Apyx Medical Corporation (APYX) Bundle
Understanding Apyx Medical Corporation (APYX) Revenue Streams
Understanding Apyx Medical Corporation’s Revenue Streams
The primary revenue sources for Apyx Medical Corporation consist of two main segments: Advanced Energy and Original Equipment Manufacturing (OEM).
Breakdown of Primary Revenue Sources
| Segment | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Change (%) | YTD 2024 Revenue (in thousands) | YTD 2023 Revenue (in thousands) | Change (%) |
|---|---|---|---|---|---|---|
| Advanced Energy | $9,288 | $9,836 | (5.6) | $26,507 | $31,248 | (15.2) |
| OEM | $2,199 | $2,140 | 2.8 | $7,373 | $6,439 | 14.5 |
| Total Revenue | $11,487 | $11,976 | (4.1) | $33,880 | $37,687 | (10.1) |
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, total revenue decreased by 4.1% compared to the same period in 2023. The Advanced Energy segment experienced a decline of 5.6%, while the OEM segment saw a slight increase of 2.8%.
For the nine months ended September 30, 2024, total revenue decreased by 10.1% year-over-year. Advanced Energy segment sales decreased by 15.2%, and OEM segment sales increased by 14.5%.
Contribution of Different Business Segments to Overall Revenue
As of Q3 2024, the Advanced Energy segment contributed approximately 81.0% of total revenue, while the OEM segment accounted for about 19.0%.
Analysis of Significant Changes in Revenue Streams
The decline in revenue from the Advanced Energy segment is attributed to several factors, including a lower average selling price of generators and reduced domestic upgrades to the Apyx One Console. Conversely, the OEM segment benefited from increased sales volume to existing customers, particularly under a long-term manufacturing agreement.
International sales for the three months ended September 30, 2024, represented approximately 32.2% of total revenues, an increase from 27.8% in the same period last year. This shows a growing presence in international markets despite overall revenue declines.
A Deep Dive into Apyx Medical Corporation (APYX) Profitability
A Deep Dive into Apyx Medical Corporation's Profitability
Gross Profit: For the three months ended September 30, 2024, gross profit was $6,954,000, a decrease of 12.8% from $7,978,000 in the same period in 2023. For the nine months ended September 30, 2024, gross profit decreased 17.9% to $20,396,000 from $24,830,000 in 2023.
Gross Margin: The gross margin for the three months ended September 30, 2024, was 60.5%, down from 66.6% in 2023. For the nine-month period, the gross margin was 60.2%, compared to 65.9% for the same period in 2023.
| Three Months Ended | Nine Months Ended | |
|---|---|---|
| Gross Profit | $6,954,000 (2024) | $20,396,000 (2024) |
| Gross Profit (2023) | $7,978,000 | $24,830,000 |
| Gross Margin | 60.5% | 60.2% |
| Gross Margin (2023) | 66.6% | 65.9% |
Operating Profit: The loss from operations for the three months ended September 30, 2024, was ($3,635,000), compared to a loss of ($4,637,000) in 2023. For the nine months ended September 30, 2024, the loss from operations was ($15,797,000), compared to ($11,483,000) in 2023.
Net Profit Margin: The net loss attributable to stockholders for the three months ended September 30, 2024, was ($4,703,000), leading to a basic and diluted loss per share of ($0.14). For the nine months ended September 30, 2024, the net loss was ($18,835,000), with a basic and diluted loss per share of ($0.54).
| Three Months Ended | Nine Months Ended | |
|---|---|---|
| Net Loss | ($4,703,000) (2024) | ($18,835,000) (2024) |
| Net Loss (2023) | ($4,629,000) | ($9,106,000) |
| Loss per Share | ($0.14) | ($0.54) |
Trends in Profitability: The company's profitability metrics show a downward trend in both gross and net profit margins, primarily attributed to a decrease in the average selling price of generators and changes in sales mix. The significant losses from operations highlight ongoing challenges in the market.
Comparison with Industry Averages: The industry average gross margin for medical device companies typically ranges from 60% to 70%. The company's gross margin of 60.5% for Q3 2024 falls within this range, but shows a decline from the previous year, indicating potential inefficiencies or pricing pressures.
