Afternoon, everybody. Thanks for joining me. My name is Matt O’Brien. I cover med tech here at Piper. I’m very excited to have Apyx with us. We’re saving the best for last today, Charlie.
Thanks.
From the company, we have Charlie, who is the President and CEO of the company. Thanks again so much for coming.
Thank so much for having us.
I was actually going to start with a finance question. Coming out of Q3, I think that was an area that got a lot of attention from folks—where your capital position is versus the performance of the business. Where are you now coming out of Q3, following the smaller raise that you completed?
Yeah, so even though I’m not the CFO, I can easily answer that question. Thanks. We’re probably in the best shape that we’ve been in in over about 2.5 years, and the biggest reason for that is we took a lot of costs out of the business. Just to give you a sense of the amount of costs that we took out, at the end of 2023, our operating expenses were about $53 million, and we’ve guided that our operating expenses will be less than $40 million for 2025. By getting all of that cost out of the business, that obviously sets us up for a lot less burn than we’ve had in the past. The second part of that is we had to amend our agreement with Perceptive, which they did.
They’ve been a very good partner for us, and we completed the $7 million deal with Nantahala, which brings us to about $35 million of cash on the balance sheet at the end of Q3, heading into Q4. We’ve also said that we will be EBITDA positive in 2026, and that is our plan. We’re very excited about the plan. We had to make some tough decisions to get our cost basis down, but we feel very good about where we are, especially going into 2025 with the launch of Aion.
Okay, yeah, I really want to get to Aion here in a second. But the cuts that you made across the organization—where were those primarily, and were they in an area that was kind of a strength or a muscle that you may have had to cut?
They were everywhere. I mean, one of the things that we did was restructure our board of directors. We went from eight down to five, which freed up about $400,000 a year in cost. The board isn’t working for cash; they’re working for equity, and so we took it from the top all the way down. One of the things that has been nice is that we’ve been working really hard on developing Aion over the last three years, so going forward, R&D spend will be less than it has been historically. One thing we didn’t do is cut our marketing budget, because our investment in direct-to-consumer and B2B is incredibly important.
Because when you talk about Renuvion, one of the areas where we still need to do a better job is helping consumers understand that, for loose and lax skin, this is the treatment and the technology they need. That’s going to be incredibly important given the prevalence of GLP-1 drugs.
Got it. And we’ll get into that as well. Talk about the 60% handpiece growth we saw in Q3. How durable is that strength, especially with the capital side of things being challenged?
Yeah, it’s been a crazy last six quarters for sure, because you’ve seen the capital markets and aesthetics be challenged. One of the things that we’re incredibly happy about and proud of is that our consumables business has grown this year and continues to grow. We forecast that it will grow low double digits for the year, and that business represents about 60% of our advanced energy revenue. Our consumables business is still continuing to grow. We’re still challenged on the capital side of things, but we think that too shall pass at some point, and our base business continues to be really strong.
So why is next year the year that the generator business stabilizes? Is it Aion-related, or is it something else that could drive that stabilization?
One key point everyone needs to understand is that we are a completely different company today than we were before announcing Aion. Previously, we were a single-technology company, but now we are positioned to be leaders in body contouring technologies. This shift is significant because, historically, the aesthetic space has focused primarily on the face and non-invasive technologies. There has been little innovation or emphasis on the surgical side of aesthetics. We see ourselves as the premier surgical aesthetic company. Even current liposuction technologies on the market have not been updated in over 20 years, indicating that this segment of the business has been largely overlooked.
We believe we can become the global leader in body contouring, as the Aion system will be capable of performing every surgical procedure an aesthetic surgeon requires. Even for procedures like breast augmentation, the system includes a Bovie generator
Could you elaborate on that? It sounds quite ambitious. What types of cases can the system handle? From what I understand, it’s entirely focused on surgical procedures.
All surgical.
If you’re performing procedures on areas like the flanks, there will always be a surgical approach involved—whether it’s liposuction or another technique. Could you explain how the Aion system handles these procedures compared with what was available previously?
