[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls evaluation [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of comprehensive income (loss), stockholders' equity, and cash flows, along with detailed notes explaining various components and accounting policies for the periods ended June 30, 2025 and December 31, 2024 [Condensed Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) This table presents the unaudited condensed consolidated balance sheets, detailing assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | **Assets** | | | | Cash, cash equivalents, and restricted cash | $212,000 | $370,063 | | Total current assets | $306,107 | $477,124 | | TOTAL ASSETS | $507,565 | $685,683 | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $59,441 | $68,152 | | Convertible senior notes, net | $363,096 | $552,198 | | Total liabilities | $433,562 | $633,880 | | Total stockholders' equity | $74,003 | $51,803 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $507,565 | $685,683 | [Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(Unaudited)) This section provides the unaudited condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $78,187 | $90,594 | $147,767 | $171,997 | | Gross profit | $49,112 | $40,940 | $97,692 | $89,301 | | Loss from operations | $(2,700) | $(22,111) | $(14,723) | $(39,102) | | Net income (loss) | $19,712 | $202 | $9,616 | $(477) | | Basic Net income (loss) per share | $0.16 | $0.00 | $0.08 | $0.00 | | Diluted Net income (loss) per share | $0.03 | $(0.10) | $(0.02) | $(0.20) | [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)) This section details changes in stockholders' equity for the periods ended June 30, 2025, and December 31, 2024, highlighting key drivers of equity fluctuations Changes in Total Stockholders' Equity (in thousands) | Period | Total Stockholders' Equity | | :----------------------- | :------------------------- | | BALANCE, December 31, 2023 | $59,390 | | BALANCE, June 30, 2024 | $69,189 | | BALANCE, December 31, 2024 | $51,803 | | BALANCE, June 30, 2025 | $74,003 | - Total stockholders' equity increased from **$51,803 thousand** at December 31, 2024, to **$74,003 thousand** at June 30, 2025, primarily driven by net income of **$19,712 thousand** and share-based compensation of **$5,308 thousand** during the three months ended June 30, 2025, and foreign currency translation adjustments[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) This section presents the unaudited condensed consolidated statements of cash flows, categorizing cash activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used for) operating activities | $12,642 | $(10,653) | | Net cash used for investing activities | $(2,697) | $(3,840) | | Net cash used for financing activities | $(173,611) | $(157,367) | | Net change in cash, cash equivalents, and restricted cash | $(163,666) | $(171,860) | | Cash, cash equivalents, and restricted cash end of period | $212,000 | $349,544 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes explaining the components, accounting policies, and significant transactions underlying the unaudited condensed consolidated financial statements [Note 1 — Description of Business](index=7&type=section&id=Note%201%20%E2%80%94%20Description%20of%20Business) This note describes the Company's core business as a medtech-meets-beauty company, its key brands, and its incorporation and acquisition history - The Beauty Health Company is a medtech-meets-beauty company that designs, develops, manufactures, markets, and sells esthetic technologies and products[18](index=18&type=chunk) - Key brands include Hydrafacial (hydradermabrasion), SkinStylus (nanoneedling and microneedling), and Keravive (scalp health)[18](index=18&type=chunk) - The Company was incorporated on **July 8, 2020**, and consummated a business combination on **May 4, 2021**, acquiring **100% of Hydrafacial**[19](index=19&type=chunk) [Note 2 — Balance Sheet Components](index=8&type=section&id=Note%202%20%E2%80%94%20Balance%20Sheet%20Components) This note provides detailed breakdowns of various balance sheet components, including inventories, accrued payroll-related expenses, other accrued expenses, warranty reserves, and restricted cash Inventories (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :------------------ | | Raw materials | $22,958 | $26,019 | | Finished goods | $36,229 | $43,094 | | Total inventories | $59,187 | $69,113 | Accrued Payroll-Related Expenses (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Accrued compensation and payroll taxes | $9,542 | $10,708 | | Accrued sales commissions | $3,349 | $4,784 | | Accrued benefits | $2,090 | $2,144 | | Total accrued payroll-related expenses | $14,981 | $17,636 | Other Accrued Expenses (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :------------------ | | Sales and VAT tax payables | $3,322 | $5,244 | | Accrued interest | $2,321 | $1,743 | | Royalty liabilities | $1,517 | $1,897 | | Deferred revenue | $172 | $2,375 | | Other | $6,311 | $8,743 | | Total other accrued expenses | $13,643 | $20,002 | - Total warranty reserve was approximately **$2 million** at June 30, 2025, down from **$4 million** at December 31, 2024[22](index=22&type=chunk) - Restricted cash held as collateral for credit cards was approximately **$2 million** at both June 30, 2025, and December 31, 2024[23](index=23&type=chunk) [Note 3 — Property and Equipment, net](index=8&type=section&id=Note%203%20%E2%80%94%20Property%20and%20Equipment,%20net) This note details the composition and net carrying value of property and equipment, including gross amounts and accumulated depreciation and amortization Property and Equipment, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Total property and equipment (gross) | $30,318 | $31,478 | | Less: accumulated depreciation and amortization | $(26,614) | $(25,500) | | Property and equipment, net | $3,704 | $5,978 | [Note 4 — Goodwill and Intangible Assets, net](index=9&type=section&id=Note%204%20%E2%80%94%20Goodwill%20and%20Intangible%20Assets,%20net) This note provides the carrying values of goodwill and a detailed breakdown of intangible assets, net of accumulated amortization, as of the reporting dates Goodwill Carrying Value (in thousands) | Date | Amount | | :---------------- | :------- | | December 31, 2024 | $123,499 | | Foreign currency translation impact | $2,774 | | June 30, 2025 | $126,273 | Intangible Assets, Net (in thousands) | Category | June 30, 2025 Net Carrying Value | December 31, 2024 Net Carrying Value | | :-------------------- | :------------------------------- | :------------------------------- | | Developed technology | $15,045 | $16,974 | | Capitalized software | $14,316 | $14,956 | | Customer relationships | $2,900 | $3,873 | | Trademarks | $5,084 | $5,485 | | Non-compete agreement | $2,703 | $3,209 | | Patents | $3,441 | $3,015 | | Total intangible assets | $43,489 | $47,512 | [Note 5 — Long-Term Debt](index=10&type=section&id=Note%205%20%E2%80%94%20Long-Term%20Debt) This note details the Company's long-term debt, including repurchases and exchanges of convertible senior notes, and the terms of the newly issued 2028 Notes - During the three and six months ended June 30, 2025, the Company repurchased an additional **$20.0 million** principal amount of its 2026 Notes for **$18.4 million**, recognizing a net gain of **$1.5 million**[29](index=29&type=chunk) - On May 21, 2025, the Company exchanged and repurchased approximately **$413.2 million** aggregate principal amount of 2026 Notes. This included exchanging **$263.2 million** principal for **$250.0 million** principal of new **7.95% Convertible Senior Secured Notes due November 15, 2028** (2028 Notes), and repurchasing **$150.1 million** principal for **$142.6 million**[30](index=30&type=chunk) - The exchange and repurchase of 2026 Notes resulted in a net gain of **$16.6 million**[30](index=30&type=chunk) - The 2028 Notes are senior, secured obligations, guaranteed by subsidiaries, accrue interest at **7.95% per annum**, and mature on **November 15, 2028**. The initial conversion rate is **349.6503 shares of Class A Common Stock per $1,000 principal amount**[32](index=32&type=chunk) Convertible Senior Notes, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | 2026 Notes | $124,485 | $557,700 | | 2028 Notes | $250,000 | — | | Unamortized debt issuance costs | $(11,389) | $(5,502) | | Convertible senior notes, net | $363,096 | $552,198 | [Note 6 — Commitments and Contingencies](index=12&type=section&id=Note%206%20%E2%80%94%20Commitments%20and%20Contingencies) This note outlines the Company's involvement in various legal proceedings, including class actions, derivative actions, and an SEC investigation, and other commitments - The Company is involved in various lawsuits, claims, and legal proceedings in the ordinary course of business, including commercial disputes, product liability, and employment matters[39](index=39&type=chunk) - A Securities Class Action was filed on **November 16, 2023**, alleging misleading statements regarding Syndeo 1.0 and 2.0 devices. The Company filed a motion to dismiss the amended complaint on **July 11, 2025**, with a hearing scheduled for **September 17, 2025**[43](index=43&type=chunk)[44](index=44&type=chunk) - A Consumer Class Action was filed on **October 24, 2024**, alleging defective Syndeo machines and misrepresentations. An amended complaint was filed on **June 2, 2025**, and defendants moved to dismiss various claims on **June 23, 2025**[46](index=46&type=chunk)[47](index=47&type=chunk) - A Consolidated Derivative Action was filed on **February 8, 2024**, alleging breach of fiduciary duty and gross mismanagement related to Syndeo devices. Oral argument on the motion to dismiss is scheduled for **October 8, 2025**[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - The SEC Division of Enforcement has issued **three subpoenas** for documents and information in connection with a formal investigation, which the Company is cooperating with[53](index=53&type=chunk) [Note 7 — Related-Party Transactions](index=15&type=section&id=Note%207%20%E2%80%94%20Related-Party%20Transactions) This note describes agreements with related parties, including registration rights for certain stockholders and director designation rights for LCP - The Registration Rights Agreement grants certain stockholders (Sponsor and Hydrafacial Stockholders) registration rights for their Class A Common Stock, with the Company bearing associated expenses[55](index=55&type=chunk)[56](index=56&type=chunk) - The Investor Rights Agreement grants LCP the right to designate directors to the Company's Board, with the number of designees dependent on LCP's ownership percentage of outstanding Class A Common Stock[58](index=58&type=chunk) [Note 8 — Stockholders' Equity](index=16&type=section&id=Note%208%20%E2%80%94%20Stockholders'%20Equity) This note provides details on the Company's common stock and authorized preferred stock, including shares issued and outstanding as of the reporting dates - As of June 30, 2025, there were **126,764,562 shares of Class A Common Stock** issued and outstanding, compared to **124,924,185 shares** at December 31, 2024[59](index=59&type=chunk) - The Company is authorized to issue **1,000,000 shares of preferred stock**, but no shares were issued or outstanding as of June 30, 2025, and December 31, 2024[60](index=60&type=chunk) [Note 9 — Fair Value Measurements](index=17&type=section&id=Note%209%20%E2%80%94%20Fair%20Value%20Measurements) This note presents fair value measurements for financial instruments, including money market funds and warrant liabilities, and the valuation methodologies used Fair Value Measurements (in thousands) | Category | June 30, 2025 (Total) | December 31, 2024 (Total) | | :-------------------------------- | :-------------------- | :------------------------ | | Money market funds (Level 1) | $88,531 | $284,462 | | Warrant liability — Private Placement Warrants (Level 3) | $349 | $488 | - The fair value of Private Placement Warrants is determined using a Monte Carlo simulation[64](index=64&type=chunk) [Note 10 — Revenue](index=18&type=section&id=Note%2010%20%E2%80%94%20Revenue) This note disaggregates net sales by major product line and geographic region for the three and six months ended June 30, 2025 and 2024 Net Sales by Major Product Line (in thousands) | Product Line | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Delivery Systems | $22,357 | $35,209 | $42,575 | $70,992 | | Consumables | $55,830 | $55,385 | $105,192 | $101,005 | | Total net sales | $78,187 | $90,594 | $147,767 | $171,997 | Net Sales by Geographic Region (in thousands) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Americas | $52,048 | $57,731 | $98,305 | $108,057 | | Europe, the Middle East and Africa | $18,422 | $19,228 | $33,409 | $38,333 | | Asia-Pacific | $7,717 | $13,635 | $16,053 | $25,607 | | Total net sales | $78,187 | $90,594 | $147,767 | $171,997 | [Note 11 — Share-Based Compensation](index=19&type=section&id=Note%2011%20%E2%80%94%20Share-Based%20Compensation) This note details share-based compensation expense by category and provides activity summaries for RSUs, PSUs, and stock options Share-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of sales | $124 | $130 | $274 | $(274) | | Selling and marketing | $1,127 | $2,204 | $1,344 | $4,628 | | Research and development | $149 | $(628) | $292 | $48 | | General and administrative | $3,908 | $4,792 | $6,874 | $8,732 | | Total share-based compensation | $5,308 | $6,498 | $8,784 | $13,134 | - Total unrecognized compensation expense related to unvested share-based compensation was **$30.9 million** as of June 30, 2025, to be recognized over a weighted-average period of **2.1 years**[69](index=69&type=chunk) RSU and PSU Activity (Shares) | Metric | RSU Shares (June 30, 2025) | PSU Shares (June 30, 2025) | | :------------------------ | :------------------------- | :------------------------- | | Outstanding - January 1, 2025 | 7,254,391 | 1,237,822 | | Granted | 10,247,990 | 1,676,134 | | Vested | (2,574,422) | — | | Forfeited | (957,822) | (68,339) | | Outstanding - June 30, 2025 | 13,970,137 | 2,845,617 | Stock Option Activity (Shares) | Metric | Shares (June 30, 2025) | | :-------------------------------- | :--------------------- | | Outstanding - January 1, 2025 | 3,483,070 | | Forfeited | (71,500) | | Expired | (480,750) | | Outstanding - June 30, 2025 | 2,930,820 | | Vested and Exercisable - June 30, 2025 | 2,915,490 | [Note 12 — Income Taxes](index=20&type=section&id=Note%2012%20%E2%80%94%20Income%20Taxes) This note discusses income tax benefits, the estimated annual effective tax rate, valuation allowances against deferred tax assets, and unrecognized tax benefits - The Company recorded an income tax benefit of **$1.0 million** for the three months ended June 30, 2025, and **$0.1 million** for the six months ended June 30, 2025[72](index=72&type=chunk) - The estimated annual effective tax rate (AETR) differed from the U.S. federal statutory rate of **21%** primarily due to a full valuation allowance against U.S. deferred tax assets, income in foreign jurisdictions, and the tax impact of executive and share-based compensation[73](index=73&type=chunk) - The Company has a valuation allowance against its U.S. deferred tax assets due to uncertainty of realization[75](index=75&type=chunk) - Gross unrecognized tax benefits were **$1.5 million** at June 30, 2025, up from **$1.2 million** at December 31, 2024[76](index=76&type=chunk) - The Company is assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements[77](index=77&type=chunk) [Note 13 — Net Income (Loss) Attributable to Common Stockholders](index=20&type=section&id=Note%2013%20%E2%80%94%20Net%20Income%20(Loss)%20Attributable%20to%20Common%20Stockholders)) This note presents basic and diluted net income (loss) per share and weighted-average common stock outstanding for the reported periods Net Income (Loss) Per Share (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) available to common stockholders - basic | $19,712 | $202 | $9,616 | $(477) | | Net income (loss) available to common stockholders - diluted | $4,166 | $(14,449) | $(3,401) | $(28,199) | | Basic net income per share | $0.16 | $0.00 | $0.08 | $0.00 | | Dilutive net income (loss) per share | $0.03 | $(0.10) | $(0.02) | $(0.20) | Weighted Average Common Stock Outstanding (Shares) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic | 126,072,603 | 123,718,797 | 125,578,780 | 123,417,353 | | Diluted | 140,294,291 | 141,927,750 | 140,589,807 | 143,200,221 | - Shares related to 2028 Notes, RSUs, Stock Options, and PSUs were excluded from diluted EPS calculation for being anti-dilutive in certain periods[79](index=79&type=chunk) [Note 14 — Segment Information](index=21&type=section&id=Note%2014%20%E2%80%94%20Segment%20Information) This note clarifies that the Company operates as a single reportable segment and provides a breakdown of total operating expenses - The Company manages its business as **one operating segment** and **one reportable segment**, with performance assessed based on consolidated net income (loss) and income (loss) from operations[80](index=80&type=chunk) Total Operating Expenses (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Personnel-related expenses | $27,439 | $33,430 | $56,258 | $68,305 | | Other segment expenses | $24,373 | $29,621 | $56,157 | $60,098 | | Total operating expenses | $51,812 | $63,051 | $112,415 | $128,403 | [Note 15 — New Accounting Pronouncements](index=21&type=section&id=Note%2015%20%E2%80%94%20New%20Accounting%20Pronouncements) This note outlines recently issued accounting standards updates and the Company's ongoing evaluation of their potential impact on financial statements - ASU 2023-09 (Income Taxes) is effective for annual periods beginning **January 1, 2025**, expanding income tax disclosure requirements[84](index=84&type=chunk) - ASU 2024-03 (Disaggregation of Income Statement Expenses) is effective for annual periods beginning after **December 15, 2026**, expanding expense disclosure requirements[85](index=85&type=chunk) - ASU 2024-04 (Debt with Conversion and Other Options) is effective for annual periods beginning after **December 15, 2025**, clarifying accounting for induced conversions of convertible debt[86](index=86&type=chunk) - The Company is currently evaluating the potential effects of these new accounting standards on its financial statements and disclosures[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year, discussing key financial metrics, business developments, liquidity, and known trends [Cautionary Note Regarding Forward-Looking Statements](index=23&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises that the report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements, which are not guarantees of future performance and involve known and unknown risks and uncertainties[88](index=88&type=chunk) - Important factors affecting actual results include the inability to recognize business combination benefits, debt service, managing growth, executing business plans, potential litigation, regulatory changes, and economic factors[89](index=89&type=chunk) [Company Overview](index=23&type=section&id=Company%20Overview) This section provides a brief overview of The Beauty Health Company, its focus on skin health, and its core esthetic technologies and product brands - The Beauty Health Company is a medtech-meets-beauty company focused on skin health experiences[92](index=92&type=chunk) - The Company designs, develops, manufactures, markets, and sells esthetic technologies and products under brands like Hydrafacial, SkinStylus, and Keravive[92](index=92&type=chunk) [Business and Macroeconomic Conditions](index=24&type=section&id=Business%20and%20Macroeconomic%20Conditions) This section discusses the Company's strategic expansion and the impact of global macroeconomic conditions, including inflation, interest rates, and supply chain disruptions, on its business - The Company continues to expand its footprint by selling hydradermabrasion delivery systems, driving consumables, investing in its community, enhancing brand awareness, and optimizing global infrastructure[93](index=93&type=chunk) - Business is impacted by global economic conditions including inflation, recession, foreign currency exchange rates, higher interest rates, tariffs, trade restrictions, supply chain disruptions, and issues related to older Syndeo device models[93](index=93&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk) [China Market](index=24&type=section&id=China%20Market) This section details the Company's transition to a distributor partner for sales in the China market, discontinuing direct sales to customers - During Q2 2025, the Company transitioned sales in the China market to a distributor partner[95](index=95&type=chunk) - As a result of this transition, the Company has discontinued direct sales to customers in China[95](index=95&type=chunk) [Comparison of Three Months Ended June 30, 2025 to Three Months Ended June 30, 2024](index=25&type=section&id=Comparison%20of%20Three%20Months%20Ended%20June%2030,%202025%20to%20Three%20Months%20Ended%20June%2030,%202024) This section analyzes the Company's financial performance for the three months ended June 30, 2025, compared to the prior year, focusing on net sales, gross profit, operating expenses, and net income Net Sales (in millions) | Product Line | 