability, but not that much operating margin. In Q4, we expect it to be around 44%, which is a healthy and respectable margin.

Moshe Mizrahy, Chairman and CEO

I want to add something. I just want to add something here as Yair talks about territory growth. Yes, Yair is right. For example, although it's relatively smaller than North America, the market in Asia is not slowing down yet. Although, we are starting to see some signs in the fourth quarter and therefore we had to do some weighted average between the territories to come up with the guidance. As regards to profitability, I'm sure you noticed that our gross margin is still very high at 84%. Even with inflation and the cost of components, which is getting higher each quarter due to inflation, we maintain 84% without raising the prices on the market, without raising the prices of our equipment on the market. We did not raise prices in any territory yet; we might, but not yet. Therefore, keeping the 84% gross margin in the third quarter, even in this slowdown, has been a challenge. I want to compliment all the operation team, the manufacturing, the engineering, the design; everybody who's working, I would say, in parallel to their regular work on new product development, working on how to improve the process, how to improve the supply chain, how to improve manufacturing and testing to maintain this 84% gross margin. It's not easy. Okay. That's something that everybody needs to remember. Our marketing and sales costs this quarter were a little bit higher than usual because we had several one-time events, such as the user meetings in the US for 1,000 doctors, a summit meeting in Cyprus, and costs associated with acquiring a patent. Additionally, we terminated one of our distributors in Germany to establish our own fully owned subsidiary there, which also incurred some expenses. So we had some events in the third quarter that affected marketing and sales expenses by at least $3.5 million, which are not regular or typical. Therefore, the operating earnings went down a bit due to these expenses. But overall, even with the slowdown and all the challenging times we're experiencing in Israel and the market, we managed to achieve a nice net profit and maintain a solid gross margin.

Operator, Operator

And our next question today comes from Danielle Antalffy with UBS.

Ryan Barocas, Analyst

Hey, this is Ryan Barocas on for Danielle today. Thanks so much for taking our questions. So just on Q3, I just want to try to better understand the timing of some of these impacts within the quarter to reconcile with some of the inter-quarter commentary you guys made. So when did you really begin to see the impacts from seasonality and interest rates? And how much of the slowdown in Q3 and I guess in Q4 comes from the impact on the financing side versus any potential real demand softening for your systems?

Moshe Mizrahy, Chairman and CEO

Well, I think it's very difficult to calculate how much of the slowdown came from the economy, how much came from the interest rates, and how much came from the time taken to approve the leasing process. We never made this kind of calculation. For us, it's an accumulation of all those reasons, all these effects. I mean, the fact that it's slowing down in the overall economy, the fact that the doctor thinks twice about buying equipment with a 14% leasing package and high-interest rate, the lengthening leasing process sometimes causes doctors to think again about whether they want the system, combined with the usual pattern that more than 50% of revenue is generated in the last months of the quarter. That's always the case; it's not typical of a slowdown or anything. Especially if in the last few days of the quarter you close a deal and you don't get financing, those deals remain pending for the next quarter and usually fall through. So you can put all those elements together to come up with what we have explained in the press release and now in response to the questions. There's no quantitative calculation for what the effect of each one of those factors is. It's a combination of all.

Ryan Barocas, Analyst

Got it. Thanks, Moshe. And then just on capital allocation, I would love to get an update on your latest priorities there. So with cash now just over 40% of your market cap. Is there any additional urgency on your end to put money to work here? And with the meaningful drop in your share price, would you consider any sort of share buyback or even a dividend program?

Moshe Mizrahy, Chairman and CEO

Well, we thought about a buyback for a long time. But I have to say two things. One, our previous experience with buyback, we actually did a buyback of $100 million, which did not help at all. The stock did not react positively to that; it was not now, but it did not help. Second, I'm sure you're aware that one of our competitors, a company called HydraFacial, which markets products to the same market that we do, mainly to spas and less to doctors, but they also sell to doctors, announced six weeks ago that they are doing a buyback of $100 million. We all expected their stock to go up. The stock price when they announced it was $6.3. The stock price today is $4. So they have lost 35% of their value in the last six weeks right after announcing the buyback. This has made us think twice about whether this is the best way to support the stock, to execute a buyback. Usually, we believe that a buyback may yield some short-term gains, but ultimately, the market will forget about it. Therefore, we prefer to keep the cash and look for M&A opportunities or business development opportunities where we can apply the funds more effectively than just buying back stock. That's my response. We are exploring some M&A opportunities. We have nothing to announce yet, and nothing is set in stone. We have tried a few things, but the prices were too high for us. We're looking for something that has the right profitability, although I'm not sure we will find something with an 84% gross margin, but a product that complements our technology, something that will offer synergy to our business. We don't want to rush into anything; perhaps in a slowdown situation like now, there may be more opportunities, but that's something we will explore.

