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Investor PresentationDecember 2024Driving Value in Dermatology Matching Patients with Clinics for a Win-Win-Win OutcomeNASDAQ: SSKN
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NASDAQ: SSKN Safe Harbor Statement 2 This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other factors. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements regarding product development, product extensions, product integration or product marketing; any statements regarding continued compliance with government regulations, changing legislation or regulatory environments; any statements of expectation or belief and any statements of assumptions underlying any of the foregoing. In addition, there are risks and uncertainties related to successfully integrating the products and employees of the Company, as well as the ability to ensure continued regulatory compliance, performance and/or market growth. These risks, uncertainties and other factors, and the general risks associated with the businesses of the Company described in the reports and other documents filed with the SEC, could cause actual results to differ materially from those referred to, implied or expressed in the forward-looking statements. The Company cautions readers not to rely on these forward-looking statements. All forward-looking statements are based on information currently available to the Company and are qualified in their entirety by this cautionary statement. The Company anticipates that subsequent events and developments will cause its views to change. The information contained in this presentation speaks as of the date hereof and the Company has or undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
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NASDAQ: SSKN About Us 3 STRATA Skin Sciences is a medical technology company offering advanced medical devices for the in-office treatment of life-altering dermatological conditions. $38B Market Opportunity Across Psoriasis, Vitiligo, Eczema, and Acne marketsExperienced Management with 20+ Year History in Dermatology MarketLeading Global Provider of Dermatology In-Office Medical Procedures NASDAQ: SSKNStock Symbol$2.96Stock Price (as of 11/26/24)4.2M Shares Outstanding (as of 8/12/24)$12MMarket Cap $8.4MCash & Equivalents* $15.2Debt*$19MEnterprise Value 501,726 @ $8.36 WAEP80,000 @ $8.80 WAEPOptions*Warrants*~39%Inside Ownership (%):Capitalization Table* As of 9/30/24
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NASDAQ: SSKN Addressing $38B Dermatology Market P s o r i a s i s - $ 2 0 . 1 B1, V i t i l i g o - $ 1 . 2 B2, E c z e m a - $ 1 1 . 8 B3, A c n e - $ 5 . 5 B4 4 30M Patients in the U.S.Psoriasis – 8M / Vitiligo - 5M / Eczema - 18M1) Fortune Business Insights Market Report 2019; 2016-2018 historical, 2019 base year, 2020-2027 projected2) Fortune Business Insights Market Report 2018; 2015-2017 historical, 2018 base year, 2019-2026 projected3) Market Data Forecast Analysis Report 2020; 2020 base year, 2021-2026 projected4) Strata Skin Sciences 50M+ Acne Patients in the U.S.
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NASDAQ: SSKN Affiliated Academic InstitutionsSTRATA has placed over 50 XTRAC® machines in residencyprograms across academic institutionsAffiliated Academic Institutions STRATA devices are available at over 50 academic institutes that offer dermatology residency programs 5
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NASDAQ: SSKN Management TeamSales and Operational Dermatology Experience Chief Executive OfficerDr. Dolev RafaeliV.P. FinanceJohn GillingsChief Operating Officer Shmuel Gov 6
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NASDAQ: SSKN STRATA Investment Highlights 7 Unique and Proven Business Model•Best-in-class Excimer Laser technologies•Recurring revenue driven by DTC and growing installed base⎼Installed base of 873 XTRAC® domestic devices for Psoriasis, Vitiligo, and Eczema treatments⎼Installed base of 135 TheraClear®X domestic devices for Acne treatments⎼Installed base of ~1700 XTRAC®and VTRAC®devices internationally•Providing “business in a box” for dermatology practices without an upfront capital spend by practices•Over 300 peer-reviewed, published clinical studiesA Win-Win-Win Business Model•For patients – safest, most effective, minimal side effects•For clinics – stable increased revenue base •For Payers – the cheapest treatment available Opportunity for Renewed Growth in U.S. in Recurring Revenue per Device•Re-emphasis on DTC marketing in U.S. with near-term opportunity of increasing recurring revenue/device by 40%•More rigorous sales and marketing strategy and process in place•Both initiatives could collectively grow revenue by double digit percent and help return the company to positive cash flow
