InMode Ltd. (INMD) Q4 2020 Earnings Call Transcript

InMode Ltd. (INMD 2.10%)
Q4 2020 Earnings Call
Feb 10, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the InMode Ltd. fourth-quarter and full-year 2020 conference call. [Operator instructions] I would now like to turn the conference over to Miri Segal of MS-IR. Please go ahead.

Miri Segal -- Investor Relations

Thank you, operator, and good day to everybody. I would like to welcome all of you to InMode's fourth-quarter and full-year 2020 financial results conference call. With us on the line today are Mr. Moshe Mizrahy, chairman of the board and CEO; Dr.

Michael Kreindel, co-founder and CTO; Mr. Yair Malca, CFO; Dr. Spero Theodorou, CMO; and Mr. Shakil Lakhani, president of InMode North America.

Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements, and the safe harbor statement outlined in today's earnings release also pertains to this call. If you have not received a copy of the release, please view it in the investor relations section of the company's website. Changes in business, competitive, technological, regulatory and other factors could cause actual results to differ materially from those expressed by the forward-looking statements made today. Our historical results are not necessarily indicative of future performance.

As such, we can give no assurance as to the accuracy of our forward-looking statements and assume no obligation to update them, except as required by law. Moshe will begin the call with the business update and turn it over to Shakil Lakhani, InMode's president of North America to discuss our North American operations, followed by Yair Malca, InMode's CFO with an overview of the financials. We will then open the call for the question-and-answer session. I'll now turn the call to Moshe Mizrahy, InMode's CEO.

Moshe, please go ahead.

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

Thank you, Miri and thanks to all of you for joining our fourth-quarter and full-year 2020 financial results conference call. With me on the call today are Yair Malca, our CFO; Shakil Lakhani, our president of North America; Dr. Michael Kreindel, our co-founder and chief technology officer; and Dr. Spero Theodorou, our chief medical officer.

Also with me in Israel, Rafi Lickerman, our VP finance. 2020. What a year it was. I believe that we will all remember this year for the rest of our life.

I remember our earnings call in February 2020 before the crisis hit the market. We all expected another momentous year, and none of us had a clue what would take place only one month later. In March 2020, the world stood still. All of our sales activity stopped and not one of us knew how things would unfold.

But as Churchill said, never let a good crisis go to waste. With that in mind, it took us a few days to recover and put together a worldwide plan based on four major decisions. One, not to lay off any of our employee. Two, to continue to work business as usual in all other businesses disciplines other than sales.

Three, to help out InMode's supply chain at all level from component manufacturer through to our distributors so that they will also be able to operate in spite of the crisis. Four, to use the time to upgrade our infrastructure worldwide and to train our team and our customers, doctors and prepare them for the day after the crisis. This strategy paid off big time when business began to get back to normal just before the summer. In the fourth quarter of 2020, InMode generated record revenue of $75.2 million, a 60% increase from the fourth quarter of 2019, a record of $36.1 million net income on a GAAP basis and $39.9 million of net income on a non-GAAP basis.

For the full year of 2020, InMode generated record revenue of $206.1 million, a 32% increase from the full year of 2019, a record net income of $75 million and $89.1 million of net income on a non-GAAP basis. In the full-year 2020, approximately 62% of our revenue derived from our surgical platforms engaged in minimally invasive and subdermal ablative treatment. 32% derived from our recently introduced hand-free platform and only 6% from our traditional laser and noninvasive RF platforms. The record revenue in the fourth quarter and the full year was driven by demand for our minimally invasive and hand-free proprietary electro-surgical bipolar RF technology.

The U.S. was a significant component in our performance, while international sales become a major growth engine with the full-year 2020 international revenue more than doubling year over year. During the year, we saw accelerated demand from our new product launches as our hand-free devices enable social distancing and allow physicians to offer solutions that customers feel comfortable with while effectively treating the entire body and face. The success we have had, despite the outbreak of the global pandemic, is a testament to our organization, dedication and innovative technology.

As we look back on our action in 2020, we are proud of the decision to not only retain our workforce during the COVID-19 pandemic, but expand our sales and marketing team, continue investing in our R&D and in our infrastructure and progress our regulatory processes in the U.S. and elsewhere around the world. We were confident in the future of InMode and saw this as an opportunity to cement ourselves as the market leader. As a result of our bold step, we were able to capture pent-up demand for our new and free and minimal invasive devices, Evoke, Evolve and Morpheus8.

Additionally, we were able to penetrate new medical categories such as OB/GYN, offering complementary solution to their practices. As we introduce additional technologies in '21, we plan to expand into ophthalmology market while continuing to grow our presence in the plastic surgery, dermatology and OB/GYN communities. Our goal is to introduce two new platforms each year and continue to diversify our R&D pipeline to offer wellness aesthetic solution, address other medical indication and continue to innovate. Additionally, we plan to further expand our international sales and marketing operation, while focus on Europe and Asia-Pacific in 2021.

