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What changed in Beauty Health Co's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Beauty Health Co's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+520 added−448 removedSource: 10-K (2025-03-12) vs 10-K (2024-03-12)

Top changes in Beauty Health Co's 2024 10-K

520 paragraphs added · 448 removed · 354 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

117 edited+39 added−17 removed179 unchanged
Biggest changeIn the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws and consumer protection laws and regulations govern the collection, use, disclosure, and protection of health-related and other personal information. Various U.S. laws assess penalties on a “per violation” basis and some include a private right of action.
Biggest changeIn addition, emerging technologies such as AI have sparked additional legislation to address potential risks and challenges of such technologies’ use of personal information. In the United States, various federal and state laws—including data breach notification laws, health information privacy and security laws, and consumer protection statutes—impose obligations on how we manage and protect both health-related and other personal information.
Leverage our global infrastructure and a connected technology platform to fuel growth and community engagement 5. Supercharge our platform with targeted acquisitions to complement our portfolio Our strategy begins with developing a network of providers, brand partners, and retail partners to build a distribution platform for our innovative products and experiences.
Leverage our global infrastructure and our connected technology platform to fuel growth and community engagement; and 5. Supercharge our platform with targeted acquisitions to complement our portfolio. Our strategy begins with developing a network of providers, brand partners, and retail partners to build a distribution platform for our innovative products and experiences.
Delivery Systems follow a traditional capital equipment cycle, with the Delivery System lasting providers for years. Oftentimes, providers buy additional Delivery Systems to increase the number of Hydrafacial treatments their business can provide at any given time. Consumables follow a recurring revenue model as they are purchased on a periodic basis by providers as they exhaust their supplies.
Delivery Systems follow a traditional capital equipment cycle, with the Delivery System lasting providers for years. Oftentimes, providers buy additional Delivery Systems to increase the number of Hydrafacial treatments their business can provide at any given time. Consumables follow a recurring revenue model as Consumables are purchased on a periodic basis by providers as they exhaust their supplies.
After a device receives the 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a new or different intended use, will require a new 510(k) clearance or, depending on the modification, a PMA approval.
After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a new or different intended use, will require a new 510(k) clearance or, depending on the modification, a PMA approval.
The main difference currently is that the UK Government has established a cosmetic product notification service to replace the EU’s CPNP in Great Britain, and that serious undesirable effects (“SUEs”) now should be notified on the new UK SUE form. Environmental Regulations We believe we are compliant in all material respects with applicable environmental laws.
The main difference currently is that the UK Government has established a cosmetic product notification service to replace the EU’s CPNP in Great Britain, and that serious undesirable effects (“SUEs”) now should be notified on the new UK SUE form. 24 Environmental Regulations We believe we are compliant in all material respects with applicable environmental laws.
Our facilities provide for recycling, and our electronic waste is sent to locally approved e-waste recycling centers. Governance Business Ethics We have placed the highest emphasis on conducting our business with honesty and integrity. The highest ethical standards are expected of management and employees alike, and we continuously strive to create a corporate culture of honesty, integrity, and trust.
Our facilities provide for recycling, and our electronic waste is sent to locally approved e-waste recycling centers. 27 Governance Business Ethics We have placed the highest emphasis on conducting our business with honesty and integrity. The highest ethical standards are expected of management and employees alike, and we continuously strive to create a corporate culture of honesty, integrity, and trust.
We recognized the opportunity to empower estheticians and created programs to elevate their skills, knowledge, and confidence through a continued relationship so they feel supported. As a result, we have open dialogue with our esthetician providers and receive valuable information on consumer preferences and behaviors they see in their practices.
We recognized the opportunity to empower estheticians and created programs to elevate their skills, knowledge, and confidence so that they feel supported through a continued relationship. As a result, we have open dialogue with our esthetician providers and receive valuable information on consumer preferences and behaviors they see in their practices.
The new Regulation also requires that before placing a device, other than a custom-made device, on the market, manufacturers must assign a unique identifier to the device and provide it along with other core data to the unique device identifier (“UDI”) database. These new requirements aim at ensuring better identification and traceability of the devices.
The new Regulation also requires that before placing a device, other than a custom-made device, on the market, manufacturers must assign a unique identifier to the device and provide it along with other core data to the unique device identifier (“UDI”) database. These new requirements aim at ensuring better identification and traceability of 21 the devices.
As such, processes for compliance and reporting should reflect requirements from regulatory authorities. 22 European Union Regulation of Cosmetic Products In the EU, the sale of cosmetic products is regulated under the EU Cosmetics Regulation (EC) No 1223/2009, (the “EU Cosmetics Regulation”) setting out the general regulatory framework for finished cosmetic products and their ingredients.
As such, processes for compliance and reporting should reflect requirements from regulatory authorities. European Union Regulation of Cosmetic Products In the EU, the sale of cosmetic products is regulated under the EU Cosmetics Regulation (EC) No 1223/2009, (the “EU Cosmetics Regulation”) setting out the general regulatory framework for finished cosmetic products and their ingredients.
A product may fall within the definition of both a cosmetic product and a medicinal product in which case the non-cumulation principle provides that the product will be regulated as a medicinal product (under the Medicinal Products Directive 2001/83/EC). Generally, there is no requirement for pre-market approval of cosmetic products in the EU.
A product may fall within the definition of both a cosmetic product and a medicinal product in which case the non-cumulation principle provides that the product will be regulated as a medicinal product (under the Medicinal Products Directive 2001/83/EC). 23 Generally, there is no requirement for pre-market approval of cosmetic products in the EU.
The new Regulation among other things: • strengthens the rules on placing devices on the market (e.g. reclassification of certain devices and wider scope than the EU Medical Devices Directive) and reinforces surveillance once they are available; • establishes explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • establishes explicit provisions on importers’ and distributors’ obligations and responsibilities; 20 • imposes an obligation to identify a responsible person who is ultimately responsible for all aspects of compliance with the requirements of the new regulation; • improves the traceability of medical devices throughout the supply chain to the end-user or patient through the introduction of a unique identification number, to increase the ability of manufacturers and regulatory authorities to trace specific devices through the supply chain and to facilitate the prompt and efficient recall of medical devices that have been found to present a safety risk; • sets up a central database (Eudamed) to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and • strengthens rules for the assessment of certain high-risk devices, such as implants, which may have to undergo a clinical evaluation consultation procedure by experts before they are placed on the market.
The new Regulation among other things: • strengthens the rules on placing devices on the market (e.g. reclassification of certain devices and wider scope than the EU Medical Devices Directive) and reinforces surveillance once they are available; • establishes explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • establishes explicit provisions on importers’ and distributors’ obligations and responsibilities; • imposes an obligation to identify a responsible person who is ultimately responsible for all aspects of compliance with the requirements of the new regulation; • improves the traceability of medical devices throughout the supply chain to the end-user or patient through the introduction of a unique identification number, to increase the ability of manufacturers and regulatory authorities to trace specific devices through the supply chain and to facilitate the prompt and efficient recall of medical devices that have been found to present a safety risk; • sets up a central database (“Eudamed”) to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and • strengthens rules for the assessment of certain high-risk devices, such as implants, which may have to undergo a clinical evaluation consultation procedure by experts before they are placed on the market.
We believe our efforts to expand our brand recognition, cultivate our BeautyHealth community, invest in marketing capabilities, and activate consumers across channels will allow us to compete effectively as we expand globally. We are focused on expanding the beauty health category and creating a premier beauty health experience.
We believe our efforts to expand our brand recognition, cultivate our BeautyHealth community, invest in marketing capabilities, and activate consumers across channels will allow us to compete effectively as we continue to expand globally. We are focused on expanding the beauty health category and creating a premier beauty health experience.
Food and Drug Administration (“FDA”), and other federal and state authorities in the United States, as well as comparable authorities in foreign jurisdictions. For example, certain of our products are subject to regulation as medical devices or cosmetics in the United States under the Federal Food, Drug and Cosmetic Act (“FDCA”), as implemented and enforced by the FDA.
Food and Drug Administration, and other federal and state authorities in the United States, as well as comparable authorities in foreign jurisdictions. For example, certain of our products are subject to regulation as medical devices or cosmetics in the United States under the Federal Food, Drug and Cosmetic Act (“FDCA”), as implemented and enforced by the FDA.
Except for low-risk medical devices (Class I non-sterile, non-measuring devices), where the manufacturer can self-assess the conformity of its products with the essential requirements (except for any parts which relate to sterility or metrology), a conformity assessment procedure requires the intervention of a notified body.
Except for low-risk medical devices (Class I non-sterile, non-measuring devices), where the manufacturer can self-assess the conformity of its products with the essential 20 requirements (except for any parts which relate to sterility or metrology), a conformity assessment procedure requires the intervention of a notified body.
Estheticians are one part of our community that we recognize as powerful. We continue to focus on our other providers, including physicians, nurses, and other partners to build consumer awareness for our brands.
Estheticians are one part of our community that we recognize as powerful. We continue to focus on other providers as well, including physicians, nurses, and other partners, to build consumer awareness for our brands.
However, in the event we experience war, natural disasters, pandemics, or epidemics, we may encounter challenges with various manufacturing related components and raw material shortages. Notwithstanding the foregoing, we believe that we currently have adequate sources of supply for all our products. Distribution Facilities We operate and distribute finished products from our leased distribution facilities in Long Beach, California.
However, in the event we experience war, natural disasters, pandemics, or epidemics, we may encounter challenges with various manufacturing related components and raw material shortages. We believe that we currently have adequate sources of supply for all our products. Distribution Facilities We operate and distribute finished products from our leased distribution facilities in Long Beach, California.
Industry Overview We are a pioneer and key player in the emerging category of beauty health, which represents the intersection of over-the-counter consumer beauty / wellness products with medical aesthetic / health products and procedures. Historically, these categories were viewed separately, but they are part of a spectrum aimed at helping consumers look and feel their best.
Industry Overview We are a pioneer and key player in the emerging category of beauty health, which represents the intersection of over-the-counter consumer beauty / wellness products with medical esthetic / health products and procedures. Historically, these categories were viewed separately, but they are part of a spectrum aimed at helping consumers look and feel their best.
The beauty / wellness industry sells widely accessible topicals, supplements, and digital tools. However, the market is a crowded and confusing space – the sheer volume of products can leave consumers overwhelmed by choice. On the other end of the spectrum, medical aesthetics offers more corrective and invasive products and procedures such as injectables and energy-based treatments.
The beauty / wellness industry sells widely accessible topicals, supplements, and digital tools. However, the market is a crowded and confusing space – the sheer volume of products can leave consumers overwhelmed by choice. On the other end of the spectrum, medical esthetics offers more corrective and invasive products and procedures such as injectables and energy-based treatments.
Delivery Systems are purchased by providers to offer Hydrafacial treatments to their clients and patients. In conjunction with the sale of Delivery Systems, we also sell our Consumables. The Consumables are akin to the razor blades, consisting of single-use tips, solutions, and serums used during a Hydrafacial treatment. Delivery Systems and Consumables can be bought together or separately.
Delivery Systems are purchased by providers to offer Hydrafacial treatments to their clients and patients. In conjunction with the sale of Delivery Systems, we also sell our Consumables. The Consumables are akin to the razor blades, consisting of single-use tips, solutions, and serums, including Boosters, used during a Hydrafacial treatment. Delivery Systems and Consumables can be bought together or separately.
Quality and Regulatory Our quality and regulatory team are responsible for registrations, ensuring product safety and reliability, and meeting regulatory compliance for all jurisdictions in which we operate. 12 Competition The beauty and personal care market is fragmented and highly competitive, with several companies specializing in different subsectors, including skincare, haircare, supplements, and medical products and procedures.
Quality and Regulatory Our quality and regulatory team is responsible for registrations, ensuring product safety and reliability, and meeting and monitoring our regulatory compliance for all jurisdictions in which we operate. 12 Competition The beauty and personal care market is fragmented and highly competitive, with several companies specializing in different subsectors, including skincare, haircare, supplements, and medical products and procedures.
Until then, the FDA’s existing draft guidance on cosmetic GMPs, most recently updated in June 2013, and other guidance such as the FDA’s Good Manufacturing Practice (GMP) Guidelines/Inspection Checklist from February 2022, will continue to provide guidance and recommendations related to process documentation, recordkeeping, building and facility design, and equipment maintenance and personnel.
Until then, the FDA’s existing draft guidance on cosmetic GMPs, most recently updated in June 2013, and other guidance such as the FDA’s Good Manufacturing Practice (“GMP”) Guidelines/Inspection Checklist from February 2022, will continue to provide guidance and recommendations related to process documentation, recordkeeping, building and facility design, and equipment maintenance and personnel.
The EU Medical Devices Regulation requires that before placing a device, other than a custom-made device, on the market, manufacturers (as well as other economic operators such as authorized representatives and importers) must register by submitting identification information to the electronic system (Eudamed), unless they have already registered.
The EU Medical Devices Regulation requires that before placing a device, other than a custom-made device, on the market, manufacturers (as well as other economic operators such as authorized representatives and importers) must register by submitting identification information to Eudamed, unless they have already registered.
We currently offer a portfolio of approximately 15 boosters and intend to continue strategically partnering with new brands internationally and locally to offer innovative and tailored booster products to our consumers. MyBeautyHealth Mobile Application Launched in November 2023, the MyBeautyHealth mobile application rewards consumers for investing in their skin health.
We currently offer a portfolio of approximately 20 Boosters and intend to continue strategically partnering with new brands internationally and locally to offer innovative and tailored Booster products to our consumers. MyBeautyHealth Mobile Application Launched in November 2023, the MyBeautyHealth mobile application rewards consumers for investing in their skin health.
Many of our providers offer Hydrafacial treatments as a bundle with other procedures, such as injectables or energy-based treatments. Manufacturing; Sourcing and Material We outsource the manufacturing of many of our products to multiple contract manufacturers that are primarily located in North America, Europe, and Asia.
Many of our providers offer Hydrafacial treatments as a bundle with other procedures, such as injectables, microneedling/nanoneedling, or energy-based treatments. Manufacturing; Sourcing and Material We outsource the manufacturing of many of our products to multiple contract manufacturers that are primarily located in North America, Europe, and Asia.
The high price tag and clinical setting of these treatments may serve as barriers to generating wider consumer demand. We seek to position ourselves not as a substitute for or competitor to either of these categories, but rather as the complimentary bridge linking the two categories.
The high price tag and clinical setting of these treatments may serve as barriers to generating wider consumer demand. We seek to position ourselves not as a substitute for or competitor to either of these categories, but rather as the complementary bridge linking the two categories.
These reports will have to be submitted through Eudamed – once functional – and aim to ensure that, in addition to reporting to the relevant authorities of the EU member states, other actors such as the economic operators in the supply chain will also be informed.
These reports will have to be submitted through Eudamed – once the relevant module is functional – and aim to ensure that, in addition to reporting to the relevant authorities of the EU member states, other actors such as the economic operators in the supply chain will also be informed.
Compliance with these recommendations can reduce the risk that products will be adulterated or misbranded in violation of the FDCA and its regulations. In addition to GMP requirements, MoCRA will bring on additional changes and updates to FDA’s cosmetics regulations.
Compliance with these recommendations can reduce the risk that products will be adulterated or misbranded in violation of the FDCA and its regulations. In addition to GMP requirements, MoCRA brought on additional changes and updates to FDA’s cosmetics regulations.
As a result of the First Merger, the registrant owns 100% of the outstanding common stock of Hydrafacial and each share of common stock and preferred stock of Hydrafacial was cancelled and converted into the right to receive a portion of the consideration payable in connection with the Mergers.
As a result of the First Merger, the Company owns 100% of the outstanding common stock of Hydrafacial and each share of common stock and preferred stock of Hydrafacial was cancelled and converted into the right to receive a portion of the consideration payable in connection with the Mergers.
As of the date of this report, the portfolio includes 9 issued U.S. patents directed to the manifold and console of the Hydrafacial MD® system and skin treatment tips used in the system that will expire in 2026.
As of the date of this report, the portfolio includes 10 issued U.S. patents directed to the manifold and console of the Hydrafacial MD® system and skin treatment tips used in the system that will expire in 2026.
Following the end of the Brexit transitional period on January 1, 2021, new regulations require medical devices to be registered with the MHRA (but manufacturers were given a grace period of four to 12 months to comply with the new registration process) before being placed on Great Britain market.
Following the end of the Brexit (as defined below) transitional period on January 1, 2021, new regulations require medical devices to be registered with the MHRA (but manufacturers were given a grace period of four to 12 months to comply with the new registration process) before being placed on Great Britain market.
All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption (“ IDE ”) regulations that govern investigational device labeling and prohibit promotion of the investigational device while specifying an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.
All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption (“IDE”) regulations that govern investigational device labeling and prohibit promotion of the investigational device while specifying an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.
