Apyx Medical Corp

Previous wording

We operate in two business segments: OEM and Surgical Aesthetics, formerly known as Advanced Energy. The OEM segment is primarily development and manufacturing contracts and product driven. The Surgical Aesthetics segment sells both capital equipment and consumables in the form of a single-use handpiece. Sales of handpiece units are a substantial portion of our business and for the nine months ended September 30, 2025 and 2024, we sold approximately 63,000 and 64,000 units, respectively. This is a result of an overall lower number of liposuction procedures and commercial focus on the launch of AYON. In the U.S. Handpiece revenue accounts for more than 50% of our total Surgical Aesthetics revenue.

Current wording

We operate in two business segments: OEM and Surgical Aesthetics, formerly known as Advanced Energy. The OEM segment is primarily development and manufacturing contracts and product driven. The Surgical Aesthetics segment sells both capital equipment and consumables in the form of a single-use handpiece. Sales of handpiece units are a substantial portion of our business and for the three months ended March 31, 2026 and 2025, we sold approximately 26,000 and 19,000 units, respectively. In the U.S. Handpiece revenue accounts for more than 50% of our total Surgical Aesthetics revenue.

Previous wording

Glucagon- like peptide -1 receptor agonists ("GLP-1s"), such as Mounjaro®, Wegovy® and Ozempic®, are prescribed for the treatment of diabetes and/or weight loss in combination with exercise to improve glycemic control. GLP-1’s have also been found to mimic the GLP-1 satiety hormone in our bodies. When one eats, GLP-1 is released in the small intestines regulating blood sugar and sending signals to the brain centers that control appetite. Studies have shown patients taking GLP-1’s have experienced a loss of body weight. Currently, three GLP-1’s are cleared by the FDA for weight loss, but we anticipate a number of additional drug candidates will be cleared, as well as oral versions of these medications.

Current wording

Glucagon- like peptide -1 receptor agonists ("GLP-1s"), such as Mounjaro®, Wegovy® and Ozempic®, are prescribed for the treatment of diabetes and/or weight loss in combination with exercise to improve glycemic control. GLP-1’s have also been found to mimic the GLP-1 satiety hormone in our bodies. When one eats, GLP-1 is released in the small intestines regulating blood sugar and sending signals to the brain centers that control appetite. Studies have shown patients taking GLP-1’s have experienced a significant loss of body weight.

Previous wording

We believe the increased use of GLP-1s had an initial negative impact on the revenue for plastic and cosmetic surgeons and created uncertainty in the aesthetic space. However, we believe, that the use of these drugs will have a ripple effect which will drive people towards plastic surgery and may provide a tailwind for sales of our Renuvion products. Rapid weight loss caused by these drugs can contribute to loose skin. To address this, the cosmetic surgery market focuses on body contouring. Body contouring is a customizable treatment for patients to target specific fat deposits, engage in the transfer of fat, and treatments to address loose or lax skin. Renuvion is the only FDA approved device for the treatment of this issue post liposuction. Additionally, Renuvion may be used to treat skin laxity without the use of liposuction, potentially increasing the total available market for our products.

Current wording

We believe the increased use of GLP-1s had an initial negative impact on revenue for plastic and cosmetic surgeons and created uncertainty in the aesthetic space. However, we believe, that the use of these drugs will have a ripple effect which will drive people towards plastic surgery and may provide a tailwind for sales of our Renuvion products. Rapid weight loss caused by these drugs can contribute to loose skin. To address this, the cosmetic surgery market focuses on body contouring. Body contouring is a customizable treatment for patients to target specific fat deposits, engage in the transfer of fat, and treatments to address loose or lax skin. Renuvion is the only FDA-approved device for the treatment of this issue post liposuction. Additionally, Renuvion may be used to treat skin laxity without the use of liposuction, potentially increasing the total available market for our products.

