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InMode Ltd. (INMD) Q3 2021 Earnings Call Transcript

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INMD earnings call for the period ending September 30, 2021.

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InMode Ltd. (INMD 1.60%)
Q3 2021 Earnings Call
Oct 26, 2021, 8:30 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Hello and welcome to the InMode Limited third-quarter 2021 earnings conference call. [Operator instructions] I would now like to turn the conference over to Miri Segal, president of MS-IR. Please go ahead.

Miri Segal -- Investor Relations

Thank you, operator and thank you all for joining us today. Welcome to InMode's third-quarter 2021 earnings call. 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 press release, please download one from 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. Therefore, we can give no assurance as to accuracy of our forward-looking statements and assume no obligation to update them except as required by law. Today, we are joined by Moshe Mizrahy, InMode's chairman of the board and CEO, who will start us off with a business update.

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Then he will turn the call over to Shakil Lakhani, InMode's president of North America to discuss North American operation. Finally, Yair Malca, the CFO will discuss the financials of the third quarter in some more detail. With that, I'd like to pass the call over to Moshe Mizrahy, Moshe congratulations on another record quarter. Please go ahead.

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

Thank you, Miri and thank you all, everyone for joining us on our third-quarter 2021 earnings call. With me today are Dr. Michael Kreindel, our co-founder and chief technology officer; Mr. Yair Malca, our CFO; Mr.

Shakil Lakhani, our president of North America; Dr. Spero Theodorou, our chief medical officer; and Rafael Lickerman, our VP finance. Following our prepared remarks, we will all be available for Q&A session. We are happy to report again a record quarter of profitable growth.

Thanks to our innovative unique technology, growing market demand, our excellent employees and collaborative work to our network around the world. We posted record revenue of $94.2 million for the third quarter of 2021, an increase of 58% over the same quarter last year. We continue to closely control our expenses and our net income for the quarter on a GAAP basis reached a record of $44.7 million, reflecting a 87% growth year over year. During the third quarter of 2021, sales of capital equipment accounted for 90% of our total revenue.

Despite summer slowdown, sales from consumable and services remained strong, representing 10% of our total revenue at $9.1 million, a 68% increase over the same quarter last year. A strong demand for our consumable, show widespread market acceptance indicating that physicians buy more platforms and perform more treatment every months. Our minimally invasive surgical technology represents 73% of our revenue for the quarter compared to 59% in the third quarter last year. Hands-free devices were 18% of total revenue, while our traditional laser and noninvasive RF platforms contributed 9%.

The U.S. was once again a major contributor to our top line with total sales reaching $62.6 million compared to $40.9 million in the third quarter of 2020, reflecting a 53% increase. It's worth noting that EmpowerRF was recently launched and is currently limited to the U.S., as we focus on early adopters in the gynecology space. This strategy will lay the necessary groundwork for successful introduction to a global market.

Our ROW sales have continued to grow. Total sales outside the U.S. were 31.6%, a 68% increase compared to the same period last year and a great results for what is usually a slower summer quarter. This represents 34% of our total revenue compared to 30% for the same quarter last year.

We currently operate in 72 countries and expect that the numbers to rise as we seek to expand into new markets. We are currently exploring establishing a new subsidiary in another major European market, which we hope will able to begin operation in Q1 2022. Our ESG effort continue every day to ensure get up the standard for ESG protocols within our industry. Accordingly, we work with our suppliers and subcontractors to ensure that they comply with the same ESG standard set by InMode.

We prepared an ESG activity plan for the fourth quarter and for 2022, which will be published on our website. Now, I would like to turn your attention to Shakil, our president of North America. Shakil?

Shakil Lakhani -- President, North America

Thanks, Moshe and to everyone joining us. It's a pleasure to announce that we delivered a record-breaking performance again this quarter, just as it is to share the news of the launch of two new platforms, EvolveX and EmpowerRF. In the third quarter, our sales from capital equipment continued to be a driving force behind revenue, which reached $85 million. As mentioned, consumables and service revenue continued to contribute to the strong performance from the previous quarter.

The third quarter of 2021 raised the bar for record attendance of our workshops, enhancing our educational support network, vitalizes both our existing and new customer base. Despite the variations and protocols across North America, physician offices are becoming increasingly busy. This reflects normalizing of elevated demand that positively impacts our financial results. Consequently, we see a lot of interest expressed in our existing and newer platforms, accelerating market acceptance.

