What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2025-03-04 compared with 2024-03-07 · 320 added, 246 removed, 799 unchanged (41% of the section changed)

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As of December 31, 2024, we had $121.5 million outstanding on the term loan.

We estimate that a 1% increase or decrease in underlying interest rates as of December 31, 2023 would increase or decrease annual interest expenses by $1.3 million.

We estimate that a 1% increase or decrease in underlying interest rates as of December 31, 2024 would not have a material impact on annual interest expense.

Foreign Exchange

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We have audited the accompanying consolidated balance sheets of Evolus, Inc.

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders' equity (deficit) and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S.

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

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How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s contingent royalty obligation process.

For example, we tested controls over management’s development of the above-described assumption used in the contingent royalty obligation.

To test the estimated fair value of the contingent royalty obligation, we performed audit procedures that included, among others, assessing the terms of the arrangement, evaluating the methodology used, and testing the US projected net revenues of Jeuveau® used by the Company in its analysis.

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Accrued expenses 40,791 33,813

Accrued litigation settlement — 5,000

Operating lease liabilities 1,718 1,377

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Term loan, net of discount and issuance costs 121,506 120,359

Contingent milestone payment 2,270 —

Deferred tax liability 6 27

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10,000,000 shares authorized;

no shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

no shares issued and outstanding at December 31, 2024 and 2023, respectively

Common Stock, $ 0.00001 par value;

100,000,000 shares authorized;

57,820,621 and 56,260,570 shares issued and outstanding at December 31, 2023 and December 31, 2022, re spectively

63,497,548 and 57,820,621 shares issued and outstanding at December 31, 2024 and 2023, re spectively

Additional paid-in capital 615,825 538,716

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Year Ended December 31,

2024 2023 2022

Product revenue, net $ 264,306 $ 199,721 $ 146,592

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Total net revenues 266,274 202,085 148,616

Cost of goods sold 83,970 64,514 58,842

Gross profit 182,304 137,571 89,774

Operating expenses:

Product cost of sales (excludes amortization of intangible assets) 61,559 55,887

Selling, general and administrative 198,025 164,944 141,840

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Balance at December 31, 2023 57,820,621 $ 1 $ 538,716 $ ( 427 ) $ ( 558,979 ) $ ( 20,689 )

Issuance of common stock in connection with the incentive equity plan 1,804,827 — 3,892 — — 3,892

Issuance of common stock upon follow-on offering, net of issuance costs 3,872,100 — 50,963 — — 50,963

Stock-based compensation — — 22,254 — — 22,254

Net loss — — — — ( 50,420 ) ( 50,420 )

Other comprehensive loss — — — ( 478 ) — ( 478 )

Balance at December 31, 2024 63,497,548 $ 1 $ 615,825 $ ( 905 ) $ ( 609,399 ) $ 5,522

See accompanying notes to consolidated financial statements.

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Year Ended December 31,

2024 2023 2022

Cash flows from operating activities

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Payments for debt issuance costs — ( 46 ) ( 500 )

Issuance of common stock in connection with incentive equity plan 224 539

Proceeds from follow-on offering, net of underwriting fees 51,211 — —

Payments for offering costs ( 248 ) — —

Cash proceeds from exercise of stock options 4,882 231 539

Tax withholding paid on behalf of employees for net share settlement ( 990 ) ( 7 ) —

Net cash provided by (used in) financing activities 47,414 44,641 ( 4,146 )

Effect of exchange rates on cash ( 90 ) ( 337 )

Effect of exchange rates on cash and cash equivalents ( 478 ) ( 90 ) ( 337 )

Change in cash and cash equivalents 24,114 8,916 ( 92,334 )

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Year Ended December 31,

2024 2023 2022

Supplemental disclosure of cash flow information

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The Company commercially launched Jeuveau ® in the United States in May 2019, in Canada through a distribution partner in October 2019, and began its launch in Europe in September 2022.

In 2023, the Company entered into an agreement to be the exclusive distributor of Evolysse™, a line of dermal fillers currently in late-stage development in the U.S.

Regulatory approval has been received for the Evolysse™ nasolabial fold product in Europe and the remaining three products are anticipated to be approved in late 2024.

regulatory approval and commercial launch remains on track to begin in 2025 for the first two products with subsequent product launches for the remaining products in 2026 and 2027.

In 2023, the Company entered into an agreement to be the exclusive distributor of Evolysse™, a collection of hyaluronic acid gels currently in late-stage development in the U.S.

Regulatory approval has been received for the four Evolysse™ hyaluronic acid gel products in Europe under the brand name Estyme ® .

The Company anticipates launching all four approved Evolysse™ products in Europe in the second half of 2025.

In February 2025, the Company received approval from the U.S.

Food and Drug Administration (the “FDA”) for Evolysse™ Form and Evolysse™ Smooth injectable hyaluronic acid gels for wrinkles and folds, such as nasolabial folds.

The Company anticipates launching Evolysse™ Form and Evolysse™ Smooth in the United States in the second quarter of 2025.

The Company anticipates two additional Evolysse™ products to be approved and launched in the United States in 2026 and 2027.

The Company currently generates all of its net revenues from Jeuveau ® .

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This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of the Company’s liabilities and commitments in the normal course of business and does not include any adjustments to reflect the possible future effects of the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Since inception, the Company has incurred recurring net operating losses and negative cash flows from operating activities and management expects operating losses and negative cash flows to continue for at least the next twelve months.

The Company recorded net loss from operations of $ 49,233 and a total net loss of $ 61,685 for the twelve months ended December 31, 2023.

The Company used cash of $ 34,008 from operations during the twelve months ended December 31, 2023, which included the final lump sum settlement payment of $ 5,000 to Medytox and Allergan, Inc.

and Allergan Limited (together, “Allergan”) and an upfront payment of $ 4,441 to Symatese S.A.S.

(“Symatese”).

Since inception, the Company has incurred recurring net operating losses and negative cash flows from operating activities;

however, management anticipates achieving operating income and positive cash flows based on current projections for at least the next twelve months.

The Company recorded loss from operations of $ 34,411 and a total net loss of $ 50,420 for the twelve months ended December 31, 2024.

The Company used cash of $ 17,999 from operations during the twelve months ended December 31, 2024.

As of December 31, 2024, the Company had $ 86,952 in cash and cash equivalents and an accumulated deficit of $ 609,399 .

On March 8, 2023, the Company entered into an “at-the-market” sales agreement (the “ATM Sales Agreement”) and filed a shelf registration statement on Form S-3 and corresponding prospectus with the SEC to permit sales under the ATM Sales Agreement, which registration statement became effective on June 8, 2023.

In March 2024, the Company completed a follow-on offering and issued 3,554,000 shares of its common stock, at a price to the public of $ 14.07 per share.

The Company received net proceeds of $ 46,794 from the offering, after deducting underwriting discounts and commissions and other offering expenses.

In addition, the Company granted the underwriters an option, exercisable for 30 days, to purchase up to 533,100 additional shares of common stock (the “option shares”) at the purchase price.

In April 2024, the underwriters exercised their option to purchase 318,100 of the allotted option shares.

The net proceeds to the Company from the sale of the option shares, after deducting the underwriters’ discounts and commissions, was $ 4,169 .

On March 8, 2023, the Company entered into an “at-the-market” sales agreement (the “ATM Sales Agreement”) and filed a shelf registration statement on Form S-3 and corresponding prospectus with the Securities and Exchange Commission (“SEC”) to permit sales under the ATM Sales Agreement, which registration statement became effective on June 8, 2023.

The Company has not sold any shares under the ATM Sales Agreement.

Stockholders’ Equity for additional information.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The Company believes that its current capital resources, which consist of cash and cash equivalents, will be sufficient to fund its operations through at least the next twelve months from the date the accompanying consolidated financial statements are issued based on its expected cash needs.

