UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K


Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 9, 2022


STRATA Skin Sciences, Inc.
(Exact Name of Registrant as Specified in Its Charter)


000-51481
(Commission File Number)

Delaware
13-3986004
(State or Other Jurisdiction of Incorporation)
(I.R.S. Employer Identification No.)

5 WALNUT GROVE DRIVE, SUITE 140
HORSHAM, Pennsylvania 19044
(Address of principal executive offices, including zip code)

(215) 619-3200
(Registrant’s telephone number, including area code)

NOT APPLICABLE
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
 
Trading
Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.001 par value per share

SSKN

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02.          Results of Operations and Financial Condition.

On November 9, 2022, STRATA Skin Sciences, Inc. (the “Company”) issued a press release announcing its results of operations for the third fiscal quarter ended September 30, 2022. The full text of such press release is furnished as Exhibit 99.1 to this report.

The information set forth under this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.

Item 7.01.          Regulation FD Disclosure.

On November 9, 2022, STRATA Skin Sciences, Inc. (the “Company”) issued a press release announcing its results of operations for the third fiscal quarter ended September 30, 2022. The full text of such press release is furnished as Exhibit 99.1 to this report.

The information set forth under this Item 7.01, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.

Item 9.01.          Financial Statements and Exhibits.
 

(d)          Exhibits.

The following press release is furnished as an exhibit to this Current Report on Form 8-K pursuant to Item 2.02 and shall not be deemed to be “filed”:

104          Cover Page Interactive Data File (embedded within the Inline XBRL document).

 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
STRATA SKIN SCIENCES, INC.
 
 
 
 
 
Date: November 9, 2022
By:
/s/ Christopher Lesovitz     
 
 
 
Christopher Lesovitz
 
 
 
Chief Financial Officer
 

 





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Exhibit 99.1




 
STRATA Skin Sciences Reports Strong Third Quarter 2022 Financial Results
 


Strong revenue in the third quarter 2022 of $9.4 million, a 22% increase over the third quarter of 2021
Strong international sales of $3.3 million, an 82% increase over the third quarter of 2021
Announced U.S. commercial launch of TheraClear®X acne therapy system
●     Company to host conference call and webcast today, November 9, 2022 at 4:30 PM EST

HORSHAM, Pa., November 9, 2022 (GLOBE NEWSWIRE) -- STRATA Skin Sciences, Inc. (NASDAQ: SSKN), a medical technology company dedicated to developing, commercializing and marketing innovative products for the treatment of dermatologic conditions, today announced strong financial results for the third quarter ended September 30, 2022.

“We are encouraged by our strong revenues in the third quarter of 2022 of $9.4 million, reflecting a 22% increase over the prior year,” stated Bob Moccia, Chief Executive Officer of STRATA Skin Sciences. “This quarter’s success was due to our continued focus on driving XTRAC usage, refurbishing and redeploying underutilized devices, and our marketing efforts.”

Third Quarter 2022 Financial Results
Revenues for the third quarter of 2022 were $9.4 million, as compared to revenues of $7.7 million for the third quarter of 2021. Global recurring revenues for the third quarter of 2022 were $5.8 million, as compared to global recurring revenues of $5.7 million for the third quarter of 2021. Equipment revenues were $3.6 million for the third quarter of 2022, as compared to $2.0 million for the third quarter of 2021.

Non-GAAP adjusted EBITDA was $1.1 million, as compared to $0.9 million for the third quarter of 2021.

Gross profit for the third quarter of 2022 was $5.8 million, or 61.6% of revenues, as compared to $5.4 million, or 69.7% of revenues, for the third quarter of 2021. The decrease in gross profit percentage was primarily the result of an increase in amortization of intangible assets due to the Pharos and TheraClear asset acquisitions and a change in product mix with higher sales of dermatology procedures equipment, which has a lower margin than dermatology recurring procedures. Non-GAAP gross profit percentage, which excludes amortization of acquired intangible assets (as noted in the table below), was 67.0% compared to 71.6% in the third quarter of 2021.

Selling and marketing costs for the third quarter of 2022 were $3.8 million, as compared to $3.3 million for the third quarter of 2021. General and administrative costs for the third quarter of 2022 were $2.6 million, as compared to $2.2 million for the third quarter of 2021. Sales and marketing expenses were higher as compared to the same period in 2021 primarily due to investments made in sales and marketing and direct-to-consumer and dermatologist advertising, as well as increased head count and employee-related expenses.