Previous wording

The initial 510(k) clearance for AYON covers a wide variety of aesthetic treatments, including Renuvion to address loose and lax skin, ultrasound-assisted liposuction, electrosurgery to support procedures requiring removal of excess tissue and closed loop contouring, among others. October 13, 2025, we announced that we had submitted the 510(k) premarket notification to the FDA for the label expansion of AYON to include power liposuction.

Current wording

October 13, 2025, we announced that we had submitted the 510(k) premarket notification to the FDA for the label expansion of AYON to include power liposuction. We anticipate receiving clearance in the second quarter of 2026.

Previous wording

The consequences of global supply chain instability and inflationary cost increases, potential and actual tariffs, and their adverse impact to the global economy, continue to evolve. Accordingly, the significance of the future impact to our business and financial statements remains subject to significant uncertainty. We continue to work on initiatives to mitigate the effects of inflation on our business, including finding alternative suppliers that meet our quality standards, streamlining our supplier network to reduce the use of middlemen and redesigning some components to achieve better volume purchase prices. Inflation has not, to date, materially impacted our operations or financial performance. However, as these trends continue for raw materials, freight, and labor costs, our future financial performance could be adversely impacted.

Current wording

The consequences of global supply chain instability, inflationary cost increases, potential and actual tariffs, and their adverse impact to the global economy, continue to evolve. Accordingly, the significance of the future impact to our business and financial statements remains subject to significant uncertainty. We continue to work on initiatives to mitigate the effects of inflation, including finding alternative suppliers that meet our quality standards, streamlining our supplier network to reduce the use of middlemen and redesigning some components to achieve better volume purchase prices. Inflation has not, to date, materially impacted our operations or financial performance. However, as these trends continue for raw materials, freight, and labor costs, our future financial performance could be adversely impacted.

Previous wording

Total revenue increased by 12.1%, or approximately $1.4 million, for the three months ended September 30, 2025 when compared with the three months ended September 30, 2024. Surgical Aesthetics segment sales increased 19.1%, or approximately $1.8 million, for the three months ended September 30, 2025 when compared with the three months ended September 30, 2024. The Surgical Aesthetics sales increase was driven by sales of AYON, as we commenced our commercial launch during the quarter and an increased volume of single-use handpieces in both domestic and international markets. These increases were partially offset by decreases in domestic sales of generators, including upgrades to the Apyx One Console, where the purchase of AYON was not part of the sale and upgrades to the Apyx One Console in international markets. Overall, domestic Surgical Aesthetics segment sales increased by over 30% from the prior year period. OEM segment sales decreased 17.6%, or approximately $0.4 million, for the three months ended September 30, 2025 when compared with the three months ended September 30, 2024. The decrease in OEM sales was due to decreases in sales volume to existing customers, including Symmetry Surgical under our 10-year generator manufacturing and supply agreement.

Current wording

Total revenue increased by 32.4%, or approximately $3.1 million, for the three months ended March 31, 2026 when compared with the three months ended March 31, 2025. Surgical Aesthetics segment sales increased 36.1%, or approximately $2.8 million, for the three months ended March 31, 2026 when compared with the three months ended March 31, 2025. The Surgical Aesthetics sales increase was driven by sales of AYON, as we commenced our commercial launch in the third quarter of 2025, increased sales of generators internationally and increased volume of single-use handpieces in both domestic and international markets. These increases were partially offset by decreases in domestic sales of generators, including upgrades to the Apyx One Console, where the purchase of AYON was not part of the sale, as expected, and upgrades to the Apyx One Console in international markets. OEM segment sales increased 13.8%, or approximately $0.2 million, for the three months ended March 31, 2026 when compared with the three months ended March 31, 2025. The increase in OEM sales was due to increases in sales volume to existing customers. While OEM segment sales increased for the three month period, with the increased focus on Surgical Aesthetics, we expect that OEM segment revenue will decrease for the year and that this trend will continue over time.

