Apyx Medical Corp (APYX) Q2 2019 Earnings Call Transcript

Apyx Medical Corp (APYX -4.35%)
Q2 2019 Earnings Call
Aug 07, 2019, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to the second quarter of fiscal-year 2019 earnings conference call for Apyx Medical Corporation. [Operator instructions] Please note that this conference call is being recorded and that a recording will be available on the company's website for replay shortly. Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management and involved inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, as well as our most recent 10-Q filing. Such factors may be updated from time to time in our filings with the SEC, which are available on our website.

We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events, or otherwise. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website.

I would now like to turn the call over to Mr. Charlie Goodwin, Apyx Medical's president and chief executive officer. Please go ahead, sir.

Charlie Goodwin -- President and Chief Executive Officer

Thanks, Julie. Welcome everyone to our second-quarter fiscal-year 2019 earnings call. I am joined on this afternoon's call by our chief financial officer, Tara Semb. Let me provide you with a quick agenda for today's call.

I'll start with an overview of our second-quarter revenue performance and the drivers of our growth during the period. Then I'll provide you with an update of our recent operational progress with respect to the four strategic initiatives that represent key components of our longer-term growth strategy. Tara will then discuss our second-quarter financial results in greater detail and review our fiscal 2019 guidance, which we updated in our earnings press release this afternoon. I'll then conclude today's prepared remarks with some additional closing thoughts on our outlook before we open the call to questions.

At the end of Q2 2019, we reported total revenue of 6.6 million representing 78% growth year over year. Our total revenue growth in Q2 was driven by performance in our advanced energy business reflected by strong global demand for our Renuvion cosmetic technology. As a reminder, we're focused on driving growth in our advanced energy business by increasing the adoption and utilization of our Renuvion generators and hand pieces in the U.S. cosmetic surgery market satisfying the increasing demand we are seeing from our OUS distributors and improving our coverage and penetration of key OUS markets by entering into new distributor partnerships.

Our continued execution with respect to each of these items during the second quarter resulted in advanced energy sales of 5.3 million, an increase of $2.2 million or 69% year over year. We also saw impressive growth in our OEM business, which increased by $721,000 or 125% year over year. Our OEM growth was primarily driven by contributions from our electrosurgical generator and supply agreement with Symmetry Surgical, which we entered into in August of last year as part of the divestiture and sale of the Bovie core business and brand. Turning to a review of our revenue performance by geography.

During the second quarter, our U.S. sales increased by 1.6 million or 53% year over year. U.S. sales were primarily driven by a 33% increase in advanced energy sales and 147% increase in our OEM sales.

Our advanced energy growth benefited from growth in sales of our Renuvion generators, as well as strong utilization-based demand. We were particularly pleased with our U.S. performance given the challenges that we faced early in the second quarter. After a tough and distracting series of events in April, we rebounded in May and June to post very strong results overall for the quarter.

I commend our team for staying focused on execution, despite the disruption early in the quarter. We also saw strong growth outside the U.S., with total international sales increasing 1.3 million or 177% year over year. Our international growth was driven primarily by strong utilization-related demand for our Renuvion generators and hand pieces from distributors in our existing OUS markets. We entered two new countries in the second quarter, which contributed very modestly to growth year over year.

But the overwhelming majority of our international growth was from distributor relationships that we formed in 2018, and to a lesser extent, in early 2019. Turning to an update of our operational progress with respect to our four strategic initiatives. As I've shared with you on prior earnings calls, we're focused on the following four strategic initiatives to position Apyx Medical for long-term growth in the cosmetic surgery market. Number one is formalize our regulatory strategy to pursue specific clinical indications that will enable us to market and sell Renuvion for our targeted procedures.

Two, to cure new clinical evidence demonstrating the safety and efficacy of our Renuvion technology. Three, enhancing physician and practice support for our cosmetic surgery customers and for improving our manufacturing capabilities and efficiencies. Starting with our first strategic initiative formalizing our regulatory strategy, in the U.S., we're focused on pursuing clinical indications that will enable us to market Renuvion for targeted procedures in the U.S. cosmetic surgery market.

