Hello, and welcome to the InMode Ltd. third quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Miri Segal, President of MS-IR. Please go ahead.
Thank you, operator, and thank you all for joining us today. Welcome to InMode's third quarter 2021 earnings call. Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements, and the safe harbor statement outlined in today's earnings release also pertains to this call. If you have not received a copy of the press release, please download one from 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. Therefore, we can give no assurance as to accuracy of our forward-looking statements and assume no obligation to update them except as required by law.
Today we are joined by Moshe Mizrahy, InMode's Chairman of the Board and CEO, who will start us off with a business update. He will turn the call over to Shakil Lakhani, InMode's President of North America, to discuss North America's operations. Finally, Yair Malca, the CFO, will discuss the financials of the third quarter in some more detail. With that, I'd like to pass the call over to Moshe Mizrahy. Moshe, congratulations on another record quarter. Please go ahead.
Thank you, Miri, and thank you all, everyone for joining us on our third quarter 2021 earnings call. With me today are Dr. Michael Kreindel, our Co-founder and Chief Technology Officer, Mr. Yair Malca, our CFO, Mr. Shakil Lakhani, our President of North America, Dr. Spero Theodorou, our Chief Medical Officer, and Rafael Lickerman, our VP of Finance. Following our prepared remarks, we will all be available for Q&A session. We are happy to report again a record quarter of profitable growth. Thanks to our innovative, unique technology, growing market demand, our excellent employees and collaborative work to our network around the world, we posted record revenue of $94.2 million for the third quarter of 2021, an increase of 58% over the same quarter last year.
We continue to closely control our expenses and our net income for the quarter on a GAAP basis reached a record of $44.7 million, reflecting an 87% growth year-over-year. During the third quarter of 2021, sales of capital equipment accounted for 90% of our total revenue. Despite the summer slowdown, sales from consumables and services remained strong, representing 10% of our total revenue at $9.1 million, a 68% increase over the same quarter last year. A strong demand for our consumables shows widespread market acceptance, indicating that physicians buy more platforms and perform more treatments every month. Our minimally invasive surgical technology represents 73% of our revenue for the quarter, compared to 59% in the third quarter last year.
Hands-free devices were 18% of total revenue, while our traditional laser and non-invasive RF platforms contributed 9%. The U.S. was once again a major contributor to our top line, with total sales reaching $62.6 million, compared to $40.9 million in the third quarter of 2020, reflecting a 53% increase. It's worth noting that EmpowerRF was recently launched and is currently limited to the U.S. as we focus on early adopters in the gynecology space. This strategy will lay the necessary groundwork for successful introduction to a global market. Our OUS sales continue to grow. Total sales outside the U.S. were 31.6%, a 68% increase compared to the same period last year, and a great result for what is usually a slower summer quarter.
This represents 34% of our total revenue compared to 32% for the same quarter last year. We currently operate in 72 countries and expect that the number to rise as we seek to expand into new markets. We are currently exploring establishing a new subsidiary in another major European market, which we hope will be able to begin operation in Q1 2022.
Our ESG efforts continue every day to ensure we set up the standard for ESG protocols within our industry. Accordingly, we work with our suppliers and subcontractors to ensure that they comply with the same ESG standard set by InMode. We prepared an ESG activity plan for the fourth quarter and for 2022, which will be published on our website. Now, I would like to turn your attention to Shakil, our President of North America. Shakil?
Thanks, Moshe, and to everyone joining us. It's a pleasure to announce that we delivered a record-breaking performance again this quarter, just as it is to share the news of the launch of two new platforms, EvolveX and EmpowerRF. In the third quarter, our sales from capital equipment continued to be a driving force behind revenue, which reached $85 million. As mentioned, consumables and service revenue continued to contribute to the strong performance from the previous quarter. The third quarter of 2021 raised the bar for record attendance of our workshops. Enhancing our educational support network vitalizes both our existing and new customer base. Despite the variations in COVID protocols across North America, physician offices are becoming increasingly busy. This reflects normalization of elevated demand that positively impacts our financial results.
