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What changed in Beauty Health Co's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Beauty Health Co's 2024 and 2025 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 2025 report.

+564 added−404 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-12)

Top changes in Beauty Health Co's 2025 10-K

564 paragraphs added · 404 removed · 310 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

89 edited+75 added−29 removed217 unchanged
Biggest changeOver the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such proposals could include increased requirements for clinical data and a longer review period, or could make it more difficult for manufacturers to utilize the 510(k) clearance process for their products by limiting the number of devices available for use to demonstrate equivalence as a predicate device.
Biggest changeFuture proposals or the finalization of any unimplemented proposals could include increased requirements for clinical data and a longer review period, or could make it more difficult for manufacturers to utilize the 510(k) clearance process for their products by limiting the number of devices available for use to demonstrate equivalence as a predicate device. 15 One such proposal was announced in November 2018, where the FDA indicated that it planned to develop proposals to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates.
The FDA may condition PMA approval on some form of post-market surveillance when deemed necessary to protect the public health or to provide additional safety and efficacy data for the device in a larger population or for a longer period of use.
The FDA may condition PMA approval on some form of post-market surveillance when deemed necessary to protect public health or to provide additional safety and efficacy data for the device in a larger population or for a longer period of use.
Moreover, the “sell-off” deadline in the EU Medical Devices Regulation is deleted which aims to prevent unnecessary disposal of safe devices. The transition period of devices is extended through to December 31, 2027 or December 31, 2028 depending on the device risk classification and certain other conditions being satisfied.
Moreover, the “sell-off” deadline in the EU Medical Devices Regulation is deleted which aims to prevent unnecessary disposal of safe devices. The transition period of devices is extended through December 31, 2027 or December 31, 2028 depending on the device risk classification and certain other conditions being satisfied.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; 17 • labeling regulations and FDA prohibitions against the promotion of investigational products, or the promotion of “off-label” uses of cleared or approved products; • requirements related to promotional activities; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a new or different intended use of a cleared device, or approval of certain modifications to PMA-approved devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling regulations and FDA prohibitions against the promotion of investigational products, or the promotion of “off-label” uses of cleared or approved products; • requirements related to promotional activities; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a new or different intended use of a cleared device, or approval of certain modifications to PMA-approved devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality System Regulation (“QSR”); facility registration and product listing; reporting of adverse medical events; and truthful and non-misleading labeling, advertising, and promotional materials.
Class I includes devices 14 with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality System Regulation (“QSR”); facility registration and product listing; reporting of adverse medical events; and truthful and non-misleading labeling, advertising, and promotional materials.
After a trial begins, the sponsor, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Post-market Regulation After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
After a trial begins, the sponsor, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. 18 Post-market Regulation After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
Failure to maintain compliance with the QSR requirements could result in an adverse inspection or audit reports such as Form 483 Notices of Inspectional Observations; the shut-down of, or restrictions on, manufacturing operations; recall, market withdrawal, or seizure of marketed products; or other enforcement actions by the FDA or other regulatory agencies.
Failure to maintain compliance with the QSR/QMSR requirements could result in an adverse inspection or audit reports such as Form 483 Notices of Inspectional Observations; the shut-down of, or restrictions on, manufacturing operations; recall, market withdrawal, or seizure of marketed products; or other enforcement actions by the FDA or other regulatory agencies.
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.
In the United States, the FDA has not yet 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.
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.
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.
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.
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.
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.
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.
Manufacturing processes for medical devices are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human use.
Manufacturing processes for medical devices are required to comply with the applicable portions of the QSR/QMSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human use.
In the event the FDA identifies unsanitary conditions, false or misleading labeling, or any other violation of FDA regulation, FDA may request or a manufacturer may independently decide to conduct a recall or market withdrawal of a product or to make changes to its manufacturing processes or product formulations or labels.
In the event the FDA identifies unsanitary conditions, false or misleading labeling, or any other violation of FDA regulation, FDA may require, request, or a manufacturer may independently decide to conduct a recall or market withdrawal of a product or to make changes to its manufacturing processes or product formulations or labels.
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.
Compliance with these recommendations can reduce the risk that products will be adulterated or misbranded in violation of the FDCA and its regulations. 20 In addition to GMP requirements, MoCRA brought on additional changes and updates to FDA’s cosmetics regulations.
Unlike the EU Medical Devices Directive, the EU Medical Devices Regulation is directly applicable in EU member states without the need for member states to implement into national law. This aims at increasing harmonization across the EU. The EU Medical Devices Regulation became effective on May 26, 2021.
Unlike the EU Medical Devices Directive, the EU Medical Devices Regulation is directly applicable in EU member states without the need for member states to implement into national law. This aims at increasing harmonization across the EU. 23 The EU Medical Devices Regulation became effective on May 26, 2021.
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.
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 March 2026.
For instance, we provide our employees with a 3-5 day training program that informs and educates our employees about our business model, marketing strategies, and other related topics about our business operations.
For instance, we provide eligible employees with a 3-5 day training program that informs and educates our employees about our business model, marketing strategies, and other related topics about our business operations.
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.
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. 25 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.
With over 60% U.S. market share in the microdermabrasion category, we continue to innovate and drive growth via novel treatment protocols by launching new Boosters, combination treatment regimens, and new indications backed by clinical data and real-world evidence. Push and Pull Marketing Our ability to effectively market our brands is critical to our operational success.
With approximately 60% U.S. market share in the microdermabrasion category, we continue to innovate and drive growth via novel treatment protocols by launching new Boosters, combination treatment regimens, and new indications backed by clinical data and real-world evidence. Push and Pull Marketing Our ability to effectively market our brands is critical to our operational success.
For instance, these laws and regulations may require businesses to regularly review and revise business operations, information technology systems, and data handling practices, and to implement enhancements and adaptations to comply. 25 To address this dynamic landscape, we have appointed a dedicated Data Privacy Officer responsible for overseeing our compliance with data protection laws and emerging AI regulations.
For instance, these laws and regulations may require businesses to regularly review and revise business operations, information technology systems, and data handling practices, and to implement enhancements and adaptations to comply. 29 To address this dynamic landscape, we have appointed a dedicated Data Privacy Officer responsible for overseeing our compliance with data protection laws and emerging AI regulations.
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.
Our facilities provide for recycling, and our electronic waste is sent to locally approved e-waste recycling centers. 31 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.
Foreign Government Regulation In addition to United States regulations, we are subject to a variety of foreign government regulations applicable to medical devices and cosmetic products. Regulation of Medical Devices in the European Union The European Union, (“EU”), has adopted specific directives and regulations regulating the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.
Foreign Government Regulation In addition to United States regulations, we are subject to a variety of foreign government regulations applicable to medical devices, cosmetic products, and drugs. 22 Regulation of Medical Devices in the European Union The European Union, (“EU”), has adopted specific directives and regulations regulating the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.
We also believe that transparently disclosing the goals and relevant metrics related to our ESG topics will allow our stakeholders to be informed about our progress. 26 Social Data Privacy and Security We recognize that protecting personal data and ensuring data privacy measures are integral to both our social responsibility and our long-term success.
We also believe that transparently disclosing the goals and relevant metrics related to our ESG topics will allow our stakeholders to be informed about our progress. 30 Social Data Privacy and Security We recognize that protecting personal data and ensuring data privacy measures are integral to both our social responsibility and our long-term success.
Most recently, in September 2023, the FDA released three draft guidance documents proposing recommendations on best practices for selecting a predicate device, situations in which clinical data may be necessary in a 510(k) submission, and evidentiary expectations for 510(k) submissions for implanted devices.
More recently, in September 2023, the FDA released three draft guidance documents proposing recommendations on best practices for selecting a predicate device, situations in which clinical data may be necessary in a 510(k) submission, and evidentiary expectations for 510(k) submissions for implanted devices.
Officers 29% 71% 57% 43% __________ (1) In the United States, 51% of employees identified as Black or African American, Hispanic or Latino, American Indian, Alaska Native, Asian American, Native Hawaiian, or other Pacific Islander. 29 Compensation and Benefits Consistent with our core values, our “Total Rewards” programs take care of our employees by offering competitive compensation and flexible, comprehensive benefits programs designed to attract, motivate, and retain world-class talent.
Officers 29% 71% 43% 57% __________ (1) In the United States, 53% of employees identified as Black or African American, Hispanic or Latino, American Indian, Alaska Native, Asian American, Native Hawaiian, or other Pacific Islander. 33 Compensation and Benefits Consistent with our core values, our “Total Rewards” programs take care of our employees by offering competitive compensation and flexible, comprehensive benefits programs designed to attract, motivate, and retain world-class talent.
Customers The majority of our customers are providers within the professional medical industry (dermatologists, plastic surgeons, and medical spas), esthetician, and beauty retail industry (spas, hotels, and other retailers). We currently sell approximately 70% of our Delivery Systems and Consumables into the professional medical channel in the United States and Canada.
Customers The majority of our customers are providers within the professional medical industry (dermatologists, plastic surgeons, and medical spas), esthetician, and beauty retail industry (spas, hotels, and other retailers). We currently sell approximately 69% of our Delivery Systems and Consumables into the professional medical channel in the United States and Canada.
We expect this trend where the majority of our sales will be within the professional medical channel to continue on a global scale. No individual customer accounted for 10% or more of our net sales in fiscal 2024.
We expect this trend where the majority of our sales will be within the professional medical channel to continue on a global scale. No individual customer accounted for 10% or more of our net sales in fiscal 2025.
The Department Safety Coordinators are the Department Heads of the Company and are an integral part of the Safety Awareness Team. 30 About Us The Company (f.k.a. Vesper Healthcare Acquisition Corp.) was incorporated in the State of Delaware on July 8, 2020.
The Department Safety Coordinators are the Department Heads of the Company and are an integral part of the Safety Awareness Team. 34 About Us The Company (f.k.a. Vesper Healthcare Acquisition Corp.) was incorporated in the State of Delaware on July 8, 2020.
SkinStylus SteriLock Microsystem (for nanoneedling) The SkinStylus SteriLock Microsystem can also be used as a nanoneedling device where it and its related accessories are intended to help enhance the penetration and absorption of topical products, and improve exfoliation to promote smoother and more luminous-looking skin.The SkinStylus SteriLock Microsystem, when used in connection with nanoneedling services, is considered to be a cosmetic device.
SkinStylus SteriLock Microsystem (for nano-channeling) The SkinStylus SteriLock Microsystem can also be used as a nano-channeling device where it and its related accessories are intended to help enhance the penetration and absorption of topical products and improve exfoliation to promote smoother and more luminous-looking skin.The SkinStylus SteriLock Microsystem, when used in connection with nano-channeling services, is considered to be a cosmetic device.
In addition, consumers and providers can personalize their Hydrafacial treatments to target specific skin concerns or needs by adding customized chemical peels, various serums, LED light therapy, and/or lymphatic drainage. Furthermore, a Hydrafacial treatment can be applied to the neck/decolletage, back, hands, or other parts of the body.
In addition, consumers and providers can personalize their Hydrafacial treatments to target specific skin concerns or needs by choosing the abrasion of the tip, adding customized chemical peels, various serums, LED light therapy, and/or lymphatic drainage. Furthermore, a Hydrafacial treatment can be applied to the neck/decolletage, back, hands, or other parts of the body.
We believe enhancing our sales force effectiveness with “pull” side marketing initiatives will be key to driving year-over-year account growth. Digital Marketing We are also continuously innovating with digital marketing strategies to drive incremental revenue, brand equity, and customer/consumer engagement by elevating our digital presence, social media presence, and influencer marketing efforts.
We believe enhancing our sales force effectiveness with “pull” side marketing initiatives will be key to driving year-over-year account growth. Digital Marketing We are also continuously innovating with digital marketing strategies to drive incremental revenue, brand equity, and customer/consumer engagement by elevating our digital presence, e-commerce capabilities, social media presence, and influencer marketing efforts.
In addition, a responsible person, as defined under FDA regulations, will be required to report any serious adverse events that result from the use of a cosmetic product manufactured, packaged, or distributed by the person, and the records relating to each adverse event report will be required to be kept for six years.
In addition, a responsible person, as defined under FDA regulations, is required to report any serious adverse events that result from the use of a cosmetic product manufactured, packaged, or distributed by the person, and the records relating to each adverse event report must be kept for six years.
We are evaluating the optimal re-launch strategy for Keravive and believe it will take time before sales of Keravive become a meaningful part of our business.
We are evaluating the optimal re-launch strategy for HydraScalp and believe it will take time before sales of HydraScalp become a meaningful part of our business.