Another focus area of our growth strategy is nurturing our relationship with the consumer. As the ultimate end user, the consumer is at the core of our efforts. We have an experienced team who meticulously curate the consumer journey, from lead generation that invites consumers to our community to the user experience of our offerings.
Another focus area of our growth strategy is nurturing our relationship with the consumer. As the ultimate end user, the consumer is at the core of our efforts. We have an experienced team that meticulously curates the consumer journey, from lead generation that invites consumers to our community to the user experience of our offerings.
In addition, the charters for our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee may be found in the “Investor Relations” section of our website: www.beautyhealth.com under the heading “Governance”, and then “Documents & Charters”. 26 Human Capital Resources Employees We have built a team of industry professionals focused on beauty health.
In addition, the charters for our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee may be found on our website: www.beautyhealth.com under the heading “Governance”, and then “Documents & Charters”. Human Capital Resources Employees We have built a team of industry professionals focused on beauty health.
By investing in our providers, we believe we are creating a thriving community as they recommend our products and experiences as part of any skincare and wellness routine. In our view, investing our efforts in any part of our community drives utilization amongst consumers, resulting in a potentially potent formula for growth.
By investing in our providers, we believe we are creating a thriving community because they recommend our products and experiences as part of skincare and wellness routines. In our view, investing our efforts in our community drives utilization amongst consumers, resulting in a potentially potent formula for growth.
The expansion of the number of Delivery Systems providing Hydrafacial treatments, or “install base,” increases the foundation for future recurring revenue by providing a platform for more treatments, driving higher Consumables sales. Additionally, increasing the utilization of the install base should also contribute to higher Consumables revenue.
The expansion of the number of Delivery Systems providing Hydrafacial treatments, or “install base,” increases the foundation for future recurring revenue by providing a platform for more treatments, driving higher Consumables sales. Additionally, increasing the utilization of the install base is anticipated to contribute to higher Consumables revenue.
Our robust benefit programs, which vary by country, include basic and supplemental health and insurance benefits, health savings and flexible spending accounts, access to a personal health advocate, family leave, life and disability insurance, employee assistance programs, physical, mental and financial well-being programs, a U.S. employee stock purchase plan, retirement savings plans, and pet insurance, to name a few.
Our robust benefit programs, which vary by country, include basic and supplemental health and insurance benefits, health savings and flexible spending accounts, access to a personal health advocate, family leave, life and disability insurance, employee assistance programs, physical, mental and financial well-being programs, retirement savings plans, and pet insurance, to name a few.
Expand our footprint by selling innovative products and connected experiences to providers and consumers 2. Invest in our providers, especially the trusted esthetician, to help turn them into brand evangelists and advocates providing first-class experiences 3. Nurture direct relationships with our consumers, building brand awareness and driving them to our trusted community of providers 4.
Expand our footprint by selling innovative products and connected experiences to providers and consumers; 2. Invest in our providers, especially estheticians, to help turn them into brand evangelists and advocates providing first-class experiences to our customers; 3. Nurture direct relationships with our consumers, building brand awareness and driving them toward our trusted community of providers; 4.
We intend to utilize our sales force to sell our offering by inviting providers and partners to become a part of our community. We believe that each placement of our offering will grow the platform and increase consumers’ awareness of our Company, ultimately building a recognizable and aspirational brand drawing in consumers.
We intend to utilize our sales force to sell our products by inviting providers and partners to become a part of our community. We believe that each placement of our product will grow the platform and increase consumers’ awareness of our Company, ultimately building a recognizable and aspirational brand that draws in consumers.
In connection with the closing of the Business Combination, we own, directly or indirectly, 100% of the stock of Hydrafacial and its subsidiaries and the stockholders of Hydrafacial as of immediately prior to the effective time of the First Merger (the “Hydrafacial Stockholders”) hold a portion of our Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”).
In connection with the closing of the Business Combination (the “Closing”), the Company owns, directly or indirectly, 100% of the stock of Hydrafacial and its subsidiaries and the stockholders of Hydrafacial as of immediately prior to the effective time of the First Merger (the “Hydrafacial Stockholders”) hold a portion of our Company’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”).
We believe that the consumer who follows a beauty and wellness regimen with topicals or supplements may someday graduate to medical procedures, while the medical aesthetics patient is almost certainly a loyal consumer of beauty topical products. 11 We don’t believe we have to be an “either/or” company (beauty or health/non-invasive or minimally invasive).
We believe that the consumer who follows a beauty and wellness regimen with topicals or supplements may someday graduate to medical procedures, while the medical esthetics patient is highly likely to be a loyal consumer of beauty topical products. 11 We don’t believe we have to be an “either/or” company (beauty or health/non-invasive or minimally invasive).
While we have single supply relationships for certain of our key components, we try to mitigate related risks through various measures.
While we have single supply relationships for certain of our key components, we try to mitigate related risks associated with our supply chain through various measures.
In the United States, the FDA has not promulgated regulations establishing GMPs (as defined below) for cosmetics. However, Congress enacted the Modernization of Cosmetics Regulation Act of 2022 (“MoCRA”) on December 29, 2022, which directed the FDA to implement a set of new regulatory requirements that previously were not applicable to cosmetic products.
In the United States, the FDA has not promulgated finalized regulations establishing GMPs (as defined below) for cosmetics. However, Congress enacted MoCRA on December 29, 2022, which directed the FDA to implement a set of new regulatory requirements that previously were not applicable to cosmetic products.
Pursuing marketing of medical devices in the EU will notably require that our devices be certified under the new regime set forth in the EU Medical Devices Regulation when our current certificates expire.
Pursuing marketing of medical devices in the EU will notably require that our devices be certified under the new regime set forth in the EU Medical Devices Regulation when our current certificates expire on December 31, 2027.
Research and Development Our research and development team works closely with our marketing and product development teams and third-party suppliers to generate ideas, develop new products and product line extensions, create new packaging concepts, and improve, redesign, or reformulate existing products.
Research and Development Our research and development team works closely with our marketing and product development teams and third-party suppliers to generate ideas, develop new products and product line extensions, create new packaging concepts, and improve, redesign, or reformulate existing products in both domestic and global markets.
Each member state appoints a competent authority to enforce the EU Cosmetics Regulation in its territory and to cooperate with the other member state authorities and the European Commission. The European Commission is responsible for driving consistency in the way the Cosmetics Regulation is enforced across the EU.
Each member state appoints a competent authority to enforce the EU Cosmetics Regulation in its territory and to cooperate with the other member state authorities and the European Commission. The European Commission is responsible for driving consistency in the way the Cosmetics Regulation is enforced across the EU. The aforementioned EU rules are generally applicable in the EEA.
The SkinStylus SteriLock Microsystem is a microneedling device where it and its related accessories are intended to be used as a treatment to improve the appearance of (i) surgical or traumatic hypertrophic scars on the abdomen in adults aged 22 years and older, and (ii) facial acne scarring in Fitzpatrick skin types I, II, and III in patients aged 22 years and older.
The SkinStylus SteriLock Microsystem can be used as a microneedling device where it and its related accessories help stimulate the body’s natural collagen and elastin production and are intended to be used as a treatment to improve the appearance of (i) surgical or traumatic hypertrophic scars on the abdomen in adults aged 22 years and older, and (ii) facial acne scarring in Fitzpatrick skin types I, II, and III in patients aged 22 years and older.
We believe the introduction of additional offerings will generate increased engagement among our community while further expanding it via the introduction of the acquired company’s established base of consumers. We will take a disciplined approach to acquisitions, adhering to the below criteria in search for opportunities that: 1.
We believe the introduction of additional offerings will generate increased engagement among our community, while further expanding it via the introduction of the acquired company’s established base of consumers. We will take a disciplined approach to acquisitions, searching for opportunities that satisfy the following criteria: 1.
Until Eudamed is fully functional, the corresponding provisions of the EU Medical Devices Directive continue to apply.
Until the module in Eudamed is functional, the corresponding provisions of the EU Medical Devices Directive continue to apply.
FDA regulations also prohibit or otherwise restrict the use of certain types of ingredients in cosmetic products. 18 In addition, the FDA requires that cosmetic labeling and claims be truthful and not misleading, and cosmetics may not be marketed or labeled for use in treating, preventing, mitigating, or curing disease or other conditions or in affecting the structure or function of the body because such claims would render the products to be a drug and subject to regulation as a drug.
In addition, the FDA requires that cosmetic labeling and claims be truthful and not misleading, and cosmetics may not be marketed or labeled for use in treating, preventing, mitigating, or curing disease or other conditions or in affecting the structure or function of the body because such claims would render the products to be a drug and subject to regulation as a drug.
Our offering is available globally through a combination of having a direct commercial presence in certain countries, or utilizing a distributor model or hybrid model in other countries. 10 Lastly, we intend to supercharge our platform via targeted acquisitions, expanding the breadth of our platform with additional innovative products and experiences.
Our offering is available globally through a combination of having a direct commercial presence in certain countries, or utilizing a distributor model or hybrid model in other countries. 10 Lastly, if we are presented with the right opportunity, we may supercharge our platform via targeted acquisitions, expanding the breadth of our platform with additional innovative products and experiences.
While they are not our employees or contractors, we believe they provide an important competitive advantage to us, as a well-trained esthetician can provide consumers with a consistent, memorable, first-class experience no matter where a consumer accesses our products and experiences. We believe that this in turn builds loyalty from the consumer to BeautyHealth.
While these estheticians are not our employees or contractors, we believe they provide us with an important competitive advantage because a well-trained esthetician can provide consumers with consistent, memorable, first-class experiences, no matter where a consumer accesses our products. We believe that this relationship with the esthetician in turn builds loyalty from the consumer to the Company.
If the FDA determines that a manufacturer has failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following, among others: • warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; • recalls, withdrawals, or administrative detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying requests for 510(k) clearance or PMA approvals of new or modified products; • withdrawing 510(k) clearances or PMA approvals that have already been granted; • refusal to permit importation of the manufacturer’s products through import detention or refusals, or import alerts; • refusal to grant export approvals for our products; or • criminal prosecution.
If the FDA determines that a manufacturer has failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following, among others: • warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; • recalls, withdrawals, or administrative detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying requests for 510(k) clearance or PMA approvals of new or modified products; • withdrawing 510(k) clearances or PMA approvals that have already been granted; • refusal to permit importation of the manufacturer’s products through import detention or refusals, or import alerts; • refusal to grant export approvals for our products; or • criminal prosecution. 18 Regulation of Cosmetics The FDCA defines cosmetics as articles or components of articles intended for application to the human body to cleanse, beautify, promote attractiveness, or alter the appearance.
For Hydrafacial providers, the MyBeautyHealth loyalty program is a value-add that comes at no cost to them, incentivizing their customers to maintain regular treatments. 9 Growth Strategy in General We intend to fulfill our vision by employing the following strategy, which we believe will generate a flywheel effect to increase our platform’s momentum: 1.
For Hydrafacial providers, the MyBeautyHealth loyalty program is a value-add that comes at no cost to them, incentivizing their customers to maintain regular treatments. 9 Growth Strategy in General We intend to fulfill our vision of expanding our platform and connecting our global community of estheticians, partners, and consumers by employing the following strategy, which we believe will generate a flywheel effect to increase our platform’s momentum: 1.
Keravive Products Keravive At the core of Keravive’s product offering is the Keravive Peptide Solution that is designed to be delivered to the individual’s scalp using a Delivery System, and a take home spray that is intended to be used once daily at home for 30-days after the individual receives an in-office Keravive treatment to help boost results.
Keravive Products Keravive At the core of Keravive’s product offering is the Keravive Peptide Solution that is designed to be delivered to an individual’s scalp using a Delivery System, and a take home spray that is intended to be used once daily at home for 30-days after an individual receives an in-office Keravive treatment to help support the appearance of healthier, thicker, fuller-looking hair.
In addition, the Trade Deal between the UK and the EU generally provides for cooperation and exchange of information between the parties in the areas of product safety and compliance, including market surveillance, enforcement activities and measures, standardization-related activities, exchanges of officials, and coordinated product recalls.
In addition, the Trade and Cooperation Agreement between the UK and the EU that went into effect in 2021 generally provides for cooperation and exchange of information between the parties in the areas of product safety and compliance, including market surveillance, enforcement activities and measures, standardization-related activities, exchanges of officials, and coordinated product recalls.
Step 3: Hydrate Vortex Fusion Technology is paired with a specialized tip to deliver and infuse hyaluronic acid and antioxidants to the skin to nourish, hydrate, and protect. 8 SkinStylus Products SkinStylus SteriLock Microsystem The Company has been offering the SkinStylus SteriLock Microsystem since February 2023, after its indirect, wholly-owned subsidiary, Edge Systems Intermediate, LLC, acquired SkinStylus.
Step 3: Hydrate Vortex Fusion Technology is paired with a specialized tip to deliver hyaluronic acid and antioxidants to the skin to help nourish, hydrate, and protect. 8 SkinStylus Products SkinStylus SteriLock Microsystem (for microneedling) The Company has been offering the SkinStylus SteriLock Microsystem since February 2023, after its indirect, wholly-owned subsidiary, Edge Systems Intermediate, LLC, acquired Esthetic Medical Inc., the owner of the SkinStylus brand.
In addition, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QSR. PMA applications are also subject to the payment of user fees, which for fiscal year 2024 includes a standard application fee of $483,560 or a small business fee of $120,890.
In addition, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QSR. PMA applications are also subject to the payment of user fees, which for fiscal year 2025 includes a standard application fee of $540,783 or a small business fee of $135,196.
Until Eudamed is fully functional, the corresponding provisions of the EU Medical Devices Directive continue to apply for the purpose of meeting the obligations laid down in the provisions regarding exchange of information, including, and in particular, information regarding registration of devices and economic operators.
Until a certain module is functional and thus mandatory under Eudamed, the corresponding provisions of the EU Medical Devices Directive continue to apply for the purpose of meeting the obligations laid down in the provisions regarding exchange of information, including, and in particular, information regarding registration of devices and economic operators.
The MHRA only registers devices where the manufacturer or their UK Responsible Person has a registered place of business in the UK. Manufacturers based outside the UK need to appoint a UK Responsible Person that has a registered place of business in the UK to register devices with the MHRA in line with the grace periods.
Manufacturers based outside the UK need to appoint a UK Responsible Person that has a registered place of business in the UK to register devices with the MHRA in line with the grace periods.
Item 1. Business. Company Overview The Beauty Health Company (the “Company” or “we”) is a global category-creating company focused on delivering skin health experiences that help consumers reinvent their relationship with their skin, bodies, and self-confidence. The Company and its subsidiaries design, develop, manufacture, market, and sell esthetic technologies and products.
Item 1. Business. Company Overview The Beauty Health Company (the “Company” or “we”) is a medtech meets beauty company that delivers skin health experiences that help consumers reinvent their relationship with their skin, bodies, and self-confidence. The Company and its subsidiaries design, develop, manufacture, market, and sell esthetic technologies and products.
In this process, we will particularly focus on the trusted esthetician. Historically, companies in the medical aesthetics industry focused on physicians, nurses, front-office staff, and business owners. Notably absent from their focus were the estheticians, highly influential providers who serve as a source of skincare information and recommendations for their clients and patients.
In this process, we will particularly focus on the esthetician. Historically, companies in the medical aesthetics industry focused on physicians, nurses, front-office staff, and business owners. Notably absent from that focus was the esthetician, a highly influential provider who serves as a source of skincare information and recommendations for clients and patients.
Solutions Proprietary formulations of ingredients delivered to the skin at different steps during the Hydrafacial treatment. 4 bottle stock-keeping units (“SKUs”) required to provide a Hydrafacial treatment; the bottles provide for approximately 12-15 treatments. 4 SKUs contain varying strength chemical peel treatments. The provider chooses which strength to use during treatment, and each SKU lasts 1-2 treatments.
Solutions Proprietary formulations of ingredients delivered to the skin at different steps during the Hydrafacial treatment. 4 bottle stock-keeping units (“SKUs”) required to provide a Hydrafacial treatment; the bottles provide for approximately 12-15 Hydrafacial treatments. 4 SKUs contain varying strength chemical peel treatments.
For fiscal year 2024, the standard user fee for a 510(k) premarket notification submission is $21,760, with the fee being $5,440 for small businesses. If the FDA agrees that the device is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device.
For fiscal year 2025, the standard user fee for a 510(k) premarket notification submission is $24,335, with the fee being $6,084 for small businesses. If the FDA agrees that the device is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device.
The components and raw materials used in our products are sourced from a variety of component and raw material suppliers. To provide products to customers in a timely, cost-effective manner, we review existing contract manufacturers and suppliers and evaluate new partners and suppliers periodically with the objectives of improving quality, increasing innovation, accelerating speed-to-market, maintaining supply sufficiency, and reducing costs.
