InMode (INMD) UBS Global Healthcare Conference 2024 summary

Market environment and industry trends

• Aesthetic market experiencing softness across devices, fillers, and toxins, with reduced patient volumes and procedures.

• Financing for capital equipment has become more challenging due to stricter underwriting and higher interest rates, leading to delayed purchasing decisions.

• The industry is in a cyclical down cycle, with uncertainty about its duration, but financial and R&D strength positions the company well for recovery.

• Key headwinds include consumer confidence, high interest rates, and tougher financing; consumer confidence is seen as the most critical factor for recovery.

• No improvement in market conditions yet, but stability has been observed; Q4 is expected to be the strongest quarter, with guidance for 2025 to be conservative.

Business strategy and operational approach

• Maintains investment in R&D and sales during downturns, launching new products and retaining talent while competitors cut costs.

• Operating margin expected to decrease from 45% to around 35% due to continued investment, but this is seen as a competitive advantage.

• Sales force engagement is supported by ongoing product launches, robust support, and unique financing programs that share risk with leasing companies.

• Organizational restructuring underway to create specialized teams for different medical communities, aligning with growth from $50M to $500M revenue.

Business model and customer economics

• Capital-intensive model preferred over razor-razorblade due to higher physician profitability and easier adoption.

• Morpheus8 brand drives demand, with physicians typically recouping investment in less than a year due to high procedure profitability.

• 70% of U.S. sales are to new customers, even during downturns, indicating ongoing market expansion.