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On Wednesday, 04 June 2025, InMode Ltd (NASDAQ:INMD) participated in the Jefferies Global Healthcare Conference 2025, offering insights into its strategic direction amid challenging economic conditions. The company, known for its innovative medical technologies, is experiencing mixed results, with growth in Europe and Asia but headwinds in the U.S. market.
Key Takeaways
- InMode’s revenue mix has shifted, with equal contributions from the U.S. and international markets.
- The company is absorbing tariffs on Israeli-manufactured products, affecting profitability.
- Future growth is expected from new products in women’s health, ophthalmology, urology, and ENT.
- Approximately $508 million has been spent on stock buybacks over the past two years.
- InMode is actively pursuing mergers and acquisitions, especially in the injectable business.
Financial Results
InMode’s financial performance reflects the current economic challenges:
- Q1 2024 revenue was below expectations, prompting a downward adjustment in profitability guidance.
- Revenue for the year is expected to remain flat compared to the previous year.
- The revenue mix now stands at 50% U.S. and 50% international, impacting profitability.
- Tariffs on Israeli-manufactured products have been absorbed by the company, further affecting margins.
- Despite these challenges, InMode maintains a strong cash position with approximately half a billion dollars in the bank.
Operational Updates
InMode is making strategic adjustments to its operations:
- The North American sales force has been restructured, with the U.S. divided into East and West regions.
- Sales groups specializing in specific platforms are being tested to enhance market penetration.
- The Empower platform for women’s health and the Envision platform for ophthalmology both saw a 20% decline in sales in 2024.
Future Outlook
InMode remains optimistic about its long-term growth prospects:
- The company aims to release two new platforms annually, with 15 R&D projects in the pipeline.
- A new platform for erectile dysfunction is expected to launch by the end of this year.
- InMode is exploring potential acquisitions in the injectable business, despite recent rejections.
- Economic conditions will play a crucial role in determining growth potential in 2026.
Q&A Highlights
During the Q&A session, InMode addressed several key topics:
- Capital allocation strategies were discussed, with management defending its decision to maintain production in Israel.
- Shareholder concerns about stock buybacks and potential acquisitions were acknowledged.
- InMode is leveraging the current economic climate to attract talent from struggling competitors.
InMode’s management remains confident in the company’s ability to navigate economic challenges and capitalize on future growth opportunities. For a detailed understanding, readers are encouraged to refer to the full transcript below.
Full transcript - Jefferies Global Healthcare Conference 2025:
Matt Taylor, US medical supplies and devices analyst, Jefferies: Let me kick off this session with InMode. I’m Matt Taylor, the US medical supplies and devices analyst here at Jefferies. And from InMode, have Moshe Masrahi, the CEO joining us here virtually on the screen.
And also Yair Melka, the CFO here next to me. So we have about a half hour for some moderated Q and A and maybe we’ll go back and forth a little bit. Moshe, let me start high level with you and talk a little bit about just the company. I want to talk about how it’s evolving. I’m sure there’s some folks here who may be newer to the story.
And so maybe just take us through kind of the arc of your innovation evolution through minimally invasive and some of the new newer platforms that you have and talk about the opportunity from here.
Moshe Masrahi, CEO, InMode: Okay. Well, company InMode is about sixteen sixteen years old. We basically started we’re based in Israel. Currently, we started with one technology in one market, which is called radio frequency assisted liposuction or lipolysis, which basically replace some type of plastic surgery without a full surgical procedure with which mean entering the body invasively with one incision point on the face, on the body, on the arm, and other area. We got the first FDA in 02/2016, and, you know, we grew from 22,000,000 a year up to close to half a billion dollars a year in 2023.
We have, right now, two years of tough time because of the slow economy all around the world. In the last three years, we decided to take the technology, which is basically a bipolar RF energy, to another indication. We started with women health, vaginal contraction, urine incontinence. Now we are doing the study on overactive bladder and different type of vaginal vaginal treatment like sex dysfunction, dryness, etcetera. Later, we decided to go into the optimal ophthalmology market as well, and we develop another platforms, for dry eye, and some aesthetic around the eyes, periorbital wrinkles, and full face rejuvenation.
