Core Points - The Beauty Health Company will report its fourth quarter and full year 2024 financial results on March 12, 2025, after market close [1] - An investor conference call will be held at 4:30 p.m. Eastern Time following the results announcement [1] - A live webcast of the call will be available on the company's investor relations website, with a recording accessible three hours post-call [2] Company Overview - The Beauty Health Company (NASDAQ: SKIN) is a medtech and beauty company that provides millions of skin health experiences annually [4] - The company is known for its flagship brand Hydrafacial™ and other brands like SkinStylus™ and Keravive™, focusing on various skin health solutions [4] - The company emphasizes a commitment to positively impacting communities and the planet through mindful business practices [4]

Core Insights - The Beauty Health Company (SKIN) experienced a total revenue of $78.8 million for the quarter ending September 2024, reflecting a year-over-year decline of 19.1% [4] - The company's international revenue performance is critical for assessing its financial resilience and growth prospects, especially in the context of a globally interconnected economy [2][9] International Revenue Breakdown - EMEA contributed 20.43% of total revenue, amounting to $16.1 million, which was a slight miss compared to analyst expectations of $16.16 million. This represents a decline from $19.2 million (21.19%) in the previous quarter and $21.1 million (21.66%) in the same quarter last year [5] - Asia Pacific generated $10.8 million, accounting for 13.71% of total revenue, which was significantly below the expected $14.08 million, marking a decline from $13.6 million (15.01%) in the previous quarter and $24.7 million (25.36%) in the year-ago quarter [6] Revenue Forecasts - Analysts predict total revenue of $76.58 million for the current fiscal quarter, indicating a decline of 20.9% from the prior-year quarter. Expected contributions from EMEA and Asia Pacific are $16.2 million (21.2%) and $15.82 million (20.7%), respectively [7] - For the entire year, total revenue is forecasted at $327.38 million, a reduction of 17.7% from the previous year, with EMEA expected to contribute $68.27 million (20.9%) and Asia Pacific $57.88 million (17.7%) [8] Market Observations - The company's reliance on international markets presents both opportunities and risks, making it essential to monitor international revenue trends for future forecasts [9] - Wall Street analysts are closely observing these international revenue patterns, especially given the complexities of global interdependence and geopolitical issues [10]

Financial Data and Key Metrics Changes - Third quarter revenue was $78.8 million, representing a 19.1% year-over-year decline [29] - Adjusted gross margin improved to 69.5%, driven by lower inventory-related charges and a favorable sales mix [34] - Total operating expenses decreased by 10.6% to $62.2 million, reflecting successful expense management [35] Business Line Data and Key Metrics Changes - Global equipment sales declined by 45.9%, while consumable sales increased by 10.4% to $51.2 million [30][32] - In the Americas, non-Syndeo systems accounted for 38% of units sold, up from 33% in Q2 [17] - Total units sold worldwide during the quarter was 1,118, down from 2,140 units sold in Q3 2023 [30] Market Data and Key Metrics Changes - Revenue in APAC declined by 56.1%, with China accounting for $5.3 million, a 68.5% year-over-year decline [32][33] - Consolidated revenue in the Americas was roughly flat, up 0.3%, while revenue in EMEA declined by 23.6% [32] Company Strategy and Development Direction - The company is focusing on three core areas: sales execution, operational excellence, and financial discipline [9] - Plans to consolidate operations in the US and leverage partnerships in other regions to maximize shareholder value [12] - The strategy includes a tiered pricing approach for equipment sales to increase adoption among providers [15] Management's Comments on Operating Environment and Future Outlook - The current macro environment is challenging due to tightened credit and high interest rates, particularly affecting new device sales [8] - Management remains optimistic about the growth of consumables and is focused on long-term sustainable profitability [27] - The company is projecting full-year 2024 sales between $322 million to $332 million, with a year-over-year revenue decline expected in Q4 [39] Other Important Information - The company ended its partnership with Sephora, which is not expected to significantly impact revenue [75] - A one-time charge of $7.6 million was taken for exiting the manufacturing partnership in China [36] Q&A Session Summary Question: What regions or aspects of consumables performed better than expected? - Management noted strong consumable sales in the Americas and EMEA, with an increase in sales per device [44] Question: What is the outlook for device sales and when might they stabilize? - Management indicated that device sales are under pressure due to cautious provider spending and higher interest