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What changed in ONESPAWORLD HOLDINGS Ltd's 10-K — 2023 vs 2024

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

+320 added−332 removedSource: 10-K (2025-02-21) vs 10-K (2023-12-31)

Top changes in ONESPAWORLD HOLDINGS Ltd's 2024 10-K

320 paragraphs added · 332 removed · 256 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

170 edited+30 added−35 removed224 unchanged
Biggest changeThe combination of our attractive tax rate and asset-light operating model leads to a financial profile that delivers comparatively high Unlevered After-Tax Free Cash Flow. Annually, from fiscal 2017 through 2019, and post-pandemic, in fiscal 2023, we converted approximately 89% of our Adjusted EBITDA to Unlevered After-Tax Free Cash Flow.
Biggest changeAdditionally, our capital expenditure requirements are comparatively modest, as our cruise line and destination resort partners typically fund the build-out, maintenance, and refurbishment of our health and wellness centers. The combination of our attractive tax rate and asset-light operating model leads to a financial profile that delivers comparatively high cash flow generation.
In so doing, we are effecting long-term sustainable growth of the Company and creating long-term value for our cruise line and destination resort partners and our shareholders. With respect to environmental matters, we manage our operations alongside our third-party suppliers, cruise line operators, landlords, and other business partners.
In so doing, we are effecting long-term sustainable growth of the Company and creating long-term value for our cruise line and destination resort partners and our shareholders. With respect to environmental matters, we manage our operations alongside our third-party suppliers, cruise line operators, destination resort landlords, and other business partners.
Our Board of Directors (the “Board”) directly oversees procedures and corporate culture promoting and upholding the ethical conduct of the Company’s business, including adopting and monitoring compliance with the Company’s Code of Ethics, which sets forth the Company’s policies of promoting high standards of integrity by and toward our employees.
Our Board of Directors (the “Board”) directly oversees policies, procedures and corporate culture promoting and upholding the ethical conduct of the Company’s business, including adopting and monitoring compliance with the Company’s Code of Ethics, which sets forth the Company’s policies of promoting high standards of integrity by and toward our employees.
We have a 100% promotion rate for our health and wellness center general managers, an average tenure of ten years for employees at our Coral Gables office, and tenures of 20 to more than 30 years for our senior leaders, many of whom started with the Company as shipboard health and wellness center team members and advanced to positions at our Coral Gables office and London Wellness Academy. • Culture and Ethics.
We have a 100% promotion rate for our health and wellness center general managers, an average tenure of ten years for employees at our Coral Gables office, and tenures of 20 years to more than 30 years for our senior leaders, many of whom started with the Company as shipboard health and wellness center team members and advanced to positions at our Coral Gables office and London Wellness Academy. • Culture and Ethics.
The courts of The Bahamas would recognize a U.S. judgment as a valid judgment, and permit the same to provide the basis of a fresh action in The Bahamas and should give a judgment based thereon without there being a re-trial or reconsideration of the merits of the case provided that (i) the courts in the United States had proper jurisdiction under Bahamian conflict of law rules over the parties subject to such judgment, (ii) the judgment is for a debt or definite sum of money other than a sum payable in respect of taxes or charges of a like nature or in respect of a fine or penalty, (iii) the U.S. courts did not contravene the rules of natural justice of The Bahamas, (iv) the judgment was not obtained by fraud on the part of the party in whose favor the judgment was given or of the court pronouncing it, (v) the enforcement of such judgment would not be contrary to the public policy of The Bahamas, (vi) the correct procedures under the laws of The Bahamas are duly complied with, (vii) the judgment is not inconsistent with a prior Bahamian judgment in respect of the same matter and (viii) enforcement proceedings are instituted within six years after the date of such judgment.
The courts of The Bahamas would recognize a U.S. judgment as a valid judgment, and permit the same to provide the basis of a fresh action in The Bahamas and should give a judgment based thereon without there being a re-trial or reconsideration of the merits of the case provided that (i) the courts in the United States had proper jurisdiction under Bahamian conflict of law rules over the parties subject to such judgment, (ii) the judgment is for a debt or definite sum of money other than a sum payable in respect of taxes or charges of a like nature or in respect of a fine or penalty, (iii) the U.S. courts did not contravene the rules of natural justice of 30 The Bahamas, (iv) the judgment was not obtained by fraud on the part of the party in whose favor the judgment was given or of the court pronouncing it, (v) the enforcement of such judgment would not be contrary to the public policy of The Bahamas, (vi) the correct procedures under the laws of The Bahamas are duly complied with, (vii) the judgment is not inconsistent with a prior Bahamian judgment in respect of the same matter and (viii) enforcement proceedings are instituted within six years after the date of such judgment.
As evidenced by our successful history of winning new contracts, we remain focused on continuing to protect and grow our dominant market share at sea. Continue Launching Innovative New Value-Added Services and Products We have successfully innovated services and products to meet guests’ ever-changing needs, attract more guests and generate more revenue and profitability per guest.
As evidenced by our successful history of winning new contracts, we remain focused on continuing to protect and grow our dominant market share at sea. Continue Launching Innovative New Value-Added Services and Products We have successfully innovated services, products and experiences to meet guests’ ever-changing needs, attract more guests and generate more revenue and profitability per guest.
We are focused on collaborating with cruise line partners to increase passenger penetration and maximize revenue yield through the following initiatives: • Increase Pre-Booking and Pre-Payment Capture Rate —We are collaborating proactively with our cruise line partners to employ increased and enhanced marketing and promotion campaigns to engage guests upon booking their vacation experience, well before boarding a ship, through pre-booking.
We are focused on collaborating with cruise line partners to increase passenger penetration and maximize revenue yield through the following initiatives: • Increase Pre-Booking and Pre-Payment Capture Rate —We collaborate proactively with our cruise line partners to employ increased and enhanced marketing and promotion campaigns to engage guests upon booking their vacation experience, well before boarding a ship, through pre-booking.
Any such changes, and any international response to them, could potentially introduce new barriers to passenger or crew travel and/or cross border transactions, impact our guest experience and/or increase our operating costs. 23 The waters and countries in which we operate include geographic regions that, from time to time, experience political and civil unrest and armed hostilities.
Any such changes, and any international response to them, could potentially introduce new barriers to passenger or crew travel and/or cross border transactions, impact our guest experience and/or increase our operating costs. The waters and countries in which we operate include geographic regions that, from time to time, experience political and civil unrest and armed hostilities.
This reallocation also could result in the imposition of interest and penalties. In addition, we cannot assure you that the tax laws on which we have relied to minimize our income taxes will remain unchanged in the future. We are directly and indirectly affected by new tax legislation and regulation and the interpretation of tax laws 21 and regulations worldwide.
This reallocation also could result in the imposition of interest and penalties. In addition, we cannot assure you that the tax laws on which we have relied to minimize our income taxes will remain unchanged in the future. We are directly and indirectly affected by new tax legislation and regulation and the interpretation of tax laws and regulations worldwide.
Through established cruise line partner relationships, current contracts, competitive 7 positioning of our operating infrastructure, track record of delivering extraordinary guest experiences, and an approximately 97% contract renewal rate over the last 15 years, we are well-positioned to capture new ship growth over the long term.
Through established cruise line partner relationships, current contracts, competitive positioning of our operating infrastructure, track record of delivering extraordinary guest experiences, and an approximately 97% contract renewal rate over the last 15 years, we are well-positioned to capture new ship growth over the long term.
We offer a specialized suite of massage and body care services and therapies, together with a broad range of beauty treatments, including facials, hair cutting and styling, manicures and pedicures, and teeth whitening services, among other services custom-designed for our cruise line and destination resort partners. • Medi-spa. We offer medi-spa services on the majority of our ships.
We offer a specialized suite of massage and body care services and therapies, together with a broad range of beauty treatments, including facials, hair styling, manicures and pedicures, and teeth whitening services, among other services custom-designed for our cruise line and destination resort partners. • Medi-spa. We offer medi-spa services on the majority of our ships.
If this were to occur, we may be unable to develop adequate alternative marketing strategies, which could impact our ability to effectively market and sell our services. 28 If we fail to comply with the laws and regulations relating to the protection of data privacy, we could be exposed to suits for breach of contract or to governmental proceedings.
If this were to occur, we may be unable to develop adequate alternative marketing strategies, which could impact our ability to effectively market and sell our services. If we fail to comply with the laws and regulations relating to the protection of data privacy, we could be exposed to suits for breach of contract or to governmental proceedings.
The unanticipated loss of the services of any of these persons or other key management personnel, due to illness, resignation or otherwise could have a material adverse effect on our business, results of operations and financial condition. Our success is dependent on our ability to recruit and retain personnel qualified to perform our services.
The unanticipated loss of the services of any of these persons or other key management personnel, due to illness, disability, resignation or otherwise could have a material adverse effect on our business, results of operations and financial condition. Our success is dependent on our ability to recruit and retain personnel qualified to perform our services.
Finally, we may in the future expand our land-based operations, the income from which is generally taxable, in which case the amount of our income that is subject to tax may materially increase. The Success of Health and Wellness Centers Depends on the Hospitality Industry We are dependent on the hospitality industry for the success of destination resort centers.
Finally, we may in the future expand our land-based operations, the income from which is generally taxable, in which case the amount of our income that is subject to tax may materially increase. 21 The Success of Health and Wellness Centers Depends on the Hospitality Industry We are dependent on the hospitality industry for the success of destination resort centers.
Other than as described below, we believe that none of the income generated by our non-United States subsidiaries should be effectively connected with the conduct of a trade or business within the United States and, accordingly, that such income should not be subject to United States federal income tax.
Other than as described below, we believe that none of the income generated by our non-United States subsidiaries 19 should be effectively connected with the conduct of a trade or business within the United States and, accordingly, that such income should not be subject to United States federal income tax.
Most scientists have concluded that increasing concentrations of greenhouse gases in the Earth’s atmosphere that contribute to climate change could have significant physical effects on weather conditions, such as increased frequency and severity of hurricanes, storms, droughts, floods, and other climatic events.
Most scientists have concluded that increasing concentrations of greenhouse gases in the Earth’s atmosphere that contribute to climate change could have significant physical effects on weather conditions, such as increased frequency and severity of hurricanes, storms, droughts, floods, fires, and other climatic events.
If any of these events occurred, we could incur substantial litigation expense and be required to make payments in connection with settlements of claims or as a result of judgments against us. We maintain insurance to cover a number of risks associated with our business.
If any of these events occurred, we could incur substantial litigation expense and be required to make payments in connection with settlements of claims or as a result of judgments against us. 26 We maintain insurance to cover a number of risks associated with our business.
In addition, the laws of certain foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. The costs required to protect our trademarks and trade names may be substantial. If other parties infringe on our 27 intellectual property rights, the value of our brands in the marketplace may be diluted.
In addition, the laws of certain foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. The costs required to protect our trademarks and trade names may be substantial. If other parties infringe on our intellectual property rights, the value of our brands in the marketplace may be diluted.
We have instituted best practices to ensure that we continue to operate to the highest standards, including requiring all our employees to familiarize themselves during the training with, and adhere strictly to, our Code of Ethics and our corporate social responsibility and sustainability policies. • Diversity & Inclusion.
We have instituted best practices to ensure that we continue to operate to the highest standards, including requiring all our employees to familiarize themselves during their training with, and adhere strictly to, our Code of Ethics and our corporate social responsibility and sustainability policies. • Diversity & Inclusion.
We also cannot assure that we will be able to continue to expand our health and wellness services sufficiently to keep up with consumer demand. Accordingly, we may not be able to successfully implement our growth strategies or continue to maintain sales at our current rate, or at all.
We also cannot assure that we will be able to continue to expand our health and wellness services sufficiently to keep up with consumer demand. Accordingly, we may not be able to successfully implement our growth strategies or continue to maintain sales at 27 our current rate, or at all.
Higher fuel charges also increase the cost to consumers of transportation to cruise ship destination ports and to venues where we operate our destination resort health and wellness centers, and also increase the cost of utilities at our destination resort health and wellness centers. Periods of increasing fuel costs would likely cause these transportation costs to correspondingly increase.
Higher fuel charges also increase the cost to consumers of transportation to cruise ship destination ports and to venues where we operate our destination resort health and wellness centers, and also increase the cost of utilities at our destination resort health and wellness 18 centers. Periods of increasing fuel costs would likely cause these transportation costs to correspondingly increase.
We may be subject to legal liability and reputational damage if we improperly sell goods or otherwise operate improperly in areas subject to economic sanctions such as Crimea, Iran, North Korea, Cuba, Sudan, and Syria, or if we improperly engage in business transactions with persons subject to economic sanctions.
We may be subject to legal liability and reputational damage if we improperly sell goods or otherwise operate improperly in areas subject to economic sanctions such as Crimea, Cuba, Iran, North Korea, Russia, Sudan, and Syria, or if we improperly engage in business transactions with persons subject to economic sanctions.
Our success depends on our ability to recruit and train employees skilled in our customer service philosophy. We recruit prospective shipboard health and wellness center employees from a broad spectrum of geographies providing a pipeline of diverse talent from a wide range of demographics and economies.
Our success depends on our ability to recruit and train employees skilled in our customer service philosophy. We recruit prospective shipboard health and wellness center employees from a broad spectrum of geographies, providing a pipeline of talent from a wide range of demographics and economies.
Our Business The majority of our revenue and profits are earned through long-term revenue sharing agreements with cruise line partners that economically align both parties and contribute to our attractive asset-light financial profile.
Our Business The majority of our revenue and profits are earned through long-term agreements with cruise line partners that economically align both parties and contribute to our attractive asset-light financial profile.
While we devote substantial resources to our global compliance 25 programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments, our employees, vendors, or agents may violate our policies.
While we devote substantial resources to our global compliance programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments, our employees, vendors, or agents may violate our policies.
Health 9 and wellness centers are designed and branded for each cruise and destination resort partner to optimize the guest experience, maximize revenues and align with our partners’ brands and hospitality environment.
Health and wellness centers are designed and branded for each cruise and destination resort partner to optimize the guest experience, maximize revenues and align with our partners’ brands and hospitality environment.
Shareholder,” generally, means a “United States person” (“U.S. person”) who owns directly, indirectly or constructively at least 10% of the voting power or value of the stock of a foreign corporation.
Shareholder,” generally, means a “United States person” (“U.S. person”) who owns directly, indirectly or constructively at least 10% of the voting power or value of the stock of a 20 foreign corporation.
