The Beauty Health Company Reports Strong First Quarter 2022 Financial Results
Beauty Health Company (NASDAQ:SKIN) reported strong Q1 2022 financial results, with net sales reaching $75.4 million, a 58.6% increase from Q1 2021. Key drivers included the successful launch of the Syndeo delivery system, contributing $41.6 million in sales. Gross profit stood at $51.9 million with a gross margin of 68.9%.
Despite a net income of $32.5 million, the company incurred an adjusted net loss of $8.5 million. Management raised fiscal 2022 guidance for net sales to $330 million–$340 million.
- Net sales increased by 58.6% to $75.4 million in Q1 2022.
- Successful launch of Syndeo contributed $41.6 million in delivery system sales.
- Gross margin improved to 68.9% from 66.8% year-over-year.
- Raised fiscal 2022 net sales guidance to $330-$340 million.
- Adjusted net loss of $8.5 million in Q1 2022 compared to a net loss of $0.1 million in Q1 2021.
- Operating loss of $13 million in Q1 2022, down from an operating income of $2.4 million in Q1 2021.
- Increased selling, general, and administrative expenses to $62.7 million in Q1 2022.
Increases 2022 Financial Guidance
“I am proud to report that BeautyHealth delivered another outstanding quarter of growth as we continued to execute on our Master Plan. We achieved record delivery system sales, supported by the highly successful launch of Syndeo, our next generation digitally connected HydraFacial delivery system,” said Andrew Stanleick, BeautyHealth’s President and Chief Executive Officer. “We are driving continued strong demand as consumers seek the confidence boosting glow we’re famous for. As a result of the momentum we’re seeing across the business and the strong rollout of Syndeo, I am pleased to announce that we are raising our full-year guidance for net sales. We remain confident in the long-term outlook for the beauty health category, and we look forward to carrying this momentum into the rest of the year as we continue to build upon our impressive platform.”
Key Operational and Business Metrics
|
Three Months Ended |
||||||
Unaudited (dollars in millions) |
2022 |
|
2021 |
||||
Delivery Systems net sales |
$ |
41.6 |
|
|
$ |
25.7 |
|
Consumables net sales |
$ |
33.8 |
|
|
$ |
21.9 |
|
Total net sales |
$ |
75.4 |
|
|
$ |
47.5 |
|
Gross profit |
$ |
51.9 |
|
|
$ |
31.7 |
|
Gross margin |
|
68.9 |
% |
|
|
66.8 |
% |
Net income (loss) |
$ |
32.5 |
|
|
$ |
(3.3 |
) |
Adjusted net income (loss)* |
$ |
(8.5 |
) |
|
$ |
(0.1 |
) |
Adjusted EBITDA* |
$ |
2.2 |
|
|
$ |
7.0 |
|
Adjusted EBITDA margin* |
|
2.9 |
% |
|
|
14.8 |
% |
Adjusted gross profit* |
$ |
54.8 |
|
|
$ |
34.3 |
|
Adjusted gross margin* |
|
72.7 |
% |
|
|
72.2 |
% |
*See "Non-GAAP Financial Measures" below. |
First Quarter 2022 Summary
-
Net sales of
increased$75.4 million 58.6% in Q1 2022 compared to in Q1 2021, driven by continued strong demand around the world, as well as the highly successful launch of Syndeo.$47.5 million -
Delivery Systems net sales increased to
in Q1 2022, compared to$41.6 million in Q1 2021. The Company sold 1,849 Delivery Systems during the quarter, including 258 trade-ups.$25.7 million -
Consumables net sales increased to
in Q1 2022, compared to$33.8 million in Q1 2021.$21.9 million -
Net sales in the
Americas region increased to in Q1 2022 compared to$44.6 million in Q1 2021 due to sales growth in the$31.3 million U.S. andMexico . The strength in theU.S. was driven by the launch of Syndeo and 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 Q1 2022 compared to$12.9 million in Q1 2021, driven by continued strength in$8.8 million Australia despite the partial offset by closures inChina due to COVID-19. -
Net sales in the EMEA region increased to
in Q1 2022 compared to$17.9 million in Q1 2021, due to strength in the$7.5 million United Kingdom ,Germany andFrance .