Operator, Operator

And our next question today comes from Dane Reinhardt with Baird.

Dane Reinhardt, Analyst

Hey, thanks guys. Maybe just a question for Shakil, Yair, kind of on the end consumer, and if you can give any color on what you're hearing from your surgeons and doctors out in the field. I mean, I know you talked about consumables growth still growing at a healthy greater than 25%, but that is down from a bit over 40% for the past few quarters. So just want to see if there's any incremental color that you can give there and if you're seeing some patients maybe defer or push out these procedures given the macro pressures right now.

Shakil Lakhani, President North America

Yes, Dan, good question. I think it's kind of a combination of both. So number one, what you just mentioned there, definitely there’s some macroeconomic impact here; there’s no question. People are getting a little tighter with their wallets. But at the same time, I do think that from what Moshe was even saying, seasonality for Q3, there are a lot of patients going back to traditional seasonality within our industry; patients are on vacation and don’t want to be in the sun, so on and so forth. Therefore, we did see a little bit of a slowdown. Obviously, we're still encouraged by the demand for it; it hasn't dropped off significantly, I would say. But I do think it's a combination of both the macroeconomic environment and the seasonality of the business.

Dane Reinhardt, Analyst

Okay, thank you very much for that. And then the second question, probably for Yair here—maybe taking a different approach at the 2024 question. I know you guys have always talked about maybe adding $50 million incrementally every year. And obviously, the past few years, you've surpassed that, potentially just with the COVID pent-up demand and tailwind effects there. But is that $50 million still in question as you're kind of going into your budgeting process, or is that maybe a safe way to start? And then on a margin front, I mean, I know you guys have put in quite a few sales reps and other investments this year. So is this probably a better starting point to think off of and we can work from here? Or might there still be pressures just potentially from growing consumables and more in-person events still? Thanks.

Yair Malca, CFO

I would really prefer to wait to see how Q4 looks like before we provide any additional color on 2024. As you know, in Q3, there are two impacts going on for us: the slowdown and seasonality. Seasonality will be off the table in Q4. Then we will get a better feeling of what we see in terms of the headwinds that are directly related to the economy, and only then will we be in a better situation to discuss the 2024 items.

Operator, Operator

And our next question comes from Mike Matson with Needham and Company.

Mike Matson, Analyst

Yes, thanks. Just given all the concerns about the GLP-1 weight loss drugs, I'm not going to ask about the impact you're seeing or expecting, but a question that I’ve received from investors is to better understand InMode’s exposure there: what is the mix of body shaping procedures versus more skin tightening procedures in your business? I don't know if you even have visibility into that, but can you give us some general sense of the rough mix of those two types of procedures, at least within the minimally invasive part of your business? If you could provide a rough percentage or something.

Moshe Mizrahy, Chairman and CEO

Shakil, can you answer that for the US and I will answer for the OW?

Shakil Lakhani, President North America

Yes, Moshe. We’ve never been a weight loss company, right? For what you're saying about body shaping and skin tightening, I believe that if there are patients who are undergoing weight loss and experiencing that, we actually serve as a complementary agent to those things. But Spero, did you want to talk about your practical experiences with this?