Consequently, we see a lot of interest expressed in our existing and newer platforms, accelerating market acceptance. Our history of successful launches, combined with market demand, fortifies us to grow different revenue segments even during seasonal and other fluctuations. The soft launch of EmpowerRF has been instrumental in giving us the necessary insight to create an effective strategy. As doctors and patients learn how to better navigate life under the COVID-19 pandemic, part of our marketing strategy is to increase the number of in-person events that we host in the coming months. Such events allow us to familiarize ourselves with the medical and wellness community with InMode's comprehensive product portfolio. Finally, I'd like to thank the North American team for the ongoing efforts and the impressive performance that led to these record results.
Their loyalty, dedication, and hard work is very much appreciated and have proven vital and indispensable in supporting InMode's operations. With that, I'd like to hand over the call to Yair for a review of our financial results. Yair?
Thanks, Shakil, and good day, everyone. I'd like to review our strong financial results in more detail. Total revenue in the third quarter of 2021 increased 58% year-over-year to $94.2 million with a gross margin of 85% on a GAAP basis. The increase in revenues stemmed primarily from the new level of demand for aesthetic procedures that we are experiencing, as well as a recovery from the lower revenue levels reported during Q3 2020, which was still significantly impacted by the COVID-19 pandemic. Our minimally invasive and traditional laser and non-invasive segments grew significantly in comparison to the same period last year. Minimally invasive and subdermal ablative technologies grew 95%, while laser and non-invasive grew 85%.
International sales were on track with the projected growth rate and increased year-over-year as we are successfully duplicating our U.S. growth strategy across these markets. Furthermore, capital equipment accounted for 90% of our revenue, with consumables and service revenues representing the remaining 10%. GAAP operating expenses in the third quarter of 2021 was $35.2 million, a 30% increase year-over-year. GAAP sales and marketing expenses for the quarter increased 30% compared to the third quarter of 2020. Share-based compensation increased to $3.1 million this quarter compared to $2.4 million in the third quarter of 2020.
On a non-GAAP basis, operating expenses totaled approximately $32.3 million in the third quarter of 2021 compared to operating expenses of $24.8 million in the same quarter of 2020, an increase of 30%. GAAP operating margin was 47.8% in the third quarter of 2021 compared to 39% in the third quarter of 2020. Non-GAAP operating margin in the third quarter of 2021 was 51% compared to 43% in the third quarter of 2020. Despite the usual cyclical nature of our industry leading to a slower Q3, our record results can be credited to growing customer demand, global trends, exceptional results achieved by our treatments, as well as lower volume of travel relative to pre-COVID era.
In addition, we are successfully managing component shortages in our supply chain through the various distributor and supply network we have established during the pandemic. GAAP diluted earnings per share for the quarter ended September 30, 2021 was 52 cents compared to 28 cents per diluted share in the third quarter of 2020. Non-GAAP diluted earnings per share in the third quarter of 2021 was 55 cents compared to 31 cents per diluted share for the same quarter of 2020. I'd like to remind our listeners that we completed a two-for-one stock split earlier in the quarter, making our shares more affordable to the investment community and our employees. We completed the third quarter with a strong balance sheet. As of September 30 of this year, the company had cash and cash equivalents, marketable securities and deposits of $387.4 million.
On the cash flow front, the company generated $50.5 million from operating activities for the third quarter of 2021. I will now hand the call back over to Moshe.
Thanks, Yair. Thanks, Shakil. Operator, we're ready for Q&A.
Yes. Thank you. At this time, we will begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble the roster. The first question comes from Travis Steed with Barclays.
Hey, good morning, and congratulations on a great quarter. When I'm looking at the quarter, it looks like things really shaped up nicely. August, September, you didn't really see as much seasonality as you expected. Curious if you can kind of comment a little bit on how the quarter shaped up and what you're seeing here in early or late October. Curious if you could comment on the growth in your various channels, like dermatologists versus med spas, if you're seeing anything different with your different customer base.
Yeah, let's start. Hi, Travis, this is Moshe. Let's start with the U.S. Shakil will start, and I will complement him.
