Jefferies London Global Healthcare Conference. I'm Matt Taylor, the U.S. Medical Supplies and Devices Analyst here at Jefferies, and I'm pleased to be joined by the management team from InMode, including Moshe Mizrahy, the CEO and founder of the company. And we'll have about 25 minutes for a fireside chat here, which I think will be lively, knowing Moshe. So maybe just to get started, I would love for you to give the uninitiated here a little bit of a background on InMode. Take us through some of the evolution of the company in terms of how you've revolutionized skin tightening and fat reduction, and maybe talk about some of the new avenues that you're moving the company into, like women's health and ophthalmology. Okay, okay, well, with me today, Adrian is VP responsible for all Europe and the Middle East. Thank you for being here. InMode was established something like 15-16 years ago. The team, the main team, came from the laser industry. At that time, the idea was to try to develop a technology that can do body and face reshaping without surgical procedure. Because laser, it's an optical energy, cannot penetrate very deep, and therefore laser can do topical treatment. But the market at that time wanted to have something that will save the cost of plastic surgery and the downtime and the full anesthesia. We took the challenge. It took us two to three years to develop technology which is based on radiofrequency bipolar. The first technology that we developed is radiofrequency-assisted lipolysis, which is basically energy that can go, the energy that is a blind energy. RF does not see the pigment. It can go any depth we want. We have decided that if we want to do something significant with efficacy results, we need to do, we need to go into the body. We need to go and penetrate minimally invasive. The first product was called BodyTite, FaceTite based on RFAL, radiofrequency-assisted lipolysis technology. We got the first FDA in 2016, end of 2016. It was successful because doctors start using it. What is the holy grail of plastic surgery? To take out the fat and tie the skin. They do it with a scalpel, with full anesthesia, hospitalization. We basically developed a technology that can do it with one incision point, where we measure the temperature inside and then outside. If we want to melt fat, we know that we need to get into 65 degrees and we can take the fat out or reposition it. If we want to tighten the skin, we need to tighten the collagen with 42 and 43 degrees. The difference between the Bipolar RF, meaning two electrodes, was the size of the electrode and the concentration of the energy. It's worked very well. I mean, as you know, we grew from $20 million in 2017 to almost $500 million in 2023. Later on, we developed some other technology with the same, this other application with the same technology, Fractional RF, Non-invasive RF, but everything around the Bipolar RF. In addition, just because we're coming from the laser business, we developed some laser equipment as well, laser IPL, monopolar, because we wanted to be a one-stop shop for medical aesthetic and surgical aesthetic. It was quite successful. A year and a half ago, we decided that we can use the same technology in women's health. By the way, the most important idea of the company was to take operations from the hospital and bring them to the clinic of the doctor under local anesthesia instead of general anesthesia. Not hospitalization, but doing it in the clinic of the doctor. People want to get surgical results without going into full surgical procedure. We did it very successfully in aesthetic. We realized that we can do something similar in gynecology, but don't misunderstand me, the type of wellness gynecology, like urinary incontinence, overactive bladder. We did some studies and we learned that if we do it through the vagina, we can do some treatment to help women improve their quality of life. We brought to the market another platform called Empower, which was very successful, and right now we continue to sell it. By doing it, actually, we enlarge the population of doctors that can use our technology. We continue. We want to do it in the ophthalmology, ENT. We have different indications that the technology might fit, and you know, we are based in Israel. We have two manufacturing facilities in Israel. The headquarters is in Israel. Very challenging time right now, as everybody knows, especially for us. We're in the northern part of Israel, where it's the war zone. But we managed, we managed to run the company. We have, we're selling in 90 countries. We have 10 subsidiaries. All the R&D and the manufacturing is done in Israel, and we ship from Israel to all over the world. We had some tough times at the end of 2023 and 2024 because of several reasons. The slowdown in the United States, the war in Israel, the interest rates, the consumer confidence, everything brought us to 2024, which is a very challenging year. We will probably end 2024 with close to 20% less than 2023, but we're still profitable, we're still cash positive. We did not cut costs, not marketing, not R&D. Continue to develop. We have something like 10 to 15 projects in the R&D pipeline today, and we intend to bring two platforms for two new indications every year. That's the company. We're about 600 people altogether, worldwide and in Israel. I'm based in Israel. Adrian is based in London. We have another guy, raise your hand. He's a Vice President responsible for all the subsidiaries in Europe, Alessandro in Rome. We have a main office in the U.S. in Irvine, California, and one in Toronto. We have five subsidiaries in Europe: Germany, Italy, UK, and Spain. We just established one in Germany and also in Japan because we want to go direct as much as we can. In other countries, we go through exclusive distributor. Great. Thank you. That's all my questions. Okay. So let's dig in on a few of those things. So one I wanted to talk about was the environment. You mentioned a difficult macro environment with impacts from the economy, rates for capital purchasing, and also consumer confidence. How do you see that evolving as we move into 2025? Okay. In the middle of 2023, interest rates all over the world started to go up, and we started that in September 2023, a slowdown in the United States, mainly in the capital equipment market, because a typical