We are currently developing two new platforms, one for urologists, for erection dysfunction, and and also for ENT market, sleep apnea, snoring, and turbinate contraction. Everywhere we can take procedures from the hospital and the operating room using energy based device instead of scalpel with the full anesthesia, we’re developing the the platforms and the tool to do the treatment. The company is now around 640 people worldwide. We do the development and the manufacturing in Israel. We have currently 11 subsidiaries, five in Europe, Asia.
We are developing now a company in China, Canada, US. We’re now now we’re now we’re establishing company in Argentina and and also in other country in Asia. In other countries, like 90 countries, we sell through exclusive distributors. As I said, we manufacture in Israel. We have two facilities.
Nine 2024, was a little bit tough year for us because of the slowdown economy in The United States and also in Europe, and 2025 is, is the same. We don’t see the momentum started again. We took the company public in 02/2019. Now we are about six years public company. In August, we’ll be six years with $7 a share.
It went up, up to, you know, close to 70 and 80, and then, it went down. Now the stock price is around $14. We hope that the momentum will start again, and we will go back to a normal condition and high profitability as we used to be. Then the stock will react react positively to our share to our to our stock in the in the stock market. That’s in a nutshell, but, you know, I don’t want to spend all the time lecturing about InMode.
I’m sure some people has question, and I’m and I’m here to answer.
Matt Taylor, US medical supplies and devices analyst, Jefferies: Great. Let me start with a couple more. And since Yair is here, maybe we could talk a little bit about the guidance this year and some of the prospects for growth. You know, what are what are the key assumptions in the guidance and just remind us overall how you’re expecting to grow this year?
Yair Melka, CFO, InMode: So so overall guidance for the year is that that we we expect to stay flat compared to last year, at least on the top line. This is how we started the year. Q one was a little bit softer than what we expected. We were below a few million dollars below where we wanted wanted to be, but since it is the first quarter of the year and also the slowest quarter of the year, we decided not to touch the or not to change the revenue guidance for the year. What we did change based on q one was the estimated profitability for the year.
So the EPS and the operating margin and the gross margin a bit, we we did make some adjustment to those. The assumption at the beginning of the year was that the revenue mix between US and OUS would be pretty much similar to what we’ve seen in previous years, which is US accounts for between 62 to 65% of the business and the rest is all US. What we’ve seen in q one is that the revenue mix is actually fifty fifty. We see that The US is facing headwinds that are than expected, and Europe and Asia are actually doing a bit better than what we expected. In fact, Europe had the record quarter in q one.
So we made some changes to the guidance assumption at the profitability level and assume that the mix will remain fifty fifty for the remain remainder remainder of the year. And since the the fact that The US is actually the most profitable region for us, that has a direct impact on profitability. Add to that, the the tariffs that were imposed at the April, this because most of Moshe mentioned, most of our products are manufactured in Israel. They are subject to those new tariffs. So we expect to see a hit on the profitability.
We decided to absorb the impact of the tariff. We are not going to roll them over to our customers mainly because of the fact that, you know, our prices are fairly high to begin with. And in this economy, I think it will not be the right move to to increase prices even more. So we’re gonna take the heat for that, and that’s the decision we we made. So so far, the only chance we made to the guidance was on the profitability side.
We are looking to see how q two is gonna shape and look like. Q2 from seasonal standpoint supposed to be a fairly strong quarter. It’s too early to say how things are going to play out. We don’t see major improvements in the market yet, but, unfortunately, in our business, most of the revenue is generated, especially on the capital side, is generated on the in in the last few weeks of of the quarter with the last few days usually being the busiest of them all. So we would not know how the quarter look like and only until the end of the quarter.
And once we we see how the quarter looks like and then we have, you know, six months, in our bag, I think we’d be in a better position to to, you know, talk about guidance, in a more accurate fashion.
Matt Taylor, US medical supplies and devices analyst, Jefferies: Great. Maybe as a follow-up, could I ask, you know, given that mix was different than what you thought, why do you think you’re seeing US have more headwinds and Europe seemingly picking up a little bit? What’s different?
