The Beauty Health Company
11/06/2025 | Press release | Distributed by Public on 11/06/2025 16:18
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q for the three months ended September 30, 2025 (the "Quarterly Report on Form 10-Q") contains "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report on Form 10-Q, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.
These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled Risk Factors of this filing and our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission (the "SEC") on March 12, 2025 (the "Annual Report on Form 10-K").
Important factors, among others, that may affect actual results or outcomes include the inability to recognize the benefits of the business combination consummated on May 4, 2021 pursuant to a certain Agreement and Plan of Merger entered into by and among the Company and other parties (the "Business Combination"); costs related to the Business Combination; the Company's availability of cash for debt service and exposure to risk of default under debt obligations; the Company's ability to manage growth; the Company's ability to execute its business plan; potential litigation involving the Company; changes in applicable laws or regulations; and the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and also with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K.
Unless the context otherwise requires, references to the "Company", "Hydrafacial", "we", "us", and "our" in this section are intended to mean the business and operations of The Beauty Health Company and its consolidated subsidiaries.
Company Overview
The Beauty Health Company is a medtech meets beauty company that delivers skin health experiences that help consumers reinvent their relationship with their skin, bodies and self-confidence. The Company and its subsidiaries design, develop, manufacture, market, and sell esthetic technologies and products. The Company's brands are pioneers: Hydrafacial in hydradermabrasion; SkinStylus in nanoneedling and microneedling; and Keravive in scalp health. Together, with its powerful global community of estheticians, partners and consumers, the Company is personalizing skin health for all ages, genders, skin tones, and skin types.
Business and Macroeconomic Conditions
During the three and nine months ended September 30, 2025, we continued to execute against our plan to expand our footprint by selling and placing our patented hydradermabrasion delivery systems ("Delivery Systems") worldwide, drive consumables, which consist of single-use tips, solutions, serums and other consumables used to provide a Hydrafacial treatment that cleanses, extracts, and hydrates the skin (collectively "Consumables"), invest in our community of providers, partners, and consumers, drive brand awareness, and optimize our global infrastructure. Although we believe we can be successful in our current operating environment, various factors may impact our business in unpredictable ways such as:
•Global economic conditions, including inflation, recession, changes in foreign currency exchange rates, higher interest rates, and other changes in economic conditions;
•The imposition of tariffs and/or trade restrictions may impact material costs and pricing;
•Disruptions in transportation and other supply chain related constraints, such as labor strife in the transportation industry; and
•Issues related to older models of Syndeo and our actions to remediate such issues.
We may be able to offset cost pressures through increasing the selling prices of some of our products, increasing value engineering efforts to optimize product costs, increasing the diversification of our suppliers and supplier contracts, increasing natural foreign currency hedging, as applicable, and reducing discretionary spending. However, our pricing actions could have an adverse impact on demand, and may in turn, cause our providers to halt or decrease Delivery Systems and/or Consumables spending, and our actions may not be sufficient to cover unexpected increased costs that we may experience.
Business and macroeconomic factors may also negatively impact, in the short-term or long-term, the global economy, the beauty health industry, our providers and their budgets with us, our business, the Company's brand reputation, financial condition, and results of operations. We remain attentive to these business and macroeconomic conditions that may materially impact our business, and we continue to explore and implement reporting and quality management systems and risk mitigation strategies in the face of these unfolding conditions to remain agile in adopting to changing circumstances.
China Market
The Company evaluated its global distribution strategy to align its go-to-market strategy with in-market partner capabilities and market opportunity. During the second quarter of 2025, the Company transitioned sales in the China market to a distributor partner, and as a result, the Company has discontinued direct sales to customers in China.