Our history of successful launches combined with market demand fortifies us to grow different revenue segments even during seasonal and other fluctuations. The soft launch of EmpowerRF has been instrumental in giving us necessary insight to create an effective strategy. As doctors and patients learn how to better navigate life under the COVID-19 pandemic, part of our marketing strategy is to increase the number of in-person events that we host in the coming months. Such events allow us to familiarize ourselves with the medical and wellness community with InMode's comprehensive product portfolio.

Finally, I'd like to thank the North American team for the ongoing efforts and the impressive performance that led to these record results. Their loyalty, dedication and hard work is very much appreciated and have proven vital and indispensable in supporting InMode's operations. With that, I'd like to hand over the call to Yair for a review of our financial results. Yair?

Yair Malca -- Chief Financial Officer

Thanks, Shakil and good day, everyone. I'd like to review our strong financial results in more detail. Total revenue in the third quarter of 2021 increased 58% year over year to $94.2 million with a gross margin of 85% on a GAAP basis. The increase in revenues stemmed primarily from the new level of demand for aesthetic procedures that we are experiencing, as well as a recovery from the lower revenue levels reported during Q3 of 2020, which was still significantly impacted by the COVID-19 pandemic.

Our minimally invasive and traditional laser and noninvasive segment grew significantly in comparison to the same period last year. Minimally invasive and subdermal ablative technologies grew 95%, while laser and noninvasive grew 85%. International sales were on track with the projected growth rate and increased year over year as we are successfully duplicating our U.S. growth strategy across these markets.

Furthermore, capital equipment accounted for 90% of our revenue with consumables and service revenues representing the remaining 10%. GAAP operating expenses in the third quarter of 2021 was $35.2 million, a 30% increase year over year. GAAP sales and marketing expenses for the quarter increased 30% compared to the third quarter of 2020. Share-based compensation increased to $3.1 million this quarter compared to $2.4 million in the third quarter of 2020.

On a non-GAAP basis, operating expenses totaled approximately $32.3 million in the third quarter of 2021 compared to operating expenses of $24.8 million in the same quarter of 2020, an increase of 30%. GAAP operating margin was 47.8% in the third quarter of 2021 compared to 39% in the third quarter of 2020. Non-GAAP operating margin in the third quarter of 2021 was 51% compared to 43% in the third quarter of 2020. Despite the usual cyclical nature of our industry leading to a slow Q3, our record results can be credited to growing customer demand, global trends, exceptional results achieved by our treatment, as well as lower volume of travel relative to pre-COVID era.

In addition, we are successfully managing component shortages in our supply chain through the various distributor and supply network we have established during the pandemic. GAAP diluted earnings per share for the quarter ended September 30, 2021, was $0.52 compared to $0.28 per diluted share in the third quarter of 2020, non-GAAP diluted earnings per share in the third quarter of 2021 was $0.55 compared to $0.31 per diluted share for the same quarter of 2020. I'd like to remind our listeners that we completed a two for one stock split earlier in the quarter, making our shares more affordable to the investment community and our employees. We completed the third quarter with a strong balance sheet.

As of September 30 of this year, the company had cash and cash equivalents, marketable securities and deposits of $387.4 million. On the cash flow front, the company generated $50.5 million from operating activities for the third quarter of 2021. I will now hand the call back over to Moshe.

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

Thanks, Yair. Thanks , Shakil. Operator, we are ready for Q&A.

Questions & Answers:


[Operator instructions] And the first question comes from Travis Steed with Barclays.

Travis Steed -- Barclays Investment Bank -- Analyst

Hi, good morning and congratulations on a great quarter. When I'm looking at the quarter, it looks like things really shaped up nicely, August, September. You didn't really see as much seasonality as you expected. So curiously, if you can kind of comment a little bit on how the quarter shaped up and what you're seeing here in early October or late October.

And I'm curious if you could comment on the growth in your various channels like dermatologists versus med spa, if you're seeing anything different with your different customer base?

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

Yeah, let's start. Hi Travis. This is Moshe. Let's start with the U.S., Shakil will start and I will complement him.

Shakil Lakhani -- President, North America

Sure. Yeah. Travis, hello. So we did -- going to one part of your question, for October we've seen a good start so far.

Going to last quarter, we've definitely normally were used to kind of seasonality. It does affect certain product lines, so differently than others, right. So minimally invasive kind of been quite well and then our hands-free side of things. We did see a little bit of pullback, but we expected that in Q3, of course.