Other expense for the third quarter of 2022 was $0.2 million as compared to $0.05 million for the third quarter of 2021.

Net loss for third quarter 2022 was $1.0 million, or a loss of $0.03 per basic and diluted common share, as compared to the net loss for the third quarter of 2021 of $0.5 million, or net loss of $0.02 per basic and diluted common share.



Financial Outlook
The company reiterated its full-year 2022 revenue guidance in the range of $33 million to $35 million.

Mr. Moccia commented, “We remain encouraged on the financial outlook of the business. This quarter, we announced the U.S. commercial launch of our TheraClear®X acne treatment device, which we believe well positions the Company in the $5.5 billion acne treatment market with a potential for additional indications. We look forward to our continued momentum for the remainder of the year and believe we are on track to achieve strong, double-digit, year-over-year growth.”

Webcast and Conference Call Information
STRATA management will host a conference call today, beginning at 4:30 PM EST. The conference call will be concurrently webcast. The link to the webcast is available here and will be archived for future reference. To listen to the conference call, please dial 1-877-269-7756 (US/Canada), 1-201-689-7817 (International), and use the conference ID number 13733102.

Reconciliation of Non-GAAP Measures
To supplement the Company’s condensed 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, Gross Domestic Recurring Billings and non-GAAP gross profit.
 
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 our current financial performance and to provide further information for comparative purposes.
 
Specifically, the Company believes the non-GAAP measures provide useful information to both management and investors by isolating certain expenses, gains and losses that may not be indicative of the Company’s core operating results and business outlook. In addition, the Company believes non-GAAP measures enhance the comparability of results against prior periods. Reconciliation of the GAAP measures of net loss to non-GAAP measures included in this press release is as follows (in thousands) (unaudited):

    
For the Three Months Ended
September 30,
 
   
2022
   
2021
 
             
Net loss
 
$
(995
)
 
$
(521
)
                 
Adjustments:
               
Depreciation and amortization
   
1,311
     
983
 
Amortization of right-of-use asset
   
67
     
87
 
Loss on disposal of property and equipment
   
17
     
10
 
Income tax expense
   
-
     
4
 
Interest expense, net
   
209
     
52
 
Non-GAAP EBITDA
   
609
     
615
 
Stock-based compensation
   
455
     
320
 
Non-GAAP adjusted EBITDA
 
$
1,064
   
$
935
 
- 2 -



Gross Domestic Recurring Billings
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 following is a reconciliation of non-GAAP XTRAC® gross domestic billings to domestic recorded revenue for the third quarter 2022 and 2021 (in thousands):
 

   
Three Months Ended
September 30,
 
   
2022
   
2021
 
Gross domestic recurring billings
 
$
5,548
   
$
5,822
 
Co-Pay adjustments
   
(188
)
   
(199
)
Other discounts
   
(40
)
   
(43
)
Deferred revenue from prior quarters
   
2,499
     
1,897
 
Deferral of revenue to future quarters
   
(2,309
)
   
(2,107
)
  GAAP Recorded domestic revenue
 
$
5,510
   
$
5,370
 

 

Non-GAAP Gross Profit
Non-GAAP gross profit excludes the non-cash expense of amortization of acquired intangible assets classified as cost of revenues.

    
For the Three Months Ended
September 30,
 
   
2022
   
2021
 
             
Gross profit
 
$
5,799
   
$
5,376
 
Amortization of acquired intangible assets
   
507
     
144
 
Non-GAAP gross profit
 
$
6,306
   
$
5,520
 
Gross profit percentage
   
61.6
%
   
69.7
%
Non-GAAP gross profit percentage
   
67.0
%
   
71.6
%

 
About STRATA Skin Sciences, Inc.
STRATA Skin Sciences is a medical technology company dedicated to developing, commercializing and marketing innovative products for the in-office treatment of various dermatologic conditions such as psoriasis, vitiligo, and acne. Its products include the XTRAC® and Pharos® excimer lasers, VTRAC® lamp systems, and now the TheraClear®X Acne Therapy System.
 
STRATA is proud to offer these exciting technologies in the U.S. through its unique Partnership Program. STRATA’s popular partnership approach includes a fee per treatment cost structure versus an equipment purchase, installation and use of the device, on-site training for practice personnel, service and maintenance of the equipment, dedicated account and customer service associates, and co-op advertising support to help raise awareness and promote the program within the practice.
 