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The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Principles of Consolidation

The Company’s consolidated financial statements include the Company’s accounts and those of the Company’s wholly-owned subsidiaries, Evolus Pharma Limited, Evolus International Ltd.

and Evolus Pharma BV, and have been prepared in conformity with GAAP.

The Company’s consolidated financial statements include the Company’s accounts and those of the Company’s wholly owned subsidiaries and have been prepared in conformity with GAAP.

All intercompany transactions have been eliminated.

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Such estimates and assumptions affect the reported consolidated financial statements.

These estimates include, but are not limited to net revenues, allowance for doubtful accounts, fair value measurements, inventory valuations and stock-based compensation, among others.

These estimates include, but are not limited to net revenues, allowance for doubtful accounts, fair value measurements and stock-based compensation, among others.

Management bases estimates on historical experience and on assumptions that management believes are reasonable.

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Any termination or loss of significant rights, including exclusivity, under the Daewoong Agreement would materially and adversely affect the Company’s commercialization of Jeuveau ® .

Commitments and Contingencies and Note 10.

Medytox/Allergan Settlement Agreements and Daewoong Arrangement for additional information.

The Company commercially launched Jeuveau ® in the United States in May 2019 and in Canada through its distribution partner in October 2019.

The Company also began commercially launching Jeuveau ® in Europe in September 2022 and, as such, has a limited history of sales in those markets.

Commitments and Contingencies for additional information.

The Company commercially launched Jeuveau ® starting in the United States in May 2019 and in Canada through its distribution partner in October 2019.

The Company also began commercially launching Jeuveau ® in Europe in 2022 and Australia in 2024 and, as such, has a limited history of sales in those markets.

If any previously granted approval to market and sell Jeuveau ® is retracted or the Company is denied approval or approval is delayed by regulators in any other jurisdictions, it may have a material adverse impact on the Company’s business and its consolidated financial statements.

The Company is also subject to risks common to companies in the pharmaceutical industry including, but not limited to, dependency on the commercial success of Jeuveau ® , the Company’s sole commercial product, significant competition within the medical aesthetics industry, its ability to maintain regulatory approval of Jeuveau ® , third party litigation and challenges to its intellectual property, uncertainty of broad adoption of its product by aesthetic practitioners and patients, its ability to in-license, acquire or develop additional product candidates and to obtain the necessary approvals for those product candidates, and the need to scale manufacturing capabilities over time.

Any disruption and volatility in the global capital markets, including caused by other events, such as public health crises, increased inflation and rising interest rates, and geopolitical conflicts, including the military conflict between Russia and Ukraine and the ongoing conflict in the Middle East, may increase the Company’s cost of capital and adversely affect its ability to access financing when and on terms that the Company desires.

The Company is also subject to risks common to companies in the pharmaceutical industry including, but not limited to, dependency on the commercial success of Jeuveau ® and Evolysse™ the Company’s approved products, significant competition within the medical aesthetics industry, its ability to maintain regulatory approval of Jeuveau ® , third party litigation and challenges to its intellectual property, uncertainty of broad adoption of its product by aesthetic practitioners and patients, its ability to in-license, acquire or develop additional product candidates and to obtain the necessary approvals for those product candidates, and the need to scale manufacturing capabilities over time.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Any disruption and volatility in the global capital markets, including caused by other events, such as public health crises, increased inflation and rising interest rates, increased tariffs, and geopolitical conflicts, including the military conflict between Russia and Ukraine and the ongoing conflict in the Middle East, may increase the Company’s cost of capital and adversely affect its ability to access financing when and on terms that the Company desires.

Any of these events could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker.

The Company has determined that it operates in a single operating and reportable segment.

The Company’s chief operating decision maker is its Chief Executive Officer who manages operations and reviews the financial information as a single operating segment for the purposes of allocating resources and evaluating its financial performance.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Concentration of Credit Risk

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government agencies.

The Company’s accounts receivable is derived from customers located principally in the United States.

The Company’s accounts receivable is derived from customers located principally in the United States and Europe.

Concentrations of credit risk with respect to trade receivables are limited due to the Company’s credit evaluation process.

The Company does not typically require collateral from its customers.

Credit losses historically have not been material.

The Company continuously monitors customer payments and maintains an allowance for credit losses based on its assessment of various factors including historical experience, age of the receivable balances, and other current economic conditions or other factors that may affect customers’ ability to pay.

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Amounts receivable from credit card issuers are typically converted to cash within two to four days of the original sales transaction and are considered to be cash equivalents.

Inventories and cost of goods sold

Inventories consist of finished goods held for sale and distribution.

Cost is determined based on the estimated amount payable to the Company’s supplier after accounting for any reimbursement receivable pursuant to the Daewoong Settlement Agreement (as such term is defined, and such agreement is discussed, in Note 10.

Medytox/Allergan Settlement Agreements and Daewoong Arrangement ), usin g the first-in, first-out method with prioritization of the items with the earliest expiration dates.

Inventory valuation reserves are established based on a number of factors including, but not limited to, finished goods not meeting product specifications, product excess and obsolescence, or application of the lower of cost or net realizable value concepts.

The determination of events requiring the establishment of inventory valuation reserves, together with the calculation of the amount of such reserves may require judgment.

No material inventory valuation reserves have been recorded for the periods presented.

Adverse changes in assumptions utilized in the Company’s inventory reserve calculations could result in an increase to its inventory valuation reserves.

Product cost of sales, excluding amortization of intangible assets, consisted of the inventory cost and certain royalties on the sale of Jeuveau ® payable to Medytox and Allergan pursuant to the Medytox/Allergan Settlement Agreements (as such term is defined in Note 10.

Medytox/Allergan Settlement Agreements and Daewoong Arrangement ).

Cost is determined using the first-in, first-out method.

Inventory is measured at the lower of cost and net realizable value based on a number of factors including, but not limited to, damage, expiration, or changes in price level.

For the year ended December 31, 2024, cost of goods sold, consisted of the inventory cost, amortization of distribution right intangible assets related to Jeuveau ® and certain royalties on the sale of Jeuveau ® payable to Medytox and Allergan pursuant to the Medytox Settlement Agreements (as such term is defined in Note 11.

Medytox Settlement Agreements ).

The prior years Consolidated Statements of Operations and Comprehensive Loss has been adjusted to conform to this presentation.

Fair Value of Financial Instruments

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• Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

• Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets;

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or other inputs that are observable, either directly or indirectly, or can be corroborated by observable market data for substantially the full term of the asset or liability;

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

• Level 3—Prices or valuation techniques that require inputs that are unobservable that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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There was no impairment of goodwill for any of the periods presented.

In-process Research and Development

Intangible assets acquired that are used for research and development, do not yet have regulatory approval for commercialization, and have no future alternative use are expensed as in-process research and development.

Collaboration Agreement

In June 2022, the Company entered into a License and Research Collaboration Agreement (the “Collaboration Agreement”) with a 3D printing company with biomaterial capabilities (the “Licensor”).

Under the terms of the Collaboration Agreement, the Company was granted a license to the Licensor’s technology to develop and commercialize any aesthetic product or non-therapeutic product that is created through the use or practice of the Licensor’s patents.

The Company paid $ 2,000 upon the signing of the Collaboration Agreement and has research funding, ongoing milestone and royalty payment obligations depending on the development plans, the success of such development and approval and commercialization of products.

The upfront payment of $ 2,000 was recorded as in-process research and development expense.

Symatese U.S.

On May 9, 2023, the Company and Symatese Aesthetics S.A.S (“Symatese”), entered into a License, Supply and Distribution Agreement (the “Symatese U.S.

