Delivers net sales of $398 million for the full
year and $96.8 million for the fourth quarter driven by growth
across international markets
The Beauty Health Company (NASDAQ: SKIN) (“BeautyHealth”), home
to flagship brand Hydrafacial, today announced financial results
for the full year and fourth quarter ended December 31, 2023. Full
year net sales of $398.0 million increased 8.8% relative to 2022,
with fourth quarter net sales of $96.8 million decreasing (1.3)%
year-over-year. Fourth quarter results reflect lower equipment
sales in the Americas, substantially offset by steady growth in
Americas consumables net sales and strong device placement in
Asia-Pacific.
"To close 2023, we delivered fourth quarter financial results
consistent with the expectations we outlined on our last earnings
call,” said BeautyHealth Chief Executive Officer Marla Beck. “While
the results reflect a necessary operational reset, the underlying
strength of our business remains—a clinically proven treatment,
passionate provider community, unique partner portfolio, beloved
consumer brand, and growing addressable market. I am confident in
the still-untapped global opportunity for BeautyHealth.”
Key Operational and Business Metrics
Three Months Ended December
31,
Year Ended December
31,
Unaudited ($ in millions) (2)
2023
2022(1
)
2023
2022(1
)
Delivery Systems net sales
$
44.6
$
50.7
$
206.6
$
206.2
Consumables net sales
52.2
47.4
191.4
159.6
Total net sales
$
96.8
$
98.1
$
398.0
$
365.9
Gross profit
$
45.7
$
66.5
$
155.1
$
248.8
Gross margin
47.2
%
67.8
%
39.0
%
68.0
%
Adjusted gross profit(3)
$
52.8
$
72.2
$
249.8
$
265.6
Adjusted gross margin(3)
54.6
%
73.6
%
62.8
%
72.6
%
Net (loss) income
$
(9.4
)
$
6.5
$
(100.1
)
$
44.2
Adjusted EBITDA(3)
$
3.4
$
17.6
$
24.3
$
46.1
Adjusted EBITDA margin(3)
3.5
%
17.9
%
6.1
%
12.6
%
Three Months Ended December
31,
Year Ended December
31,
Unaudited
2023
2022
2023
2022
New delivery systems sold
1,210
1,882
7,013
6,699
Trade-up delivery systems sold
341
185
1,274
1,793
Total delivery systems sold
1,551
2,067
8,287
8,492
Active install base
31,446
25,336
31,446
25,336
__________________________
(1) Reflects the impact of immaterial revisions to the financial
statements.
(2) Amounts may not sum due to rounding.
(3) See "Non-GAAP Financial Measures" below.
Fourth Quarter Financial Highlights
- Net sales were $96.8 million for the fourth quarter of 2023, a
decrease of (1.3)% compared to the prior year period, with
challenges in the Americas largely offset by growth in APAC and
EMEA.
- Gross margin was 47.2% in Q4 2023 compared to 67.8% in Q4 2022.
Adjusted gross margin was 54.6% in Q4 2023 compared to 73.6% in Q4
2022. Gross margin and adjusted gross margin were adversely
impacted by higher inventory related charges and higher product and
warranty costs.
- Net loss was $(9.4) million in Q4 2023 compared to net income
of $6.5 million in Q4 2022. The change compared to the prior year
was primarily due to gross margin pressures.
- Adjusted EBITDA was $3.4 million in Q4 2023 compared to
adjusted EBITDA of $17.6 million in Q4 2022, primarily due to gross
margin pressures.
- The Company placed 1,551 delivery systems during the quarter
compared to 2,067 in the prior year period; challenges in the
Americas and EMEA were partially offset by growth in APAC.
Full Year Financial Highlights
- Net sales were $398.0 million for 2023, an increase of 8.8%
compared to the prior year period due to growth in APAC and
EMEA.
- Gross margin was 39.0% in 2023 compared to 68.0% in 2022. Gross
margin was adversely impacted by a $65.2 million of inventory
write-downs and charges associated with the Syndeo Program, higher
inventory related charges, and higher product costs. Adjusted gross
margin was 62.8% in 2023 compared to 72.6% in 2022, due to the
aforementioned factors, excluding the Syndeo Program.
- Net loss was $(100.1) million in 2023 compared to net income of
$44.2 million in 2022. The change compared to the prior year was
primarily due to gross margin pressures and the $78.3 million
benefit from the change in fair value of warrant liabilities in the
prior year.
