UBS MedTech team, thank you so much for joining, and massive thank you to Charlie Goodwin for agreeing to do this, from Apyx Medical, as CEO. Charlie, I think maybe what would be amazing is if you could give people a little bit of a background to yourself. I know you've been at the firm for a while now, but a little bit of a history of you and then just a brief overview.
Okay, perfect. Thank you very much, Patrick. Thanks for having us, and thanks to UBS for inviting us to the conference. My name is Charlie Goodwin. I'm the CEO of Apyx Medical. I have been the CEO of Apyx Medical since December of 2017, and we transformed this company from a prior company, it was called Bovie Medical, which everybody's obviously heard about in the RF space.
In January of 2019, we became Apyx Medical with a focus on surgical aesthetics. We had a product called Renuvion, a technology called Renuvion, that was used after liposuction and body contouring for skin tightening. We built a business around that, and then just last year, we launched AYON, which is a complete body contouring solution that has two forms of liposuction. It has dedicated fat transfer.
It's obviously got the Bovie generator, so you can do all surgical procedures, and it has Renuvion for skin tightening to be able to complete the entire body contouring procedure with AYON. We launched that about a year ago. Just later this year, we finished a power-assisted handpiece for the second form of liposuction, so now AYON is 100% complete, and we are in the process of now trying to register that throughout the world so we can sell it everywhere, because right now we're only commercialized it so far in the United States.
My background is I have been in medical device now for 35 years, although Patrick, you got to admit, it doesn't look that long if you're looking at me. But I actually have been in medical devices for 35 years. Been all focused on the surgical side of things. As I came here to Apyx, that was the first time in aesthetics, and it's probably not a surprise that we're focused on the surgical side of aesthetics, and we think that Apyx can be the largest surgical company in aesthetics.
We think surgery is incredibly relevant in aesthetics because we believe it is the only thing that provides durable and transformational results. We also believe that because of the disruption of the marketplace for the GLP-1 drugs, that most of those patients are going to benefit from a surgical intervention to get their bodies contoured back after the weight loss that they've had because of these drugs. We think that we are positioned incredibly well to be able to grow for many years to come.
We're very proud that in this last earnings call that we just had on Thursday, that the trailing last four months, we have got the EBITDA positive. We've taken a small company and we've dramatically lowered the burn that is there, and we think that with AYON and Renuvion, we can grow for a long, long time.
I definitely want to hit on the GLP-1 side later. Pretty much everybody in the town I live is microdosing that, which is kind of entertaining. But maybe for those who are less familiar with Renuvion and helium plasma specifically as an approach, some of the background of the technology and the relative advantages versus other approaches might be helpful.
Okay. Renuvion is an amazing technology, and historically, it has been used to tighten the skin after a liposuction procedure. If you think about the removal of fat for liposuction, the last thing you want to have happen is to not have that finish or not have that tight look. If you just do lipo without Renuvion, you can look much better in your clothes, but you won't look that great on the beach, and everybody wants to look really good on the beach.
Renuvion has done that. We've always believed in evidence-based medicine for Renuvion, and so I believe that Renuvion is the most researched technology of its type in aesthetics. We've got over 100 clinical papers that talk about the safety and efficacy of Renuvion. Renuvion is also a cold atmospheric plasma. I won't go into the science behind that, but cold atmospheric plasma is being studied all throughout medicine, and there's two other studies that we have done.
One just came out in September, but there's two other areas of Renuvion that are being used in aesthetics. The first is, we did a study that if you pre-treat an area with Renuvion before you do fat transfer, you get a 40% higher viability of the fat long term with that, and that has to do with the cold atmospheric plasma portion of Renuvion, and that becomes incredibly important, obviously, in something like a BBL, where you're going to take fat from other parts of the body and put it in the butt.
One of the fastest growing procedures that is out there is scarless mastopexy, which is into the breast, and it's incredibly relevant in the GLP-1 drugs because when women lose weight, one of the places that they lose weight first is in their breast, and quite honestly, it's one of the last places they'd want to lose weight.
