Venus Concept Inc. (VERO) on Q1 2022 Results - Earnings Call Transcript
Operator: Please standby. Good day, ladies and gentlemen and welcome to the First Quarter 2022 Earnings Conference Call for Venus Concept Inc. At this time, all participants have been placed on a listen-only mode. Please note, that this conference call is being recorded and the recording will be available on the company's website for replay. Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-look statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our most recent 10-Q our annual report on Form 10-K to be filed with the Securities and Exchange Commission. Such factors may be updated from time to time in our filings with the SEC which are available on our website. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in our earnings press release issued today on the Investor Relations portion of our website. I would now like to turn the call over to Mr. Dom Serafino, Chief Executive Officer of Venus Concept. Please go ahead, sir.
Dom Serafino: Thank you very much operator and welcome everyone to Venus Concept's first quarter of 2022 earnings conference call. I'm joined today by our chief financial officer Domenic Della Penna, and Ross Portaro, our President of global sales. Let me start with a brief agenda of what we will cover during our prepared remarks. I will start with an overview of our revenue results in the first quarter. I will then provide a summary of our operating progress in key areas in recent months. And Dominic will provide you with a more in depth review of our quarterly financial results our balance sheet and our guidance for the full year 2022, which we reaffirmed in today's press release, then Ross will provide an update on our commercial progress and priorities. And then we will open up the call for your questions. With that overview in mind, let's get started with a review of our first quarter revenue performance and overall business trends. We reported GAAP revenue of $26.4 million up 17% year-over-year. The increase in total revenue year-over-year was driven by 25% growth in the sales in the U.S. customer base and 10% growth in international customers in the period. Total Sales and subscription revenue increased 22% year-over-year in Q1 and our procedure related disposable revenue increased 14% year-over-year excluding our discontinued vehicle grafter program from the prior year period as we exited this business line in Q4 of 2021. Importantly, revenue growth in Q1 was driven by the key franchises we prioritize as part of our commercial strategy, which we discussed in recent investor calls. Specifically, excluding our VeroGrafters program revenue, sales in our growth franchises increased 19% year-over-year in Q1 fueled by Salesforce focus and execution continued with strong demand for artists iEX robotic systems, and the early clearance and initial commercial launch of our Bliss Max in March. The early market response to Bliss Max has been notable and sales of this highly differentiated robotic body contouring workstation drove growth and sales of products of our body franchise by more than 60% in Q1. With respect to procedure trends in the first quarter. Our real time IoT data gives us strong visibility into the act of device trends for large portions of our medical aesthetic installed base. This average uses for system continues to reflect measured improvement in patient’s activity. Outside of the US we continue to see varying usage trends depending on the region of the world and the respective pace of recovery from pandemic. Procedure trends in our hair restoration customers in the first quarter reflect improving growth after a slower part of the quarter as well. North America procedures exceeded previous Q4 -- four years Q1 records, while Latin America and EMEA were at similar levels to Q1 2021. But this was not enough to cover loss of procedures in APAC, APAC did have increase in artists installs in Q1. So we hope to see utilization returned to normalize levels in Q2. Turning to a brief update on operating highlights for the first quarter and in recent months. Overall, we've made significant progress in the areas of new product development, clinical validation, regulatory clearances, and commercialization. Our efforts to expand the venous list portfolio of systems and products continues to progress, we received 510-K clearance for the venous Bliss Max in January, and started our initial commercial March. In April, we're pleased to announce the receipt of the new 510 K clearance for the market the Bliss Max with an expanded indication for use in new areas of the body and an increase in RF energy output. This new clearance further expands our single body contouring workstations versatility, and utility and its indication for use to include non-invasive lipolysis of the backhand side, in addition to abdomen and flanks, and by increasing maximum RF