Venus Concept Inc. (NASDAQ:VERO) is a global medical technology company that develops, commercializes, and sells minimally invasive and non-invasive medical aesthetic and hair restoration technologies and related services. The company has faced a challenging macroeconomic environment, but its strategic initiatives to optimize its operations and focus on cash sales are starting to bear fruit.

Financials

In the first quarter of 2024, Venus Concept reported revenue of $17.5 million, down 14.9% from the prior year period. The decrease in revenue was primarily attributed to general macroeconomic headwinds that impacted customer access to capital and the effects of tighter third-party lending practices, which negatively impacted capital equipment sales. Despite the revenue decline, the company's cash used in operations decreased by 51% year-over-year, indicating that its strategic initiatives are enhancing the cash flow profile of the business.

For the full year 2023, Venus Concept reported annual revenue of $76.4 million and a net loss of $37.3 million. The company's annual operating cash flow was -$12.9 million, and its annual free cash flow was -$13.0 million. These financial results highlight the challenges the company has faced in the current macroeconomic environment.

In the first quarter of 2024, the company's gross profit decreased by 15% to $11.6 million, with a gross margin of 66.6%. The decrease in gross profit was primarily due to the decline in revenue in the company's international markets, driven by its strategic initiatives to exit unprofitable direct markets.

Total operating expenses decreased by 11% to $19.4 million in the first quarter of 2024, driven by reductions in general and administrative, research and development, and selling and marketing expenses. The company's net loss attributable to stockholders for the first quarter of 2024 was $9.8 million, or $1.68 per share, compared to a net loss of $9.7 million, or $1.84 per share, in the prior year period.

Liquidity

The company's balance sheet reflects its efforts to manage its liquidity. As of March 31, 2024, Venus Concept had cash and cash equivalents of $5.1 million and total debt obligations of approximately $76.7 million. The company's current ratio was 2.06, and its quick ratio was 1.18, indicating a relatively strong liquidity position.

Business Overview

One of the key strategic priorities for Venus Concept in 2023 was to optimize its commercial and operational strategy in certain international markets and to reinvest those resources in higher opportunity markets to enhance the company's longer-term growth and profitability profile. The company has made progress in this initiative, with international revenue increasing more than 30% sequentially in the first quarter of 2024, driven by strong initial demand from new distribution partners added in late 2023 and stronger-than-expected ARTAS system sales.

The company's efforts to reposition the business and focus on key strategic and operational initiatives appear to be well-founded. In the first quarter of 2024, cash system sales represented 75% of total systems subscription and lease program sales, compared to 66% in the prior year period. Notably, global cash system sales increased more than 20% on a quarter-over-quarter basis in the first quarter of 2024, with particular strength in markets outside of the U.S.

The company's cost reduction and cash management initiatives have also been productive, with the targeted incremental cost containment initiatives implemented in the second half of 2023 further enhancing the company's ability to execute on its high-priority strategic initiatives while preserving liquidity. The company's Adjusted EBITDA loss for the first quarter of 2024 improved 11% year-over-year to $5.1 million.

Product Development and Regulatory Initiatives

In terms of product development and regulatory initiatives, Venus Concept has made progress in several key areas. The U.S. commercial launch of the company's new multi-application platform, the Venus Versa Pro, is going well, and the company has received regulatory clearance for the Venus Bliss MAX in Israel. The company has also launched a rebranding initiative, Venus AI, and a new customer education and training program, NEXThetics, which have received positive feedback from participants.

Outlook

Despite the challenging macroeconomic environment, Venus Concept remains cautiously optimistic about the future. The company expects total revenue for the three months ending June 30, 2024, to be at least $16.5 million. While the company is not providing full-year 2024 financial guidance at this time due to its active dialogue with existing lenders and investors and the ongoing evaluation of strategic alternatives, the company's strategic initiatives and operational improvements suggest that it is well-positioned to navigate the current market conditions and return to growth and sustained profitability in the future.

Conclusion

Overall, Venus Concept's first quarter 2024 results demonstrate the company's ability to adapt to the challenging macroeconomic environment through strategic initiatives focused on optimizing its operations, enhancing its cash flow profile, and positioning the business for long-term success. While the company continues to face headwinds, its progress in key areas suggests that it is on the right track to deliver value for its shareholders.