What changed in this filing

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Item 1. Business

2023-03-10 compared with 2022-03-11 · 57 added, 33 removed, 375 unchanged (19% of the section changed)

Unless otherwise indicated or the context otherwise requires, references in this Annual Report on Form 10-K to the “Company,” “Elite Body Sculpture,” “we,” “us” and “our” refer to, (i) EBS Intermediate Parent LLC and its consolidated subsidiaries and the Professional Associations (as defined hereinafter) immediately prior to the Reorganization (as defined in the prospectus filed in connection with our initial public offering (“IPO”)) and the consummation of our IPO and (ii) AirSculpt Technologies, Inc.

and its consolidated subsidiaries, including EBS Intermediate Parent LLC, and the Professional Associations immediately following the Reorganization and the consummation of our IPO.

and its consolidated subsidiaries and the Professional Associations (as defined hereinafter).

Our Company is an experienced, fast-growing national provider of body contouring procedures delivering a premium consumer experience under our brand Elite Body Sculpture.

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Our motivation to provide the best body contouring outcomes for our patients fuels our innovation.

Further, the Company introduced AirSculpt ® + and AirSculpt ® Smooth in fiscal year 2022.

AirSculpt ® + is a new procedure that permanently removes fat and tightens the skin with unparalleled precision and finesse.

Patients first target any area containing excess fat with AirSculpt ® , then have that same area treated with a new technology that instantly tightens skin and improves laxity.

This advanced, minimally invasive treatment combines helium gas and radiofrequency energy to create a plasma specially equipped to correct sagging skin and restore a youthful, natural appearance.

AirSculpt ® Smooth delivers effective and long-lasting cellulite reduction with one single treatment.

AirSculpt ® Smooth uses an advanced cellulite removal tool, which is FDA-cleared to target cellulite on the buttocks and thighs.

Results appear almost instantly, and because AirSculpt ® Smooth is heat-free, it can be used on any skin type.

Our treatment results—highlighted by a vast gallery of “before and after” photos across gender, body shape and treatment areas—are a powerful tool to build our brand through digital marketing on our website and social media accounts.

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We utilize celebrity and influencer endorsements, as well as word-of-mouth referrals, to drive new patient acquisition.

We deliver our body contouring procedures through a growing, nationwide footprint of 19 centers across 15 states as of March 10, 2022.

We deliver our body contouring procedures through a growing, nationwide footprint of 22 centers across 18 states and Canada as of March 10, 2023.

Our centers, located in metropolitan and suburban areas, offer a premium patient experience and luxurious, spa-like atmosphere.

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Additionally, we require 100% private pay upfront and, therefore, face no reimbursement risk.

Under the stewardship of our founder and Chief Executive Officer, Dr.

Aaron Rollins, our non-executive chairman, Adam Feinstein, and the other management team members, we have built a results-driven culture.

Under the stewardship of our founder and Executive Chairman of our board of directors, Dr.

Aaron Rollins, our director, Adam Feinstein, and the other management team members, we have built a results-driven culture.

For the year ended December 31, 2022, we generated $168.8 million of revenue compared to $133.3 million for the year ended December 31, 2021, which represents approximately 26.6% growth.

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Our market includes both surgical procedures, such as liposuction and abdominoplasty procedures, as well as non-surgical procedures, such as cryolipolysis, ultrasound, laser lipolysis and other non-surgical body fat reduction procedures.

The global market for body fat reduction procedures was estimated to be $9.8 billion in 2020 by Global Market Insights.

The North American market for body fat reduction procedures was estimated to be $2.6 billion in 2020, growing at approximately a 6.5% compound annual growth rate (“CAGR”) since 2015 and expected to grow at a 9.8% CAGR through 2026, according to Global Market Insights.

The North American market for non-surgical body fat reduction procedures was estimated to be $434 million in 2020, growing at approximately a 13.5% CAGR since 2015 and expected to grow at a 16.6% CAGR through 2026, according to Global Market Insights.

The United States market for body fat reduction procedures was estimated to be $5.2 billion in 2021 by LifeSci Consulting, growing at approximately a 8.8% compound annual growth rate (“CAGR”) since 2017 and expected to grow at a 10% CAGR through 2026, according to Global Market Insights.

The global market for body fat reduction procedures was estimated to be in excess of $10 billion in 2021.

Our Growth Drivers

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As of December 31, 2022, our patent portfolio is comprised of two issued U.S.

utility patents and three pending U.S.

utility patents and one pending U.S.

utility patent applications, each of which we own directly.

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• Power BBL ® ( “ Brazilian Butt Lift ” ) , which removes a patient’s unwanted fat from areas such as tummy or thighs and transfers it to the buttocks, giving a flatter stomach and slimmer waist, while shaping the buttocks and tightening the skin;

• Up a Cup™ Breast Augmentation , which removes a patient’s natural fat, typically from the tummy or thighs, and transfers it to the breasts to increase size by about one cup.