Sure, yeah. Travis, hello. You know, we did, going to one part of your question, you know, for October, we've seen a good start so far. Going to last quarter, we've definitely, you know, normally we're used to kind of seasonality. It does affect certain product lines, so, you know, differently than others, right? The minimally invasive kind of, you know, did quite well, and then, you know, our hands-free side of things, we did see, you know, a little bit of pullback, but we expected that in Q3, of course. We obviously are pretty optimistic about Q4 and where we're going with that. However, in terms of specialties, it's kind of been status quo for a little bit now.
What we will be doing, you know, as we continue to grow the soft launch of EmpowerRF, our app, obviously, we're gonna start focusing on penetrating the core markets first, like we did with some of our minimally invasive technology, and really build a solid network and support structure around that in order to really create, you know, what we like to call staying power for the devices. That's a little bit of the North American side of things. Moshe, did you wanna talk about international?
Yeah. Sure. Travis, you know that there are some countries in Europe, for example, that in the third quarter closed operation for at least 6-8 weeks, like France, Spain, Italy. Therefore, in these countries, most of the business came in September. A little bit in the beginning of July, and then from the last week of August where everybody is coming back to work after vacationing. In Asia, I would say that we didn't see any slowdown in the summertime. We had a good quarter with Korea. A good quarter with India, which is now a little bit better from the COVID pandemic there.
Australia was mainly on lockdown most of the quarter, so we didn't see much there. China, I would say one month in August, September, did very well. In South America, Brazil was in a slowdown, I would say, in July, August, and they started again in September. If I look on all the countries outside U.S., which you know, it's something like 71 countries that we sell to, this summertime this quarter was much better than any summertime quarter that I remember, and I'm in this industry I would say for all the way from ESC and Lumenis for 25 years. I don't want to say we were surprised. We believe that this is because we have a different product.
Usually, summertime is not the best time to get laser treatment because, you know, you are tanned, you just came from vacation. You don't go to get optical energy on your skin if you don't want to get the burns. But all of our minimally invasive technology, which are color free, or I would say color blind, we saw a little bit more procedures compared to the traditional laser treatment. We hope that will continue. October started very strong in most of the countries. We see a momentum which we believe will continue in November, December. The last quarter, the fourth quarter is usually the strongest one. Did we answer your question?
Oh, that's super helpful detail. Thanks a lot on that. My next question is really thinking about next year. It seems like you've got a ton of momentum in the base business. So I would say really no change in that, $50 million-$70 million growth that you typically see in the base business. Thinking through the GYN launch, I'm curious if you could add some color on some of the initial feedback on that and should we expect something like $20 million for next year incremental from the GYN launch?
Spero, do you want to talk a little bit about our strategy launching the to the-
Sure.
To the gynecology market?
Sure. Travis, it's a great question. I think we've seen in the past what's happened with different GYN products from the competitors in the past, and we certainly don't want to make the same mistake. We took the path that we took with plastic surgery and dermatology, especially plastic surgery. We took the hardest way, and the hardest sort of adopters to convince that our technology is different. In this case, we're starting off with a urogynecologists, which would be equivalent of the plastic surgeons. A lot of the offerings that we have, we had to convince them that this is the case. From what we're seeing right now, it's pretty quite enthusiastic, so it's gonna be a slow ramp in this respect because we do need to give it credibility.
This group is probably the group that is actually doing it for us. A lot of our KOLs are in that area. As the urogynecologist and some of the gynecologists as well start adopting it'll move into general GYN and everyone else. That's how this is different, and this is why we're performing a lot of studies and putting a lot of effort to go with this group, which will take some time of course, but it's definitely worth it in the long run, especially when you wanna have staying power. We don't wanna market a device that goes up one year or two years and then goes back down, which has been the norm for usually in this industry. As you've seen, it's not been the case with us.
Does that answer your question, Travis?
It did, yeah.
At least the first part?
Yeah.
Okay. Moshe, you can comment on the rest. Yep.
Yeah. I would say that right now we launched the EmpowerRF only in the U.S. We're still working, getting the regulatory approvals in certain other countries, which is in the process. We are submitting documentation studies according to any regulatory body and we have to deal with, you know, close to 30 of them worldwide. And it's not approved yet. We believe that starting January we will launch the product in Europe, probably during IMCAS in Paris. That's the end of January.