So we obviously are pretty optimistic about Q4 and where we're going with that. However, in terms of specialties, it's kind of been status quo for a little bit now. What we will be doing as we continue to grow the soft launch of EmpowerRF, obviously, we're going to start focusing, penetrating on the core markets first like we did with some of our minimally invasive technology and really build a solid network and support structure around that in order to really create what we like to call staying power for the devices. So that's a little bit of the North American side of things.

Moshe, do you want to talk about international?

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

Yeah. Yeah. Yeah. Sure.

Sure. Travis, you know that there are some countries in Europe for example that in the third quarter, closed operation for at least 6 to 8 weeks like France, Spain, Italy. And therefore, in this country as most of the business came in September, a little bit in the beginning of July and then from the last week of August where everybody is coming back to work after vacationing. In Asia, I would say that we didn't see any slowdown in the summertime.

We had a good quarter with Korea, a good quarter with India, which is now a little bit better from the COVID pandemic there. Australia was mainly on lockdown most of the quarter. So we didn't see much there. China, I would say, one month in August, September did very well.

In South America, Brazil was in a slowdown, I would say, in July, August and they started again in September. But if I look on the -- on all the countries outside U.S., which you know, it's something like 71 countries that we sell to, this summertime, this quarter was better than any summertime quarter that I remember and I'm in this industry, I would say for all the way from ESC and Lumenis for 25 years. So I don't want to say we were surprised. We believe that this is because we have a different product.

Usually, summertime is not the best time to get laser treatment because you attend, you just came from vacation, you don't go to get optical energy on your skin if you don't want to get the burns, but all of our minimally invasive technology, which are color or color-free or, I would say color blind, we saw a little bit more procedures compared to the -- I would say to the traditional laser treatment. We hope that that will continue. October started very strong in most of the countries. We see momentum, which we believe will continue in November, December.

The last quarter, the fourth quarter is usually the strongest one. Did we answer your question?

Travis Steed -- Barclays Investment Bank -- Analyst

That's super helpful detail. Thanks a lot on that. My next question is really thinking about next year. It seems like you've got a ton of momentum in the base business.

So I would say really no change in that $50 million to $70 million growth that you typically see in the base business. But then thinking through the GYN launch, I'm curious if you could add some color on some of the initial feedback on that. And should we expect something like $20 million for next year incremental from the GYN launch?

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

Spero, do you want to talk a little bit about our strategy launching to the genealogy market?

Spero Theodorou -- Chief Medical Officer -- Analyst

Sure, Travis. It's a great question. I think we've seen in the past what's happened with different GYN products and the competitors in the past and we certainly don't want to do the same mistake. So we took the path that we took with plastic surgery and dermatology, especially plastic surgery.

We took the hardest way and the hardest sort of adopters to convince that our technology is different. And in this case, we're starting off with the urogynecologist, which would be equivalent of the plastic surgeons. A lot of the offerings that we have, we had to convince them that this is the case and what we're seeing right now, it's been quite enthusiastic. And so it's going to be a slow ramp in this respect because we do need to give it credibility.

And these are -- this group is probably the group that will -- is actually doing it for us. A lot of our KOLs are in that area. As urogynecologist and some of the gynecologists as well start adopting it, it'll move into general GYN and everyone else. So that's how this is different and this is why we're performing a lot of studies and putting a lot of effort to go with this group, which will take some time, of course, but it's definitely worth in the long run, especially when you want to have staying power.

We don't want to market device that goes up one year or 2 years, then it goes back down, which has been the norm for usually in this industry. And as you've seen, it's not been the case with us. Does that answer your question, Travis?

Travis Steed -- Barclays Investment Bank -- Analyst

It did. Yeah.

Spero Theodorou -- Chief Medical Officer -- Analyst

This is the first part. Moshe, you can comment on the rest, yeah.

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

Yeah. I would say that right now, we launched the Empower only in the U.S. We're still working, getting the regulation approvals in certain other countries, which is in the process. We are submitting our documentation, studies according to any regulatory body.

And we have to deal with close to 30 of them worldwide and it's not approved yet. We believe that starting January, we will launch the product in Europe, probably during INCAS in Paris that's the end of January. So to give you a number, what will be the total revenue for next year just because this gynecology market is new to us and just because we want to be very careful with what we claim and indication to the doctors. And this is according to what Spero said, we're spending a lot of money on studies and all kind of checking for every indication that we claim.