Agreement”), pursuant to which Symatese granted to the Company an exclusive right to commercialize and distribute its five hyaluronic acid gel product candidates, including the products referred to as:

(iii) Sculpt;

and (v) Eye (collectively, the “Products”) in the United States for use in the aesthetics and dermatological field of use.

The Company also has the right of first negotiation to obtain a license from Symatese to commercialize and distribute any new products developed using the same technology as the Evolysse ™ collection of hyaluronic acid gels.

As consideration for the rights granted under the Symatese U.S.

Agreement, the Company is required to make up to € 16,200 in milestone payments to Symatese, including an initial payment of € 4,100 within 30 days of execution of the Symatese U.S.

Agreement, and additional annual payments of € 1,600 in June 2025, € 4,100 in June 2026, € 3,200 in June 2027, and € 3,200 in

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

June 2028, in each case subject to three of the Products gaining approval prior to that date.

In June 2023, the Company paid $ 4,441 as an upfront payment upon the signing of the Symatese U.S.

Agreement and has developmental costs, ongoing milestone and royalty payment obligations.

The Symatese U.S.

Agreement is also subject to minimum purchase requirements and failure to meet such requirements may result in a reduction or termination of the Company’s exclusive rights, subject to certain exceptions.

Additionally, the Company agreed to a specified cost-sharing agreement with Symatese related to the registration of the Lips and Eye Products with the FDA.

The initial term of the Symatese U.S.

Agreement is fifteen ( 15 ) years from the first FDA approval of a Product, with automatic renewals for successive five ( 5 )-year terms subject to the terms of the Symatese U.S.

The upfront payment of $ 4,441 was recorded as in-process research and development expense in the twelve months ended December 31, 2023.

Symatese Europe Agreement

On December 20, 2023, the Company entered into a License, Supply and Distribution Agreement (the “Symatese Europe Agreement”), pursuant to which Symatese granted to us an exclusive right to commercialize and distribute four hyaluronic acid gel product candidates, which are referred to as:

(iii) Sculpt and (iv) Lips in 50 countries in Europe for use in the aesthetics and dermatological fields.

The initial agreement is for a term of fifteen ( 15 ) years, with automatic year renewal provisions.

In exchange for the rights granted under the Symatese Europe Agreement, the Company issued 610,000 shares of common stock and is required to pay two milestone payments:

(i) € 1,200 on the second anniversary of certain regulatory approvals, and (ii) € 1,900 on the earlier of the third anniversary of certain regulatory approvals or following a year in which the Company achieves € 25,000 in revenue in Europe;

provided that the payment shall occur no later than December 2029.

The Symatese Europe Agreement is also subject to minimum purchase requirements and failure to meet such requirements may result in a reduction or termination of the Company’s exclusive rights, subject to certain exceptions.

Upon signing of the Symatese Europe Agreement and issuance of 610,000 shares, the Company recorded $ 4,429 in in-process research and development expense and $ 1,476 in intangible assets in the twelve months ended December 31, 2023 for the stock issuance of 610,000 shares.

The intangible assets of $ 1,476 represents the value of the nasolabial fold product in Europe which was already approved at the time of signing the Symatese Europe Agreement and is amortized over its estimated useful life of 15 years.

The remaining value recorded in in-process research and development expense relates to the distribution rights for the three remaining products that did not yet have regulatory approval as of the execution date.

Intangible Assets

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The definite-lived distribution right intangible asset related to the Evolysse TM nasolabial fold product approved in Europe is amortized on a straight-line basis over the estimated useful life of 15 years.

Pursuant to the Symatese Europe Agreement, the Company is required to pay two milestone payments:

In October 2024, the Company received European Union Medical Device Regulation (“MDR”) approval for the remaining three hyaluronic acid gel products.

As a result, the two milestone payments have been triggered.

The first milestone payment is payable in October 2026, the two-year anniversary of the approval.

For the second milestone payment, the Company determined that it is probable the payment will be made no later than December 2029.

As such, the Company recorded $ 1,035 and $ 1,200 in long-term liabilities for the first and second milestone payments, and $ 1,035 and $ 1,200 in intangible assets for the first and second milestone payments as of December 31, 2024.

These amounts reflect the

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

application of a discount to account for the time value of money, which adjusts the present value of the liabilities and intangible assets based on the timing of future payments.

The definite-lived distribution right intangible asset related to the Evolysse TM products approved in Europe is amortized on a straight-line basis over the remaining estimated useful life of 14 years and 2 months.

The Company capitalizes certain internal-use software costs associated with the development of its mobile and web-based customer platforms.

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If both criteria are met, upon lease commencement, the Company records a lease liability which represents the Company’s obligation to make lease payments arising from the lease, and a corresponding right-of-use (“ROU”) asset which represents the Company’s right to use an underlying asset during the lease term.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

lease assets and liabilities are included in ROU assets, current portion of operating lease liabilities and noncurrent operating lease liabilities in the accompanying consolidated balance sheets.

Operating lease assets and liabilities are included in ROU assets, current portion of operating lease liabilities and noncurrent operating lease liabilities in the accompanying consolidated balance sheets.

Operating lease ROU assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease term at commencement date calculated using the Company’s incremental borrowing rate applicable to the underlying asset unless the implicit rate is readily determinable.

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Operating lease ROU assets also include any lease payments made at or before lease commencement and exclude any lease incentives received, if any.

The Company determines the lease term as the noncancelable period of the lease and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

The Company determines the lease term as the noncancellable period of the lease and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

The Company’s leases do not contain any residual value guarantees.

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There were no significant finance leases as of December 31, 2024.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Contingent Royalty Obligation Payable to Evolus Founders

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In order to achieve that core principle, a five-step approach is applied:

(1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue allocated to each performance obligation when the

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Company satisfies the performance obligation.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition.

The Company generates product revenue from the sale of Jeuveau ® in the United States and Europe, and service revenue from the sale of Jeuveau ® through a distribution partner in Canada.

The Company generates product revenue from the sale of Jeuveau ® in the United States, Europe, and Australia, and service revenue from the sale of Jeuveau ® through a distribution partner in Canada.

For product revenue, the Company recognizes revenue when control of the promised goods under a contract is transferred to a customer, in an amount that reflects the consideration the Company expects to receive in exchange for those goods as specified in the customer contract.

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The Company also excludes any amounts related to taxes assessed by governmental authorities from revenue measurement.

Shipping and handling costs associated with outbound product freight are accounted for as fulfillment costs and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss.

Shipping and handling costs associated with outbound product freight are accounted for as fulfillment costs

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss.

For service revenue, the Company evaluated the arrangement with the distribution partner in Canada and determined that it acts as an agent in the distribution of Jeuveau ® in Canada as it does not control the product before control is transferred to a customer.

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Subsequently, when the advertisement airs, the deferred revenue is recognized in net revenues at that time.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Contract Balances

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Sales commissions are included in selling, general and administrative expenses when incurred.

Contract liabilities reflect estimated amounts that the Company is obligated to pay to customers or patients primarily under the rebate and deferred revenue associated with Rewards under the consumer loyalty program and co-branded marketing programs.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The Company’s contract liabilities are included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

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Research and development costs are expensed as incurred.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

with the Company’s regulatory compliance and quality assurance functions, including the costs of outside consultants and contractors that assist in the process of submitting and maintaining regulatory filings, and overhead costs, including allocated facility related expenses.

In-process Research and Development

Collaboration Agreement

The upfront payment of $ 2,000 was recorded as in-process research and development expense.

Symatese U.S.

On May 9, 2023, the Company and Symatese, entered into a License, Supply and Distribution Agreement (the “Symatese U.S.

Agreement”), pursuant to which Symatese granted to the Company an exclusive right to commercialize and distribute its five dermal filler product candidates, including the products referred to as:

(iii) Sculpt;

and (v) Eye (collectively, the “Products”) in the United States for use in the aesthetics and dermatological field of use.

