Page
	PART I	3
Item 1.	Business	3
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	36
Item 1C.	Cybersecurity	36
Item 2.	Properties	37
Item 3.	Legal Proceedings	37
Item 4.	Mine Safety Disclosures	38
	PART II	38
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	38
Item 6.	[Reserved]	39
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 8.	Financial Statements and Supplementary Data	53
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	53
Item 9A.	Controls and Procedures	53
Item 9B.	Other Information	54
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	54
	PART III	55
Item 10.	Directors, Executive Officers and Corporate Governance	55
Item 11.	Executive Compensation	55
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	55
Item 13.	Certain Relationships and Related Transactions, and Director Independence	55
Item 14.	Principal Accounting Fees and Services	55
	PART IV	56
Item 15.	Exhibits and Financial Statement Schedules	56
Item 16.	Form 10-K Summary	58

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forecasts of future business performance, consumer trends and macro-economic conditions;

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descriptions of market, competitive conditions, and competitive product introductions;

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descriptions of plans or objectives of management for future operations, products or services;

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actions by the FDA or other regulatory agencies with respect to our products or product candidates;

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changes to third-party reimbursement of laser treatments using our devices;

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our estimates regarding the sufficiency of our cash resources, expenses, capital requirements and needs for additional financing and our ability to obtain additional financing;

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our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;

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anticipated results of existing or future litigation or government actions;

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health emergencies, the spread of infectious disease or pandemics; and

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descriptions or assumptions underlying or related to any of the above items.

ITEM 1.

BUSINESS

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96920 – designated for: the total area less than 250 square centimeters. CMS assigned a 2023 national payment of $153 per treatment;

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96921 – designated for: the total area 250 to 500 square centimeters. CMS assigned a 2023 national payment of $168 per treatment; and

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96922 – designated for: the total area over 500 square centimeters. CMS assigned a 2023 national payment of $228 per treatment.

ITEM 1A.

RISK FACTORS

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We have incurred losses for a number of years and anticipate that we will incur continued losses for the foreseeable future.

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Public health epidemics or pandemics may affect our ability to develop, market and sell our products, disrupt regulatory activities or have other adverse effects on our business and operations.

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We may not be able to maintain an uninterrupted supply of the gases used to power our lasers, as the Russia-Ukraine War has disrupted supplies of rare gases.

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We may not be able to successfully integrate newly acquired businesses, joint ventures and other partnerships into our operations or achieve expected profitability from our acquisitions.

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Our laser treatments of psoriasis, vitiligo, atopic dermatitis and leukoderma and/or any of our future products or services may fail to gain market acceptance or be impacted by competitive products, services or therapies which could adversely affect our competitive position.

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The success of our products depends on third-party reimbursement of patients' costs, which could result in potentially reduced prices or reduced demand and adversely affect our revenues and business operations.

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Any failure in our customer education efforts could have a material adverse effect on our revenue and cash flow.

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If revenue from significant distributors declines, we may have difficulty replacing the lost revenue, which would negatively affect our results and operations.

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If we fail to manage our sales and marketing force or to market and distribute our products effectively, we may experience diminished revenues and profits.

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We are reliant on a limited number of suppliers for production of our products.

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Our indebtedness could materially adversely affect our financial condition and our ability to operate our business, react to changes in the economy or industry or pay our debts and meet our obligations under our debt and could divert our cash flow from operations for debt payments.

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If our actual liability for state sales and use taxes is higher than our accrued liability, it could have a material impact on our financial condition.

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We must comply with complex statutes prohibiting fraud and abuse, and both we and physicians utilizing our products could be subject to significant penalties for noncompliance.

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We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws and regulations and could face substantial penalties if we are unable to fully comply with such laws.

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If the effectiveness and safety of our devices are not supported by long-term data, and the level of acceptance of our products by dermatologists does not increase or is not maintained, our revenues could decline.

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Our failure to obtain or maintain necessary FDA clearances and approvals, or to maintain continued clearances, or equivalents thereof in the U.S. and relevant foreign markets, could hurt our ability to distribute and market our products, and our products are subject to recall by such agencies.