The provider chooses which strength to use during the Hydrafacial treatment, and each SKU lasts approximately 1-2 treatments. Serums Optional add-on to target specific skin concerns. Offering includes proprietary booster serums that are co-developed via collaborations with various skincare brands. Approximately 1-2 treatments per serum vial.
The provider chooses which strength to use during the Hydrafacial treatment, and each SKU lasts approximately 1-2 treatments. Serums Optional add-on to target specific skin concerns. Offering includes proprietary booster serums that are Hydrafacial branded as well as some that are co-developed via collaborations with various skincare brands. Approximately 1-2 treatments per serum vial.
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.
Additionally, cosmetic labels 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 requires that manufacturers maintain product complaint and recall files and voluntarily report adverse events to the agency.
For instance, we have identified several priorities designed to guide our efforts in this matter such as increasing diverse representation throughout our organization, creating an environment where every employee feels included and valued for who they are, and promoting equal opportunity in recruitment, hiring, training, development, and advancement across our organization.
For instance, we have identified several priorities designed to guide our efforts in this matter such as creating an environment where every employee feels included and valued for who they are, and promoting equal opportunity in recruitment, hiring, training, development, and advancement across our organization.
The QSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. As a manufacturer, we are subject to periodic scheduled and unscheduled inspections by the FDA.
The QSR/QMSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. As a manufacturer, we are subject to periodically scheduled and unscheduled inspections by the FDA.
Marketing Approach We deploy a business-to-business-to-consumer marketing model with targeted strategies to engage relevant audiences through a combination of live and digital experiences. With aided brand awareness at 39% among U.S. esthetics consumers (Ipsos. 2024 Consumer Survey; n=1000), we are focused on maximizing our organic presence and introducing our brand to highly targeted consumer growth markets around the world.
Marketing Approach We deploy a business-to-business-to-consumer marketing model with targeted strategies to engage relevant audiences through a combination of live and digital experiences. With aided brand awareness at 38% among U.S. esthetics consumers (Ipsos. 2025 Consumer Survey; n=1100), we are focused on maximizing our organic presence and introducing our brand to highly targeted consumer growth markets around the world.
We are in the process and intend to revamp our digital infrastructure over the next 1-2 years to help improve user experience, maximize organic engagement, and drive online sales through artificial intelligence (“AI”) assisted targeting/check-out functions.
We are currently in the process of enhancing our digital infrastructure over the next 1-2 years to help improve user experience, maximize organic engagement, and drive online sales through artificial intelligence (“AI”) assisted targeting/check-out functions.
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 current as of November 2025, will continue to provide guidance and recommendations related to process documentation, recordkeeping, building and facility design, and equipment maintenance and personnel.
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”).
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, to follow a regulatory process that the FDA uses to classify low-to moderate-risk devices for which there is no predicate device already on the market (the “De Novo pathway”), or approval of a premarket approval application (“PMA”).
The discovery of previously unknown problems with any marketed products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or approval, or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls.
The discovery of previously unknown problems with any marketed products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or approval, or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls. 19 The FDA has broad regulatory compliance and enforcement powers.
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.
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.
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.
For fiscal year 2026, the standard user fee for a 510(k) premarket notification submission is $26,067, with the fee being $6,517 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.
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.
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 2026 includes a standard application fee of $579,272 or a small business fee of $144,818.
In 2024, total net sales derived from markets outside the United States and Canada comprised approximately 38% of total net sales. 13 Trademarks, Patents and Domain Names As of December 31, 2024, we had 179 patents with 87 pending patent applications worldwide to protect Hydrafacial’s current and contemplated technology platform.
In 2025, total net sales derived from markets outside the United States and Canada comprised approximately 35% of total net sales. 13 Trademarks, Patents and Domain Names As of December 31, 2025, we had a total of 226 patents with 84 pending patent applications worldwide to protect Hydrafacial’s current and contemplated technology platform.
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.
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.
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.
Formal adoption of the proposal is not expected before the second quarter of 2027. 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 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.
We currently offer a portfolio of approximately 15+ Boosters and intend to continue strategically developing Hydrafacial branded and partnership boosters 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.
As of December 31, 2024, we employed 769 employees, of whom approximately 84% were salaried, with the remainder being compensated on an hourly basis.
As of December 31, 2025, we employed 613 employees, of whom approximately 80% were salaried, with the remainder being compensated on an hourly basis.
On the “push” side, we foster relationships with our providers by investing in proprietary training programs, educational content-branding initiatives, digital marketing materials, and a loyalty program that offers tiered pricing on Consumables based on the provider’s and consumer’s spend.
Part of our marketing spend is based on a targeted “push and pull” marketing model that engages with both providers and consumers. On the “push” side, we foster relationships with our providers by investing in proprietary training programs, educational content-branding initiatives, digital marketing materials, and a loyalty program that offers tiered pricing on Consumables based on the provider’s spend.
In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical trials.
The PMA process is more demanding than the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical trials.
Syndeo is designed to connect providers to consumers’ preferences to create more personalized skin care experiences. The hardware and software in Syndeo has been fully updated and includes Wi-Fi connectivity and radio frequency identification. These technologies allow us and providers to collect data on Hydrafacial consumers to ultimately provide a better consumer experience.
The hardware and software in Syndeo has been fully updated and includes Wi-Fi connectivity and radio frequency identification. These technologies allow us and providers to collect data on Hydrafacial consumers to ultimately provide a better consumer experience.
The FDA intends to promote consistency, facilitate efficient premarket review, and ensure that devices are sufficiently resilient to cybersecurity threats by establishing recommended design, labeling, and documentation of testing to be included in premarket submissions of relevant devices.
As a result, the FDA released guidance on the evolving landscape of cybersecurity threats in relation to premarket review and quality systems. The FDA intends to promote consistency, facilitate efficient premarket review, and ensure that devices are sufficiently resilient to cybersecurity threats by establishing recommended design, labeling, and documentation of testing to be included in premarket submissions of relevant devices.
These proposals have not yet been finalized or adopted, although the FDA may work with Congress to implement such proposals through legislation. 15 In September 2019, the FDA issued revised final guidance describing an optional “safety and performance based” premarket review pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial equivalence under the 510(k) clearance pathway by showing that such device meets objective safety and performance criteria established by the FDA, thereby obviating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance process.
Further, in September 2019, the FDA issued revised final guidance describing an optional “safety and performance based” premarket review pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial equivalence under the 510(k) clearance pathway by showing that such device meets objective safety and performance criteria established by the FDA, thereby obviating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance process.
For example, cosmetic manufacturing and processing facilities are now required to be registered with FDA, and any products that are marketed after MoCRA’s effective date need to be listed with FDA. Adulterated or misbranded cosmetic products will be subject to recalls that are mandated by FDA, similar to medical devices.
For example, cosmetic manufacturing and processing facilities are required to be registered with FDA, and products must be listed with FDA. Adulterated or misbranded cosmetic products are subject to recalls that are mandated by FDA, similar to medical devices.
Under the EU Cosmetics Regulation, a product is considered to be a cosmetic if it is presented as protecting the skin, maintaining the skin in good condition or improving the appearance of the skin, provided that it is not a medicinal product due to its composition or intended use.
Over the years, the EU cosmetics legal regime has been adopted by many countries around the world. 26 Under the EU Cosmetics Regulation, a product is considered to be a cosmetic if it is presented as protecting the skin, maintaining the skin in good condition or improving the appearance of the skin, provided that it is not a medicinal product due to its composition or intended use.
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.
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.
Our patent portfolio covers key aspects of certain products, systems, and designs, including several issued U.S. patents directed to features of the Hydrafacial MD® liquid-based skin exfoliation system.
We also have 3 patents to protect certain aspects of the cartridge and needling system for the SkinStylus SteriLock Microsystem. Our patent portfolio covers key aspects of certain products, systems, and designs, including several issued U.S. patents directed to features of the Hydrafacial MD® liquid-based skin exfoliation system.
Clinical Trials Clinical trials are almost always required to support a PMA and are sometimes required to support a 510(k) submission.
Clinical Trials 17 Clinical trials are almost always required to support a PMA and are sometimes required to support a 510(k) submission or De Novo classification request.
State regulations can vary widely and include things such as permit or licensure requirements for manufacturing of devices at a facility located within certain states, manufacturing of devices which are sold in certain states, and the distribution of medical devices into or out of various states. 19 State Regulation of Professionals The regulation of professional scope of practice related to licensed professionals, such as estheticians, is governed by state law.
State regulations can vary widely and include things such as permit or licensure requirements for manufacturing of devices at a facility located within certain states, manufacturing of devices which are sold in certain states, and the distribution of medical devices into or out of various states.
Set forth below is the geographic makeup of our workforce: Geographic Location Number of Employees % of Total Workforce United States of America (1) 460 60% Asia-Pacific (“APAC”) 119 15% Europe, Middle East, and Africa (“EMEA”) 144 19% Canada & Latin America 46 6% Total 769 100% __________ (1) As of December 31, 2024, 219 of these employees were based in our Long Beach, California headquarters. 28 None of our employees are represented by a labor organization or are a party to any collective bargaining arrangement.
Set forth below is the geographic makeup of our workforce: Geographic Location Number of Employees % of Total Workforce United States of America (1) 414 67% Asia-Pacific (“APAC”) 30 5% Europe, Middle East, and Africa (“EMEA”) 128 21% Canada & Latin America 41 7% Total 613 100% __________ (1) As of December 31, 2025, 187 of these employees were based in our Long Beach, California headquarters. 32 None of our employees are represented by a labor organization or are a party to any collective bargaining arrangement.
In such cases, the manufacturer might be required to follow certain patient groups for a number of years and to make periodic reports to the FDA on the clinical status of those patients.
In such cases, the manufacturer might be required to follow certain patient groups for a number of years and to make periodic reports to the FDA on the clinical status of those patients. Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval.
Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval. 16 Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the device, require submission of a PMA supplement.
Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the device, require submission of a PMA supplement.
Pursuant to MoCRA, the FDA now subjects manufacturers and cosmetic products to requirements such as facility registration and product listing requirements, compliance with certain GMP requirements, adverse event reporting requirements, and other labeling requirements. In addition, the FDA is required to promulgate final regulations implementing GMPs for cosmetics by December 29, 2025.
Pursuant to MoCRA, the FDA now subjects manufacturers and cosmetic products to requirements such as facility registration and product listing requirements, adverse event reporting requirements, and other labeling requirements. The ongoing implementation timeline of MoCRA is uncertain as the FDA was required to promulgate final regulations implementing GMPs for cosmetics by December 29, 2025, a deadline which has now passed.
Devices deemed by the FDA to pose the greatest risks, such as life sustaining, life supporting, some implantable devices, or devices that have a new intended use or use advanced technology that is not substantially equivalent to that of a legally marketed device, are placed in Class III, requiring approval of a PMA.
Alternatively, low to moderate risk novel medical devices for which there is no existing predicate may submit a De Novo classification request through which the FDA may establish a new classification for the device, Devices deemed by the FDA to pose the greatest risks, such as life sustaining, life supporting, some implantable devices, or devices that have a new intended use or use advanced technology that is not substantially equivalent to that of a legally marketed device, are placed in Class III, requiring approval of a PMA.
A subsequent consultation on the new pre-market regime was opened on November 14, 2024. By way of Statutory Instruments 2024 No. 1368, the UK introduced amendments to the UK Medical Device Regulations 2002 regarding post-market surveillance. These amendments will come into effect on June 16, 2025.
By way of Statutory Instruments 2024 No. 1368, the UK already introduced amendments to the UK Medical Device Regulations 2002 regarding post-market surveillance. These amendments came into effect on June 16, 2025.
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.
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 HydraScalp powered by Keravive Products At the core of the HydraScalp product offering is the Keravive Peptide Solution that is designed to be delivered to an individual’s scalp using a Hydrafacial Delivery System and custom tips, 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 HydraScalp treatment to help support the appearance of healthier, thicker, fuller-looking hair.
Keravive is a pioneer in scalp health with its products that are designed to support the hair’s natural growth by cleansing, exfoliating, and hydrating the scalp and hair follicles for a visibly improved appearance of healthier, thicker, fuller-looking hair.
The treatment extends to the scalp through the Company’s HydraScalp powered by Keravive treatment, which is designed to support the hair’s natural growth by cleansing, exfoliating, and hydrating the scalp and hair follicles for a visibly improved appearance of healthier, thicker, fuller-looking hair.
To support the “pull” side of our products, we are investing in tactics to drive consumer demand such as gift-with-purchase promotions, in-office events, targeted paid campaigns, and regional experiences such as the GLOWvolution tour, a traveling experiential program to promote Hydrafacial.