rates, with no immediate stabilization expected [46] Question: How will the consolidation of manufacturing impact operations? - The consolidation aims to improve quality and efficiency, with most production now occurring in Long Beach [45] Question: Is the company still committed to the Chinese market? - Management is evaluating global markets to determine where to invest for growth and where partnerships may be more beneficial [54] Question: What are the underlying demand trends for Hydrafacials? - Demand remains strong, particularly in the US medical channel, with increases in consumables per device [57] Question: How does the company plan to manage gross margin moving forward? - Management expects adjusted gross margin to improve in Q4 compared to last year, but to decline sequentially from Q3 due to higher overhead expenses [61] Question: What is the expected impact of interest rates on system sales? - Interest rates are a factor in provider purchasing decisions, and management is working on financing solutions to improve credit approvals [81]

Company Performance - Beauty Health Company (SKIN) reported a quarterly loss of $0.15 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.12, and a decline from earnings of $0.05 per share a year ago, representing an earnings surprise of -25% [1] - The company posted revenues of $78.8 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.29%, but down from year-ago revenues of $97.4 million [2] - Over the last four quarters, Beauty Health has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Performance - Beauty Health shares have lost approximately 43.4% since the beginning of the year, contrasting with the S&P 500's gain of 25.8% [3] - The current consensus EPS estimate for the coming quarter is -$0.06 on revenues of $90.45 million, and -$0.20 on revenues of $341.09 million for the current fiscal year [7] Industry Outlook - The Medical Services industry, to which Beauty Health belongs, is currently ranked in the bottom 45% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Beauty Health's stock performance [5]

Financial Performance - Net sales for the three months ended September 30, 2024, decreased by $18.6 million, or 19.1%, compared to the same period in 2023, totaling $78.8 million[109]. - Delivery Systems net sales fell by $23.4 million, or 45.9%, to $27.6 million, impacted by unfavorable macroeconomic conditions and a challenging year-over-year comparison due to the prior year's international launch of Syndeo[110]. - Consumables net sales increased by $4.8 million, or 10.4%, to $51.2 million, driven by increased placements of Delivery Systems[111]. - Net sales for the nine months ended September 30, 2024 decreased by $50.4 million, or 16.7%, compared to the same period in 2023, with Delivery Systems net sales decreasing by $63.4 million, or 39.1%[124]. - The company reported a net loss of $18.8 million for the nine months ended September 30, 2024, compared to a net loss of $90.7 million for the same period in 2023[123]. - The company reported a net loss of $18.8 million for the nine months ended September 30, 2024, compared to a net loss of $90.7 million for the same period in 2023[152]. Cost and Expenses - Cost of sales decreased by $71.8 million to $38.2 million, primarily due to the absence of charges related to the Syndeo Program in the prior year[112]. - Selling and marketing expenses decreased by $3.1 million, or 10.1%, to $27.6 million, representing 35.0% of net sales[113]. - Research and development expenses decreased by $0.7 million, or 39.7%, to $1.1 million, accounting for 1.4% of net sales[114]. - General and administrative expenses decreased by $3.5 million, or 9.6%, to $33.4 million, representing 42.4% of net sales[117]. - Gross profit for the three months ended September 30, 2024, was $40.6 million, compared to a loss of $12.6 million in the same period of 2023, resulting in a gross margin of 51.6%[112]. - Gross profit for the nine months ended September 30, 2024 increased by $20.5 million, or 18.8%, compared to the same period in 2023, with gross margin improving to 51.8% from 36.3%[126]. - Selling and marketing expenses for the nine months ended September 30, 2024 decreased by $20.7 million, or 18.4%, compared to the same period in 2023, primarily due to lower personnel-related expenses[127]. - Research and development expenses for the nine months ended September 30, 2024 decreased by $2.0 million, or 28.1%, compared to the same period in 2023, driven by lower personnel-related expenses[128]. - General and administrative expenses for the nine months ended September 30, 2024 decreased by $8.8 million, or 8.5%, compared to the same period in 2023, primarily due to lower personnel-related expenses and losses on asset sales[129]. Cash Flow and Liquidity - As of September 30, 2024, the company had cash, cash equivalents, and restricted cash of approximately $358.9 million, which supports ongoing operations and potential acquisitions[134]. - The company has sufficient liquidity to meet anticipated working capital requirements for at least the next 12 months[137]. - Net cash