The Beauty Health Company Reports Record Fourth Quarter and Fiscal Year 2021 Financial Results
BeautyHealth (NASDAQ: SKIN) reported Q4 2021 net sales of $77.9 million, a 105.6% increase from Q4 2020. For FY 2022, the company expects net sales between $320 million to $330 million and adjusted EBITDA around $50 million. Despite a net loss of $17.3 million in Q4 2021, adjusted EBITDA rose to $8.5 million, up from $3.6 million in Q4 2020. Cash and equivalents surged to $901.9 million, largely from a $638.7 million convertible senior notes offering. The company aims to leverage its investments and achieve historical profitability margins by 2023.
- Q4 2021 net sales increased 105.6% YoY to $77.9 million.
- FY 2021 net sales reached $260.1 million, a 118.3% increase from 2020.
- Adjusted EBITDA rose to $32.7 million, up from $7.7 million in 2020.
- Gross margin improved to 72.9% in Q4 2021 compared to 60.8% in Q4 2020.
- Company has $901.9 million in cash and cash equivalents.
- Net loss of $17.3 million in Q4 2021 compared to a loss of $7.5 million in Q4 2020.
- Operating loss of $7.2 million in Q4 2021 versus operating income of $4.7 million in Q4 2020.
- Higher selling, general and administrative expenses of $62.1 million in Q4 2021.
Provides Fiscal Year 2022 Outlook
“I am grateful and honored to be leading this impressive company as CEO, especially at such an exciting time for BeautyHealth,” said Andrew Stanleick, BeautyHealth’s President and Chief Executive Officer. “I am pleased to share that for 2022, we expect net sales in the range of
Key Operational and Business Metrics
|
Three Months Ended |
|
Year Ended |
|||||||||||||
Unaudited (dollars in millions) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||
Delivery Systems net sales |
$ |
42.7 |
|
|
$ |
17.4 |
|
|
$ |
139.5 |
|
|
$ |
53.4 |
|
|
Consumables net sales |
$ |
35.2 |
|
|
$ |
20.5 |
|
|
$ |
120.6 |
|
|
$ |
65.7 |
|
|
Total net sales |
$ |
77.9 |
|
|
$ |
37.9 |
|
|
$ |
260.1 |
|
|
$ |
119.1 |
|
|
Gross profit |
$ |
56.8 |
|
|
$ |
23.0 |
|
|
$ |
181.8 |
|
|
$ |
67.2 |
|
|
Gross margin |
|
72.9 |
% |
|
|
60.8 |
% |
|
|
69.9 |
% |
|
|
56.4 |
% |
|
Net loss |
$ |
(17.3 |
) |
|
$ |
(7.5 |
) |
|
$ |
(375.1 |
) |
|
$ |
(29.2 |
) |
|
Adjusted net income (loss)* |
$ |
1.6 |
|
|
$ |
(2.0 |
) |
|
$ |
4.5 |
|
|
$ |
(12.1 |
) |
|
Adjusted EBITDA* |
$ |
8.5 |
|
|
$ |
3.6 |
|
|
$ |
32.7 |
|
|
$ |
7.7 |
|
|
Adjusted EBITDA margin* |
|
10.9 |
% |
|
|
9.4 |
% |
|
|
12.6 |
% |
|
|
6.5 |
% |
|
Adjusted gross profit* |
$ |
59.6 |
|
|
$ |
25.7 |
|
|
$ |
192.5 |
|
|
$ |
78.0 |
|
|
Adjusted gross margin* |
|
76.5 |
% |
|
|
67.8 |
% |
|
|
74.0 |
% |
|
|
65.5 |
% |
|
*See "Non-GAAP Measures" below. |
Fiscal 2021 Business Highlights
-
Delivered net sales of
, a$260.1 million 118.3% and56.2% increase compared to and$119.1 million in 2020 and 2019, respectively.$166.6 million - Sold 6,191 Delivery Systems during the year, bringing the Company’s install base to 20,399 Delivery Systems.
