InMode at Canaccord Genuity Conference: Navigating Market Challenges

On Tuesday, 12 August 2025, InMode Ltd (NASDAQ:INMD) presented its strategic outlook at Canaccord Genuity’s 45th Annual Growth Conference. CFO Yair Malca acknowledged that while the company’s Q2 performance fell short of expectations due to U.S. market challenges, growth in Europe and Asia Pacific offered a positive counterbalance. InMode is proactively addressing these hurdles with revised guidance and strategic product launches.

Key Takeaways

• InMode’s Q2 2024 performance was below expectations, primarily due to U.S. market headwinds.
• The company is seeing a shift in revenue mix towards non-U.S. markets, now evenly split.
• New product launches include the CO2 laser and Optimus Max to meet rising demand for combination treatments.
• Strategic restructuring and management changes aim to bolster future growth.
• InMode is expanding into wellness platforms, including a new device for erectile dysfunction.

Financial Results

• Q2 2024 results showed a $5 million shortfall, driven by a decline in U.S. business.
• Despite U.S. challenges, Europe and Asia Pacific reported record growth.
• The revenue mix shifted from a 65% U.S. to 50% U.S., reflecting stronger international performance.
• The company has spent approximately $400 million on share buybacks over the past year, totaling $500 million in recent years.
• Tariffs are expected to impact gross margins by 2-3% annually, with efforts underway to mitigate this effect.

Operational Updates

• InMode launched several new products, including Optimus Max and Ignite RF, and introduced a CO2 laser.
• A soft launch of an erectile dysfunction device, cleared for improved blood circulation, is underway.
• The company has reorganized its sales team, creating specialized roles to enhance focus on different product lines.
• Management changes in North America, Europe, and Asia Pacific are aimed at improving performance.

Future Outlook

• InMode has revised its guidance for the remainder of 2024, with hopes for stabilization.
• The company anticipates a recovery in the U.S. market as consumer confidence improves.
• Continued investment in R&D will focus on both aesthetic and wellness products.
• InMode is exploring capital allocation strategies, including share buybacks, dividends, and potential acquisitions.

Q&A Highlights

• Persistent U.S. market headwinds, including decreased patient demand and higher interest rates, were discussed.
• Economic conditions are impacting the demand for new platforms, though the CO2 laser has seen strong interest.
• Sales team restructuring and potential acquisitions were highlighted as part of InMode’s growth strategy.

InMode’s strategic initiatives and market adaptations were thoroughly discussed at the conference. For a detailed account, please refer to the full transcript below.

Full transcript - Canaccord Genuity’s 45th Annual Growth Conference:

Caitlin Cronin, Medical Device Analyst, Canaccord Genuity: Good afternoon, and thank you for joining us at this year’s Canaccord Genuity growth conference. My name is Caitlin Cronin, and I’m one of the medical device analysts here at Canaccord Genuity. Joining us this afternoon is InMode, a leading player in the global energy based aesthetic treatments market. And with me today is Yair Malca, CFO. Before we begin, I want to remind everyone of any relevant disclosures which can be found on our conference and our firm website.

And with that, we’ll get started with the fireside chat. So, Yair, I think the best place to start here is the q two given you just released results a couple of weeks ago. Maybe just provide some thoughts on, you know, where you guys are the first half of the year and and what you’re really trying to make sure investors understand coming out of the q two results.

Yair Malca, CFO, InMode: First of all, thank you very much for having me and having been in mode. Q2 was an okay year, an okay quarter, let’s put it this way. It’s not it wasn’t as strong as we hoped it would be, but it wasn’t a terribly slow quarter. I think what we have seen is that we still see decline in The U. S.

Business. Luckily, it was offset to some extent by a good performance, actually record quarter in Europe and nice growth in Asia Pacific area. Overall, we still continue to see the same headwinds we’ve been seeing since the 2023. Things are unfortunately in Q2 did not improve. But on the other side, I don’t think they got worse.

So we still continue to experience the same challenges, low demand on the side of the patients. So our doctors see a lower demand than what they used to see a couple of years ago, and that reflect on their willingness to invest in cap into capital equipment into their practices. In addition to the fact that interest rates are higher, this makes their monthly payment on those devices higher as well. Together with some challenging financing market, I think it’s kind of a perfect storm that has been with us for a couple of quarters, and and we still felt it in q two.