By the way, this is the only system on the market that has a very broad indication approval from the FDA and we believe we will get it from other regulatory bodies. So $20 million sounds reasonable to me. But as we go in November, December and we will check ourselves as we are educating the market and learning from the market and arriving on the learning curve with this new product and other products that we will bring to this category I will be more, I would say definite be able to give you some numbers and some focus. We're in a very early stage, we have to remember, this product was launched in the last week of August.

So basically, we have only one month experience, only one month's experience with this product.

Travis Steed -- Barclays Investment Bank -- Analyst

Great. Thanks for taking the questions.


Thank you. And the next question comes from Matt Taylor with UBS.

Matt Taylor -- UBS -- Analyst

Great. Good morning and thank you for taking the questions and congrats on a good quarter. 

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


Matt Taylor -- UBS -- Analyst

Sure. So the first question I wanted to ask you, Moshe was in the past, you have talked about the scale of the organization and being able to grow, you used to be $50 million in terms of absolute dollars on the top line. And you've talked about some increased numbers in recent months. And obviously, this year you have an easy comp, but you're growing potentially $140 million over last year in 2021? So I just wanted you to frame some thoughts on the scale of the organization and how much you think you may be able to grow in dollars now with your current size and your products and expansion to international?

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

Yeah. Thank you, Matt. Very good question. I would say that in 2020, we grew from $156 million to $206 million, that's about $50 million in 2020.

But we all need to remember that, that was a COVID year. I believe that if we want to normalize 2020, I would say that at least $30 million or $35 million from 2021 belong to 2020. So we need to make some kind of an average between 2020 and 2021 to understand what was the real growth, but I agree with you. I mean the total growth this year exceeded our expectation.

If you remember the first guidance that we gave for 2021 was $250 million to $260 million. And every quarter, we continue to update the guidance according to the performance of the last quarter and what we believe will be the performance of the next quarter. I mean 2021 is a great year for us. I would say that maybe because 2020 was a COVID year and everybody now go to make aesthetic procedures.

People call it a zoom effect, or all kind of other effect that people give a name to this. If you look in the future, 2022 and 2023, I cannot promise that we will continue to grow with $140 million every year, but we see a great momentum in the aesthetic and we see some good sign in the gynecology and hopefully in 2022, we will come up with another platform for the medical, more ophthalmology or some others and continue to develop products for the aesthetic, which we have right now on our R&D pipeline close to 15 products or 15 projects, I would say, to enhance our portfolio. So the total system that we sold up to now was around 10,000 system. Out of which 5,000, five times and a change in the United States and the others in OUS.

This is, I would say, very embryonic stage of our business. Since we believe that if we go into all the medical business, medical communities that we want to enter in the future, the total available market could reach $200 million, -- sorry, 200,000 clinics. We will continue to grow, probably much more than $50 million a year. How much we will give a guidance at the end of this year.

Matt Taylor -- UBS -- Analyst

That's a lot of good color. I appreciate you walking us through that. I do have a follow-up on the pipeline. Could you talk about ophthalmology and the timing of that and what the ramp could look like there? You mentioned these 15 projects.

Are there any other ones that you could give us some color on in terms of the timing or the composition of the...

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

I can tell you what projects we are working on. We're working on 3 projects right now for the aesthetic. We just came with the transform on the Evolve. We do something similar on the Evoke for the phase to enhance our hands-free device.

We're developing product on the ophthalmology for dry eye, which will come probably early next year. We're doing a study now. We are working on ENT platform for snoring, for septal treatment for turbinate and others. That will be a separate platforms.

We're working on the platforms for erection dysfunction for urology, mainly for men's, plenty of projects. Some of them are new platforms, some of them are handpieces, some of them are new indications. It's a variety.

Matt Taylor -- UBS -- Analyst

OK. Thanks a lot for the color. I'll let some others jump in. Thank you.


Thank you. And the next question comes from Kyle Rose of Canaccord Genuity.

Kyle Rose -- Canaccord Genuity -- Analyst

Great. Thank you very much and congrats on the success thus far. I wanted to just see if we could talk a little bit more about Empower. I mean I realize that you had a small contribution in the quarter and you've got a controlled launch taking place.

But when I just think about what the business looked like several years ago when the gynecology market was still growing and you guys were launching the Votiva product. Just trying to understand how should we think about the contribution of Empower maybe in the first 12 to 18 months of launch? Can it be what Votiva was on a percentage of sales basis? I'm just trying to understand how we should kind of frame that opportunity given it seems like you might be one of the only companies in the space really investing in launching new technologies here?

