Okay, great. Thanks for joining us for this session. I'm Matt Taylor, the U.S. Medical Supplies and Devices Analyst at Jefferies, and I'm joined by the CEO of InMode and the founder, Moshe Mizrahy. Although, per the lights, it looks like we've been accused of a crime. We have not committed any crimes that I'm aware of. We'll try to deal with that in this session. Moshe, we're going to have about a 25-minute fireside chat. Okay. Maybe you could start. A lot of times in these sessions, there's a few people who don't know the story very well. Oh, okay. We'd like you to start a little bit high level and talk about how InMode started and then now how it's evolving as you've matured and grown to be a bigger aesthetic company. Okay. Thank you for the opportunity. My name is Moshe. I am the CEO and the founder of InMode. The company was established by me exactly 17 years ago. We're celebrating now 17 years, 17th anniversary. The company is Israeli-based. We started as an aesthetic company, but unlike most aesthetic companies that you're familiar with, we decided not to specialize in optical energy, which is the laser and IPL and some other technology, but rather to develop a technology which is minimally invasive, not only topical. Minimally invasive, we can go into the body, into the subdermal fat and to enable to melt the fat and tie the skin simultaneously. It took us about two years, three years to develop the technology, and we started selling the first what they call the BodyTite platforms and the technology called Radio Frequency Assisted Lipolysis in some countries in Europe, in the Middle East, until we got the first FDA in 2016. The company started selling in the U.S. We started with 2017. Total revenue was $22 million, and we grew to $500,000,000 in 2023. Very fast growth. We currently have 650 people worldwide. We have 13 subsidiaries covering 25 countries where we go direct. The rest, 90 countries, we sell to distributors. All the manufacturing and the R&D is done in Israel. We actually develop two systems every year and bring them to the market. We started in aesthetic, in surgical aesthetic, minimally invasive, but in the last few years, we extended into some what we call wellness medical treatment. For example, in women's health, overactive bladder, urinary incontinence, ophthalmology, dry eye, urology, erection dysfunction, and we will continue to develop products which, on one side, will be aesthetic; on the other side, will be wellness because the market is looking for products to improve quality of life. People want to look good, but also to feel good. The company today, as I said, is 650 people worldwide, plus 200 people in the manufacturing. All the manufacturing and the R&D are located in Israel. Yeah, that's who we are. Basically, what we do, we take full-scale surgical procedures which used to be done in the hospital and move them under local anesthesia to the doctor's office. That is easier for the patient and easier for the doctors. We will continue to expand into other medical communities as long as our technology allows us. Okay, maybe just to extend that a bit, could we talk a little bit more about sort of your forays into women's health and ophthalmology? How are those doing, and how could they grow in the future? We started with the women's health product. The first product was introduced to the market about three, three and a half years ago. It's called Empower. Basically, we use the same technology, Bipolar RF. We started with treatment of vaginal laxity, sex dysfunction, rehabilitation of the pelvic floor, but we right now continue with two major indication studies, with the FDA. One is urinary incontinence, and the other one is overactive bladder. We hope that those indications will continue and finish the studies before the end of 2026 and submit to the FDA. It's a long process. The overactive bladder study cost us $4 million, but once we have those, we believe that the women's health will be a major part of our business, and we might expand into other indications. The first year of the Empower in the market, we sold $40 million of platforms and disposables, which was a very successful and aesthetic company who never dealt with women's health. I want to say one more thing, which is very important. Every platform that we develop and manufacture has some aesthetic and other indications as well. For example, the Empower for women's health, the doctor can do vaginal plasty, labia plasty. You know, we can do some other indications with Morpheus and other aesthetic modalities. At the end of the day, they can make money from the specialty of their, you know, if the doctor is a gynecologist, he can make money from vaginal treatment, but he also can make money from aesthetic. The other product that we brought to the market is called InVision, and this product is for dry eye, treatment of dry eye. Again, this is a very successful one. Basically, we sold $30 million in the first year, and we believe this product was introduced to the market two years ago, and it has continued to grow. We believe within a few years, it will reach more than $50 million a year. Can you talk a little bit more about the indications for women's health in the future? After you finish the studies, what kind of a label do you expect to get? For the women's health? Yeah. What do the indications look like for? Once we get the clearance from the FDA for overactive bladder, we can claim overactive bladder. Today, we cannot claim overactive bladder. The only indication that we have today is for pelvic floor rehabilitation and some treatment of the vagina, like laxity. In order to be able to claim urinary incontinence and overactive bladder, we need to complete the studies, submit to the FDA, and get the clearance. This is something that will take at least two years. I guess similarly in ophthalmology, is there more that you can do to build the evidence base to increase the claims that you can make in that market? Yeah, we do have five publications so far on the dry eye indication with InVision. We're doing the study for the FDA right now in order to get a clear indication for dry eye treatment. That's something that hopefully will take less than the overactive bladder, and we will be able to do the claims