- Adjusted EBITDA was $24.3 million in 2023 compared to adjusted
EBITDA of $46.1 million in 2022, primarily due to gross margin
pressures.
- The Company placed 8,287 delivery systems in 2023 compared to
8,492 in the prior year, primarily due to challenges in the
Americas nearly offset by strength across APAC and EMEA.
Balance Sheet and Cash Flow Highlights
- Cash and cash equivalents were approximately $523.0 million as
of December 31, 2023 compared to approximately $568.2 million as of
December 31, 2022. The change was primarily due to share
re-purchases made during Q3 and Q4 2023 and strategic acquisitions
made during Q1 2023, partially offset by the net impact of the
current year net loss and other non-cash adjustments.
- The Company had approximately 7 million private placement
warrants and approximately 122.9 million shares of Class A common
stock outstanding as of December 31, 2023. In September 2023, the
Company announced a $100.0 million share repurchase authorization.
As of December 31, 2023, the Company repurchased and retired 10.4
million shares for $30.2 million, excluding taxes.
- In January 2024, the Company redeemed $75.0 million principal
amount of our Notes at a weighted-average redemption price equal to
77% for $57.8 million.
Financial Guidance as of March 2024
First Quarter 2024
Net sales
$77 – $83 million
Adjusted EBITDA(1)
($6) – ($9) million
Fiscal Year 2024
Net sales
Flat to low-single digit %
growth
Adjusted EBITDA(1)
> $40 million
__________________________
(1) See "Non-GAAP Financial Measures" below.
Financial guidance reflects the following assumptions:
- First quarter financial guidance reflects our seasonally lowest
sales quarter of the year and investments in sales and marketing
spend in the quarter.
- Assumes no material deterioration in general market conditions
or other unforeseen circumstances beyond the Company's control,
such as foreign currency exchange rates.
- Excludes any unannounced acquisitions, dispositions or
financings.
Regional Operational and Business Metrics
Three Months Ended December
31,
Year Ended December
31,
Unaudited ($ in millions) (1)
2023
2022
2023
2022
Delivery Systems net sales
Americas
$
21.8
$
32.7
$
95.0
$
134.7
Asia-Pacific (“APAC”)
13.0
7.8
59.4
31.4
Europe, the Middle East and Africa
(“EMEA”)
9.8
10.2
52.2
40.1
Total Delivery Systems net sales
$
44.6
$
50.7
$
206.6
$
206.2
Consumables net sales
Americas
$
37.5
$
32.2
$
132.7
$
108.5
APAC
5.7
8.1
22.8
22.9
EMEA
9.0
7.1
35.9
28.2
Total Consumables net sales
$
52.2
$
47.4
$
191.4
$
159.6
Total net sales
Americas
$
59.4
$
64.9
$
227.7
$
243.2
APAC
18.7
15.9
82.2
54.3
EMEA
18.8
17.3
88.1
68.3
Total net sales
$
96.8
$
98.1
$
398.0
$
365.9
Total delivery systems sold
Americas
758
1,211
3,603
5,280
APAC
450
399
2,392
1,439
EMEA
343
457
2,292
1,773
Total delivery systems sold
1,551
2,067
8,287
8,492
Trade-up delivery systems sold
Americas
82
185
349
1,793
APAC
214
—
626
—
EMEA
45
—
299
—
Total trade-up delivery systems sold
341
185
1,274
1,793
__________________________
(1) Amounts may not sum due to rounding.
Conference Call
BeautyHealth will host a conference call on Tuesday, March 12,
2024, at 4:30 p.m. ET to review its fourth quarter and full year
2023 financial results. The call may be accessed via live webcast
through the Events & Presentations page on our Investor
Relations website at https://investors.beautyhealth.com. A replay
of the conference call will be available approximately three hours
after the conclusion of the call and can be accessed online at
https://investors.beautyhealth.com.
Non-GAAP Financial Measures
In addition to results determined in accordance with accounting
principles generally accepted in the United States of America
("GAAP"), management utilizes certain non-GAAP financial measures
such as adjusted gross profit and adjusted EBITDA for purposes of
evaluating ongoing operations and for internal planning and
forecasting purposes.