Comparison of Three Months Ended September 30, 2025 to Three Months Ended September 30, 2024
The following tables set forth our consolidated results of operations in dollars and as a percentage of net sales for the periods presented. The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future. The results of operations data for the three months ended September 30, 2025 and September 30, 2024, have been derived from the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Amounts and percentages may not foot due to rounding.
| Three Months Ended September 30, | |||||||||||||||||||||||
| (in millions) | 2025 | % of Net Sales | 2024 | % of Net Sales | |||||||||||||||||||
| Net sales | $ | 70.7 | 100.0 | % | $ | 78.8 | 100.0 | % | |||||||||||||||
| Cost of sales | 25.0 | 35.4 | 38.2 | 48.4 | |||||||||||||||||||
| Gross profit | 45.6 | 64.6 | 40.6 | 51.6 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Selling and marketing | 20.9 | 29.6 | 27.6 | 35.0 | |||||||||||||||||||
| Research and development | 1.7 | 2.4 | 1.1 | 1.4 | |||||||||||||||||||
| General and administrative | 29.3 | 41.4 | 33.4 | 42.4 | |||||||||||||||||||
| Total operating expenses | 51.9 | 73.4 | 62.2 | 78.9 | |||||||||||||||||||
| Loss from operations | (6.2) | (8.8) | (21.5) | (27.3) | |||||||||||||||||||
| Interest expense | 6.3 | 8.9 | 2.5 | 3.1 | |||||||||||||||||||
| Interest income | (1.3) | (1.8) | (4.9) | (6.2) | |||||||||||||||||||
| Other income, net | (0.6) | (0.9) | (0.1) | (0.1) | |||||||||||||||||||
| Change in fair value of warrant liabilities | (0.2) | (0.3) | (0.4) | (0.5) | |||||||||||||||||||
| Foreign currency transaction loss (gain), net | 0.2 | 0.2 | (2.3) | (2.9) | |||||||||||||||||||
| Loss before provision for income taxes | (10.6) | (15.1) | (16.3) | (20.7) | |||||||||||||||||||
| Income tax expense | 0.4 | 0.5 | 1.9 | 2.5 | |||||||||||||||||||
| Net loss | $ | (11.0) | (15.6) | % | $ | (18.3) | (23.2) | % | |||||||||||||||
Net Sales
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| Net sales | |||||||||||||||||||||||
|
Delivery Systems
|
$ | 20.8 | $ | 27.6 | $ | (6.8) | (24.6) | % | |||||||||||||||
| Consumables | 49.8 | 51.2 | (1.4) | (2.6) | % | ||||||||||||||||||
| Total net sales | $ | 70.7 | $ | 78.8 | $ | (8.1) | (10.3) | % | |||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||
| Percentage of net sales | 2025 | 2024 | |||||||||||||||||||||
| Delivery Systems | 29.5% | 35.0% | |||||||||||||||||||||
| Consumables | 70.5% | 65.0% | |||||||||||||||||||||
| Total | 100.0% | 100.0% | |||||||||||||||||||||
Total net sales for the three months ended September 30, 2025 decreased $8.1 million, or 10.3%, compared to the three months ended September 30, 2024. Delivery Systems net sales for the three months ended September 30, 2025 decreased $6.8 million, or 24.6%, compared to the three months ended September 30, 2024, with decreases across all regions. Delivery Systems net sales were negatively impacted globally by unfavorable macroeconomic and credit conditions.
Consumables net sales for the three months ended September 30, 2025 decreased $1.4 million, or 2.6%, compared to the three months ended September 30, 2024. The slight decrease in Consumables net sales includes declines related to the China transition to a distributor partner. Excluding the impact of the China transition, Consumables net sales increased slightly, with price increases offset by lower volume.
Cost of Sales, Gross Profit, and Gross Margin
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| Cost of sales | $ | 25.0 | $ | 38.2 | $ | (13.1) | (34.4)% | ||||||||||||||||
|
Gross profit
|
$ | 45.6 | $ | 40.6 | $ | 5.0 | 12.3% | ||||||||||||||||
| Gross margin | 64.6 | % | 51.6 | % | |||||||||||||||||||
Cost of sales for the three months ended September 30, 2025 decreased $13.1 million, compared to the three months ended September 30, 2024 primarily due to lower inventory related charges and net sales. Cost of sales for the three months ended September 30, 2024 include approximately $8 million of manufacturing optimization related costs. Gross margin increased to 64.6% for the three months ended September 30, 2025 from 51.6% for the three months ended September 30, 2024 primarily due to lower inventory related charges and favorable mix shift towards consumable net sales, partially offset by lower average selling price of equipment net sales.