We didn’t have any of these capabilities before. A complete body contouring procedure previously involved liposuction, infiltration, suction, fat transfer, skin tightening, and use of the Bovie, with Renuvion handling the skin-tightening portion. The Aion system now integrates and advances all four of these areas. It includes two types of liposuction: ultrasonic liposuction, represented by VASER in the market, and power-assisted liposuction, represented by MicroAire. Even for procedures like breast augmentation, the system features a Bovie generator for use with a monopolar pencil, so there is nothing it cannot handle. In short, the Aion system has taken every technology currently available and updated it, making each component best in class.
The best analogy I can give is that using the Aion system is like driving a brand-new car today versus a car from 20 years ago. In the surgical space 20 years ago, smart instruments didn’t exist. With today’s technology, we can develop smart instruments that understand the environment they are in and automatically adjust how they work. For example, in a very fatty area, such as during body contouring, the system can emulsify fat much more quickly than existing technologies. In areas with less fat, it will reduce its intensity, preventing overheating and making the procedure safer.
It’s similar to the car analogy: we’re offering surgeons the ability to trade in their 20-year-old “car” for a brand-new one equipped with advanced body contouring capabilities.
I didn’t fully appreciate how many different components of the procedure this system handles. How were you able to integrate everything into a single system? It must have been a massive undertaking.
It was a massive undertaking. Developing the system took over three years, with collaboration from some of the top body contouring doctors in the world. They worked with us not only to improve the technologies but also to optimize the entire workflow. Every aspect of the procedure is now better, faster, safer, and more efficient. Two people can perform different tasks simultaneously, improving overall efficiency. Essentially, we reimagined the entire process and built a system that doctors wanted and were eager to see in the marketplace. This development completely transforms our company, positioning us as a surgical leader that every doctor will want to engage with.
What kind of benefits does a clinician gain from having a system like this? Is it primarily about efficiency, or are there other advantages as well? What do they actually get from using it?
There is a strong ROI due to the efficiency and time savings the system provides. Patients also benefit from faster and safer procedures thanks to the way the technologies operate. Additionally, the system offers better integration. Currently, surgeons often have multiple pieces of equipment in small office-based operating rooms, which can be cramped. The Aion system consolidates everything into a much more streamlined footprint.
So it's even smaller than all the other?
The system’s footprint is nearly identical to what it currently is with just Renuvion, despite integrating all the other technologies. It simplifies purchasing, allowing surgeons to buy from a single company rather than five. Perhaps most importantly, no other surgical company provides the level of clinical training that we do. We have a dedicated clinical nursing team that helps surgeons and their staff get up to speed—a service unmatched in the industry. Additionally, we continue marketing Renuvion directly to consumers to drive patients to their practices, which is another unique advantage that no other surgical company offers today.
So from a value that we can bring to the practice and that we can bring to the provider, it's unmatched in any of those competitors.
Have you talked about ASP of this system at all?
We haven’t discussed the ASP of the system yet. If a clinician were to purchase all of the individual components separately, the total cost would likely be around $325,000. By consolidating everything into a single system, we can present a compelling economic story for clinicians, offering both efficiency and cost savings.
Okay. And just as efficacious as everything else that's out there?
More so.
Okay. Why is that? Does that come back to the core technology and?
The key point is that most of these technologies haven’t been updated in 20 years. We took every existing technology and made it best in class, then combined them into a single, integrated workflow. Because these components were previously separate, this unified system is unmatched in the marketplace today.
Right. We can’t control the current economic environment—it is what it is. The focus has to be on innovation, which you’ve clearly delivered. That said, how challenging will it be to sell the Aion system domestically in this macroeconomic environment, despite all the features and benefits clinicians will receive?
I think what’s happening in the aesthetics market that you need to consider is why there’s an economic downturn and why it’s harder for aesthetic surgeons to invest in new capital. In my opinion, this is largely driven by the prevalence of GLP-1 drugs. In certain practices, the med spa and non-invasive portions of the business have declined significantly—by some data, about a third. By comparison, liposuction procedures are down only around 5%. Our business, in fact, is growing in the low double digits, indicating that we are taking market share. These trends align logically with the impact of GLP-1 drugs.