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NASDAQ: SSKN 3Q24 Financial Highlights 8 Revenue•Total revenue $8.8M (-1% YOY) vs. $8.9M 3Q23•Global net recurring revenue $5.4M (+2% YOY) vs. $5.3M 3Q23•Gross domestic XTRAC®recurring billings $4.8M (-2% YOY) vs. $4.9M 3Q23•Revenue per domestic XTRAC®system $5,332 (+2% YOY) on 873 systems vs. $5,233 on 929 systems in 3Q23Gross Margin•60.3% (+430 bps YOY) vs. 56.0% in 3Q23Operating Expenses•$5.2M (-7% YOY) (excluding one-time accrual expense) vs. $5.6M 3Q23Operating Income•Non-GAAP operating profit (excluding accrual item) $128,000 •First time generating positive operating profit since early 2018
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Core Domestic Business Model
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NASDAQ: SSKN A True Partnership – A Complete Business Solution 10 +No upfront capital expense; instead, it’s a fee-per-use business model+Complete business solution includes a suite of value-added support services to maximize practice’s successClinical SupportReimbursement SupportCall Center SupportField Service SupportConsumables and PartsDevice UpgradesCo-pay SupportDTC Marketing P a r t n e r s h i pP r o g r a m
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NASDAQ: SSKN ~900 Partner Dermatology Clinics with 3,000+ Dermatology Providers Across the U.S. 11 Overview873 Partner XTRAC®clinics + >150 sold XTRAC® devices135 TheraClear®X clinics3 Regions / 23 Sales Territories / 1 National Accounts Manager15 Field Service TechsIn-house call center and insurance benefits team4 Clinical specialists
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NASDAQ: SSKN Practice Development Program•In-Office Patient Education Materials for psoriasis, vitiligo & atopic dermatitis:Patient BrochuresCounter CardsIn Office Branding•“Patient-Directed” marketing initiative:Patient Education MailingsOutreach ProgramsEblasts 1212
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NASDAQ: SSKN Marketing Support Drives Additional Patient Awareness 13 Patient EblastsDirect Mailers In-office BrandingSocial MediaTrade ShowsClinical Webinars
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NASDAQ: SSKN DTC Advertising Generates Direct and Indirect Appointments in Partner Clinics 14 See XTRAC®ad on Facebook, Google and Instagram Click on the ad to go to an XTRAC®page Leave their contact information In-house call center team confirms appointment and insurance benefits Show in the office Convert to XTRAC® Stay on XTRAC®Patient Journey
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NASDAQ: SSKN Leads Appointments RDX Charts (New Patient Charts) 1 2 13 DTC Model DriverCore Business Refocused to DRIVE Recurring Revenue Model$21.1MNet U.S. Recurring Revenue Significant opportunity to increase ARR back to 2019 levels using proven DTC strategies that should yield appreciable incremental revenue and at higher incremental margins, allowing the Company to become cash flow positive again$23.6M $16.8M $21.2M $21.6M $20.2M Change in US Recurring Revenue+12% -29% +26% +2% -6%1. Recurring Revenue model in practice.2. Pandemic reduces in-person appointments, companypivots to device sales over recurring model.3. Device sales model stays in tact aspandemic eases.15
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NASDAQ: SSKN International Sales Operations IndiaIsraelS. KoreaJapanChinaBahrain, Iraq,Jordan, Kuwait,Qatar, Oman, Saudi Arabia,UAEMexico•In-house Head of International Sales•39 international partner XTRAC®clinics (S. Korea, Japan) at 9/30/24•Capital equipment sales preferred model•Usage per device higher than in U.S. market•TheraClear®X equipment sales opportunity•Latin America & European markets untappedTotal International Install Base > 1,700 devices Markets added in 2023S T R A T A ’ s international markets$6,698 $5,286 $6,780 $12,180 $10,330 2019 2020 2021 2022 202316($000s)
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NASDAQ: SSKN XTRAC®: OverviewSafe,effectivetreatment150+ peer-reviewed clinical studiesPsoriasis treatment is the number 1 domesticuse for XTRAC®lasers – 80% of treatmentsOpportunities exist for expanding use for other approvedindications like vitiligo and eczemaClinical support team focused on:•In-office training•Best practices 17
