Hi everyone, good morning, good afternoon, thanks for attending our third BNP Paribas Aesthetics Day. Today I'm joined by Moshe Mizrahy, CEO of InMode, and Yair Malca, CFO of InMode. Thank you very much for joining us. We just had the Galderma session and an expert session where we mostly focus on facial injectables. Maybe if you can give a short intro on InMode, the revenue model, segment breakdown, margin profile, just as an intro. Okay, we'll do a short intro. InMode is an Israeli-based company established around 16 years ago. Everything is based in Israel, manufacturing, R&D headquarter, except our CFO, who is based in California. We're specializing in medical aesthetic equipment, mainly surgical equipment, which means that we penetrate the skin. We are not just a laser or IPL company who delivers the energy through the skin. We penetrate the skin with the special technology that we have developed, and we own the technology and the IP. The technology is based on a bipolar RF, meaning that we did not invent RF in surgical procedures. It's known for many years. What we did, we customized the technology into aesthetic surgical procedures where we can measure the temperature, measure the level of energy, and the amount of energy that we deliver. The first technology that we developed is called radiofrequency-assisted lipolysis, which basically can do most of the plastic surgical procedures: face type, body type, neck type. What we sell, we sell a platform which delivers the energy, like a big power supply with some kind of a control mechanism, and a handpiece, which is the one-time use, that goes into the body to perform with one incision point to perform full surgical procedures. Later on, we developed some other technology, like bipolar matrix RF, which is called Morpheus. We also developed what we call the commodity-type medical aesthetic devices based on laser, based on IPL, based on ultrasound, based on a combination of energies to perform all kinds of aesthetic procedures, but mostly in the doctor clinic and mostly under local anesthesia and not full anesthesia. Basically, instead of going to the hospital to do a facelift, we can do it in the doctor office under local anesthesia in the lunchtime procedure, and the patient can go home immediately after the treatment. We're saving money, we're saving downtime, we're saving hospitalization and other stuff. We got the first FDA in 2016. We started to commercialize our product in the United States. At that time, in the first year of 2017, we sold around $22 million. In 2023, we actually reached something near $500 million, $495 million in revenue with very high profitability. Later on, we started to diversify our product line, not only in aesthetic and not only in plastic surgery. We started to develop products based on the same technology, based on the same technologies that we control for women's health, for applications like urine incontinence, overactive bladder, vaginal rejuvenation. We cannot use the word rejuvenation, but all the GSM symptoms. In addition, we developed a product for dry eye and full face rejuvenation and periorbital. We continue to develop now products for the ENT market. Whenever we can move an operation in a full-size operation procedure from the hospital, from the operating room into the doctor office, instead of using knife, scalpel to use an energy-based device, which is based on our technology, this is an unmet need for us, and we're coming with a solution. We currently have about 12 platforms in our product portfolio for all kinds of indications, as I described. We're selling in 90 countries. Currently, we have 11 subsidiaries in the process to establish another two subsidiaries. 80% of our business, we sell direct to our subsidiaries around the world, and 20% through our exclusive distributors. We develop two indications or two platforms or two handpieces every year just to keep the market going. We went public in 2019 with $7 per share. We went up very high. In the end of 2023, 2024, and the beginning of 2025, the market slowed down significantly because of several reasons. One of them is the interest rate on leasing packages. We sell equipment with the financing of lease through third-party companies who are not the finance company. Of course, the slowdown in the economy in the United States did not help us. We went down 20% in revenue in 2024. We are currently the target for 2025 is to be the same as 2024, trying to recover from the slowdown/recession into a second or into another momentum. That is the company. We are about 600 people, a little bit more than that worldwide. We're the leader in medical aesthetics, and we also want to be the leader in the other, what I call medical community solution. We believe that aesthetic and wellness can go together, and therefore any indication which improves quality of life is something that interests us, and we continue to develop solutions for that. That's basically the company. I'm based in Israel, as I said, R&D in Israel, manufacturing in Israel. We had some tough time in Israel during the last two years because of the war, but we managed very, very carefully and successfully