Afternoon. Thanks for joining us again at the 24th Annual Needham Healthcare Conference. I'm Mike Matson, and I lead the MedTech and Diagnostics Equity Research Team at Needham & Company. I'm pleased to introduce InMode. Presenting from InMode today, we have CEO Moshe Mizrahy and CFO Yair Malca. Instead of a standard presentation, we are going to do a Q&A session. If you do have questions that you would like to ask, you can submit them electronically through the Needham website, conference website, that is, or feel free to email them to me at mmatson@needhamco.com, and I will do my best to fit them in. With that, we're going to go straight into the questions here. I know that it's been a kind of a really tough environment for InMode and aesthetics more broadly. Maybe we can just start out by getting your latest view of kind of the macro environment with things like interest rates, financing availability for your customers. I know rates have kind of come down a little bit, but I do not know if that has filtered through to the rates that your customers are seeing. Just trying to get a feel for kind of where things stand right now. Thank you, Mike. The first quarter of 2025 is a continuation of what we experienced in 2024. We do not see yet improvement. Therefore, I mean, as we gave guidance for 2024, and we said it will be similar to 2024, 2025 will be similar to 2024, we believe that that is what is happening. The fact that we see some kind of new inflation does not help reducing interest rate and does not help reducing interest rate for capital equipment, which is a leasing vehicle. Therefore, the leasing interest rate is still high. The fact that the stock exchange crashed a little bit did not help because doctors are looking on the stock exchange, and they realize they lose money, and maybe they can delay buying equipment for $100,000 and more. Q1 was not something that we can say that we see the light at the end of the tunnel. We do not see it yet. We work hard. Unlike other companies, we decided to keep the team, and we are not laying off anybody, not in the sales, not in marketing, not in R&D. We continue to develop the regular project. I believe that the only thing we can say is that we need to wait. Yeah. Okay. Just as far as, you know, so that question was aimed kind of more at the physician, customer, or I guess, you know, clinician, customer base. You know, the other thing that's happened is consumer confidence has gotten a bit worse. What about the demand, the kind of patient demand for these procedures? I mean, are you seeing that get any worse, or is that kind of the same as it was early, you know, late last year? Consumer confidence went down in the last two months, and this is not helping the doctors and not helping us. We do not see a reduction of the numbers of treatment are not coming down, but we do not see an increase in the numbers of treatment taking into consideration that we added more capital to the market, more equipment, more machines. The total volume of disposable in Q1 is quite similar to 2024, as like platforms and the rest. Doctors are still seeing patients, but we need to say that the treatment of InMode is much more expensive than the treatment of typical laser for skin rejuvenation, hair removal. If a typical laser treatment is about $300-$400 or maybe $500, we are dealing here with Morpheus or BodyTite, FaceTite, or the new Quantum. We are talking about $3,000-$5,000 per treatment. This is a little bit more difficult for people to decide, especially when the consumer confidence is down and the market is in the slowdown. That also does not help the doctor to make a decision that they want to buy now. Once we start seeing a reduction in the interest rate, and that will lead to a reduction of the interest rate for capital equipment on leasing packages, it does not have to be back to 7%-7.5% as it used to, but it will come down from 13%-13.5%, or maybe 14% gradually, and we see a trend, I think that will be the beginning of a new momentum. Unfortunately, due to the fact that we see some sign of inflation again, I do not see the interest rate coming down fast enough to affect us in the next quarter or two. Yeah. Okay. How much of this is sort of a global phenomenon versus just in the U.S.? I mean, are you seeing any better trends in any of the key foreign regions that you're operating in? The situation in Asia is similar to the U.S., and in some countries, even worse. Canada, for example, the slowdown is, I would say, even worse than the one in the U.S. Europe is a dependent country. In Western Europe, I believe we see a better sign than what we see in North America. Latin America is still suffering from an exchange rate situation. Yeah. Okay. Maybe can you just talk about one thing I've wondered with InMode is you've sold a lot of systems over the years, right? Your installed base is very large now. Some of those systems have got to be getting older. How old do you think the average unit is out there, and how close? I mean, is there a potential to see some sort of replacement cycle here where these things just get to a point where the doctors are just looking to upgrade or replace