Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Beauty Health Co (SKIN, Financial) has implemented a quality improvement program for its Syndeo system, resulting in improved performance and customer satisfaction.
- The company has completed its global Syndeo replacement program, ensuring all providers operate on the latest 3.0 standard device.
- Consumable sales grew by 6.7% to $55.4 million, indicating strong demand for Hydrafacial products.
- The company has significantly reduced operating expenses by $24 million in the first half of 2024 compared to the previous year.
- The Beauty Health Co (SKIN) is launching a new Hydrafacial booster supported by extensive clinical claims, with plans for a skincare line in 2025.
Negative Points
- Second quarter revenue was below guidance at $91 million, representing a 23% year-over-year decline.
- The company experienced a 46% decline in global equipment sales, contributing to the overall revenue drop.
- Adjusted EBITDA showed a loss of $5.2 million, compared to a $12.4 million gain in the second quarter of 2023.
- The company incurred unanticipated inventory-related write-offs totaling approximately $17 million.
- The macroeconomic environment, including interest rate pressures and financing challenges, has negatively impacted sales, particularly outside the United States.
Q & A Highlights
Q: Can you provide details on the headwinds by region, particularly regarding provider sentiment around the reliability of the newest Syndeo machine?
A: Marla Beck, CEO: Our quality improvement program for Syndeo is showing significant results, with positive feedback from providers. The return rate of new Syndeo 3.0 devices is much better than before. Provider sentiment remains strong, with 90% of US providers maintaining or increasing revenue from Hydrafacial treatments over the past year.
Q: What gives you confidence in a strong rebound in the fourth quarter despite a weaker market environment?
A: Michael Monahan, CFO: The largest pressure is from outside the US. We are introducing new financing programs to lower entry barriers and opening up our product portfolio with lower-priced options like Elite and Allegro. These actions should gain traction in the second half of the year.
Q: Can you comment on the trends in consumables demand and the health of that segment?
A: Marla Beck, CEO: As our installed base grows, overall consumable sales are increasing. While sales per device were down slightly, core consumables are strong. The decline is mainly due to a lack of new launches this year, particularly in boosters.
Q: Could you provide more detail on the operational changes implemented by the new Chief Supply Chain and Operations Officer?
A: Marla Beck, CEO: Sheri has focused on restoring trust in Syndeo and driving quality improvements. She is now evaluating our global manufacturing and supply chain strategy, including inventory management and manufacturing capacity, to improve gross margins.
Q: Why is there a shift towards legacy systems like Elite and Allegro despite completing the Syndeo replacement program?
A: Marla Beck, CEO: The shift is due to provider requests for more affordable devices. The cost of Syndeo is higher, and reintroducing Elite and Allegro makes Hydrafacial devices more accessible, especially given current macroeconomic conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