We may also be required to make such minimum annual payments under any future agreements into which we enter. Accordingly, we could be obligated to pay more in minimum payments than the amount we collect from customers. As of December 31, 2023, these payments were required by three of the agreements for our destination resort health and wellness centers.
We may also be required to make such minimum annual payments under any future agreements into which we enter. Accordingly, we could be obligated to pay more in minimum payments than the amount we collect from customers. As of December 31, 2024, these payments were required by three of the agreements for our destination resort health and wellness centers.
Our business model is centered on providing our cruise line and destination resort partners with the following solutions: • Creating Extraordinary Guest Experiences —We pride ourselves on creating extraordinary guest experiences in our health and wellness facilities, offering our cruise line and destination resort partners’ guests a comprehensive suite of premium health, wellness, fitness and beauty services, treatments, and products. • Global Recruiting, Training and Logistics —We recruit, train and manage over 5,000 health, fitness, beauty and wellness professionals annually around the world, representing 88 nationalities and 27 spoken languages.
Our business model is centered on providing our cruise line and destination resort partners with the following solutions: • Creating Extraordinary Guest Experiences —We pride ourselves on creating extraordinary guest experiences in our health and wellness facilities, offering our cruise line and destination resort partners’ guests a comprehensive suite of premium health, wellness, fitness and beauty services, treatments, and products. • Global Staff Recruiting, Training and Logistics —We recruit, train and manage over 5,200 health, fitness, beauty and wellness professionals annually around the world, representing 88 nationalities and 27 spoken languages.
Competition With our over 90% market share in the outsourced maritime health and wellness center operations segment of the cruise industry, we currently compete with a small number of competitors. Across the destination resorts business, we compete with other outsource providers of health, fitness, beauty and wellness services to hotel and destination resort operators.
Competition With our over 90% market share in the outsourced maritime health and wellness center operations segment of the cruise industry, we have a small number of competitors. Across the destination resorts business, we compete with other outsource providers of health, fitness, beauty and wellness services to hotel and destination resort operators.
As a result of our scale, our captive consumer audience, and consumers’ increasing desire for more health, fitness, beauty and wellness services and products, we are well-positioned in the global health and wellness industry and have a large and highly attractive addressable consumer market at sea and on land. 5 Differentiated Business Model That Would Be Difficult and Uneconomic to Replicate For more than 50 years, our business model has been built through investment in global infrastructure, supply chain logistics and training, decades-long relationships with our cruise line and destination resort partners and our reputation for offering our guests a best-in-class health, fitness, beauty and wellness experience.
As a result of our scale, our captive consumer audience, and consumers’ increasing desire for more health, fitness, beauty and wellness services and products, we are well-positioned in the global health and wellness industry and have a large and highly attractive addressable consumer market at sea and on land. 4 Differentiated Business Model That Would Be Difficult and Uneconomic to Replicate For more than 50 years, our business model has been built through investment in global infrastructure, staff recruiting, training and logistics, supply chain logistics, decades-long relationships with our cruise line and destination resort partners and our reputation for offering our guests a best-in-class health, fitness, beauty and wellness experience.
Over the last 50 years, we have built our leading market position on our depth of staff expertise; broad and innovative service and product offerings; expansive global recruitment, training and logistics platform; and decades-long relationships with cruise line and destination resort partners.
Over the last 50 years, we have built our leading market position on our depth of staff expertise; broad and innovative service and product offerings; expansive global staff recruitment, training and logistics platform; global operations infrastructure; and decades-long relationships with cruise line and destination resort partners.
If We Fail to Maintain an Effective System of Internal Control over Financial Reporting, We May Not Be Able to Accurately and Timely Report Our Financial Results or Prevent Fraud; as a Result, Shareholders Could Lose Confidence in Our Financial and Other Public Reporting, Which Is Likely to Negatively Affect Our Business and the Market Price of Our Common Shares Pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to furnish a report by our management on our internal control over financial reporting, and once we no longer qualify as an emerging growth company, our independent registered public accounting firm will also be required to provide an attestation report on our internal control over financial reporting.
Risks Related to Ownership of Our Securities If We Fail to Maintain an Effective System of Internal Control over Financial Reporting, We May Not Be Able to Accurately and Timely Report Our Financial Results or Prevent Fraud; as a Result, Shareholders Could Lose Confidence in Our Financial and Other Public Reporting, Which Is Likely to Negatively Affect Our Business and the Market Price of Our Common Shares Pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to furnish a report by our management on our internal control over financial reporting, and once we no longer qualify as an emerging growth company, our independent registered public accounting firm will also be required to provide an attestation report on our internal control over financial reporting.
We are proud to bring valuable long-term employment and career opportunities to individuals residing and supporting families in major economies such as Australia, the British Isles, Canada, continental Europe, India, Indonesia, Mauritius, the Philippines, South Africa, South America, and Thailand, as well as smaller, less developed employment markets such as Bhutan, the Caribbean, Madagascar, Nepal, Nigeria, Ukraine, Zambia, and Zimbabwe, among others.
We are proud to bring valuable long-term employment and career opportunities to individuals residing and supporting families in major economies such as Australia, the British Isles, Canada, China, continental Europe, India, Indonesia, Japan, Mauritius, the Philippines, South Africa, South America, and Thailand, as well as smaller, less developed employment markets such as the Caribbean, Madagascar, Nepal, Nigeria, Ukraine, Zambia, and Zimbabwe, among others.
We cannot be assured of the continued viability of any of the land-based venues (including our ability to protect our investments in build-outs of health and wellness centers) or cruise lines that we serve, particularly in the event of recurrence of the more severe aspects of the economic slowdown experienced in certain prior years, which may recur due to a future pandemic or other disruptions.
We cannot be assured of the continued viability of any of the land-based venues (including our ability to protect our investments in build-outs of health and wellness centers) or cruise lines that we serve, particularly in the event of recurrence of the more severe aspects of the economic slowdown experienced in certain prior years, which may recur due to a future outbreak of illness or other disruptions.
Highly Visible and Predictable Revenue Streams We operate health and wellness centers on 193 ships under long-term contracts with our cruise line partners, which we expect to grow as new ships are commissioned by our existing partners and prospective new partners.
Highly Visible and Predictable Revenue Streams We operate health and wellness centers on 199 ships under long-term contracts with our cruise line partners, which we expect to grow as new ships are commissioned by our existing partners and prospective new partners.
On each cruise ship and in every destination resort health and wellness center, we have a general manager and typically an assistant manager training to become a general manager, along with up to 83 total staff, depending on the scale of the health and wellness center.
On each cruise ship and in every destination resort health and wellness center, we have a general manager and typically an assistant manager training to become a general manager, along with up to 96 total staff, depending on the scale of the health and wellness center.
We risk damage to our brand and reputation or limited access to capital markets and loans, if we fail to adapt to or comply with investor, lender or other stakeholder expectations and standards and potential government regulation in a number of areas, such as diversity and inclusion, environmental stewardship, support for local communities, and corporate governance and transparency.
We risk damage to our brand and reputation, potential government inquiries or litigation, or limited access to capital markets and loans if we fail to adapt to or comply with investor, lender, government regulator, or other stakeholder expectations and standards and potential government regulation in a number of areas, such as diversity and inclusion, environmental stewardship, support for local communities, and corporate governance and transparency.
Most of our cruise line agreements cover all of the then-operating ships of a cruise line and typically new ships are added to ships in service through an amendment to the agreement. The agreements have specified terms ranging from three to 8.6 years, with an average remaining term per ship of approximately three years as of December 31, 2023.
Most of our cruise line agreements cover all of the then-operating ships of a cruise line and typically new ships are added to ships in service through an amendment to the agreement. The agreements have specified terms ranging from three to 8.6 years, with an average remaining term per ship of approximately four years as of December 31, 2024.
Actual or Threatened Epidemics or Pandemics may Have an Adverse Effect on our Business, Financial Condition and Results of Operations Pandemics have had in the past, and may continue to have in the future, an adverse impact on our business, operations, results of operations and financial condition, including liquidity.
Actual or Threatened Epidemics, Pandemics and Outbreaks of Illnesses may Have an Adverse Effect on our Business, Financial Condition and Results of Operations Pandemics have had in the past, and may continue to have in the future, an adverse impact on our business, operations, results of operations and financial condition, including liquidity.
Additionally, future pandemics may have adverse negative impacts on restrictions in the agreements governing our indebtedness that require us to maintain minimum levels of liquidity and otherwise limit our flexibility in operating our business, including the significant portion of assets that are collateral under these agreements.
Additionally, future outbreaks of illnesses may have adverse negative impacts on restrictions in the agreements governing our indebtedness that require us to maintain minimum levels of liquidity and otherwise limit our flexibility in operating our business, including the significant portion of assets that are collateral under these agreements.
We recently introduced a new pricing strategy, simplifying the choice architecture for our guests while continuing to make price adjustments across multiple areas within our spas. Guests have responded positively, resulting in an increased service spend coupled with a higher frequency of longer treatments booked, and a shift toward booking relatively more premium and signature services.
We recently introduced a new pricing strategy, simplifying the choice architecture for our guests while continuing to make price adjustments across multiple areas within our health and wellness centers. Guests have responded positively, resulting in an increased service spend coupled with a higher frequency of longer treatments booked, and a shift toward booking relatively more premium and signature services.
A recurrence of the recent pandemic or future pandemics could have a negative impact on global and regional economies and economic activity, including an impact on unemployment rates and consumer discretionary spending, a short and/or longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence.
A recurrence of the recent pandemic or future outbreaks of illnesses could have a negative impact on global and regional economies and economic activity, including an impact on unemployment rates and consumer discretionary spending, a short and/or longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence.
Cruise line and destination resort partners depend on us to provide their guests with the best and broadest assortment of services and products to enhance their vacation experience and the competitive positioning and consumer value of their brands. 6 Entrenched Partnerships with Economic Alignment We have cultivated long-standing partnerships with substantially all of the largest and most successful cruise lines and many premier resorts in the world.
Cruise line and destination resort partners depend on us to provide their guests with the best and broadest assortment of services and products to enhance their vacation experience and the competitive positioning and consumer value of their brands. 5 Entrenched Partnerships with Economic Alignment We have cultivated long-standing partnerships with substantially all of the largest and most successful cruise lines and many premier resorts.
Medi-spa has been a highly successful innovation for OneSpaWorld at sea and is now an accretive component of our offerings. Performed by medically licensed professionals, the medi-spa offerings provide the latest cosmetic medical services to guests, such as non-surgical cosmetic procedures, including Dysport, Restylane, CoolSculpting, Thermage, and dermal fillers.
Medi-spa has been a highly successful innovation for OneSpaWorld at sea and is an increasingly accretive component of our offerings. Performed by medically licensed professionals, the medi-spa offerings provide the latest cosmetic medical services to guests, such as non-surgical cosmetic procedures, including Dysport, Restylane, CoolSculpting, Thermage, IV therapy, and dermal fillers.
Our service menu consists of the leading medi-spa brands, including Dysport, Restylane, CoolSculpting, Thermage, dermal fillers, and microneedling, among others. Medi-spa services are administered by medically licensed professionals. By the end of 2024, we expect to offer medi-spa services on 148 ships. • Health. Our health and pain management offerings present one of our largest and most profitable categories.
Our service menu consists of the leading medi-spa brands, including Dysport, Restylane, CoolSculpting, Thermage, dermal fillers, and microneedling, among others. Medi-spa services are administered by medically licensed professionals. By the end of 2025, we expect to offer medi-spa services on 151 ships. • Health. Our health and pain management offerings present one of our largest and most profitable categories.
Our robust infrastructure and processes required to operate and maximize revenue across our network of global health and wellness centers separates us from existing and prospective peers.
Our robust infrastructure and processes required to operate and maximize revenue across our network of global health and wellness centers separates us from existing and prospective competitors.
Should we violate or not comply with the EU GDPR or the UK GDPR, or any other applicable laws or regulations, contractual requirements relating to data security and privacy, either intentionally or unintentionally, or through the acts of intermediaries, it could have a material adverse effect on our business, results of operations and financial condition, as well as subject us to significant fines, litigation, losses, third-party damages and other liabilities.
Should we violate or not comply with the EU GDPR or the UK GDPR, or any other applicable laws or regulations, contractual requirements relating to data security and privacy, either intentionally or unintentionally, or through the acts of intermediaries, we could experience a material adverse effect on our business, results of operations and financial condition, as well as become subject to significant fines, litigation, losses, third-party damages and other liabilities.
Guests purchasing medi-spa services spend on average up to 5x more than on traditional health, beauty and wellness services. We continue to roll out incremental revenue opportunities, including Hyperice percussion and vibration therapy products and related services.
Guests purchasing medi-spa services spend on average up to 5x more than those purchasing solely traditional health, beauty and wellness services. We continue to roll out incremental revenue opportunities, including Hyperice percussion and vibration therapy products and related services and LED services.
Due to our success across select cruise lines that have implemented pre-booking capabilities, we are in the process of implementing pre-booking across additional partner cruise lines. • Expand Targeted Marketing and Promotion Initiatives —We are now directly marketing and distributing promotions to onboard passengers as a result of enhanced collaboration with select cruise line partners.
Due to our success across select cruise lines that have implemented pre-booking capabilities, we are in the process of implementing pre-booking across additional partner cruise lines. • Expand Targeted Marketing and Promotion Initiatives —We directly market and distribute promotions to onboard passengers as a result of enhanced collaboration with select cruise line partners.
Some credit agencies may downgrade our credit ratings in the future as a result of a pandemic. If our credit ratings are downgraded, or if general market conditions were to ascribe a higher risk to our credit rating levels, our industry, or our company, our access to capital and the cost of debt financing could be negatively impacted.
Some credit agencies may downgrade our credit ratings as a result of future outbreaks of illnesses. If our credit ratings are downgraded, or if general market conditions were to ascribe a higher risk to our credit rating levels, our industry, or our company, our access to capital and the cost of debt financing could be negatively impacted.
Historically, with the exception of the adverse impact of the recent pandemic discussed elsewhere herein, and since the resumption of our health and wellness center operations on cruise ships and in destination resorts, we have driven strong financial performance and believe our leading market position in a growing industry, differentiated business model, and mutually accretive partnerships with our cruise line and destination resort partners position our business for continued growth.
Historically, with the exception of the adverse impact of the recent COVID-19 pandemic, and since the resumption of our health and wellness center operations on cruise ships and in destination resorts, we have driven strong financial performance and believe our leading market position in a growing industry, differentiated business model, and mutually accretive partnerships with our cruise line and destination resort partners position our business for continued growth.