Caitlin Cronin, Medical Device Analyst, Canaccord Genuity: And then just relating to the guidance, you know, at last year, you lowered guidance multiple times, but, you know, the q one, this year had kept guidance consistent. But then q two, you preannounced you lowered guidance. I mean, what was the rationale to lower guidance, the amount that you did and when you did? And then how does that lowering play out into kind of the future quarterly cadence for this year?

Yair Malca, CFO, InMode: That’s a great question. As you have noticed, we did change our guidance philosophy this year. Last year, we were more or even overly communicative and with every quarter where we came a little bit below our expectations, we lowered the guidance. I think what we have realized and going to do moving forward starting this year is to try to minimize the revisions to the guidance. Q1 twenty twenty five, we came below our expectations by a few million dollars because it was the first quarter of the year, which is usually seasonally also the slowest quarter of the year, we decided not to make any changes and to see how Q2 would look like.

As I’ve mentioned, Q2 things did not improve didn’t get worse, but did not improve. We also came below our expectations for Q2 by $500,000,000 $5,000,000 sorry. Not too much, but still together with the miss in Q1, when we have six months behind us, I think we kind of were in a better shape to look at the remainder of the year and have a better estimate of where we expect us to be. And we provide the revised guidance, and we really hope that that’s the only and believe that that’s the only revision that we will need to do from now until until the end of the year. As I said, not a great year, but hopefully, soon as the economy start recovering, which we believe would happen, and the consumer confidence would and consumer spending would, start increasing again, I think, in in in future years, we should see some improvement.

Caitlin Cronin, Medical Device Analyst, Canaccord Genuity: I think another interesting dynamic in the q two was, the increase in noninvasive platform mix. I mean, just maybe explain to the audience why this might have been the case and then if this is a trend that you guys expect to continue.

Yair Malca, CFO, InMode: That’s another good question. I think what we’ve seen in recent years is some trends of combination treatments became very popular. So for example, we have seen that many of our customers, the doctors, offer to their patients the Morpheus8 procedures together with a c o two laser procedure. So the Morpheus8 procedure used for a more deeper treatment of the skin, and then immediately after, followed by a c o two procedure for resurfacing and smooth the skin. And so you are getting a complete treatment of of the skin in in one appointment.

We we have noticed this trend. We’ve noticed many laser companies reaching out to our Morpheus8 owners and try to sell them their CO2 laser. We decided to take advantage of this trend and offer our own CO2 laser. And this is one of the new system that you see in this category, and that’s one of the reason for for the increase. It was somewhat surprising, at least to me, you know, the CO2 laser is not a a new or novel technology.

This technology has been around for almost two decades. There are several more than a head handful of companies in the in our space offering the c o two laser platforms. However, now that it’s been packaged in the combination with Amorphous eight, it looks like there is a surprising and nice demand for it. So this is something that we’ve been doing. And based on the results, we might look into expanding on that and maybe add additional laser procedures that would go hand in hand with our existing offering also in the future.

As one of the largest and biggest player definitely in North America and probably in the world in the energy based aesthetic medical device, I think we would like to become a one stop shop for all our customer needs, especially when it comes to energy based device, in the future, maybe we can expand even more than that.

Caitlin Cronin, Medical Device Analyst, Canaccord Genuity: And, you know, also in recent quarters, revenue mix has been, you know, more evenly split US, OUS than, you know, in the past. Can you talk about this dynamic? And then is this something that you would expect to, you know, skew further back to The US when the the market rebounds, or what are your kind of expectations going forward for this mix?

Yair Malca, CFO, InMode: So yeah. Yes. As you pointed out, in the last couple of quarters, the mix has changed to around fifty-fifty, 50% coming from The U. S, 50% outside of The U. S.

Used to be 65% coming from The U. S, 35% from OUS. As I mentioned, the headwinds that we are experiencing in The U. S. Market are more significant than what we see OUS, especially in Europe and in Asia.

We do hope that when The U. S. Consumer confidence and consumer spending start coming back, we will see an increase in the mix towards The U. S. The U.

S. Is the more profitable region for us by far, I would even say. So I am looking forward for The U. S. Market to recover.

This is a weakness that we see all across the market, not only with the energy based device. That’s maybe something that it’s worth mentioning now. It’s not specific problem that InMode is facing. This is something that the entire space is now facing and we see that with our doctors and with some of the competitive dynamic, even not direct competitors. Competitors.