them, and then that'll drive a new leg of growth? We have currently less than 30,000 systems worldwide. I would say between 28,000-29,000. We are deploying around 4,000-5,000 systems every year worldwide. If we take into account that we started to sell and to commercialize the product in 2016 when we got the first FDA, that means that we are eight years real on the market. The average device, the average is about, I would say, between three to four years old. The lease package is for five years. We start seeing some doctors replacing the BodyTite with Ignite, the regular Optimas with OptimasMAX. That happens when the first lease is fully paid. We are doing it. We are taking the old system back from them, and they buy new stuff, and we give them a discount from the old system, which we collect. Two reasons for that. We do not want to see the system in the second market. Second, we bring them to Israel, and we refurbish them and sell them in some countries that cannot afford paying the full price of OptimasMAX or Ignite. Unlike the laser industry, where 100% of their business is replacement, because just in the U.S., probably there are, I do not know, between 60,000-75,000 or 80,000 devices active, laser equipment, we are not here or there. We are not there yet. In the U.S., we have 12,000, maybe a little bit more than that. We are still, I do not want to say we are in the embryonic stage, but we are just entering the growth stage. Okay. So that number, you're saying 60,000-70,000 laser machines, which is a more mature market. But you think that's the right, that's the potential installed base that you could eventually reach with your systems over the long run? Yes, absolutely. Okay. Because doctors want something which they can charge more than just $300 per hair removal treatment. They want to do body and face reshaping. In order to do it, they need to penetrate deep into the subdermal fat. The only energy that can do that is bipolar RF, which you can adjust and determine what is the level of depth that you want to enter, either Morpheus up to 7 mm or BodyTite FaceTite up to 2 cm. The new Quantum, its range is between 0.5 cm to 2-2.5 cm. You need something a little bit minimally invasive that you can perform minimally invasive surgical procedures in the clinic under local anesthesia. That is what we developed. The new platforms that we launched to the market last year in 2024, the Ignite with the Quantum and with the new Morpheus Burst and Morpheus Scale, I will explain in a second what these two technologies are, very successful. They are replacing BodyTite, and they are replacing Renuvion, and they are replacing some competition that doctors are not happy with because these are very old technologies. Basically, we came to the market in the middle of 2024. You know, maybe we did a mistake bringing two new products, very, very, I would say, sophisticated to the market in the middle of the slowdown. I don't know. I'm sure you remember that in the second quarter of 2024, everybody was under the impression that the second half of 2024 will start seeing the momentum and the slowdown. I don't want to say it will disappear, but we'll see some kind of movement. It didn't happen. Yeah. Therefore, although the expectation from these two platforms was very high, we have not yet materialized all the potential. It will take some time, or maybe we need to wait for a little bit better time. The Quantum is a very unique product for skin tightening. It's basically single cannula, bipolar on a single cannula, which works on pulses and not continuous energy. They do not measure temperature. They measure impedance, which is much faster to react. Therefore, it's safer than BodyTite and FaceTite. Today, the potential is high because of all the GLP-1 drugs for fat reduction and fat killing. At the end of the day, you have loose skin, and Quantum is the right—this is the reason why we develop it. It's the right, I would say, modality to treat loose skin after all kinds of liposuction or just fat reduction injection. The Morpheus, we developed two new features on the Morpheus. You can determine on one pulse going into three different depths. For example, if you want to go to the 7 mm pulse and then went up a little bit, 5 mm, and then 3 mm, instead of punching the skin three times, you punch it once, and you deliver energy in three levels. You basically treat the skin all the way from the subdermal depth up to the epidermis. Now, there's another technology that we developed which is called Scale. You basically determine how much energy you want in each depth. You can say, "Okay, I want 50% of the energy in 7 mm. I want 30% on 5 mm and only 20% on the 2 mm depth in order to eliminate any possibility of adverse effect." It's worked just beautifully. We have a patent on it. It was protected. Also, the Ignite and the Quantum are protected. We believe that these are the right replacements for the two old new technologies that we have. One is the BodyTite, the radiofrequency-assisted lipolysis. The second one is the regular Optimas with the OptimasMAX. The potential is high, and we need to materialize it. We're still waiting for the best time