For more than 50 years, we have continuously defined and redefined the onboard health, fitness, beauty and wellness category by consistently expanding our onboard offerings with innovative and leading-edge service and product introductions, while developing the powerful back-end recruiting, training and logistics platforms to manage and optimize the complexity of our operations and maintain our industry-leading quality standards.
For more than 50 years, we have continuously defined and redefined the onboard health, fitness, beauty and wellness category by consistently expanding our onboard offerings with innovative and leading-edge service and product introductions, while developing the powerful staff recruiting and training and operational logistics platforms to manage and optimize the complexity of our global operations and maintain our industry-leading quality standards.
However, OneSpaWorld (Bahamas)’s shipboard income generated while in port in The Bahamas is subject to the payment of a 10% VAT payable to the Bahamas Department of Inland Revenue. 20 The Risks to OneSpaWorld Under United States Treasury Department regulations, as of January 1, 2007, all or a portion of OneSpaWorld (Bahamas)’s income for periods commencing on or after that date could be subject to United States federal income tax at a rate of up to 35% with respect to income earned prior to January 1, 2018 and 21% with respect to income earned thereafter: • to the extent the income from OneSpaWorld (Bahamas)’s shipboard operations that OneSpaWorld believes are performed outside of United States territorial waters is considered by the Internal Revenue Service (“IRS”) to be attributable to functions performed, resources employed or risks assumed within the United States or its possessions or territorial waters; • to the extent the income from OneSpaWorld (Bahamas)’s sale of health and wellness products for use, consumption, or disposition in international waters is considered by the IRS to be attributable to functions performed, resources employed or risks assumed within the United States, its possessions or territorial waters; or • to the extent that passage of title or transfer of ownership of products sold by OneSpaWorld (Bahamas) for use, consumption or disposition outside international waters, takes place in the United States or a United States office materially participates in such sales.
The Risks to OneSpaWorld Under United States Treasury Department regulations, as of January 1, 2007, all or a portion of OneSpaWorld (Bahamas)’s income for periods commencing on or after that date could be subject to United States federal income tax at a rate of up to 35% with respect to income earned prior to January 1, 2018 and 21% with respect to income earned thereafter: • to the extent the income from OneSpaWorld (Bahamas)’s shipboard operations that OneSpaWorld believes are performed outside of United States territorial waters is considered by the Internal Revenue Service (“IRS”) to be attributable to functions performed, resources employed or risks assumed within the United States or its possessions or territorial waters; • to the extent the income from OneSpaWorld (Bahamas)’s sale of health and wellness products for use, consumption, or disposition in international waters is considered by the IRS to be attributable to functions performed, resources employed or risks assumed within the United States, its possessions or territorial waters; or • to the extent that passage of title or transfer of ownership of products sold by OneSpaWorld (Bahamas) for use, consumption or disposition outside international waters, takes place in the United States or a United States office materially participates in such sales.
A recurrence of the recent pandemic or future pandemics could also present a significant threat to our employees’ well-being and morale, which may impact employee productivity and employee retention.
A recurrence of the recent pandemic or future outbreaks of illnesses could also present a significant threat to our employees’ well-being and morale, which may impact employee productivity and employee retention.
We also offer our guests access to leading beauty and wellness brands including ELEMIS ®, Grown Alchemist®, Kérastase ®, Dysport ®, Restylane®, Thermage®, CoolSculpting®, truSculpt® 3D, truSculpt® iD, Good Feet®, and Hyperice®, among others, with many brands offered exclusively by us in the cruise market. On average, during the year ended December 31, 2023, guests spent approximately $286 per visit.
We offer our guests access to leading beauty and wellness brands including ELEMIS®, Grown Alchemist®, Kérastase®, Dysport®, Restylane®, Thermage®, CoolSculpting®, truSculpt® 3D, truSculpt® iD, Good Feet®, Lightstim®, and Hyperice®, among others, with many brands offered exclusively by us in the cruise market. On average, during the year ended December 31, 2024, guests spent approximately $297 per visit.
The following are other risks related to the hospitality industry: • changes in the national, regional and local conditions (including major national or international terrorist attacks, armed hostilities, such as the recent invasion of Ukraine, or other significant adverse events, including an oversupply of hotel properties or a reduction in demand for hotel rooms); • the possible loss of funds expended for build-outs of health and wellness centers at venues that fail to open, underperform or close due to economic slowdowns or otherwise; • the attractiveness of the venues to consumers and competition from comparable venues in terms of, among other things, accessibility and cost; • the outbreaks of illnesses, such as the recent pandemic, or the perceived risk of such outbreaks, in locations where we operate land-based health and wellness centers or locations from which guests of such wellness centers are sourced; • weather conditions, including natural disasters, such as earthquakes, hurricanes, tsunamis and floods, which may be exacerbated due to climate change; • possible labor unrest or changes in economics based on collective bargaining activities; • changes in ownership, maintenance or room rates of, or popular travel patterns and guest demographics at the venues we serve; • possible conversion of guest rooms at hotels to condominium units and the decrease in health and wellness center usage that often accompanies such conversions, and the related risk that condominium hotels are less likely to be suitable venues for our health and wellness centers; • reductions in destination resort occupancy during major renovations or as a result of damage or other causes; 22 • acquisition by destination resort chains of health and wellness service providers to create captive “in-house” brands and development by destination resort chains of their own proprietary health and wellness service providers, reducing the opportunity for third-party health and wellness providers like us; and • the financial condition of the airline industry, which has eliminated or reduced airline service to locations where we operate destination resort facilities, which has resulted and could continue to result in fewer guests at those venues.
The following are other risks related to the hospitality industry: • changes in the national, regional and local conditions (including major national or international terrorist attacks, armed hostilities, such as the ongoing conflicts between Russia and Ukraine and the conflicts in the Middle East, or other significant adverse events, including an oversupply of hotel properties or a reduction in demand for hotel rooms); • the possible loss of funds expended for build-outs of health and wellness centers at venues that fail to open, underperform or close due to economic slowdowns or otherwise; • the attractiveness of the venues to consumers and competition from comparable venues in terms of, among other things, accessibility and cost; • the outbreaks of illnesses, such as the recent pandemic, or the perceived risk of such outbreaks, in locations where we operate land-based health and wellness centers or locations from which guests of such wellness centers are sourced; • weather conditions, including natural disasters, such as earthquakes, hurricanes, tsunamis and floods, which may be exacerbated due to climate change; • possible labor unrest or changes in economics based on collective bargaining activities; • changes in ownership, maintenance or room rates of, or popular travel patterns and guest demographics at the venues we serve; • possible conversion of guest rooms at hotels to condominium units and the decrease in health and wellness center usage that often accompanies such conversions, and the related risk that condominium hotels are less likely to be suitable venues for our health and wellness centers; • reductions in destination resort occupancy during major renovations or as a result of damage or other causes; • acquisition by destination resort chains of health and wellness service providers to create captive “in-house” brands and development by destination resort chains of their own proprietary health and wellness service providers, reducing the opportunity for third-party health and wellness providers like us; and • the financial condition of the airline industry, which has eliminated or reduced airline service to locations where we operate destination resort facilities, which has resulted and could continue to result in fewer guests at those venues. 22 We Compete with Passenger Activity Alternatives We compete with passenger activity alternatives on cruise ships and with competing providers of services and products similar to our services and products seeking agreements with cruise lines.
By the end of 2026, our existing cruise line partners are expected to introduce 16 new ships.
By the end of 2026, our existing cruise line partners are expected to introduce 19 new ships.
We believe we have a leading retail attachment rate based on the number of products purchased in conjunction with a service compared to the broader consumer personal care services and retail industry. During 2023, product sales comprised approximately 18% of our revenues, enabling incremental revenue even at full treatment room utilization.
We believe we have a leading retail attachment rate based on the number of products purchased by our guests in conjunction with a service compared to the broader consumer personal care services and retail industry. During 2024, product sales comprised approximately 19% of our revenues, enabling incremental revenue even at full treatment room utilization.
The recent pandemic caused, and future pandemics may again cause, heightened volatility and disruptions in the global credit and financial markets, and this may adversely affect our ability to borrow and could increase our counterparty credit risks.
The recent pandemic caused, and future outbreaks of illnesses may again cause, heightened volatility and disruptions in the global credit and financial markets, and this may adversely affect our ability to borrow and could increase our counterparty credit risks.
The above capabilities have contributed to building a differentiated and defensible strategy around our leading market position in a historically growing and attractive industry. Unmatched Breadth of Service and Product Offering We offer our guests a comprehensive suite of health, fitness, beauty and wellness services and products to meet any and all of their needs.
The above capabilities have contributed to building a differentiated and defensible strategy around our leading market position in a historically growing and attractive industry. Unmatched Breadth of Service and Product Offering We offer our guests a comprehensive suite of leading and advanced health, fitness, beauty and wellness services and products.
The Compensation Committee of our Board is responsible for advising the Board with respect to the compensation philosophy, policies, and procedures pertaining to our employees, in order to attract, retain and motivate the most talented personnel.
The Compensation Committee of our Board is responsible for advising the Board with respect to the compensation philosophy, policies, and procedures pertaining to our executive officers, in order to attract, retain and motivate the most talented management personnel.
We cannot assure that the market price of our common shares will not fluctuate widely or decline significantly in the future in response to a number of factors, including, without limitation, the following: 29 o the realization of any of the risk factors presented in this Annual Report on Form 10-K; o the recurrence of the COVID-19 pandemic or emergence of a new epidemic or pandemic; o actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, results of operations, level of indebtedness, liquidity or financial condition; o performance and departures of key personnel; o failure to comply with the requirements of Nasdaq; o failure to comply with the Sarbanes-Oxley Act or other laws or regulations; o future issuances, sales or resales, or anticipated issuances, sales or resales, of our common shares; o publication of research reports about us, the cruise industry, or the hospitality industry generally; o the performance and market valuations of our cruise line partners and of companies in the hospitality and travel industry; o broad disruptions in the financial markets, including sudden disruptions in the credit markets; o speculation in the press or investment community with respect to the factors impacting our business, including the risk factors presented in this Annual Report on Form 10-K; o actual, potential or perceived operational and internal control, accounting or financial reporting issues; and o changes in accounting principles, policies and guidelines.
We cannot provide assurance that the market price of our common shares will not fluctuate widely or decline significantly in the future in response to a number of factors, including, without limitation, the following: o the realization of any of the risk factors presented in this Annual Report on Form 10-K; o disease outbreaks and increased concern related to illness when traveling; o actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, results of operations, level of indebtedness, liquidity or financial condition; o performance and departures of key personnel; o failure to comply with the requirements of Nasdaq; 29 o failure to comply with the Sarbanes-Oxley Act or other laws or regulations; o future issuances, sales or resales, or anticipated issuances, sales or resales, of our common shares; o publication of research reports about us, the cruise industry, or the hospitality industry generally; o the performance and market valuations of our cruise line partners and of companies in the hospitality and travel industry; o broad disruptions in the financial markets, including sudden disruptions in the credit markets; o speculation in the press or investment community with respect to the factors impacting our business, including the risk factors presented in this Annual Report on Form 10-K; o actual, potential or perceived operational and internal control, accounting or financial reporting issues; and o changes in accounting principles, policies and guidelines.
Responding to ESG considerations, including diversity and inclusion, environmental stewardship, support for local communities, labor conditions and human rights, ethics and compliance with law and corporate governance and transparency, and implementing goals and initiatives involve risks and uncertainties and depend in part on third-party performance or data that is outside our control.
Responding to ESG considerations, including those related to diversity and inclusion, environmental stewardship, local communities, labor conditions and human rights, ethics, compliance with law, and corporate governance and transparency, and implementing related goals and initiatives involve risks and uncertainties and depend in part on third-party performance, government policy priorities, or data that is outside our control.
Products and supplies can only be loaded at designated ports around the world during a limited window of time while the ship is in port, in many cases overnight, adding to the complexity of the process. • Yield and Revenue Management —We have developed proprietary technology, processes and staff training tools to consistently measure, analyze and maximize onboard and destination resort revenue and profitability. • Exclusive Relationships at sea with Global Brands —Due to our scale, superior operations, industry longevity and attractive captive consumer audience, through the OneSpaWorld platform at sea, we offer for sale and utilize in our services more than 1,400 product SKUs sourced from over 75 vendors, including ELEMIS, Grown Alchemist, Kérastase, Thermage, GoodFeet Arch Supports, and Hyperice, among others. • Facility Design and Branding Expertise —We design our state-of-the-art health and wellness centers specifically for each cruise line vessel and destination resort, creating bespoke branding, guest experience, guest services offerings, complementary retail products assortment, and competitive differentiation for each of our cruise line and destination resort partners to optimize guest experiences and maximize productivity and financial performance.
Products and supplies can only be loaded at designated ports around the world during a limited window of time while the ship is in port, in many cases overnight, adding to the complexity of the process. • Yield and Revenue Management —We have developed proprietary technology, processes and staff training tools to consistently measure, analyze and maximize onboard and destination resort revenue and profitability. • Exclusive Relationships at Sea with Global Brands —Due to our scale, superior operations, industry longevity and attractive captive consumer audience, through the OneSpaWorld platform at sea, we offer for sale and utilize in our services more than 1,200 product SKUs sourced from over 90 industry leading vendors. • Facility Design and Branding Expertise —We design our state-of-the-art health and wellness centers specifically for each cruise line vessel and destination resort, creating bespoke branding, guest experience, guest services offerings, complementary retail products assortment, and competitive differentiation for each of our cruise line and destination resort partners to optimize cruise line and resort branded guest experiences and maximize productivity and financial performance.
Most of our cruise line agreements encompass 100% of a partner cruise line’s existing fleet and all new ships with spas introduced by the cruise line during the term of the agreement.
Most of our cruise line agreements encompass 100% of a partner cruise line’s existing fleet and all new ships with health and wellness centers introduced by the cruise line during the term of the agreement.
We could become subject to actions taken by governments, businesses and individuals in response to the recent pandemic or future pandemics, including limiting or banning travel and cruises.
We could become subject to actions taken by governments, businesses and individuals in response to the recent pandemic or future outbreaks of illnesses, including limiting or banning travel and cruises.
(3) Oceania and Regent are owned by Norwegian Cruise Line. 10 Destination Resort Locations and Partners As of December 31, 2023, we provided health and wellness services at destination resorts in the following locations: Country Number of Destination Resort Spas Maldives 16 United States (1) 12 Malaysia 8 Bahamas 3 Indonesia 2 Palau 2 Russia 2 Aruba 1 Japan 1 Egypt 1 Oman 1 Thailand 1 United Arab Emirates 1 Total 51 (1) Includes Puerto Rico.
