APYX MEDICAL CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended September 30, 2025

 

						Page
Part I.			Financial Information			2
Item 1.			Condensed Consolidated Financial Statements (Unaudited)			2
			Condensed Consolidated Balance Sheets at September 30, 2025 and December 31, 2024			2
			Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024			3
			Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2025 and 2024			4
			Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024			5
			Notes to Condensed Consolidated Financial Statements			6
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3.			Quantitative and Qualitative Disclosures about Market Risk			23
Item 4.			Controls and Procedures			23
Part II.			Other Information			24
Item 1.			Legal Proceedings			24
Item 1A.			Risk Factors			24
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			24
Item 3.			Defaults Upon Senior Securities			24
Item 4.			Mine Safety Disclosures			24
Item 5.			Other Information			24
Item 6.			Exhibits			25
			Signatures			26

 

PART I.     Financial Information

 

ITEM 1. Condensed Consolidated Financial Statements

 

APYX MEDICAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

APYX MEDICAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

APYX MEDICAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(In thousands)

 

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

APYX MEDICAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

APYX MEDICAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1.     BASIS OF PRESENTATION

 

Apyx Medical Corporation (“Company”, “Apyx”, “it” and similar terms) was incorporated in 1982, under the laws of the State of Delaware and has its principal executive office at 5115 Ulmerton Road, Clearwater, FL 33760.

 

The Company is a surgical aesthetics company with a passion for elevating people’s lives through innovative products, including its Helium Plasma Platform Technology products marketed and sold as Renuvion® and the AYON Body Contouring SystemTM in the cosmetic surgery market and J-Plasma® in the hospital surgical market. Renuvion and J-Plasma offer surgeons a unique ability to provide controlled heat to tissue to achieve their desired results. The AYON Body Contouring SystemTM is an FDA-cleared, surgeon-designed body contouring system that combines precision, versatility, and innovation in an all-in-one platform. It seamlessly integrates fat removal, closed loop contouring, and Renuvion’s tissue contraction and electrosurgical capabilities, empowering surgeons to deliver comprehensive body contouring treatments for patients. The Company also leverages its deep expertise and decades of experience in unique waveforms through OEM agreements with other medical device manufacturers.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Securities and Exchange Commission (“SEC”) rules that permit reduced disclosure for interim periods. For a more complete discussion of significant accounting policies and certain other information, please refer to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended  December 31, 2024. In the opinion of management these condensed consolidated financial statements reflect all adjustments that are necessary for a fair presentation of results of consolidated operations and financial condition for the interim periods shown, including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year.

 

Recent Business Developments

 

On May 13, 2025, the Company announced it had received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) for the AYON Body Contouring System™ (“AYON”). The Company completed its soft launch of AYON, leveraging its relationships with key surgeons in critical geographies. Additionally, the Company commenced the commercial launch of AYON in September 2025.

 

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. On October 13, 2025, the Company announced that it had submitted the 510(k) premarket notification to the FDA for the label expansion of AYON to include power liposuction.

 

Liquidity

 

The Company has incurred recurring net losses and cash outflows from operations and anticipates that losses will continue, at least, in the near term. The Company plans to continue to fund operations and capital funding needs through existing cash, sales of its products and, if necessary, additional equity and/or debt financing. However, the Company cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on acceptable terms. The sale of additional equity would result in dilution to its stockholders. Incurring additional debt financing would result in further debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict operations. If the Company is unable to raise additional capital in sufficient amounts or on acceptable terms, it may be required to delay, limit, reduce, or terminate sales, marketing and product development. Any of these actions could harm the Company's business, prospects and results of operations.

 

In November 2024, the Company undertook a cost saving restructuring which included an organizational reduction in force to better focus, optimize and streamline operations. As a result of the organizational change, the Company reduced its US workforce by nearly 25%. The estimated annualized future cost savings from the reduction in force is approximately $4.3 million, which is expected to contribute to the goal of decreasing loss and achieving cash-flow breakeven. In addition to the reduction in force, the Company eliminated bonuses in 2024, reduced the board of directors from eight to five members and reduced board cash compensation from $0.5 million annually to approximately $0.1 million. In addition to the organizational changes, the Company has identified other direct cost savings it anticipates achieving in 2025. The identified cost savings include reductions in professional fees, lower research and development costs as we complete the development of AYON, credit card fees and stock-based compensation. The Company foresees, in totality, these cost savings will reduce its annual operating expenses below $40 million in fiscal 2025.

 

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NOTE 2.     RECENT ACCOUNTING PRONOUNCEMENTS

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 on January 1, 2025. The Company expects incremental disclosures in its Annual Report on Form 10-K for the 2025 year. This includes additional items in the income tax rate reconciliation, qualitative information for significant reconciling items, disclosing additional information about taxes paid and disclosing loss before income taxes by domestic and foreign.

 

In  November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods. The objective of the disclosure requirements is to provide disaggregated information about a public business entity's expenses to help investors (a) better understand the entity's performance, (b) better assess the entity's prospects for future cash flows, and (c) compare an entity's performance over time and with that of other entities. The amendments in this ASU are effective for fiscal years beginning after  December 15, 2026, interim periods within fiscal years beginning after  December 15, 2027. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements.