• Up a Cup TM Breast Augmentation , which removes a patient’s natural fat, typically from the tummy or thighs, and transfers it to the breasts to increase size by about one cup.

AirSculpt ® enhanced breasts are all natural.

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In 2020, we started performing and trademarked the Hip Flip ® procedure.

Since then, we have continued to innovate and in 2020 we introduced CankCure™, a procedure that removes fat and contours the calf and ankle area.

Since then, we have continued to innovate and in 2020 we introduced the CankCure ® procedure which removes fat and contours the calf and ankle area.

In 2022, we introduced AirSculpt ® + and AirSculpt ® Smooth, as discussed above.

We are only in the beginning stages of innovation and have much more to introduce to the body contouring field.

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As AirSculpt ® is only available for use at Elite Body Sculpture centers, we protect our brand and are able to retain high quality surgeons.

National Footprint Fueled by Attractive Unit Economics

We have a growing national footprint consisting of 19 centers across 15 states as of March 10, 2022.

National and International Footprint Fueled by Attractive Unit Economics

We have a growing national footprint consisting of 22 centers across 18 states and Canada as of March 10, 2023.

Further, we opened our newest center in Toronto, Canada in December 2022, which is the Company's first international facility.

Our centers are located primarily in metropolitan cities near retail shops that our patients frequent and popular areas.

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We are led by an experienced team united by our vision to redefine body contouring and a belief in our future growth potential.

Our founder and Chief Executive Officer, Dr.

Our founder and Executive Chairman of our board of directors, Dr.

Aaron Rollins, is a celebrity cosmetic surgeon that is recognized as a leader in body sculpting and has been featured across digital, print and TV.

Rollins has been a licensed cosmetic surgeon since 2004.

In addition, our non-executive chairman, Adam Feinstein, who founded Vesey Street Capital Partners, L.L.C., our private equity sponsor (“Sponsor”), has 25 years of experience working with many of the leading healthcare services companies, including service as a director of public and private healthcare company boards.

They have partnered with our Chief Operating Officer and President, Ron Zelhof, and our Chief Financial Officer, Dennis Dean, who together have over 50 years of experience in the health care industry, including at Envision Healthcare, Healthsouth, and Surgery Partners.

In addition, our director, Adam Feinstein, who founded Vesey Street Capital Partners, L.L.C., our private equity sponsor (“Sponsor”), has 25 years of experience working with many of the leading healthcare services companies, including service as a director of public and private healthcare company boards.

They have partnered with our Chief Financial Officer, Dennis Dean, who has over 20 years of experience in the health care industry, including at Envision Healthcare and Surgery Partners.

Further, AirSculpt founder and former Chief Executive Officer, Dr.

Aaron Rollins, recently became Executive Chairman of the board of directors.

Rollins is primarily focused on leading the Company’s overall vision and providing strategic guidance.

In addition, the Company recently appointed Todd Magazine as Chief Executive Officer.

Magazine assumed CEO responsibilities at the end of January 2023.

Magazine brings to AirSculpt more than 30 years of experience in retail operations and brand-building.

For the past 10 years, he has been the CEO of Blink Fitness, a subsidiary of Equinox, where he led the company of over 1,500 employees from four locations to over 100 and increased membership 25x.

Previously, he was North American President of Pfizer's OTC business, held president's roles for Gatorade and Quaker Oats at PepsiCo, and led various marketing teams at Procter & Gamble.

We have built a strong and diverse team across our marketing and operations functions that is highly scalable and capable of supporting future growth.

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◦ Continue to add new procedure rooms:

Our centers typically have one to two procedure rooms.

We have the opportunity to continue to both add procedure rooms and adapt our schedule from primarily open six days to seven days a week in order to meet the strong demand from our patients for our services.

Our centers typically have two procedure rooms.

We have the opportunity to continue to both add procedure rooms and adapt our schedule from primarily open six days

to seven days a week in order to meet the strong demand from our patients for our services.

Through referral and outreach, we plan to continue recruiting surgeons to operate on our growing number of patients and staff to conduct consultations and organize appointments.

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Management uses a disciplined approach to choose potential markets, opening centers at minimal cost located near premium retail shops that our patients frequent.

there is a significant domestic growth opportunity and will continue to opportunistically evaluate new center openings and target opening three to four centers each year.

We believe there is a significant domestic growth opportunity and will continue to opportunistically evaluate new center openings and target opening three to four centers each year.

• Expand Internationally:

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We believe there is significant opportunity to open new centers in densely populated, affluent international metropolitan regions.

We opened our first international facility in Toronto, Canada in December 2022.