doctor buys equipment with a five-year lease package. At the time, 2021 and 2022, that was 6-7% interest, but at the beginning of 2024, it went up to 14-15% interest, which again, it's more psychological effect on the doctor saying, "Hey, I want to wait." In addition, it's more money. But in addition to that, the consumer confidence in the U.S. because of everything and because of what happened in Europe with the war in Ukraine and Russia went down, and you know, the first thing people want to cut is cost of aesthetic. I want to say something. Not all the aesthetic, because treatment with InMode equipment is quite expensive. BodyTite treatment or FaceTite treatment can cost in the U.S. $5,000-$7,000 a treatment. Morpheus, which is ablative up to 7 millimeter, three treatment packages can cost $4,000-$5,000. It's not like laser hair removal session, which is $300. And therefore, the consumer confidence, I mean, affects the numbers of treatments the doctor performed. And that's, you know, like a snowball, again, affects the market for platforms in the U.S. and later on in Europe. Now we see that in Latin America and in Asia. It's evolving. The fact that in the U.S., the interest rate went down by 0.5% a month ago did not affect that much the leasing interest rate. And it's still very high. I don't want to backtrack on prediction because in the beginning of this year, I used to say in the second half of 2024, we will start to see momentum. Unfortunately, we don't see it yet. Not in the fourth quarter. We don't see it yet. We hope that it will come in 2025 because the trend is going into low interest rates. I hope the world will stabilize after the election in the United States. I cannot say anything about the war in Israel, which is affecting us, unfortunately, highly. We don't see the end, but this is something that we cannot control, unfortunately. Therefore, we believe that the beginning of 2025, we'll see what will happen. We'll see the trend. The fourth quarter usually is the strongest one. At the beginning of the fourth quarter, we thought we might see some change in the fourth quarter of this year. Unfortunately, we see stabilization. We don't see increase. It probably will come in 2025. I don't believe people will save long-term on surgical aesthetic. People want to feel better. People want to improve their quality of life. The fact that we're enlarging our potential customers into other medical societies will help us. We have a lot of resources, so we will survive. We will touch on the impacts of the conflict in Israel. I know previously you had talked about some friction in the supply chain. You have the factories there. I know some of the workers have been conscripted to go to the army. What's the current state? What's been changing there now? And how well are you able to manage some of those pressures? In the beginning of the year, the first and the second quarter, the impact and the effect was very, very high. We did not manage to supply all the equipment on time because the two manufacturing facilities were shut down and most of the people went to the reserve duty in the army, but right now, we are stabilizing. We reached an agreement with the government that not more than 20% of the employees at any given time will be on reserve duty, and we managed on the third quarter to supply all the back orders that we accumulated in the first and the second quarter, something like $30 million, which was not easy, but we did it, maintaining the quality and the product name. I know that customers today ask the question, what will happen in Israel? Are you sure you will survive within five years? And we buy a system not for one year. We pay $100 and above $1,000 per system. It's something that will affect it. But right now, we actually stabilize the production and the capacity. We keep a lot of inventory of main components, and you can see that in our balance sheet because this is a safety stock for our supply chain in order to be able not to shut down facilities and production lines because of missing components. And we do that. It's important. The cost is a cost, but not delivering is higher cost. But you know, like an Israeli I always say, we managed to live with it. It's not the best answer, but we managed to live with it. Right now, we don't see the end of the war. We don't see that. Every day there is a new development. Maybe something will happen. The fact that we're in the northern part of Israel, close to the border, to the Lebanese border, affects us a lot. At the beginning of the war, when the war was in the south, in the Gaza Strip, we had very little effect, but right now it's much higher, but you know, I'm here. The only airline we fly out of Israel is El Al. All the other airlines closed, shut down the operation in Israel, and it's very difficult for our team to travel. But with all the obstacles, we still run the company. We take care of the families. We take care of the employees. We come to work on a daily basis. I'm traveling a lot because you know I'm the only one who travels right now. From here, I go to Rome and then to the West Coast to work with the American team. But that's the situation today. It's affected very heavily the stock price, of course. But hopefully, it will end sometime in 2025. Now, as part of that transition earlier this year, the back order catch-up that you talked about, you've been refreshing a lot of the core platforms. So I was hoping you could talk about how that refresh cycle is going. And you mentioned two new platforms a year is always the goal. Maybe talk about some of the things that could be coming in the pipeline as well. In 2024 to the end of 2024, because of the war, we have introduced to the market two new platforms. One of them is called Ignite, which is the second-generation technology for minimally invasive body surgical and face surgical. It's basically a complementary technology to BodyTite and FaceTite with the Morpheus, which is the second-generation Morpheus that can do burst and also scale and determine how much energy in each level you want to deliver. That was a successful introduction. We know that U.S. doctors, we see very good signs in the U.S. and now also in Europe. The second platform that we brought to the market was called OptimasMAX, which is more a comprehensive system that can do invasive and non-invasive, ablative