Yair Melka, CFO, InMode: Europe and Asia. So first of all, some of the measures that we implemented in in Europe, we made some changes, went it stopped going direct in Germany, made some changes to some of the country managers in some of the countries in in Europe, and we start seeing some of the results now. Same in Asia Pacific. We changed the head of sales for Asia Pacific area this year as long as some other changes like going direct in Japan. And it takes some time from the moment you open a direct subsidiary until you start seeing some meaningful contribution from this subsidiary.
So I think now we are starting the the results of all those changes that we’ve made. In addition to the fact that in The US, in North America, overall, we are the biggest player, I would say. And it’s very hard to avoid the headwinds where you are the biggest player in the market. You are basically the market. In Europe and Asia, we are fairly a smaller player, and it’s easier to maneuver and grow despite the headwinds when you are smaller, in in territories when you are smaller.
And overall, I think this is something that also other companies are reporting that the headwinds in Europe and Asia are not as severe as the headwinds that we see in The US. This is not only something that InMode is experiencing.
Matt Taylor, US medical supplies and devices analyst, Jefferies: It makes sense. I wanted to double click on the the pipeline and some of the things that Moshe was talking about and maybe we could roll that back into how to think about growth in in future years. So, you know, InMode has done a pretty good job historically of having a steady cadence of new products and Moshe before you were talking about moving into women’s health and ophthalmology. So first I wanted to get sort of a pulse check on how those businesses are doing. Maybe you could give us an update on those.
And then talk a little bit more about the pipeline that you mentioned in ENT and sleep, ED, those sorts of things and how contributory they could be and and when we might see them.
Moshe Masrahi, CEO, InMode: Okay. We we basically launched two platforms, one in the women health business and one for the and one for the ophthalmology. One thing I wanted to say, although we call it a women health, but any platform that we develop will have one specialty or special treatment, for OBGYNs and, angina oncologist, but the other indication for aesthetic. Because we believe that those doctors are looking for private money treatment, and we’re giving them the chance since they have the client base to use, you know, women health indication and also some aesthetic indication. The same with the ophthalmologist and and also with the optometrist with the dry eye, but with the same platforms, they can do full full facial rejuvenation, morpheus treatment for wrinkles and and and and and smooth face and IPL for pigmented lesion and others.
So at the end of the day, we’re an aesthetic company. The reason why we we opened the market into other medical community, it’s because we wanted to enlarge the customer base. And when we approach any new medical community, we come with at least one or two indication which are specific to this medical community. But in addition to that, we’re giving them platforms that they can use for some type of aesthetic. Of course, minimally invasive, it’s, it’s a little bit difficult for optometrists to do, but they can use the noninvasive handpieces in order in order to do some treatment that that that that they can make more money, especially private money with no relationship, with no relation to any, code or reimbursement.
The man the first the first system that we developed, which called Empower, is is cleared by the FDA for pelvic store pelvic floor restoration and also for vaginal treatment. We’re now developing two study with the different handpieces for urine incontinence and overactive bladder. Overactive bladder, it’s a big business in The United States, especially women after, after after two or three, birth. And, we’re doing a study which was approved by, the FDA in order to get the indication. It might take time.
Probably, it will be ready sometime at the end of twenty twenty six, but it will be on the same platforms. And therefore, doctors will enjoy some indication that they can do now and upgrade the system later on. In the first year, we sold $40,000,000 of Empower. That was a surprise to us. That was in 2023.
And in 2024, it went down a little bit like every everything else, about 20%. The same with Envision, which we brought to the market early last year, and we did very well in the first year. And now since the market for all type of medical equipment, especially capital equipment, it also went down 20% like the other the other portfolio, the other platforms that that we sell. Regarding future indication, we’re developing some new indication for existing platforms, as I said, for the for the Empower. And also, are working on some indication for the ophthalmologist.
ENT, we just finished a big study which was will be published soon in one of the peer review magazine on contraction of turbinate to open the to open the breathing tunnels. And that’s something that probably will come to the market after FDA approval sometime at the end of twenty twenty six. And and the platforms that we’re developing using bipolar RF noninvasive for erection dysfunction, also will probably will come to
Yair Melka, CFO, InMode: the
Moshe Masrahi, CEO, InMode: market sometime at the end of this year. It’s now being tested by several doctors in The United States. The first results looking very promising. So these two platforms hopefully will come to the market soon. But we have, as I said, 15 different r and d project in the in the r and d pipeline, and we intend to release two every year.
You know, medical platforms need regulation, need training, regulation all over the world, and we’re dealing with twenty seven twenty seven different regulatory bodies, and therefore it’s take time. Not all of our product are regulated worldwide yet. The main countries which we face, you know, long term process is China, Brazil, some countries in in Asia like Korea. The new MDR, you know, code for medical equipment in Europe make it more difficult for regulation. But we are we know we know how to do it.
We have a we have a regulatory team in Israel, and we’re using in every country some consultant. It takes time, but, you know, we need patience. We have, we are not well, relatively, we have resources. The com currently, we have close to half a billion dollars in the bank. So we have to wait and see what will happen in the market and how fast we can get additional regulation.
Matt Taylor, US medical supplies and devices analyst, Jefferies: Okay, great. Maybe just one area I’m very curious about. You mentioned the OAB and you’re running study there. Could you give us an update on that? Where are you on the study?
When could that read out? And what are kind of the early results telling you about the results in OAB?
Moshe Masrahi, CEO, InMode: Well, a preliminary result on two studies which were done in The US by, by doctor Mickey Karam and in Colombia indicated indicated very, very promising results, and it was already published. There are some publication which accepted which were accepted by peer reviewed and published on, on thirty two patient, US and Colombia. One treatment one treatment, fifteen minutes every treatment, with the with the basically Morpheus Morpheus v, up to seven millimeter depth, we see good results. Based on this preliminary results, we filed what is called pre submission or IDE with the FDA, and the study was approved. We’re now, basically, you know, opening eight sites in The United States to do the study.
It’s a study with six to nine months follow-up. So if we start to do the study this year, it will probably end up in sometime in 2026. And I don’t know how long it will take with the FDA to get it approved, but so far, we are very encouraged by the results and the process.
Matt Taylor, US medical supplies and devices analyst, Jefferies: Okay. Great. Maybe I’ll switch gears a little bit. I did wanna ask you about some recent letters that you’ve received because the company did put out a press release in an ’8 k, I believe, in response to some feedback from shareholders who were talking about capital allocation and wanting you to buy back more more stock and just asking questions about management and and the field management, field force management in North America. So I guess the two questions I’ll ask you is number one, could you talk about the current state of the North American sales force?
How do you feel about them? Are there any gaps? And then maybe you could just review how you plan to allocate capital from here given you have already repurchased a lot of shares? Are you gonna get continue doing that or maybe look to do more with internal investment or or m and a?
Moshe Masrahi, CEO, InMode: Well, let me start with The US. Okay? That was your first question, and then I will continue with the with the capital allocation. Basically, The United States, we used to have a president for North America. And the president for North America, you know him, Shaquille.
You met him more than once. He was responsible for the entire US and Canada, which at the time was around 70% of our business. So I I decided that, you know, to have one guy responsible for 70% of the business I’m talking about sales, not development or manufacturing, etcetera. It’s too big, and therefore, we need to divide the territory, and we divided the territory into three three sub territories. Canada is a country by itself with the self regulation different than than the FDA.
For me, it’s like, it’s like Italy, Spain, you know, Korea, and other countries, with the same level of sales. And therefore, Canada has a managing director report directly to me. And The United States, is divided into East and West, and there are two vice president of sales. One is responsible for the East and one responsible for the West. Both of them currently report to me.
Okay? And I feel this is better because I spend every month at least one week in The US working with them. We were doing some changes in the organization. For example, right now, we try to get group of salespeople specializing in one or two platforms, and not everybody sell every everything. And and I hope that when the slowdown in The US will end and we will see some new momentum, I hope that this will work better.
It seems like. Regarding capital allocation, I’m sure you know that, in the last two years, we actually, bought back stock for $508,000,000, which I believe it’s it’s a it’s a lot of money even for small company like us. Basically, we bought back 30% of the shares. Now there was one tax rule in Israel which allow us to buy 10% of the outstanding shares every year without paying dividend tax. And that’s what we did in the last two years, actually covering three years of 10%.