Our initial success in this region give us confidence that we can capture market opportunity as the world gradually recover from the pandemic. As we expand into a new region and medical categories, we plan to continue developing patent protection for our novel method in RF technology that differentiate our product portfolio. Also, we will continue to defend our existing intellectual property. The success of InMode so far has come from our innovation and ability to generate interest across medical communities for our platforms.

The fact that our devices and platforms can effectively be performed in the doctor office without the need of anesthesia or any other invasive method has appealed to patient and physician alike. We will continue to deliver industry-leading solution using our unique technology to bridge the current significant treatment gap. Considering our successful performance in 2020, we are providing a full-year 2021 guidance of revenue between $250 million and $260 million, non-GAAP gross margin between 84% and 86%. Non-GAAP income from operation between $100 million and $104 million and a non-GAAP earnings per diluted share between $2.34 and $2.45.

Lastly, as part of our recently introduced corporate social responsibility, we place a high value on our employees, partners and stakeholders across the growing numbers of communities and market we operate in. We aim to positively impact local economies in the U.S. and in the rest of the world and will continue to prioritize the health and welfare of our employee and customers. With that, I would like to turn the call to Shakil, our president in North America.

Shakil?

Shakil Lakhani -- President of InMode North America

Thanks, Moshe and hello, everyone. We reported a record fourth quarter and full year in North America as accelerated demand for our new product launches led to record capital equipment and consumable volume. It was very encouraging to see high levels of consumable purchases coincide with capital equipment sales. This clearly indicated that physicians were treating patients at pre-pandemic volumes and have successfully adapted to the restrictions of COVID-19.

We were very pleased with the reception of our new products, Evolve, Evoke and Morpheus8. These products prove to be high in demand, not only by physicians, but also patients. The momentum we saw in the second half of 2020 supported our decision to continue investing in our sales and marketing organization back in March and April. We were able to bring in some of the top talent from across the industry during the market contraction earlier this year.

This enabled us to successfully capture the pent-up demand for our products following the easing of restrictions. One of the key initiatives to keep physicians engaged during the pandemic was the use of technology. We introduced InMode University, our web-based educational resource for physician and aesthetic providers and created an impressive library of online tutorials and training content to sharpen the skills of our sales force and educate physicians on our newest products. The COVID-19 global pandemic accelerated consumer trends that were driven by efficiency, results and innovation, which are the core building blocks of our organization.

Additionally, as the world transitions work and socialization to virtual meeting applications such as Zoom, people are spending more time than ever analyzing their appearances. This trend, along with the flexibility of working remotely, have created the need and opportunity for patients to visit physician offices and request aesthetic procedures more frequently. We believe that these trends are here to stay, and we will continue to provide our innovative solutions to physicians and patients. Coming out of 2020, our sales and marketing team has created a successful multi-pronged approach to introduce InMode's latest technologies.

Our ability to penetrate new offices in medical categories with new products is unparalleled, which is illustrated by our financial performance this year. Once again, we are proud of our team for the resilience and determination during this pandemic, and we are excited to take InMode's momentum into the new year. Now, let me hand over the call to Yair to review our financial results in detail. Yair?

Yair Malca -- Chief Financial Officer

Thanks, Shakil. Good day, everyone. Total revenue in the fourth quarter of 2020 increased 60% to $75.2 million with a gross margin of 86% on a GAAP basis. The increase in revenues was driven primarily by the expansion of InMode's direct sales organization in the United States and the continued momentum of InMode hands-free technology as well as the recently introduced Morpheus8 body fractional technology.

Additionally, InMode continued to gain traction into international markets, with international revenues growing 102% year over year. GAAP operating expenses in the fourth quarter of 2020 totaled approximately $29.2 million, a 27% increase from the fourth quarter of 2019. Sales and marketing expenses increased 25.4% in the fourth quarter of 2020 compared to the fourth quarter of 2019. Stock-based compensation increased to $3.2 million in the fourth quarter of 2020 compared to $2.4 million in the third quarter of 2020.

This increase is due to higher than previously estimated vesting of our performance-based options as a result of our record revenue in the fourth quarter. On a non-GAAP basis, operating expenses totaled approximately $26.1 million in the fourth quarter of 2020 compared to operating expenses of $22.7 million in the fourth quarter of 2019, an increase of 15.1%. GAAP operating margin was 47% in the first quarter of 2020 compared to 38% in the fourth quarter of 2019. Non-GAAP operating margin in the first quarter of 2020 was 51% compared to 39% in the fourth quarter of 2019.