-
Increased adjusted gross margin to
74.0% compared to65.5% in 2020. -
Adjusted EBITDA and Adjusted EBITDA margin increased to
from$32.7 million in 2020 and to$7.7 million 12.6% from6.5% , respectively. -
Closed convertible senior notes offering, generating net proceeds of
.$638.7 million - Directly entered new countries via the acquisition of four distributors.
- Implemented phase 1 of its global ERP system in November.
-
Announced
100% of the Company’s Public Warrants were exercised or redeemed, generating cash proceeds of .$185.4 million
Fourth Quarter 2021 Summary
-
Net sales of
increased$77.9 million 105.6% compared to in Q4 2020 and$37.9 million 56.0% compared to in Q4 2019, driven by continued strength in the$49.9 million U.S. and EMEA, as well as significant growth in APAC despite the negative impact from COVID-19.-
Delivery Systems net sales increased to
, compared to$42.7 million in Q4 2020 and$17.4 million in Q4 2019. The Company sold over 1,800 Delivery Systems during the quarter and saw continued sequential improvement in system sales.$24.5 million -
Consumables net sales increased to
, compared to$35.2 million in Q4 2020 and$20.5 million in Q4 2019.$25.4 million -
Net sales in the
Americas region increased to in Q4 2021 compared to$50.4 million in Q4 2020 and$26.9 million in Q4 2019 due to strong trends in the$34.2 million U.S. andMexico . The strength in theU.S. was driven by a continued increase in sales productivity fueled by strong conversion from the Company's marketing-driven leads. -
Net sales in the APAC region increased to
in Q4 2021 compared to$12.0 million in Q4 2020 and$4.8 million in Q4 2019, driven by continued strength in$7.3 million China andAustralia despite the partial closure during the quarter due to COVID-19. -
Net sales in the EMEA region increased to
in Q4 2021 compared to$15.5 million in Q4 2020 and$6.1 million in Q4 2019, due to strength in the$8.4 million United Kingdom ,Germany ,France , and theMiddle East .
-
Delivery Systems net sales increased to
-
Gross margin increased to
72.9% compared to60.8% in Q4 2020, and Q4 2021 adjusted gross margin increased to76.5% compared to67.8% in Q4 2020. The improvement in gross profit was due to higher sales volumes, fixed cost leverage and margin accretion from distributor acquisitions, partially offset by higher supply chain and logistics costs. The Company expects continued headwinds from global supply chain challenges and inflationary pressures to weigh on gross margin into 2022, specifically higher shipping costs, offset by margin accretion related to the acquired distributor inventory and pricing initiatives. -
Selling, general and administrative expenses were
in Q4 2021 compared to$62.1 million in Q4 2020, primarily driven by increased personnel-related expenses, sales commissions, marketing expenses and costs related to the successful roll out of phase 1 of the Company's global ERP platform. The Company has incurred$26.9 million non-cash stock compensation in addition to$3.5 million of public company costs including directors' and officers' liability insurance, SOX compliance and additional audit and tax related services in the fourth quarter.$1.5 million -
Operating loss was
compared to an operating income of$7.2 million in Q4 2020. The operating loss includes non-cash stock-based compensation expense of$4.7 million and other transaction and one-time costs of$3.8 million . The Company continues to invest in global infrastructure, people, and systems to fuel future growth.$5.9 million -
Net loss was
compared to a net loss of$17.3 million in Q4 2020. Net loss includes the non-cash change in fair value of the warrant liabilities, which totaled$7.5 million . In Q4 2021, adjusted net income was$6.0 million compared to an adjusted net loss of$1.6 million in Q4 2020.$2.0 million -
Adjusted EBITDA is an important profitability measure that the Company uses to manage its business internally. In Q4 2021, adjusted EBITDA was
compared to$8.5 million in Q4 2020. The increase in adjusted EBITDA is the result of higher sales, partially offset by increased sales commissions, personnel-related expenses, marketing spend and public company costs.$3.6 million