You see injectables are down, fillers, fillers, toxins are trending down in the last several quarters. Same I can say about the rest of the industry. I’m very much familiar with the energy based device industry, and I can tell you that many of them, especially the big players, are hurting and reporting decline in sales. I think once The US market start turning around, I hope to see the mix change back. And the more revenue we get from The US, the more profitable we will be.

Caitlin Cronin, Medical Device Analyst, Canaccord Genuity: You know, and I think in spite of these macro challenges, you’ve really continued to launch new products and and upgrades to products. So maybe I’ll just turn to that. You launched two new upgrades last year, Optimus Max and Ignite, as well as, you know, the c o two laser you mentioned, that was earlier this year, you know, in the midst of these challenges. I mean, how has demand been for these new and upgraded platforms, and and how much of your installed base do think has upgraded to these next gen platforms?

Yair Malca, CFO, InMode: The demand for those new platforms, especially with the existing user, you know, it definitely can be better. I think, the fact that the economy, especially in The US, is not doing that great and and the space has been has been experienced these headwinds that I mentioned, existing owners of the old generation, which is the Optimus and the BodyTite. So we are we launched last year the Optimus Max, which is the next generation of the Optimus, which is has been a legacy product for us, one our bestseller. And same with the Ignite RF that we launched last year, which is the next generation of the BodyTite platform, which is again one of our main drivers, especially when it comes to minimally invasive procedures. So doctors that used to have the old device might, you know, think twice before upgrading to the new one, especially when they see this weak weakness in the market.

They have a good working device. The both products has been very successful for many, many years. If if so, some of them, I would I would think, decided to keep them a little bit longer until they see some improvement, and maybe then they will feel more comfortable upgrading those to the next generation. That being said, we do see many of them upgrading or some of them at least upgrading. It started last year, but because of the fact that last year we had some supply chain issues, we focused on selling the products that we were able to bring to the market to new accounts.

This year, we no longer have those issues. We came up with some trading programs to incentivize existing owners of Optimas and BodyTite to upgrade to the next generation. We try to sweeten the deal for them. But as I mentioned, some of them are still sitting on the sidelines waiting for the economy to improve before they feel confident enough to take this leap of faith and invest reinvest in their practice. Regarding the the CO two, as I mentioned, it was a very surprising success because this was not a new technology, yet the demand there was very healthy and nice.

Caitlin Cronin, Medical Device Analyst, Canaccord Genuity: Then, you know, another part of your R and D strategy has, you know, you’re, been commercializing your new wellness platforms. And, you know, you talked on the Q2 call about your newest platform for erectile dysfunction, with the soft launch occurring in the Q2. And can you talk about, you know, the commercial strategy around this platform, when you expect FDA approval of an erectile dysfunction indication? And then, you know, what are the treatments that these docs can do with the device in the meantime as you soft launch?

Yair Malca, CFO, InMode: So the actual launch will happen in a couple of weeks during our user meeting and then we will be able to provide additional information. But what I can say is that currently, we start with soft launch. The device is cleared for a more generic FDA clearance, which is improved blood circulation, which is exactly what you want to do in order to help people that suffer from erectile dysfunction. So we currently lead with this clearance, and we can start selling until we get the FDA indication if and when it will happen, hopefully, probably next year, definitely not this year. But I think with the indication that we do have, we can start selling.

We usually go after urologists, but in addition to that, we see some of our med spas that enter HRT space, hormone replacement therapy, actually interested in adding these procedures to their practices. Also, we’ve been very active for several years with the women’s health space, selling the Empower or OBGYN that helped many women across this country with SUI, but also with issues around sexual dysfunction for women. And these practices decide to expand the offering to help also their partners with their sexual dysfunction. So the women potentially will bring the husband too. So this is another, call point for for us.

Caitlin Cronin, Medical Device Analyst, Canaccord Genuity: Great. And then, you know, any other system upgrades, or launches on the horizon, and any sort of changes to the r and d strategy as these macroeconomic challenges continue such as developing products that maybe target, you know, cheaper, noninvasive procedures?

Yair Malca, CFO, InMode: Our strategy overall on the R and D is to continue to bring new products to the market, both in aesthetic and in those wellness area. And we plan to continue with doing that. On the aesthetic side, we continue to bring into products to these two avenues. One, the minimally invasive surgically physicians and also to the non invasive. There is a huge demand also for non invasive procedures, just like the c o two laser that we introduced earlier this year, and we plan to introduce more.

Hopefully, this answer your question.

