Apyx Medical Corp (APYX) 2021 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the First Quarter of Fiscal Year 2021 Earnings Conference Call for Apyx Medical Corporation. (Operator Instructions) Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly.

Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including those identified in the Risk Factors section of our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, as well as our most recent 10-Q filing. Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise.

This call will also include references to certain financial measures that are not calculated in accordance with Generally Accepted Accounting Principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website.

I would now like to turn the call over to Mr. Charlie Goodwin, Apyx Medical's President and Chief Executive Officer. Please go ahead, sir.

Thanks, operator. Welcome everyone to our first quarter earnings call. I'm joined on this call this morning by our Chief Financial Officer, Tara Semb. Let me provide you with a quick agenda for today's call. I'll begin with a review of our first quarter revenue results. Following this discussion, I'll share an update on the operational progress we made during the quarter towards the 4 strategic initiatives, we are pursuing to enhance our long-term growth in the cosmetic surgery market. Tara will then provide a detailed review of our financial results and an overview of our 2021 financial guidance which we updated in our press release this morning. I will then conclude with some additional closing thoughts before we open the call for questions. With that, let's get started with review of our revenue results.

In the first quarter of 2021, we delivered total revenue of $8.6 million, representing growth of 73% year-over-year, which was well ahead of our expectations.

Our total revenue performance was especially noteworthy given the disruption created by the COVID-19 pandemic, which continued to challenge the overall operating environment both in the U.S. and internationally. By geographic region, the U.S. sales increased 54% year-over-year to $5.6 million, while total international sales increased 123% year-over-year to $3.1 million.

The year-over-year increase in total revenue was driven exclusively by our sales of our Advanced Energy Products, which increased 92% year-over-year to $7.7 million, more than offsetting a modest decline in our OEM business, which decreased 3% year-over-year to $1 million.

Shifting to a more detailed discussion of our Advanced Energy business. I am pleased to report that the 92% year-over-year growth we saw in total Advanced Energy sales was driven by strong global sales of both our generators and handpieces, reflecting encouraging adoption and utilization of our technology in our key markets around the world.

As we mentioned on our earnings call in March, during the first quarter, we continued to see strong utilization of our handpieces in the U.S., coupled with demand from our distributors internationally despite the elevated volumes of COVID cases in many countries.

Our total Advanced Energy handpiece sales ultimately grew by over 100% year-over-year. In addition to our strong handpiece growth, the total Advanced Energy generator sales increased by more than 80% year-over-year. We were especially pleased to see strong sales of our generators, both domestically and internationally during the quarter given that the global capital equipment purchasing environment continues to remain challenged by the effects and uncertainty, created by the COVID pandemic.

With respect to our U.S. Advanced Energy business, utilization-based demand from our existing cosmetic surgeon customers remain strong with handpiece growth of 92% year-over-year despite the uptick in COVID cases in the month of December, which persisted into January and February.

Our existing U.S. accounts remained open and active throughout Q1 and we saw improving year-over-year trends in each month of the quarter, with growth in the month of March being the strongest. The process of engaging with potential new U.S. customers continued to be challenged by COVID; however these headwinds did ultimately improve in the first quarter and our direct sales team performed exceptionally well, enabling us to deliver 67% growth in U.S. generator sales year-over-year. Q1 marked our return to year-over-year growth in U.S. generator sales for the first quarter, since the onset of the COVID pandemic.

Importantly, while our U.S. generator growth in the first quarter was aided in part by an easier comparison in prior year periods given the COVID impacts in March of 2020, our U.S. generator sales results reflect strong growth compared to the first quarter of 2019 as well with sales up 37% in Q1 '21 versus Q1 '19.

With respect to the underlying utilization-based demand trends in Q1, our U.S. handpiece sales increased 92% year-over-year and were up more than a 150% in Q1 '21 as compared to the first quarter of 2019.

With respect to our Advanced Energy business outside the U.S., our international Advanced Energy growth was very strong and was driven by contributions from sales of handpieces and generators, both of which increased more than 120% year-over-year in the first quarter. The overall pace of recovery in many countries continue to lag behind the U.S. and remains difficult to characterize overall. But we were pleased to see important pockets of strength in certain regions, which fueled our strong performance.