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents were
Capital expenditures for the year ended
Warrants and Shares Outstanding
The Company has approximately 7 million private placement warrants and approximately 150 million shares of Class A common stock outstanding as of
Outlook
BeautyHealth is providing a fiscal 2022 net sales guidance range of
For fiscal 2022, BeautyHealth also expects up to
BeautyHealth’s achievement of the anticipated results is subject to risks and uncertainties, including those disclosed in the Company’s filings with the
Conference Call
BeautyHealth will host a conference call on
Non-GAAP Financial Measures
In addition to results determined in accordance with accounting principles generally accepted in
The Company does not provide a reconciliation of its fiscal 2022 adjusted EBITDA guidance to net income (loss), the most directly comparable forward looking GAAP financial measure, due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, which cannot be done without unreasonable efforts, including adjustments that could be made for changes in fair value of warrant liabilities, integration and acquisition-related expenses, amortization expenses, non-cash stock-based compensation, gains/losses on foreign currency, and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The Company's fiscal 2022 adjusted EBITDA guidance is merely an outlook and is not a guarantee of future performance. Stockholders should not rely or place an undue reliance on such forward-looking statements. See “Forward-Looking Statements” for additional information.
Adjusted Gross Profit and Adjusted Gross Margin
Management uses adjusted gross profit and adjusted gross margin to measure profitability and the ability to scale and leverage the costs of Delivery Systems and Consumables. The continued growth of Delivery Systems is expected to improve adjusted gross margin, as additional Delivery Systems sold will increase our recurring Consumables net sales, which has higher margins.
Management believes adjusted gross profit and adjusted gross margin are useful measures to the Company and its investors to assist in evaluating operating performance because they provide consistency and direct comparability with past financial performance and between fiscal periods, as the metrics eliminate the effects of amortization, depreciation, and stock-based compensation which are non-cash expenses that may fluctuate for reasons unrelated to overall continuing operating performance. Adjusted gross margin has been and will continue to be impacted by a variety of factors, including the product mix, geographic mix, direct vs. indirect mix, the average selling price on Delivery Systems, and new product launches. Management expects adjusted gross margin to fluctuate over time depending on the factors described above.
The following table reconciles gross profit to adjusted gross profit for the periods presented:
|
Three Months Ended |
|
Year Ended |
|||||||||||||
Unaudited (in thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||
Net sales |
$ |
77,889 |
|
|
$ |
37,880 |
|
|
$ |
260,086 |
|
|
$ |
119,092 |
|
|
Cost of sales |
|
21,128 |
|
|
|
14,843 |
|
|
|
78,259 |
|
|
|
51,893 |
|
|
Gross profit |
$ |
56,761 |
|
|
$ |
23,037 |
|
|
$ |
181,827 |
|
|
$ |
67,199 |
|
|
Gross margin |
|
72.9 |
% |
|
|
60.8 |
% |
|
|
69.9 |
% |
|
|
56.4 |
% |
|
Adjusted to exclude the following: |
|
|
|
|
|
|
|
|||||||||
Stock-based compensation expense |
$ |
183 |
|
|
$ |
— |
|
|
$ |
405 |
|
|
$ |
— |
|
|
Depreciation and amortization expense |
|
2,651 |
|
|
|
2,634 |
|
|
|
10,313 |
|
|
|
10,758 |
|
|
Adjusted gross profit |
$ |
59,595 |
|
|
$ |
25,671 |
|
|
$ |
192,545 |
|
|
$ |
77,957 |
|
|
Adjusted gross margin |
|
76.5 |
% |
|
|
67.8 |
% |
|
|
74.0 |
% |
|
|
65.5 |
% |
Adjusted Net Income, Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted net income, adjusted EBITDA and adjusted EBITDA margin are key performance measures that management uses to assess the Company's operating performance. Because adjusted net income, adjusted EBITDA and adjusted EBITDA margin facilitate internal comparisons of our historical operating performance on a more consistent basis, management uses these measures for business planning purposes.