The initial procedure that we have been focused on is dermal resurfacing, and I am pleased to report that we have made substantial progress. After withdrawing our initial 510(k) applications for derma resurfacing procedures on March 29th, we committed publicly to developing a new 510(k) submission for this clinical indication as quickly and methodically as possible and engaged the help of external resources to advise us on the best path forward. Our clinical and regulatory teams worked diligently during the second quarter to develop a new clinical protocol and secure the necessary support that would enable us to prepare a new IDE application. I'm pleased to report that on July 23rd, we submitted the IDE application for our new dermal resurfacing trial, and we're currently awaiting the agency's response and feedback on the materials we submitted.

Once we receive and incorporate the agency's feedback and obtain the IDE approval, we expect to initiate a new clinical study to evaluate the use of Renuvion in dermal resurfacing procedures the results of this trial would be intended to support the creation of a new application for 510(k) clearance. As discussed on prior earnings calls, our pursuit of new clinical indications for Renuvion has not been limited to our focus on dermal resurfacing. We have also identified other potential clinical indications where we believe our Renuvion technology would address important unmet clinical needs within the U.S. cosmetic surgery market.

To that end, we are happy to announce that the indication we intend to pursue will be the treatment of skin laxity via the sub-dermal use of Renuvion in the neck we intend to begin building clinical support for our pursuit of this indication in the coming months. Specifically, we expect to conduct a feasibility study consisting of approximately 20 patients to evaluate the safety profile of Renuvion in these procedures. I am very excited to announce that we obtained our IDE approval for this study on July 25th and expect to begin enrolling patients by December. In terms of our OSU reg -- OUS regulatory strategy, Apyx Medical is focused this year on expanding our geographic footprint by obtaining regulatory clearance for our technology in new countries particularly those with large and growing cosmetic surgery markets.

In doing so, it is important to us that we own the product registrations in the countries that we enter. During the first quarter, we entered Canada and Mexico. As discussed on prior calls, our fiscal 2019 guidance assumes growth will be driven by penetrating into existing countries as we service utilization-based demand. To the extent that we enter new countries that we believe may be material contributors to our growth profile this year, we will announce them and incorporate them into our updated guidance expectations accordingly.

In recent months, we've also made important additions to the Apyx Medical team to further bolster our regulatory affairs capabilities and support the development of our long-term regulatory strategy. In July, we appointed Dr. Libet Garber as our director of global regulatory affairs. We recruited Dr.

Garber from the FDA, where she worked for 10 years as a master scientific reviewer leading the review of over 700 FDA submissions. Prior to her tenure with the FDA, she also worked as an electrical engineer at John Hopkins University Applied Physics Lab in Maryland and as a researcher in several engineering laboratories. Dr. Garber will help develop our regulatory strategy and direct the day-to-day regulatory activities for all Apyx Medical sites.

She will also support the planning and design of all clinical studies required as part of our strategy to pursue and obtain new regulatory clearances. I'm also excited to announce the appointment of Minnie Baylor-Henry, the newest member of our board of directors. Ms. Baylor-Henry joins our board with over 20 years of regulatory and affairs and will be chairing a newly formed regulatory and compliance committee.

Among her many career highlights, Ms. Baylor-Henry spent over 15 years working in regulatory affairs for Johnson and Johnson and was ultimately promoted to worldwide vice president of medical and regulatory affairs in the company's medical device division. She also spent eight years with the FDA. Turning to our second strategic initiative.

