Sisram Medical Ltd ($1696)

So ladies and gentlemen, thank you for standing by, and welcome to Sisram Medical's 2025 Annual Results Conference Call. So I'm Jinpeng He from Citic Securities. And joining me today is our Chief Analyst, Yifan Du. So joining us online on today's call is Sisram's senior management team. So they are Mr. Lior Moshe Dayan, Chairman; Mr. Eyal Ben David, Chief Executive Officer; Mr. Jiahong Li, Co-Chief Executive Officer and Chief Financial Officer; Ms. Qianli Fang, Secretary of the Board; and Ms. Hui Fan, Investor Relations Director. So management will begin with prepared remarks, which will be followed by a Q&A session. And as a reminder, today's conference call is being recorded. A replay of this call will be available on Sisram's website. So I will now turn the call over to Sisram's Chairman, Mr. Lior Moshe Dayan. So Mr. Lior, please go ahead. Thank you.

Thank you very much. Good day, everyone. As we begin today's call, I would like to briefly share the Board's perspective on the industry and Sisram positioning. The medical aesthetics industry continues to demonstrate strong long-term fundamentals, supported by growing patient awareness, expanding treatment adoption and ongoing innovation across technologies, injectables and digital solutions. At the same time, the industry is evolving. As the market matures, practitioners and patients are increasingly prioritizing solutions that deliver consistent outcomes, operational efficiency and long-term engagement. Sisram anticipated this shift early and has been steadily building a broader ecosystem that integrates technologies, diagnostics, injectables and digital capabilities. Alongside this, our diversified global footprint provides resilience as we navigate different market cycles. During the year, we also completed a structured leadership transition. The Board has full confidence in the new executive team and in their ability to lead Sisram next phase with a strong focus on execution, operational discipline and long-term value creation. At the Board level, we remain closely engaged in shaping the company's strategic direction, monitoring execution and supporting the development of a stable and high-quality shareholder base. These foundations supported the company's progress in 2025 and position Sisram well for the years ahead. Before I conclude, I would like to thank our management team and employees for their dedication and of course, the shareholders and partners for their continued trust. With that, I would like now to hand the call over to Sisram CEO, Mr. Eyal Ben David, who will walk you through the company's performance and outlook in more detail. Thank you.