Management also believes this information will be useful for investors to facilitate comparisons of operating performance and better identify trends in the business. Management expects adjusted EBITDA margin to increase over the long-term, as the Company continues to scale our business and achieve greater operating leverage.
The Company calculates adjusted net income as net income (loss) adjusted to exclude: change in fair value of public and private placement warrants, change in fair value of earn-out shares liability, other expense, net; amortization expense; stock-based compensation expense; management fees incurred from historical private equity owners; one-time or non-recurring items such as transaction costs (including transactions costs with respect to the Business Combination); restructuring costs (including those associated with COVID-19) and the aggregate adjustment for income taxes for the tax effect of the adjustments described above.
The Company calculates adjusted EBITDA as net income (loss) adjusted to exclude: change in fair value of public and private placement warrants, change in fair value of earn-out shares liability, other expense, net; interest expense; income tax benefit (expense); depreciation and amortization expense; stock-based compensation expense; foreign currency (gain) loss; management fees incurred from historical private equity owners; one-time or non-recurring items such as transaction costs (including transactions costs with respect to the Business Combination); and restructuring costs (including those associated with COVID-19).
The following table reconciles BeautyHealth’s net loss to adjusted net income (loss) and adjusted EBITDA for the periods presented:
|
Three Months Ended |
|
Year Ended |
|||||||||||||
Unaudited (in thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||
Net loss |
$ |
(17,311 |
) |
|
$ |
(7,493 |
) |
|
$ |
(375,108 |
) |
|
$ |
(29,175 |
) |
|
Adjusted to exclude the following: |
|
|
|
|
|
|
|
|||||||||
Change in FV of warrant liability |
|
5,982 |
|
|
|
— |
|
|
|
277,315 |
|
|
|
— |
|
|
Change in FV of earn-out shares liability |
|
— |
|
|
|
— |
|
|
|
47,100 |
|
|
|
— |
|
|
Amortization expense |
|
3,943 |
|
|
|
2,415 |
|
|
|
13,297 |
|
|
|
11,981 |
|
|
Stock-based compensation expense |
|
3,794 |
|
|
|
37 |
|
|
|
12,418 |
|
|
|
363 |
|
|
Other expense (income) (1) |
|
160 |
|
|
|
131 |
|
|
|
4,450 |
|
|
|
47 |
|
|
Management fees (2) |
|
— |
|
|
|
533 |
|
|
|
209 |
|
|
|
1,486 |
|
|
Transaction related costs (3) |
|
2,600 |
|
|
|
3,212 |
|
|
|
34,913 |
|
|
|
4,223 |
|
|
Other non-recurring and one-time fees (4) |
|
3,323 |
|
|
|
964 |
|
|
|
4,017 |
|
|
|
4,298 |
|
|
Aggregate adjustment for income taxes |
|
(881 |
) |
|
|
(1,782 |
) |
|
|
(14,133 |
) |
|
|
(5,370 |
) |
|
Adjusted net income (loss) |
$ |
1,610 |
|
|
$ |
(1,983 |
) |
|
$ |
4,478 |
|
|
$ |
(12,147 |
) |
|
Depreciation expense |
|
2,040 |
|
|
|
1,111 |
|
|
|
4,486 |
|
|
|
2,552 |
|
|
Interest expense |
|
3,488 |
|
|
|
5,828 |
|
|
|
11,777 |
|
|
|
21,275 |
|
|
Foreign currency (gain) loss, net |
|
(594 |
) |
|
|
(129 |
) |
|
|
69 |
|
|
|
(21 |
) |
|
Remaining benefit for income taxes |
$ |
1,944 |
|
|
$ |
(1,266 |
) |
|
$ |
11,891 |
|
|
$ |
(3,938 |
) |
|
Adjusted EBITDA |
$ |
8,488 |
|
|
$ |
3,561 |
|
|
$ |
32,701 |
|
|
$ |
7,721 |
|
|
Adjusted EBITDA margin |
|
10.9 |
% |
|
|
9.4 |
% |
|
|
12.6 |
% |
|
|
6.5 |
% |
__________________ |
||
(1) |
In connection with the consummation of the Business Combination, the Company repaid all long-term borrowings. For the year ended |
|
(2) |
Represents quarterly management fees paid to the former majority shareholder of HydraFacial based on a pre-determined formula. Following the Business Combination, these fees are no longer paid. |
|
(3) |
For the year ended |
|
(4) |
For the three months ended and year ended |
About the Business Combination
On
About The
The
Forward-Looking Statements
Certain statements made in this release are “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.
