APYX — Q2 2026 Financial Report Analysis

AYON lifts Surgical Aesthetics sales 28%, and the operating loss narrows to $1.8 million

Apyx Medical sells helium-plasma devices that tighten skin during and after liposuction (Renuvion), and since Q3 2025 also AYON, a single body-contouring system that combines fat removal with Renuvion. In Q2 2026 total sales rose 22.1% to $13.9 million. All of that growth came from the Surgical Aesthetics segment (+28.1% to $12.4 million), which the 10-Q attributes to "sales of AYON," higher international generator sales and more single-use handpieces sold in the US, partly offset by lower US sales of standalone generators. The small OEM business, which makes devices for other manufacturers, fell 12.0%. The company still lost money: the loss from operations was $1.8 million (vs $2.6 million a year earlier), and the net loss attributable to shareholders was $3.2 million, or $0.07 per share (vs $0.09).

At a glance

• Surgical Aesthetics revenue +28.1% to $12.4M. The core business is growing quickly, and AYON (which had not launched a year ago) is the main reason.
• Operating margin -13.0% vs -22.6%. Operating margin is operating profit or loss as a share of sales. Losses are shrinking as sales grow faster than costs, but the company is still not profitable at the operating level.
• $1.4M of quarterly interest expense on a $37.5M term loan at 12%. That is about 10% of sales, and it keeps the bottom line negative even as the business itself approaches break-even.

Results table

Percentage changes on losses are marked n/m (not meaningful), since dividing one loss by another gives a figure that is easy to misread.

Takeaway: The device business itself is close to break-even (Q2 adjusted EBITDA loss of $0.7M, and the Surgical Aesthetics segment earned $1.9M at the operating level before corporate costs), but a 12% term loan and a second half that must grow sharply to meet both guidance and a lender covenant mean the next two quarters matter far more than this one.

Where the growth came from

• Surgical Aesthetics ($12.4M, 89% of sales) grew $2.7M. The 10-Q names three drivers: AYON sales, international generator sales, and more US single-use handpieces. Handpieces are the recurring part of the business (each procedure uses one), and over the first six months Apyx sold about 48,000 vs 40,000 a year earlier. In the US, handpieces are more than half of Surgical Aesthetics revenue.
• What went the other way: US sales of standalone Renuvion generators fell. Part of that is likely surgeons buying AYON (which includes Renuvion) instead of a standalone generator, though the filing does not quantify the shift.
• OEM ($1.5M) fell $0.2M on lower volume to existing customers. Management says it expects OEM revenue to decline for the year "and that this trend will continue over time" as it focuses on aesthetics.
• Geography: US sales rose 21.0% to $9.4M; international rose 24.4% to $4.5M.

Costs: most lines held flat, one non-cash charge jumped

Total operating expenses rose 10.6% to $10.7M, about half the pace of sales growth:

• Professional services fell 18.2% to $1.2M, mainly on $0.3M less physician and marketing consulting.
• R&D dipped 3.8% to $0.8M.
• Salaries rose 9.8% to $3.4M, including about $0.4M for added sales and marketing staff supporting the AYON launch.
• SG&A rose 23.9% to $5.3M. The largest single item was $0.7M of stock-based compensation for the newly appointed Executive Chairman, plus $0.3M more advertising and $0.2M more sales commissions.

