Good morning, ladies and gentlemen, and welcome to the Apyx Medical Third Quarter 2026 Earnings Conference Call. At this time, all lines are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeremy Feffer from LifeSci Advisors. Please go ahead.
Thank you and welcome everyone to our third quarter 2026 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 factor 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. Reconciliations of these 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. Per our usual format on these quarterly calls, I will begin with a review of our performance over the past several months and then turn the call over to Matt for a review of our third quarter 2026 financial results, along with our guidance for the full year 2026. We will then open the call for your questions. Let me begin with a review of a few key highlights from our third quarter 2026 performance. We delivered another quarter of strong year-over-year growth with total revenue of $14 million, an increase of 9% compared with the third quarter of 2025. Growth was driven primarily by sales of AYON in the U.S. and Renuvion outside the U.S., reflecting continued demand for our body contouring technologies.
For the three and nine months ended September 30, 2026, our Surgical Aesthetics segment grew over 17% and 26%, respectively, as compared to the same periods last year. We are pleased by the progress we have made with AYON in the one year since its full commercial launch. During the time, we have continued to build awareness of the platform and demonstrate the value of bringing fat removal, closed-loop contouring, Renuvion tissue contraction, and electrosurgical capabilities together in one integrated system. We are building on a foundation with the broader commercial rollout of AYON's power liposuction capability, consistent with the plans we outlined last quarter. Power liposuction uses a reciprocating cannula to support more efficient fat removal while reducing the physical effort required of the surgeon. We estimate approximately 70% of plastic surgeons use power liposuction, making this an important addition that broadens AYON's appeal.
Therefore, the recent clearance and commercial launch of power liposuction was a pivotal catalyst in driving AYON's adoption. While the rollout remains in the early stages, feedback from surgeons has been very positive. Power Lipo was designed directly into every AYON, and activation requires only a simple software update and the purchase of the handpiece and cannula. Clinicians can seamlessly deploy the full clinical AYON solution with no downtime. The legacy liposuction products on the market haven't moved the needle on safety and efficacy in two decades. The AYON system, designed by surgeons to specifically close these clinical gaps by embedding next-generation safety and workflow optimization into a single elegant system, we believe AYON establishes a new benchmark for surgical performance. It is uniquely positioned to be the global standard of care for plastic surgeons.
Renuvion remains central to our strategy, both as a standalone system and as an integrated part of AYON. Its tissue contraction capability complements fat removal, helping surgeons address skin laxity that remain after liposuction or significant weight loss. Continued demand for AYON and Renuvion reflects the value surgeons see in having these complementary technologies available for their patients. Our commercial strategy is supported by our continued commitment to building clinical evidence. Last quarter, we discussed studies reporting higher patient satisfaction and lower rates of abdominoplasty and surgical revision with Renuvion plus liposuction compared with liposuction alone, as well as improvements in cellulite appearance and skin laxity following combined Avéli and Renuvion treatment. In September, we added to this evidence with a prospective study evaluating Renuvion's effect on biological markers associated with skin quality, published in Plastic and Reconstructive Surgery Global Open.
The study enrolled seven patients undergoing facelift surgery, with six completing the six-month follow-up. Tissue analysis at the visit showed 30% greater elastin fiber density and 34% less inflammation in treated tissue compared to untreated control areas. All six patients reported improvements in skin quality and satisfaction with their outcomes. These findings add direct human tissue evidence supporting the improvements surgeons and patients have observed with Renuvion and reinforce the value of evaluating tissue quality alongside tissue contraction. We believe this is an important consideration in body contouring, where achieving the desired results depend not only on removing the fat, but also addressing the quality and laxity of the skin that remains. Looking ahead, the continued adoption of GLP-1 medications is reshaping the body contouring patient population and creating what we believe is a meaningful long-term opportunity for our business.
While these therapies are helping a growing number of patients achieve substantial weight loss, many are left with loose or lax skin and residual areas of fat that they want to address. As these patients reach or approach their target weight, we believe many will seek procedures that address these concerns more comprehensively. By combining advanced fat removal with Renuvion's tissue contraction capabilities, AYON positions us to help surgeons meet these needs. Our focus remains on transitioning this opportunity into broader adoption through continued commercial execution.