To provide products to customers in a timely, cost-effective manner, we review existing contract manufacturers and suppliers and evaluate new partners and suppliers periodically with the objectives of improving quality, increasing innovation, accelerating speed-to-market, maintaining supply sufficiency, and reducing costs.
Additionally, cosmetic labels will need to identify the responsible person for the purpose of serious adverse event reporting, and cosmetic labels will also need to identify fragrance allergens. The provisions relating to labels become effective on December 29, 2024. The FDA also recommends that manufacturers maintain product complaint and recall files and voluntarily report adverse events to the agency.
Additionally, cosmetic labels now need to identify the responsible person for the purpose of serious adverse event reporting, and cosmetic labels need to identify fragrance allergens. The FDA also recommends that manufacturers maintain product complaint and recall files and voluntarily report adverse events to the agency.
As a result of the Second Merger, we own 100% of the outstanding interests in Merger Sub II.
As a result of the Second Merger, the Company owns 100% of the outstanding interests in Merger Sub II.
Product Development Pipeline Boosters A key differentiating factor of the Hydrafacial treatment is how we partner with leading skincare brands to co-develop boosters, an optional add-on serum that tailors a Hydrafacial treatment based on a consumer’s skincare concerns.
Product Development Pipeline Boosters A key differentiating factor of the Hydrafacial treatment is how we partner with leading skincare brands to co-develop optional add-on serums that tailor a Hydrafacial treatment based on a consumer’s skincare concerns (each, a “Booster”, and collectively, “Boosters”).
The Company has a designated environmental, health, and safety (“EHS”) department to provide a clear focal point for the safety program. The EHS department has appointed “Department Safety 28 Coordinators” to implement and maintain the program at each location. The Department Safety Coordinators are the Department Heads of the Company and are an integral part of the Safety Awareness Team.
The Company has a designated environmental, health, and safety (“EHS”) department to provide a clear focal point for the safety program. The EHS department has appointed “Department Safety Coordinators” to implement and maintain the program at each location.
For instance, in addition to base pay (which is based on specific circumstances, including role and experience, geographic location, and performance), we offer annual cash performance-based incentives and equity-based long-term incentive awards for eligible employees.
We continuously review and ensure our compensation packages are competitive across all markets in which we operate. For instance, in addition to base pay (which is based on specific circumstances, including role and experience, geographic location, and performance), we offer annual cash performance-based incentives and equity-based long-term incentive awards for eligible employees.
The aforementioned EU rules are generally applicable in the EEA. 23 UK Regulation of Cosmetic Products following Brexit The UK formally left the EU on January 31, 2020, commonly referred to as “Brexit”.
UK Regulation of Cosmetic Products following Brexit The UK formally left the EU on January 31, 2020, commonly referred to as “Brexit”.
Our current certificates have been granted under the EU Medical Devices Directive whose regime is described below. However, as of May 26, 2021, some of the EU Medical Devices Regulation requirements apply in place of the corresponding requirements of the EU Medical Devices Directive with regard to registration of economic operators and of devices, post-market surveillance and vigilance requirements.
However, as of May 26, 2021, some of the EU Medical Devices Regulation requirements apply in place of the corresponding requirements of the EU Medical Devices Directive with regard to registration of economic operators and of devices, post-market surveillance and vigilance requirements.
The regime is expected to come into force in July 2025, subject to appropriate transitional arrangements. The consultation indicated that the MHRA will publish guidance in relation to the changes to the regulatory framework and may rely more heavily on guidance to add flexibility to the regime.
The core elements of the new regime regarding pre-market requirements are expected to come into force in 2026, subject to appropriate transitional arrangements. The consultation indicated that the MHRA will publish guidance in relation to the changes to the regulatory framework and may rely more heavily on guidance to add flexibility to the regime.
As of the date of this report, the FDA has only cleared the 36-pin cartridge of the SkinStylus SteriLock Microsystem to be used by providers to help treat facial acne scars.
As of the date of this report, the FDA has only cleared the 36-pin cartridge of the SkinStylus SteriLock Microsystem to be used by providers to help treat facial acne scars, while the 12-pin cartridge, 36-pin cartridge, and the 36-pin HiLo cartridge may be used to help treat surgical or traumatic hypertrophic scars on the abdomen.
FDA Premarket Clearance and Approval Requirements Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a premarket notification submitted under Section 510(k) of the FDCA, the De Novo pathway, or approval of a premarket approval application (“PMA”).
FDA Premarket Clearance and Approval Requirements Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a premarket notification submitted under Section 510(k) of the FDCA, follow a regulatory process that the FDA uses to classify low-to moderate-risk devices (the “De Novo pathway”), or approval of a premarket approval application (“PMA”).
As of December 31, 2023, a breakdown of our workforce is as follows: Employee Population Race/Ethnicity Gender % Minority (1) % White % Female % Male U.S. Workforce 54% 45% 67% 33% U.S. Managers & Above 48% 49% 71% 29% U.S.
As of December 31, 2024, a breakdown of our workforce is as follows: Employee Population Race/Ethnicity Gender % Minority (1) % White % Female % Male U.S. Workforce 51% 49% 68% 32% U.S. Managers & Above 42% 58% 67% 33% U.S.
We firmly believe an inclusive work environment is essential for a successful and thriving business and enables us to better understand our consumers, drive innovation, and stimulate creativity.
We firmly believe an inclusive work environment is essential for a successful and thriving business and enables us to better understand our consumers, drive innovation, and stimulate creativity. We recognize the importance of all types of diversity at leadership levels and throughout our organization.
As we optimize our install base, we believe Consumables revenue will ultimately become a larger share of Hydrafacial’s business. Hydrafacial operates through a direct sales force in over 15 markets, and sells its products globally in other markets utilizing a distributor or hybrid business model.
As we optimize our install base, we believe Consumables revenue will ultimately become a larger share of our business. In certain countries, we operate through a direct sales force, while in other countries, we sell our products utilizing a distributor or hybrid business model.
We continuously encourage a culture of fairness, equal access to opportunities, including positions of leadership, and transparency in employment matters. We have enhanced our strategy in many areas including hiring, employee engagement, development, and talent management to further support diversity and inclusion across our organization.
We have enhanced our strategy in many areas including hiring, employee engagement, development, and talent management to further support diversity and inclusion across our organization.
For similar serious incidents that occur with the same device or device type and for which the root cause has been identified or an FSCA implemented or where the incidents are common and well documented, manufacturers may provide periodic summary reports instead of individual serious incident reports. 21 The advertising and promotion of medical devices is subject to some general principles set forth in EU legislation as well as in national legislation of the EU Member States and industry codes of conduct.
For similar serious incidents that occur with the same device or device type and for which the root cause has been identified or an FSCA implemented or where the incidents are common and well documented, manufacturers may provide periodic summary reports instead of individual serious incident reports.
United Kingdom (“UK”) Regulation of Medical Devices following Brexit Since January 1, 2021, the Medicines and Healthcare Products Regulatory Agency (“MHRA”), has become the sovereign regulatory authority responsible for Great Britain (i.e.
The aforementioned EU rules are generally applicable in the European Economic Area, which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland. 22 United Kingdom (“UK”) Regulation of Medical Devices following Brexit Since January 1, 2021, the Medicines and Healthcare Products Regulatory Agency (“MHRA”), has become the sovereign regulatory authority responsible for Great Britain (i.e.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, electronic marketing and privacy requirements in the EU are highly restrictive and differ greatly from those in the U.S., which could cause fewer individuals in the EU to subscribe to our marketing messages and drive up our costs and risk of regulatory oversight and fines if we are found to be non-compliant.
Biggest changeFor example, electronic marketing and privacy requirements in the EU are highly restrictive and differ greatly from those in the U.S., which could cause fewer individuals in the EU to subscribe to our marketing messages and drive up our costs and risk of regulatory oversight and fines if we are found to be non-compliant. 68 Our use of email and other messaging services to send communications to consumers may also result in legal claims against us, which may cause increased expenses, and if successful might result in fines and orders with costly reporting and compliance obligations or might limit or prohibit our ability to send emails or other messages.
Moreover, our international operations expose us to other risks and uncertainties that are customarily encountered in non-U.S. operations and that may have a material effect on our results of operations and business as a whole, including: • local political and economic instability; • increased expense of developing, testing and making localized versions of our products; • difficulties in hiring and retaining employees; • differing employment practices and laws and labor disruptions; • pandemics, such as the COVID-19 pandemic, and natural disasters; • difficulties in managing international operations, including any travel restrictions imposed on us or our customers, such as those imposed in response to the COVID-19 pandemic; • fluctuations in currency exchange rates; • foreign exchange controls that could make it difficult to repatriate earnings and cash; • increased or more stringent import and export controls, license requirements and restrictions; • difficulties in controlling production volume and quality of the manufacturing process; • acts of terrorism and acts of war, including the current conflicts between Russia and Ukraine and between Israel and Hamas; • general geopolitical instability and the responses to it, such as the possibility of economic sanctions, trade restrictions and changes in tariffs, such as the recent economic sanctions implemented by the United States against China and Russia and tariffs imposed by the United States and China; • interruptions and limitations in telecommunication services; • product or material transportation delays or disruption, including as a result of customs clearance, violence, protests, police and military actions, or natural disasters; 46 • risks of non-compliance by our employees, contractors, or partners or agents with, and burdens of complying with, a wide variety of extraterritorial, regional and local laws, including competition laws and anti-bribery laws such as the U.S.
Moreover, our international operations expose us to other risks and uncertainties that are customarily encountered in non-U.S. operations and that may have a material effect on our results of operations and business as a whole, including: • local political and economic instability; 49 • increased expense of developing, testing and making localized versions of our products; • difficulties in hiring and retaining employees; • differing employment practices and laws and labor disruptions; • pandemics, such as the COVID-19 pandemic, and natural disasters; • difficulties in managing international operations, including any travel restrictions imposed on us or our customers, such as those imposed in response to the COVID-19 pandemic; • fluctuations in currency exchange rates; • foreign exchange controls that could make it difficult to repatriate earnings and cash; • increased or more stringent import and export controls, license requirements and restrictions; • difficulties in controlling production volume and quality of the manufacturing process; • acts of terrorism and acts of war, including the current conflicts between Russia and Ukraine and between Israel and Hamas; • general geopolitical instability and the responses to it, such as the possibility of economic sanctions, trade restrictions and changes in tariffs, such as the recent economic sanctions implemented by the United States against China and Russia and tariffs imposed by the United States and China; • interruptions and limitations in telecommunication services; • product or material transportation delays or disruption, including as a result of customs clearance, violence, protests, police and military actions, or natural disasters; • risks of non-compliance by our employees, contractors, or partners or agents with, and burdens of complying with, a wide variety of extraterritorial, regional and local laws, including competition laws and anti-bribery laws such as the U.S.
If the FDA or other authorities determine that our promotional or training materials constitute the unlawful promotion of an off-label use, they could request that we modify our training or promotional materials and/or subject us to warning letters or untitled letters; fines, injunctions or civil penalties; suspension or withdrawal of approvals or clearances; seizures or recalls of products; total or partial suspension of production or distribution; administrative or judicially imposed sanctions; the FDA’s refusal to grant pending or future clearances or approvals for products; clinical holds; refusal to permit the import or export of products; and criminal prosecution.
If the FDA or other authorities determine that our promotional or training materials constitute the unlawful promotion of an off-label use, they could request that we modify our training or promotional materials and/or subject us to warning letters or untitled letters; fines, injunctions or civil penalties; suspension or withdrawal of approvals or clearances; seizures or recalls of products; total or partial suspension of production or distribution; 57 administrative or judicially imposed sanctions; the FDA’s refusal to grant pending or future clearances or approvals for products; clinical holds; refusal to permit the import or export of products; and/or criminal prosecution.
Any failure by us to take satisfactory corrective action in response to an adverse inspection could result in enforcement actions against us, including warning letters or untitled letters; fines, injunctions 52 or civil penalties; suspension or withdrawal of approvals or clearances; seizures or recalls of products; total or partial suspension of production or distribution; administrative or judicially imposed sanctions; the FDA’s refusal to grant pending or future clearances or approvals for products; clinical holds; refusal to permit the import or export of products; and criminal prosecution.
Any failure by us to take satisfactory corrective action in response to an adverse inspection could result in enforcement actions against us, including warning letters or untitled letters; fines, injunctions or civil penalties; suspension or withdrawal of approvals or clearances; seizures or recalls of products; total or partial suspension of production or distribution; administrative or judicially imposed sanctions; the FDA’s refusal to grant pending or future clearances or approvals for products; clinical holds; refusal to permit the import or export of products; and criminal prosecution.
Our future growth, profitability and cash flows depend upon our ability to successfully implement our business strategy, which, in turn, is dependent upon a number of key initiatives, including our ability to: • drive demand in the brand; • invest in our providers and digital capabilities; • improve productivity in our retailers, U.S. medical spa facilities and U.S. spa facilities; • implement the necessary cost savings to help fund our marketing and digital investments; and • pursue strategic extensions that can leverage our strengths and bring new capabilities.
Our future growth, profitability and cash flows depend upon our ability to successfully implement our business strategy, which, in turn, is dependent upon a number of key initiatives, including our ability to: • drive demand in the brand; • invest in our providers and digital capabilities; • improve productivity in our retailers, U.S. medical spa facilities and U.S. spa facilities; 34 • implement the necessary cost savings to help fund our marketing and digital investments; and • pursue strategic extensions that can leverage our strengths and bring new capabilities.
Any material loss, individually or in the aggregate, from a similarly failed banking relationship above FDIC insurance limits that we may experience in the future could have an adverse effect on our ability to pay our operational expenses or make other payments and may require us to move our accounts to other banks, which could cause a temporary delay in making payments to our vendors and employees and cause other operational inconveniences.
Any material loss, individually or in the aggregate, from a failed banking relationship above FDIC insurance limits that we may experience in the future could have an adverse effect on our ability to pay our operational expenses or make other payments and may require us to move our accounts to other banks, which could cause a temporary delay in making payments to our vendors and employees and cause other operational inconveniences.
Although our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 and our management is required to report on our internal controls over financial reporting under Section 404, any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.
Although our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes- 59 Oxley Act of 2002 and our management is required to report on our internal controls over financial reporting under Section 404, any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.
Physicians, a/estheticians, and others may also misuse our products or use improper techniques if they are not adequately trained in the particular use, potentially leading to injury and an increased risk of product liability claims. Product liability claims are expensive to defend and could divert management’s attention from the primary business and result in substantial damage awards against us.
Physicians, estheticians, and others may also misuse our products or use improper techniques if they are not adequately trained in the particular use, potentially leading to injury and an increased risk of product liability claims. Product liability claims are expensive to defend and could divert management’s attention from the primary business and result in substantial damage awards against us.
Adverse economic conditions in the United States, Europe or any of the other jurisdictions in which we do significant business, or periods of inflation or high energy prices may contribute to higher unemployment levels, decreased consumer spending, reduced credit availability and declining consumer confidence and demand, each of which poses a risk to our business.
Adverse economic conditions in the United States, Europe, China or any of the other jurisdictions in which we do significant business, or periods of inflation or high energy prices may contribute to higher unemployment levels, decreased consumer spending, reduced credit availability and declining consumer confidence and demand, each of which poses a risk to our business.
There may be certain challenges to compliance with these requirements and failure to comply may result in enforcement actions from FDA and other regulatory agencies that could disrupt our business operations. 57 If we market products in a manner that violates healthcare laws, we may be subject to civil or criminal penalties.
There may be certain challenges to compliance with these requirements and failure to comply may result in enforcement actions from FDA and other regulatory agencies that could disrupt our business operations. If we market products in a manner that violates healthcare laws, we may be subject to civil or criminal penalties.
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with the listing requirements would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, or prevent future non-compliance with the continued listing requirements of Nasdaq.
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with the listing requirements would allow our Class A Common Stock to become listed again, stabilize the market price or improve the liquidity of our Class A Common Stock, or prevent future non-compliance with the continued listing requirements of Nasdaq.
Adverse economic conditions in the United States, Europe or any of the other countries in which we may conduct business could negatively affect our business, financial condition and results of operations. Consumer spending on beauty health products and services is influenced by general economic conditions and the availability of discretionary income.
Adverse economic conditions in the United States, Europe, China or any of the other countries in which we may conduct business could negatively affect our business, financial condition and results of operations. Consumer spending on beauty health products and services is influenced by general economic conditions and the availability of discretionary income.
Our e-commerce operations are important to our business. Our e-commerce websites serve as effective extensions of our marketing strategies by introducing potential new consumers to our brand, product offerings, providers and enhanced content. Due to the importance of our e-commerce operations, we are vulnerable to website downtime and other technical failures.
Our e-commerce operations are important to our business. Our e-commerce websites serve as effective extensions of our marketing strategies by introducing potential new consumers to our brand, product offerings, providers and enhanced content. 45 Due to the importance of our e-commerce operations, we are vulnerable to website downtime and other technical failures.