As consideration for the rights granted under the Symatese U.S.

Agreement, the Company is required to make up to € 16,200 in milestone payments to Symatese, including an initial payment of € 4,100 within 30 days of execution of the Symatese U.S.

Agreement, and additional annual payments of € 1,600 in June 2025, € 4,100 in June 2026, € 3,200 in June 2027, and € 3,200 in June 2028, in each case subject to three of the Products gaining approval prior to that date.

In June 2023, the Company paid $ 4,441 as an upfront payment upon the signing of the Symatese U.S.

Agreement and has developmental costs, ongoing milestone and royalty payment obligations.

The Symatese U.S.

Additionally, the Company agreed to a specified cost-sharing agreement with Symatese related to the registration of the Lips and Eye Products with the FDA.

The initial term of the Symatese U.S.

Agreement is fifteen ( 15 ) years from the first FDA approval of a Product, with automatic renewals for successive five ( 5 )-year terms subject to the terms of the Symatese U.S.

The upfront payment of $ 4,441 was recorded as in-process research and development expense in the twelve months ended December 31, 2023.

Symatese Europe Agreement

On December 20, 2023, the Company entered into a License, Supply and Distribution Agreement (the “Symatese Europe Agreement”), pursuant to which Symatese granted to us an exclusive right to commercialize and distribute four dermal filler product candidates, which are referred to as:

(iii) Sculpt and (iv) Lips in 50 countries in Europe for use in the aesthetics and dermatological fields.

In exchange for the rights granted under the Symatese Europe Agreement, the Company issued 610,000 shares of common stock and is required to pay two milestone payments:

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The initial agreement is for a term of fifteen ( 15 ) years, with automatic year renewal provisions.

Upon the receiving of regulatory approval for the Evolysse TM nasolabial fold product in Europe, the Company recorded $ 4,429 in in-process research and development expense and $ 1,476 in intangible assets in the twelve months ended December 31, 2023 for the stock issuance of 610,000 shares.

The intangible assets of $ 1,476 represents the value of the approved nasolabial fold product in Europe and is amortized over its estimated useful life.

Research and development expenses include personnel-related costs, costs associated with pre-clinical and clinical development activities, costs associated with and costs for prototype products that are manufactured prior to market approval for that prototype product, internal and external costs associated with the Company’s regulatory compliance and quality assurance functions, including the costs of outside consultants and contractors that assist in the process of submitting and maintaining regulatory filings, and overhead costs, including allocated facility related expenses.

Litigation Settlement

In February 2021, upon entering into certain agreements to settle intellectual property disputes relating to Jeuveau ® , the Company agreed to pay to Allergan and Medytox $ 35,000 in multiple payments over two years , of which $ 15,000 was paid in the third quarter of 2021, $ 15,000 was paid in the first quarter of 2022, and $ 5,000 was paid in the first quarter of 2023, and issued 6,762,652 shares of its common stock to Medytox.

As of December 31, 2024 and 2023, there were no liabilities recorded in the accompanying consolidated balance sheets related to the litigation settlement with Allergan and Medytox.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

In addition, for the period from December 16, 2020 through September 16, 2022 (the “Restricted Period”), the Company agreed to pay to Allergan and Medytox a royalty on the sale of Jeuveau ® , based on a certain dollar amount per vial sold in the United States and a low-double digit royalty on net sales of Jeuveau ® sold in other Evolus territories.

1 unchanged sentence

For the period from December 16, 2020 to September 16, 2022, Daewoong agreed to reimburse the Company certain amounts with respect to the royalties payable to Medytox and Allergan.

This reimbursement was received quarterly and recorded as an offset to the related royalties to Medytox and Allergan in the product cost of sales on the accompanying consolidated statements of operations and comprehensive loss.

This reimbursement was received quarterly and recorded as an offset to the related royalties to Medytox and Allergan in the cost of goods sold on the accompanying consolidated statements of operations and comprehensive loss.

For the period from September 17, 2022 to September 16, 2032, the Company agreed to pay Medytox a mid-single digit royalty percentage on all net sales of Jeuveau ® .

The royalty payments are made quarterly and recorded as product cost of sales on the accompanying consolidated statements of operations and comprehensive loss in the periods the royalties are incurred.

As of December 31, 2023, there were no liabilities recorded in the accompanying consolidated balance sheets related to the litigation settlement with Allergan and Medytox.

As of December 31, 2022, a current liability of $ 5,000 was recorded in the accompanying consolidated balance sheets related to the litigation settlement with Allergan and Medytox.

Medytox/Allergan Settlement Agreements and Daewoong Arrangement for the details of all litigation settlement agreements.

The royalty payments are made quarterly and recorded as cost of goods sold on the accompanying consolidated statements of operations and comprehensive loss in the periods the royalties are incurred.

Medytox Settlement Agreements for the details of all litigation settlement agreements.

Stock-Based Compensation

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Stock-based compensation expense is recognized net of actual forfeitures when they occur, as an increase to additional paid-in capital in the consolidated balance sheets and in the selling, general and administrative or research and development expenses in the consolidated statements of operations and comprehensive loss.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Advertising Costs

5 unchanged sentences

A valuation allowance is recorded against deferred tax assets to reduce the net carrying value when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation allowance.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.

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Diluted earnings per share is based on the treasury stock method and includes the effect from potential issuance of ordinary shares, such as shares issuable pursuant to the exercise of stock options and the vesting of restricted stock units.

Because the impact of the options and non-vested RSUs are anti-dilutive during periods of net loss, there was no difference between the weighted-average number of shares used to calculate

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

basic and diluted net loss per common share for the periods presented.

Because the impact of the options and non-vested RSUs are anti-dilutive during periods of net loss, there was no difference between the weighted-average number of shares used to calculate basic and diluted net loss per common share for the periods presented.

Excluded from the dilutive net loss per share computation for the twelve months ended December 31, 2024, 2023, and 2022, were stock options of 6,151,069 , 5,753,466 , and 4,769,521 , respectively, and non-vested RSUs of 3,476,314 , 3,281,045 , and 2,663,320 , respectively.

2 unchanged sentences

Recently Adopted Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting and in January 2021, the FASB issued ASU No.

2021-01, Reference Rate Reform (Topic 848):

Scope (“ASU 2021-01”) .

2020-04 and ASU No.

2021-01 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

2020-04 and ASU No.

2021-01 are effective upon issuance for contract modifications and hedging relationships, and the Company is allowed to elect to apply the amendments prospectively through December 31, 2022.

In December 2022, the FASB issued ASU No.

2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 , which extends the temporary accounting rules under Topic 848 to December 31, 2024.

The Company transitioned to SOFR from LIBOR on May 9, 2023.

There are no material impacts to the consolidated financial statements.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment .

The update simplifies the accounting for goodwill impairment by removing step two of the goodwill impairment test, which requires a hypothetical purchase price allocation.

A goodwill impairment will be the amount by which a reporting unit’s carrying amount, including goodwill, exceeds its fair value.

The impairment charge will be limited to the amount of goodwill allocated to that reporting unit.

The Company adopted this guidance on the effective date of January 1, 2023.

There are no material impacts to the consolidated financial statements as a result of this adoption.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which modifies the measurement and recognition of credit losses for most financial assets and certain other instruments.

The new standard requires the use of forward-looking expected credit loss models based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount, which may result in earlier recognition of credit losses under the new standard.

The new guidance also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination.

Subsequent to the issuance of ASU No.

2016-13, the FASB issued ASU No.

2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses .

This ASU does not change the core principle of the guidance in ASU No.

2016-13, instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard.

The FASB also subsequently issued ASU No.