This increase in non-GAAP operating margin was primarily attributable to decreased travel and marketing activities in the United States, such as events and conference participation due to restrictions caused by the COVID-19 pandemic. GAAP diluted earnings per share in the first quarter of 2020 were $0.85 compared to $0.46 per diluted share in the fourth quarter of 2019. Non-GAAP diluted earnings per share in the first quarter of 2020 were $0.94 compared to $0.46 per diluted share in the fourth quarter of 2019. We completed our fourth quarter with a strong balance sheet.

As of December 31, 2020, the company had cash and cash equivalents, marketable securities and deposits of $260.5 million. On the cash flow front, the company generated $41.6 million from operating activities for the fourth quarter of 2020, driven by the record sales volume. Total revenue in the full year of 2020 grew 32% to a record of $206.1 million with a gross margin of 85% on a GAAP basis. Year-over-year international revenue growth was 76% in 2020.

GAAP operating expenses in the full year of 2020 total approximately $102.4 million, a 33.9% increase from the full year of 2019. On a non-GAAP basis, operating expenses total $90.1 million in the full year of 2020 compared to operating expenses of $75 million in the year of 2019, an increase of 20.1%. GAAP operating margin was 35% in the full year of 2020 compared to 38% for the full year of 2019. Non-GAAP operating margin for the full year of 2020 was 42% compared to 39% for the full year of 2019.

This increase in non-GAAP operating margin was, as previously mentioned, attributable to decreased travel and marketing activities due to the pandemic. GAAP diluted earnings per share in the full year of 2020 were $1.78 compared to $1.60 per diluted share in the full year of 2019. Non-GAAP diluted earnings per share in the full year of 2020 were $2.11 compared to $1.63 per diluted share in the full year of 2019, an increase of 29.4%. On the cash flow front, the company generated $79.2 million from operating activities for the full year of 2020.

With that, I will turn the call back to Moshe. Moshe? Operator?

Questions & Answers:

Operator

This is the operator. Moshe has disconnected. We will connect in a minute. Just hold the line please.

Yair Malca -- Chief Financial Officer

OK.

Operator

[Operator instructions] Our first question today comes from Matt Taylor with UBS. Please go ahead.

Matt Taylor -- UBS -- Analyst

Hi, guys. Thanks for taking the question. And congrats on a good quarter. So the first thing I wanted to start off with was just understanding the guidance for '21.

The way I'll frame the question is you obviously had a very strong Q4, and you're at a $75 million run rate. So can you talk to us about how you derived the $250 million to $260 million? That would imply average sales below that run rate. Was there some stuff that was onetime in Q4? Are you just being conservative to start the year? Maybe you could talk about some of the ongoing trends and what you're seeing.

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

Hi, Matt. This is Moshe. I'm back again. I was disconnected, sorry.

Matt Taylor -- UBS -- Analyst

No, problem.

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

Yeah, sorry. The $75 million in the fourth quarter I believe that we gave you the -- how it was divided between the product. It was something like 62% on minimal invasive and 30%-something on the hand-free. The $260 million, we need to remember that we are going to add another two platforms.

So percentage-wise, I believe maybe the -- although they will grow on absolute numbers, but percentage-wise, maybe they are minimal invasive and the hands-free will go a little bit down. And the OB/GYN business will go up from a few percentage to something like maybe 7% to 9%. All the rest will stay the same. The laser and the regular RF noninvasive will continue to be in the neighborhood of 5%.

Matt Taylor -- UBS -- Analyst

OK, thank you. And can you comment on any trends you're seeing here early in '21? Are you continuing to see strong demand for procedures and for capital?

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

Oh, yes. Yes. The disposable that we're selling, we reached a record in Q4. And in the beginning of this year, so far, very strong demand for consumable which are being used, as you know, in the minimal invasive and ablative and also on the Votiva, the women health platform.

So hopefully, and I'm -- and the way it looks like, we will break the record again in the Q1.

Shakil Lakhani -- President of InMode North America

And Matt, just to add there, as far as what we've seen momentum-wise, January is typically a slower month. We've seen some really good momentum come up in February here and normally February and March are kind of the bulk of Q1. So it's tracking in a positive way.

Matt Taylor -- UBS -- Analyst

OK. Thanks, Shakil. Maybe I'll just ask one more. So you highlighted this women's health offering.

And I know you're beefing it up for a bigger launch here in '21. Can you talk about the components of that? How you expect to market it and how it's differentiated from some of the other systems that are out there?

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

Spero, can you answer that?

Spero Theodorou -- Chief Medical Officer

Sorry?

Shakil Lakhani -- President of InMode North America

Matt, why don't I start off, and I'll pass it over to Spero. So basically, as we know, there's been -- in the past, there's basically been a lot -- they were worse in other companies and competitors in the space in the women's health and wellness market. And many of them have actually left the space based on what happened a year and a half, two years ago with the FDA. However, we decided to invest very heavily with this.