Before I turn the call over to Matt, I want to recognize the Apyx team. We have successfully achieved our product development, regulatory, and sales goals, all while maintaining strict cost discipline. To that end, I am pleased to report that on a cumulative trailing 12-month basis, the company has achieved positive EBITDA. Now I will turn the call over to Matt for a review of our third quarter 2026 financial results in more detail, along with our financial guidance for 2026.
Thanks, Charlie. Before I get started, please note that all references to our 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 2026 increased 9% to $14 million compared to $12.9 million in the prior year period. Revenue for the Surgical Aesthetics segment increased 17% or $1.9 million to $13 million compared to $11.1 million for the prior year period. This growth was driven by sales of AYON, as we commenced our commercial launch in the third quarter of 2025 and increased sales of generators internationally. These increases were partially offset by decreases in domestic sales of standalone generators and sales of single-use handpieces globally.
Turning to the OEM segment, sales decreased 41.5% or approximately $0.7 million to $1.1 million for the third quarter of 2026, compared to $1.8 million for the third quarter of 2025. The decrease in OEM sales was due to a decrease in sales volume to existing customers. With the increased focus on Surgical Aesthetics, we expect OEM segment revenue will decrease for the year. Domestic revenue increased 4% year-over-year to $9.7 million, and international revenue increased 22% year-over-year to $4.3 million for the third quarter of 2026. Gross profit for the third quarter 2026 increased 9% to $9 million, compared with $8.3 million in the prior year period. Gross profit margin for the third quarter 2026 decreased to 64.2% compared to 64.4% in the prior year period.
The decrease is primarily attributable to geographic mix, with international sales comprising a higher percentage of total sales, and product mix within both the Surgical Aesthetics and OEM segments. These decreases were partially offset by an increase due to mix between our segments, with Surgical Aesthetics comprising a higher percentage of total sales. Operating expenses increased to $9.6 million for the third quarter 2026, compared to $9.1 million for the prior year period. The increase was mostly driven by a $0.4 million increase in salaries and related costs, and a $0.2 million increase in selling, general, and administrative expenses, which was partially offset by a $0.2 million decrease in professional services. Loss from operations was $0.6 million, compared with a loss from operations of $0.8 million for the third quarter of 2025.
Net loss attributable to shareholders was $1.8 million, or $0.04 per share for the third quarter of 2026, compared with $2 million, or $0.05 per share in the prior year period. Adjusted EBITDA was $0.4 million for the third quarter of 2026, compared to an Adjusted EBITDA loss of $0.1 million for the third quarter of 2025. As a reminder, we provided detailed reconciliation from net loss attributable to stockholders to non-GAAP Adjusted EBITDA in our earnings press release. For the three months ended September 30, 2026, net cash used in operating activities was $1.6 million, compared to $3.5 million used in the prior year period. The decrease was primarily due to changes in working capital, combined with a reduction in net loss. As of September 30, 2026, the company had cash and cash equivalents of $25.8 million.
We have maintained a solid cash position, managing to an average cash burn of approximately $2 million a quarter this year, providing substantial flexibility to support our ongoing operations and execute our strategic plan. As you can see from our financial performance, we are very focused on growing the top line while prudently holding the line on operating expenses. Our continued focus on operating discipline, cash management, and financial performance positions us to navigate our upcoming obligations while maintaining our commitment to long-term value creation. Turning to our 2026 guidance, we are reaffirming our full-year revenue guidance in the range of $59 million-$60 million, compared with $52.8 million reported for the year ended December 31, 2025.
Our guidance continues to assume Surgical Aesthetics segment revenue in the range of $54 million-$55 million, compared with approximately $45.3 million for 2025, and OEM revenue of approximately $5 million, compared with approximately $7.5 million for 2025. In addition, we now expect gross margins in the range of 63%-64% and updated our total operating expense targets in the range of $41 million-$42.5 million for the full year. Previously, we stated operating expenses would be less than $45 million. This completes our prepared remarks. Charlie and I will now open the call for questions. Operator?
Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star, then the number 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star, then the number 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We will wait for a moment while we poll for questions. Your first question comes from the line of Alex Fuhrman with Lucid Capital Markets. Please go ahead.
Hey, guys. Thanks very much for taking my questions here, and congratulations on the strong results. Can you talk a little bit more about the lower operating expense target for the year and what's driving the improved profitability here? Obviously, it sounds like very strong demand here, especially with the addition of Power Lipo here, but would love to get a better understanding of the improved profitability here as well.
Yeah. No, I appreciate the question. Look, we've stated that we want to get this business to profitability as quickly as we can, and we're very proud of the effort that the team has put forward. For the last trailing four quarters, we're actually EBITDA positive. We've done a very good job of growing the top line, but also managing the bottom line, and you're seeing the growth go straight to the bottom line, and that's why you get the improvement. We had always, at the beginning of the year, that we weren't going to spend more than $45 million, and obviously, through the first three quarters, we're way under that. So now, we just tightened that range of what we will spend between now and the end of the year.
Okay, that's really helpful. Then, obviously, not trying to get you to give us formal guidance for next year or anything, but just can you give us a little bit of understanding of just how to frame up where you are in the rollout of the new all-in-one system? Is that expected to be continued tailwind into the first half of next year?
Well, I would say that the tailwind for AYON is for multiple years. Remember, we're just getting started in the U.S. We actually just got Power Lipo out to everybody that had bought it. We think that AYON will have growth for a lot of years to come. The other side of that is, right now, we are only selling it in the U.S., and obviously, we're working on registration in a lot of the key markets outside the U.S. and would expect to have those at some point to be able to start selling AYON on a worldwide basis. Doctors all over the world are seeing AYON at the shows. They're talking about it, they're hearing about it, and we're just excited to get it registered and to get it out there.
Yeah, that'll be really exciting to see that. Thank you, Charlie, and congratulations again on the strong results.
Thanks, Alex.
Your next question comes from the line of Sam Eiber with BTIG. Please go ahead.
Hey. Good morning, Charlie, Matt. Thanks for taking the questions here. Maybe just following up on that last question. Is there any key markets we should be looking out for in terms of timelines when AYON might get the necessary regulatory approvals? I know Renuvion has been doing well in certain markets, but curious if you are able to give us any timelines on AYON and some of the larger OUS markets you plan today.
Yeah. Timelines, the answer to that is no. Obviously, when we get registration in some of these key areas, we will obviously let the market know if it is important. But obviously, the markets that we were really after and really want right away are obviously Europe, the Middle East, and then key countries in Latin America. And those key countries in Latin America are namely Brazil, Colombia, and Mexico.
Okay. Very good. Fair enough. Maybe I can just use a follow-up question here on what is resonating maybe more with some of the doctors that have adopted AYON at this point. Is it more so the clinical benefits that they are seeing? Is it the economics on the faster procedures and greater patient throughput? Or maybe it is a combination of the two, but curious what you are hearing from the field.
Yeah. It is all of the above. Doctors are really noticing the technological advances in the liposuction, and the doctors that see it and have it are talking a lot about it. They are seeing that their patients actually recover faster because they have less bruising and less downtime from traditional lipo that they were using before. So there is definitely that clinical aspect of it, and having the integrated system for fat transfer and everything else is key to them. Then there are doctors that are using it to actually bring in new patients and talk to patients that they have got the latest and greatest technology and are able to either convert more patients into having procedures with them or even, in some cases, charging more for those procedures because they are using the latest and greatest technology.
And then there's the whole efficiency piece for the doctors and their teams where they're able to save time and to do that. AYON has a lot of drivers for the doctors, their patients, and their practices. It's now our job on the commercial side to make sure that everybody understands that, the doctors themselves, their staff, and the patients also. So we've still got work to do from a worldwide basis, but we are even more excited as we sit here today that we think that AYON will be the standard of care for body contouring all over the world. It really is being received that well in the field.
Okay. Very good. Thanks for taking the questions, guys.
All right. Thank you. And your next question comes from the line of Tollef Kohrman with Craig-Hallum. Please go ahead.
Hello, and thank you for taking the question. So for AYON growth, how much of that was competitive conversions? And then for my second question, could you speak to the pipeline of Power Lipo? Thank you very much.