throughout this time. We hope that now business will go back to normal, although so far, based on the first quarter and the beginning of the second quarter, the market is not improving significantly. We see some sign of improvement, but not very much. Thank you. Thank you for that introduction and also your comments on the microenvironment. I mean, it's InMode, but it's also other aesthetics med tech that are reporting pressure on the capital equipment sales. Can you remind us of the cost of the device and has it changed versus competitors and whether competitors have changed the pricing strategy? Okay, first, we sell platforms. You're right, capital equipment. But we also sell disposables that go with the capital equipment for one-time use since we penetrate the skin. About 80% is capital equipment, and something like 20% is disposables. The return on investment to the doctors is very high. For example, if a doctor buys a system in the United States for $130,000, he usually finances the purchase through a five-year lease package, which is about $3,500 a month, even with the interest rate of today or maybe a little bit more, depending on the credit scoring of the doctor. He can charge in between $5,000-$7,000 per invasive treatment and maybe a package of three treatments for non-invasive. Even if he would do five to six treatments per month and charge $5,000, he needs to buy disposable for $2,000 and in addition to pay $3,500 for the leasing, so he can pay back the system in less than a year, in most cases, less than a year. From the doctor point of view and from the company point of view, it's a win-win. We have about 80% plus minus 1% gross margin, which is very high for capital equipment. It's mainly for non-capital equipment like software you can find gross margin like that. We spend heavily on marketing and sales throughout all of our subsidiaries and distributors. At the end of the day, we all have to remember that although we are medical equipment devices and manufacturers, at the end of the day, we are treating healthy people who want to feel better, they want to look better. From a marketing and sales point of view, it's quite similar to consumer products. The service is relatively consumer-oriented. The EBITDA is around 20%-25%. It used to be higher than that, but in the last two years, since margin and revenue went down, the EBITDA went down as well. We hope that in the future, we will overcome it and we will improve the profitability as well. Thank you. Maybe if you can describe the pressure on the end consumer, so maybe the coming in less or postponing treatment in the U.S. versus outside of the U.S. We do marketing to consumer and marketing to doctor, B2B and B2C, not just in the U.S. We do it outside the U.S. as well. The U.S. market is currently 50% of our business, and our ROW is 50% of our business from a money point of view, from dollars point of view, from system point of view, since in the U.S., we can charge higher prices for our equipment. The ratio, I would say, is 65:35. 35% of our system goes to the U.S. and 65% of our system goes to ROW. We need to also remember that whenever we sell outside the U.S., because everything in the U.S. is direct and outside the U.S. to distributors, we recognize only the transfer price and not the full price of the system. Therefore, the ratio is based on 35%-65% on system-wise. Dollar-wise, it's more like 50-50. In terms of the headwinds, we do see or feel stronger headwinds in the U.S. compared to O.U.S., even though in some pockets of the O.U.S., we see the same issues, especially consumer confidence or lack thereof. I think overall, we've seen that in Q1, Europe and Asia-Pacific had a decent quarter for us, and it's also a little bit the drop that we experienced in the U.S. Overall, to answer your question about what we see out there, it's more difficult in the U.S. than in the O.U.S. Just to add to what you said, this is correct, and I would say that unfortunately, we start seeing another sign of inflation in Europe and also in the U.S. Yes, we had some first quarter, good first quarter, O.U.S., what we call our W. Recently, we start to see some kind of, I do not want to call it a slowdown because we do not see a big difference from the first quarter, but interest rates are not going down. Okay. I remember there were some signals that were suggesting a bottoming in 2024, but at the end, it did not materialize. Do you think we are close to bottoming or see any signs or not yet? In 2024, in the beginning of the year, we thought it was false. We thought that in the second half of 2024, no, we thought that in 2024, interest rates will start coming down and we will see some momentum, but it did not happen. And 2024 was a very slowdown year for us. If you ask whether we see the light at the end of the tunnel, not yet. We do not see the light at the end of the tunnel yet, not in the second quarter. We do not want to predict now because whenever we predict, I mean, it is. You never know. Sometimes it's wishful thinking, but we'll wait to see what will happen in 2025. As you can see, the stock market is not reacting well to what happened in the