 

No other new accounting pronouncement issued or effective during the fiscal year are expected to have a material impact on the Company’s condensed consolidated financial statements or disclosures.

 

NOTE 3.     INVENTORIES

 

Inventories consisted of the following:

 

		September 30,				December 31,
(In thousands)		2025				2024
Raw materials		$	4,716			$	3,973
Work in process			2,689				1,918
Finished goods			2,874				2,705
Gross inventories			10,279				8,596
Less: provision for obsolescence			(1,134	)			(1,032	)
Inventories, net		$	9,145			$	7,564

  

NOTE 4.     ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

Accrued expenses and other current liabilities consisted of the following:

 

		September 30,				December 31,
(in thousands)		2025				2024
Accrued payroll		$	1,179			$	995
Accrued commissions			787				981
Accrued product warranties			418				428
Accrued product liability claim insurance deductibles			2,265				3,168
Accrued professional fees			424				390
Short-term contract liabilities			1,173				693
Other accrued expenses and current liabilities			1,098				1,096
Total accrued expenses and other current liabilities		$	7,344			$	7,751

 

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NOTE 5.     DEBT

 

The Company’s outstanding debt with Perceptive Credit Holdings IV, LP (“Perceptive”) (as initial lender and administrative agent) (“Perceptive Credit Agreement”) at  September 30, 2025 and December 31, 2024 bears interest at a floating rate based on one-month SOFR, subject to a floor of 5.0%, plus 7.0% (12.0% at September 30, 2025). Included in interest expense for the three and nine months ended September 30, 2025 are $66,000 and $196,000, respectively, of amortization of debt issuance costs and $176,000 and $518,000, respectively, of amortization of debt discounts. Included in interest expense for the three and nine months ended September 30, 2024 are $66,000 and $195,000, respectively, of amortization of debt issuance costs and $159,000 and $473,000, respectively, of amortization of debt discounts.

 

On November 7, 2024, the Company 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, formerly known as Advanced Energy (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, contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and its 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, the Company 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, the Company was in compliance with the financial covenants contained within the Perceptive Credit Agreement, as amended. The Company’s continued compliance with covenants is subject to meeting or exceeding forecasted Surgical Aesthetics revenues, as amended, and reducing operating expenses. 

 

In connection with the amendment to the Perceptive Credit Agreement, the Company issued Perceptive 150,000 shares of its common stock. 

 

In connection with the Company’s initial loan under the Perceptive Credit Agreement, the Company issued Perceptive warrants to purchase up to 1,250,000 shares of its common stock, with an exercise price of $2.43 per share.

 

The Company’s term loan under the Perceptive Credit Agreement, net consists of the following:

 

		September 30,				December 31,
(In thousands)		2025				2024
Term loan		$	37,500			$	37,500
Unamortized debt issuance costs			(783	)			(979	)
Unamortized debt discount			(2,110	)			(2,628	)
Term loan, net		$	34,607			$	33,893

 

As of September 30, 2025, principal repayments on the debt are as follows:

 

(In thousands)
2025		$	—
2026			—
2027			2,216
2028			35,284
Total repayments		$	37,500

 

NOTE 6.     CHINA JOINT VENTURE

 

In 2019, the Company executed a joint venture agreement with its Chinese supplier (the “China JV”) whereby the Company has a 51% ownership interest. The agreement required the Company to make capital contributions of approximately $357,000 into the newly formed entity, which were made in prior years. In June 2023, the Company executed an amendment to the joint venture agreement to increase the amount of its registered capital. The amendment requires the Company to make additional capital contributions to the China JV of $408,000, of which $214,000 has been made as of September 30, 2025. During May 2025, the China JV executed a distribution agreement with a Chinese distributor and commenced operations during the second quarter of 2025. 

 

During 2024, the Company determined that the contributions made to the China JV to date are not sufficient for the China JV to fund expected losses without additional subordinated financial support. Accordingly, the Company has determined that the China JV is a VIE. The Company has determined that because it has the sole right to direct the activities of the China JV that most significantly impact its economic performance, and as the majority owner, has the obligation to absorb losses of the VIE and the right to receive benefits from the VIE that are significant to the China JV, that the Company is the primary beneficiary of the VIE. Accordingly, the China JV has been consolidated in these consolidated financial statements.

 

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The China JV is organized as a limited liability company under the laws of the Peoples Republic of China, accordingly the Company’s exposure to losses in the China JV is limited to the Company’s registered capital in the Company, which is equal to the sum of the required capital contributions above. As the China JV is not currently sufficiently capitalized, the assets of the China JV are not available to settle obligations of the Company.