And essentially what we're going to do, without giving away too much, as you know, what we would like to do in this case and with the technology that we'll be launching, is it will not just be a uni-focused product. So we're not just going to have it focused on one aspect of the women's health and wellness. The idea with this is to have a multi-pronged approach to it, where we can actually have multiple revenue streams for physicians and also beneficial ways of treating the women's health and wellness market. Spero, did you want to just add on to that?

Spero Theodorou -- Chief Medical Officer

Yes, I think -- Shak, thank you. Matt, great question. Obviously everything we do here at InMode, we try to back up with solid science and publications and peer-reviewed journals. So when we attack these problems that have been plaguing women for a very long time, we stood back and we looked how can we approach it.

And that's been the focus of our research in R&D with Mishka for the last two years. So we finally got to the point where we feel confident enough to provide different elements of those solutions, which have not been addressed as well before. And especially since the fact that, as we know, radio frequency is quite -- is very differentiated from lasers. So the fact that we can go deeper, we can remodel tissue and RF does not see pigment, I would say that's the core of what we're doing in the women's health.

In addition to utilizing some of our technology, which have been so successful up to this point, such as Morpheus8 microneedling. So bringing that into the women's health with expanded capabilities on the Morpheus8 platform, in addition to the EMS, which we have been very successful with on the Evolve platform. Both of those two core elements will be on -- will be part of the solution that we're providing women going forward, Matt. I'm sorry.

I'm not trying to be vague here, but we like to not get ahead of ourselves. But I can tell you right now, we're very confident, just like all the products, when we launch with InMode, that they actually work, and that's our reputation in the market and certainly with clinicians and patients, and we'd like to keep it that way.

Matt Taylor -- UBS -- Analyst

OK, great. I'll leave it there. Thank you guys.

Shakil Lakhani -- President of InMode North America

Thank you, Matt.

Operator

[Operator instructions] The next question comes from Kyle Rose of Canaccord. Please go ahead.

Kyle Rose -- Canaccord Genuity -- Analyst

Hi. Good morning, everyone. Thank you for taking the questions. Just a few for me.

I wanted to see if you could -- Shak, you talked about some of the strengthening of the commercial team that took place in 2020. Just wondered if you could help us understand that a little bit more. Maybe where did you end from a headcount perspective? And then how should we think about hiring moving forward? I mean, is there any real white space left when we think about territories to build out? Do you need to build specialized teams to go after some of these specialized markets? Just help us understand how the sales force should trend over the coming 12 to 24 months.

Shakil Lakhani -- President of InMode North America

Sure, Kyle. Great question. So I think, first and foremost, we ended up around 134 headcount for the year. We're definitely going to be adding for that.

And when it comes to specialized sales force, it's tricky and based on my experience, it can go either way, but I think learning from some of the things in my past and in the team's past, I think the way we're going to look at this, Kyle, is we're going to take a hybrid approach to it. So there's -- in this business, it's very challenging to find people who can close capital equipment. Luckily, we've found that formula. We're going to take that integrated within that and kind of have a farming system similar to what you see in the major leagues.

So I think as we start to develop some of our people, all of our sales force, they all want upward mobility, and we know that and we support that 100%. And so I think in doing that, as they can kind of learn some of the skill sets that they need in order to actually close business and find business and so on and so forth. The women's health and wellness space is a very, very, very specialized sale. OB/GYNs, urologists, urogynecologists, this is within their scope of practice, right? And within their scope of specialty.

So we need to have people that can actually talk their lingo and understand what they're going to benefit from this. So I think with that being said, we have a plan to do that. But what we'd like to do is take a hybrid approach to it, see how that's going and then eventually transition into potentially specialized teams. Does that make sense, Kyle?

Kyle Rose -- Canaccord Genuity -- Analyst

It does. That's very helpful. Thank you. And then, Moshe, I wanted to circle back just on one of Matt's questions just with respect to guidance for the year.

And I appreciate you framing it out with respect to the product category. But maybe just help us understand, I mean you exited in the second half of the year, particularly in Q4, with record numbers. And guidance for the full-year '21 is suggesting a little bit of a slowdown. I'm just trying to understand, is that more just is it still ongoing dynamics from COVID? It's the timing of new product launches? Just because to get to that $250 million, $260 million, it does suggest a step down.

Maybe help us understand what you're assuming as far as the puts and takes of what happens in '21.

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

OK. OK. I mean, as you probably noticed in the last three years, we were growing about $50 million, plus/minus $1 million or $2 million every year. And basically growing from $206 million to $260 million, it's about the same $50 million.