Good morning, good afternoon, good evening. Lior, thank you very much, and thanks, everybody, for joining the call today. 2025 was an important year for Sisram as we strengthened our operational and commercial foundations to support the company next phase of growth. During the year, we delivered revenue of $365 million, representing a 4.7% year-over-year growth. This was primarily driven by double-digit international expansion, particularly in across APAC, which posted record growth of 26.9%, led by China and Thailand. This performance helped to offset softer conditions in North America, where higher interest rates and weaker consumer sentiment continue to impact the demand. At the same time, we continued executing our strategy to expand beyond EBD. We made significant progress expanding Sisram Injectable business, which grew by over 185% year-over-year. This growth demonstrates strong adoption and growing practitioner confidence in Sisram's gold standard approach of integrating EBD with fillers, neurotoxins and biostimulators. In parallel, we continued advancing our AI-enabled diagnostics and skin care, further strengthening our integrated treatment ecosystem. Together, these initiatives position Sisram at the forefront of the evolving medical aesthetics landscape. As we enter 2026, we believe the company is well positioned to capture long-term opportunities across the global aesthetics market. Regarding our EBD, throughout the year, our EBD platform remain key growth drivers. Alma Harmony sustained global demand and order flow, reinforcing its position as the leading multi-application aesthetic platform in the industry. At the same time, Alma Hybrid continued strong adoption trajectory for the fifth consecutive year, further expanding its presence among leading medical aesthetics practitioners worldwide. We also achieved several important milestones in China with the launch of Soprano Platinum, further strengthening our position of one of the most strategic markets and support our growth outlook for the coming years. Looking ahead, we will continue to strengthen our flagship device portfolio while expanding our global energy-based device offering. This includes the launch of new platforms and upgrade applicators designed to enhance performance, improve practitioner experience and meet evolving market demand. We also plan to introduce additional EBD solutions in Thailand, further enhancing customer experience and expanding treatment options for practitioners. Finally, we see strong potential in the fast-growing hair growth segment, and we plan to broaden our presence across international markets as we continue expanding Sisram's holistic medical aesthetics and wellness offering. As for injectables, along our EBD platforms, we continued expanding our injectables business, which is becoming an increasingly important growth engine for Sisram. Profhilo demonstrated strong momentum in Thailand, reflecting growing market adoption and increasing practitioner confidence in our injectable portfolio. As the first treatment of its kind, Profhilo is a revolutionary beneath the skin hyaluronic acid moisturizing treatment and delivering unique injectable formulation designed to stimulate dermal cells over a prolonged period, helping to improve skin hydration and skin quality. During the year, we also successfully launched Hallura in Israel, an innovative hyaluronic acid filler built on property click chemistry technology recognized with the 2022 Noble Prize in chemistry. Hallura's BDDE-free formulation is designed to deliver a strong safety profile while preserving the natural structure of hyaluronic acid. This is closely mimicking the healthy skin. We are continuing to expand its commercial footprint across strategic markets. In addition, we advanced preparation for the entry of DAXXIFY into Mainland China, working closely with leading Chinese key opinion leaders and building the commercial infrastructure required to support the launch. As of our announcement, DAXXIFY has been rolled out across multiple provinces in China with commercial shipments exceeding 10,000 units and usage steadily increasing. This effort culminated in the commercial launch of DAXXIFY in January 2026, marking an important milestone in our expansion of one of the world's most dynamic aesthetic markets. Building on this momentum, we will expand commercialization of DAXXIFY across Mainland China while advancing regulatory clearance for additional injectable products. Our ecosystem strategy, another important focus during the year was the continued development of our integrated ecosystem across the aesthetic treatment journey. Supporting this strategy, we launched Universkin by Alma in North America and during the first half of the year, followed by Hong Kong later in the year. As an AI-powered skin care system designed for post-treatment use, Universkin enables clinics to deliver high personalized skin care while improving patient retention, treatment outcomes and long-term patient engagement. We also introduced Alma IQ internationally, strengthening the diagnostic capabilities and improving treatment planning from the very first patient interaction. As we move forward, we plan to expand the global penetration of Alma IQ and continue scaling Universkin by Alma while further integrating AI across our operations to enhance productivity and support long-term growth. As we enter 2026, Sisram does so with strong operational resilience and disciplined execution. In APAC, particularly in Thailand and China, we will continue advancing our ecosystem strategy by combining EBD injectables and AI-powered diagnostics to increase clinics' lifetime value and deepen practitioner engagement. In North America, where market conditions remain more challenging, we will maintain strict operational discipline while strengthening strategic capabilities and leveraging more granular market analytics to position the business for recovery. With the leading EBD portfolio, a rapidly expanding injectable business and a growing AI-enabled ecosystem, we believe Sisram is well positioned to capture long-term growth opportunities in the global medical aesthetics market and deliver sustainable value for our shareholders. To provide additional detail on our operational and manufacturing progress during the year with a review of our financial performance, I will now turn the mic -- the call to our Co-CEO and CFO, Jiahong Li. Thank you.

Okay. Thank you, Ben Da, and hello, everyone. Thank you for taking the time to join us today. I'll begin with an update on our operational and manufacturing progress, then review our financial performance by region and also by business segment and close with our strategic priorities for 2026. In 2025, we executed a comprehensive manufacturing ramp-up to strengthen global supply. We expanded product capabilities, tightening production planning and material management and materially shorten the lead time for our high-volume energy-based devices system. Our Israel manufacturing facility maintained disciplined inventory control while perceiving operational flexibilities to meet dynamic global demand. We also advanced our localization strategy, signing a memorandum of understanding to explore localized manufacturing in China. This initiative is intended to improve cost efficiency, shorten regional lead time and enhance supply chain resilience across the Asia Pacific market. We expect our first China-made product in the first half of 2026. Now to our financial results. For the full year 2025, revenue was USD 365.3 million, up 4.7% year-on-year. We delivered double-digit growth in both year-on-year and sequential terms in the second half, reflecting improving operational momentum. International markets, excluding North America, grew 20.1%, led by Asia Pacific, which rose 26.9% year-on-year and serve as our primary growth engine. We also see broad growth across Europe, Middle East and Africa and Latin America. North America revenue was USD 111 million, down 19.2% year-on-year as weakened macroeconomic conditions and softer consumer demand weighted on the device and service sales. While still our core market, we believe in its growth potential and are optimizing our cost structure and building target capabilities to capture the rebound. By segment, EBD revenue was USD 310.4 million, representing 85% of total revenue and essentially flat year-on-year, supported by strong demand for our Alma Harmony and Alma Hybrid platforms as well as the launch of [ Titetian ] injectable revenues reached USD 28 million, up 185.6% year-on-year, reflecting meaningful diversification, thanks to Profhilo's momentum and broader adoption by practitioners. Looking into 2026, we will expedite DAXXIFY commercialization in China and also advance regulatory approvals for additional injectables to achieve a more balanced revenue mix. Gross profit for 2025 was USD 215.1 million with gross margin of 58.9% versus 62.1% in 2024. The margin correction primarily reflects shift in geographic and product mix and the impact of new import tariffs. We view this as a temporary structural shift rather than a weakening of our underlying profitability. R&D remains core to our leadership and long-term competitiveness. In 2025, R&D spending was USD 16.9 million, up about $1 million versus 2024. We continue to invest in clinical programs, AI integrated across Alma IQ and Universkin, intellectual property and the next-generation EBD and injectable products. This product -- this investment position us to deliver differentiated product and drive sustainable revenue growth. Adjusted net profit for 2025 was USD 31 million, up 7.9% year-on-year, with adjusted net profit margin of 8.5%, a 0.3 percentage point expansion from 2024, reflect our disciplined cost management and efficiency gains. We will continue to refine our cost structure and boost the sales productivities to further enhance profitability. We finished the year with a strong financial position, holding cash and cash equivalent of USD 71 million as of December 31, 2025. The Board has proposed a final dividend of HKD 0.095 per share for 2025. We remain committed to balancing reinvestment for sustainable growth with returning value to shareholders. To conclude, 2025 reinforced the resilience of our business model, a leading EBD franchise, a rapidly expanding injectable business and a growing AI-enabled ecosystem. Looking ahead, we will continue investing in core business and new growth engines while actively pursuing M&A opportunities that align with the medical aesthetics and the wellness ecosystem to enrich our product portfolio and enhance innovation capabilities. We will now open the line for questions. Operator, please. Thank you.