2019-04 which did not change the core principle of the guidance in ASU No.

2016-13 but clarified that expected recoveries of amounts previously written off and expected to be written off should be included in the valuation account and should not exceed amounts previously written off and expected to be written off.

The Company prospectively adopted this guidance on the effective date of January 1, 2023 and the adoption did not have a material impact to the consolidated financial statements and resulted in no adjustment to the Company’s prior year earnings.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting - Improving Reportable Segment Disclosures (Topic 280) .

The standard requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods.

ASU 2023-07 is effective for annual reporting periods beginning after December

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

15, 2023 and interim reporting periods after December 15, 2024.

The Company adopted this guidance on December 31, 2024 and updated its disclosures to conform to this new segment disclosure requirement.

Recent Accounting Pronouncements Issued But Not Adopted

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In November 2024, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

This update requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

requirements in ASC 280, on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024, with early adoptions permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires disaggregated disclosure of certain costs and expenses on an interim and annual basis.

2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The disclosure updates are required to be applied prospectively with the option for retrospective application.

The Company is currently evaluating the impact of adopting ASU No.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future financial position, results of operations or cash flows.

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The Company determines the fair value of the contingent royalty obligation payable to Evolus Founders based on Level 3 inputs using a discounted cash flows method.

The significant unobservable input assumptions that can significantly change the fair value include (i) projected amount and timing of net revenues during the payment period, which terminates at the end of the second quarter of 2029, (ii) the discount rate, and (iii) the timing of payments.

The significant unobservable input assumptions that can significantly change the fair value include (i) projected amount and timing of U.S.

net revenues of Jeuveau ® during the payment period, which terminates at the end of the second quarter of 2029, (ii) the discount rate, and (iii) the timing of payments.

During the years ended December 31, 2024 and 2023, the Company utilized discount rates between 14 % and 15 %, reflecting changes in the Company’s risk profile.

1 unchanged sentence

Significant increases (decreases) in the discount rate and to the projected net revenues would result in a significantly lower (higher) fair value measurement, which could materially impact their fair value reported on the consolidated balance sheet.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The following table shows a reconciliation of the beginning and ending fair value measurements of the contingent royalty obligation payable:

Year Ended December 31,

2024 2023 2022

Fair value, beginning of period $ 45,030 $ 46,310 $ 44,740

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The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, lease liabilities, and long-term debt.

The carrying amount of cash and cash equivalents, accounts

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

receivable, accounts payable and accrued expenses approximates their fair value because of the short-term maturity of such instruments.

The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates their fair value because of the short-term maturity of such instruments.

The Company estimates the fair value of long-term debt and operating lease liabilities using the discounted cash flow analysis based on the interest rates for similar rated debt securities (Level 2).

1 unchanged sentence

The fair value of operating lease liabilities as of December 31, 2024 and 2023 approximated their carrying value.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Goodwill and Intangible Assets

The table below shows the weighted-average life, original cost, accumulated amortization and net book value by major intangible asset classification:

Weighted-Average Life (Years) Original Cost Accumulated Amortization Net Book Value

Original Cost Accumulated Amortization Net Book Value

Definite-lived intangible assets

7 unchanged sentences

$ 97,312 $ ( 27,350 ) $ 69,962

Weighted-Average Life (Years) Original Cost Accumulated Amortization Net Book Value

Original Cost Accumulated Amortization Net Book Value

Definite-lived intangible assets

6 unchanged sentences

$ 91,564 $ ( 23,246 ) $ 68,318

* Intangible assets with indefinite lives have an indeterminable average life.

The following table outlines the estimated future amortization expense related to intangible assets held as of December 31, 2024 that are subject to amortization:

1 unchanged sentence

Distribution rights represent the license and associated distribution rights to Jeuveau ® and Evolysse TM .

For the year ended December 31, 2023, the Company capitalized $ 1,476 related to the license and distribution right to Evolysse TM nasolabial fold product in Europe, which is amortized on a straight-line basis over the estimated useful life of 15 years.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

For the years ended December 31, 2024 and 2023, the Company capitalized $ 2,235 and $ 1,476 related to the license and distribution right to Evolysse TM nasolabial fold product in Europe, which is amortized on a straight-line basis over the estimated useful life of 15 years.

For the years ended December 31, 2024 and 2023, the Company capitalized $ 3,513 and $ 1,168 , respectively, related to costs of computer software developed for internal use.

1 unchanged sentence

For the years ended December 31, 2024, 2023, and 2022, total intangible assets amortization expense of $ 4,104 , $ 4,072 , and $ 3,350 , respectively, was recorded within depreciation and amortization on the accompanying consolidated statements of operations and comprehensive loss.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Accrued Expenses

1 unchanged sentence

Year Ended December 31,

Accrued royalties under the Medytox Settlement Agreement $ 3,657 $ 2,618

Accrued royalties under the Medytox Settlement Agreements

$ 4,743 3,657

Accrued payroll and related benefits 14,127 13,433

2 unchanged sentences

$ 40,791 $ 33,813

Property, Plant and Equipment

Property, plant and equipment consisted of the following:

Year Ended December 31,

Equipment $ 452 81

Furniture 702 345

Leasehold Improvements 3,574 2,212

Computers 317 149

Marketing Fixtures 1,700 1,700

Total property, plant, and equipment $ 6,745 $ 4,487

accumulated depreciation $ ( 3,523 ) $ ( 2,400 )

Property, plant and equipment, net $ 3,222 $ 2,087

For the years ended December 31, 2024, 2023, and 2022, depreciation expense was $ 1,194 , $ 1,001 , and $ 373 , respectively.

Pharmakon Term Loans

8 unchanged sentences

The Third Amendment amended the principal payment terms to seven quarterly payments, each in an amount equal to 1/12 th of the outstanding principal amount of the Pharmakon Term Loans following the 51 st-month anniversary of the closing date of the first tranche and the remaining principal balance of the Pharmakon Term Loans on the Maturity Date.

The Third Amendment replaced the interest rates based on LIBOR with interest rates based on the Secured Overnight Financing Rate (“SOFR”) throughout the remaining term of the Pharmakon Term Loans.

The Third Amendment replaced the interest rates based on LIBOR with

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

interest rates based on the Secured Overnight Financing Rate (“SOFR”) throughout the remaining term of the Pharmakon Term Loans.

Initially, the Pharmakon Term Loans accrued interest at a per annum rate equal to the 3-month U.S.

5 unchanged sentences

If the Pharmakon Term Loans are accelerated following the occurrence of an event of default, including a material adverse change, the Company is required to immediately pay Pharmakon an amount equal to the sum of all outstanding principal, unpaid interest, and applicable make whole and prepayment premiums.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The Pharmakon Term Loans are secured by substantially all of the Company’s assets.

15 unchanged sentences

Long term debt, net of discounts and issuance costs $ 121,506

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Operating Leases

2 unchanged sentences

The Company has an option to extend the term of the lease for an additional 60 months, which was not recognized as part of its ROU assets and lease liabilities.

On July 27, 2023, the Company entered into the First Amendment to the Lease Agreement (the “Lease Amendment”) for its corporate headquarters.

The Lease Amendment includes a lease extension to January 31, 2030 with a three-month rent abatement period and additional office space.

On July 27, 2023, the effective date of the Lease Amendment, the Company recognized additional ROU assets and lease liabilities in the amount of $ 4,550 .

On July 27, 2023, the Company entered into the First Amendment to the Lease Agreement (the “First Lease Amendment”) for its corporate headquarters.

The First Lease Amendment includes a lease extension to January 31, 2030 with a three-month rent abatement period and additional office space.

On July 27, 2023, the effective date of the First Lease Amendment, the Company recognized additional ROU assets and lease liabilities in the amount of $ 4,550 .