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Safe Harbor
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 launch and sell an acne treatment device and to integrate that device into its product offerings, the Company’s ability to develop, launch and sell products recently acquired or to be developed in the future, the Company’s ability to develop social media marketing campaigns, direct to dermatologist 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.
 

Investor Contact:
Rich Cockrell
CG Capital
Phone: +1 (404) 736-3838
sskn@cg.capital














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STRATA Skin Sciences, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)

   
September 30, 2022
   
December 31, 2021
 
Assets
 
(unaudited)
       
Current assets:
           
Cash and cash equivalents
 
$
7,454
   
$
12,586
 
Restricted cash
   
1,361
     
-
 
Accounts receivable, net of allowance for doubtful accounts of $299 and $275 at September 30, 2022 and December 31, 2021, respectively
   
3,655
     
3,433
 
Inventories
   
5,662
     
3,489
 
Prepaid expenses and other current assets
   
621
     
462
 
Total current assets
   
18,753
     
19,970
 
                 
Property and equipment, net
   
6,566
     
6,883
 
Operating lease right-of-use assets
   
836
     
638
 
Intangible assets, net
   
18,110
     
10,083
 
Goodwill
   
8,803
     
8,803
 
Other assets
   
167
     
216
 
Total assets
 
$
53,235
   
$
46,593
 
                 
Liabilities and Stockholders' Equity
               
Current liabilities:
               
Accounts payable
 
$
4,369
   
$
2,822
 
Accrued expenses and other current liabilities
   
6,075
     
6,377
 
Deferred revenues
   
2,968
     
3,285
 
Current portion of operating lease liabilities
   
246
     
318
 
Current portion of contingent consideration
   
500
     
-
 
Total current liabilities
   
14,158
     
12,802
 
                 
Long-term debt
   
7,435
     
7,319
 
Deferred revenues and other liabilities
   
280
     
400
 
Deferred tax liability
   
266
     
266
 
Operating lease liabilities net of current portion
   
674
     
392
 
Contingent consideration, net of current portion
   
8,622
     
-
 
Total liabilities
   
31,435
     
21,179
 
                 
Stockholders' equity:
               
Series C convertible preferred stock, $0.10 par value; 10,000,000 shares authorized; no shares issued and outstanding
   
-
     
-
 
Common stock, $0.001 par value, 150,000,000 shares authorized; 34,723,046 and 34,364,679 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively
   
35
     
34
 
Additional paid-in capital
   
248,833
     
247,059
 
Accumulated deficit
   
(227,068
)
   
(221,679
)
Total stockholders' equity
   
21,800
     
25,414
 
Total liabilities and stockholders’ equity
 
$
53,235
   
$
46,593
 

- 5 -


 
STRATA Skin Sciences, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)

   
For the Three Months Ended
September 30,
 
   
2022
   
2021
 
Revenues, net
 
$
9,413
   
$
7,711
 
Cost of revenues
   
3,614
     
2,335
 
Gross profit
   
5,799
     
5,376
 
 
               
Operating expenses:
               
Engineering and product development
   
216
     
371
 
Selling and marketing
   
3,754
     
3,295
 
General and administrative
   
2,615
     
2,175
 
 
   
6,585
     
5,841
 
                 
Loss from operations
   
(786
)
   
(465
)
Other income (expense):
               
Interest expense
   
(244
)
   
(53
)
Interest income
   
35
     
1
 
     
(209
)
   
(52
)
Loss before income taxes
   
(995
)
   
(517
)
Income tax expense
   
-
     
(4
)
Net loss
 
$
(995
)
 
$
(521
)
                 
Net loss per share of common stock, basic and diluted
 
$
(0.03
)
 
$
(0.02
)
                 
Weighted average shares of common stock outstanding, basic and diluted
   
34,723,046
     
34,150,438
 
                 
 

- 6 -


 
STRATA Skin Sciences, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(unaudited)


   
For the Nine Months Ended
September 30,
 
   
2022
   
2021
 
Revenues, net
 
$
25,559
   
$
20,920
 
Cost of revenues
   
10,639
     
7,070
 
Gross profit
   
14,920
     
13,850
 
 
               