[Operator Instructions] So just a quick question to start. So I have one question regarding the marketing expense ratio. So we noticed that there's a downward trend of the sales and marketing expense ratio in the second half of last year. And also, we also noticed that there is an ongoing investment need for the [indiscernible] new business. So could you elaborate on what specific measures do you take to cut down this expense ratio? And can we expect this ratio to maintain its downward trend and thereby driving a recovery in the company's profit margin? Yes, that's my question.

Okay. Let me address this one. So in 2025, in view of the challenging top line, we had taken proactive measures to drive the efficiency program whose aim is to reduce the cost across line. So you will see some reductions in sales and marketing expenses. And on the other hand, as you mentioned, we keep investing in our strategic projects, including DAXXIFY in China. So it's a balance out. In 2026, we're going to continue the efficiency program and trying to drive leverage in our P&L. At the same time, we want to maintain a decent investment into the new initiatives like DAXXIFY to make sure that the commercialization will be successful at the end of the day.

And I see the next question is from [indiscernible].

I am [indiscernible]. Please share an update on the company's R&D pipeline and clinical progress. Please expect this to be launched over the next 2 to 3 years.

Okay. So thank you for this important question. Obviously, the R&D pipeline is the engine for the company growth and sustainability. In 2026, we have several launches planned. I think mentioned our focus would be on hair growth where we see opportunities. We have a product that was successfully launched a few years back in North America, and we've been learning how to make it even more suitable for success in international markets, and that is planned to be launched midyear. We see in the reports that the hair growth segment in the aesthetic arena is with the highest growth rates, lining between 20% and 30% growth from the consumer aspect. And this is where we have our current R&D working for this project. And also, we have a lot of R&D investments in future technologies for this segment. But we are not putting all our eggs in this basket alone. We're also leveraging protocols on existing platforms to use the Harmony Bio-Boost and take it to the next level. In addition, we have always in our pipeline, 3, 4 projects that are ongoing. The time to market in the industry has changed in the last decade from 2 to 3 years more to the 4 or 5 years and the market is getting more mature and higher standards of regulation and quality. So this is the plan for this year. In addition, we have a department that is assessing a few very interesting products to capitalize on opportunities outside our R&D. It is -- at this moment, it's still premature to prolong about the launch dates and the impact that it will have on our business, but we feel very, very strongly. Looking at '27, '28, because you asked about the next years, we have several products that are already proven clinically in-house, and we are just waiting for regulation clearance. This gives us a very strong outlook, specifically for '28, '29.

Our next question is from [indiscernible]

I'm [indiscernible] from Sealand Securities. My question is about energy based devices. What is the company's 2026 sales strategy for energy-based devices in China? And what is its sales target guidance?