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

Shakil, you want to start?

Shakil Lakhani -- President, North America

Yeah. Sure. Hey, Kyle. So I think the way to look at it is again, I appreciate you noting our controlled kind of release of this product.

The one thing we definitely want to do is, as I mentioned before, get it into the right core specialties, right hands and make sure that it's doing what it's doing. I think we'll have a better idea probably in the next one to two quarters as to what the potential looks like for the longer outlook here. However, we all know what the total addressable market is for this particular segment. And it's a big -- it's a large segment.

However, the one thing to note is that typically the women's health and wellness physicians and specialties, they're used to dealing with the insurance. The biggest hiccup that we have in dealing with them is getting them to understand how cash based procedures work. And luckily, we have a ton of experience and a lot of people that have sold in that market over the last four, 5 years. So I think it gives us a leg up.

But before doing anything, we wanted to have enough statistical data that goes behind it, so that we could actually back it up because when you look at urologists, you are going to call just OBG GYN, they're very, very, very heavy on data. So we're investing in the fund and doing that, which explains kind of the controlled release. We want to do it right. We want to make sure that if we're offering something for SUI, that's going to work and it's going to change women's lives.

So far, preliminarily, we've seen that. I think we're going to have, as I said, a better idea in the next one to 2 quarters as to what the maximum potential is, but we are definitely very, very optimistic as to what the total potential market for this is. Does that make sense?

Kyle Rose -- Canaccord Genuity -- Analyst

It does. Thank you. And then I'll just ask my last 2 questions, just kind of at the same time. One, can we get an update just on China on where you stand from a regulatory aspect as far as the number of systems that are approved there? And then secondarily, you've obviously had very strong system sales over the last 24 months? I guess you've had strong system sales, the entirety of your business.

Just trying to understand how we should think about the mix of consumables and service maybe moving forward? I think the service contracts don't kick in until after 12 months. So just trying to understand how that mix might change when we think about 2022 and beyond? Thank you.

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

OK, let's start with China. Right now, we have 3 products, the invested product approved in China. And we expect to get in the first-quarter approval for laser IPL and some noninvasive products, which we submitted to the CFDA something like 8 months ago. The problem with China, they don't give you timeline.

The CFDA has no commitment. They can come back to you after 3 months and ask questions. They come back to you after 8 months and ask questions. And they don't tell you when they start and when they finish, that's the philosophy of the CFDA.

And we have to comply and we have to deal with it. We have a team in China today and we also hired a consultant in order to expedite approvals within the CFDA. The CFDA usually makes it more difficult to foreign companies. But we believe we know how to deal with it and we will continue to deal to give you an exact date when we get -- when we will get more approval, I don't know and I cannot.

But even with those 3 categories that right now are cleared in China, the market is growing and we're doing well. I believe that we're -- now we're doing about $2 million, $2.5 million a quarter. Hopefully, next year, we will go to $4 million a quarter on average between the fourth quarter, that's my estimate. Now regarding the numbers of systems that we sold in the last quarter, we sold 1,200 systems worldwide, 100 more than the second quarter.

Disposable we sold 91,000 compared to 92,000 on the second quarter and I already mentioned that the summertime usually is slower as far as treatment by at least 10% to 15%. So the fact that we did exactly the same number, almost exactly the same number as Q2 is a good sign for us. And this is about, I would say around 70% growth in disposable compared to last year to the same period last year. So the disposable are growing faster than the system that we sell on an average, not quarter on an average per quarter.

So this is also a good sign for us. Another thing I wanted to say, the Empower, the Empower platform has 3 different disposable or even 4 different disposable, the Viton, the Morpheus8V, the formV and the Aviva. All of them are one-time use. So it depends what treatment the doctor is doing on a patient, but at least in every treatment, he will use one or 2 disposable and this is good because that will enlarge the numbers of disposable that we will sell.

Almost every system that we are now developing will have at least one disposable. So the disposable number right now is, between, 10% to 11% depending on the quarter. I assume that once the installed base of platforms will reach 20,000 platforms worldwide, the numbers of disposable will probably go to, I would say between, 15% to 18% of the total revenue. Does that answer your question?

Kyle Rose -- Canaccord Genuity -- Analyst

It does. Thank you very much.


Thank you. And the next question comes from Mike Matson with Needham & Company.

Mike Matson -- Needham & Company -- Analyst

Hi. Good morning. Thanks for taking my questions. I guess, I'll start with the international business.