 

The following table summarizes the assets and liabilities of the China JV, a consolidated variable interest entity, included in the Company’s consolidated balance sheets at September 30, 2025 and December 31, 2024, respectively:

 

		September 30,				December 31,
		2025				2024
(In thousands)
Cash and cash equivalents			373				13
Prepaid expenses and other current assets			122				54
Property and equipment, net			231				247
Accounts payable			116				8
Accrued expenses and other current liabilities			115				33

 

Changes in the Company’s ownership investment in the China JV were as follows:

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In thousands)		2025				2024				2025				2024
Beginning interest in China JV		$	210			$	184			$	130			$	229
Contributions			—				—				61				—
Net income (loss) attributable to Apyx			31				(22	)			50				(67	)
Ending interest in China JV		$	241			$	162			$	241			$	162

  

NOTE 7.     EARNINGS (LOSS) PER SHARE

 

Basic earnings (loss) per share (“basic EPS”) is computed by dividing the net income or loss by the weighted average number of common shares outstanding for the reporting period. Diluted earnings (loss) per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding. As the Company is in a net loss position for all periods presented, all potential shares outstanding are anti-dilutive. The following table provides the computation of basic and diluted loss per share.

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(in thousands, except per share data)		2025				2024				2025				2024
Numerator:
Net loss attributable to stockholders		$	(1,984	)		$	(4,703	)		$	(9,912	)		$	(18,835	)
Denominator:
Weighted average shares outstanding - basic and diluted			40,748				34,644				40,735				34,644
Loss per share:
Basic and diluted		$	(0.05	)		$	(0.14	)		$	(0.24	)		$	(0.54	)
Anti-dilutive instruments excluded from diluted loss per common share:
Options			8,327				8,257				8,327				8,257
Warrants			1,500				1,500				1,500				1,500

 

During November 2024, the Company sold pre-funded warrants to purchase 2,934,690 shares of its Common Stock. The pre-funded warrants are included in weighted average shares outstanding in the calculation of basic and diluted loss per share.

 

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NOTE 8.     STOCK-BASED COMPENSATION

 

Under the Company’s stock option plans, the Board of Directors may grant restricted stock and options to purchase common shares to the Company’s employees, officers, directors and consultants. The Company accounts for stock options in accordance with FASB ASC Topic 718, Compensation - Stock Compensation, with stock-based compensation expense recognized over the vesting period based on the fair value on the grant date utilizing the Black-Scholes model, which includes a number of estimates that affect the grant date fair value and the amount of expense to recognize.

 

The Company recognized approximately $530,000 and $1,501,000, respectively, in stock-based compensation expense during the three and nine months ended September 30, 2025, as compared with $997,000 and $3,175,000, respectively, for the three and nine months ended September 30, 2024.

 

Stock option activity is summarized as follows:

						Weighted average
		Number of options				exercise price
Outstanding at December 31, 2024			7,638,458			$	5.50
Granted			1,858,000			$	1.38
Exercised			(25,592	)		$	1.91
Canceled and forfeited			(1,143,921	)		$	4.94
Outstanding at September 30, 2025			8,326,945			$	4.67

 

The Company allows stock option holders to exercise stock-based awards by surrendering stock-based awards with an intrinsic value equal to the cumulative exercise price of the stock-based awards being exercised, referred to as net settlements. These surrenders are included in stock options exercised in the options rollforward above. There were no such exercises for the three and nine months ended September 30, 2025. For the nine months ended September 30, 2024, the Company received 531 options as payment in the exercise of 38 options. 

 

Common shares required to be issued upon the exercise of stock options would be issued from authorized and unissued shares. The Company calculated the grant date fair value of options granted in 2025 (“2025 Grants”) utilizing a Black-Scholes model.

 

		2025 Grants
Strike price		$0.90 - $1.85
Risk-free rate			3.9% - 4.5%
Expected dividend yield			—
Expected volatility			94.5% - 98.1%
Expected term (in years)			6
Grant date fair value			$0.70 - $1.47

 

NOTE 9.     INCOME TAXES

 

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. 

 

 

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NOTE 10.     COMMITMENTS AND CONTINGENCIES

 

Litigation

 

The medical device industry is characterized by frequent claims and litigation, and the Company may become subject to various claims, lawsuits and proceedings in the ordinary course of our business. Such claims may include claims by current or former employees, distributors and competitors, claims concerning the marketing and promotion of the Company’s products and product liability claims.

 

The Company is involved in a number of legal actions relating to the use of its Helium Plasma Platform Technology, which actions are being defended by the Company’s insurance carrier-appointed counsel. The outcomes of these legal actions are not within the Company’s control and may not be known for prolonged periods of time. Management has not yet received from carrier-appointed defense counsel the estimates of the net potential range of losses in all of these cases, as would be required to confirm whether all of the claims in total are adequately covered by the varying levels of aggregate insurance coverage available for each relevant insurance policy period. Notwithstanding the foregoing, in the opinion of management, the Company has meritorious defenses, and such claims are not expected, individually or in the aggregate, to result in a material, adverse effect on its financial condition, results of operations and cash flows. However, in the event that damages exceed the aggregate coverage limits of the Company’s policies or if its insurance carriers disclaim coverage, management believes it is possible that costs associated with these claims could have a material adverse impact on the consolidated financial condition, results of operations and cash flows.