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NASDAQ: SSKN Indicated for Chronic Dermatological Diseases Visible skin disorders can limit healthy psychosocial development and have profoundly negative consequences on quality of life3-5VITILIGO~7.5 millionadults in the US1,aPSORIASISATOPIC DERMATITIS~2–3 millionadults in the US2~16.5 millionadults in the US31. Armstrong AW et al. JAMA Dermatol. 2021;157(8):940-946.aIncludes people 20 years of age and older. 2. Gandhi K et al. JAMA Dermatol. 2022;158(1):43-50. 3. Fuxench ZCC et al. J Invest Dermatol. 2019;139(3):583-590.4. Elbuluk N, Ezzedine K. Dermatol Clin. 2017;35:117-128. 5. Armstrong AW, Read C. JAMA. 2020;323(19):1945-1960.18
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NASDAQ: SSKN Induces Apoptosis of T cells and Keratinocytes in Psoriatic Plaques 19 BaselineAfter 2 tx After 4 txXTRAC®Psoriasis Clinical Protocol - 6.2 treatments t o PASI* 75 Induces apoptosis in T cells and keratinocytes1T cellKeratinocytesPsoriasis:Autoimmune disease that causes the skin to regenerate faster than normal; characterized byred, itchy scaly patches*PASI –A 75% reduction in the Psoriasis Area and Severity Index (PASI) score (PASI 75) is the current benchmark of primary endpoints for most clinical trials of psoriasis Tx- treatments1. Abrouk M et al. Psoriasis Targets Ther. 2016;6:165-173. 2. Esmat S et al. Dermatol Clin. 2017;35:171-192. 3. Oh CT et al. Lasers Surg Med. 2016;48(6):629-637, XTRAC® Targeted 308nm UVB
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NASDAQ: SSKN Induces Melanocyte Proliferation and T cell Apoptosis in Vitiligo Patches 20 BaselineAfter 18 tx After 21 txXTRAC®Vitiligo Clinical Protocol - >75% repigmentation in less than 20 treatments1Vitiligo:An autoimmune condition due to a loss of melanocytes, characterized by white patches of skin losing its pigmentLong lasting resultsNo pigment loss during 2-year follow-up280% facial repigmentation retention at 3-year follow-up3 XTRAC® Targeted 308nm UVB Stimulates melanocyte proliferation and induces T cell apoptosis2MelanocyteT cell1. Shi Q et al. Photodermatol Photoimmunol Photomed. 2013;29(1):27-33. 2. Esposito M et al. Clin Exp Dermatol. 2004;29:133-137. 3. Hong SB et al. J Korean Med Sci. 2005;20:273-2782. Hadi S et al. Photomed Laser Surg. 2006; 24(3):354-357 3. Sethi S, Silverberg NB. J Drugs Dermatol.2022;21(7):773-775.
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NASDAQ: SSKN Source: National Psoriasis Foundation XTRAC®is a Preferred Treatment for 90% of Psoriasis Patients (<10% BSA) 21
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NASDAQ: SSKN Has Clinical and Economic Competitive Advantage 22 BiologicsNon-Biologic SystemicsTopical SteroidsNB-UVBXTRAC® 32K-68K1K1K-7K3K-9K1K-3KApproximate Costs ($)50-70%48%75%71%92%Clinical Outcomes12143105Speed of Onset12-65522948018Days of Actual CareContinued with maintenanceContinued with maintenanceContinued with maintenanceContinued with maintenance2.5 MonthsRemissionMild-SevereTemp – LastingMild-SevereTemp – LastingMild-ModTemp –LastingMild TempMild TempAdverse Events 1. Marchetti A, Bhutani T, Lockshin B, Siegel DM, Behringer F. Therapies for Psoriasis: Clinical and Economic Comparisons. J Drugs Dermatol. 2020 Nov 1;19(11):1101-1108. doi: 10.36849/JDD.2020.5510. PMID: 33196750
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NASDAQ: SSKN XTRAC®Adds (Delegated)* Reimbursed Recurring Revenue for Dermatology Partners 23 2024 National Average Medicare Payment RateDescriptionCPT Code$152.92Excimer Laser Treatment for Psoriasis (<250 sq cm)96920$167.65Excimer Laser Treatment for Psoriasis (250 - 500 sq cm)96921$228.23Excimer Laser Treatment for Psoriasis (>500 sq cm)969223020Number of Treatment/ Week4848# of Weeks / Year1440960Total # of Treatments / Year$190$190Average Revenue Per Treatment$273,100$182,067Physician Gross Revenue (Annual)* Subject to state legislation** Patients who are eligible to receive CPT code 10040 services are those with acne lesions such as milia, comedones, cysts, or pustules that require surgical intervention. This may include patients with severe or persistent acne that hasnot responded to other treatments, or those with large or painful cysts that need to be drained or removed. Determination of the appropriate usage of the CPT code is made by the treating physician.