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If required, clinical trials necessary to support a 510(k) notice or PMA application, for new or modified products, will be expensive and will require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit.

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Healthcare policy changes may have a material adverse effect on us.

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Our market acceptance in international markets requires regulatory approvals from foreign governments and may depend on third party reimbursement of participants’ cost.

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We face substantial competition, which may result in others discovering, developing or commercializing products more successfully than us.

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We actively employ social media as part of our marketing strategy, which could give rise to regulatory violations, liability, breaches of data security or reputational damage.

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Social media companies on which we rely for advertising may change their policies limiting our ability to reach our target markets.

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We may become subject to claims of infringement or misappropriation of the intellectual property rights of others, which could prohibit us from shipping affected products, require us to obtain licenses from third parties or to develop non-infringing alternatives, and subject us to substantial monetary damages and injunctive relief. Our patents may also be subject to challenge on validity grounds, and our patent applications may be rejected.

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If we or our third-party manufacturers or suppliers fail to comply with the FDA’s Quality System Regulation or any applicable state equivalent, our manufacturing operations could be interrupted and our potential product sales and operating results could suffer.

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If any of our medical products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.

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We may have a need for additional funds in the future and there is no guarantee that we will be able to generate those funds from our business, and if we do not have enough capital to fund operations, then we will have to cut costs or raise funds.

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We may be subject to disruptions or failures in our information technology systems and network infrastructures, including through cyber-attacks or other third-party breaches that could have a material adverse effect on our business.

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Environmental and health safety laws may result in liabilities, expenses and restrictions on our operations.

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Our shares of common stock could be delisted from the Nasdaq Capital Market which could result in, among other things, a decline in the price of our common stock and less liquidity for holders of shares of our common stock.

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Your percentage ownership will be further diluted.

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In the event of certain contingencies, the investors in the May 2018 Equity Financing may receive additional shares issued pursuant to the Retained Risk Provisions as defined in the purchase agreements.

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Our stock price may be volatile, meaning purchasers of our common stock could incur substantial losses.

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Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable and could also limit the market price of our stock.

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the ability to source raw materials and supplies;

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a general decline in business activity;

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the destabilization of the markets and negative impacts on the healthcare system globally, which could negatively impact our ability to market and sell our products, including through the disruption of health care activities in general and elective health care procedures in particular, the inability of our sales team to contact and/or visit doctors in person, patients’ interest in starting or continuing procedures involving our products and our ability to support patients that presently use our products; and

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difficulty accessing the capital and credit markets on favorable terms, or at all, and a severe disruption and instability in the global financial markets, or deteriorations in credit and financing conditions which could affect our access to capital necessary to fund business operations.

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unforeseen difficulties in integrating operations, technologies, services, accounting and personnel;

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diversion of financial and management resources from existing operations;

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unforeseen difficulties related to entering geographic regions where we do not have prior experience;

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risks relating to obtaining sufficient equity or debt financing; and

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potential loss of customers.

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to hire, as needed, a sufficient number of qualified sales and marketing personnel with the aptitude, skills and understanding to market our products;

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to adequately train our sales and marketing force in the use and benefits of all our products and services, thereby making them more effective promoters;

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to manage our sales and marketing force and our ancillary channels (e.g., telesales) such that variable and semi-fixed expenses grow at a lesser rate than our revenues; and

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to set the prices and other terms and conditions for treatments using the XTRAC system in a complex legal environment so that treatments will be accepted as attractive skin health and appropriate alternatives to conventional modalities and treatments

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it may be difficult for us to satisfy our obligations, including debt service requirements under our outstanding debt, resulting in possible defaults on and acceleration of such indebtedness;

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our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions or other general corporate purposes may be impaired;

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a substantial portion of cash flow from operations may be dedicated to the payment of principal and interest on our debt, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, future business opportunities, acquisitions and other purposes;

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we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited;

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our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt; and

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our ability to borrow additional funds or to refinance debt may be limited.