Management believes that these non-GAAP financial measures, when
reviewed collectively with the Company’s GAAP financial
information, provide useful supplemental information to investors
in assessing the Company's operating performance. These non-GAAP
financial measures should not be considered as an alternative to
GAAP financial information or as an indication of operating
performance or any other measure of performance derived in
accordance with GAAP, and may not provide information that is
directly comparable to that provided by other companies in its
industry, as these other companies may calculate non-GAAP financial
measures differently, particularly related to unusual items.
Adjusted gross profit is gross profit excluding the effects of
depreciation expense, amortization expense, stock-based
compensation expense and other items such as write-off of
discontinued, excess and obsolete product, Syndeo Program and
Syndeo product optimization logistics & service costs.
Adjusted EBITDA is calculated as net (loss) income excluding the
effects of expense (benefit) for income taxes; depreciation
expense; amortization expense; stock-based compensation expense;
interest expense; interest income; other expense (income), net;
change in fair value of warrant liability; foreign currency (gain)
loss, net; loss on disposal of assets; transaction related costs;
write-off of discontinued, excess and obsolete product; litigation
related costs; Syndeo Program; Syndeo product optimization
logistics and service costs; and severance, restructuring and
other.
The Company does not provide a reconciliation of its fiscal 2023
adjusted EBITDA margin guidance to net (loss) income, the most
directly comparable forward looking GAAP financial measures, due to
the inherent difficulty in forecasting and quantifying certain
amounts that are necessary for such reconciliation, which cannot be
done without unreasonable efforts, including adjustments that could
be made for changes in fair value of warrant liabilities,
integration and acquisition-related expenses, amortization
expenses, non-cash stock-based compensation, gains/losses on
foreign currency, and other charges reflected in our reconciliation
of historic numbers, the amount of which, based on historical
experience, could be significant. The presentation of this
financial information is not intended to be considered in isolation
or as a substitute for the financial information prepared and
presented in accordance with GAAP. The Company's fiscal 2023
adjusted EBITDA margin guidance is merely an outlook and is not a
guarantee of future performance. Stockholders should not rely or
place an undue reliance on such forward-looking statements. See
“Forward-Looking Statements” for additional information.
The Beauty Health
Company
Consolidated Statements of
Comprehensive Income (Loss) (1)
($ in millions, except share
and per share amounts)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022(2
)
2023
2022(2
)
Net sales
$
96.8
$
98.1
$
398.0
$
365.9
Cost of sales
51.1
31.6
242.9
117.1
Gross profit
45.7
66.5
155.1
248.8
Operating expenses:
Selling and marketing
32.0
39.0
144.5
160.1
Research and development
3.0
1.4
10.1
8.4
General and administrative
29.0
28.5
131.4
106.1
Total operating expenses
64.0
68.9
286.0
274.6
Loss from operations
(18.4
)
(2.4
)
(130.9
)
(25.8
)
Interest expense
3.4
3.4
13.6
13.4
Interest income
(6.4
)
(5.6
)
(23.2
)
(9.2
)
Other expense (income), net
0.1
1.3
(5.2
)
1.7
Change in fair value of warrant
liabilities
(3.6
)
(6.8
)
(11.9
)
(78.3
)
Foreign currency transaction (gain) loss,
net
(3.1
)
(0.5
)
(2.4
)
1.3
(Loss) income before provision for
income taxes
(8.8
)
5.8
(101.9
)
45.3
Income tax expense (benefit)
0.6
(0.8
)
(1.8
)
1.1
Net (loss) income
(9.4
)
6.5
(100.1
)
44.2
Comprehensive (loss) income, net of
tax:
Foreign currency translation
adjustments
2.1
2.2
1.5
(3.3
)
Comprehensive (loss) income
$
(7.3
)
$
8.7
$
(98.6
)
$
41.0
Net (loss) income per share
Basic
$
(0.07
)
$
0.05
$
(0.76
)
$
0.30
Diluted
$
(0.07
)
$
0.05
$
(0.76
)
$
(0.23
)
Weighted average common shares
outstanding
Basic
128,716,355
138,198,781
131,680,605
147,554,090
Diluted
128,716,355
138,198,781
131,680,605
148,506,312
__________________________
- Amounts may not sum due to rounding.
- Reflects the impact of immaterial revisions to the financial
statements.