Many factors, some of which are beyond our control, will impact our ability to maintain and enhance our reputation and brand, including our ability to comply with ethical, social, product, labor and environmental standards. Any actual or perceived failure in compliance with such standards could damage our reputation and brand.
Many factors, some of which are beyond our control, will impact our ability to maintain and enhance our reputation and brand, including our 32 ability to comply with ethical, social, product, labor and environmental standards. Any actual or perceived failure in compliance with such standards could damage our reputation and brand.
As a result, either our net revenues or our ability to maintain market share could be materially harmed if: we are unable to retain our direct sales personnel or quickly replace them with individuals of equivalent technical expertise and qualifications; we are unable to successfully instill technical expertise in new and existing sales representatives; we fail to establish and maintain strong relationships with our customers; or if our efforts at specializing our selling techniques do not prove to be successful and cost-effective. 39 Our providers generally are not under any obligation to purchase product, and business challenges at one or more of these providers could adversely affect our results of operations.
As a result, either our net revenues or our ability to maintain market share could be materially harmed if: we are unable to retain our direct sales personnel or quickly replace them with individuals of equivalent technical expertise and qualifications; we are unable to successfully instill technical expertise in new and existing sales representatives; we fail to establish and maintain strong relationships with our customers; or if our efforts at specializing our selling techniques do not prove to be successful and cost-effective. 41 Our providers generally are not under any obligation to purchase product, and business challenges at one or more of these providers could adversely affect our results of operations.
Further, because of the substantial discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be disclosed or otherwise compromised. Additionally, we may be unable to protect our intellectual property rights throughout the world.
Further, because of the substantial discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be disclosed or otherwise compromised. 65 Additionally, we may be unable to protect our intellectual property rights throughout the world.
Similarly, the Indenture governing the Notes contains certain restrictive covenants including covenants restricting our ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and our subsidiaries.
The Indenture governing the Notes contains certain restrictive covenants including covenants restricting our ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and our subsidiaries.
The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein. 29 Risks related to the beauty health industry The beauty health industry is highly competitive, and if we are unable to compete effectively, our results will suffer.
The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein. Risks related to the beauty health industry The beauty health industry is highly competitive, and if we are unable to compete effectively, our results will suffer.
Any of these occurrences could delay or impede our ability to achieve our sales objectives, which could have a material adverse effect on our business, financial condition and results of operations. 30 Any damage to our reputation or brand may materially and adversely affect our business, financial condition and results of operations.
Any of these occurrences could delay or impede our ability to achieve our sales objectives, which could have a material adverse effect on our business, financial condition and results of operations. Any damage to our reputation or brand may materially and adversely affect our business, financial condition and results of operations.
If we do not make the necessary overhead 33 expenditures to accommodate our future growth, we may be unsuccessful in executing our growth strategy and our results of operations could suffer. Acquisitions or investments could disrupt our business and harm our financial condition.
If we do not make the necessary overhead expenditures to accommodate our future growth, we may be unsuccessful in executing our growth strategy and our results of operations could suffer. Acquisitions or investments could disrupt our business and harm our financial condition.
A general slowdown in the U.S. economy and certain international economies or an uncertain economic outlook could adversely affect consumer spending habits which may, among other things, result in reduced patient traffic in dermatology or internal medicine offices and in medical spa facilities and spa facilities, a reduction in consumer spending on elective, non-urgent or higher value treatments, such as those offered by our providers, or a reduction in the demand for aesthetic services generally, each of which could have a material adverse effect on our sales and operating results.
A general slowdown in the U.S. economy and certain international economies or an uncertain economic outlook could adversely affect consumer spending habits which may, among other things, result in reduced patient traffic in dermatology or internal medicine offices and in medical spa facilities and spa facilities, a reduction in consumer spending on elective, non-urgent or higher value treatments, such as those offered by our providers, or a reduction in the demand for esthetic services generally, each of which could have a material adverse effect on our sales and operating results.
A depreciation of these currencies against the U.S. dollar will decrease the U.S. dollar equivalent of the amounts derived from foreign operations reported in our consolidated financial statements, and an appreciation of these currencies will result in a corresponding increase in such amounts.
A depreciation of these currencies against the U.S. dollar will decrease the U.S. dollar equivalent of the amounts derived from foreign operations reported in our consolidated financial statements, and an appreciation of these currencies will result in a 44 corresponding increase in such amounts.
Overall, we may have little recourse if we process a criminally fraudulent transaction. 45 We are subject to payment card association operating rules, certification requirements, including the Payment Card Industry Data Security Standard (“PCI DSS”), including the new standards required under PCI DSS 4.0, and various rules, regulations and requirements governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply.
Overall, we may have little recourse if we process a criminally fraudulent transaction. 48 We are subject to payment card association operating rules, certification requirements, including the Payment Card Industry Data Security Standard (“PCI DSS”), including the new standards required under PCI DSS 4.0, and various rules, regulations and requirements governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply.
Such a delisting would likely have a negative effect on the price of our common stock and would impair our stockholders’ ability to sell or purchase our common stock when they wish to do so.
Such a delisting would likely have a negative effect on the price of our Class A Common Stock and would impair our stockholders’ ability to sell or purchase our Class A Common Stock when they wish to do so.
The decline of cookies or other online tracking technologies as a means to identify and target potential purchasers may increase the cost of operating our business and lead to a decline in revenues.
The decline of cookies or other online tracking technologies as a means to identify and target potential purchasers may increase the cost of operating our business and lead to a decline in 61 revenues.
Furthermore, the failure of our products to perform as promised could result in increased costs, lower margins, liquidated damage payment obligations, and harm to our reputation and brand. 43 If we fail to adopt new technologies or adapt our e-commerce websites and systems to changing consumer demands or emerging industry standards, our business may be materially and adversely affected.
Furthermore, the failure of our products to perform as promised could result in increased costs, lower margins, liquidated damage payment obligations, and harm to our reputation and brand. 46 If we fail to adopt new technologies or adapt our e-commerce websites and systems to changing consumer demands or emerging industry standards, our business may be materially and adversely affected.
While not mandatory, compliance with these standards is viewed as the easiest way to satisfy the essential requirements as a practical matter as it creates a rebuttable presumption that the device satisfies that essential requirement. 51 To demonstrate compliance with the essential requirements, medical device manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its (risk) classification.
While not mandatory, compliance with these standards is viewed as the easiest way to satisfy the essential requirements as a practical matter as it creates a rebuttable presumption that the device satisfies that essential requirement. 55 To demonstrate compliance with the essential requirements, medical device manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its (risk) classification.
There can be no assurance that any contemplated or future acquisition will occur. 34 Our operating results have fluctuated in the past and we expect our future quarterly and annual operating results to fluctuate for a variety of reasons, particularly as we focus on increasing provider and consumer demand for our products.
There can be no assurance that any contemplated or future acquisition will occur. 36 Our operating results have fluctuated in the past and we expect our future quarterly and annual operating results to fluctuate for a variety of reasons, particularly as we focus on increasing provider and consumer demand for our products.
If freight costs materially increase and we are unable to pass that increase along to our customers for any reason or otherwise offset such increases in costs, our gross margin and financial results could be adversely affected. 38 If we fail to manage our inventory effectively, our results of operations, financial condition and liquidity may be materially and adversely affected.
If freight costs materially increase and we are unable to pass that increase along to our customers for any reason or otherwise offset such increases in costs, our gross margin and financial results could be adversely affected. 40 If we fail to manage our inventory effectively, our results of operations, financial condition and liquidity may be materially and adversely affected.
Depending on tariffs and trade regulation negotiations, we may be forced to acquire duplicate arrangements in the EU either temporarily or permanently, which may increase our costs in the EU and the United Kingdom. Further, since the United Kingdom is no longer part of the EU, its data protection regulatory regime will be independent of the EU.
Depending on tariffs and trade regulation negotiations, we may be forced to acquire duplicate arrangements in the EU either temporarily or permanently, which may increase our costs in the EU and the United Kingdom. Further, since the United Kingdom is no longer part of the EU, its data protection regulatory regime is also independent of the EU.
Any inquiry into the regulatory status of our products and any related interruption in the marketing and sale of these products by any regulatory agencies, such as the FDA, could damage our reputation and image in the marketplace. 49 In recent years, the FDA has issued warning letters to several cosmetic companies alleging improper claims regarding their cosmetic products.
Any inquiry into the regulatory status of our products and any related interruption in the marketing and sale of these products by any regulatory agencies, such as the FDA, could damage our reputation and image in the marketplace. 53 In recent years, the FDA has issued warning letters to several cosmetic companies alleging improper claims regarding their cosmetic products.
Due to these and other factors, we believe that quarter-to-quarter comparisons of our operating results may not be meaningful. You should not rely on our results for any one quarter as an indication of future performance. 35 We have a history of operating losses and may experience future losses. We have yet to establish any history of profitable operations.
Due to these and other factors, we believe that quarter-to-quarter comparisons of our operating results may not be meaningful. You should not rely on our results for any one quarter as an indication of future performance. 37 We have a history of operating losses and may experience future losses. We have yet to establish any history of profitable operations.
To the extent federal, state, local or foreign regulatory changes regarding the scope of practice of estheticians, licensing, distribution, consumer protection, or the ingredients, claims or safety of our products occurs in the future, they could require us to obtain additional licenses and registrations, reformulate or discontinue certain of our products, revise the product packaging or labeling, adjust operations and systems, or affect our ability to sell our products to certain customer groups in particular states and/or territories, any of which could result in, among other things, increased costs, delays in product launches, product returns or recalls and lower net sales, and therefore could have a material adverse effect on our business, financial condition and results of operations.
To the extent federal, state, local or foreign regulatory changes regarding the scope of practice of estheticians or other professionals utilizing our products, licensing, distribution, consumer protection, or the ingredients, marketing, claims, or safety of our products occurs in the future, they could require us to obtain additional licenses and registrations, reformulate or discontinue certain of our products, revise the product packaging or labeling, adjust operations and systems, or affect our ability to sell our products to certain customer groups in particular states, countries, and/or territories, any of which could result in, among other things, increased costs, delays in product launches, product returns or recalls and lower net sales, and therefore could have a material adverse effect on our business, financial condition and results of operations.
If our Delivery Systems are not accepted and adopted by our customers, if our customers experience significant performance interruptions or if our Syndeo 3.0 devices do not meet our performance standards, or if we experience an RMA rate for Syndeo 3.0 devices significantly above historical averages, our revenue and results of operations will be materially and adversely affected.
If our Delivery Systems are not accepted and adopted by our customers, if our customers experience significant performance interruptions or if our Syndeo devices do not meet our performance standards, or if we experience an RMA rate for Syndeo devices significantly above historical averages, our revenue and results of operations will be materially and adversely affected.
Seeking such approvals, clearances or certifications may delay our ability to replace the recalled products in a timely manner.
Seeking such approvals, clearances or 58 certifications may delay our ability to replace the recalled products in a timely manner.
In addition, we have limited control or influence over the security policies or measures adopted by third-party providers of online payment services through which some of our 44 consumers may elect to make payment for purchases at our e-commerce websites.
In addition, we have limited control or influence 47 over the security policies or measures adopted by third-party providers of online payment services through which some of our consumers may elect to make payment for purchases at our e-commerce websites.
Increased market acceptance of all of our products and treatments will depend in part upon the recommendations of medical and aesthetics professionals, as well as other factors including effectiveness, safety, ease of use, reliability, aesthetics and price compared to competing products and treatment methods.
Increased market acceptance of all of our products and treatments will depend in part upon the recommendations of medical and esthetics professionals, as well as other factors including effectiveness, safety, ease of use, reliability, esthetics and price compared to competing products and treatment methods.
Delivery Systems are subject to regulation by the FDA and comparable foreign regulatory authorities as a medical device, while our boosters and serums are marketed as cosmetics. 50 Before a new medical device, or a new use of, or claim for, an existing medical device product can be marketed in the United States, it must first receive marketing authorization from the FDA unless it is exempt from such requirements.
Currently, Delivery Systems are subject to regulation by the FDA and comparable foreign regulatory authorities as a medical device, while our Boosters and serums are marketed as cosmetics. 54 Before a new medical device, or a new use of, or claim for, an existing medical device product can be marketed in the United States, it must first receive marketing authorization from the FDA unless it is exempt from such requirements.
The loss of key personnel or the failure to attract and retain qualified personnel may have a material adverse effect on our business, financial condition and results of operations. 36 Our workforce reductions may cause undesirable consequences and our results of operations may be harmed.
The loss of key personnel or the failure to attract and retain qualified personnel may have a material adverse effect on our business, financial condition and results of operations. 38 Our workforce reductions may cause undesirable consequences and our results of operations may be harmed.
Weakness in the global economy results in a challenging environment for selling aesthetic technologies and doctors or estheticians may postpone investments in capital equipment, such as our delivery systems.
Weakness in the global economy results in a challenging environment for selling esthetic technologies and doctors or estheticians may postpone investments in capital equipment, such as our delivery systems.
In addition, if our privacy or data security measures fail to comply with applicable current or future laws and regulations, we may be subject to litigation, regulatory investigations, enforcement notices requiring us to change the way we use personal data or our marketing practices, fines or other liabilities, all of which could affect our business, results of operations, and financial condition. 56 Failure to comply with the U.S.
In addition, if our privacy or data security measures fail to comply with applicable current or future laws and regulations, we may be subject to litigation, regulatory investigations, enforcement notices requiring us to change the way we use personal data or our marketing practices, fines or other liabilities, all of which could affect our business, results of operations, and financial condition.
Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations.
Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging, provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations.
If a prolonged government shutdown occurs, or if new or 54 existing global health concerns hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
In the event that a prolonged government shutdown occurs, or if new or existing global health concerns hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
These covenants may restrict our current and future operations, particularly our ability to respond to certain changes in our business or industry, or take future actions. Furthermore, a failure to satisfy these covenants would constitute an event of default under the respective agreement.
These covenants may restrict our current and future operations, particularly our ability to respond to certain changes in our business or industry, or take future actions. Furthermore, a failure to satisfy these covenants would constitute an event of default under the Notes.
A default under our credit facility or the Notes, among other things, would trigger the counterparty’s ability to immediately demand payment without any further action or notice by such party.
A default under the Notes, among other things, would trigger the counterparty’s ability to immediately demand payment without any further action or notice by such party.
We reported a loss from operations of $130.9 million during the year ended December 31, 2023. We expect to incur additional operating losses for the foreseeable future. Furthermore, our strategic plan will require a significant investment in product development, sales, marketing and administrative programs, which may not result in the accelerated revenue growth that we anticipate.
We reported a loss from operations of $67.8 million during the year ended December 31, 2024. We expect to incur additional operating losses for the foreseeable future. Furthermore, our strategic plan will require a significant investment in product development, sales, marketing and administrative programs, which may not result in the accelerated revenue growth that we anticipate.
As a “large accelerated filer”, we are responsible for establishing and maintaining internal controls and procedures that will allow our management to report on, and our independent registered public accounting firm to attest to, our internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404.
As an “accelerated filer”, we are responsible for establishing and maintaining internal controls and procedures that will allow our management to report on, and our independent registered public accounting firm to attest to, our internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404.
Our facilities are subject to regulation under the FDCA and FDA implementing regulations governing the manufacture of our products. If we fail to comply with federal, state and foreign regulations, our manufacturing operations could be halted, and our business would suffer. Our facilities are subject to regulation under the FDCA and FDA implementing regulations.
If we fail to comply with federal, state and foreign regulations, our manufacturing operations could be halted, and our business would suffer. Our facilities are subject to regulation under the FDCA and FDA implementing regulations.
In addition, we or our suppliers may not obtain or retain the requisite legal permits to continue to operate in China, and costs or operational limitations may be imposed in connection with obtaining and complying with such permits.
In addition, we or our suppliers or our distributors may not obtain or retain the requisite legal permits to continue to do business in China, and costs or operational limitations may be imposed in connection with obtaining and complying with such permits.
FCPA, other applicable anti-corruption and anti-bribery laws, and applicable trade control laws could subject us to penalties and other adverse consequences. We sell our products in several countries outside of the United States, primarily through distributors.
Failure to comply with the U.S. FCPA, other applicable anti-corruption and anti-bribery laws, and applicable trade control laws could subject us to penalties and other adverse consequences. We sell our products in several countries outside of the United States, primarily through distributors.
Our ability to generate revenue depends on our ability to manufacture and sell high quality, reliable Delivery Systems and execute on our commercialization plans, and the size of the market for, and the level of market acceptance of, our Delivery Systems, particularly the Syndeo 3.0.
Our ability to generate revenue depends on our ability to manufacture and sell high quality, reliable Delivery Systems and execute on our commercialization plans, and the size of the market for, and the level of market acceptance of, our Delivery Systems.