We are a very dominant player in China for many, many years. And although the macro environment challenges in China, we were able to grow significantly even in '25, almost 20% in '25. Obviously, we are committed to maintain that strength and looking forward to even to grow in the long-term future as we try to utilize our different business segments and to create a synergy and to execute our strategy. As mentioned, that you asked about EBD, but I would like to remind that we have also DAXXIFY the injectable unit that is operating at the moment as a separate business unit. And we have strong efforts to find a way to unite these teams, not only from a financial and operation point of view, but more from a clinical point of view for the consumer for engaged protocols, enhanced results.

Yes. Okay. So our next question is from Nate Zhou.

This is Nate from UBS. I just got one question on -- can you share a bit more on your plan for the commercialization of DAXXIFY this year and also the other -- an update maybe on the general injectable pipeline here in China. That would be very helpful.

Great. So a very interesting question. For us, as we put DAXXIFY as one of our strategic products to take really Sisram for the next level. For this year, we have capacity of 100,000 units to sell to the market as we did regulation with DAXXIFY, it was done with a specific manufacturing site in North America. So for this year, supply, not demand is a bottleneck, and we are committed to maintain and obviously to support these 100,000. And according to that, we build the team. Our initial strategy is to start with the high-value clinics, the high -- the most exclusive clinics as this product is unique. It's a premium product. I'm sure that it's well known in the market. We're very proud to have the new generation toxin product out there. And the initial feedback looks very positive. We are already engaged with a variety of high-end clinics in China. As for the total injectable portfolio, we are aiming to launch by -- before end of '27, Profhilo also in Mainland China. And we have strong evidence of the potential looking at what we've done in other APAC markets and in the Middle East. I mentioned earlier in my statement, Profhilo had a first full year in Thailand last year with amazing results, more than, I would say, double digits on millions of dollars on the first year and capturing significant market share. Once we have a portfolio of injectables, we can then leverage and have even more investments in marketing and expanding our team.

Okay. Here, I also have a question from an online investor. So he said, could you please elaborate on the company's strategic road map on this year, the 2026 and the road map on the mid- to long term? And maybe what are the key growth drivers and strategic priorities to keep sustaining our competitive advantage in coming years?

Thank you very much. Strategy by definition is something that you hope not to change every year. That takes time to build it and to execute it. The interesting trade-off is that the world and the trends are changing very fast. So we try to balance these 2 factors in order to be efficient. I think we could be very proud with the strategy led obviously by Lior, [indiscernible] and the team to be proven to be very relative to the changes of our industry. We believe that EBD and we see that the growth of EBD is expected to be around 8% to 10%. And we have a very wide portfolio, allowing us to navigate between different technologies and geographies. But being an EBD player is not enough. This is why our strategy is to create Alma Universe, which is actually an ecosystem to provide more value to the practitioners and to create a stronger brand for the consumers. Actively, for this year, this is the true launch of Alma Universe. Until this 2026, it was just on pilot phase, and now it will be fully implemented. For example, in North America, we already have the AI skin care, the Alma IQ for diagnosis, enhancing AI and the EBD. We don't have injectables in North America. In other markets like Germany and U.K. and Australia, we will gauge all aspects of this ecosystem. So this is holistically about our strategy. We hold strong about that, and we continue to seek for valid strategic partners that could enhance this trend. On the EBD, as mentioned earlier, we look not only on our capabilities, but where the market trends are going. And the main focus is tightening that is related to GLP-1 injections that is very strong globally and specifically in North America. And post the treatment, consumers are seeking to have better skin temperature and tightening. And in addition, hair growth, where there is not yet a dominant EBD player to create a solid solution for consumers. These are the 2 areas where we believe we should focus on. Saying that, we continue to be a leading player for hair removal, and we continue to be a very significant player for multi-platform, as mentioned at Alma Harmony that is really a great choice for clinics especially in macro-economical times that they can have one platform that could engage in a wide variety of treatments, and that remains a very solid choice for high-end clinics around the world.

And he also has another question regarding the U.S. business. So he noticed that there are some softness in the U.S. segment in recent years and also in 2025. So what may be the underlying reasons for this kind of continuous decline? And could we see there is a cadence of recovery in U.S. market throughout this year?

I think for this question, we will use all 3 of us because there's different aspects. And from the financial operational view, I would like Jiahong to begin. And then later on, I will try to bring a more business holistic approach, and we are [indiscernible] with our aspect as the Chairman, how we look at it in terms of strategic invest.