energy output by 50%. Bliss Max now offers physicians more efficiency and flexibility and treatments, which we believe will provide even stronger clinical results and ultimately increases the revenue for our customers. Finally, we are proud of the continued progress we've made in recent months to advance our development, regulatory and clinical strategy for AIme, our non-surgical robotic technology platform for medical aesthetic applications. We announced 510(k) submission for general indication of tissue excision skin resurfacing on March 31. And we look forward to engage with the FDA during the review period of our submission. We continue to believe that AIme has the potential to bring true innovation to the medical aesthetic market by changing the way procedures are performed, and bringing a new level of Speed Safety and clinical predictability. The submission of this 510(k) brings us one step closer to our goal of commercializing AIme in the U.S. And we continue to expect that we will be in a position to begin limited release in the fourth quarter of 2022. The prospects for non-surgical robotic technology platform AIme are very compelling. And we look forward to introducing this disruptive technology begin later this beginning later this year. It's important to remember that AIme is a platform is just that a platform, and it has been designed to support numerous different clinical applications via a unique upgrade path for clinicians, making it extremely cost effective and differentiated from any products currently available to aesthetic device market today. In parallel to the progress -- to the process of submitting for general indications for skin excision and skin resurfacing, we have also made progress towards our strategy to secure specific clinical indications for AIme for the treatments of the face. As discussed on prior calls, we are pursuing an IDE clinical study evaluating the safety and efficacy of using AIme for the treatment of moderate to severe facial wrinkles. This study will support our FDA submissions specific clinical indications for the treatment of wrinkles on the cheeks, and will further expand our annual addressable market opportunity and enhance our long term growth profile. We recently announced that the first patients has been treated with it and our four Clinical Investigation sets are busy enrolling and treating 70 patients in this study. With that, let me turn the call over to Domenic Della Penna, who will provide a detailed review of our first quarter financial results and discuss our balance sheet, financial conditions and our 2022 guidance which we reaffirmed in today's press release. Dominic?
Domenic Penna: Thank you Dom. Given Dom's detailed review of our revenue results, I will begin with a review of our financial performance across the rest of the P&L for the avoidance of doubt unless otherwise noted, my prepared remarks will focus on the company's reported results for the first quarter of 2022 on a GAAP basis, and all growth related items are on a year-over-year basis. Gross Profit increased $2.5 million or 17% to $17.8 million. Gross margin was 67.3% compared to 67.4% of revenue in the first quarter of 2021. The change in gross margin was driven primarily by changes in mix partially offset by higher shipping costs compared to the prior year period. Total operating expenses were $25.2 million, compared to $22.1 million in the first quarter of 2021. The change in total operating expenses was driven by an increase of $2 million or 26% in sales and marketing and an increase of $0.9 million or 8% in general and administrative expenses, and an increase of $0.2 million or 7% in R&D expenses. First quarter operating expense growth reflects the strategic investments we're making to support our key growth initiatives including our commercial launch of the Bliss Max, and our development, regulatory and clinical programs for AIme, we continue to expect GAAP operating expenses in the range of $98 million to $101 million for the full year 2022 periods. Total operating loss was $7.4 million compared to $6.8 million in the first quarter of 2021. Net loss attributable to stockholders increased 0.6 million or 7% to $8.6 million. Non GAAP adjusted EBITDA loss increased $0.9 million or 17% year-over-year to $5.9 million. As a reminder, we have provided a full reconciliation or GAAP net loss to adjusted EBITDA loss in our earnings press release. Turning to the balance sheet as of March 31 2022, the company had $17.9 million of cash and cash equivalents and total debt obligations of approximately $77.5 million compared to $30.9 million and $77.8 million respectively as of December 31 2021. The year-over-year increase in cash operations is directly related to our strategic initiatives which prioritize investments in inventory for our ability to meet customer demand as we move through 2022 given the realities of ongoing supply chain