STRATA Skin Sciences(SSKN 6.25%) reported its second-quarter 2025 results on August 13, 2025, highlighting significant developments in reimbursement expansion, ongoing litigation, and commercial initiatives that are expected to shape the company’s long-term outlook despite international headwinds.
CPT code expansion broadens STRATA Skin Sciences’ U.S. market
The American Medical Association (AMA) revised the Current Procedural Terminology (CPT) codes in May 2025, enabling reimbursement for XTRAC excimer laser treatments across 30 dermatologic indications beyond psoriasis. The effective date is targeted for January 1, 2027, with the possibility of acceleration into 2026 through temporary G codes. This change could triple the company’s total available market to 30 million patients.
"The revision of these codes expands reimbursement eligibility for excimer laser treatments to include multiple inflammatory and autoimmune skin conditions beyond their original psoriasis indication, enabling coverage for conditions such as vitiligo, atopic dermatitis, mycosis fungoides, lichen planus, alopecia areata, and cutaneous T-cell lymphoma, better known as CTCL, among approximately 30 indications. The implications of these changes could not be more dramatic for us and our providers. While the revisions are set to go into effect on January 1, 2027, we have commenced the process to accelerate access to these revised codes through temporary G codes. Assuming successful implementation of the temporary G codes into the 2026 reimbursement period, we have the potential to pull forward revenue opportunities by one year as we expand into new indications. These developments open our addressable market to 30 million patients, expanding our total available market, TAM, threefold."
— Dolev Rafaeli, Chief Executive Officer
This expansion positions STRATA Skin Sciences to capture a significantly larger patient population, potentially accelerating revenue growth if temporary G codes are approved for earlier implementation.
STRATA Skin Sciences targets higher reimbursement and operational leverage
The company is providing extensive utilization and economic data to the Centers for Medicare and Medicaid Services (CMS) to support raising reimbursement per procedure, with proposed increases from $160 to as high as $230 per procedure if device-related practice expense values are accepted. STRATA Skin Sciences’ operational model focuses on driving device usage within its 844-unit U.S. installed base and leveraging consulting programs like Elevate 360 to materially raise revenue per device.
"Our application to CMS now includes three components. One, has to do with the time. I covered that. The second one has to do with the device or the utilization of the device. And we are showing CMS backed by data. And the data we show them is over the span of 2018 until today, there were 1,300 providers using or 1,300 devices used or 1,300 clinics using the devices. And that is a combination of our heart care clinics, clinics that have purchased the device from us, and clinics that have purchased the TheraClear device from our from RE Medical, which we acquired that business from them in 2021. So there are 1,300 individual clinics using the device. Since we have insight into the utilization of every one of these devices, we are providing CMS with data covering 1,300 devices going all the way back to 2018, showing them that the component, the cost of the device in the code, should be approximately four and a half times. So it should be about $95. If that happens, then our reimbursement is going to go average reimbursement is going to go up from $160 up about $70, so it is going to go up to $230. That is kind of the maximum. And that is just based on the practice expense components. If the time component also expands, that is going to push the reimbursement even further up. The third request from CMS is to provide temporary G codes."
— Dolev Rafaeli, Chief Executive Officer
If reimbursement rate increases are approved, STRATA Skin Sciences stands to benefit from both rising eligible patient volumes and higher revenue per procedure, enhancing its financial leverage and growth prospects.
STRATA Skin Sciences pursues legal action for competitor’s alleged market disruption
The company filed litigation against LaserOptik and its affiliates for alleged multi-year false claims on device reimbursability and technical superiority, with the court already barring some of these claims. Management estimates damages in the eight-figure range, and legal expenses reached $340,000 in the quarter, though most costs are believed to be behind the company as fact discovery winds down.
"Now, I am not going to go into the specific damages, but these damages are in the eight-digit range when it comes to calculation. The damages experts have come up with the relevant theories, and STRATA is going to pursue this to the end if needed. Unless, as you know, in these cases, companies meet and find a way to settle the dispute before the case goes all the way. Maybe it should be pointed out, and I did mention this in my prepared remarks, one of the things that LaserOptik has done is they were hiding behind entities that did not exist. So for some time since we started this suit in August 2024, they claimed that all the relevant parties were present. However, we just recently found out that LaserOptik America was actually not an entity. It was doing business as DBA, but it was another company that they did not present, and that is the company I mentioned, which is C. Dalton International LLC. They also represented themselves as representatives of Korea, which they are not or at least they claim they are not. The judge in his recent remarks to the parties in the case mentioned his dissatisfaction with the way they have conducted their business. However, to your specific question, most of our legal expenses are behind us. Now we are towards the end of fact discovery. And what is going to extend the case somewhat is the inclusion of these two new defendants. However, these two new defendants are not going to come up with anything we do not know."
— Dolev Rafaeli, Chief Executive Officer
The resolution of this litigation could result in substantial financial recovery for STRATA Skin Sciences and may deter future competitive misconduct in the dermatology device market.
Looking Ahead
Management did not provide specific quantitative guidance for the remainder of 2025, citing ongoing tariff-driven volatility impacting international markets, particularly China. Leadership expects U.S. business momentum to improve toward year-end 2025 and highlighted November 2025 as the anticipated timing for CMS’s decision on the temporary G code application and reimbursement rate adjustments. No concrete figures or explicit forward revenue or EBITDA targets were disclosed for upcoming quarters.