On August 1, 2024, the lease commencement date for the additional office space, the Company recognized additional ROU assets and lease liabilities in the amount of $ 3,002 .

On October 16, 2024, the Company entered into the Second Amendment to the Lease Agreement (the “Second Lease Amendment”) to lease additional office space for its corporate headquarters.

The lease is expected to commence on or around the second half of 2025 and is set to expire January 31, 2030.

Fixed cash payments under this amendment are estimated to be $ 1,876 over the term of the lease.

The Company expects to account for this lease an operating lease.

The Company’s lease agreement does not contain any residual value guarantees or material restrictive covenants.

1 unchanged sentence

The Company considers the timing of the renewal period and other economic factors such as the financial implications of a decision to extend or not to extend a lease in determining if the renewal option is reasonably certain to be exercised.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The components of operating lease expense are as follows:

Year Ended December 31,

2024 2023 2022

Fixed operating lease expense $ 1,526 $ 1,164 $ 1,084

3 unchanged sentences

As of December 31,

2024 2023 2022

Weighted-average remaining lease term (years) 5.1 6.1 2.1

Weighted-average discount rate 9.7 % 11.0 % 9.4 %

Cash paid for amounts included in the measurement of lease liabilities

$ 1,433 $ 1,320 $ 1,265

Operating lease expenses were included in the selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss.

Operating lease right-of-use assets and related current and noncurrent operating lease liabilities are presented in the accompanying consolidated balance sheets.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The following table presents the future minimum payments under the operating lease agreements with non-cancelable terms as of December 31, 2024:

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Commitments and Contingencies

Purchase Commitments

As of December 31, 2023, the Company has entered into commitments to purchase services and products for an aggregate amount of approximately $ 2,044 .

Certain minimum purchase commitments related to the purchase of Jeuveau ® and Evolysse TM are described below.

License and Supply Agreement

Daewoong Agreement

The Daewoong Agreement includes certain minimum annual purchases that the Company is required to make in order to maintain the exclusivity of the license.

1 unchanged sentence

These potential minimum purchase obligations are contingent upon the occurrence of future events, including receipt of governmental approvals and the Company’s future market share in various jurisdictions.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Total inventory payments to Daewoong were $ 62,233 , $ 50,770 , and $ 50,685 for the years ended December 31, 2024, 2023, and 2022, respectively.

Symatese U.S.

3 unchanged sentences

Pursuant to the Symatese U.S.

Agreement, the Company is required to make up to € 16,200 in milestone payments to Symatese, including an initial payment of € 4,100 within 30 days of execution of the Symatese U.S.

In June 2023, the Company paid $ 4,441 as an upfront payment upon the signing of the Symatese U.S.

Agreement and has developmental costs, ongoing milestone and royalty payment obligations.

Pursuant to the Symatese Europe Agreement, the Company is required to pay two milestone payments:

In October 2024, the Company received European Union Medical Device Regulation (“MDR”) approval for the remaining three hyaluronic acid gel products.

As a result, the two milestone payments have been triggered.

The first milestone

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

payment is payable on the two-year anniversary of the approval.

For the second milestone payment, the Company determined that it is probable the payment will be made no later than December 2029.

Legal Proceedings

13 unchanged sentences

Both motions were fully briefed on June 16, 2022.

The outcome of the legal proceeding is uncertain at this point.

Based on information available to the Company at present, management cannot reasonably estimate a range of loss with respect to this matter.

On September 26, 2024, the court granted the Company’s motion to dismiss the amended complaint and on October 18, 2024, the court entered final judgment in favor of the defendants.

Shareholder Derivative Lawsuit

17 unchanged sentences

The outcome of this matter is uncertain at this point.

Based on information available to the Company at present, management cannot reasonably estimate a range of loss with respect to this matter.

Other Legal Matters

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

information available to the Company at present, management cannot reasonably estimate a range of loss with respect to this matter.

Other Legal Matters

The Company is, from time to time, involved in various litigation matters or regulatory encounters arising in the ordinary course of business that could result in unasserted or asserted claims or litigation.

12 unchanged sentences

As of December 31, 2024, 63,497,548 shares of its common stock were issued and outstanding.

In March 2024, the Company completed a follow-on offering and issued 3,554,000 shares of its common stock, at a price to the public of $ 14.07 per share.

Refer to Note 1.

Description of Business for additional details regarding the follow-on offering.

2024 Employee Stock Purchase Plan (“ESPP”)

On June 6, 2024, the Company approved the adoption of the 2024 Employee Stock Purchase Plan.

The 2024 ESPP provides an opportunity to purchase shares of the Company’s common stock at a favorable price and upon favorable terms in consideration of the participating employees’ continued services.

Eligible employees will be entitled to purchase, by means of payroll deductions, limited amounts of the Company’s common stock at a discount during periodic offering periods.

There were 579,648 shares initially reserved for issuance under the 2024 ESPP, which shall automatically increase on March 5 of each calendar year, by an amount equal to the lesser of (i) 1.0 % of the total number of shares of common stock issued and outstanding on March 4 of the year in which such increase is to occur, (ii) 579,648 shares of common stock, or (iii) such number of shares of common stock as may be established by the Board of Directors.

There were no shares issued under the 2024 ESPP during the twelve months ended December 31, 2024.

“At-the-market” Offerings of Common Stock

3 unchanged sentences

2017 Omnibus Incentive Plan and Stock-based Compensation Allocation

The Company’s 2017 Omnibus Incentive Plan (the “Plan”) provides for the grant of incentive options to employees of the Company, and for the grant of non-statutory options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of stock compensation to the Company’s officers, directors, consultants and employees of the Company.

The maximum number of shares of common stock that may be issued under the Plan is 4,361,291 shares, plus an annual increase on each anniversary of November 21, 2017 equal to 4.0 % of the total issued and outstanding shares of the Company’s common stock as of such anniversary (or such lesser number of shares as may be determined by the Company’s Board of Directors).

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

and employees of the Company.

The maximum number of shares of common stock that may be issued under the Plan is 4,361,291 shares, plus an annual increase on November 21 of each year equal to 4.0 % of the total issued and outstanding shares of the Company’s common stock as of such anniversary (or such lesser number of shares as may be determined by the Company’s Board of Directors).

On November 21, 2024, 2023, and 2022, an additional 2,535,476 , 2,287,649 , and 2,249,863 , shares, respectively, were reserved under the evergreen provision of the Plan.

2 unchanged sentences

In September 2023, the Company’s Board of Directors adopted the Company’s 2023 Inducement Incentive Plan (the “Inducement Plan”) in accordance with Nasdaq Listing Rule 5635(c)(4).

The Company’s Inducement Plan provides for the grant of equity awards to selected individuals in connection with their commencing employment with the Company as an

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

inducement material to their accepting such employment.

The Company’s Inducement Plan provides for the grant of equity awards to selected individuals in connection with their commencing employment with the Company as an inducement material to their accepting such employment.

The Board of Directors reserved 1,000,000 shares of common stock for issuance under the Inducement Plan.

24 unchanged sentences

Consequently, the Company uses an expected dividend yield rate of zero .