Previous wording

International sales represented approximately 27.5% and 29.2% of total revenues for the three and nine months ended September 30, 2025, respectively, as compared with 32.2% and 30.8% of total revenues for the same period in the prior year. Management estimates our products have been sold in more than 60 countries through local dealers, coordinated by our sales and marketing personnel through our facilities in Clearwater, Florida and Sofia, Bulgaria.

Current wording

International sales represented approximately 35.1% of total revenues for the three months ended March 31, 2026 as compared with 28.5% of total revenues for the same period in the prior year. Management estimates our products have been sold in more than 60 countries through local dealers, coordinated by our sales and marketing personnel through our facilities in Clearwater, Florida and Sofia, Bulgaria.

Previous wording

Gross profit for the three months ended September 30, 2025, increased 19.3% to $8.3 million, compared to $7.0 million for the same period in the prior year. Gross margin for the three months ended September 30, 2025, was 64.4%, compared to 60.5% for the same period in 2024. The increase in gross margin for the three months ended September 30, 2025 from the prior year period is primarily attributable to mix between our segments with Surgical Aesthetics comprising a higher percentage of total sales, geographic mix, with domestic sales comprising a higher percentage of total sales and product mix within our OEM segment. These increases were partially offset by changes in product mix within our Surgical Aesthetics segment.

Current wording

Gross profit for the three months ended March 31, 2026, increased 39.9% to $7.9 million, compared to $5.7 million for the same period in the prior year. Gross margin for the three months ended March 31, 2026, was 63.5%, compared to 60.1% for the same period in 2025. The increase in gross margin for the three months ended March 31, 2026 from the prior year period is primarily attributable to mix between our segments with Surgical Aesthetics comprising a higher percentage of total sales and product mix within our OEM segment. This was partially offset by geographic mix, with international sales comprising a higher percentage of total sales and tariffs that began effecting us in the second half of 2025.

Previous wording

Professional services expense decreased 14.4% for the nine months ended September 30, 2025, primarily due to a decreases in physician and marketing consulting expenses ($0.4 million), legal expenses ($0.3 million), recruiting expenses ($0.1 million) and accounting and audit fees ($0.1 million). This decrease was partially offset by an increase in board of director’s stock-based compensation expense ($0.1 million), which was offset by lower board cash compensation included in selling, general and administrative expenses.

Current wording

Professional services expense decreased 9.0% for the three months ended March 31, 2026, primarily due to a decrease in physician and marketing consulting expenses ($0.1 million) and legal expense ($0.1 million). These decreases were partially offset by an increase in recruiting expense ($0.1 million).

Previous wording

During the three months ended September 30, 2025, selling, general and administrative expense decreased 14.8%, primarily due to lower insurance expense, including claims on our policies ($0.3 million), lower meeting and training costs ($0.1 million), travel expenses ($0.1 million) and board of directors cash compensation ($0.1 million). These decreases were partially offset by an increase in commissions ($0.1 million).

Current wording

During the three months ended March 31, 2026, selling, general and administrative expense increased 3.2%, primarily due to an increase in commissions ($0.2 million), travel expenses ($0.1 million) and miscellaneous other expenses ($0.2 million). These increases were partially offset by a decrease in advertising expense ($0.4 million).

Previous wording

Interest income decreased approximately $0.1 million and $0.4 million for the three and nine months ended September 30, 2025, respectively, when compared with the same period in the prior year. These decreases are due to a lower average balance and lower average yield in our investments in money market funds and U.S. Treasury securities included in cash and cash equivalents.

Current wording

Interest income decreased approximately $0.1 million for the three months ended March 31, 2026 when compared with the same period in the prior year. This decreases are due to a lower average yield in our cash equivalents in money market funds and U.S. Treasury securities.

Previous wording

Interest expense was largely unchanged at approximately $1.4 million and approximately $4.2 million for the three and nine months ended September 30, 2025 and 2024, respectively.

Current wording

Interest expense was largely unchanged at approximately $1.4 million for the three months ended March 31, 2026 and 2025.