A lot of women don't want to have an implant, so you take fat from part of the body, you put it in the breast, and you help the aesthetics that way. So that is a study that we did that talks about another utility for Renuvion. The one that just came out in September is the one I am most excited about because we have always heard from longtime Renuvion customers that the quality of the skin gets better after they use Renuvion.
We actually did a study on the face where we treated part of the face underneath with Renuvion, and then we had a control area that wasn't treated with Renuvion, and it showed that Renuvion formed over 30% more elastin growth underneath the skin, which is huge because that is like Ponce de León and the Fountain of Youth. It is regenerative in nature to have your body produce more elastin.
So not only did it have 30% more elastin, it also had over 30% less inflammation also. So that is a study that just came out in September. If you look at our total revenue, which I think this year is going to be about $54 million, about half of that is in the disposable Renuvion handpieces. So we do have a very nice recurring business of Renuvion.
There's over 90,000 Renuvion procedures that are done every year, so it's not a small number of procedures. It has been something that has grown this business from zero to where we are today. So we're very happy with what's happened with Renuvion, but we're incredibly excited about the future of Renuvion based on the last two clinical studies that I talked about.
Always nice to hear about the science, and you never bore me with it. I watched an hour-long video about liquid hydrogen, so I'm that kind of guy, so I get it. Maybe you could walk us through the AYON system and the appeal for the surgeons themselves and why they would pick that kind of a solution.
We obviously were the one technology company that had Renuvion, and we started to look as an organization where we could have the biggest impact on aesthetics. As I mentioned before, we're a big believer of surgical aesthetics for the durable and transformational results for it. When we started to look at the marketplace, there wasn't any meaningful innovation that had gone on in liposuction in almost 20 years. The other side of it is it was incredibly fragmented market with a lot of smaller players, and in our opinion, it was an area that was ripe for disruption.
What we did as a company is we went out and started to work with some of the top body contouring doctors in the world, and we basically gave them a blank slate and said, okay, from a technology point of view, what would you want to have improved? From a workflow perspective, what would you want to have improved? What features are not there today that you would love to be able to see in a body contouring system?
We had them design the entire system from scratch. We also took a look at pain points that they had from a reliability, a usability, all of those types of things, huge list, and gave it to our development team, and our development team did a phenomenal job and developed AYON. What is AYON? AYON is the ultimate body contouring system in the world today.
It has two forms of liposuction. It's got ultrasonic liposuction, and it's got power-assisted liposuction. It's got aspiration. It has infiltration. It has a closed loop for fat transfer, so you can take the fat out and put it back into the breast or the butt, as we talked about before. It has an electrosurgical generator, so there is not a surgical procedure that the doctor cannot do in aesthetics with AYON. It really is the only surgical system that an aesthetic doctor needs to do any form of body contouring or any surgery there.
Every technology that is in AYON is better than the existing technologies today. The workflow and other features it has, like fluid warmers for the fluid that go into the patient, are things that the doctors were having to do and having to do in a very cumbersome way before, and it wasn't very easy for them or their staff to do it. Everything about the procedure has been enhanced and changed.
What we're seeing right now from the field in AYON is doctors are telling us that their patients are having less bruising and recovering faster because of the technologies that are in AYON. There is a definite workflow advantage and a synergy advantage to doing procedures quicker and faster for the doctor and their staff than they could do them before with the existing technologies.
Then the other thing is, when you look at these body contouring procedures that the patients are seeking, there are really two things that are incredibly important to the patient. Those two things that the patient really cares about is they want an incredible result. They want their body to look amazing after it is done. The second thing is, they want it done as safely as possible.
If you really think about plastic and aesthetic surgery, they are the only surgeons that are competing globally for patients. Patients will travel all over the world to have a procedure done if they think that they are going to get a smoking hot result and it is going to be done incredibly safe. AYON helps the physician deliver on both of those things for the patient.
