InMode Q2 2026 Earnings: Flat Revenue and Lower Margins

InMode (Nasdaq: INMD) reported Q2 2026 revenue of $95.6 million, essentially unchanged from $95.6 million a year earlier, while GAAP diluted EPS fell to $0.29 from $0.42. Growth in consumables and service revenue and stable U.S. capital equipment demand offset weaker international equipment sales, but higher product costs, operating expenses and an unfavorable mix reduced profitability.

Core Earnings Results

Flat revenue did not translate into stable earnings. GAAP gross margin contracted by five percentage points, while GAAP and non-GAAP operating margins both declined by 11 percentage points.

Net finance income of $7.4 million lifted pretax income above operating income, but it was not enough to offset the deterioration in operating profitability. The table uses US dollars in millions except for per-share data.

Non-GAAP results exclude share-based compensation and related tax adjustments. For the six-month period, they also exclude expenses associated with the independent transaction committee review.

Business and Revenue Mix

Consumables and service revenue was the main source of growth, while international capital equipment sales were the largest offset. U.S. equipment revenue increased modestly, consistent with management’s description of stable domestic demand.

Consumables and service increased to 23% of total revenue from 21%, with the growth coming primarily from international sales. InMode also reported record quarterly revenue in Asia, although it did not disclose the amount.

The technology mix shifted as well. Minimally invasive products represented 73% of revenue, down from 78%, while non-invasive products rose to 26% from 19%. Hands-free products declined to 1% from 3%.

Flat Revenue Came With Significant Operating Deleverage

Cost of revenue increased approximately 26% to $24.1 million even though total revenue was flat, producing the five-point decline in gross margin. InMode attributed this pressure to higher cost of goods sold and product mix.

Operating expenses increased approximately 11% to $59.3 million. Sales and marketing expense rose about 7% to $50.8 million, while general and administrative expense increased approximately 76% to $4.8 million. The company cited the North American sales-team restructuring implemented near the end of 2025, additional marketing and sales investments intended to retain talent and maintain market share, and higher professional-services costs.

These expenses explain why operating income declined much faster than revenue. Management also said the underlying cost and expense trends are expected to continue for the foreseeable future, making margin stabilization an important issue beyond the current quarter.

Cash Flow and Balance Sheet

InMode generated $21.1 million of operating cash flow during the quarter. After $0.2 million of fixed-asset purchases, operating cash flow less those purchases was approximately $20.8 million.

The company ended June 30, 2026, with a total cash position of $501.1 million, consisting of cash and cash equivalents, marketable securities and short-term bank deposits. That liquidity remained substantial despite $56.5 million of share-repurchase cash outflows during Q2.

InMode completed the previously announced repurchase program by acquiring 6.38 million ordinary shares for an aggregate $87.8 million. Diluted weighted-average shares declined approximately 7% year over year to 59.4 million, which partly cushioned the EPS decline relative to the decrease in net income. The company did not state that the repurchases reflected a view that its shares were undervalued.

2026 Financial Guidance

Management provided an outlook for the fiscal year ending December 31, 2026. The release did not include a previous outlook for comparison, so no directional revision can be determined from the supplied information.

The projected gross-margin range is close to the 75% reported in Q2, consistent with management’s warning that the current cost and mix pressures may persist.

Management View

Chief Financial Officer Moshik Itzkovich said U.S. capital equipment demand remained steady and that the company expects stabilization to continue through the remainder of the year. At the same time, management intends to keep investing in opportunities intended to support long-term growth, even as those expenditures weigh on current operating margins.

InMode did not host an earnings call or conduct investor meetings because its Special Committee continued to evaluate unsolicited proposals. The company did not provide an outcome or timetable for that process.

Recent Insider Transactions

The supplied insider data reported no insider purchase or sale transactions during the previous six months. It separately listed three director stock awards dated July 30, 2026; no share quantities were provided, and each had a reported transaction value of zero.

These awards were not open-market purchases and did not involve a reported cash payment.

Risks Investors Should Monitor

• Persistent margin pressure: Higher product costs, mix changes, sales investments and professional-services expenses reduced both GAAP and non-GAAP operating margins. Management expects these trends to continue for the foreseeable future.
• Uneven capital equipment demand: U.S. equipment revenue increased, but international equipment revenue declined approximately 14%. Continued growth in consumables, services and selected regions will be important if international equipment weakness persists.
• Regional geopolitical uncertainty: InMode said its operations had not been materially affected by conflicts involving Israel and the broader region as of the release date. However, the scope and potential escalation of those conflicts remain unpredictable.

Summary

InMode’s Q2 revenue was stable because consumables and service growth and modestly higher U.S. equipment sales offset weaker international capital equipment revenue. The more consequential change was the decline in profitability as product costs and operating expenses increased faster than sales. InMode’s cash position and positive operating cash flow provide financial capacity, but future results will depend heavily on whether demand stabilization can translate into better operating leverage while the company continues investing in sales and marketing.