What the headline numbers hide

• The gross margin gain is mix, not better product economics. Consolidated gross margin (the share of sales left after the cost of making the products) rose to 63.9% from 62.3%, which the 10-Q attributes "primarily" to Surgical Aesthetics being a bigger share of sales and to product mix in OEM, partly offset by tariffs that started affecting costs in the second half of 2025. The segment table shows the offset clearly: Surgical Aesthetics' own gross margin fell to 69.8% ($8.6M on $12.4M) from 71.3% ($6.9M on $9.7M). The overall margin went up because the low-margin OEM business shrank, not because the core products got cheaper to make.
• One equity grant inflated Q2 costs. On June 11, 2026 Apyx appointed Stavros Vizirgianakis as Executive Chairman and granted him 450,000 restricted stock units (shares that vest over time) valued at $4.65 each. A third vested immediately, which explains the $0.7M SG&A charge. Total stock-based compensation was $1.1M in Q2 vs $0.5M a year earlier. Without the immediate-vesting tranche, the operating loss would have been closer to $1.1M. The other 300,000 units vest from mid-2027 to mid-2029, so they will add smaller charges in later periods.
• GAAP vs adjusted: the company's adjusted EBITDA (earnings before interest, tax, depreciation and amortization, also excluding stock compensation) was a $0.7M loss vs a $2.0M loss a year earlier. The $2.5M gap to the GAAP net loss is mostly $1.1M of net interest expense and $1.1M of stock compensation. Stock comp is non-cash but is a real cost to shareholders through dilution.
• Cash burn rose even as losses fell. Over six months, operating cash outflow was $4.1M vs $1.9M a year earlier, despite a smaller net loss ($5.2M vs $7.9M). Management attributes this to paying 2025 bonuses in Q1 and "cash used to procure inventory for our expanded product portfolio." Inventory rose to $10.7M from $8.6M at year-end, up 25% in six months. That build matches AYON and power-liposuction stocking. If second-half sales fall short, it becomes a risk.
• Debt is the main bottom-line drag. The $37.5M Perceptive term loan carries SOFR plus 7% with a 5% floor, which was 12.0% at June 30. Interest expense was $1.4M a quarter, including about $0.24M of non-cash amortization. $2.2M of principal is due in 2027 and $35.3M in 2028. Cash fell to $27.6M from $31.7M at year-end.
• Minority interest flips the sign of the small items. Apyx owns 51% of a China joint venture, which earned $0.2M this quarter. So the loss attributable to Apyx shareholders ($3.2M) was larger than the consolidated net loss ($3.1M).
• No buybacks and no tax effect to adjust for. Income tax is small ($0.1M) because the company has a full valuation allowance on its tax losses, meaning it does not book a tax benefit for them.

Outlook: the second half has to do the heavy lifting

In its Q2 earnings release (Exhibit 99.1), management reaffirmed its FY2026 guidance:

H2 2025 figures are FY2025 reported totals ($52.8M total, $45.3M Surgical Aesthetics, $7.5M OEM) minus the H1 2025 figures in this 10-Q.

Three points come out of that arithmetic:

1. Growth is guided to slow sharply. H1 Surgical Aesthetics grew 31.7%. The guidance implies about 11–15% in H2, because AYON launched in Q3 2025, so the year-ago comparison gets harder from here. Implied total H2 revenue growth is only 2–5%, since OEM sales are expected to fall by more than half.
2. The lender covenant leaves a small margin. The credit agreement requires trailing-twelve-month Surgical Aesthetics revenue of at least $52.4M at the end of 2026 (tested quarterly) and caps 2026 operating expenses at $45.0M. Hitting the low end of guidance clears the revenue test by about $1.6M, around 3%. A miss on AYON or handpiece volume would put this covenant at risk before it shows up anywhere else. Apyx was in compliance at June 30.
3. Cash runway: management says that, based on its projections including AYON uptake, working capital management and cost controls, "the Company will yield cash through 2027." With $27.6M on hand, an H1 burn of $4.1M, and the 2028 maturity of $35.3M, refinancing in 2027 looks more pressing than the day-to-day cash position.

Our read: Q2 shows AYON working commercially. It added to segment growth, the US handpiece base grew, and operating expenses grew at half the pace of sales. Still, the margin improvement is mostly mix, and Surgical Aesthetics' own gross margin is slipping under tariffs and the product shift. Q3 is the test: it is the first quarter where AYON is in the year-ago figures, and it is the first read on the power-liposuction launch that began in late June. Watch whether Q3 Surgical Aesthetics revenue reaches roughly $15.4M–$15.7M per quarter (the average needed across Q3 and Q4 to reach the low end to midpoint of guidance), whether inventory starts turning back into cash, and whether segment gross margin stabilizes near 70%.