To give you a number of what will be the total revenue for next year, just because this gynecology market is new to us, and just because we want to be very careful with what we claim and indication to the doctors, and this is according to what Spero said, we're spending a lot of money on studies and all kind of you know checking for every indication that we claim. By the way, this is the only system on the market that has a very broad indication approval from the FDA, and we believe we will get it from other regulatory bodies. $20 million sounds reasonable to me.
As we go in November, December, and we will check ourself as we're educating the market and learning from the market and riding on the learning curve with this new product and other product that we will bring to this category, I will be more, I would say, you know, definite, be able to give you some numbers and some focus. We're in a very early stage. We have to remember this product was launched in the last week of August, so basically we have only one month experience with this product.
Great. Thanks for taking the questions.
Thank you. The next question comes from Matt Taylor with UBS.
Great. Good morning. Thank you for taking the question and congrats on a good quarter.
Thanks.
Sure. The first question I wanted to ask you, Moshe, was, you know, in the past you have talked about the scale of the organization and being able to grow. You used to be $50 million in terms of absolute dollars on the top line. And you've talked about some increased numbers in recent months, and obviously this year you have an easy comp, but you're growing, you know, potentially $140 million over last year in 2021. I just wanted you to frame some thoughts on the scale of the organization and how much you think you may be able to grow in dollars now with your current size and your products and expansion to international.
Yeah. Thank you, Matt. Very good question. You know, I would say that in 2020 we grew from $156 million to $206 million. That's about $50 million in 2020. We all need to remember that was a COVID year. I believe that if we want to normalize 2020, I would say that at least $30 million or $35 million from 2021 belong to 2020. We need to make some kind of an average between 2020 and 2021 to understand what was the real growth. I agree with you. I mean, the total growth this year exceeded our expectation.
If you remember, the first guidance that we gave for 2021 was $250 million-$260 million. Every quarter we continue to update the guidance according to to the performance of the last quarter and what we believe will be the performance of the next quarter. I mean, 2021 is a great year for us. I would say that maybe because 2020 was a COVID year and everybody now go to make you know aesthetic procedures. People call it the Zoom effect or all kind of other effect that people give a name to this.
If you look in the future, 2022 and 2023, I cannot promise that we will continue to grow with $140 million every year. We see a great momentum in the aesthetic, and we see some good sign in the gynecology. Hopefully, in 2022, we will come up with another platform for the medical, more ophthalmology or some others, and continue to develop products for the aesthetic, which we have right now on our R&D pipeline, close to 15 products or 15 projects, I would say, to enhance our portfolio.
The total systems that we sold up to now was around 10,000 systems, out of which 5,000 and a change in the United States and the others are in OUS. This is, I would say, a very embryonic stage of our business. We believe that if we go into all the medical business medical communities that we want to enter in the future, the total available market could reach 200,000 clinics. We will continue to grow, probably much more than $50 million a year. How much? We will give a guidance at the end of this year.
Okay. Thanks, Moshe. That's a lot of good color. I appreciate you walking us through that. I did wanna, excuse me, ask a follow-up on the pipeline. Could you talk about ophthalmology and the timing of that and what the ramp could look like there? You mentioned these 15 projects. Are there any other ones that you could give us some color on in terms of the timing or the composition of-
I can tell you what projects we're working on. We're working on three projects right now for the aesthetic. We just came with the Transform on the Evolve. We do something similar on the Evoke for the face to enhance our hands-free device. We're developing product on the ophthalmology for dry eye, which will come probably early next year. We're doing a study now. We're working on ENT platform for snoring for septal treatment for you know turbinate and others. That will be a separate platforms. We're working on the platforms for erectile dysfunction, for urology, mainly for men. Plenty of projects.
Some of them are new platforms, some of them are handpieces, some of them are new indications. It's a variety.
Okay. Thanks a lot for the color. I'll let someone else jump in. Thank you.
Thank you. The next question comes from Kyle Rose with Canaccord Genuity.
Great. Thank you very much and congrats on the success thus far. I wanted to just see if we could talk a little bit more about EmpowerRF. I mean, I realize that you had a small contribution in the quarter and you've got a controlled launch taking place. You know, when I just think about what the business looked like several years ago, when the gynecology market was still you know, growing and you guys were launching the Votiva product, just trying to understand how should we think about the contribution of EmpowerRF you know, maybe in the first 12-18 months of launch. You know, can it be you know, what Votiva was on a percentage of sales basis?