2025 | 2024 | Change Amount | Change % | | :--------------- | :--- | :--- | :------------ | :------- | | Delivery Systems | $22.4 | $35.2 | $(12.9) | (36.5)% | | Consumables | $55.8 | $55.4 | $0.4 | 0.8% | | Total net sales | $78.2 | $90.6 | $(12.4) | (13.7)% | - Delivery Systems net sales decreased by **36.5%** due to unfavorable macroeconomic and credit conditions globally[99](index=99&type=chunk) - Consumables net sales slightly increased by **0.8%** due to increased placements of Delivery Systems and adjoining consumption[100](index=100&type=chunk) Gross Profit and Margin (in millions) | Metric | 2025 | 2024 | Change Amount | Change % | | :----------- | :--- | :--- | :------------ | :------- | | Cost of sales | $29.1 | $49.7 | $(20.6) | (41.4)% | | Gross profit | $49.1 | $40.9 | $8.2 | 20.0% | | Gross margin | 62.8% | 45.2% | | | - Gross margin increased to **62.8%** from **45.2%**, primarily due to lower inventory-related charges and a favorable mix shift towards consumable net sales[101](index=101&type=chunk) Operating Expenses (in millions) | Expense Category | 2025 | 2024 | Change Amount | Change % | | :--------------------- | :--- | :--- | :------------ | :------- | | Selling and marketing | $23.1 | $30.5 | $(7.4) | (24.2)% | | Research and development | $1.3 | $1.2 | $0.1 | 7.9% | | General and administrative | $27.5 | $31.4 | $(4.0) | (12.6)% | - Net income increased significantly to **$19.7 million** in 2025 from **$0.2 million** in 2024, driven by lower operating expenses and a net gain from convertible senior notes exchange/repurchases[98](index=98&type=chunk)[107](index=107&type=chunk) [Comparison of Six Months Ended June 30, 2025 to Six Months Ended June 30, 2024](index=28&type=section&id=Comparison%20of%20Six%20Months%20Ended%20June%2030,%202025%20to%20Six%20Months%20Ended%20June%2030,%202024) This section analyzes the Company's financial performance for the six months ended June 30, 2025, compared to the prior year, focusing on net sales, gross profit, operating expenses, and net income Net Sales (in millions) | Product Line | 2025 | 2024 | Change Amount | Change % | | :--------------- | :--- | :--- | :------------ | :------- | | Delivery Systems | $42.6 | $71.0 | $(28.4) | (40.0)% | | Consumables | $105.2 | $101.0 | $4.2 | 4.1% | | Total net sales | $147.8 | $172.0 | $(24.2) | (14.1)% | - Delivery Systems net sales decreased by **40.0%** across all regions due to unfavorable macroeconomic and credit conditions[111](index=111&type=chunk) - Consumables net sales increased by **4.1%** due to increased placements of Delivery Systems and adjoining consumption[112](index=112&type=chunk) Gross Profit and Margin (in millions) | Metric | 2025 | 2024 | Change Amount | Change % | | :----------- | :--- | :--- | :------------ | :------- | | Cost of sales | $50.1 | $82.7 | $(32.6) | (39.4)% | | Gross profit | $97.7 | $89.3 | $8.4 | 9.4% | | Gross margin | 66.1% | 51.9% | | | - Gross margin increased to **66.1%** from **51.9%**, primarily due to lower inventory-related charges and a favorable mix shift towards consumable net sales[113](index=113&type=chunk) Operating Expenses (in millions) | Expense Category | 2025 | 2024 | Change Amount | Change % | | :--------------------- | :--- | :--- | :------------ | :------- | | Selling and marketing | $49.1 | $64.2 | $(15.0) | (23.4)% | | Research and development | $2.2 | $4.0 | $(1.7) | (43.3)% | | General and administrative | $61.0 | $60.3 | $0.7 | 1.2% | - Net income was **$9.6 million** in 2025, compared to a net loss of **$(0.5) million** in 2024, driven by improved gross profit and lower operating expenses, partially offset by lower other income[110](index=110&type=chunk)[121](index=121&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's sources of capital, current liquidity position, and management's assessment of its ability to meet future working capital requirements - Primary capital sources include cash flow from operating activities, net proceeds from the Business Combination, 2026 Notes, and warrant exercises[122](index=122&type=chunk) - As of June 30, 2025, cash, cash equivalents, and restricted cash totaled **$212.0 million**[122](index=122&type=chunk) - Management believes the Company has sufficient liquidity for anticipated working capital requirements for at least the next **12 months**[125](index=125&type=chunk) - The Company may seek additional equity or debt financing for capital expenditure needs, including potential acquisitions, if operating cash flow is insufficient[124](index=124&type=chunk)[127](index=127&type=chunk) [Convertible Senior Notes, Net](index=31&type=section&id=Convertible%20Senior%20Notes,%20Net) This section details the Company's recent transactions involving its convertible senior notes, including repurchases and the issuance of new 2028 Notes with associated covenants - The Company repurchased **$20.0 million** principal amount of 2026 Notes for **$18.4 million** during the three and six months ended June 30, 2025, resulting in a **$1.5 million** net gain[130](index=130&type=chunk) - On May 21, 2025, the Company exchanged **$263.2 million** principal of 2026 Notes for **$250.0 million** principal of new **7.95% Convertible Senior Secured Notes due November 15, 2028** (2028 Notes), and repurchased an additional **$150.1 million** principal of 2026 Notes for **$142.6 million**[131](index=131&type=chunk) - The 2028 Notes are senior, secured obligations, guaranteed by subsidiaries, and contain restrictive covenants on indebtedness, liens, investments, and restricted payments[133](index=133&type=chunk) [Known Trends or Uncertainties](index=32&type=section&id=Known%20Trends%20or%20Uncertainties) This section identifies potential impacts from industry consolidations, ongoing macroeconomic challenges, and the risk of goodwill impairment due to financial performance trends - The Company faces potential impacts from industry consolidations within the medical, esthetician, and beauty retail sectors[135](index=135&type=chunk) - Macroeconomic challenges, such as recession, financial market instability, and governmental actions (e.g., tariffs), continue to negatively impact revenues in 2025[136](index=136&type=chunk)[137](index=137&type=chunk) - Negative trends in financial performance could lead to a sustained decline in stock price, potentially triggering a goodwill impairment assessment[137](index=137&type=chunk) [Cash Flows](index=32&type=section&id=Cash%20Flows) This section summarizes the Company's cash flow activities for operating, investing, and financing, highlighting changes and their primary drivers for the six months ended June 30, 2025 and 2024 Cash Flow Summary (in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used for) operating activities | $12.6 | $(10.7) | | Net cash used for investing activities | $(2.7) | $(3.8) | | Net cash used for financing activities | $(173.6) | $(157.4) | | Net change in cash, cash equivalents, and restricted cash | $(163.7) | $(171.9) | | Cash, cash equivalents, and restricted cash at end of period | $212.0 | $349.5 | - Net cash provided by operating activities improved to **$12.6 million** in 2025 from a usage of **$10.7 