Q125 Earnings review, part I

New year, part I

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Q125 Earnings review, part I

This delivery is the first installment of the first-quarter earnings commentary for 2025 for the companies under our watch or model portfolio. These presentations tend to be highly positive events for our portfolio, as they showcase to the market the strong cash-generating capacity of our holdings and are often accompanied by generous shareholder returns. Specifically, in this publication, we will discuss the results of the following companies::

• InMode

• CVR Partners

• Sylvania Platinum

• Valaris

Let’s get at it.

InMode

InMode started 2025 with a 3% drop in revenue, which came in at $77.9 million for the first quarter—just as the company had previewed a few weeks ago. GAAP gross margin was 78% (vs. 80% in Q1’24), and the adjusted margin stood at 79%. Earnings also declined: EPS came in at $0.26, and non-GAAP EPS at $0.31, both below last year’s figures.

Minimally invasive platforms accounted for 87% of revenue, confirming the company’s strategic focus, but this hasn’t been enough to offset the profitability deterioration. InMode generated $14 million in operating cash flow during the quarter and maintains a strong balance sheet, with $512.9 million in cash, allowing it to weather this downturn in the cycle. Still, outlook concerns remain.

The company has lowered its 2025 guidance across all key metrics. Revenue is now expected to range between $395 million and $405 million, while the non-GAAP gross margin is projected to fall to 78%–80% (vs. 80%–82% previously). Non-GAAP operating income was revised down to $101–$106 million (from $130–$135 million), and adjusted EPS to $1.64–$1.68 (from $1.95–$1.99). The business slowdown began in mid-2023, with the full impact of rising interest rates becoming clear, and the company is now facing its seventh consecutive soft quarter. Higher interest rates—affecting equipment leasing terms—and inflation, which has dampened U.S. discretionary spending, are directly impacting the demand for minimally invasive aesthetic treatments, many of which exceed $4,000 per session. InMode acknowledges that if Q2 results don’t clearly outperform Q1 (which is usually weaker due to seasonality), it will be forced to revise guidance again. The medical aesthetics market is expected to face these headwinds for several more quarters, and the company still doesn't see a clear path to recovery. Macroeconomic weakness and declining consumer confidence are directly affecting elective procedures, especially in the surgical segment—the first to be cut when budgets tighten. That said, demand for minimally invasive treatments remains more resilient, and the company is confident in a rebound once macro conditions improve.

InMode has made a deliberate decision not to lay off staff or scale back its ambitions. Management believes that tough times are when leadership is cemented, positioning itself to gain market share once demand returns. To this complex picture, tariff impact must be added. Products imported from Israel face a 17% tariff, but due to the relative weight of U.S. sales (50%) and the transfer price (also 50%), the effective impact is about 4%. With the temporary reduction of the tariff to 10%, the effect drops to 2.5 percentage points on gross and net margins—but it remains significant.

The worst part of the results, and what investors disliked most, was related to shareholder returns. Although the company has continued returning capital (in April alone it repurchased nearly 7 million shares for $127 million), and has returned more than $412 million over the past 12 months—about 27% of its total market cap—it admitted that its share buyback program has failed. It spent $508 million at an average price of $19.95 per share, while the stock currently trades at $14/share, meaning the capital deployed hasn’t generated value. I strongly disagree, and believe that once the sector recovers, this will prove to be a game-changer—but management has been weak on this front.

CVR Partners