The CPRA significantly amends the CCPA and imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
Further, the CPRA passed in California in 2020. The CPRA significantly amends the CCPA and imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
Further, our third-party suppliers and distributors may: • be subject to potentially increased regulatory and compliance requirements; • have economic or business interests or goals that are inconsistent with ours; • take actions contrary to our instructions, requests, policies or objectives; • be unable or unwilling to fulfill their obligations under relevant purchase orders, including obligations to meet our production deadlines, quality standards, pricing guidelines and product specifications, or to comply with applicable regulations, including those regarding the safety and quality of products and ingredients and good manufacturing practices; • have financial difficulties; • encounter raw material or labor shortages; • encounter increases in raw material or labor costs that may affect our procurement costs; • disclose our confidential information or intellectual property to competitors or third parties; • engage in activities or employ practices that may harm our reputation; or • work with, be acquired by, or come under control of, our competitors. 37 The occurrence of any of these events, alone or together, could have a material adverse effect on our business, financial condition or results of operations.
Further, our third-party suppliers and distributors may: • be subject to potentially increased regulatory and compliance requirements; • have economic or business interests or goals that are inconsistent with ours; • take actions contrary to our instructions, requests, policies or objectives; • be unable or unwilling to fulfill their obligations under relevant purchase orders, including obligations to meet our production deadlines, quality standards, pricing guidelines and product specifications, or to comply with applicable regulations, including those regarding the safety and quality of products and ingredients and good manufacturing practices; • have financial difficulties; • encounter raw material or labor shortages; • encounter increases in raw material or labor costs that may affect our procurement costs; • disclose our confidential information or intellectual property to competitors or third parties; 39 • engage in activities or employ practices that may harm our reputation; or • work with, be acquired by, or come under control of, our competitors.
If we are unable to continue to successfully commercialize Syndeo 3.0, our results or operations and financial condition will be materially harmed. Our business and our ability to generate revenue largely depends on our ability to successfully commercialize and sell our Delivery Systems, particularly Syndeo 3.0 devices.
If we are unable to continue to successfully commercialize and sell our Delivery Systems, our results or operations and financial condition will be materially harmed. Our business and our ability to generate revenue largely depends on our ability to successfully commercialize and sell our Delivery Systems.
Our ability to operate in China may be adversely affected by changes in U.S. and Chinese laws and regulations such as those related to, among other things, taxation, import and export tariffs, environmental regulations, land use rights, intellectual property, currency controls, network security, employee benefits, hygiene supervision and other matters.
Our ability to conduct business in China may be adversely affected by changes in U.S. and Chinese laws and regulations such as those related to, among other things, taxation, import and export tariffs, environmental regulations, land use rights, intellectual property, currency controls, network security, and other matters.
Uncertainties regarding trade arrangements between the United Kingdom and the EU resulting from such withdrawal could result in increased costs or otherwise adversely impact our operations in the EU and the United Kingdom. We distribute our products to our EU based providers and distributors from the United Kingdom.
On January 31, 2020, the United Kingdom formally withdrew from the EU. Uncertainties regarding trade arrangements between the United Kingdom and the EU resulting from such withdrawal could result in increased costs or otherwise adversely impact our operations in the EU and the United Kingdom. We distribute our products to our EU based providers and distributors from the United Kingdom.
Fluctuations in currency exchange rates may negatively affect our financial condition and results of operations. Exchange rate fluctuations may affect the costs we incur in our operations. The main currencies to which we are exposed are the British pound, the EU euro, and the Chinese Renminbi.
Fluctuations in currency exchange rates may negatively affect our financial condition and results of operations. Exchange rate fluctuations may affect the costs we incur in our operations. The main currencies to which we are exposed are the Euro, Chinese renminbi, British pound sterling, Mexican peso, and Australian dollar.
Any adverse determination against us in these proceedings, or even the allegations contained in these claims, regardless of whether they are ultimately found to be without merit, may also result in settlements, injunctions or damages that could have a material adverse effect on our business, financial condition and results of operations.
Any adverse determination against us in these proceedings, or even the allegations contained in these claims, regardless of whether they are ultimately found to be without merit, may also result in settlements, injunctions or damages that could have a material adverse effect on our business, financial condition and results of operations. 63 We may face product liability claims, which could result in unexpected costs and damage our reputation.
Our success depends, in part, on our retention of key members of our senior management team, whose continued service is not guaranteed, ability to manage the transition of our Chief Executive Officer, and ability to attract and retain qualified personnel.
Our success depends, in part, on our retention of key members of our senior management team, whose continued service is not guaranteed, and ability to attract and retain qualified personnel.
If our earnings substantially decrease or we are unable to obtain future financings on terms acceptable to us, it is possible that we would be unable to make payments of principal and interest due under our credit agreement with JPMorgan Chase Bank, N.A. and/or our 1.25% Convertible Senior Notes due 2026 (the “Notes”), resulting in a default under such agreements.
If our earnings substantially decrease or we are unable to obtain future financings on terms acceptable to us, it is possible that we would be unable to make payments of principal and interest due under our 1.25% Convertible Senior Notes due October 2026 (the “Notes”), resulting in a default under the Notes.
We anticipate that we will continue to rely on such third-party products, technologies and intellectual property in the future. We cannot assure you that these third-party licenses, or support for such licensed products and technologies, will continue to be available to us on commercially reasonable terms, if at all.
We cannot assure you that these third-party licenses, or support for such licensed products and technologies, will continue to be available to us on commercially reasonable terms, if at all.
Our failure to meet Nasdaq’s continued listing requirements could result in a delisting of our Class A Common Stock. If we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our Class A Common Stock.
If we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our Class A Common Stock.
Recent and potential additional tariffs imposed by the United States government on certain imports or a global trade war could increase the cost of our products, which could materially and adversely affect our business, financial condition and results of operations.
If any of these events occur, our business, financial condition and results of operations could be materially and adversely affected. 51 Recent and potential additional tariffs imposed by the United States government on certain imports or a global trade war could increase the cost of our products, which could materially and adversely affect our business, financial condition and results of operations.
If we are unable to continue to compete effectively, it could have a material adverse effect on our business, financial condition and results of operations. Our business is dependent on the commercial success of selling our Delivery Systems, particularly Syndeo 3.0 devices.
If we are unable to continue to compete effectively, it could have a material adverse effect on our business, financial condition and results of operations. Our business is dependent on the commercial success and our ability to sell Delivery Systems.
For example, regulations implemented pursuant to the Health Insurance Portability and Accountability Act (“HIPAA”), including regulations governing the privacy and security of individually identifiable health information held by healthcare providers and their business associates may require us to make significant and unplanned enhancements of software applications or services, result in delays or cancellations of orders, cause us to be subject to significant penalties or fines for violations, or result in the revocation of endorsement of our products and services by healthcare participants, among others.
For example, regulations implemented pursuant to the Health Insurance Portability and Accountability Act (“HIPAA”), including regulations governing the privacy and security of individually identifiable health information held by healthcare providers and their business associates may require us to make significant and unplanned enhancements of software applications or services, result in delays or cancellations of orders, cause us to be subject to significant penalties or fines for violations, or result in the revocation of endorsement of our products and services by healthcare participants, among others. 62 In addition, significant changes to the regulatory requirements for cosmetic products have come into effect and more are scheduled throughout 2025.
If in the future we raise additional capital through debt financing, the terms of any new debt arrangements could further restrict our ability to operate our business by imposing significant restrictions on our operations, including restrictive covenants such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to pay dividends, limitations on our ability to acquire or license intellectual property rights, and other operating restrictions.
If in the future we raise additional capital through debt financing, the terms of any new debt arrangements could further restrict our ability to operate our business by imposing significant restrictions on our operations, including restrictive covenants such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to pay dividends, limitations on our ability to acquire or license intellectual property rights, and other operating restrictions. 43 We maintain our cash at financial institutions, often in balances that exceed federally insured limits.
If we discover that any of our products are causing adverse reactions, we could suffer adverse publicity or regulatory or government sanctions. 58 Potential product liability risks may arise from the testing, manufacture and sale of our products, including that the products fail to meet quality or manufacturing specifications, contain contaminants, include inadequate instructions as to their proper use, include inadequate warnings concerning side effects and interactions with other substances or for persons with health conditions or allergies, or cause adverse reactions or side effects.
Potential product liability risks may arise from the testing, manufacture and sale of our products, including that the products fail to meet quality or manufacturing specifications, contain contaminants, include inadequate instructions as to their proper use, include inadequate warnings concerning side effects and interactions with other substances or for persons with health conditions or allergies, or cause adverse reactions or side effects.
If any of these sites were shut down or damaged by natural disaster, fire, social unrest, government regulation or other causes, our operations would be negatively impacted.
If this site were shut down or damaged by natural disaster, fire, social unrest, government regulation or other causes, our operations would be negatively impacted.
A determination that we are in violation of FDA or other applicable foreign laws and regulations or any of our product clearances, approvals or certifications could lead to warning letters or untitled letters; fines, injunctions, or civil penalties; suspension or withdrawal of approvals or clearances; seizures or recalls of products; total or partial suspension of production or distribution; administrative or judicially imposed sanctions; the FDA’s refusal to grant pending or future clearances or approvals for products; clinical holds; refusal to permit the import or export of products; and criminal prosecution.
A determination that we are in violation of FDA or other applicable foreign laws and regulations or any of our product clearances, approvals or certifications could lead to warning letters or untitled letters; fines, injunctions, or civil penalties; suspension or withdrawal of approvals or clearances; seizures or recalls of products; total or partial suspension of production or distribution; administrative or judicially imposed sanctions; the FDA’s refusal to grant pending or future clearances or approvals for products; clinical holds; refusal to permit the import or export of products; and/or criminal prosecution. 56 Our employees, consultants, and other commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Class A Common Stock could decrease, which might cause our Class A Common Stock price and trading volume to decline.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Class A Common Stock could decrease, which might cause our Class A Common Stock price and trading volume to decline. 69 Our failure to meet Nasdaq’s continued listing requirements could result in a delisting of our Class A Common Stock.
Furthermore, if we cannot make scheduled payments on our debt, the lenders under our credit agreement may terminate their commitments to loan money to us under our revolving credit facility, and our lenders under our credit agreement can declare all outstanding principal and interest to be due and payable and foreclose against the assets securing their borrowings, and we could be forced into bankruptcy or liquidation. 40 The terms of our credit agreement and senior notes require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility.
Furthermore, if we cannot make scheduled payments on our debt, the lenders under our credit agreement may terminate their commitments to loan money to us under our revolving credit facility, and our lenders under our credit agreement can declare all outstanding principal and interest to be due and payable and foreclose against the assets securing their borrowings, and we could be forced into bankruptcy or liquidation.
The qualitative and quantitative analysis used to test goodwill are dependent upon various assumptions and reflect management’s best estimates. Changes in certain assumptions including revenue growth rates, discount rates, earnings multiples and future cash flows may cause a change in circumstances indicating that the carrying value of goodwill or the asset group may be impaired.
The qualitative and quantitative analysis used to test goodwill are dependent upon various assumptions and reflect management’s best estimates. Changes in assumptions may cause a change in circumstances indicating that the carrying value of goodwill or the asset group may be impaired.
We are subject to changing tax laws and policies, and changes in interpretations of existing tax laws, both within and outside of the United States, and tax authorities are increasingly scrutinizing the tax positions of companies.
We are subject to changing tax laws and policies, and changes in interpretations of existing tax laws, both within and outside of the United States, and tax authorities are increasingly scrutinizing the tax positions of companies. For example, on August 16, 2022, the U.S.
These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 60 In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who does conceive or develop intellectual property that we regard as our own.
In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who does conceive or develop intellectual property that we regard as our own.
Any of these negative effects resulting from litigation, regulatory investigations, and other legal matters could materially adversely affect our business, financial condition, and results of operations. 59 Risks related to intellectual property Intellectual property rights may not provide adequate protection for some or all of our products, and our intellectual property rights may be difficult to enforce and protect, which could enable others to copy or use aspects of our technology without compensating us, thereby eroding our competitive advantages and having an adverse effect on our business, results of operations, and financial condition.
Risks related to intellectual property Intellectual property rights may not provide adequate protection for some or all of our products, and our intellectual property rights may be difficult to enforce and protect, which could enable others to copy or use aspects of our technology without compensating us, thereby eroding our competitive advantages and having an adverse effect on our business, results of operations, and financial condition.
Any of these factors could depress economic activity and restrict our access to capital, which could materially and adversely affect our business, financial condition and results of operations. 47 We have growing operations in China, which exposes us to risks inherent in doing business in that country.
Any of these factors could depress economic activity and restrict our access to capital, which could materially and adversely affect our business, financial condition and results of operations. We conduct business in China, which exposes us to risks inherent in doing business in that country. We currently source components in China and do not have substantial alternatives to those suppliers.
Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants for each reporting period that our warrants remain outstanding and that the amount of such gains or losses on our warrants could be material. 64 We may be subject to securities litigation, which is expensive to defend and could divert management’s attention.
Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants for each reporting period that our warrants remain outstanding and that the amount of such gains or losses on our warrants could be material.
Climate change could impact our business in various ways. Government action to reduce climate change such as the introduction of a carbon tax, land use regulations or product composition regulations that restrict or ban certain greenhouse gas intensive ingredients, could impact our business through higher costs or reduced flexibility of operations.
Government action to reduce climate change such as the introduction of a carbon tax, land use regulations or product composition regulations that restrict or ban certain greenhouse gas intensive ingredients, could impact our business through higher costs or reduced flexibility of operations. Market risks associated with the energy transition and rising energy prices could disrupt our operations and increase costs.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our shares of Class A Common Stock.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our shares of Class A Common Stock. We have identified a material weakness in our internal control over financial reporting that could negatively impact our financial condition.
Any regulatory action or penalty could lead to private party actions, or private parties could seek to challenge our claims even in the absence of formal regulatory actions, which could harm our business, financial condition, and results of operations. 53 Our products may cause or contribute to adverse medical events or other undesirable side effects that we are required to report to the FDA or foreign regulatory authorities, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, financial condition and results of operations.
Our products may cause or contribute to adverse medical events or other undesirable side effects that we are required to report to the FDA or foreign regulatory authorities, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeMembers of our Board of Directors receive presentations on cybersecurity topics from our Chief Information Security Officer, internal staff, or external experts as part of the Board of Directors’ continuing education on topics that impact public companies. 65 Our management team is responsible for assessing and managing our material risks from cybersecurity threats.
Biggest changeThe full Board of Directors also receives briefings from management on our cyber risk program on an as-needed basis. Members of our Board of Directors receive presentations on cybersecurity topics from our Chief Information Security Officer, internal staff, or external experts as part of the Board of Directors’ continuing education on topics that impact public companies.
We evaluate the risks associated with technology and cybersecurity threats and monitor our information systems for potential weaknesses. We review and test our information technology system on an as-needed basis (and at least on an annual basis) and also utilize internal team personnel to evaluate and assess the efficacy of our information technology system and enhance our controls and procedures.
We evaluate the risks associated with technology and cybersecurity threats and monitor our information systems for potential weaknesses. We review and test our information technology system on an as-needed basis (and at least on an annual basis) and utilize internal team personnel to evaluate and assess the efficacy of our information technology system and enhance our controls and procedures.
Team personnel who support our information security program have relevant educational and industry experience, including holding similar positions at previous large companies and government entities.
Team personnel who support our information security program have relevant educational and industry experience, including holding similar positions at previous large companies and government entities. 71
For more information about the cybersecurity risks that we face, see the risk factor entitled, “ We are increasingly dependent on information technology, and if we are unable to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted ” in Part I, Item 1A Risk Factors in this Annual Report on Form 10-K.
For more information about the cybersecurity risks that we face, see the risk factor entitled, “We are increasingly dependent on information technology, and if we are unable to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted” in Part I, Item 1A Risk Factors in this Annual Report on Form 10-K.
The team is led by our Vice President - Software, Engineering, and IT, who also currently serves as our Interim Chief Information and Security Officer, and has over 24 years of industry experience leading IT for organizations of similar sizes.
The team is led by our Vice President of Technology, who also currently serves as our Chief Information and Security Officer, and has over 25 years of industry experience leading IT for organizations of similar sizes.
The team (and team personnel who support our information security program) has primary responsibility for our overall cybersecurity program and supervises both our internal cybersecurity personnel and our retained external cybersecurity third party vendors and consultants.
Our management team is responsible for assessing and managing our material risks from cybersecurity threats. The team (and team personnel who support our information security program) has primary responsibility for our overall cybersecurity program and supervises both our internal cybersecurity personnel and our retained external cybersecurity third party vendors and consultants.
Removed
The full Board of Directors also receives briefings from management on our cyber risk program on an as-needed basis.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOutside of the United States, we also lease several small office spaces in China, Australia, Japan, Spain, France, Germany, the United Kingdom, and Mexico for sales and marketing employees in those markets. We believe our present facilities are suitable and adequate for our current operating needs. We do not own any real property.