Operational Efficiency Analysis: The company's operational efficiency can be assessed through its cost management strategies. For the three months ended September 30, 2024, salaries and related expenses were $3,508,000, down 22.6% from $4,534,000 in 2023. Selling, general, and administrative expenses also decreased by 11.4% to $4,291,000 compared to $4,841,000 in 2023.
| Expense Type | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Change |
|---|---|---|---|
| Salaries and Related Expenses | $3,508,000 | $4,534,000 | (22.6)% |
| SG&A Expenses | $4,291,000 | $4,841,000 | (11.4)% |
Overall, Apyx Medical Corporation's profitability metrics indicate a challenging environment with declining margins and increasing operational losses, necessitating a focus on enhancing efficiency and managing costs effectively.
Debt vs. Equity: How Apyx Medical Corporation (APYX) Finances Its Growth
Debt vs. Equity: How Apyx Medical Corporation Finances Its Growth
Debt Levels
As of September 30, 2024, Apyx Medical Corporation reported a total long-term debt of $33.853 million, with no short-term debt recorded. The company has a principal repayment schedule that indicates $2.216 million due in 2027 and $35.284 million due in 2028, totaling $37.500 million in repayments .
Debt-to-Equity Ratio
The debt-to-equity ratio for Apyx Medical Corporation stands at approximately 3.06, calculated from total liabilities of $49.524 million and total stockholders’ equity of $11.041 million as of September 30, 2024 . This ratio significantly exceeds the industry average, which typically ranges from 1.0 to 1.5.
Recent Debt Issuances
In November 2023, Apyx Medical Corporation executed a debt agreement with Perceptive Credit Holdings IV, LP, which included a term loan of $37.500 million. The agreement also featured a $7.5 million delayed draw loan available until December 31, 2024 .
Credit Ratings
The company's credit rating is not explicitly stated; however, the interest on its debt is based on a floating rate tied to one-month SOFR, with a minimum of 5.0% plus 7.0%, resulting in an effective interest rate of approximately 12.2% as of September 30, 2024 .
Debt Management Strategy
Apyx Medical Corporation has been actively managing its debt through refinancing activities. The prior debt was paid off in November 2023, reflecting a strategic approach to maintain liquidity while minimizing interest costs. The company plans to continue funding operations through existing cash, product sales, and if necessary, additional equity or debt financing .
| Debt Component | Amount (in millions) |
|---|---|
| Total Long-term Debt | $33.853 |
| 2027 Principal Repayment | $2.216 |
| 2028 Principal Repayment | $35.284 |
| Total Repayments | $37.500 |
| Debt-to-Equity Ratio | 3.06 |
| Effective Interest Rate | 12.2% |
Equity Financing
As of September 30, 2024, Apyx Medical Corporation has total stockholders’ equity of $11.041 million, which indicates a significant reliance on debt financing relative to its equity base. The company has issued common stock and warrants to raise additional capital, notably a registered direct offering completed in November 2024, which raised $7.0 million .
Conclusion on Financing Strategy
Apyx Medical Corporation continues to balance its financing needs between debt and equity, with a focus on maintaining operational liquidity while managing the implications of a high debt-to-equity ratio. The ongoing strategy includes leveraging existing cash and exploring further equity or debt options as necessary .
Assessing Apyx Medical Corporation (APYX) Liquidity
Assessing Apyx Medical Corporation's Liquidity
At September 30, 2024, the company had approximately $28.0 million in cash and cash equivalents, down from approximately $43.7 million at December 31, 2023. The working capital at September 30, 2024, was approximately $42.6 million, compared to $57.6 million at December 31, 2023.