To support the “pull” side of our products, we are investing in tactics to drive consumer demand such as gift-with-purchase promotions, in-office events, targeted paid campaigns, and regional experiences such as influencer spa days conducted in partnership with key accounts and local influencers to promote both the Hydrafacial brand and product offerings.
The EU Cosmetics Regulation is directly applicable in, and binding on all EU member states and is enforced at the national member state level. Over the years, the EU cosmetics legal regime has been adopted by many countries around the world.
The EU Cosmetics Regulation is directly applicable in, and binding on all EU member states and is enforced at the national member state level.
These Special Controls can include performance standards, post-market surveillance, patient registries, and any additional recommendations set forth in FDA guidance documents. 14 While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification application under Section 510(k) of the FDCA before engaging in commercial distribution for the device.
While most Class I devices are exempt from the premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification application under Section 510(k) of the FDCA before engaging in commercial distribution for the device.
UK Regulation of Cosmetic Products following Brexit The UK formally left the EU on January 31, 2020, commonly referred to as “Brexit”.
The European Commission’s proposal is currently under review by the EU co-legislators (European Parliament and Council). 27 UK Regulation of Cosmetic Products following Brexit The UK formally left the EU on January 31, 2020, commonly referred to as “Brexit”.
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.
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.
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.
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. Delivery Systems follow a traditional capital equipment cycle, with the Delivery System lasting providers for years.
PMA Pathway Class III devices require PMA approval before they can be marketed, although some pre-amendment Class III devices for which FDA has not yet required a PMA are cleared through the 510(k) process. The PMA process is more demanding than the 510(k) premarket notification process.
The De Novo classification request standard user fee for fiscal year 2026 is $173,782 and the small business fee is $43,446. 16 PMA Pathway Class III devices require PMA approval before they can be marketed, although some pre-amendment Class III devices for which FDA has not yet required a PMA are cleared through the 510(k) process.
A Hydrafacial treatment results in instantly gratifying, glowy-looking skin and a “gunkie” container that collects dead skin cells and debris that were extracted from the skin during the Hydrafacial treatment. We believe the instant gratification provided by our Hydrafacial treatment generates high consumer and provider affinity for our brand. A summary of the Hydrafacial treatment is set forth below.
We believe the instant gratification provided by our Hydrafacial treatment generates high consumer and provider affinity for our brand. A summary of the Hydrafacial treatment is set forth below.
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.
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.
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.
As of December 31, 2025, a breakdown of our workforce is as follows: Employee Population Race/Ethnicity Gender % Minority (1) % White % Female % Male U.S. Workforce 53% 47% 64% 36% U.S. Managers & Above 43% 57% 60% 40% U.S.
Also, in these circumstances, the manufacturer may be subject to significant regulatory fines, penalties, or other regulatory actions from the FDA.
Also, in these circumstances, the manufacturer may be subject to significant regulatory fines, penalties, or other regulatory actions from the FDA. Over the last several years, the FDA has proposed and implemented several changes to modernize and strengthen the 510(k) clearance process.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, Congress enacted MoCRA on December 29, 2022, which directed FDA to implement a set of new regulatory requirements that previously were not applicable to cosmetic products. Pursuant to MoCRA, FDA now subjects manufacturers and cosmetic products to requirements such as facility registration and product listing requirements, adverse event reporting requirements, and other labeling requirements.
Biggest changePursuant to MoCRA, FDA now subjects manufacturers and cosmetic products to requirements such as facility registration and product listing requirements, adverse event reporting requirements, and other labeling requirements. The FDA was required to promulgate by December 29, 2025 final regulations implementing GMPs for cosmetics, a deadline that has been delayed multiple times and the regulations are still forthcoming.
We attempt to structure our advertising/marketing campaigns in ways we believe most likely to increase brand awareness and adoption; however, there is no assurance our campaigns will achieve the returns on advertising spend desired or successfully increase brand or product awareness sufficiently to sustain or increase our growth goals, which could have an adverse effect on our gross margin and business overall.
We attempt to structure our advertising/marketing campaigns in ways we believe will most likely increase brand awareness and adoption; however, there is no assurance our campaigns will achieve the returns on advertising spend desired or successfully increase brand or product awareness sufficiently to sustain or increase our growth goals, which could have an adverse effect on our gross margin and business overall.
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.
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.
These factors may include: • any reduction in consumer traffic and demand at our providers as a result of economic downturns, pandemics or other health crises, changes in consumer preferences or reputational damage as a result of, among other developments, data privacy and security breaches, regulatory investigations or employee misconduct; • any credit risks associated with the financial condition of our providers; • the effect of consolidation or weakness in the retail industry or at certain providers, including store and spa closures and the resulting uncertainty; and • changes in federal, state, local, or foreign regulations that affect the scope of practice of our providers.
These factors may include: • any reduction in consumer traffic and demand at our providers as a result of economic downturns, pandemics or other health crises, changes in consumer preferences or reputational damage as a result of, among other developments, data privacy and security breaches, regulatory investigations or employee misconduct; • any credit risks associated with the financial condition of our providers; 46 • the effect of consolidation or weakness in the retail industry or at certain providers, including store and spa closures and the resulting uncertainty; and • changes in federal, state, local, or foreign regulations that affect the scope of practice of our providers.
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.
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/or criminal prosecution.
You should carefully consider the following risk in addition to the other information included in this Annual Report on Form 10-K, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business or financial condition.
You should carefully consider the following risks in addition to the other information included in this Annual Report on Form 10-K, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business or financial condition.
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.
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.
For more information, see Part II, Item 7 “Critical Accounting Policies and Estimates — Goodwill and Intangible Assets” and Part II, Item 8 “Financial Statements and Supplementary Data — Note 2 - Summary of Significant Accounting Policies — Goodwill” in this Annual Report on Form 10-K. Volatility in the financial markets could have a material adverse effect on our business.
For more information, see Part II, Item 7 “Critical Accounting Policies and Estimates — Goodwill and Intangible Assets” and Part II, Item 8 “Financial Statements and Supplementary Data — Note 2 - Summary of Significant Accounting Policies — Goodwill” in this Annual Report on Form 10-K. 49 Volatility in the financial markets could have a material adverse effect on our business.
A loss of key personnel or their work product could diminish or prevent our ability to commercialize our products, which could have an adverse effect on our business, results of operations and financial condition. 67 Risks related to marketing activities Use of social media may materially and adversely affect our reputation or subject us to fines or other penalties.
A loss of key personnel or their work product could diminish or prevent our ability to commercialize our products, which could have an adverse effect on our business, results of operations and financial condition. Risks related to marketing activities Use of social media may materially and adversely affect our reputation or subject us to fines or other penalties.
Whether or not we are successful in defending against such actions or investigations, we could incur substantial costs, including legal fees and reputational harm, and divert the attention of management in defending ourselves against any of these claims or investigations. Our facilities are subject to regulation under the FDCA and FDA implementing regulations governing the manufacture of our products.
Whether or not we are successful in defending against such actions or investigations, we could incur substantial costs, including legal fees and reputational harm, and divert the attention of management in defending ourselves against any of these claims or investigations. 62 Our facilities are subject to regulation under the FDCA and FDA implementing regulations governing the manufacture of our products.
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.
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. 68 If we market products in a manner that violates healthcare laws, we may be subject to civil or criminal penalties.
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.
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. If we fail to manage our inventory effectively, our results of operations, financial condition and liquidity may be materially and adversely affected.
Future licensors may allege that we have breached our license agreement with them, and accordingly seek to terminate our license, which could adversely affect our competitive business position and harm our business prospects. 42 Risks related to our financial condition Our business could also be adversely affected by our inability to repay or refinance existing debt.
Future licensors may allege that we have breached our license agreement with them, and accordingly seek to terminate our license, which could adversely affect our competitive business position and harm our business prospects. Risks related to our financial condition Our business could also be adversely affected by our inability to repay or refinance existing debt.
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.
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. In recent years, the FDA has issued warning letters to several cosmetic companies alleging improper claims regarding their cosmetic products.
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.
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.
Many of the risks associated with the use of third‑party products cannot be eliminated, and these risks could negatively affect our business. Third parties may assert ownership or commercial rights to inventions we develop or acquire. Third parties may make claims challenging the inventorship or ownership of our intellectual property.
Many of the risks associated with the use of third‑party products cannot be eliminated, and these risks could negatively affect our business. 73 Third parties may assert ownership or commercial rights to inventions we develop or acquire. Third parties may make claims challenging the inventorship or ownership of our intellectual property.
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.
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 consumers may elect to make payment for purchases at our e-commerce websites.
Our customers and consumers could confuse counterfeit products with our authentic products, which could damage or diminish the image, reputation, and value of our brand and cause our customers and consumers to refrain from purchasing our products in the future. 33 Products sold to estheticians are meant to be sold to and used by such esthetician.
Our customers and consumers could confuse counterfeit products with our authentic products, which could damage or diminish the image, reputation, and value of our brand and cause our customers and consumers to refrain from purchasing our products in the future. Products sold to estheticians are meant to be sold to and used by such esthetician.
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.
The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein. 35 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.
We believe that developing and maintaining our brand is critical and that our financial success is directly dependent on consumer perception of our brand. Furthermore, the importance of brand recognition may become even greater as our competitors offer more products that are similar to our products.
We believe that developing and maintaining our brand is critical and that our financial success is directly dependent on consumer perception of our brand. Furthermore, the importance of brand recognition and brand differentiation may become even greater as our competitors offer more products that are similar to our products.
Such supply in excess of demand could cause the market price of our Class A Common Stock to decline. Our outstanding warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.
Such supply in excess of demand could cause the market price of our Class A Common Stock to decline. 76 Our outstanding warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.
Any of these events could harm our business, results of operations and financial condition. Government regulations and private party actions relating to the marketing and advertising of our products and services may restrict, inhibit, or delay our ability to sell our products and harm our business, financial condition and results of operations.
Any of these events could harm our business, results of operations and financial condition. 63 Government regulations and private party actions relating to the marketing and advertising of our products and services may restrict, inhibit, or delay our ability to sell our products and harm our business, financial condition and results of operations.
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.
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.
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.
Overall, we may have little recourse if we process a criminally fraudulent transaction. 53 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.
If we fail to obtain and maintain necessary market clearances from the FDA and other marketing authorizations or certifications from counterpart foreign regulatory authorities or notified bodies for our medical device products and indications, if clearances or other marketing authorizations or certifications for future products and indications are delayed or not issued, if we or any third-party suppliers or manufacturers fail to comply with applicable regulatory requirements, or if there are U.S. federal or state level or comparable foreign regulatory changes, our commercial operations could be harmed.
If we fail to obtain and maintain necessary market clearances from the FDA and other marketing authorizations or certifications from counterpart foreign regulatory authorities or notified bodies for our applicable products and indications, if clearances or other marketing authorizations or certifications for future products and indications are delayed or not issued, if we or any third-party suppliers or manufacturers fail to comply with applicable regulatory requirements, or if there are U.S. federal or state level or comparable foreign regulatory changes, our commercial operations could be harmed.
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.
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.
Some of the difficulties associated with combining the operations of companies include, among others, difficulties in: • achieving anticipated cost savings, synergies, business opportunities, and growth prospects from the combinations; • integrating operations and systems; and • conforming standards, controls, procedures, accounting and other policies, business cultures, and compensation structures among companies. 35 We may be unable to grow our business effectively or efficiently, which would harm our business, financial condition and results of operations.
Some of the difficulties associated with combining the operations of companies include, among others, difficulties in: • achieving anticipated cost savings, synergies, business opportunities, and growth prospects from the combinations; • integrating operations and systems; and • conforming standards, controls, procedures, accounting and other policies, business cultures, and compensation structures among companies. 40 We may be unable to grow our business effectively or efficiently, which would harm our business, financial condition and results of operations.
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.
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. 51 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.
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.
There can be no assurance that any contemplated or future acquisition will occur. 41 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 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 any of these events occur, our business, financial condition and results of operations could be materially and adversely affected. 56 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.
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.
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. 42 We have a history of operating losses and may experience future losses. We have yet to establish any history of profitable operations.
If the FDA disagrees with us concerning the scope or applicability of a clearance or exemption with respect to a device or its marketing, we may be required to change its promotional and/or labeling materials and/or stop marketing that device and may need to pursue additional authorizations or conduct product recalls, corrections, or removals.