International handpiece sales growth was largely driven by strong sales to our distributors in Brazil and Taiwan, 2 countries which we entered during the second quarter of 2020 while international generator sales growth was more evenly distributed across multiple countries. Our international generator sales growth benefited from easier comparisons given the impact of COVID in February and March of last year, but we were pleased to see sales increased 6% compared to the first quarter of 2019.

Turning to a review of our operational progress during the first quarter towards our 4 strategic initiatives to position Apyx Medical for continued success and sustainable long-term growth in the cosmetic surgery market. First, we continue to pursue our regulatory strategy to obtain specific clinical indications for targeted cosmetic surgery procedures in the U.S. while securing product registrations in new countries internationally.

In the U.S., our 2 IDE clinical studies evaluating the use of Renuvion in dermal resurfacing and skin laxity procedures continue to progress as we had anticipated. During the first quarter, we completed the 90-day follow-up visits for patients enrolled in our dermal resurfacing study. Our team is preparing our request for 510(k) clearance, which we are still on track to submit by the end of this month.

We also made important progress in enrollment of patients in Phase II of our IDE study evaluating the use of Renuvion in skin laxity procedures in the neck and submental region, which we initiated in December of 2020. We remain on track to complete Phase II enrollment in the third quarter of 2021.

Turning to our OUS regulatory strategy, our regulatory team continue to expand our global commercial footprint by obtaining regulatory clearance for our Helium Plasma Technology in 2 new countries in Eastern Europe as well as South Africa during the first quarter. While we saw initial orders from our distributors in 2 of these countries during the quarter which modestly benefited our Advanced Energy growth in Q1, we do not expect them to contribute materially to our performance this year.

With that said, we are pleased to achieve continued progress on this aspect of our regulatory strategy and believe our success in driving new customer adoption in international markets is notable given the continued COVID-related disruption in these regions.

With respect to our second strategic initiative, we continue to expand the portfolio of clinical evidence for our Renuvion technology in the cosmetic surgery market.

In March, we were pleased to see a peer-reviewed article published in the Journal of cosmetic dermatology, which was authored by Dr. J David Holcomb. The article focused on the analysis of 22 subjects treated by Dr. Holcomb as part of our initial IDE study, focused on the use of Renuvion in dermal resurfacing procedures.

Dr. Holcomb performed a quantitative comparison of the number of brown spots and in large pores as well as wrinkle area and thickness both prior to and 3 months following dermal resurfacing with Renuvion. Based on this analysis, he found that a single pass treatment with Renuvion at low energy setting, yielded qualitative and quantitative improvements in facial skin appearance, specifically, the number of brown spots decreased by 45%, the number of in large pores decreased by 28%, wrinkle area decreased by 13% and wrinkle thickness decreased by 5% on average.

In short, this new peer-reviewed publication provides additional clinical validation which we expect will support our clinical adoption, following receipt of U.S. regulatory clearance for this target procedure.

Turning to our third strategic initiative. During the quarter, our commercial team continued to make progress in supporting new and existing cosmetic surgery customers and their practices. Working together with some of our top surgeons and KLOs, we organized and hosted 3 educational events for our new and potential surgeon customers. These 3 events were open to both in-person and virtual participation and saw more than 200 clinicians reflecting the strong interest in our technology.

Our team also hosted 5 virtual training sessions to further educate some of our OUS distributors on our Helium Plasma Technology. We also continue to expand and enhance our portfolio of marketing materials for our existing surgeon customers. During the quarter, we introduced an in-office marketing kit, which we are providing to all new customers moving forward. This kit includes a variety of Renuvion branded materials including brochures, wall clings and scrub caps that can be used to help surgeons raise awareness and educate their customers on the benefits of Renuvion technology. Likewise, we launched an event planning kit that customers can access on our online marketing portal which provides them with everything they need to organize customer focus events and programs.

In early April, we hosted our first users' meeting, a 2-day event with participation from roughly half of our existing customers representing more than 50 countries. The event featured presentations and discussions hosted by 22 key opinion leaders, and top surgeon users from around the world, which is now available for our entire customer base to access on demand via our online portal.