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the anti-kickback statute which prohibits certain business practices and relationships, including the payment or receipt of remuneration for the referral of patients whose care will be paid by Medicare or other federal healthcare programs, as modified by the ACA;

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the physician self-referral prohibition, commonly referred to as the Stark Law;

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the anti-inducement law, which prohibits providers from offering anything to a Medicare or Medicaid beneficiary to induce that beneficiary to use items or services covered by either program; the Civil False Claims Act, which prohibits any person from knowingly presenting or causing to be presented false or fraudulent claims for payment by the federal government, including the Medicare and Medicaid programs; and

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the Civil Monetary Penalties Law, which authorizes HHS to impose civil penalties administratively for fraudulent or abusive acts. Sanctions for violating these federal laws include criminal and civil penalties that range from punitive sanctions, damage assessments, monetary penalties, and imprisonment, denial of Medicare and Medicaid payments, or exclusion from the Medicare and Medicaid programs, or both.

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the federal healthcare programs’ anti-kickback laws, as modified by the ACA, which prohibits, among other things, persons or entities from soliciting, receiving, offering or providing remuneration, directly or indirectly, in return for or to induce either the referral of an individual for, or the purchase order or recommendation of, any item or service for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs;

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federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent, or are for items or services not provided as claimed and which may apply to entities like us to the extent that our interactions with customers may affect their billing or coding practices;

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HIPAA, which established new federal crimes for knowingly and willfully executing a scheme to defraud any healthcare benefit program or making false statements in connection with the delivery of or payment for healthcare benefits, items or services, as well as leading to regulations imposing certain requirements relating to the privacy, security and transmission of individually identifiable health information; and

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state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state laws governing the privacy of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

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warning letters or untitled letters issued by the FDA;

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fines, civil penalties, injunctions and criminal prosecution;

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unanticipated expenditures to address or defend such actions;

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delays in clearing or approving, or refusal to clear or approve, our products;

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withdrawal or suspension of clearance or approval of our products by the FDA or other regulatory bodies;

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product recall or seizure;

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orders for physician or customer notification or device repair, replacement or refund;

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interruption of production; and

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operating restrictions.

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Sell or license some of our technologies that we would not otherwise sell or license if we were in a stronger financial position;

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Sell or license some of our technologies under terms that are less favorable than they otherwise might have been if we were in a stronger financial position; and

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Consider further business combination transactions with other companies or positioning ourselves to be acquired by another company.

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failure of any of our products to achieve or continue to have commercial success;

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the timing of regulatory approval for our future products;

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adverse regulatory determinations with respect to our existing products;

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results of our research and development efforts and our clinical trials;

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the announcement of new products or product enhancements by us or our competitors;

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regulatory developments in the U.S. and foreign countries;

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our ability to manufacture our products to commercial standards;

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developments concerning our clinical collaborators, suppliers or marketing partners;

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changes in financial estimates or recommendations by securities analysts;

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public concern over our products;

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developments or disputes concerning patents or other intellectual property rights;

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product liability claims and litigation against us or our competitors;

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the departure of key personnel;

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the strength of our balance sheet and any perceived need to raise additional funds;

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variations in our financial results from expected financial results or those of companies that are perceived to be similar to us;

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changes in the structure of third-party reimbursement in the U.S. and other countries;

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changes in accounting principles or practices;

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general economic, industry and market conditions; and

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future sales of our common stock.

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limit who may call a special meeting of stockholders;

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establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon at stockholder meetings;

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do not permit cumulative voting in the election of our directors, which would otherwise permit less than a majority of stockholders to elect directors;

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prohibit stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; and

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provide our board of directors the ability to designate the terms of and issue a new series of preferred stock without stockholder approval.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

ITEM 1C.

CYBERSECURITY

ITEM 2.

PROPERTIES

ITEM 3.

LEGAL PROCEEDINGS

ITEM 4.