Yeah. I will do the second one first. Power Lipo, we were able to fulfill all the orders of Power Lipo just within the end of this last quarter. Everybody that had an AYON Power Lipo system could actually get their handpiece, at least one of them. I think now we have been able to get everybody all of theirs since then. Now is the first time that if you actually bought an AYON today, you could actually get Power Lipo with it. Okay? That is the first one. As far as new customers, if you look at where we have done so far, about 75% of our AYON sales have been to existing Renuvion customers and about 25% to brand new customers that have never been part of Apyx.
Great. Thank you.
Thank you. Your next question comes from the line of Danny Stauder with Citizens JMP. Please go ahead.
Yeah. Great. Thanks for the questions. This is my first one. I wanted to ask on Q4. Just wanted to see, how should we be thinking about capital versus handpiece mix in terms of what is implied for fourth quarter sales? As we think out to 2027, what is a good way to frame that, just considering some of the puts and takes we saw in 2026? Thank you.
Yeah. If you look at handpieces in particular, it's always tough to look at it on a quarter-by-quarter basis. We obviously look at it on a year-by-year basis because it depends on whether some large customers, when they place their order to where it is. For the first three quarters, from a handpiece perspective, we're right where we thought we were going to be. We would expect Q4 obviously to be a very good handpiece quarter because that's where the greatest number of procedures are done in Q4 as opposed to Q3. So we think that Q4 will be a good handpiece quarter as well as a good capital quarter. It's always our best capital quarter, and so we're looking for both of those things to happen.
As far as the comparison in Q4, remember that last year, we started pre-selling AYON in May when we got approval, and so we were selling AYONs basically for over half of a year, and we didn't actually ship those AYONs until Q3 and Q4. So from a comparison basis, there was six months of sales that were put into the last quarter, basically. So from a comparison, it's not an apple-to-an-apple comparison on a regular quarter. That's the last quarter of this, and then as we move into 2027, obviously, the comparisons will be a lot easier to go after.
That's really helpful. Thank you. Just one follow-up on some of the questioning in terms of the international opportunity. Just in terms of AYON, could you talk about those markets? I mean, is that 70% of plastic surgeons using power lipo? Is that consistent abroad? Is there any reason that AYON might be more or less attractive in some of these international markets, just depending on the different trends and idiosyncratic characteristics there? Thank you.
Yeah. No, it's a good question because there is some differences there. Power lipo is about the same. That is not different. What is different in Europe especially, and in various other countries, is a lot of the liposuction are done in the hospital setting, and done by teams of doctors. That makes AYON even that much more of a value to the doctors and their teams because of the simultaneous activation. Remember, you can do up to four things at the same time with AYON. So that simultaneous activation is a huge benefit in places like Europe, where doctors and their teams do that.
The other side of it is, too, is because they're done in the hospital, a lot of the reconstructive doctors can be using AYON also, and that is an area that, quite honestly, they weren't really using Renuvion before. Now they are going to get exposure to Renuvion, too, on the reconstructive market. The reconstructive market is obviously an upside for us all over the world, because it is really not a market that we have called on before. So, there are some differences outside the U.S. because of where the body contouring procedures are done.
Great. Thanks so much for the questions.
Thank you.
Your next question comes from the line of Yi Chen, with H.C. Wainwright. Please go ahead.
Good morning. This is Katie on for Yi. Thinking about AYON, for the systems that were installed earlier in the launch, do you find that customers are adopting the full workflow or selectively using different pieces of it? Are they using Renuvion tissue contraction in a greater proportion of their cases? What kind of gives you a clue that one of these customers is going to be a broader utilizer versus more selective?
Yeah. So, the answer to that is yes, more doctors are using the full suite of AYON. We're seeing that especially is on the two different liposuction. There's a lot of doctors that only used power liposuction and didn't have ultrasonic liposuction, and now we're seeing them use the ultrasonic liposuction also, because it is a great tool for them to use in these procedures. So we are seeing that. As far as the Renuvion usage, as I stated earlier, about 75% of the AYONs that we've sold have been to Renuvion customers.