challenges. Note, part of the increase in working capital related to incremental cash invested for advances to suppliers as part of this initiative. This strategic initiative is expected to result in additional cash investment in the second quarter. However, we continue to expect improving working capital trends as we move through 2022. And we continue to expect cash flow positive in the fourth quarter of 2022. Turning to a review of our guidance, as detailed in our press release, we reaffirmed our revenue guidance for the full year 2022 period. The company continues to expect total revenue for the 12-months ending December 31 2022 in the range of $126 million 230 million, representing an increase of approximately 20% to 23% year-over-year, compared to total revenue of $105.6 million for the 12 months ended December 31 2021. While we are not providing formal profitability guidance for the full year 2022, our outlook continues to assume that we deliver another year of material profitability improvement, including a target of achieving cash flow positivity in the fourth quarter of 2022. For modeling purposes, we would like to offer the following considerations to help investors understand the underlying assumptions, driving our 2022 profitability targets. First, we expect our gross margins to be in the range of 68% to 71%, as we see continued improvement in gross margins, driven by mix, but also expect inflationary headwinds to pressure our COGs in 2022. Second, we expect continued expense management to drive notable operating leverage in 2022. Specifically, we expect GAAP operating expenses in the range of $98 million to $101 million, representing growth of 10% to 13% year-over-year, compared to our total revenue growth range of 20% to 23% this year. Third, we expect our interest expense to be approximately $4 million, and we expect non-cash in a of $4.5 million and noncash stock comp of approximately $2.4 million. Fourth, we continue to expect our weighted average shares outstanding to be approximately $64 million. There are two additional items to bear in mind when evaluating our full years 2022 revenue growth expectations. First, we continue to expect our body franchise to be a material driver of total company growth this year, fueled by commercialization of our Venus Bliss and OUS markets, and the commercialization of our Venus Bliss Max in the U.S. We do expect growth in our body franchise to be stronger over second half of 2022 given the timing and expected ramp from our recent reduction of the Bliss Ma. Second, our 2022 total revenue guidance does not assume material contributions related to the limited release of AIme and Q4 of 2022. We intend to update the investment community on the potential contributions from the initial commercial release of AIme following the receipt of 510(k) clearance While AIme is not expected to materially impact our 2022 growth, it is fair to assume that we will be highly focused on ensuring that we are well prepared to execute our commercial strategy for this highly differentiated robotic technology as soon as possible following receipt of regulatory clearance, and what expecting me to be a material contributor, or a total company growth getting in fiscal year 2023 and beyond. With that, let me turn the call over to Ross for an update on our commercial progress and priorities. Ross?
Ross Portaro: Thanks, Tom. We're most pleased with our commercial execution in Q1, with key initiatives. We continue to attract proven aesthetic leaders in the industry that are attracted to our industry best new product innovation, and key growth drivers in body and hair. As I mentioned most recently, we started at the senior management level, and we are finishing our execution at the field level. As we mentioned earlier, our investment in the U.S. was rewarded with 25% growth and sales. Bliss Max was a key driver with 60% growth with our body franchise, we continue to expand our KOL install base in body and we expect the growth to continue based on the initial market acceptance of the only platform that addresses fat skin and muscle. The early feedback from our initial launch of the Bliss Max has been very positive. We are especially encouraged by the response from highly regarded practitioners, including Dr. Scott Garish, a leading expert in regenerative medicine and aesthetics, and a pioneer with first generation fat technologies that changed our industry. Dr. Garrison noted and I quote. The Bliss Max system represents a truly synergistic addition to his body contouring practice. It offers improved outcomes with both tightening and muscle stimulation, and attractive practice economics given the lack of consumable cost per treatment. ARTAS and NeoGraft had another strong global quarter as we continue to sell the business of hair restoration versus just systems. With that, I'll turn the call back to Dom for closing remarks. Dom?