We are seeing doctors that are taking AYON and they are marketing it directly to the patient to be able to attract those patients into their practice to be able to have the latest and greatest technology to give the patient exactly what they want as far as the look of their body after and the reassurance that the doctor is using state-of-the-art technology to be able to provide it as safely as they possibly can. So that is what AYON is. That is a lot of long answer into AYON, but that is what AYON is.
How much of the heavy lifting is then done on, say, capturing new patients from the physician selling the benefits, the faster recovery time outside, versus you guys doing patient awareness? Because aesthetics is a little unique in that there is really two people that you want to win over.
There are.
It's a little bit unlike cardiology or whatever, which is a different mechanism.
Absolutely. It falls on both of us, actually. It falls on the company to do that, to be able to talk and educate the consumer, to talk to the consumer about the choices that they have and the questions that they should be asking. Then, obviously, it's the physician and their teams and their practices when that patient comes in the door, and they're able to talk to the patient and present to them what their options are and what they think is the best option for them and why. It falls on both of us.
Presumably, you have a subset of Renuvion customers who you could then approach with AYON and talk to them about that. Have we gone through most of that? Is there any of that left as a conversion?
There is still lots of that left. So, if you look at the AYONs that we have sold so far, about 75% of those AYONs have been to Renuvion customers before, and about 25% did not have any affiliation with Apyx or us before. That is kind of the makeup. If you look at from our installed base of Renuvion, we've probably only upgraded about 15% of those customers.
Part of the reason for that is we just did get approval of the power-assisted handpiece in May of this year. Even though portions of the AYON system have been out, the entire system wasn't completed until we just got to May. About 70% of body contouring doctors use a power-assisted handpiece. It was an incredibly important piece of AYON to get to the marketplace. We just got approval in May, then we just were able to basically start shipping a lot of those in the September, October timeframe.
Got it. I am actually less familiar with the approval process. Presumably, it is like a 510(k), but it is separate for the system versus the handpiece. Is that-
Yeah, when we did AYON, the first approval that we got was for all of AYON and the ultrasonic portion of that. We had the ultrasonic liposuction portion of that approved in May of last year. Then the plan was always to come with the power-assisted as a second approval. It is a 510(k), and that is what we did.
Everybody asked me the question, well, if it is 70% of the doctors use the power assist, why didn't you do that first? The reason being is just we could get the ultrasound to the market first. It was just from a speed perspective, and the power assist took more time. We needed more time and development to be able to do it. That is why we prioritized it in that order.
I think you guys have talked about shifting into the hospital setting a little bit. Where are we at in that?
Well, right now, we're on a, if they call us, we'll sell to them. One of the things that we've always been as a company is our business has been 100% focused on the cash pay portion of that. Part of that was just because of Renuvion, and customers would pay for Renuvion to be able to have that really nice look. Hospitals and breast reconstruction market, that's not typically what they do.
But in breast reconstruction and all of those procedures, they all use liposuction. Now that we have AYON, it has completely changed our offering into that marketplace. We have had doctors that have called us to purchase AYON, and we have sold some AYONs into the hospital because of that reason.
They've heard about it, they've read about it, they've seen the technology, and they obviously want to provide the best technology in that setting also. We've sold some by accident is the best way that I can say that at this point in time. Now we as a company obviously need to figure out how we are going to go to market in the hospital setting. Obviously, there's options. We could find a partner to do it for us.
We could do it through a direct sales channel. We could do it through an indirect sales channel. Those are the things that we are looking at as an organization to try to figure out the best way for us to be able to do that. But the nice thing is it's a brand new market for us that we weren't exactly calling on, and that market is almost as big as the cash pay market in the United States. So, it's a nice problem to have.
After you place the system, how much support does that account then need subsequently? Does that differ by cash pay versus hospital or not?
Not really, no. The doctors and their teams are all used to these technologies. It's really just an in-service on the actual AYON itself and the differences of AYON versus the equipment that they're using and how it needs to function and how they need to use it. It's really just that. We do have a clinical team as part of Apyx. We've got some tremendous nurses that will go around, and they'll do the in-services, and they'll make sure that everybody understands how to use it and how to use it safely and effectively and all of that. It's not a huge lift from that aspect at all.