(3) Oceania and Regent are owned by Norwegian Cruise Line. 10 Destination Resort Locations and Partners As of December 31, 2024, we provided health and wellness services at destination resorts in the following locations: Country Number of Destination Resort Spas Maldives 14 United States (1) 10 Malaysia 9 Bahamas 3 Russia 3 Indonesia 2 Palau 2 Japan 2 Aruba 1 Egypt 1 Oman 1 Thailand 1 United Arab Emirates 1 Total 50 (1) Includes Puerto Rico.
Our commitment to our onboard and destination resort staff has proven to be an essential element of our successful return to service performance. • Supply Chain and Logistics —We managed the complex delivery of all products and supplies to our health and wellness centers onboard 193 vessels operating 8,500 voyages around the world during 2023, leveraging proprietary data to accurately forecast and stock each health and wellness center.
Our commitment to our onboard and destination resort staff has proven to be an essential element of our successful return to service performance. • Supply Chain and Logistics —We managed the complex delivery of all products and supplies to our health and wellness centers onboard 199 vessels operating 9,000 voyages around the world during 2024, leveraging proprietary data to accurately forecast and stock each health and wellness center.
Our efforts include training at our London Wellness Academy and our satellite training facilities in India, South Africa and the Philippines, ranging from two to six weeks depending on the profession and modality of each employee, onboard training for certain of our shipboard employees, and management training courses at our Coral Gables office.
Our efforts include training at our London Wellness Academy and our satellite training facilities in India, Jamaica, South Africa and the Philippines, ranging from two to six weeks depending on the profession and modality of each employee, periodic training sessions in Argentina and Serbia, and onboard training for certain of our shipboard employees, as well as management training courses at our Coral Gables office.
During the year ended December 31, 2023, centers employed up to 83 highly trained professionals and ranged in size up to over 30,000 square feet, depending on the cruise line or destination resort partner’s needs. We are recognized by our cruise line and destination resort partners and our guests for our comprehensive suite of services and products.
During the year ended December 31, 2024, our health and wellness centers employed up to 83 highly trained professionals and ranged in size up to over 30,000 square feet, depending on the cruise line or destination resort partner’s needs. 2 We are recognized by our cruise line and destination resort partners and our guests for our comprehensive suite of industry-leading health and wellness services, products and experiences.
These agreements range from three to 9.4 years in duration and average approximately six years in length, providing us with the exclusive right to offer health, fitness, beauty and wellness services and the ability to sell complementary products onboard the ships we serve.
These agreements range from three to 8.6 years in duration and average approximately five years in length, providing us with the exclusive right to offer health, fitness, beauty and wellness services and the ability to sell complementary products onboard the ships we serve.
Health and Wellness Centers As of December 31, 2023, we operated state-of-the-art health and wellness centers on 193 ships, including substantially all of the major cruise lines globally, and 51 land-based destination resorts, principally in the United States, the Caribbean and Asia.
Health and Wellness Centers As of December 31, 2024, we operated state-of-the-art health and wellness centers on 199 ships, including substantially all of the major cruise lines globally, and in 50 land-based destination resorts, principally in the United States, the Caribbean and Asia.
In addition, the recent pandemic caused, and may continue to cause, some cruise lines to declare bankruptcy or cause their lenders to declare a default, accelerate the related debt, or foreclose on collateral.
In addition, the recent pandemic caused, and future outbreaks of illnesses may cause some cruise lines to declare bankruptcy or cause their lenders to declare a default, accelerate the related debt, or foreclose on collateral.
The numbers of ships served as of December 31, 2023 under agreements with the respective cruise lines are listed below: Cruise Line Ships Served Royal Caribbean (2) 27 Carnival (1) 26 Norwegian (3) 19 Princess (1) 15 Celebrity (2) 13 Holland America (1) 11 Costa (1) 10 Silversea (2) 10 Oceania (3) 7 P&O (1) 7 Seabourn (1) 7 Regent (3) 6 Windstar 6 Disney 5 Marella 5 Azamara 4 Cunard 3 Carnival Australia (1) 3 Virgin 3 Saga 2 Adora 2 Crystal 2 Total 193 (1) Carnival Corporation, the parent company of Carnival Cruise Line, also owns Carnival Australia, Costa, Holland America, P&O, Princess, and Seabourn.
The numbers of ships served as of December 31, 2024 under agreements with the respective cruise lines are listed below: Cruise Line Ships Served Royal Caribbean (2) 28 Carnival (1) 27 Norwegian (3) 19 Princess (1) 16 Celebrity (2) 13 Holland America (1) 11 Costa (1) 9 Silversea (2) 11 Oceania (3) 7 P&O (1) 7 Seabourn (1) 6 Regent (3) 6 Windstar 6 Disney 6 Marella 5 Azamara 4 Cunard (1) 4 Carnival Australia (1) 3 Virgin 3 Saga 2 Adora 2 Crystal 2 Aroya 1 Mitsui 1 Total 199 (1) Carnival Corporation, the parent company of Carnival Cruise Line, also owns Carnival Australia, Costa, Cunard, Holland America, P&O, Princess, and Seabourn.
We believe that non-North American passengers spend less on our services and products than North American passengers. Our health and wellness centers on ships operating in the North American market are currently our best performing centers, and there can be no assurance that we will be able to generate the same revenue performance in non-North American markets.
Our health and wellness centers on ships operating in the North American market are currently our best performing centers, and there can be no assurance that we will be able to generate the same revenue performance in non-North American markets.
We offer our guests yoga, Tai Chi and sound therapy in addition to meditation and biofeedback. • Thermal suites. We offer guests the option to purchase passes for dedicated thermal suite areas on many of the ships where we operate health and wellness centers.
We offer our guests yoga, meditation and biofeedback. • Thermal suites. We offer guests the option to purchase passes for dedicated thermal suite areas on many of the ships where we operate health and wellness centers.
This enhanced dynamic pricing capability is currently available with only a few cruise line partners, representing a significant opportunity for revenue growth as it is rolled out and optimized fleet-wide. • Extend Retail Beyond the Ship —Our Shop & Ship program provides guests the ability to buy retail products onboard and have products shipped directly to their home to avoid the hassle of packing products in their luggage.
This enhanced dynamic pricing capability represents a significant opportunity for revenue growth as it is rolled out and optimized fleet-wide. • Extend Retail Beyond the Ship —Our Shop & Ship program provides guests the ability to buy retail products onboard and have products shipped directly to their home to avoid the hassle of packing products in their luggage.
As of December 31, 2023, our comprehensive suite of premium health, fitness, beauty and wellness services and products reached more consumers than ever before, with 193 centers onboard cruise ships addressing a captive audience of over 23 million passengers annually, and 51 destination resort centers serving global travelers at premier destination resorts around the world.
As of December 31, 2024, our comprehensive suite of premium health, fitness, beauty and wellness services, products, solutions and experiences reached more consumers than ever before, with 199 centers onboard cruise ships addressing a captive audience of over 26 million passengers annually, and 50 destination resort centers serving global travelers at premier destination resorts around the world.
Among other initiatives, we provide annual trainings for all of our employees to assure awareness and adherence to our policies, practices, and procedures toward effecting a culture of civility, harassment prevention, reporting and intervention in all respects, and a fully respectful workplace. • Talent Attraction.
We provide annual trainings for all of our employees to encourage a culture of civility and a fully respectful workplace, and to assure awareness and adherence to our policies, practices, and procedures regarding harassment prevention, reporting and intervention in all respects. • Talent Attraction.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have not historically been materially impacted by risks from cybersecurity threats and as of the date of this Annual Report on Form 10-K, we are not aware of any cybersecurity risks that are reasonably likely to materially affect our business.
Biggest changeAs of the date of this Annual Report on Form 10-K, we are not aware of any cybersecurity risks that are reasonably likely to materially affect our business. However, the breadth and scope of cybersecurity threats have grown over time and our systems and networks may be the target of increasingly sophisticated cyberattacks.
We implement our cybersecurity program internally through maintaining cybersecurity policies; deploying updated security technologies; using third-party services and consultants to support and improve our cybersecurity program.
We implement our cybersecurity program internally through maintaining cybersecurity policies; deploying updated security technologies; and using third-party services and consultants to support and improve our cybersecurity program.
The CFO reports directly to the Executive Chairman. Our CFO regularly updates our Board and Audit Committee on cybersecurity matters. In addition to providing regular updates to our Board and Audit Committee, the CFO is a member of the ISOC.
The CFO reports directly to the Executive Chairman. Our CFO regularly updates our Audit Committee and Board on cybersecurity matters. In addition to providing regular updates to our Audit Committee and Board, the CFO is a member of the ISOC.
In addition to regular presentations, management promptly updates our Board and Audit Committee regarding significant threats and incidents as they arise.
In addition to regular presentations, management promptly updates our Audit Committee and Board regarding significant threats and incidents as they arise.
For more information on our cybersecurity risks and their potential impact to our business, see Item 1A, “Risk Factors—Risks related to our Business—We May Be Exposed to the Threat of Cyber Attacks and/or Data Breaches, which Could Cause Business Disruptions and Loss.” Governance Management, under the supervision of our Chief Financial Officer (CFO) is directly responsible for assessing and managing cybersecurity risks and otherwise implementing our cybersecurity program.
For more information on our cybersecurity risks and their potential impact to our business, see Item 1A, “Risk Factors—Risks related to our Business—We May Be Exposed to the Threat of Cyber Attacks and/or Data Breaches, which Could Cause Business Disruptions and Loss.” 31 Governance Management, under the supervision of our Chief Financial Officer (CFO), is directly responsible for assessing and managing cybersecurity risks and otherwise implementing our cybersecurity program.
Depending on its nature and scope, a cybersecurity threat may be managed within our Information 31 Security Operations Committee (ISOC), responsible for day-to-day management of cybersecurity risks, and escalated to our executive management team, the Board, and the Audit Committee, as appropriate.
Depending on its nature and scope, a cybersecurity threat may be managed within our Information Security Operations Committee (ISOC), responsible for day-to-day management of cybersecurity risks, and escalated to our executive management team, the Audit Committee, and the Board, as appropriate. We have not historically been materially impacted by risks from cybersecurity threats.
Removed
However, the breadth and scope of cybersecurity threats have grown over time and our systems and networks may be the target of increasingly sophisticated cyberattacks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our existing facilities are adequate for our current and planned levels of operations and that alternative sites are readily available on competitive terms in the event that any of our material leases are not renewed. ITEM 3. LEG AL PROCEEDINGS None. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 32 PART II
Biggest changeWe believe that our existing facilities are adequate for our current and planned levels of operations and that alternative sites are readily available on competitive terms in the event that any of our material leases are not renewed.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES 32 PART II 33 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 33 ITEM 6. SELECTED FINANCIAL DATA 35 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 37 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 48 ITEM 8.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 32 PART II 32 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 32 ITEM 6. SELECTED FINANCIAL DATA 35 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 37 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 49 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCOMPARISON OF CUMULATIVE TOTAL RETURN Among OneSpaWorld Holdings Limited, the Nasdaq Composite Index, and the Dow Jones US Travel & Leisure Index Dates OneSpaWorld Holdings Limited Nasdaq Composite Dow Jones Mar-21-2019 $ 100.00 $ 100.00 $ 100.00 Aug-30-2019 $ 128.06 $ 101.58 $ 106.95 Jan-31-2020 $ 122.43 $ 116.74 $ 108.56 Jun-30-2020 $ 38.91 $ 128.32 $ 77.88 Nov-30-2020 $ 72.10 $ 155.62 $ 100.68 Apr-30-2021 $ 86.91 $ 178.12 $ 117.25 Sep-30-2021 $ 81.32 $ 184.32 $ 113.16 Feb-28-2022 $ 84.34 $ 175.42 $ 107.52 Jul-29-2022 $ 58.81 $ 158.07 $ 95.43 Dec-30-2022 $ 76.10 $ 133.52 $ 97.00 Mar-31-2023 $ 97.80 $ 155.91 $ 111.48 Oct-31-2023 $ 85.48 $ 163.94 $ 104.44 Dec-31-2023 $ 115.01 $ 191.50 $ 118.86 34
Biggest changeCOMPARISON OF CUMULATIVE TOTAL RETURN Among OneSpaWorld Holdings Limited, the Nasdaq Composite Index, and the Dow Jones US Travel & Leisure Index 33 Dates OneSpaWorld Holdings Limited Nasdaq Composite Dow Jones Dec-31-2019 $ 100.00 $ 100.00 $ 100.00 Mar-31-2020 $ 24.11 $ 85.82 $ 60.53 Jun-30-2020 $ 28.33 $ 112.11 $ 69.30 Sep-30-2020 $ 38.60 $ 124.46 $ 77.31 Dec-31-2020 $ 60.21 $ 143.64 $ 93.22 Mar-31-2021 $ 63.24 $ 147.64 $ 101.19 Jun-30-2021 $ 57.54 $ 161.65 $ 100.74 Sep-30-2021 $ 59.20 $ 161.03 $ 100.69 Dec-31-2021 $ 59.50 $ 174.36 $ 101.84 Mar-30-2022 $ 60.75 $ 160.96 $ 95.82 Jun-30-2022 $ 42.58 $ 122.92 $ 77.64 Sep-30-2022 $ 49.88 $ 117.87 $ 77.35 Dec-30-2022 $ 55.40 $ 116.65 $ 86.31 Mar-31-2023 $ 71.20 $ 136.21 $ 99.20 Jun-30-2023 $ 71.85 $ 153.67 $ 105.06 Sep-29-2023 $ 66.63 $ 147.33 $ 97.04 Dec-29-2023 $ 83.73 $ 167.30 $ 105.76 Mar-28-2024 $ 78.56 $ 182.55 $ 111.50 Jun-28-2024 $ 91.27 $ 197.63 $ 108.71 Sep-30-2024 $ 98.04 $ 202.72 $ 120.97 Dec-31-2024 $ 118.17 $ 215.22 $ 127.33 34
Travel and Leisure Index for the period beginning March 19, 2019 and ending December 31, 2023. The graph assumes that $100.00 was invested on March 19, 2019 in our common shares and in each of the comparative indices. The share price performance on the following graph is not necessarily indicative of future share price performance.
The graph assumes that $100.00 was invested on December 31, 2019 in our common shares and in each of the comparative indices. The share price performance on the following graph is not necessarily indicative of future share price performance.
We have no other recent repurchases of any securities or sales of any unregistered securities. 33 Stock Performance Graph The following graph compares the change in the cumulative total shareholder return on our common shares against the cumulative total return (assuming reinvestment of dividends) of the Nasdaq Composite® (United States and Foreign) Index, and the Dow Jones U.S.