Some practices are entering the weight loss management space, and those that are pivoting their business models are performing exceptionally well. These practices are likely to be the first adopters of Aion because they are serving patients with loose or lax skin who require surgical interventions or body contouring procedures. This will create a significant patient demand for these technologies, and many doctors will see the value in investing in the system.
Are you seeing that now? Are you seeing that flow of patients into the centers?
We are aware of this, and I want to highlight it because you participated in the KOL call with Dr. Johnny Franco. He has been at the forefront of integrating GLP-1 drugs into plastic surgery. Dr. Franco, a plastic surgeon in Austin, Texas, has been doing this for nearly two years. He was among the first to implement it, marketing the “Skinny Shot” and bringing patients into his practice for weight loss management. He is now seeing about 2,000 new patients per month, guiding them through their weight loss journey and addressing skin laxity at the end. His practice has grown from roughly 20 staff members to over 70, and he has added three new plastic surgeons.
His business has never been stronger. He calls this the “weight loss revolution,” and many doctors are discussing a potential tsunami of patients seeking treatment after starting weight loss drugs. From the patient’s perspective, however, many of these are cash-pay treatments. Depending on where they purchase them and whether they use branded or compounded versions, these drugs can cost between $1,000 and $1,400 per month. Over the course of a year, a patient may spend $12,000–$14,000—the approximate cost of a body contouring procedure.
Got it. Okay.
There are many factors influencing the market, but we are confident that we are positioned with the right technologies to address them. When the timing aligns, that will be our opportunity—an area where we have previously misjudged, and one that no other company in the industry has yet executed successfully.
I know you don’t have a crystal ball, Charlie, but do you have any sense of when that tsunami of patients might begin—2026, 2027?
It feels like it could be next year. I would have expected it to happen already, but one indicator is that our consumables business continues to grow, which reflects the procedures that are occurring. The overall market—where the med spa and non-invasive segments are still down—affects cash flow into these practices. The key is helping practices adjust their business models, place more focus on weight loss, engage with these patients, and provide treatment for them.
I think we’re going to start seeing a shift toward more surgical procedures and fewer non-invasive treatments. It’s likely to happen sooner rather than later, though predicting the exact timing is difficult.
Okay. I did want to go back to Aion for a second. What's the rollout timing there for that?
We have stated that we will file with the FDA no later than the end of the first quarter. We are confident in the 510(k) submission because we have already completed a pre-submission with the FDA, outlining what we plan to submit. The FDA provided written feedback on the testing and documentation they would like to see, which we have incorporated into our plan. We feel confident about the timing of the submission once it is officially submitted.
Okay. So maybe no guarantees, but sometime next year you should get approval.
I would say to be cautious, it'd be sometime in the fourth quarter.
Got it. Okay.
We would have it, so we would have it next year.
Okay. So you start rolling that system out. Is it a domestic-only rollout?
It will be. It will be a domestic-only, at least through next year. It'll only be domestic. And then we'll work on taking it out.
How many of these systems can you make? Is manufacturing going to be any kind of an issue?
So it would be an issue next year as to what we could do. But going into 2026, there would be no issue. We can make as many as we needed to.
Okay. I mean, hopefully, that's a good problem to have.
It's a great problem to have.
Is there a way to ease the burden for clinicians in accessing the system? They may compare the cost of purchasing the components separately versus the all-in-one system. Even if the price ends up being $250,000 instead of $325,000, it’s still a significant savings—but clinicians might not immediately see it that way. It’s a substantial investment and a large check to write.
Our goal is to be the most dominant company in the surgical aesthetic space. We want an Aion system in every practice, and any practice performing surgery should have one. We will implement programs to ensure aggressive adoption and explore ways to make the economics work for practices. This could include trade-in programs, similar to trading in a 20-year-old car for a new one, to help clinicians access the system more easily.
Understood. Okay. So that could be some kind of just outright purchase or leasing or something along those lines.
Exactly.
Understood Okay, this is a tough question, but from a financial perspective, if more clinicians prefer leasing, will you be able to accommodate that?