Operating Expenses
Selling and Marketing
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| Selling and marketing | $ | 20.9 | $ | 27.6 | $ | (6.7) | (24.2) | % | |||||||||||||||
| As a percentage of net sales | 29.6 | % | 35.0 | % | |||||||||||||||||||
Selling and marketing expense for the three months ended September 30, 2025 decreased $6.7 million, or 24.2%, compared to the three months ended September 30, 2024. The decrease is primarily driven by lower personnel-related expenses, including share-based compensation expense, and lower depreciation and amortization expense.
Research and Development
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| Research and development | $ | 1.7 | $ | 1.1 | $ | 0.6 | 53.2 | % | |||||||||||||||
| As a percentage of net sales | 2.4 | % | 1.4 | % | |||||||||||||||||||
Research and development expense for the three months ended September 30, 2025 increased $0.6 million, or 53.2%, compared to the three months ended September 30, 2024. The increase is primarily driven by higher other professional services expenses.
General and Administrative
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| General and administrative | $ | 29.3 | $ | 33.4 | $ | (4.2) | (12.5) | % | |||||||||||||||
| As a percentage of net sales | 41.4 | % | 42.4 | % | |||||||||||||||||||
General and administrative expense for the three months ended September 30, 2025 decreased $4.2 million, or 12.5%, compared to the three months ended September 30, 2024. The decrease is primarily driven by lower share-based compensation expense and other general corporate spend, and bad debt recoveries. The decrease was partially offset by higher amortization expense, severance expense, and legal fees.
Interest Expense, Interest Income, Change in Fair Value of Warrant Liabilities, and Other Income, Net
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| Interest expense | $ | 6.3 | $ | 2.5 | $ | 3.8 | 155.7 | % | |||||||||||||||
|
Interest income
|
$ | (1.3) | $ | (4.9) | $ | 3.6 | (74.2) | % | |||||||||||||||
|
Change in fair value of warrant liabilities
|
$ | (0.2) | $ | (0.4) | $ | 0.2 | N/M | ||||||||||||||||
|
Other income, net
|
$ | (0.6) | $ | (0.1) | $ | (0.5) | N/M | ||||||||||||||||
| N/M - Not meaningful | |||||||||||||||||||||||
Interest expense for the three months ended September 30, 2025 increased $3.8 million compared to the three months ended September 30, 2024, primarily due to interest and amortization of debt issuance costs related to the 2028 Notes, partially offset by lower outstanding balances related to the 2026 Notes.
Interest income for the three months ended September 30, 2025 decreased $3.6 million compared to the three months ended September 30, 2024 primarily due to lower average invested balances and interest rates during the three months ended September 30, 2025.
Comparison of Nine Months EndedSeptember 30, 2025 to Nine Months EndedSeptember 30, 2024
The following tables set forth our consolidated results of operations in dollars and as a percentage of net sales for the periods presented. The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future. The results of operations data for the nine months endedSeptember 30, 2025 and September 30, 2024 have been derived from the condensed consolidated financial statements included elsewhere in this Form 10-Q. Amounts and percentages may not foot due to rounding.
