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Beauty Health Co (SKIN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales were $83.5M and adjusted EBITDA $9.0M; management stated both exceeded the high end of guidance, with GAAP gross margin expanding to 62.7% and adjusted gross margin to 67.1% .
  • Sequentially, revenue rose vs Q3 ($78.8M → $83.5M) while adjusted EBITDA improved ($8.1M → $9.0M); year-over-year, revenue fell 13.8% principally on lower delivery systems sales, but margins expanded sharply due to lower inventory-related charges and mix shift to consumables .
  • FY25 guidance introduced: net sales $270–$300M and adjusted EBITDA $10–$25M; Q1 2025 guide: net sales $61–$66M and adjusted EBITDA ($6)–($4)M, reflecting ongoing pressure in devices and China distributor transition .
  • Near-term catalysts: margin trajectory, consumables innovation (Hydralock HA booster launch), footprint optimization (manufacturing consolidation and China to distributor model), and disciplined OpEx; watch device demand sensitivity to rates/financing and APAC/China transitions .

What Went Well and What Went Wrong

What Went Well

  • Material margin expansion: GAAP gross margin 62.7% (+1,550 bps YoY) and adjusted gross margin 67.1% (+1,250 bps YoY), driven by lower inventory charges and favorable consumables mix .
  • Consumables strength: Q4 consumables net sales grew to $56.7M (+8.7% YoY), with strong traction in Americas corporate accounts (~25% YoY) and successful Hydralock booster launch becoming the most successful branded booster to date .
  • Cost discipline and EBITDA: Q4 adjusted EBITDA $9.0M (vs $3.4M YoY), with full-year OpEx reduced by >$30M; management: “we reduced operating expenses by over $30 million” and delivered adjusted EBITDA above implied guidance .

What Went Wrong

  • Devices under pressure: Q4 delivery systems net sales fell to $26.8M (from $44.6M YoY) and units sold dropped to 1,087 (from 1,551), reflecting macro uncertainty, higher rates, and tougher international comps from the prior Syndeo launch .
  • APAC/China weakness: APAC Q4 net sales declined to $9.2M (from $18.7M YoY), with China down 56.4% YoY and a 70.2% drop in system sales, prompting a transition to a distributor model in 2025 .
  • Sequential gross margin headwinds expected into Q1: Management guided Q1 adjusted EBITDA negative ($6)–($4)M and flagged lower sequential margins vs Q3 due to higher overhead absorption at lower device production and selling through higher-cost Elite inventory .

Financial Results

Sequential Quarterly Comparison (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($USD Millions)$90.6 $78.8 $83.5
Gross Margin (%)45.2% 51.6% 62.7%
Adjusted Gross Margin (%)49.4% 69.5% 67.1%
Net Income (Loss) ($USD Millions)$0.2 $(18.3) $(10.3)
Adjusted EBITDA ($USD Millions)$(5.2) $8.1 $9.0

YoY Quarter Comparison (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Net Sales ($USD Millions)$96.8 $83.5
Gross Margin (%)47.2% 62.7%
Adjusted Gross Margin (%)54.6% 67.1%
Net Loss ($USD Millions)$(9.4) $(10.3)
Adjusted EBITDA ($USD Millions)$3.4 $9.0

EPS (Basic and Diluted)

MetricQ2 2024Q3 2024Q4 2024
Basic EPS ($)$0.00 $(0.15) $(0.08)
Diluted EPS ($)$(0.10) $(0.15) $(0.08)

Segment/Regional Breakdown (Q4 2024 vs Q4 2023)

RegionDelivery Systems Net Sales ($M) Q4'23 → Q4'24Consumables Net Sales ($M) Q4'23 → Q4'24Total Net Sales ($M) Q4'23 → Q4'24Delivery Systems Sold (Units) Q4'23 → Q4'24
Americas$21.8 → $16.8 $37.5 → $40.2 $59.4 → $57.1 758 → 649
APAC$13.0 → $2.8 $5.7 → $6.5 $18.7 → $9.2 450 → 140
EMEA$9.8 → $7.2 $9.0 → $10.0 $18.8 → $17.2 343 → 298
Total$44.6 → $26.8 $52.2 → $56.7 $96.8 → $83.5 1,551 → 1,087

KPIs and Operating Metrics

KPIQ2 2024Q3 2024Q4 2024
Total Delivery Systems Sold (Units)1,285 1,118 1,087
Active Install Base (Units)33,504 34,162 34,735
Average Selling Price (Devices) ($)$27,400 $24,699 $24,650
Consumables Net Sales ($M)$55.4 $51.2 $56.7
Adjusted EBITDA Margin (%)(5.7)% 10.2% 10.8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($M)Q1 2025N/A$61–$66 Initiated
Adjusted EBITDA ($M)Q1 2025N/A($6)–($4) Initiated
Net Sales ($M)FY 2025N/A$270–$300 Initiated
Adjusted EBITDA ($M)FY 2025N/A$10–$25 Initiated
Capital Expenditures ($M)FY 2025N/A$10–$15 Initiated

Notes:

  • No specific tax rate, OI&E, or segment guidance disclosed for FY25/Q1; management does not reconcile forward-looking adjusted EBITDA to GAAP due to forecasting difficulty .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Device demand & financingPressure from rates/credit; “good-better-best” device strategy introduced; ASP improved YoY on less discounting Devices still pressured; non‑Syndeo mix rising; ASP ~$24.7K; focus on ROI messaging (<9 months payback) Mixed
Consumables performanceGrowth; U.S./EMEA per-device consumables up; pipeline of boosters and back bar Q4 consumables +8.7% YoY; Hydralock booster success; aim to lift per-device consumables with more branded boosters Improving
Manufacturing & qualityConsolidating to Long Beach; exiting China manufacturing; quality program; Syndeo replacement Reshoring complete; capacity sufficient across devices; improved quality/company support Improving
China strategySoftness and execution gaps; evaluating go-to-market Transitioning to distributor model in 2025; expect FY impact $10–$15M revenue; target EBITDA neutrality in 2025 Transition
MarginsAdj. GM climbed to 69.5% in Q3; sequential margin pressure expected due to overhead absorption Q4 GAAP GM 62.7%, Adj. GM 67.1%; sequential margin down vs Q3 as flagged Mixed
Sales force & commercialCRO/CMO appointments; process/tech upgrade; analytics-led targeting New leaders in seat; refined structure; emphasis on provider utilization and device/consumables growth Improving
Product innovationHydralock HA booster launched; clinical pairing with lasers study in progress Hydralock sold out; expanded booster pipeline for 2025; exploring device roadmap Improving
Sephora partnershipEnding; modest revenue impact No Perk consumables revenue post‑2024; branding benefits acknowledged Neutral

Management Commentary

  • CEO: “We increased consumable sales, expanded our gross margins and continued to reduce our operating expenses, delivering $9 million of adjusted EBITDA in the quarter. We now have over 34,000 global delivery systems” .
  • CFO: “Adjusted EBITDA of $9 million was well above our implied guidance… Gross margin… sequentially improved from 51.6% in Q3 to 62.7% in Q4” .
  • CEO: “Hydrafacial is offering the ideal complement [to non‑ablative lasers]… taking steps to shift Hydrafacial from a great treatment to a true science‑backed clinically validated skincare leader” .
  • CFO: “We deployed $156 million of cash to repurchase $192 million of our convertible debt… inventory decreased to ~$69 million” .
  • CEO: “We diversified our device sales… good, better, best pricing… continued increase in non‑Syndeo unit sales… enhanced lead generation with advanced analytics” .

Q&A Highlights

  • Devices & macro: Providers are delaying purchases amid uncertainty and higher rates; company levers include lower price points and ROI sell‑through (<9 months payback) .
  • Consumables durability: Expect growth in Americas/EMEA; APAC lower as China transitions; per‑device spend pressured by mix down to base treatments, addressed via new boosters and marketing .
  • China distributor model: Expect $10–$15M FY revenue pressure; goal to move from slight loss to EBITDA neutral in 2025, with accretive long‑term profitability .
  • Margins & overhead: Sequential adjusted gross margin to decline from Q3 due to overhead absorption at lower device production and selling higher-cost Elite inventory .
  • Capacity & quality: Reshoring complete; sufficient capacity for all three devices; quality improvement and tech support resolving minor issues quickly .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS/revenue could not be retrieved during this session due to S&P Global request limits; therefore, direct comparison to consensus is unavailable. Values were intended to be retrieved from S&P Global.
  • Management emphasized exceeding the high end of internal guidance for Q4 and FY 2024, and introduced a conservative FY25 net sales range ($270–$300M) reflecting continued device demand pressure and China transition, which likely implies downward estimate revisions to devices offset by consumables/margin stability .

Key Takeaways for Investors

  • Margin story improving: Sustained adjusted gross margin in mid‑ to high‑60s and disciplined OpEx underpin near‑term profitability even as devices remain soft; monitor sequential margin cadence vs Q3’s peak .
  • Consumables resilience: Installed base expanded to 34,735 with consumables up +8.7% YoY in Q4; branded booster pipeline (Hydralock success) is a lever to lift per‑device spend in 2025 .
  • Devices remain cyclical: Rates/credit and international headwinds continue; “good‑better‑best” strategy and used Elite sell‑through can support unit adoption but pressure gross margin; ASP trends and discounting discipline are key variables .
  • Strategic footprint pivot: Manufacturing consolidation should aid quality/cost; China distributor model prioritizes profitability over top‑line; expect transitional revenue impact ($10–$15M FY) with medium‑term EBITDA benefits .
  • FY25 setup conservative: Guide brackets device weakness and APAC transition; near‑term trading likely keyed to margin delivery vs guide and consumables growth; watch Q1 seasonality and trade show spend dynamic in EBITDA .
  • Capital structure/liquidity: ~$370M cash at year‑end; 2024 repurchase of $192M convertible debt demonstrates proactive balance sheet management .
  • Narrative drivers: Clinical innovation (laser pairing study), provider utilization, and commercial leadership changes may re‑rate growth expectations if devices stabilize and consumables accelerate .

All information and figures cited above are sourced from BeautyHealth’s Q4 2024 8-K and press release, the Q4/Q3/Q2 earnings call transcripts, and related press releases: .