 

The Company accrues a liability in its condensed consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is recorded. If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded, actual results may differ from these estimates.

 

During 2022, the Company was notified of certain procedures alleged to have been performed by the same physician and which are currently the subject of two related products liability cases within the courts. During 2023, the Company was notified by its insurance carriers that all or most of the ten individual plaintiff’s allegations could be subject to separate deductibles notwithstanding the commonality of each underlying occurrence. During March 2024, two of the plaintiffs claims were dismissed by the courts. Additionally, during 2024, the Company determined that one of the procedures was performed by a different physician. The Company has determined that a loss, comprised of estimated costs to defend the Company against the lawsuits, is probable and that the range of estimated losses is approximately $1,650,000 to $1,950,000. The Company recorded an estimated loss of $1,450,000 related to the matters during 2022 and $200,000 related to the matters during 2024. It is at least reasonably possible that a change in the actual amount of loss will occur in the near term, though management expects the actual amount of loss will be within the estimated range of losses.

 

During March 2024, the Company was named as a defendant in a number of product liability lawsuits filed under the direction of a single plaintiff’s tort firm alleging off-label use of Renuvion products and the Company’s mismarketing of the same. The suits are venued predominantly in Florida and nearly all involve procedures conducted prior to 2023, which was before the Company received FDA 510k clearance for the use of Renuvion in the types of procedures at issue. The Company denies liability and intends to vigorously defend these suits and believes that it has applicable substantive and procedural defenses. The Company has determined that a loss, comprised of estimated costs to defend the Company against the lawsuits, is probable and currently estimates the range of losses in connection with these matters to be between $1,300,000 and $1,500,000. The Company recorded an estimated loss of $1,300,000 related to these matters during 2024. The Company has also determined that there is a reasonable possibility that there will be an additional loss related to the matters, but the Company is unable to provide an estimate of the range of such additional loss at this time.

 

Purchase Commitments

 

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

 

NOTE 11.     RELATED PARTY TRANSACTIONS

 

Two relatives of Nikolay Shilev, Apyx Bulgaria’s Managing Director, are considered related parties. Teodora Shileva, Mr. Shilev’s spouse, is an employee of the Company working in the accounting department. Svetoslav Shilev, Mr. Shilev’s son, is a quality manager in the quality assurance department.

 

The partner in the Company’s China JV is also a supplier to the Company. For the three months ended September 30, 2025 and 2024, the Company made purchases from this supplier of approximately $588,000 and $189,000, respectively. For the nine months ended September 30, 2025 and 2024, the Company made purchases from this supplier of approximately $958,000 and $282,000, respectively. At September 30, 2025 and December 31, 2024, respectively, the Company had net payables to this supplier of approximately $482,000 and $243,000, respectively.

 

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NOTE 12.     GEOGRAPHIC AND SEGMENT INFORMATION

 

Operating segments are aggregated into reportable segments only if they exhibit similar economic characteristics. In addition to similar economic characteristics, the Company also considers the following factors in determining the reportable segments: the nature of business activities, the management structure directly accountable to its Chief Operating Decision Maker (“CODM”) for operating and administrative activities, availability of discrete financial information and information presented to the Board of Directors and investors. Charles D. Goodwin, CEO, is the Company's CODM. The CODM uses gross profit to assess segment performance and allocate resources, including employees and capital resources. The Company has included additional financial measures regularly reported to the CODM on a segment basis in the tables below along with a reconciliation between these measures and net income (loss). All other operating expenses are not regularly reported to the CODM on a segment basis. Asset information is not reviewed by the CODM by segment and is not available by segment. Accordingly, the Company has not presented a measure of assets by segment.

 

The Company’s reportable segments are disclosed as principally organized and managed as two operating segments: Surgical Aesthetics, formerly known as Advanced Energy, and OEM. “Corporate & Other” includes certain unallocated corporate and administrative costs which were not specifically attributed to any reportable segment. The Surgical Aesthetics segment is comprised primarily of sales of its Helium Plasma Technology products marketed and sold as Renuvion and the AYON Body Contouring System in the cosmetic surgery market. Renuvion and J-Plasma offer surgeons a unique ability to provide controlled heat to tissue to achieve their desired results. These sales consist of electrosurgical generators, single-use handpieces, accessories and related products sold in the cosmetic surgical market. The AYON Body Contouring System is an FDA-cleared, surgeon-designed body contouring system that combines precision, versatility, and innovation in an all-in-one platform. It seamlessly integrates fat removal, closed loop contouring, and Renuvion’s tissue contraction and electrosurgical capabilities, empowering surgeons to deliver comprehensive body contouring treatments for patients. The OEM segment is comprised primarily of sales related to the development and contract manufacturing of surgical devices, accessories and handpieces. 