| Nine Months Ended September 30, | |||||||||||||||||||||||
| (in millions) | 2025 | % of Net Sales | 2024 | % of Net Sales | |||||||||||||||||||
| Net sales | $ | 218.4 | 100.0 | % | $ | 250.8 | 100.0 | % | |||||||||||||||
| Cost of sales | 75.1 | 34.4 | 120.8 | 48.2 | |||||||||||||||||||
| Gross profit | 143.3 | 65.6 | 130.0 | 51.8 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Selling and marketing | 70.1 | 32.1 | 91.8 | 36.6 | |||||||||||||||||||
| Research and development | 3.9 | 1.8 | 5.1 | 2.0 | |||||||||||||||||||
| General and administrative | 90.3 | 41.3 | 93.7 | 37.4 | |||||||||||||||||||
| Total operating expenses | 164.3 | 75.2 | 190.6 | 76.0 | |||||||||||||||||||
| Loss from operations | (21.0) | (9.6) | (60.6) | (24.2) | |||||||||||||||||||
| Interest expense | 13.0 | 5.9 | 7.9 | 3.2 | |||||||||||||||||||
| Interest income | (7.4) | (3.4) | (14.4) | (5.8) | |||||||||||||||||||
| Other income, net | (18.8) | (8.6) | (33.5) | (13.3) | |||||||||||||||||||
| Change in fair value of warrant liabilities | (0.3) | (0.2) | (3.0) | (1.2) | |||||||||||||||||||
| Foreign currency transaction (gain) loss, net | (6.2) | (2.8) | 0.2 | 0.1 | |||||||||||||||||||
| Loss before provision for income taxes | (1.1) | (0.5) | (17.8) | (7.1) | |||||||||||||||||||
| Income tax expense | 0.3 | 0.1 | 0.9 | 0.4 | |||||||||||||||||||
| Net loss | $ | (1.4) | (0.6) | % | $ | (18.8) | (7.5) | % | |||||||||||||||
Net Sales
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| Net sales | |||||||||||||||||||||||
|
Delivery Systems
|
$ | 63.4 | $ | 98.6 | $ | (35.2) | (35.7) | % | |||||||||||||||
| Consumables | 155.0 | 152.2 | 2.8 | 1.9 | % | ||||||||||||||||||
| Total net sales | $ | 218.4 | $ | 250.8 | $ | (32.4) | (12.9) | % | |||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| Percentage of net sales | 2025 | 2024 | |||||||||||||||||||||
| Delivery Systems | 29.0% | 39.3% | |||||||||||||||||||||
| Consumables | 71.0% | 60.7% | |||||||||||||||||||||
| Total | 100.0% | 100.0% | |||||||||||||||||||||
Total net sales for the nine months endedSeptember 30, 2025 decreased $32.4 million, or 12.9%, compared to the nine months endedSeptember 30, 2024. Delivery System net sales for the nine months endedSeptember 30, 2025 decreased $35.2 million, or 35.7%, compared to the nine months endedSeptember 30, 2024, with decreases across all regions. Delivery Systems net sales were negatively impacted globally by unfavorable macroeconomic and credit conditions.
Consumables net sales for the nine months ended September 30, 2025 increased $2.8 million, or 1.9%, compared to the nine months endedSeptember 30, 2024. The increase in Consumables net sales was primarily attributable to increasedplacements of Delivery Systems and the adjoining consumption of Consumables during the nine months endedSeptember 30, 2025.
Cost of Sales, Gross Profit, and Gross Margin
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| Cost of sales | $ | 75.1 | $ | 120.8 | $ | (45.8) | (37.9)% | ||||||||||||||||
| Gross profit | $ | 143.3 | $ | 130.0 | $ | 13.4 | 10.3% | ||||||||||||||||
| Gross margin | 65.6 | % | 51.8 | % | |||||||||||||||||||
Cost of sales for the nine months endedSeptember 30, 2025 decreased $45.8 million, compared to the nine months ended September 30, 2024 primarily due to lower inventory related charges and net sales. Cost of sales for the nine months ended September 30, 2024 include $22.7 million of inventory charges for discontinued, excess, obsolete inventory, including the write-down of Delivery System inventory to its net realizable value and the write-off of excess raw materials and approximately $8 million of manufacturing optimization related costs. Gross margin increased to 65.6%for the nine months endedSeptember 30, 2025 from 51.8%for the nine months ended September 30, 2024primarily due to lower inventory related charges and favorable mix shift towards consumable net sales, partially offset by lower average selling price of equipment net sales.
Operating Expenses
Selling and Marketing
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| Selling and marketing | $ | 70.1 | $ | 91.8 | $ | (21.7) | (23.7) | % | |||||||||||||||
| As a percentage of net sales | 32.1 | % | 36.6 | % | |||||||||||||||||||
Selling and marketing expense for the nine months ended September 30, 2025 decreased $21.7 million, or 23.7%, compared to the nine months ended September 30, 2024. The decrease is primarily driven by lower personnel-related expenses, including share-based compensation expense and sales commission expense, and lower marketing related spend and depreciation and amortization expense.
Research and Development
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| Research and development | $ | 3.9 | $ | 5.1 | $ | (1.1) | (22.2) | % | |||||||||||||||
| As a percentage of net sales | 1.8 | % | 2.0 | % | |||||||||||||||||||
Research and development expense for the nine months ended September 30, 2025 decreased $1.1 million, or 22.2%, compared to the nine months ended September 30, 2024. The decrease is primarily driven by lower personnel-related expenses, partially offset by higher other professional services expenses.