based on the clearance from the FDA sometime at the end of 2026. Great. Maybe we could pivot and talk a little bit about the market. It's been a little bit of a challenging market the last year or so, just with interest rates being high. Okay, in aesthetic. Et cetera, yeah. As everybody knows, since the second quarter of 2023, there was a slowdown in the U.S. market. The main reason was that inflation went up to 8%–9%, and the interest rate the same. Most doctors today finance buying equipment with leasing, usually for five years. The interest on lease packages for five years used to be 6%, 7%, 8%, but when the interest rate in the U.S. went up, it went up to 13% and 14%. You know, most doctors do not want to buy it with this annual interest rate. It affects the market. We went down 20% in our revenue in 2024, not just in the U.S., also in AUW, and to $400 million. This year, it has continued to be a struggle, and we will probably end the year with $370 million. Yet, we still maintain an 80% gross margin. We still maintain above 20% EBITDA. We're positive cash flow. We have more than $540 million in the bank, and we finance everything with our free cash flow. We have no debt. Compared to other aesthetic companies, we are very strong, and we can suffer the slowdown for two, three years. Hopefully, it will start the momentum in 2026. I believe that once the interest rate in the U.S. will start coming down, it will affect the interest rate for the leasing, and that will help us a lot. Maybe what about patient demand? It was notable in Q3, you had a nice increase in consumables. Obviously, typically in Q3, there is a seasonal lull and then a pickup in Q4. Are you seeing that pickup, and could we see more consumable growth in Q4? Q3 was above our expectation and above the analysts' expectation. I believe it's the beginning of some kind of momentum, hopefully. Although the interest rate did not go down again. The consumable part of our business is a one-time treatment. Every doctor, when you penetrate the skin, needs one treatment consumable, and it went down a little bit. We're selling above a million consumables every year. That's also a good sign that from a demand point of view of the consumer, the market did not go down. That's encouraging. Hopefully, Q4, it's always the strongest quarter of the year because of some seasonality, and the third quarter is usually the soft quarter because of the summer. Hopefully, Q4, we will go above $100 million in revenue to close the year with above $370 million, but yet to be proved. Gotcha. You touched on the international before, but I wanted you to articulate that strategy a little bit more. You've been adding a lot of countries and distributors. Is that going to be kind of a steady cadence of additions, or are there any big ones to call out, or maybe you could just give us some color on where the biggest opportunities are internationally? Okay. As I said, today we have subsidiaries in Europe, Asia, and also one in Latin America. In the last two years, we have established three new subsidiaries: Japan, Argentina, and Thailand, because we want to go direct to the doctors. 80% of our sales today are direct, and only 20% through distributors. We want to increase the 80% to 85%. The biggest market that we still sell to distributors is Brazil and some countries in the Gulf, like Dubai and others. We are planning to establish a subsidiary there. It will take time. We do not know yet when. Every time we are establishing a subsidiary and sell direct, we can recognize the full value of the system and not just the transfer price to the distributor. That's increased the top line and also the bottom line, although we need to spend money on marketing and the other activity that usually the distributors are carrying out. The situation in AUW depends on the territory. I mean, as you know, the U.S. is one language, but we're dealing with 27 different languages in Europe and another 10 languages in Latin America and a few other languages in Asia-Pacific. We're dealing with 27 different regulatory bodies in the international market, which is very tough because every country has its own regulation process that you need to comply with and get the clearance, which is something that we work very hard on. China is going to be a big potential for us, although the CFDA, the China FDA, is relatively very tough, and it will take a lot of time to get approval. We're working on this market with a lot of intensity because we want to get, right now, we have three clearances. Hopefully, before the end of the year, we'll have another two, which will open the market in China for us. In all other countries, I believe we're growing. AUW versus U.S. today, it's 50-50. It used to be 65% U.S. and 35% AUW. Today, it's 50-50, which is also very important. I have to say something. When I started this company 17 years ago and I had very little money, $3 million, I concentrated in the U.S. I focused on the U.S. because most of the opinion leaders are U.S.-based. Most of the major conferences are in the U.S., especially for aesthetic and the luminary doctor. Once we penetrate the U.S. market and build a network, today it's 210 salespeople, we opened the market to AUW and started to develop the market outside the U.S. And so far, it's working very well. Somewhat related, but tangential, you had a little bit of a tariff headwind on the gross margin from transfer pricing. I mean, is there any way that you could think about using price to offset that? So far, you've chosen not to, but wanted to get some outlook on pricing for you and if there's any opportunities for price increases. The tariff between Israel and the U.S. is 15%. The effect on InMode, since the U.S. is 50% of our business and the transfer price to the U.S., you have to pay tariff only on the transfer price, not the full price, is 50%. The effect on our gross margin is between 2%-3%. We are trying to minimize it in different ways, but according to the law. As you can see and follow the market, follow InMode, our gross margin went down from 81%, 82% to the 79%, 80% levels. This is because of the tariff. All the other countries that sell in the U.S., except the U.S. companies, which are not very, I would say, successful, Korean company and Chinese