“We were encouraged by our second quarter results, which showed significant growth over the second quarter of 2020, but more importantly, reflect total revenues at 95% of the comparable quarter of 2019 levels,” said Robert J. Moccia, Chief Executive Officer of STRATA Skin Sciences.

“Additionally, we’ve seen significant progress on our new strategic plan approved by our Board in May, including the positive impact of our improved direct to consumer and direct to dermatologist marketing efforts, as well as the successful execution of our sales initiatives. We were also pleased to announce the acquisition of the Pharos 308nm excimer laser business from Ra Medical. This transaction further demonstrates our commitment to commercial execution to drive both organic and inorganic growth,” continued Mr. Moccia. “In addition, Brent Cowgill recently joined the STRATA team, heading up our marketing efforts. We are confident that his extensive experience in sales and marketing will further enable us to reach new customers and expand the XTRAC excimer laser’s patient and physician base.”

Revenues were $7.4 million, as compared to revenues of $4.0 million for the second quarter of 2020. Recurring revenues were $5.5 million, as compared to recurring revenues of $2.8 million for the second quarter of 2020. Equipment revenues were $1.9 million, as compared to $1.2 million for the second quarter of 2020.

Gross profit was $4.8 million, or 64.5% of revenues, as compared to $2.0 million, or 48.7% of revenues, for the second quarter of 2020. Gross profit on recurring revenues was $3.8 million, or 70.0% of recurring revenues, as compared to $1.4 million, or 51.2% of revenues, for the second quarter of 2020. The increase in gross profit is the result of higher sales, partially offset by higher depreciation expense.

Net income was $1.1 million, or earnings of $0.3 per basic and diluted common share, as compared to the net loss for the second quarter of 2020 of $1.7 million, or a net loss of $0.05 per basic and diluted common share.

STRATA management will host a conference call today, beginning at 4:30 p.m. Eastern. The conference call will be concurrently webcast. The link to the webcast is available on the company website (www.strataskinsciences.com) under the investor relations section and will be archived for future reference. To listen to the conference call, please dial (877) 300-8521 (US/Canada) or (412) 317-6026 (International) and use the conference ID number 10159329.

To supplement the Company’s consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the Company provides certain non-GAAP measures of financial performance, including non-GAAP adjusted EBITDA and Gross Domestic Recurring Gross Billings.

 

The Company’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but is not a substitute for, nor superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of STRATA’s current financial performance and to provide further information for comparative purposes.

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Gross domestic recurring billings represent the amount invoiced to partner clinics when treatment codes are sold to the physician. It does not include normal GAAP adjustments which are deferred revenue from prior quarters recorded as revenue in the current quarter, the deferral of revenue from the current quarter recorded as revenue in future quarters, adjustments for co-pay and other discounts. This excludes international recurring revenues.

The total gross domestic recurring billings for the second quarter of 2021 was $5.5 million, compared to $1.9 million for the second quarter of 2020.

The following is a reconciliation of non-GAAP gross domestic billings to recorded revenue for the second quarter of 2021 and 2020 (in thousands):

 

		2021				2020
Gross domestic recurring billings		$	5,482			$	1,848
Co-Pay adjustments			(186	)			(86	)
Other discounts			(41	)			(4	)
Deferred revenue from prior quarters			1,769				1,458
Deferral of revenue to future quarters			(1,897	)			(546	)
GAAP Recorded revenue		$	5,127			$	2,670

STRATA Skin Sciences is a medical technology company in dermatology dedicated to developing, commercializing and marketing innovative products for the treatment of dermatologic conditions. Its products include the XTRAC® and Pharos® excimer lasers and VTRAC® lamp systems utilized in the treatment of psoriasis, vitiligo and various other skin conditions.

 

The Company’s proprietary XTRAC and recently acquired Pharos excimer lasers deliver a highly targeted therapeutic beam of UVB light to treat psoriasis, vitiligo, eczema, atopic dermatitis and leukoderma, diseases which impact over 31 million patients in the United States alone. The technology is covered by multiple patents.

 

STRATA’s unique business model leverages targeted Direct to Consumer (DTC) advertising to generate awareness and utilizes its in-house call center and insurance advocacy teams to increase volume for the Company’s partner dermatology clinics.

 

This press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. These statements include but are not limited to the Company’s plans, objectives, expectations and intentions and may contain words such as “will,” “may,” “seeks,” and “expects,” that suggest future events or trends. These statements, the Company’s ability to migrate customers from the Pharos system to XTRAC and to execute new service agreements to at least portions of the Pharos user base, to generate the growth in its core business, including transitioning capital equipment purchasers into recurring revenue users, to integrate the Pharos service business into the Company’s field service offering, the Company’s ability to develop social media marketing campaigns, and the Company’s ability to build a leading franchise in dermatology and aesthetics, are based on the Company’s current expectations and are inherently subject to significant uncertainties and changes in circumstances. Actual results may differ materially from the Company’s expectations due to financial, economic, business, competitive, market, regulatory, adverse market conditions or supply chain interruptions resulting from the coronavirus and political factors or conditions affecting the Company and the medical device industry in general, future responses to and effects of COVID-19 pandemic and its variants including the distribution and effectiveness of the COVID-19 vaccines, as well as more specific risks and uncertainties set forth in the Company’s SEC reports on Forms 10-Q and 10-K. Given such uncertainties, any or all these forward-looking statements may prove to be incorrect or unreliable. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not undertake any obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release. The Company urges investors to carefully review its SEC disclosures available at www.sec.gov and www.strataskinsciences.com.