I kind of want to pivot now back to that massive, the GLP-1 side of things, because that is just a huge tailwind, I think, as a lot of people are aware. We've seen it on the foot with bariatric surgery just having a really tough time. But obviously, there's downsides to GLP-1 therapy and having a lot of loose skin, things like that. Maybe give people a sense for you of the longer-term vision of what's happening there and how that helps you.
We think that the GLP-1s have been the biggest disruption to the aesthetics market that the market has ever seen. Obviously, from a scale perspective, the GLP-1 drugs are just massive in comparison to the entire aesthetics market. Not only has it changed the companies, but it's changed the way that the doctors are having to talk and to practice, and it's changed the procedures that they're having to do, because they're having to do more combination procedures where they do body contouring and some incisional work because of the amount of weight loss that the patients are having with these drugs.
We see this as not just a short-term change to the market. We see this as a massive change to the market for many, many years to come, because we see the use of these drugs actually increasing, not decreasing anytime soon. If you really think about what's happened is because of the weight loss and because of the taking the drug, most patients aren't going to benefit from a non-invasive treatment.
They are going to need to have a more invasive treatment, whether that becomes liposuction and Renuvion, or whether that becomes an incisional procedure, or whether that becomes a combination of both to be able to get to the body to the way that they want it. McKinsey just did a study not that long ago that over 60% of these patients are going to be new to aesthetics. That is a massive amount of people that are going to be coming into the aesthetics market that are going to want to get their body contoured. The other thing about it is, if you look at the aesthetics market, there's really a couple markets in aesthetics.
There's the med spa market where people have Botox and microneedling and all those types of things that are done by non-physicians, and then there's the surgical side of aesthetics where only surgeons are performing the treatments. If you look at how the market is, the med spa market tends to be lower price, lower dollar volume, a lot of times younger consumers. The surgical side tends to be a little bit older and a lot more well-off. So, those are the same people a lot of times that are taking the GLP-1 drugs, and we believe that they've got the money, they've got the bandwidth to be able to get their bodies taken care of as they see fit.
So, you see the Venn diagram of the GLP-1 patients intersecting probably quite nicely with where you would get your patients from. I guess, the other question people always have with aesthetics is the economy and the macro side of things. But to your point, should we think that your patients tend to be a little bit more well-off and older, and you've got low penetration today, so there's like two effects. Is that fair?
That is incredibly right. That is exactly how we see it, the patients that are going to want to get their body contoured are typically older, typically more well-off, typically have had their children, typically sometimes they've even gotten them through college and everything else, and now they just want to look as good as they feel. People are active for a lot more years in their lives. They're getting healthier. They're finding all the things about that.
They're going to want their body to look that way, and that is exactly what we believe. More importantly, everybody wants to look better. Everybody wants to be the best version of themselves that they can possibly be, and we believe that surgery in aesthetics is really the only true thing that is durable in aesthetics and transformational. So, it's really got those two things.
There's a lot of things in aesthetics that aren't durable and aren't transformational, and we've seen that with technologies in the aesthetic space that were once here today, gone tomorrow. Surgery is probably the only thing that is truly durable and will be for many, many years to come in aesthetics.
Interesting area you talk about being the best version of yourself. I do not know, between Christmas and New Year's, I try to be the worst version of myself, just a really degenerate. If you think about the bigger picture within aesthetics, because as you said, you have been in the industry for a long time, do you think nowadays the introduction of social media and all that stuff has just made people acutely aware?
Because if I look at other categories that are tangential to yours, like take Bausch + Lomb, they have got a product that makes your eyes whiter, LUMIFY, which has just been flying. All this stuff is just still flying. Do you think the pressure and the social situation has just created people who are just much more aware of how they look, I guess?
Well, I think that people have always, number one, cared of how they looked. Now they just got a forum for it to be able to talk about it. I do think, though, I think your point is right on. I think that social media has made aesthetic surgery much more acceptable.