So I know that when you calculate that on a $200 million percentage-wise, it's come a little bit less than what we did between 2019 and 2020. But overall, $50 million every year on medical equipment, when you have to deal with regulation on 27 different regulatory bodies around the world and you have to deal with that clinical studies and we have to deal with training, it's not a small number. Introducing two platforms every year in addition to the growth in the existing portfolio by $50 million every year, that's something that we would like to beat that number. And hopefully it will be above $260 million.

But as far as the guidance, $260 million, which is $55 million more than 2020, we believe it's a fair growth, and we hope to achieve that and do even better than that. I mean, it's easy to say fourth quarter of $75 million, let's multiply that by 4, and we'll get $300 million. But I'm sure you remember, we discussed that several times before, there is some seasonality in this business. And the fourth quarter is the strongest one, always.

So taking the fourth quarter, which usually it's about 40% of the total year and multiplied it by four and expect us to do $300 million, hopefully we'll do it, but it's a little bit more than the guidance that we can give. In addition to that, yes, you're right. The first quarter, we still see a lot of effect of the pandemic, especially in Europe. They are experiencing the second wave.

I know that in the United States, things are getting better. But in South America, they are not getting better. And in some countries in Asia, things are getting better, but other countries like India are suffering. So overall, we believe that the first quarter we will continue to see the effect of the pandemic.

And therefore, on the fourth quarter, as far as the budget is concerned, we took it into account. But overall, $260 million in 2021, it's a challenge, but we will beat it.

Kyle Rose -- Canaccord Genuity -- Analyst

Thank you very much. And then just one final question for me, Shak or Spero. I think the one thing that surprised us in 2020 was the durability of the interest from patients as far as getting treatments. I think there's a lot of maybe conjecture or reasons for that -- why that might have happened.

I just wanted to see if you maybe give us your thoughts on the pulse of the market as we head into 2021, particularly, hopefully, the market reopens, people are out doing more. Do you expect there to continue to be a big focus on image and wellness and disposable income being allocated toward these type of procedures, just what you're seeing from the commercial field or your peers?

Shakil Lakhani -- President of InMode North America

Yeah. No, great question, and I'll pass it over to Spero after to talk a little more from the patient perspective. But I think one of the things that we saw very early on with the pandemic is that we -- no one really knew how to deal with it, right? So it was foreign to everybody. And I think once we got to the point where people learned how to -- you go from having 10 to 15 people sitting in your waiting room to now having people coming in, checking their temperature and then having them come in, it almost feels like a VIP type of experience for them, right? So I think now that physicians have learned and patients have learned how to deal with the pandemic, they're a little more gun shy, and that's why we saw back in March and April things pretty much just went completely dead.

And since then, fortunately, we haven't seen that. I do think from what we've seen and what we've heard and based on our consumable sales, that we certainly have seen an uptick in procedures, which is great. And I'll let Spero comment on why that might be.

Spero Theodorou -- Chief Medical Officer

Well, I think it's a great question, right? I'm a practicing plastic surgeon, so I could tell you -- in New York, so I could tell you this much, there's a group of patients who've always had this done, no matter what. That's an existing pool that's going to come in no matter what happens. What happened differently, and we've seen this reflected by the volume coming into the different offices across the country, which I'm in touch with, is there's a lot of new patients that never considered plastic surgery, never considered aesthetic medicine for themselves. And I think the reason is people have reconsidered a lot of things that are going on in their lives.

This is a big full-stop for a lot of people. So yes, the disposable income, no question. Yes, they're not traveling as much, not spending as much on restaurants and stuff like that. So they do have disposable income, but I think there's a reset on the thought process, saying, you know what, I need to take of myself.

I need to work out, I need to do these things, and I need to look good, too. And a lot of self-reflection has found its way into expanding this aesthetic market. So even though we saw -- we thought the volume was going to be sort of shifted since usually the volume for plastic surgery, the highest is in the spring. And usually in the fall, it sort of tapers off and we saw that pushed back.

And we thought that it would basically -- that's what it was, but it has continued. And I think the continue -- the part -- the reason is, is that the market has expanded and people start to take care of themselves, and that's part of what we do as well. So I don't anticipate any change in 2021. I think that this has been a wonderful year for a lot of plastic surgeons, no matter how tough it has been, has really shown that, yes, people have sort of redetermined what their priorities are.

And believe it or not, this is one of them. So the psychological factor of this pandemic has had a huge impact. And as well I'm sure that you guys have heard about Zoom Face and Zoom call, so people are looking at themselves for hours on the computer has also helped us. So we anticipate this trend to continue.

I think that the percentage of new patients is what's fueling this market. And I expect that to continue as things open up, especially if you consider the optimism behind that and the vaccinations will help that as well. Does that answer your question?

Kyle Rose -- Canaccord Genuity -- Analyst

Yeah. It absolutely does. Thank you very much.