These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside The Beauty Health Company’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.
Important factors, among others, that may affect actual results or outcomes include the inability to recognize the anticipated benefits of the Business Combination; the inability to maintain the listing of The Beauty Health Company’s shares on NASDAQ; The Beauty Health Company’s ability to manage growth; The Beauty Health Company’s ability to execute its business plan; the timing of the launch of Syndeo and risks and uncertainties regarding market conditions around the launch of Syndeo; potential litigation involving The
The |
||||||||||||||||
Consolidated Statements of Operations |
||||||||||||||||
(in thousands except share and per share amounts) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
Three Months Ended |
|
Year Ended |
|||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||
|
|
|
|
|
|
|
|
|||||||||
Net sales |
$ |
77,889 |
|
|
$ |
37,880 |
|
|
$ |
260,086 |
|
|
$ |
119,092 |
|
|
Cost of sales |
|
21,128 |
|
|
|
14,843 |
|
|
|
78,259 |
|
|
|
51,893 |
|
|
Gross profit |
|
56,761 |
|
|
|
23,037 |
|
|
|
181,827 |
|
|
|
67,199 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|||||||||
Selling and marketing |
|
37,053 |
|
|
|
15,898 |
|
|
|
111,583 |
|
|
|
50,323 |
|
|
Research and development |
|
1,875 |
|
|
|
860 |
|
|
|
8,195 |
|
|
|
3,409 |
|
|
General and administrative |
|
25,045 |
|
|
|
10,990 |
|
|
|
98,688 |
|
|
|
30,649 |
|
|
Total operating expenses |
|
63,973 |
|
|
|
27,748 |
|
|
|
218,466 |
|
|
|
84,381 |
|
|
Loss from operations |
|
(7,212 |
) |
|
|
(4,711 |
) |
|
|
(36,639 |
) |
|
|
(17,182 |
) |
|
Other (income) expense: |
|
|
|
|
|
|
|
|||||||||
Interest expense, net |
|
3,488 |
|
|
|
5,828 |
|
|
|
11,777 |
|
|
|
21,275 |
|
|
Other expense, net |
|
160 |
|
|
|
131 |
|
|
|
4,450 |
|
|
|
47 |
|
|
Change in fair value of warrant liability |
|
5,982 |
|
|
|
— |
|
|
|
277,315 |
|
|
|
— |
|
|
Change in fair value of earn-out shares liability |
|
— |
|
|
|
— |
|
|
|
47,100 |
|
|
|
— |
|
|
Foreign currency (gain) loss, net |
|
(594 |
) |
|
|
(129 |
) |
|
|
69 |
|
|
|
(21 |
) |
|
Total other expense |
|
9,036 |
|
|
|
5,830 |
|
|
|
340,711 |
|
|
|
21,301 |
|
|
Loss before provision for income taxes |
|
(16,248 |
) |
|
|
(10,541 |
) |
|
|
(377,350 |
) |
|
|
(38,483 |
) |
|
Income tax expense (benefit) |
|
1,063 |
|
|
|
(3,048 |
) |
|
|
(2,242 |
) |
|
|
(9,308 |
) |
|
Net loss |
$ |
(17,311 |
) |
|
$ |
(7,493 |
) |
|
$ |
(375,108 |
) |
|
$ |
(29,175 |
) |
|
Net loss per share - basic and diluted |
$ |
(0.12 |
) |
|
$ |
(0.22 |
) |
|
$ |
(3.67 |
) |
|
$ |
(0.85 |
) |
|
Weighted average common shares outstanding - basic and diluted |
|