Stock Performance Graph The following graph compares the change in the cumulative total shareholder return on our common shares against the cumulative total return (assuming reinvestment of dividends) of the Nasdaq Composite® (United States and Foreign) Index, and the Dow Jones U.S. Travel and Leisure Index for the period beginning December 31, 2019 and ending December 31, 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHA REHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common shares are traded on The Nasdaq Capital Market under the symbol “OSW.” As of February 27, 2024, there were 20 registered holders of our common shares.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHA REHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information of Common Stock Our common shares are traded on The Nasdaq Capital Market under the symbol “OSW.” As of February 20, 2025, there were 16 registered holders of our common shares. 32 Dividend Policy Our Board declared the following quarterly dividends in 2024: (1) $0.04 per common share declared on July 23, 2024 and paid on September 4, 2024 to shareholders of record as of the close of business on August 21, 2024; and (2) $0.04 per common share declared on October 24, 2024 and paid on December 4, 2024 to shareholders of record as of the close of business on November 20, 2024.
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Dividends We adopted a cash dividend program in November 2019, with an initial quarterly cash dividend payment of $0.04 per common share.
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The declaration and payment of future dividends to holders of our common shares is at the discretion of our Board and depends upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant.
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However, as a result of the impact of the COVID-19 pandemic on our business, our Board re-evaluated our current dividend program and has determined, in order to increase our financial flexibility and reallocate our capital resources, to defer the previously authorized and declared quarterly dividend to be paid on May 29, 2020 and to temporarily suspend the dividend program until further notice.
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Repurchases and Sales of Unregistered Securities Issuer Purchases of Equity Securities There were no repurchases of equity securities during the quarter ended December 31, 2024. Unregistered Sales of Equity Securities There were no sales of unregistered equity securities during the quarter ended December 31, 2024.
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Repurchases and Sales of Unregistered Securities On November 30, 2023, we entered into a Shares Repurchase Agreement with Steiner Leisure Limited (the “Seller”), pursuant to which we purchased 789,046 of our common shares from the Seller at a purchase price of $11.46 per common share (the “Repurchase”). The Repurchase closed on December 4, 2023.
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The graph is not deemed filed with the SEC and shall not be deemed incorporated by reference into any of our prior or future filings made with the SEC.
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In determining the sizing, timing and benefit of the Repurchase, we analyzed a number of different factors, including market signaling, dilution mitigation, the discounted price of the shares, potential improvement to the Company’s capital structure, and the reduction of the Seller’s ownership of the Company’s outstanding shares.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeYear Ended December 31, 2023 2022 2021 (In thousands) REVENUES Service revenues $ 648,091 $ 446,518 $ 115,945 Product revenues 145,954 99,741 28,086 Total revenues 794,045 546,259 144,031 COST OF REVENUES AND OPERATING EXPENSES Cost of services 541,356 375,136 108,939 Cost of products 125,649 87,555 26,646 Administrative 17,111 15,777 15,526 Salary, benefits and payroll taxes 36,805 35,830 28,151 Amortization of intangible assets 16,823 16,823 16,829 Long-lived assets impairment 2,129 — — Total cost of revenues and operating expenses 739,873 531,121 196,091 Income (loss) from operations 54,172 15,138 (52,060 ) OTHER (EXPENSE) INCOME, NET Interest expense (21,395 ) (15,755 ) (13,488 ) Interest income 280 — 55 Change in fair value of warrant liabilities (37,557 ) 54,400 (2,600 ) Total other (expense) income, net (58,672 ) 38,645 (16,033 ) (Loss) Income before income tax (benefit) expense (4,500 ) 53,783 (68,093 ) INCOME TAX (BENEFIT) EXPENSE (1,526 ) 624 429 NET (LOSS) INCOME $ (2,974 ) $ 53,159 $ (68,522 ) Adjusted EBITDA (1) $ 89,192 $ 50,384 $ (18,946 ) Unlevered After-Tax Free Cash Flow (1) $ 79,061 $ 45,125 $ (21,974 ) % Conversion 88.6 % 89.6 % 116.0 % December 31, 2023 2022 2021 Balance Sheet Data (In thousands): Working Capital (2) $ 16,961 $ 15,068 $ 4,249 Total Assets 706,140 717,435 688,868 Total Liabilities 272,071 351,626 394,964 Total Shareholders' Equity 434,069 365,809 293,904 (1) We define adjusted EBITDA as net (loss) Income plus income tax (benefit) expense, interest income, interest expense, depreciation and amortization, long-lived assets impairment, stock-based compensation, change in fair value of warrant liabilities and business combination costs.
Biggest changeYear Ended December 31, 2024 2023 2022 (In thousands) REVENUES Service revenues $ 723,273 $ 648,091 $ 446,518 Product revenues 171,746 $ 145,954 $ 99,741 Total revenues 895,019 794,045 546,259 COST OF REVENUES AND OPERATING EXPENSES Cost of services 599,756 541,356 375,136 Cost of products 145,799 125,649 87,555 Administrative 18,827 17,111 15,777 Salary, benefits and payroll taxes 35,630 36,805 35,830 Amortization of intangible assets 16,571 16,823 16,823 Long-lived assets impairment 376 2,129 — Total cost of revenues and operating expenses 816,959 739,873 531,121 Income from operations 78,060 54,172 15,138 OTHER (EXPENSE) INCOME, NET Interest expense (10,048 ) (21,395 ) (15,755 ) Interest income 1,167 280 — Change in fair value of warrant liabilities 7,677 (37,557 ) 54,400 Total other (expense) income, net (1,204 ) (58,672 ) 38,645 Income (loss) before income tax expense (benefit) 76,856 (4,500 ) 53,783 INCOME TAX EXPENSE (BENEFIT) 3,992 (1,526 ) 624 NET INCOME (LOSS) $ 72,864 $ (2,974 ) $ 53,159 Adjusted EBITDA (1) $ 112,076 $ 89,192 $ 50,384 December 31, 2024 2023 2022 Balance Sheet Data (In thousands): Working Capital (2) $ 23,463 $ 16,961 $ 15,068 Total Assets 746,423 706,140 717,435 Total Liabilities 191,926 272,071 351,626 Total Shareholders' Equity 554,497 434,069 365,809 (1) We define Adjusted EBITDA as Net Income (loss) plus income tax expense (benefit), interest income, interest expense, depreciation and amortization, long-lived assets impairment, stock-based compensation, change in fair value of warrant liabilities and business combination costs.
Adjusted EBITDA and Unlevered After-Tax Free Cash Flow have limitations as profitability measures in that they do not include total amounts for interest expense on our debt, change in fair value of warrant liabilities and provision for income taxes, and the effect of our expenditures for capital assets and certain intangible assets.
Adjusted EBITDA has limitations as profitability measures in that it does not include total amounts for interest expense on our debt, change in fair value of warrant liabilities and provision for income taxes, and the effect of our expenditures for capital assets and certain intangible assets.
In addition, all of these non-GAAP measures have limitations as profitability measures in that they do not include the impact of certain expenses related to items that are settled in cash. Because of these limitations, the Company relies primarily on its GAAP results.
In addition, this non-GAAP measure has limitations as a profitability measure in that it does not include the impact of certain expenses related to items that are settled in cash. Because of these limitations, the Company relies primarily on its GAAP results.
(b) Unlevered After-Tax Free Cash Flow Conversion is calculated as Adjusted EBITDA less Capital Expenditures and Cash Taxes, divided by Adjusted EBITDA Note Regarding Non-GAAP Financial Information We believe that these non-GAAP measures, when reviewed in conjunction with GAAP financial measures, and not in isolation or as substitutes for analysis of our results of operations under GAAP, are useful to investors as they are widely used measures of performance and the adjustments we make to these non-GAAP measures provide investors further insight into our profitability and additional perspectives in comparing our performance to other companies and in comparing our performance over time on a consistent basis.
Note Regarding Non-GAAP Financial Information We believe that Adjusted EBITDA, as a non-GAAP measure, when reviewed in conjunction with GAAP financial measures, and not in isolation or as a substitute for analysis of our results of operations under GAAP, is useful to investors as it is a widely used measure of performance and the adjustments we make provide investors further insight into our profitability and additional perspectives in comparing our performance to other companies and in comparing our performance over time on a consistent basis.
(2) Working capital calculated as current assets less current liabilities, less cash and cash equivalents and restricted cash. 35 The following table reconciles Net (Loss) Income to Adjusted EBITDA and Unlevered After-Tax Free Cash Flow for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, (In thousands) 2023 2022 2021 Net (loss) Income $ (2,974 ) $ 53,159 $ (68,522 ) Income tax (benefit) expense (1,526 ) 624 429 Interest Income (280 ) — (55 ) Interest expense 21,395 15,755 13,488 Depreciation and amortization 22,040 22,353 22,468 Long-lived assets impairment 2,129 — — Stock-based compensation 10,138 12,893 10,646 Change in fair value of warrant liabilities 37,557 (54,400 ) 2,600 Business combination costs (a) $ 713 $ — $ — Adjusted EBITDA $ 89,192 $ 50,384 $ (18,946 ) Capital expenditures (5,415 ) (4,825 ) (2,868 ) Cash paid during the year for income taxes (4,716 ) (434 ) (160 ) Unlevered After-Tax Free Cash Flow $ 79,061 $ 45,125 $ (21,974 ) % Conversion (b) 88.6 % 89.6 % 116.0 % (a) Business combination costs refers to legal and advisory fees incurred by OneSpaWorld in connection with the secondary offering and warrant conversion.
(2) Working capital calculated as current assets less current liabilities, less cash and cash equivalents and restricted cash. 35 The following table reconciles Net Income (Loss) to Adjusted EBITDA for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, (In thousands) 2024 2023 2022 Net Income (loss) $ 72,864 $ (2,974 ) $ 53,159 Income tax expense (benefit) 3,992 (1,526 ) 624 Interest income (1,167 ) (280 ) — Interest expense 10,048 21,395 15,755 Depreciation and amortization 24,276 22,040 22,353 Long-lived assets impairment 376 2,129 — Stock-based compensation 9,071 10,138 12,893 Change in fair value of warrant liabilities (7,677 ) 37,557 (54,400 ) Business combination costs (a) 293 713 — Adjusted EBITDA $ 112,076 $ 89,192 $ 50,384 (a) Business combination costs refers to legal and advisory fees incurred by OneSpaWorld in connection with the secondary offering and warrant conversion.
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We define Unlevered After-Tax Free Cash Flow as adjusted EBITDA minus capital expenditures and cash taxes.
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Our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

Item 7. Management's Discussion & Analysis

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

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Biggest changeYear Ended December 31, (in thousands) 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (2,974 ) $ 53,159 $ (68,522 ) Depreciation and amortization 22,040 22,353 22,468 Long-lived assets impairment 2,129 — — Stock-based compensation 10,138 12,893 10,646 Amortization of deferred financing costs 1,463 1,103 1,026 Income tax benefit from change in reserve of uncertain tax positions (3,440 ) — — Change in fair value of warrant liabilities 37,557 (54,400 ) 2,600 Provision for doubtful accounts 59 18 453 Inventories impairment charges — — 3,977 Loss from write-offs of property and equipment 14 10 177 Deferred income taxes (2,092 ) (181 ) 89 Change in working capital (1,518 ) (10,192 ) (8,018 ) Net cash provided by (used in) operating activities 63,376 24,763 (35,104 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (5,415 ) (4,825 ) (2,868 ) Net cash used in investing activities (5,415 ) (4,825 ) (2,868 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from At-the Market Equity Offering, net of issuance costs paid — — 27,474 Proceeds from exercise of warrants 2,426 59 — Repurchase of common shares (9,042 ) — — Repayment on term loan and revolver facilities (56,042 ) (18,776 ) — Net cash (used in) provided by financing activities (62,658 ) (18,717 ) 27,474 Effect of exchange rate changes on cash 337 (792 ) (117 ) Net (decrease) increase in cash and cash equivalents and restricted cash (4,360 ) 429 (10,615 ) Cash and cash equivalents and restricted cash, Beginning of period 33,262 32,833 43,448 Cash and cash equivalents and restricted cash, End of period $ 28,902 $ 33,262 $ 32,833 Comparison of Results for the Years Ended December 31, 2023 and 2022 Operating activities .
Biggest changeYear Ended December 31, (in thousands) 2024 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 72,864 $ (2,974 ) $ 53,159 Depreciation and amortization 24,276 22,040 22,353 Long-lived assets impairment 376 2,129 — Stock-based compensation 9,071 10,138 12,893 Amortization of deferred financing costs 782 1,463 1,103 Income tax benefit from change in reserve of uncertain tax positions — (3,440 ) — Losses on early extinguishment of debt 735 — — Change in fair value of warrant liabilities (7,677 ) 37,557 (54,400 ) Provision for doubtful accounts 18 59 18 Loss from write-offs of property and equipment 119 14 10 Deferred income taxes 1,137 (2,092 ) (181 ) Change in working capital (22,903 ) (1,518 ) (10,192 ) Net cash provided by operating activities 78,798 63,376 24,763 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (6,743 ) (5,415 ) (4,825 ) Net cash used in investing activities (6,743 ) (5,415 ) (4,825 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of warrants 51,698 2,426 59 Repurchase of common shares (18,988 ) (9,042 ) — Proceeds from term loan facility 100,000 — — Repayment on first and second lien term loan facilities (159,639 ) (56,042 ) (18,776 ) Payment of deleveraging fee on first lien term loan facilities (5,420 ) — — Dividends (8,331 ) — — Payment of deferred financing costs (1,528 ) — — Net cash used in financing activities (42,208 ) (62,658 ) (18,717 ) Effect of exchange rate changes on cash (112 ) 337 (792 ) Net increase(decrease) in cash and cash equivalents and restricted cash 29,735 (4,360 ) 429 Cash and cash equivalents and restricted cash, Beginning of period 28,902 33,262 32,833 Cash and cash equivalents and restricted cash, End of period $ 58,637 $ 28,902 $ 33,262 Comparison of Results for the Years Ended December 31, 2024 and 2023 Operating activities .
Other income (expense) consists of royalty income, interest income and interest expense. Income tax (benefit) expense. Income tax (benefit) expense includes current and deferred federal income tax expenses, as well as state and local income taxes. See “ —Critical Accounting Policies—Income Taxes ” included elsewhere in this Annual Report on Form 10-K. Net (loss) income.
