EX-99.1 2 ex_99-1.htm STRATA INVESTOR PRESENTATION, UPDATED AUGUST 7, 2019.
EXHIBIT 99.1
August 2019 Investor Presentation Driving Value to Dermatology Partners Matching Patients with Clinics

This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other factors. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements regarding revenue growth, product development, product extensions, product integration or product marketing; any statements regarding continued compliance with government regulations, changing legislation, insurance or regulatory environments; any statements of expectation or belief and any statements of assumptions underlying any of the foregoing; any are risks and uncertainties related to successfully integrating the products and employees of the Company, as well as the ability to ensure continued regulatory compliance, performance and/or market growth. In addition there are risks to statements relating to historical contingent and potential liabilities related to sales and use taxes as well as potential derivative liabilities, the timing and outcome of the completion of our financial statements for the year ended December 31, 2018, the timing of the filing of form 10-K and the completion of the review of the quarter ended March 31, 2019, and regaining compliance with NASDAQ compliance requirements. These risks, uncertainties and other factors, and the general risks associated with the businesses of the Company described in the reports and other documents filed with the SEC, could cause actual results to differ materially from those referred to, implied or expressed in the forward-looking statements. The Company cautions readers not to rely on these forward-looking statements. All forward-looking statements are based on information currently available to the Company and are qualified in their entirety by this cautionary statement. The Company anticipates that subsequent events and developments will cause its views to change. The information contained in this presentation speaks as of the date hereof and the Company has or undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. Safe Harbor Statement 2

STRATA Investment Highlights 3 A Win-Win-Win CompanyFor patients – safest, most effective, no side effectsFor clinics – stable increased revenue baseFor Payers – the least expensive treatment availableExcimer Laser Technology for Dermatology IndicationsPsoriasis, Vitiligo, Atopic Dermatitis and LeukodermaLarge Market Opportunity 35 Million lives – $6 Billion annual revenueTreatment modality use growing > 25% per yearReimbursement - 3 unique CPT codes 25% target clinic penetrationUnique and Proven Business ModelBest in class XTRAC® and VTRAC ® Excimer Laser technologiesDomestic recurring revenue driven by DTCOUS recurring revenue OUS - Announced July 2019Providing “business in a box” for dermatology practicesGrowing Install base – low hanging fruit DTC – Direct To Consumer awareness and advertising

Excimer laser use grew at ~30% annual rate in the US over last 15 years 4 Historical phototherapy utilization. Trend in phototherapy utilization among Medicare beneficiaries by billing code across all providers, 2000 to 2015. HCPCS, Healthcare Common Procedure Coding System; PUVA, psoralen plus ultraviolet A; UVB, ultraviolet B. 30%

Continuous technology investment and business growth 510 (K) FDA Approval AL-7000 Ultra Velocity 400 Velocity 700 Velocity 7 Series S3 2000 2005 2008 2010 2014 2018 CPT code Approval DTC platform creation 510 (K) FDA Approval (MMD)* Full Insurance Reimbursement 2012 *MMD tip is a diagnostic accessory for XTRAC used in optimal therapeutic dose (OTD) protocol that helps patients achieve Optimal Clinical Outcomes leading to increased Patient Retention 5

XTRAC® is to excimer what Xerox is to photocopy Over 150 peer-reviewed published clinical-studiesMultiple academic institutes in U.S. use XTRAC Over 2,200 device installed base worldwideOver 1,000 dermatology practices in the U.S. have XTRAC, providing device access to over 3,000 dermatology providers Over 5 Million treatments performedMore than 500,000 patients treated Best in class excimer technologyLatest product launched in Q4 2018 with advanced featuresOnly excimer laser with Vitiligo and OTD protocol 1 4 2 3 6 XTRAC is a registered trademark of STRATA Skin Sciences, Inc.

Partner academic institutes 7

How XTRAC Works - Psoriasis After 4 tx After 2 tx Baseline Beam of UVB light applied to the affected area UVB light induces apoptosis of the keratinocytes and T cells in the dermis Promotes immunosuppression Induces alterations in cytokine profile 150+ peer reviewed published clinical studies 8 PASI - A 75% reduction in the Psoriasis Area and Severity Index (PASI) score (PASI 75) is the current benchmark of primary endpoints for most clinical trials of psoriasis. Clinical Protocol – 6.2 treatments to PASI75

How XTRAC Works - Vitiligo 9 Long-term skin condition characterized by patches of skin losing its pigment Disease is believed to be due to genetic susceptibility where the autoimmune disease is then triggeredPotentially the immune system is attacking and destroying melanocytes of the skinLife-altering disease that leads to low self esteem UVB light reduces the immune system’s attack on the melanocytes and enhances the migration and proliferation of melanocytes resulting in re-pigmentation EXCLUSIVE LICENSE FOR TREATMENT USING EXCIMER LASER

Domestic XTRAC Revenue Funnel REOCCURRENCE DTC ADVERTISING ASSIGNING A DOCTOR PARTNER PATIENTAPPOINTMENT TREATMENT WIN WIN WIN DOCTOR PATIENT STRATA (AND PAYER) INTEREST CREATION IN-HOUSE CALL CENTER INSURANCE ADVOCACY VERIFY APPOINTMENTPrescription of treatment VERIFY XTRACTREATMENT 10 Patient leads turn into appointmentsAppointments drive XTRAC partner revenueOther revenue for the partner clinicRevenue for STRATA Revenue = # of lasers x # of treatments/pt x # patients x cost/tx

DTC advertisement is generating word of mouth for XTRAC through ‘Shares’ and ‘Comments’ 11

XTRAC helps patients Live Clear, Live Free… https://youtu.be/GdMBliZYy70 12

International Market: Installed Base Major Markets – China, Japan, Saudi Arabia, South KoreaInsurance covered in most marketsUsage/device higher than domestic market – untapped potential in U.S.1,300 OUS devices sold and in servicePlacement Recurring revenue model agreement executed for South Korea July 2019 Strategic Growth Target 13

XTRAC adds (delegated) recurring revenue driver for its partners CPT CODE Description 2018 National AverageMedicare Payment Rate 96920 Laser treatment for inflammatory skin diseases, (psoriasis); total area less than 250 sq cm $168.12 96921 Laser treatment for inflammatory skin diseases, (psoriasis); total area between 250 – 500 sq cm $184.32 96922 Laser treatment for inflammatory skin diseases, (psoriasis); total area greater than 500 sq cm $250.92 Number of Treatments / Weeks 20 30 # of Weeks / Year 48 48 Total # of Treatments / Year 960 1,440 Average Revenue Per Treatment $186 $186 Physician Gross Revenue (Annual) $178,485 $267,728 Treatment Patient Type Reimbursement Details Annual Revenue per Patient Can be delegated** XTRAC Mild / moderate / severe CPT Code 96920-96922 ($168-$251) average $186; 16 tx/course (2/yr) and Office Visit -$70 (2/Yr) $6,092  Phototherapy* Moderate / severe Office visit - $70 (2/yr) $140 X Biologics Moderate / severe Office visit - $70 (6/yr) $420 X Systemics Moderate / severe Office visit - $70 (3/yr) $210 X Topicals Mild / moderate Office visit - $70 (3/yr) $210 X *Phototherapy Center Revenue – CPT Code 96910 $40 per tx; 30 tx/course (2/yr) - $2,400**Subjected to state legislation 14

Domestic Market: Installed Base – sales and service engine Overview 764 Partner XTRAC clinics 150+ sold XTRAC 4 Regions 24 Sales Territories 15 Field Service Techs In-house call center to qualify leadsOnly one competitor in U.S. 15 Territories color coded

Financial Metrics – recurring revenue and margin growth 16 Note: all quarterly numbers are unaudited

Install Base Growth Drivers 17 1,608 clinics owned by 58 roll-up groups164 (10.2%) of which are XTRAC partnersStrata signs strategic expansion agreements with major groups Expansion into roll-up groups Comebacks 300-400 Clinics own Excimer lasers Conversion to an XTRAC partner clinic = immediate revenue15 Comebacks in 2018 (compared to 4 in 2017)10 Comebacks in first half 2019 764 1,608 164

Recent Financial Highlights Q2 2019Q1 2019 18 Total Revenue $7.4 million +15% versus Q1 2018 Recurring XTRAC Revenue $5.3 million +17% versus Q1 2018 Gross Margin 62% +13% versus Q1 2018 Recurring XTRAC Margin 66% +9% versus Q1 2018 Cash and Cash Equivalents $16.4 million Total Revenue $8.2 million +9% versus Q2 2018 Recurring XTRAC Revenue $6.0 million +16% versus Q2 2018 Gross Margin 64% +11% versus Q2 2018 Recurring XTRAC Margin 72% +9% versus Q2 2018 Cash and Cash Equivalents $15.9 million

Financial Profile Shares and Share Equivalents – Market cap*- $91M (As of July 29, 2019) * On an as converted basis of the convertible preferred stock** Does not include 750K warrants with a weighted average exercise price of $4.12 as of July 30, 2019 of which 600K expire by June 2020** Does not include 4.0M options with a weighted average exercise price of $1.78 Common stock outstanding 32.9M Series C preferred shares* 0.7M Total** 33.6M 19

STRATA Investment Highlights 20 A Win-Win-Win CompanyFor patients – safest, most effective, no side effectsFor clinics – stable increased revenue baseFor Payers – the least expensive treatment availableExcimer Laser Technology for Dermatology IndicationsPsoriasis, Vitiligo, Atopic Dermatitis and LeukodermaLarge Market Opportunity 35 Million lives – $6 Billion annual revenueTreatment modality use growing > 25% per yearReimbursement - 3 unique CPT codes 25% target clinic penetrationUnique and Proven Business ModelBest in class XTRAC® and VTRAC ® Excimer Laser technologiesDomestic recurring revenue driven by DTCOUS recurring revenue OUS - Announced July 2019Providing “business in a box” for dermatology practicesGrowing Install base – low hanging fruit DTC – Direct To Consumer awareness and advertising

August 2019 Investor Presentation Driving Value to Dermatology Partners Matching Patients with Clinics 21

Appendix 22

Multicenter Psoriasis Study1 Scalp Study3 124 patients were enrolled and 80 completed the protocol. 72% achieved at least 75% clearing in an average of 6.2 treatments. 84% of patients reached improvement of 75% or better after 10 or fewer treatments. 50% of patients reached improvement of 90% or better after 10 or fewer treatments. Common side effects included erythema, blisters, hyperpigmentation, and erosions, but were well tolerated. All patients improved. 17/35 (49%) of patients cleared>95% (mean: 21 treatments; range: 6-52) and 16/35 (45%) cleared 50-95%. Conclusion - The excimer laser is a successful approach to treatment of psoriasis of the scalp being a simple treatment that can be performed in a short period of time and which has a high rate of effectiveness. Sample studies from 150+ clinical studies Vitiligo Study2 Out of 221 vitiligo patches treated, 50.6% showed 75% pigmentation or more, 25.5% achieved 100% pigmentation of their patches, and 64.3% showed 50% pigmentation or more. Lesions on the face responded better than lesions elsewhere. Conclusion: The 308-nm xenon chloride excimer laser is an effective and safe modality for the treatment of vitiligo, with good results achieved in a relatively short duration of time. Pediatric Study4 4 children with a mean age of 11.0 years and 12 adults with a mean age of 48.8 years completed the protocol. Both the children and the adult groups yielded a significant decrease in psoriatic severity scores of their respective target lesions. The children’s group had a greater reduction (91.3% reduction) as compared to the adult treatment group (61.6% reduction). 1Multicenter Psoriasis Study - Feldman SR, Mellen BG, Housman TS, Fitzpatrick RE, Geronemus RG, Friedman PM, Vasily DB, Morison WL. Efficacy of the 308-nm excimer laser for treatment of psoriasis: Results of a multicenter study. J Am Acad of Dermatol; vol. 46, no. 6, June 2002, pp. 900-906 2Vitiligo Study - Suhail Hadi, Patricia Tinio, Khalid Al-Ghaithi, Haitham Al-Qari, Mohammad Al-Helalat, Mark Lebwohl, and James Spencer. Photomedicine and Laser Surgery. Treatment of Vitiligo Using the 308-nm Excimer Laser. Jun 2006.ahead of printhttp://doi.org/10.1089/pho.2006.24.3543Scalp Study - Morison WL, Atkinson DF and Werthman L. Effective treatment of scalp psoriasis using the excimer (308nm) laser. Photodermatol Photoimmunol Photomed 2006; 22: 181-1834Pediatric Study - Pahlajani N, Katz BJ, Lonzano AM, Murphy F and Gottlieb A. Comparison of the Efficacy and Safety of the 308nm Excimer laser for the Treatment of Localized Psoriasis in Adults and in Children: A Pilot Study. Pediatric Dermatology Vol. 22 No. 2, March/April 2005, pp. 161-165Induration Protocol Study - Taneja A, Trehan M, Taylor C. 308-nm Excimer Laser for the Treatment of Psoriasis – Induration-Based Dosimetry. Arch Dermatol, Vol. 139, June 2003, pp. 759-764High Dose Protocol Study - Michael Abrouk,1 Ethan Levin,2 Merrick Brodsky,1 Jessica R Gandy,1 Mio Nakamura,2 Tian Hao Zhu,3 Benjamin Farahnik,4 John Koo,2 and Tina Bhutani2 Excimer laser for the treatment of psoriasis: safety, efficacy, and patient acceptability. Published online 2016 Dec 12. doi: 10.2147/PTT.S105047 23

Maximizing Dermatologist Partner Clinical Revenue Data collected directly from the lasers demonstrates the importance of following treatment guidelines Revenue = # of lasers x # of treatments/pt x # patients x cost/tx x recurrence factor 24

Proven Turnaround Strategy – Install Base and Utilization Growth STRATA bought XTRAC business from PhotoMedex in 2015 25 Note the numbers prior to Jan 1, 2018 do not reflect adjustments for the adoption of ASC 606 Q2 ’19 average revenue – 13% growth over Q2‘18

DTC – The Driver for Recurring Revenue Growth 26 Q2 ’19 qtr. revenue - 15% growth over Q2 ‘18 STRATA bought XTRAC business from PhotoMedex in 2015 Note the numbers prior to Jan 1, 2018 do not reflect adjustments for the adoption of ASC 606