Caitlin Cronin, Medical Device Analyst, Canaccord Genuity: Yeah. Maybe let’s move on to the commercial and and management structure recent changes there. So I think you made a number of changes to, the commercial org and the management org over the past year, including the structure of of The US, and North America. Can you describe those changes and then, you know, why you implemented them and and any further changes that that you expect to to occur?

Yair Malca, CFO, InMode: Yes. Maybe I’ll start on a very high level. InMode experienced a very accelerated growth from 2017 all the way up to 2023. And, you know, sometimes it’s pretty acceptable to assume that the team that bought you almost from zero to almost $500,000,000 in revenue, not necessarily be the same team that will take you from that level to to the next level. Sometimes you you need a different skill set.

Not to say that they were did something wrong, but they are the perfect fit for what we needed then, and what we needed moving forward might be something different. And Moshe, our CEO, took the time to review region by region and we start making changes. We in Europe, we changed some of the country managers and we start seeing the results. We made some promotions there. We went direct in some countries, which helped a lot.

In Asia Pacific, we got an we changed the head of sales, the VP of sales for Asia Pacific earlier this year, and we start seeing some results there. And in North America, as you suggested, we made some management changes with the removal of the president and and two VPs. And this actually free up some space for new VPs to get promoted. And Moshe is the CEO working closely with the new VPs to mentor them and grow them and make sure they would have the tools and mindset they need in order to take this company to the next step of of where we want to be. I think with the all the products that we added in the last few years, both on the aesthetic side and the wellness side, I think it might make sense to start looking at reorganize the sales team, create some specialties.

When we were smaller, it was okay. It made sense to have one sales rep carry the entire bag of products. But now when you have so many products that address different call points, I think we are at the moment that we start thinking seriously of creating specialties, and that’s what we’ve been doing. We started with the Envision. We have a director or someone a senior director that overseen this space and start building its own team of sales reps that can sell only this product.

And by doing that, we almost force them to focus on one product. And based on the success of this pilot, we’ve got it, I think we might do the same thing in other areas like women’s health, ENT in the future where we plan to introduce platforms for the ENT, etcetera. Even in aesthetic, I think we have the surgical devices which are focusing on minimally invasive and the noninvasive. And sometimes these are two different call points. This is only for plastic surgeons or surgically trained physicians, and the non invasive can go almost to any med spas.

And sometimes, you may want a different type of sales reps to go after those different call points.

Caitlin Cronin, Medical Device Analyst, Canaccord Genuity: And then maybe just turning to capital allocation. You have a large, you know, cash balance, and you’ve gotten pressure from investors to put some of that capital to work, which you have done. Just maybe provide an overview of your recent capital allocation and further plans for for this year and beyond.

Yair Malca, CFO, InMode: So I think in the past, starting last year, within less than a year or a little bit over a year, I’d say, we purchased 27% of the company for about $400,000,000 in cash. And overall, in the last few years, we bought $500,000,000 in cash. We spent on share buyback basically. There are investors that think that this is not enough and we should do more. And again, we appreciate the feedback.

We we are basically looking at all the options. Yes, we can do more and we are considering that, but we’re also considering other cash allocation strategies, such dividend allocation as well as M and A. At the end of the day, M and A can help us buy some interesting assets that can contribute to the future growth of the company, whether it’s additional asset on aesthetic or additional asset on the wellness space, the ones that we are going after, whether it’s women health, male health, ophthalmology, ENT, etcetera. So I would say that all the options are on the table. We have nothing against buyback.

We’ve done quite a significant buyback program so far, and we are open to do more if we if the board determined that that’s the right thing to do. But having said that, we’re also looking at other alternatives that might be the right thing to do as well.

Caitlin Cronin, Medical Device Analyst, Canaccord Genuity: Maybe just in the last minute here, touching on tariffs, you know, what’s what’s the strategy, and what’s the expected impact for this year, and and how do you expect to implement mitigation efforts?

Yair Malca, CFO, InMode: So the currently, our estimate is that we are gonna pay on average of 10% tariffs. It’s probably hopefully, will be less. We are trying to implement some programs that would help us reduce that. For now, let’s go with the 10%. This would impact have an impact of two to 3% on the gross margin on an annual basis.

Once we are successful in implementing different alternatives, we will report back the expected income. But for now, let’s go with what we provided so far. Mhmm.

Caitlin Cronin, Medical Device Analyst, Canaccord Genuity: Great. I think we’ll end it there. Thanks, Tahir.

Yair Malca, CFO, InMode: Thank you very much. Thank you, guys.

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