10-Q: Apyx Medical Corp: Revenue Grows, But Losses Persist in Q2 2026

Apyx Medical Corporation reported increased revenue and improved gross margins for the second quarter of 2026, but continued to incur net losses and cash outflows from operations, highlighting ongoing financial challenges.

Summary

• Apyx Medical Corporation reported total revenue of $13.9 million for the three months ended June 30, 2026, a 22.1% increase compared to $11.4 million in the prior year period.
• For the six months ended June 30, 2026, total revenue increased by 26.8% to $26.4 million from $20.8 million in the prior year period.
• Gross profit for the three months ended June 30, 2026, increased by 25.2% to $8.9 million, with a gross margin of 63.9%, up from 62.3% in the prior year.
• Net loss for the three months ended June 30, 2026, was $3.1 million, compared to a net loss of $3.7 million in the prior year period.
• For the six months ended June 30, 2026, net loss was $5.2 million, compared to $7.9 million in the prior year period.
• The company had $27.6 million in cash and cash equivalents as of June 30, 2026.
• Net cash used in operating activities for the six months ended June 30, 2026, was $4.1 million, an increase from $2.0 million in the prior year period.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a cautiously negative sentiment due to continued net losses and cash outflows from operations, despite revenue growth and improved gross margins. The company's reliance on future financing and potential for dilution are significant concerns.

Positives

• Total revenue increased by 22.1% to $13.9 million for the three months ended June 30, 2026.
• Surgical Aesthetics segment sales grew by 28.1% to $12.4 million for the three months ended June 30, 2026.
• Gross profit increased by 25.2% to $8.9 million for the three months ended June 30, 2026.
• Gross margin improved to 63.9% for the three months ended June 30, 2026, from 62.3% in the prior year.
• International sales showed strong growth, increasing by 40.9% to $8.9 million for the six months ended June 30, 2026.
• The company received expanded 510(k) clearance from the FDA for the AYON Body Contouring System to include power liposuction.

Negatives

• The company incurred a net loss of $3.1 million for the three months ended June 30, 2026.
• Net cash used in operating activities increased to $4.1 million for the six months ended June 30, 2026, from $2.0 million in the prior year.
• The company has incurred recurring net losses and cash outflows from operations and anticipates these will continue in the near term.
• The company's ability to fund operations and capital needs relies on existing cash, product sales, and potentially additional equity or debt financing, with no certainty of availability on acceptable terms.
• The sale of additional equity would result in dilution to stockholders.
• The company is involved in several legal actions, including a patent infringement lawsuit filed on July 20, 2026, the outcome of which is uncertain.

Risks

• The company has incurred recurring net losses and cash outflows from operations and anticipates that losses will continue in the near term.
• The company cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on acceptable terms.
• The sale of additional equity would result in dilution to its stockholders.
• Incurring additional debt financing would result in further debt service obligations and potential restrictive covenants.
• If the company is unable to raise additional capital, it may be necessary to delay, limit, reduce, or terminate sales, marketing, and product development, which could harm the business.
• The company is involved in legal actions, including product liability claims and a patent infringement lawsuit, the outcomes of which are uncertain and could have a material adverse impact.
• The company's continued compliance with covenants under the Perceptive Credit Agreement is subject to meeting or exceeding forecasted Surgical Aesthetics revenues and controlling operating expenses.

Future Outlook

The company anticipates that losses will continue in the near term and plans to fund operations through existing cash, product sales, and potentially additional equity or debt financing. Continued compliance with debt covenants is dependent on meeting forecasted revenues and controlling operating expenses.

Management Comments

• We believe the increased use of GLP-1s had an initial negative impact on revenue for plastic and cosmetic surgeons and created uncertainty in the aesthetic space. However, we believe, that the use of these drugs will have a ripple effect which will drive people towards plastic surgery and may provide a tailwind for sales of our Renuvion products.
• Rapid weight loss caused by these drugs can contribute to loose skin. To address this, the cosmetic surgery market focuses on body contouring. Body contouring is a customizable treatment for patients to target specific fat deposits, engage in the transfer of fat, and treatments to address loose or lax skin. Renuvion is the only FDA-approved device for the treatment of this issue post liposuction.
• We cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on acceptable terms.
• If we are unable to raise additional capital in sufficient amounts or on acceptable terms, it may be necessary to delay, limit, reduce, or terminate our sales, marketing and product development.

Industry Context

StockSavvy.ai notes that the company's performance is influenced by trends in the surgical aesthetics market, including the impact of GLP-1 drugs on patient demand for cosmetic procedures. The company's strategy to leverage Renuvion for post-weight loss skin laxity addresses a potential market opportunity arising from the widespread use of GLP-1s.

Management Changes

Legal Proceedings

• The company is involved in several legal actions relating to the use of its Helium Plasma Platform Technology, being defended by insurance carrier-appointed counsel.
• Two product liability cases related to specific procedures were subject to deductibles, with two claims dismissed in March 2024.
• Product liability lawsuits alleging off-label use of Renuvion and mismarketing were filed in March 2024, with the company denying liability.
• A patent infringement lawsuit was filed on July 20, 2026, alleging infringement of certain patents and seeking unspecified damages and injunctive relief.

Related Party Transactions

• Purchases were made from the partner in the Company's China JV, who is also a supplier. Purchases totaled $629,000 and $1,242,000 for the three and six months ended June 30, 2026, respectively.
• Net payables to this supplier were $329,000 at June 30, 2026.

Stakeholder Impact

• Shareholders may experience dilution if additional equity financing is pursued.
• Creditors and lenders may face increased risk if the company cannot secure additional financing or meet debt obligations.
• Employees may be impacted if sales, marketing, or product development activities are delayed, limited, reduced, or terminated due to insufficient capital.

Next Steps

• Continue to fund operations and capital needs through existing cash, product sales, and potentially additional equity or debt financing.
• Monitor compliance with financial covenants under the Perceptive Credit Agreement, which is subject to meeting or exceeding forecasted Surgical Aesthetics revenues and controlling operating expenses.
• Manage legal proceedings, including the patent infringement lawsuit filed on July 20, 2026.

Key Dates

Recommendation

While revenue growth and improved gross margins are positive, the continued net losses, increased cash burn from operations, and reliance on future financing present significant risks. The ongoing legal proceedings also add uncertainty. A 'hold' recommendation reflects a balance between the company's growth potential in its core markets and the substantial financial and legal challenges it faces.

Keywords

Surgical Aesthetics, Renuvion, AYON Body Contouring System, J-Plasma, OEM, Helium Plasma Platform Technology, FDA clearance, power liposuction