General and Administrative
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| General and administrative | $ | 90.3 | $ | 93.7 | $ | (3.4) | (3.7) | % | |||||||||||||||
| As a percentage of net sales | 41.3 | % | 37.4 | % | |||||||||||||||||||
General and administrative expense for the nine months ended September 30, 2025decreased $3.4 million, or 3.7%, comparedto the nine months endedSeptember 30, 2024. The decrease is primarily driven by lower share-based compensation expense, depreciation expense, and other general corporate spend, and bad debt recoveries. The decrease is partially offset by higher legal fees, amortization expense, and severance expense.
Interest Expense, Interest Income, Change in Fair Value of Warrant Liabilities, and Other Income, Net
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| Interest expense | $ | 13.0 | $ | 7.9 | $ | 5.0 | 63.0 | % | |||||||||||||||
|
Interest income
|
$ | (7.4) | $ | (14.4) | $ | 7.0 | (48.4) | % | |||||||||||||||
|
Change in fair value of warrant liabilities
|
$ | (0.3) | $ | (3.0) | $ | 2.6 | N/M | ||||||||||||||||
|
Other income, net
|
$ | (18.8) | $ | (33.5) | $ | 14.7 | (43.8) | % | |||||||||||||||
|
N/M - Not meaningful
|
|||||||||||||||||||||||
Interest expense for the nine months ended September 30, 2025 increased $5.0 million compared to the nine months ended September 30, 2024, primarily due to interest and amortization of debt issuance costs related to the 2028 Notes, partially offset by lower outstanding balances related to the 2026 Notes.
Interest income for the nine months ended September 30, 2025 decreased $7.0 millioncompared to the nine months ended September 30, 2024primarily due to lower average invested balances and interest rates during the nine monthsended September 30, 2025.
During the nine months ended September 30, 2025, the Company recognized incomeof $0.3 millionrelated to the change in the fair value of the warrant liabilities, as compared to incomeof $3.0 millionfor the nine months ended September 30, 2024, driven primarily by the fluctuation of the price of the Company's Class A common stock, par value $0.0001 per share (the "Class A Common Stock").
Other income, net for the nine months ended September 30, 2025 included $18.1 million net gain related to the exchange and repurchases of the 2026 Notes. Other income, net for the nine months ended September 30, 2024 included $33.4 million net gain related to the repurchases of the 2026 Notes.
Liquidity and Capital Resources
Our primary sources of capital have been (i) cash flow from operating activities, (ii) net proceeds received from the consummation of the Business Combination, (iii) net proceeds received from the 2026 Notes, and (iv) net proceeds received from the exercise of public and private placement warrants. As of September 30, 2025, we had cash, cash equivalents, and restricted cash of $219.4 million.
Our operating cash flows result primarily from cash received from sales of Delivery Systems and Consumables, offset primarily by cash payments made for products and services, employee compensation, payment processing and related transaction costs, operating leases, marketing expenses, and interest payments for our Notes. Cash received from our customers and other activities generally corresponds to our net sales.
Our sources of liquidity and cash flows are used to fund ongoing operations, research and development projects for new products, services, and technologies, and provide ongoing support services for our providers and customers. As part of our business strategy, we occasionally evaluate potential acquisitions of businesses and products and technologies. Accordingly, a portion of our available cash may be used at any time for the acquisition of complementary products, services, or businesses. Such potential transactions may require substantial capital resources, which may require us to seek additional debt or equity financing. We cannot assure you that we will be able to successfully identify suitable acquisition candidates, complete acquisitions, integrate acquired businesses into our current operations, or expand into new markets. Furthermore, we cannot provide assurances that additional financing will be available to us in any required time frame and on commercially reasonable terms, if at all.
Based on our sources of capital, management believes that we have sufficient liquidity to satisfy our anticipated working capital requirements for our ongoing operations and obligations for at least the next 12 months. However, we will continue to evaluate our capital expenditure needs based upon factors including but not limited to our rate of revenue growth, potential acquisitions, the timing and amount of spending on research and development, growth in sales and marketing activities, the timing of new product launches, timing and investments needed for international expansion, the continuing market acceptance of the Company's products and services, expansion, and overall economic conditions.