Domenic Penna: Thanks, Ross. In closing, we remain confident in our full year outlook and continue to expect improving growth trends as we move through 2022. Our 2022 total revenue outlooks continues to assume that more than 75% of our total revenue growth year-over-year comes from two key growth franchises specifically our body franchise, which includes systems and procedure revenue related to the Bliss Max and Venus Bliss products and our hair restoration franchise which includes systems and procedure related revenue for our ARTAS and NeoGraft products. Importantly, we expect the contributions of total revenue growth from these two growth franchises to fuel continued growth in sales and procedure related in revenue. And to be accretive to our total company gross margins. Our 2022 total Revenue outlook also assumes growth contributions from the portions of our business dedicated to a medical esthetics outside of the body franchise. This portion of our business includes contributions from six commercialized aesthetic products, including two of our largest product lines, the Venus Legacy in the Venus Versa. We continue to expect sales of these products to increase in the mid to high single digits year-over-year in 2022, reflecting a continuation of the durable stable growth profile demonstrated in recent years. With that operator, we’ll now open the call to questions. Operator.
Operator: Our first question comes from the line of Marie Thibault with BTIG. Please proceed with your question.
Marie Thibault: Hi, good evening, and thank you for taking my questions. I'll ask two quick ones here. Congrats on the expanded indications of bliss Max. Very nice to see. It took us by surprise. Was that something that was planned was that requested by early users? What was kind of driving the decision for that expansion and what does that mean for the total addressable market?
Dom Serafino : We were quite pleased with that, Marie and good evening. What was really nice about this particular clearance, it gives us real confidence in the process that the FDA is going through even with AIme, we were able to achieve this clearance in a 54-day cycle. This was something that our client base wanted to be able to market. And so to be able to add additional body zones in the marketing materials that are used day in and day out in the in the field is a big help. So we're pleased with the 54-day turnaround from our submission. And hopefully that type of turnaround will help us in submissions to the FDA and other products that we choose to market.
Marie Thibault: Sure, very good. Okay. And then a quick follow up here on some of the OUS you addressed. Would you say? I guess maybe a two-part question on that. Would you say that some of those headwinds are starting to improve here now that we're in May, what are you seeing on the ground? And then in terms of FX headwinds, what should we be baking into kind of our outlook for the rest of the year?
Dom Serafino : So, Ross you want to take the first one and GDP you can answer the second one as well.
Ross Portaro : Yes, absolutely. We're talking OUS, you really have to break it into the three markets of EMEA, Latham, and APAC. In EMEA, we certainly have a strong direct presence. And, certainly from a pandemic standpoint, that's becoming less and less a factor each day, and the existing core product portfolio of Venus Concept and ARTAS remain strong. As far as APAC there is a little bit of headwind, certainly that we all know with Hong Kong and China, and the pandemic, but our risk in that market is less based on our product portfolio, and certainly, what we're looking at in business in May in June. And then certainly, in Mexico, we're direct in that marketplace. And we are very, very optimistic. We don't have any limitations, let's just say from pandemic or any outside supply chain type issues. As far as FX, I'll leave that to DDP.
Domenic Penna: Hey Marie. So our FX for Q1 was actually pretty much flat. I think we've reported -- I don't think we've reported anything for the first time in a long time. Usually it's a plus or a minus. It's been manageable. We don't manage -- we don't hedge our effects or currencies, but we do seem to have a natural hedge between the currencies that the major ones are the U.S. dollar, the Euros, the Euro, the Israeli shekel and the Canadian dollar. And between those four movements we found that typically we're not seeing huge swings quarter on quarter. Yes, there are movements between two individual currencies, but their tentative coin is down there tends to be some other currency that kind of offsets it. And so we haven't seen any really strong headwinds nor am I projecting it's a very difficult thing to project but we don't have a strategy to hedge those currencies.
Marie Thibault: Okay, very good. I appreciate the caller I'll hop back into Thank you.
Operator: The next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
Jeffrey Cohen : Hi, Dom, Dominic and Rob, how are you?
Dom Serafino : Hey, good, Jeff. How are you?
Jeffrey Cohen: So two questions from around here. Firstly, can you talk a little more about AIme and the FDA the agency, so it looks like you're going after initially this quote unquote general indication, which is tissue extension? And skin resurfacing with this idea looks like there's 70 patients expected and you started enrolling. So curious on the timing there. And then talk to us a little bit about wrinkles tell us if you could the type of energy or the pulsation that you may be using. And then perhaps doctors also about dermo, micro recording and when we might see that come to fruition? And also other anticipated tips, if you will over the coming years?