Other income (expense), net. Other income (expense) consists of royalty income, interest income and interest expense. Income tax (benefit) expense. Income tax (benefit) expense includes current and deferred federal income tax expenses, as well as state and local income taxes. See “ —Critical Accounting Policies—Income Taxes ” included elsewhere in this Annual Report on Form 10-K. Net (loss) income.
As our cruise line partners continue to invest in new ships with enhanced health and wellness centers that allow for more advanced treatment rooms and larger staff sizes, we are able to increase the availability of these services, driving an overall shift towards a more profitable service mix. 39 • Expansion of value-added services and products and increased pricing across modalities in existing health and wellness centers.
As our cruise line partners continue to invest in new 39 ships with enhanced health and wellness centers that allow for more advanced treatment rooms and larger staff sizes, we are able to increase the availability of these services, driving an overall shift towards a more profitable service mix. • Expansion of value-added services and products and increased pricing across modalities in existing health and wellness centers.
Factors we consider when making this determination include assessing historical trends and the overall effect of current trends in and future expectations of the industry and the general economy and regional performance, and other asset-specific information; • Determine the projected undiscounted future cash flows when indicators of impairment are present to determine whether an asset group is recoverable by comparing the expected undiscounted future cash flows to the net carrying value of that asset group.
Factors we consider when making this determination include assessing historical trends and the overall effect of current trends in and future expectations of the industry and the general economy and regional performance, and other asset-specific information; 48 • Determine the projected undiscounted future cash flows when indicators of impairment are present to determine whether an asset group is recoverable by comparing the expected undiscounted future cash flows to the net carrying value of that asset group.
Throughout our history, our mission has been simple: helping guests look and feel their best during and after their stay. At our core, we are a global services company. We serve a critical role for our cruise line and destination resort partners, operating a complex and increasingly important aspect of our cruise line and destination resort partners’ overall guest experience.
Throughout our history, our mission has been simple: helping guests look and feel their best during and after their stay. At our core, we are a global services company. We serve a critical role for our cruise line and destination resort partners, operating a complex and increasingly important aspect of their overall guest experience.
Service revenues consist primarily of sales of health and wellness services, including a full range of massage treatments, facial treatments, nutritional/weight management consultations, teeth whitening, mindfulness services and medi-spa services to cruise ship passengers and destination resort guests.
Service revenues consist primarily of sales of health and wellness services, including a full range of massage treatments, facial treatments, nutritional/weight management consultations, teeth whitening, mindfulness services 38 and medi-spa services to cruise ship passengers and destination resort guests.
As of October 1, 2023 and 2022, we performed our annual trade name indefinite-lived intangible asset impairment quantitative test and determined there was no incremental impairment. The trade name was valued through application of the relief from royalty method.
As of October 1, 2024, 2023 and 2022, we performed our annual trade name indefinite-lived intangible asset impairment quantitative test and determined there was no incremental impairment. The trade name was valued through application of the relief from royalty method.
Product revenues for the year ended December 31, 2023 were $146.0 million, an increase of $46.2 million, or 46%, compared to $99.7 million for the year ended December 31, 2022. Cost of services. Cost of services were $541.4 million compared to $375.1 million in the year ended December 31, 2022.
Product revenues for the year ended December 31, 2023 were $146.0 million, an increase of $46.2 million, or 46%, compared to $99.7 million for the year ended December 31, 2022. Cost of services. Cost of services were $541.4 million compared to $375.1 million for the year ended December 31, 2022.
We bill our services at rates which inherently include an immaterial charge for products used in the rendering of such services, if applicable. 38 • Product revenues. Product revenues consist primarily of sales of health and wellness products, such as facial skincare, body care, orthotics and detox supplements to cruise ship passengers, destination resort guests and timetospa.com customers.
We bill our services at rates which inherently include an immaterial charge for products used in the rendering of such services, if applicable. • Product revenues. Product revenues consist primarily of sales of health and wellness products, such as facial skincare, body care, orthotics and detox supplements to cruise ship passengers, destination resort guests and timetospa.com customers. Cost of services.
The information for the years ended December 31, 2023, 2022 and 2021 is derived from OneSpaWorld’s audited consolidated financial statements and the notes thereto included elsewhere in this report. Any reference to “OneSpaWorld” refers to OneSpaWorld Holdings Limited and our consolidated subsidiaries on a forward-looking basis.
The information for the years ended December 31, 2024, 2023 and 2022 is derived from OneSpaWorld’s audited Consolidated Financial Statements and the notes thereto included elsewhere in this report. Any reference to “OneSpaWorld” refers to OneSpaWorld Holdings Limited and our consolidated subsidiaries on a forward-looking basis.
When determining the fair value of the asset 47 (asset group), we consider the highest and best use of the assets from a market-participant perspective.
When determining the fair value of the asset (asset group), we consider the highest and best use of the assets from a market-participant perspective.
The increase was primarily attributable to costs associated with increased service revenues of $648.1 million in the year ended December 31, 2023 from our operating health and wellness centers at sea and on land, compared with service revenues of $446.5 million in the year ended December 31, 2022. Cost of products.
The increase was primarily attributable to costs associated with increased Service revenues of $648.1 million for the year ended December 31, 2023 from our operating health and wellness centers at sea and on land, compared with Service revenues of $446.5 million for the year ended December 31, 2022. Cost of products.
We directly market and promote to onboard passengers as a result of enhanced collaboration with certain of our cruise line partners. We also utilize our proprietary health and wellness services pre-booking and pre-payment technology platforms integrated with certain of our cruise line partners’ pre-cruise planning systems.
We directly market and promote to onboard passengers as a result of increasing collaboration with our cruise line partners. We also utilize our proprietary health and wellness services pre-booking and pre-payment technology platforms integrated with certain of our cruise line partners’ pre-cruise planning systems.
For the year ended December 31 2022, the Company repaid $11.8 million on the First and Second Term Loan Facilities and $7.0 million on the First Lien Revolving Facility, and received proceeds from the exercise of public warrants of $0.059 million.
For the year ended December 31, 2022, the Company repaid $11.8 million on the First Lien Term Loan Facility and $7.0 million on the First Lien Revolving Facility, and received proceeds from the exercise of public warrants of $0.059 million.
We review long-lived assets for impairment whenever events or changes in circumstances indicate, based on estimated future cash flows, that the carrying amount of these assets may not be fully recoverable.
We review definite-lived assets for impairment whenever events or changes in circumstances indicate, based on estimated future cash flows, that the carrying amount of these assets may not be fully recoverable.
This is a key metric that impacts revenue and profitability. • Average Resort Count. The number of destination resorts on average during the period on which we operate the health and wellness centers.
The number of destination resorts at period end on which we operate the health and wellness centers. This is a key metric that impacts revenue and profitability. • Average Resort Count. The number of destination resorts on average during the period on which we operate the health and wellness centers.
The increase was primarily attributable to costs associated with increased product revenues of $146.0 million in the year ended December 31, 2023 from our operating health and wellness centers at sea and on land, compared to product revenues of $99.7 million in the year ended December 31, 2022. 41 Administrative.
The increase was primarily attributable to costs associated with increased Product revenues of $146.0 million for the year ended December 31, 2023 from our operating health and wellness centers at sea and on land, compared to Product revenues of $99.7 million for the year ended December 31, 2022. Administrative.
The number of cruise ships on which we operate during each period is primarily impacted by our renewal of existing cruise ship partner agreements, introductions of new ships to service under our existing agreements, agreements with new cruise line partners, ships temporarily out of service for maintenance and repair, and ships prevented from sailing due to outbreaks of illnesses, such as the recent pandemic, among other factors.
The number of cruise ships on which we operate during each period is primarily impacted by our renewal of existing cruise ship partner agreements, introductions of new ships to service under our existing agreements, agreements with new cruise line partners, ships temporarily out of service for maintenance and repair, and ships prevented from sailing due to outbreaks of illnesses, among other factors.
The number of destination resorts in which we operate during each period is primarily attributable to renewal of existing agreements with destination resort partners and destination resorts prevented from operating due to outbreaks of illnesses, such as the recent pandemic, among other factors. • The size and offerings of new health and wellness centers.
The number of destination resorts in which we operate during each period is primarily attributable to renewal of existing agreements with destination resort partners and destination resorts prevented from operating due to outbreaks of illnesses, among other factors. • The size and offerings of new health and wellness centers.
The resulting royalty savings are then discounted to present fair value at rates reflective of the risk and return expectations of the interests to derive its fair value as of the impairment testing date. Long-Lived Assets.
The resulting royalty savings are then discounted to present fair value at rates reflective of the risk and return expectations of the interests to derive its fair value as of the impairment testing date. Definite-Lived Intangible Assets.
Cost of products were $125.6 million compared to $87.6 million in the year ended December 31, 2022.
Cost of products were $125.6 million compared to $87.6 million for the year ended December 31, 2022.
However, public demand for activities, including cruises, is influenced by general economic conditions, including inflation, global health epidemics/pandemics and customer preferences. Periods of economic softness could have a material adverse effect on the cruise industry and hospitality industry upon which we are dependent. Such a slowdown could adversely affect our results of operations and financial condition.
However, public demand for activities, including cruises, is influenced by general economic conditions, including inflation, global concerns regarding health, and customer preferences. Periods of economic softness could have a material adverse effect on the cruise industry and hospitality industry upon which we are dependent and could adversely affect our results of operations and financial condition.
Our net cash provided by operating activities for year ended December 31, 2023 and 2022 were $63.4 million and $24.8 million, respectively. In 2023, net operating cash flows continued to accelerate from 2022, as the Company has returned to normalized operations since the conclusion of the COVID-19 pandemic. Investing activities .
In 2023, net operating cash flows continued to accelerate from 2022, as the Company has returned to normalized operations since the conclusion of the COVID-19 pandemic. Investing activities . Our net cash used in investing activities for the year ended December 31, 2023 and 2022 were $(5.4) million and $(4.8) million, respectively. Financing activities .
Our highly trained and experienced staff offer guests a comprehensive suite of premium health, fitness, beauty and wellness services and products onboard cruise ships and at destination resorts globally. We are the market leader at more than 20x the size of our closest maritime competitor.
We are positioned as a leader in the hospitality-based health and wellness industry. Our highly trained and experienced staff offer guests a comprehensive suite of premium health, fitness, beauty and wellness services and products onboard cruise ships and at destination resorts globally. We are the market leader at more than 18x the size of our closest maritime competitor.
The impairment was primarily related to the expected closure in 2024 of our Las Vegas destination resort health and wellness center as a result of the expected demolition of the hotel where the health and wellness center is located. Other (expense) income, net.
The impairment was primarily related to the expected closure in 2024 of our Las Vegas destination resort health and wellness center as a result of the expected demolition of the hotel where the health and wellness center is located. Other (expense) income, net. Other (expense) income, net includes interest expense and changes in the fair value of the warrant liabilities.
Financing activities . Our net cash provided by financing activities for the year ended December 31, 2022 and 2021 were $(18.7) million and $27.5 million, respectively.
Our net cash provided by financing activities for the year ended December 31, 2023 and 2022 were $(62.7) million and $(18.7) million, respectively.
The increase was primarily attributable to professional fees incurred during the year ended December 31, 2023 for a secondary offering of common shares by selling shareholders related to the Business Combination and increased public company costs as the Company emerged from emerging growth company status. Salary, benefits and payroll taxes.
The increase was primarily attributable to professional fees 43 of $0.7 million incurred during the year ended December 31, 2023 for a secondary offering of common shares by selling shareholders related to the business combination in March 2019 and increased public company costs of $0.6 million as the Company exited emerging growth company status. Salary, benefits and payroll taxes.
Amortization of intangible assets are comprised of the amortization of intangible assets with definite useful lives (e.g., retail concession agreements, destination resort agreements, licensing agreements) and amortization expenses associated with the 2019 Transaction. Long-lived assets impairment . Long-lived assets impairment is comprised of destination resort agreements-intangible asset, property and equipment charges, and licensing agreement-intangible charges. Other income (expense), net.
Amortization of intangible assets are comprised of the amortization of intangible assets with definite useful lives (e.g., retail concession agreements, destination resort agreements, licensing agreements) and amortization expenses associated with the business combination in March 2019. Long-lived assets impairment . Long-lived assets impairment is comprised of destination resort agreements-intangible asset, property and equipment charges, and licensing agreement-intangible charges.
The effect of each of these factors on our revenues and financial performance varies from period to period. 40 Results of Operations Comparison of Results for the Years Ended December 31, 2023 and 2022 Year Ended December 31, ($ in thousands) 2023 % of Total Revenue 2022 % of Total Revenue REVENUES Service revenues $ 648,091 81.6 % $ 446,518 81.7 % Product revenues 145,954 18.4 % 99,741 18.3 % Total revenues 794,045 100.0 % 546,259 100.0 % COST OF REVENUES AND OPERATING EXPENSES Cost of services 541,356 68.2 % 375,136 68.7 % Cost of products 125,649 15.8 % 87,555 16.0 % Administrative 17,111 2.2 % 15,777 2.9 % Salary, benefits and payroll taxes 36,805 4.6 % 35,830 6.6 % Amortization of intangible assets 16,823 2.1 % 16,823 3.1 % Long-lived assets impairment 2,129 0.3 % — 0.0 % Total cost of revenues and operating expenses 739,873 93.2 % 531,121 97.2 % Income from operations 54,172 6.8 % 15,138 2.8 % OTHER (EXPENSE) INCOME, NET Interest expense (21,395 ) -2.7 % (15,755 ) -2.9 % Interest income 280 0.0 % — 0.0 % Change in fair value of warrant liabilities (37,557 ) -4.7 % 54,400 10.0 % Total other (expense) income, net (58,672 ) -7.4 % 38,645 7.1 % (Loss) Income before income tax (benefit) expense (4,500 ) -0.6 % 53,783 9.8 % INCOME TAX (BENEFIT) EXPENSE (1,526 ) -0.2 % 624 0.1 % NET (LOSS) INCOME $ (2,974 ) -0.4 % $ 53,159 9.7 % Results of operations for the year ended December 31, 2023 continued to accelerate from 2022 as the Company has returned to normalized operations since the conclusion of the COVID-19 pandemic.