In addition to the studies we intend to pursue in support of our regulatory strategy, we're also focused on securing new clinical evidence demonstrating the safety and efficacy of our Renuvion technology in cosmetic surgery procedures. In the near term, our clinical team has been working on a retrospective clinical study examining the sub-dermal use of Renuvion in liposuction procedures, which we expect to publish during the second half of 2019. I am pleased to report that we completed and submitted the manuscript of this study during the second quarter and recently received confirmation that it has been accepted for publication in the open access journal of plastic and reconstructive surgery. The publication timing has not yet been confirmed, but we're looking forward to sharing additional details with you once the study becomes publicly available.

On July 15th, we announced the appointment of four new members to our medical advisory board with extensive expertise in plastic and cosmetic surgery. Dr. Brian Kinney, Dr. Paul Ruff, Dr.

Richard Gentile, and Dr. Edward Zimmermann. With the addition of these four professionals to our existing board consisting of Dr. Diane Duncan and Dr.

Jack Zamora, we believe we've established an impressive team of advisors to evaluate and inform our clinical strategy, including the design of clinical trials to support our pursuit of new regulatory clearances. In July, we also appointed a senior director of clinical affairs Ms. Kari Larson, who will develop and manage our clinical research activities and support the development of our longer-term clinical strategy. Ms.

Larson has spent over 15 years of clinical research experience working with both healthcare companies and clinical sites. Importantly, she has developed and managed clinical affairs teams and directed clinical research activities at three aesthetic medical device companies: Lutronic, Ulthera, and Myoscience. With respect to our third strategic initiative, enhancing physician and practice support for our cosmetic surgery customers, we continue to make great progress in developing our training and support for both new and prospective surgeon customers. During the second quarter, we continued to host physician-mentor programs, or PMPs, which were attended by both potential surgeon customers in key locations across the U.S.

These PMP events include educational sessions and live cases performed by our consulting surgeons. The primary goal of our PMPs is to provide surgeons with the ability to learn directly from their peers in formal educational settings. They've proven very effective in helping us engage with prospective customers and ensure that we are delivering high-quality training across the country. To assist in our training efforts, we have also created a small team of clinical specialists charged with supporting our sales team.

Following the sale of one of our Renuvion generators, our clinical specialists work closely with the new surgeon customer to deliver one on one training and provide support during their first cases. By ensuring that our new customers are well-trained on the use of Renuvion, we believe our clinical specialists are able to encourage strong utilization of our technology while also allowing our reps to spend more of their time pursuing new business. In addition to pursuing and improving our surgeon training efforts, we also continue to expand our marketing support for the Renuvion brand. During the second quarter, we provided new patient-focused marketing brochures to our surgeon customers that feature before and after photos.

We've also received positive feedback from our surgeon customers on the first series of patient-focused Renuvion marking materials, which we introduced during Q1. And lastly, in connection with our fourth strategic initiative, our director of global operations for advanced energy, Laura Iverson, and her team continue to make progress in improving our manufacturing capabilities and efficiencies. She is currently pursuing several new lean initiatives with the input of our board member, Craig Swandal . Additionally, we've identified areas to improve the manufacturing cost of our hand pieces.

We expect to see these improvements evident themselves in our financial results as we continue to sell more hand pieces. In addition to our recent progress with respect to our four strategic initiatives, I'd also like to congratulate our regulatory and R&D teams on an important achievement. On Monday, we announced that we received FDA 510(k) clearance for the next-generation version of our J-Plasma precise laparoscopic hand piece. In recent years, we received feedback that surgeons in the OUS markets were interested in an upgraded version of our J-Plasma precise hand piece for laparoscopic procedures that would enable them to utilize our Cool-Coag feature.

As a reminder, Cool-Coag is a feature that enables our surgeon customers to deliver standard monopolar energy and a noncontact helium present plasma spray called plasma beam coagulation. In addition to our precise J-Plasma energy in a single hand piece, this feature is particularly helpful when surgeons need to coagulate a wide area of tissue. In response to this surgeon demand, we leveraged our expertise in research and development and manufacturing to create this next-generation version of our J-Plasma precise hand piece. In addition to incorporating our Cool-Coag technology, this next-generation hand piece is also 39% lighter than its predecessor for improved ergonomics.