You mentioned you were looking at opening a subsidiary in a major European country. Just wondering if you could provide more detail on that? And can you talk about kind of the financial implications of doing that?

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

Yeah. Yeah. Of course, of course. Well, I don't want to mention the name of the country, but it's one of the biggest.

Right now, we have Spain, U.K. and France. And we have distributors in Italy and distributor in Germany. Probably, we will go and establish a subsidiary in one of those two and that will start operation in the beginning.

We already hired the team. We are now training the team. The team was trained in Europe and probably will come to Israel to train in more detail on every system. The team consists of a manager, two sales manager, one clinical manager and one admin.

We are looking for a space to operate from. This all will be done in the next 2 months. So we would like to start January 1st fresh in the country. And we will work.

When we sell direct, we get close to the doctor or to the customers. We know what the customer wants and we don't need to depend on the loyalty of the distributors. Around 81% of our sales today worldwide are direct. And this is done in -- we have 2 subsidiaries in North America.

Currently, 3 subsidiaries in Europe and 2 subsidiaries in Asia, Australia and India. So currently, we are finishing the -- to establish a subsidiary in China and also an additional country in Europe. So next year, we'll have 9 subsidiaries. And that will probably increase the percentage of what we sell direct compared to indirect.

When we sell direct, we recognize the full value. We know what the doctor want. We're servicing better. And I have to say another thing, doctors in every country would like to buy from the company and not from distributors, we realize that because the distributors one day work for you and one day go to another company and they want to have redundancy.

So this is the plan. Did -- do you want more detail, Matt?

Mike Matson -- Needham & Company -- Analyst

No, no, that was great. That's great. Thanks. And then just wanted to ask on EmpowerRF.

So, I understand it's early days of the launch here, but what are you seeing in terms of the different handpieces and options there? Is it -- what's the most popular handpiece? And is it really being driven primarily by the SUI option?

Shakil Lakhani -- President, North America

Yeah. So -- yeah, I'll hand it over to Spero, one second Moshe.

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

OK. Go ahead. Sorry.

Shakil Lakhani -- President, North America

No, problem. From the commercial aspect, we only really have a month to judge it on and it's a really small sample size. Of course it's a little tough to really figure out things like I said earlier, it's probably going to take us at least 3 to 6 months to get an idea of what the patterns are. From an interest level though, SUI is something that's very, very popular and common and something that there's not a major solution for us.

So we do have a lot of excitement. But as I mentioned before, we want to make sure that we have significant clinical data behind it so that we can live up to what we're promising. So, I do think that the Viton handpiece and the Morpheus8V are going to be significant drivers in terms of what's on the workstation itself. From more of the clinical side and the physician's perspective, I'll hand it over to Spiro.

Spero Theodorou -- Chief Medical Officer -- Analyst

Thank you, Shakil. That's a great question. Within the gynecology, our gynecology world, right, everyone has a certain category and focus on what they're interested in. So when we talk to the urogynecologists, the whole fact about the intravaginal microneedling is a novel treatment.

It's something that we've patented. And that's causing a lot of the excitement initially so far what we've seen. When we go over to gynecologists who are working still and delivering OBs or delivery babies and they're very excited about the ability to treat women right after delivery, which includes all aspects of this, right, it includes Viton for public floor rehabilitation. In addition to our EMS device for diastasis closure and they're looking at selling as a packet to the patients after postpartum.

So this is very, very unique. This has never been done before to actually be able and offer comprehensive postpartum solution. So for the doctors that are doing a lot of OB and looking at this very differently. So within -- however globally, when you look at all these groups, everyone has a solution for something.

So whether you're urogynecologists or gynecologists, whether you do a combination of both treatments, this platform has such versatility that it offers a different things that you can do. In addition, let's not forget right, we're an aesthetics company and we're introducing aesthetics into this category through that. So, holding their hand initially, here is a medical indication. Here is where existing population of patients that you have.

And by the way, here is they can also enter the cash-based business, which is aesthetics. So typical, this is our philosophy, how we move into these different categories.

Mike Matson -- Needham & Company -- Analyst

And then my final question is really just on the supply chain. So obviously, demand appears to be really strong in your business. But one thing that I worry a little bit about is that we're just going to see an announcement one day that you had some kind of shortage in terms of semiconductors or some other component your products and so I just wanted to kind of gauge your confidence level and your ability to meet this tremendous growth that you're seeing, your volume growth that you're seeing in your business, given everything that's happening out there in the supply chain? Thanks.