There used to be a time where people would not admit that they had a procedure or that they had something or that they do anything, and now it has just become so much more socially acceptable that you have got actually influencers that will take you on their journey from when they go into the consultation to their recovery to everything else, that it gives people a sense of what to expect, what to think about, questions to ask. I mean, that education is actually valuable in a lot of ways that never existed before because it was a situation to where you just did not talk about it, and like my parents' generation-
Yeah.
... it was something you just would not do. Now it has become so much more socially acceptable, and I think it is like everything else that we have got in this world. There is a huge part of that that is really good, and there is a downside to that too. That huge part that is really good is it allows people to understand what it is that they are going to potentially do, what they need to ask for, what they need to do, what they need to expect, and quite honestly, then how they should look afterwards.
I think it has changed a lot, and I think it will change aesthetic surgery forever, and I think that aesthetic surgery will be something that is incredibly mainstream. I mean, if you really look at aesthetic surgery, this is all going to fit and to morph into wellness and longevity.
There is a huge push right now in aesthetics for wellness and longevity, and I think as you get more wellness and more longevity, it is going to be more important for how you look the way that you think in your mind that you should look based on how you feel and everything else. I think this all ties together, and I think it is going to be a tremendous market for many years to come.
Presumably for you guys, people's ability to filter how they look on their phones, and I think there is something like Align, right, where you can see how your teeth would look, and that is how they get you into the procedure. Same deal for you guys, people to look at photos themselves, but then say, what might I look like? Presumably that is quite a helpful funnel of driving incremental volume over time.
There is no question about that, and the technology is going to exist for all of that. You are going to be able to scan your body and show what it looks like now and what it could look like in the future, and it really will be an amazing market with the things that are going on in aesthetics. It is tough right now because of the disruption. That disruption, as you know, once everything settles out of that, then things really go.
I just want to pivot back quickly to Power Lipo. Are you guys in full release now, or is this a limited market release, or what are we-
We are now in full release of Power Lipo. If you would ask me a month ago, it would have been, "Uh." Now we are in full release of Power Lipo. Anytime you are going to start a new product, you got to get the supply chain up and running, you got to get manufacturing up and running, you have all of those things that you have to do. But the team did a wonderful job of getting through all of that, and now if you want an AYON, I can get you a Power Lipo tomorrow.
I do like to collect toys from all my companies, so don't tempt me. I have a genomic sequencer in my office, so like-
There you go.
... I'll definitely go on that side. When you're having those discussions with the accounts on Power Lipo coming out, do you think the uptake will be pretty strong in line with what you were hoping? There's obviously a benefit, obviously, from that being in full release to the more holistic portfolio overall. What's the feedback been?
Yeah, the feedback from Power Lipo has been amazing. One of the things that is really unique about our Power Lipo system is that the doctor can actually control the direction of the fat from the sterile field. Before, with every other system, they would have to have a scrub nurse changing the flow of the pump every time. Now the doctor has complete control with a button right on the handpiece that they can either take the fat out or put the fat back in after it's been processed for the fat transfer.
It is amazing that doctors didn't even know that that was possible. It's one of those things that now that doctors have seen it, they go, well, I can't be without that now. For us, it's just a matter now of making sure that everybody understands exactly what AYON is, what it does, and what all the technology is, because the issue is, when you see AYON, it is a beautiful, sexy machine, but what you notice is that it's all in one, and that is the least impressive part of AYON.
The technology that is actually in AYON, in each one of the liposuction and everything else that is in there, is really the most important part and really the most impactful part for the doctors, their patients, and their teams, but it's us telling them that story. It's other doctors talking to them that have it. That word takes a while to actually get out, and that's the part that we're in right now. Obviously, we're commercialized in the United States, but we got to tell this story everywhere in the world, and we're working on registrations now.
Yeah, I was going to say, for the OUS market, there's still plenty of aesthetics going on, and to your point about medical tourism is very high. How are you thinking about the go-to? I can imagine bits of APAC in particular have massive markets there. How are you thinking about the OUS opportunity?