used for operating activities for the nine months ended September 30, 2024 was $0.3 million, compared to net cash provided of $26.9 million for the same period in 2023[153]. - Net cash used for investing activities for the nine months ended September 30, 2024 was $5.9 million, down from $29.3 million in the prior year[154]. - Net cash used for financing activities for the nine months ended September 30, 2024 was $157.6 million, compared to $6.1 million for the same period in 2023[155]. - During the nine months ended September 30, 2024, the company repurchased $192.3 million principal amount of its Notes for $156.1 million[141]. Strategic Initiatives - The Syndeo Program, which offered upgrades and replacements for existing devices, was completed as of September 30, 2024[105]. - The company continues to explore strategies to mitigate cost pressures, including potential price increases and optimizing supplier contracts[106]. - The company discontinued its trade-up program starting in 2024, which previously recognized approximately $12 million and $17 million in revenue for the nine months and year ended December 31, 2023, respectively[150]. - The company entered into an Amended and Restated Credit Agreement providing a $50.0 million revolving credit facility with a maturity date of November 14, 2027[144]. Market Conditions - The company faced macro-economic challenges that negatively impacted revenues in 2024, including potential recession and financial market instability[148]. - Interest income for the three months ended September 30, 2024 decreased by $1.9 million, or approximately 27.9%, compared to the same period in 2023, primarily due to lower average invested balances[119]. - The company recognized income of $0.4 million related to the change in the fair value of warrant liabilities for the three months ended September 30, 2024, a decrease of $5.4 million, or 91.6%, compared to the same period in 2023[120]. Other Financial Transactions - Other income, net for the nine months ended September 30, 2024 increased by $28.1 million compared to the same period in 2023, primarily due to a net gain related to the repurchase of Convertible Senior Notes[133]. - The cap price of the Capped Call Transactions is initially set at $47.94, representing a premium of 100% over the last reported sale price of the company's Class A Common Stock on September 9, 2021[142].

Financial Performance - Net sales for Q3 2024 were $78.8 million, a decrease of 19.1% compared to Q3 2023, primarily due to lower delivery systems net sales[5] - Gross margin improved to 51.6% in Q3 2024 from (12.9)% in Q3 2023, driven by the absence of prior year charges and lower inventory-related costs[5] - Adjusted gross margin increased to 69.5% in Q3 2024 from 62.5% in Q3 2023, attributed to lower product costs and a favorable shift towards consumable net sales[5] - The company reported a net loss of $(18.3) million in Q3 2024, significantly improved from a net loss of $(73.8) million in Q3 2023[5] - Adjusted EBITDA for Q3 2024 was $8.1 million, down from $9.1 million in Q3 2023, reflecting lower net sales but higher gross margin[5] - Net sales for the three months ended September 30, 2024, were $78.8 million, a decrease of 19.2% compared to $97.4 million for the same period in 2023[17] - Gross profit for the three months ended September 30, 2024, was $40.6 million, with a gross margin of 51.6%, compared to a gross loss of $12.6 million in 2023[21] - The net loss for the three months ended September 30, 2024, was $(18.3) million, compared to a net loss of $(73.8) million for the same period in 2023[22] - Adjusted EBITDA for the three months ended September 30, 2024, was $8.1 million, with an adjusted EBITDA margin of 10.2%, compared to $9.1 million and 9.3% margin for the same period in 2023[22] Sales and Market Dynamics - The company revised its full-year net sales guidance to $322 million – $332 million, reflecting continued pressure on delivery systems sales[7] - Total delivery systems sold in Q3 2024 were 1,118, down from 2,140 in the prior year period, indicating a challenging macroeconomic environment[5] - Active install base increased to 34,162 as of September 30, 2024, compared to 30,074 in the same period last year[4] - The company successfully launched the Hydralock HA Booster, contributing to growth in consumables sales[2] Operational Changes - The company centralized its global manufacturing footprint in Long Beach, California, concluding its relationship with a third-party manufacturer in China[2] - Total operating expenses for the three months ended September 30, 2024, were $62.2 million, down from $69.5 million in the same period last year[17] - The company incurred manufacturing optimization costs of $7.6 million during the three months ended September 30, 2024[22] Cash Flow and Assets - Cash, cash equivalents, and restricted cash at the end of the period were $358.9 million, down from $523.0 million at the beginning of the period[19] - Total assets decreased to $699.5 million as of September 30, 2024, from $929.1 million as of December 31, 2023[19] - Total liabilities decreased