The Beauty Health pany(SKIN) - 2022 Q1 - Quarterly Report

Financial Performance - Total net sales for the three months ended March 31, 2022, were $75.4 million, representing a 58.6% increase from $47.5 million in the same period of 2021[128]. - Delivery Systems net sales increased by 62.2% to $41.6 million, up from $25.7 million year-over-year[133]. - Consumables net sales rose by 54.4% to $33.8 million, compared to $21.9 million in the prior year[133]. - Gross profit for Q1 2022 was $51.9 million, with a gross margin of 68.9%, compared to $31.7 million and 66.8% in Q1 2021[128]. - The company reported a net income of $32.5 million for Q1 2022, a significant improvement from a net loss of $3.3 million in Q1 2021[132]. - Adjusted gross profit for Q1 2022 was $54.8 million, with an adjusted gross margin of 72.7%, compared to $34.3 million and 72.2% in Q1 2021[128]. - Total net sales for Q1 2022 increased by $27.9 million, or 58.6%, compared to Q1 2021, driven by strong trends in the Americas, Europe, and Asia[135]. - Delivery System sales rose by $15.9 million, or 62.2%, in Q1 2022, primarily due to the launch of Syndeo Delivery Systems[135]. - In the Americas, net sales increased to $44.6 million in Q1 2022 from $31.3 million in Q1 2021, with significant growth in the U.S. and Mexico[136]. - Consumables sales increased by $11.9 million, or 54.4%, in Q1 2022, attributed to increased placements of delivery systems[138]. - Net income for the three months ended March 31, 2022, was $32.5 million, compared to a net loss of $3.3 million in the same period of 2021[165]. - Adjusted EBITDA for the three months ended March 31, 2022, was $2.2 million, with an adjusted EBITDA margin of 2.9%, down from 14.8% in 2021[180]. - Net sales increased to $75.4 million for the three months ended March 31, 2022, compared to $47.5 million in the same period of 2021, reflecting a growth of 58.5%[185]. - Adjusted gross profit for the three months ended March 31, 2022, was $54.8 million, with an adjusted gross margin of 72.7%, slightly up from 72.2% in 2021[185]. Expenses and Investments - Selling and marketing expenses surged by $19.3 million, or 113.0%, in Q1 2022, primarily due to higher sales commissions and increased personnel-related expenses[140]. - Research and development expenses rose by $0.7 million, or 53.6%, in Q1 2022, reflecting increased investment in product development and digital platforms[142]. - General and administrative expenses increased by $15.5 million, or 142.9%, in Q1 2022, driven by stock-based compensation and public company costs[143]. - The company expects capital expenditures of up to $20.0 million for the year ending December 31, 2022, to support ongoing operations and growth initiatives[147]. Cash and Liquidity - As of March 31, 2022, the company had cash and cash equivalents of approximately $859.2 million, with a revolving credit facility of $50 million available[145]. - Cash used in operating activities for the three months ended March 31, 2022, was $38.5 million, primarily due to inventory investments related to the launch of Syndeo Delivery Systems[166]. - Cash and cash equivalents at the end of the period were $859.2 million, a decrease from $901.9 million at the beginning of the period[165]. Market and Customer Insights - The company plans to expand its global footprint, with 41% of total revenue in Q1 2022 coming from outside the United States and Canada[125]. - The launch of the HydraFacial Syndeo system aims to enhance consumer and provider experiences through digital capabilities and data analytics[115]. - The company is focused on innovation and maintaining investment in research and development to stay at the forefront of technology in the beauty health industry[122]. - The customer base is predominantly young, with approximately 50% of HydraFacial customers being Millennials and 30% under the age of 24, indicating a growing market potential[120]. - Approximately 50% of HydraFacial customers are Millennials, and about 30% are under the age of 24, indicating a strong focus on younger demographics[158]. Operational Challenges - The company expects continued headwinds from global supply chain challenges and inflationary pressures to impact gross margin into 2022[161]. - The increase in accounts receivable was $14.2 million, contributing to a decrease in working capital of $34.3 million for the three months ended March 31, 2022[167]. - The company does not maintain any off-balance sheet arrangements that would materially affect its financial condition or results of operations[163]. - All inventory purchases are denominated in U.S. dollars, while international sales are primarily in foreign currencies, exposing the company to foreign currency exchange rate fluctuations[188]. - A hypothetical 10% change in foreign currency exchange rates as of March 31, 2022, would not have had a material impact on consolidated results of operations[190]. - The company does not currently face significant inflationary pressures that materially affect its business or financial condition[191]. - Operating expenses incurred outside the U.S. are subject to foreign currency fluctuations, but the exposure is considered relatively small at this time[190]. - The company is not contractually obligated to pay increased costs due to exchange rate changes, but suppliers may pass on additional costs, potentially impacting gross margins[189].