The $23.9 million change in Income from operations primarily derived from the increase in the number of health and wellness centers onboard ships operating during the year and increased productivity of our Maritime health and wellness centers. 42 Comparison of Results for the Years Ended December 31, 2023 and 2022 Year Ended December 31, ($ in thousands) 2023 % of Total Revenue 2022 % of Total Revenue REVENUES Service revenues $ 648,091 81.6 % $ 446,518 81.7 % Product revenues 145,954 18.4 % 99,741 18.3 % Total revenues 794,045 100.0 % 546,259 100.0 % COST OF REVENUES AND OPERATING EXPENSES Cost of services 541,356 68.2 % 375,136 68.7 % Cost of products 125,649 15.8 % 87,555 16.0 % Administrative 17,111 2.2 % 15,777 2.9 % Salary, benefits and payroll taxes 36,805 4.6 % 35,830 6.6 % Amortization of intangible assets 16,823 2.1 % 16,823 3.1 % Long-lived assets impairment 2,129 0.3 % — 0.0 % Total cost of revenues and operating expenses 739,873 93.2 % 531,121 97.2 % Income from operations 54,172 6.8 % 15,138 2.8 % OTHER (EXPENSE) INCOME, NET Interest expense (21,395 ) -2.7 % (15,755 ) -2.9 % Interest income 280 0.0 % — 0.0 % Change in fair value of warrant liabilities (37,557 ) -4.7 % 54,400 10.0 % Total other (expense) income, net (58,672 ) -7.4 % 38,645 7.1 % Income (loss) before income tax expense (4,500 ) -0.6 % 53,783 9.8 % INCOME TAX (BENEFIT) EXPENSE (1,526 ) -0.2 % 624 0.1 % NET (LOSS) INCOME $ (2,974 ) -0.4 % $ 53,159 9.7 % Revenues.
Recurrence of the more severe aspects of the recent adverse economic conditions, increases in inflation rates and interest rates, as well as periods of fuel price increases, could have a material adverse effect on our business, results of operations and financial condition during the period of such recurrence. U.S.
Severe adverse economic conditions, increases in inflation rates and interest rates, as well as periods of fuel price increases, could have a material adverse effect on our business, results of operations and financial condition.
Other (expense) income , net includes interest expense and changes in the fair value of the warrant liabilities. Interest expense, net for the year ended December 31, 2023 was $21.1 million, an increase of $5.4 million, or 34%, compared to $15.8 million for the year ended December 31, 2022.
Interest expense, net for the year ended December 31, 2023 was $21.1 million, an increase of $5.4 million, or 34%, compared to $15.8 million for the year ended December 31, 2022.
Indefinite-Lived Intangible Assets. Trade name represents our identifiable intangible asset not subject to amortization and is assessed for impairment annually each October or, more frequently, when events or circumstances dictate an interim test is necessary.
No inventory reserve was recorded during the years ended December 31, 2024, 2023 and 2022. Indefinite-Lived Intangible Assets. Trade name represents our identifiable intangible asset not subject to amortization and is assessed for impairment annually each October or, more frequently, when events or circumstances dictate an interim test is necessary.
We utilize this performance metric to assist in determining the productivity of our onboard staff, which we believe is a critical element of our operations. • Period End Resort Count . The number of destination resorts at period end on which we operate the health and wellness centers.
We utilize this performance metric to assist in determining the productivity of our onboard staff, which we believe is a critical element of our operations. • Revenue Days. R evenue days are the days on which the health and wellness centers are open onboard a revenue generating cruise with passengers. • Period End Resort Count .
The following table sets forth the above key performance indicators for the periods presented: Year Ended December 31, 2023 2022 2021 Period End Ship Count 193 179 170 Average Ship Count 180 146 36 Average Weekly Revenues Per Ship $ 80,013 $ 66,494 $ 59,933 Average Revenues Per Shipboard Staff Per Day $ 555 $ 539 $ 492 Period End Resort Count 51 50 52 Average Resort Count 50 47 46 Average Weekly Revenues Per Destination Resort $ 15,242 $ 14,946 $ 12,175 Key Financial Definitions Revenues.
The following table sets forth the above key performance indicators for the periods presented: Year Ended December 31, 2024 2023 2022 Period End Ship Count 199 193 179 Average Ship Count 190 180 146 Average Weekly Revenues Per Ship $ 86,213 $ 80,013 $ 66,494 Average Revenues Per Shipboard Staff Per Day $ 572 $ 555 $ 539 Revenue Days 69,365 65,670 53,330 Period End Resort Count 50 51 50 Average Resort Count 52 50 47 Average Weekly Revenues Per Destination Resort $ 13,962 $ 15,242 $ 14,946 Key Financial Definitions Revenues.
Our net cash used in investing activities for the year ended December 31, 2023 and 2022 were $(5.4) million and $(4.8) million, respectively. Financing activities . Our net cash provided by financing activities for the year ended December 31, 2023 and 2022 were $(62.7) million and $(18.7) million, respectively.
Our Net cash provided by financing activities for the year ended December 31, 2024 and 2023 were $(42.2) million and $(62.7) million, respectively.
Our revenues and financial performance may be impacted by other risks and uncertainties, including, without limitation, those set forth under the section entitled “ Risk Factors ”.
The negative impact of hurricanes in the Northern Hemisphere is highest during peak season, from August through October. • Other risks and uncertainties. Our revenues and financial performance may be impacted by other risks and uncertainties, including, without limitation, those set forth under the section entitled “ Risk Factors ”.
Taking into account the actions described above, the magnitude and positive trend of our results of operations, and our current financial condition and resources, we have concluded that we will have sufficient liquidity to satisfy our obligations over the next twelve months and comply with all debt covenants as required by our debt agreements. 44 Cash Flows The following table shows summary cash flow information for the years ended December 31, 2023, 2022 and 2021.
We have concluded that we will have sufficient liquidity to satisfy our existing and planned capital requirements over the next twelve months and thereafter and comply with all debt covenants as required by our debt agreements. 45 Cash Flows The following table shows summary cash flow information for the years ended December 31, 2024, 2023 and 2022.
These areas of increased collaboration with cruise line partners are resulting in higher productivity, revenue generation, and profitability across our health and wellness centers. • The impact of weather.
These areas of increased collaboration with cruise line partners are resulting in higher productivity, revenue generation, and profitability across our health and wellness centers. • The impact of weather. Our health and wellness centers onboard cruise ships and in select destination resorts may be negatively affected by the frequency and intensity of hurricanes, which may be impacted by climate change.
All inventory balances are comprised of finished goods used in beauty and health and wellness services or held for resale for sale to customers. Inventory reserve is recorded to write down the cost of inventory to the estimated net realizable value. The Company’s evaluation of net realizable value requires judgment and is based on specific assumptions.
Inventory reserve is recorded to write down the cost of inventory to the estimated net realizable value. The Company’s evaluation of net realizable value requires judgment and is based on specific assumptions.
Our principal uses for liquidity have been funding our return to service on 193 cruise ships and in 51 destination resorts, including associated working capital investment and capital expenditures; debt service, including full repayment of $7 million borrowed under our First Lien Revolving Facility, full repayment of our $25 million Second Lien Term Loan Facility, and $42 million repayment of our First Lien Term Loan Facility; and purchasing 789,046 of our common shares at a purchase price of $11.46 per common share from Steiner Leisure Limited pursuant to a Shares Repurchase Agreement.
Our principal uses for our liquidity have been funding our health and wellness centers onboard 199 cruise ships and in 50 destination resorts, including associated working capital investment and capital expenditures; debt service, including $59.6 million repayment of our First Lien Term Loan Facility; purchasing 1,395,432 of our common shares from Steiner Leisure Limited pursuant to a Shares Repurchase Agreement, and purchasing 745,302 of our common shares under a Share Repurchase Program, among other uses of our liquidity.
As of December 31, 2023, our operations include 193 cruise ships and 51 destination resorts, as compared to 179 cruise ships and 50 destination resorts as of December 31, 2022. Revenues. Total revenues increased 45% to $794.0 million compared to $546.3 million in the year ended December 31, 2022.
Total revenues increased 45% to $794.0 million compared to $546.3 million for the year ended December 31, 2022.
Product revenues for the year ended December 31, 2022 were $99.7 million, an increase of $71.7 million, or 255%, compared to $28.1 million for the year ended December 31, 2021. Cost of services.
Product revenues for the year ended December 31, 2024 were $171.7 million, an increase of $25.8 million, or 18%, compared to $146.0 million for the year ended December 31, 2023. Cost of services. Cost of services were $599.8 million compared to $541.4 million in the year ended December 31, 2023.
The change in fair value of the outstanding warrants during the year ended December 31, 2022 was a gain of $54.4 million compared to a loss of $2.6 million during the year ended December 31, 2022. The change in fair value of warrant liabilities is the result of changes in market prices deriving the value of the financial instruments.
The Change in fair value of warrant liabilities was the result of the remeasurement to fair value of the warrants exercised during the year ended December 31, 2024 reflecting changes in market prices of our Common stock and other observable inputs deriving the value of these financial instruments.
Our net cash provided by (used in) operating activities for year ended December 31, 2022 and 2021 were $24.8 million and $(35.1) million, respectively. The year ended December 31, 2022 net operating cash flows were significantly impacted by the ongoing resumption of our health and wellness operation onboard vessels and in destination resorts.
Comparison of Results for the Years Ended December 31, 2023 and 2022 Operating activities . Our net cash provided by operating activities for year ended December 31, 2023 and 2022 were $63.4 million and $24.8 million, respectively.
Income tax expense. Income tax expenses for the year ended December 31, 2022 were $0.6 million, an increase of $0.2 million, or 45%, compared to $0.4 million for the year ended December 31, 2021. The increase was driven by higher income in taxable jurisdictions in the year ended December 31, 2022. Net income.
Income tax expense (benefit) for the year ended December 31, 2024 was an expense of $4.0 million, an increase of $5.5 million, or 362%, compared to a benefit of ($1.5) million for the year ended December 31, 2023.
Further, cruises and destination resorts have been negatively affected by the frequency and intensity of hurricanes, particularly during the August through October period, which may be increasing in frequency and intensity due to climate change. Critical Accounting Policies Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
The negative impact of hurricanes in the Northern Hemisphere is highest during peak season, from August through October. 47 Critical Accounting Policies Our Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
The change in fair value of the outstanding warrants during the year ended December 31, 2022 was a gain of $54.4 million compared to a loss of $2.6 million during the year ended December 31, 2021. The change in fair value of warrant liabilities is the result of changes in market prices deriving the value of the financial instruments.
The change in fair value of the outstanding warrants during the year ended December 31, 2023 was a loss of ($37.6) million compared to a gain of $54.4 million during the year ended December 31 2022. Liquidity and Capital Resources Overview We fund our operations principally with cash flow from operations.
For the year ended December 31, 2021, the Company sold 2.6 million common shares under the ATM Program, resulting in $27.5 million in net proceeds. Seasonality A significant portion of our revenues are generated onboard cruise ships and are subject to specific individual cruise itineraries as to time of year and geographic location, among other factors.
Seasonality A significant portion of our revenues are generated onboard cruise ships and are subject to specific individual cruise itineraries as to time of year and geographic location, among other factors. As a result, we experience varying degrees of seasonality as the demand for cruises is stronger in the Northern Hemisphere during the summer months and during holidays.
Cost of services for the year ended December 31, 2022 were $375.1 million, an increase of $266.2 million, or 244%, compared to $108.9 million for the year ended December 31, 2021.
Service revenues for the year ended December 31, 2024 were $723.3 million, an increase of $75.2 million, or 12%, compared to $648.1 million for the year ended December 31, 2023. • Product revenues.
The increase was primarily attributable to costs associated with increased product revenues of $99.7 million in the year ended December 31, 2022, compared to product revenues of $28.1 million in the year ended December 31, 2021 from our operating health and wellness centers at sea and on land. 43 Administrative.
The increase was primarily attributable to costs associated with increased Product revenues of $171.7 million for the year ended December 31, 2024, compared to Product revenues of $146.0 million for the year ended December 31, 2023. 41 Administrative.
Salary, benefits and payroll taxes for the year ended December 31, 2022 were $35.8 million, an increase of $7.7 million, or 27%, compared to $28.2 million for the year ended December 31, 2021.
Salary, benefits and payroll taxes for the year ended December 31, 2024 were $35.6 million, a decrease of $1.2 million, or 3%, compared to $36.8 million for the year ended December 31, 2023. The decrease was primarily attributable to $1.1 million lower stock-based compensation expense for the year ended December 31, 2024. Amortization of intangible assets.
These payments may also be increased under new agreements with cruise lines and destination resort health and wellness center owners that replace expiring agreements. Inventories. Inventories, consisting principally of personal care products, are stated at the lower of cost, as determined on a first-in, first-out basis, or market.
Inventories. Inventories, consisting principally of personal care products, are stated at the lower of cost, as determined on a first-in, first-out basis, or market. All inventory balances are comprised of finished goods used in beauty and health and wellness services or held for resale for sale to customers.
Administrative expenses for the year ended December 31, 2022 were $15.8 million, an increase of $0.3 million, or 2%, compared to $15.5 million for the year ended December 31, 2021. Salary, benefits and payroll taxes.
Administrative expenses for the year ended December 31, 2024 were $18.8 million, an increase of $1.7 million, or 10%, compared to $17.1 million for the year ended December 31, 2023. The increase was attributable to increased professional fees of $1.7 million primarily incurred in connection with public company costs including Sarbanes-Oxley compliance work. Salary, benefits and payroll taxes.
For the year ended December 31, 2022, the Company repaid $11.8 million on the First Lien Term Loan Facility and $7.0 million on the First Lien Revolving Facility, and received proceeds from the exercise of public warrants of $0.059 million. Comparison of Results for the Years Ended December 31, 2022 and 2021 Operating activities .
For the year ended December 31, 2024, the Company received proceeds from the exercise of public and private warrants of $51.7 million, received proceeds from the Term Loan Facility of $100.0 million, repaid $159.6 million on the First Lien Term Loan Facility, paid a $5.4 million deleveraging fee on the First Lien Term Loan Facility, paid Dividends of $8.3 million, utilized $19.0 million to repurchase 1,351,688 of our common shares, and paid $1.5 million in deferred financing costs.
Net income for the year ended December 31, 2022 was $53.2 million, a change in the income (loss) of $121.7 million, or 178%, compared to a net loss of $68.5 million for the year ended December 31, 2021.
Net income (loss). Net income was $72.9 million, or Net income per diluted share of $0.69, as compared to Net loss of ($3.0) million or Net loss per diluted share of ($0.03) for the year ended December 31, 2023.
Amortization of intangible assets. Amortization of intangible assets for the year ended December 31, 2022 and 2021 were both $16.8 million, respectively. Other income (expense), net. Other income (expense), net includes interest expense and changes in the fair value of the warrant liabilities.
Amortization of intangible assets for the year ended December 31, 2024 and 2023 were $16.6 million and $16.8 million, respectively. Long-lived assets impairment. Long-lived assets impairment charges for the year ended December 31, 2024 were $0.4 million compared to $2.1 million for the year ended December 31, 2023.