Spero Theodorou -- Chief Medical Officer

Welcome.

Operator

The next question comes from Jeff Johnson with Baird. Please go ahead.

Jeff Johnson -- Baird -- Analyst

Thank you. Good morning, guys. Three questions for me. Let me ask my -- I guess my first one, my own gating question on 2021 guidance.

I think what we're all trying to figure out here is we want to get the quarters right too, and I know you guys don't guide quarterly, but putting kind of pieces together, should we think about the first and maybe second quarter being down sequentially off fourth quarter by a good solid amount, 15%, 20%? And then how do you think about the second half of the year against these tough, tough comps and the big pent-up demand recovery? Is there solid growth you can put up year over year? Or should we really dial down our year-over-year growth expectations in the second half against those tough comps?

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

Well, this is Moshe. The first quarter of 2021, as compared to the first quarter of 2020, we will see a big growth. We will see a big growth. And you always have to compare quarter-over-quarter.

You cannot compare Q1, you cannot compare Q1 to Q4 -- Q1 2021 to Q4 2020, just because of seasonality of our business. But if you compare Q1 2021 and Q1 2020, you'll see a big growth. That's something that we can assure you even in our budget. Regarding -- and again, as I said before, we still see the effects of the pandemic on Q1 2021 in certain part of the country, including in Canada and North America, but also in Europe and other countries.

We believe that starting Q2 2021, once most of the world will get the vaccine or at least we hope so, then we will see a big momentum start and the numbers for Q2, Q3 and Q4 will pass of course the Q2, Q3 and Q4 of 2020. So overall, the growth of $55 million or close to $55 million year over year will spread over the fourth quarter. And quarter-over-quarter, we believe that we will see a nice growth between '21 and 2020 -- between '21 and 2020. Did I answer your question?

Jeff Johnson -- Baird -- Analyst

You did. Thank you, Moshe. And I guess one follow-up on that. You mentioned the women's healthcare maybe growing to 8% to 9%, I think you said or maybe 7% to 9% of revenue, the numbers you gave.

If I do the quick math, that would suggest we're getting good growth out of that business this year up to maybe $20 million to $25 million contribution from that product versus only about $5 million in 2020. It kind of puts the MI RF or the minimally invasive and the hands-free growing closer to maybe 15% year over year for the year. Is that just conservatism? Have we gone through kind of a big bolus of demand for the MI and the hands-free? And now we have to dial our growth expectations down there, just how to kind of think about kind of your comments on the women's healthcare versus what that implies for the other two big platforms.

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

Well, we always try to be conservative. We -- especially when we give guidance because we try to be conservative and do better than the guidance. And I think that's what we did in the last -- in the last -- since we're a public company. Now as we go to the women health, I believe, as we said, we intend to launch sometime in the second quarter another platforms for the women health, which called the Empower.

And I think Dr. Spero Theodorou talked about all the modalities that these platforms will include. We are now doing clinical study and the initial results are showing are promising. So we expect that that will go to something like 6%, 7% in 2021.

Whether if it's $20 million or $50 million, time will say, but we will see an increase. One thing I want to remind you all, if you remember, the letter from the FDA in the middle of 2018 that actually brought the women health market almost to 0 across all the companies and that actually marketed products to the OB/GYN community, I want to remind you that we are the only company that responded to the FDA letter and received the letter from the FDA that allow us to continue to sell to this community. And we -- and this is the reason why we continue to develop product for new indication for the women health. So yes, the OB/GYN and the women health market is the growth engine for us.

We intend to invest on it. Also, as Shak described, in a special distinguished sales force, and we will take it seriously as we did with the plastic surgery and aesthetic and all the minimal invasive and the hand-free products that we have launched to the market in the last two years.

Jeff Johnson -- Baird -- Analyst

Thank you. And then maybe my last question, I just wanted to follow up on some comments Spero made about patient demand. It sounds like obviously some pent-up demand here in the second half and the disposable income and Zoom effect have been helping. Has that been broad across the U.S., Spero? My question I guess more where we still see significant shutdowns in L.A., where maybe the service economy is still quite pressured in a place like Las Vegas, historically, big aesthetic markets in L.A., Las Vegas, is there still pent-up demand that could come out in 2021 in health? Or do you feel like even in those markets you're hearing from some of your colleagues that demand has already rebounded quite a bit?

Spero Theodorou -- Chief Medical Officer

That's a really good question. So the biggest markets traditionally for plastic surgery are New York, L.A., Miami, Texas. And I'm going to touch with all my colleagues. The thing that really impacts is the -- when we had the closure of elective procedures.

And that's what happened in March. So if you have closure of elective procedures, at that point, you just really can't do anything. So that has not been the case in California as far as the doctors I'm speaking to. And so the demand is still there.