If the FDA disagrees with us concerning the scope or applicability of a clearance or exemption with respect to a device or its marketing, or any drug product or its marketing, we may be required to change its promotional and/or labeling materials and/or stop marketing that product and may need to pursue additional authorizations or conduct product recalls, corrections, or removals.
Seeking such approvals, clearances or 58 certifications may delay our ability to replace the recalled products in a timely manner.
Seeking such approvals, clearances or certifications may delay our ability to replace the recalled products in a timely manner.
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.
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. 71 Additionally, we may be unable to protect our intellectual property rights throughout the world.
In addition, our ability to launch new products may be limited by delays or difficulties affecting the ability of our suppliers or manufacturers to timely manufacture, distribute and ship new products. We may also experience a decrease in sales of certain existing products as a result of newly launched products.
Furthermore, our ability to launch new products may be limited by delays or difficulties affecting the ability of our suppliers or manufacturers to timely manufacture, distribute and ship new products. We may also experience a decrease in sales of certain existing products as a result of newly launched products.
In addition, perceived uncertainties as to our future direction, strategy, or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new or retain existing investors, customers, directors, employees or other partners, and cause our stock price to experience periods of volatility or stagnation. 70 Item 1B.
In addition, perceived uncertainties as to our future direction, strategy, or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new or retain existing investors, customers, directors, employees or other partners, and cause our stock price to experience periods of volatility or stagnation.
The occurrence of product defects and/or technological flaws could result in negative publicity, delays in product introduction, the diversion of resources to remedy defects, loss of or delay in industry acceptance and adoption or claims by customers against us, and could cause us to incur warranty obligations and additional costs, any one of which could adversely affect our business.
The occurrence of product defects and/or technological flaws has previously, and could in the future, result in negative publicity, delays in product introduction, the diversion of resources to remedy defects, loss of or delay in industry acceptance and adoption or claims by customers against us, and could cause us to incur warranty obligations and additional costs, any one of which could adversely affect our business.
We may be subject to securities litigation, which is expensive to defend and could divert management’s attention. In the past, following periods of market volatility in the price of a company’s securities or the reporting of unfavorable news, security holders have often instituted class action litigation.
We are currently, and may continue to be, subject to securities litigation, which is expensive to defend and could divert management’s attention. In the past, following periods of market volatility in the price of a company’s securities or the reporting of unfavorable news, security holders have often instituted class action litigation.
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.
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. 67 Failure to comply with the U.S.
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.
We reported a loss from operations of $20.8 million during the year ended December 31, 2025. 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.
Our credit facilities may restrict our ability to take these actions, and we may be unable to affect any such alternative measures on commercially reasonable terms, or at all. The sale of our equity securities would result in dilution to our existing stockholders.
Our Notes may restrict our ability to take these actions, and we may be unable to affect any such alternative measures on commercially reasonable terms, or at all. The sale of our equity securities would result in dilution to our existing stockholders.
The FDA and foreign regulatory authorities have the authority to require the recall or recommend the market withdrawal, as applicable, of commercialized products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health.
The FDA and foreign regulatory authorities have the authority to require the recall or recommend the market withdrawal, as applicable, of commercialized products subject to the agency’s jurisdiction in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health.
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.
Each of the Indentures 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.
Since our growth strategy depends in part on our ability to penetrate international markets and increase the localization of our products and services, we expect to continue to increase our sales and presence outside the United States, particularly in markets we believe to have high-growth potential.
Since our growth strategy depends in part on our ability to penetrate international markets and increase the localization of our products and services, we aim to increase our sales and presence outside the United States, particularly in markets we believe to have high-growth potential.
To increase awareness of our products and services domestically and internationally, we have increased the amount we spend, and anticipate spending in the future on marketing activities. Our marketing efforts and costs are significant and include national and regional campaigns involving print media, social media, additional placements and alliances with strategic partners.
To increase awareness of our products and services domestically and internationally, we continue to spend, and anticipate spending in the future on marketing activities. Our marketing efforts and costs are significant and include national and regional campaigns involving print media, social media, additional placements and alliances with strategic partners.
The CPSC also requires manufacturers of consumer products to report certain types of information to the CPSC regarding products that fail to comply with applicable regulations. Certain state laws also address the safety of consumer products, and mandate reporting requirements, and noncompliance may result in penalties or other regulatory action. Similar requirements may exist in foreign jurisdictions.
The CPSC also requires manufacturers of consumer products to report certain types of information to the CPSC regarding products that fail to comply with applicable regulations. Certain state laws also address the safety of consumer products, and mandate reporting requirements, and noncompliance may result in penalties or other regulatory action.
These economic conditions could cause some of our providers or suppliers to experience cash flow or credit problems and impair their financial condition, which could disrupt our business and adversely affect product orders, payment patterns and default rates and increase our bad debt expense. 50 Legal, political, and economic uncertainty surrounding the planned exit of the United Kingdom from the European Union are a source of instability and uncertainty.
These economic conditions could cause some of our providers or suppliers to experience cash flow or credit problems and impair their financial condition, which could disrupt our business and adversely affect product orders, payment patterns and default rates and increase our bad debt expense. 55 Legal, political, and economic uncertainty surrounding the exit of the United Kingdom from the European Union continue to be a source of instability and uncertainty.
In addition, the EU’s institutions are debating the ePrivacy Regulation, which would repeal and replace the current ePrivacy Directive that regulates electronic marketing and use of cookies and tracking technologies.
In addition, the EU’s institutions have been debating the ePrivacy Regulation, which would repeal and replace the current ePrivacy Directive that regulates electronic marketing and use of cookies and tracking technologies.
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.
To the extent that we experience difficulties in recruiting, training, managing and retaining an international staff, and specifically staff related to marketing, sales management, and sales personnel, we may experience difficulties in sales productivity in foreign markets. 54 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; • 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.
The new administration has also delayed or put on pause a number of initiatives at the FDA.
The current administration has also delayed or put on pause a number of initiatives at the FDA.
We must continually work to develop, produce and market new products, maintain and enhance the recognition of our brand, maintain a favorable mix of products and develop our approach as to how and where we market and sell our products. We have an established process for the development, evaluation and validation of our new product concepts.
We must continually work to develop, produce and market new products, maintain and enhance the recognition of our brand, maintain a favorable mix of products and develop our approach as to how and where we market and sell our products. 36 We have continued to refine our process for the development, evaluation and validation of our new product concepts.
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.
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.
Any such regulatory changes could affect our ability to sell our products to certain customer groups in particular states and/or territories, which could result in decreased sales, and therefore could have a material adverse effect on our business, financial condition, and results of operation. Our business is subject to extensive and continuing regulatory compliance obligations.
Any such regulatory changes could affect our ability to sell our products to certain customer groups in particular states and/or territories, which could result in decreased sales, and therefore could have a material adverse effect on our business, financial condition, and results of operation.
Our business, financial condition, and results of operations could be materially adversely affected by unfavorable results in pending or future litigations, regulatory investigations, and other legal matters related to violations or perceived violations of applicable securities laws and regulations by the Company or its affiliates. We may become subject to SEC investigations or legal proceedings in the future.
Our business, financial condition, and results of operations could be materially adversely affected by unfavorable results in pending or future litigations, regulatory investigations, and other legal matters related to violations or perceived violations of applicable securities laws and regulations by the Company or its affiliates.
If we are unable to obtain, maintain and enforce intellectual property protection directed for our technology and future technologies that we develop, others may be able to make, use, import or sell products that are the same or substantially the same as ours, which could adversely affect our business, financial condition and results of operations.
If we are unable to obtain, maintain and enforce intellectual property protection directed for our technology and future technologies that we develop, others may be able to make, use, import or sell products that are the same or substantially the same as ours, which could adversely affect our business, financial condition and results of operations. 72 If we are unable to protect the confidentiality of our trade secrets, our business or competitive position could be harmed.
For example, over the past decade, the United States government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical and non-critical activities.
For example, the United States government shut down in 2025 as well as several times in the past decade, and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical and non-critical activities.
New laws, regulations, enforcement trends, or changes in existing regulations could affect the ability of our esthetician providers in certain states to provide our treatments to consumers, any of which could have a material adverse effect on our business, financial condition, and results of operation.
Similar requirements may exist in foreign jurisdictions. 59 New laws, regulations, enforcement trends, or changes in existing regulations could affect the ability of our esthetician providers in certain states to provide our treatments to consumers, any of which could have a material adverse effect on our business, financial condition, and results of operation.
Our new product introductions may not be as successful as we anticipate. The beauty health industry is driven in part by beauty and skincare trends, which may shift quickly.
Our new product introductions may not be, and at times in the past have not been, as successful as we anticipate. The beauty health industry is driven in part by beauty and skincare trends, which may shift quickly.
Our ability to provide a high-quality consumer experience will depend, in part, on our ability to provide a reliable and user-friendly website interface and mobile applications for our consumers to browse and purchase products on our e-commerce websites.
Our ability to provide a high-quality consumer experience will depend, in part, on our ability to provide reliable customer service and tech support, as well as a reliable and user-friendly website interface and mobile applications for our consumers to browse and purchase products on our e-commerce websites.
Noncompliance with applicable regulations, including those for medical devices, could result in enforcement action by the FDA or other regulatory authorities within or outside the United States, including state and local regulatory authorities, with actions including but not limited to warning letters or untitled letters, fines; injunctions or civil penalties; suspension or withdrawal of approvals or clearances; seizures or recalls of product; 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, all of which could have a material adverse effect on our business, reputation, financial condition and results of operations.
Noncompliance with applicable regulations, including those for medical devices, could result in enforcement action by the FDA or other regulatory authorities within or outside the United States, including state and local regulatory authorities, with actions including but not limited to warning letters or untitled letters, fines; injunctions or civil penalties; suspension or withdrawal of approvals or clearances; seizures or recalls of product; 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, all of which could have a material adverse effect on our business, reputation, financial condition and results of operations. 58 For example, Congress enacted MoCRA on December 29, 2022, which directed FDA to implement a set of new regulatory requirements that previously were not applicable to cosmetic products.
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.
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.
Specific legislative and regulatory proposals discussed during election campaigns and more recently that might materially impact our business include, but are not limited to, promoting access to healthcare via market competition and pricing transparency, enhancing flexibility and choice in healthcare at the state and individual level, prioritizing domestic production and increasing tariffs on imports (which may complicate and increase costs associated with our supply chain), and rolling back regulatory initiatives adopted under the previous administration.
Specific legislative and regulatory proposals and contemplated or implemented executive action that might materially impact our business include, but are not limited to, promoting access to healthcare via market competition and pricing transparency, enhancing flexibility and choice in healthcare at the state and individual level, prioritizing domestic production and further increasing or shifting tariffs on imports (which may complicate and increase costs associated with our supply chain), and rolling back regulatory initiatives adopted under the previous administration.
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.
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.
The ultimate resolution of such investigations and lawsuits cannot be predicted, and the claims raised in these lawsuits may result in further legal matters or actions against us, including, but not limited to, government enforcement actions or additional private litigation.
We are currently, and may continue to be, subject to SEC investigations or legal proceedings in the future. The ultimate resolution of such investigations and lawsuits cannot be predicted, and the claims raised in these lawsuits may result in further legal matters or actions against us, including, but not limited to, government enforcement actions or additional private litigation.
Since the start of the new congressional session and presidential administration, substantial volatility and uncertainty have surrounded both the present activities of federal regulatory agencies and their future, including termination of a substantial number of employees at many agencies, and re-hiring of a substantial number of such employees at certain regulatory agencies, such as the FDA.
Substantial volatility and uncertainty have surrounded both the present activities of federal regulatory agencies and their future, including termination of a substantial number of employees at many agencies, and re-hiring of a substantial number of such employees at certain regulatory agencies, such as the FDA.
We generate an increasing share of our revenue from international sales and maintain international operations, including supply and distribution chains that are, and will continue to be, a significant part of our business.
A significant portion of our revenue comes from international sales and we maintain international operations, including supply and distribution chains that are, and will continue to be, a significant part of our business.
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.
Additionally, goodwill is required to be tested for impairment at least annually. 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.
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.
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.
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 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.
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 we discover that any of our products are causing adverse reactions, we could suffer adverse publicity or regulatory or government sanctions. 69 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.
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.
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. 39 There can be no assurance that we can successfully achieve any or all of the above initiatives in the manner or time period that we expect.
It is impossible to predict changes that may result from the new administration, and the risks associated with this change are not completely known. In addition, in the EU, notified bodies must be officially designated to certify products and services in accordance with the EU Medical Devices Regulation.
It is impossible to predict changes that may result from the rapidly shifting political and geopolitical landscapes, and the risks associated with these changes are not completely known. In addition, in the EU, notified bodies must be officially designated to certify products and services in accordance with the EU Medical Devices Regulation.