million** in 2024, primarily due to lower working capital usage and changes in net income and non-cash adjustments[140](index=140&type=chunk) - Net cash used for financing activities increased to **$173.6 million** in 2025, mainly due to the exchange and repurchases of the 2026 Notes[142](index=142&type=chunk) [Critical Accounting Policies and Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms the preparation of financial statements under GAAP and notes no changes to critical accounting policies since the last annual report - The consolidated financial statements are prepared in accordance with GAAP, involving estimates and judgments that affect reported amounts[143](index=143&type=chunk) - There have been no changes to the Company's critical accounting policies since the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[144](index=144&type=chunk) [Recent Accounting Pronouncements](index=33&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 15 for details on new accounting pronouncements and their potential impact on the Company's financial statements - Refer to Note 15 to the Consolidated Financial Statements for details on new accounting pronouncements[145](index=145&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the Company's exposure to market risks, primarily from changes in interest rates, foreign currency, and inflation, noting no material changes since the last annual report - Market risks primarily stem from changes in interest rates, foreign currency, and inflation[146](index=146&type=chunk) - There were no material changes to the Company's market risks disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024[146](index=146&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures, identifies a material weakness in the inventory process, and outlines the remediation plan and changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=33&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports the ineffectiveness of disclosure controls and procedures due to a material weakness in the inventory process as of June 30, 2025 - The Company's disclosure controls and procedures were not effective as of **June 30, 2025**[147](index=147&type=chunk) - This ineffectiveness is due to a material weakness in the Company's internal control over financial reporting related to the inventory process[147](index=147&type=chunk) [Remediation Plan for Material Weakness](index=34&type=section&id=Remediation%20Plan%20for%20Material%20Weakness) This section outlines the Company's plan to remediate the material weakness in inventory controls through new appointments, enhanced training, and improved control implementation - Remediation activities include appointing new individuals in key supply chain and operations roles[150](index=150&type=chunk) - Enhanced training and operational guidelines led to the successful completion of annual physical inventory counts[150](index=150&type=chunk) - Controls regarding excess and obsolete inventory and inventory pricing/purchase arrangements have been designed and implemented[150](index=150&type=chunk) - Remediation activities are anticipated to be completed during fiscal year **2025**[148](index=148&type=chunk) [Changes in Internal Control Over Financial Reporting](index=34&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section states that no material changes in internal control over financial reporting occurred during the three months ended June 30, 2025 - There have been no changes in internal control over financial reporting during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[149](index=149&type=chunk) [PART II—OTHER INFORMATION](index=35&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section provides updates on legal proceedings, risk factors, equity security sales, defaults, mine safety, other information, and a list of exhibits [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) This section provides an update on various legal proceedings the Company is involved in, including patent and trademark infringement cases, securities class actions, consumer class actions, derivative actions, and an SEC investigation - The Company is a party to various lawsuits, claims, and other legal proceedings, including commercial disputes, product liability, and employment matters[152](index=152&type=chunk) - Ongoing patent infringement cases include actions against Cartessa Aesthetics, LLC (including ITC matters), Medicreations LLC, Sinclair Pharma US, Inc. (including ITC matters), Aesthetic Management Partners Inc., Luvo Medical Technologies Inc. (including ITC matters), eMIRAmed USA, LLC, Candela Corp., and BQ Aesthetix & Co., LLC[155](index=155&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - Trademark infringement cases include actions against Medical Purchasing Resource, LLC (settled for **$105,000**) and Med Spa Essentials, LLC (settled with business shutdown)[164](index=164&type=chunk)[168](index=168&type=chunk) - A Securities Class Action (Abduladhim A. Alghazwi) and a Consumer Class Action (Jason Davalos, Sonia Davalos, Sol Tan Tanning & Spa LLC) are ongoing, both alleging issues with Syndeo devices and misrepresentations[171](index=171&type=chunk)[174](index=174&type=chunk) - A Consolidated Derivative Action (Margie Elstein, Richard Montague) is ongoing, alleging breach of fiduciary duty and gross mismanagement by former officers and current directors[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - The SEC Division of Enforcement has issued **three subpoenas** in connection with a formal investigation, and the Company is cooperating[181](index=181&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors discussed in the Company's Annual Report on Form 10-K and highlights new restrictive covenants associated with the 2028 Convertible Senior Secured Notes - The Company's business, financial condition, or future results could be materially affected by risks discussed in the Annual Report on Form 10-K[182](index=182&type=chunk) - New restrictive covenants in the 2028 Notes may limit the Company's ability to incur additional debt, engage in certain transactions, and make restricted payments, potentially affecting current and future operations[183](index=183&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the unregistered issuance of the 2028 Convertible Senior Secured Notes in exchange for existing 2026 Notes, relying on a private offering exemption - The Company exchanged **$263.2 million** principal amount of 2026 Notes for **$250.0 million** principal amount of new 2028 Notes[184](index=184&type=chunk) - The 2028 Notes were issued on **May 27, 2025**, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933[185](index=185&type=chunk) - The initial conversion rate for the 2028 Notes is **349.6503 shares of Class A Common Stock per $1,000 principal amount**, representing an initial conversion price of approximately **$2.86 per share**[185](index=185&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there have been no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[188](index=188&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[189](index=189&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) This section reports that no directors or officers adopted, modified, or terminated Rule 10b5-1 trading plans during the quarter - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[190](index=190&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive list of exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q - The report includes an exhibit index listing various agreements, certificates, and certifications[193](index=193&type=chunk) - New exhibits filed herewith include the Indenture for the **7.95% Convertible Senior Secured Notes due 2028** and related form of note, along with certifications from the Principal Executive Officer and Principal Financial Officer[193](index=193&type=chunk)[195](index=195&type=chunk)