Our net cash used in investing activities for the year ended December 31, 2022 and 2021 were $(4.8) million and $(2.9) million, respectively. In the year ended December 31, 2022, the Company incurred more capital expenditures than in the year ended December 31, 2021, during which the Company incurred more limited capital expenditures due to the COVID-19 pandemic.
Our net cash provided by operating activities for the year ended December 31, 2024 and 2023 were $78.8 million and $63.4 million, respectively.
Cost of products. Cost of products for the year ended December 31, 2022 were $87.6 million, an increase of $60.9 million, or 229%, compared to $26.6 million for the year ended December 31, 2021.
The increase was primarily attributable to costs associated with increased Service revenues of $723.3 million for the year ended December 31, 2024, compared with Service revenues of $648.1 million for the year ended December 31, 2023. Cost of products. Cost of products were $145.8 million compared to $125.6 million for the year ended December 31, 2023.
Removed
In the face of the global impact of the coronavirus (“COVID-19”) pandemic, our cruise line partners paused their guest cruise operations and the majority of our U.S. and Caribbean-based destination resort spas temporarily closed in mid-March 2020.
Added
The effect of each of these factors on our revenues and financial performance varies from period to period. 40 Results of Operations Comparison of Results for the Years Ended December 31, 2024 and 2023 Year Ended December 31, ($ in thousands) 2024 % of Total Revenue 2023 % of Total Revenue REVENUES Service revenues $ 723,273 80.8 % $ 648,091 81.6 % Product revenues 171,746 19.2 % 145,954 18.4 % Total revenues 895,019 100.0 % 794,045 100.0 % COST OF REVENUES AND OPERATING EXPENSES Cost of services 599,756 67.0 % 541,356 68.2 % Cost of products 145,799 16.3 % 125,649 15.8 % Administrative 18,827 2.1 % 17,111 2.2 % Salary, benefits and payroll taxes 35,630 4.0 % 36,805 4.6 % Amortization of intangible assets 16,571 1.9 % 16,823 2.1 % Long-lived assets impairment 376 0.0 % 2,129 0.3 % Total cost of revenues and operating expenses 816,959 91.3 % 739,873 93.2 % Income from operations 78,060 8.7 % 54,172 6.8 % OTHER (EXPENSE) INCOME, NET Interest expense (10,048 ) -1.1 % (21,395 ) -2.7 % Interest income 1,167 0.1 % 280 0.0 % Change in fair value of warrant liabilities 7,677 0.9 % (37,557 ) -4.7 % Total other expense, net (1,204 ) -0.1 % (58,672 ) -7.4 % Income (loss) before income tax expense (benefit) 76,856 8.6 % (4,500 ) -0.6 % INCOME TAX EXPENSE (BENEFIT) 3,992 0.4 % (1,526 ) -0.2 % NET INCOME (LOSS) $ 72,864 8.1 % $ (2,974 ) -0.4 % Revenues.
Removed
During 2021, we initiated our resumption of spa operations on cruise ships and in destination resorts in a phased manner, in concert with our cruise line and resort partners, and have completed such resumption of operations.
Added
Total revenues increased 13% to $895.0 million compared to $794.0 million for the year ended December 31, 2023.
Removed
As of December 31, 2023, our health and wellness center operations are no longer impacted by closures resulting from COVID-19, and we are positioned as a leader in the hospitality-based health and wellness industry.
Added
The increase in each of Service revenues and Product revenues was driven by (i) a 4% increase in our Revenue Days of the existing fleet, which positively impacted revenue by $39.3 million, (ii) a 4% increase in our guest spend, which led to a $32.4 million increase in revenue, and (iii) fleet expansion, which contributed $31.8 million in revenue.
Removed
Our health and wellness centers onboard cruise ships and in select destination resorts may be negatively affected by hurricanes, particularly during the August through October period, which may be increasing in frequency and intensity due to climate change. • Other risks and uncertainties.
Added
Contributing to the increased volume and spend was $20.3 million in increased pre-booked revenue on health and wellness centers included in our ship count as of December 31, 2024. The break-down of Revenue between Service and Product revenues was as follows: • Service revenues.
Removed
The increase was attributable to our average ship count increasing 23% to 180 health and wellness centers onboard ships operating during the year ended December 31, 2023 compared with our average ship count of 146 health and wellness centers onboard ships operating during the year ended December 31, 2022, along with the impact of our on-board initiatives to drive revenue growth.
Added
The 2024 impairment was related to the closure in 2024 of one of our destination resort health and wellness centers as a result of the hotel operator deciding to no longer offer spa operations.
Removed
The change in fair value of the outstanding warrants during the year ended December 31, 2023 was a loss of ($37.6) million compared to a gain of $54.4 million during the year ended December 31 2022. 42 Comparison of Results for the Years Ended December 31, 2022 and 2021 Year Ended December 31, ($ in thousands) 2022 % of Total Revenue 2021 % of Total Revenue REVENUES Service revenues $ 446,518 81.7 % $ 115,945 80.5 % Product revenues 99,741 18.3 % 28,086 19.5 % Total revenues 546,259 100.0 % 144,031 100.0 % COST OF REVENUES AND OPERATING EXPENSES Cost of services 375,136 68.7 % 108,939 75.6 % Cost of products 87,555 16.0 % 26,646 18.5 % Administrative 15,777 2.9 % 15,526 10.8 % Salary, benefits and payroll taxes 35,830 6.6 % 28,151 19.5 % Amortization of intangible assets 16,823 3.1 % 16,829 11.7 % Total cost of revenues and operating expenses 531,121 97.2 % 196,091 136.1 % Income (loss) from operations 15,138 2.8 % (52,060 ) -36.1 % OTHER (EXPENSE) INCOME, NET Interest expense (15,755 ) -2.9 % (13,488 ) -9.4 % Interest income — 0.0 % 55 0.0 % Change in fair value of warrant liabilities 54,400 10.0 % (2,600 ) -1.8 % Total other income (expense), net 38,645 7.1 % (16,033 ) -11.1 % Income (loss) before income tax expense 53,783 9.8 % (68,093 ) -47.3 % INCOME TAX EXPENSE 624 0.1 % 429 0.3 % NET INCOME (LOSS) $ 53,159 9.7 % $ (68,522 ) -47.6 % The results of operations for the year ended December 31, 2022 recovered from the material adverse impacts of COVID-19, which at its peak resulted in the cessation of operations of all of the Company’s health and wellness centers on board cruise ships and the closing of or substantial restrictions imposed on the operation of substantially all of the destination resort health and wellness centers at the end of first quarter 2020.
Added
The 2023 impairment was comprised of destination resort agreements-intangible asset, property and equipment charges, and licensing agreement-intangible charges of $1.3 million, $0.5 million and $0.4 million, respectively.
Removed
As of December 31, 2022, our operations had resumed on 177 cruise ships and in 48 destination resorts, as compared to 118 cruise ships and 48 destination resorts as of December 31, 2021. Revenues. Total revenues for the year ended December 31, 2022 were $546.3 million compared to $144.0 million in the year ended December 31, 2021.
Added
The impairment was primarily related to the expected closure in 2024 of destination resort health and wellness center as a result of the expected demolition of the hotel where the health and wellness center was located. Other (expense) income, net. Other (expense) income, net includes Interest expense and Changes in fair value of the warrant liabilities.
Removed
The revenues generated in the year ended December 31, 2022 were derived primarily from our 177 health and wellness centers onboard ships having resumed voyages and our health and wellness centers at 48 open and operating destination resorts.
Added
Interest expense, net for the year ended December 31, 2024, was $8.9 million, a decrease of $12.2 million, or 58%, compared to $21.1 million for the year ended December 31, 2023. The decrease in Interest expense, net was primarily from lower debt balances and a one-time $5.4 million deleveraging fee incurred during the fourth quarter on 2023.
Removed
Total revenues for the year ended December 31, 2021 were negatively impacted by the COVID-19 pandemic and the resulting March 14, 2020 No Sail Order, with revenues derived primarily from health and wellness centers onboard 118 ships and in 48 destination resorts that were open and operating for partial periods during the twelve-month period and e-commerce Product sales through the Company’s timetospa.com website.
Added
Since the year ended December 31, 2023, we have repaid a total of $59.6 million in debt instruments.
Removed
The break-down of revenue between service and product revenues was as follows: • Service revenues Service revenues for the year ended December 31, 2022 were $446.5 million, an increase of $330.6 million, or 285%, compared to $115.9 million for the year ended December 31, 2021. • Product revenues.
Added
The Company has no outstanding warrants as of December 31, 2024; accordingly, there will be no impact on the Consolidated Statement of Operations in future periods. Income tax expense (benefit).
Removed
The increase was primarily attributable to costs associated with increased service revenues of $446.5 in the year ended December 31, 2022 from our operating health and wellness centers at sea and on land, compared with service revenues of $115.9 million in the year ended December 31, 2021 and increased costs related to the resumption of operations at our health and wellness centers at sea and on land.
Added
The increase was primarily driven by the recognition of a discrete tax benefit of approximately $3.4 million in uncertain tax benefits during the third quarter of 2023 related to foreign tax exposures as a result of our participation in a tax amnesty program in Italy that settled such liability in August 2023, offset by an increase in the taxable income, the change in valuation allowance and the decrease in availability of net operating losses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+0 added−0 removed2 unchanged
Biggest changeOur objective in managing the exposure to interest rate changes is to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, we have used interest rate swaps to manage net exposure to interest rate changes to our borrowings.
Biggest changeOur policy is to manage interest rate risk through the use of a combination of fixed and floating rate debt and interest rate derivatives based upon market conditions. Our objective in managing the exposure to interest rate changes is to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs.
Accounts receivable are stated at amounts due from customers, net of an allowance for credit losses. The Company records an allowance for credit losses with respect to accounts receivable using historical collection experience, current and forecasted business conditions and generally, an account receivable balance is written off once it is determined to be uncollectible.
Accounts receivable are stated at amounts due from customers, net of an allowance for credit losses. The Company records an allowance for credit losses with respect to accounts receivable using historical collection experience and current and forecasted business conditions. Generally, an account receivable balance is written off once it is determined to be uncollectible.
Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. We maintain cash and cash equivalents with high quality financial institutions. As of December 31, 2023 and 2022, respectively, none of the destination resort spas we served represented greater than 10% of our accounts receivable.
Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. We maintain cash and cash equivalents with high quality financial institutions. As of December 31, 2024 and 2023, respectively, none of the destination resort spas we served represented greater than 10% of our accounts receivable.
As of December 31, 2023 and 2022, respectively, two of the cruise lines we served represented greater than 10% of our accounts receivable. We do not normally require collateral or other security to support normal credit sales. We control credit risk through credit approvals, credit limits, and monitoring procedures.
As of December 31, 2024 and 2023, respectively, three and two, respectively, of the cruise lines we served represented greater than 10% of our accounts receivable. We do not normally require collateral or other security to support normal credit sales. We control credit risk through credit approvals, credit limits, and monitoring procedures.
For the years ended December 31, 2023 and 2022 and 2021, allowance for credit losses expense amounted to $0.06, $0.02 million and $0.5 million, respectively. Allowance for credit losses expense is included within administrative operating expenses in the accompanying consolidated statements of operations. Interest rate risk.
For the years ended December 31, 2024 and 2023 and 2022, allowance for credit losses expense amounted to $0.02 million, $0.06 million and $0.02 million, respectively. Allowance for credit losses expense is included within administrative operating expenses in the accompanying Consolidated Statements of Operations. 49 Interest rate risk.
Our expected credit losses are based on historical collection experience, current and forecasted business conditions and other facts and circumstances. The allowance for credit losses was $0.2 million and $0.1 million as of December 31, 2023 and 2022, respectively.
Our expected credit losses are based on historical collection experience, current and forecasted business conditions and other facts and circumstances. The allowance for credit losses was $0.2 million as of each of December 31, 2024 and 2023.
If such mitigation proves ineffective, a hypothetical 10% change in the aggregate exchange rate exposure of the U.K. Pound Sterling and the Euro to the U.S. Dollar would change our results of operations by approximately $0.2 million. 49
We have mitigated the risk relating to fluctuations in the U.K. Pound Sterling and the Euro through the structuring of intercompany debt. If such mitigation proves ineffective, a hypothetical 10% change in the aggregate exchange rate exposure of the U.K. Pound Sterling and the Euro to the U.S. Dollar would change our results of operations by approximately $0.2 million.
Accordingly, we face the risk of fluctuations in non-U.S. currencies compared to U.S. Dollars. We manage this currency risk by monitoring fluctuations in foreign currencies and, when exchange rates are appropriate, purchasing amounts of those foreign currencies. We have mitigated the risk relating to fluctuations in the U.K. Pound Sterling and the Euro through the structuring of intercompany debt.
Dollars, they also are represented by various other currencies, primarily the U.K. Pound Sterling and the Euro. Accordingly, we face the risk of fluctuations in non-U.S. currencies compared to U.S. Dollars. We manage this currency risk by monitoring fluctuations in foreign currencies and, when exchange rates are appropriate, purchasing amounts of those foreign currencies.
Interest rate changes do not affect the market value of such debt, but could impact the amount of our interest payments, and accordingly, our future earnings and cash flows, assuming other factors are held constant. 48 Our policy is to manage interest rate risk through the use of a combination of fixed and floating rate debt and interest rate derivatives based upon market conditions.
Interest rate changes do not affect the market value of such debt, but could impact the amount of our interest payments, and accordingly, our future earnings and cash flows, assuming other factors are held constant.
The fluctuation in currency exchange rates is not a significant risk for us, as most of our revenues are earned and expenses are incurred in U.S. Dollars. While our revenues and expenses are primarily represented by U.S. Dollars, they also are represented by various other currencies, primarily the U.K. Pound Sterling and the Euro.
A hypothetical 10% change in our interest rate would change our results of operations by approximately $0.6 million. Foreign currency risk . The fluctuation in currency exchange rates is not a significant risk for us, as most of our revenues are earned and expenses are incurred in U.S. Dollars. While our revenues and expenses are primarily represented by U.S.
These swaps are typically entered into with a group of financial institutions with investment grade credit ratings, thereby reducing the risk of credit loss. A hypothetical 10% change in our interest rate would change our results of operations by approximately $0.8 million. Foreign currency risk .
To achieve these objectives, we have used interest rate swaps to manage net exposure to interest rate changes to our borrowings. These swaps are typically entered into with a group of financial institutions with investment grade credit ratings, thereby reducing the risk of credit loss.

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