MINE SAFETY DISCLOSURES

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Plan Category		Number of securities to be issued upon exercise of outstanding securities (#)				Weighted average exercise price of outstanding options ($)				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) (#)
		(a)				(b)				(c)
Equity compensation plans approved by security holders			7,728,721			$	1.11				1,329,375
Equity compensation plans not approved by security holders			—				—				—
			7,728,721			$	1.11				1,329,375

ITEM 6.

[RESERVED]

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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XTRAC® Excimer Laser. XTRAC received FDA clearance in 2000 and has since become a widely recognized treatment among dermatologists for psoriasis and other skin diseases. The XTRAC System delivers ultra-narrowband ultraviolet B (“UVB”) light to affected areas of skin. Following a series of treatments typically performed twice weekly, psoriasis remission can be achieved, and vitiligo patches can be re-pigmented. XTRAC is endorsed by the National Psoriasis Foundation, and its use for psoriasis is covered by nearly all major insurance companies, including Medicare. We estimate that more than half of all major insurance companies now offer reimbursement for vitiligo as well, a figure that is increasing.

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In the third quarter of 2018, we announced the FDA granted clearance for our Multi Micro Dose (MMD) tip for our XTRAC excimer laser. The MMD Tip accessory is indicated for use in conjunction with the XTRAC laser system to filter the Narrow Band UVB (“NB-UVB”) light at delivery in order to calculate and individualize the maximum non-blistering dose for a particular patient.

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In January 2020, we announced the FDA granted clearance of our XTRAC Momentum Excimer Laser Platform. In February 2022, we announced the commercial launch, with the first installation in the U.S. market, of our next generation excimer laser system, XTRAC Momentum® 1.0.

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VTRAC® Lamp. VTRAC received FDA clearance in 2005 and provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system.

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TheraClear® X Acne Treatment Device. The TheraClear® Acne Therapy System combines intense pulse light with vacuum (suction) for the treatment of mild to moderate inflammatory acne (including acne vulgaris), comedonal acne and pustular acne.

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Effective October 30, 2023, (a) Robert Moccia stepped down as our President and Chief Executive Officer and as a member of our board of directors; and (b) the Company and Christopher Lesovitz, our Chief Financial Officer, entered into a retention agreement, pursuant to which, in accordance with the terms and conditions of such agreement, Mr. Lesovitz will receive an aggregate cash bonus equal to $0.1 million.

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On October 31, 2023, Dr. Dolev Rafaeli was appointed as our Vice-Chairman, President and Chief Executive Officer and as a member of our board of directors.  In connection with such appointment, on October 31, 2023, we issued Dr. Rafaeli an option to purchase 1,745,569 shares of common stock, with a strike price of $0.53 per share, vesting over a three-year period.

		Year Ended December 31,								Change
(in thousands)		2023				2022				Dollar				Percentage
Revenues, net		$	33,358			$	36,161			$	(2,803	)			(8	)%
Cost of revenues			14,897				14,393				504				4	%
Gross profit			18,461				21,768				(3,307	)			(15	)%
Operating expenses:
Engineering and product development			1,317				1,029				288				28	%
Selling and marketing			12,956				15,301				(2,345	)			(15	)%
General and administrative			10,508				10,087				421				4	%
Impairment of goodwill			2,284				—				2,284				100	%
			27,065				26,417				648				2	%
Loss from operations			(8,604	)			(4,649	)			(3,955	)			85	%
Other (expense) income:
Interest expense			(1,640	)			(926	)			(714	)			77	%
Interest income			231				89				142				160	%
Loss on debt extinguishment			(909	)			—				(909	)			100	%
			(2,318	)			(837	)			(1,481	)			177	%
Loss before benefit from / (provision for) income taxes		$	(10,922	)		$	(5,486	)		$	(5,436	)			99	%

		Year Ended December 31,								Change
(in thousands)		2023				2022				Dollar				Percentage
Domestic		$	23,028			$	23,981			$	(953	)			(4	)%
International			10,330				12,180				(1,850	)			(15	)%
Total revenues		$	33,358			$	36,161			$	(2,803	)			(8	)%