 

Summarized financial information with respect to reportable segments is as follows:

 

		Three Months Ended September 30, 2025
(In thousands)		Surgical Aesthetics				OEM				Corporate & Other				Total
Sales		$	11,065			$	1,812			$	—			$	12,877
Cost of sales			3,438				1,142				—				4,580
Gross profit			7,627				670				—				8,297
Commissions			1,255				—				—				1,255
All other expenses(i)			4,477				3				3,394				7,874
Income (loss) from operations			1,895				667				(3,394	)			(832	)
Interest income			—				—				292				292
Interest expense			—				—				(1,413	)			(1,413	)
Other income, net			—				—				76				76
Income (loss) before income taxes			1,895				667				(4,439	)			(1,877	)
Income tax expense			—				—				78				78
Net income (loss)			1,895				667				(4,517	)			(1,955	)

 

		Three Months Ended September 30, 2024
(In thousands)		Surgical Aesthetics				OEM				Corporate & Other				Total
Sales		$	9,288			$	2,199			$	—			$	11,487
Cost of sales			2,716				1,817				—				4,533
Gross profit			6,572				382				—				6,954
Commissions			1,132				—				—				1,132
All other expenses(i)			5,909				9				3,539				9,457
(Loss) income from operations			(469	)			373				(3,539	)			(3,635	)
Interest income			—				—				378				378
Interest expense			—				—				(1,431	)			(1,431	)
Other income, net			—				—				24				24
(Loss) income before income taxes			(469	)			373				(4,568	)			(4,664	)
Income tax expense			—				—				60				60
Net (loss) income			(469	)			373				(4,628	)			(4,724	)

 

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		Nine Months Ended September 30, 2025
(In thousands)		Surgical Aesthetics				OEM				Corporate & Other				Total
Sales		$	28,622			$	5,058			$	—			$	33,680
Cost of sales			8,530				4,105				—				12,635
Gross profit			20,092				953				—				21,045
Commissions			3,046				—				—				3,046
All other expenses(i)			14,474				13				9,969				24,456
Income (loss) from operations			2,572				940				(9,969	)			(6,457	)
Interest income			—				—				874				874
Interest expense			—				—				(4,182	)			(4,182	)
Other income, net			—				—				76				76
Income (loss) income before income taxes			2,572				940				(13,201	)			(9,689	)
Income tax expense			—				—				176				176
Net income (loss)			2,572				940				(13,377	)			(9,865	)

 

		Nine Months Ended September 30, 2024
(In thousands)		Surgical Aesthetics				OEM				Corporate & Other				Total
Sales		$	26,507			$	7,373			$	—			$	33,880
Cost of sales			7,712				5,772				—				13,484
Gross profit			18,795				1,601				—				20,396
Commissions			2,972				—				—				2,972
All other expenses(i)			20,928				35				12,258				33,221
(Loss) income from operations			(5,105	)			1,566				(12,258	)			(15,797	)
Interest income			—				—				1,312				1,312
Interest expense			—				—				(4,254	)			(4,254	)
Other income, net			—				—				2				2
(Loss) income before income taxes			(5,105	)			1,566				(15,198	)			(18,737	)
Income tax expense			—				—				163				163
Net (loss) income			(5,105	)			1,566				(15,361	)			(18,900	)

 

(i) For the Surgical Aesthetics segment, all other expenses includes salaries and related costs, research and development, professional services, including marketing and physician consulting, and other selling, general, and administrative expenses such as travel and entertainment, advertising, trade show fees and meeting and training costs. For the OEM segment, substantially all related expenses are recorded as cost of sales, therefore no significant segment specific operating expenses are incurred. For Corporate & Other, all other expenses includes salaries and related costs, professional services, including legal, accounting and audit fees, investor relations consulting, information technology consulting, board of directors’ stock compensation expense, and general and administrative expenses, such as insurance, building lease costs, depreciation and computer software.

 

---

 

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 approximately 32.2% and 30.8% of total revenues for the three and nine months ended September 30, 2024, respectively.

 

Sales by geographic region, based on the customer's “ship to” location on the invoice, are as follows:

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In thousands)		2025				2024				2025				2024
Sales by Domestic and International
Domestic		$	9,332			$	7,793			$	23,851			$	23,459
International			3,545				3,694				9,829				10,421
Total		$	12,877			$	11,487			$	33,680			$	33,880

 

		September 30,				December 31,
(In thousands)		2025				2024
Long-lived assets by Domestic and International
Domestic		$	5,701			$	5,532
International			1,064				1,206
Total		$	6,765			$	6,738

 

 

 

 

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APYX MEDICAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis should be read in conjunction with our financial statements and related notes contained elsewhere in this report and with the audited consolidated financial statements and footnotes as of and for the year ended December 31, 2024 contained within our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 13, 2025. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors discussed in this report and those discussed in other documents we file with the SEC. In light of these risks, uncertainties and assumptions, readers are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements represent beliefs and assumptions as of the date of this report. While we may elect to update forward-looking statements and at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. Past performance does not guarantee future results.