Spero Theodorou, Chief Medical Officer

Yes, we get this question quite often, and it's starting to taper down. I think it’s a little too early to make a decision on how the overall 30,000-foot view will look in the future about this. But I can tell you one thing for sure: weight loss and loose skin is a problem. These patients are definitely going to come to us. Now I'm not talking about the massive weight loss patients who have traditional plastic surgery done. That’s definitely not going to change. I'm talking about the average weight loss of 10% that these drugs usually accomplish, or 15%, depending on which one they use. Those patients are all going to need some sort of skin tightening procedure. And they're going to want a minimally invasive approach in the office, not surgery, not in a hospital. And we're the best company to provide that. So we're in a really good position to take advantage of that. And as a practicing plastic surgeon, I can tell you my colleagues are starting to see more and more of them. So the trend is upwards; it's very positive. Morpheus, as I know, is our leading commercial brand and is what people are asking for. The demand reflects this right in our consumables and the offices that we talk to. As for body contouring, liposuction has never been a weight loss procedure. So patients that are over a 35 or 36 BMI are not really good candidates for liposuction. We definitely want them lower. So these drugs actually get these patients to a lower BMI where then they become candidates. Thus, they fit in the category where we can treat them. The fact that we can do liposuction and skin tightening simultaneously with a product like BodyTite offers us an even greater advantage due to the differentiated technology that nobody else has. So overall, I'm very optimistic. I know it sounds a little different than what people expect: that if I lose weight with a pill, I don't need plastic surgery. On the contrary, once you start losing weight, you become more optimistic and want to look better—it's a vanity procedure that we're offering, of course, and we're right there to take advantage of it. So the trends, so far, are positive and continue to improve. I hope that helps answer your question.

Mike Matson, Analyst

Okay, yes, that was helpful. Thank you. I also wanted to ask one on just the disclosure about this patent suit against BTL. Could you talk about what products or technologies are involved there, specifically regarding their presence in the US with their competing product?

Moshe Mizrahy, Chairman and CEO

Are you talking about the patent infringement lawsuit that we filed against them?

Mike Matson, Analyst

Yes.

Moshe Mizrahy, Chairman and CEO

Okay. As you know, we were in the women's health market for quite some time. We started with Votiva and then with Empower. We have our own portfolio of patents in women's health. Recently, we acquired the full patent portfolio of women's health from Viveve, a NASDAQ-based company that tried to develop a monopolar RF device for treating SUI. Finally, they conducted a study which was not successful, and as a result, the FDA rejected their submission and they went bankrupt; we bought all their patent portfolio for $480,000. One of their patents, which is the 511 patent specified in the press release, is even better than the patent of InMode. Based on this patent, which is now owned by us, we filed a lawsuit against them because what they are doing is exactly infringing on this patent, specifically a monopolar device for vaginal tightening inside and out. They are competing with us, and there’s no reason why we should not protect our technology and knowhow. This lawsuit is in the early stages of litigation; we filed it not long ago and we're waiting for their response, but we’re going to take them to court.

Operator, Operator

And our next question today comes from Caitlin Cronin with Canaccord Genuity.

Caitlin Cronin, Analyst

Hi, good morning, and thanks for taking the questions. So I know you saw weakness this quarter in North American capital. And just to touch further on what you're seeing in the rest of the world, what are you seeing in Q4 so far? And any signs of swelling there or plans in place to be proactive on the leasing front there?

Moshe Mizrahy, Chairman and CEO

Well, the rest of the world is similar to what you see in the United States. Interest rates in Europe are even higher than those in the US. Even before we had difficulties with leasing companies in Europe, we were finally working with BNP Paribas, the French company, and trying to do leasing in some of our subsidiaries in Europe. Some of our distributors also have some sources for capital lending to help their customers. There is no difference in the interest rates and leasing processes in other parts of the world. Therefore, I mean Europe is behaving the same way as in the United States. What will happen in 2024? We don't know what will happen with the leasing companies in 2024. We anticipate that it will continue to be tough until interest rates start to decline.

Caitlin Cronin, Analyst

Awesome. Thank you. Then just a quick question on the US side of the business. What capital systems and platforms really kind of saw the weakest uptake during the Q3?

Moshe Mizrahy, Chairman and CEO

Shakil, that's your question.

Shakil Lakhani, President North America

Sure. I think it was just overall, as I mentioned before, we had some strong growth with Envision in doing the initial launch, which was successful so far, along with the Define launch toward the latter end of the quarter. Hopefully, we’ll see some of the rewards from that come into Q4. Overall, it was kind of pretty much level across the board as we normally see it. It's just, again, as Moshe had mentioned, the financing side of things and the macroeconomic environment have slowed things down. But for the products that we did see, we’ve still been very strong in the minimally invasive side of things with Morpheus8 and so forth, and we’re also staying steady with our women's health and wellness platforms as well.