		Year Ended December 31,								Change
(in thousands)		2023				2022				Dollar				Percentage
Dermatology recurring procedures		$	21,530			$	23,025			$	(1,495	)			(6	)%
Dermatology procedures equipment			11,828				13,136				(1,308	)			(10	)%
Total revenues		$	33,358			$	36,161			$	(2,803	)			(8	)%

		Year Ended December 31,								Change
(in thousands, except percentages)		2023				2022				Dollar				Percentage
Revenues		$	21,530			$	23,025			$	(1,495	)			(6	)%
Cost of revenues			8,729				8,371				358				4	%
Gross profit		$	12,801			$	14,654			$	(1,853	)			(13	)%
Gross profit percentage			59.5	%			63.6	%

		Year Ended December 31,								Change
(in thousands, except percentages)		2023				2022				Dollar				Percentage
Revenues		$	11,828			$	13,136			$	(1,308	)			(10	)%
Cost of revenues			6,168				6,022				146				2	%
Gross profit		$	5,660			$	7,114			$	(1,454	)			(20	)%
Gross profit percentage			47.9	%			54.2	%

		Year Ended December 31,
(in thousands)		2023				2022
Gross profit		$	18,461			$	21,768
Amortization of acquired intangible assets			1,861				2,031
Non-GAAP gross profit		$	20,322			$	23,799
Gross profit percentage			55.3	%			60.2	%
Non-GAAP gross profit percentage			60.9	%			65.8	%

		Year Ended December 31,
(in thousands)		2023				2022
Net loss		$	(10,830	)		$	(5,549	)
Adjustments:
Depreciation and amortization			5,553				5,293
Amortization of operating lease right-of-use asset			349				395
Loss on disposal of property and equipment			72				52
(Benefit from) / provision for income taxes			(92	)			63
Interest income			(231	)			(89	)
Interest expense			1,640				926
Non-GAAP EBITDA			(3,539	)			1,091
Impairment of goodwill			2,284				—
Stock-based compensation			1,303				1,466
Loss on debt extinguishment			909				—
Non-GAAP adjusted EBITDA		$	957			$	2,557

		Year Ended December 31,
(in thousands)		2023				2022
Cash (used in) provided by
Operating activities		$	(519	)		$	(924	)
Investing activities			(5,019	)			(4,367	)
Financing activities			6,861				(500	)
Net increase (decrease) in cash, cash equivalents and restricted cash		$	1,323			$	(5,791	)

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A.

CONTROLS AND PROCEDURES

ITEM 9B.

OTHER INFORMATION

ITEM 9C.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

ITEM 11.

EXECUTIVE COMPENSATION

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

ITEM 16.

FORM 10-K SUMMARY

		STRATA SKIN SCIENCES, INC.
Date:	March 27, 2024	By:	/s/ Dolev Rafaeli
			Dolev Rafaeli
			Chief Executive Officer and Director (principal executive officer)

Signature		Title		Date
/s/ Dolev Rafaeli		President, Chief Executive Officer,		March 27, 2024
Dolev Rafaeli		and Director (Principal Executive Officer)
/s/ Christopher Lesovitz		Chief Financial Officer		March 27, 2024
Christopher Lesovitz		(Principal Financial Officer and Financial Officer)
/s/ Uri Geiger		Director and Chairperson of the Board of Directors		March 27, 2024
Uri Geiger
/s/ Samuel Rubinstein		Director		March 27, 2024
Samuel Rubinstein
/s/ Dr. Irit Yaniv		Director		March 27, 2024
Dr. Irit Yaniv
/s/ Wayne Cafran		Director		March 27, 2024
Wayne Cafran

		Page
Report of Independent Registered Public Accounting Firm (PCAOB ID #688)		F-2
Consolidated Balance Sheets		F-4
Consolidated Statements of Operations		F-5
Consolidated Statements of Changes in Stockholders’ Equity		F-6
Consolidated Statements of Cash Flows		F-7
Notes to Consolidated Financial Statements		F-8

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM