UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-51481

STRATA SKIN SCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware		13-3986004
(State or Other Jurisdiction of incorporation or Organization)		(I.R.S. Employer Identification No.)

5 Walnut Grove Drive, Suite 140, Horsham, Pennsylvania		19044
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (215) 619-3200

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol(s)		Name Of Each Exchange On Which Registered
Common Stock, $0.001 Par Value		SSKN		The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of our common stock as of May 13, 2024 was 35,060,920 shares.

STRATA SKIN SCIENCES, INC.

TABLE OF CONTENTS

Part I. Financial Information:			PAGE

	ITEM 1. Financial Statements:
	a.	Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023	1

	b.	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 (unaudited)	2

	c.	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited)	3

	d.	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited)	4

	e.	Notes to Condensed Consolidated Financial Statements (unaudited)	5

	ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21

	ITEM 3. Quantitative and Qualitative Disclosure about Market Risk		28

	ITEM 4. Controls and Procedures		28

Part II. Other Information:

	ITEM 1. Legal Proceedings		29

	ITEM 1A. Risk Factors		30

	ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds		30

	ITEM 3. Defaults Upon Senior Securities		30

	ITEM 4. Mine Safety Disclosures		30

	ITEM 5. Other Information		30

	ITEM 6. Exhibits		30

		Signatures	31

		Certifications	E-31.1

Table of Contents

PART I - Financial Information

ITEM 1.

Financial Statements

STRATA Skin Sciences, Inc. and Subsidiary

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

	March 31, 2024			December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	5,237		$	6,784
Restricted cash		1,334			1,334
Accounts receivable, net of allowance for credit losses of $306 and $222 at March 31, 2024 and December 31, 2023, respectively		3,630			4,440
Inventories		2,695			2,673
Prepaid expenses and other current assets		343			312
Total current assets		13,239			15,543
Property and equipment, net		11,726			11,778
Operating lease right-of-use assets		1,508			626
Intangible assets, net		6,825			7,319
Goodwill		6,519			6,519
Other assets		231			231
Total assets	$	40,048		$	42,016

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,592		$	3,343
Accrued expenses and other current liabilities		6,269			6,306
Deferred revenues		2,366			2,120
Current portion of operating lease liabilities		300			352
Current portion of contingent consideration		61			53
Total current liabilities		12,588			12,174
Long-term debt, net		15,075			15,044
Deferred revenues and other liabilities		480			552
Deferred tax liability		186			186
Operating lease liabilities, net of current portion		1,166			237
Contingent consideration, net of current portion		1,121			1,135
Total liabilities		30,616			29,328
Commitments and contingencies (Note 13)
Stockholders’ equity:
Series C convertible preferred stock, $0.10 par value; 10,000,000 shares authorized, no shares issued and outstanding		—			—
Common stock, $0.001 par value; 150,000,000 shares authorized; 35,060,920 shares issued and outstanding at March 31, 2024 and December 31, 2023		35			35
Additional paid-in capital		250,823			250,711
Accumulated deficit		(241,426	)		(238,058	)
Total stockholders’ equity		9,432			12,688
Total liabilities and stockholders’ equity	$	40,048		$	42,016

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

STRATA Skin Sciences, Inc. and Subsidiary

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended March 31,
	2024			2023
Revenues, net	$	6,754		$	7,567
Cost of revenues		3,674			3,179
Gross profit		3,080			4,388
Operating expenses:
Engineering and product development		241			315
Selling and marketing		3,018			3,742
General and administrative		2,710			2,917
		5,969			6,974
Loss from operations		(2,889	)		(2,586	)
Other (expense) income:
Interest expense		(524	)		(286	)
Interest income		45			37
		(479	)		(249	)
Net loss	$	(3,368	)	$	(2,835	)

Net loss per share of common stock, basic and diluted	$	(0.10	)	$	(0.08	)
Weighted average shares of common stock outstanding, basic and diluted		35,060,920			34,862,092

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

STRATA Skin Sciences, Inc. and Subsidiary

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For The Three Months Ended March 31, 2024 and 2023

(in thousands, except share data)

(unaudited)

	Common Stock
	Shares		Amount		Additional Paid-in-Capital		Accumulated Deficit			Total Stockholders’ Equity
Balance at January 1, 2024		35,060,920	$	35	$	250,711	$	(238,058	)	$	12,688
Stock-based compensation expense		—		—		112		—			112
Net loss		—		—		—		(3,368	)		(3,368	)
Balance at March 31, 2024		35,060,920	$	35	$	250,823	$	(241,426	)	$	9,432

	Common Stock
	Shares		Amount		Additional Paid-in-Capital		Accumulated Deficit			Total Stockholders’ Equity
Balance at January 1, 2023		34,723,046	$	35	$	249,024	$	(227,228	)	$	21,831
Stock-based compensation expense		—		—		325		—			325
Issuance of restricted stock		158,407		—		—		—			—
Net loss		—		—		—		(2,835	)		(2,835	)
Balance at March 31, 2023		34,881,453	$	35	$	249,349	$	(230,063	)	$	19,321

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

STRATA Skin Sciences, Inc. and Subsidiary

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2024			2023
Cash flows from operating activities:
Net loss	$	(3,368	)	$	(2,835	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,249			1,397
Amortization of operating lease right-of-use assets		95			105
Amortization of deferred financing costs and debt discount		31			41
Change in allowance for credit losses		84			(95	)
Stock-based compensation expense		112			325
Loss on disposal of property and equipment		13			—
Inventory write-off		141			—
Changes in operating assets and liabilities:
Accounts receivable		726			626
Inventories		(154	)		283
Prepaid expenses and other assets		(31	)		16
Accounts payable		261			(326	)
Accrued expenses and other liabilities