company, they pay a higher tariff. At the end of the day, hopefully, it will be an entry barrier to some competitors and will give us the opportunity to expand the market there. Maybe I can pivot again and ask about the Salesforce. You talked about 210 in the U.S. You recently made a leadership change there. Can you talk about how that's going? Has the Salesforce been stable, and do you expect it to grow in the future? Worldwide, we have about 300 direct salespeople in the U.S., Canada, subsidiaries in Europe, Argentina, and four subsidiaries in Asia. The U.S. sales team today is about 210, including the management, but the total employees in the U.S. and Canada are close to 300 because we have marketing, we have finance. Our CFO is based in California, in Irvine. We have a base in Irvine and a base in Toronto. Since the slowdown, we have decided that we're not laying down or firing any salespeople because we're not a capital-intensive industry. We are all about people, and I didn't want to lose the talent. I did the same during the COVID, and it's worked very well. We have the resources, we have the money, we can suffer two or three years. We made some changes in the United States. We had three levels of management: President, Vice President, and directors. When the previous President of North America left more than a year ago, I have decided that I will take over for a year and be President, active President for one year. A month and a half ago, I nominated one of the VPs, the VP responsible for the East, to take over the presidency of the U.S. I cut all the VPs. There was President and the Sales Director. I did not want three levels of people, only two levels of people. It shows a very successful decision in the third quarter, and I see that in the fourth quarter as well because everybody now knows who they report to. They do not have a lot of management. They have management attention with their directors and the President. I believe that that will affect the market and the momentum among the salespeople in the U.S. Also, in Canada, we made a few changes, also in Germany and some countries, preparing all the network for 2026. We all hope that in 2026, we will start growing again. Gotcha. I also wanted to ask you more about capital allocation. The last few years, you've been buying back a lot of stock, kind of the maximum allowable under Israeli law to not have to pay the higher tax, but have always talked about doing more M&A. I guess, where does the M&A pipeline stand? If you don't do M&A, could we see you resume more large buybacks in the future? I do not want to say spent. I would say invested half a billion dollars, to be exact $508 million, in buying back stock. It did not help. The stock still went down. I mean, I have decided that I do not want to continue to do buyback. We still have $500,000 and a little bit more in the bank. We used to have a billion. I am keeping the money to explore any M&A opportunities in the near future. Although we do not have anything right now on the pipeline that I can tell you that within a month, we are closing an M&A, we would like to keep the money. If we need to borrow more money, because doing an M&A for $20 million or $30 million, that is not something that will change the company. If we have to do an M&A, it could be a big M&A, something which is synergetic to what we do. And as you know, there are many companies, many laser companies on the shelf right now, which we can buy. We have decided that we do not want a laser company because we develop laser and we know the laser industry. Nobody has 80% gross margin like we do. Every company that we will buy, which are laser-based companies, will not help and will not increase our gross margin and not net profit and EBITDA. Other companies in the women's health, ophthalmology, or any other business which relate to aesthetic and to wellness, it will be a possible M&A. Speaking of the lasers, you're launching a couple next year. Could you talk a little bit about those a little bit more and kind of what they do and how they could add to sales? Okay. Okay. Yes. We start to develop all the lasers that exist in the market, but we try to develop something which is later stage. There are four different lasers that we develop: CO2, Erbium, Q-Switch, and PICO. The way we develop it is on one platform, which combines also minimally invasive RF, like Morpheus. The two modalities are complementing each other, something that no other company can claim. That is something that the doctor will love because doing CO2 laser and laser doing Morpheus 8, it is a typical treatment that aesthetic doctors are doing. Instead of sending them to buy the CO2 from other companies, we want them to buy the CO2 or the Erbium or the PICO from us. That is the product that we are developing right now. Some of it we will launch during 2026 and the other two in 2027. We know how to develop laser. This is our previous expertise. This is something that will enable us to be a one-stop shop for the doctors. Maybe I'll follow up on China because if you get these two indications, you mentioned that that could open up the market for you. Can you talk about how big the China business is today and what the opportunity could be like if you do get those additional products approved? My last visit in China a few months ago, I discovered that there are many private clinics because in China, originally, medical aesthetic was part of hospitals. Right now, in the major cities, you can see three floors of plastic surgery operations or two floors of dermatologies. Women and even men are going to do aesthetic procedures, minimally invasive and non-invasive. Currently, we're selling three products from our 12-product portfolio in China because that's what we have clearances. Hopefully, as I said, within a few months, we will have another two, which will enable us to expand the market. We don't sell direct, but we have good distributors. We would like, in the future, maybe to become partners with them in order to expand the market even bigger. The potential in China is getting bigger and bigger, and we want to be part of it. Great. I think we have to end there, Moshe, but thanks so much for your time. Thanks, everybody, for your interest in InMode. Thank you.