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The assumptions used in determining the fair value of stock options granted were as follows:

1 unchanged sentence

2024 2023 2022

83.7 % 83.6 % 78.9 %

Risk-free interest rate

4.1 % 3.7 % 2.1 %

Expected life (years)

6.21 6.21 6.19

Dividend yield rate

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

A summary of stock option activity for the year ended December 31, 2024, 2023, and 2022 is presented below:

4 unchanged sentences

Outstanding as of December 31, 2023 5,753,466 $ 9.46 6.69 $ 11,111

1,773,043 6.82

( 53,098 ) 10.08

Cancelled/forfeited

( 872,710 ) 13.19

Outstanding as of December 31, 2022 4,769,521 $ 9.24 7.02 $ 2,911

Granted 1,127,833 13.11

2 unchanged sentences

Outstanding as of December 31, 2024 6,151,069 $ 10.29 6.16 $ 10,691

Vested and expected to vest at December 31, 2024 6,151,069 $ 10.29 6.16 $ 10,691

Exercisable as of December 31, 2024 3,619,512 $ 9.95 4.64 $ 7,801

The weighted average grant date fair value per share of stock options granted during the years ended December 31, 2024, 2023, and 2022 was $ 9.71 , $ 7.73 , and $ 4.76 , respectively.

The total intrinsic value of stock options that vested during the years ended December 31, 2024, 2023, and 2022 was $ 3,171 , $ 136 , and $ 55 , respectively.

The aggregate intrinsic value of outstanding and exercisable options represents the excess of the fair market value of the Company’s common stock over the exercise price of underlying options as of December 31, 2024, 2023, and 2022.

7 unchanged sentences

Outstanding as of December 31, 2023 3,281,045 $ 8.88

1,890,533 7.00

( 630,484 ) 8.02

( 490,059 ) 7.21

Outstanding as of December 31, 2022 2,696,457 $ 7.48

Granted 1,571,280 13.02

4 unchanged sentences

(in thousands, except share and per share data)

The total fair value of restricted stock units that vested during the years ended December 31, 2024, 2023, and 2022 was $ 15,740 , $ 7,593 , and $ 6,008 , respectively.

Performance Restricted Stock Units

1 unchanged sentence

The PRSU awards function in the same manner as restricted stock units except that vesting terms are based on achievement of certain pre-established performance measures.

In February 2024, the Company’s Board of Directors granted 219,485 shares of PRSUs to certain executive officers under the Plan.

The PRSU awards are measured on a cumulative two-year period ending in 2025.

The performance measure milestones have not been met, and all were outstanding as of December 31, 2024.

As of December 31, 2024, the achievement of the performance measure milestones was considered probable.

In December 2024, the Company’s Board of Directors granted 79,052 shares of PRSUs to an executive officer under the Plan.

The PRSU awards are measured on regulatory approval ending in 2027.

The performance measure milestones have not been met and all were outstanding as of December 31, 2024.

As of December 31, 2024, one of the three achievement of the performance measure milestones was considered probable.

A summary of PRSU activity for the year ended December 31, 2024 and 2023, is presented below:

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Compensation expense is recorded if the service condition is met regardless of whether the market condition is satisfied.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The following table summarizes stock-based compensation expense:

Year Ended December 31,

2024 2023 2022

Selling, general and administrative $ 21,172 $ 15,564 $ 10,565

1 unchanged sentence

Total stock-based compensation expense $ 22,188 $ 16,458 $ 10,833

Medytox/Allergan Settlement Agreements and Daewoong Arrangement

Medytox/Allergan Settlement Agreements

In addition to the amounts recorded in selling, general and administrative and research and development, the Company capitalized $ 66 of stock-based compensation expense as part of capitalized software during the year ended December 31, 2024.

As of December 31, 2024, unrecognized compensation cost totaled $ 47,092 and will be recognized over a weighted-average period of 2.2 years.

Medytox Settlement Agreements

Settlement Agreement

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Effective February 18, 2021, the Company, Allergan and Medytox entered into a Settlement and License Agreement (the “U.S.

19 unchanged sentences

Share Issuance Agreement

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

In connection with the execution of the ROW Settlement Agreement, the Company and Medytox entered into a Share Issuance Agreement effective February 18, 2021 (the “Share Issuance Agreement”).

1 unchanged sentence

The Settlement Shares are subject to contractual restrictions on transfer that, subject to certain limited exceptions such as transfers to affiliates, prevented Medytox from transferring any shares of common stock prior to February 16, 2022 or more than 25 % of the shares it held prior to September 16, 2023 and, thereafter, prohibit Medytox from transferring more than 50 % of the shares it holds prior to September 16, 2024 and more than 75 % of the shares it holds prior to September 16, 2025, with such contractual restrictions terminating on September 16, 2025.

Registration Rights Agreement

In connection with the execution of the ROW Settlement Agreement, the Company and Medytox also entered into a Registration Rights Agreement effective February 18, 2021 (the “Registration Rights Agreement”).

Pursuant to the Registration Rights Agreement, among other things, the Company agreed, after March 31, 2022, (i) to comply with certain requests by Medytox to register for sale, under the Securities Act, the Settlement Shares, and (ii) to include the Settlement Shares in certain registrations by the Company of its securities for sale under the Securities Act, to the extent requested by

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Medytox, in each case subject to certain customary conditions, exceptions and limitations as set forth in the Registration Rights Agreement.

In addition, Medytox’s registration rights under the Registration Rights Agreement will terminate at such time that Medytox is able to sell all of the Settlement Shares over a three-month period, or less, pursuant to an exemption to registration under the Securities Act.

As of September 30, 2023, Medytox’s registration rights under the Registration Rights Agreement have terminated.

As of December 31, 2023, the Company accrued $ 3,657 for royalties under the Medytox/Allergan Settlement Agreements.

As of December 31, 2022, the Company accrued $ 2,618 for royalties under the Medytox/Allergan Settlement Agreements and $ 5,000 of accrued litigation settlement expense.

Daewoong Arrangement

Daewoong Settlement Agreement

On March 23, 2021, the Company and Daewoong entered into a Confidential Settlement and Release Agreement (the “Daewoong Settlement Agreement”), pursuant to which, among other things:

(i) Daewoong agreed to (a) pay to the Company an amount equal to $ 25,500 , which the Company received in April 2021, (b) pay certain legal fees incurred by the Company’s litigation counsel in connection with its defense of the ITC Action (including any appeal of the resulting remedial orders), (c) cancel all remaining milestone payments, totaling $ 10,500 in aggregate, and (d) reimburse the Company certain amounts (calculated on a dollar amount per vials sold basis in the United States) for sales of certain products with respect to which the Company is required to pay Medytox and Allergan royalties pursuant to the U.S.

Settlement Agreement;

and (ii) the Company agreed to (a) release, on behalf of itself and certain of its affiliates and representatives, certain claims they may have against Daewoong related to the allegations made in or the subject matter of the Medytox/Allergan Actions, or any orders, remedies and losses resulting from the Medytox/Allergan Actions, and (b) coordinate with Daewoong on certain matters related to the Medytox/Allergan Actions.

Daewoong Agreement Amendment

In connection with the execution of the Daewoong Settlement Agreement, on March 23, 2021, the Company and Daewoong also entered into the Third Amendment to the Supply Agreement (the “Daewoong Agreement Amendment”).

Pursuant to the Daewoong Agreement Amendment, the parties amended the Daewoong Agreement to (i) expand the territory within which the Company may distribute Jeuveau ® to certain countries in Europe, (ii) reduce the period of time with respect to which the Company is required to deliver binding forecasts to Daewoong;

(iii) introduce certain limitations on Daewoong’s ability to convert the Company’s exclusive license for certain territories to a non-exclusive license in the event the Company fails to meet certain minimum purchase requirements for such territory;

(iv) adjust the minimum purchase requirements and reduce the transfer price per vial of Jeuveau ® applicable to various territories, (v) require that any Jeuveau ® supplied by Daewoong match certain shelf-life thresholds, and (vi) prohibit the Company from sharing certain confidential information of Daewoong with Medytox or its affiliates or representatives.

Total inventory payments to Daewoong were $ 50,770 and $ 50,685 for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2024 and 2023, the Company accrued $ 4,743 and $ 3,657 for royalties under the Medytox Settlement Agreements.