 

Executive Level Overview

 

We are a surgical aesthetics company with a passion for elevating people’s lives through innovative products, including our Helium Plasma Platform Technology products marketed and sold as Renuvion® and the AYON Body Contouring SystemTM in the cosmetic surgery market and J-Plasma® in the hospital surgical market. Renuvion and J-Plasma offer surgeons a unique ability to provide controlled heat to tissue to achieve their desired results. The AYON Body Contouring SystemTM is an FDA-cleared, surgeon-designed body contouring system that combines precision, versatility, and innovation in an all-in-one platform. It seamlessly integrates fat removal, closed loop contouring, and Renuvion’s tissue contraction and electrosurgical capabilities, empowering surgeons to deliver comprehensive body contouring treatments for patients. We also leverage our deep expertise and decades of experience in unique waveforms through OEM agreements with other medical device manufacturers.

 

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.

 

Recent Activities

 

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.

 

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.

 

On May 13, 2025, we announced that we had received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) for the AYON Body Contouring System™ (“AYON”). We completed our soft launch of AYON, leveraging our relationships with key surgeons in critical geographies. Additionally, we commenced the commercial launch of AYON in September 2025.

 

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.

 

 

 

Liquidity

 

We have incurred recurring net losses and cash outflows from operations and we anticipate that losses will continue in the near term. We plan to continue to fund our operations and capital funding needs through existing cash, sales of our products and, if necessary, additional equity and/or debt financing. However, we cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms acceptable to us. The sale of additional equity would result in dilution to our stockholders. Incurring additional debt financing would result in further debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. If we are unable to raise additional capital in sufficient amounts or on acceptable terms, it may be necessary to delay, limit, reduce, or terminate our sales, marketing and product development. Any of these actions could harm our business, prospects and results of operations.

 

In November 2024, we undertook a cost saving restructuring which included an organizational reduction in force to better focus, optimize and streamline operations. As a result of the organizational changes, we reduced our workforce by nearly 25%. We estimate the annualized future cost savings from the reduction in force to be approximately $4.3 million which we expect to contribute to our goal of decreasing loss and achieving cash-flow breakeven. In addition, to the reduction in force, we eliminated bonuses in 2024, reduced the board of directors from eight to five members and reduced board cash compensation from $0.5 million annually to $0.1 million. In addition to the organizational changes, we have identified other direct cost savings we anticipate achieving in 2025. The identified cost savings include reductions in professional fees, lower research and development costs as we complete the development of AYON, credit card fees and stock-based compensation. We foresee, in totality, these cost savings will reduce our annual operating expenses below $40 million in 2025.

 

We are actively monitoring trade policy and tariff announcements including the recent executive orders issued by the U.S. federal administration regarding tariffs on imports from various countries, including the European Union, Canada, Mexico and China. In addition, we are monitoring the potential impact of actions taken by these countries in response to the announced tariffs. We currently manufacture in Clearwater, Florida and Sofia, Bulgaria and we intend to utilize these locations to minimize the impact of the tariffs, but such tariffs may make our products less cost competitive and reduce gross margins. At this time, the overall impact on our business related to these or any other tariffs that may be imposed, remains uncertain and depends on multiple factors, including the duration and expansion of current tariffs, future changes to tariff rates, scope or enforcement, retaliatory measures by impacted trade partners, inflationary effects, and the effectiveness of our responses in managing these challenges.

 

 

 

In regard to our operating segments, results are aggregated into reportable segments only if they exhibit similar economic characteristics. In addition to similar economic characteristics, we also consider the following factors in determining the reportable segments: the nature of business activities, the management structure directly accountable to our chief operating decision maker for operating and administrative activities, availability of discrete financial information, and information presented to the Board of Directors and investors. Asset information is not reviewed by the CODM by segment and is not available by segment and, accordingly, we have not presented a measure of assets by reportable segment.

 

Our reportable segments are disclosed as principally organized and managed as two operating segments: Surgical Aesthetics and OEM. “Corporate & Other” includes certain unallocated corporate and administrative costs which are not specifically attributed to any reportable segment. The OEM segment is primarily development and manufacturing contract and product driven. All related expenses are recorded as cost of sales and therefore no segment specific operating expenses are incurred.

 

We strongly encourage investors to visit our website: www.apyxmedical.com to view the most current news and to review our filings with the Securities and Exchange Commission.

 

 

Results of Operations

 

Sales

 

		Three Months Ended												Nine Months Ended
		September 30,												September 30,
(In thousands)		2025				2024				Change				2025				2024				Change
Sales by Reportable Segment
Surgical Aesthetics		$	11,065			$	9,288				19.1	%		$	28,622			$	26,507				8.0	%
OEM			1,812				2,199				(17.6	)%			5,058				7,373				(31.4	)%
Total		$	12,877			$	11,487				12.1	%		$	33,680			$	33,880				(0.6	)%
Sales by Domestic and International
Domestic		$	9,332			$	7,793				19.7	%		$	23,851			$	23,459				1.7	%
International			3,545				3,694				(4.0	)%			9,829				10,421				(5.7	)%
Total		$	12,877			$	11,487				12.1	%		$	33,680			$	33,880				(0.6	)%

 

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.