Just trying to understand how we should try to frame that opportunity, given it seems like, you know, you might be one of the only companies in this space really investing in launching new technologies here.
Shakil, you want to start?
Yeah, sure. Hey, Kyle. So I think the way to look at it is, you know, again, you know, I appreciate you noting our controlled kind of release of this product. You know, the one thing we definitely wanna do is, as I mentioned before, get it into the right core specialties, the right hands, and make sure that it's doing what it's doing. I think we'll have a better idea, probably in the next one to two quarters as to what the potential looks like for the longer outlook here. However, we all know what the total addressable market is for this particular segment. It's a large segment.
However, you know, the one thing to note is that typically the women's health and wellness physicians and specialties, you know, they're used to dealing with insurance. The biggest hiccup that we have in dealing with them is getting them to understand how cash-based procedures work. Luckily, we have a ton of experience and a lot of people that have sold in that, you know, market over the last, you know, four or five years. I think it gives us a leg up. Before doing anything, we wanted to have the, you know, enough statistical data that goes behind it so that we could actually back it up. Because when you look at urologists, urogynecologists, OB-GYNs, they're very heavy on data. We're investing in the fund and doing that, which explains kind of the controlled release.
We wanna do it right. We wanna make sure that, you know, if we're offering something for SUI, that it's gonna work and it's gonna change women's lives. So far, preliminarily, we've seen that. I think we're gonna have, as I said, a better idea in the next 1 to 2 quarters as to what the maximum potential is, but we are definitely very, very optimistic as to what the total potential market for this is. Does that make sense?
It does. Thank you. I'll just ask my last two questions just kind of at the same time. One, can we get an update just on China and where you stand from a regulatory aspect as far as you know the number of systems that are approved there? Secondarily, you've obviously had very strong system sales the last 24 months. You know, I guess you've had strong system sales the entirety of your business. Just trying to understand how we should think about the mix of consumables and service, you know, maybe moving forward. I think the service contracts don't kick in until after 12 months, so just trying to understand how that mix might change when we think about 2022 and beyond. Thank you.
Okay. Let's start with China. Right now, we have three products, the invasive products approved in China, and we expect to get in the first quarter approval for laser IPL and some non-invasive products, which we submitted to the CFDA something like eight months ago. The problem with China is they don't give you a timeline. The CFDA has no commitment. They can come back to you after three months and ask questions. They come back to you after eight months and ask questions, and they told that they don't tell you where, when they start and when they finish. That's the philosophy of the CFDA, and we have to comply, and we have to deal with it.
We have a team in China today, and we also hired a consultant in order to expedite approvals within the CFDA. The CFDA usually makes it more difficult to foreign companies, but we believe we know how to deal with it, and we will continue to deal. To give you exact date when we will get more approval, I don't know, and I cannot. Even with those three categories that right now are cleared in China, the market is growing, and we're doing well. I believe that now we're doing about $2.5 million a quarter. Hopefully next year we will go to $4 million a quarter on average between the fourth quarter. That's my estimate.
Now regarding the number of systems that we sold in the last quarter, we sold 1,200 systems worldwide, 100 more than the second quarter. Disposables, we sold 91,000 compared to 92,000 in the second quarter, and I already mentioned that the summertime usually is slower as far as treatment by at least 10%-15%. The fact that we did exactly the same number, almost exactly the same number as Q2 is a good sign for us. This is about, I would say, around 70% growth in disposables compared to last year, to the same period last year.
The disposables are growing faster than the systems that we sell on an average per quarter. This is also a good sign for us. Another thing I wanted to say, the EmpowerRF platform has three different disposables or even four different disposables. The VTone, the Morpheus8 V, the FormaV, and the Aviva . All of them are one-time use. It depends what treatment the doctor is doing on a patient, but at least in every treatment he will use one or two disposables and this is good because that will enlarge the numbers of disposables that we will sell.
Almost every system that we are now developing will have at least one disposable, so the disposable number right now is between 10%-11%, depending on the quarter. I assume that once the installed base of platforms will reach 20,000 platforms worldwide, the numbers of disposable will probably go to, I would say, between 15%-18% of the total revenue. Does that answer your question?