in order to invest additional marketing money and bring it to the market in a very, I would say, full scale. Okay. Just back to something I asked before. I just want to be clear on this. You're saying you think there's potential to have 60,000-70,000 or somewhere around that number in the U.S. of your systems. Because 12,000, I mean, I guess I've been wondering, 17,000 plastic surgeons and dermatologists. It doesn't sound like you're worried about market saturation, I guess. Despite that number of your core customers, I know there's other people that use the products like GYN and gynecologists and ophthalmologists and things like that. This is correct. We are not in a stage that we start worrying because of market saturation. For example, when the market is saturated, like the regular laser industry, you see prices are coming down. InMode prices are not coming down. I mean, of course, when we do a trade-in, we recognize only less than the full price, but the prices of the system, of the platforms, are stable. We did not bring prices down. We did not raise it. We do raise some when we come up with a new platform like the Ignite and the OptimasMAX, but we don't go back and raise prices on all the other Empower and Envision, Hands- Free, etc. Therefore, we don't see any saturation yet. I mean, we believe the market is still capable to get at least twice as much as we did so far. All right. Clearly, Ignite and OptimasMAX did well in 2024, despite the market environment not being great. I guess I've had some investors ask, "Hey, is this something where they kind of launched it? It kind of ran its course in 2024, and now you've sold, kind of got to a level, and then it starts to level off." The unit numbers of those, or I guess what I'm getting at is, do you think that this is kind of like a multi-year product cycle where it can ramp over multiple years, or is it more of a situation like if I'm thinking back to Envision and Empower, Empower, you kind of launched it, went up in maybe two years, and then kind of flatlined after that? In the regular time, you're right. We sell the first year is the launch year, and then we see a growth. We showed it in between 2018 to 2022 with less platforms in our portfolio. We grew very nicely until the second half of 2023. Right now, we believe that in 2025, the numbers of systems that we will sell almost in every category will be similar to 2024. We're not changing, and that's the guidance that we gave. We see no reason to change it now. Basically, there are some that the OptimasMAX and the Ignite will sell more probably than last year. We will sell less BodyTite and less Optimas. In 2024, we sold both versions. Right now, nobody wants to buy the BodyTite or the Optimas. They want the OptimasMAX and the Ignite, which are the new technologies. Therefore, I believe the numbers of systems that we will sell out of these two platforms will be at least as high as 2024. Okay. Got it. I did have somebody email a question. I wanted to try to ask this as best I can. Essentially, your commentary around the first quarter, and I say this knowing you haven't pre-announced, but it sounds like things were kind of flat-ish in terms of consumables. I think you said something about similar trends. When you say similar trends, do you mean similar kind of revenue or volume run rate, or do you mean a similar growth rate? In other words, if sales were down last year, you're seeing similar trends. Do you mean it's playing down, or are you saying it's flat, I guess? If you're not comfortable answering, it's fine. No. Sales last year in 2024 was close to $100 million less than 2023. We face it. I mean, that's fact. Therefore, when we started 2025, we said we will not go back to 500. The guidance was $400, $400 million, similar to 2023. Plus minus, we believe that in 2025, the seasonality will go back to normal. The seasonality in this industry, everybody knows that, is 20% in the first quarter, 25% in the third quarter, and then 20% and 30-35% on the last quarter. That's the seasonality, the regular seasonality for many years, and I'm many years in this industry. I mean, last year, because of the war and because of backorders and because of many reasons, the seasonality did not behave as it used to behave. Therefore, in 2025, now the war is over, and the factories are working fine, and we do not have any supply chain issue. We do not see why it will not go back to the same seasonality pattern as we have seen in many years until 2024. We will see. Okay. I mentioned Empower and Envision, but can you give us an update on those products? I mean, was my characterization of those correct in the sense that they grew for maybe two years and kind of flattened out, or are you still seeing growth there in terms of units or dollars? Every platform, Mike, that we develop is potential for new indication on the Empower, okay? We're now working on two major indications. One is urine incontinence, which we have the indication from the FDA, but we would like to have it on another handpiece, and overactive bladder. Overactive bladder, almost 50% of the women in the world have some kind of overactive bladder. Today, the treatment