Biggest changeWe lease a 105,000 square foot warehouse that serves as our distribution center, manufacturing facility, and production facility in Long Beach, California. Outside of the United States, we also lease several small office spaces in China, Australia, Spain, France, Germany, the United Kingdom, and Mexico for sales and marketing employees in those markets.
Removed
We lease a 105,000 square foot warehouse that serves as our distribution center, manufacturing facility, and production facility in Long Beach, California, under a lease that expires in November 2024. In February 2024, the Company entered into a two-year lease extension for its Long Beach facility.
Added
We believe our present facilities are suitable and adequate for our current operating needs. We do not own any real property.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. For a description of our material pending legal proceedings, see Note 14, Commitments and Contingencies, to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K . Item 4. Mine Safety Disclosures. Not Applicable. 66 PART II
Biggest changeItem 3. Legal Proceedings. For a description of our material pending legal proceedings, see Note 8, Commitments and Contingencies, to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not Applicable. 72 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHowever, subject to applicable rules and regulations, the extent to which the Company repurchases shares, and the timing of such repurchases, will depend upon a variety of factors as determined by the Company’s management. 67 Performance Graph The graph above shows the total stockholder return of an investment of $100 cash on November 20, 2020 (the date our Class A Common Stock began trading on Nasdaq) through December 31, 2023 for (1) our Class A Common Stock, (2) Standard & Poor’s (“S&P”) 500 Index, and (3) the S&P Consumer Discretionary Select Sector Index.
Biggest changeIssuer Purchases of Equity Securities None. 73 Performance Graph The graph above shows the total stockholder return of an investment of $100 cash on November 20, 2020 (the date our Class A Common Stock began trading on Nasdaq) through December 31, 2024 for (1) our Class A Common Stock, (2) Standard & Poor’s (“S&P”) 500 Index, and (3) the S&P Consumer Discretionary Select Sector Index.
All values assume reinvestment of the full amount of all dividends. The comparisons in the table are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock.
All values assume reinvestment of the full amount of all dividends. The comparisons in the table are required by the SEC and are not intended to forecast or be indicative of possible future performance of our Class A Common Stock.
Market Information Our Class A Common Stock is traded on the Nasdaq Capital Market under the symbol “SKIN.” Prior to May 4, 2021 and before the completion of the Business Combination by and among Vesper Healthcare Acquisition Corp., Hydrate Merger Sub I, Inc., Hydrate Merger Sub II, LLC, LCP Edge Intermediate, Inc., the indirect parent of Edge Systems LLC d/b/a The Hydrafacial Company, and LCP Edge Holdco, LLC, the Class A Common Stock of Vesper Healthcare Acquisition Corp. traded on Nasdaq under the ticker symbol “VSPR.” Holders As of March 9, 2024 , there were 51 holders of record of our Class A Common Stock.
Market Information Our Class A Common Stock is traded on the Nasdaq Capital Market under the symbol “SKIN.” Prior to May 4, 2021 and before the completion of the Business Combination by and among Vesper Healthcare Acquisition Corp., Hydrate Merger Sub I, Inc., Hydrate Merger Sub II, LLC, LCP Edge Intermediate, Inc., the indirect parent of Edge Systems LLC d/b/a The Hydrafacial Company, and LCP Edge Holdco, LLC, the Class A Common Stock of Vesper Healthcare Acquisition Corp. traded on Nasdaq under the ticker symbol “VSPR.” Holders As of March 10, 2025, there were 42 holders of record of our Class A Common Stock.
Removed
Issuer Purchases of Equity Securities We are authorized by the Board of Directors to repurchase shares of our Class A Common Stock from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions, or accelerated share repurchase programs depending on market conditions and other factors.
Removed
The following table presents information related to our purchases of the Company's Class A Common Stock during the quarter ended December 31, 2023: Period Total Number of Shares Repurchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program (1) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plan or Program (1) October 1, 2023 through October 31, 2023 1,311,315 $ 5.83 1,311,315 $ 89,974,044 November 1, 2023 through November 30, 2023 6,704,261 $ 2.22 6,704,261 $ 75,094,120 December 1, 2023 through December 31, 2023 1,915,931 $ 2.74 1,915,931 $ 69,844,738 9,931,507 $ 2.80 9,931,507 $ 69,844,738 (1) On September 12, 2023, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $100.0 million of the Company’s Class A Common Stock.
Removed
During the quarter ended December 31, 2023, the Company repurchased approximately 9.9 million shares for $27.8 million, excluding taxes. The share repurchase program does not obligate the Company to repurchase any specific number of shares, and may be suspended or discontinued at any time.
Removed
Under the share repurchase plan, shares may be repurchased through a variety of methods including, but not limited to, open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, or otherwise in compliance with Rule 10b5-1, and, to the extent applicable, Rule 10b-18 under the Exchange Act.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeInterest Income, Change in Fair Value of Warrant Liabilities, and Other (Income) Expense, Net Year Ended December 31, Change (Dollars in millions) 2023 2022 Amount % Interest income $ (23.2) $ (9.2) $ (14.0) 152.6 % Change in fair value of warrant liabilities $ (11.9) $ (78.3) $ 66.4 N/M Other (income) expense, net $ (5.2) $ 1.7 $ (6.9) N/M Interest income for the year ended December 31, 2023 increased $14.0 million compared to the year ended December 31, 2022 due to higher interest earned on our investment in money market funds and $0.5 million received for the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act. 73 During the year ended December 31, 2023, the Company recognized income of $11.9 million related to the change in the fair value of the warrant liabilities, a decrease of $66.4 million, as compared to income of $78.3 million during the year ended December 31, 2022, driven by the fluctuation of the Company’s stock price.
Biggest changeInterest Income, Change in Fair Value of Warrant Liabilities, and Other Income, Net Year Ended December 31, Change (Dollars in millions) 2024 2023 Amount % Interest income $ (16.6) $ (23.2) $ 6.5 (28.2) % Change in fair value of warrant liabilities $ (3.1) $ (11.9) $ 8.9 (74.3) % Other income, net $ (33.6) $ (5.2) $ (28.4) N/M N/M - Not meaningful Interest income for the year ended December 31, 2024 decreased $6.5 million compared to the year ended December 31, 2023, primarily due to lower average invested balances during the year ended December 31, 2024.
The Notes were issued pursuant to, and are governed by, an indenture, dated as of September 14, 2021, between the Company and U.S. Bank National Association, as trustee. The Notes accrue interest at a rate of 1.25% per annum, payable semi-annually in arrears on April 1 and October 1 of each year, which began on April 1, 2022.
The Notes were issued pursuant to, and are governed by, an indenture dated as of September 14, 2021, between the Company and U.S. Bank National Association, as trustee (the “Indenture”). The Notes accrue interest at a rate of 1.25% per annum, payable semi-annually in arrears on April 1 and October 1 of each year, which began on April 1, 2022.
Impact if Actual Results Differ from Estimates and Judgements : If the assumptions around future demand for our inventory are more optimistic than actual future results, the net realizable value calculated using these assumptions may be overstated, resulting in an overstatement of the inventory balance. 79 Income Taxes Management’s Policy : We use the asset-and-liability method for income taxes.
Impact if Actual Results Differ from Estimates and Judgements : If the assumptions around future demand for our inventory are more optimistic than actual future results, the net realizable value calculated using these assumptions may be overstated, resulting in an overstatement of the inventory balance. Income Taxes Management’s Policy : We use the asset-and-liability method for income taxes.
Interest Income Interest income consists of interest earned from investments in money market funds that the Company classifies as cash equivalents. Interest income as a percentage of revenue will fluctuate period to period along with fluctuations in interest rates, which is not related to normal business operations.
Interest Income Interest income primarily consists of interest earned from investments in money market funds that the Company classifies as cash equivalents. Interest income as a percentage of revenue will fluctuate period to period along with fluctuations in interest rates, which is not related to normal business operations.
Selling and Marketing Selling and marketing expense consists of personnel-related expenses, sales commissions, travel costs, training, and advertising expenses incurred in connection with the sale of our products.
Selling and Marketing Selling and marketing expense primarily consists of personnel-related expenses, sales commissions, travel costs, training, and advertising expenses incurred in connection with the sale of our products.
The Company and its subsidiaries design, develop, manufacture, market, and sell esthetic technologies and products. The Company’s brands are pioneers: Hydrafacial in hydradermabrasion; SkinStylus in microneedling; and Keravive in scalp health. Together, with its powerful community of estheticians, partners and consumers, the Company is personalizing skin health for all ages, genders, skin tones, and skin types.
The Company and its subsidiaries design, develop, manufacture, market, and sell esthetic technologies and products. The Company’s brands are pioneers: Hydrafacial in hydradermabrasion; SkinStylus in nanoneedling and microneedling; and Keravive in scalp health. Together, with its powerful global community of estheticians, partners and consumers, the Company is personalizing skin health for all ages, genders, skin tones, and skin types.
Our sources of liquidity and cash flows are used to fund ongoing operations, research and development projects for new products, services, and technologies, and provide ongoing support services for our providers and customers, including liabilities associated with the Syndeo Program . As part of our business strategy, we occasionally evaluate potential acquisitions of businesses and products and technologies.
Our sources of liquidity and cash flows are used to fund ongoing operations, research and development projects for new products, services, and technologies, and provide ongoing support services for our providers and customers, including liabilities associated with the recently completed Syndeo Program . As part of our business strategy, we occasionally evaluate potential acquisitions of businesses and products and technologies.
Impact if Actual Results Differ from Estimates and Judgments : Changes around share price volatility and assumptions and inputs used in the Monte Carlo model can result in an increase or decrease in fair value which can substantially impact the outstanding liability and the change in fair value of warrant liabilities in the Consolidated Statements of Comprehensive Loss.
Impact if Actual Results Differ from Estimates and Judgments : Changes around share price volatility and assumptions and inputs used in the Monte Carlo simulation model can result in an increase or decrease in fair value which can substantially impact the outstanding liability and the change in fair value of warrant liabilities on the Consolidated Statements of Comprehensive Loss.
Amended and Restated Credit Agreement On November 14, 2022, the Company, as successor by assumption to Hydrafacial, entered into an Amended and Restated Credit Agreement (as it may be further amended, restated, supplemented or modified from time to time, the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (the “Administrative Agent”).
Amended and Restated Credit Agreement On November 14, 2022, the Company, as successor by assumption to Hydrafacial, a California limited liability company, entered into an Amended and Restated Credit Agreement (as it may be further amended, restated, supplemented or modified from time to time, the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (the “Administrative Agent”).
Research and Development Research and development expense primarily consists of personnel-related expenses, tooling and prototype materials, technology investments, and other expenses incurred in connection with the development of new products and internal technologies. 70 General and Administrative General and administrative expenses include personnel-related expenses, professional fees, credit card and wire fees and facilities-related costs primarily for our executive, corporate affairs, finance, accounting, legal, human resources, and information technology (“IT”) functions.
Research and Development Research and development expense primarily consists of personnel-related expenses, tooling and prototype materials, technology investments, and other expenses incurred in connection with the development of new products and internal technologies. 76 General and Administrative General and administrative expense primarily consists of personnel-related expenses, credit card and wire fees and facilities-related costs primarily for our executive, corporate affairs, finance, accounting, legal, human resources, and information technology (“IT”) functions.
Although we believe we can be successful in our current operating environment, various factors may impact our business in unpredictable ways such as: • Disruptions in transportation and other supply chain related constraints, such as labor strife in the transportation industry; • Global economic conditions, including inflation, recession, changes in foreign currency exchange rates, higher interest rates, and other changes in economic conditions; and • Issues related to older models of Syndeo and our actions to remediate such issues We may be able to offset cost pressures through increasing the selling prices of some of our products, increasing value engineering efforts to optimize product costs, increasing the diversification of our suppliers and supplier contracts, increasing natural foreign currency hedging, as applicable, and reducing discretionary spending.
Although we believe we can be successful in our current operating environment, various factors may impact our business in unpredictable ways such as: • Disruptions in transportation and other supply chain related constraints, such as labor strife in the transportation industry; • The imposition of tariffs and/or trade restrictions may impact material costs and pricing; • Global economic conditions, including inflation, recession, changes in foreign currency exchange rates, higher interest rates, and other changes in economic conditions; and • Issues related to older models of Syndeo and our actions to remediate such issues We may be able to offset cost pressures through increasing the selling prices of some of our products, increasing value engineering efforts to optimize product costs, increasing the diversification of our suppliers and supplier contracts, increasing natural foreign currency hedging, as applicable, and reducing discretionary spending.
The increase in Consumables sales was primarily attributable to increased placements of Delivery Systems and the adjoining consumption of Consumables during the year ended December 31, 2023.
The increase in Consumables sales was primarily attributable to increased placements of Delivery Systems and the adjoining consumption of Consumables during the year ended December 31, 2024.
Liquidity and Capital Resources Our primary sources of capital have been (i) cash flow from operating activities, (ii) net proceeds received from the consummation of the Business Combination, (iii) net proceeds received from the Notes (as defined below), and (iv) net proceeds received from the exercise of Public and Private Placement Warrants.
Liquidity and Capital Resources Our primary sources of capital have been (i) cash flow from operating activities, (ii) net proceeds received from the consummation of the Business Combination, (iii) net proceeds received from the Notes, and (iv) net proceeds received from the exercise of public and Private Placement Warrants.
The Company will provide, at no cost to the customer, the option of (i) a technician upgrade to their Syndeo 1.0 or 2.0 devices to 3.0 standards in the field; or (ii) a replacement Syndeo 3.0 device for their existing device (the “Syndeo Program”).
The Company provided, at no cost to the customer, the option of (i) a technician upgrade to their Syndeo 1.0 or 2.0 devices to 3.0 standards in the field; or (ii) a replacement Syndeo 3.0 device for their existing device (the “Syndeo Program”).
This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Additionally, the Company will extend the customer’s warranty by one year for each system from the date it was either brought to the 3.0 standards or the customer received a Syndeo 3.0 device.
Additionally, the Company extended the customer’s warranty by one year for each system from the date it was either brought to the 3.0 standards or the customer received a Syndeo 3.0 device.
Our operating cash flows result primarily from cash received from sales of Delivery Systems and Consumables, offset primarily by cash payments made for products and services, employee compensation, payment processing and related transaction costs, operating leases, marketing expenses, and interest payments on our long-term obligations. Cash received from our customers and other activities generally corresponds to our net sales.
Our operating cash flows result primarily from cash received from sales of Delivery Systems and Consumables, offset primarily by cash payments made for products and services, employee compensation, payment processing and related transaction costs, operating leases, marketing expenses, and interest payments for our Notes. Cash received from our customers and other activities generally corresponds to our net sales.
Syndeo Program To stand behind its commitment to its customers and protect the Company’s brand reputation, during October 2023, the Company’s management decided that, with respect to Syndeo devices, the Company will only market and sell Syndeo 3.0 devices.
Syndeo Program To stand behind its commitment to its customers and protect the Company’s brand reputation, in October 2023, the Company’s management decided that, with respect to Syndeo devices, the Company would only market and sell Syndeo 3.0 devices.
Change in Fair Value of Warrant Liabilities The Company’s Public and Private Placement Warrants are accounted for as liabilities in the Consolidated Balance Sheets and measured at fair value at inception and on a recurring basis. The value of the Private Placement Warrants was determined using a Monte Carlo simulation model.
The Private Placement Warrants are accounted for as liabilities on the Consolidated Balance Sheets and are measured at fair value at inception and on a recurring basis. The fair value of the Private Placement Warrants was determined using a Monte Carlo simulation model.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are not included in this Annual Report on Form 10-K, and can be found in Part II, Item 7 of the Company’s Annual Report on Form 10-K filed on March 1, 2023 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Company Overview The Beauty Health Company is a global category-creating company delivering skin health experiences that help consumers reinvent their relationship with their skin, bodies and self-confidence.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this Annual Report on Form 10-K, and can be found in Part II, Item 7 of the Company’s Annual Report on Form 10-K filed on March 12, 2024 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Company Overview The Beauty Health Company is a medtech meets beauty company that delivers skin health experiences that help consumers reinvent their relationship with their skin, bodies and self-confidence.
During the year ended December 31, 2023, the Company recognized other income of $5.2 million primarily related to payments received for the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act.
During the year ended December 31, 2023 , the Company recognized other income, net of $5.2 million , which includes $4.9 million related to payments received for the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act.
Cost of Sales Hydrafacial’s cost of sales consists of product costs, including the cost of materials, labor costs, overhead, depreciation and amortization of developed technology, shipping and handling costs, and the costs associated with excess and obsolete inventory.
Cost of Sales Costs of sales primarily consists of Delivery Systems and Consumables product costs, including the cost of materials, labor costs, overhead, depreciation and amortization of developed technology, shipping and handling costs, and the costs associated with excess and obsolete inventory.