Dom Serafino : Yes, look, I think for our first clearance, we're quite excited about, I call it the versatility of the areas of the body that the use of the device can be used in general terms. For competitive reasons, we don't really want to disclose kind of where we're targeting right now. But I think that the doctors who will be able to be our first 10 or 15 sites, once we get our FDA approval, will teach us a lot about some of the things that we've already seen in our clinical trials, feasibility trials and our big studies as to what happens to dermo remodeling their collagen remodeling as well. So I think that there's a lot of different indications for it, I'll call it the first generation AIme, the second generation AIme, which is the more specific clinical indications for the face. Because we do believe that minimally invasive treatments, a variety of different areas of the face, will benefit greatly from this very predictive, very safe and very quick technology, will also allow us to expand other clinical indications as we go forward. The FDA has asked us to do the study in two phases, the first phase being 12 patients, to confirm what we saw in our general indication submission, a very high level of safety profile. But when you're working on the face, the FDA wants to make sure that, we're on site. So we understand that and we're aggressively pursuing that Phase 1. Phase 2 will add the additional 58 patients, all of this we anticipate will be completed by the end of the year, given the nature of the treatment itself, where we have to have a month delay between treatments. And we'll typically do two treatments per patient, in some cases, three, depending on the area where we're treating. But so it'll be done in phases. And that's not going to preclude us from launching AIme, nor does it preclude us from currently in the background working on other clinical indications that we'll be able to add to the AIme platform, as I said, via the purchase of an upgrade path and app, et cetera, et cetera. So we're very excited about what this platform will do to the market in general. Because we do think it's time for the market to see something that's truly unique and differentiated from what normally gets sold by our competitors.
Jeffrey Cohen: That's very helpful. Can you talk a little bit about AIme and its development, and bringing the context the restoration robotics platform and any architectural similarities between both platforms as far as their development, I think that you are already somewhat underway on the AIme side prior to restoration, but has that played a fact on the hardware, software and to things?
Dom Serafino : Because a lot of the lot of the technology that has been built into the AIme, the vision system, the artificial intelligence capabilities, the machine learning, et cetera, came from the massive amounts of money that were sent into developing the ARTAS robot by the previous restoration robotics team. So it's benefited us because we've been able to be extremely efficient financially, in bringing this next generation robot to the market. What we're pleased about is that we learned a lot of lessons from the amount of money spent by restoration. And we're very confident that we're going to be able to cut the COGS on this device by half from the current hair system, which will allow us to price the next generation robots at around $150,000 and actually improve our margins to north of 70%. From the 60% we're at now. So I think it's going to allow us -- there's a big difference at $150,000, the addressable market versus $250,000, in the addressable market. So I think we're excited about that, because it'll make it a meaningful proposition, economic proposition for the clinic. And then as the clinic has the ability to upgrade with a variety of different apps, I think it'll just be much more efficient. And by the way, just to remind everybody, every procedure that we will do on the AIme platform will have a meaningful but yet reasonable cost of utilization. And, call it the razor blade model. So we feel that over the next few years, we're going to be able to dramatically improve our revenue from disposable disposables on the device. Finally, the platform for AIme is about half the size of the current restoration robotics platform. And the industrial design will be very elegant and very appealing. So all of those things play important roles in aesthetics, and that we're excited about what this opportunity will provide us especially in the core market of dermatology and plastic surgery.
Jeffrey Cohen: That's helpful. And then a quick one for DDP if I could. Can you talk about the services impact from the VeroGrafters? I know it was only 3% of the business but what percent decrease should we model in for that seeing during 2022? Because I know you saw the extended warranty side.