-
Delivery Systems net sales increased to
-
Gross margin was
68.9% in Q1 2022 compared to66.8% in Q1 2021, and adjusted gross margin was72.7% in Q1 2022 compared to72.2% in Q1 2021. 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 through 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 Q1 2022 compared to$62.7 million in Q1 2021, primarily driven by increased investment in global personnel, stock-based compensation and advertising expenses. The Company incurred$27.9 million non-cash stock compensation in addition to$7.0 million of public company costs which include directors' and officers' liability insurance, Sarbanes-Oxley Act compliance and additional audit and tax and other professional service fees in Q1 2022.$2.0 million -
Operating loss was
in Q1 2022 compared to an operating income of$13.0 million in Q1 2021, reflecting continued investment in global infrastructure, people, and systems to fuel future growth. The operating loss in Q1 2022 includes non-cash stock-based compensation expense of$2.4 million and other transaction and one-time costs of$7.0 million .$2.4 million -
Net income was
in Q1 2022 compared to a net loss of$32.5 million in Q1 2021, and adjusted net loss was$3.3 million in Q1 2022 compared to$8.5 million in Q1 2021.$0.1 million -
Adjusted EBITDA is an important profitability measure that the Company uses to manage its business internally. In Q1 2022, adjusted EBITDA was
compared to adjusted EBITDA of$2.2 million in Q1 2021. Adjusted EBITDA was impacted by targeted investments across the business, including launch costs associated with Syndeo and international hiring efforts.$7.0 million
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents were
Warrants and Shares Outstanding
The Company has approximately 7 million private placement warrants and approximately 151 million shares of Class A common stock outstanding as of
Outlook
BeautyHealth increased its fiscal 2022 guidance, and now expects net sales in the range of
For fiscal 2022, BeautyHealth also continues to expect 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 |
||||||
Unaudited (in thousands) |
2022 |
|
2021 |
||||
Net sales |
$ |
75,415 |
|
|
$ |
47,542 |
|
Cost of sales |
|
23,478 |
|
|
|
15,802 |
|
Gross profit |
$ |
51,937 |
|
|
$ |
31,740 |
|
Gross margin |
|
68.9 |
% |
|
|
66.8 |
% |
Adjusted to exclude the following: |
|
|
|
||||
Stock-based compensation expense |
$ |
226 |
|
|
$ |
— |
|
Depreciation and amortization expense |
|
2,655 |
|
|
|
2,591 |
|
Adjusted gross profit |
$ |
54,818 |
|
|
$ |
34,331 |
|
Adjusted gross margin |
|
72.7 |
% |
|
|
72.2 |
% |
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 income (loss) to adjusted net income (loss) and adjusted EBITDA for the periods presented:
|
Three months ended |
||||||
Unaudited (in thousands) |
2022 |
|
2021 |
||||
Net income (loss) |
$ |
32,507 |
|
|
$ |
(3,274 |
) |
Adjusted to exclude the following: |
|
|
|
||||
Change in FV of warrant liability |
|
(52,052 |
) |
|
|
— |
|
Amortization expense |
|
3,713 |
|
|
|
2,954 |
|
Stock-based compensation expense |
|
7,049 |
|
|
|
34 |
|
Other expense |
|
937 |
|
|
|
7 |
|
Management fees (1) |
|
— |
|
|
|
127 |
|
Transaction related costs (2) |
|
1,045 |
|
|
|
746 |
|
Other non-recurring and one-time fees (3) |
|
1,955 |
|
|
|
87 |
|
Aggregate adjustment for income taxes |
|
(3,626 |
) |
|
|
(763 |
) |
Adjusted net loss |
$ |
(8,472 |
) |
|
$ |
(82 |
) |
Depreciation expense |
|
1,416 |
|
|
|
690 |
|
Interest expense |
|
3,400 |
|
|
|
5,699 |
|
Foreign currency (gain) loss, net |
|
(368 |
) |
|
|
256 |
|
Remaining benefit for income taxes |
|
6,241 |
|
|
|
457 |
|
Adjusted EBITDA |
$ |
2,217 |
|
|
$ |
7,020 |
|
Adjusted EBITDA margin |
|
2.9 |
% |
|
|
14.8 |
% |
__________________
(1) |
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. |
||
(2) |
For the three months ended |
||
(3) |