The Beauty Health
Company
Consolidated Balance Sheets
(1)
($ in millions)
(Unaudited)
December 31, 2023
December 31, 2022 (2)
ASSETS
Current assets:
Cash and cash equivalents
$
523.0
$
568.2
Accounts receivable, net
54.7
76.5
Inventories
91.3
109.7
Income tax receivable
0.3
1.3
Prepaid expenses and other current
assets
28.9
27.6
Total current assets
698.3
783.3
Property and equipment, net
14.2
18.2
Right-of-use assets, net
12.1
15.6
Intangible assets, net
62.1
46.4
Goodwill
125.8
124.6
Deferred income tax assets, net
0.5
0.8
Other assets
16.0
14.2
TOTAL ASSETS
$
929.1
$
1,003.1
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
44.8
$
28.5
Accrued payroll-related expenses
22.0
21.7
Syndeo Program reserves
21.0
—
Lease liabilities, current
4.6
5.0
Income tax payable
2.8
1.4
Other accrued expenses
19.8
15.2
Total current liabilities
115.0
71.7
Lease liabilities, non-current
9.3
12.7
Deferred income tax liabilities, net
0.7
2.0
Warrant liabilities
3.6
15.5
Convertible senior notes, net
738.4
734.1
Other long-term liabilities
2.8
—
TOTAL LIABILITIES
$
869.7
$
836.0
Stockholders’ equity:
Class A Common Stock
$
—
$
—
Additional paid-in capital
541.3
550.3
Accumulated other comprehensive loss
(3.0
)
(4.5
)
Accumulated deficit
(478.9
)
(378.8
)
Total stockholders’ equity
$
59.4
$
167.1
LIABILITIES AND STOCKHOLDERS’
EQUITY
$
929.1
$
1,003.1
__________________________
- Amounts may not sum due to rounding.
- Reflects the impact of immaterial revisions to the financial
statements.
The Beauty Health
Company
Consolidated Statement of Cash
Flows (1)
($ in millions)
(Unaudited)
Year Ended December
31,
2023
2022 (2
)
Cash and cash equivalents at beginning of
period
$
568.2
$
901.9
Operating activities:
Net (loss) income
(100.1
)
44.2
Non-cash adjustments
98.5
(5.6
)
Change in operating assets and
liabilities:
Accounts receivable
16.5
(32.0
)
Inventories
(22.6
)
(84.4
)
Income taxes receivable
(3.7
)
3.9
Prepaid expenses and other current
assets
(3.3
)
(17.7
)
Accounts payable
15.8
(0.3
)
Accrued payroll and other expenses
26.9
(3.4
)
Income taxes payable
1.3
0.7
Other, net
(7.6
)
(12.1
)
Net cash provided by (used for) operating
activities
21.8
(106.6
)
Net cash used for investing activities
(31.5
)
(18.9
)
Net cash used for financing activities
(37.4
)
(205.2
)
Net decrease in cash and cash
equivalents
(47.2
)
(330.7
)
Effect of foreign currency translation
2.0
(3.0
)
Cash and cash equivalents at end of
period
$
523.0
$
568.2
__________________________
- Amounts may not sum due to rounding.
- Reflects the impact of immaterial revisions to the financial
statements.
The following table reconciles gross profit to adjusted gross
profit for the periods presented:
Three Months Ended December
31,
Year Ended December
31,
Unaudited ($ in millions) (2)
2023
2022(1
)
2023(3
)
2022(1
)
Net sales
$
96.8
$
98.1
$
398.0
$
365.9
Gross profit
$
45.7
$
66.5
$
155.1
$
248.8
Gross margin
47.2
%
67.8
%
39.0
%
68.0
%
Adjusted to exclude the following:
Depreciation expense
0.5
0.5
2.4
2.1
Amortization expense
4.2
2.6
13.9
9.5
Stock-based compensation expense
0.3
0.2
1.5
0.8
Write-off of discontinued, excess and
obsolete product
—
—
10.4
2.0
Syndeo Program
2.1
—
65.2
—
Syndeo product optimization logistics
& service costs
—
2.4
1.4
2.4
Adjusted gross profit
$
52.8
$
72.2
$
249.8
$
265.6
Adjusted gross margin
54.6
%
73.6
%
62.8
%
72.6
%
__________________________
- Reflects the impact of immaterial revisions to the financial
statements.
- Amounts may not sum due to rounding.
- Reflects the removal of the accrual for annual cash incentives
in prior periods for comparability purposes.