We're pleased to have enhanced our offering for laparoscopic surgical procedures and we expect to begin a limited launch of this hand piece by the end of the third quarter. Importantly, the J-Plasma precise hand piece for laparoscopic procedures will be commercialized in the European market where many of our European distributors sell both our Renuvion and J-Plasma products which we believe are used in a variety of surgical procedures. Stepping back, as I mentioned earlier in my prepared remarks, I am very pleased with our company's performance during the second quarter. Despite the unfortunate setback we experienced with the withdrawal of our initial 510(k) submission for the dermal resurfacing at the end of March, our team has done an excellent job of exemplifying our core values under difficult circumstances working together, challenging the status quo, and going the extra mile to create new opportunities for our company.

I am also very pleased with the incredible talent that we have added to our team as we continue our journey toward becoming the world's leading innovator in unique energy solutions for the cosmetic surgery market. With that, let me turn the call over to Tara to discuss our second-quarter financial results in greater detail and review our fiscal-year 2019 financial guidance, which we updated on this afternoon's released. Tara?

Tara Semb -- Chief Financial Officer

Thanks, Charlie. As a reminder, our results are reported on a continuing operations basis for the period ending June 30th, 2019. Any financial impact related to the divestment and sale of our core segment appear in our financial statements as discontinued operations and are excluded from the commentary that follows. Total revenue for second-quarter 2019 increased 2.9 million or 78% year over year to 6.6 million, compared to 3.7 million last year.

By business segment, total revenue growth in the second quarter was driven primarily by advanced energy segment sales, which increased 2.2 million or 69% year over year to 5.3 million. Total revenue growth in Q2 also benefited from growth in sales from our OEM segment. OEM segment sales increased $721,000 or 125% year over year to 1.3 million in the second quarter of 2019 driven primarily by the sales of generators related to our 10-year manufacturing and supply agreement with Symmetry entered into as part of the divestiture of the core business last August. Advanced energy and OEM sales represented approximately 80% and 20% of total revenue in the second quarter of 2019, respectively, compared to 84% and 16% in the prior-year period.

Revenue in the United States increased approximately 1.6 million or 53% year over year to 4.5 million, and international revenue increased approximately 1.3 million or 177% year over year to 2 million. International revenue represented approximately 31% of total sales in the second quarter of 2019, compared to 20% in the second quarter of 2018. Moving down the P&L, gross profit increased approximately $1.9 million or 76% year over year to 4.5 million, compared to 2.5 million for the second quarter of '18. The increase in second-quarter 2019 gross profit was driven primarily by strong sales in the company's advanced energy segment.

Gross margin for the second quarter of 2019 was 68.1%, compared to 68.7% last year. The change in gross margin this quarter was primarily due to revenue mix by product and geography in our advanced energy segment and higher OEM sales as a percentage of total revenue this year. Operating expenses for second-quarter 2019 increased 3.5 million or 63% year over year to 8.9 million, compared to 5.5 million for the second quarter of 2018. The year-over-year change in operating expenses was primarily driven by a $1.5 million increase in salaries and related costs, 1 million increase in professional services, and an $870,000 increase in selling, general, and administrative expenses.

Loss from operations for the second quarter of '19 was 4.5 million, compared to the operating loss of 2.9 million last year. Net loss from continuing operations for second-quarter 2019 was 4.3 million or $0.13 per diluted share, compared to a net loss from continuing operations of 2.9 million or $0.09 per diluted share for the second quarter of 2018. Second-quarter 2019 adjusted EBITDA loss was 3.5 million, compared to an adjusted EBITDA loss of 2.4 million last year. As a reminder, we have provided a detailed reconciliation from GAAP net loss to adjusted EBITDA in our press release this afternoon.