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.
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.
While new AI initiatives, laws, and regulations are emerging and evolving, what they ultimately will look like remains uncertain, and our obligation to comply with them could entail significant costs, negatively affect our business, or limit our ability to incorporate certain AI capabilities into our business.
While new AI initiatives, laws, and regulations are emerging and evolving, or have been adopted such as the European Union’s Artificial Intelligence Act, what they ultimately will look like remains uncertain, and our obligation to comply with them could entail significant costs, negatively affect our business, or limit our ability to incorporate certain AI capabilities into our business.
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.
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.
If we are unable to preserve our reputation, enhance brand recognition and increase positive awareness of our products and Internet platforms, it may be difficult for us to maintain and grow our consumer base, and our business, financial condition and results of operations may be materially and adversely affected.
If we are unable to preserve our reputation, enhance brand recognition and brand differentiation, and increase positive awareness of our products and Internet platforms, it may be difficult for us to maintain and grow our consumer base, and our business, financial condition and results of operations may be materially and adversely affected. 37 Our success depends, in part, on the quality, efficacy and safety of our products.
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.
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.
Furthermore, changes in the regulatory landscape in response to the new presidential administration and congress in 2025 may result in significant changes to laws, regulations, and enforcement practices of various agencies that we may not be able to follow or may significantly change the way that our business operates.
Furthermore, changes in the regulatory landscape in response to the tumultuous political environment both domestically and globally may result in significant changes to laws, regulations, and enforcement practices of various agencies that we may not be able to follow or may significantly change the way that our business operates.
Diversion may result in lower net sales of our products if our customers purchase diverted products or choose to purchase products manufactured or sold by our competitors because of any perceived damage or diminishment to the image, reputation, or value of our brand resulting from such diversion.
Diversion may result in lower net sales of our products if our customers purchase diverted products or choose to purchase products manufactured or sold by our competitors because of any perceived damage or diminishment to the image, reputation, or value of our brand resulting from such diversion. 38 Our reputation and brand may be negatively affected if our customers do not use our Delivery System as intended.
Changes in funding for, or disruptions caused by global health concerns impacting the FDA and other government agencies or notified bodies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products from being developed, authorized, or commercialized in a timely manner, which could negatively impact our business.
A future recall announcement could harm our reputation with customers, potentially lead to product liability claims against us and negatively affect sales. 64 Changes in funding for, or disruptions caused by global health concerns impacting the FDA and other government agencies or notified bodies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products from being developed, authorized, or commercialized in a timely manner, which could negatively impact our business.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe 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.
Biggest changeWe 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.
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 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 size.
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
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. 78
We also use third party security tools to help identify, assess, mitigate, and remediate cybersecurity threats; however, we cannot guarantee that any third-party tools that we utilize will be successful in all circumstances, and whether such tools are appropriate for their level of risk.
We also use third party security tools to help identify, assess, mitigate, and remediate cybersecurity threats; however, we cannot guarantee that any third-party tools that we utilize will be successful in all circumstances or appropriate for their level of risk. We also consider cybersecurity risks associated with third-party service providers.
In addition, a penetration of our systems or a third party’s systems or other misappropriation or misuse of personal information could subject us to business, regulatory, litigation, and reputation risk, which could have a negative effect on our business, financial condition, and results of operations.
In addition, a penetration of our systems or a third party’s systems or other misappropriation or misuse of personal information could subject us to business, regulatory, litigation, and reputation risk, which could have a negative effect on our business, financial condition, and results of operations. Cybersecurity risks are considered as part of the Company’s overall enterprise risk management processes.
The results of these assessments are reported to our Audit Committee and, from time to time, our Board of Directors.
The results of these assessments are reported to our Audit Committee and, from time to time, our Board of Directors. We also provide periodic cybersecurity awareness training to employees.
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We maintain incident response and business continuity plans designed to detect, respond to, and recover from cybersecurity incidents. We evaluate the risks associated with technology and cybersecurity threats and monitor our information systems for potential weaknesses.

Item 2. Properties

Properties — owned and leased real estate

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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.
Biggest changeItem 2. Properties. Our principal executive office is located in Long Beach, California, where we lease a warehouse that is approximately 105,000 square feet, that serves as our headquarters, distribution center, manufacturing facility, and production facility.
We believe our present facilities are suitable and adequate for our current operating needs. We do not own any real property.
We occupy an experience center in New York, and outside of the United States, we lease office and/or warehouse space in Australia, Spain, France, Germany, the United Kingdom, and Mexico for 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.
Removed
Item 2. Properties. Our principal executive offices are located in Long Beach, California, where we lease approximately 23,000 square feet of office space. We also occupy corporate offices, warehouses and/or experience centers across the United States, Europe, Asia, Latin America and Australia.
Added
We also lease approximately 23,000 square feet of additional office space in Long Beach, California, of which approximately 15,000 square feet is sublet to a sublessee.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
Item 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
Added
Item 3. Legal Proceedings. The Company is a party to various lawsuits, claims, and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to commercial disputes, product liability, and employment related matters.
Added
In addition, the Company may bring claims or initiate lawsuits from time to time against various third parties with respect to matters arising out of the ordinary course of the Company’s business, including but not limited to commercial and intellectual property related matters.
Added
For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies.
Added
Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows.
Added
Except as otherwise disclosed below, we believe that none of our pending lawsuits, claims, and other proceedings are expected to have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. However, management’s judgment may prove materially inaccurate, and such judgment is made subject to the known uncertainties of litigation.
Added
Cartessa Aesthetics, LLC On December 14, 2020, Hydrafacial filed a complaint (the “Cartessa Complaint”) against Cartessa Aesthetics, LLC (“Cartessa”) in the United States District Court for the Eastern District of New York (the “New York Court”), captioned Edge Systems LLC v.
Added
Cartessa Aesthetics, LLC, Case No. 1:20-cv-6082 (the “Cartessa Case”), for patent infringement arising from Cartessa’s sale of Cartessa’s hydrodermabrasion system that Hydrafacial alleged has infringed five of Hydrafacial’s patents on its device. Hydrafacial narrowed its allegation in the Cartessa Complaint to assert infringement of just four of its patents.
Added
On September 15, 2022, the New York Court granted Hydrafacial’s Motion for Summary Judgment of No Unclean Hands and denied Cartessa’s Motion for Summary Judgment of non-infringement on three of the four patents-in-suit.
Added
On June 6, 2023, the New York Court granted Hydrafacial’s Motion for Summary Judgment of No Invalidity of the fourth patent-in-suit and granted Cartessa’s Motion for Summary Judgment of non-infringement of that same patent. The parties agreed to dismiss the remaining claims without prejudice so that Hydrafacial can appeal the New York Court’s grant of Cartessa’s Motion for Summary Judgment.
Added
Final judgment was entered on October 15, 2024. On October 8, 2024, Hydrafacial filed an appeal in the Federal Circuit Court of Appeals challenging the New York Court’s final judgment and summary judgment decision of Cartessa’s non-infringement regarding the fourth patent-in-suit.
Added
On November 13, 2024, Cartessa filed a cross-appeal challenging the New York Court’s final judgment and summary judgment decision of granting Hydrafacial’s motion for summary judgment of no invalidity regarding the fourth patent-in-suit. The parties exchanged their opening briefs on March 12, 2025 and June 20, 2025.
Added
As of the date of this report, all briefing is complete, and Hydrafacial expects the hearing for this appeal to be scheduled later in 2026. 79 On June 11, 2024, Hydrafacial filed a complaint against Cartessa and its foreign manufacturer, Eunsung Global Corp (“Eunsung”), in the United States International Trade Commission.
Added
A Notice of Institution of Investigation was issued on July 11, 2024, and the investigation was assigned investigation number 337-TA-1408 (the “ITC Cartessa Matter”). In the ITC Cartessa Matter, Hydrafacial has asserted that Cartessa and Eunsung infringe Hydrafacial’s U.S. Patent No. 11,865,287, which relates to hydrodermabrasion systems but was not asserted in the Cartessa Case.
Added
Eunsung has consented to an exclusion order during the term of the Hydrafacial patent-in-suit. In the ITC Cartessa Matter, the parties concluded the evidentiary hearing on April 9-15, 2025. The parties filed post-hearing briefs in May 2025 and the judge issued an initial determination on August 26, 2025, finding that the patent is valid and infringed by Cartessa’s products.
Added
The initial determination recommended an exclusion order and cease and desist order against Cartessa that would prevent importation or sale of Cartessa’s hydrodermabrasion systems within the United States. The initial determination has been certified to the Commission and it is expected to issue a final determination by the end of March 2026.
Added
Cartessa Aesthetics, LLC - Second Complaint On June 14, 2024, Hydrafacial filed a complaint (the “Second Cartessa Complaint”) against Cartessa in the New York Court, captioned HydraFacial LLC v. Cartessa Aesthetics, LLC, Case No. 2:24-cv-04253 (the “Second Cartessa Case”), for patent infringement arising from Cartessa’s sale of Cartessa’s hydrodermabrasion system that Hydrafacial alleged has infringed Hydrafacial’s U.S. Patent No. 11,865,287.
Added
The Second Cartessa Case has been stayed pending resolution of the ITC Cartessa Matter and there will be no activity until the conclusion of the ITC Cartessa Matter. After conclusion of the ITC Cartessa Matter, Hydrafacial plans to reopen the Second Cartessa Case to seek monetary damages and plans to vigorously pursue its claims against Cartessa.
Added
Eunsung Global Corp (and Sinclair Pharma Ltd. and Aesthetic Management Partners, Inc.) - IPRs On September 30, 2024, Eunsung filed a Petition for inter partes review (“IPR”), IPR2024-01491, challenging the validity of Hydrafacial’s U.S. Patent No. 11,865, 287 (the “’287 Patent”). On November 25, 2024, Sinclair Pharma Ltd and Aesthetic Management Partners, Inc.
Added
(“AMP”) filed a similar IPR Petition, IPR2025-00145, challenging the same patent and relying on the same arguments. On January 10, 2025, Eunsung filed an IPR Petition, IPR2025-00445, challenging the validity of Hydrafacial’s U.S. Patent No. 9,550,052 (the “’052 Patent”). On January 13, 2025, Eunsung filed an IPR Petition, IPR2025-00452, challenging the validity of Hydrafacial’s U.S. Patent No. 12,053,607.
Added
On January 14, 2025, Eunsung filed an IPR Petition, IPR2025-00453, challenging the validity of Hydrafacial’s U.S. Patent No. 11,446,477 (the “’477 Patent”). On April 11, 2025, the United States Patent and Trademark Office (“USPTO”) Board denied institution of the first IPR challenging the ’287 Patent (IPR2024-01491).
Added
On June 2, 2025, the USPTO Board granted institution of the second IPR challenging the ’287 Patent (IPR2025-00145). In July 2025, Sinclair and AMP filed copycat IPR Petitions challenging the ’052 Patent and ’477 Patent (IPR2025-01169 and IPR2025-01217, respectively) based on the same arguments as Eunsung’s corresponding IPR Petitions.
Added
In July 2025, Eunsung terminated each of its IPR proceedings against Hydrafacial. The only IPR proceedings still pending against Hydrafacial are the three Sinclair and AMP IPRs (IPR2025-00145, IPR2025-01169, and IPR2025-01217).
Added
These remaining IPR proceedings have been instituted but are all stayed pending the USPTO Director review of the ’287 Patent IPR in light of the final initial determination issued in the ITC Cartessa Matter. Hydrafacial plans to vigorously defend its patents against each of these challenges if they are unstayed.
Added
Medicreations LLC On May 6, 2024, Hydrafacial filed a complaint against Medicreations LLC (“Medicreations”) in the United States District Court for Nevada, Case Number 2:24-cv-00855 (the “Medicreations Case”), for patent infringement arising from Medicreations’ sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed twelve of Hydrafacial’s patents. On July 26, 2024, Medicreations filed a motion to dismiss the complaint.
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On March 3, 2025, the court issued an order dismissing a few of Hydrafacial’s claims to specific remedies, but the majority of the case and claims will move forward. On May 13, 2025, Hydrafacial filed a Motion for Preliminary Injunction that was denied in October 2025. The Medicreations Case is in its early stages of discovery and claim construction.
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On January 29, 2026, the parties reached a settlement in principle and the court has stayed all deadlines while the parties finalize the settlement and dismiss the case.