Domenic Penna: Well on the on the VeroGrafters, you should be modeling zero on that. The revenue in the previous year was I think just over 2 million, but you should be modeling. Nothing going forward. We may have had a little bit trickled in in the first quarter. But we essentially discontinued the operations in December.
Jeffrey Cohen: So the service segment should go from $4 million, it should be cut in half?
Domenic Penna: It'll be offset.
Dom Serafino : While there is then there'll be an offset by growth and services. Just for the benefit of those on the call, the definition of VeroGrafters is that we used to have a program where we would actually deploy 1099 to help physicians carry out the procedures. And we just felt that that was a low margin business, that wasn't really going to be a big part of our future. And therefore what we've done is essentially given our customers who use robots and or NeoGraft, the ability to directly access this particular group of 1099 nines, and that's worked out pretty well. Still supporting our customers, but not necessarily having to be the middleman in the whole process.
Jeffrey Cohen: Thank you.
Domenic Penna: And Jeff, our guidance assumptions on revenue take into account have always taken into account the fact that we would suspend the VeroGrafter services.
Operator: Our next question comes in line of Jon Block with Stifel. Please proceed with your question.
Jon Block : Thanks guys, good afternoon. Dom maybe just the first one, when we think about ARTAS, Bliss Max, the great systems, but they're also higher ASP systems. And I believe usually financed by the doctor. And I know you said the, the market trends continue to be solid through your IoT data, certainly in North America. But just, we'd love your thoughts on any trepidation now, or several quarters from now from doctors down the line on these higher ASP systems and any reluctance to purchase and especially if the financing terms get more scrutinized or more difficult, and what that does to the total cost of ownership.
Dom Serafino : Yes, I think that and that's a great question, Jon, because I think that with anything that has higher ASPs, the true analysis that needs to be done is what is the rate of return on those ASPs. We know that, for example, right now, the ARTAS hair restoration technology, at an ASP of somewhere around $140,000 $150,000 has a rate of return of about $1,500 an hour to the clinic when they're doing hair to hair treatments. So it's easily justifiable in their ROI calculations. As we look at the real time data that we have on Bliss and Bliss Max, payback periods, even at a higher ASP. And just to remind everybody that the ASPs on the Bliss Max are in the 175, 180 range. Those payback periods are less than a year. So it's not necessarily about what the cost of the devices, it's how quickly can they recoup their investment. And so these happen to be two very big growth areas. Hair, obviously, is the number one procedure for men, and fat and body contouring and muscle stimulation is quickly becoming the number one procedure demanded in clinics, both for male and female. So the fact that we've extended our clinical indications really does help continue to further the validation of the ROI on these devices. Look, we don't know obviously, what we don't know, if credit becomes tighter down the road, for whatever reasons, you know, we'll have to revisit that. But I think generally speaking, if you're taking an ROI from 26, or 28 weeks to 32, or 34, because of increased interest costs or things of that sort, we don't think that that's going to be material. And I don't think that that's going to really impact our sales pitch whatsoever.
Jon Block : Obviously, to your point, so very compelling ROI overall. Maybe just a couple other quick questions, I think you called out in the press release and to get on the calls are the 60% sales growth in product in the body franchise you talked about in the previous call, body and hair going to play an integral role in the overall growth in '22. Did you give an ARTAS number, just year-over-year growth or anything sequentially? And then maybe just to tack on ask everything up from. Freedom seemed a little muted. And I know you were working out the business model, and it seemed like a capital light type of business model. But anything more than Freedom. I had heard some chatter that the FDA was giving that a little bit more scrutiny. Just would love your thoughts on freedom, the business model, and how you want to move forward there? Thanks.