Our Technique, Training and Equipment

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A thin cannula is inserted in each entryway, at which point a local numbing solution is dispersed subdermally to the target areas.

Laser Ablation

Laser ablation, which is the use of the heat from

laser light to destroy unwanted cells, is then applied

to soften the fat cells for extraction.

As a byproduct

of the laser’s heat, the skin in the treated area is

tightened for post-surgery effects.

Fat Removal Process

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For the year ended December 31, 2022, our total advertising costs were $20.6 million, split 85% digital advertising and 15% other advertising platforms.

Selling expenses consist of advertising spend for social, digital and traditional marketing and sales and marketing personnel.

Selling expenses consist of advertising costs for social, digital and traditional marketing and sales and marketing personnel.

Our total selling expenses for 2022 were approximately $22.4 million, or approximately 13.3% of revenue.

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Rather than making an in-office appointment, our patients are able to speak with our surgeons and qualified patient care consultants in the convenience of their own home or office typically within 24-72 hours.

We encourage a strong relationship between our patients and surgeons, from initial consultation, through procedure, to after treatment.

We encourage a strong relationship between our patients and

surgeons, from initial consultation, through procedure, to after treatment.

Nearly all of our patient-facing consultants are former patients and can speak to their personal Elite experiences.

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We do not face any risk in default of payment under that financing arrangement, which is solely between the patient and third party financing vendor.

In 2021, approximately 42% of our revenue involved the patient securing third-party financing.

In 2022, approximately 43% of our cases involved the patient securing third-party financing.

Our Intellectual Property

As of December 31, 2022, our patent portfolio is comprised of two issued U.S.

utility patents and three pending U.S.

utility patents and one pending U.S.

utility patent applications, each of which we own directly.

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We expect our issued patents to expire in 2033 or later.

AirSculpt ® , No Needle, No Scalpel, No Stitches ® , If You Can Pinch It, We Can Take It ® , Power BBL ® , Tiny Tuck ® , 48 Hour Six Pack ® , AirSculpt is for Everybody ® , Cure for the Hip Dip ® , Hip Flip ™ , CankCure ™ , and our logo are U.S.

AirSculpt ® , AirSculpt+ ™ , AirSculpt Plus ™ , AirSculpt Smooth ™ , AirSculpt Slim ™ , No Needle, No Scalpel, No Stitches ® , If You Can Pinch It, We Can Take It ® , Power BBL ® , Tiny Tuck ® , 48 Hour Six Pack ® , AirSculpt is for Everybody ® , Cure for the Hip Dip ® , Hip Flip ® , CankCure ® , Next Generation Of Body Contouring, and our logo are U.S.

registered trademarks or trademarks for which registration is pending in the United States.

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In addition, these requirements are subject to broad interpretation and enforcement by state regulators.

Thus, regulatory authorities or other persons, including the Professional Associations’ contracted surgeons, may assert that, notwithstanding the careful structuring of our management arrangements, that we are engaged in the corporate practice of medicine or that the fees earned by us under our contractual arrangements with the Professional Associations constitute unlawful fee splitting.

unlawful fee splitting.

In such event, failure to comply could lead to adverse judicial or administrative action against us and/or our surgeons, civil, criminal or administrative penalties, receipt of cease and desist orders from state regulators, loss of provider licenses, the need to make changes to the terms of engagement with the Professional Associations (or their terms of engagement with their contracted surgeons), in each case that interfere with our business, our profitability and may have other materially adverse consequences.

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None of our employees is represented by a collective bargaining agreement.

Additional Information

The Company was founded by Dr.

Rollins in 2012 and reorganized in 2018 as part of the acquisition by our Sponsor of a majority stake in the company prior to the IPO.

AirSculpt Technologies, Inc.

was incorporated in Delaware on June 30, 2021 and completed an IPO on October 28, 2021.

Our website address is www.elitebodysculpture.com and our investor relations website is located at https://investors.elitebodysculpture.com .

The information posted on our website is not incorporated into this Annual Report.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) are available free of charge on our investor relations website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S.

Securities and Exchange Commission (“SEC”).

Risk Factor Summary

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Risks Related to Our Business

• Macroeconomic trends including inflation and rising interest rates may adversely affect our financial condition and results of operations.

• We have a limited operating history and our past results may not be indicative of our future performance.

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• We may fail to open and operate new centers in a timely and cost-effective manner.

• We may not be able to successfully expand in markets outside of North America.

• We may not be able to successfully continue to expand in markets outside of North America.

• We may not be able to compete or achieve significant market penetration.

• Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy resulting from the ongoing military conflict between Russia and Ukraine.

• Changes in laws and regulations related to the internet, perceptions toward the use of social media and changes in internet infrastructure itself may diminish our ability to drive new customer acquisition.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business