U.S., and the interest rate is not going to come down at the speed that we thought. We don't know. Yeah. We are looking for some stability in the market and to consumer confidence that hit a record low a week or two ago. We are waiting for that to improve. In return, hopefully, once consumer confidence improves, our doctors would start seeing an increase in demand for aesthetic procedures overall, and this would end up translated into them buying additional capital equipment. Thank you. A follow-up on this year, does guidance require higher adoption of product launches as well as execution? What is the historical cadence in Q2? Are May and June bigger months than April given the warmer weather? Q2 is supposed to be a stronger quarter than Q1. Usually, the cadence throughout the year is Q1 is the slowest quarter of the year historically, going back years ago. In the industry overall, not only for InMode. It's usually about 20% of the revenue for the year in Q1. Q2 is supposed to be a good quarter, about 25% of the revenue. Q3 is a soft quarter because of the summertime. It's more significant in Q3, less so much in Q2. Q4 historically is the strongest quarter of them all. That was not the situation in the last year or two because of the slowdown. If you want to divide it, first quarter is 20%, second quarter is about 25%. The third quarter is usually in between 22%, 23%, or something like that. The fourth quarter is usually 30% +. Okay. Thank you. Maybe I'll combine to the next question. Can you describe the situation in Israel cease fire, and do you foresee any other impact being based in Israel outside of tariffs? Maybe a second question on tariffs, what is the InMode tariff exposure in terms of revenue, manufacturing exposure, type of products? As far as the ceasefire in Israel, it's come and go. I mean, I know now the government decided that there was no ceasefire and they want to renew the war. That's happening this morning. Every day is changing. We're on the northern part of Israel. And on the northern part of Israel, right now, it's quiet. The war is more on the south part of Israel. It does not affect us so much. Although some of our people are serving in the reserve duty and they were called to the army, so we're missing some people, especially in the manufacturing. I hope it will not affect the manufacturing capacity and stability. But it's nothing new. It's better than a year ago, and it's better than two years ago or less than two years ago when the war started in October 2023. We still don't see the end of the war. It's still running. As for the. As far as the tariff, Yair Malca. As for the tariffs, the situation is very fluid and things are changing almost on a weekly basis. We hope that the Israeli government will be able to work out some sort of an arrangement with the U.S. administration. Right now, our working plan is to expect between 2%-3% impact on the gross margins. As I said, this can change. Hopefully, by next earnings call, we'll have a better understanding of where this is heading. Right now, this is our assumption, an impact of between 2%-3%, mainly because, as Moshe mentioned at the beginning, most of our products are manufactured in Israel and being exported here into the U.S. I mean, when the tariff was announced, Israel tariff was 17%. And later on, it was reduced to 10%. On a temporary basis. Temporary release, yeah. If it will go back to 17%, the effect will be higher, will be 4%. Yes. Say on 10%, it will be, as Yair said, between 2%-3%. Yeah. We are still figuring out the situation. There might be some workarounds that we might use here and there. Again, this thing is, as I said, very fluid. Right now, we believe between 2%-3% is a reasonable impact to expect, but we will update more as we know more. Thank you. And then on innovation, can you discuss the recent performance of the newest system? So IgniteRF, OptimasMAX versus the existing platforms? We introduced basically two major systems, I would say. The OptimasMAX, which is a versatile system that can handle different types of handpieces for different indications, all the way from hair removal, skin rejuvenation, cellulite, pigmentation, fine lines, and also Morpheus, which is one of our major products, fractional RF technology. Basically, this system is the second generation of a previous system that we developed, which we call Optimas. OptimasMAX is the second generation for Optimas with some special technology. Even the Morpheus that we have on the OptimasMAX is a second generation for the Morpheus that we had on the Optimas. The second device that we brought to the market and we sold in 2024 and in 2025 is called Ignite. Ignite is a second generation for the BodyTite. On the Ignite, we added another technology, another new technology, not just updated technology, another new technology which is called Quantum, which is different than the BodyTite. We're doing it with one cannula instead of two cannula, basically almost the same type of procedures, but mostly for non-aspirational treatment, non-liposuction treatment. As you probably know, today, all the GLP-1 drugs that melt fat create loose skin on many people who