Operating expenses:
               
Engineering and product development
   
588
     
1,158
 
Selling and marketing
   
11,516
     
9,387
 
General and administrative
   
7,599
     
7,085
 
 
   
19,703
     
17,630
 
                 
Loss from operations
   
(4,783
)
   
(3,780
)
 
               
Other income (expense):
               
Gain on debt extinguishment
   
-
     
2,028
 
Interest expense
   
(651
)
   
(109
)
Interest income
   
45
     
16
 
     
(606
)
   
1,935
 
                 
Loss before income taxes
   
(5,389
)
   
(1,845
)
Income tax expense
   
-
     
(12
)
Net loss
 
$
(5,389
)
 
$
(1,857
)
                 
Net loss per share of common stock, basic and diluted
 
$
(0.16
)
 
$
(0.05
)
                 
Weighted average shares of common stock outstanding, basic and diluted
   
34,708,606
     
33,944,321
 


- 7 -


STRATA Skin Sciences, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
   
For the Nine Months Ended
September 30,
 
   
2022
   
2021
 
Cash flows from operating activities:
           
Net loss
 
$
(5,389
)
 
$
(1,857
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
               
Amortization of intangible assets
   
2,155
     
1,113
 
Amortization of operating lease right-of-use assets
   
248
     
261
 
Depreciation and amortization
   
1,816
     
1,576
 
Amortization of deferred financing costs and debt discount
   
116
     
-
 
Provision (recoveries) for doubtful accounts
   
24
     
(26
)
Stock-based compensation
   
1,275
     
1,563
 
Loss on disposal of property and equipment
   
52
     
73
 
Gain on debt extinguishment
   
-
     
(2,028
)
Deferred taxes
   
-
     
12
 
Changes in operating assets and liabilities:
               
Accounts receivable
   
(246
)
   
(181
)
Inventories
   
(1,616
)
   
219
 
Prepaid expenses and other assets
   
(110
)
   
(243
)
Accounts payable
   
1,547
     
(284
)
Accrued expenses and other liabilities
   
(267
)
   
858
 
Deferred revenues
   
(472
)
   
58
 
Operating lease liabilities
   
(236
)
   
(275
)
Net cash (used in) provided by operating activities
   
(1,103
)
   
839
 
                 
Cash flows from investing activities:
               
Purchase of property and equipment
   
(2,037
)
   
(2,523
)
Cash paid in connection with TheraClear asset acquisition
   
(631
)
   
-
 
Cash paid in connection with Ra Medical asset acquisition
   
-
     
(3,473
)
Net cash used in investing activities
   
(2,668
)
   
(5,996
)
                 
Cash flows from financing activities:
               
Proceeds from long-term debt
   
-
     
8,000
 
Payment of deferred financing costs
   
-
     
(133
)
Repayment of note payable
   
-
     
(7,275
)
Repayment of long-term debt
   
-
     
(500
)
Net cash provided by financing activities
   
-
     
92
 
                 
Net decrease in cash, cash equivalents and restricted cash
   
(3,771
)
   
(5,065
)
Cash, cash equivalents and restricted cash, beginning of period
   
12,586
     
18,112
 
Cash, cash equivalents and restricted cash, end of period
 
$
8,815
   
$
13,047
 
                 
Cash and cash equivalents
 
$
7,454
   
$
13,047
 
Restricted cash
   
1,361
     
-
 
   
$
8,815
   
$
13,047
 
Supplemental disclosure of cash flow information:
               
Cash paid for interest
 
$
523
   
$
109
 
Supplemental disclosure of non-cash operating, investing and financing activities:
               
Change in operating lease right-of-use assets and liability due to amended lease
 
$
446
   
$
-
 
Inventories acquired in connection with TheraClear asset acquisition
 
$
71
   
$
-
 
Intangible assets acquired in connection with TheraClear asset acquisition
 
$
10,182
   
$
-
 
Contingent consideration issued in connection with TheraClear asset acquisition
 
$
9,122
   
$
-
 
Common stock issued in connection with TheraClear asset acquisition
 
$
500
   
$
-
 
Transfer of property and equipment to inventories
 
$
486
   
$
-
 
Fair value of warrants issued in connection with debt
 
$
-
   
$
585
 
Assumed deferred revenue in connection with Ra Medical asset acquisition
 
$
-
   
$
1,841
 



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