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Hydrafacial expects this case to be dismissed by the end of March 2026. 80 Sinclair Pharma US, Inc On July 24, 2024, Hydrafacial filed a complaint against Sinclair Pharma US, Inc (“Sinclair”), and its distributor Viora, Inc (“Viora”), in the United States District Court for the Central District of California, Case No. 2:24-cv-06250 (the “Sinclair Case”), for patent infringement arising from Sinclair’s sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial’s patents on its device.
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The Sinclair Case was stayed pending the resolution of an ITC investigation against Sinclair. The ITC investigation was terminated in February 2025, and the district court judge lifted the stay in the Sinclair Case. This case is now proceeding into the discovery phase.
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Sinclair filed a motion to stay this case in view of the IPR proceedings and the court has stayed discovery until it issues a decision on the motion to stay. Hydrafacial will seek monetary damages and plans to vigorously pursue its claims against Sinclair and Viora. Aesthetic Management Partners Inc.
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On July 8, 2024, Hydrafacial filed a complaint against AMP in the United States District Court for the Western District of Tennessee, Case No. 2:24-cv-02480-JPM-TMP (the “AMP Case”), for patent infringement arising from Aesthetic Management Partners’ sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial’s patents on its device.
Added
The AMP Case was stayed due to a corresponding ITC investigation. The ITC investigation was terminated in February 2025, and the judge lifted the stay. On June 13, 2025, Hydrafacial filed a motion for preliminary injunction for which the judge held a hearing on July 25, 2025, but the judge has not yet issued an order.
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On June 23, 2025, AMP filed a partial motion to dismiss which only addresses a small portion of Hydrafacial’s claims and remedies in this case, but a hearing has not been scheduled for this motion yet.
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On November 7, 2025, AMP filed a motion to stay the case in view of the IPR proceedings, but the court has not issued a decision on this motion as of the date of this report. This case is proceeding into discovery and claim construction.
Added
Hydrafacial will continue to seek monetary damages, and plans to vigorously pursue its claims against AMP.
Added
Medical Purchasing Resource, LLC On June 4, 2024, Hydrafacial filed a complaint against Medical Purchasing Resource, LLC (“Medical Purchasing Resource”) in the United States District Court for the Central District of California, Case No. 2:24-cv-4655 (the “MPR Case”), for trademark infringement, false designation of origin, unfair competition, tortious interference, and other causes of action relating to Hydrafacial’s trademark rights.
Added
On April 3, 2025, the parties participated in a mediation and came to a tentative agreement to settle the case. In the mediation, the parties reached a settlement agreement and ultimately agreed that Medical Purchasing Resource will stop using Hydrafacial’s trademarks and any marks that are confusingly similar to those marks.
Added
Medical Purchasing Resource also agreed to stop the other activities identified by Hydrafacial in its complaint, including selling products to known Hydrafacial customers. Medical Purchasing Resource also agreed to take additional measures to ensure that customers are aware that Medical Purchasing Resource and its products have no relation or affiliation with Hydrafacial.
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Medical Purchasing Resource also agreed to pay Hydrafacial a total of $105,000 for past damages which will be paid to Hydrafacial in four quarterly payments of $26,250 starting in July 2025, and the parties filed a consent judgment with the court to end the lawsuit. As a result, the MPR Case has been dismissed.
Added
Luvo Medical Technologies Inc On August 16, 2024, Hydrafacial filed a complaint against Luvo Medical Technologies Inc (“Luvo”), Healthcare Markets, Inc (“Healthcare Markets”), and their foreign manufacturer Eunsung in the United States District Court of Utah, Case No. 2:24-cv-00587 (the “Luvo Case”), for patent infringement arising from Healthcare Markets’ sale of Luvo’s hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial’s patents on its device.
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The Luvo Case was stayed due to the corresponding ITC Luvo Matter, but pursuant to the ITC settlement agreement, the parties filed a consent judgment in the Luvo Case that terminated the case as to Luvo and Healthcare Markets.
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This case continued against Eunsung until the parties achieved a settlement in July 2025, wherein Eunsung agreed to a consent judgment as well.
Added
As a result, the Luvo Case has been dismissed. 81 On August 7, 2024, Hydrafacial filed a complaint against Luvo, its distributor Healthcare Markets, Medical Purchasing Resource, eMIRAmed USA, LLC (“eMIRAmed”), and its manufacturer, MIRAmedtech UG (“MIRAmedtech”), in the United States International Trade Commission.
Added
A Notice of Institution of Investigation was issued on September 16, 2024, and the investigation was assigned investigation number 337-TA-1417 (the “ITC Luvo Matter”). In the ITC Luvo Matter, Hydrafacial has asserted that Luvo, Healthcare Markets, Medical Purchasing Resource, and eMIRAmed infringe Hydrafacial’s U.S.
Added
Patent No. 11,446,477, which is not asserted in the ITC Cartessa Matter or ITC Sinclair Matter, and relates to hydrodermabrasion systems. After a mediation between the parties, on March 17, 2025, Hydrafacial signed a settlement agreement with Luvo and Healthcare Markets.
Added
As a result, the ITC has terminated the investigation as to Luvo and Healthcare Markets, and issued default judgment against the remaining respondents.
Added
Med Spa Essentials, LLC On March 6, 2025, Hydrafacial filed a complaint against Med Spa Essentials, LLC (“MS Essentials”) in the United States District Court for the Central District of California, Case No. 2:25-cv-01994 (the “MS Essentials Case”), for trademark infringement, false designation of origin, unfair competition, tortious interference, and other causes of action relating to Hydrafacial’s trademark rights.
Added
Before filing any response to the complaint, MS Essentials agreed to shut down its business and stop all unlawful acts alleged in the complaint. The parties entered into a settlement agreement and filed a consent judgment, dismissing this case in July 2025. Candela Corp. On April 3, 2025, Hydrafacial filed a complaint against Candela Corp.
Added
(“Candela”), and its manufacturer Termosalud S.L. (“Termosalud”), in the United States District Court for the District of Delaware, Case No. 1:25-cv-00418-JLH (the “Candela Case”), for patent infringement arising from Candela’s sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial’s patents on its device.
Added
The Candela Case is in its early stages of discovery and Hydrafacial is seeking monetary damages and plans to vigorously pursue its claims against Candela and Termosalud.
Added
BQ Aesthetix & Co., LLC On June 24, 2025, Hydrafacial filed a complaint against BQ Aesthetix & Co., LLC d/b/a Bellatrix USA (“Bellatrix”) in the United States District Court for the Southern District of Florida, Case No. 0:25-cv-61262-AHS (the “Bellatrix Case”), for patent infringement arising from Bellatrix’s sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed seven of Hydrafacial’s patents on its device.
Added
The Bellatrix Case is in its early stages of discovery and Hydrafacial is seeking monetary damages and plans to vigorously pursue its claims against Bellatrix.
Added
Securities Class Action On November 16, 2023, a putative class action was filed in the United States District Court for the Central District of California against the Company, its then-current President and Chief Executive Officer, Andrew Stanleick, its former Chief Financial Officer, Liyuan Woo, and its current Chief Financial Officer, Michael Monahan (the “Defendants”). The complaint, styled Abduladhim A.
Added
Alghazwi, individually and on behalf of all others similarly situated, v. The Beauty Health Company, Andrew Stanleick, Liyuan Woo, and Michael Monahan, Case No. 2:23-cv-09733 (C.D.
Added
Ca.) (the “Securities Class Action”), asserted claims for violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder against all defendants (First Claim), and violation of Section 20(a) of the Exchange Act against the individual defendants (Second Claim).
Added
The complaint alleged that, between May 10, 2022 and November 13, 2023, Defendants materially misled the investing public by publicly issuing false and/or misleading statements and/or omissions relating to Hydrafacial's business, operations, and prospects, specifically with respect to the performance of and demand for the Syndeo 1.0 and 2.0 devices.
Added
The relief sought in the complaint included a request for compensatory damages suffered by the plaintiff and other members of the putative class for damages allegedly sustained as a result of the alleged securities violations. 82 On January 16, 2024, putative class members Jeff and Kevin Brown (the “Browns”), Priscilla and Martjn Dijkgraaf (the “Dijkgraafs”), and Joseph Jou filed three competing motions for appointment as lead plaintiff under the Private Securities Litigation Reform Act (“PSLRA”), 17 U.S.C. § 78u-4(a)(3).
Added
On January 31, 2024, Joseph Jou filed a notice of non-opposition to the Browns’ and Dijkgraafs’ motions for appointment as lead plaintiff. On May 2, 2024, the Court granted the Dijkgraafs’ motion for appointment as lead plaintiff and approved the Dijkgraafs’ counsel, Hagens Berman, as lead counsel.
Added
On July 1, 2024, lead plaintiffs filed a consolidated amended class action complaint asserting the same causes of action as the original complaint. The Securities Class Action case was assigned to U.S. District Judge Sherilyn Peace Garnett. On September 30, 2024, Defendants filed a motion to dismiss the consolidated amended class action complaint in its entirety.
Added
Plaintiffs filed their opposition brief on November 22, 2024, and Defendants filed their reply brief on December 23, 2024. A hearing on the Defendants’ motion to dismiss was scheduled for January 15, 2025. On January 10, 2025, the Court granted the parties’ joint stipulation to adjourn the January 15, 2025 hearing.
Added
On January 17, 2025, the Court granted the parties’ joint stipulation to withdraw briefing on Defendants’ motion to dismiss without prejudice to refiling and to briefly stay proceedings so that the parties could complete a private mediation. The parties conducted the private mediation on March 27, 2025. The parties were unable to reach a settlement at the mediation.
Added
On May 5, 2025, the plaintiffs filed a second amended complaint (the “SAC”), pursuant to the parties’ stipulation, which was so-ordered by the Court on April 16, 2025. On July 11, 2025, Defendants filed a motion to dismiss the SAC in its entirety. The Court scheduled a hearing on Defendants’ motion for September 17, 2025.
Added
On September 15, 2025, the Court vacated the hearing sua sponte. On September 25, 2025, the Court denied Defendants’ motion to dismiss. On November 24, 2025, each Defendant filed an answer to the SAC. On November 26, 2025, the parties filed a Fed. R. Civ. P. 26(f) joint report and proposed stipulated pretrial schedule.
Added
On December 15, 2025, the Court so-ordered the parties’ stipulated pretrial schedule, set the final pretrial conference for November 17, 2027, and set trial for December 7, 2027. On the same day, the Court referred the parties to a private mediation before a private mediator of their choice, to be completed by October 13, 2027.
Added
The parties are currently in the discovery phase of the case. The Company believes that the claims asserted in the Securities Class Action have no merit and intends to vigorously defend them.
Added
Customer Class Action On October 24, 2024, Jason Davalos (“Jason Davalos”), Sonia Davalos (“Sonia Davalos”, and collectively with Jason Davalos, the “Davaloses”), and Sol Tan Tanning & Spa LLC (“Sol Tan”, and collectively with the Davaloses, the “Class Action Plaintiffs”), individually and on behalf of all others similarly situated, filed a putative class action complaint (the “Complaint”) against Hydrafacial LLC d/b/a The Hydrafacial Company (“Hydrafacial”) and The Beauty Health Company (“BHC” and collectively with Hydrafacial, the “Class Action Defendants”) for alleged violations of New York consumer fraud statutes, breach of contract, and common law breach of implied warranties (the “Customer Class Action”).
Added
The case is captioned Jason Davalos, Sonia Davalos, Sol Tan Tanning & Spa LLC, on behalf of themselves and all others similarly situated v.
Added
Hydrafacial LLC dba The Hydrafacial Company, and The Beauty Health Company, Case No. 24-cv-8073 (S.D.N.Y.) (Caproni, J.) The Complaint alleged that all three versions of the Syndeo machine (Syndeo 1.0, Syndeo 2.0, and Syndeo 3.0) were defective and did not perform in the manner in which it had been represented by Class Action Defendants.
Added
Class Action Plaintiffs claim that Class Action Defendants made various misrepresentations in its marketing and sales of the Syndeo machines and, rather than provide a refund to customers for the defective machines, replaced them with another Syndeo machine that exhibited the same defects.
Added
Class Action Plaintiffs purported to bring claims on behalf of themselves, and all other similarly situated purchasers within the United States, of Class Action Defendants’ Syndeo machines. The Complaint asserted five causes of action: (1) violations of N.Y. G.B.L., § 349, the state consumer production statute; (2) violations of N.Y.
Added
G.B.L., § 350, the state’s false advertising statute; (3) breach of contract; (4) breach of the implied warranty of merchantability; and (5) breach of the implied warranty of fitness.
