InMode (INMD) Q3 2026 earnings review
InMode holds equipment sales steady, but operating profit falls
InMode, a maker of radio-frequency and laser tools for cosmetic clinics, kept equipment sales steady while its recurring treatment revenue slipped. Total revenue edged down 1% from a year ago to $92 million, and finance chief Moshik Itzkovich said the business is stabilizing as planned. However, operating profit excluding one-offs fell 13% on higher sales and overhead costs, and by our math the unchanged full-year plan points to a 3% revenue drop in the fourth quarter.
| Revenue | $92.1M -1.1% from a year ago |
|---|---|
| Consumables and service revenue | $19.3M -2.9% from a year ago |
| Profit per share, excluding one-offs | $0.37 $0.38 a year ago |
| Full-year outlook | Unchanged middle of the range: $370M revenue |
⚖️ Verdict: 🔴 Bearish
The story got worse because patient procedure volume and cash collection both weakened at the same time. Consumables and service sales fell 3% after growing 13% last quarter, while unpaid customer bills cut operating cash flow in half to $11 million. On the positive side, record demand in Asia lifted international equipment sales, and the board ended its quiet period so executives will take investor questions again next quarter.
The question now is whether clinics are running fewer patient treatments or just using up disposable tips they bought earlier in the year. If patient demand is shrinking, clinics will delay buying the new Morpheus8 Max device; if it was only a dip in tip orders, consumables growth will return in the fourth quarter. Fourth-quarter consumables revenue and the return of the earnings call early next year will tell.
🐂 Bull Case
International Equipment Sales Grow on Record Asia Demand
InMode makes radio-frequency and laser machines for cosmetic surgery and skin treatments. While doctors in the United States bought fewer machines than a year ago, clinics outside the country increased their spending. International capital equipment revenue rose 7.4% from a year ago to $30.1 million, and the Israeli medical device maker said sales in Asia reached another quarterly record.
That overseas demand kept total equipment sales nearly even with last year at $72.8 million. Over the past year, the group has opened direct sales offices in countries such as Argentina and Thailand to rely less on the slow US market.
What to watch: international equipment revenue in the fourth quarter, when Europe and Asia typically close their largest yearly orders. Another gain above 7% would show that new overseas offices can offset flat US demand.
Earlier Share Buybacks Softened the Drop in Profit Per Share
InMode spent $87.8 million in the first half of 2026 to buy back 6.38 million of its own shares. The medical technology group did not buy back any stock in the third quarter, but the earlier purchases reduced its diluted share count, excluding one-offs, by 9.0% from a year ago to 58.8 million.
Because the profit is split among fewer shares, per-share earnings held up much better than total profit. Net income excluding one-offs fell 10.7% from a year ago to $21.9 million, but earnings per share on the same basis slipped only a penny, or 2.6%, to $0.37.
What to watch: any new capital return plan on the fourth-quarter call early next year. With the board's strategic review now finished and $512.7 million in cash, leadership must decide between a fresh buyback and a dividend.
🐻 Bear Case
Consumables Revenue Fell for the First Time This Year
"Total revenue in the third quarter was largely consistent with the prior-year period," finance chief Moshik Itzkovich said. "These results are consistent with the stabilization we expect to continue through the remainder of the year." Earlier this year, leadership pointed to rising sales of consumables—single-use tips that doctors buy for every patient treatment—as proof that clinic traffic was holding up.
In the third quarter, revenue from consumables and service fell 2.9% from a year ago to $19.3 million, and dropped 13.4% from the second quarter. That breaks a string of gains, including 12.6% growth in the second quarter and 5.8% in the first.
This matters because consumables track how often doctors actually use InMode's machines after buying them. When patients book fewer treatments, clinics have less reason to buy new devices such as the recently launched Morpheus8 Max, a radio-frequency skin tool.
What to watch: fourth-quarter consumables and service revenue, along with the number of disposable tips sold. A second straight quarterly decline would show that patient procedure volume is shrinking rather than stabilizing.
Higher Sales and Administrative Costs Cut Operating Margin
InMode kept its gross margin steady at 78%, yet its operating margin excluding one-offs fell 3.0 percentage points from a year ago to 22.3%. The drop came from higher overhead and selling costs after the group reorganized its North American sales force late last year.
- Sales and marketing excluding one-offs: 47.6% of revenue, up 1.3 percentage points from a year ago
- General and administrative excluding one-offs: 4.5% of revenue, up 1.7 percentage points
- Research and development excluding one-offs: 3.9% of revenue, up 0.4 percentage points
The device maker blamed the increase on "increased sales and marketing investments to retain talent and maintain market share" plus higher legal and consulting bills. It warned that these cost pressures will continue "for the foreseeable future".
What to watch: operating expenses in the fourth quarter and the 2027 profit outlook early next year. By our math, the full-year plan points to a fourth-quarter operating margin excluding one-offs of 19.9%, down from 27.4% a year ago.