For the three months 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 risks and uncertainties regarding market conditions around the continued rollout of Syndeo; potential litigation involving The
The Consolidated Statements of Operations (in thousands except share and per share amounts) (Unaudited) |
|||||||
|
Three months ended |
||||||
|
2022 |
|
2021 |
||||
|
|
|
|
||||
Net sales |
$ |
75,415 |
|
|
$ |
47,542 |
|
Cost of sales |
|
23,478 |
|
|
|
15,802 |
|
Gross profit |
|
51,937 |
|
|
|
31,740 |
|
Operating expenses: |
|
|
|
||||
Selling and marketing |
|
36,407 |
|
|
|
17,095 |
|
Research and development |
|
2,230 |
|
|
|
1,452 |
|
General and administrative |
|
26,261 |
|
|
|
10,811 |
|
Total operating expenses |
|
64,898 |
|
|
|
29,358 |
|
Loss from operations |
|
(12,961 |
) |
|
|
2,382 |
|
Other (income) expense: |
|
|
|
||||
Interest expense, net |
|
3,400 |
|
|
|
5,699 |
|
Other expense, net |
|
937 |
|
|
|
7 |
|
Change in fair value of warrant liability |
|
(52,052 |
) |
|
|
— |
|
Foreign currency (gain) loss, net |
|
(368 |
) |
|
|
256 |
|
Total other expense |
|
(48,083 |
) |
|
|
5,962 |
|
Loss before provision for income taxes |
|
35,122 |
|
|
|
(3,580 |
) |
Income tax expense (benefit) |
|
2,615 |
|
|
|
(306 |
) |
Net income (loss) |
$ |
32,507 |
|
|
$ |
(3,274 |
) |
|
|
|
|
||||
Net income (loss) per share |
|
|
|
||||
Basic |
$ |
0.22 |
|
|
$ |
(0.09 |
) |
Diluted |
$ |
(0.13 |
) |
|
$ |
(0.09 |
) |
Weighted average common shares outstanding |
|
|
|
||||
Basic |
|
150,598,105 |
|
|
|
35,501,743 |
|
Diluted |
|
152,711,698 |
|
|
|
35,501,743 |
|
The Consolidated Balance Sheets (in thousands) (Unaudited) |
|||||||
|
|
|
|
||||
|
|
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
859,237 |
|
|
$ |
901,886 |
|
Accounts receivable |
|
60,769 |
|
|
|
46,824 |
|
Prepaid expenses and other current assets |
|
13,554 |
|
|
|
12,322 |
|
Income tax receivable |
|
1,801 |
|
|
|
4,599 |
|
Inventories |
|
47,033 |
|
|
|
35,261 |
|
Total current assets |
|
982,394 |
|
|
|
1,000,892 |
|
Property and equipment, net |
|
17,859 |
|
|
|
16,183 |
|
Right of use asset |
|
14,251 |
|
|
|
14,992 |
|
Intangible assets, net |
|
52,544 |
|
|
|
56,010 |
|
|
|
123,774 |
|
|
|
123,694 |
|
Deferred tax assets, net |
|
330 |
|
|
|
330 |
|
Other assets |
|
8,026 |
|
|
|
6,705 |
|
Total assets |
$ |
1,199,178 |
|
|
$ |
1,218,806 |
|
Liabilities and Shareholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
26,962 |
|
|
$ |
29,049 |
|
Accrued payroll related expenses |
|
21,383 |
|
|
|
28,662 |
|
Other accrued expenses |
|
12,419 |
|
|
|
14,722 |
|
Lease liabilities |
|
3,969 |
|
|
|
3,712 |
|
Income tax payable |
|
4,197 |
|
|
|
292 |
|
Total current liabilities |
|
68,930 |
|
|
|
76,437 |
|
Other long-term liabilities |
|
11 |
|
|
|
— |
|
Lease liabilities, non current |
|
12,032 |
|
|
|
12,781 |
|
Long-term debt due to related parties, net of current portion |
|
— |
|
|
|
— |
|
Deferred tax liabilities, net |
|
3,761 |
|
|
|
3,561 |
|
Warrant liabilities |
|
41,765 |
|
|
|
93,816 |
|
Convertible senior notes, net |
|
730,971 |
|
|
|
729,914 |
|
Total liabilities |
|
857,470 |
|
|
|
916,509 |
|
Stockholders’ (deficit) equity: |
|
|
|
||||
Common stock |
|
16 |
|
|
|
16 |
|
Preferred stock |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
729,299 |
|
|
|
722,250 |
|
Note receivable from stockholder |
|
— |
|
|
|
— |
|
Accumulated other comprehensive (loss) income |
|
(1,402 |
) |
|
|
(1,257 |
) |
Accumulated deficit |
|
(386,205 |
) |
|
|
(418,712 |
) |
Total stockholders’ equity |
|
341,708 |
|
|
|
302,297 |
|
Total liabilities and stockholders’ equity |
$ |
1,199,178 |
|
|
$ |
1,218,806 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220510005629/en/
Investors:
Email: BeautyHealthIR@the193.com
Press:
Email: BeautyHealth@the193.com
Source: The
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