GLP 1 Skin Laxity Trend Will Drive Future Surgical Aesthetics Demand

Catalysts

About Apyx Medical

Apyx Medical develops and sells energy based surgical aesthetics systems and related consumables for body contouring and treatment of loose and lax skin.

What are the underlying business or industry changes driving this perspective?

• The AYON Body Contouring System integrates fat removal, contouring, tissue contraction and electrosurgical capabilities in a single platform, which can support higher Surgical Aesthetics revenue and handpiece pull through as more procedures are performed on one installed system.
• AYON’s tight integration with Renuvion, which is already being used after body contouring and as a stand alone treatment, can deepen usage per procedure and increase single use handpiece volumes, supporting revenue growth and gross margins in the Surgical Aesthetics segment.
• The growing population using GLP 1 medications and experiencing skin laxity issues, including many patients who are new to aesthetics, creates a broadening pool of potential Renuvion and AYON candidates, which can support higher procedure volumes and recurring consumable revenue.
• The anticipated FDA clearance for AYON’s power liposuction indication, with the ability to activate the function on systems already in the field, offers a built in upsell and utilization driver that can support higher capital productivity, revenue per system and improved earnings leverage.
• The company’s shift of resources toward Surgical Aesthetics, combined with prior cost reductions and lower operating expenses, creates a leaner model where incremental AYON and Renuvion sales can have a larger impact on net margins and overall earnings.

Assumptions

This narrative explores a more optimistic perspective on Apyx Medical compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Apyx Medical's revenue will grow by 14.9% annually over the next 3 years.
• The bullish analysts are not forecasting that Apyx Medical will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Apyx Medical's profit margin will increase from -30.4% to the average US Medical Equipment industry of 12.9% in 3 years.
• If Apyx Medical's profit margin were to converge on the industry average, you could expect earnings to reach $9.4 million (and earnings per share of $0.24) by about January 2029, up from $-14.5 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 42.9x on those 2029 earnings, up from -9.9x today. This future PE is greater than the current PE for the US Medical Equipment industry at 29.5x.
• The bullish analysts expect the number of shares outstanding to grow by 1.19% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.29%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The company is still reporting a net loss attributable to stockholders of $2 million in the third quarter of 2025 and an adjusted EBITDA loss of $0.1 million, so if AYON adoption or Renuvion procedure volumes do not build fast enough, the path to sustained profitability could remain pushed out, which would weigh on earnings and net margins over time.
• Apyx is deliberately shifting resources away from its OEM segment, where revenue guidance for 2025 is approximately $7.5 million compared to $9.5 million for 2024. If AYON and Surgical Aesthetics do not fully replace or exceed this declining OEM contribution, total revenue growth and gross profit could be weaker than expected.
• The long term opportunity linked to patients using GLP 1 drugs depends on aesthetics demand remaining strong. If patient interest in body contouring or skin tightening procedures settles at a lower level than management expects, utilization of AYON systems and single use handpieces could fall short, affecting recurring consumable revenue and limiting margin expansion.
• The business remains exposed to external cost pressures, including tariffs on imports from various countries that management describes as uncertain. If trade policy becomes less favorable or supply chain costs rise, gross margin, which is currently 64.4% for the third quarter of 2025, could come under pressure and slow any improvement in operating margins.
• AYON’s growth story is closely tied to regulatory progress such as the additional 510(k) for the power liposuction indication and broader international registrations. If regulatory timelines are slower than management hopes or any approvals are delayed or limited, the installed base expansion could be constrained, which would cap revenue scalability and the ability to leverage operating expenses.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Apyx Medical is $8.0, which represents up to two standard deviations above the consensus price target of $6.0. This valuation is based on what can be assumed as the expectations of Apyx Medical's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $8.0, and the most bearish reporting a price target of just $5.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $72.6 million, earnings will come to $9.4 million, and it would be trading on a PE ratio of 42.9x, assuming you use a discount rate of 8.3%.
  
• Given the current share price of $3.5, the analyst price target of $8.0 is 56.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.