Previous wording

Income tax expense was approximately $78,000 and $60,000 with effective tax rates of (4.2)% and (1.3)% for the three months ended September 30, 2025 and 2024, respectively. Income tax expense was approximately $176,000 and $163,000 with effective tax rates of (1.8)% and (0.9)% for the nine months ended September 30, 2025 and 2024, respectively. For the three and nine months ended September 30, 2025 and 2024, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the net operating loss (“NOL”) and net deferred tax assets generated during the period.

Current wording

Income tax expense was approximately $143,000 and $49,000 with effective tax rates of (7.2)% and (1.2)% for the three months ended March 31, 2026 and 2025, respectively. For the three and three months ended March 31, 2026 and 2025, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the net operating loss (“NOL”) and net deferred tax assets generated during the period.

Previous wording

At September 30, 2025, we had approximately $25.1 million in cash and cash equivalents as compared to approximately $31.7 million in cash and cash equivalents at December 31, 2024. Our working capital at September 30, 2025 was approximately $37.8 million compared with $45.7 million at December 31, 2024.

Current wording

At March 31, 2026, we had approximately $31.1 million in cash and cash equivalents as compared to approximately $31.7 million in cash and cash equivalents at December 31, 2025. Our working capital at March 31, 2026 was approximately $45.3 million compared with $46.8 million at December 31, 2025.

Previous wording

For the nine months ended September 30, 2025, net cash used in operating activities was approximately $5.5 million, compared with net cash used in operating activities of approximately $15.5 million in the nine months ended September 30, 2024. The decrease in cash used in operations is primarily due to improvements in our accounts receivable and accounts payable positions and the decrease in operating loss, which is a result of the cost cutting measures implemented in the fourth quarter of 2024, compared to the same period in the prior year. These decreases were partially offset by cash used to procure inventory as we commenced the commercial rollout of AYON during the period and decreases in non-cash expenses included in our operating losses.

Current wording

For the three months ended March 31, 2026, net cash used in operating activities was approximately $0.6 million, compared with net cash used in operating activities of approximately $0.7 million in the three months ended March 31, 2025. The decrease in cash used in operations is primarily due to the reduction in our operating loss, which was driven by an increase in Surgical Aesthetics sales. This was partially offset by the payment of 2025 bonuses in the first quarter of 2026 and cash used to procure inventory for our expanded product portfolio.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2025 and 2024, was $0.8 million and $0.5 million, respectively, related to investments in property and equipment.

Current wording

Net cash used in investing activities for each of the three months ended March 31, 2026 and 2025, was $0.1 million, related to investments in property and equipment.

Previous wording

Net cash provided by financing activities for the nine months ended September 30, 2025 was $95,000 and was primarily related to contributions to the China JV by the non-controlling member and proceeds on the exercise of stock options.

Current wording

Net cash provided by financing activities for the three months ended March 31, 2026 was $0.1 million and was primarily related to proceeds on the exercise of stock options.

Previous wording

On November 7, 2024, we entered into an amendment to the Perceptive Credit Agreement. The amendment reduced the financial covenant trailing twelve-month revenue targets relating to its Surgical Aesthetics segment (tested quarterly), with amended year-end targets of $37.0 million, $52.4 million and $60.3 million for 2025, 2026 and 2027, respectively. The amendment also introduced a maximum operating expense financial covenant, with full year targets of $40.0 million and $45.0 million for 2025 and 2026, respectively. The Perceptive Credit Agreement, as amended, continues to contain customary affirmative and negative covenants, including covenants limiting the ability of us and our subsidiaries, among other things, to incur debt, grant liens, make distributions, enter certain restrictive agreements, pay or modify subordinated debt, dispose of assets, make investments and acquisitions, enter into certain transactions with affiliates, and undergo certain fundamental changes, in each case, subject to limitations and exceptions set forth in the Perceptive Credit Agreement. Additionally, we must maintain a balance of $3.0 million in cash and cash equivalents during the term of the Perceptive Credit Agreement. As of September 30, 2025, we were in compliance with the financial covenants contained within the Perceptive Credit Agreement, as amended. Our continued compliance with covenants is subject to meeting or exceeding forecasted Surgical Aesthetics revenues, as amended and reducing operating expenses.