146,314,776 |
|
|
|
35,551,196 |
|
|
|
102,114,883 |
|
|
|
34,293,271 |
|
The |
||||||||
Consolidated Balance Sheets |
||||||||
(in thousands) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|||||
Assets |
|
|
|
|||||
Current assets: |
|
|
|
|||||
Cash and cash equivalents |
$ |
901,886 |
|
|
$ |
9,486 |
|
|
Accounts receivable |
|
46,824 |
|
|
|
18,576 |
|
|
Prepaid expenses and other current assets |
|
12,322 |
|
|
|
3,220 |
|
|
Income tax receivable |
|
4,599 |
|
|
|
4,611 |
|
|
Inventories |
|
35,261 |
|
|
|
23,202 |
|
|
Total current assets |
|
1,000,892 |
|
|
|
59,095 |
|
|
Property and equipment, net |
|
16,183 |
|
|
|
9,191 |
|
|
Right of use asset |
|
14,992 |
|
|
|
— |
|
|
Intangible assets, net |
|
56,010 |
|
|
|
50,935 |
|
|
|
|
123,694 |
|
|
|
98,531 |
|
|
Deferred tax assets, net |
|
330 |
|
|
|
270 |
|
|
Other assets |
|
6,705 |
|
|
|
4,813 |
|
|
Total assets |
$ |
1,218,806 |
|
|
$ |
222,835 |
|
|
Liabilities and Shareholders’ (Deficit) Equity |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Accounts payable |
$ |
29,049 |
|
|
$ |
18,485 |
|
|
Accrued payroll related expenses |
|
28,662 |
|
|
|
9,475 |
|
|
Other accrued expenses |
|
14,722 |
|
|
|
2,458 |
|
|
Lease liabilities |
|
3,712 |
|
|
|
— |
|
|
Income tax payable |
|
292 |
|
|
|
— |
|
|
Current portion of long-term debt due to related parties |
|
— |
|
|
|
512 |
|
|
Total current liabilities |
|
76,437 |
|
|
|
30,930 |
|
|
Other long-term liabilities |
|
— |
|
|
|
1,854 |
|
|
Lease liabilities, non current |
|
12,781 |
|
|
|
— |
|
|
Long-term debt due to related parties, net of current portion |
|
— |
|
|
|
216,024 |
|
|
Deferred tax liabilities, net |
|
3,561 |
|
|
|
3,987 |
|
|
Warrant liabilities |
|
93,816 |
|
|
|
— |
|
|
Convertible senior notes, net |
|
729,914 |
|
|
|
— |
|
|
Total liabilities |
|
916,509 |
|
|
|
252,795 |
|
|
Stockholders’ (deficit) equity: |
|
|
|
|||||
Common stock |
|
16 |
|
|
|
4 |
|
|
Preferred stock |
|
— |
|
|
|
— |
|
|
Additional paid-in capital |
|
722,250 |
|
|
|
13,952 |
|
|
Note receivable from stockholder |
|
— |
|
|
|
(554 |
) |
|
Accumulated other comprehensive (loss) income |
|
(1,257 |
) |
|
|
242 |
|
|
Accumulated deficit |
|
(418,712 |
) |
|
|
(43,604 |
) |
|
Total stockholders’ equity (deficit) |
|
302,297 |
|
|
|
(29,960 |
) |
|
Total liabilities and stockholders’ equity (deficit) |
$ |
1,218,806 |
|
|
$ |
222,835 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220222006116/en/
Investors:
BeautyHealthIR@icrinc.com
Press:
BeautyHealth@icrinc.com
Source: The
FAQ
What are BeautyHealth's projected sales for FY 2022?
What was BeautyHealth's net loss for Q4 2021?
How did BeautyHealth's adjusted EBITDA perform in Q4 2021?
What was the company's cash position at the end of 2021?