Yes. So you are right that we have been experienced a little bit downside in the U.S. over the past 2 years, primarily, largely due to the macroeconomic situation and the lower consumer confidence and also the high interest rate. So what we did is we continue to drive the cost structure and optimize our operations to cope with the challenges we are seeing. And if you look at comparison versus our major competitors, you can see that results is actually declined much more than us. So that basically shows that the actions we have taken is actually helping us to protect our bottom line. Moving to 2026, we feel like the macroeconomic should be improving, but given the current geopolitical issues in Middle East, where the U.S. is also getting involved. So it's a little bit hard to tell at this point of time. But finger crossed, if the situation in Middle East get stabilized and quickly resolved, we still have high hope that the macroeconomic in the U.S. will improve and eventually Fed will cut the interest rate, right? These 2 factors will definitely help us to improve our financial results. At the same time, we continue to strengthen our sales team, and we also completed the transition -- the leadership transition in the U.S. as well. We also managed to have some of the more experienced, high-performing salespeople from the competitors given that we're not doing very well. So that opened a window for us to attract more talents to join us. With all these efforts, together with some of the new product introductions that Ben Da just touched base on, I believe he's going to talk a little bit more. We believe that we are well positioned for a rebound, probably a rebound in 2026. Ben Da?

Yes. Thank you, Jiahong. I would just like to echo that in times of challenges and macro challenges, macro-economical challenges, we see also opportunity. And as Jiahong mentioned, this is the time that we could capture new talent in order to leverage in the future. So that's one aspect that was already mentioned. Secondly, we understood in the latest years that in order to be stronger, we want a more united portfolio for global products. In the past, North America was more unique in their products because of regulation and because of the customer different culture. As a global company and understanding that our marketing abilities are not infinitive, we try to align and have the same product portfolio globally, especially looking at North America, that North America is the star that all the world is still looking at what is the trends. So we leverage from North America to other markets. So investments made in North America, not necessarily hit the specific P&L of North America, but in the midterm, they help build our brand and our consumer trust in the company. One solid example for that is, again, coming back to our branded treatment TED, which is for hair growth, a huge success in North America. We didn't launch in other parts because we wanted to adapt the solution and adapt the regulation. And we're confident that once we launch it internationally, we will have a strong impact. We are also basing on the launch of Alma Harmony that was done less than 2 years ago. It was launched first in North America, and we were able to enjoy the waves of success of North America and to have a very fast launch internationally, capturing initially in the first quarter have launched hundreds of systems. So we look at North America on 2 aspects. First, we must be a very strong player in North America. Secondly, how do we leverage North America for other countries. And yes, the macro environment is not great, but we are here to make the right moves to make us stronger for the future.

That's clear. Okay. We have another question from [indiscernible].

I am [indiscernible] from Sealand Securities. I have 2 questions. The first one is about AI-enabled products. What's the progress for your AI-enabled products? And the second question is what's the impact of geopolitical issues on your business?

Okay. Thank you. Two very different questions, both very interesting for all of us, obviously. As for AI, because we are very focused on our core, initially technologies of AI, we wanted to leverage companies that were already in the journey of utilizing AI technology. So we have partnered with 2 external strategic partners. One is Universkin by Alma. Their whole protocol of personalizing the skin care is based on an AI protocol, and this is why we are engaged with them with a global distribution, and we are learning and executing the AI. In addition, we did the same thing with the Alma IQ, the diagnostics. This gives us a fast learning curve to implement in our core technologies. This is about product and AI. Obviously, as a leading company in the industry, we are highly putting in high focus usage of AI internally for operations, for sales, for marketing. This is to make our whole operation more efficient. And we see already good signs looking into our marketing expenses this year, where we can utilize projects that in the past were 2x more expensive today, we can do it with fewer productions and get to the consumer in the same impact, but with less cost. That's about AI. Moving to the Middle East conflict. Unfortunately, it's not the first conflict that we've seen in the last years. And specifically, this company has created a muscle to how to handle these things with high agility and resilience. On a more practical note, we've been able to come back to work on the second day of this conflict, and we've been able to work on more than -- on the operational side, more than 90% capacity and our assumption is that the global capacity of what we achieve is 80%. Nevertheless, we do see an impact for getting parts into the Middle East and getting parts out of the Middle East when we have shipments. This is increasing the prices of shipments. So to be very honest and clear, we cannot have it with zero impact. But we feel very confident, and we have this accumulated experience, unfortunately, and we utilize it to be more resilient.

Okay. So thank you all. And I think this -- I think here concludes the Q&A session. And so thank you for joining the Sisram Medical's 2025 Annual Results Conference Call today. If you have any further questions, you can also contact Sisram's IR team using the contact information provided on the company's website. So that concludes today's conference call, and thank you all for your participation. You may now disconnect your lines. Thank you all.