is very tough on them. We believe, and we did a pilot, and we just published a public article on peer review with a pilot study on overactive bladder using Morpheus8V up to 7 mm. That study was required by the FDA in order to get an IDE protocol to start the real study, pivotal study to get the indication. If we will be able to prove and to get the overactive bladder indication from the FDA using Morpheus on a seven-minute treatment, one treatment, the Empower has a new life. The Empower becomes a new platform, although it's the same platform, the same hardware, the same RF, whatever. Now you have two new handpieces, two new indications, and much bigger the entire medical aesthetic industry altogether. On the Envision, we have the same issue. We are submitting pre-submission to the FDA to get approval on the protocol to run a study, pivotal study for dry eye indication. Once we get the indication and we can claim that we are the only one in the world that treats with bipolar RF dry eye treatment, it will open another new life for the Envision. The idea is to develop platforms that you can add more indication in the future in order to extend the lifespan of the product. Exactly the same with the Ignite. We're developing now two new handpieces to complement the portfolio handpieces of the Quantum. When we say we will come up with two platforms, it doesn't have two new platforms, but it's two new lives, two new indications to existing platforms in order to grow with the sales of the product of these platforms and in addition to sell upgrade to existing users. That's basically the main idea behind all the research that we're doing right now. Okay. Just to be clear, on the Women's Health and Empower product, you mentioned two handpieces, two indications. One was overactive bladder. The other one was incontinence. I guess I thought there was already an incontinence handpiece. Incontinence. We have incontinence with the VTone. We have the. Oh, the VTone. This would be with Morpheus. This is with the Morpheus8V. Yes. Got it. Okay. All right. Okay. Yeah, that makes sense. What you're trying to do effectively is just expand capabilities of existing platforms to try to bring new life to those and increase their appeal to the customers. Increase the numbers of indications that these platforms can perform. By the way, we need always to remember, Mike, we are an aesthetic company, a medical aesthetic company. Every platform that we will develop will have some aesthetic capability. For example, the Envision. The Envision has the Lumecca, which is a great IPL for full skin rejuvenation, not just for dry eye, pigmented lesion, vascular lesion, a little bit tightening, fine line. We're adding the Morpheus, the regular Morpheus for face, in addition to the Forma-I for the dry eye. The doctor can enjoy both his medical specialty and also some new stuff or new potential on aesthetic. The same with Empower. The same with Empower. Yeah. We're not building systems with one modality. We try to extend the modality so it will be more versatile. Doctors today stuck with the reimbursement, which is going down and down. They want to have some private money indication as well. Yeah. Okay. In terms of aside from the things that you just talked about, I think you'd said on recent calls that you were going to launch two platforms in 2025. One was the fractional CO2 laser, and the other, I'm not sure. I don't think you'd ever disclose what the other one was. I don't know if you can do that now, but I'm assuming it wasn't one of the things you just talked about in terms of the gynecology products or not. Maybe it was. I don't know, but can you tell us what the other platform is or not yet? We launched the Solaria, which is CO2. Solaria? Okay? That's the name of the platform, the CO2. Fractional CO2, and it can also be continuous CO2, surgical and non-surgical, and ablative. I mean, it's a very nice product, very nice product, very simple, very basic, not very complicated. The market is saturated with CO2, and we sold many units in the first quarter. We didn't believe in the numbers. We have a backlog now. We have a backlog. The other product, there are three alternatives, which I don't want to talk about them right now, but there are three new platforms that we're developing right now for three different indications. We're in the last stage, and probably it will not be launched before we realize and we feel that there is some kind of start new momentum. After the market starts to improve, essentially, is what you're saying, the aesthetic smartphone? Something toward the end of the year. Okay. No, that's fine. The fractional CO2, I think if I recall correctly, you just noted it's kind of a crowded market, but I think there's some sort of synergies or something with some of the other procedures that's getting used with some of the other procedures or products that you guys make. Is that the case? That's kind of why it's important to offer that? The CO2 that we brought to the market does not have the handpiece for vaginal treatment, only for aesthetic. Okay. If I may add, what we've seen in the market is the trend that many of our doctors, our customers, are combining Morpheus8 treatment with CO2 laser when they offer procedures to their patients. We wanted this doctor to buy everything from us, both the Morpheus8 and the CO2, and not just buy the Morpheus8 from us and then go to a competitor to buy a CO2 laser. That's why we thought it would make sense for us to offer both. Yeah. Okay. I think that's awesome. I mean, the CO2 laser, it's one modality. It's only CO2. We cannot add Morpheus to this platform. The doctor operates with two platforms in order to combine the treatment. Yeah. Yeah. I understand. Okay. We are starting to run out of time here, so I did want to make sure that we get to the tariff question. I think Israel has, what is it, 17%? 