Unpaid Customer Bills Cut Operating Cash Flow in Half
InMode's net income fell 13.7% from a year ago to $18.9 million, but cash generated from operations dropped 53.5% to $11.4 million. Free cash flow—operating cash left after buying equipment—fell 54.0% to $11.2 million, or 12.1% of revenue.
The gap opened because customers are taking longer to pay. Total accounts receivable—money owed by clinics and distributors for machines already delivered—rose $6.5 million during the quarter to $56.1 million, up 20.6% since December even though nine-month sales rose only 1.2%. The company also recorded $0.7 million for potential unpaid bills, six times last year's charge.
What to watch: accounts receivable and bad-debt charges on the fourth-quarter balance sheet. If receivables keep growing faster than sales, InMode is giving clinics looser payment terms to close equipment deals.
A One-Off Tariff Refund Held Up Gross Margin
Reported gross margin—the share of sales left after the cost of making the machines—looked stable at 78.3% excluding one-offs, matching last year's 78.0%. InMode noted that the quarter included "a non-recurring U.S. tariff refund", which lifted gross margin by about 1 percentage point. Without that refund, gross margin was about 77.3% by our math.
Even with a 76.3% gross margin over the first nine months, management kept its full-year target at 74% to 76%. Because third-party lasers carry higher manufacturing costs than InMode's own radio-frequency tools, the full-year middle of the range leaves fourth-quarter gross margin at 71.5% by our math.
What to watch: fourth-quarter gross margin excluding one-offs. A drop near 71.5% would show that new laser machines are squeezing profitability, whereas a reading near 76% would show the full-year target was simply cautious.
👓 Other Themes
The Board Ended Its Review Without Announcing a Deal
Earlier in 2026, InMode formed a special board committee to evaluate buyout proposals, skipping its second-quarter conference call while the review ran. Today the company said: "The Special Committee has completed its work and ceased its activities." It announced no sale or transaction, and said it will resume investor meetings and host a conference call for fourth-quarter results early next year.
Regional Conflicts Have Not Disrupted Operations in Israel
InMode is based in Yokneam, Israel, and manufactures its radio-frequency medical devices in the country. Management warned that ongoing military conflicts across Gaza, northern Israel, Lebanon and Iran remain unpredictable and could escalate, but stated: "To date, our operations have not been materially affected."
💲 Other KPIs
Sales of treatment machines in the United States fell 5.6% from a year ago and edged down 0.9% from the second quarter. After growing 14.0% in the first quarter and 6.0% in the second following a North American sales team overhaul, the company's largest market slipped back into decline.
Total cash, marketable securities and short-term bank deposits rose by $11.6 million from the second quarter because the group paused share buybacks. Cash is still down from $555.3 million at the end of 2025 after $87.8 million of first-half stock repurchases, and the company carries no debt.
Stockpiles of components and finished medical machines rose $0.8 million from the second quarter and sit 2.2% below the $74.1 million held at the end of 2025. Inventory has stayed between $71.4 million and $72.4 million all year as the company adds third-party laser platforms.
🔮 Guidance
Unchanged. The medical device maker kept its full-year target at $370 million in the middle of the range, matching 2025 revenue of $370.5 million. By our math, that leaves $100.3 million for the fourth quarter, a 3.5% drop from the $103.9 million recorded in the fourth quarter of last year.
Unchanged. The full-year plan still calls for a 75% gross margin at the middle of the range, down from 79% in 2025. Because the company recorded 76.3% over the first nine months, the full-year midpoint leaves fourth-quarter gross margin at 71.5% by our math.
Unchanged. After cutting this target twice earlier in the year—by $14 million in the first quarter and $5 million in the second—management held the middle of the range at $70.5 million, a 27.0% drop from 2025. By our math, that leaves $20.0 million for the fourth quarter, down 29.9% from a year ago.
Unchanged. Following two cuts in the first half of the year totaling $0.14 at the middle of the range, the plan still points to $1.315 per share, down 17.8% from $1.60 in 2025. With $0.96 earned in the first nine months, the target leaves about $0.36 for the fourth quarter by our math.
❓ Key Questions
Why did consumables revenue fall after growing 13% last quarter?
Consumables and service revenue dropped 2.9% from a year ago and 13.4% from the second quarter. Management did not disclose how many disposable tips it sold this quarter, leaving unclear whether patient treatments fell or clinics worked down existing tip inventory.
Is InMode extending longer payment terms to sell equipment?
Total accounts receivable has climbed 20.6% since December to $56.1 million while nine-month revenue rose only 1.2%, cutting third-quarter operating cash flow in half. Management did not explain why customer collections slowed or why bad-debt provisions rose.
Why did the special committee end its work without action?
The board committee evaluating buyout offers closed down without announcing a transaction or a new capital return plan. Investors have not heard from executives since the first-quarter call and do not know whether the $512.7 million cash pile will fund buybacks, dividends or acquisitions.
Will fourth-quarter gross margin really drop toward 71.5%?
Nine-month gross margin excluding one-offs sits at 76.3%, yet the reaffirmed 74% to 76% full-year outlook implies 71.5% in the fourth quarter at the middle of the range. Management did not say whether fourth-quarter laser sales or tariffs will drive a drop that large.