They're still coming in. And will there be a pent-up demand after that? I'm sure. I'm sure, especially, New York and L.A. are probably the super strength in what they're doing.

The patients are still coming in. Will it be more afterwards? It's hard to predict. I'm sure there are people who are scared, who are not probably coming in. So I anticipate once the vaccination process continues, just like everything else, I expect that trend to continue with it.

And the ones that are actually are concerned that want their elective procedure done will probably feel a lot more confident to come through. So if I had to answer the question in a simple way, yes, there is going to be pent-up demand in those markets. We expect it, anticipate it, but the volume right now has not been impacted the existing volume. Everyone's doing quite well because of the fact that the elective procedures have not been stopped, which was very different back in March.

Does that answer your question?

Jeff Johnson -- Baird -- Analyst

It does. Thank you.

Shakil Lakhani -- President of InMode North America

You're welcome.

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

By the way, the numbers of disposable that we -- just a second. Yes, the number of disposable that we sold until now from the beginning of the year are more than what we saw, I mean, in the first 1.5 month in the fourth quarter.

Operator

[Operator instructions] The next question comes from Asaf Barel Chandali with Oppenheimer. Please go ahead.

Asaf Barel Chandali -- Oppenheimer & Co. Inc. -- Analyst

Thank you for taking our questions. And again, congratulations on a very impressive year. I guess maybe if we could just start on the new product launches, can you walk us through how you're seeing the timing of the launches as we move through 2021, so back half, front half, back half.

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

Hi, Asaf. How are you? Well, yes, we intend in 2021 to launch two products. One, as I said, Empower for the OB/GYN. This we have all the FDA approval already, and we're waiting for the clinical study and clinical proof.

I think Spero gave some insight on all the studies that we're doing there. We believe that this product will be launched sometime in the second quarter. We also intend to launch another platforms for the ophthalmology market, mainly for dry eye and some aesthetic eye upper and lower lid procedures. And that will come probably toward the end of the third quarter.

We're still working on this platform. We don't have an FDA yet. It's in process. We've submitted for FDA approval.

So that will come probably in the next two months. In addition to that, we continue -- we are putting the production line for these platforms, which will be ready in the second quarter, starting to manufacturing. And hopefully that will be also on time.

Asaf Barel Chandali -- Oppenheimer & Co. Inc. -- Analyst

OK. That's very helpful. I appreciate it. And maybe I guess on the competitive front and maybe just an opportunity for you guys to comment on it, I think we all appreciate the commentary on the healthy kind of demand for aesthetics broadly.

But as we look across the other public medical aesthetics comps, whether it be injectables or cryo or obviously even lasers, we're seeing relative weakness. So if you guys maybe want to kind of take this as an opportunity to comment on how you're seeing, not just RF, but specifically your kind of solution is taking share and what the feedback is from physicians, that would be helpful.

Shakil Lakhani -- President of InMode North America

Sure. So I'll start off and I'll pass it over to Spero. So I mean we've definitely seen over the last two years, we've -- you're absolutely correct, there has been some decrease. And obviously with anything like that, there's an opportunity, right? And I think we've kind of seized that opportunity in doing what we've done.

Just in the global space, there have been -- a lot of the competitive issues have been based on consolidation within the industry as we've seen. So private equity getting involved purchasing other companies, big pharma, so on and so forth. And I think what we've done is we -- this is what we do. We specialize in capital equipment or consumable side of things.

Our minimally invasive solutions, which no one really has per se. And then we obviously have our hands-free, which is a competitive space. But again, a lot of those companies have been gobbled up by larger companies. And I think they, at that point, lose focus on what they're trying to do and accomplish, and they don't really have a captain to navigate the ship.

And so I think that we've definitely created a situation where we can now come in and capitalize on this type of situation. Spero, from a patient perspective, did you want to comment?

Spero Theodorou -- Chief Medical Officer

Yes. I think -- Shak, thank you for saying all that. I think what's important here to understand is that we've identified what we call a treatment gap. That's a concept.

We noticed in the market, we found a unmet need. And what does that mean? And I'll repeat again for the -- for people who don't know. So you have two ends of the spectrum. You have the one end of the spectrum, we have major operations, plastic surgery operations taken care in the hospitals.

And then you also have, on the other side of the spectrum, you have a lot of these noninvasive procedures, lasers, etc., etc., which are not as effective as it can be. So you have a whole number of patients between 35 to 60, 55, 60 years old, which, A, are not bad enough to have a big operation. By being bad enough meaning they don't have enough skin laxity, they're not ready for the facelift. The same token, they've tried everything else, and it hasn't really worked.