As of December 31, 2023, the Company has accrued $21.0 million for the estimated cost for its remediation plan to upgrade or exchange Syndeo devices.
As of December 31, 2023, the Company accrued $21.0 million for the estimated cost for its remediation plan to upgrade or exchange Syndeo devices. As of December 31, 2024, the Syndeo Program is complete.
Research and Development Year Ended December 31, Change (Dollars in millions) 2023 2022 Amount % Research and development $ 10.1 $ 8.4 $ 1.7 19.6 % As a percentage of net sales 2.5 % 2.3 % Research and development expense for the year ended December 31, 2023 increased $1.7 million, or 19.6%, compared to the year ended December 31, 2022.
Research and Development Year Ended December 31, Change (Dollars in millions) 2024 2023 Amount % Research and development $ 6.3 $ 10.1 $ (3.8) (37.7) % As a percentage of net sales 1.9 % 2.5 % Research and development expense for the year ended December 31, 2024 decreased $3.8 million, or 37.7%, compared to the year ended December 31, 2023.
Capital expenditures for the year ending December 31, 2023 were $3.8 million. Based on our sources of capital, management believes that we have sufficient liquidity to satisfy our anticipated working capital requirements for our ongoing operations and obligations for at least the next 12 months.
Capital expenditures for property and equipment and intangible assets for the year ended December 31, 2024 were $6.8 million. Based on our sources of capital, management believes that we have sufficient liquidity to satisfy our anticipated working capital requirements for our ongoing operations and obligations for at least the next 12 months.
Revenue Recognition Management’s Policy : In accordance with ASU 2014-09, we determine the amount of revenue to be recognized through application of the following steps: • Identify the customer contract; • Identify the performance obligations in the contract; 78 • Determine the transaction price; • Allocate the transaction price to the performance obligations in the contract; and • Recognize revenue as the performance obligations are satisfied.
Revenue Recognition Management’s Policy : In accordance with ASC 606, Revenue from Contracts with Customers , we determine the amount of revenue to be recognized through application of the following steps: • Identify the customer contract; • Identify the performance obligations in the contract; • Determine the transaction price; • Allocate the transaction price to the performance obligations in the contract; and • Recognize revenue as the performance obligations are satisfied.
The Company anticipates that the vast majority of its customers will elect to request a replacement Syndeo 3.0 device. 69 As a result of the decision to market and sell Syndeo 3.0 devices exclusively, the Company has designated all Syndeo 1.0 and 2.0 builds on-hand as obsolete, resulting in an inventory write-down of $19.6 million during the year ended December 31, 2023.
As a result of the decision to market and sell Syndeo 3.0 devices exclusively, the Company designated all Syndeo 1.0 and 2.0 builds on-hand as obsolete, resulting in an inventory write-down of $19.6 million during the year ended December 31, 2023.
Payments Due by Fiscal Period (Dollars in millions) Total Less Than 1 Year 1-3 years 3-5 Years More than 5 Years Notes (1) $ 750.0 $ — $ 750.0 $ — $ — Interest on Notes (1) 28.1 9.4 18.8 — — Operating leases 15.1 4.8 3.9 2.3 4.2 Purchase of inventory, service, and other 73.7 73.3 0.4 — — Total contractual obligations $ 866.9 $ 87.5 $ 773.1 $ 2.3 $ 4.2 (1) The Notes will mature on October 1, 2026 and are due either in cash or shares of the Company’s Class A Common Stock.
Payments Due by Fiscal Period (Dollars in millions) Total Less Than 1 Year 1-3 years 3-5 Years More than 5 Years Notes (1) $ 557.7 $ — $ 557.7 $ — $ — Interest on Notes (1) 13.9 7.0 6.9 — — Operating leases 17.4 5.8 6.6 2.0 3.0 Purchase of inventory, service, and other 30.2 21.8 8.4 — — Total contractual obligations $ 619.2 $ 34.6 $ 579.6 $ 2.0 $ 3.0 (1) The Notes will mature on October 1, 2026 and are due either in cash or shares of the Company’s Class A Common Stock.
The Company incurred costs of $24.6 million during the year ended December 31, 2023, associated with the cost to upgrade or replace Syndeo 1.0 or 2.0 devices during the year.
The Company incurred costs of $24.6 million during the year ended December 31, 2023, associated with the cost to upgrade or replace Syndeo 1.0 or 2.0 devices during the year. As of December 31, 2023, the Company accrued $21.0 million for the estimated cost for its remediation plan to upgrade or exchange Syndeo devices.
The Company recognized revenue based on the estimated fair value of such Delivery Systems for the fiscal years ended 2023 and 2022 of approximately $17 million and $9 million, respectively.
The Company recognized revenue based on the estimated fair value of such Delivery Systems for the years ended December 31, 2023 and 2022 of approximately $17 million and $9 million, respectively. No trade-in revenue was recognized for the year ended December 31, 2024.
Under this method, deferred tax assets and liabilities are determined based on differences between the consolidated financial statement carrying amounts and tax bases of assets and liabilities and operating loss and tax credit carryforwards and are measured using the enacted tax rates that are expected to be in effect when the differences reverse.
Under this approach, deferred tax assets and liabilities arise from differences between the financial statement carrying amounts and tax bases of assets and liabilities, as well as operating loss and tax credit carryforwards. These are measured using enacted tax rates expected to be in effect when the differences reverse.
Amounts and percentages may not foot due to rounding. 71 Comparison of Year Ended December 31, 2023 to Year Ended December 31, 2022 Year Ended December 31, (Dollars in millions) 2023 % of Net Sales 2022 % of Net Sales Net sales $ 398.0 100.0 % $ 365.9 100.0 % Cost of sales 242.9 61.0 117.1 32.0 Gross profit 155.1 39.0 248.8 68.0 Operating expenses Selling and marketing 144.5 36.3 160.1 43.8 Research and development 10.1 2.5 8.4 2.3 General and administrative 131.4 33.0 106.1 29.0 Total operating expenses 286.0 71.9 274.6 75.1 Loss from operations (130.9) (32.9) (25.8) (7.1) Interest expense 13.6 3.4 13.4 3.7 Interest income (23.2) (5.8) (9.2) (2.5) Other (income) expense, net (5.2) (1.3) 1.7 0.5 Change in fair value of warrant liabilities (11.9) (3.0) (78.3) (21.4) Foreign currency transaction (gain) loss, net (2.4) (0.6) 1.3 0.4 (Loss) income before provision for income taxes (101.9) (25.6) 45.3 12.4 Income tax (benefit) expense (1.8) (0.4) 1.1 0.3 Net (loss) income $ (100.1) (25.2) % $ 44.2 12.1 % Net Sales Year Ended December 31, Change (Dollars in millions) 2023 2022 Amount % Net sales Delivery Systems $ 206.6 $ 206.2 $ 0.4 0.2% Consumables 191.4 159.6 31.7 19.9% Total net sales $ 398.0 $ 365.9 $ 32.1 8.8% Percentage of net sales Delivery Systems 51.9% 56.4% Consumables 48.1% 43.6% Total 100.0% 100.0% Total net sales for the year ended December 31, 2023 increased $32.1 million, or 8.8%, compared to the year ended December 31, 2022.
Amounts and percentages may not foot due to rounding. 77 Comparison of Year Ended December 31, 2024 to Year Ended December 31, 2023 Year Ended December 31, (Dollars in millions) 2024 % of Net Sales 2023 % of Net Sales Net sales $ 334.3 100.0 % $ 398.0 100.0 % Cost of sales 152.0 45.5 242.9 61.0 Gross profit 182.3 54.5 155.1 39.0 Operating expenses Selling and marketing 118.3 35.4 144.5 36.3 Research and development 6.3 1.9 10.1 2.5 General and administrative 125.5 37.5 131.4 33.0 Total operating expenses 250.1 74.8 286.0 71.9 Loss from operations (67.8) (20.3) (130.9) (32.9) Interest expense 10.4 3.1 13.6 3.4 Interest income (16.6) (5.0) (23.2) (5.8) Other income, net (33.6) (10.0) (5.2) (1.3) Change in fair value of warrant liabilities (3.1) (0.9) (11.9) (3.0) Foreign currency transaction loss (gain), net 4.6 1.4 (2.4) (0.6) Loss before provision for income taxes (29.6) (8.8) (101.9) (25.6) Income tax benefit (0.5) (0.1) (1.8) (0.4) Net loss $ (29.1) (8.7) % $ (100.1) (25.2) % Net Sales Year Ended December 31, Change (Dollars in millions) 2024 2023 Amount % Net sales Delivery Systems $ 125.4 $ 206.6 $ (81.2) (39.3)% Consumables 208.9 191.4 17.5 9.2% Total net sales $ 334.3 $ 398.0 $ (63.7) (16.0)% Percentage of net sales Delivery Systems 37.5% 51.9% Consumables 62.5% 48.1% Total 100.0% 100.0% Total net sales for the year ended December 31, 2024, decreased $63.7 million, or 16.0%, compared to the year ended December 31, 2023.
Year Ended December 31, (Dollars in millions) 2023 2022 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) Changes in working capital 23.4 (145.3) 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 change 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 Operating Activities Net cash provided by operating activities were $21.8 million in 2023, as compared to net cash used for operating activities of $106.6 million in 2022.
Year Ended December 31, (Dollars in millions) 2024 2023 Cash, cash equivalents, and restricted cash at beginning of period $ 523.0 $ 568.2 Operating activities: Net loss (29.1) (100.1) Non-cash adjustments 72.6 98.5 Changes in working capital (27.4) 23.4 Net cash provided by operating activities 16.1 21.8 Net cash used for investing activities (6.8) (31.5) Net cash used for financing activities (158.3) (37.4) Net change in cash, cash equivalents, and restricted cash (149.0) (47.2) Effect of foreign currency translation (4.0) 2.0 Cash, cash equivalents, and restricted cash at end of period $ 370.1 $ 523.0 Operating Activities Net cash provided by operating activities for the year ended December 31, 2024 was $16.1 million, as compared to $21.8 million for the year ended December 31, 2023 .
Impact if Actual Results Differ from Estimates and Judgements : If the actual selling price of the refurbished Delivery Systems are lower or higher than the estimated reselling price, the difference would result in an increase or decrease in gross profit in the periods the refurbished Delivery Systems are sold.
If the actual selling price of the refurbished Delivery Systems are higher than the estimated reselling price, the difference would result in an increase in gross profit in the periods the refurbished Delivery Systems are sold.
Operating Expenses Selling and Marketing Year Ended December 31, Change (Dollars in millions) 2023 2022 Amount % Selling and marketing $ 144.5 $ 160.1 $ (15.6) (9.7) % As a percentage of net sales 36.3 % 43.8 % Selling and marketing expense for the year ended December 31, 2023 decreased $15.6 million, or 9.7%, compared to the year ended December 31, 2022.
Operating Expenses Selling and Marketing Year Ended December 31, Change (Dollars in millions) 2024 2023 Amount % Selling and marketing $ 118.3 $ 144.5 $ (26.2) (18.1) % As a percentage of net sales 35.4 % 36.3 % Selling and marketing expense for the year ended December 31, 2024 decreased $26.2 million, or 18.1%, compared to the year ended December 31, 2023.
However, if cash flows from operations become insufficient to continue operations at the current level, and if no additional capital were obtained, then management would restructure the Company in a way to preserve our business while maintaining expenses within operating cash flows.
However, if cash flows from operations become insufficient to continue operations at the current level, and if no additional capital were obtained, then management would restructure the Company in a way to preserve our business while maintaining expenses within operating cash flows. 80 Notes On September 14, 2021, the Company issued an aggregate of $750.0 million in principal amount of its Notes.
General and administrative expense also includes fees for professional services principally comprising legal, audit, tax and accounting services and insurance. Interest Expense Interest expense primarily consists of interest accrued on the Company’s Convertible Senior Notes and amortization of debt issuance costs relating to the Notes.
General and administrative expense also includes fees for professional services principally comprising legal, audit, tax and accounting services, and insurance. Interest Expense Interest expense consists of interest accrued on the Company’s Notes and amortization of debt issuance costs relating to the Notes. The Notes mature on October 1, 2026 and accrue interest at a rate of 1.25% per annum.
We remain attentive to these business and macroeconomic conditions that may materially impact our business, and we continue to explore and implement reporting and quality management systems and risk mitigation strategies in the face of these unfolding conditions to remain agile in adopting to changing circumstances.
We remain attentive to these business and macroeconomic conditions that may materially impact our business, and we continue to explore and implement reporting and quality management systems and risk mitigation strategies in the face of these unfolding conditions to remain agile in adopting to changing circumstances. 75 China Market The Company evaluated its global distribution strategy to align its go-to-market strategy with in-market partner capabilities and market opportunity.
The cost of the remediation program has been recognized in cost of sales, and is based on the Company’s estimates of the cost to upgrade or exchange customer devices. 80 Subjective Estimates and Judgements : The accrued cost includes significant judgments regarding customer response rates, the assumed method of remediation, and the cost of remediation, which include considerations such as the material and labor costs of upgrades and the manufacturing and logistics costs for replacement devices.
Subjective Estimates and Judgements : The accrued cost includes significant judgments regarding customer response rates, the assumed method of remediation, and the cost of remediation, which include considerations such as the material and labor costs of upgrades and the manufacturing and logistics costs for replacement devices.
Syndeo Program Reserves Management’s Policy : The Company accrues for the estimated cost for its remediation plan to upgrade or exchange customer Syndeo devices to meet the Syndeo 3.0 device standard.
Syndeo Program Reserves Management’s Policy : The Company accrues for the estimated cost for its remediation plan to upgrade or exchange customer Syndeo devices to meet the Syndeo 3.0 device standard. The cost of the remediation program has been recognized in cost of sales, and is based on the Company’s estimates of the cost to upgrade or exchange customer devices.
General and Administrative Year Ended December 31, Change (Dollars in millions) 2023 2022 Amount % General and administrative $ 131.4 $ 106.1 $ 25.3 23.9 % As a percentage of net sales 33.0 % 29.0 % General and administrative expense for the year ended December 31, 2023 increased $25.3 million, or 23.9%, compared to the year ended December 31, 2022.
General and Administrative Year Ended December 31, Change (Dollars in millions) 2024 2023 Amount % General and administrative $ 125.5 $ 131.4 $ (6.0) (4.5) % As a percentage of net sales 37.5 % 33.0 % General and administrative expense for the year ended December 31, 2024 decreased $6.0 million, or 4.5%, compared to the year ended December 31, 2023.
Although we have not seen any significant reduction in revenues to date due to consolidations, we have seen some consolidation in our industry during economic downturns. These consolidations have not had a negative effect on our total sales; however, should consolidations and downsizing in the industry continue to occur, those events could adversely impact our revenues and earnings going forward.
These consolidations have not had a negative effect on our total net sales; however, should consolidations and downsizing in the industries continue to occur, those events could adversely impact our revenues and earnings going forward.
The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future. The results of operations data for the years ended December 31, 2023 and December 31, 2022 have been derived from the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The results of operations data for the years ended December 31, 2024 and December 31, 2023 have been derived from the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We are continuing to monitor these and other risks that may affect our business so that we can respond appropriately.
Macroeconomic challenges and credit conditions have negatively impacted our revenues in 2024. We are continuing to monitor these and other risks that may affect our business so that we can respond appropriately.
The increase in cash used for investing activities was primarily related to the cash payment associated with the asset acquisitions of Esthetic Medical Inc. and Anacapa Aesthetics LLC for $18.5 million. Financing Activities Net cash used for financing activities were $37.4 million in 2023, as compared to $205.2 million in 2022.
The change in cash used for investing activities was primarily related to prior year’s asset acquisitions of Esthetic Medical Inc. and Anacapa Aesthetics LLC for $18.5 million. 82 Financing Activities Net cash used for financing activities for the year ended December 31, 2024 was $158.3 million, as compared to $37.4 million for the year ended December 31, 2023 .
Warrant Liabilities Management’s Policy : We classify the Public and Private Placement Warrants (“Warrant liabilities”) as liabilities on our Consolidated Balance Sheets as these instruments are precluded from being indexed to our own stock given the terms allow for a settlement adjustment that does not meet the scope of the fixed-for-fixed exception in ASC 815, Derivatives and Hedging .
If we are unable to realize all or part of our deferred tax assets or if a tax position is overturned by a taxing authority, we may need to adjust the valuation allowance, affecting income tax expense and potentially our earnings. 84 Warrant Liabilities Management’s Policy : We classify the Private Placement Warrants as liabilities on our Consolidated Balance Sheets as these instruments are precluded from being indexed to our own stock given the terms allow for a settlement adjustment that does not meet the scope of the fixed-for-fixed exception in ASC 815, Derivatives and Hedging .
Specifically, there is a high degree of subjectivity and judgement in evaluating the determination of the expected share price volatility inputs used in the Monte Carlo model for the warrant derivative liability. Historical, implied, and peer group volatility levels provide a range of possible expected volatility inputs and the fair value estimates are sensitive to the expected volatility inputs.