to $639.8 million as of September 30, 2024, from $869.7 million as of December 31, 2023[19] - The company reported a net cash used for operating activities of $0.3 million for the nine months ended September 30, 2024, compared to $26.9 million provided in 2023[20] Expenses and Financial Adjustments - Adjusted gross profit for the three months ended September 30, 2024, was $54.7 million, with an adjusted gross margin of 69.5%[21] - The company reported a significant increase in stock-based compensation expense, totaling $7.7 million for the three months ended September 30, 2024, compared to $8.2 million for the same period in 2023[22] - Interest expense for the three months ended September 30, 2024, was $2.5 million, down from $3.4 million in the same period in 2023[22] - The company experienced a foreign currency loss of $(2.3) million for the three months ended September 30, 2024[22] - The write-off of discontinued, excess, and obsolete products amounted to $2.0 million for the three months ended September 30, 2024[22] Strategic Focus - The company is focused on expanding its product offerings and enhancing its market presence through innovative skin health solutions[24] - The Beauty Health Company emphasizes its commitment to sustainability and positive community impact as part of its business strategy[24]

The Beauty Health Company (NASDAQ:SKIN) Q1 2024 Earnings Conference Call May 9, 2024 4:30 PM ET Company Participants Norberto Aja – Investor Relations Marla Beck – Chief Executive Officer Mike Monahan – Chief Financial Officer Conference Call Participants Oliver Chen – TD Cowen Allen Gong – JPMorgan Susan Anderson – Canaccord Genuity Olivia Tong – Raymond James Joe Federico – Stifel Korinne Wolfmeyer – Piper Sandler Operator Hello, and welcome to The Beauty Health First Quarter 2024 Earnings Conference Call ...

PART I—FINANCIAL INFORMATION This section presents the unaudited financial statements, management's analysis of financial performance and liquidity, market risk disclosures, and internal control effectiveness [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited Q1 2024 financial statements reflect reduced assets and liabilities, a narrowed net loss, and increased cash usage for financing activities [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2024, shows a decrease in total assets and liabilities, with a slight increase in equity Balance Sheet Summary (as of March 31, 2024 vs. December 31, 2023) | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $614,824 | $698,252 | | Cash, cash equivalents, and restricted cash | $444,634 | $523,025 | | Inventories | $95,721 | $91,321 | | **Total Assets** | **$844,741** | **$929,113** | | **Total Current Liabilities** | $93,568 | $115,008 | | Convertible senior notes, net | $665,486 | $738,372 | | **Total Liabilities** | **$781,446** | **$869,723** | | **Total Stockholders' Equity** | **$63,295** | **$59,390** | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Q1 2024 saw a 5.7% decline in net sales, but net loss significantly narrowed due to a gain on debt repurchase Q1 2024 vs. Q1 2023 Income Statement Highlights | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Net sales | $81,403 | $86,278 | -5.7% | | Gross profit | $48,361 | $54,104 | -10.6% | | Loss from operations | $(16,991) | $(17,310) | +1.8% | | Other income, net | $(16,087) | $(418) | N/A | | Net loss | $(679) | $(20,259) | +96.6% | | Diluted net loss per share | $(0.10) | $(0.15) | +33.3% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2024 cash flows show increased usage in operations and financing, while investing activities saw a sharp decrease Q1 2024 vs. Q1 2023 Cash Flow Summary | Activity | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :--- | :--- | :--- | | Net cash used for operating activities | $(16,854) | $(13,010) | | Net cash used for investing activities | $(1,802) | $(21,680) | | Net cash used for financing activities | $(58,618) | $(2,190) | | **Net change in cash** | **$(77,274)** | **$(36,880)** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail revenue decline, ongoing legal challenges, the Syndeo Program's financial impact, and debt repurchase gains Revenue Breakdown by Product and Region (Q1 2024 vs. Q1 2023) | Category | Q1 2024 (in thousands) | Q1 2023 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | **By Product** | | | | | Delivery Systems | $35,783 | $45,353 | -21.1% | | Consumables | $45,620 | $40,925 | +11.5% | | **Total Net Sales** | **$81,403** | **$86,278** | **-5.7%** | | **By Region** | | | | | Americas | $50,326 | $52,978 | -5.0% | | Asia-Pacific (APAC) | $11,972 | $13,620 | -12.1% | | EMEA | $19,105 | $19,680 | -2.9% | - In January 2024, the company repurchased **$75.0 million** of its Convertible Senior Notes for **$57.8 million**, recognizing a net gain of **$16.1 million**. Additional repurchases were made in April and May 2024[47](index=47&type=chunk)[48](index=48&type=chunk) - The company is facing a putative securities class action lawsuit, two derivative actions, and an SEC subpoena related to alleged false and misleading statements about the