 

Total revenue decreased by 0.6%, or approximately $0.2 million, for the nine months ended September 30, 2025 when compared with the nine months ended September 30, 2024. Surgical Aesthetics segment sales increased 8.0%, or approximately $2.1 million, for the nine months ended September 30, 2025 when compared with the nine months ended September 30, 2024. The Surgical Aesthetics sales increase was driven by sales of AYON, as we commenced our commercial launch during the third quarter. This increase was partially offset by decreases in domestic and internal sales of generators, including upgrades to the Apyx One Console, where the purchase of AYON was not part of the sale. OEM segment sales decreased 31.4%, or approximately $2.3 million, for the nine months ended September 30, 2025 when compared with the nine 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.

 

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.

 

Gross Profit

 

		Three Months Ended												Nine Months Ended
		September 30,												September 30,
(In thousands)		2025				2024				Change				2025				2024				Change
Cost of sales		$	4,580			$	4,533				1.0	%		$	12,635			$	13,484				(6.3	)%
Percentage of sales			35.6	%			39.5	%							37.5	%			39.8	%
Gross profit		$	8,297			$	6,954				19.3	%		$	21,045			$	20,396				3.2	%
Percentage of sales			64.4	%			60.5	%							62.5	%			60.2	%

 

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.

 

 

Gross profit for the nine months ended September 30, 2025, increased 3.2% to $21.0 million, compared to $20.4 million for the same period in the prior year. Gross margin for the nine months ended September 30, 2025, was 62.5%, compared to 60.2% for the same period in 2024. The increase in gross margin for the nine 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. These increases were partially offset by changes in product mix within our OEM segment.

 

Other Costs and Expenses

 

Research and development

 

		Three Months Ended												Nine Months Ended
		September 30,												September 30,
(In thousands)		2025				2024				Change				2025				2024				Change
Research and development expense		$	801			$	1,142				(29.9	)%		$	2,429			$	3,963				(38.7	)%
Percentage of sales			6.2	%			9.9	%							7.2	%			11.7	%

 

Research and development expenses decreased 29.9% for the three months ended September 30, 2025, primarily due to lower compensation and benefits costs ($0.2 million) and lower spending on our product development initiatives and clinical studies ($0.1 million), as we complete the development of AYON. 

 

Research and development expenses decreased 38.7% for the nine months ended September 30, 2025, primarily due to lower compensation and benefits costs ($1.0 million) and lower spending on our product development initiatives and clinical studies ($0.5 million), as we complete the development of AYON. 

 

Professional services

 

		Three Months Ended												Nine Months Ended
		September 30,												September 30,
(In thousands)		2025				2024				Change				2025				2024				Change
Professional services expense		$	1,481			$	1,648				(10.1	)%		$	4,551			$	5,318				(14.4	)%
Percentage of sales			11.5	%			14.3	%							13.5	%			15.7	%

 

Professional services expense decreased 10.1% for the three months ended September 30, 2025, primarily due to a decrease in physician and marketing consulting expenses ($0.3 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. 

 

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. 

 

Salaries and related costs

 

		Three Months Ended												Nine Months Ended
		September 30,												September 30,
(In thousands)		2025				2024				Change				2025				2024				Change
Salaries and related expenses		$	3,191			$	3,508				(9.0	)%		$	9,344			$	12,886				(27.5	)%
Percentage of sales			24.8	%			30.5	%							27.7	%			38.0	%

 

During the three months ended September 30, 2025, salaries and related expenses decreased 9.0%, primarily due to a decrease in salaries and benefits ($0.6 million), which was due to lower headcount following our reduction in force in the fourth quarter of 2024 and lower stock-based compensation expense ($0.5 million). These decreases were partially offset by the prior year reversal of our annual bonus accrual during the third quarter of 2024 (0.7 million). Annual bonuses for 2025 are discretionary.

 

During the nine months ended September 30, 2025, salaries and related expenses decreased 27.5%, primarily due to a decrease in salaries and benefits ($1.9 million), which was due to lower headcount following our reduction in force in the fourth quarter of 2024, lower stock-based compensation expense ($1.4 million) and bonus expense ($0.2 million), as bonuses for 2025 are discretionary.

 

 

Selling, general and administrative expenses

 

		Three Months Ended												Nine Months Ended
		September 30,												September 30,
(In thousands)		2025				2024				Change				2025				2024				Change
SG&A expense		$	3,656			$	4,291				(14.8	)%		$	11,178			$	14,026				(20.3	)%
Percentage of sales			28.4	%			37.4	%							33.2	%			41.4	%

 

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).

 

During the nine months ended September 30, 2025, selling, general and administrative expense decreased 20.3%, primarily due to lower travel expenses ($0.9 million), meeting and training costs ($0.8 million), regulatory and translation expenses ($0.4 million), insurance expense, including claims on our policies ($0.3 million), board of directors cash compensation ($0.3 million), sales and property taxes ($0.1 million), payment processing fees ($0.1 million), software subscriptions ($0.1 million), foreign currency gains and losses ($0.1 million) and office supplies and shipping costs ($0.1 million). These decreases were partially offset by higher advertising expense, including trade show fees and related costs ($0.3 million) and allowances for credit losses ($0.1 million).