It does. Thank you very much.
Thank you. The next question comes from Mike Matson with Needham & Company.
Hi, good morning. Thanks for taking my questions. I guess I'll start with the international business. You mentioned you were looking at opening a subsidiary in a major European country. Just wondering if you could provide more detail on that and can you talk about kind of the financial implications of doing that?
Yeah. Of course. Well, I don't want to mention the name of the country, but it's you know one of the biggest. Right now we have Spain, U.K. and France. You know, we have distributors in Italy and distributor in Germany. Probably we will go and establish a subsidiary in one of those two and that will start operation in the beginning. We already hired the team. We are now training the team. The team was trained in Europe and probably will come to Israel to train in more detail on every system.
The team consists of a manager, two sales managers, one clinical manager and one admin. We are looking for a space to operate from. This all will be done in the next two months, so we would like to start January 1st fresh in the country. When we sell direct, we get close to the doctor or to the customers. We know what the customer wants, and you know, we don't need to depend on the loyalty of the distributors. Around 81% of our sales today worldwide are direct.
We have two subsidiaries in North America, currently three subsidiaries in Europe and two subsidiaries in Asia, Australia and India. Currently, we are to establish the subsidiary in China and also an additional country in Europe. Next year we'll have nine subsidiaries. That will probably increase the percentage of what we sell direct compared to indirect. When we sell direct, we recognize the full value, we know what the doctor wants, we service him better. I have to say another thing, doctors in every country would like to buy from the company and not from distributors. We realize that. Because the distributors, one day he work for you, and one day he go to another company, and they want to have, you know, redundancy.
This is the plan. Do you want more detail, Matt?
No. That was great. That's good. Thanks. You know, just wanted to ask on EmpowerRF. I understand it's early days of a launch here, but what are you seeing in terms of the different, you know, hand pieces and options there? Is it you know, what's the most popular, you know, hand piece? Is it really being driven primarily by the SUI option?
Yeah.
Spero?
You know. Yeah. I'll hand it over to Spero in a sec here, and we'll share-
Okay. Go ahead. Sorry.
Yeah. No problem. From the commercial aspect, you know, we only really have a month to judge it on, and it's a really small sample size, of course. It's a little tough to really figure out. I think, like I said earlier, it's probably gonna take us at least 3 to 6 months to get an idea of what the patterns are. From an interest level, though, SUI is something that's very popular and common. It's something that, you know, there's not a major solution for. We do have a lot of excitement. As I mentioned before, we wanna make sure that we have the, you know, significant clinical data behind it so that we can live up to what we're promising.
I do think that, you know, the VTone hand piece and the, you know, Morpheus8 V are gonna be significant drivers in terms of what's on the workstation itself. From more of the clinical side and the physician's perspective, I'll hand it over to Spero.
Thank you, Shakil. That's a great question. Within the gynecology, urogynecology world, right? Everyone has a certain category and focus on what they're interested in. So when we talk to the urogynecologist, the whole fact about the intravaginal microneedling is a novel treatment. It's something that we've patented, and that's causing a lot of the excitement, initially, so far what we've seen. When you go over to gynecologists who are working still and delivering, you know, OBs who are delivering babies, and they're very excited about the ability to treat women right after delivery, which includes all aspects of this, right? Includes VTone for pelvic floor rehabilitation, in addition to our EMS device for diastasis closure, and they're looking at it selling as a package to the patients after postpartum. So this is very, very unique.
This has never been done before to actually be able to offer a comprehensive postpartum solution. For the doctors doing a lot of OB and looking at this very differently. However, globally, when you look at all these groups, everyone has a solution for something. Whether you're a urogynecologist or a general gynecologist, whether you do a combination of both treatments, this platform has such versatility that it offers different things that you can do. In addition, let's not forget, right, we're an aesthetics company, and we're introducing aesthetics into this category through that. Holding their hand initially, here is a medical indication, here is your existing population of patients that you have, and by the way, here is they can also enter the cash-based business, which is aesthetics.
This is our philosophy, how we move into these different categories.