and non-ablative treatment with the new handpieces with high peak power, which is also doing well. These platforms in the future will be able to be upgraded with different types of laser like Erbium YAG or Q-Switch and other types of indications that we want to bring to the market. In 2025, we will probably bring platforms in the U.S. for erectile dysfunction using Bipolar RF non-invasive. We'll probably bring, we'll push more on the Empower, which we started in 2024. This will be the main one in addition to the Ignite and the OptimasMAX. We don't want to cannibalize old product by bringing new product all the time. We want to exploit the maximum potential from every product or every platform or every indication or every handpiece that we bring to the market. Just to tell you that we have more than 10 projects on the R&D pipeline, which is a hot project. You mentioned the stock price. I think what's notable about your capital allocation this year is you've now worked through one big buyback and announced a second one. Maybe talk about the decisions to do those. How do you think that they're repositioning the company for shareholder value going forward? Okay. I mean, I know that everybody wants that we will do buyback. In the beginning, we said we don't want to do buyback because we want to keep the money for M&A. We tried twice to do an M&A, one with Jefferies and the other one we did by ourselves, but we failed because the prices were not good. And therefore, we're basically now doing the third round of buyback. We did once three or four years ago of $100 million. In the beginning of this year, we did 8.7 million shares, which is $156 million. Now we're doing a buyback of 7.6 million shares for $140 million or $145 million, depending on the stock price. In Israel, the Israeli IRS considers buyback as paying dividend. Unless you get a prior ruling from the IRS that you can do buyback, you better not do a buyback because on every $1 that you do buyback, you need to pay the government $0.25. So we decided to do it only with prior ruling from the Israeli IRS. And now this time we do the second one. We can do once a year. But you know, if we won't be able to use the money, we will do buyback and pay taxes. I mean, this money belongs to the shareholders. But other than that, that's what we do now. I know that for some shareholders it's not enough. We have one shareholder who said that he will hire a lawyer and file a lawsuit against us because we don't do a tender offer for $500 million. But we decided to keep the resources. I mean, there is a war in Israel. We need money. We want to keep the people. We want to keep the operation. If we need to spend money to move production overseas, we will find a way to do it because of the war. We try to manage it very conservatively. How do you see the prospects for M&A going forward? Are there still properties that you're interested in? You mentioned there was a bid-ask problem, but do you think you could get something done in the next few years? I have to say that right now, we're not exploring any M&A because of the management attention. My management attention right now is the situation in Israel and go over the crisis, not the crisis, the slowdown that we had in 2024, and therefore, I'm not saying we're not open if something will arrive, but we're not actively looking for M&A, but once we go back to the same level of operation, hopefully in 2025, if not 2026, we will start looking again on M&A. Yes. Now, with the challenging macro environment, you're going to have some easier comps next year. Do you think that you'll be able to grow the business? And maybe just frame out over the medium term, what are your growth goals? And what do you think is realistic for the business to grow? If we will do $410 million this year, I believe 2025 will be some kind of stabilization year. We might grow $20 million-$25 million, but we're not going to be $500 million, and if everything will work well with the women's health, with the ophthalmology, and with the Ignite and the OptimasMAX, we'll get the regulation in many countries because right now we don't have the regulation in all the countries for those products. Hopefully in 2026, we will add another $50 million of revenue. Now, I just wanted to be clear on women's health. You've talked about various strategies in the past with the efficacy that you've shown in overactive bladder and SUI. What kind of indications are you going to be pursuing there? And are you going to remain aesthetic, or could you go for more medical reimbursement? Now we're in a process with the FDA to get the overactive bladder indication. Actually, we had a meeting with them yesterday, and we will start probably the study that they approve, the protocol, starting next year. I don't know how long it will take. It's a long process. But once we have an indication like overactive bladder, we will be able to do some reimbursement as well. Right now, all the indications that we're claiming, like pelvic floor restoration and vaginal contraction, it's not approved by the FDA. They don't have indications for that. The other thing I wanted to ask about was China. It's always been on your radar as a big opportunity internationally. Could you give us some updates there in terms of where you are with getting more products approved? And how material do you think that could be as a growth driver going forward? The problem with China is the Chinese FDA. It takes a long time to get something approved, and they never give you a time limit like the FDA or the CE. We have three products right now approved in China. We received the approval for the Morpheus. We have a distributor in China, but we're not growing fast in China. China has the same slowdown like the rest of the world in 2024. In our plan, in our regional plan in 2023, we thought to establish our own subsidiary in China and go direct. In China, you cannot use one type of distribution system. You have to combine between distributors and maybe in some area you go direct. China, it's a big market. Apparently, it's a big market. Some companies are doing well. Hopefully, we will start growing again in 2025. Currently, we're in the neighborhood of $10 million a year. Great. I think we have to end there, but thanks so much, guys, for your time, and thanks, everybody, for your interest in InMode. Thank you.