Syndeo devices. The company believes the claims lack merit[66](index=66&type=chunk)[69](index=69&type=chunk)[73](index=73&type=chunk) - The Syndeo Program, established to upgrade or replace older Syndeo devices, had a remaining liability of **$8.3 million** as of March 31, 2024, down from **$21.0 million** at the end of 2023[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) [Management's Discussion and Analysis (MD&A)](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A details a net sales decline driven by Delivery Systems, a contracted gross margin, and the company's sufficient liquidity position [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q1 2024 results show a net sales decrease driven by Delivery Systems, a lower gross profit, and reduced selling and marketing expenses Net Sales Performance (Q1 2024 vs. Q1 2023) | Product Line | Q1 2024 (in millions) | Q1 2023 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Delivery Systems | $35.8 | $45.4 | (21.1)% | | Consumables | $45.6 | $40.9 | 11.5% | | **Total net sales** | **$81.4** | **$86.3** | **(5.7)%** | - Gross margin decreased to **59.4%** in Q1 2024 from **62.7%** in Q1 2023, impacted by higher indirect product costs and inventory related charges[106](index=106&type=chunk) - Selling and marketing expenses decreased by **13.0%** to **$33.7 million**, primarily due to lower personnel-related expenses, including sales commissions, and reduced marketing spend[107](index=107&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with a substantial cash balance and undrawn credit, sufficient for future operations and debt management - As of March 31, 2024, the company had cash, cash equivalents, and restricted cash of approximately **$444.6 million** and an undrawn **$50 million** revolving credit facility[113](index=113&type=chunk) - In January 2024, the company repurchased **$75.0 million** principal amount of its Notes for **$57.8 million**. Further repurchases totaling **$117.3 million** in principal were made in April and May 2024[122](index=122&type=chunk) - Management believes that existing capital is sufficient to satisfy working capital requirements for ongoing operations and obligations for at least the next 12 months[116](index=116&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risks, including interest rates, foreign currency, and inflation, were reported since the 2023 Form 10-K - There were no material changes to the company's market risks related to interest rates, foreign currency, and inflation as disclosed in the 2023 Annual Report on Form 10-K[138](index=138&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective due to a material weakness in inventory processes, with remediation efforts underway - The company's principal executive and financial officers concluded that disclosure controls and procedures were not effective as of March 31, 2024[139](index=139&type=chunk) - The ineffectiveness is due to a material weakness in internal control over financial reporting related to the company's inventory process, as described in the 2023 Form 10-K[139](index=139&type=chunk) - A remediation plan is underway, focusing on hiring experienced personnel and enhancing controls over physical inventory, obsolescence identification, and purchasing authorization[140](index=140&type=chunk) PART II—OTHER INFORMATION This section provides updates on legal proceedings, confirms no material changes to risk factors, and reports on equity security sales [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) Material pending legal proceedings are detailed in Note 10 of the condensed consolidated financial statements - For a description of material pending legal proceedings, refer to Note 10, Commitments and Contingencies, in Part I, Item 1 of this report[144](index=144&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) No material updates or changes to the risk factors previously disclosed in the 2023 Annual Report on Form 10-K - As of the filing date, there have been no material updates or changes to the risk factors disclosed in the company's 2023 Annual Report on Form 10-K[145](index=145&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not issue or repurchase any unregistered equity securities during the first quarter of 2024 - The company did not issue any unregistered shares of Class A Common Stock or other equity securities during the three months ended March 31, 2024[146](index=146&type=chunk) - No purchases of the company's equity securities were made by the issuer or its affiliates during the three months ended March 31, 2024[147](index=147&type=chunk)

Exhibit 99.1 BeautyHealth Reports First Quarter 2024 Financial Results Delivers first quarter net sales of $81.4 million; year-over-year operating expense improvement of $6.1 million Repurchases $192.3 million of convertible notes through May 8th Long Beach, Calif., May 9, 2024 – The Beauty Health Company (NASDAQ: SKIN) ("BeautyHealth"), home to flagship brand Hydrafacial, today announced financial results for the first quarter ended March 31, 2024. First quarter net sales of $81.4 million decreased (5.7)% ...