Okay, thanks. That's helpful. My final question is really just on the supply chain. You know, obviously demand appears to be really strong in your business. One thing that I worry a little bit about is that, you know, we're just gonna see an announcement one day that you had some kind of shortage in terms of semiconductors or some other component to your products. You know, I just wanted to kinda gauge your confidence level and your ability to meet this tremendous growth that you're seeing, you know, volume growth that you're seeing in your business, given everything that's happening out there in the supply chain. Thanks.
Yeah. As far as supply chain and logistics, you're absolutely right, Mike Matson. We are seeing a lot of, I would say, companies that we used to get components in 4 weeks. Today, we get delivery time of 14 weeks. Basically, I don't know if you noticed our inventory grew a little bit because we don't want to take any chance of shortage, and we buy from everyone that can supply us. On every component and sub-assembly that we use in our manufacturing line, we have at least two suppliers, and most of them, three suppliers. We buy components from China, U.S., Europe. We buy from different territories.
As far as manufacturing capacity, currently we have manufacturing capacity to 2,500 systems, 100 platforms per quarter , and today we're using only 50% of it, but we've prepared ourselves for the future. I mean, unlike some of our competitors, we delivered everything in the third quarter according to the plan and according to the orders. No one waited more than, I would say, 10 days before we got the order, either a distributor or a doctor, and we will continue to watch it. We have a special engineering department that we established and built here that the only thing they do is to check on alternative components whenever we have a problem with one component or one supplier.
We do it all the time, and this is a major, I would say, effort on our part. In Israel, everything is manufacturing in Israel and shipping from here. One issue we have with the shipping and the logistics, the prices of sending either by sea or by air in the last year went up four times, and this is why right now we're shipping mainly in containers and not by air in order to save money. All this is done in order to maintain the 85% gross margin, which for us, as I said before, it's a must. It's not nice to have.
Okay. Just the container comment, you know, I'm hearing a lot about ports being backed up and things like that, so you're not worried about, you know, these things getting stuck in a container somewhere on a boat floating around, waiting to get in a port or in the back of an 18-wheeler somewhere?
No, We're not worried. You know, you never know what will happen. Hopefully, people learn to live with the pandemic, and everything will go back to normal in the next year. It will not take months. It will take at least a full year until everything from a manufacturing, from the supply chain will go back to normal. We have prepared ourselves very well to this time, and I believe we are coping with that in the right way.
Okay. Got it. Thanks.
Thank you. The next question comes from Jeff Johnson with Baird.
Thanks. Good morning, guys. Moshe, it's not too dissimilar from a question I've asked in the past. I'd be interested in the quarter in the U.S., what percentage of your revenues or even qualitatively, if you could talk about what, you know, how many of the systems, of the handpieces, of the platforms, that were sold in the U.S. during the quarter went into current customers, so they were buying a second, a third, a fourth handpiece, or system, or versus how many went into, you know, brand-new accounts. Just trying to understand penetration and where we are on kind of penetration in the U.S. of the derm and the plastic side of the market. Thanks.
Shakil, could you please answer that?
Yeah, sure. Hey, Jeff. Yeah, you know, we unfortunately, in some ways, you know, we're not the type of company that has. It's not gonna be like a Stryker or something where you have these relationship type of sales per se, meaning that we just go in and sell something every month, every quarter or anything like that, right? These are six-figure devices. You know, we definitely do go after our existing customers, but we do it once we know that they're successful, right? It's a lot easier for them to reinvest in what we have. Because of our robust pipeline, we always have something new that's coming out, and we keep them kind of excited. Our first task is to definitely get them so that they are successful, right?
That it kinda starts with that. In terms of, you know, what we're doing percentage-wise, I don't wanna give you anything that I'm not 100% certain of, but majority of our business is new business. Although we have, you know, a lot of existing customers who have, you know, purchased different devices, I know earlier on I talked about some of our workshops, and we've seen some record attendance and things like that. You know, we have a good mix of existing customers and new customers. However, what I do feel, as Spero even mentioned talking about EmpowerRF, you know, as we get a lot of these specialties into doing things they're not used to doing, we're going after the women's health and wellness.