Lastly, regarding our fourth and final strategic initiative to improve our manufacturing capabilities and efficiencies, our manufacturing team is continuing to drive further improvements in our overall manufacturing capabilities and efficiencies, through the introduction of new manufacturing technologies at our Clearwater facility and by approving the handpiece production capabilities of our facility in Sofia, Bulgaria.

Importantly, the early benefits of our team's strong execution of the strategic initiative, we're seeing in strong gross margin performance in the first quarter of 2021. Specifically, our focus in recent years on reducing the per-unit manufacturing cost of our Advanced Energy handpieces is expected to drive material improvements in our handpiece gross margin and the adoption of our APR handpieces increases going forward.

As a reminder, our efforts in 2020 focused on introducing this product to our customers in North America. In 2021, we are expanding our focus to OUS markets including where necessary securing the requisite registrations before commercial introduction in our key international markets in years to come.

All in all, the first quarter marked a great start to 2021. We saw encouraging utilization and adoption trends and strong sales growth in our Advanced Energy business driven by balanced contributions to total year-over-year growth coming from the sales of handpieces and generators, as well as from customer demand in the U.S. and internationally.

Our sales performance translated into strong year-over-year improvements in our total gross margins and improvements in our adjusted EBITDA loss, compared to the prior year period. And our activities related to our 4 strategic initiatives continued to progress smoothly leaving us better positioned to deliver strong sustained growth over the long term.

Our team did an exceptional job this quarter and I would like to take a moment to thank them for their effort and their commitment they've demonstrated to overcoming any obstacles as we revolutionize the cosmetic surgery market with our Helium Plasma Technology.

With that let me turn the call over to Tara to discuss our first quarter financial results and our updated 2021 guidance. Tara?

Thanks, Charlie. Given Charlie's detailed review of our first quarter revenue results, I will begin my discussion of our Q1 financial results by continuing down the P&L.

Gross profit for the first quarter of 2021 increased $2.9 million or 96% year-over-year to $5.9 million. Gross profit margin for the first quarter of 2021 was 67.8% compared to 59.7% last year. The year-over-year increase in gross profit margins was driven by revenue mix between our 2 segments and as well as improved product margins in our Advanced Energy segment, due to the continued manufacturing efficiency initiatives that Charlie mentioned earlier. The year-over-year increase in gross profit margins was offset partially by revenue mix by geography and by product.

Operating expenses for the first quarter of 2021 increased $0.1 million or 1% year-over-year to $10.6 million compared to $10.5 million for the first quarter of 2020. The increase in operating expenses year-over-year was driven by a $0.9 million increase in salaries and related costs and a $0.1 million increase in research and development expenses, partially offset by a $0.9 million decrease in professional services and a $0.1 million decrease in selling, general and administrative expenses.

The very modest year-over-year increase in operating expenses reflects the continued benefits from our initiatives to control costs, and reduce our discretionary spending, which began in the second quarter of 2020 in response to the impact of COVID-19 on our financial condition.

Loss from operations for the first quarter of 2021 was $4.7 million compared to operating loss of $7.5 million last year. Total other loss net was $0.1 million compared to total other income of $0.6 million last year. The year-over-year change was primarily due to a benefit from the receipt of refunds in the first quarter of 2020 and tariffs paid in 2019, which did not benefit our financial results in the first quarter of 2021.

Income tax expense for the first quarter of 2021 was $0.1 million compared to a benefit of $4.9 million in the first quarter of 2020. The year-over-year change in income tax expense was primarily due to the net operating loss carryback claim refunds recognized in the first quarter of 2020, which did not benefit our financial results in the first quarter of 2021.

Net loss attributable to stockholders for the first quarter of 2021 was $4.9 million or $0.14 per share compared to $2 million or $0.06 per share for the first quarter of 2020. First quarter of 2021 adjusted EBITDA loss was $3.4 million compared to a loss of $5.8 million last year, an improvement of $2.4 million or 41% year-over-year. As a reminder, we provided a detailed reconciliation from GAAP net loss to adjusted EBITDA loss in our press release this morning.

As of March 31, 2021, the company had cash and cash equivalents of $39.5 million compared to $41.9 million as of December 31, 2020. As of March 31, 2021, the company had working capital of $53.3 million including expected tax refunds of approximately $7.5 million that the company anticipates to receive during 2021 related to the net operating loss carrybacks resulting from the 2020 CARES Act.