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

Yeah, as far as supply chain and logistic, you're absolutely right, Matt. We are seeing a lot of, I would say companies that we used to get component in 4 weeks. Today, we get delivery time of 14 weeks. So basically, I don't know if you noticed our inventory grew a little bit because we don't want to take any chance of shortage and we buy from everyone that can supply us on every component and subassembly that we use in our manufacturing line.

We have at least 2 suppliers and in most of them, 3 suppliers. We buy components from China, U.S., Europe, we buy from different territories. As far as manufacturing capacity, currently, we have manufacturing capacity to 2,500 systems, 100 platforms per quarter, which is -- and today, we're using only 50% of it, but we prepared ourselves for the future. I mean, unlike some of our competitors, we delivered everything.

Everything in the third quarter according to the plan and according to the orders, no one waited more than I would say, 10 days before we got the order, either a distributors or doctor and we will continue to watch it. We have a special engineering department that we established and built here that the only thing they do is to check on alternative component whenever we have a problem with one component or one supplier. So we do it all the time and this is the major, I would say, effort in our part. In Israel everything is manufacturing in Israel and shipping from here.

One issue we have with the shipping and the logistic, the prices of sending either by sea or by air in the last year went up four times and this is why right now we're shipping mainly in containers and not by air in order to save money. All this is done in order to maintain the 85% gross margin, which for us as I said before, it's a must. It's not nice to have.

Mike Matson -- Needham & Company -- Analyst

OK. And just the container comment, I'm hearing a lot about ports being backed up and things like that. So you're not worried about these things getting stuck in a container somewhere on a boat floating around, where you need to get in a port or in a back of an 18-wheel or somewhere?

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

No. We are not worried. But you know, you never know what will happen. Hopefully, people learn to live with the pandemic and everything will go back to normal in the next year.

It will not take months. It will take at least a full year until everything from a manufacturing, from the supply chain will go back to normal. But we have prepared ourselves very well to this time and I believe we are coping with that in the right way.

Mike Matson -- Needham & Company -- Analyst

OK. Got it. Thanks.


Thank you. And the next question comes from Jeff Johnson with Baird.

Jeff Johnson -- Robert W. Baird & Co. -- Analyst

Yeah. Thanks. Good morning, guys. Moshe, it's not too dissimilar from a question I've asked in the past, but I'd be interested in the quarter in the U.S., what percentage of your revenues or even qualitatively if you could talk about what -- how many of the systems of the handpieces of the platforms that were sold in the U.S.

during the quarter went into current customers. So they were buying a second or third or fourth ANPs or a system or versus how many went into brand new accounts? Just trying to understand penetration and where we are on kind of penetration in the U.S. of the derm and the plastic side of the market? Thanks.

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

Shakil, could you please answer that?

Shakil Lakhani -- President, North America

Yeah, sure. Hi, Jeff. So yeah, we -- unfortunately in some ways, we're not the type of company that has -- that -- it's not going to be like a Stryker or something where you have these relationships type of sales per se, meaning that you just go in and sell something every month, every quarter or anything like that, right. These are 6 figure devices.

We definitely do go after our existing customers, but we do it once we know that they're successful, right. So it's a lot easier for them to reinvest in what we have. And because of our robust pipeline, we always have something new that's coming out and keep them kind of excited. But our first task is to definitely get them so that they are successful, right.

So it kind of starts with that. In terms of what we're doing percentage-wise, I don't want to give you anything that I'm not 100% certain of, but majority of our business is new business. So although we have a lot of existing customers who have purchased different devices, I know earlier on, I talked about some of our workshops and we've seen some record attendance and things like that. We have a good mix of existing customers and new customers.

However, what I do feel, as Spero even mentioned talking about Empower, as we get a lot of these specialties into doing things they're not used to doing, so we're going after the women's health and wellness. They already have some -- a large degree of -- or a large audience, I should say, have been captive patient base that they can now start talking about that too. While, a lot of those patients are getting cosmetic and aesthetic procedures done elsewhere. So the idea is getting used to starting to charge cash pay for these procedures and then slowly be able to help them kind of do that on the cosmetics side.

So I know it's not an exact answer that you're looking for, but I do see a lot of our business in North America being two newer customers, although we do still have a very good existing customer base. But the main thing for us is we want to make sure that they succeed first and then it's so much easier for our sales force to go and talk to them about new technology. Does that make sense?

Jeff Johnson -- Robert W. Baird & Co. -- Analyst

Yeah. It does. And may be the follow-up...