As of June 30th, 2019, the company had cash and cash equivalents of 67.4 million and no short-term investments, compared to cash and cash equivalents of 16.5 million and short term investments in U.S. Treasury bills of 61.7 million as of December 31st, 2018. The company had working capital of 74.1 million as of June 30th, 2019, compared to 81.8 million as of December 31st, 2018. Turning to a review of our 2019 financial guidance, which we updated in our earnings press release this afternoon, for the 12 months ending December 31st, 2019, we now expect total revenue in the range of 26.5 to 27.5 million representing growth of 59% to 65% year over year.

This compares to the company's prior total revenue guidance range of 25.5 to 26.5 million. Our updated 2019 total revenue guidance assumes advanced energy revenue in the range of approximately 21.5 to 22.5 million, representing growth of 65% to 72% year over year. This compares to our prior advanced energy revenue guidance range of 20.5 to 21.5 million. The $1 million increase in this range is driven by our stronger-than-expected performance during the second quarter and higher growth expectations from international countries over the balance of 2019.

Our OEM revenue remains unchanged at approximately 5 million, representing growth of 38% year over year. In terms of our profitability guidance for fiscal-year 2019, we expect GAAP net loss in the range of 22.4 to 21.4 million, compared to our prior guidance range of net loss in the range of 23.5 to 22.5 million. Roughly half of the $1.1 million improvement in our fiscal 2019 net loss guidance range versus our prior guidance is driven by the higher revenue growth expectations and the other half from higher gross margin assumptions for fiscal 2019. Specifically, we now expect 2019 gross margins in a range of approximately 61 to 62.5% this year, compared to our prior guidance range of 59 to 61%.

The increase in our gross margin range is driven by the stronger-than-expected gross margins we reported over the first half of 2019 and the early benefits of our focus on improving manufacturing efficiencies on our hand piece margins. While we are pleased to report higher gross margin expectations for 2019, our margins will come in lower than the 64.7% margin we've reported in 2018. As discussed on prior calls, the largest driver of the expected decline in gross margins this year is the impact of 12 months of contribution from our manufacturing agreement with Symmetry in 2019, compared to only approximately three months of contribution in 2018. Excluding the full-year contribution to total revenue from this manufacturing agreement, our 2019 gross margin would be approximately 65%.

Finally, we have also increased our adjusted EBITDA loss expectation in this afternoon's release. Specifically, we now expect adjusted EBITDA loss in the range of 18.8 to 17.8 million, compared to adjusted even a loss from continuing operations of 11.7 million in fiscal-year 2018. This compares to the company's prior guidance of adjusted EBITDA loss in the range of 19.9 to 18.9 million. As a reminder, we have included a full reconciliation from GAAP net loss to non-GAAP adjusted EBITDA in our earnings press release this afternoon.

With that, I'll turn the call back to Charlie for closing remarks. Charlie?

Charlie Goodwin -- President and Chief Executive Officer

Thanks, Tara. In summary, we're very pleased with our performance in the first half of 2019 and we're raising our guidance today to account for our stronger-than-anticipated results in the second quarter. We look forward to driving impressive growth in our advanced energy business through the remaining months of the year as we continue to increase our share of the 1.5 billion cosmetic market in the United States, penetrate our existing international markets, and expand our distributor network into new countries. We will also remain focused on our strategic initiatives that comprise our longer-term growth strategy and continue to allocate capital appropriately through targeted investments.

Based on our strong performance to date, we remain convinced that our current and future opportunities we are pursuing in the cosmetic surgery market will ultimately position us to deliver sustained profitable growth and strong returns for our shareholders as we establish Apyx Medical as a leader in the cosmetic surgery market. I'd like to close my prepared remarks today by thanking our employees for their hard work this quarter and their commitment to reshaping what's possible in this market by delivering game-changing solutions to our surgeon customers and improving the lives of their patients. With that, operator, let's now open the call for questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] And our first question will come from Matt Hewitt from Craig-Hallum Capital. Your line is open.