They already have some, you know, a large audience, I should say, a captive patient base that they can now start talking about that too. Well, a lot of those patients are getting cosmetic and aesthetic procedures done elsewhere. The idea is to get them used to starting to charge, you know, cash pay, for these procedures and then slowly be able to help them kinda do that on the cosmetic side. I know it's not an exact answer that you were looking for, but I do see, you know, a lot of our business in North America being to newer customers, although we do still have a very good existing customer base.
The main thing for us is we wanna make sure that they succeed first, and then it's so much easier for our sales force to go in and talk to them about new technology. Does that make sense?
Yeah, it does. Maybe to follow up.
Hi, Jeff. Jeff, this is Yair. Just to complement what Shakil said, I can tell you that at least in the U.S., over 70% of our sales were to new customers. As Shakil mentioned, most of our revenue is still coming from new customers.
All right. That's helpful. Thank you, Yair. I guess the follow-up to that, and it kind of is an international question as well. You know, should we think then that Evolve and Evoke didn't necessarily go into customers who own an AccuTite, BodyTite platform, that those procedures or those products were going more into med spas, things like that? Moshe, you mentioned in China getting IPL and hands-free potentially next year. Does that move you in China into med spas, whereas right now with the other RF platforms, you've been more focused on, you know, the physician hospital category more so? I'm just trying to understand, you know, one, does Evolve, Evoke—are you doing well on the med spa side with some of those hands-free technologies?
In China, is the opportunity to go into hands-free and IPL opening a new door that you're not necessarily in right now with the RF platform? Thanks.
Well, let me answer you regarding China. Shakil will answer you about the med spa in North America. By the way, the Evoke and the Evolve were introduced in the all U.S. only this year. We're now just getting the first, I would say, approvals in certain countries. It's already been approved in Europe, but not in Asia yet and not in China. The market in China, you're absolutely right, is if you want to categorize it, you have the hospital, the private clinics, and what they call the spa market, which is the biggest. The spa market is the, you know, all the way from small shops to well-organized spa market, spa chains. Yes, definitely.
Once we get the approval for the hands-free devices in China, we will go to the spa market. We can also go to the doctors, to the doctor clinics and sell them, plastic surgeon and dermatologists, which are now become something very popular in China. It used to be only in the hospital, but right now there are private clinics as well. Definitely, we will go to the spa market and also to those customers. Shakil, you want to say something about North America?
Yeah, sure. Absolutely. You know, I think we've always kind of penetrated the market going after physicians specifically. You know, the hands-free technology does allow us into the med spa side of things, and we do sell to med spas that have obviously medical directors and certain physicians that can finance it. That's the other thing, is we're always gonna be, you know, medical. If it's medical spa, the actual spa market itself, you know, it's really tough to get people financed and things of that nature when you're looking at just the spa market, right? You know, it's tough for a lot of those smaller places to afford it. A lot of our focus is on the medical professionals.
In terms of the med spas, yeah, I mean, the hands-free technologies are applicable to them, but also, you know, as you asked, you know, with someone who has AccuTite or BodyTite or FaceTite or whatever it is, you know, Just remember that the hands-free technology is kind of set it and forget it, right? You're able to delegate that, so you can have that one patient room generating a bunch of revenue for the office while the physician is still out there doing their AccuTite or BodyTite or whatever it is, right? We do have the passive income side of things from the hands-free while they can still keep doing what they're doing, if they are using different technologies.
I think as far as the hands-free goes, you know, I don't think we've really scratched the surface yet. Hands-free is not new, as we know, with some of our former competitors and things like that. I do think that our offering is a lot more unique than anything else that's come into the marketplace between Evoke and EvolveX, you know, the things that we have that we're working on those platforms.
Yeah. Understood. Thank you, guys.
Thank you. This concludes the question and answer session. I would like to turn the call to Moshe Mizrahy, Chairman and CEO, for closing comments.
Okay. Thank you, operator. Again, thanks everybody for joining us today. I want also to express thanks to all of our employees worldwide. I'm sure that some of them are on the line. We had a very successful quarter, but a very tough one. We work very hard on the logistics, on the manufacturing, sales, marketing, support, training, and I believe, as a team, we did a very good job. We will continue the momentum for the benefit of the employees, all the stakeholders and the shareholders. Thank you, everybody. Bye-bye.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.