Financial Data and Key Metrics Changes - Revenue for the full year 2023 was $398 million, representing an 8.8% year-over-year growth, driven by steady consumables growth in the Americas and strong international performance [53] - Adjusted EBITDA for the full year was $24.3 million, a decline of 47.2% year-over-year, compared to $46.1 million in the prior year [55] - Gross margin for the full year was 39% compared to 68% in the prior year, primarily affected by the Syndeo 3.0 program and higher charges related to discontinued products [55] Business Line Data and Key Metrics Changes - Consumable sales increased 19.9% year-over-year to $191.4 million, representing 48.1% of total revenue [54] - Equipment revenue was relatively flat for the year, up 0.2%, primarily due to lower provider adoption in the Americas [53] - In Q4 2023, consumable sales were $52.2 million, accounting for 53.9% of revenue, while system sales declined 12% year-over-year to $44.6 million [58] Market Data and Key Metrics Changes - APAC revenue grew 17.3% year-over-year to $18.7 million in Q4, with China contributing $14.2 million, showing 71.8% year-over-year growth [57] - Americas revenue declined 8.5% year-over-year in Q4, primarily due to soft device sales related to Syndeo concerns [56] - EMEA Q4 revenue grew 8.4% year-over-year to $18.8 million, driven by consumables [57] Company Strategy and Development Direction - The company is focused on three key priorities: sales excellence, operational excellence, and financial discipline [41][45] - There is a strong emphasis on improving operational capabilities and addressing quality control issues with the Syndeo 3.0 program [37][44] - The company aims to increase consumable sales per system and stabilize the business while completing the Syndeo 3.0 replacement program [79] Management's Comments on Operating Environment and Future Outlook - Management believes there is significant growth potential in the China market, indicating they are still in the early stages of market penetration [4] - The company expects to return to growth in the back half of 2024, driven by improved system sales and consumable sales per system [82] - Management acknowledges challenges in the first half of 2024 but anticipates a recovery as provider confidence in Syndeo 3.0 improves [73] Other Important Information - The company ended Q4 2023 with approximately $523 million in cash and has $70 million remaining on its share repurchase authorization [63] - Inventory decreased to approximately $91.3 million at the end of December 2023, down from $109.7 million in December 2022 [64] - The company is reallocating cost savings towards investments in systems and processes to improve inventory management and controls [68] Q&A Session Summary Question: Concerns regarding Syndeo 3.0 and growth in China - Management addressed quality control issues with Syndeo 3.0, stating they are focused on ensuring product quality upon delivery [3] - They believe they are early in the China market and see significant growth potential [4] Question: Trends in consumable sales by region - Consumable growth was strong in the Americas and EMEA but down 30% year-over-year in APAC, primarily due to distributor channel softness [7][8] Question: Equipment sales and free cash flow - Equipment sales were down approximately 35% year-over-year, with management noting challenges related to Syndeo [10] - They expect to generate flat to some adjusted free cash flow, with CapEx projections of $15 million to $20 million [13] Question: Syndeo 3.0 issues and trade-up program changes - Management confirmed ongoing quality issues with Syndeo 3.0 but noted improvements compared to earlier versions [17] - The trade-up program is being restructured to offer incentives for upgrades without taking back existing devices [19] Question: Capital allocation priorities - Management is focused on capital allocation discussions with the Board and will provide updates as changes are made [22]