Matt Hewitt -- Craig-Hallum Capital Group LLC -- Analyst

Good afternoon. Congratulations on the strong quarter and progress on your strategic initiatives. First question for me. Could you give us an update on the size of your sales team today? I think last quarter was approximately 40 with 28 of them being internal.

Where does that sit and do you have any plans to add to that team as the year progresses?

Charlie Goodwin -- President and Chief Executive Officer

Yeah. So at the end of Q2, we had actually 29 direct sales reps and six independent agencies. So think of it roughly about 40 feet on the street in the United States and that's -- and we're happy with that size for the rest of the year.

Matt Hewitt -- Craig-Hallum Capital Group LLC -- Analyst

That's great. And then implied within the guidance and kinda just working through some of the initial math here and given some of the comments you made regarding the IDE submission, some of the clinical data that you're gonna be working toward, what kind of a step-up should we be anticipating from an R&D perspective? And is that gonna -- is there any timing-related issues there, like, where maybe Q3 be lumpier or heavier than Q4? Just how should we be thinking about the back half from an R&D expense perspective?

Charlie Goodwin -- President and Chief Executive Officer

Yeah. You're talking about total opex. If you notice that we haven't changed. We're still committed to spending about 40 to 41 million dollars, but most of that will be in the third and fourth quarter.

I think we spent about 18 million in the first half. And the rest will be in the back half of the year.

Matt Hewitt -- Craig-Hallum Capital Group LLC -- Analyst

OK. That's great. And then maybe one last one if I can. And you commented on this a little bit, but gross margins obviously a pretty strong quarter there, better than we had expected and up sequentially.

You're making some enhancements and improvements there to drive further growth. How should we be thinking about that over, say, the medium term over the next three to five years. Where do you think that can go without giving a specific range but just help us understand where you see that going. Thank you.

Charlie Goodwin -- President and Chief Executive Officer

Yeah. Yeah. Thank you. And obviously, the manufacturing capabilities have been a strategic focus since I've gotten here and it's been one of our core building blocks.

And over three to five years, we would not only see this as an expanding revenue story, but also an expanding gross margin story. But obviously, we're not gonna get into specifics at this time as we're just really in the early stages of starting to see some benefit from that.

Matt Hewitt -- Craig-Hallum Capital Group LLC -- Analyst

Understood. Thank you.

Charlie Goodwin -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from Kyle Bauser from Dougherty and Company. Your line is open.

Kyle Bauser -- Dougherty and Company -- Analyst

Hi. Thanks. Good evening, and some great updates here. Congratulations on the IDE approval for the skin laxity trial.

Can you speak a little bit more about this? I mean, well, you have skin tightening claim in it. How many sites will you have for it, and will there be any overlap with these sites and the dermal resurfacing trial.

Charlie Goodwin -- President and Chief Executive Officer

Yeah. So we're not gonna get into a lot of specifics today with the skin laxity trial other than we're very pleased and very excited that we got approval to move forward with these 20 patients. We don't see and anticipate any overlap between the sites for the skin laxity side and the dermal sites. They will be they will be separate sites, but we're obviously excited that we received IDE approval and we're looking forward to enrolling patients toward end of this year.

Kyle Bauser -- Dougherty and Company -- Analyst

Got it. And so you mentioned you still have 40 reps of feet on the street, 29 of which are dedicated reps. So if we kinda do back the envelope math using your current advanced energy run rate, we're looking at maybe $500,000 of sales that a rep is generating per year. I mean, what's the goal for rep productivity, maybe what your competitors are doing.

And at what point do you envision needing to add more dedicated reps?

Charlie Goodwin -- President and Chief Executive Officer

Yeah. So I think it depends on obviously how long the rep's been here and they probably need a good six months to a year to get really up to speed and really start contributing. But after a year, you would expect them to generate in their second year somewhere around a million dollars in sales. So if you think about that as a ballpark, that's a pretty good rule of thumb.