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NASDAQ: SSKN TheraClear®X: OverviewSafe,effectivetreatmentPeer-reviewed clinical studiesOpportunities exist for expanding use forexpanding the installed base to clinics using reimbursed acne surgery proceduresClinical support team focused on:•In-office training•Best practices 24
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NASDAQ: SSKN Acne is the Most Common Skin Condition in Dermatology•Up to 50 Million Americans affected annually2•~85% of all adolescents experience some degree of acne from the ages of 12 to 24 years3•>50% of US women experience acne in their 20s4•Acne occurring in adults is increasing5 #1skin disease in the US1 1. Bickers DR et al. J Am Acad Dermatol. 2006;55:490-500.2. Tan JKL, Bhate K. Br J Dermatol. 2015;172 (Suppl 10:3-12.3. White GM. J Am Acad Dermatol. 1998;39:S34-S37.4. Collier CN et al. J Am Acad Dermatol. 2008;58:56-59.5. Holzmann R, Shakery K. Skin Pharmacol Physiol. 2014;27 (Suppl 1):3-8.25
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NASDAQ: SSKN Photopneumatic Technology Combines VACUUM with PULSED BROADBAND LIGHT 26 •Clears bacteria and follicular contents from pilosebaceous unit, C acnes are removed both mechanically and thermally from the active acne lesion. Reduces sebum production cleans pores by extracting sebaceous and follicular materiallight activates porphyrins to directly reduce C acnes and sebum productionskin normalizes upon completionPlace Extract Treat Completecontactwith treatment area BaselineAfter 4 tx1.Photos courtesy of Suneel Chilukuri, MD.
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NASDAQ: SSKN Addresses Limitations of Existing Acne Therapies 27 Visible improvement of acne lesions as early as after second treatmentVisible improvement of skin texture, pore size, and perilesional erythema after the first few treatmentsTime to improvement Initiation 4 to 6 treatments, scheduled 1-2 weeks apartMaintenance1 to 2 months apart as neededTreatment regimen Procedure~15 minutes per treatmentNo pre-treatment with topical analgesicsComfortablewith no down timeCan be delegated(depending on state laws) Systemic and topical acne treatments× Are often associated with poor adherence due to forgetfulness, inconvenience, and adverse effects1,2× Typically require 3 to 6 weeks to achieve visible improvement3× Can be associated with skin dryness, irritation, burning, and bleaching effects2TheraClear®XComfortable in-office treatment with no down-timeVisible improvement of acne lesions as early as after second treatmentVisible improvement of skin texture, pore size, and perilesional erythema after the first few treatments1. Snyder S et al. Am J Clin Dermatol. 2014;15(2):87-94. 2. Tuchayi SM et al. Patient Pref Adherence. 2016;10:2091-2096 3. Fox L et al. Molecules. 2016;21:1063. doi:10.3390/molecules21081063. 4. Data on file. STRATA Skin Sciences.
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NASDAQ: SSKN TheraClear®X Adds (Delegated)* Reimbursed Recurring Revenue for Dermatology Partners 28 2024 National Average Medicare Payment RateDescriptionCPT Code$114.61Acne Surgery, which Involves the opening or removal of multiple milia, comedones, cysts and pustules.100403020Number of Treatment/ Week4848# of Weeks / Year1,440960Total # of Treatments / Year$114.61$114.61Average Revenue Per Treatment$165,038.40$110,025.60Physician Gross Revenue (Annual)* Subject to state legislation** Patients who are eligible to receive CPT code 10040 services are those with acne lesions such as milia, comedones, cysts, or pustules that require surgical intervention. This may include patients with severe or persistent acne that hasnot responded to other treatments, or those with large or painful cysts that need to be drained or removed. Determination of the appropriate usage of the CPT code is made by the treating physician.