Turning to a review of our 2021 financial guidance which we updated in our earnings press release this morning for the 12 months ending December 31, 2021. We now expect total revenue in the range of $37.6 million to $39.7 million, representing growth of 36% to 43% year-over-year. This compares to our prior guidance range of $36.7 million to $38.7 million.

The updated total revenue guidance range assumes Advanced Energy revenue in the range of approximately $33.1 million to $35.2 million, representing a growth of 49% to 59% year-over-year. This compares to our prior guidance range of $32.3 million to $34.3 million. The updated Advanced Energy revenue guidance range continues to assume U.S. growth is only driven by contributions from Renuvion sales related to its use as a subdermal coagulator following liposuction procedures and international growth driven primarily by demand in existing international markets.

OEM revenue of approximately $4.4 million representing a decline of 20% year-over-year. This is unchanged from our prior guidance range. In terms of profitability guidance for fiscal year 2021, we expect net loss attributable to stockholders in the range of $20.3 million to $18 million. This compares to our prior guidance range of $20.7 million to $18.4 million. And we expect adjusted EBITDA loss in the range of $14.1 million to a $11.5 million. This compares to our prior guidance range of $14.5 million to $12 million.

As a reminder, we have included a full reconciliation from our GAAP net loss to non-GAAP adjusted EBITDA loss in our earnings press release this morning. Our formal financial guidance for 2021 continues to incorporate the following considerations for modeling purposes.

First, we assume our total company revenue growth for the full year 2021 period will be driven exclusively by our Advanced Energy business. We expect strong Advanced Energy growth both in the U.S. and internationally and the midpoint of our Advanced Energy guidance now assumes roughly 63% growth in sales to U.S. Advanced Energy customers in 2021 and roughly 40% growth in sales international Advanced Energy customers compared to our prior guidance range, which assumed year-over-year growth of 60% and 35% respectively.

Second, we continue to expect gross margins in the range of 69% to 71% this year, compared to 63.2% last year, driven primarily by continued mix benefits by segment, by geography and by product. Specifically, our continued manufacturing efficiency initiatives for our handpieces including the APR handpiece.

Third, our GAAP operating expense assumptions increased as a result of the increase in our revenue guidance expectations. Accordingly, we now expect GAAP operating expenses to increase approximately 23% year-over-year driven by mid-single-digit growth in our normalized operating expenses, which excludes roughly $4.3 million of COVID-related expense reductions, including discretionary, travel and entertainment and other compensation-related expenses that benefited our 2020 GAAP operating expense.

Plus incremental stock-based compensation expense in 2021 of approximately $1.3 million and approximately $500,000 of initial expenses related to our joint venture partnership in China, which we established last year.

Fourth, we continue to expect net interest and other expense of approximately $150,000 in 2021, compared to a benefit of approximately $700,000 last year.

Fifth, we now expect income tax expense of approximately $250,000 compared to an income tax benefit of $7.5 million last year, which included the aforementioned net operating loss carryback tax benefit from the 2020 CARES Act.

And sixth, we expect non-cash depreciation and amortization of approximately $700,000, non-cash stock-based compensation expense in the range of $5.2 million to $5.5 million and weighted average diluted shares outstanding of approximately 35 million shares.

Lastly, while it is not our standard practice to provide quarterly expectations given the significant impact of the COVID pandemic, in the second quarter of 2020 and the related benefit to our Q2 '21 year-over-year growth rate for the avoidance of doubt and in the interest of transparency, we expect our total revenue in the second quarter of 2021 to increase approximately 101% to112% year-over-year. This total revenue range assumes Advanced Energy growth of approximately 165% to 180% and a decline in OEM revenue of approximately 27% to 23% year-over-year.

With that, I'll turn the call back to Charlie for closing remarks. Charlie?

Thanks, Tara. We are raising our guidance for 2021 to reflect both our strong start to the year, including the encouraging adoption and utilization trends that we have seen as well as the continued confidence we have in our outlook for the remaining 9 months. With a solid balance sheet a global multi-billion dollar addressable market opportunity and differentiated technology, supported by an expanding portfolio of clinical evidence, we remain well positioned to drive strong, sustained revenue growth and improving financial performance as the global environment continues to recover.