Operator, Operator

And our next question is a follow-up from Young Li, Jefferies.

Matthew Taylor, Analyst

Hey, it's Matt on for Young Li. I just had a follow-up question. I wanted to ask more about the GLP-1 tailwinds you started talking about. I wanted to ask, Spero, have you already seen this phenomenon where patients are losing weight on GLP-1 and then coming in to get surgery? And if there is much broader adoption of them, do you think it could be a significant tailwind for InMode in the future?

Spero Theodorou, Chief Medical Officer

So, it’s a great question. I think the one thing I did not mention is the price of these medications, right? I think a person who's spending $1,500 a month, $2,000 a month to lose weight has already crossed the line to say, you know what, I want to look better and healthier. And the healthier part is secondary. It's usually I want to look better; that’s just human nature. So, you're looking at a patient spending $10,000 to $15,000 in a year on these medications and committed; now they've definitely lost the weight, but they've also looked worse. So, once they've crossed that line, what we're seeing is for them to come in and have things done to spend more money on a Morpheus treatment, for example, which is simple, $3,500 to $4,000. It's not a big deal. So I don't want to say it’s sort of like a gateway drug to us, but it kind of is. So, I do think it's going to have a positive impact for us. We're seeing these patients come in. The term Ozempic face is a term that came from a New York plastic surgeon that is one of our key opinion leaders. So, that shows you that we're very aware and very engaged. Our doctors are definitely involved. You see the different names come up from Ozempic butt, Ozempic face. These are plastic surgeons or aesthetic doctors coming up with this terminology, and the reason they're coming up with these terms is that they're creating an environment and educating patients for them to come to the practice and have these treatments done. So, definitely, I think there’s going to be a positive impact for us. The trends thus far are looking that way. Does that answer your question? I'm not quite sure. Is that what you were asking?

Matthew Taylor, Analyst

Yes, no. That’s right. I wanted confirmation of that. Another thing I wanted to ask you about is I noticed you were in the news recently discussing some of the dangers associated with fillers. So I was hoping maybe you could just touch on that and whether that might also lead folks to InMode treatments instead of using any filler options.

Spero Theodorou, Chief Medical Officer

Yes, sure. I mean, that's sort of separate from my work as a practicing plastic surgeon, so it's not necessarily InMode sponsored. The concern with the fillers is real. We were among the first in a study that proved that fillers do block lymphatics, and that study is coming out soon. But how does that impact us? Well, we do have doctors that use InMode technology, Morpheus combined with hyaluronidase. A doctor in LA, named Kami Parsa, is doing great with it, having a two-year waiting list. Overall, we had to step back; I think that what's going to happen in the next 2-3 years is as patients, especially women, the majority of whom are fillers patients, start to look for alternatives. There could be a push towards biologics, whether that's fat or a filler that isn't hyaluronic based with a lot of cross-linking. Patients will be seeking more natural options, and of course, we're looking at all these things as InMode. But that has to do specifically with the trends. I think if you look at any device in plastic surgery, it takes about 20 years for it to start having issues. The same thing happened with implants in the past. Personally, I feel strongly about this; this is not representing InMode but rather my independent thought process. It’s important to always take good care of patients, finding the best treatments for them, and InMode does have that reputation that our equipment works. So in that line, whatever we’re looking for in the past, and M&A typically runs along those lines.

Operator, Operator

Thank you, and ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to Moshe Mizrahy, Chairman and CEO for closing remarks.

Moshe Mizrahy, Chairman and CEO

Thank you, operator. Again, thanks to all of you who participated in this earnings call. I would like to thank all InMode employees worldwide who worked hard in the third quarter, facing the challenges that we have discussed today. Especially, I want to thank the InMode team in Israel, who, under this wartime situation, work every day, sometimes 16 hours a day, to ensure that we comply with all the promises we make worldwide and deliver on time. We all hope that Q4 will get better as far as the market; usually, Q4 is stronger. We have some challenges ahead to hit the numbers for Q4 in order to remain within the target that we set. However, we're doing everything we can, as always, to meet that. Again, thank you all. Goodbye.

Operator, Operator

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may disconnect your lines, and have a wonderful day.