are using the GLP-1. They need some additional treatment to tighten the skin. The Quantum technology was developed just for that. The results that we're seeing so far are good, and it's very promising. It's going to be, according to our salespeople and distributors, as successful as the Morpheus and the BodyTite. We hope that that will happen. We're working very hard to do studies and publication. It is already approved by the FDA, so we set it free. It's not approved yet by the CE in Europe, and we're working on approval. Tomorrow, we will announce that it's already approved in Canada, and we're working on approval in other regulatory bodies around the world. Thank you. If possible, can you discuss the new wellness platforms to be launched later this year? Is that going to be very different indications than the existing one? Different station then? Different indications than the existing one. Yes. It's a different indication. It's a different segment of doctors that we are going after. We will provide the additional information at the time of the launch, hopefully in Q3. Oh, yeah. Thank you. In women's health, because it's one of your expansion areas, do you expect any negative changes from the new administration? Negative changes on the women's health from the new administration? In what way? I don't know if any negative changes, maybe less willingness to treat women's health. From the new administration in the United States? Yes. Yeah. Sorry. Yeah. No. We don't expect. We are not aware of any major change from the new administration on the aspect of women's health. Basically, all the indications that we will develop and bring to the market on women's health will be on the wellness side. We're not saving life or not measure, I would say, illnesses like overactive bladder, like urinary incontinence, like vaginal contraction to improve sex. We're not in the business of medical, I would say. We're more in the business of wellness women's health and less on the medical women's health. We do not rely right now on any reimbursement. It's all private money. If we will develop any indication that will need reimbursement and the reimbursement will be affected by the new administration, it will affect us as well, but we're not there yet. Okay. Thank you. Maybe on your margins, how are you managing OpEx in that environment, and how does that compare during COVID? Which areas are you prioritizing, deprioritizing? Yeah. Innovation, R&D versus labor, marketing? You mean on prioritizing R&D? Prioritizing of operating expenses generally, including R&D? The G&A and R&D on InMode are very low relatively to competitors and relatively to any medical equipment company. You can see that. Our major expense is sales and marketing. This is our major expense. I mean, G&A is in the range of 2%-3%, and maybe R&D is in the range of 3%-4%. That's all, which is relatively low because we're very efficient in our R&D and engineering department. The major expense is commission and the cost of reps that we pay them. In addition to that, all the marketing activity that we do B2B and also B2C with all the advertisement on Morpheus, etc. This is the major part, and it can be 35%-40% of our revenue. I don't know if Yair, you have anything to add on the managing of OpEx in today's environment. Again, overall, what we've done in the past year, despite the decline in the revenue, we continue almost business as usual. We so far didn't terminate anyone, kept all the marketing initiatives we had in place, continued to do the workshops for our doctors that we plan to have. In terms of that, we kept everything the same despite the decline in revenue. This translated to some definitely an impact on profitability, as we all saw. We believe this is a short-term. At the end of the day, the demand for aesthetic procedures in the U.S. and worldwide is not going to go away. At some point, it will come back. We wanted to have the organization structure ready to take over the market once that happens. We did the same during the COVID time. Yes. It went well, and the return on the, I would say, on the expense that we allocated was very high. Thank you. Can you discuss the recent margin geographical mix evolution? What makes the U.S. and Canada the most profitable regions compared to the other ones? First of all, we work direct in those two countries. Unlike other regions, Europe, some of the countries, five countries or six, seven countries, we work direct. The other, we work through distributors. Once you work through distributor, you get to recognize only the transfer pricing. By definition, the top line is lower. Generally speaking, not only for aesthetic capital equipment, overall for med tech, usually U.S. tends to be the region with the highest prices all around the world. It tends to be the most profitable region. Thank you. Maybe if you can have more detail on what you're seeing outside of the U.S., is that getting a touch softer in recent months outside of the U.S.? You mean from the economy point of view? From for InM ode. Yeah. Impacting InMode. How has it been on the end consumer and outside of the U.S.? I mean, we discussed the pressure in the