17%. What's that? 17%. 17%. I mean, look, who knows what's going to happen? It could go away. Hopefully, for everyone, it goes away. If it does stay in place, I guess my understanding is you do most of your manufacturing there. I mean, is there any possible workarounds or anything you could do? Could you raise prices? Could you move manufacturing somewhere? I mean, I don't know where you'd move it to, maybe the U.S. or something. One thing we will not do. We will not move production to the U.S. because it doesn't make sense to us. Yeah. Fair enough. Yeah. Fair enough. Yeah. I mean, we are not in a position to answer this question now, Mike, because we're still learning what is excluded, what is included. We know that medical devices are not excluded, but some part of software and others, which we can claim we have software and we're selling the software as well. It's not just the platform. Software are excluded, I mean, exempt. And services are exempt, and we're giving a lot of services to North America. We will do everything by the law, by the law. We're not going to do anything to go around, but we will try to minimize it in the smart way. Yeah. Okay. All right. I guess the other topic that's gotten a fair bit of attention is just around the balance sheet and the amount of cash you guys have and buybacks and so forth. I think you stated pretty clearly your views on that with the response to the activist shareholder. Maybe just give us an update there. I think the plan is to kind of limit the buybacks to 10% a year because 10% of the outstanding shares per year, just given the tax implications in Israel. Am I summarizing that correctly? Yeah. So far, what we've done is to do up to 10% buyback a year because that was an easy decision for us to make up to this amount. The Israeli tax authority usually lets you do whatever you want without any tax consequences. Anything above that, this is something we need to discuss internally because it might have a similar tax implication as of distributing dividend. It's not like that we cannot do it. We can, but then it's going to be treated the same as dividend. Now we need to decide if they're treated the same, should we maybe consider dividend? Once we conclude the first 10%, all the other options are on the table: additional buyback, maybe dividend. Again, we don't forget for a second M&A. Again, assuming we're going to complete soon the buyback program that we announced earlier this year, that means that within practically a year, we acquired almost 30%, 27% to be exact, of our outstanding share within a year. I think we've done a pretty aggressive share repurchase program so far, especially in the past year. I think we need to have a serious discussion of what to do next. Obviously, it didn't help the share price, as you can see. Nevertheless, we have been very aggressive with the execution of the share repurchase so far, and especially in the past year. We should discuss and continue how to proceed. Okay. You did mention M&A, so maybe just give us your updated thoughts there. I mean, without being too specific, right, I mean, would you look at other types of aesthetics equipment? I know in the past, you've potentially talked about things like injectables, etc. We gave two offers. Both of them were injectables. One was filler and one was toxin. We thought that the price we offered was a great one because the way we calculated it is that it will be equated by one cent within 12 months of the acquisition to the EPS. Apparently, it was rejected twice from both companies. I do not know what was the expectation, but apparently, we did not meet the expectation. Right now, we are not active in M&A. We did not hire a bank to help us. If the opportunity will present itself, if it is interesting, not only in aesthetic, also in gynecology, women's health, ophthalmology, ENT, if we will find something that will help us to position ourselves in a competitive way in certain territory or in aesthetic, we will do it. Yeah. Okay. I mean, it's definitely encouraging that you're being disciplined and sticking to your guns there in terms of trying to do something that's at least not dilutive or minimally accretive. Okay. All right. I think we're almost out of time, and I don't see any more questions from the viewers. I think we're going to have to wrap up there. Thank you, guys. Appreciate it. I hope you had some good meetings at the conference. Thank you very much. Thank you. Thank you.