And they're getting -- there is a fatigue component involved there, right? Getting fillers every three months, getting -- doing these lasers. So finally, if they can find a procedure that will essentially tighten their skin or give them a long-lasting result in one session, a 45-minute session, even though it might be a higher price, at the end of the day, if you look at the number of continuing treatments over a period of time, financially even makes more sense just to have one procedure done, you're finished and it lasts for eight to 10 years. So there's been a paradigm shift in the way people are looking at these things. And a combination of what Shak mentioned, in addition to the fact that people are starting to smarten up, they're like if I'm having filler three times a year and I'm having these things done, and I put it all together, it's just easier for me to have something like this which is permanent and it looks good and looks great.

So the minimally invasive approach to what we're doing is a paradigm shift in aesthetic medicine. And that's why you're seeing the growth that you're seeing because we're able to penetrate these offices, but most importantly, give the patients what they really need. And the doctors are relieved because they don't have to explain themselves afterwards why this works, doesn't work. They're like, here you go.

And add to the fact that you have the hospitals and patients are afraid of hospitals, add to the fact that office-based procedures is where it's at, all these elements are what make us competitive, but also are changing the way the industry has been in the past. So I'm not surprised there's a weakness in other sectors aside from the aspects that Shak brought out. It's also a combination of patients having what I call fatigue, for example.

Asaf Barel Chandali -- Oppenheimer & Co. Inc. -- Analyst

OK. That's very helpful. That's all.

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

Asaf, this is Moshe. I believe we discussed that when we met in Israel, I think it's a mistake to compare us to the laser company. You're fully familiar with them. I'm sure there are many private companies, but there are three public companies: Alma, Venus and Cutera.

And when you look on those three companies' performance in 2020 and you compare them to the performance of InMode in 2020, you understand the difference. 95% of their business rely on one energy, which is the laser energy. Laser energy today is becoming a commodity, a commodity energy -- a commodity technology and a commodity product. They have no IP protection anymore, gross margin of about 50%, 55%, and all losing money, barely breakeven.

So we don't have -- our category, the new category that we have established, the minimally invasive surgical procedure, it's a new category. I don't think we have a recognized comparable or recognized peer. So I think we need to be judged based on our performance, not comparing to other company because most of the other laser companies are not doing well these days. The market is saturated, there's overcapacity.

Prices of the system are going down. You can buy today the best laser for less than $60,000. And the best IPL for -- from Korea for $30,000, $35,000. With this type of prices, they cannot make money.

So the strategy and the DNA of this company is to work on things that we will have intellectual property protection and also some uniqueness, and this is the reason why this category was established.

Asaf Barel Chandali -- Oppenheimer & Co. Inc. -- Analyst

OK. Great. And just last question on my end. So once again, exceptionally strong growth in the international business.

Can you give us -- you guys helped us out last quarter giving us some color on some of the underlying countries. I mean I guess maybe most interesting would be any commentary you can get on how things are developing in China. Anything that you guys think is relevant.

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

OK. OK. I'll give you that. Let's divide the answer into three answers.

One, currently, we have five -- outside North America and I'm not including Canada. We have five fully owned subsidiary: U.K., France, Spain, Australia and India. All the rest, we're selling through distributors. So by the way, just to give you some idea, 85% of our sales is direct, North America and those five subsidiary.

All the rest we sell through distributors. In 2020, we built the company in France. And also we hired more direct people in the other subsidiaries. We changed several distributors, but most important, we have received regulatory approvals in China, in Australia, in Korea and also in Brazil, and these are major countries that actually drive the growth in the international market.

We continue to invest heavily on regulatory bodies with regulatory processes in many countries. And don't forget, we have to deal with 27 countries, 27 languages and 27 different submission. It is not everything FDA or see in Europe, but we continue to do it because we believe once all of our portfolio will be approved and will be cleared in those countries, it will grow there -- it will drive the growth. So we work on three basic avenues.

One, to enhance the distribution in certain countries like we did in Italy and Germany, to enhance our position with all of our subsidiaries in those countries where we go direct and continue to invest in regulatory processes in order to get all of our portfolio approved by most of the regulatory bodies around the world. These are something that we are doing parallel. And this is the reason why in 2020, the rest of the world have grown, as you said, more than 70% compared to 2019. And I believe that this process will continue in 2021.

Duration: 68 minutes

Call participants:

Miri Segal -- Investor Relations

Moshe Mizrahy -- Chairman of the Board and Chief Executive Officer

Shakil Lakhani -- President of InMode North America

Yair Malca -- Chief Financial Officer

Matt Taylor -- UBS -- Analyst

Spero Theodorou -- Chief Medical Officer

Kyle Rose -- Canaccord Genuity -- Analyst

Jeff Johnson -- Baird -- Analyst

Asaf Barel Chandali -- Oppenheimer & Co. Inc. -- Analyst

More INMD analysis

All earnings call transcripts