We may, from time to time, seek to redeem or repurchase our outstanding debt or equity securities through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors.
If cash generated from operations is insufficient to satisfy our capital requirements, we may have to sell additional equity or debt securities or obtain expanded credit facilities to fund our operating expenses. The sale of additional equity would result in additional dilution to our stockholders. Also, the incurrence of additional debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. In the event such additional capital is needed in the future, there can be no assurance that such capital will be available to us, or, if available, that it will be in amounts and on terms acceptable to us. If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected. However, if cash flows from operations become insufficient to continue operations at the current level, and if no additional capital were obtained, then management would restructure the Company in a way to preserve our business while maintaining expenses within operating cash flows.
Convertible Senior Notes, Net
Convertible Senior Notes - 2026
On September 14, 2021, the Company issued an aggregate of $750.0 million in principal amount of its 2026 Notes. The 2026 Notes were issued pursuant to, and are governed by, an indenture dated as of September 14, 2021, between the Company and U.S. Bank National Association, as trustee. Pursuant to the purchase agreement between the Company and the initial purchasers of the 2026 Notes, the Company granted the initial purchasers an option to purchase, for settlement within a period of 13 days from, and including, the date the 2026 Notes were first issued, up to an additional $100.0 million principal amount of 2026 Notes. The 2026 Notes issued on September 14, 2021 include the $100.0 million principal amount of 2026 Notes issued pursuant to the full exercise by the initial purchasers of such option.
During the three months ended September 30, 2024, there were no repurchases related to the 2026 Notes. During the nine months ended September 30, 2024, the Company repurchased $192.3 million principal amount of the 2026 Notes for $156.1 million and recognized a net gain of $33.4 million, which includes $2.8 million of unamortized debt issuance costs related to the repurchase.
During the three months ended September 30, 2025, there were no repurchases related to the 2026 Notes. During the nine months ended September 30, 2025, the Company repurchased $20.0 million principal amount of the 2026 Notes for $18.4 million and recognized a net gain of $1.5 million, which includes $0.1 million of unamortized debt issuance costs related to the repurchase. The net gain is included in other income, net in the Condensed Consolidated Statements of Comprehensive Income (Loss).
Convertible Senior Secured Notes - 2028
On May 21, 2025, the Company entered into privately negotiated exchange agreements (the "Exchange Agreements") with certain holders (the "Exchanging Holders") of the 2026 Notes (the "Existing Notes"). Pursuant to the Exchange Agreements, the Company exchanged and repurchased $413.2 million aggregate principal amount of the Existing Notes. Of the $413.2 million aggregate principal amount of the Existing Notes, $263.2 million principal amount were exchanged at a weighted-average price equal to 95% for $250.0 million principal amount of new 7.95% Convertible Senior Secured Notes due November 15, 2028 (the "2028 Notes"), and $150.1 million principal amount were repurchased at a weighted-average price equal to 95% for $142.6 million. The exchange and repurchase resulted in a net gain of $16.6 million, which includes $3.1 million of unamortized debt issuance costs and $0.9 million of other related fees. The Company incurred $11.4 million of debt issuance costs related to the exchange and repurchase of its Existing Notes which are being amortized over the term of the 2028 Notes using the effective interest method.
On May 27, 2025, the Company issued the 2028 Notes to the Exchanging Holders. The 2028 Notes were issued pursuant to, and are governed by, an indenture (the "2028 Indenture"), dated as of May 27, 2025, between the Company, the guarantors party thereto, and U.S. Bank Trust Company, National Association, as trustee and collateral agent.
The 2028 Notes are the Company's senior, secured obligations and are guaranteed by certain of the Company's subsidiaries (including the Company's material domestic, wholly-owned subsidiaries) and are secured on a first-priority basis by substantially all assets of the Company and such guarantors, subject to certain exceptions. The 2028 Indenture also contains a number of restrictive covenants and limitations, including restrictions on the Company's ability to incur certain indebtedness
and other limitations on liens, investments and restricted payments, as further described in the 2028 Indenture. For more information, see Part I, Item 1 "Financial Statements - Note 5 - "Long-term Debt" in this Quarterly Report on Form 10-Q.