Yair Malca -- Chief Financial Officer

Jeff, this is Yair, just to complement what Shakil said. I can tell you that at least in the U.S., over 70% of our sales this year were to new customers. So as Shakil mentioned, most of our revenue is still coming from new customers.

Jeff Johnson -- Robert W. Baird & Co. -- Analyst

All right. That's helpful. Thanks, Yair. And then I guess a follow-up to that and it's kind of is an international question as well.

Should we think then that Evolve and Evoke didn't necessarily go into customers who own an AccuTite, BodyTite platform that those procedure or those products were going more into med spas things like that? And Moshe, you mentioned in China getting IPL and hands-free potentially next year. Does that move you in China into med spa, whereas right now with the other MIRF platforms, you've been more focused on the physician hospital category more so? I'm just trying to understand, one, does Evolve, Evoke -- are you doing well on the med spa side with some of those hands-free technologies? And in China, is the opportunity to go into -- into hands-free and IPL opening a new door that you're not necessarily in right now with the MIRF platform. Thanks.

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

Well, let me answer you regarding China. Shakil will answer you about the med spa in North America. By the way, the Evoke and Evolve were introduced in the OUS only this year. And we're now just getting the first, I would say, approvals in certain countries.

It's already been approved in Europe, but not in Asia yet and not in China. The market in China, you're absolutely right, is if you want to categorize it, you have the hospital, the private clinics and what they call the spa market, which is the biggest. The spa market is all the way from small shops to well-organized spa market -- spa chains. Yes, definitely.

Once we get the approval for the hands-free devices in China, we will go to the spa market. We can also go to the doctors, to the doctor clinics and sell them, plastic surgeons and dermatologists, which are now become something very popular in China. It used to be only in the hospital. But right now, they are private clinics as well.

Definitely, we will go to the spa market and also to those customers. Shakil, you want to say something about North America?

Shakil Lakhani -- President, North America

Yeah, sure. Absolutely. So I think we've always kind of penetrated the market going after physicians specifically. The hands-free technology does allow us into the med spa side of things and we do supplement med spa of that ad obviously medical directors and certain physicians that can finance it.

So that's the other thing. We're always going to be medical. So if it's medical spa, the actual spa market itself, it's really tough to get people financed and things of that nature when you're looking at just the spa market, right and it's tough for a lot of those smaller places to afford it. So a lot of our focus is on the medical professionals.

But in terms of the med spas yes, I mean, the hands-free technologies are applicable to them, but also as you asked, with someone who has AccuTite or BodyTite or FaceTite, or whatever it is, just remember that the hands-free technology is kind of set it and forget it, right. So you're able to delegate that, so you could have that one patient room generating a bunch of revenue for the office, while the physician is still out there doing their AccuTite or BodyTite or whatever it is, right. So we do have the passive income side of things from the hands-free while they can still keep doing what they're doing, if they are using different technologies. So I think as far as the hands-free goes, I don't think we've really scratched the surface yet.

Hands-free is not new as we know with some of our former competitors and things like that. I do think that our offering is a lot more unique than anything else that's come into the marketplace between the Evoke and Evolve ex and the things that we have, that we're working on those platforms.

Jeff Johnson -- Robert W. Baird & Co. -- Analyst

Understood. Thank you, guys.


Thank you. And this concludes the question-and-answer session. I would like to turn the call to Moshe Mizrahy, chairman and CEO, for closing comments.

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

OK. Thank you, operator. Again, thanks, everybody for joining us today. I want also to express thanks to all of our employees worldwide.

I'm sure that some of them are on the line. We had a very successful quarter, but a very tough one. We work very hard on the logistics, on the manufacturing, sales, marketing, support, training and I believe as a team, we did a very good job. And we will continue the momentum for the benefit of the employees, all the stakeholders and the shareholders.

Thank you, everybody. Bye, bye.


[Operator signoff]

Duration: 54 minutes

Call participants:

Miri Segal -- Investor Relations

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

Shakil Lakhani -- President, North America

Yair Malca -- Chief Financial Officer

Travis Steed -- Barclays Investment Bank -- Analyst

Spero Theodorou -- Chief Medical Officer -- Analyst

Matt Taylor -- UBS -- Analyst

Kyle Rose -- Canaccord Genuity -- Analyst

Mike Matson -- Needham & Company -- Analyst

Jeff Johnson -- Robert W. Baird & Co. -- Analyst

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