The Beauty Health pany(SKIN) - 2024 Q3 - Quarterly Report

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].