Subjective Estimates and Judgements : The valuation technique requires assumptions and judgement around the inputs to be used. Specifically, there is a high degree of subjectivity and judgement in evaluating the determination of the expected share price volatility inputs used in the Monte Carlo simulation model for the warrant derivative liability.
Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions. The critical accounting policies that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements include those noted below.
The critical accounting policies that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements include those noted below.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Subjective Estimates and Judgements : Valuation allowances are established when necessary to reduce deferred tax assets to an amount that, in the opinion of management, is more likely than not to be realized.
Any change in tax rates is recognized in income in the period of enactment. Subjective Estimates and Judgements : We assess the need for valuation allowances to reduce deferred tax assets to amounts that are more likely than not to be realized. This requires significant judgment.
Foreign Currency Transaction (Gain) Loss, Net Foreign currency transaction gains and losses are generated by intercompany balances and transactions denominated in other currencies other than the functional currency of the entity. Foreign currency gains and losses as a percentage of revenue will fluctuate period to period along with fluctuations in exchange rates, which is not related to normal business operations.
Foreign Currency Transaction Loss (Gain), Net Foreign currency transaction gains and losses are generated by intercompany balances and transactions denominated in other currencies other than the functional currency of the entity.
The decrease was primarily driven by lower sales commission expense, lower training and travel expense, lower marketing and advertising expense, and lower personnel related compensation expense, primarily driven by lower share-based compensation expense.
The decrease is primarily driven by lower personnel-related expenses, including sales commission expense and lower marketing related spend.
Syndeo inventory write-down and Syndeo Program charges were recognized in cost of sales for the year ended December 31, 2023.
Syndeo inventory write-down and Syndeo Program charges were recognized in cost of sales for the year ended December 31, 2023. As of December 31, 2024, the Syndeo Program is complete. Components of our Results of Operations Net Sales The Company generates revenue through manufacturing and selling Delivery Systems.
The Notes mature on October 1, 2026 and accrue interest at a rate of 1.25% per annum. Debt issuance costs are being amortized over the term of the Notes using the effective interest method.
Debt issuance costs are being amortized over the term of the Notes using the effective interest method.
Goodwill is recorded as the difference between the aggregate consideration paid for an acquisition and the fair value of the assets acquired and liabilities assumed. Goodwill is not amortized but is evaluated for impairment annually or more frequently if indicators of impairment are present or changes in circumstances suggest that impairment may exist.
Goodwill is recorded as the difference between the aggregate consideration paid for an acquisition and the fair value of the assets acquired and liabilities assumed.
From and after April 1, 2026, noteholders may convert their Notes into shares of Class A Common Stock until the close of business on the second scheduled trading day immediately before the maturity date. 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.
From and after April 1, 2026, noteholders may convert their Notes into shares of Class A Common Stock until the close of business on the second scheduled trading day immediately before the maturity date. Cash Flows The following table summarizes the activities from our statements of cash flows. Amounts may not foot due to rounding.
Gross margin decreased from 68.0% to 39.0% during the year ended December 31, 2023, primarily due to reserves and charges associated with the Syndeo Program, higher charges related to other discontinued, excess, and obsolete product costs, and higher product costs.
Gross margin increased from 39.0% to 54.5% during the year ended December 31, 2024, primarily due to the prior year’s charges and inventory write-downs associated with the Syndeo Program, partially offset by higher inventory related charges and the manufacturing optimization related costs.
In addition, we continue to face macro-economic challenges such as the possibility of recession or financial market instability, and the impact of any governmental actions on the economy. These factors may adversely impact consumer, business, and government spending as well as customers' ability to pay for our products and services on an ongoing basis.
In addition, we continue to face macroeconomic challenges such as the possibility of recession or financial market instability, and the impact of any governmental actions on the economy, such as tariffs and/or trade restrictions.
The net proceeds from the issuance of the Notes were approximately $638.7 million, net of capped call transaction costs of $90.2 million and debt issuance costs totaling $21.3 million. See Note 9 – Long-term Debt , to the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.
For information regarding the Company’s repurchases of its Notes during the year ended December 31, 2024, see Note 7, Long-Term Debt, to the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.
The fair value calculation requires significant judgments in determining the assets’ fair value, such as estimated cash flows, weighted-average cost of capital, comparable market multiples for the industry segment, royalty rates, when applicable, as well as market conditions.
The fair value calculation requires significant judgments in determining the assets’ fair value. The key estimates and factors used in the valuation models may include, as applicable, revenue growth rates and profit margins based on internal forecasts, weighted average cost of capital used to discount future cash flows, comparable market multiples for the industry segment, and historical operating trends.
In preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders’ equity, revenue, expenses, and related disclosures. We re-evaluate our estimates on an on-going basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
We re-evaluate our estimates on an on-going basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions.
The change in cash was primarily related to lower working capital usage, and the net impact of current year net loss and other non-cash adjustments. The net loss, non-cash adjustments, and change in inventories and other accrued expenses include the impact of the Syndeo Program charges.
The change in cash provided by operating activities was primarily related to higher working capital usage and changes in net loss and non-cash adjustments. The current year net loss and non-cash adjustments include a net gain of $33.4 million related to the repurchase of the Company’s Notes.
Subjective Estimates and Judgements : We assess the impairment of intangible assets and goodwill whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If necessary, we will use an industry accepted valuation model to estimate the fair value.
Goodwill is not amortized but is evaluated for impairment at least annually or more frequently if indicators of impairment are present or changes in circumstances suggest that impairment may exist. 83 Subjective Estimates and Judgements : We will use industry accepted valuation models to estimate the fair value for impairment testing.
Income Tax (Benefit) Provision The provision for income taxes consists primarily of income taxes related to federal, state and foreign jurisdictions in which we conduct business. Results of Operations The following tables set forth our consolidated results of operations in dollars and as a percentage of net sales for the periods presented.
Foreign currency transaction gains and losses as a percentage of revenue will fluctuate period to period along with fluctuations in exchange rates, which is not related to normal business operations. Income Tax (Benefit) Expense The provision for income taxes consists of income taxes related to federal, state and foreign jurisdictions in which we conduct business.
We recognized interest accrued and penalties related to unrecognized tax benefits in our income tax expense.
Interest and penalties related to unrecognized tax benefits are recorded in income tax expense. Impact if Actual Results Differ from Estimates and Judgments : While we believe our estimates and judgments are reasonable, actual results may differ.
The change in cash was primarily related to higher share repurchases in the prior year. Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“ GAAP”).
Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. In preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders’ equity, revenue, expenses, and related disclosures.
The prior year net sales of Delivery Systems in the Americas included the impact of the launch of Syndeo, which included trade-up net sales. Consumables sales for the year ended December 31, 2023 increased $31.7 million, or 19.9%, compared to the year ended December 31, 2022.
Delivery Systems net sales for the year ended December 31, 2024 decreased $81.2 million, or 39.3%, compared to the year ended December 31, 2023, with decreases across all regions. The decrease in Delivery Systems net sales reflects a challenging year-over-year comparison due to the prior year international launch of Syndeo, which included net sales from the trade-in program.
The Credit Agreement provides for a $50 million revolving credit facility with a maturity date of November 14, 2027.
The Credit Agreement provided the Company with a $50.0 million revolving credit facility that had a maturity date of November 14, 2027. On August 6, 2024, the Company prepaid all obligations and terminated all commitments, liabilities, and other obligations under the Credit Agreement.
The prior year net income and non-cash adjustments include the impact of $78.3 million gain resulting from the change in fair value of the Company’s warrants. Investing Activities Net cash used for investing activities were $31.5 million in 2023, as compared to $18.9 million in 2022.
The prior year net loss, non-cash adjustments, and changes in working capital include the impact of the Syndeo Program charges and inventory write-down. Investing Activities Net cash used for investing activities for the year ended December 31, 2024 was $6.8 million, as compared to $31.5 million for the year ended December 31, 2023 .
The increase was primarily driven by higher personnel related compensation expense which includes higher annual cash incentives and higher share-based compensation expense.
The decrease is primarily driven by lower personnel-related expenses, including share-based compensation expense.
Cost of Sales, Gross Profit, and Gross Margin Year Ended December 31, Change (Dollars in millions) 2023 2022 Amount % Cost of sales $ 242.9 $ 117.1 $ 125.8 107.4% Gross profit $ 155.1 $ 248.8 $ (93.7) (37.7)% Gross margin 39.0 % 68.0 % 72 Cost of sales increased by 107.4% primarily driven by $65.2 million of inventory write-downs and charges associated with the Syndeo Program, $18.3 million in charges for discontinued, excess, or obsolete inventory identified during the year ended December 31, 2023, $7.8 million in charges for contract losses, and higher product costs.
Cost of Sales, Gross Profit, and Gross Margin Year Ended December 31, Change (Dollars in millions) 2024 2023 Amount % Cost of sales $ 152.0 $ 242.9 $ (90.9) (37.4)% Gross profit $ 182.3 $ 155.1 $ 27.2 17.5% Gross margin 54.5 % 39.0 % 78 Cost of sales for the year ended December 31, 2024 decreased by $90.9 million, or 37.4%, compared to the year ended December 31, 2023.
The Warrant liabilities were initially recorded at fair value on the date of the Business Combination and at each reporting date thereafter. There were no Public Warrants outstanding as of December 31, 2023. The value of the Private Placement Warrants was determined at year end using the Monte Carlo simulation model.
The Private Placement Warrants were initially measured at fair value at inception and are subsequently adjusted to fair value at each subsequent reporting date. The value of the Private Placement Warrants was determined at year end using the Monte Carlo simulation model. Changes in the fair value of these instruments are recognized within the Consolidated Statements of Comprehensive Income Loss.
The initial conversion rate is 31.4859 shares of Class A Common Stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $31.76 per share of Class A Common Stock. We used $90.2 million of the net proceeds from the sale of the Notes to fund the cost of entering into capped call transactions (described below).
The initial conversion rate is 31.4859 shares of Class A Common Stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $31.76 per share of Class A Common Stock. See Note 7 – Long-term Debt, to the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.
As a result, if economic and social conditions or the degree of uncertainty or volatility worsen, or the adverse conditions previously described are further prolonged, our growth rate could be affected by consolidation and downsizing in the medical, esthetician, and beauty retail industry.
These factors may adversely impact consumers, business, and government spending as well as our customers' ability to pay for our products and services on an ongoing basis. If economic and social conditions or the degree of uncertainty or volatility worsen, or the adverse conditions previously described are further prolonged, our revenues could be adversely affected.
Delivery Systems net sales for the year ended December 31, 2023 increased $0.4 million, or 0.2%, compared to the year ended December 31, 2022. Increased net sales of Delivery Systems in APAC and EMEA were nearly offset by decreases in the Americas, which was impacted by provider experience challenges with Syndeo creating lower than expected demand.
Delivery Systems net sales were also negatively impacted globally by unfavorable macroeconomic and credit conditions and as the Company works to strengthen customer confidence in Syndeo. Consumables net sales for the year ended December 31, 2024, increased $17.5 million, or 9.2%, compared to the year ended December 31, 2023.
Significant judgement is required to determine if a valuation allowance is needed. As of December 31, 2023, we incurred cumulative pre-tax losses, and as a result, we do not rely on our projections as a source of income that would give us the ability to realize our deferred tax assets.
As of December 31, 2024, due to cumulative pre-tax losses, we do not rely on projected income to support the realization of deferred tax assets. Instead, we consider the reversal of taxable temporary differences as a source of income for realizing these assets.
Removed
As of December 31, 2023, the Company accrued additional costs of $21.0 million, primarily for the estimated cost to remediate, upgrade or exchange the remaining Syndeo 1.0 and 2.0 builds, which is expected to be completed during the first half of 2024. Any returning devices with a Syndeo 1.0 or 2.0 device build are expected to be responsibly destroyed.
Added
The Company expects to transition sales in the China market to a distributor partner during the second quarter of 2025, and as a result, the Company intends to discontinue its direct sales presence in China. The Company has not currently estimated the severance and restructuring and non-cash charges associated with these actions.
Removed
Business Transformation Program and Other Restructuring Actions The Company has recognized restructuring charges of $7.2 million primarily related to reductions in workforce of approximately 100 employees and consulting expenses for the year ended December 31, 2023 for the first phase of the Company’s business transformation plan and other restructuring actions.
Added
The change in go-to-market strategy is expected to be accretive to the Company’s long-term profitability, as reductions in operating spend are partially offset by a reduction to revenue.
Removed
Outstanding liabilities for consulting expenses was $2.4 million as of the year ended December 31, 2023. Outstanding liabilities for reductions in force were immaterial as of the year ended December 31, 2023. Gross cost savings as a result of restructuring actions taken as of the year ended December 31, 2023 are expected to be approximately $15 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+1 added−0 removed8 unchanged
Biggest changeChanges in U.S. interest rates affect the interest earned on our cash, cash equivalents and marketable securities and the fair value of those securities. Our investment policy and strategy are focused on the preservation of capital and supporting our liquidity requirements. We use a combination of internal and external management to execute our investment strategy and achieve our investment objectives.
Biggest changeOur investment policy and strategy are focused on the preservation of capital and supporting our liquidity requirements. We use a combination of internal and external management to execute our investment strategy and achieve our investment objectives. We typically invest in highly rated securities, with the primary objective of minimizing the potential risk of principal loss.
Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred. 82
Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred. 86
We have experienced and may continue to experience fluctuations in net loss as a result of transaction gains or losses related to remeasuring certain current asset and current liability balances denominated in currencies other than the functional currency of the entities in which they are recorded.
We have experienced and may continue to experience fluctuations in net loss as a result of foreign currency transaction gains or losses related to remeasuring monetary asset and liability balances denominated in currencies other than the functional currency of the entities in which they are recorded.
Foreign Currency Risk Our reporting currency is the U.S. dollar. Due to our international operations, we have foreign currency risks related to revenue and operating expenses denominated in currencies other than the U.S. dollar, primarily the China Renminbi, British pound sterling, Euro, and Australian dollar.
Foreign Currency Risk Our reporting currency is the U.S. dollar. Due to our international operations, we have foreign currency risks related to revenue and operating expenses denominated in currencies other than the U.S. dollar, primarily the Euro, Chinese renminbi, British pound sterling, Mexican peso, and Australian dollar.
If an adverse 10% foreign currency exchange rate change was applied to total monetary assets, liabilities, and commitments denominated in currencies other than the functional currencies at the balance sheet date, it would have resulted in an adverse effect on income before income taxes of approximately $8 million as of December 31, 2023.
If an adverse 10% foreign currency exchange rate change was applied to total monetary assets and liabilities denominated in currencies other than the functional currencies at the balance sheet date, it would have resulted in an adverse effect on income before income taxes of approximately $6 million and $8 million for the years ended December 31, 2024 and 2023, respectively.
We have not engaged in the hedging of foreign currency transactions to date, although we may choose to do so in the future. 81 While we are not currently contractually obligated to pay increased costs due to changes in exchange rates, to the extent that exchange rates move unfavorably for our suppliers, they may seek to pass these additional costs on to us, which could have a material impact on our gross margins.
While we are not currently contractually obligated to pay increased costs due to changes in exchange rates, to the extent that exchange rates move unfavorably for our suppliers, they may seek to pass these additional costs on to us, which could have a material impact on our gross margins.
Based on investment positions as of December 31, 2023, a hypothetical 100 basis point increase in interest rates across all maturities would result in approximately $5 million increase in the fair market value of the portfolio. Our debt obligations related to the Notes are long-term in nature with fixed interest rates.
If a hypothetical 100 basis points increase was applied to our investment positions at the balance sheet date, it would result in approximately $3 million and $5 million increase in the fair market value of the portfolio as of December 31, 2024 and 2023, respectively. 85 Our debt obligations related to the Notes are long-term in nature with fixed interest rates.
We typically invest in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. Our investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.
Our investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk Our exposure to changes in interest rates relates primarily to our investment portfolio and changes in short-term interest rates with respect to our cost of borrowing under our Credit Agreement, from which we have yet to draw on.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk Our exposure to changes in interest rates relates primarily to our investment portfolio. We monitor our cost of borrowing, taking into account our funding requirements, and our expectations for short-term rates in the future.
We monitor our cost of borrowing, taking into account our funding requirements, and our expectations for short-term rates in the future. While we are exposed to global interest rate fluctuations, we are most affected by fluctuations in U.S. interest rates.
While we are exposed to global interest rate fluctuations, we are most affected by fluctuations in U.S. interest rates. Changes in U.S. interest rates affect the interest earned on our cash, cash equivalents, restricted cash and marketable securities and the fair value of those securities.
Added
We have not engaged in the hedging of foreign currency transactions to date, although we may choose to do so in the future.

Other SKIN 10-K year-over-year comparisons