The net gain recognized related to the exchange and repurchases is included in other income, net in the Condensed Consolidated Statements of Comprehensive Income (Loss).
Known Trends or Uncertainties
The majority of our customers operate within the medical industry (dermatologists and plastic surgeons), esthetician industry, and beauty retail industry. Although we have not seen any significant reduction in revenues to date due to consolidations, we have seen some consolidation in these industries during economic downturns. These consolidations have not had a negative effect on our total net sales; however, should consolidations and downsizing in the industries continue to occur, those events could adversely impact our revenues and earnings going forward.
In addition, we continue to face macroeconomic challenges such as the possibility of recession or financial market instability, and the impact of any governmental actions on the economy, such as tariffs and/or trade restrictions. These factors may adversely impact consumers, business, and government spending as well as our customers' ability to pay for our products and services on an ongoing basis.
If economic and social conditions or the degree of uncertainty or volatility worsen, or the adverse conditions previously described are further prolonged, our revenues could be adversely affected. Macroeconomic challenges and credit conditions have negatively impacted our revenues in 2025. We are continuing to monitor these and other risks that may affect our business so that we can respond appropriately. Negative trends in our financial performance or financial condition may result in a sustained decline in our stock price, which may result in a triggering event necessitating an interim goodwill impairment assessment and potential goodwill impairment.
Cash Flows
The following table summarizes the activities from our statements of cash flows. Amounts may not foot due to rounding.
| Nine Months Ended September 30, | |||||||||||
| (Dollars in millions) | 2025 | 2024 | |||||||||
|
Cash, cash equivalents, and restricted cash at beginning of period
|
$ | 370.1 | $ | 523.0 | |||||||
| Operating activities: | |||||||||||
| Net loss | (1.4) | (18.8) | |||||||||
| Non-cash adjustments | 21.2 | 51.6 | |||||||||
| Changes in working capital | 2.5 | (33.2) | |||||||||
| Net cash provided by (used for) operating activities | 22.3 | (0.3) | |||||||||
| Net cash used for investing activities | (3.8) | (5.9) | |||||||||
| Net cash used for financing activities | (174.4) | (157.6) | |||||||||
|
Net change in cash, cash equivalents, and restricted cash
|
(155.9) | (163.8) | |||||||||
| Effect of foreign currency translation | 5.2 | (0.3) | |||||||||
|
Cash, cash equivalents, and restricted cash at end of period
|
$ | 219.4 | $ | 358.9 | |||||||
Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2025 was $22.3 million, as compared to net cash used for operating activities of $0.3 million for the nine months ended September 30, 2024. The change in cash provided by operating activities was primarily related to lower working capital usage and changes in net loss and non-cash adjustments. The current year net loss and non-cash adjustments include $18.1 million of net gain related to the exchange and repurchases of the 2026 Notes. The prior year net loss and non-cash adjustments include $33.4 million of net gain related to the repurchases of the 2026 Notes and the prior year changes in working capital includes the impact of the costs associated with the Syndeo Program of $21.0 million.
Investing Activities
Net cash used for investing activities for the nine months ended September 30, 2025 was $3.8 million, as compared to $5.9 million for the nine months ended September 30, 2024. The change in cash used for investing activities was due to lower capital expenditures during the nine months ended September 30, 2025.
Financing Activities
Net cash used for financing activities for the nine months ended September 30, 2025 was $174.4 million, as compared to $157.6 million for the nine months ended September 30, 2024. The cash used for financing activities for the nine months ended September 30, 2025 was primarily related to the exchange and repurchases of the Company's 2026 Notes. The cash used for financing activities for the nine months ended September 30, 2024 was primarily related to the repurchases of the Company's 2026 Notes.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. In preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders' equity/deficit, revenue, expenses, and related disclosures. We re-evaluate our estimates on an on-going basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions.
There have been no changes to our critical accounting policies since our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Recent Accounting Pronouncements
See Part I, Item 1 "Financial Statements-Note 15 to the Consolidated Financial Statements-New Accounting Pronouncements" of this Quarterly Report on Form 10-Q.
The Beauty Health Company published this content on November 06, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 06, 2025 at 22:18 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]