Q2 2025 Performance - Net sales decreased by 13.7% year-over-year to $78.2 million[10] - Delivery Systems net sales decreased by 36.5% year-over-year to $22.4 million[10] - Consumables net sales increased slightly by 0.8% year-over-year to $55.8 million[10] - Net income increased by $19.5 million year-over-year to $19.7 million[10] - Adjusted EBITDA increased by $19.1 million year-over-year to $13.9 million[10] Financial Outlook - The company expects 3Q 2025E net sales to be between $65 million and $70 million[20] - The company expects 3Q 2025E adjusted EBITDA to be between $2 million and $4 million[21] - The company expects FY 2025E net sales to be between $285 million and $300 million[21] - The company expects FY 2025E adjusted EBITDA to be between $27 million and $35 million[21] Market Position - Hydrafacial holds the 1 market share and 41% of aesthetic practices with microdermabrasion offer Hydrafacial[25] - Hydrafacial is the 2 best-known brand[26]

[Q2 2025 Financial Results Overview](index=1&type=section&id=Q2%202025%20Financial%20Results%20Overview) [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) The company's Q2 2025 net sales decreased due to lower delivery system sales, but gross margin and Adjusted EBITDA improved significantly Key Financial Metrics | Financial Metric | Q2 2025 | Q2 2024 | Change | Six Months 2025 | Six Months 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total net sales** | $78.2M | $90.6M | -13.7% | $147.8M | $172.0M | -14.1% | | **Delivery Systems net sales** | $22.4M | $35.2M | -36.4% | $42.6M | $71.0M | -40.0% | | **Consumables net sales** | $55.8M | $55.4M | +0.7% | $105.2M | $101.0M | +4.2% | | **Gross profit** | $49.1M | $40.9M | +20.0% | $97.7M | $89.3M | +9.4% | | **Gross margin** | 62.8% | 45.2% | +17.6pp | 66.1% | 51.9% | +14.2pp | | **Net income (loss)** | $19.7M | $0.2M | +9750% | $9.6M | $(0.5)M | N/A | | **Adjusted EBITDA** | $13.9M | $(5.2)M | N/A | $21.2M | $(4.8)M | N/A | Key Operational Metrics | Operational Metric | Q2 2025 | Q2 2024 | Change | Six Months 2025 | Six Months 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total delivery systems sold** | 957 | 1,285 | -25.5% | 1,819 | 2,702 | -32.7% | | **Active install base** | 35,193 | 33,504 | +5.0% | 35,193 | 33,504 | +5.0% | - The overall revenue decrease was driven by fewer delivery system units placed year-over-year, which was impacted by a **challenging macroeconomic environment**[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted strong Q2 performance exceeding expectations, driven by consumables demand and margin expansion, leading to an increased full-year outlook - Management emphasized **strong execution**, disciplined cost management, and exceeding expectations, which prompted the company to **raise its full-year financial guidance**[1](index=1&type=chunk)[2](index=2&type=chunk) - The company's recurring revenue model is showing strength, with **over 35,000 active devices** in the field and **consumables driving more than 70% of total revenue**[2](index=2&type=chunk) - Innovation remains a focus, highlighted by the **successful launch of the HydraFillic with Pep9™ Booster**[1](index=1&type=chunk)[2](index=2&type=chunk) - As part of a global distribution strategy evaluation, the company **transitioned its sales in the China market to a distributor partner** and has discontinued direct sales in the region[5](index=5&type=chunk) [Detailed Financial Performance](index=3&type=section&id=Detailed%20Financial%20Performance) [Second Quarter Financial Review](index=3&type=section&id=Second%20Quarter%20Financial%20Review) Q2 2025 net sales declined, but gross margin expanded significantly due to a favorable sales mix and lower inventory charges, boosting net income - Gross margin and adjusted gross margin improved primarily due to **lower inventory-related charges** and a **favorable mix shift** towards higher-margin consumable sales[10](index=10&type=chunk) - The increase in net income and the positive swing in Adjusted EBITDA were primarily due to **lower operational spending and higher gross margins**, which more than offset the impact of lower net sales[10](index=10&type=chunk) - The company **placed 957 delivery systems** in Q2 2025, a decrease from 1,285 in Q2 2024, reflecting a challenging macroeconomic environment[10](index=10&type=chunk) [Balance Sheet and Cash Flow Highlights](index=3&type=section&id=Balance%20Sheet%20and%20Cash%20Flow%20Highlights) The company strengthened its financial position through significant debt restructuring while reporting cash and equivalents of $212.0 million - Cash, cash equivalents, and restricted cash was approximately **$212.0 million** as of June 30, 2025, down from $370.1 million at the end of 2024[10](index=10&type=chunk) - The company undertook significant debt restructuring, **repurchasing ~$170 million** of its 2026 Notes and **exchanging ~$263 million** for new 7.95% convertible senior secured notes due 2028[10](index=10&type=chunk) - As of June 30, 2025, the company had approximately **126.8 million shares** of Class A common stock outstanding[10](index=10&type=chunk) [Regional Performance](index=4&type=section&id=Regional%20Performance) Net sales declined across all regions in Q2 2025, led by a significant drop in APAC, though consumables sales showed resilience in the Americas and EMEA Net Sales by Region | Region | Q2 2025 Net Sales | Q2 2024 Net Sales | YoY Change | | :--- | :--- | :--- | :--- | | **Americas** | $52.0M | $57.7M | -9.9% | | **APAC** | $7.7M | $13.6M | -43.4% | | **EMEA** | $18.4M | $19.2M | -4.2% | - Sales of delivery systems declined year-over-year in all three regions for both the second quarter and the first six months of 2025[12](index=12&type=chunk) - Consumables net sales **grew in the Americas and EMEA** regions during Q2 2025 compared to the prior year, while APAC consumables sales declined[12](index=12&type=chunk) [Financial Guidance](index=3&type=section&id=Financial%20Guidance) [Updated 2025 Outlook](index=3&type=section&id=Updated%202025%20Outlook) The company raised its full-year 2025 guidance for net sales and Adjusted EBITDA following strong first-half performance 2025 Financial Guidance | Guidance Period | Metric | Guidance Range | | :--- | :--- | :--- | | **Third Quarter 2025** | Net sales | $65 – $70 million | | | Adjusted EBITDA | $2 – $4 million | | **Fiscal Year 2025** | Net sales | $285 – $300 million | | | Adjusted EBITDA | $27 – $35 million | [Guidance Assumptions](index=3&type=section&id=Guidance%20Assumptions) The revised 2025 guidance assumes stable market conditions and excludes the impact of potential M&A or other unforeseen events - The increase in full-year guidance reflects the company's **strong performance during the first half of 2025**[11](index=11&type=chunk) - The outlook is contingent on the assumption of **no further material deterioration in market conditions** or other unforeseen circumstances like changes in foreign currency rates or trade restrictions[11](index=11&type=chunk) - The guidance **excludes any potential impact** from unannounced acquisitions, dispositions, or financings[11](index=11&type=chunk) [Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported a significant increase in Q2 2025 net income to $19.7 million, driven by higher gross profit and lower operating expenses Q2 Statement of Comprehensive Income (Loss) Highlights | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net sales** | $78.2 | $90.6 | | **Gross profit** | $49.1 | $40.9 | | **Loss from operations** | $(2.7) | $(22.1) | | **Net income (loss)** | $19.7 | $0.2 | | **Basic EPS** | $0.16 | $0.00 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities decreased as of June 30, 2025, primarily reflecting debt restructuring and a reduction in cash Balance Sheet Highlights | ($ in millions) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $306.1 | $477.1 | | **TOTAL ASSETS** | $507.6 | $685.7 | | **Total current liabilities** | $59.4 | $68.2 | | **Convertible senior notes, net** | $363.1 | $552.2 | | **TOTAL LIABILITIES** | $433.6 | $633.9 | | **Total stockholders' equity** | $74.0 | $51.8 | [Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) The company generated positive cash from operations for the first six months of 2025, a significant improvement from the prior year Cash Flow Highlights | ($ in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by (used for) operating activities** | $12.6 | $(10.7) | | **Net cash used for investing activities** | $(2.7) | $(3.8) | | **Net cash used for financing activities** | $(173.6) | $(157.4) | | **Net change in cash** | $(163.7) | $(171.9) | | **Cash at end of period** | $212.0 | $349.5 | [Non-GAAP Financial Measures & Reconciliations](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Explanation of Non-GAAP Measures](index=4&type=section&id=Explanation%20of%20Non-GAAP%20Measures) The company uses non-GAAP metrics like adjusted gross profit and adjusted EBITDA to provide a clearer view of core operational performance - Management uses non-GAAP financial measures such as **adjusted gross profit** and **adjusted EBITDA** for evaluating ongoing operations and for internal planning and forecasting[14](index=14&type=chunk) - Adjusted gross profit is defined as gross profit excluding depreciation, amortization, and share-based compensation expense[16](index=16&type=chunk) - Adjusted EBITDA is calculated by excluding items such as taxes, interest, D&A, share-based compensation, litigation costs, and restructuring charges from net income[17](index=17&type=chunk) [Reconciliation of Gross Profit to Adjusted Gross Profit](index=9&type=section&id=Reconciliation%20of%20Gross%20Profit%20to%20Adjusted%20Gross%20Profit) Adjusted gross profit for Q2 2025 was $51.5 million, yielding an adjusted gross margin of 65.9% after excluding certain non-cash expenses Gross Profit to Adjusted Gross Profit Reconciliation | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Gross profit (GAAP)** | $49.1 | $40.9 | | Depreciation expense | $0.2 | $0.4 | | Amortization expense | $2.1 | $3.3 | | Share-based compensation | $0.1 | $0.1 | | **Adjusted gross profit (Non-GAAP)** | $51.5 | $44.8 | | **Adjusted gross margin** | 65.9% | 49.4% | [Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20(Loss)%20to%20Adjusted%20EBITDA) The company reported a significant turnaround to a positive Adjusted EBITDA of $13.9 million in Q2 2025 from a loss in the prior-year period Net Income (Loss) to Adjusted EBITDA Reconciliation | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net income (loss) (GAAP)** | $19.7 | $0.2 | | Adjustments (Taxes, D&A, Interest, etc.) | $(5.8) | $(5.4) | | **Adjusted EBITDA (Non-GAAP)** | $13.9 | $(5.2) | | **Adjusted EBITDA margin** | 17.8% | (5.7)% | [Other Information](index=4&type=section&id=Other%20Information) [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) A conference call to discuss Q2 2025 financial results was scheduled for August 7, 2025, with a webcast available online - The company will host a conference call to discuss Q2 2025 results on **Thursday, August 7, 2025, at 4:30 p.m. ET**[13](index=13&type=chunk) [About The Beauty Health Company](index=10&type=section&id=About%20The%20Beauty%20Health%20Company) The company operates at the intersection of medical technology and beauty, with a portfolio of brands focused on skin and scalp health - The company's flagship brands are **Hydrafacial™**, **SkinStylus™**, and **Keravive™**, focusing on hydradermabrasion, microneedling, and scalp health, respectively[28](index=28&type=chunk) [Forward-Looking Statements](index=10&type=section&id=Forward-Looking%20Statements) This section provides a standard safe harbor statement, advising that future projections are subject to risks and uncertainties - The press release contains forward-looking statements that are **subject to risks and uncertainties** and are not guarantees of future performance[29](index=29&type=chunk)[30](index=30&type=chunk) - Readers are cautioned not to place undue reliance on these statements and are referred to the company's SEC filings, such as the **Form 10-K**, for a comprehensive list of risk factors[31](index=31&type=chunk)

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for The Beauty Health Company (SKIN) despite lower revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The upcoming earnings report is expected to show a quarterly loss of $0.06 per share, reflecting a 40% improvement year-over-year, while revenues are projected at $74.55 million, down 17.7% from the previous year [3]. - A positive earnings surprise could lead to a stock price increase, while a miss may result in a decline [2]. Estimate Revisions - The consensus EPS estimate has been revised 3.85% higher in the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Beauty Health is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +20.00% [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10]. - Beauty Health currently holds a Zacks Rank of 2, indicating a favorable outlook for beating the consensus EPS estimate [12]. Historical Performance - In the last reported quarter, Beauty Health was expected to post a loss of $0.13 per share but actually reported a loss of $0.08, resulting in a surprise of +38.46% [13]. - Over the past four quarters, the company has exceeded consensus EPS estimates twice [14]. Conclusion - While the potential for an earnings beat exists, other factors may also influence stock performance, making it essential to consider the broader context [15][17].