 

Interest Income (Expense)

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In thousands)		2025				2024				2025				2024
Interest income		$	292			$	378			$	874			$	1,312
Percentage of sales			2.3	%			3.3	%			2.6	%			3.9	%
Interest expense		$	(1,413	)		$	(1,431	)		$	(4,182	)		$	(4,254	)
Percentage of sales			(11.0	)%			(12.5	)%			(12.4	)%			(12.6	)%

 

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.

 

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.

 

Income Taxes

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In thousands)		2025				2024				2025				2024
Income tax expense		$	78			$	60			$	176			$	163
Effective tax rate			(4.2	)%			(1.3	)%			(1.8	)%			(0.9	)%

 

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. 

 

 

Liquidity and Capital Resources

 

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.

 

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.  

 

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. 

 

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.

 

We have incurred recurring net losses and cash outflows from operations and we anticipate that losses will continue in the near term. We plan to continue to fund our operations and capital funding needs through existing cash, sales of our products and if necessary additional equity and/or debt financing. However, we cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms acceptable to us. The sale of additional equity would result in dilution to our stockholders. Incurring additional debt financing would result in further debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. If we are unable to raise additional capital in sufficient amounts or on acceptable terms, it may be necessary to delay, limit, reduce, or terminate our sales, marketing and product development. Any of these actions could harm our business, results of operations and prospects.

 

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.

 

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. 

 

 

For a more in-depth description of the terms of the Perceptive Credit Agreement, as amended, see Note 11 in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2024 and Note 5 of Notes to Condensed Consolidated Financial Statements in Item 1 of this Quarterly Report on Form 10-Q. 

 

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.

 

Critical Accounting Estimates

 

In preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), we have adopted various accounting policies. Our most significant accounting policies are disclosed in Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 13, 2025.

 

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Our estimates and assumptions, including those related to inventories, intangible assets, property, plant and equipment, legal proceedings, research and development, warranty obligations, product liability, sales returns and discounts, stock-based compensation and income taxes are updated as appropriate, which in most cases is at least quarterly. We base our estimates on historical experience, or various assumptions that are believed to be reasonable under the circumstances and the results form the basis for making judgments about the reported values of assets, liabilities, revenues and expenses. Actual results may materially differ from these estimates.

 

Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period. Our critical accounting estimates include the following:

 

Accounts Receivable Allowance

 

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.

 

Litigation Contingencies

 

In accordance with authoritative guidance, we record a liability in our consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. We discuss significant judgements with counsel, which include determining the legitimacy of asserted and unasserted claims, the probability that a loss has been incurred, the estimates of the net potential range of losses associated with these claims, the timing of the losses associated with these claims and historical experience with these claims. Additionally, the deductibles on our insurance policies that cover these claims have increased in recent periods, creating additional exposure and losses in excess of historical experience. It is at least reasonably possible that a change in the actual amount of loss will occur in the near term.

 

 

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements at this time.

 

Recent Accounting Pronouncements

 

See Note 2 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

 

APYX MEDICAL CORPORATION

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable.

 

ITEM 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

Our management has established and maintains disclosure controls and procedures that are designed to ensure that the information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2025, the Company’s disclosure controls and procedures were effective.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by the Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II.     Other Information

 

ITEM 1. Legal Proceedings

 

See Note 10 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

 

ITEM 1A. Risk Factors

 

There have been no material changes to the risk factors described under Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

ITEM 3. Defaults Upon Senior Securities

 

None.

 

ITEM 4. Mine Safety Disclosures

 

Not Applicable.

 

ITEM 5. Other Information

 

None.

 

ITEM 6. Exhibits

 

3.1			Articles of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s report on Form 10-K/A filed on March 31, 2011)
3.2			By laws of the Registrant (Incorporated by reference to Exhibit 3.2 to the Registrant’s report on Form 10-K/A filed on March 31, 2011)
3.3			Certificate of Amendment of the Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.5 to the Registrant’s Quarterly Report on Form 10-Q filed on November 3, 2017)
3.4			Certificate of Elimination (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 3, 2018)
3.5			Certificate of Amendment of the Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 28, 2018)
31.1*			Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
31.2*			Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
32.1*			Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
32.2*			Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
101.INS**			Inline XBRL Instance Document
101.SCH**			Inline XBRL Taxonomy Extension Schema Document
101.CAL**			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE**			Inline XBRL Taxonomy Extension Label Presentation Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

* Filed herewith.

 

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended and otherwise is not subject to liability under these sections.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

			Apyx Medical Corporation
Date: November 6, 2025			By:			/s/ Charles D. Goodwin II
						Charles D. Goodwin II
						President, Chief Executive Officer and Director
						(Principal Executive Officer)
Date: November 6, 2025			By:			/s/ Matthew Hill
						Matthew Hill
						Chief Financial Officer,
						Treasurer and Secretary
						(Principal Financial Officer)