U.S. Outside of the U.S., has it been a bit softer in recent months? Or yeah, if you can spend more time on discussing outside of the U.S. We are currently spending a lot of management attention outside the U.S. Also in the U.S., but we're in the process of establishing another two subsidiaries, one in Argentina and one in Thailand. We're planning on another two in 2026, in the beginning of 2026, since we want to go direct in major countries and not through distributors. Developing a country, hiring the people, starting to launch the product, doing regulation. It's a time and management attention-consuming process. That's one thing. Second, in all of our subsidiaries in 2024 and 2025, we spent time to create stability and to hire more salespeople and to expand the market. We start seeing the result. As Yair said, on the first quarter, Europe performed not bad at all, also Asia, compared to the big slowdown that we had in the U.S. I believe that this is because of the time that I myself and other people in the company are spending in those territories. In January, we have a major conference in France. We launched Ignite and OptimasMAX in Europe at that time. We had another major conference in Monaco. Next month, beginning of next month, I'm flying to Bangkok to do a distributor and subsidiaries meeting to introduce new product. We do everything we can because, for example, we believe that Asia is growing much faster than the U.S. as far as a steady, especially China. We are planning to do some kind of direct operation in China as well. Compared to the U.S., and you have to remember that in the ROW or U.S., we're dealing with 27 different regulatory bodies and 25 different languages. We have to cope with all of them. It is not so easy for a relatively young and small company like us, but we are not giving up in any market. We are supporting the market, even if it is small. Maybe in the future, it will grow. Whenever we can go direct, we will establish direct operation. Thank you. That's very helpful. I don't know if Yair, you have any comments on what you're seeing outside of the U.S. versus U.S. I think Moshe covered it. We made some management changes in all U.S. versus in Europe and Asia in the past few quarters. We established almost one, two, I would say even two subsidiaries every year in the last few years internationally. We start seeing the results. Okay. Moshe, the international expansion that you mentioned, is that this year or is that later on? No, no. The companies that I mentioned have already been established. We hired people in Thailand. We hired people in Argentina. Hopefully, they will start and launch sometime in the third quarter. We're not waiting for the next year. The next year, it will be another two countries. Okay. Thank you. Can you maybe come back on the management changes that you made and maybe any progress hiring for a North American segment? If you can discuss Dr. Aaron Krieger's focus versus your previous CMO? Oh, not COO. CMO. CMO. CMO, yeah. He's Chief Medical. Okay. Let's start with the U.S. Yes. We made some management changes there, which were required. The U.S. is the big country. Therefore, I have decided that the U.S. needs to be managed with two, I would say, I do not want to call it branches, but two arms, one on the east and one on the west with two central management. They both report to me. I'm spending some time every month in the U.S., at least a few days. I will be there in June. I will be there in July. I'm doing a management meeting, and I'll be there. I'm in direct contact with all the VPs, the two VPs, one of the east and one of the west. We're changing the organization as we believe the market is developed. I believe that now the management is better of the U.S. It was centralized all U.S. to one management team, and it was too big. Now, as we go to the CMO, yes, we change the CMO. Erwan is now based in Israel. He's an aesthetic doctor with 30 years of experience in medical aesthetic, in all types of medical aesthetic. And he's now responsible not just on the U.S., but also all over the world. He just came from the U.S. yesterday. We had a few conferences there. I believe the management of the medical team is better with Erwan. Thank you. Can you discuss the health of your balance sheet and liquidity and what are your capital allocation priorities today? Should we expect continued buybacks? ` In the last, and I believe we said that in the earnings call, in the last 12 months, we bought back $412 million of stock. If you take into two years or a little bit more than two years, we bought back $508 million of stock. We started with, I don't know, $50 per share and ending up with $15 per share. We did it in the most tax-efficient way because this is what the Israeli IRS allowed to do buyback without paying dividend tax. What will happen between now and the end of the year? All the options are on the table. Doing another buyback, M&A, dividend, everything is on the table. It depends how the market will develop. As you know, we tried to do two acquisitions, but we failed because probably the price that we offered was not good enough. If the opportunity will