Added
The relief sought in the Complaint included monetary damages allegedly suffered by Class Action Plaintiffs and other members of the putative class as a result of Class Action Defendants’ alleged violations and breaches, including a trebling of any money damages award for alleged violations of N.Y.
Added
G.B.L., § 349 and § 350. 83 On December 30, 2024, the Class Action Defendants filed a motion to dismiss the Complaint in its entirety. On January 3, 2025, the Class Action Defendants filed a motion to stay discovery during the pendency of their motion to dismiss.
Added
On January 8, 2025, the Davaloses voluntarily dismissed their claims against the Class Action Defendants pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i), leaving Plaintiff Sol Tan as the sole remaining Customer Class Action Plaintiff. Plaintiff Sol Tan filed their opposition brief on January 9, 2025, and the Class Action Defendants filed their reply brief on January 13, 2025.
Added
On January 16, 2025, the Court granted the parties’ joint stipulation to adjourn the January 17, 2025 initial pretrial conference and stay the action pending the parties’ completion of a private mediation.
Added
As part of its order, the Court also (1) adjourned Plaintiff Sol Tan’s deadline to respond to the Class Action Defendants’ motion to dismiss sine die pending the outcome of mediation; (2) denied as moot the Class Action Defendants’ motion to stay discovery in light of the parties’ agreement to stay discovery pending the outcome of mediation; and (3) directed the parties to (a) file a joint letter on or before February 7, 2025, indicating the date (not later than May 8, 2025) on which the mediation is scheduled to occur; and (b) within seven days after the mediation, either (i) file a joint letter indicating that settlement was reached; or (ii) file a revised proposed case management plan and a revised joint letter required by the Court’s Notice of Initial Pretrial Conference.
Added
On February 7, 2025, the parties filed a joint letter notifying the Court that they had agreed to mediate before Greg Danilow of Phillips ADR Enterprises. The parties conducted the private mediation on April 29, 2025; however, the parties were unable to reach a settlement at the mediation.
Added
Pursuant to the parties’ so-ordered January 16 joint stipulation, on May 7, 2025, the parties filed a revised proposed case management plan and a revised joint letter in accordance with the Court’s Notice of Initial Pretrial Conference.
Added
On the same day, the Court endorsed the joint submission and ordered Plaintiff to file an amended complaint no later than June 2, 2025, and scheduled an initial pretrial conference for July 18, 2025.
Added
On June 2, 2025, Plaintiff and fifteen other alleged purchasers of the Syndeo machines (“Plaintiffs”) filed an amended complaint (the “Amended Complaint”) asserting: (1) violations of N.Y. G.B.L., § 349 (Count IV), the state consumer protection statute; (2) violations of N.Y.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+1 added−0 removed5 unchanged
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.
Biggest changeIssuer Purchases of Equity Securities None. 87 Stock 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, 2025 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.
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.
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, 2026, there were 38 holders of record of our Class A Common Stock.
Added
Equity Compensation Plan Information The information concerning our Equity Compensation Plan will be included in the Company’s 2026 Annual Meeting of Stockholders (the “2026 Proxy Statement”) under the caption “Equity Compensation Plan Information”, and is incorporated herein by reference.

Item 7. Management's Discussion & Analysis

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

62 edited+16 added−26 removed37 unchanged
Biggest changeAmounts 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.
Biggest changeComparison of Year Ended December 31, 2025 to Year Ended December 31, 2024 Year Ended December 31, (Dollars in millions) 2025 % of Net Sales 2024 % of Net Sales Net sales $ 300.8 100.0 % $ 334.3 100.0 % Cost of sales 104.4 34.7 152.0 45.5 Gross profit 196.4 65.3 182.3 54.5 Operating expenses Selling and marketing 93.6 31.1 118.3 35.4 Research and development 5.6 1.9 6.3 1.9 General and administrative 117.9 39.2 125.5 37.5 Total operating expenses 217.2 72.2 250.1 74.8 Loss from operations (20.8) (6.9) (67.8) (20.3) Interest expense 19.3 6.4 10.4 3.1 Interest income (9.0) (3.0) (16.6) (5.0) Other income, net (18.9) (6.3) (33.6) (10.0) Change in fair value of warrant liabilities (0.5) (0.2) (3.1) (0.9) Foreign currency transaction (gain) loss, net (5.8) (1.9) 4.6 1.4 Loss before provision for income taxes (5.9) (2.0) (29.6) (8.8) Income tax expense (benefit) 3.6 1.2 (0.5) (0.1) Net loss $ (9.5) (3.2) % $ (29.1) (8.7) % 91 Net Sales Year Ended December 31, Change (Dollars in millions) 2025 2024 Amount % Net sales Delivery Systems $ 88.1 $ 125.4 $ (37.3) (29.8)% Consumables 212.7 208.9 3.8 1.8% Total net sales $ 300.8 $ 334.3 $ (33.5) (10.0)% Percentage of net sales Delivery Systems 29.3% 37.5% Consumables 70.7% 62.5% Total 100.0% 100.0% Total net sales for the year ended December 31, 2025, decreased $33.5 million, or 10.0%, compared to the year ended December 31, 2024.
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.
The Private Placement Warrants are accounted for as liabilities on the Consolidated Balance Sheets and 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.
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.
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.
The Notes will mature on October 1, 2026, unless earlier repurchased, redeemed or converted. Before April 1, 2026, noteholders have the right to convert their Notes only upon the occurrence of certain events.
The 2026 Notes will mature on October 1, 2026, unless earlier repurchased, redeemed or converted. Before April 1, 2026, noteholders have the right to convert their Notes only upon the occurrence of certain events.
In conjunction with the sale of Delivery Systems, the Company also sells its Consumables. Original Consumables are sold solely and exclusively by the Company (and from authorized retailers) and are available for purchase separately from the purchase of Delivery Systems.
In conjunction with the sale of Delivery Systems, the Company also sells its Consumables. Original Consumables are sold solely and exclusively by the Company and our authorized retailers and are available for purchase separately from the purchase of Delivery Systems.
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.
The 2026 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 2026 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.
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.
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. 89 China Market The Company evaluated its global distribution strategy to align its go-to-market strategy with in-market partner capabilities and market opportunity.
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.
Foreign currency transaction gains and losses as a percentage of revenue will fluctuate period to period along with fluctuations in exchange rates, which are not related to normal business operations. Income Tax Expense (Benefit) The provision for income taxes consists of income taxes related to federal, state and foreign jurisdictions in which we conduct business.
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.
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. 94 Notes 2026 Notes On September 14, 2021, the Company issued an aggregate of $750.0 million in principal amount of its 2026 Notes.
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.
As of December 31, 2025, 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.
Factors Affecting Our Performance We remain attentive to economic and geopolitical conditions that may materially impact our business. We continue to explore and implement risk mitigation strategies in the face of these unfolding conditions and remain agile in adopting to changing circumstances.
Factors Affecting Our Performance We remain attentive to economic and geopolitical conditions that may materially impact our business. We continue to explore and implement risk mitigation strategies in the face of these unfolding conditions and remain agile in adapting to changing circumstances.
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.
Macroeconomic challenges and credit conditions have negatively impacted our revenues in 2025. We are continuing to monitor these and other risks that may affect our business so that we can respond appropriately.
Negative trends in our financial performance or financial condition may result in a sustained decline in our stock price, which may result in a triggering event necessitating an interim goodwill impairment assessment and potential goodwill impairment. 81 Contractual Obligations and Other Commercial Commitments The following table summarizes the Company’s contractual obligations and other commercial commitments as of December 31, 2024.
Negative trends in our financial performance or financial condition may result in a sustained decline in our stock price, which may result in a triggering event necessitating an interim goodwill impairment assessment and potential goodwill impairment. Contractual Obligations and Other Commercial Commitments The following table summarizes the Company’s contractual obligations and other commercial commitments as of December 31, 2025.
Changes in fair value of warrant liabilities as a percentage of revenue will fluctuate period to period along with fluctuations in fair value, which is not related to normal business operations.
Changes in fair value of warrant liabilities as a percentage of revenue will fluctuate period to period along with fluctuations in fair value, which are not related to normal business operations.
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.
Although we believe we can be successful in our current operating environment, various factors may impact our business in unpredictable ways such as: • Global economic conditions, including inflation, recession, changes in foreign currency exchange rates, higher interest rates, and other changes in economic conditions; • The imposition of tariffs and/or trade restrictions may impact material costs and pricing; • Changes in applicable laws, regulations, regulatory interpretations, or enforcement policies in countries in which we operate; • Disruptions in transportation and other supply chain related constraints, such as labor strife in the transportation industry; 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.
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.
This section of this Annual Report on Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
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.
For information regarding the Company’s exchange and repurchases of its Notes during the year ended December 31, 2025, 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 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.
The Company recognized revenue based on the estimated fair value of such Delivery Systems for the year ended December 31, 2023 of approximately $17 million. No trade-in revenue was recognized for the years ended December 31, 2025 and 2024.
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.
Capital expenditures for property and equipment and intangible assets for the year ended December 31, 2025 were $5.2 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.
Cost of sales for the year ended December 31, 2024 include $28.0 million in charges for discontinued, excess, or obsolete inventory, including the write-down of Delivery System inventory to its net realizable value and the write-off of excess raw materials.
Cost of sales for the year ended December 31, 2024 include $28.0 million of inventory charges for discontinued, excess, or obsolete inventory, including the write-down of Delivery System inventory to its net realizable value and the write-off of excess raw materials, and also approximately $8 million of manufacturing optimization related costs.
During the year ended December 31, 2024, the Company recognized income of $3.1 million related to the change in the fair value of the warrant liabilities, a decrease of $8.9 million, as compared to income of $11.9 million during the year ended 79 December 31, 2023, driven primarily by the fluctuation of the price of the Class A Common Stock underlying the Private Placement Warrants.
During the year ended December 31, 2025, the Company recognized income of $0.5 million related to the change in the fair value of the warrant liabilities, as compared to income of $3.1 million during the year ended December 31, 2024, driven primarily by the fluctuation of the price of the Class A Common Stock underlying the Private Placement Warrants.
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 .
Year Ended December 31, (Dollars in millions) 2025 2024 Cash, cash equivalents, and restricted cash at beginning of period $ 370.1 $ 523.0 Operating activities: Net loss (9.5) (29.1) Non-cash adjustments 36.6 72.6 Changes in working capital 10.4 (27.4) Net cash provided by operating activities 37.5 16.1 Net cash used for investing activities (5.2) (6.8) Net cash used for financing activities (174.9) (158.3) Net change in cash, cash equivalents, and restricted cash (142.6) (149.0) Effect of foreign currency translation 5.2 (4.0) Cash, cash equivalents, and restricted cash at end of period $ 232.7 $ 370.1 Operating Activities Net cash provided by operating activities for the year ended December 31, 2025 was $37.5 million, as compared to $16.1 million for the year ended December 31, 2024.
Accordingly, a portion of our available cash may be used at any time for the acquisition of complementary products, services, or businesses. Such potential transactions may require substantial capital resources, which may require us to seek additional debt or equity financing.
As part of our business strategy, we occasionally evaluate potential acquisitions of businesses and products and technologies. Accordingly, a portion of our available cash may be used at any time for the acquisition of complementary products, services, or businesses. Such potential transactions may require substantial capital resources, which may require us to seek additional debt or equity financing.
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.
General and Administrative Year Ended December 31, Change (Dollars in millions) 2025 2024 Amount % General and administrative $ 117.9 $ 125.5 $ (7.5) (6.0) % As a percentage of net sales 39.2 % 37.5 % General and administrative expense for the year ended December 31, 2025 decreased $7.5 million, or 6.0%, compared to the year ended December 31, 2024.
Change in Fair Value of Warrant Liabilities In October 2020, in connection with Vesper’s initial public offering, the Company issued 9,333,333 warrants to purchase shares of the Company’s Class A common stock at $11.50 per share (the “Private Placement Warrants”), to BLS Investor Group LLC, which will expire five years after the Business Combination.
Interest income, as a percentage of revenue, will fluctuate period to period along with fluctuations in interest rates, which are not related to normal business operations. 90 Change in Fair Value of Warrant Liabilities In October 2020, in connection with Vesper’s initial public offering, the Company issued 9,333,333 warrants to purchase shares of the Company’s Class A common stock at $11.50 per share (the “Private Placement Warrants”), to BLS Investor Group LLC, which will expire five years after the Business Combination.
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.
The results of operations data for the years ended December 31, 2025 and December 31, 2024 have been derived from the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Amounts and percentages may not foot due to rounding.
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.
The key estimates and factors used in the valuation models may include, as applicable, the most recent price of our Class A common stock, fair value of our Notes, 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.