Yeah. The OUS opportunity is gigantic. If you think about the United States, there's about 15,000 clinicians that are doing body contouring. There's about 30,000 outside the United States. So the market is twice as big outside the United States, and the market is actually a little bit different outside the United States in that most of the procedures, especially in Europe, for example, and even in Brazil and other places, are actually done in the hospital.
The cosmetic procedures are done in the hospital, and they're done by surgeons and teams of surgeons. One of the things that we haven't talked about with AYON, one of the features of it, is it has simultaneous activation, where a doctor and their team can be doing four distinct things at the exact same time. Or they can have two Power Lipos taking out fat at the exact same time.
The benefit actually, in places like Europe, where it's a doctor and his team, is that much greater because now they can do the procedure that much faster, a nd it is so much better for the patient because they're under anesthesia for less time. The procedure's half the time and everything like that. It has huge unique advantages in certain countries outside the United States , because a lot of times in the U.S., it's just done by one doctor.
Have you seen a change in the, or are you expecting to see a change in the patient mix over time? Obviously, GLP-1s are across a wide range of patients. You hinted at it, but can you paint what the average patient is today? Do you know your male-female mix, the average kind of age, a nd is that likely to stay stable, or do you think that's going to change over time?
Yeah. It's interesting because yes, the average patient is actually female. About 85% of them are female. Most of the age is typically around 45, is around the typical age. We see the age growing on both sides, older and younger. We actually see more and more people having procedures from a wider, higher, and lower. The other thing that is there is men now are becoming more interested in these procedures as they lose their weight, and they want to come in. So we're seeing growth from the male side too. I think it's just expanding the overall market. Remember the McKinsey stat, 60% of these people are new to aesthetics.
Yeah.
It's huge.
Yeah. Net new on that side.
Yeah.
The other thing that's unusual about GLP-1s is, a good chunk of patients will end up regaining the weight, then losing it, then regaining the weight, then losing it, which creates a sort of I can't imagine what that does to your skin and things like that. How do you see that fitting into the overall?
Well, I think that has been the biggest thing that we thought initially is we thought that these patients would take the drug, they would lose the weight, and they would have surgery right away. I think the part that you're talking about is, I think everybody first thing when that happens is most plastic surgeons will make you wait six months if you're going to get off the drug to make sure that you can keep the weight off before they're going to do a procedure.
So that is most of the plastic surgeons are doing that right now. But the second thing is, I think from a person's point of view is you have to figure out what you're going to do with GLP-1 drugs. Are you going to take them, lose the weight, get off, change your lifestyle, and keep it that way?
Or are you going to do what a lot of people are doing now is losing the weight and then micro-dosing the GLP-1 drug potentially for the rest of your life to be able to do that. So those are all the things that are happening in the marketplace, and everybody's trying to, from a consumer point of view, is figuring out what is best for them.
I think trying to manage that is going to be an interesting challenge. Final thing. You have conversations with investors and the public markets and all that side of things. Is there anything that people don't ask you that they should, or where you think that there's a miscalibration between how the market views you and aesthetics relative to how you view it internally? Anything like that?
Yeah. I do. I think that because of the huge disruption of the GLP-1 drugs, it's made the market incredibly complicated right now. I think there's a lot of misconception from investors and everybody from what the future of this market is going to be. If you look at it right now, a lot of people don't want to invest in the aesthetics market.
I personally think that is a tremendous mistake, because I think any time that there is major disruption in a marketplace, there is major opportunity in a marketplace. I think what you've seen is you've seen a change in the providers, you've seen a change in the patients, you've seen a change in the companies. There are companies that don't have the right technologies or the right products to be able to address this class of patients.
There are some providers that, quite honestly, aren't doing as good a job of communicating to that group either. I think as this gets all sorted out, there's going to be tremendous winners on the provider side, and there's going to be tremendous winners on the company side that have the right technologies to be able to address this patient group and provide what they need.
Sounds like an opportunity for Apyx Medical.
Thank you. Appreciate it a lot.
Thank you.