Current and Quick Ratios
The current ratio, calculated as current assets divided by current liabilities, stood at approximately:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $52.16 million | $9.56 million | 5.46 |
The quick ratio, which excludes inventories from current assets, was calculated as follows:
| Current Assets (excl. Inventories) | Current Liabilities | Quick Ratio |
|---|---|---|
| $43.16 million | $9.56 million | 4.52 |
Analysis of Working Capital Trends
The trend in working capital shows a decrease from $57.6 million at the end of 2023 to $42.6 million by September 30, 2024. This reduction reflects increased operational expenditures and a strategic shift in asset allocation.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the company reported:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $(15,110) | $(3,037) |
| Investing Activities | $(477) | $6,827 |
| Financing Activities | $(15) | $8,322 |
The net cash used in operating activities increased significantly due to operational losses and higher interest expenses. In contrast, net cash provided by investing activities saw a drastic shift from positive inflows in 2023 to outflows in 2024, primarily due to decreased asset sales.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company is obligated to maintain a minimum cash balance of $3.0 million under the amended Perceptive Credit Agreement. The total liabilities were approximately $49.5 million, with total stockholders’ equity at $11.04 million, indicating a leverage ratio that could be a concern if operational losses persist.
Additionally, the company incurred net losses amounting to $(18.9 million) for the nine months ended September 30, 2024, compared to $(9.2 million) for the same period in 2023, which raises questions about the sustainability of current liquidity levels if these trends continue.
Is Apyx Medical Corporation (APYX) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The company reported a net loss attributable to stockholders of $18.8 million for the nine months ended September 30, 2024, resulting in a loss per share of $0.54. As there are no earnings, the P/E ratio cannot be calculated meaningfully at this time.
Price-to-Book (P/B) Ratio
As of September 30, 2024, total stockholders’ equity was $11.2 million, with total assets of $60.7 million and total liabilities of $49.5 million. The book value per share, calculated as total equity divided by shares outstanding (34,644,000), is approximately $0.32. Given the stock price of $1.50 as of the latest trading, the P/B ratio stands at approximately 4.69.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value is calculated as market capitalization plus total debt minus cash. With a market cap of approximately $51.9 million (stock price of $1.50 34,644,000 shares), total debt of $33.9 million, and cash of $28.0 million, the enterprise value is approximately $57.8 million. The EBITDA for the nine months ended September 30, 2024, is not directly available as the company reported a loss from operations of $15.8 million, leading to a negative EBITDA. Therefore, the EV/EBITDA ratio is indeterminate.
Stock Price Trends
The stock has seen fluctuations over the past year, with a recent price of $1.50. The stock price has ranged from a low of $0.75 to a high of $2.50 over the last 12 months.
Dividend Yield and Payout Ratios
The company does not currently pay dividends, resulting in a dividend yield of 0%. Thus, the payout ratio is also 0%.
Analyst Consensus
As of the latest reports, analysts have a consensus rating of Hold for the stock, reflecting cautious optimism given the company's financial performance and market conditions.
| Metric | Value |
|---|---|
| Net Loss (9M 2024) | $18.8 million |
| Loss per Share | $0.54 |
| Book Value per Share | $0.32 |
| P/B Ratio | 4.69 |
| Market Capitalization | $51.9 million |
| Total Debt | $33.9 million |
| Cash | $28.0 million |
| Enterprise Value | $57.8 million |
| Stock Price | $1.50 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Apyx Medical Corporation (APYX)
Key Risks Facing Apyx Medical Corporation
Overview of Internal and External Risks: Apyx Medical Corporation faces various risks that could impact its financial health. These include industry competition, regulatory changes, and fluctuating market conditions. The medical device industry is highly competitive, with numerous established players. The company competes with larger firms that have more resources, which can lead to pricing pressures and market share erosion.
Regulatory Risks: The company operates in a heavily regulated environment. Changes in regulations or delays in obtaining necessary approvals can hinder product launches and affect financial performance. The FDA and other regulatory bodies scrutinize medical devices, and any changes in compliance requirements could impose additional costs or operational delays.
Market Conditions: Economic uncertainty in the capital equipment market, particularly in the aesthetic space, has adversely affected sales. The company reported a decline in Advanced Energy segment sales, which fell by 15.2% for the nine months ended September 30, 2024, compared to the previous year. This decline is attributed to lower average selling prices and reduced domestic customer upgrades.
Operational, Financial, and Strategic Risks
Operational Risks: The company has faced operational challenges, including a workforce reduction of nearly 25% announced in November 2024, aimed at aligning costs with revenue expectations. The reduction in workforce may impact operational efficiency and product development timelines.