Core Viewpoint - The Beauty Health Company will report its second quarter 2025 financial results on August 7, 2025, after market close, followed by an investor conference call [1]. Group 1: Financial Reporting - The financial results will be announced in a press release, and an investor conference call is scheduled for 4:30 p.m. Eastern Time on the same day [1]. - A live webcast of the call will be available on the company's investor relations website, with a recording accessible approximately three hours after the call concludes [2]. Group 2: Disclosure Practices - The company utilizes various means to disclose material information, including SEC filings, press releases, public conference calls, and its investor relations website, in compliance with Regulation FD [3]. Group 3: Company Overview - The Beauty Health Company (NASDAQ: SKIN) combines medtech and beauty, providing millions of skin health experiences annually, focusing on consumer relationships with skin and self-confidence [4]. - The company's flagship brands include Hydrafacial™ for hydradermabrasion, SkinStylus™ for microneedling, and Keravive™ for scalp health, aiming to personalize skin health for diverse demographics [4]. - The company emphasizes a commitment to mindful business practices that positively impact communities and the environment [4].

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with the traditional "buy low and sell high" strategy, but it carries risks if future growth does not justify high valuations [1] Group 1: Momentum Investing Strategy - Momentum investing can be risky as stocks may lose momentum when their growth potential fails to justify inflated valuations [1] - A safer approach may involve investing in bargain stocks that have recently shown price momentum [2] Group 2: The Beauty Health Company (SKIN) - The Beauty Health Company (SKIN) has shown a four-week price change of 5.2%, indicating growing investor interest [3] - SKIN has gained 103.7% over the past 12 weeks, demonstrating its ability to deliver positive returns over a longer timeframe [4] - The stock has a beta of 1.22, suggesting it moves 22% higher than the market in either direction, indicating fast-paced momentum [4] - SKIN has a Momentum Score of B, suggesting it is a favorable time to invest in the stock [5] - The stock has a Zacks Rank 2 (Buy) due to upward trends in earnings estimate revisions, which attract more investors [6] - SKIN is trading at a Price-to-Sales ratio of 0.79, indicating it is reasonably valued at 79 cents for each dollar of sales [6] Group 3: Additional Investment Opportunities - Besides SKIN, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, suggesting further investment opportunities [7] - Zacks offers over 45 Premium Screens tailored to different investing styles, which can help identify winning stock picks [8]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point for fast-moving stocks, which can lead to limited upside or downside risks [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: The Beauty Health Company (SKIN) - The Beauty Health Company (SKIN) has shown significant recent price momentum, with a four-week price change of 19.4% [4] - Over the past 12 weeks, SKIN's stock has gained 82.8%, indicating strong long-term momentum [5] - SKIN has a Momentum Score of A, suggesting it is an opportune time to invest in the stock [6] Group 3: Earnings Estimates and Valuation - SKIN has received upward revisions in earnings estimates, earning a Zacks Rank 2 (Buy), which is associated with strong momentum effects [7] - The stock is currently trading at a Price-to-Sales ratio of 0.75, indicating it is attractively priced relative to its sales [7] Group 4: Additional Investment Opportunities - Besides SKIN, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

Core Insights - The Beauty Health Company has launched the Hydrafacial HydraFillic with Pep9™ Booster, a new skin treatment designed to visibly improve fine lines, wrinkles, and overall skin health through a proprietary complex of nine peptides [1][19] - The product aims to meet the rising consumer demand for non-invasive treatments that address aging signs and enhance skin health, as 81% of beauty consumers prioritize fine lines and wrinkles as their main skin concern [2][3] Product Details - The HydraFillic with Pep9™ Booster is clinically proven to enhance skin appearance, hydration, and barrier strength, resulting in a firmer and more youthful complexion [1][19] - Clinical testing showed significant improvements in skin firmness (100%), overall glow (96%), and reduced appearance of fine lines (83%) among participants after treatment [6][9] - Key ingredients include a proprietary complex of nine peptides, Triple Hyaluronic Acid Complex, and fruit extracts, which work synergistically to improve skin hydration and minimize aging signs [7][8] Market Context - The launch reflects the company's commitment to innovation in non-invasive aesthetic treatments, leveraging advanced device technology and novel skincare formulations [1][3] - The HydraFillic with Pep9™ Booster is positioned to empower providers to customize treatments based on individual client needs, aligning with current aesthetic trends focused on longevity and skin health [2][4]

Core Insights - The BeautyHealth Company has reached a significant milestone with 35,000 Hydrafacial devices installed globally, solidifying its leadership in the hydradermabrasion market [1][2] - The Hydrafacial treatment has seen approximately 5 million treatments delivered in the past year, indicating strong demand and consumer trust [2][5] - Hydrafacial ranks as the second most recognized facial treatment in the U.S., with a 96% "Worth It" rating on RealSelf and a Net Promoter Score of 52, showcasing high consumer satisfaction [2][4] Company Performance - The Hydrafacial treatment is responsible for driving about 7% of new patients to medical spas and aesthetic practices annually, highlighting its role in practice growth [2][4] - The treatment combines seven skin therapies, resulting in visible improvements and a boost in consumer confidence with no downtime [2][3] Market Trends - There is a growing trend towards non-invasive aesthetic treatments that prioritize skin health, which aligns with the offerings of Hydrafacial [2][3] - The success of Hydrafacial reflects a shift in beauty trends favoring a natural and effortless look [2]

Core Viewpoint - The Beauty Health Company has announced a refinancing initiative aimed at strengthening its financial position and extending the maturity of a portion of its existing debt, which will facilitate long-term growth investments [2]. Group 1: Refinancing Details - The company has entered into exchange agreements to swap approximately $413.2 million of existing 1.25% convertible senior notes due 2026 for $250.0 million of new 7.95% convertible senior secured notes due 2028, along with approximately $143.4 million in cash [2]. - The new notes will be senior, secured obligations guaranteed by certain subsidiaries and will bear an interest rate of 7.95% per annum [2]. - The initial conversion rate for the new notes is set at 349.6503 shares per $1,000 principal amount, translating to a conversion price of approximately $2.86 per share [2]. Group 2: Strategic Focus - The CEO emphasized that the refinancing is a critical step in enhancing the company's financial flexibility, allowing for investments in innovation and brand initiatives [2]. - The company aims to improve commercial execution, accelerate product development, and deepen engagement with providers [2]. Group 3: Transaction Advisors - Goldman Sachs is serving as the exclusive financial advisor for the transaction, while Latham & Watkins LLP is acting as transaction counsel [3].