Impact if Actual Results Differ from Estimates and Judgements : Changes in qualitative factors assessed, changes to assumptions used in the impairment test, selection and weighting of the various fair value techniques, and downturns in economic or business conditions, could have a significant adverse impact on the carrying value of goodwill and intangible assets and could result in impairment losses which could have a material impact on our financial condition and earnings.
Impact if Actual Results Differ from Estimates and Judgements : Changes in qualitative factors assessed, changes to assumptions used in the impairment test, selection and weighting of the various fair value techniques, and downturns in economic or business conditions, could have a significant adverse impact on the carrying value of goodwill and intangible assets and could result in impairment losses which could have a material impact on our financial condition and earnings. 98 Inventories Management’s Policy : Inventories are stated at the lower of cost (determined using the average cost method which approximates the first-in, first-out method) or net realizable value.
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.
Payments Due by Fiscal Period (Dollars in millions) Total Less Than 1 Year 1-3 years 3-5 Years More than 5 Years 2026 Notes (1) $ 124.5 $ 124.5 $ — $ — $ — 2028 Notes (2) 250.0 — 250.0 — — Interest on Notes (1) (2) 61.2 21.4 39.8 — — Operating leases (3) 15.6 5.7 5.7 2.2 2.0 Purchase of inventory, service, and other 20.3 19.9 0.4 — — Total contractual obligations $ 471.6 $ 171.5 $ 295.9 $ 2.2 $ 2.0 (1) The 2026 Notes mature on October 1, 2026 and are due either in cash or shares of the Company’s Class A Common Stock.
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.
Operating Expenses Selling and Marketing Year Ended December 31, Change (Dollars in millions) 2025 2024 Amount % Selling and marketing $ 93.6 $ 118.3 $ (24.7) (20.9) % As a percentage of net sales 31.1 % 35.4 % Selling and marketing expense for the year ended December 31, 2025 decreased $24.7 million, or 20.9%, compared to the year ended December 31, 2024.
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.
The change in cash provided by operating activities was primarily related to changes in working capital, net loss, and non-cash adjustments. The current year net loss and non-cash adjustments include $18.1 million of net gain related to the exchange and repurchases of the 2026 Notes.
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 critical accounting policies that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements include those noted below. 97 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.
Inherent in the net realizable value are management’s estimates related to economic trends, future demand for products, and technological obsolescence of our products.
Subjective Estimates and Judgements : Obsolete inventory or inventory in excess of management’s estimated usage is written-down to its estimated net realizable value. Inherent in the net realizable value are management’s estimates related to economic trends, future demand for products, and technological obsolescence of our products.
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.
Cost of Sales, Gross Profit, and Gross Margin Year Ended December 31, Change (Dollars in millions) 2025 2024 Amount % Cost of sales $ 104.4 $ 152.0 $ (47.6) (31.3)% Gross profit $ 196.4 $ 182.3 $ 14.1 7.7% Gross margin 65.3 % 54.5 % Cost of sales for the year ended December 31, 2025 decreased by $47.6 million, or 31.3%, compared to the year ended December 31, 2024.
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.
As of December 31, 2025, we had cash, cash equivalents, and restricted cash of $232.7 million. 93 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.
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.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 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, 2025 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Company Overview The Beauty Health Company is a global medical aesthetics company delivering an integrated ecosystem of clinically proven solutions designed to help consumers achieve superior skin health and support the success of providers.
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.
The increase in Consumables net sales was primarily attributable to increased placements of Delivery Systems and the adjoining consumption of Consumables during the year ended December 31, 2025, and price increases, partially offset by declines related to the China transition to a distributor partner.
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.
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. 95 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.
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.
The decrease is primarily driven by lower personnel-related expenses, including share-based compensation expense and sales commission expense, and lower marketing-related spend, and depreciation and amortization expense. 92 Research and Development Year Ended December 31, Change (Dollars in millions) 2025 2024 Amount % Research and development $ 5.6 $ 6.3 $ (0.7) (10.6) % As a percentage of net sales 1.9 % 1.9 % Research and development expense for the year ended December 31, 2025 decreased $0.7 million, or 10.6%, compared to the year ended December 31, 2024.
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.
Interest Expense Interest expense consists of interest accrued on the Company’s Notes and amortization of debt issuance costs relating to the Notes. The 2026 Notes mature on October 1, 2026 and accrue interest at a rate of 1.25% per annum. The 2028 Notes mature on November 15, 2028 and accrue interest at a rate of 7.95% per annum.
Business and Macroeconomic Conditions We continued to execute against our plan to expand our footprint by selling and placing Delivery Systems worldwide, drive Consumables, invest in our community of providers, partners, and consumers, drive brand awareness, and optimize our global infrastructure. Consumables include serums, solutions, tips, and other Consumables.
Business and Macroeconomic Conditions In 2025, we continued to strengthen the foundation of the business while expanding our footprint by selling and placing Delivery Systems worldwide, driving Consumables, investing in our community of providers, partners, and consumers, driving brand awareness, advancing our science-backed innovation product pipeline, and optimizing our global infrastructure. Consumables include serums, solutions, tips, and other products.
Interest 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.
Interest Expense, Interest Income, Change in Fair Value of Warrant Liabilities, and Other Income, Net Year Ended December 31, Change (Dollars in millions) 2025 2024 Amount % Interest expense $ 19.3 $ 10.4 $ 8.9 85.6 % Interest income $ (9.0) $ (16.6) $ 7.7 (46.2) % Change in fair value of warrant liabilities $ (0.5) $ (3.1) $ 2.6 (84.1) % Other income, net $ (18.9) $ (33.6) $ 14.6 N/M N/M - Not meaningful Interest expense for the year ended December 31, 2025 increased $8.9 million compared to the year ended December 31, 2024, primarily due to interest and amortization of debt issuance costs related to the 2028 Notes, partially offset by lower outstanding balances related to the 2026 Notes.
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.
From and after April 1, 2026, noteholders may convert their 2026 Notes into shares of Class A Common Stock until the close of business on the second scheduled trading day immediately before October 1, 2026. (2) The 2028 Notes mature on November 15, 2028 and are due either in cash or shares of the Company’s Class A Common Stock.
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.
Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions.
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.
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. General and administrative expense also includes fees for professional services principally comprising legal, audit, tax and accounting services, and insurance.
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.
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.
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.
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 at least annually or more frequently if indicators of impairment are present or changes in circumstances suggest that impairment may exist.
During the year ended December 31, 2024, t he Company repurchased $192.3 million principal amount of the Notes for $156.1 million.
During the year ended December 31, 2024, t he Company repurchased $192.3 million principal amount of the 2026 Notes for $156.1 million, and recognized a net gain of $33.4 million, which includes $2.8 million of unamortized debt issuance costs related to the repurchase.
During the year ended December 31, 2024, the Company recognized other income, net of $33.6 million, which includes a net gain of $33.4 million related to the repurchase of the Company’s Notes.
Other income, net for the year ended December 31, 2025 included $18.1 million net gain related to the exchange and repurchases of the 2026 Notes. Other income, net for the year ended December 31, 2024 included $33.4 million net gain related to the repurchase of the 2026 Notes.
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.
Interest Income Interest income primarily consists of interest earned from investments in money market funds that the Company classifies as cash equivalents.
The decrease is primarily driven by lower personnel-related expenses, including share-based compensation expense.
The decrease is primarily driven by lower personnel-related expenses, including share-based compensation expense, depreciation expense, and other general corporate spend, and bad debt recoveries. The decrease is partially offset by higher legal fees, amortization expense, and severance expense.
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.
Delivery Systems net sales for the year ended December 31, 2025, decreased $37.3 million, or 29.8%, compared to the year ended December 31, 2024, with decreases across all regions. Delivery Systems net sales were negatively impacted globally by unfavorable macroeconomic and credit conditions.
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.
Cash received from our customers and other activities generally corresponds to our net sales. 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.
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 .
Investing Activities Net cash used for investing activities for the year ended December 31, 2025 was $5.2 million, as compared to $6.8 million for the year ended December 31, 2024. The change in cash used for investing activities was due to lower capital expenditures during the year ended December 31, 2025.
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 cash used for financing activities for the year ended December 31, 2024 was primarily related to the repurchases of the Company’s 2026 Notes. 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.
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 .
Financing Activities Net cash used for financing activities for the year ended December 31, 2025 was $174.9 million, as compared to $158.3 million for the year ended December 31, 2024. The cash used for financing activities for the year ended December 31, 2025 was primarily related to the exchange and repurchases of the Company’s 2026 Notes.
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 .
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.
The decrease is primarily driven by lower personnel-related expenses, including sales commission expense and lower marketing related spend.
The decrease is primarily driven by lower personnel-related expenses, partially offset by higher other professional services expenses.
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.
Gross margin increased to 65.3% for the year ended December 31, 2025 from 54.5% for the year ended December 31, 2024, primarily due to lower inventory related charges and favorable mix shift towards consumable net sales, partially offset by lower average selling price of equipment net sales.
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.
During the second quarter of 2025, the Company transitioned sales in the China market to a distributor partner, and as a result, the Company has discontinued direct sales to customers in China. Components of our Results of Operations Net Sales The Company generates revenue through manufacturing and selling Delivery Systems.
The decrease is primarily due to the absence of charges and inventory write-downs associated with the Syndeo Program of $65.2 million and lower net sales, partially offset by higher inventory related charges and approximately $8 million of manufacturing optimization related costs incurred in 2024.
The decrease is primarily due to lower inventory-related charges and net sales.
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.
During the year ended December 31, 2025, the Company repurchased $20.0 million principal amount of the 2026 Notes for $18.4 million, and recognized a net gain of $1.5 million, which includes $0.1 million of unamortized debt issuance costs related to the repurchase.
Removed
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.
Added
Anchored by Hydrafacial, a leading and widely requested professional skincare treatment, and supported by complementary offerings including SkinStylus microneedling and HydraScalp powered by Keravive, the Company combines advanced device technology, proprietary consumables, and clinical validation to deliver trusted treatment experiences through an omnichannel network of providers worldwide.
Removed
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.
Added
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.
Removed
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.
Added
Consumables net sales for the year ended December 31, 2025, increased $3.8 million, or 1.8%, compared to the year ended December 31, 2024.
Removed
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”).
Added
Interest income for the year ended December 31, 2025 decreased $7.7 million compared to the year ended December 31, 2024, primarily due to lower average invested balances during the year ended December 31, 2025.
Removed
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.
Added
Additionally, in February 2026, the Company repurchased $21.3 million principal amount of the 2026 Notes at a weighted-average price equal to 94.875% for $20.2 million. 2028 Notes On May 21, 2025, the Company entered into privately negotiated exchange agreements (the “Exchange Agreements”) with certain holders (the “Exchanging Holders”) of the 2026 Notes (the “Existing Notes”).
Removed
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.
Added
Pursuant to the Exchange Agreements, the Company exchanged and repurchased $413.2 million aggregate principal amount of the Existing Notes.
Removed
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.
Added
Of the $413.2 million aggregate principal amount of the 2026 Notes, $263.2 million principal amount were exchanged at a weighted-average price equal to 95% for $250.0 million principal amount of new 7.95% Convertible Senior Secured Notes due November 15, 2028, and $150.1 million principal amount were repurchased at a weighted-average price equal to 95% for $142.6 million.
Removed
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.
Added
The exchange and repurchase resulted in a net gain of $16.6 million, which includes $3.1 million of unamortized debt issuance costs and $0.9 million of other related fees. The 2028 Notes accrue interest at a rate of 7.95% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2025.
Removed
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.
Added
The 2028 Notes will mature on November 15, 2028, unless earlier repurchased, redeemed or converted. Subject to certain restrictions, noteholders may convert their 2028 Notes at any time at their election until the close of business on the second scheduled trading day immediately before November 15, 2028.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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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.
Biggest changeWe 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. Our investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.
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
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. 100
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.
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 $4 million and $6 million for the years ended December 31, 2025 and 2024, respectively.
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.
If a hypothetical 100 basis points increase was applied to our investment positions at the balance sheet date, it would result in approximately $1 million and $3 million increase in the fair market value of the portfolio as of December 31, 2025 and 2024, respectively. Our debt obligations related to the Notes are long-term in nature with fixed 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.
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. 99 Our investment policy and strategy are focused on the preservation of capital and supporting our liquidity requirements.
Removed
Our investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.
Added
While we are exposed to global interest rate fluctuations, we are most affected by fluctuations in U.S. interest rates.

Other SKIN 10-K year-over-year comparisons