We look forward to building on our recent momentum this year by continuing to deliver exceptional financial performance and strategic execution as we establish Apyx Medical as a leading player in the global cosmetic surgery market.

I'd like to again thank our employees for their hard work as well as our customers, distributors and investors for their continued support for Apyx Medical and our mission. With that, operator, let's now open the call for questions.

(Operator Instructions) And our first question will come from Dave Turkaly with JMP Securities.

Congrats on the broad strength you saw across the geographies and the different product lines. Charlie, we've asked this before and I'm just curious given how balance that growth was, I know capital has always been a larger component, but I would assume it's got to be getting closer to 50-50, I'd just love to get your thoughts on sort of where that mix stands today between the handpiece and the generators and if we are approximating that level.

Yes, thanks, Dave. We appreciate the question. Yes. We were very happy with our generators being up 80% year-over-year in Q1 and U.S. generator sales, in particular, were up 67% year-over-year and it was our first quarter of growth as we had talked about with the pandemic in the U.S. on the generator side and it was incredibly impressive growth in light of still the COVID-related challenges that still exist. On the U.S. side, we were up by 120% year-over-year, but that remember benefited from easy comps, but we still grew 6% over '19 and generator demand from multiple countries reflects our measured improvement in our operating environment -- quarter-over-quarter operating environment and certain OUS markets. As far as the exact mix of generators to handpieces, we're obviously not going to be talking about that in detail, but we are incredibly happy with the continued growth in utilization that we've seen globally and the adoption of Renuvion, it is very exciting for us and we're -- it makes us very confident about the future.

And I appreciate that and I had to try. And then I guess as a follow-up on international front, you called out Brazil and Taiwan in the handpiece side, you mentioned strength in, I guess across other countries on the generator, but obviously, that's been very strong in the last 2 quarters sequentially. So I guess, any additional color you might give us there, maybe even particularly on the generator side would be helpful.

Well, I think that when you're talking about those 2 countries in particular and when you're talking about our long-term regulatory strategy that we've had to get new countries, obviously there is going to be more generators that go into place, right when we get those because there is demand in lot of those countries, and so this strategy has been a strategy that we've been talking about now, since we've been here for 3 years and as we continue to keep adding new countries, obviously generator adoption starts but then the handpiece utilization then follows and so all of this really starts to build a nice business outside the United States with adoption of that and you could see that with the handpiece growth up more than 120%. But as we talked about outside the United States from a COVID perspective, it is really, really a mixed bag outside the United States and some areas are really being affected more than others, and it is still hard to predict outside the United States, how COVID is recovering the way behind on the vaccine in certain countries and things like that, so.

Our next question comes from Matt Hewitt with Craig-Hallum.

Congratulations on the strong quarter. Couple of questions from me. I was hoping to focus a little bit on the sales and marketing efforts as here domestically and pockets of OUS as vaccines are rolled out. As COVID starts to decline, are you able to get out in about more from sales perspective, get into see your customers, how should we be thinking about some of those cost ramping up over the course -- over the year.

Yes. So we were very much pleased with the progress that we made in the first quarter, specifically in the United States, selling generators and finally, having growth in that again. And we were very active on this front in Q1, despite the COVID. We have actually just started in April, I think it was the very first in-person trade show that actually had and so we would expect as we go forward in the United States to have more in-person trade shows. But as you can see that we hosted a hybrid event for our PMP and that was in-person and then virtual and it was wonderful because it was attended by about 200 doc and so -- and that's the same thing with the trade shows that we're seeing. Is there a hybrid thing of in-person and virtual and so I think that this year, you will start to see a lot more of that and I think that, as obviously we start attending more of those things and traveling more of those things, Tara -- we will start to see more of an increase in our expenses as we go forward through the rest of the year.

Got it and then maybe just a follow-up on that, it sounds like you've launched a couple of new marketing campaigns. Would it be safe to assume that Q3, early Q4 you receive the dermal resurfacing approval, would it be safe to assume that you would add some sales resources, some headcount to the sales team to really drive growth in that market after the approval.