Financial Risks: Apyx Medical has incurred recurring net losses, with a net loss of approximately $18.9 million for the nine months ended September 30, 2024. The company reported a cash and cash equivalents balance of $28.0 million as of September 30, 2024, down from $43.7 million at the end of 2023. These losses and reduced cash reserves raise concerns regarding liquidity and the ability to fund ongoing operations and growth initiatives.
Strategic Risks: The company relies on a successful product pipeline and market acceptance of its offerings. Failure to innovate or keep pace with technological advancements could result in lost market opportunities. Additionally, the company’s debt obligations, including a term loan of $37.5 million, could limit financial flexibility. The Perceptive Credit Agreement requires compliance with specific financial covenants, which, if not met, could trigger additional penalties or restrictions.
Mitigation Strategies
Financial Management: Apyx Medical has plans to continue funding operations through existing cash and product sales and may seek additional equity or debt financing. However, the company acknowledges uncertainty regarding the availability and terms of such financing. The potential dilution of equity from future financing raises concerns for existing shareholders.
Operational Adjustments: To mitigate operational risks, the company is focused on cost management and efficiency improvements. The recent workforce reduction is part of a broader strategy to align resources with market conditions and expected revenue.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Competition | Increased competition from established medical device firms | Pricing pressures and potential loss of market share | Focus on innovation and value-added services |
| Regulatory Changes | Potential changes in FDA regulations | Delays in product launches and increased compliance costs | Engagement with regulatory bodies and compliance audits |
| Market Conditions | Economic uncertainty affecting customer spending | Decline in sales, particularly in Advanced Energy segment | Cost management and diversification of product offerings |
| Financial Performance | Recurring net losses and reduced cash reserves | Liquidity risks and funding challenges | Explore additional financing options and strategic partnerships |
| Operational Efficiency | Workforce reductions impacting operations | Potential delays in product development | Streamlining operations and enhancing productivity |
Future Growth Prospects for Apyx Medical Corporation (APYX)
Future Growth Prospects for Apyx Medical Corporation
Key growth drivers for the company include product innovations, market expansions, and strategic partnerships. The company has been focusing on enhancing its product offerings within the Advanced Energy segment, which saw a revenue of $26.5 million for the nine months ended September 30, 2024, down from $31.2 million in the same period in 2023, a decrease of 15.2%.
Market Expansion Initiatives
The company has made significant strides in international markets, with international sales representing approximately 32.2% of total revenues for the three months ended September 30, 2024, compared to 30.8% for the same period in 2023. This growth in international sales is attributed to improved market penetration in over 60 countries through local dealers.
Revenue Growth Projections
Looking ahead, the company anticipates revenue growth driven by new product launches, including upgrades to the Apyx One Console. The revenue targets set forth in the Perceptive Credit Agreement include year-end revenue targets of $34.4 million for 2024, increasing to $60.3 million by 2027.
Strategic Partnerships and Acquisitions
The company has entered into a long-term supply agreement with Symmetry Surgical, which is expected to enhance OEM segment sales, projected to grow by 14.5% for the nine months ended September 30, 2024. Additionally, the company has plans to increase capital contributions to its joint venture in China, estimated at $255,000, to bolster its manufacturing capabilities.
Competitive Advantages
The company maintains a competitive edge through its innovative product lines and established relationships within the healthcare industry. The Advanced Energy segment's performance, despite a decline, still contributes significantly to the overall revenue structure, underscoring the brand's market presence.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Advanced Energy Revenue | $9.3 million | $9.8 million | (5.6) |
| OEM Revenue | $2.2 million | $2.1 million | 2.8 |
| Total Revenue | $11.5 million | $12.0 million | (4.1) |
| International Sales (% of total) | 32.2% | 30.8% | 1.4 |
| Projected Revenue Target (2024) | $34.4 million | N/A | N/A |
In summary, the company is positioned to leverage its existing market presence and product innovations to drive future growth, supported by strategic partnerships and a focus on expanding its international footprint.
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Resources:
- Apyx Medical Corporation (APYX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Apyx Medical Corporation (APYX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Apyx Medical Corporation (APYX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.