Dom Serafino : Yes. So one of the things that we have looked at very seriously is we're a company that has 12 different platforms that we market day in and day out. Having 12 Different platforms that we market day in and day out, makes it very difficult and challenging from a marketing perspective, a focus perspective, et cetera. So we made a strategic decision of few quarters ago to focus on the hair franchise, and the body franchise that we've talked about, over the last few quarters. We think that this has really aligned our sales organization much better in terms of where their attention is where our marketing's attention is, et cetera, et cetera. And it's starting to pay some dividends. While we don't break out the hair restoration franchise. We do know, okay, that Q4 was a record quarter for us overall, since the beginning of hair restoration in terms of robotics, and Q1 was a record quarter of all Q1 in this particular business segments. So we don't normally break out the two. But as we said earlier, it will continue to represent the most -- the biggest area of our particular focus, and where we expect our growth to be for the balance of 2022. And moving into 2023, when we continue to streamline our product offering into more robotic focus than the traditional handheld devices that you see today. As far as Freedom, you're 100%, right. I mean, the FDA does continue to monitor, the marketing activities and so on, which is why we've taken a very pragmatic approach here, in terms of ensuring that we endear ourselves to the appropriate KOL network to be able to support this particular product. Would we like to bring it to market sooner with the typical off label indications that all of our competitors have done? Sure, but we try to be a little bit more responsible about how we're going to the market, we think that this is a great product. And we don't want to, quite frankly, we want to take our time to make sure that we properly pursue the appropriate regulatory pathways and more importantly, working with the appropriate KOLs to ensure that that happens.
Jon Block: Okay, thanks. I'll follow up offline. Appreciate it.
Operator: Our next question comes from the line of Anthony Vendetti with Maxim Group, please proceed with your question.
Anthony Vendetti : Thanks. Yes. So just following up on some of the points. Just wanted to make sure I have this right. So 60% of -- well you're expecting 60% growth in the body franchise, which is, which is the Bliss and the Bliss max. And then and then for the year 75%, of the growth in your revenues for the year will come from the body franchise? And the hair restoration franchise? Is that correct?
Dom Serafino : Correct. We think it'll be more but yes, for the sake of 75%.
Anthony Vendetti: Okay, and then and just on AIme, so can you talk a little bit more about, I know, you said, the gross margin, you're expecting that to be 70%, which is great. But can you talk a little bit more about the business model there, what that would look like, just in terms of pricing, consumable, just get a little more color. Thanks.
Domenic Penna: Oh, no problem at all. So the bottom line on it says that we expect that we're going to raise $150,000 on an ASP basis, we do expect that every device will have a utilization by the nature of the procedures that we intend, especially in the first generation of the technology that disposable we haven't calculated yet. But it'll be -- if the device margins will be 70% range or greater, we expect that the disposable portion of it will be north of 80% in that range in North America. So we say that will have a significant potential impact on overall blended gross profit margin, which is the intent here. And as we go forward with the AIme platform, once we understand the FDA pathways, we will be able to give you more color as to what we plan to do with the next generation of this particular platform in the various clinical indications that we're quite excited about, but are not prepared to disclose at this particular point in time for competitive reasons.
Anthony Vendetti: Now, that makes sense. And then just to follow up on the IP, obviously, you acquired a lot of IP when you acquired restoration robotics. Can you talk about just in general, after AIme, what the other opportunities are maybe in order of where you intend to go next, in terms of pursuing automation of aesthetic products?
Dom Serafino : Yes, look, you're spot on. I mean, one of the benefits of acquiring restoration was a very deep portfolio of IP that they have accumulated over the years. We've been able to leverage a lot of that IP in what we're doing right now, but more importantly, use that as the foundation for other clinical indicators. We're quite confident that we're going to have an ability to build with pretty solid IP protection solutions and a variety of different things that are already being treated right now. Big categories areas like cellulite and so on, that we feel we have some interesting potential solutions that are completely differentiated than anything else that's in the market today. I don't want to go too much further than that, Anthony simply because we're in the early stages of this, but we're quite confident that we have some solid IP in this particular area or in the process of completing that at this point.
Anthony Vendetti: Okay, great. Makes sense. Thanks for the color, I'll hop back in the queue.
Operator: There are no more questions in the queue. This does conclude our call. Thank you for your participation. You may now disconnect your lines and have a wonderful day.
