The Beauty Health pany(SKIN)2025-03-12 21:20Financial Performance - Net sales for the year ended December 31, 2024, decreased by $63.7 million, or 16.0%, compared to 2023, with Delivery Systems net sales down by $81.2 million, or 39.3%[440] - Consumables net sales increased by $17.5 million, or 9.2%, for the year ended December 31, 2024, primarily due to increased placements of Delivery Systems[441] - Gross profit for the year ended December 31, 2024, was $182.3 million, representing a 17.5% increase from $155.1 million in 2023[442] - Gross margin improved from 39.0% in 2023 to 54.5% in 2024, primarily due to the absence of prior year charges associated with the Syndeo Program[443] Cost and Expenses - Cost of sales for the year ended December 31, 2024, decreased by $90.9 million, or 37.4%, compared to 2023, largely due to the absence of charges related to the Syndeo Program[443] - Total operating expenses for the year ended December 31, 2024, were $250.1 million, compared to $286.0 million in 2023, reflecting a decrease in selling and marketing expenses[439] - Selling and marketing expenses decreased by $26.2 million, or 18.1%, to $118.3 million for the year ended December 31, 2024, primarily due to lower personnel-related expenses[444] - Research and development expenses decreased by $3.8 million, or 37.7%, to $6.3 million for the year ended December 31, 2024, driven by lower personnel-related expenses[445] - General and administrative expenses decreased by $6.0 million, or 4.5%, to $125.5 million for the year ended December 31, 2024, primarily due to lower losses on the sale of assets[446] Interest and Income - Interest expense for the year ended December 31, 2024, was $10.4 million, down from $13.6 million in 2023[439] - Interest income decreased by $6.5 million, or 28.2%, to $(16.6) million for the year ended December 31, 2024, primarily due to lower average invested balances[447] - The company recognized other income, net of $33.6 million for the year ended December 31, 2024, compared to $5.2 million in 2023, including a net gain of $33.4 million related to the repurchase of the Company's Notes[450] Cash Flow and Investments - As of December 31, 2024, the company had cash, cash equivalents, and restricted cash of $370.1 million, down from $523.0 million at the beginning of the period[468] - Net cash provided by operating activities was $16.1 million for the year ended December 31, 2024, compared to $21.8 million in 2023, primarily due to higher working capital usage[469] - Capital expenditures for property and equipment and intangible assets for the year ended December 31, 2024, were $6.8 million[454] - Net cash used for investing activities decreased to $6.8 million in 2024 from $31.5 million in 2023, primarily due to prior year's asset acquisitions totaling $18.5 million[470] - Net cash used for financing activities increased significantly to $158.3 million in 2024 from $37.4 million in 2023, mainly due to the repurchase of $192.3 million in Notes at a weighted average price of 81%[471] Inventory and Trade-in Programs - The Syndeo Program resulted in an inventory write-down of $19.6 million and costs of $24.6 million during the year ended December 31, 2023[427] - The company recognized approximately $7 million in inventory charges related to the write-down of trade-in Delivery Systems to net realizable value in 2024[474] - Revenue from trade-in programs was approximately $17 million in 2023 and $9 million in 2022, with no trade-in revenue recognized in 2024[473] Future Expectations and Risks - The Company expects to transition sales in the China market to a distributor partner by Q2 2025, discontinuing its direct sales presence in China[425] - The company continues to evaluate potential acquisitions of businesses and products, which may require substantial capital resources[453] - A hypothetical 100 basis points increase in interest rates would result in an approximate $3 million increase in the fair market value of the investment portfolio as of December 31, 2024[493] - An adverse 10% change in foreign currency exchange rates would have resulted in an approximate $6 million and $8 million negative impact on income before income taxes for the years ended December 31, 2024 and 2023, respectively[495] - Inflation has the potential to increase the overall cost structure, affecting liquidity and financial condition, with expectations of further cost increases if inflation persists[498] - The company has not engaged in hedging foreign currency transactions to date, which may expose it to fluctuations in net loss due to foreign currency transaction gains or losses[496] - The company does not rely on projected income to support the realization of deferred tax assets due to cumulative pre-tax losses as of December 31, 2024[482] Remediation and Charges - As of December 31, 2023, the company accrued $21.0 million for the estimated cost of its remediation plan for Syndeo devices, which was completed by December 31, 2024[490]