The following table reconciles net (loss) income to adjusted
EBITDA for the periods presented:
Three Months Ended December
31,
Year ended December
31,
Unaudited ($ in millions) (2)
2023
2022(1
)
2023(3
)
2022(1
)
Net sales
$
96.8
$
98.1
$
398.0
$
365.9
Net (loss) income
$
(9.4
)
$
6.5
$
(100.1
)
$
44.2
Adjusted to exclude the following:
Expense (benefit) for income taxes
0.6
(0.8
)
(1.8
)
1.1
Depreciation expense
4.3
1.9
11.3
7.2
Amortization expense
5.6
4.1
23.3
15.7
Stock-based compensation expense
2.3
7.6
22.5
28.5
Interest expense
3.4
3.4
13.6
13.4
Interest income
(6.4
)
(5.6
)
(23.2
)
(9.2
)
Other expense (income), net
0.1
1.3
(5.2
)
1.7
Change in fair value of warrant
liability
(3.6
)
(6.8
)
(11.9
)
(78.3
)
Foreign currency (gain) loss, net
(3.1
)
(0.5
)
(2.4
)
1.3
Loss on disposal of assets
—
0.5
0.1
5.2
Transaction related costs
—
—
0.8
3.1
Write-off of discontinued, excess and
obsolete product
—
—
10.4
2.0
Litigation related costs
—
2.8
1.5
3.8
Syndeo Program
2.1
—
65.2
—
Syndeo product optimization logistics
& service costs
—
2.4
1.4
2.4
Severance, restructuring and other
7.4
0.6
18.7
4.0
Adjusted EBITDA
$
3.4
$
17.6
$
24.3
$
46.1
Adjusted EBITDA margin
3.5
%
17.9
%
6.1
%
12.6
%
__________________________
- Reflects the impact of immaterial revisions to the financial
statements.
- Amounts may not sum due to rounding.
- Reflects the removal of the accrual for annual cash incentives
in prior periods for comparability purposes.
About The Beauty Health Company
The Beauty Health Company (NASDAQ: SKIN) is a global
category-creating company delivering millions of skin health
experiences every year that help consumers reinvent their
relationship with their skin, bodies and self-confidence. Our
brands are pioneers: Hydrafacial™ in hydradermabrasion, SkinStylus™
in microneedling, and Keravive™ in scalp health. Together, with our
powerful global community of estheticians, partners and consumers,
we are personalizing skin health for all ages, genders, skin tones,
and skin types. We are committed to being ever more mindful in how
we conduct our business to positively impact our communities and
the planet. Find a local provider at
https://hydrafacial.com/find-a-provider/, and learn more at
beautyhealth.com or LinkedIn.
Forward-Looking Statements
Certain statements made in this release are “forward looking
statements” within the meaning of the “safe harbor” provisions of
the United States Private Securities Litigation Reform Act of 1995,
including statements regarding The Beauty Health Company’s
strategy, plans, objectives, initiatives and financial outlook.
When used in this press release, the words “estimates,”
“projected,” “expects,” “anticipates,” “forecasts,” “plans,”
“intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,”
“propose” and variations of these words or similar expressions (or
the negative versions of such words or expressions) are intended to
identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside The Beauty Health Company’s
control, that could cause actual results or outcomes to differ
materially from those discussed in the forward-looking statements.
As such, readers are cautioned not to place undue reliance on any
forward-looking statements.
Important factors that may affect actual results or outcomes
include, among others: The Beauty Health Company’s ability to
manage growth; The Beauty Health Company’s ability to execute its
business plan; potential litigation involving The Beauty Health
Company; changes in applicable laws or regulations; the possibility
that The Beauty Health Company may be adversely affected by other
economic, business, and/or competitive factors; and other risks and
uncertainties set forth in the sections entitled “Risk Factors” and
“Cautionary Note Regarding Forward-Looking Statements” in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2022 filed with the U.S. Securities and Exchange Commission
(the “SEC”) and in the Company’s subsequent filings with the SEC.
There may be additional risks that the Company does not presently
know of or that the Company currently believes are immaterial that
could also cause actual results to differ from those contained in
the forward-looking statements. The Beauty Health Company does not
undertake any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events,
or otherwise, except as required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240312515027/en/
Investors: IR@beautyhealth.com
Press: Press@beautyhealth.com
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