skin-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________.

Commission File Number: 001-39565

The Beauty Health Company

(Exact name of registrant as specified in its charter)


Delaware						85-1908962
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


2165 Spring Street Long Beach, CA 90806						(800) 603-4996
(Address of principal executive offices, including zip code)						Registrant's telephone number, including area code


N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

SKIN

The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 6, 2024, there were 124,020,249 shares of Class A Common Stock, par value $0.0001 per share issued and outstanding.

THE BEAUTY HEALTH COMPANY

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2024

TABLE OF CONTENTS


		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	34
SIGNATURES

PART I— FINANCIAL INFORMATION

Item 1. Financial Statements.

THE BEAUTY HEALTH COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share amounts)

(Unaudited)


	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	349,544	$	523,025
Accounts receivable, net of allowances for estimated credit losses of $8,257 and $6,604 at June 30, 2024 and December 31, 2023, respectively	41,409		54,697
Inventories	77,143		91,321
Income tax receivable	401		332
Prepaid expenses and other current assets	21,129		28,877
Total current assets	489,626		698,252
Property and equipment, net	9,718		14,226
Right-of-use assets, net	14,942		12,120
Intangible assets, net	54,161		62,123
Goodwill	124,822		125,818
Deferred income tax assets, net	3,035		531
Other assets	15,529		16,043
TOTAL ASSETS	$	711,833	$	929,113
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	26,686	$	44,768
Accrued payroll-related expenses	17,146		22,028
Lease liabilities, current	4,278		4,598
Income tax payable	2,360		2,759
Syndeo Program reserves	912		21,009
Other accrued expenses	24,044		19,846
Total current liabilities	75,426		115,008
Lease liabilities, non-current	12,704		9,319
Deferred income tax liabilities, net	1,064		702
Warrant liabilities	976		3,555
Convertible senior notes, net	550,625		738,372
Other long-term liabilities	1,849		2,767
Total liabilities	642,644		869,723
Commitments (Note 10)
Stockholders’ equity:
Class A Common Stock, $0.0001 par value; 320,000,000 shares authorized; 123,993,785 and 122,899,002 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	12		12
Additional paid-in capital	553,420		541,281
Accumulated other comprehensive loss	(4,899)		(3,036)
Accumulated deficit	(479,344)		(478,867)
Total stockholders’ equity	69,189		59,390
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	711,833	$	929,113

The accompanying notes are an integral part of these unaudited financial statements.

THE BEAUTY HEALTH COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except for share and per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net sales	$	90,594	$	117,479	$	171,997	$	203,757
Cost of sales	49,654		49,603		82,696		81,777
Gross profit	40,940		67,876		89,301		121,980
Operating expenses:
Selling and marketing	30,482		43,041		64,166		81,740
Research and development	1,159		2,881		3,966		5,217
General and administrative	31,410		35,100		60,271		65,479
Total operating expenses	63,051		81,022		128,403		152,436
Loss from operations	(22,111)		(13,146)		(39,102)		(30,456)
Interest expense	2,452		3,429		5,481		6,846
Interest income	(4,194)		(5,717)		(9,550)		(10,032)
Other income, net	(17,319)		(47)		(33,406)		(465)
Change in fair value of warrant liabilities	(4,043)		(11,585)		(2,579)		(2,509)

Foreign currency transaction loss (gain), net	1,144		(397)		2,441		(1,546)
(Loss) income before provision for income taxes	(151)		1,171		(1,489)		(22,750)
Income tax benefit	(353)		(2,193)		(1,012)		(5,855)
Net income (loss)	$	202	$	3,364	(477)		(16,895)
Comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(816)		(367)		(1,863)		521
Comprehensive (loss) income	$	(614)	$	2,997	$	(2,340)	$	(16,374)
Net income (loss) per share
Basic	$	0.00	$	0.03	$	0.00	$	(0.13)
Diluted	$	(0.10)	$	0.03	$	(0.20)	$	(0.13)
Weighted average common shares outstanding
Basic	123,718,797		132,716,024		123,417,353		132,569,209
Diluted	141,927,750		132,716,024		143,200,221		132,569,209

The accompanying notes are an integral part of these unaudited financial statements.

THE BEAUTY HEALTH COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except for share amounts)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount
BALANCE, December 31, 2022	132,214,695	$	14	$	550,320	$	(4,530)	$	(378,751)	$	167,053
Net loss	—	—		—		—		(20,259)		(20,259)
Issuance of Common Stock pursuant to equity compensation plan	473,049	—		—		—		—		—
Shares withheld for tax withholdings on vested stock awards	(170,415)	—		(2,195)		—

SEC Form 10-Q filed by The Beauty Health Company