Kyle Bauser -- Dougherty and Company -- Analyst

Got it. Quickly, just lastly, I didn't catch it if you did mention it, but Mexico Canada came online in Q1. What were the two new countries in Q2?

Charlie Goodwin -- President and Chief Executive Officer

Yeah. We're not gonna -- we had mentioned that we would give out countries if they were material for us. And the countries that we added in Q2 were smaller countries, and they're really not material and really didn't have any effect in our guidance.

Kyle Bauser -- Dougherty and Company -- Analyst

OK. Thanks for taking the questions. I'll jump back in queue here.

Charlie Goodwin -- President and Chief Executive Officer

Thanks, Kyle.

Operator

[Operator instructions] Our next question comes from Russell Cleveland with RENN Capital. Your line is open.

Russell Cleveland -- RENN Capital -- Analyst

So congratulations on all the progress here with the FDA, both in dermal and the other -- the throat area. I got a longer-term question here. It looks like we're making a lot of progress in moving the business forward and we are -- positioned ourselves. But some kind of indication here, a little longer term, I don't want any numbers or anything but the philosophy we have about 67 million -- 60 million.

There is a limit to what we can spend and create business. So what's the longer -- give me some longer term here about what we're going to do here to make sure that our financial position remains really strong along with growing the business.

Charlie Goodwin -- President and Chief Executive Officer

Yeah. Look we've stated publicly that we are committed to making this a long-term profitable company. And we've also stated publicly that the cash that we have currently is plenty for us to achieve that goal and so that still remains our goal. We haven't changed from there.

We're looking at our investments and we're investing wisely. But we're not investing foolishly and we're making sure that our investments are going to have long-term growth for the company. And so that still remains our goal, and that hasn't changed.

Russell Cleveland -- RENN Capital -- Analyst

Right. Well, thanks again, and congratulations on the regulatory progress. It's really great. Thanks so much.

Charlie Goodwin -- President and Chief Executive Officer

Thank you, Russell.

Operator

Matt O'Brien with Piper Jaffray. Please go ahead. Your line is open.

Unknown speaker

Hi, guys. This is Drew on for Matt. Thanks for taking the questions here, and congrats on a nice quarter.

Charlie Goodwin -- President and Chief Executive Officer

Thank you.

Unknown speaker

Kind of on the 510(k) approval this week, certainly your commentary reads -- it sounds a little bit like a pivot a little bit away from the cosmetics market back toward the surgical market. I mean, is that the right interpretation of it at all and sort of kind of what have you heard that sort of prompted you in that direction. And does that open up any new markets that you're not currently targeting?

Charlie Goodwin -- President and Chief Executive Officer

Yeah. So no, that does not represent any pivot or anything like that. We are still 100% focused on the cosmetic surgery market in the United States and that has not changed. As we have stated before, in Europe, we are actually selling both J-Plasma and Renuvion because a lot of the Renuvion procedures are done in the hospital and we had a open device that also -- a J-Plasma open device that had Cool-Coag on it, but we were getting a lot of requests from the surgeons that were doing the procedures to add that for a laparoscopic version also.

So what we did is we took their feedback. We took the R&D team. It is it is a core competency of what we do is to be able to design and manufacture these types of devices, and we just took the strength that we have to add a -- an important tool to the bag for those distributors in Europe.

Unknown speaker

OK. That makes a lot of sense. I appreciate the clarification. And then kinda obviously very good quarter internationally for you guys.

I believe you're still working through distributors there. I know you discuss in the past about some of the larger cosmetic markets, including Brazil, China, South Korea. And I know you added two international markets this quarter. But I guess what are the hurdles mainly to enter those big markets? I guess what's the stopping factor for you guys going after those?

Charlie Goodwin -- President and Chief Executive Officer

Well, it's not a stopping factor. It's just that time factor in that all of -- any market, it doesn't matter if it's those three. But any of the markets, all have different regulatory requirements that you have to do in order to have your products registered to be able to sell. And it's just going through that process and getting the things done.