Employee Benefit Plan

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Matching contributions totaled $ 2,023 , $ 1,582 , and $ 773 for the years ended December 31, 2024, 2023, and 2022, respectively.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The Company’s loss before income taxes was generated from its U.S.

1 unchanged sentence

Year Ended December 31,

2024 2023 2022

United States $ 33,349 $ 51,004 $ 66,103

3 unchanged sentences

Year Ended December 31,

2024 2023 2022

Current provision:

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State 279 138 113

Foreign 406 33 —

Total current provision $ 685 $ 171 $ 113

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State ( 3 ) 4 ( 10 )

Foreign — — —

Total deferred (benefit) provision $ ( 21 ) $ 5 $ ( 18 )

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As of December 31, 2024, the Company has state NOL carryforwards of $ 231,980 , which will begin to expire in 2024.

As of December 31, 2023, the Company has federal research and development (“R&D”) credit carryforwards of $ 2,929 , which will begin to expire in 2034.

The Company also has California R&D credit carryforwards of $ 2,918 , which has an indefinite carryforward period.

The NOL and the R&D credit carryforwards generated by the Company in tax years ended February 11, 2018 and prior have been included in the consolidated and unitary income tax returns of Alphaeon Corporation (“Alphaeon”).

After the Company left Alphaeon consolidated and unitary income tax group on February 11, 2018, the Company files its own standalone income tax returns.

Deferred tax assets in the accompanying consolidated financial statements reflect the Company's standalone tax attributes that are reportable on its own income tax returns.

In general, if a company experiences a greater than 50 percentage point aggregate change in ownership of certain significant stockholders over a three-year period, utilization of its pre-change NOL carryforwards and R&D credit carryforwards is subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state laws.

The annual limitation generally is determined by multiplying the value of the Company’s stock at the time of such ownership change, subject to certain adjustments, by the applicable long-term tax-exempt rate.

The annual limitations may result in the expiration of NOL and R&D credit carryforwards before utilization and may be material.

The Company has started but has not completed an analysis to determine whether its NOL and R&D credits generated through December 31, 2023 are likely to be limited by Section 382 and 383.

The Company anticipates that an ownership change as defined under Section 382 may have occurred and that the resulting limitation would significantly reduce the Company’s ability to utilize its NOL and R&D credit carryforwards before they expire.

Additionally, future ownership changes under Section 382 and 383 may also limit the Company's ability to fully utilize any remaining tax benefits.

The Company’s net deferred income tax

As of December 31, 2024, the Company has foreign NOL carryforwards of $ 38,922 , which can be carried forward indefinitely.

As of December 31, 2024, the Company has federal research and development

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

assets have been offset by a valuation allowance.

Therefore, any resulting reduction to the Company’s NOL and R&D credit carryforwards once the analysis is complete will be offset by a corresponding reduction of the valuation allowance and there would be no impact on the Company’s consolidated balance sheet, statement of operations, or cash flows.

(“R&D”) credit carryforwards of $ 2,929 , which will begin to expire in 2034.

The Company also has California R&D credit carryforwards of $ 2,918 , which has an indefinite carryforward period.

In general, if a company experiences a greater than 50 percentage point aggregate change in ownership of certain significant stockholders over a three-year period, utilization of its pre-change NOL carryforwards and R&D credit carryforwards, and interest expense under section 163(j), is subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state laws.

The annual limitation may result in the expiration of the Company’s tax attribute carryforwards before utilization and may be material.

The Company has completed a study to evaluate whether an ownership change, as defined by Section 382 of the Internal Revenue Code, occurred from the Company's formation through December 31, 2023.

Based on the findings of this study, the Company has determined that several ownership changes have occurred.

Consequently, the Company’s tax attribute carryforwards allocable to the periods preceding the ownership change are subject to limitation under Section 382.

However, it is important to note that the Company’s tax attribute carryforwards, which include net operating losses (NOLs), research and development (R&D) credits, and interest expense under Section 163(j), are not anticipated to expire unused, solely due to the limitations under Section 382.

The Company started but has not completed a study to determine whether its tax attribute carryforwards generated through December 31, 2024, are likely to be limited by Section 382 and 383.

The Company’s net deferred income tax assets have been offset by a valuation allowance.

Therefore, any resulting reduction to the Company’s tax attribute carryforwards once the analysis is completed will be offset by a corresponding reduction of the valuation allowance and there would be no impact on the Company’s consolidated balance sheet, statement of operations, or cash flows.

The components of deferred tax assets and liabilities were as follows:

As of December 31,

2024 2023 2022

Deferred income tax assets:

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Net deferred income taxes $ ( 6 ) $ ( 27 ) $ ( 22 )

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

A reconciliation of the difference between the provision (benefit) for income taxes and income taxes at the statutory U.S.

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Year Ended December 31,

2024 2023 2022

Income tax at statutory rate $ ( 10,413 ) $ ( 12,917 ) $ ( 15,607 )

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Valuation allowance 8,822 12,378 18,169

Income tax provision (benefit) $ 176 $ 95

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Income tax provision

$ 664 $ 176 $ 95

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Year Ended December 31,

2024 2023 2022

Beginning balance $ 2,924 $ 2,924 $ 2,924

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The Company’s tax returns for all years since inception are open for audit.

The Internal Revenue Service (“IRS”) commenced an examination of our U.S.

income tax returns for the tax year ended December 31, 2022, in the third quarter of 2024.

The exam is still in progress.

As of December 31, 2024, the IRS has not proposed any adjustments to our tax positions.

Segment Reporting

The Company conducts business as a single operating segment, which is the business of performance beauty focused on delivering products in the cash-pay aesthetic market.

The Company’s chief executive officer, who is the chief operating decision maker (“CODM”), reviews financial information on a consolidated basis for allocating and evaluating financial performance.

The single operating segment is further based upon the Company’s organizational and management structure and other factors.

The key measure of segment profit and loss that the CODM uses to allocate resources and assess performance is the Company’s net loss, which is utilized to evaluate the achievement of the Company’s business operations.

The table below

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

shows the Company’s reconciliation of revenue and significant segment items to net loss, regularly provided to and reviewed by the CODM, as computed under U.S.

Year Ended December 31,

2024 2023 2022

Net revenues $ 266,274 $ 202,085 $ 148,616

Product cost of goods sold 81,015 61,559 55,887

Amortization of distribution right 2,955 2,955 2,955

Selling, general and administrative 176,853 149,380 131,275

Research and development 8,156 5,662 4,474

In process research and development — 8,869 2,000

Revaluation of contingent royalty obligation 7,176 4,257 5,755

Stock-based compensation 22,188 16,458 10,833

Depreciation and amortization 2,342 2,178 767

Interest income ( 3,263 ) ( 860 ) ( 119 )

Interest expense 18,735 13,832 9,097

Other expense, net ( 127 ) ( 696 ) 9

Income tax provision 664 176 95

Net loss ( 50,420 ) ( 61,685 ) ( 74,412 )

Assets provided to the CODM are consistent with those reported on the Balance Sheets with particular emphasis on the Company’s available liquidity, including its cash and cash equivalents, and financial instruments owned, reduced by current liabilities.

All long-lived assets are maintained in the United States of America.

The product and service revenue attributed to foreign countries from which the Company derives product and service revenue is as follows:

Year Ended December 31,

2024 2023 2022

Revenue by country, net

United States $ 253,159 $ 195,424 $ 146,150

International 13,115 6,661 2,466

Total revenue by country, net 266,274 202,085 148,616

Subsequent Events

On February 13, 2025, the Company received FDA approval for Evolysse TM Form and Evolysse TM Smooth injectable hyaluronic acid gels for the treatment and improvement of moderate to severe nasolabial folds facial wrinkles.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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 7A. Quantitative and Qualitative Disclosures About Market Risk