Obviously, they were using Renuvion before, and so that utilization is basically the same that it was. But where we are obviously seeing an uptick in Renuvion and them using the whole system is into the 25% of those that are new customers, new to Apyx, and we know that they're using Renuvion, obviously, because they're buying handpieces.
Great. Quick follow-up. You had at one point mentioned a mechanism paper that will be published for Renuvion. Do you guys have any update on that?
Yeah, that paper was I don't think it was a mechanism paper. I think it was the paper that we highlighted in the prepared remarks. It was for skin quality. If you look at Renuvion, we have done a very good job of publishing and talking about Renuvion for skin retraction. That is obviously very important, skin tightening. It's used after liposuction, it's used in body contouring, and that will remain obviously important. But we've done two other studies that show versatility of the Renuvion itself, and one is the pretreatment of areas before fat transfer. If you pretreat the area with Renuvion before fat transfer, we have papers that show up to 40% higher retention of the fat graft. That is incredibly important when you're doing fat transfer.
The last part of that was the study that just came out in September that talked about the skin quality. That skin quality is incredibly important, and we think is going to be a driver for Renuvion, for new users for Renuvion, because the skin is your largest organ, and as you're doing the skin tightening, what actually helps is if the quality of your skin can get better. In this study, we had over a 30% improvement of elastin and about the same improvement in inflammation, and that improves the quality of the skin. There hasn't been anything that has shown an improvement in elastin out there. So, we think that that is going to be a very important paper for us, and to keep talking about how Renuvion will keep being a driver of this business for many years to come also.
Thank you very much.
All right, thank you. Your next question comes from the line of Jeremy Pearlman with Maxim Group. Please go ahead.
Thank you. Good morning. Firstly, are there any remaining investments that are either planned or required to support the AYONs now that you've moved into the full commercial launch?
Yeah, now that we've made it into full commercial launch, no, we've made all the investments that we're going to make for that. The only thing that we have ever mentioned before is, as I alluded to on one of the other questions, there is an opportunity in the reconstructive space in the hospitals in the U.S., and we need to figure out how we're going to actually do that. More on that when it comes. But as far as investments come for this year, that is all baked into what we're doing. Then we've stated that getting to profitability for this company is incredibly important for us, and we're going to do it as fast as we can.
Okay, understood. Just another question. Relating, maybe you could help us understand some of the divergence between domestic revenue grew this year only 4%, and then international was 22% this quarter. Sorry, this quarter. Is that just because of the winding down of the OEM business and then the transition from the limited to the full commercial launch? It's just a timing issue? Should we expect that gap to be covered up by the domestic revenue going forward? Thanks.
Yeah. If you remember from our guidance, we've given guidance for the year that we will grow the Surgical Aesthetics business 20%, and we're at 26%, I think, after three quarters. What you're seeing in the U.S. business is, as I stated last year when we launched AYON, we got approval in May, and we started to sell AYON units that we could not ship till September, October, November, and December. So, when you're looking at a comparison, all of the months that we've had before September, there was no AYON in that number, and now you're getting AYON in that number for September, October, November, and December, and that's why the growth rate appears to be going down. It is from a mathematical point of view, but we were selling AYONs all last year, and shipped them all just in four months.
That's really the difference in why you're seeing that now in the third quarter. Then obviously in the fourth quarter, you'll see that the growth rate in the United States won't be as high either because of those comparisons of AYON that were shipped in October, November, and December. As far as outside the United States, that still remains, especially Korea has been having a very good year, their first year of obviously launching Renuvion, and that's where a lot of the growth is from outside the United States.
Okay. Thank you for answering my questions. I'll hop back in the queue.
Yep.
I'm showing no further questions at this time. Thank you, ladies and gentlemen. This concludes our question and answer session. I will now hand the conference back to Charlie Goodwin for his closing comments.
Thank you, everybody, for joining us today. We are pleased with the momentum in the business this quarter and look forward to executing on the expanded commercial strategy we discussed as we continue to build market share for the AYON platform. I appreciate the continued support of our shareholders, our staff, and thank you all for joining the call today.
Thank you. The conference for Apyx Medical has now concluded. Thank you for your participation. You may now disconnect your line.