Leasing is easy for us. Leasing, we get paid all up front.
Oh, you do? Because you have a third party?
Yeah. We have a third party that does that. So leasing is no problem at all.
Understood. When do you think you could roll out Aion internationally?
International markets are a significant opportunity, though it depends on the region. Europe is a bit more challenging now due to the EU MDR regulations, which have made registration slightly more difficult than it used to be. Nonetheless, Europe remains a key focus, along with Latin America and the Middle East.
Understood. Okay.
Yeah. And some areas, some countries, once you have FDA approval, you can start selling directly into those countries.
Is that LATAM? Is that an area you can get into pretty quickly?
Some countries in there, yes.
That's still the second largest aesthetics market?
Actually, Brazil is the number one aesthetics market for surgery.
Interesting. I didn't know that. Okay.
Even ahead of the United States. They do more surgical procedures. It's number two overall aesthetics, but number one for surgery.
Interesting. Okay. So it should come fairly quickly.
Yeah.
All right, let’s talk about the forward-looking perspective. You needed about $52 million in sales in 2023, and this Aion product sounds impressive. Do you think it’s possible to get back to that level in 2026 once the system is fully rolled out?
I don't think we've given guidance for 2026.
I'm sure you haven't.
I’m certainly not going to give specifics today, especially on a recorded call being shared publicly. But we view ourselves as a company—and Aion as a product—as a complete differentiator for both our business and for the doctors we serve.
For sure.
We don't see any reason why we can't be by far and away the largest player in surgical aesthetics.
Yeah. Is the generator opportunity in the U.S. alone over $1 billion or is it only $2 billion?
It is.
It's $1.2 billion.
It is a billion—actually, it might be closer to $1.3 billion—but you’re very close for the U.S. market alone. Globally, there are 2 million liposuction procedures performed each year, with only about 400,000 in the United States. That leaves 1.6 million procedures outside the U.S. The market for this is enormous. Our challenge isn’t the TAM; the total addressable market is massive.
Okay, and I'm sorry if this is a silly question, but this body contouring opportunity, is it just around the midsection or can you use it everywhere?
Everywhere.
Okay.
Everywhere.
All right. That should be a massive problem.
From the neck to the ankles.
Okay. Okay. Got it.
Everywhere in between.
What about revenue? I know profitability is important to everyone. With $40 million in OpEx next year, what kind of revenue base do you need to reach profitability? I’m not sure what the gross margin of the product is going to look like.
We haven’t provided guidance on next year’s gross margin, but for argument’s sake, let’s use the current gross margin of around 60%. Doing some rough “CEO math,” if operating expenses are under $40 million next year—about $4 million of which is non-cash stock compensation—then $36 million in cash OpEx times 60% gross margin equals $36 million. That means roughly $60 million in revenue would get us to EBITDA break-even.
Wow. Okay. So we're not too far away from that, hopefully, business. Okay. What about cash flow positive? Is there a big capital outlay for all of these systems?
No. We've actually said that we will be EBITDA positive in 2026.
Okay. EBITDA equals cash flow roughly?
Close, yeah.
Close. Okay. All right. So not too far away.
Within CEO math. I mean, look, there's always inventory and things like that and receivables and those types of things. But yeah.
Got it. I have one last question. You recently added a new member to the board who’s very well established. Can you talk a little about what Stavros brings to the organization?
Stavros and I have a long history together—we’ve known each other for about 20 years. He was our distributor in South Africa when I was president of Gyrus Medical. Stavros is extremely smart, passionate about med tech and technology, and a genuinely great person. He joined the company in May, investing approximately $5.7 million. With Andrew preparing to retire, Stavros wanted to join the board, and he has already added tremendous value. He’s just getting started in helping us explore what we can achieve, and he’s been a huge support to me. I look forward to working with him for many years to come.
Got it. Well, it sounds like very exciting times at the company, Charlie. Hopefully, everything goes smoothly with the submission, especially with the new administration. Best of luck—it all sounds very promising.
Yeah. Thank you very much.