And so each one's a little bit unique, each one's a little bit different, and the timing on the different markets is all a little bit unique. So it's just a matter of us doing the work, and that's one of the reasons that we've invested so much into the regulatory this year is because we've got a lot of these countries that we're going to be going after and getting the registration for. So it's -- each country is a little bit different and we're just working through the process.

Unknown speaker

OK. Very helpful. Thank you.

Charlie Goodwin -- President and Chief Executive Officer

You bet. Thank you.

Operator

[Operator instructions] Our next question comes from Matt Hewitt with Craig-Hallum Capital. Your line is open.

Matt Hewitt -- Craig-Hallum Capital Group LLC -- Analyst

Just a quick follow up for me regarding the the next skin laxity trial. If you're successful and get a label for that, how should we be thinking about market size? And will it be just for the neck or will doctors have the ability to kind of use that as they see fit on patients? But how should we think about a market size I guess is the big question.

Charlie Goodwin -- President and Chief Executive Officer

Yeah. It's a very good question, and I appreciate the question. But I'm not gonna enter into the answer of that question right now, Matt, and just for the main reason of, look, we've got to go out and get the indication and once we get the indication we will totally then update you on on all the market size and everything else for it. Obviously, we think that is very important and we think that it has a lot of potential for us.

But until we actually get the indication and until we can actually go out and do that, it doesn't do us a lot of good to talk about because remember we're still a $20 million business and a $1.5 billion opportunity in the United States. And so we've got plenty of stuff to do right now to keep executing and grow our share there. This is just something that we're letting you know that we're doing because we got the approval and it's something that we're excited about. But at the end of the day, we need to wait until we get everything done before we really start talking about the opportunity to add on there.

Matt Hewitt -- Craig-Hallum Capital Group LLC -- Analyst

Fair enough. Thank you.

Charlie Goodwin -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from Jeffrey Bernstein with Cowen Prime. Your line is open.

Jeffrey Bernstein -- Cowen Prime Advisors -- Analyst

Thanks for taking my questions. Just a couple. Glad to hear you're starting to put some lean disciplines in there and it sounds like you're already gonna have some benefit on some redesign of the hand piece. How much low-hanging fruit is there in efficiency overall and manufacturing and in particular -- I'm only looking for qualitative kind of answer.

Charlie Goodwin -- President and Chief Executive Officer

Yeah. Look, I think that anytime that you are an organization, when you're a smaller organization and you're looking to really be able to scale and grow a business, I think there is things that you could potentially do because there's definitely opportunity. And so we're -- we've been focused on it as you know it takes time especially with manufacturing and we think we've got the right people in here to help do it and we look forward over the next three to five years of seeing the fruits of our labor for sure.

Jeffrey Bernstein -- Cowen Prime Advisors -- Analyst

And then just on the dermal resurfacing application part two, is there any reason to think that this trial would be significantly bigger in terms of enrollment than the prior?

Charlie Goodwin -- President and Chief Executive Officer

No. I think you could think about it as about the same size and everything else. And obviously, we don't have -- we just submitted so we don't have approval back from the FDA and we don't have their comments yet. So to talk about anything specific really doesn't matter, but you could think of that about the same size.

Jeffrey Bernstein -- Cowen Prime Advisors -- Analyst

Gotcha. That's fair. Great. Thanks so much.

Charlie Goodwin -- President and Chief Executive Officer

Yeah. You bet.

Operator

[Operator signoff]

Duration: 47 minutes

Call participants:

Charlie Goodwin -- President and Chief Executive Officer

Tara Semb -- Chief Financial Officer

Matt Hewitt -- Craig-Hallum Capital Group LLC -- Analyst

Kyle Bauser -- Dougherty and Company -- Analyst

Russell Cleveland -- RENN Capital -- Analyst

Unknown speaker

Jeffrey Bernstein -- Cowen Prime Advisors -- Analyst

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