Yes, good question. So for the dermal resurfacing study week, as I mentioned earlier, we continue to target our 510 (k) by the end of this month. We anticipate at least 90 days from the decision from the FDA. Our guidance in 2021 does not include contributions from sales for dermal resurfacing. We do plan on getting the sales force together in August to plan and prepare for our potential limited launch during Q4. But we really wouldn't expect any material contributions from a revenue perspective, until our full commercial launch in '22 and we're comfortable with the size of the sales organization that we have right now.

Our next question is from the line of Matt O'Brien with Piper Sandler.

Hi, this is Korinne on for Matt. And congrats on the quarter. So first just looking at your guidance with no change to OEM guide despite the segment doing a little bit better in Q1 than we had anticipated. Can you just speak to some of the trends you're seeing with that business and why you have that unchanged?

Yes. Well, thank you for the question. For the OEM, we had, it's right in with what our guidance was for the first quarter. So the first quarter results that we had of $1 million are right what we basically had expected and where we thought the business would be after Q1 and our guidance for '21 assumes a 20% decrease in revenue which is approximately $4.4 million and we did the $1 million in Q1. So for us, it was right on what we expected and that's why there was no change in the OEM revenue and when you asked why it is down this year. Remember, we've always talked about the OEM business being about a $5 million business, it did $5.5 million last year. We're forecasting it to do $4.4 million this year, but it is really driven by demand trends from COVID because remember these are sold to our partner, customers that primarily sell these in hospitals and the hospital environment has been has been impacted globally by COVID more than obviously our market here in the esthetic space.

Great. That's helpful. And then just on the gross margin front, how should we think about the ramp throughout the year to get out from where we are now to that 69% to 71% range, should it be like a pretty good sequential improvement or will it be a little bit lumpy. Any color on that would be helpful.

Yes. So if you remember for the gross margins, it was primarily driven by our segment and by our product mix, and the product mix specifically on the APR handpiece and we rolled out the APR last year in the United States and we're seeing obviously adoption of that in the U.S. and we just started to do that outside the United States, and so outside the United States, we would expect that as obviously will have more APR sold in the last quarter of the year outside the United States than we will in the first quarter of the year, and so that ramp will help drive the gross margin sequentially on a quarter-by-quarter basis.

(Operator Instructions) Our next question is coming from the line of Russell Cleveland with RENN Capital.

A couple of quick questions, first on the international scale. There's a lot of places that we're not, for example, like Argentina and so forth. Can you comment on your international growth, how we're looking at the world in these places that were not now.

So, Russell. Our OUS regulatory strategy has been something that we've been focused on and obviously we're working on as fast as we can, especially given the COVID environment in a lot of these countries and a lot of some countries are more hampered by COVID than others as far as their Ministries of Health allowing these things, but we never do comment on the timing of it because we're not in control of the timing of it, but we are very encouraged that we were able to get 3 new registrations this quarter, which is a testament to the team and the work that they're doing and then the strong growth that we had internationally of 120% is obviously real exciting and this is a multi-year strategy for us also to really keep adding 2 new countries and our guidance really only assumes growth from existing countries and we're not baking a lot of growth into when we get these new registrations because we just aren't in control of that.

Okay. My second question, it's our FDA on the dermal resurfacing, which we call facelift, now that's being done. Currently, we just don't have the regulatory approval, but that's been performed as we speak with our technology. Is that correct?

Yes, it is an off-label procedure. We cannot promote it and we do not promote it. So it is being done. You're correct, because the clinician can decide to use the technology any way that they want to, but there are a lot of clinicians that will not use a technology off-label, they wait for the company to actually get an indication for that before they actually use it. So yes, it is being done, but it is being done off-label and it is something that we as an organization do not promote or actually commercialize in the marketplace today.

So and you spoke about this earlier and indicated that really, it would be fourth quarter going into next year before we would really get to the completion of the study, hopefully, approvals and launch our marketing campaign in that, is that where we are?

Yes. So we are on track to submit our 510 (k) by the end of this month. It is at least a 90-day process after that for the dermal resurfacing and then we plan to get the sales force together towards the end of August to start planning for a soft launch. We always do a soft launch when we launch a certain product that will be in the fourth quarter and then you would expect then to have material revenue from that in 2022.

We currently are showing no remaining questions at this time. And that does conclude our conference for today. Thank you for your participation.

Thank you.