Now, if we if we decide to buy more shares in 2025, we will need to pay 20% tax. I’m not sure the shareholders will like it. Maybe. But, you know, there’s at least one shareholders, from a fund called Duma who believe that we need to do a tender offer and buy additional 30% of the shares. If we will do that, we will lose the opportunity to do m and a when the opportunity will present itself.
And therefore, currently, all the all the options are on the table. Continue buying shares and pay 20% dividend, wait until January 2026 and buy another 10% without paying dividend tax, or use the money to do acquisition. I believe, we discussed that in the past. Regarding m and a, we gave, we gave two proposal, official proposal to two companies, to acquire. Both of them are in the injectable business.
One is toxin, the other is filler. But apparently, it was not, it was not accepted. Maybe the price was too low. We cannot buy a company just because we need to do an m and a, and we cannot find companies with 80% gross margin. And therefore, we need to be very selective here.
I’m not saying we will not do more buyback. We probably will. The question is whether to do it in 2025 or to do it in 2026. Now regarding the letters that we’re getting from from Duma, I there are some letters that he sent privately and two letters publicly, and we basically send him a public public respond twice. He wanted to us to move the production from Israel to other countries in order to save a few cent on the on the manufacturing cost and improve the gross margin.
We explained to him more than once that that cannot happen because we’re not a mass production company. We have to we have to manufacture the product according to, regulatory rules, then every country is different. And therefore, we’re manufacturing in small batches, and we need the manufacturing close to the engineering and close to the development team. But he kept he kept saying it over and over again. I don’t know how many companies he manage in his life, but probably not industrial companies.
Regarding the buyback, we told them, listen. Let’s look look at the numbers. 5 and $5,508,000,000 in two years, that’s a lot of money. Apparently, it did not help the stock move up, unfortunately unfortunately for the shareholders and unfortunately for me and for the management. But we’re doing everything we can in order to improve the business, which we believe is the most important factor in order to start seeing the new momentum.
Yair Melka, CFO, InMode: I I think that this is what’s most important here. To keep in mind that we have a very strong management which proven its execution abilities over time. Aesthetics sometimes is a cyclical space. We’ve seen it during COVID. I think everybody needs to understand that TinMode is the strongest and the most profitable company in the in this business.
So no one knows how this slowdown going going to play out. But however it’s gonna look like, I think we are gonna come out of it stronger on the on the other end of it. We have the resources, we have the technology, and we have the execution team in place to to take us through this period.
Matt Taylor, US medical supplies and devices analyst, Jefferies: So maybe I’ll ask a couple final ones. We only have about a minute left, but one question that was kinda sparked by your your comment is we have seen other aesthetic companies really struggling. And so I would imagine that this could be an opportunity for you to pick up some talent and maybe some new accounts. Is that helping you today? Is that a tailwind as we look into next year?
Yair Melka, CFO, InMode: Again, I don’t want to call it a tailwind, but definitely, once the economy start improving, the fact that we might have less competition, not all of them will survive. I can tell you that. That definitely would help us then. And, yes, we are picking up some talents from some of the companies that are struggling at the moment. And as I said, once the economy start improving, then we should expect to see a tailwind then.
Matt Taylor, US medical supplies and devices analyst, Jefferies: Alright. Very good. Maybe last one. Just conceptually help me understand because we’ve seen a couple tough years, your business is rebased a bit. Let’s say the environment does not improve at all.
Would you actually grow in 2026 or do you think it would still be sort of flattish?
Yair Melka, CFO, InMode: That’s a very good question. It depends how the rest of the year would look like. If the economy is gonna remain pretty much the same, maybe we would be able to grow. If things would get tougher, probably not. It’s we are we no one knows.
Really, no one knows.
Matt Taylor, US medical supplies and devices analyst, Jefferies: Okay. Great. I think we’re out of time. Moshe, thanks for joining us virtually, and thanks everybody for your interest in in modem.
Moshe Masrahi, CEO, InMode: Thank you very much.
Yair Melka, CFO, InMode: Thank you very much for having us.
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