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SUMMARY
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NASDAQ: SSKN Financial MetricsUnaudited quarterly results30 Q3 2024Q2 2024Q1 2024FY 2023Q4 2023Q3 2023Q2 2023 Q1 20232022202120202019$4,799$4,735$4,578$19,622$4,947$4,883$5,057$4,735$22,271$22,071$16,901$24,590U.S. Gross Recurring Revenue873882907923923929930916909890832820U.S. Installed Base (XTRAC® Devices) $5,497$5,369$5,047$5,315$5,360$5,256$5,438$5,169$6,125$6,200$5,078$7,497Average Gross Recurring Revenue/device/Qtr$8,797$8,435$6,754$33,358$8,689$8,852$8,250$7,567$36,161$29,977$23,090$31,586Revenues, net3,4903,4983,67414,897 3,888 3,898 3,932 3,179 14,393 10,127 8,956 11,316 Cost of revenues5,3074,9373,08018,461 4,801 4,954 4,318 4,388 21,768 19,850 14,134 20,270 Gross profitOperating expenses:2431992411,317 380 248 374 315 1,029 1,434 1,274 1,002 Engineering and product development3,0483,0143,01812,956 2,760 3,038 3,416 3,742 15,301 13,106 9,038 12,003 Selling and marketing1,8882,2102,71010,508 2,818 2,283 2,490 2,917 10,087 9,712 7,898 10,275 General and administrative--5,9692,284 2,284 -------Impairment of goodwill$5,179$5,423$11,938$27,065$8,242$5,569$6,280$6,974$26,417$24,252$18,210$23,280Total Expenses$128($486)($2,889)($8,604)($3,441)($615)($1,962)($2,586)($4,649)($4,402)($4,076)($3,010)Loss from operations$1,493$1,012($1,279)$957 $520 $1,291 ($95)($759)$2,557 $1,467 $1,492 $3,036 Non-GAAP adjusted EBITDA($515)$591($804)($519)$1,506 $(997)$175($1,203)($924)$1,508 $2,096 $2,229 Net cash provided (used) by operating activities (All numbers below in $'000s except for U.S. Installed Base)
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NASDAQ: SSKN STRATA Investment Summary Unique and Proven Business Model•Best-in-class Excimer Laser technologies•Recurring revenue driven by DTC and growing installed base⎼Installed base of 873 XTRAC® domestic devices for Psoriasis, Vitiligo, and Eczema treatments⎼Installed base of 135 TheraClear®X domestic devices for Acne treatments⎼Installed base of ~1700 XTRAC®and VTRAC®devices internationally•Providing “business in a box” for dermatology practices without an upfront capital spend by practices•Over 300 peer-reviewed, published clinical studiesA Win-Win-Win Business Model•For patients – safest, most effective, minimal side effects•For clinics – stable increased revenue base •For Payers – the cheapest treatment available Opportunity for Renewed Growth in U.S. in Recurring Revenue per Device•Re-emphasis on DTC marketing in U.S. with near-term opportunity of increasing recurring revenue/device by 40%•More rigorous sales and marketing strategy and process in place•Both initiatives could collectively grow revenue by double digit percent and help return the company to positive cash flow 31
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THANK YOU!Investor Contact:CORE IR516-222-2560IR@strataskin.comwww.strataskinsciences.com
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APPENDIX
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NASDAQ: SSKN Acquisitions to Drive Top-line GrowthJanuary 2022 August 2021•$3.7M Acquisition•Minimal acquisition cost comparedto exclusivity in external laser market•$1M Acquisition•Adds attractive business segmentto address $5.5B acne market34
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NASDAQ: SSKN Domestic XTRAC®Installed Base Growth Drivers8732286370As of 9/30/2024Signed strategic expansion into group clinic rollupsWithin the 48 groups:•61 TheraClear®X devices•Penetration grew from 86 in 2018 to 386 in 2023•Group partnership accounts represent 37% of XTRAC®domestic recurring revenue XTRAC®PartnersGroupClinics35Representative PE Backed Groups:Over 250 comeback opportunities of existing excimer laser ownersIncreased penetration into facility locations (e.g. Kaiser, VA, and Mt. Sinai)
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NASDAQ: SSKN Example – NYC Metro Area XTRAC®Placements and DTC Leads (1Q24) 36 Metro NYC XTRAC®installed base Metro NYC 1Q24 DTC Patient Leads
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NASDAQ: SSKN Psoriasis Case Study: Patient I.B., Lewisburg, PA 37 Treatment Room AfterBefore