Current wording

On November 7, 2024, we entered into an amendment to the Perceptive Credit Agreement. The amendment reduced the financial covenant trailing twelve-month revenue targets relating to its Surgical Aesthetics segment (tested quarterly), with amended year-end targets of $52.4 million and $60.3 million for 2026 and 2027, respectively. The amendment also introduced a maximum operating expense financial covenant, with a full year target of $45.0 million for 2026. The Perceptive Credit Agreement, as amended, continues to contain customary affirmative and negative covenants, including covenants limiting the ability of us and our subsidiaries, among other things, to incur debt, grant liens, make distributions, enter certain restrictive agreements, pay or modify subordinated debt, dispose of assets, make investments and acquisitions, enter into certain transactions with affiliates, and undergo certain fundamental changes, in each case, subject to limitations and exceptions set forth in the Perceptive Credit Agreement. Additionally, we must maintain a balance of $3.0 million in cash and cash equivalents during the term of the Perceptive Credit Agreement. As of March 31, 2026, we were in compliance with the financial covenants contained within the Perceptive Credit Agreement, as amended. Our continued compliance with covenants is subject to meeting or exceeding forecasted Surgical Aesthetics revenues, as amended and controlling operating expenses.

Previous wording

On November 22, 2022, we filed a shelf registration statement providing us the ability to register and sell our securities in the aggregate amount up to $100 million. The shelf registration statement included an embedded ATM facility for up to $40 million.

Current wording

On December 1, 2025, we filed a shelf registration statement providing us the ability to register and sell our securities in the aggregate amount up to $100 million. This shelf registration statement replaced our previous shelf registration statement that expired during December 2025.

Previous wording

At September 30, 2025, we had purchase commitments totaling approximately $4.4 million, substantially all of which is expected to be purchased within the next twelve months.

Current wording

At March 31, 2026, we had purchase commitments totaling approximately $4.2 million, substantially all of which is expected to be purchased within the next twelve months.

Previous wording

We maintain a reserve for uncollectible accounts receivable. When evaluating the adequacy of the allowance for credit losses, we analyze historical bad debt experience, the composition of outstanding receivables by customer class, and the age of outstanding balances, and we make estimates in connection with establishing the allowance for credit losses, including the expected impacts of changes in the operating environment in multiple countries as well as the credit terms being offered to customer, to determine where adjustments to historical experience are warranted. The economic uncertainty in the capital equipment market being experienced in the aesthetic space as a result of the disruption from GLP-1's has resulted in the granting of extended credit terms. Accordingly, we believe that there is additional exposure in our outstanding receivables and have adjusted our accounts receivable allowance for this expectation. Changes in estimates are reflected in the period they are made. If the financial condition of our customers deteriorates, resulting in an inability to make payments, additional allowances may be required.

Current wording

We maintain a reserve for uncollectible accounts receivable. When evaluating the adequacy of the allowance for credit losses, we analyze historical bad debt experience, the composition of outstanding receivables by customer class, and the age of outstanding balances, and we make estimates in connection with establishing the allowance for credit losses, including the expected impacts of changes in the operating environment in multiple countries as well as the credit terms being offered to customers, to determine where adjustments to historical experience are warranted. The economic uncertainty in the capital equipment market being experienced in the aesthetic space as a result of the disruption from GLP-1's has resulted in the granting of extended credit terms. Accordingly, we believe that there is additional exposure in our outstanding receivables and have adjusted our accounts receivable allowance for this expectation. Changes in estimates are reflected in the period they are made. If the financial condition of our customers deteriorates, resulting in an inability to make payments, additional allowances may be required.