present itself on a company that synergizes with our product line or complements our product line, we will do an acquisition. It's not that we don't want to. I know that some shareholders believe that buyback is the only way to allocate money back to the shareholders. We believe that there are some others. I don't think that, I mean, listen, we made a billion dollars between 2017 until today, a billion dollars in profit. Out of which $508 million, we did buyback. We want to do it carefully. That's what we're saying. We're not saying we will not do, but we want to do it carefully. Again, in the last 12 months, we did buy back 27% of the company. This is a significant number. We are not against buyback, as you can see. We went very aggressive with the buyback in the last year. We continue to look at that as an option together with some other options. Thank you. You mentioned M&A. I know that in our previous discussion, you mentioned interest in neurotoxin and fillers. Is that still a category of interest, or what are your category of interest? Yeah, absolutely, yes. Because every doctor who does aesthetic procedures using fillers and toxin. This is why we gave one proposal to a toxin company and one proposal to a filler company. At the time, we thought that this is a good price, which is above the market price. We did not receive any response from one. The second one actually was a negative answer. By the way, we made another offer to a medical hardware company, but not officially. I talked with the chairman, and I said, "Are you willing to discuss with that acquisition in the range of X, Y, Z?" The answer was no. I believe they regret that. Thank you. We have been discussing GLP-1 with other players in InMode as well. I think you have been quite vocal about GLP-1, given the body contouring business. Has it materialized? Are you seeing it now? We know that fillers are discussing it more and more. Yeah. I'm not sure if it's accurate that we were vocal about GLP-1. When we were asked about GLP-1 in the context of, "Will the GLP-1 come and take away the fat-killing business from InMode?" we said that GLP-1 treats only one aspect of body contouring, which is killing fat, which is sometimes not the most difficult thing to do. To tighten skin, improve the quality of the skin, this is something that you cannot do with GLP-1. Especially for patients with GLP-1, that tends to lose a fairly high volume of fat in a fairly short time. Many of them end up with loose, saggy skin. This is exactly where our procedures can come into play, especially some of our minimally invasive procedures. We believe that GLP-1 will do good to our business. To the industry of the world. Because we're basically specializing in skin tightening and melting fat as well simultaneously. Nobody else can do that. We have a few minutes left, so feel free to send more questions. Maybe if you discuss the steps that you're making for when the market recovers. How we prepare the organization, how we prepare the organization for the time when the market is coming back. Moshe, you want to take this one? I believe we're well prepared. We have the sales team. We have the product. We have the R&D team. We continue to develop product to bring them to the market. I believe we never lose the momentum. Therefore, we're ready for that. Thank you. Do you think the category—and you said we're not there yet—do you think the category might come back stronger after the delayed procedures? There are some analysts and companies that have this narrative that all the patients that delayed aesthetic procedures, and that's the drop in demand for aesthetic procedures that we see now. When things improved, those patients would come back and would need to do even more treatments because they neglected their skin for so long. Again, we are not pushing this narrative at all, but we are saying patients and consumers would want to come back and start treating their skin. We don't count on over-demand, let's put it this way. We do expect the demand to come back. Any final comments and other points that we haven't discussed you'd like to mention? Moshe? Final comments? No. I believe you covered most of the issues that need to be covered. Great. Thank you very much, Yair and Moshe. Thank you very much. Thank you. If you have any follow-up questions, let me know. Otherwise, thank you very much, Moshe and Yair, again, for your support of the Aesthetics Day this year again. We will take a few minutes break, and we will have our last session going back to facial injectables with Evolus. Again, thank you very much for your time today. Thank you for having us. Are we the only medical aesthetic? The capital equipment. Equipment company that you cover? We don't cover any other. Not the only one, but the only one attending this year. Oh, okay. Yeah. This year has been mostly. I'm talking about equipment company, not injectable. Yeah, we are the only. Yeah, yeah. I also cover skin, Beauty Health. Oh, Beauty Health. Yeah, the HydraFacial. So we discussed that with Yair, but they're not attending this year. But I also cover another capital equipment. Thank you very much. Thank you very much.